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Lawmaker Calls for Overhaul of Nonprofit Satellite Systems

Telecom: Rep. Bliley wants Intelsat to follow Inmarsat, create a commercial company to spur competition.


WASHINGTON — The chairman of the House Commerce Committee on Tuesday called for overhauling the powerful international satellite organizations Intelsat and Inmarsat, saying the government-owned consortiums are relics of 1960s telecommunications policy and impediments to robust competition.

Rep. Thomas J. Bliley (R-Va.) said in a telephone news conference that he will push for legislation requiring Intelsat to establish a commercial company much like the for-profit entity that Inmarsat is attempting to create.

"Technological advances and market forces now force us to look anew at the 1960s-era international satellite organizations . . . [and] transform these organizations to better reflect the free market," he said.

Bliley said it is his hope "that most nations would embrace the idea because even for those that have state-owned telecommunications facilities, it would seem to be to their advantage to have a choice as to whom they would purchase service from."

Founded in 1964, Washington-based Intelsat is the world's largest satellite consortium. Each of its 139 members has a voice in its operations, and the nonprofit concern promises to sell time on its satellites to all member countries, regardless of size. Its satellites carry more than half of all international telephone calls, virtually all transoceanic television broadcasts and domestic services for close to 30 nations.

Its smaller sibling, Inmarsat, was established in 1979 to provide worldwide satellite communications for the maritime industry. Inmarsat now has 79 member countries.

Bliley's proposal recalls similar recommendations advanced in recent years by Intelsat and several federal agencies.

On Tuesday, for instance, the General Accounting Office issued a report recommending that "some portion of the satellite facilities of each of the two organizations could be privatized . . . to enhance competition."

However, overhaul of Inmarsat and Intelsat, which are parties to international treaties that influence pricing and availability of satellite communications services, could face significant opposition from overseas, where many small and developing nations fear that a more commercialized Intelsat and Inmarsat would abandon developing nations in pursuit of more lucrative markets in fully industrialized nations, experts say.

"That's traditionally been the sticking point in the debate over reforming Intelsat: What is the trade-off between providing improved service to the people who are privileged [and] providing basic service to people who are not," said John Pike, an expert on satellite issues and director of space policy for the Federation of American Scientists in Washington. "The thinking in many poorer countries is, 'Intelsat may be a monopoly but at least I have a say in Intelsat.' "

Intelsat spokesman John Trujillo said it would be inappropriate for him to comment on Bliley's proposal or the GAO report before his members had a chance to study them. But he added: "We are in favor of restructuring Intelsat as well. There is simply no consensus among the different players yet."

Acknowledging the concern voiced by some Intelsat members--which range from the U.S. to tiny Malta--Trujillo said that for many countries, Intelsat is "their lifeline link to the rest of the world. And they say why fix it if it ain't broke?"

Neither Intelsat nor Inmarsat publicly reports its net income. But according to a telecommunications expert at the Organization for Economic Cooperation and Development in Paris, the satellite business has been hugely profitable for Inmarsat as well as Intelsat, which reported operating revenue of more than $805 million in 1985.

"They've never been able to get [their profits] down to their targeted rates of return," said the official, who spoke on the condition of anonymity.

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