Phil Spector has spent much of a long and distinguished career as a Washington-based telecom lawyer doing battle with the company that now employs him.

Spector cut his teeth in the early 1980s representing PanAmSat Corp. and its maverick founder, the late Rene Anselmo, in their landmark and ultimately successful fight to break Intelsat‘s treaty-based lock on the international satellite telecommunications market.

And as recently as August 2004, Spector argued that Intelsat’s pending acquisition by private-equity investors did not fulfill its obligations under the 1999 Open Market Reorganization for the Betterment of International Telecommunications (ORBIT) Act, the U.S. law governing the privatization of Intelsat and Inmarsat. At the time, he was representing Intelsat rival SES Americom, which maintained that the ORBIT Act required Intelsat to conduct an initial public offering (IPO) of stock.

But Spector points out that he also has represented Intelsat, which is based in Bermuda and Washington, on ORBIT Act questions. He further notes that the law, as amended in 2004, no longer requires Intelsat to conduct an IPO.

Spector joined his sometime adversary after nearly 25 years at the Washington law firm of Paul, Weiss, Rifkind, Wharton & Garrison LLP, where he rose to the position of managing partner and chairman of the Communications & Technology Group. He spoke with Space News staff writer Jason Bates just before beginning the new job.

How do you suppose Rene Anselmo might react to your joining Intelsat?

Rene Anselmo was the foremost proponent of competition in the marketplace and having Intelsat act like a normal, private company. Today, Intelsat is a normal, private company competing in the marketplace with no special advantages of any kind from the government. In that kind of environment, I think Rene Anselmo would be very pleased to know I was at Intelsat.

Did the ORBIT Act have its intended effect on the satellite telecommunications industry?

The ORBIT Act was viewed as somehow forcing privatization that was well under way anyway. The most significant impact of the ORBIT Act was in terms of trying to force IPOs on the former intergovernmental organizations like Intelsat and Inmarsat. That very much failed. The ORBIT Act in the end did not create the conditions for IPOs, because the market wasn’t there. The market was there for a move to private equity, and that’s where the buyouts did occur.

How soon, if ever, do you see the privately held satellite operators conducting stock offerings?

When the market forces are right for IPOs, they will happen; but they will happen because they are desired through the market, not because a government fiat imposes it.

What is attracting
private equity firms to this

The private equity investors look carefully at the value of assets. What they have seen in the satellite industry are some valuable assets, and in particular ones that throw off a lot of cash flow, which can be used to either support new initiatives or lower debt on the companies. We’ve been privileged in this industry lately to have the fundamental strength of the industry validated by these very savvy financial players coming into the industry.

Are satellite operators owned
by private equity firms more or less likely to invest in
their business than a publicly
held company?

I think it is unfair to think of the private equity companies as just short-term players. I think these are private equity firms that will be in it for the intermediate and in some cases the long haul. They are certainly focused on the financial metrics, and that’s how it should be. These are businesses that are intended to make profits for their shareholders, but at the same time they will look at all of the ways you can make profits, and one of them is by investing in the industry. So I think you’ll see plenty of investment over time.

Can a privatized Intelsat become the No. 1
revenue producer in the satellite industry?

I don’t think the focus is on being No. 1 . I think the focus will be on growing the company through a sharp focus on new sources of revenue, and at the same time looking at strategic opportunities to grow. If through those methods Intelsat becomes No. 1 , that’s fine. But if through those methods it remains a profitable No. 2 , that’s probably even better.

are the growth areas?

We are looking at the Americas as an area of growth. The areas that certainly come to mind for future possible growth include government services, additional video services and areas where geographically Intelsat may not be as strong today as it would like to be.

Will the U.S. government have to revise its processes for acquiring commercial satellite services in order for Intelsat to take full advantage of that market?

I think we can grow within that system if the Department of Defense and other elements of the U.S. government are willing to buy additional services. Clearly, the taxpayers are paying more than they might have to if the dealings were directly between Intelsat and other operators and the government. Looking at the relationship between those middlemen and what value the y add certainly ought to be a priority for the satellite industry.

What are the top regulatory issues for the industry today?

There are changes to the ORBIT Act that are still necessary. There are parts of the ORBIT Act that continue to treat Intelsat as if it were an intergovernmental organization when it is 100-percent owned by private interests.

There are certainly areas within the FCC (Federal Communications Commission), such as spectrum issues, that could be viewed as dividing the satellite industry from the wireless industry, and we’ll be watching those very carefully to make sure satellite interests are protected.

There are a host of issues related to government services beyond how middlemen are used in the provision of those services. There are issues such as procurement of capacity for more than one year at a time. In many other parts of the government they buy for longer periods. It’s always subject to revision if Congress pulls out a budget item, but you don’t build a jet fighter in a year. These are long-term government contract programs, and by the same token there should be long-term government contracting for satellite services.

Has this industry
grown more litigious in recent years

I would say these things go in cycles. In the 1980s when I worked for PanAmSat, it was extremely litigious, and we were fighting so much with Intelsat that the then-director general of Intelsat, Dean Birch, said in a speech to a group of FCC bar association lawyers, “Why is Phil Spector saying all these mean things about me?”

Then we went through a period of relative quiet where we did not have those kinds of battles between the companies. Then we had the ORBIT Act battle, but today I think that has cycled back and I do not expect for the next few years that these companies will be doing battle with each other. They have plenty to do doing battle together against some of the impositions the government might impose in the regulatory arena.