COMMISSION OF THE EUROPEAN COMMUNITIES 
C0MC94) 210 final 
Brussels, 10.06.1994 
COMMUNICATION FROM THE COMMISSION TO THE COUNCIL 
ANP THE EUROPEAN PARLIAMENT 
ON SATELLITE COMMUNICATIONS: 
THE PROVISION OF - AND ACCESS TO - SPACE SEGMENT CAPACITY" 
CONTENTS 
SUMMARY. 
BACKGROUND. 
SPACE SEGMENT ISSUES AND PRESSURE FOR CHANGE. 
3.1. Access to space segment capacity. 
3.2. Market pressures on the supply structure. 
3.3. Fragmentation of supply. 
3.4. The International Satellite Organisations. 
3.4.1. Introduction 
3.4.2. National implementation of constituent instruments 
3.4.3. The role of the current Signatories in the International Satellite Organisations. 
3.4.4. Community rules and policies. 
3.4.5. The future of the International Satellite Organisations. 
3.5. Non-discriminatory access to orbit and related frequency resources. 
3.6. Future regulatory coordination in the satellite communications sector. 
3.7. The competitive position of the European satellite communications industry 
3.8. Conclusions. 
POLICY LINES TO BE FOLLOWED 
4.1. Requirement for action. 
4.2. Detailed objectives and lines of action 
4.3. Concluding remarks. 
1. SUMMARY 
Satellite communications have developed rapidly in Europe in recent years. Revenues directly 
derived from the operation of satellite systems in Europe increased from 540 million ECU in 1990 
to 835 million ECU in 1992. More than half of these revenues were generated by the usage of 
satellite capacity for television services. However, the use of satellite capacity for 
telecommunications is equally important, given the potential significance of satellite 
communications to the establishment of a pan-European market. This technology is now 
considered an essential contributor to trans-European services and networks, and their 
enlargement to a continental dimension following the agreement with six EFTA countries on a 
European Economic Area, and the developments in Central and Eastern Europe. 
The implementation of the Satellite Green Paper has commenced but, until now, has mainly 
concerned "ground segment" issues: the liberalisation and harmonisation of satellite earth station 
equipment and satellite services. 
The "space segment" issues (the provision of space segment capacity, access to this capacity, 
and access to orbit and related frequency resources), now require further action in order to make 
the overall policy approach fully efficient, taking into account the broad objectives of the 
Commission in the space sector. 
Increasingly the market itself exercises pressure for change. Both within the Community and 
globally, moves towards easier access to space segment capacity have attracted considerable 
attention, especially in the context of the International Satellite Organisations EUTELSAT, 
INTELSAT and INMARSAT. 
The satellite communications equipment and services industry has clearly underlined the crucial 
importance of further progress on space segment matters, which is regarded as a pivotal issue 
which could determine whether European industry can continue to operate viably and 
autonomously. 
Industry argues that an uncertain or unstable policy in this area would have a negative impact on 
investment and development decisions of both prospective space segment operators and 
satellite service providers, as well as the space industry. 
Furthermore, the Treaty on European Union identifies as a key Community policy the 
establishment of trans-European networks in telecommunications. Satellites are intrinsically well 
suited to assist in the provision of telecommunication services on a pan-European basis, but their 
availability within this context needs to be assured. 
The main requirements for change thus result from the following: 
-» The fragmented nature of the European space segment supply market does not provide the 
European satellite industry with a viable base for world-wide competition, particularly as 
new systems are emerging; nor does it satisfy the requirements for trans-European 
networks. The Treaty on European Union now imposes special obligations on Member 
States to act in common in order to ensure the establishment and development of trans-
European networks. 
-» The constituent instruments of International Satellite Organisations (Conventions and 
Operating Agreements) and/or their interpretation must be adjusted to the overall European 
telecommunications environment and to the schedule leading to full liberalisation of 
services by 1st January 1998. This requires, in particular, an urgent review of the 
interpretation of the constituent instruments of Eutelsat, given the special responsibilities of 
the Member States in this area. 
-» The evolving competitive market structure in the global space segment market is leading to 
a review of the financial and commercial basis of the International Satellite Organisations. 
Member States must develop a common approach in order to ensure the competitiveness 
of European undertakings on the global market. 
As a result, the European Union's satellite sector risks losing the initiative in the world satellite 
communications market, as discussed below in this communication and as indicated most 
spectacularly by recent international developments in the new fields of satellite-based personal 
communications and multi-media services. 
In order to avoid the European Union falling behind in a rapidly developing world satellite 
communications market, measures and action are now required which must go substantially 
further than the limited measures to date. 
On the basis of the analysis set out in this communication, the Commission considers necessary: 
1. Ensuring throughout the European Union direct access to the space segment, including in 
particular space segment provided by the International Satellite Organisations 
To ensure this goal the Commission intends to use fully all means available to remove all 
existing restrictions through the application of the EC Treaty provisions and in particular, 
the Community competition rules. 
5. 
2. Joint action by the Member States in the reform of the International Satellite 
Organisations and in particular of EUTELSA T. 
Immediate advantage must be taken of current discussions in the International Satellite 
Organisations in order to ensure the adjustment of those organisations to the new 
regulatory and market requirements. 
3. Joint management in the future of the space segment as a common resource of the 
Union, in particular concerning future applications to the International 
Telecommunication Union for orbital positions and related coordination procedures and 
availability of radio-frequencies. 
This should involve close cooperation with the European Committee of 
Telecommunications Regulatory Affairs (ECTRA) and the European 
Radiocommunications Committee (ERC) according to the principles and procedures 
currently being established. 
4. The establishment of measures in order to ensure comparable and effective access to 
third countries, in parallel with the Union's market liberalisation. 
Balanced market access arrangements must be sought to guarantee full European 
participation in the global satellite communications market. 
5. Inclusion of satellite-based services in programmes for Trans-European Networks as a 
major priority, in particular, with regard to the emerging technologies. 
In addition to European research and development activities in particular through the 
European Space Agency, and the creation of a liberalised environment, the full 
participation of the European Union's satellite sector in the satellite communications 
markets is vitally dependent on attracting investment and initiatives into the new fields. 
The White Paper on growth, competitiveness and employment identified satellite 
communications projects as potentially making a major contribution to the development 
of Trans-European Networks. 
l;b& further development of - and access to - the space segment constitutes a major factor in 
securing Europe^ potential to participate in the development of the new satellite communications 
technologies, &\<t t© maximise the potential of the sector-for developing.the-European Union's 
communicate^ toftsstructuce as a whole. It is with this objective in mind that the Commission 
intends toj^pw^t policy ifnes set out and that it transmits this Communication to the European 
Pariiarflf^a^Klte the council. 
2. BACKGROUND 
The framework of the Community's satellite communications policy has been established with the 
adoption of the Satellite Green Paper1 and the subsequent generally positive responses from 
regulators, industry and users. The related Council Resolution2 confirmed the broad agreement 
of the Member States to the approach of the policy. 
The Commission has moved ahead firstly in the area of ground segment regulation: the 
liberalisation and harmonisation of satellite earth station equipment and services. In value, the 
market size for satellite services and equipment is at least twice that of satellite systems 
themselves. In December 1992, the Commission adopted a proposal for a Directive3 concerning 
the mutual recognition of satellite earth station equipment type approval procedures on the basis 
of harmonisation. This proposal was adopted by Council4 on 29 October 1993 and will enter into 
force in May 1995. 
Building on the impetus provided by the Telecommunications Review15 the Commission has 
adopted a Draft Directive abolishing exclusive and special rights in the provision of satellite 
communications services and equipment, and has adopted a proposal for .a Directive on a policy 
for the mutual recognition of satellite communications services licences6. 
1 "Towards Europe-wide systems and Services: Green Paper on a Common Approach in lvhe field of Sateliu,? 
Communications in the European Community", COM(90)490 final, 22.11.90 
2 "Council Resolution on the development of the Common Market for satellite communications services and equipment", 
O.J. No C 8 p.1,14.1.92 
^ "Proposal for a Council Directive on the approximation of the laws of the Member States concerning satellite earth station 
equipment, extending the scope of Directive 91/263/EEC", COM(92)451 final, 15.12.92, 
4 "Council Directive 93/97/EEC of 29 October 1993 supplementing Directive 91 /263/EEC in respect of satellite earth station 
equipment", OJ No. L 290 p.1, 24.11.93 
5 "Council Resolution of 22 July 1993 on the review of the situation in the telecommunications sector and the need for 
further development in that market", OJ No. C 213 p.1. 6.8.93. 
° The liberalisation measure ("Draft Commission Directive amending Directives 88/301/EEC and 90/388/EEC with regard to 
satellite communications") amends the two earlier Commission Directives which opened competition in the provision of 
terminal equipment and in the provision of services in the telecommunications sector in general, extending both these 
measures to cover the satellite communications sector. The harmonisation measure concerns a "Proposal for a Directive 
by European Parliament and Council on a policy for the mutual recognition of licences and other national authorisations for 
the provision of satellite network services and/or satellite communications services", (COM(93)652, 04/01/94) for a policy 
on the mutual recognition of licences for the provision of satellite services based on the evolution in the medium term of 
common licensing conditions. 
With the two elements of ground segment regulation (equipment and services) now mainly 
in place, space segment access is now the vital third policy element that requires addressing 
in order to facilitate the further expansion of the Community's satellite communications 
market. 
In the context of the provision of space segment capacity, the freedom to provide services 
(Article 59 of the Treaty) and the right of establishment (Article 52) are specifically 
concerned. 
