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Intelsat History

Intelsat History. International Satellite Cooperative created as a result of a US initiative How to finance international satellite communication? Locus of control for this international project? . Communication Satellite Act of 1962.

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Intelsat History

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  1. Intelsat History • International Satellite Cooperative created as a result of a US initiative • How to finance international satellite communication? • Locus of control for this international project?

  2. Communication Satellite Act of 1962 . . .to establish, in conjunction and in cooperation with other countries, as expeditiously as practicable a commercial communications satellite system, as part of an improved global communications network, which will be responsive to public needs and national objectives, which will serve the communication needs of the United States and other countries, and which will contribute to world peace and understanding.

  3. Intelsat History (continued) • Creation of Comsat (quasi-private entity) --early consortium manager • Interim Communication Satellite Committee (ISC)--early decision making body • August 20, 1964, interim agreement signed--no developing nation, no USSR included • Multi-lateral agreement signed in 1971; activated in 1973

  4. Intelsat Former Structure • Assembly of Parties: policy making body made up of governmental representatives; met every two years • Meeting of Signatories: technical and operational issues; telecom administrations met annually • Board of Governors: real power of organization; met four times a year; membership based on ownership share • Intelsat Management: Director General and CEO; day-to-day operation

  5. Intelsat Former Structure • Cooperative structure--144 members in September 2000 • Ownership shares based on usage of system • Provided services to 200 nations and territories • Investment shares by signatories and, since May 1999, from investing entities. • In 2000, had 19 geo-stationary satellites in orbit • Creation of commercial affiliate for video and new services (New Skies Satellites)

  6. Investment Shares • Largest Shares in December 2000: • US: 20.413718 • UK: 8.306423 • India: 5.230898 • Norway: 4.476162 • Germany: 3.448252 • Italy: 3.381220 • Argentina: 3.238563 • Canada: 3.056633 • Australia: 2.532997 • China: 2.346246

  7. Intelsat Customers • Customers traditionally contracted for services through signatories, not from Intelsat directly—no longer the case • telecom operators • broadcasters • airlines • international banks • multinational manufacturers • newspaper distributors • health care and relief organizations

  8. Article XIV (D) of Intelsat Agreement • . . .shall consult with the Assembly of Parties, through the Board of Governors, to ensure technical compatibility of such facilities and their operation with the use of the radio frequency spectrum and orbital space by the existing or planned INTELSAT space segment and to avoid significant economic harm to the global system of INTELSAT.

  9. Competitive Satellite Systems • 1984 Reagan letter and 1985 FCC Separate Systems decision: • At first, competitors not to interconnect with PSTN • competitors to get authorization from foreign authorities • Requirement to prove no economic harm; presumption of no harm for traffic totaling less than 100 64-kbps circuits (1990); for less than 1,250 64-kbps circuits (1992); less than 8000 (1994); infinite (1997)

  10. Further Competition • Regional satellite systems • Transoceanic fiber optic cables • Intelsat’s response: • Privatization • Creation of New Skies affiliate • Tariff rebalancing • Reassertion of universal service role

  11. Why privatize? • 48 member board—hard to make decisions • No investments could be made without 2/3 vote of shares • Proposals for new satellites or services aimed at specific regions often ran into resistance • Couldn’t selectively cut prices • Intelsat shut out of new markets in some countries to protect new entrants (satellite TV in the US)

  12. Intelsat Privatization • Approved by the Assembly of Parties in Malaysia in October 1999 • Transaction to be complete on July 18, 2001 • New structure • Intelsat Ltd., private holding company based in Bermuda; wholly owned service company, Intelsat, based in D.C. • Current and planned C- and Ku-band satellites and licenses held by Intelsat LLC (US subsidiary); orbital filings in Ka-, V- and BSS frequencies licenses in UK. • Board of directors (17 members) to be elected by all shareholders

  13. Continued “universal service” commitment • Continued commercial provision of • Global coverage and global connectivity • Service to lifeline customers around the world • Non-discriminatory access to the Intelsat Ltd. Satellite fleet

  14. US Involvement • Comsat as sole US signatory • No direct access allowed, until FCC action in September 1999 to allow level 3 access • Purchase of Comsat by Lockheed Martin • 49% share approved in September 1999 • Remaining 51% could only be purchased after change in Communication Satellite Act of 1962—passed in early 2000

  15. Intelsat post-privatization • 200 shareholders from 145 countries at privatization • Largest is Lockheed Martin with 22% • Other private sector companies hold 50% of share • Merger with PanamSat in 2006 • Stripped of antitrust immunity, tax privileges, embassy status

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