February 2011 The Leader in Global Communications Coverage www.viasatellite.com PCI COMPLIANCE REQUIREMENTS PUT BURDEN ON SECTOR SATELLITE EXECUTIVE OF THE YEAR 2010: THE NOMINEES ARE … VIEW FROM THE TOP: Jack Waters, XipLink BROADCASTERS CORNER: Bruce Churchill, DirecTV Latin America WRC-12 www.viasatellite.com Full Agenda of Spectrum Issues
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February 2011 The Leader in Global Communications Coverage
www.viasatellite.com
PCI COMPLIANCE REQUIREMENTS
PUT BURDEN ON SECTOR
SATELLITE EXECUTIVEOF THE YEAR 2010:
THE NOMINEES ARE …
VIEW FROM THE TOP:Jack Waters, XipLink
BROADCASTERS CORNER:Bruce Churchill, DirecTV Latin America
WRC-12
www.viasatellite.com
Full Agenda of Spectrum Issues
Approvals
Client Hughes Network SystemJob 10-HNS-0427
Pubs Via SatelliteMedia Type MagazineLive 7” x 10”Trim 7.875” x 10.75”Bleed 8.125” x 11”
ad 504 7.875x10.75:ad 439 297x210mm 1/21/10 11:20 AM Page 1
4 FEBRUARY 2011 V IA SATELL ITE MAGAZINE WWW.SATELL ITETODAY.COM
TABLE OF CONTENTS
Follow us on Twitter: Get up-to-the satellite communications news and analysis delivered to your Twitter account on your mobile device or computer by following us onTwitter.com/Via_Satellite and Twitter.com/SatelliteTODAY.
February/11 Vol. XXVI Number 02
CO
VE
R S
TO
RY
Features18 | Full Agenda Of Spectrum Issues at WRC-12 »GIOVANNI VERL IN I At the World Radiocommunication Council 2012 (WRC-12), experts will
review the allocation of radiofrequency spectrum and orbital resources.
A positive outcome for the satellite industry will be crucial to its future.
22 | Satellite Executive of the Year 2010: The Nominees Are... »JASON BATES , JEFF H ILL , MARK HOLMES While not considered a banner year for the satellite communications sector,
2010 was not as down as some might have forecasted. Many executives
navigated their companies successfully through a tough economic
environment, and the following five nominees stood out.
26 | PCI Compliance Requirements Put Burden on Satellite Sector »GREG BERLOCHER The ability to transport large numbers of credit card transactions fueled the early
growth of the VSAT industry, making satellite technology the de facto network
standard in the retail segment, but big changes have occurred within the payment
card industry that are having major ramifications.
OnlineWebinars On Demand
Satellite Broadband on Airplanes:A New Era Set To Begin
After the World Cup: Early Lessons in Sports 3-D TV
Remote Asset Management: Identifying End User Needs in the Expanding Enterprise Market
The U.S. Air Force: The $41 Billion Question
For more information on upcoming and on-demand webinars, visit www.SatelliteTODAY.com/webinars
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To view our recent e-letters, visit www.satellitetoday.com.
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SatelliteTODAY.tv: view exclusive interviews and industry events cov-erage at www.SatelliteTODAY.tv
satellite industry. All other subscriptions, U.S.: one year $99; two years $188. Canada: one year $129; two years $228. Foreign: one year $149; two years $278. Contents February not be reproduced without per-
mission. Periodicals postage paid at Rockville, MD, and additional mailing offices. POSTMASTER send address changes to Via Satellite, P.O. Box 3098, Northbrook, IL 60065-3098. Change of address: two to eight
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Cover: This month, Via Satellite talks about the agenda and implications of the upcoming WRC-12. Design: Vince Lim.
18
22
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news and analysis delivered to your
Twitter account on your mobile device or
computer by following us on
Twitter.com/Via_Satellite and
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26
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Celebrating 30 Years
TABLE OF CONTENTS
6 FEBRUARY 2011 V IA SATELL ITE MAGAZINE WWW.SATELL ITETODAY.COM
Britain’s youngest member of Parliament, Pamela Nash, (Labour), reads Via Satel-
lite in Kourou, French Guiana, following the November launch of the Hylas-1 and Intelsat 17 satellites. Nash is a member of the House of Commons Science and
Technology Committee.
DepartmentsEditor’s Insight 8
View From The Top 10
Jack Waters, XipLink
Industry Events 12
Broadcasters Corner 30
Bruce Churchill, DirecTV Latin America
Industry At Large 32
The Marketplace 35
Advertiser Index 35
Web Directory 36
Columns
14 | Global Regulations A Closer Look at the ITU’s Radio Regulations Board
GERRY OBERST
The Radio Regulations Board is a relatively recent body, created in 1994 as a
replacement for the earlier International Frequency Registration Board. Find
out more about the role of this board.
16 | Satellite Policies FCC Auction
RAUL MAGALLANES
Since 1994, the U.S. Federal Communications Commission has used online auctions to
license rights to parts of the electromagnetic spectrum. Bidders can place bids from
the comfort of their homes or offices. Find out how auctions work.
17 | Satellite Gets Personal The Success of Satellite Radio
MAX ENGEL
Satellite radio suffered from high startup costs and no initial subscriber base.
As recently as the first quarter of 2009, Sirius XM looked set to fail, but it now
seems that 2010 will be the year the satellite radio will become profitable.
38 | Dollars and Sense Net Neutrality Update
OWEN KURT IN
In December, Julius Genachowski, chairman of the U.S. Federal Communications
Commission, announced that the agency would pursue enactment of rules to ensure
Net Neutrality — unblocked, non-discriminatory access to the Internet. The rules
have been released and will be debated for a long time.
and lotteries. Other methods still remain, such as straight-
forward applications for Earth station licenses and first-
come, first-serve for space station licenses. Auctions have
proven not only to be a lucrative endeavor for the FCC but
also an efficient and expeditious way to assign spectrum
rights. Next time there is an online FCC auction, make
sure to sit by the computer with your favorite soft drink
and some popcorn by your side.
FCC Auctions
Raul Magallanes
runs a Houston-
based law firm
focusing on tele-
communications
law. He may be
reached at +1 (281)
317-1397 or by
email at raul@
rmtelecomlaw.com.
WWW.SATELL ITETODAY.COM VIA SATELL ITE MAGAZINE FEBRUARY 2011 17
SATELLITE GETS PERSONAL
Max Engel is an
experienced satel-
lite industry and
telecom industry
analyst and found-
er of The North
Star Consultancy.
He can be reached
at maxnorthstar@
gmail.com.