In addition, as stated in the Commission's Guidelines on the application of the EEC 
competition rules in the telecommunications sector7, the Treaty competition rules fully apply 
to the satellite sector8. These require inter alia a strict separation of regulatory and 
operational functions with regard to space segment provision. 
Compliance with Community law, and in particular with the competition rules, must also be 
ensured with regard to the relevant international conventions (such as the ITU Convention or 
the Conventions establishing International Satellite Organisations). To the extent that these 
agreements were concluded before the entry into force of the Treaty, Article 234 obliges 
Member States to take all appropriate steps to eliminate any incompatibility between such 
agreements and the Treaty9 
A Community policy in the context of the provision of, and access to, space segment must 
therefore be developed within the framework of the Treaty rules, the most important of 
which are mentioned above. 
O.J. N° C 233, 06.09.91, p.2, N° 124 
8 Agreements between telecommunications organisations concerning space segment capacity must be assessed primarily 
on the basis of Article 85. A coordinated or common supply of space segment capacity by independent 
telecommunications organisations may restrict competition between them and with regard to third parties. Additionally, 
agreements on space segment capacity between telecommunications organisations and private satellite operators may be 
in violation of Article 85 where they limit competition in the provision of uplinks, unless such agreements can be exempted 
under Article 85(3) of the treaty. Violations of Article 86 on the basis of abuse of dominant market positions could occur 
e.g. by direct or indirect imposition on customers of any kind of agreement by a TO, the bundling of uplink and space 
segment capacity provision, and TO's direct or indirect participation in several of the private, national and/or international 
satellite systems. No exemption is possible for behaviour which results in abuses of a dominant market position. Where 
behaviour or agreements result from the grant of special or exclusive rights by the Member States to the 
telecommunications organisations concerned, Article 90 still requires their compliance to the Treaty in particular to Articles 
6, and 85 to 94. 
9 Cf. Competition Guidelines n°139 to 144 
3. SPACE SEGMENT ISSUES AND PRESSURE FOR CHANGE. 
3.1. Access to space segment capacity. 
Within the Community, space segment capacity is available from the International Satellite 
Organisations INTELSAT, INMARSAT, and EUTELSAT created under international Treaties, 
national satellite operators, private satellite operators and some other organisations10. 
Table 1 presents an overview of the available capacity which is mostly used in Europe. It shows 
that the International Satellite Organisations are the predominant providers of capacity. 
Table 1 
Main space segment capacity providers in Europe11 
(by type of satellite system) 
International National Private 
65 % 25 % 9 % 
Note: The EUTELSAT market share is 35%, making it the largest player on the European market. 
The Member States of the Community are, practically without exception, all members of the 
International Satellite Organisations, and represent a significant share in the ownership of these 
organisations. Table 3 below gives an overview of these ownership shares in INTELSAT, 
INMARSAT and EUTELSAT. Particularly in the case of EUTELSAT, the Community Member 
States represent an important majority with a total ownership share of around 85%. 
In the Community there is still a wide disparity in access arrangements to the capacity of 
international, national and private systems. As Table 2 demonstrates, the overall situation in 
Europe remains restricted, making it difficult for a commercial satellite service operator to gain 
access to the necessary space segment capacity in a flexible and commercially viable fashion. 
10 International: 
National : 
Private: 
Others: INTELSAT, Inmarsat, EUTELSAT, Intersputnik, Arabsat. 
DFS-Kopernicus, Telecom-I and II, Italsat, Hispasat, TDF, TV-SAT, Tele-X, Thor, 
Turksat(planned). 
Astra, PanAmSat, Orion (planned), Columbia, Sarit (planned). 
ESA - experimental satellites, various Russian satellite systems, etc. 
1 ' Measured in standardised transponder units of Ku-band capacity. In J_ne 1993 the total number of these units in 
operation over Europe was 422. For mobile satellite services, Inmarsat enjo/s in Europe a near monopoly. 
10. 
Table 2 
ACCESS TO SPACE SEGMENT 
Country 
Belgium 
Denmark 
France 
Germany 
Greece 
Ireland 
Italy 
Luxembourg 
Netherlands 
Portugal 
Spain 
United Kingdom International 
Satellite 
Organisations 
access 
only via national 
Signatory 
3 
yes*3 
3 
yes° 
no 
no 
yes ^ 
3 
yes° 
3 yes° 
yes3 
no 
3 yes° 
3 yes° 
no Intemational 
Satellite 
Organisations 
access via 
other Signatories 
no 
no 
yes ' 
yes1 
no 
no 
no 
no 
yes ' 
no 
no 
1 2 yes '• ^ Access via 
independent 
organisation 
no 
no 
no 
no 
no 
no 
no 
no 
no 
no 
no 
4 yes^ Access 
restrictions to 
other systems 5 
yes 
yes 
no 
no 
yes 
yes 
yes 
yes 
no 
yes 
yes 
no National systems 
Signatory 
controlled 
-
-
Telecom-l.ll 
TDF 
Kopernicus, 
TVSAT 
-
-
Italsat 
-
-
-
Hispasat 
-
"Multiple access" arrangement for EUTELSAT space segment (see section 3.4.2.). 
Special arrangement for Mercury can be characterised largely as direct access. 
In addition, the Signatory continues to have the statutory or de facto monopoly in the satellite services sector. 
The arrangement of a Signatories Affairs Office for access to space segment from EUTELSAT (see also section 
3.4.2.) and direct access to INTELS A T. 
In many of the Member States this has not yet been taken into account due the presence of an incumbent monopoly 
provider. 
In eight out of the twelve Member States, access to space segment of the International Satellite 
Organisations remains restricted exclusively via the national Signatory, who is the national 
Telecommunications Operator (TO); only in four countries is access now possible to EUTELSAT 
via the Signatory of those three other countries. Furthermore, on1) in one country have efforts 
11. 
been made to handle access to International Satellite Organisation's space segment via an 
independent office, or even directly. In effect this means that despite of the Satellite Green Paper 
and the Council Resolution of December 1991, in most Member States access to the 
International Satellite Organsation's space segment capacity remains controlled by the national 
Telecommunications Operator, with whom new satellite services providers aim to compete. 
With regard to access to other (non-International Satellite Organisation) systems, there are only 
three Member States in which this is currently not restricted in any way. 
Thus, one major issue with regard to access arrangements concerns the control that the 
Telecommunications Operators continue to exercise over most of the access to space segment 
capacity in Europe, making them a bottleneck through which competing service providers must 
pass. There are, in several important cases12, the main owners of national systems, and they 
also play a key role in controlling the space segment capacity of the International Satellite 
Organisations via their role as Signatories to the international agreements. 
Studies undertaken13 indicate that, even in a Member State which has implemented a liberal 
regulatory regime subsequent to the Satellite Green Paper, the national TO controls access to 70 
to 80 percent of the potentially available space segment capacity of all satellite operators 
combined. 
There is no reason to believe that this situation is different in other Member States; on the 
contrary, in many Member States, the national TO controls all access to available space segment 
capacity14. 
In addition, the national TO's offer satellite services via this space segment. There is an inherent 
conflict of interest between the roles of the national TO as a competitor in the provision of 
services, and as monopoly supplier of space segment capacity as an "essential facility" 
necessary for the provision of satellite services. 
Even in the presence of some form of competition in the provision of space segment capacity, 
the existence of other provisions or regulations distorts the competitive provision of capacity. 
12 DBP-Telekom (TV-SAT, DFS-Kopemicus), France Telecom (Telecom I and II, TDF), Telefonica (Hispasat), Telespazio 
(Italsat). 
13 Studies for the Bundesministerium fOr Post und Telekommunication (BP.'PT) carried out for Germany during 1991-1992. 
14 Notably Belgium, Denmark. Greece, Ireland, Italy, Portugal, Spain. 
12. 
It can be concluded that despite the mandate to the Member States to undertake urgent actions 
as a result of the Satellite Green Paper of 1990 and the related Council Resolution of 1991, 
notably in broadening access to space segment of intergovernmental systems, only limited 
results have been achieved , and these only in some Member States. 
Additionally, the adoption of competition guidelines for the telecommunications sector by the 
Commission, as a clarification of the legal situation in the sector in relation to Treaty obligations, 
and in which the issues of the space segment access are clearly identified and addressed, has 
not yet had sufficient impact to the extent that the guidelines have not been taken into account 
by Member States in this area. 
In order to, among other things, facilitate the procedures for space segment capacity access, the 
Commission recently proposed measures in the Directive by European Parliament and Council 
on a Policy for the Mutual Recognition of Licenses and other National Authorizations for the 
Provision of Satellite Network Services and/or Satellite Communications Services. The 
proposed Directive foresees that national access arrangements are recognised throughout the 
Community. 
One such an arrangement is the multiple access arrangement15 mentioned above whereby a 
service provider operating in one Member State, can use the space segment leased from the 
Signatory of another Member State. The Directive requires a recognition of possible 
arrangements in other Member States for the purposes for licensing satellite service providers. 
With these Directives, a first step is made towards a clear space segment access policy with 
regard to the prime facility required for the provision of satellite services. 
However, there remains a need for further coherent Community action in order to ensure full and 
balanced implementation of further measures concerning access to space segment capacity. 
1^ France, Germany, the UK and the Netherlands have established such a multiple access arrangement in their agreement 
of September 1992. 
13. 
