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Intelsat Fears Satellite Consortium Could Erode

September 19, 1986

NEW YORK (AP) _ Competition from independent satellite launchers threatens the health of Intelsat, the satellite organization that handles two-thirds of all international telephone traffic, Intelsat’s top lawyer said Friday.

Private launchers of satellites, politically supported by the U.S. government, threaten to skim off some of the most profitable transmissions, David Leive, chief counsel for Intelsat, told members of the International Bar Association meeting in New York.

Intelsat could be forced to raise rates if it loses prime customers, a step that would be especially hard on developing nations in Asia, Africa and Latin America, Leive said.

Nations such as Algeria often find it cheaper to bounce a phone call off a satellite hovering 22,600 miles above Earth and down to another village 300 miles away than to lay a cable between the villages, he said.

Intelsat is a non-profit organization of 112 nations, including the United States, created in 1964 to share the costs and risks of providing international satellite communications.

The 16 satellites owned by Intelsat handle virtually all international television transmissions as well as two-thirds of the phone calls, Leive said. But the organization is coming under pressure from many sides.

In addition to independent satellite operators, Intelsat faces competition from fiber-optic cables, such as the one being laid beneath the Atlantic Ocean to handle traffic between the United States and Europe, Leive told the international lawyers.

″The organization is faced with a whole series of different pressures and challenges,″ Leive said.

The United States was once the biggest backer of a unified global satellite system. But the Reagan administration, citing what it calls the benefits of free enterprise, favors creation of international satellite systems separate from the Intelsat consortium.

The Reagan administration has approved the application of Pan American Satellite Corp. to provide satellite service between the United States and Peru. PanAmSat’s satellite would also have six transponders that could handle high-speed data transmissions between the United States and Europe, a prime market now covered almost solely by Intelsat.

Intelsat is expected to rule on PanAmSat’s application by early next year. Raul Rodriguez, a Washington lawyer who formerly represented PanAmSat, charged that Intelsat’s leaders have decided to oppose the application.

Rodriguez described the conflict between Intelsat and separate satellite systems as the ″Cold War revisited″ and said the United States should consider withdrawing from the consortium or trying to limit Intelsat’s authority.

″The (U.S.) government should begin to consider whether it is in its best interests to maintain its support of Intelsat,″ Rodriguez said.

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