By Max Enge l
The Success of Satellite Radio
Satellite radio (specifically Sirius and XM) was created with the idea that such a service could
offer more specialized programming than conventional
terrestrial radio. A broader range of more specialized
content would gain a profitable audience by aggregating
demand from a continental landmass. No ordinary radio
station could afford to offer the sort of programming
satellite radio could offer, because terrestrial stations
could not focus their programming as tightly as an
individual satellite radio channel could — and there
would be many channels. With the additional benefit of
continental signal coverage, this high level of choice,
coupled with higher quality sound, was expected to
convince people to pay for usually free radio.
This same dynamic was successful in the cable and
satellite TV (DTH) business, but it took years for DTH
to become profitable. Satellite radio suffered from the
same problems as DTH — high startup costs and no ini-
tial subscriber base. While the DTH business had cable
as an example that people would pay for TV, there was
no such evidence for satellite radio. As recently as the
first quarter of 2009, Sirius XM lost 400,000 subscrib-
ers and looked set to fail, and it was widely held that
satellite radio had been made irrelevant by the iPod
and the Internet.
Now it appears that those sages will have to eat their
words. In the second quarter of 2010, Sirius XM reported
net income of $15.27 million, rebounding from a loss of
$159.64 million in the 2009 second quarter. In the third
quarter of 2010, Sirius XM announced a $67.6 million
profit. Finally, on Nov. 30, Sirius XM announced that it
had passed 20 million subscribers. Results for the full
year had not yet been released as
of this writing, but it seems certain
that 2010 will be the year the satellite
radio will become profitable.
So what does this tell us? Noth-
ing for certain; but it suggests that
the Internet is not the satellite killer
that some have suggested.
First, satellite-based services
generally are not limited by loca-
tion. While satellite radio does have
a terrestrial repeater network, it is in no way as com-
plex or expensive as the sort of wireless network that
would be required to provide similar coverage to Inter-
net-based programming. I just drove from Texas to Cali-
fornia, and as my wife pointed out, there were quite a
few long stretches of low cell phone connectivity, where
the system could not provide 3G or 4G connectivity, just
generic voice. We are a long way from providing mobile
access to a large body of entertainment via wireless
access to the Internet.
Second, the recent results for Sirius XM also sug-
gests that the use of new car sales channels as the major
distribution method for satellite radio has been a suc-
cess. This approach has made satellite radio more easily
accessible to a broader audience than Internet broadcast
audio. While the generation that has grown up with the
Internet may find it less intimidating than their prede-
cessors do, it is still more complicated than terrestrial
or satellite radio. By making satellite radio a one-to-one
replacement for the very familiar radio in your car, Sirius
XM has opened markets that remain largely closed to
the Internet as a distribution channel.
Similar factors have influenced the growth of video
distribution by Internet. As services such as Netflix have
developed simple user interfaces, they have appealed to
more users. Likewise, DirecTV’s DVRs can be hooked
directly to the Internet so that the user is unaware of
whether the content received is coming over the satel-
lite or Internet connection. Audio over the Internet also
has grown quite sophisticated (iTunes is an example),
but it is not mobile.
There is no question that the existence of a broadly
available wireless Internet would be a strong competitor
for satellite radio (if the cost was competitive), but such
a network is not likely to appear any time soon. Satellite
radio offers a combination of broad geographical cover-
age, low cost (compared to 4G) and a wide selection of
programming (compared to terrestrial radio) that should
keep it in the game for quite some time.
The real question was whether it could turn a profit.
The only remaining question will be its ability to replace
its satellites and that question will remain unanswered
for some years to come.
COVER STORY
BY GIOVANNI VERLINI
WRC-1218 FEBRUARY 2011 V IA SATELL ITE MAGAZINE WWW.SATELL ITETODAY.COM
Full Agenda of Spectrum Issues at
WWW.SATELL ITETODAY.COM VIA SATELL ITE MAGAZINE FEBRUARY 2011 19
At the World Radiocommunication Council 2012 (WRC-
12), experts will review the allocation of radiofrequency
spectrum and orbital resources. A positive outcome
for the satellite industry will be crucial to its future.
M Many satellite players enter 2011 with
a sense of optimism, having largely performed
well during difficult economic times. However,
while an optimistic mood prevails, an International
Telecommunication Union (ITU) Conference that
could have a major impact on the satellite sector is
coming into focus, and once again, satellite players
will have to battle wireless and telecom interests
seeking to acquire the spectrum the satellite sector
needs. The hard work starts now, and 2011 will be
a critical year in preparation for WRC-12, which
will take place in Geneva, Switzerland, from Jan.
23 through Feb. 17.
During the three-week event, experts are due
to revise the Radio Regulations, i.e., the intergov-
ernmental treaty governing the use of the radiof-
requency spectrum as well as the geostationary
and non-geostationary satellite orbits. Such revi-
sions are of paramount importance to the future
of satellite services. While in the case of orbit
resources, the satellite industry only will be fac-
ing what could be defined as internal issues, in the
case of the radiofrequency spectrum, it will not
be alone. Industry bodies and lobby groups from
the wider telecoms sector will vie for influence
within the council. The allocation of resources,
i.e., frequency bands, to different radio services
will be the battleground. The airwaves are getting
crowded and competition will be fierce as the
stakes for all parties involved are high. WRC-12,
in other words, promises to be a busy event.
Busy AgendaIt is the Radiocommunication Sector’s (ITU-R)
mission to ensure rational, equitable, efficient and
economical use of the radiofrequency spectrum
by all radiocommunication services, including
those using satellite orbits, and to carry out studies
and adopt recommendations and standards on
radiocommunication matters. “The ITU-R mission
emphasizes its major role as custodian of the
radio frequency spectrum,” says Yvon Henry, who
heads the space services department at the ITU
Radiocommunication Bureau (BR). “This can be
achieved through effective international spectrum
management, linked with standardization activities
associated with the various radio services and
systems concerned.”
The agenda for WRC-12 already has been
shaped, in collaboration with state authorities,
by the ITU, and the issues on the table at WRC-
12 affecting the satellite industry are many. They
include the convergence between radiocommu-
nication services (agenda item 1.2); the use of
spectrum for control links of unmanned aircraft
systems (UAS) (agenda item 1.3); and from the use
of the band 21.4-22.0 GHz for broadcasting satel-
lite service (BSS) in Europe, Africa and Asia, also
known as ITU Regions 1 and 3 (agenda item 1.13);
and the possible identification of spectrum for
gateway links for high-altitude platforms (HAPs)
in the range 5,850-7,075 MHz (agenda item 1.20).
The issues also include possible changes to the
advance publication, coordination, notification
and recording procedures for satellite networks
(agenda item 7), an issue affecting only the sat-
ellite sector.
