Regulatory Review: Satellite Principles 2002–Bringing Regions Together
by Gerry Oberst
Earlier this year, the major satellite companies in Europe issued a position paper on regulatory issues facing the industry. This “satellite principles 2002” was an outgrowth of extensive work done by the Satellite Action Plan Regulatory Group (SAP REG) in the years since 1997, when it was formed under a mandate from the European Commission to address regulatory provisions affecting satellite communication services in the European Union (EU).
At the outset, the SAP REG sought to remind regulators that the satellite industry is a strategic one for Europe. Reasons for this assessment include satellite’s unparalleled reach, high-tech leadership and infrastructure for bridging the digital divide. It may seem parochial that this statement even had to be made to European regulators. But, in fact, many countries on that continent devote far more attention to terrestrial players, and only a few countries in Europe actually license satellite operators themselves. As a result, satellite issues are technical, complex and sometimes awkward for national regulators who have firmer control over local terrestrial operators.
Nevertheless, reminded the SAP REG, more than 50 million subscribers rely on individual satellite dishes in urban, suburban and rural European areas. European administrations have filed over 500 applications for orbital slots and frequencies that are now pending with the International Telecommunication Union.
Further, the paper notes the high-tech leadership provided by satellite companies, and the inherent ability of satellite transmissions to remove regional disparities and ensure access to all parts of the EU.
These points echo what some European policymakers have said themselves. The European Commissioner for Information Society, Erkki Liikanen, declared at the SAP Plenary meeting that “from an industrial policy viewpoint, satellite systems are a strategic industry from which Europe cannot be absent.” And in December 2001, the Commission recommended in a communication on space policy that EU policy should “[f]oster the development of satellite communications to provide advanced services to European citizens in the context of policies supported by the Union such as education, health, transport, environment and e-Europe.”
Starting with this premise, the SAP REG proceeded to note that full development of satellite infrastructure and services in Europe depends on (a) access to frequencies and markets; (b) harmonized licensing and spectrum allocations, and (c) rational fee structures.
On access to frequencies and markets, which are critical if the satellite industry is to realize its full potential, the SAP REG argued there is a need to protect existing ITU primary frequency allocations to satellite services against threats from terrestrial operators. Most importantly, SAP REG said that spectrum should not be allocated to terrestrial systems in only a small number of European countries or even worse, for small areas within some countries, when the outcome results in the prevention of satellite services across the entire continent. Another issue is that the effect of placing stringent technical limits on satellite facilities to mitigate interference risks creates market access barriers, which ends up favoring other technologies.
Harmonized licensing and spectrum allocations are a particular issue in Europe, due to the many national boundaries and different regulatory approaches. In early 2002, the EU adopted a new set of regulations, called the Electronic Communications package, which strongly supports harmonized licensing and spectrum allocations. The SAP REG paper recited some of the specific provisions of those regulations that could bolster the development of satellite networks and services. The paper then identified specific regulatory steps that could be taken. These include class license regimes (i.e., blanket license or registration approaches that avoid individual terminal authorizations), or even licensing exemptions as the way to foster consumer or small business satellite applications.
On rational fee structures, the SAP REG contended that the cost structure for satellite infrastructure and services is different than for the terrestrial communications sector. Satellite footprints cover many countries and cross many borders, and thus are not localized in a way that permits fee structures to be developed in isolation at the national level. This phenomenon leads to several conclusions: One, fees for satellite licensing should cover only actual administrative costs. Two, fees for spectrum should not hamper the development of a competitive satellite industry. And, three, reliance on auction or spectrum trading approaches is difficult, if not economically irrational, due to the inherently trans-border nature of satellite transmissions.
Some of these principles, of course, fall into the category of “motherhood and apple pie” for the satellite industry. And they are principles that the industry expresses time and time again before regulators in all parts of the world. The SAP REG argued, however, to European regulators that “by its very nature, the satellite industry can and should contribute to basic European goals, bringing regions together, leading the introduction of new digital services and contributing to the evolution of e-Europe. These goals can only be achieved based on a rational and optimized regulatory structure.”
Gerry Oberst is the chairman of the SAP REG, and also is a partner in the Brussels office of the Hogan & Hartson law firm. His email address is [email protected].