Intelsat: Complaints of Anti-competitive Practices Irrelevant to ORBIT Act Review

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PARIS — Satellite fleet operator Intelsat on April 21 responded to allegations of anti-competitive practices leveled by four of its customers, saying the protesting companies are in effect asking the U.S. Federal Communications Commission (FCC) to re-regulate Intelsat, which was privatized in 2001.


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In an April 21 submission to the FCC, Intelsat does not address the detailed charges by CapRock Communications of Fairfax, Va., and Artel Inc. of Reston, Va., relating to Intelsat’s conduct during a recent competition for a U.S. Navy contract to provide satellite capacity and related services.

Instead, Intelsat’s main argument is that almost none of the issues raised by CapRock, Artel and the two other companies that filed complaints about Intelsat to the FCC — Globecomm Systems of Hauppauge, N.Y., and Spacenet Inc. of McLean, Va., — has any place in the FCC’s annual review of Intelsat’s post-privatization status.

The four companies filed their complaints April 7 as part of the FCC’s annual review of the Open-Market Reorganization for the Betterment of International Telecommunications (ORBIT) Act, which sets goals for the privatization of Intelsat and mobile satellite services provider Inmarsat of London. Intelsat and Inmarsat formerly were intergovernmental organizations.

Artel, CapRock and Globecomm were among the competitors for the Navy contract, called the Commercial Broadband Satellite Program, potentially worth more than $500 million. Intelsat’s government-focused subsidiary, Intelsat General, won the contract, but the award has been stalled as three companies — including Artel and CapRock — protest to the U.S. Government Accountability Office.

Intelsat, in its FCC filing, says Artel, CapRock and Globecomm — “disappointed competitors [seeking] to pursue lost procurement bids” — are trying to drag the FCC into the Navy contract dispute. Spacenet, which was not a bidder on the Navy contract, is appealing to the FCC in hopes that a more closely regulated Intelsat would offer Spacenet better satellite-bandwidth prices, according to Intelsat.

“Even apart from the absence of merit in their positions, the commenters’ views are clearly extraneous” to the FCC’s ORBIT Act review, which includes a report to the U.S. Congress “to confirm that Intelsat now operates in the satellite marketplace as a fully privatized company,” Intelsat says.

Artel, CapRock and Globecomm say in their FCC submissions that Intelsat denied them access to Intelsat satellite capacity for their bids on the Navy contract unless they agreed to a bundle of Intelsat services that made their bids uncompetitive with the bid assembled by Intelsat General.

Intelsat’s FCC submission dismisses the idea that it is “required to provide satellite capacity at uniform terms and prices. In reality, [the protesters] seek to have Intelsat regulated as a public utility, rather than as an efficient and effective competitor for end users.”

Implicit in the protesting companies’ complaints is that, at least for the Navy contract, they were forced to include Intelsat satellite bandwidth in their bids because only Intelsat has satellites over certain areas the Navy specified in its bid request.

Because Intelsat acquired many of its current orbital slots and frequency rights as an intergovernmental organization, they suggest, it should be obliged to make this capacity available on terms and conditions that do not favor Intelsat’s subsidiary over outside companies.

Intelsat rejects this claim, saying the company is classified by the FCC as a “common carrier” for only a few satellite broadcast positions for which there is no competitive alternative. For these satellites, a similar tariff structure is offered to all customers.

“On all other routes, Intelsat, just like any other satellite services provider, has the option of operating as a common carrier or non-common carrier,” Intelsat says in its FCC filing. “[T]he non-discriminatory access … [demanded by the protesting companies] is not related to Intelsat’s prices, does not apply to commercial customers such as Artel, and provides no basis for additional Commission regulation.”

One of the points raised in the FCC comments sent by the protesting companies is that Intelsat has used its influence to secure an exclusive relationship with Paradigm Secure Communications of Britain, which sells military X-band satellite capacity. Paradigm is the principal X-band provider listed in the Intelsat General bid on the Navy contract.

Paradigm, a unit of Astrium Services, denied that claim, saying it has no exclusive agreement with Intelsat despite a September 2009 agreement in which Intelsat General was announced as a Paradigm “preferred U.S. distributor.”

Jeremy Close, an Astrium Services spokesman, said April 16 that Paradigm has several “preferred distributors” in the United States, including CapRock, which in November 2009 announced a “strategic partner agreement” with Paradigm.

“It is true that until sometime in 2009, we had a very small staff in the United States and we used Intelsat as a contact point for customers,” Close said. “That may have caused some confusion. But then and now we work with many customers and we have no exclusive arrangements with Intelsat or anyone else in the United States.”