OECD Report Says Government Slow To Open Satellite Markets

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Many governments are not living up to their World Trade Organization (WTO) commitments when it comes to deregulating their satellite communications industries and granting equal access to their markets by foreign companies, according to a new report by the 30-nation Organization for Economic Cooperation and Development (OECD).

Dragging their feet on market access, these governments are a major hurdle to the global spread of space-based telecommunications, according to the report.

“We need to emphasize the key role of public authorities” in maximizing the economic benefits of space technology, said Michael Oborne, director of the OECD’s International Futures Program. “Framework conditions — whether they are institutional, legal or regulatory — are less than ideal.”

The 238-page report, “Space 2030: Tackling Society’s Challenges,” is the result of a two-year OECD project assessing the economic impact of space technologies and how to increase it. It was released July 6 during a briefing at the Luxembourg headquarters of SES Global, the world’s largest commercial satellite-fleet operator.

The choice of Luxembourg was partly due to SES’s participation in the OECD study, and partly due to the fact that the Luxembourg government has just completed its six-month European Union presidency.

Luxembourg also became, in June, the 17th full member of the European Space Agency and expects to participate more fully in the agency’s Earth observation, navigation and telecommunications programs, Luxembourg Research Minister Francois Biltgen said in introducing the OECD report.

SES Chairman Romain Bausch, without mentioning any individual governments, said regulations on market access for satellite communications services and related ground hardware “have to become more business-friendly. Many regulatory hurdles continue to exist in different fields.”

Bausch also said the U.S. ITAR, or International Traffic in Arms Regulations, regime is inhibiting global trade in satellites and satellite components.

The OECD report expressed similar sentiments, saying ITAR is having the effect of forcing governments outside the United States to develop domestically the technologies they once purchased from U.S. companies.

Aside from ITAR, which is a U.S.-specific phenomenon, the OECD does not identify individual governments that continue to place roadblocks in front of international trade in space-based hardware and services. It says only that “WTO discipline is limited in most space products and services markets.”

The limitations include discriminatory licensing policies, restrictive operating conditions, unequal tax and fiscal obligations and local-presence requirements.

Most of the large satellite-fleet operators, who have operations in many nations, have complained about these practices at one time or another. But none has seen fit to ask its home government to take a complaint to WTO.

“This is problematic,” Oborne said. “There is a lack of clear space law and licensing regimes in a number of space-faring countries. It leads to uncertainty for the private sector.”

The OECD report says that while the global space sector in many regions is going through a difficult period, the long-term prospects are good as new ways of linking space-based telecommunications, navigation and Earth-observation products emerge.

Bausch, whose company is forecasting 10 percent sales growth this year and again in 2006, shared the generally optimistic outlook . He said SES Global plans “to take advantage of existing satellite capacity to test unserved markets quickly,” a veiled reference to the company’s plans to use old satellites operated by EchoStar of the United States to test new businesses in North and South America.

Bausch also said SES Global, whose core business is offering television programming via satellite, intends to make a play in the mobile communications sector, which is considered by some U.S. investors as the next big commercial-space growth area.

“Mobile services will be one of the main demand drivers in the future for satellite services,” Bausch said. “Satellites have a role in three areas — offering interconnections and feeder links to headends for terrestrial networks that provide the last mile, mobile broadcasting and broadband to vehicles including airplanes and ships, and delivering services to hand-held devices with hybrid satellite/terrestrial systems for commercial and government users.”