FCC Policy Hostile to Satellite Communications

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The U.S. Congress created the Federal Communications Commission (FCC) in 1934 in order to moderate the concentrated political power of the media and to avoid interference between wireless services. Since then its charter has been expanded to include raising government revenue by auctioning spectrum. Most recently it has taken a more activist role by promoting universal access to broadband.

In 2010 the FCC released “Connecting America: The National Broadband Plan,” a comprehensive report that discusses policies to enhance broadband infrastructure in the United States. This 376-page document deals with the policies that are needed to support development of broadband services. It argues that broadband is the great infrastructure challenge today. High-speed Internet access is the foundation for economic growth, job creation, global competitiveness and a better way of life.

Unfortunately, this noble cause has led to U.S. government policies that encourage and subsidize terrestrial infrastructure where it is neither cost effective nor in the public interest. Furthermore, it has led the FCC to reassign satellite spectrum for terrestrial use in a manner that appears to create interference with GPS transmissions.

For almost 60 years, satellites have been providing communications to areas that cannot be served economically by terrestrial means. That situation has not changed with the development of fiber optics or broadband wireless communications. Satellites can provide almost any form of communications to wide areas without installation of superfluous transmission lines that bypass users who do not want or need the service. Furthermore, the service can be installed quickly without the need for infrastructure expansion.

For decades the International Telecommunication Union and the U.S. government have recognized the benefits of satellite communications. Unfortunately, recent policies of the FCC have been hostile to satellite communications. According to the FCC broadband plan, satellites are not cost effective in most locations. The following is from footnote 10 on page 62:

“Satellite-based broadband providers, because of limited satellite capacity, have Fair Access Policies (often termed usage caps) for their customers: the Hughes current limit is as low as 200 [megabytes] per day, while WildBlue’s cap is as low as 7,500 [megabytes] per month. Next-generation satellites will have much higher capacities, in excess of 100 [gigabits per second] each, with download speeds per user of up to 25 [million bits per second, or Mbps]. Larger capacities could allow for usage patterns that more-closely mirror terrestrial usage. However, the high fixed costs of designing, building and launching a satellite mean that satellite-based broadband is likely to be cheaper than terrestrial service only for the most expensive-to-serve areas” (emphasis added).

Perhaps the FCC has not taken into consideration the potential cost reductions that can be achieved with the next-satellite generation. The U.S. government clearly considers satellite service to be the last choice for broadband service.

The latest generation of broadband satellites can provide competitive broadband Internet access to millions of Americans “beyond the edge” where terrestrial communications are prohibitively expensive. Wireless terrestrial solutions, like satellite communications, also require higher-cost facilities with fixed throughput. An objective analysis of currently available services shows that terrestrial wireless is more expensive than wired or fibered installations in urban areas. These terrestrial services also have imposed Fair Access Policies to distribute communications on an equitable basis.

Fixed broadband wireless services are best suited to higher frequencies that can provide higher throughput with directional antennas. Mobile communications can best be provided at lower frequencies. The FCC should be addressing the needs of truly disadvantaged fixed users in remote areas or regions of widely disbursed populations rather than the urban elite who are using hand-held terminals.

In its zeal to expand broadband access, the FCC has reassigned spectrum reserved for mobile satellite communications to terrestrial-only broadband service. In so doing, it has created a potential interference issue with GPS of staggering proportions.

The highest purpose of the broadband policy should be to encourage universal fixed broadband service. Most of the effort should go into policies that support the most cost-effective solutions in disadvantaged areas. Over the past few years a tiny amount of government support has been given to satellite solutions that are the most cost effective in these regions. The vast amount of funding has been poured into terrestrial facilities that barely move the edge into unserved areas.

The U.S. government has allocated $7.2 billion to fund the expansion of broadband services. The Rural Utilities Service has earmarked only a relatively small amount, $100 million (1.4 percent), for satellite broadband. In early July 2010, $5 million was awarded for an Alaska town with only 60 people. Broadband satellite service is treated as an alternative to be replaced, not the selected solution. This is an unfortunate U.S. government attitude that rejects the solution that is certainly the most cost-effective in many situations.

The Australian government is prudently contemplating extensive use of satellites for broadband service. Its broadband program is budgeted for $38.4 billion and would provide fiber optic links at 100 Mbps to 90 percent of Australian homes. The remainder would be covered by wireless terrestrial or satellite links from two Ka-band satellites. The wireless solutions would provide 12 Mbps downlink and 1 to 2 Mbps uplink. This plan suggests that Australia will eventually have a significant share of users accessing the Internet though satellite facilities.

To date, broadband satellite service has not achieved the penetration that was hoped for 15 years ago. When satellite systems were first being examined in the late 1990s, many market forecasts assumed that anywhere from 6 percent to 25 percent of the broadband subscribers would use satellite service. There were more than 400 million fixed broadband subscribers worldwide in 2008. Somewhat over 1 million received broadband satellite service.

There were 79 million fixed broadband subscribers in the United States in 2008. In spite of the FCC reservations, there were about 820,000 (1 percent) satellite service subscriptions. The U.S. broadband service providers have by far the largest satellite broadband service customer base in the world today. Many of these customers are located in suburban areas adjacent to larger cities, but they are more widely disbursed and therefore costly to serve. The FCC has focused on the disadvantaged users. Typically, these users can be served most economically by broadband satellite service.

No doubt the satellite industry needs to provide greater clarity to the government, but we are not a huge industry. The FCC and federal policymakers should encourage balanced participation by the satellite operators as well as the wealthy terrestrial operators that have the vast share of the broadband market.

 

Roger J. Rusch is president of TelAstra Inc.