The satellite industry’s stance in respect to
these issues varies on a case-by-case basis, though
it has often been described as defensive. “The
satellite industry has been taking a defensive and
offensive position depending on the specific agen-
da item,” says Kalpak Gude, vice president and
deputy general counsel, Intelsat. “With respect to
WRC-12
20 FEBRUARY 2011 V IA SATELL ITE MAGAZINE WWW.SATELL ITETODAY.COM
the convergence between services (agenda item 1.2) and the
identification of spectrum for HAPs gateway links (agenda
item 1.20), the position had to be more defensive.”
For agenda item 1.2, Intelsat’s position is that any change
to the definition of radiocommunication services to take
into account the convergence between satellite services,
i.e., FSS, MSS and BSS, would have potential advantages
but also would be too difficult to implement. “Also, possible
changes in the radiocommunication definitions to accom-
modate the convergence between terrestrial services, i.e.,
fixed service (FS) and mobile service (MS), could have the
negative effect of allowing MS operation in frequencies allo-
cated on a primary basis to FS only,” says Gude. “Therefore,
an NOC (i.e., No Change) is preferable, which can be seen
as defensive.” Similarly, in agenda item 1.20, Intelsat’s posi-
tion is that there is no justification to identify additional
spectrum for HAPs since the spectrum currently identified
for these systems has not been put to use. “In this case too,
NOC is preferable,” he says.
Not all activity on the satellite sector’s part can objectively
be classified as defensive, though, as some of it is proactive
too. For example, the satellite industry is expected to bring
to WRC-12 proposals to include an item in the agenda of
the next WRC to identify new uplink Ku-band frequencies
(approximately between 10 and 15 GHz) in order to elimi-
nate the imbalance between uplink and downlink frequen-
cies in the Americas and in Asia (ITU Regions 2 and 3). In
addition, many would not agree at all with the opinion that
the satellite sector is preparing to be largely on the defen-
sive at WRC 2012.
“With several agenda items asking for more satellite spec-
trum, e.g., BSS, FSS, MSS and Aeronautical Mobile Satellite
(Route) Service [AMS(R)S], the satellite industry is certainly
not on the defensive,” says Astrium’s Jean-Claude Domien,
who is responsible for ITU matters at the European Satel-
lite Operators Association (ESOA). “But since most of the
spectrum is already allocated to other radio services, the
satellite industry has to prove that we are able to co-exist
to get more spectrum allocated to satellite services. This is
certainly a problem since satellite services by nature are
regional and therefore more dependent on spectrum har-
monization.”
ESOA has prepared common positions on the satellite
agenda items for WRC-12, which have been shared with other
operator groups like the Asia-Pacific Satellite Communication
Council (APSCC) and the Satellite Informal Group (SIG).
At a European level, these positions have been used by
each operator to lobby their national regulators, thus result-
ing in a draft European Common Positions reflecting most
of ESOA’s original positions. “This pressure will continue
until February 17, 2012, the date of the end of WRC-12,” says
Domien. “ESOA also invites all its members to take part in
their national preparations to be able to discuss the differ-
ent issues with their authorities to make them aware of the
importance of the satellite issues at the next WRC.”
What Can Be Expected?The question hanging over the satellite industry in relation to
WRC-12, of course, is what outcome can be expected from the
council. The mood among ITU experts seems to be positive
by and large. “It is expected that WRC-12 will take positive
decisions for the satellite industry with regard to spectrum
requirements and regulatory procedures associated with
the FSS, BSS, MSS, RDSS and MetSat,” say Nelson Malaguti
and Philippe Aubineau, Counselors for ITU-R Study Group
4 and Study Group 1, respectively.
Yet, negative outcomes in agenda items 1.2 and 1.20 repre-
sent a potential risk for the satellite industry. Also in agenda
item 1.13 (non-planned BSS band 21.4-22.0 GHz), there are
proposals that deviate from the “first-come-first-served” prin-
ciple. “In a non-planned band, such deviation would repre-
sent a dangerous precedent, especially in view of the risk
of possible future proposals to utilize the same approach in
other non-planned bands,” says Gude.
But there are clear opportunities, too. One such oppor-
tunity is in agenda item 1.3, where the possibility of using
FSS spectrum for unmanned aircraft system control links
would increase efficiencies, as the communication payloads
of unmanned aircraft likely will extensively use FSS frequen-
cies. Use of FSS frequencies for control links raises some
concerns from those believing that these links should be
operated on the AMS(R)S, however, with appropriate redun-
dancy, FSS links can provide the availability values required
by the unmanned aircraft control links.
Another important opportunity for satellites is in agen-
da item 1.25, which offers the possibility of allocating new
spectrum to the MSS sector. “Further, the consideration of
new FSS allocations for Ku-band uplinks will be proposed
as an agenda item to the next WRC and offers an excellent
opportunity for new satellite spectrum,” says Gude.
These views are largely shared within the industry. ESOA
is confident the conference will not implement any form of
a prior planning in the BSS bands and will confirm the exist-
ing interim provisions, including the ‘super-primary’ status
of BSS with regard to terrestrial services.
A similar positive mood informs ESOA’s position on dif-
ferent agenda items. “Following intensive studies done in
the last two years resulting in shortening the list of potential
frequency bands, ESOA is convinced that the bands 15.43-
15.63 GHz (uplink) as well as 5150-5250 MHz, 10.5-10.6 GHz
and 13.25-13.40 GHz (for downlink) provide an excellent
opportunity for the introduction of new MSS allocations,”
says Domien. ESOA also supports the allocation of the band
24.65 – 25.25 GHz for feeder links in Regions 1 and 3.
An All-Satellite BusinessThe satellite industry has been quite active in all ITU and
regional meetings addressing preparations for WRC-12.
WWW.SATELL ITETODAY.COM VIA SATELL ITE MAGAZINE FEBRUARY 2011 21
It fully supported the workshops on the efficient use of
the orbit and spectrum resources promoted by the ITU
Radiocommunication Bureau and held in Wroclaw, Poland
(June 2008), in Geneva (May 2009) and in Singapore (June
2010). In particular, these workshops raised several issues
that will be addressed under agenda item 7 at WRC-12. Among
these topics, the mismatch between satellite networks
recorded in the ITU’s Master International Frequency
Register (MIFR) and satell ites
actually in orbit should be highlighted.
Eliminating these “virtual satellites”
would contribute significantly to the
efficient use of the orbit and spectrum
resources. Several proposals in this
connection will be discussed at WRC-
12. These include the establishment
of a definitive list of networks with
which GSO-GSO coordination has
to be effected, the reduction of the
coordination arc and the elimination of
unnecessary mandatory letters during
the coordination process. In addition,
it would help clarify the status of
frequency assignments provisionally
recorded and prevent their suppression
without due process.
