*Pages 1--6 from Microsoft Word - 55833.doc* 1 PUBLIC NOTICE FEDERAL COMMUNICATIONS COMMISSION 445 12 th Street, S. W. WASHINGTON, DC 20554 News media information 202/ 418- 0500 Fax- On Demand 202/ 418- 2830 Internet: http:// www. fcc. gov ftp. fcc. gov DA 06- 635 Released: March 20, 2006 IB INVITES COMMENT FOR ANNUAL REPORT TO CONGRESS ON STATUS OF COMPETITION IN THE SATELLITE SERVICES MARKET IB Docket No. 06- 67 Comments Due: April 19, 2006 Reply Comments Due: May 4, 2006 In July 2005, Congress adopted and President Bush signed into law an Act 1 “to amend the Communications Satellite Act of 1962 to strike the privatization criteria for Intelsat separated entities, remove certain restrictions on separated and successor entities to Intelsat and for other purposes.” 2 Section 4 of the Amendment Act requires the Commission to submit to Congress an annual report (“ Satellite Competition Report”) that analyzes the competitive market conditions with respect to domestic and international satellite communications services. 3 Congress further stated that the Commission include in this report: (1) an identification of the number and market share of competitors in domestic and international satellite markets; (2) an analysis of whether there is effective competition in the market for domestic and international satellite services; and (3) a list of any foreign nations in which legal or regulatory practices restrict access to the market for satellite services in such nation in a manner that undermines competition or favors a particular competitor or set of competitors. 4 This Public Notice solicits data and information in order to evaluate the state of competition in markets for domestic and international satellite services. The statute requiring the Commission to submit annual reports stipulates that the report shall include, among other things, identification of the number and 1 Communications Satellite Act— Amendment, Pub. L. No. 109- 34, 119 Stat. 377 (2005) (“ Amendment Act”). The Amendment Act amended the Communications Satellite Act of 1962, 47 U. S. C. § 701 et seq. 2 Preamble, Amendment Act. 3 Amendment Act, § 4( a). 4 Id. at § 4( b)( 1)-( 3). 1 3 The Bureau invites commenters to address our proposed definitions for the relevant product markets for this report. Are there other services that justify a separate product market? Should we define the product markets based on different criteria? For example, should the relevant product markets be based on satellite frequency band assigned or orbital configuration (e. g., geostationary orbits vs. non-geostationary orbits), rather than by type of service provided? We also invite comment on geographic markets based on the Commission’s regulatory oversight. We define geographic markets as follows: (1) Domestic markets (services provided within the U. S); (2) International markets (services provided to and from the U. S.); and (3) Foreign markets (services provided from overseas locations to other overseas locations). We seek comments on our definition of the geographic markets. The Bureau asks commenters to address the sources of data and the analysis related to specific aspects of market structure listed in the following subsections. A. Market Participants The Bureau seeks information on the number of firms in each relevant product and geographic market. We also seek information concerning the types and number of buyers of services (including both number of firms and number of subscribers) in each product and geographic market. B. Horizontal Concentration The Bureau seeks information concerning sales (revenues by product) and capacity data (number of available transponders, number of transponders used or other capacity measures) by participants in each product and geographic market. The Bureau also seeks information on market shares based on the number of subscribers or customers served by each market participant (firms). Are there any other reasonable measures of market shares, and if so, what are they? C. Market Entry Conditions The Bureau invites comment on market entry conditions in each product and geographic market. Specifically, the Bureau seeks information on cost structures in each relevant market, especially information on the presence of large sunk costs that would influence the ease of market entry and exit. The Bureau also invites comments on barriers to entry in the relevant satellite communications services markets. Barriers to entry may include, but may not be limited to, first- mover advantages, spectrum allocation, and the allocation of orbital locations, as well as effects of regulation and policies of governments. The Bureau seeks information on these and other types of barriers to entry in all relevant satellite communications services markets. What are the most significant barriers to entry today in the satellite communications services industry? The Bureau invites comment on whether inability to access spectrum is a barrier to entry in the satellite communications services industry. Are existing service providers spectrum constrained? If so, in which geographic markets are firms most likely to be constrained? Have these service providers become more spectrum constrained after rolling out advanced services like high- speed Internet access and High Definition Digital Television? Do potential entrants have sufficient opportunities to access spectrum and orbital locations? Are there other barriers that limit access to spectrum? 