3.2 Market pressures on the supply structure. 
The liberalisation of the Community's ground segment market, as announced in the Satellite 
Green Paper and supported by Council, is now underway with the implementation of the 
various legal measures. The establishment of satellite service providers has started in a 
number of Member States16 and is expected to take off at a rapid pace after the full effect 
of the proposed measures is felt in other countries. Revenues directly derived from the 
operation of satellite systems in Europe increased from 540 million ECU in 1990 to 835 
million ECU in 1992. The adoption and publication of the Commission's Satellite Green 
Paper by itself has thus already triggered significant interest in the use of satellite services. 
The establishment of new satellite earth station network operators and satellite 
communications services providers is resulting in a more complex, but competitive market 
place. However, these providers address market sectors in a very different way and the 
related demand differentiation for space segment capacity results in new pressures on the 
supply sector. 
Satellite Television Broadcasting and Distribution Services. 
Contrary to the original planning of the 1970's, the satellite communications sector in 
Europe has mainly developed on the basis of television broadcasting and distribution. Late 
1992 almost 75% of all available transponders were used for television services17. The 
combined space segment revenues for the provision of television broadcasting and 
distribution services in Europe totalled over 450 million ECU that same year. The use of 
satellite systems for television has been (and is) of enormous significance for the satellite 
communications market: 
* Firstly, it represents the largest market for all European systems in orbit. 
* Secondly, national broadcasting policies may have a direct impact on the development 
of, and on key issues in, the satellite communications market. 
* Thirdly, Community broadcasting policies have a considerable impact on the demand-
side of the broadcasting market and thus, implicitly, on the satellite communications 
market18. 
1° The provision of satellite services by undertakings other than the TO is now allowed in France, Germany, the UK and the 
Netherlands. 
1 ' Measured in standardized transponder units of Ku-band capacity. 
18 The corner-stone of these polices is the "Television without frontiers" Directive (89/552/EEC) which provides the legal 
framework for the cross-frontier movement of television signals. Also important in this context is the Community's digital 
television policy. See footnote 20. 
14. 
* Fourthly, the existing telecommunications - based players, now have to deal with players 
from the broadcasting sector, some of whom address satellite communications on a 
completely different, commercial basis. 
It has also been the area of television where competitive forces in the provision of space 
segment have first made themselves felt. Whilst the space segment used to be almost entirely 
provided by the International Satellite Organizations, the private satellite system ASTRA19 has 
succeeded in acquiring a substantial market share of the television market. The revenues of 
Astra for television services was about 130 million ECU over 1992, roughly the same as 
EUTELSAT derived from television services. 
The television market can be divided in two parts: television distribution to cable head-ends, and 
direct television broadcasting. The improved performance of both ground and space segment in 
this area is currently pushing the distribution and broadcasting market closer together, to a point 
where it is virtually impossible to distinguish between the two. 
At the same time, new digital compression technology is arriving on the market: digital 
compression. The digital compression techniques are not only important in the context of the 
introduction of end-to-end advanced digital services20, but also in the context of existing 
transmissions of PAL/SECAM signals whereby the satellite transmission path between uplink and 
receiver uses digital technologies. 
If introduced on a relatively large scale in a short time frame, digital compression techniques 
may, possibly after an initial increase due to "simulcasting", reduce the demand for transponders 
significantly. Even if the demand for television channels grows, the demand for transponders 
may be compensated, or even decrease, as a result of the introduction of digital compression 
techniques. 
19 The Société Européenne de Satellites (SES) was founded in 1985. It was granted a 22-year license as a satellite 
television and radio broadcaster by the government of Luxembourg. Twenty percent of the company's capital stock is held 
by the Grand Duchy of Luxembourg through two public financial institutions. 
SES launched its first satellite, Astra-1A, purchased from GE Astro Space (now Martin Marietta), in 1988. The Astra-1B 
satellite was purchased from GE Astro Space and launched in 1991. Astra-1 A and Astra-1 B have 16 transponders each. 
Astra-1 C and Astra-1 D have been procured from Hughes, and will have 18 transponders each. Astra-1 C was launched in 
1993, Astra-1 D is plannned to be launched in 1994. A fifth satellite has been orderd from Hughes for launch in 1995. A 
sixth satellite is being considered. All Astra satellites are planned to be co-located at the same orbital spot. 
Thanks to the attractiveness of its offer for space segment, and due to a lack of competitive offering, Astra has been able 
to charge the highest rates for its television transponders. Customers of Astra include the Sky and RTL channels. 
Of) 
^u See: "Council decision of 22 July 1993 on an Action Plan for the introduction of advanced television services in Europe", 
OJ No L 196, 5.8.93, p.48, and "Communication on a framework for a Community policy for digital television", 
COM(93)557, 15.11.93 
15. 
Satellite services for business users. 
As far as other satellite services are concerned, studies recently completed for the Commission 
indicate an expected realised demand for interactive Very Small Aperture Terminal (VSAT) 
services in the EC and EFTA countries of more than 50,000 terminals in the year 2000 against 
only a fraction of this at the moment. The growth of the realised business television demand 
would be equally important rising from 2000 terminals at the moment to 50,000 terminals by the 
year 2000, while the SNG21 market is expected at least to double in size. 
In 1992, satellite business services, including VSATs, SNG, business TV and videoconferencing 
generated more than 300 million ECU of revenues for service providers in Western and Eastern 
Europe. 
The space segment capacity required to satisfy the forecast demand for interactive VSAT, 
business television, and SNG services is expected to be high and it may prove difficult to supply 
sufficient capacity of adequate technical performances. This is independent of the fact that, in 
general terms, surplus capacity is predicted. In particular, the demand for large coverage, pan-
European space segment capacity is expected to be high. Given the projected demand, the 
prices for this capacity will not necessarily come down in the absence of competitive pressures 
leading to cost-orientated tariff structures. 
Other than in the area of television services, space segment for business services is almost 
exclusively provided by the TO's, either via the International Satellite Organisations or via 
national systems. There are signs however that in this area there is increasing interest from 
private suppliers: the US system PanAmSat already provides space segment for this use in 
Europe, whilst the Orion22 system, planned to be launched later this year, intends to offer space 
segment for these purposes. 
In addition, the changing circumstances in Central and Eastern Europe call for the rapid and 
adequate implementation of satellite services. 
With the changes in the former Soviet Union, space segment capacity from Russian space 
systems is also becoming available. This offer extends to capacity of various systems, and is 
also planned for a number of low earth orbiting satellite systems. Joint ventures and cooperation 
2 ' Satellite News Gathering (SNG), the provision of video and/or audio signals of a news event to a studio via satellite. 
22 A US licensed, separate satellite system planned mainly for trans-Atlantic services, with US and European shareholders, 
among which British Aerospace and Matra. 
16. 
agreements with Western industries are aiming at enhancing the product quality of the already 
considerable satellite production capabilities. Increased availability of these systems over the 
next few years will put further competitive pressure on the space segment supply sector. 
Furthermore, Article 129b of the EC Treaty, following.amendment by the Treaty on European, 
Union calls for the establishment of trans-European networks in telecommunications. Satellites 
are by their intrinsic nature well suited for the provision of telecommunication services on a pan-
European basis, but their availability within the context of networks will need to be assured. The 
current progress on the establishment of a framework within which Trans-European Networks can 
develop, offers an opportunity to propose full use of the inherently international characteristics of 
the satellite medium for the development of such TEN'S both as concerns an infrastructure 
provision as well as for services development purposes. In this context also broadcasting, mobile 
and personal communications satellite services are of importance. 
Satellite mobile and personal communications services 
Among the most promising satellite services are mobile and personal communications 
services23. 
In Europe, the international maritime satellite organisation INMARSAT has been the dominant 
supplier of satellite voice and telex services to mobile users for more than ten years. Originally 
INMARSAT was only intended to address the maritime mobile communications market, but in the 
eighties the INMARSAT system came to be used for land-mobile and aeronautical satellite 
communications as well. The INMARSAT system had about 20.000 (INMARSAT A) terminals24 
in use late 1992 , of which about three quarters on vessels, and the remaining quarter on land. 
About 25% of all these terminals are registered in European countries25. In terms of ownership, 
23 see 'Towards the personal communications environment: Green Paper on a Common Approach in the field of Mobile and 
Personal Communications in the European Union", COM(94)145 
24 Inmarsat A terminal is the original terminal used by Inmarsat for its services. In January 1991, the Inmarsat-C terminal 
was added to the range t. This latter category of terminals is used for low data-rate text and data services only. At the end 
of 1992 there were approximately 3.500 Inmarsat-C terminals in use. At the beginning of 1993, the Inmarsat-M (portable 
satellite phone) service was launched. Inmarsat has also offered an aeronautical satellite communications service since 
1990. Inmarsat-B, the digital successor to Inmarsat-A was introduced in late 1993, and future plans include the 
introduction of Inmarsat-P, a projected handheld voice device. 
2^ The largest numbers of registrations were (late 1992) in the UK (867), Norway (674) and Greece (411 ). 
17. 
European TO's represent a significant percentage of total ownership (approximately 40% of the 
total in December 199226). 
Not only in voice, but also in data, and other non-voice applications service providers have 
started to focus their attention on the use of satellite systems for low data-rate mobile services 
via satellite. In Europe EutelTracs (Eutelsat), INMARSAT-C, and the independent Traksat's 
service are examples of these. 