“But above all, it would help clarify
the definition of ‘bringing into use’ and
potentially modify the due diligence
requirements aiming at more transpar-
ency and possible elimination, or at
least reduction, of so-called ‘virtual
satellites’,” says Gude.
2012 around the CornerThe preparation for WRC-12 continues,
as ITU BR has been organizing a series
of meetings on the issue. The second
such meeting took place in November.
“Based on the presentation of the draft
Conference Preparatory Meeting
(CPM) report and on information
regarding the bureau and regional
preparations for WRC-12, this meeting
provided participants the opportunity
to exchange views and have a better
understanding of the preliminary
draft common proposals and positions of the concerned
entities,” says Henry. ITU-R Working Parties are finalizing the
technical information included in ITU-R recommendations
and reports as appropriate. The second session of the 2011
CPM (CPM11-2) will take place from Feb. 14-25 to finalize
the CPM Report to WRC-12.
What will remain to be done then, is to tackle these issues
at WRC-12.
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22 February 2011 V ia Satell ite magazine WWW.Satell itetODay.COm
As a regional operator working in both Europe and Latin America, Hispasat Chairwoman Petra Mateos-Aparicio provides a textbook example on how a smaller satellite operator can expand its reach and build a business.
Hispasat will once again see growth in both revenues and profits for fiscal year 2010, continuing a trend of strong increases in all key financial metrics
over the past several years. In 2009, the operator saw profits increase by 50 percent compared to 2008, and the regional player’s profits doubled between 2007 and 2009.
Hispasat’s growth has been based, in part, on making great strides in Latin America, securing good transponder fill rates for both its Amazonas-1 and Amazonas-2 satellites. The operator signed contracts for capacity in Latin America with companies
such as Spain-based Telefonica, which provides services in Spain and Latin America, and Brazil’s Petrobras. The majority of the capacity on the Amazonas-2 satellite, placed in orbit in October 2009, already has been sold, giving Hispasat an even stronger position in markets such as the United States and Mexico. At the end of 2009, more than 30 percent of Hispasat’s overall revenues were derived from the Americas.
The company ended the year with the launch of its Hispasat 1E satellite, the second of five spacecraft that form the basis of Hispasat’s latest growth plan
Hispasat also was selected in 2010 by NASA to participate in the hurricane research mission, Genesis and Rapid Intensi-fication Processes, intended to better understand how tropical storms form and then develop into hurricanes.
Due to Mateos’s astute leadership, Hispasat’s growth curve shows no signs of slowing, and with strong positions in both Latin America and Europe, it is an operator on the rise.
Petra Mateos-Aparicio, Chairwoman, Hispasat
While not considered a banner year for the satellite communications sector, 2010 was not as down as some might have forecasted.
Many executives navigated their companies successfully through a tough economic environment, and the following five nominees stood out.
fidence in the vehicle and put the company a step closer to
providing cargo services to the International Space Station
under the multibillion-dollar Commercial Orbital Trans-
portation Services (COTS) contract.
In December, SpaceX became the first commercial
operation in history to re-enter a spacecraft from Earth
orbit, lofting its Dragon spacecraft into orbit atop a Fal-
con 9 rocket and then returning the vehicle and landing
it less than a mile from the center of the targeted land-
ing zone in the Pacific Ocean, bringing national atten-
tion to the future of the U.S. space program that could
rely more heavily on commercially provided services.
Previously, recovering a spacecraft that had re-entered
from low-Earth orbit had been performed by only the
United States, Russia, China, Japan, India and the Euro-
pean Space Agency.
The highlight of SpaceX’s commercial launch wins in
2010 was a $492 million contract with Iridium to place part
of satellite operator’s Iridium Next constellation in orbit
via multiple Falcon 9 missions scheduled to take place
between 2015 and 2017. SpaceX also added commercial
contracts to perform missions for Israel’s Space Commu-
nication Ltd., Space Systems/Loral and Taiwan’s National
Space Organization.
SpaceX also raised $50 million in additional funding
from investors and, in September, unveiled a commercial
agreement with Astrium to provide dedicated launch ser-
vices to the European institutional small satellite market
using the Falcon 1 rocket.
WWW.SATELL ITETODAY.COM VIA SATELL ITE MAGAZINE FEBRUARY 2011 25
Thales Alenia Space
posted a strong
2010 under CEO
Reynald Seznec,
winning 12 satellite
manufacturing
contracts along
with adding to its
capabilities via
acquisitions.
Thales reported 1.13 billion euros
($1.46 billion) in orders in 2010, a
39 percent increase over the same
period in 2009. Thales captured four
commercial geostationary commu-
nications spacecraft orders — W6A
and W3D from Eutelsat, Apstar 7B
for APT Satellite Holding and Arsat
2 for Argentina’s Arsat. The four
contracts trailed only Boeing and
Space Systems/Loral, which cap-
tured five contracts apiece. Thal-
es also captured contracts for the
Jason-3, Athena-Fidus, Meteosat
Third Generation (with partner OHB
Technology) and Sicral 2 contracts
from various government entities as
well as awards to develop payloads
for the U.S. Navy’s Geosat Follow-
On 2 satellite and for three RSCC
communications satellites.
Where Thales has taken a com-
manding lead on its competitors is
in the low-Earth orbit sector. Dur-
ing 2010, the company completed
and delivered the first six of the 48
Globalstar second-generation sat-
ellites it is manufacturing and also
finalized its $2.2 billion contract
with Iridium to design and build 81
Iridium Next spacecraft.
Thales received a Galileo System
Support contract from the European
Commission, one of six contracts
for the Galileo system. Under the
agreement, Thales Alenia Space
Italia will perform overall system
design, system security design, sys-
tem integration, verification and in-
orbit validation for Europe’s satellite
navigation system.
Thales also boosted its capabilities
via acquisitions, including the purchase
of SESO, a precision-optics manufac-
turer, that augmented Thales’ ability to
produce satellite optical sensors.
Through the first three quarters of
2010, Thales recorded revenue of 3.72
billion euros ($4.79 billion), a 7 per-
cent increase from the same period
in 2009.
Reynald Seznec, CEO, Thales Alenia Space
7671 North San Fernando RoadBurbank, CA 91505 USA
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30 FEBRUARY 2011 V IA SATELL ITE MAGAZINE WWW.SATELL ITETODAY.COM
BROADCASTERS CORNER
Executive Q&A
Bruce Churchill, CEO, DirecTV Latin AmericaDirecTV Latin America has become a
pay-TV giant in the region with more than
8.2 million subscribers. The operator
now is embarking on a new strategy
targeting emerging middle classes in the
region. CEO Bruce Churchill discusses
the 2010 performance, the next phase
of growth and why Colombia could be
an exciting market for pay-TV.
