The SATCOM AllianceSatellite and Telecommunications Companies Opposed to Monopolies

Support Competition in International Satellite Services

END SATELLITE END SATELLITE MONOPOLIES NOW!MONOPOLIES NOW!

“To gain access to Intelsat’s phone, TV and other services, American firms must go through Comsat, which customers liken to a troll on a toll bridge…”

- Michael W. Lynch, Washington Editor , Reason Magazine

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THE INTELSAT CARTELTHE INTELSAT CARTEL

• Then: Created 37 years ago, Intelsat is a United Nations-like organization originally tasked with creating and then operating a global satellite communications network.

• Now: Intelsat remains an international governmental cartel still in the commercial business, stifling competition which leads to excessive rates for telecommunications services.

• Future: Governmental cartels have no place in commercial satellite communications.

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PROBLEM: THE INTELSAT PROBLEM: THE INTELSAT CARTEL CARTEL

• . . . Is Anti-Competitive. Private companies are unable to offer global satellite telecommunications services because Intelsat enjoys monopoly access in many countries.

• . . . Has Outlived Its Purpose. Private satellite communications providers are fully capable of serving the needs of the market.

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THE SISTER CARTEL : THE SISTER CARTEL : INMARSATINMARSAT

• Then — Inmarsat was organized to provide communications for ships at sea at a time when there was no other way to handle this responsibility. Inmarsat later ventured into mobile satellite services outside its original mandate.

• Now — Inmarsat faces competition from private sector mobile satellite systems. Inmarsat is in the process of privatizing, but remains under the control of the foreign monopoly telecommunications providers.

• Future —Inmarsat must be influenced to change its ownership to the private sector and must relinquish the advantages that it gained while still an intergovernmental cartel.

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PROBLEM PROBLEM — THE INMARSAT THE INMARSAT CARTEL CONTINUESCARTEL CONTINUES

• …To Remain A Creature Of Telecommunications Monopolies. Inmarsat’s owners can limit access to markets and to the spectrum that is needed by private companies to provide services.

• …To Enjoy Government-Granted Advantages. The cartel itself has been given control of a substantial block of spectrum that should be made available to private companies.

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SOLUTION: SATELLITE SOLUTION: SATELLITE COMPETITIONCOMPETITION

• The antiquated 1962 Satellite Act needs to be changed to allow private satellite companies to compete in all markets in a free and unfettered manner.

• Today, the private sector has replaced government as the primary innovator and service provider of satellite technologies.

• Open markets and free competition can provide a wide range of services more efficiently and cheaper than governmental ownership and monopolies.

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THE COMSAT MONOPOLYTHE COMSAT MONOPOLY

• Comsat is the exclusive U.S. participant in Intelsat.

• Comsat, by law, is the only entity authorized to sell Intelsat services in the United States. Comsat acts as a toll collector for these satellite services.

• Companies in the U.S. are barred from having direct access to Intelsat without first going through Comsat. Companies must pay the Comsat toll before they can offer services to the public.

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COMSAT: “THE LAST MONOPOLY” COMSAT: “THE LAST MONOPOLY” COSTS CONSUMERS BILLIONS OF COSTS CONSUMERS BILLIONS OF

DOLLARSDOLLARS• Comsat charges U.S. companies up to 68% in markup

charges on all international calls -- costing American consumers more than $2.7 billion every 10 years in higher rates.

• Comsat does not own the wires or dishes that are used to reach the satellites, and offers few services in connection with the use of those satellites. Comsat is simply a middleman to a monopoly -- able to charge exorbitant fees for no services.

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THE U.S. IS ONE OF THE LAST THE U.S. IS ONE OF THE LAST DEFENDERS OF MONOPOLY ACCESS DEFENDERS OF MONOPOLY ACCESS

TO INTELSATTO INTELSAT

• The U.S. used to lead the world in opening markets. Now we have fallen behind. Over 90 countries already allow companies direct access to Intelsat. Only the United States, Mexico, and El Salvador protect their monopolies by barring direct access to Intelsat.

• Even Comsat sees the value of direct access. In fact, Comsat has taken advantage of direct access itself in countries like the United Kingdom and Brazil by becoming a direct access customer in those nations.

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COMPETITION, NOT COMPETITION, NOT MONOPOLIESMONOPOLIES

• Ending telecommunications monopolies means that companies can offer telecommunications services at lower rates.

• Over the past 20 years, Congress has deregulated the airline, natural gas, and freight rail shipping industries. This has created reduced rates for consumers and greater competition in each of these industrial sectors.

• Comsat has the last remaining telecommunications monopoly following passage of the 1996 Telecommunications Reform Act.

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CURRENT LAW IS CURRENT LAW IS UNACCEPTABLEUNACCEPTABLE

• Higher Rates. Companies must pay substantially higher rates for satellite services under the Comsat monopoly, thereby passing on higher costs to consumers. Comsat’s mark-ups alone have cost U.S. consumers an estimated $2.7 billion over 10 years!

• Slower Growth. U.S. satellite companies around the world are unable to enter certain telecommunications markets. Intelsat and Comsat stifle competition and allow foreign competitors, most often owned by their governments, to dominate the market.

• Jobs. Comsat’s monopoly costs more than 30,000 U.S. jobs every year in the communications services and equipment industries.

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WHAT IS SATCOM?WHAT IS SATCOM?

SATCOM is a coalition made up of companies large and small that are dedicated to competition and free-market access in the delivery of telecommunications services.

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WHAT SATCOM STANDS FORWHAT SATCOM STANDS FOR

Promoting Competition in International Satellite Services.

Intergovernmental satellite monopolies must be privatized in a way that promotes competition in the delivery of international satellite communications services.

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WHAT OTHERS ARE SAYING ABOUT THE WHAT OTHERS ARE SAYING ABOUT THE INTELSAT, INMARSAT AND COMSAT INTELSAT, INMARSAT AND COMSAT

MONOPOLIESMONOPOLIES“(Intelsat) was an expression of Kennedy-era idealism that has been hijacked by foreign

telecommunications monopolists. These monopolists now use Intelsat’s market power, and its immunity from US law, unfairly to compete with privately owned satellite companies – and to drive

new competitors from the market”- Scott Blake Harris, former FCC International Bureau Chief (“A Cosmic Monopoly”, Washington Times 3/25/98)

“Americans no more need Intelsat in its current form than we need a government-run telephone company, airline or overnight package-delivery service.”

- Michael W. Lynch (“Congress Should Uplink Competition”, Investor’s Business Daily 3/23/98)

“A recent study by the Federal Communications Commission found that US satellite customers could save 17 percent to 35 percent if Intelsat and Inmarsat were forced to compete with private

enterprises instead of being protected by international treaties from competition.”- Jube Shriver, Jr. (“Congress Seeks to Privatize Global Satellite Operators”, Los Angeles Times 3/23/98)

“Global competition would help reduce prices for international long-distance calls, which are still dominated in most of the world by government-owned monopolies. More broadly, more competition

would make it easier and cheaper for more of the world’s people to tap into the information age.”- Editorial (“Freedom and Satellites”, Wall Street Journal 5/8/91)