by Gerry Oberst

This year’s Satel Conseil symposium in Paris had a session titled "What’s up, regulators?" Needless to say, it spurred some debates. Is the global regulatory environment no longer hindering the satellite industry? Panelists scratched their heads regarding this topic and reviewed the state of play.

Currently the European Commission (EC), as well as national regulatory bodies, are investigating how to rely more on market mechanisms than traditional "command and control" systems for allocating radio frequencies. The EC scheduled a workshop to review studies on how spectrum secondary trading could cut through some of the regulatory roadblocks in order to achieve a more efficient use of spectrum.

Despite its good intentions, this approach could pose a special threat to the satellite industry, because satellite companies heavily rely on international coordination. This mix of potential efficiencies from market mechanisms versus concerns regarding unintended effects added some controversy to the session.

Jean-Jacques Bloch, with the consultancy Sat Concept, took the perspective that regulations are our friends. He stated regulation is necessary for the space industry to assure access to spectrum and that the licensing procedures are generally getting simpler, regions are harmonizing their requirements and their positions at International Telecommunication Union (ITU) radio conferences, and regulations in developing countries have "positively evolved."

Bloch also, however, identified room for improvement. He noted that national applications of international regulations are not always straightforward, pointing to a decision on uplink bands for VSAT terminals that was approved at the 2003 ITU radio conference but not yet applicable in France. There remains a need for easier procedures to license ground equipment. Such blanket licensing for entire networks of satellite terminals is officially in place but still not globally implemented.

Yvon Henri, head of the Space Services Department within the ITU’s Radiocommunication Bureau, maintained that his department’s procedures for coordinating satellite orbital positions and frequencies have tightened up. The interference landscape is even more complicated with many different services using shared frequency bands.

He pointed to trends toward simplification and improvements to procedures used to avoid interference. But Henri thought it was "wishful thinking" to believe that regulatory simplification could get rid of the regulations. He stated that if secondary trading leads to more interference, then market participants would be "trading nothing."

The session also focused on national regulation efforts, as speakers from the Federal Communications Commission (FCC) and the French radio spectrum agency shared their perspectives. Roderick Porter, deputy chief of the FCC International Bureau, described the thrust of FCC efforts to instill flexibility in the regulatory system. The FCC has already started experimenting with spectrum trading and is continuing moves toward market mechanisms.

In counterpoint, Francois Rancy, director of spectrum planning and international affairs of the French frequency agency, determined all this talk about flexibility could threaten progress toward international rules. He remembered that the ill-fated Teledesic project supposedly was pushed in the name of flexibility.

Rancy noted that ITU working groups and project teams within pan-European bodies focus on flexible measures for allocating spectrum. The initial resolutions will be reviewed by a radio conference in 2007, with possible action taken by the radio conference in 2010, so nothing should be done too fast.

And nothing will be done too fast if regulators continue to rely on current command and control mechanisms for satellite allocations and licensing. The overall impression to come from this session was that many regulators are perfectly comfortable with things as they are and view moves toward market-based structures as a threat.

What can the satellite industry executives do about this conflict? The economists have a rock-bottom certainty that relying on market mechanisms leads to a more efficient result. Economists define efficiency as the highest value use of the spectrum, not the technical efficiency concept that satellite engineers and spectrum managers rely upon.

Satellite companies must make a compelling case that market trading of spectrum could fragment the allocation system. The satellite sector will have to emphasize international coordination unique to satellite communications and assess the cost benefit analysis specific to the industry–pure opposition to the concept will not work.

If regulation for the 95 percent of the communications industry using spectrum outside the satellite sector moves toward market mechanisms and spectrum trading, the satellite sector must find some good reasons not to be included in that mix.

Gerry Oberst is a partner in the Brussels office of the Hogan & Hartson law firm. His e-mail address is geoberst@hhlaw.com.