While the 1957 launch of Sputnik 1 inspired fear and trepidation in the West about satellites, the 1962 launch of AT&T’s Telstar 1 inspired boundless optimism about the potential for the Space Age to improve the daily life of the average American and to connect the entire globe. The commercial satellite industry did indeed change the world, but most developments in its early years were invisible to the average person.
Throughout the past two decades, the prominence of the satellite industry in the public’s eye has increased as the industry has developed a wide range of consumer-oriented services. As Via Satellite magazine celebrates 20 years of publication, we review the business and regulatory changes that have placed the satellite industry in its rightful role as the most exciting industry on (and off) the planet.
Satellite communications began as a public-private partnership, not as a government monopoly. The Eisenhower administration directed NASA to cooperate with AT&T in the development of the Telstar system, hoping to encourage the development of competing private satellite carriers. NASA helped develop the underlying technology, and AT&T provided the financing, hopeful that satellites could replace ocean cables, providing international long-distance service at a fraction of the cost, and making transatlantic television transmissions possible. Telstar’s transatlantic TV broadcasts in July 1962 created a public sensation, but the Kennedy administration feared the extension of AT&T’s telephone monopoly, and saw international satellite communications as an instrument of foreign policy and global social reform.
Fixed Satellite Services
Congress passed the Communications Satellite Act of 1962, creating the U.S. satellite monopoly Comsat. Two years later, the United States and 10 other countries formed Intelsat, an intergovernmental consortium with Comsat as the manager and U.S. signatory. Through Intelsat, Comsat commenced the use of the geostationary orbit and developed basic Fixed Satellite Services (FSS), such as international long distance and TV distribution.
Under President Nixon’s Open Skies policy, the U.S. Federal Communications Commission (FCC) began allowing domestic satellite operations in the United States in 1970. Companies such as RCA Americom soon began backhauling programming to local U.S. cable systems, giving rise to what would become Ted Turner’s TBS Superstation and opening the floodgates of new cable content. The mid-1970s saw the birth of Mobile Satellite Services (MSS) for maritime users. Comsat launched Marisat, the first commercial MSS system, in 1976. Inmarsat, the intergovernmental consortium formed in 1979, used leased capacity on the Marisat satellites prior to launching its first satellite in 1990.
Satellite communications were not as high-profile with the public when Via Satellite debuted in 1986, but the next two decades would see the evolution of a highly competitive industry that spawned a host of new consumer-oriented services.
After intense lobbying by Panamsat Corp. and others, the Reagan administration decided in 1984 that alternative international satellite systems were “required in the national interest.” This determination allowed the FCC in 1985 to adopt its Separate Satellite System Policy, under which the agency licensed a number of private international FSS operators. Panamsat launched its first satellite in 1988, initially providing service to Latin America before gradually expanding its fleet, services and reach.
FCC regulation, however, constrained separate systems such as Panamsat and the domestic satellite operators from fully competing. Separate systems generally could not provide domestic U.S. service, and domestic satellite operators were greatly constrained in the extent to which they could provide international service. All of this changed in 1996, when the FCC issued its Domestic Satellite Consolidation Order (Disco) 1, allowing all U.S.-licensed spacecraft to serve all areas within their geographic coverage. In its 1997, Disco 2 decision, the FCC took the next step and generally opened the U.S. market to the provision of service by “foreign” spacecraft. Now even more avenues were available for providing new and innovative services to U.S. consumers.
In 2000, the Open-Market Reorganization for the Betterment of International Telecommunications (ORBIT) Act mandated the full privatization of both Intelsat and Inmarsat. Both entities were privatized, and consistent with a trend that has pervaded the industry since the dotcom bust. Private-equity firms took major stakes in each company, and the privatized Intelsat acquired archrival Panamsat in 2005.
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