VIA SATELLITE: How have you built your subscriber base?
CHURCHILL: We have three platforms, one we call Pan-
Americana, which is Spanish-speaking South America. We
pretty much operate throughout the Spanish-speaking part
of Latin America, except for Bolivia. The big territories are
Venezuela, Argentina and Colombia. That is a wholly owned
subsidiary of DirecTV. There, we have 3.2 million subscrib-
ers. In Brazil, we own 74 percent of the operating company,
and there, we have 2.3 million subscribers. In Mexico, where
we are the minority shareholder, we have a percent share,
we have 2.8 million subscribers.
VIA SATELLITE: How has the economy affected operations?
CHURCHILL: The Latin American economies, with the pos-
sible exception of Mexico, are not so really tied to the United
States but are more tied to countries in the emerging world,
specifically China. So even though there was worldwide
concern at the end of 2008 in Latin America, Latin America
bounced back much more quickly. The reality is they were
not as affected. Those economies do not have huge consumer
credit issues. You didn’t have a credit bubble or anything like
that. The fundamentals, in fact, were always quite strong.
In hindsight, there really wasn’t even a reason for a stall-
ing in Latin America, but I think it was more psychologi-
cal than real. Even 2009 was pretty strong for us. 2010 was
particularly strong for us, and that could be explained due
to the World Cup. As you know, in Latin America, there are
three main sports, football, football and football. The World
Cup generated a lot of excitement, encouraged people to
buy TVs for the first time or upgrade their televisions to
HD. That created a lot of excitement. We rode the wave of
that excitement.
VIA SATELLITE: How important are the addition of HD channels
in your business plan?
CHURCHILL: I don’t necessarily think we will see a huge
ramp-up in the number of HD channels we offer customers.
In Brazil, for example, we offer 35 HD channels in our top
package. If you look at our competition, they may have 23
HD channels. This is a cable operator, so we are the clear
leader in Brazil offering HD services. In Mexico, we have 25
HD channels, which is ahead of the cable competition. Pan-
Americana varies country by country, but we have roughly
around 15 HD channels and we are on a par with everyone
else. There is still a lot of growth there to be had, but there
is still huge potential for HD growth.
VIA SATELLITE: Are local broadcasters producing HD?
CHURCHILL: The initial HD product came from interna-
tional broadcasters, as they were already producing HD for
other markets, so there has been more international than
local content available. Local broadcasters have really only
been gearing up to get into HD. When that happens, you will
see us reach 50 channels, but, at the moment, there are still
several countries in Latin America that have still not defined
what their HD or broadcast standard is going to be, so that
is going to limit FTA HD broadcasts.
VIA SATELLITE: Are you still accepting new SD channels?
CHURCHILL: We still have a very broad and robust SD chan-
nel offering. Most new channels that still come in the market
today are still SD.
VIA SATELLITE: What are your demands for satellite capacity?
CHURCHILL: I think we are fine in the near term. We have
actually launched several new satellites. We had a new satel-
lite for our Brazil business. It came online around two years
ago. It had initial capacity built into it. As regard to Mexico,
we launched a new satellite in January [2010], so we have
doubled the capacity for Mexico. For our Pan-Americana
platform, we have quite a bit of capacity, but we have got
more capacity out of that by investing in more significant
compression technologies. We have added capacity that way,
so in the near term, we don’t see the need for additional
WWW.SATELL ITETODAY.COM VIA SATELL ITE MAGAZINE FEBRUARY 2011 31
capacity in Brazil and the Pan-Americana platform for at
least another three years.
VIA SATELLITE: Is it too early to be thinking about 3-D TV?
CHURCHILL: It is not even on the horizon. It is still all about
HD. We have around 2.3 million subscribers in Brazil, but only
350,000 have HD. In Brazil, our HD product only comes with
PVR. It gives you a sense of where we are with the things. That
is only around 15 percent of that market. We have a million
subscribers that have advanced products in Pan-Americana,
but a third of those are SD DVRs. It is still very early days in
HD. Some countries have not even defined the HD standard
yet, so it is hard to even imagine 3-D.
VIA SATELLITE: What will be your major launches in 2011?
CHURCHILL: The real action in our markets in 2011 will
be at the other end as we move down the pyramid and the
demographics and move more into the middle classes. Histori-
cally, pay-TV has been more for the A and B classes in Latin
America. We have made a concerted effort, along with our
competitors, to move into the C and D classes. As an example,
if you take a country like Brazil, pay-TV penetration is still
only at around 16 percent. The reason for that is that it has
been a product for the upper and upper-middle class.
This year, we have done some repackaging and have intro-
duced a couple of new products at lower price points to
address the fast growing middle class in Brazil. If you were to
look at the size of the middle class in Brazil, and the growth
there, there have been 30 million people added to the middle
class in the last five to six years. The favorable economic story
that is going on in Latin America, coupled with the favorable
demographic profile is good for us. Typically, these countries
have young populations, so around 70 percent of the people
are under the age of 40. These countries are moving into a
place in their history where large numbers of people are
moving into their high-earning years. There is tremendous
economic growth, and this is creating a burgeoning middle
class and that is where the action is going to be. I think a lot
of our growth will be in the middle class.
VIA SATELLITE: Does this take a different sales approach?
CHURCHILL: You have to price things differently. It is not a
case of lowering prices, because we don’t want to cannibalize
our existing subscriber base. We have been working with pro-
grammers to put together lower-end packages with few pay
channels but still to try and make it sufficiently compelling
for people. In Brazil, we have created completely different
communications strategies. The kind of advertising we have
run is very different. Even organization-wise, we have created
different sales structures, separate advertising teams, etc.
Probably, where we have taken the biggest leap in terms of
a change in method of operations when targeting the middle
classes, is that we offer a prepaid product. We have done this
in our Pan-Americana part of our operations. You can buy a
kit off the shelf, install it, gain a month’s programming and
you can top up the way you would with a cell phone. With a
lot of people that is an attractive option.
VIA SATELLITE: How many prepaid customers do you have?
CHURCHILL: It depends on how you count it. When we do
our financial reporting, we only count those subscribers who
are on at that moment in time. The last time we reported,
there were 500,000 prepaid subscribers at that time. What
is interesting to us about the prepaid model is if you look
at all the prepaid kits we have sold since we launched this
three years ago, we have sold around 1 million kits. At Sept.
30, only around 55 percent were actually active. Those were
the ones that were on and subscribing to DirecTV, but if you
look back from that moment in time and look and go back
30 days and ask what percentage of people had been on for
some period of time, that number jumps to 65 percent. If
you go back 180 days, it jumps to 80-plus percent. What that
means is that the million kits we have sold over the last three
to four years, sometime in the last 180 days, some 800,000
of them have used the service.
