Regulatory Hurdles Hindering Satellite Growth - Page 1 of 2

The satellite industry has enjoyed a long period of steady growth, but the industry faces formidable regulatory hurdles in the new millennia. In addition to the challenges of doing day-to-day business, regulatory hurdles impede the entire industry’s progress, retarding growth and possibly serving as a barrier to expansion. To broaden the satellite market, players must give thoughtful consideration to the best way to overcome these regulatory challenges.

The satellite industry is made up of a number of different segments, each with its own unique challenges, but there are a number of issues which seem to bubble up to the top whenever regulatory hurdles are discussed. Some of these issues are global in scope, while others are regional, but they all negatively affect the satellite industry.

The Role of Satellite

A recurring theme heard time and time again from industry leaders is the lack of understanding by regulators regarding the role of satellite technology. This is problematic in that many policymakers often overlook satellite technology because many satellite services are similar to those offered by terrestrial service providers. In short, regulators do not understand satellite technology’s unique characteristics and the benefits it affords.

As an example, Jennifer Manner, vice president regulatory affairs of SkyTerra, pointed to a draft of pending stimulus legislation which included funds to encourage the build-out of telecommunication facilities in order to expand broadband coverage. "The language in the draft only discussed requirements for high-speed circuits, which effectively limits satellite’s role," says Manner. "Satellite is an important means to reach rural areas of the country which can’t be served cost effectively by either copper or fiber. The arbitrary limits on circuit speeds set out in the stimulus package effectively limits who can participate. We believe that any stimulus package should be focused on the most cost-effective way to provide the best connection to broadband."

Patricia Cooper, president of the Satellite Industry Association (SIA), echoes Manner’s comments. "We need to make sure that the policies our government adopts don’t penalize the satellite industry. There are several goals of the broadband initiative. One is getting higher speed circuits to more places, but there are eight million to 11 million people in this country which don’t have any access to broadband services. Satellite can provide broadband access to those areas which are underserved. We want to make sure the ‘access side’ doesn’t get swallowed up by the ‘speed side,’" she says.

As part of its overall strategy regarding the 700 megahertz (MHz) band, the Federal Communications Commission (FCC) had intended to create a nationwide public safety/public service network using the D Block. The minimum bid for this slice of spectrum was not achieved during the bidding process in 2008, and the FCC has requested more information from stakeholders and industry. One of the requirements to bid included satellite-enabled handsets. The FCC will solicit new bids for the D Block in the future and is revisiting requirements. "The cost to add satellite capabilities to handsets is dropping dramatically," says Manner. "It is important to include satellite technology from the beginning. If you are going to deploy a nationwide network you need to get it right from the beginning." Manner and Cooper both agree that the continued education of policy makers on the unique capabilities and advantages that satellite technology can provide is necessary now and in the future, to make sure satellite is not overlooked in policy matter.

Lack of understanding by policymakers is not limited to the United States. "The same types of initiatives to expand broadband coverage are going on in Europe," says Gerry Oberst, partner in the Brussels office of the law firm Hogan & Hartson. "Substantial packages of funding have been put together to help subsidize the construction of infrastructure projects. They are called structural funds and have primarily funded terrestrial lines. Terrestrial lines are much easier to break out financially as fiber optic circuits serve discrete geographic areas, thereby making the accounting easier. Competing telcos can utilize a common terrestrial circuit, but satellite service providers don’t typically share uplink facilities or satellites. As such, these funds don’t lend themselves well to satellite. We need to make sure there are categories in these funds which include satellite or else we will be frozen out from the beginning. As an industry, we must reach out to policymakers and continue the education process. Unfortunately, the satellite industry tends to be its own worst enemy. It is hard to find common ground as competitors, but we need to come together for the common good."