Efficient use of orbit/spectrum by
satellite systems the impact of fees
BR Workshop on the efficient use of the
spectrum/orbit resource
Gerry Oberst
6 May 2009
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The impact of fees
Critical inputs and considerations for satellite
networks
•
Spectrum
•
Orbital slots
•
Construction contracts
•
Launch contracts
•
Consistent regulatory structures
Including fees limited to administrative cost recovery
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The impact of fees
Efficient use of orbit / spectrum requires consistent
and reasonable regulatory structures
•
Satellite investments are long term
•
Satellite networks are the ultimate definition of
“fixed assets”, whether FSS, MSS, BSS or other…
•
Satellite coverage patterns normally are uniquely
international
•
All of which adds up to a heightened need for
business certainty and attention to the business
plan for satellite assets
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The impact of fees
National rules typically limit fees to cost recovery
EU standards generally for fees:
•
Administrative charges can cover only … administrative costs (Auth.
Dir. Art. 12)
•
Fees for use of radio frequencies can reflect the need to ensure optimal
use (Auth. Dir. Art. 13)
•
The number of fees has decreased as the number of required licenses
has also decreased, by the move towards general authorizations
U.S. regulatory fees
•
The FCC shall assess and collect fees to recover costs of regulatory
activities (47 U.S.C. 159)
•
Application fees set legislatively (47 U.S.C. 158)
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The impact of fees
Countries do not always get the message
European experiences
•
Inconsistent charges for VSAT – somewhat cured by
legislative moves towards license exemption
•
Early experience with DTH terminals – European
Commission had to take court action to thwart excessive
and discriminatory fees
•
Upfront administrative fees – what might be reasonable
administrative fees become difficult if charged all in one
upfront payment
•
Zigzagging fees – case study of precipitous fee
adjustments causing a 900% increase in one year, falling
back to 300%
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The impact of fees
The international nature of satellite service
multiplies potential problems
•
Due to satellite footprints, often business plans must be
based on regulatory structure and fees crossing many
national boundaries
•
Implications of planning a new service can be daunting with
multiple inconsistent fee structures – affects new entrants in
particular
•
If the economic feasibility of a project depends on service
revenues in multiple countries, then operators must defer
market entry until all (or most) relevant countries have
completed their licensing + regulatory processing
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The impact of fees
Auctions are also problematic
•
“Auctions are anathema to satellite operators and are likely to
have damaging results on the ability of satellite operators to
serve the … market, especially for international systems” (SIA
comments to the Australian Communications Authority, May 2003)
•
“The FCC “shall not have the authority to assign by
competitive bidding orbital locations or spectrum used for the
provision of international or global satellite communications
services. The President shall oppose in the [ITU] and in other
… fora any assignment by competitive bidding of orbital
locations or spectrum used for the provision of such services.”
(Communications Act Sec. 648, 47 U.S.C. 765g)
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The impact of fees
Satellite service remains international even with an
integrated ground component
•
ATC / CGC approaches add terrestrial component to satellite
network – increasing efficiency and offering new service
concepts, based on aggregated demand across the entire
footprint
•
The integrated approach adds substantial cost elements,
which can be hugely magnified by separate national
determinations of fee structures
•
One administration in Europe has publicly explored CGC fees
by comparison to domestic terrestrial systems – if the same
approach were applied across Europe, an operator would
have to pay between $261M and $320M
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The impact of fees
Economic options – fees for spectrum use or MIFR
“Financial due diligence” – not a new concept
•
Historically the ITU has examined this option in depth
•
Res. 18 (Kyoto, 1994) gave rise to substantial discussion →
e.g., SCRPM Report SC-4, November 1996
•
Res. 85 (Minneapolis, 1998) evaluated early results of the
due diligence concept
•
WRC-1997 adopted administrative due diligence and cost
recovery → (Res. 49)
•
WRC-2000 declined to adopt financial due diligence →
(Res. 81)
•
WRC-2007 revised Res. 49 on administrative due diligence,
no sign of financial due diligence
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The impact of fees
Economic options – advantages and disadvantages
•
Could limit coordination filings to serious efforts
•
Filing deposit could better balance early filing with later
start
•
Increase resources to BR
•
Administrations would more carefully tailor filing to
national needs
•
Possibility of forfeiture would require degree of certainty
of actual system
•
Straight filing fee is simple to administer
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The impact of fees
Economic options – advantages and disadvantages
•
Impracticality of agreeing to fee levels
•
Disadvantage to entities in developing countries
•
Possible need for extension of ITU regulatory
competence and consequential reduction in national
sovereignty
•
Dilution of responsibilities of administrations
•
Complexities for extending to all other filings and ITU
activities (fairness / nondiscrimination)
•
Consideration of failure to coordinate despite genuine
intentions
•
Fees may not be a deterrent to major players and could
decrease competition
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