VIA SATELLITE: What country outside of Brazil and Mexico has
the strongest potential growth for pay-TV?
CHURCHILL: We have around 400,000 subscribers in Colom-
bia. It has been an industry that we have described euphemis-
tically as informal, which is another word for piracy. There are
analog cable operators who do not have conditional access
who are distributing to many more subscribers than they
are admitting to. They are paying programmers for fewer
subscribers than they are distributing to. They don’t pay the
government taxes on the full number of subscribers they
are distributing to. That creates competitive problems for
people like us, but what has happened in Colombia is there
has been more emphasis on law and order. The industry is
becoming much more formal and structured. Telmex has
come in and bought a lot of cable systems. The market has
become much more formal, and Telmex will come in and
start to run it like a proper business. They will start paying
programmers and the government taxes. Therefore, it charges
more to customers, so we become much more competitive.
We saw this happen in Argentina, and now I expect to see
the same thing happen in Colombia. That market today has a
little more than 3 million pay-TV households. There are some
people that estimate that there are as many as another 3 mil-
lion more unreported households in Colombia.
INDUSTRY AT LARGE
32 FEBRUARY 2011 V IA SATELL ITE MAGAZINE WWW.SATELL ITETODAY.COM
Technology xx
Services xx
Contracts xx
Executive Moves xx
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TECHNOLOGY
Technology 32
Services 32
Contracts 32
Executive Moves 34
Education 34
SERVICES
Sevis Systems
UNVEILS GSM BANDWIDTH OPTIMIZATION PLATFORM
Sevis Systems unveiled its third-generation GSM bandwidth
optimization platform, a backhaul solution designed to opti-
mize GSM traffic.
The Sevis 6104 is designed to work on 4 E1/T1 links over a
variety of WAN infrastructures such as Internet Protocol, digital
leased E1/T1 lines, Ethernet and satellite. It is designed for rural
areas in the developing world. The solution employs field GSM
A.bis optimization algorithms that reduce backhaul bandwidth.
In particular, it decreases satellite bandwidth consumption and
the operating costs of microwave and leased line networks.
Tripura
ROLLS OUT GEOSPATIAL SATELLITE TRACKING SYSTEM
Indian developer Tripura launched the Geo-Spatial 3D satel-
lite-based imagery system to track terrorists and curb crime
in the northeastern state.
Tripura is the second state in India to introduce the system,
which was developed by the Mission for Geo-Spatial Applica-
tions (MGSA) under Indian Government’s Department of Sci-
ence and Technology.
Iridium
UPGRADES DIRECT INTERNET SOFTWARE PACKAGE
Iridium Communications introduced an updated version of its
Direct Internet software package to connect to the Internet
using the Iridium 9555 and Iridium 9505A satellite phones
as well as the Iridium 9522B L-band Transceiver.
The Direct Internet 3 package aims to enhance Internet
connectivity by using new data compression, caching and
network optimization techniques powered by SlipStream
SP6.0 with Now Imaging compression technology. The update
is part of Iridium’s effort to enhance its offerings in prepara-
tion for Iridium Next, the company’s next-generation satellite
constellation expected to begin launching in 2015.
Italian Space Agency
COMMENCES SERVICE ON COSMO-SKYMED
Italy’s Cosmo-SkyMed constellation is complete and fully
operational after the system’s fourth satellite began sending
images to ground stations.
Thales Alenia Space developed the civil and military Cos-
mo-SkyMed program for the Italian Space Agency and the
Italian Ministry of Defense. The system will take images of the
Earth using an X-band synthetic aperture radar instrument
capable of operating in all visibility conditions.
Intelsat
TAPS SATLINK FOR VIRTUAL NETWORK SERVICES
Intelsat awarded a contract to SatLink Communications to
provide virtual network operator (VNO) end-to-end turnkey
services based on the iDirect Evolution hub. The long-term
agreement enables Intelsat to provide uplink and IP services
to clients in the Middle East from the Intelsat 15 satellite at
85.2 degrees East.
SatLink’s teleport services and strategic location will help Intel-
sat expand its geographic reach on multiple satellites and gain
independent regional control over remote management markets.
Telenor
LEASES THOR 3 BROADBAND CAPACITY TO VICUS LUXLINK
Teleport services provider Vicus Luxlink leased six transponders
of Thor 3 inclined-satellite capacity from Telenor Satellite Broad-
casting (TSB) with the option of an additional two transponders.
Vicus Luxlink will use the capacity to provide Internet con-
nectivity in the Middle East region from the 4 degrees West
orbital location at speeds of more than 600 Mbps. Vicus Lux-
link will support the service from its teleport facility in Ger-
many and also install and manage its own platform at Cyta’s
Makarios Teleport in Cyprus.
Thales Alenia Space
TO BUILD MULTIBEAM RADAR FOR CFOSAT
Thales Alenia Space signed a contract with French space
agency CNES to produce the Surface Waves Investigation
and Monitoring (SWIM) instrument as part of a joint French-
Chinese program to develop an Earth observation satellite.
The SWIM multibeam Ku-band radar will be integrated with
the China France Oceanography Satellite (CFOSat), built by
CNES and the China National Space Administration (CNSA).
Thales Alenia Space has built similar spectrometers for other
civil spacecraft, such as the Siral instrument on the Cryosat
satellite, AltiKa on Saral and Poseidon on the Jason satellite.
CFOSat’s mission is to detect and characterize surface
winds and ocean wave spectrum properties. The SWIM
instrument will be paired with a SCAT instrument made by
CONTRACTS
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Contact Wright’s Media to discuss how we can customize these materials toenhance your current marketing campaign.
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REPRINTSEPRINTSPLAQUESPOSTERS
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Industry At Large
34 FEBRUARY 2011 V IA SATELL ITE MAGAZINE WWW.SATELL ITETODAY.COM
China to form the payload for the CFOSat satellite.
EMS Technologies
NAMES MACKAY TO BOARDEMS Technologies appointed President and CEO Neil Mack-
ay to its board and said Mackay’s involvement in overseeing
the company’s strategy development, risk management and
corporate governance will expand.
Prior to becoming CEO, Mackay served as EMS’ COO and
executive vice president of strategy. Prior to joining EMS,
Mackay served as CEO for Innotech Aviation.
NASA
APPOINTS ASSOCIATE DEPUTY ADMINISTRATOR NASA named Richard Keegan associate deputy administra-
tor, replacing Charles Scales, who is retiring after serving in
the position since April 2007 .
Keegan will assist and support in day-to-day agency oper-
ations, institutional and workforce issues, and with contin-
gency and continuity of operations planning. He previously
served as director of NASA’s Office of Program and Institu-
tional Integration.
