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U.S. Satellite Aimed At International Telecommunications Market

June 20, 1988

WASHINGTON (AP) _ A U.S. company that lofted a satellite into space last week on the Ariane rocket is promising superior prices and services in its attempt to unlock the 25-year international satellite telecommunications monopoly held by the global consortium Intelsat.

Pan American Satellite, based in Greenwich, Conn., is aiming its services at businesses, government agencies and TV broadcasters in the United States, Canada, the Caribbean, Latin America and Europe now dominated by Intelsat.

Pan American believes it not only can lure customers from Intelsat, but also can expand the telecommunications market and bring in new customers by driving prices lower industrywide.

″Intelsat has already responded. Prices (for international services) have come down, not only on big routes but also on services into developing countries,″ said Doug Goldschmidt, director of data services for Pan American Satellite.

″You’re also going to start seeing prices (for telecommunications services) come down within these countries because the national telephone companies are going to be under pressure to bring prices down, and a lot of new (data) services are going to be brought in a lot faster,″ he said in a recent interview.

The effects will be greater in Latin America than anywhere else, Goldschmidt said, because the area now has few data services and little competition for domestic telecommunications. But the company also is actively pursuing the high-density traffic in the North Atlantic, Intelsat’s biggest market.

Since the International Telecommunications Satellite Organization was founded in 1963, it has been the only satellite system carrying international telephone and video traffic, and the only network providing domestic communications in some countries. It now has 115 member countries.

A 1984 determination by the Reagan administration extended its marketplace philosophy to international communications and paved the way for limited competition for Intelsat from private international satellite systems.

Some Intelsat member countries resisted the move to a competitive system, fearful it would weaken Intelsat irreparably. Unlike Intelsat, which serves all countries regardless of how poor, new private systems would be able to enter only the most profitable markets. This could hurt Intelsat financially and jeopardize its services to developing countries, many of which depend on the consortium for domestic communications, some feared.

But the view of the U.S. government, Intelsat’s largest member, prevailed and the consortium agreed to allow privately-owned satellite systems to compete on a limited basis. Such systems are not allowed to connect to public telephone networks, interfere with Intelsat’s transmissions or hurt the consortium financially.

Pan American Satellite is the first to emerge to take on the global Intelsat monopoly on these terms, but the company says the consortium is trying to block its efforts to compete.

″We see the markets opening up slowly, but they have made life harder for us than was necessary,″ Goldschmidt said.

He said Intelsat recently cut some prices drastically in an apparent effort to undercut services Pan American Satellite was marketing in Latin America. And he said the consortium vigorously is lobbying foreign governments not to deal with the company.

″They are using business practices that under most conventional terms are unethical,″ he said.

Intelsat denies it is trying to block Pan American Satellite and says its price decreases are not extraordinary.

″Our prices have continued to go down and that’s unrelated to Pan American Satellite. That has been part of a continuous trend for regular rate decreases,″ said Walda Roseman, senior adviser for strategic planning at Intelsat.

She said the consortium had lowered its per-circuit rates 14 times in its quarter-century history. Rates are now 1 percent of t they were when the consortium began operating, she said.

″That has resulted through a deliberate effort to take full advantage of global economies and technological advances, and both of those (factors) were involved in the last rate decrease,″ she said.

Goldschmidt said Pan American Satellite has been received well by the private sector and by government agencies, but not by telephone companies that are owned by most governments that are Intelsat members.

Despite U.S. government pressure on foreign governments to allow Pan American Satellite to provide service, many countries are resisting.

Pan American Satellite has signed agreements for television services in Argentina and Chile, and data services with the Scandinavian countries, Chile, Ecuador and Venezuela. In Western Europe, only Great Britain and West Germany have agreed to let the company set up communications links for customers there.

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