In this changing context, the usage of satellite systems for mobile services may launch yet 
another period of revolutionary changes, brought about by new concepts for personal 
communication services via satellite27. Already in the INMARSAT system, terminal sizes and 
prices are decreasing. The new systems envisaged offer a wide variety of technical solutions in 
terms of systems power, architecture, facilities or use of orbits (Geostationary Orbit (GEO), Low-
Earth Orbit (LEO), Highly Elliptical Orbit (HEO), or others). One thing all these systems have in 
common is their goal to deliver voice and/or non-voice services to customers via mobile, hand­
held terminals. 
The forecasts for these new types of "personal communications via satellite" vary widely, ranging 
from 2 million subscribers world-wide to more than 20 million. No matter what the exact size of 
the market will be, it would seem, that, if and when these new satellite PCS28 systems 
commence service later this decade, they will completely change the scale of the satellite mobile 
market: from tens of thousands of users to millions. 
Already steps are being taken by INMARSAT to respond to these significant market changes, 
and the organisation is now reviewing its status as a governmental organisation with an eye to 
the introduction of private capital. 
The changes in the commercial and technological environment for all satellite applications, and 
the resulting change in the supply structure, call for a review of the principles on which the 
provision of space segment thusfar has been based. 
2° Status for end December 1992. EC countries represent slightly more than 30% in terms of investment shares. The other 
main European investor is Norway with an investment share of slightly more than 10%. 
2' See: "Communication from the Commission and Proposal for a Council Resolution on Satellite Personal 
Communications", COM(93)171, 27.04.93 
23 Personal Communication Services (PCS) 
18. 
3.3 Fragmentation of the supply 
Both from studies conducted in individual Member States introducing liberal satellite service 
licensing regimes, and from studies conducted for the Commission, it appears that the overall 
economic benefits, arising from the introductrorr of--the- Community's liberal satellite 
communications policy, are substantial. These benefits represent new complementary satellite 
services, addressing markets whose demand is not presently satisfied by the national 
Telecommunications Operators. With the exception of satellite PCS, the overlap with non-
satellite services is expected to be small, as such specialised satellite services address specific 
end-user communities, in contrast with the traditional terrestrially based TO services which, in 
general, address undifferentiated demand of the public at large and the wider professional 
community. 
As witnessed in those Member States29 where more liberal regimes have resulted in the creation 
of independent satellite service operators, competitive service provision has brought important 
economic benefit, as well as a proliferation of satellite service offerings. Some of these new 
satellite service operators already have such demand for services that their required space 
segment capacity requirements exceed those of numerous International Satellite Organisations' 
Signatories. 
In order to achieve its full potential, however, the satellite market needs to further develop 
economies of scale, which will reduce end-user prices. A major barrier to this, is the current 
fragmentation of the European satellite market. 
The markets addressed by the different satellite applications are quite diverse. The satellite TV 
market is not uniform but segmented according to linguistic zones, though the use of multi­
channel soundtracks can overcome this problem to some extent30. The VSAT/business services 
market requires a broad coverage but the predicted size of the market, even under the most 
optimistic scenarios, does not require abundant numbers of transponders. The market for 
military and governmental services is largely national, while the market for international trunk 
connections requires specifically tailored space segment. And last, but not least, the mobile 
satellite services market may be on the verge of expanding from a market of several tens of 
thousands of terminals into a mass market of millions. 
29 Germany, France, Netherlands, United Kingdom 
3® Euronews, the European-based news channel, is broadcast in English, French and German with subscribers owning 
stereo TV's being able to select the appropriate sound channel. 
19. 
The use of multi-function space segment (for fixed, broadcasting and/or mobile services from 
one satellite) may seem attractive from the perspective of a single country, especially a smaller 
country, as it would limit the necessary investment. From the perspective of a satellite operator 
however, this leads to considerable inefficiencies in economy due to technical constraints. 
The geography of Europe, contrary to that of the continental U.S., adds a level of complexity for 
satellite operators. The use of shaped beam antennas and related costly hardware has proven 
necessary for many operators in order to prevent overspill into non-addressable markets, and in 
order to avoid frequency interference hazards. The resulting increases in costs for the satellite 
systems are a heavy burden in the face of competition. 
Entry of new satellite systems for the provision of satellite space segment capacity in the 
Community has been largely agreed on an ad-hoc basis todate. The number of satellite operators 
currently numbers 14 with at least another 2 entrants planned31, and amongst these only 4 
satellite operators are not national Telecommunications Operators or consortia involving TO 
participation32. 
The fragmentation of the satellite operations industry has led to high prices while the economic 
sustainability of each individual satellite system is low, especially for the satellite systems which, 
to date, only address a limited national market. 
This proliferation of satellite systems finds its cause in satellite policies pursued primarily with a 
purely national orientation. The absence of a policy at Community level, or at European level for 
that matter, has led to Member States to give priority to policies of national interest. 
31 INTELSAT, EUTELSAT, Inmarsat, France Telecom (Telecom-I and II, and TDF), DBP Telekom (DFS-Kopernicus, 
TVSAT), Telespazio (Italsat), SES (Astra), NOTELSAT(Tele-X), Norwegian Telecom (Thor), Alpha Lyracom 
(PanAmSat), Columbia (TDRSS), Intersputnik, Hispasat and Turksat. Orion and RAI (Sarit) are planned new entrants, 
as well as are various former Sovjet systems. 
32 The European (Luxemburg) system ASTRA, that now holds more than 25 % of the satellite TV market in Europe (1992 
revenues of 130 million ECU out of a total European broadcast market of 451 million ECU). 
The American systems Alpha Lyracom and Columbia. 
The planned system Orion with its shareholders: British Aerospace, Matra, General Dynamics, Nissho Iwai, STET, 
Kingston Communications and Com Dev. 
20. 
As far as national satellite systems are concerned - operated by the TO's under their direct 
control - the provisions concerning "economic harm co-ordination" in the constituent instruments 
of the International Satellite Organisations constitute, in principle, a significant entry barrier33. 
The lack of a clear entry policy at Community level, which encompasses both private and 
national systems in addition to the intergovernmental systems, has led to a proliferation of 
relatively small, mostly national, satellite systems and a resulting lack of economies of scale, 
both in terms of orbital and frequency use, and in terms of industrial development. 
The financial viability of relatively small national systems addressing limited markets is, to a 
large extent, dependent on national government financing and support. The question arises 
whether this continued support has the desired effect on the development of the market for 
satellite services and equipment in general, as well as being consistent with Community law. This 
support has in the past always led to closing of the national market for other satellite systems 
(other than the International Satellite Systems), with the result that reciprocal restrictions were 
imposed by other Member States, so that national systems were unable to address other markets 
besides their limited national market. 
A national satellite system has, in a number of Member States, been the key element of a 
national industrial policy aiming to stimulate the national space and satellite telecommunications 
industry. However, in order to make that policy a success, development of the ground segment 
market is of utmost importance as it is this market that provides the industrial impetus and 
sustainability in the long term. The national systems need to be able to access this ground 
segment market, not only at national level, but also at a wider Community level in order to be 
able to support pan-European services, which, by nature, have an international dimension. 
Experience of the difficult financial situation of virtually all national satellite systems around the 
globe leads to the conclusion that a restructuring of the industry may take place in the future, 
including within the Community. 
An uncontrolled shake-out of the sector however, could well be to the detriment of the industry as 
a whole, and to an intergovernmental system like EUTELSAT in particular. The financial 
commitments of national Telecommunications Operators in systems operated by the 
International Satellite Organisations, notably that of EUTELSAT, are substantially smaller than 
their stakes in their own national system(s). Therefore the survival of national systems can be 
33 Although these provisions have actually never led to formal objections against the establishment of private systems, they 
are still seen as a significant delay to the introduction of new capacity and innovative services, as well as providing 
Signatories with confidential information concerning a competitor's activities. 
21. 
expected to be the key financial and political priority of any national Telecommunications 
Operator and its Government. 
Studies undertaken for the Commission and the European Space Agency indicate that a 
consolidation of the satellite operations industry is to be expected in the medium term in the 
Community, probably as a result of decisions on follow-up generations of satellite systems over 
the next few years. 
These studies indicate that full implementation of the Satellite Green Paper liberalisation 
proposals, including those for space segment: 
* could trigger a fall in the price of space segment to users by some 25-30 percent; 
* will allow space segment operators to operate profitably, if opportunities are created for 
consolidation and scale effects flowing from the European space segment; 
* will have maximum effect if the space segment operations industry is allowed to 
consolidate at the same time that liberalisation is introduced. 
* provide an opportunity for the European space industry, if a significant degree of 
consolidation is achieved. 
Continuing the current framework of nationally oriented policies would be detrimental to the 
European operations industry as a whole, as an increasingly fragmented variety of national 
systems would emerge, operating on an effective monopoly basis in small national niche markets 
segments, as well as increasing pressure on EUTELSAT in particular, as national systems try to 
survive individually. 
Currently, EUTELSAT is the primary source for space segment capacity for interactive 
VSAT/business applications, as well as for a majority of SNG applications. As a consequence, 
the future of EUTELSAT is becoming a pivotal issue in the space segment supply market. 
22. 
3.4. The International Satellite Organisations. 
3.4.1 Introduction 
The International Satellite Organisations, INTELSAT, INMARSAT and EUTELSAT34, constitute 
an important element in the development of a Community satellite communications policy and its 
related regulatory framework. Not only do they offer 66 percent of the available space segment 
capacity in Europe, they are also of particular importance in the context of pan-European 
telecommunications services. 
