OpEd: The Use and Misuse of Intersystem Coordination for Competitive Advantage

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  Space News Business

OpEd: The Use and Misuse of Intersystem Coordination for Competitive Advantage

By MAURY J. MECHANICK

posted: 17 July 2008
12:30 pm ET





Once upon a time in the satellite industry, battles were fought not only in the commercial marketplace, but they often spilled over into the regulatory environment as well. Indeed, one of the most effective competitive techniques was the use – or some might say the misuse – of the frequency coordination process or intersystem coordination. In the hands of a skilled practitioner, this process could be exploited minimally to delay and hopefully ultimately impede the emergence of a putative competitor’s service offerings. As such, the supposed protective shield that the intersystem coordination process was intended to afford incumbent operators had become a fairly potent sword as well.

For various laudable reasons the industry has moved away from resorting to such tactics over the past few years, reflecting a positive affirmation of the ongoing maturation of the industry and its major players. Unfortunately, in light of some recent developments, particularly in the Asia Pacific Region and particularly directed at ProtoStar, which was launched successfully July 7, it appears as though this maturation process�� now may be in partial retreat. A quick look back should help remind us of why a return to the “good old days” would in fact be anything but.

The intersystem coordination game, as previously played, was grounded in the basic laws of physics as applied to satellite technology – specifically that the transmission or reception of radio signals by satellites in close proximity to one another in geosynchronous orbit could result in harmful interference that would disrupt the telecommunications services being provided by both.

The closer two satellites were located to one another, the greater likelihood that harmful interference would occur. Similarly, as the distance between two satellites increased, this likelihood diminished. As the geosynchronous orbital arc became more congested, this problem would become most acute, forcing satellites into reduced spatial separation from one another.

Relative priority among competing satellite operators was governed by a set of ground rules developed and administered by the International Telecommunication Union (ITU), generally rewarding the operator that had first submitted advanced publication information regarding its proposed satellite network. It was largely up to those operators with later submission dates to accept the burden of avoiding interference through various means, including possible repositioning of the satellite; re-pointing of certain beams; restrictions on certain types of transmissions with particular characteristics; or reductions in the power levels of certain transmissions. This process unfolded largely on the honor system, as the ITU lacked any meaningful enforcement power, although individual administrations were certainly free to impose more specific obligations on those satellite operators which they had licensed.

As a matter of principle, there is absolutely nothing wrong with this paradigm and, indeed, in its absence, chaos most likely would abound. However, while the process in theory is based on supposed objective criteria, the truth of the matter is that the process�� largely rests on a number of subjective assessments and determinations.

Indeed, the actual intersystem coordination process largely is carried out as an entirely theoretical undertaking – dealing with assumed values and acceptable margins, calculated interference probabilities and the like, which may or may not bear any actual resemblance to reality in terms of the actual interference environment. As such, the potential for abuse was considerable; moreover, given this potential, the proper conduct of the process required a reasonable degree of restraint and indeed stewardship on the part of the incumbents. This would ensure that their demands for protection were rationally based and related to actual interference concerns, rather than merely theory.

The intersystem coordination process also was dependent on good-faith acceptance of the concept of burden sharing, which stood for the principle that the total weight of compliance should not fall entirely on the shoulders of the latecomer but that some responsibility for accommodation needed to be borne by each of the participants in the process.

The poster child for the way that intersystem coordinations used to be conducted was undoubtedly Intelsat, which during its incarnation as an international organization was exceptionally adept at exploiting this process, particularly given its treaty-based status.

Intelsat in fact had two weapons in its arsenal: a treaty- based requirement that its potential competitors had to demonstrate that their system’s operation would not result in significant technical harm to the Intelsat system as well as a requirement that the execution of the competitor’s business plan would not result in significant economic harm occurring to Intelsat either.

While this gave Intelsat a significant leg up on all other operators, in fairness, Intelsat was not the only player adept at this game, as other operators certainly attempted to emulate Intelsat in their creative ability to exploit this for commercial gain as well.

Fortunately, one of the true success stories of the 1990s concerns the efforts undertaken during this time period to substantially overhaul and reform Intelsat’s approach to intersystem coordination, which ultimately also paved the way for that organization’s eventual privatization in 2001. As someone with first-hand experience in that transformation, it is my considered judgment that this effort, as much as anything else, set the stage for the overall maturation of the satellite industry that occurred over roughly the same time period.

The benefits of such a transformation on the industry as a whole were manifested in a variety of ways. First, by largely eschewing regulatory methods to gain competitive advantage, the industry signaled its seriousness in seeking to conduct itself in a more mature, competitive manner and show that it was no longer dependent on regulatory gimmicks for its commercial success. Given the fact that this was an industry in which the cost of constructing and launching a satellite already represented a fairly major barrier to entry, there was no legitimate rationale to justify harsher tactics intended to blunt competition.

Moreover, it served as a clear signal to the rest of the telecommunications industry that the satellite-services component of that industry had a legitimacy and status that warranted the full respect accorded to other industry segments. This was particularly important given that, as spectrum resources became more scarce, this proper positioning of the satellite industry in the broader telecommunications marketplace strengthened the industry’s credibility in fending off competing demands for the spectrum that it had been allocated.

Indeed, although perhaps not visible on the surface, the industry’s success in banding together to fight off efforts to reallocate C-band spectrum for other purposes that surfaced at the last World Radio Conference in 2007 was to a large extent predicated on the greater stability and maturity that the industry had been able to accomplish.

As such, it is rather disheartening to witness the recent re- emergence of such tactics, particularly in the Asia Pacific region. In making this point, it is not my intent to diminish or undermine the importance of avoiding actual technical interference in an era of an increasingly congested geosynchronous orbit. That, however, in no way justifies the rhetoric that has recently surfaced, particularly when directed not merely to avoidance of actual interference problems, but with the implications that satellite launches or their entry into operational service should be delayed because of the pendency of allegedly unresolved intersystem coordination concerns.

While the laws of physics may be immutable, the conduct of the intersystem coordination process remains as much an art as a scientific exercise, and can often require considerable time and effort to reach a proper conclusion. In light of this, expecting the industry to conduct itself with some semblance of civility does not seem to be too much to ask in this day and age.

Maury J. Mechanick is an attorney with White & Case LLP. His firm has not represented ProtoStar in the past, although they have represented a major investor in ProtoStar.