by Gerry Oberst

A guiding principle of the telecom field in recent years has been that regulation and infrastructure funding decisions should be "technologically neutral." This approach runs the risk, expressed by the Earl of Northesk before the United Kingdom House of Lords, that "strident efforts to be technology neutral" can convey the impression that regulation "either is ignorant of the way in which current technology operates or pretends that there is no technology at all."

Being neutral toward technology cannot mean being oblivious to it, and there must be a careful balance between unduly favoring a certain technology while still assessing the technical features of a particular sector. Because the satellite sector offers unique benefits, this industry must be careful when the mantra of technological neutrality is used.

Regulators are using this phrase with great frequency, in light of convergence between different services and technologies. Thus, in 2000, Hong Kong sought to implement a "technology neutral" broadcasting bill. In 1999, the Australian Competition and Consumer Commission initiated a consultation into a "technology neutral subscription television" service. The ITU announced in 2003 that it was funding a technology-neutral as well as "technology-independent framework" for global implementation of technologies to benefit the least developed countries worldwide.

In December 2001, the U.S. National Telecommunications and Information Administration said the marketplace must remain a fertile ground for innovation, and thus "broadband policy should not favor any particular technology platform." Earlier, a Canadian task force also noted that the government "should not be selecting the technologies to be used for future service delivery of the Information Highway."

Technology neutrality is one of the primary principles behind the European Union’s (EU) new regulatory framework for electronic communications. A key article of the framework directive adopted in March 2002 provides that "national regulatory authorities take the utmost account of the desirability of making regulations technologically neutral."

Talking about competition between infrastructures and platforms, the European Commissioner responsible for information society, Erkki Liikanen, said in February of this year, "We cannot continue to think in the traditional way of each network having its own set of rules. The new framework addresses markets, not networks, and it does so in a technologically neutral manner based on competition law."

Subsequently, in June of this year, the European Commission released draft guidelines on how "structural funds"–a form of infrastructure subsidies–should be allocated to ensure that all parts of Europe can fully participate in the information society. The Commission is responding to EU policy to support new infrastructure and services across Europe with European funding, "provided that public aid does not distort competition and ensures technologically neutral investments."

A concern of the satellite industry at times has been that funding decisions might overlook the larger benefits of pan-European satellite services. This could happen if a funding agency or potential aid recipient looks only to the immediate needs of a specific location. Thus, for example, if a local community develops a funding request, it might favor a cable or terrestrial approach that is closer to the locality or under control of local officials.

The European Commission draft would provide that if a project involves the financing of a specific technology or a dedicated infrastructure, "the choice must be clearly justified on the basis of a cost-benefit analysis, taking into account possible alternatives for the provision of the service."

Some satellite companies have called for technology neutral solutions to ensure that satellite solutions are not disadvantaged. By contrast, however, it may be necessary at times to stress, rather than to ignore the technological distinctions of satellite solutions. The best policy may not always be to remain "neutral," or to lump all platforms into a commodity approach.

Satellite networks can uniquely serve less developed rural and isolated areas. For this reason, in 2001, the U.S.-based Satellite Industry Association called upon the government to ensure adequate spectrum for the satellite sector so that these advantages could be realized.

This request is the real crux of the technology neutrality principle–spectrum decisions are rarely neutral. Some agency must determine whether a particular sector uses certain radio frequencies.

It may also be that the uniquely regional and global nature of satellite networks is a flaw in the neutrality mantra. Satellite networks depend on harmonized spectrum allocations and uniform rules to cross national borders. National administrations may not always see this big picture, especially if they have no national interests in the satellite network and do not license any operators. Thus, there may be reasons for regional level policies to sponsor satellite-based solutions and new broadband networks that depend on satellite links.

We can hardly expect the satellite industry to be neutral about its special capacities. The challenge ahead is to ensure that regulators and policymakers also are not always neutral in recognizing the special role that satellite platforms can play.

Gerry Oberst is a partner in the Brussels office of the Hogan & Hartson law firm. His email address is [email protected].