The Interantional Satellite Organisation's are unique in being international organisations, set up 
on the basis of a treaty under public international law, operating on a commercial footing. On the 
one hand, the very existence of the Conventions and Operating Agreements is an 
acknowledgment of the particular difficulty and complexity of providing satellite services on a 
larger, international scale. On the other hand, the operations of the International Satellite 
Organisations as major, if not dominant players in the market, are now difficult to accommodate 
under normal regulatory control mechanisms. 
Nevertheless, the fact that the International Satellite Organisation are dominant players in the 
market, requires that a Community satellite communications policy articulates their role, as well 
as their place, in the evolving regulatory framework. This is of importance in relation to 
establishing a level playing field, for the acceptance of the International Satellite Organisations 
by the other players in the market, as also in relation to the future of the organisations 
themselves. 
34 The intergovernmental structures of INTELSAT, Inmarsat and EUTELSAT are very similar, based on the way the 
INTELSAT statutes were conceived in the beginning of the sixties. Their constituent instruments encompass two 
international agreements, the Convention and the Operating Agreement (In INTELSAT these are called Agreement and 
Operating Agreement, respectively. For ease of reading this document will call them Convention and Operating 
Agreement). In all three organisations, States (known as "Parties") signed the Convention, whereas the Operating 
Agreement was signed either by governments or by a singl;e designated public or private telecommunications entity 
(known as "Signatory"). Within each of the Community Member States, the Signatory is the national Telecommunications 
Operator (TO) for all three organisations (with the exception of Luxembourg and Ireland in the case of Inmarsat, as they 
are not members). Ratification of the constituent instruments of the three organisations has taken place by all national 
parliaments concerned. 
23. 
Table 3 
Participation of Member States and shareholdership of Community Signatories in Intelsat, 
INMARSAT and Eutelsat (1992) 
Member States Signatory 
Belgium 
Denmark 
France 
Germany 
Greece 
Ireland 
Italy 
Luxembourg 
Netherlands 
Portugal 
Spain 
UK Belgacom 
Tele Danmark A/S 
France Telecom 
DBP Telekom 
OTE 
Telecom Eireann 
Telespazio 
Administration des P&T 
PTT Nederland NV 
CPRM 
Telefonica 
BT 
Total Investment Share (%) 
Intelsat INMARSAT Eutelsat 
0.73 
0.59 
3.68 
4.19 
0.63 
0.20 
2.80 
0.05 
1.22 
0.64 
3.09 
11.60 
29.42 0.87 
2.00 
5.41 
2.77 
2.49 
2.74 
2.51 
0.26 
1.84 
11.74 
32.63 2.62 
2.04 
19.45 
14.50 
0.05 
0.19 
8.10 
0.05 
3.60 
1.1.0 
17.12 
15.86 
84.68 
It would seem that, due to the international conventions in place and the intemational obligations 
resulting thereof, certain rights remain with the International Satellite Organisations. However, in 
accordance with Treaty, international obligations entered into by the Member States after the 
date of entry into force of the Treaty must be consistent with Community policy. Such a 
privileged position for the International Satellite Organisations should not result in barriers, 
preventing licensed service operators (also those other than the Signatories) from accessing the 
space segment for the purpose of providing services, in particular in terms of access to space 
segment capacity. 
At the time of the creation of the International Satellite Organisations35, the Signatories were 
mostly part of the Government as a department of a Ministry. 
One of the principal motives for the creation of the International Satellite Organisations was the 
notion of availability of space segment capacity on a non-discriminatory basis36. With the 
35 INTELSAT was established in 1964, Inmarsat in 1979, and EUTELSAT in 1985. 
24. 
introduction of the separation of regulatory and operational functions and the subsequent split off 
of telecommunications administrations into separate corporations, the continued adherence to 
this notion is becoming complex. The Member States' role as Parties in the International Satellite 
Organisations is therefore becoming of increased importance: they need to guarantee that in the 
new situation all economic operators, whose need for space segment capacity is vital in order to 
be able to sell their products, have non-discriminatory access to the assets. 
Over recent years, and under the influence of the proposals of the Commission's Satellite Green 
Paper, it has been recognised that certain provisions of the constituent instruments of the 
International Satellite Organisations need changing or, as a minimum, need an agreed and 
flexible interpretation, to take account of the evolving telecommunications policies and, in 
particular, of the application of competition rules at the root of the Union's telecommunications 
policy. 
In response to the new market requirements, fundamental changes and interpretation of their 
constituent instruments are being contemplated within the three International Satellite 
Organisations to ensure their continued adaptation to the new environment. INMARSAT, for 
instance, is now investigating the options for changing its financial basis towards a quasi-private 
company. 
All three International Satellite Organisations have set up special working parties to study the 
issues. This examination is focusing on articles concerning "economic harm" which oblige 
competing satellite operators to coordinate their independent satellite systems before they are 
put into operation with the aim of establishing potential economic harm to the International 
Satellite Organisations37. 
Other provisions under review concern, inter alia, technical coordination of competing systems, 
access to the space segment capacity, approval of satellite earth stations, utilisation charges, 
and investment share determination. 
However, limited progress has been achieved to date in terms of amending the constituent 
instruments, or agreeing on further action. 
As a consequence of this limited progress, unilateral or multilateral measures are being 
implemented in some Member States on an interim basis in order to try and alleviate the most 
pressing conflicts of interest. This is in itself already an indication that urgent action is required. 
3^ Preamble to the INTELSAT Agreement: ".. considering the principle [] that communication by means of satellites should 
be available [] on a [] non-discriminatory basis". 
J' INTELSAT Agreement Article XIV, Inmarsat Convention A .toe 6, EUTELSAT Convention Article XVI. 
25. 
3.4.2. National implementation of the constituent instruments. 
In all Member States, the implementation of the International Satellite Organisations' 
Conventions and Operating Agreements has resulted in the appointment of a single national 
Signatory, the national TO: which was consistent with the monopolies which existed at the time 
the Conventions were adopted. 
However, some Member States, in accordance with the Satellite Green Paper, have put in place 
additional arrangements which aim to alleviate conflicts of interest inherent to the TO being the 
sole Signatory to the International Satellite Organisations. 
In the United Kingdom, Mercury Communications pic. can deal directly with INTELSAT and 
EUTELSAT, as a "virtual" Signatory, instead of passing via BT. Although understandable at the 
time, this arrangement may have to be reviewed as new UK licensees can not benefit from 
similar arrangements. 
In the United Kingdom furthermore, a Signatory Affairs Office38 was created in 1989, with the 
aim to take away from British Telecom those administrative functions connected with providing 
access arrangements for other, specialised satellite service providers. This arrangement has 
drawn considerable attention as a potential short-term alternative, pending changes to the 
International Satellite Organisations' Treaties. However, a recent review of the SAO's operations 
by the UK's Office of Telecommunications (OFTEL), revealed that the arrangements are 
considered "fundamentally unsatisfactory"39, and OFTEL suggests that the.objective of direct 
access must be facilitated. This has subsequently been achieved for access to INTELSAT. 
On the basis of data available at the time, the Council Resolution of December 1991 considered 
the creation of Signatory Affairs Offices in all Member States as an initial step to develop 
effective procedures in improving and broadening access to the space segment capacity of the 
International Satellite Organisations. It would appear that, while some Member States are now 
considering this option, they may wish to take into account OFTEL's conclusions. 
38 The Signatory Affairs Office (S.A.O.) is a "walled-off division of BT dealing with applications, for the use of space 
segment. It is intended to operate independently from the commercial divisions of BT (separated by a "Chinese wall"). 
The option of the creation of S.A.O.'s was taken account Of in the Satellite Green Paper, and recommended in the Council 
Resolution of December 1991. 
39 "The operation of BT's Signatory Affairs Office and Competition in the Satellite Servies Sector", OFTEL, July 1993, 
paragraph 2.1. 
26. 
In June 1992 EUTELSAT informed the Commission of discussions on possible improvements in 
access arrangements through either SAO's or via the so-called multiple access arrangements, 
where licensed operators can also obtain space segment capacity through other Signatories than 
the Signatory in which they are located. On the basis of data available at the time, the 
Commission replied that, in its view and with regard to the Community's competition rules, both 
options, i.e. the introduction of competition (e.g. via a "multiple access" arrangement) and the 
introduction of structures to avoid conflicts of interests (e.g. via an SAO arrangement) could 
remedy the competition problems raised by space segment access. 
In four Member States40, such a "multiple access" arrangement has now been worked out 
whereby a licensed operator may apply to any of the Signatories of the four Member States in 
order to obtain space segment capacity. The precise impact of this arrangement is still not clear. 
However, it appears that in some cases the agreement is subject to national interpretation41. 
The principle of multiple access is now integrated in the proposed Directive on a policy for the 
mutual recognition of authorisations for satellite services42. 
Organisations in countries which are not members of the International Satellite Organisations, 
can nevertheless access their systems as long as they have the authorisation of their national 
regulatory body. The latter usually notifies the International Satellite Organisation of its 
authorisation. In these cases, more that one operator can be authorised to access the systems43. 
This has led to a situation where in some cases access to EUTELSAT is currently easier to 
achieve in non-member countries than in Signatory states. 
3.4.3. The role of the current Signatories in the International Satellite Organisations. 
As mentioned, the role of the Community Signatories in the International Satellite Organisions 
has changed considerably over the years. The implementation of a competitive 
telecommunications environment has led to conflicts of interest for Signatories in their function of 
dominant provider of space segment capacity, their role as competitive or substitute provider of 
^ France, Germany, the UK and the Netherlands have established such a multiple access arrangement in their agreement 
of September 1992. 