NASA
SEEKS SPACE TECHNOLOGY NASA is accepting applications from U.S. graduate students
for the agency’s Space Technology Research Fellowships to
perform space technology research beginning in the fall.
The fellowships, sponsored by NASA’s Office of the Chief
Technologist, are intended to provide the nation with a pipe-
line of highly skilled engineers and technologists to improve
America’s technological competitiveness.
The deadline for submitting fellowship proposals is Feb. 23.
EXECUTIVE MOVESEDUCATION
For more industry news, sign up for SatelliteTODAY’s
Daily News Feed e-mail at
www.satelliteTODAY.com/mailinglist/
MORENEWS?
WWW.SATELL ITETODAY.COM VIA SATELL ITE MAGAZINE FEBRUARY 2011 35
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Arianespace 9
AvL Technologies 23
BroadcastAsia 2011 34
C-Com Satellite
Systems27
Comtech EF Data 29
CPI Satcom C4
EchoStar Satellite
Services11
Hughes 2
Advertiser Page
ManSat, LLC 15
MITEQ 3
Mobile Deployable
Communications37
MSUA-8 39
NAB Show 13
SATELLITE 2011 5
Universal Switching 25
Wavestream 7
Wright’s Media 33
Xicom Technology 21
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WEB DIRECTORY
As a result of the overwhelming popularity
of Via Satellite’s Web Directory, our current
advertisers appear in this space. A full version of
satellite companies can be found on our Web site
at www.viasatellite.com.
36 FEBRUARY 2011 V IA SATELL ITE MAGAZINE WWW.SATELL ITETODAY.COM
Corporativo Dotcomexico S.A. de C.V. dotcommexico.com
CPI Canada Inc. cpii.com/cmp
CPI Satcom Division cpii.com/satcom
CPI MPP cpii.com/mpp
Crawford Communications crawford.com
Cross Technologies Inc. crosstechnologies.com
Crown Media Inernational crownmedia.net
dBm dbmcorp.com
Desert Sky Digital Satellite Inc. sattruck.com
DEV Systemtechnik GmbH & Co.KG dev-systemtechnik.de
DH Satellite dhsatellite.com
Digicast Networks Inc. digicastnet.com
Digital Voice Systems Inc. dvsinc.com
Disitron Industries Inc. disitron.com
Diversified Communications Inc. dciteleport.com
Company WebsiteDucommun ductech.come2v e2v.comEADS Space space.eads.netEASi (Efficient Antenna Systems Inc.) easisat.comEasy Trading Communications Inc. etcny.netEchostar echostarfixedsatellite.comEfficient Channel Coding eccincorp.comEmbedded Consultants LLC embeddedconsult.comEmerging Markets Communications emc-corp.netEmcore Corp. emcore.comEutelsat eutelsat.comEvertz Microsystems Ltd. evertz.comFlextronics Software Systems flextronicssoftware.com
Force Inc. forceinc.com
Foxcom Inc. foxcom.com
General Dynamics C4 Systems gdc4s.com/space
Geosync Microwave geosyncmicrowave.com
Gilat gilat.com
GL Communications Inc. gl.com
Global Communications Solutions Inc. globalcoms.com
Global Digital Media Xchange Inc. gdmxchange.com
Globecomm Systems globecommsystems.com
Glowlink glowlink.com
Gulf Communications International gcigulf.com
HDTV Uplink hdtvuplink.com
Helius Inc. helius.com
Hispasat hispasat.com
Honeywell ERI honeywell.com/satcomprotection
Hughes hughes.com
IDB Systems idbsystems.com
iDirect Technologies idirect.net
ILC ilc.com
Integral Systems Inc.integ.com
integ-europe.com
Intellian intelliantech.com
Intelsat General intelsatgeneral.comInternational Launch Services ilslaunch.comIntorel intorel.comIrdeto Access irdetoaccess.comITS Electronics, Inc. itselectronics.comITT Industries ittsystems.comIronlink Communications ironlinkus.comJ A Taylor & Associates broadcastassociates.comJersey Microwave jerseymicrowave.comJSAT International Inc. jsati.comJuch-Tech Inc. juch-tech.comKayou Communications kayoucommunications.comKencast Inc. kencast.comL-3 Satellite Networks l-3com.comLinearizer Technology lintech.comLinksat, Inc. linksat.comLocus Microwave locusmicrowave.comLogus Microwave logusmicrowave.comLongbottom Communications LLC longbottomcommunications.comLoral Space & Communications loral.comM2 Global Inc. m2global.comM&C Systems Inc. mcsys.comManSat spaceisle.comMCL Inc. mcl.comMicroSpace Communications Corp. microspace.comMicrowave Radio Communications mrcbroadcast.comMitec Telecom mitectelecom.comMITEQ miteq.comNabtesco Motion Control Inc nabtescomotioncontrol.comNarda Satellite Networks lnr.comND Satcom ndsatcom.comNew and Used Inc. newandusedinc.com
WWW.SATELL ITETODAY.COM VIA SATELL ITE MAGAZINE FEBRUARY 2011 37
Company WebsiteNew Era Systems newerasystems.netNewSat/Multiemedia newsat.com.auNewpoint Technologies Inc. newpointtech.comNewtec newtec.beNJRC (New Japan Radio Corp.) njr.co.jp/index_e.htmNorthrop Grumman northropgrumman.comNorthStar Studios northstarstudios.tvNPR Satellite Services nprss.orgNTT Electronics nel-world.comOn Call Communications occsat.comOptimal Satcom optimalsatcom.comOrbit orbit-techgroup.comOrtel ortel.comPALS Electronic Co. Ltd. pals.com.trParadise Datacom paradisedata.comPatriot Antenna Systems sepatriot.comPetrocom petrocom.comPolarSat polarsat.comPSSI-USA pssi-usa.comPulse Power & Measurement Ltd. (PPM) vialite.netQuintech quintechelectronics.comRadyne radn.comRainbow Network Communications rncnetwork.comResearch Concepts Inc. researchconcepts.comRockwell Collins rockwellcollins.comRussian Satellite Communications Co. (RSCC) rscc.ruSAT Corp. sat.comSATELLITE 2010 SATELLITE2010.comSatellite Today satellitetoday.comSatellite Engineering Group sateng.comSatellite Systems Corp. satsyscorp.comSat-Lite Technologies sat-litetech.comSatmex satmex.comSatService GmbH satservicegmbh.deSea-Cell Inc. seacellsatellite.com Sea Launch sea-launch.comSeatel seatel.comSector Microwave sectormicrowave.comSivers Lab AB siverslab.seSES Americom ses-americom.comSES Global ses.comShiron Satellite Communications shiron.comSingTel Optus Pty Ltd optus.com.au/satellite
Company WebsiteSKY Perfect JSAT Corp. sptvjsat.com/enSkyWeb Inc. skydigital.comSojitz Corporation of America myvsat.comSophia Wireless Inc. sophiawireless.com Spacecom amos-spacecom.comSpacenet spacenet.comSpace Star Technology (Group) Corp. space-star.comSpace Systems/Loral ssloral.comSPC Electronics America Inc. spcamerica.comST Electronics Pte Ltd. stee.stengg.com/satcomsStarling Advanced Communications starling-com.comSTM Group stmi.comSuperior Satellite Engineers superiorsatelliteusa.comSWE-DISH Satellite Systems swe-dish.comSystems Technology stainc.comTampa Microwave Lab Inc. tmli.comTeleCommunication Systems telecomsys.comTeleSpectra telespectra.comTelinc Corp. telinc.comTerrasat Communications Inc. terrasatinc.comThales thales-bm.comThrane & Thrane us.thrane.comThe SpaceConnection thespaceconnection.com