3 4 D. Market Consolidation The Bureau invites comment on the effects of market consolidation on the satellite services industry. Are the effects of consolidation different for mergers and acquisitions, swaps, joint ventures, and bankruptcies? Has consolidation affected the video and audio services market differently than, say, the telecommunications services market? Has consolidation affected rural areas differently than urban areas? II. Market Satellite Communications Services Market A. Price Rivalry The Bureau seeks information on pricing plans that include price per transponder or portion thereof (transponder lease rates or satellite capacity sales prices) by the relevant markets listed above. What distinct characteristics, if any, affect the pricing practices observed in the satellite services industry? To what extent do pricing plans reflect price rivalry among firms? In addition, the Bureau invites comment on the extent to which satellite firms in their pricing plans differentiate between different types of satellite communications services. Do satellite firms offer short- term or long- term pricing plans? To what extent is transponder pricing determined by bilateral negotiations between satellite service providers and their customers? B. Non- Price Rivalry The Bureau seeks information regarding any non- price rivalry among satellite firms, especially competition based on quality differences. To what extent do communications satellite operators invest in research and development to gain competitive advantage? What is the level of capital expenditures by satellite firms? Have capital expenditures by satellite firms increased (or decreased) in the last five years? How important is capacity expansion to the competitive strategies of communications satellite operators? Are there any studies or analyst reports on the capital expenditures of domestic versus international satellite firms? Have any satellite firms adopted new marketing strategies in last five years? C. Consumer Behavior The Bureau invites comment on the development of consumer information sources for satellite communications services. Are there new avenues for consumers to gain information, such as retailers providing on- line and in- store comparisons of pricing plans, services, and equipment? How often do consumers/ buyers switch firms providing satellite communications services (i. e., what is the level of “churn” in the various relevant markets and is it increasing or decreasing)? If there is a significant churn/ switching by consumers/ buyers, is this in response to price differences, coverage, and/ or quality of service differences? To what extent can buyers exercise buyer power in communications satellite service markets? What is the extent and effect of aggregators on the price and other terms and conditions of communications satellite services? III. Satellite Communications Services Market Performance The Bureau intends to analyze various market performance metrics including pricing levels and trends, subscriber growth and penetration, innovation and diffusion of services, and quality of service. 4 5 Specifically, the Bureau seeks 5- year time- series data on revenues, profitability, cash flows, and cash-flow margins for the relevant satellite communications services markets. Are there any other metrics that would add significantly to the Bureau’s analysis of these markets? Are these metrics available on a national or international level, and are they available for a 5- year time period? IV. Access To Foreign Markets The Bureau also seeks information on the legal or regulatory practices of foreign nations which have the effect of restricting access to that nation’s market for satellite services. What types of legal or regulatory practices hinder U. S. firms from fully participating in a given foreign market? Are there foreign legal or regulatory practices that favor a particular competitor or set of competitors? V. Procedural Matters Pursuant to sections 1.415 and 1.419 of the Commission’s rules, 47 CFR §§ 1.415, 1.419, interested parties may file comments and reply comments on or before the dates indicated on the first page of this document. Comments may be filed using: (1) the Commission’s Electronic Comment Filing System (ECFS), (2) the Federal Government’s eRulemaking Portal, or (3) by filing paper copies. See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998). Electronic Filers: Comments may be filed electronically using the Internet by accessing the ECFS: http:// www. fcc. gov/ cgb/ ecfs/ or the Federal eRulemaking Portal: http:// www. regulations. gov. Filers should follow the instructions provided on the website for submitting comments. For ECFS filers, if multiple docket or rulemaking numbers appear in the caption of this proceeding, filers must transmit one electronic copy of the comments for each docket or rulemaking number referenced in the caption. In completing the transmittal screen, filers should include their full name, U. S. Postal Service mailing address, and the applicable docket or rulemaking number. Parties may also submit an electronic comment by Internet e- mail. To get filing instructions, filers should send an e-mail to ecfs@ fcc. gov, and include the following words in the body of the message, “get form.” A sample form and directions will be sent in response. Paper Filers: Parties who choose to file by paper must file an original and four copies of each filing. If more than one docket or rulemaking number appears in the caption of this proceeding, filers must submit two additional copies for each additional docket or rulemaking number. Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U. S. Postal Service mail (although we continue to experience delays in receiving U. S. Postal Service mail). All filings must be addressed to the Commission’s Secretary, Office of the Secretary, Federal Communications Commission. The Commission’s contractor will receive hand- delivered or messenger- delivered paper filings for the Commission’s Secretary at 236 Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing hours at this location are 8: 00 a. m. to 7: 00 p. m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes must be disposed of before entering the building. 5 6 Commercial overnight mail (other than U. S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743. U. S. Postal Service first- class, Express, and Priority mail should be addressed to 445 12th Street, SW, Washington DC 20554. People with Disabilities: To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an e- mail to fcc504@ fcc. gov or call the Consumer & Governmental Affairs Bureau at 202- 418- 0530 (voice), 202- 418- 0432 (tty). For further information, contact Patricia Cooper, International Bureau, (202) 418- 2150. 6