4 ' In Germany for example, broadcasting services do not fall under the agreement. 
4^ "Proposal for a Directive by European Parliament and Council on a policy for the Mutual Recognition of Licenses and 
other National Authorizations for the Provision of Satellite Network Services and/or Satellite Communications Services", 
COM(93)652 
43 So-called Duly Authorised Telecommunications Entities (DATE'S). Russia has for example five DATE'S accessing 
EUTELSAT capacity. 
27. 
satellite services, and/or as (partially) substitute regulator. These conflicts of interest are 
seriously threatening the development of the satellite communications sector as the newly 
licensed private operators find considerable obstacles to acquiring the essential facility required 
for the provision of satellite services, namely space segment capacity. 
Current interests of Signatories in the International Satellite Organisations are diverse. 
In the case of INTELSAT and INMARSAT this interest is clearer and also more narrowly focused. 
INTELSAT provides capacity mainly for the basic provision of intercontinental public voice 
services and intercontinental TV contribution and distribution links, while INMARSAT is 
considered by many Signatories to be a lucrative investment, as the effective monopoly 
provision of mobile satellite services in their countries enables them to demand considerable 
mark-ups. 
As regards EUTELSAT, of prime importance in the European context, the Signatories' interest 
combine four elements in which EUTELSAT is seen as: 
* a provider of space segment capacity, 
* a financial investment, 
* a player in the telecommunications and broadcasting market, 
* a vehicle for national industry policy. 
As a provider of space segment capacity, EUTELSAT can be anything from a major source of 
capacity, to a certain risk to satellite investment interests and/or terrestrial networks investments. 
The former seems mostly true for the smaller nations, while the latter seems to hold for some of 
the larger countries which are also the biggest investors in EUTELSAT. 
As regards financial investment, EUTELSATs return on equity is reasonable and relatively 
secure but not excessive, while on the other hand, the shares are not tradable, limiting the 
flexibility of the owners. The link of the investment share to the utilisation however, is becoming 
a burden, certainly for Signatories with financial liabilities related to the use of space segment by 
licensed private operators. 
In the broadcasting sector, EUTELSAT's biggest Signatories, representing around 75 percent of 
the investment, have significant interests in other satellite systems44. In the telecommunications 
sector, EUTELSAT seems to be perceived by some as a threat as its capacity could be used as 
44 The latest event reported by the trade press is DBP Telekom's (the German EUTELSAT Signatory) association with SES 
Astra. 
28. 
the transmission medium to assist new operators to enter the European telecommunications 
market in line with the new liberal regime environment. 
Some third country telecommunications operators are entering into special arrangements with 
member governments either as nominated Signatory or as Duly Authorised Telecommunications 
Entity in new member countries of the International Satellite Organisations. This in itself could 
already be sufficient to call for a change in the arrangements. 
As a vehicle for industrial policy, EUTELSAT has been set up in the past as a symbol of 
European technological capabilities in high-technology in general, and space technology in 
particular45. However, the ongoing privatisation and "corporatisation" of the national operators 
means that industrial policy considerations are less important for them than for the European 
space industry which has expressed strong reservations concerning the Signatories' policies in 
this area46. 
Studies undertaken for the Commission indicate that, in principle, EUTELSAT would not have 
any problems in remaining an important and competitive player in the market. However, the 
structural problems related to EUTELSAT's institutional basis, the role of the Signatories therein, 
and the possible inability for major reform as a result thereof, calls for political initiatives by 
Member States to address EUTELSAT's future. 
3.4.4. Community rules and policies. 
The provisions under which the International Satellite Organisations operate are contained in 
their constituent instruments, the Convention and Operating Agreement, as well as in their 
operations guides and tariff manuals. In addition, there are bilateral and multilateral agreements 
between Parties and/or Signatories as well as communications from individual Parties to the 
executives of the International Satellite Organisations which concern implementations of specific 
measures at national level (E.g. the Signatory Affairs Office in the United Kingdom, and the four 
country agreement between Parties and Signatories of the U.K., France, Netherlands and 
Germany). 
In analysing these documents, agreements and the ongoing discussions of the various working 
parties against the background of the Community's satellite communications policy positions of 
4^ ESA was responsible for the OTS industrial contract and launch, and the launch and construction of the first generation 
of six EUTELSAT satellites. 
46 ESA report: Europe at the Cross Roads: The Future of its Satellite Communications Industry, 15 September 1993. 
29. 
the Satellite Green Paper and the Council Resolution on satellite communications, the following 
emerges: 
-» the separation of regulatory and operational activities has by and large not yet been 
achieved; 
-» the interpretation of the provisions of the constituent instruments often results in differences 
in national implementation, and continuing conflicts of interest for the Signatories; 
-» Community Member States are not acting in these bodies on the basis of a common 
position in order to advance changes and agree on a flexible interpretation of the 
constituent instruments in line with the positions of the Satellite Green Paper and Council 
Resolution on satellite communications; 
-» Two major goals of the Satellite Green Paper, as endorsed by Council, have not yet been 
achieved: 
* Free (unrestricted) access to space segment capacity, 
* Full commercial freedom for space segment providers, including direct marketing of 
satellite capacity to service providers and users; 
-» The full review of the EUTELSAT constituent instruments, as called for in the Satellite 
Green Paper, has only been partially undertaken; 
-» Progress in adapting the provisions of the constituent instruments of the International 
Satellite Organisations to take a more flexible approach, supporting the overall goal of 
liberalisation, has been slow and structures are still not sufficiently responsive to market 
needs in the Community; 
-» Whilst national measures interpreting the constituent instruments of the International 
Satellite Organisations, notably INTELSAT, have been adopted by certain of their 
members, such as the establishment of multiple signatories47, Community Member States 
have not followed suit. 
Now that liberalisation and harmonisation measures within the framework of the Community's 
satellite communications policy are being implemented, the provision of space segment capacity 
by the International Satellite Organisations within the Community needs further and rapid action. 
47 More than one Signatory per country on the basis of a specific, national, arrangement under flexible interpretation of the 
constituent instruments. 
30. 
As either changes to provisions of the constituent instruments, or related unilateral or multilateral 
arrangements must hot affect compliance with the EC Treaty, in particular with the competition 
rules48, the application of these Conventions in accordance with the Treaty must flow from a 
common position amongst Member States. A coherent position at Community level is therefore 
essential to guide such a development. 
Within Europe, the issues mentioned above are particularly pressing in the context of 
EUTELSAT, the European Telecommunications Satellite Organisation. 
3.4.5 The future of the international Satellite Organisations. 
International Telecommunications Satellite Organisation - INTELSAT 
The pressures which are put on INTELSAT in the form of separate satellite systems competing 
head-on, and in the form of cable systems of considerable capacity, are impacting the 
organisation. The success of the INTELSAT organisation, and the way in which it has promoted 
satellite communications, has been a major factor in the development of the satellite sector. 
However, the original basis for the operation of the organisation has been replaced by a 
realisation that its success can only be maintained if adapted to a competitive environment. 
It has been argued that the current changes in INTELSAT, achieved on the basis of a majority 
view of over 120 countries, are substantial. Nevertheless, INTELSAT has substantial assets and 
operates on a relatively stable market in which it has a dominant position. Although separate 
systems have started to divert some of this business, INTELSAT'S market position allows it to 
accommodate relatively easily new policy directions. 
The recent interpretations of the INTELSAT constituent instruments by some of its members 
indicate what can be achieved at national level, without revising parts or all of these legal 
instruments. This new flexibility, however, has until now mainly been used by nations outside the 
Community, namely Argentina, Chile, Australia and others. In these countries, national 
telecommunications policy requires recognition of the notion of multiple signatories, as well as 
direct access to the organisation. 
48 See: "Guidelines on the application'of EEC competition rules in the telecommunications sector", Section VIII, OJ No C 
233, p.2, 06.09.91. 
31. 
Based on the schedule for liberalisation of public voice services set out in the Council 
Resolution49, the Community must now review the manner in which satellite service operators 
are allowed to participate in INTELSAT. The current interpretation of the constituent instruments 
by other nations shows that there is little standing in the way of a more flexible interpretation by 
Member States. However, any such interpretation will have to be achieved on the basis of 
Community wide implementation and harmonisation. 
International Mobile Satellite Organisation - INMARSAT 
The provision of space segment for mobile satellite services is becoming more and more 
exposed to competition. Until recently, only INMARSAT provided mobile satellite services, but 
now EUTELSAT has started to provide a service, while also former Soviet satellite systems are 
engaging in this (potentially) lucrative market. Furthermore, a communications payload 
developed by the European Space Agency might fly later in the decade to provide mobile 
services across Europe. 
With the advent of satellite personal communications services, the provision of space segment 
develops a different character as competition might develop between geostationary and non-
geostationary - notably low earth orbiting - satellite systems. The effects of this, if any, will not 
be known for some time50. 
The provision of competitive mobile satellite services has various aspects which merit special 
attention. 
Firstly, the level at which such competition could take place must be addressed. This could be 
both in the provision of space segment and in the provision of the mobile satellite services itself. 
INMARSAT through its Signatories, in effect, provides only services, and not space segment 
capacity as such. The only provision of space segment is that for domestic use, but INMARSAT 
has declined a lease policy with regard to the provision of space segment for international, 
49 "Council Resolution of 22 July 1993 on the review of the situation in the telecommunications sector and the need for 
further development in that market", OJ No. C 213 p.1, 6.8.93. 