Ultra Electronics-DNE Technologies ultra-dne.comUniversal Switching Corp., Inc. uswi.com
Unlimi-Tech Software Inc. utechsoft.comUplit exceedthefeed.comVerso Technologies verso.comViasat viasat.comVia Satellite magazine viasatellite.comVislink Group vislink.co.ukVizada vizada.comWarner Bros. Entertainment Inc. warnerbros.comWavestream wavestream.comW.B. Walton Enterprises Inc. de-ice.comW.C. & A.N. Miller wcanmiller.comWegener wegener.comWork GmbH Satcom work-gmbh.deWorldsat International Inc. worldsat.comXicom Technology xicomtech.comXipLink xiplink .com
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38 FEBRUARY 2011 V IA SATELL ITE MAGAZINE WWW.SATELL ITETODAY.COM
DOLLARS AND SENSE
Owen D. Kurtin is a
founder and princi-
pal of private invest-
ment firm The Vin-
land Group LLC and
a practising attorney
in New York City. He
may be reached by
e-mail at okurtin@
vinlandgroup.com.
• Not Just Passengers: New Opportunities for In-Flight Voice and Data
• Moving Onto Each Others’ Turf: MSS And FSS Operators Compete To Serve The
• The Changing World of MSS Distribution: Views from the Front Lines• Competing For Customers: The MSS CEOs Speak Out• A New Generation of MSS Terminals: What’s Next for MSS Equipment
Providers?• How Can Commercial Satellite Providers Best Meet Government
Requirements for COTM?• Public Safety and Homeland Security Applications• Developing the Next Generation of Satellite Tracking Solutions
On Dec. 1 Julius Genachowski, chairman of the U.S.
Federal Communications Commission, announced that
the FCC would pursue enactment of rules to ensure “Net
Neutrality — unblocked, non-discriminatory access to the
Internet. The rules, released Dec. 23, will be reviewed in
March — and debated for a long time.
Whether law or regulation should guarantee Net Neutral-
ity is critical for the development of satellite broadband ser-
vice. Net Neutrality opponents, the owners of the Internet
backbone — the fiber optic and coaxial cables, routers and
switches over which Internet traffic travels, such as Verizon,
AT&T and the major cable operators — argue that they should
be free to charge differential rates for high bandwidth users of
their networks and, in some cases, block some users in favor
of others who pay to be hosted. Net Neutrality proponents,
the high traffic, content and application providers, such as
Google/YouTube, Amazon, Ebay, and Facebook, which do not
pay the backbone owners to host their traffic, argue that the
Internet must remain an open network that guarantees non-
discriminatory access to all users. The Obama administration
and the FCC officially are pro-Net Neutrality.
In the Dec. 1 announcement, Genachowski stated that the
FCC would proceed without attempting to reclassify broad-
band from its existing classification as Communications Act
of 1934 Title I Information Service to Title II Telecommu-
nications Service. The FCC, in making its announcement,
tacitly abandoned the “third-way” approach it proposed in
May, which attempted to reverse its own winning position
before the U.S. Supreme Court in the 2005 Brand X decision,
in which the FCC successfully argued that broadband service
was Information Service and not subject to telephone-like
common carrier regulation set out in Title II. At the time, the
FCC saw the substantially unregulated Information Service
classification as the best way to pre-
serve the Internet’s open-access, low-
entry barrier structure.
Subsequent events convinced the
FCC that it had made a mistake. In
April, the Comcast v. FCC decision by
the D.C. Circuit U.S. Court of Appeals
threw out the FCC’s claim of “ancillary
authority” under Title I to impose
common carrier-like regulation on
broadband service providers, in a case in which the FCC
had taken action against cable operator Comcast for blocking
the use by subscribers on its cable modem lines of certain
peer-to-peer networking software.
The FCC a month later announced the third-way plan, by
which the data transport part of broadband service would
be reclassified as Telecommunications Service but with the
FCC exercising its authority to forebear from all but the most
basic access-assuring regulation. The data processing aspect
of broadband service would be unbundled from the data trans-
port part and would continue to be treated as Information Ser-
vice. The plan was based on the dissenting opinion in Brand X,
which contemplated that kind of unbundling.
During the following comment period, this column argued
that the FCC’s effort was doomed to fail, but not before
subjecting Net Neutrality proponents, opponents and con-
sumers to years of litigation, much like that which followed
the FCC’s ill-fated 1996 Local Competition Order, another
attempt at unbundling packaged services which ultimately
failed to achieve a competitive local telecommunications
market (see “Broadband Pendulum Swings: FCC Hoist with
its own Petard,” Via Satellite, June 2010).
In particular, we argued that the FCC, having pushed
successfully for a broadband Information Service classi-
fication only five years ago, and having, at the time, refut-
ed opponents’ attempts to impose a Telecommunications
Service classification, taken together with the 40-year his-
tory of the Computer Inquiries FCC regulatory proceed-
ings, which led to the Brand X decision, would doom the
third-way reclassification attempt. The new opponents
would put before the court the FCC’s own arguments and
record of five years ago. We argued that the FCC instead
should follow the majority decision in Brand X, that the
FCC’s classification of broadband as Information Service
was reasonable and that it should be accorded deference
in asserting its statutory ancillary authority. The Brand X
majority recognized not only ancillary authority as a legiti-
mate way to regulate broadband service but the right of
an administrative agency to change its position on regula-
tory paradigms based on changing conditions and still be
afforded judicial deference.
It is this position that the FCC has now adopted as the
way to proceed in its Net Neutrality rulemaking.
Net Neutrality Update
By Owen D. Kur t in
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