^ See: "Communication from the Commission and Proposal for a Council Resolution on Satellite Personal 
Communications", C0M(93)171 
32. 
roaming services. However, by virtue of the lease policy for national use, both AMSC (U.S.A.) 
and TMI (Canada) have been able to start up services51. 
INMARSAT has now embarked on a path of reviewing its tasks (and commercial goals) in the 
light of market and technological developments. This may lead, subject to the outcome of the 
review, to moves towards privatisation of INMARSAT. Without prejudging the outcome of such a 
review, it would seem that fundamental changes are required to align the organisation's policy 
with the changing environment, in particular with regard to potential competitors. 
The results of a special working group involving both Parties and Signatories could well be 
instrumental in pointing the way to a more commercially oriented organisation and have an 
important effect on the other organisations in this respect. 
An element of considerable importance in this context is the development of a new model for the 
functioning of a possibly (partially) privatised organisation under cover of an intergovernmental 
Treaty instrument. The separation of regulatory and operational activities achieved as a result, 
might, as a logical subsequent step, lead to a new form of global cooperative regulatory 
oversight, restricted to those areas where such oversight is strictly necessary, over all the players 
in the global mobile satellite communications market. 
European Telecommunications Satellite Organisation - EUTELSAT 
Given the analysis provided earlier, it would appear that EUTELSAT's future needs careful 
consideration and will have to be assured on the basis of substantial common political initiatives. 
The future of EUTELSAT constitutes a major element of any European approach to space policy. 
Service providers, equipment industries, and users' needs require maximum exploitation of 
EUTELSAT's assets. 
Firstly, EUTELSAT could fulfil an important public service role in the provision of satellite 
services in the wider European context. This relates, for example, to the provision of capacity for 
TDMA52 voice services; for interconnection of trunk and light traffic voice services in Central and 
Eastern Europe; in the context of Trans European Networks; as well as the provision of capacity 
for pan-European VSAT services. 
^1 The American Mobile Satellite Corporation (AMSC) and Telesat Mobile Inc. (TMI) both lease Inmarsat space segment for 
the provision of their services. Both firms plan to launch their own satellite systems in 1994. 
CO 
^ Time Divison Multiple Access, a methoc cf access to a satellite by utilising its capacity on a time sharing basis. 
33. 
The political role as a catalyst in the new East-West relations in Europe may also be seen as a 
public service role, in order to try and assist in the stabilisation of the new democracies and to 
facilitate economic developments. 
In addition, there are, conceivably, other important missions under more general policy 
considerations. 
One of these is related to the Community's policy on advanced television which identifies as 
indispensable the need for predictable availability of space segment capacity with the proper 
technical characteristics. 
But also, the possible extension of the scope and depth of the past role of EUTELSAT in 
European space industrial objectives will need evaluation. 
In general, the current assets and its potential market base are an important element in efforts to 
stabilise EUTELSAT. However, its current institutional base works to its disadvantage and limits 
its ability to react according to normal commercial principles. On the basis of the considerations 
above, and as part of overall Community satellite communications policy, political initiatives 
need to be developed to guarantee the future of Europe's most important provider of space 
segment capacity. 
3.5. Non-discriminatory access to orbit and related frequency resources. 
A major influence on satellite communications in Europe is brought about by the international 
coordination procedures for orbital positions and the related frequency resources, administered by 
the International Telecommunication Union (ITU)53, of which the Community Member States are 
members. 
The radio frequency spectrum and the various satellite orbits, including the geostationary satellite 
orbit, are recognised as finite natural resources to which all countries have, in principle, equitable 
rights of access. All radio communications services using these resources must comply with 
certain coordination procedures designed to ensure access without harmful interference to other 
services. 
53 The ITU regulations with regard to orbital position and frequency bands are geared to the usage and applications for 
usage by individual member countries. As set out, this implies that the application for usage passes via the national 
government, and that this application has to be coordinated with other national governments where this application could 
lead to interference. 
34. 
The ability to satisfy the increasing demand for these resources in a non-discriminatory fashion 
will depend on the ability to adopt measures to maximise the capacity and efficient use of these 
finite resources within an environment of increased competition. 
The fact that the ITU procedures are based on national applications, also in the case of private 
systems, and that there is no prior coordination at Community level, is a major reason for the 
fragmentation of the offer of space capacity in Europe. 
A continued fragmentation of these resources will mean that in the long run the collective 
Community requirements may no longer be met: experience in the European satellite 
broadcasting sector has already shown that coherent action is required to achieve an efficient 
management of these resources, taking due account of the use of the resources by other 
continents sharing the same orbital resources as Europe, notably Africa. 
Also, space activities are normally regulated either by specific national law implementing 
international law principles54 or may be subject to case-by-case treatment. Authorisation or 
licence obligations under national law for the establishment of satellite systems and the use of 
orbit and frequency resources may include a variety of criteria linked to financial, technical, 
operational and other requirements. The diversity of national laws in this area in EU Member 
States now requires Community-wide implementation of the applicable international law 
principles on a transparent and non-discriminatory basis, and in line with Community law. 
A careful and balanced approach towards Community action is therefore essential as equitable 
access to orbital and frequency resources by all Member States within a competitive 
environment must be ensured. 
54 With the exception of Portugal, all EU Member States are bound by the following international Treaties regarding space 
activities and which have been adopted by the United Nations: 
"Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon 
and other Celestial Bodies", done at Washington, London and Moscow, January 27,1967 
"Convention on International Liability for Damage caused by Space Objects", done at Washington, London and Moscow, 
March 29, 1972. 
"Convention on the Registration of Objects Launched in Outer Space", New York, January 14, 1975. 
35. 
3.6. Future regulatory coordination in the satellite sector. 
With the Telecom Review and the subsequent Council Resolution of 22 July 1993, a clear time­
table has been drawn up for regulatory change in the Community. As a result, the Commission is 
requested to prepare, before 1 January 1996, proposals for the adjustments necessary to the 
Community regulatory framework to promote a liberalised environment. 
Studies undertaken for the Commission as well as for the European Space Agency over recent 
years, have suggested that serious consideration should be given to the strengthening of 
regulatory coordination in the satellite sector, combined with substantive means to undertake a 
coordinated approach to the formulation and/or implementation of satellite communications 
policies in the Community. 
In its response to the Satellite Green Paper, coordinated by ESA, 150 representative industry 
representatives stated in their submission to the Commission that ".. there is strong support for 
an independent and efficient European regulatory authority (EURO-OFTEL or OFSAT) to ensure 
fair play..", as well as ".. many.. advocate the creation of a European equivalent of the FCC in 
the USA.:'. 
The industry voiced its concern that national orientation, policies and procedures would be 
detrimental to the development of the satellite communications sector as a whole. In addition, it 
was felt that, as a minimum, ".. the Commission itself should be responsible for ensuring access 
to orbital and frequency resources.. ". 
A further ESA-led satellite and related communications industry initiative is now underway. It is 
investigating the current state of affairs in the satellite communications sector as a whole, with 
the aim of making proposals to ESA and the Community Member States, the Commission, 
industry itself, EUTELSAT and its members, as well as ETSI. 
One of the key results of the initiative to date is a determined appeal for the management of 
satellite communications issues at a European level, and the strengthening of European 
regulatory coordination for the sector. 
While the creation of new regulatory mechanisms will have to be discussed in the more general 
context of the adjustment of the Community regulatory framweork set out above, an immediate 
response is needed to the call for intensidying regulatory coordination in Europe in the satellite 
sector, in particular with regard to space segment issues 
36. 
3.7. The competitive position of the European satellite communications industry 
As a result of considerable efforts by the European Space Agency and relevant national space 
agencies, the European space industry has been successfully built up over the last 20 years. A 
significant share of the satellites covering Europe has been manufactured by European 
manufacturers. 
However, some of the new private systems covering Europe, both European systems (Astra), 
and third country systems (PanAmSat) have selected U.S. suppliers for their satellites. 
Additionally, the more recent developments of satellite mobile communications, would seem to 
indicate a strong non-EC dominance of this now evolving new industry, limiting itself not only to 
the manufacturing of satellites, but extending to services as well. The concept of vertical 
integration of the satellite operations industry and the satellite service industry elsewhere could 
well threaten the position of European industry. The Commission has already drawn attention to 
these developments in the context of satellite personal communications services. 
This causes particular concern, since European industry is confronted with many barriers when 
seeking access to the markets of those third countries of which operators are among the most 
active on the European market. 
In this context also, the strategic importance of space in general and of satellite communications 
in particular is considerable for a number of the Community's trade partners. The resulting civil 
and military government support to the satellite communications industry in these countries is 
undeniably of such a magnitude so as to result in distortion of competition. The widely 
acknowledged dominance of the US satellite communications industry is the clearest example of 
this support. Furthermore, issues such as state-aids, access to financial resources, tax 
immunitites, and related matters further distort competition. Given that mainly the global market 
is of importance to the satellite communications industry and the fact that the US market is 
effectively closed, the provision of third country satellite systems and services might also require 
a reflection under the Community's competition rules. 
Directly related to this concern regarding third country provision of satellite systems and services 
in Europe, is the issue of competitiveness of the European space industry. With the scaling back 
of government support for large space research projects of a more general nature, the 
commercial telecommunications sector has become even more important. Increasingly, 
however, the European industry is confronted with fierce competition both inside and outside of 
the Community. 
The Commission has outlined its general policy line with regard to the European space effort in 
the Communication entitled "The European Community and Space. Challenges, Opportunities 
37. 
and new Actions"55. Therein it was stated that the Community's contribution should support and 
complement the role of ESA and the Member States, in particular their national space agencies. 
These contributions could, inter alia, take place in the context of R&D programmes of both ESA, 
national agencies, and the Community. The concept of Trans-European Networks may offer a 
further framework for appropriate support. 
With the establishment of a new regulatory framework, a key step has been made towards 
developing a viable market base for the European space industry. The coordination of 
programmes at Community level could add substantially to the impact of this development on the 
European satellite communications industry and its competitive position on the world market. 
This is all the more important with the slow-down of traditional space markets and the increase in 
competition in new areas, such as satellite personal communications. 
3.8. Conclusions 
Although improvements have been achieved, the lack of sufficient progress on space segment 
issues, combined with the increasing pressure from the market place, means that new initiatives 
are required to ensure that the new satellite communications developments, emerging as a result 
of the Satellite Green Paper, are not hampered by bottlenecks flowing from the provision of - and 
access to - space segment capacity. 
It is also evident from the current situation, that the lack of a comprehensive policy, as well as 
the divergence in national attitudes, has had a negative impact on the supply side of the market. 
Investments in satellite systems, especially in new technologies, require stable policies and 
stable regulatory frameworks as a solid base for long term planning, development and financial 
risks, especially now that new systems are developing56. The lack of this solid base currently 
presents a major threat to the position of the European space industry as a whole. 
The next chapter indicates the policy lines which, according to the Commission, should be 
followed to improve the current situation, as decribed above. 
55 "The European Community and Space. Challenges, Opportunities and new Actions", COM(92) 360 final 
5° See: "Communication from the Commission and Proposal for a Council Resolution on Satellite personal 
Communications", COM(93)171, 27.04.93 
38. 
4. POLICY LINES TO BE FOLLOWED 
4.1. Requirement for action. 
The market for space segment capacity in the Community is characterised by the presence of 
multiple and diverse satellite systems with either national, regional, or international coverage. 
This market continues to be fragmented and access to it continues to remain limited. 
Main requirements for change result from the following: 
-» The fragmented nature of the European space segment market does not provide the 
European satellite industry with a viable base for world-wide competition, particularly as 
new systems are emerging; nor does it satisfy the requirements for trans-European 
networks. The Treaty on European Union now imposes special obligations on Member 
States to act in common in order to ensure the establishment and development of trans-
European networks. 
-» The constituent instruments of International Satellite Organisations (Conventions and 
Operating Agreements) and/or their interpretation must be adjusted to the overall European 
telecommunications environment and to the schedule leading to full liberalisation of 
services by 1st January 1998. This requires, in particular, an urgent review of the 
interpretation of the constituent instruments of Eutelsat, given the special responsibilities of 
the Member States in this area. 
-» The evolving competitive market structure in the global space segment market is leading to 
a review of the financial and commercial basis of the International Satellite Organisations. 
Member States must develop a common approach in order to ensure the competitiveness 
of European undertakings on the global market. 
As a result, the European Union's satellite sector risks losing the initiative in the world satellite 
communications market, as discussed in this Communication and as indicated most 
spectacularly by recent developments in the new fields of satellite-based personal 
communications and multi-media services, where US actors have announced major global 
projects during recent months. 
A new phase of EU satellite communications policy, going substantially beyond current 
achievements, is now needed if Europe is not to fall behind its competition in the world satellite 
market and to lose the benefits of the very substantial research and development effort 
undertaken in Europe,in particular, through the European Space Agency, during the last two 
decades, which has helped to develop the European space sector and the European space 
industry. 
39. 
4.2 Detailed objectives and lines of action. 
An urgent objective continues to be the full implementation of the political decision to liberalise 
the satellite communications sector on a pan-European basis, taken as far back as 1991 with the 
adoption of Council Resolution 92/C8/01 on the development of the common market for satellite 
communications services and equipment - a commitment renewed by Council Resolution 93/C 
213/01 of 22 July 1993 on the review of, the situation in the telecommunications sector and the 
need for further development in that market. 
This implies in particular: 
-» The implementation of a Directive liberalising both the satellite services and equipment 
markets; 
-» The adoption of the proposal for a Directive on mutual recognition of national licenses and 
authorisations for satellite network licences and/or satellite communications services, based 
on harmonised conditions, with an interim solution based on a one-stop-shopping 
procedure; 
The Commission has submitted the necessary measures and proposals. 
However, in order to allow the European Union to keep pace with a rapidly moving world satellite 
communications market, measures and actions are required which must go substantially further. 
On the basis of the analysis set out in this communication, the Commission considers necessary: 
1 Ensuring throughout the European Union direct access to the space segment, including in 
particular space segment provided by the International Satellite Organisations. 
Towards this purpose, the Commission intends to use fully all means available to it through the 
application of the EC Treaty provisions, in particular the Community competition rules to remove 
all national restrictions within the Community on access to space segment, allowing free and 
direct access to the International Satellite Organisations and in particular EUTELSAT, as well as 
to other systems' space segment 
40. 
2. Joint action by the Member States in the reform of the Intemational Satellite Organisations 
and in particular of EUTELSA T. 
Immediate advantage should be taken of current discussions in the International Satellite 
Organisations in order to ensure the adjustment of those organisations to the new regulatory 
framework and market requirements, in particular in relation to the future of EUTELSAT, 
Joint action should imply prior coordination within the ad hoc high level Committee of National 
Regulators established according to Council Resolution 93/C 213/01 on the review of the 
situation and the need for further development in that market, and in the framework of the future 
Community Telecommunications Committee to be established according to current proposals. 
This prior coordination should concern in particular all positions taken by Member States 
concerning the Party's obligations under the respective Conventions as well as with regard to 
reform of the respective Conventions and Operating Agreements. 
Common positions on these issues should be worked out taking into account, inter alia, the 
following principles: 
-» Strict separation of all regulatory and operational aspects within the International Satellite 
Organisations to enable moves towards a more commercial environment; 
-» Separation of user and shareholder interests in the International Satellite Organisations 
through, inter alia, a separation in the linkage of investment share and usage, including 
adjustment and strenghtening of the financial base and opening participation to new 
shareholders; 
-» Within the International Satellite Organisations, structural separation of space segment 
provision on the one hand, and the provision of satellite communication services on the 
other; 
-» The marketing and selling of the International Satellite Organisations' space segment by 
either the relevant Executive directly, or by agents (brokers) for whom conflicts of interest 
do not exist. 
41. 
3. Joint management in the future of the space segment as a common resource of the Union, 
in particular concerning future applications to the International Telecommunication Union for 
orbital positions and related coordination procedures and availabilility of radio-frequencies. 
The development of future European satellite services and networks and Europe's participation 
in the new satellite communications markets such as satellite-based personal communications 
and multi-media is critically dependent on a common European approach with regard to the 
space segment resource and its management thereof. 
This should involve, in particular, prior coordination in the Community framework set out above 
of all future requests to the International Telecommunication Union concerning orbital resources 
and related frequencies. It should also involve close cooperation with ECTRA and ERC in their 
fields of technical competence, according to the principles and procedures currently being 
established. 
4. The establishment of measures in order to ensure comparable and effective access to 
third countries, in parallel to the Community's market liberalisation. 
Balanced market access arrangements must be sought to guarantee full European participation 
in the global satellite communications market. A current case in point in this context is the future 
development and operation of satellite-based personal communications and multi-media 
services. 
Common action should be developed according to standard procedures within the 
Community's 113-Committee to ensure comparable and effective market access to third 
countries, in line with the GATT framework. 
Until such market access is achieved, and subject to the Community's bi-lateral and multi­
lateral obligations, the option of including provisions in Community legislation similar to 
those pertaining in third countries could be considered. 
42. 
5. Inclusion of satellite-based services in programmes for Trans-European Networks as a 
major priority in particular with regard to the new technology developments. 
In addition to European research and development activities and the creation of a liberalised 
environment, the participation of the European Union's satellite sector in the new satellite 
communications markets is vitally dependent on attracting substantial investment into the new 
fields. As referred to in the White Paper on growth, competitiveness and employment, satellite 
communications projects can make a major contribution to the development of Trans-European 
Networks. 
The Commission intends, within the overall framework of the development of Trans-European 
Networks to submit a coherent programme for the development of satellite-based Trans-
European Networks and to propose guidelines according to the procedures of Title XII for 
identifying projects of common interest for the sector. These guidelines should concern in 
particular: satellite-based personal communications; interactive corporate and multi-media 
services; broad-band services; satellite services supporting the transport sector; and global 
navigation satellite services concerning positioning and tracking services. 
In defining and developing projects, full use should be made of the possibilities to cooperate with 
third countries to promote projects of mutual interest. 
4.3. Concluding remarks 
The European satellite communications sector - and the European satellite industry globally -
are in a critical phase of their development. The further development of - and access to - the 
space segment constitutes a major factor in maximising Europe's potential to participate in the 
development of the new technologies in the sector and to maintain Europe's position in the world 
space market. 
It is with this objective in mind that the Commission intends to follow the policy lines set out and 
that it transmits this Communication to the European Parliament and to the Council. 
KSN 0254-1475 
COM(94) 210 final 
DOCUMENTS 
EN 06 15 
Catalogue number : CB-CO-94-225-EN-C 
ISBN 92-77-69295-2 
Office for Official Publications of the European Communities 
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