*Pages 1--7 from  Microsoft Word - 42046*
 1 
 Optimizing  Opportunities:  A  Satellite  Report  (As  presented  by  Donald  Abelson  at  the  September  9  th  Commission  meeting) 
 Slide  1  –  Satellite  Presentation 
 Good  morning,  Mr.  Chairman  and  Commissioners. 
 Slide  2:  Overview 
 It  is  my  pleasure  to  share  with  you  an  updated  satellite  report. 
 My  intention  is  leave  you  with  four  points: 
 One:  Overall,  the  satellite  industry  continues  to  show  growth  and  provide  critical  services; 


 Two:  The  industry  faces  a  number  of  challenges  that  vary  from  service  to  service; 
 Three:  The  industry  is  re-  examining  the  market  and  taking  action  to  better  serve  consumers  and  shareholders;  and 
 Four:  The  FCC  continues  to  modernize  to  foster  future  innovation. 
 Slide  3:  Worldwide  Industry  Revenue  (1996-  2003) 
 As  you  can  see  from  this  graph,  the  global  satellite  industry  continues  to  grow  despite  the  recent  general  economic  downturn 
 and  slowdown  in  the  entire  telecommunications  industry. 


 Slide  4:  Covering  the  Globe 
1
 2 
 Satellites  are  able  to  serve  consumers  in  virtually  every  country.  The  fact  is  that  there  are  over  400  commercial  satellites  covering 
 the  globe  today.  Of  this  number,  approximately  58%  are  U.  S.  licensees  and  59%  are  serving  U.  S.  consumers. 


 Slide  5:  Satellite  Industry:  Four  Major  Components 
 The  satellite  industry  can  be  broken  out  into  four  major  components: 


 First:  Building  satellites  for  mobile,  fixed  and  broadcast  services;  so-  called  MSS,  FSS,  and  BSS  systems; 
 Second:  Launching  satellites; 
 Third:  Serving  consumers,  and 
 Fourth:  Providing  ground  equipment. 
 The  International  Bureau  focuses  its  energy  on  the  last  two  components. 


 Slide  6:  Global  Revenue  by  Industry  Sector 
 This  pie  chart  shows  the  four  satellite  industry  components  by  revenue. 


 The  two  largest  components,  serving  consumers  and  providing  ground  equipment,  showed  12  and  4  percent  growth,  respectively, 
 in  2003.  However,  the  other  components  shrank. 
 Zooming  in  on  the  consumer  service  component  of  the  industry,  providers  of  BSS,  MSS  and  FSS  face  a  variety  of  challenges. 
2
 4 
 Slide  11:  Fixed  Satellite  Service  –  The  “Silent  Partner” 
 FSS  has  long  been  the  most  profitable  and  core  service  provider  for  the  industry.  In  fact,  fixed  satellite  services  often  make  other 
 communications  technologies  possible,  operating  as  a  “silent  partner”  in  the  overall  communication  pathway. 


 Slide  12:  Challenge  to  FSS  Service  Providers:  Global  Bandwidth  Supply  and  Demand 
 You  can  see  that  satellite  service  providers  face  a  global  market  challenge  related  to  infrastructure  build  out.  As  this  chart  shows, 
 while  both  global  supply  and  demand  for  FSS  bandwidth  have  steadily  grown,  they  are  growing  at  different  rates.  Specifically: 


 Between  1995  and  2003,  globally: 
 o  the  supply  of  bandwidth  grew  at  nearly  6%  o  while  demand  grew  just  over  3% 


 o  demand  for  voice  capacity  declined,  and  o  demand  for  data  and  video  services  grew 


 In  a  series  of  informal  roundtables,  the  International  Bureau  heard  from  leading  providers  that  they  are  responding  to  the  challenge  by 
 taking  stock  of  existing  assets  and  exploring  opportunities  to  serve  new  customers  and  add  value  to  existing  customers. 


 Slide  13:  FSS  Core  Customers 
 In  the  United  States,  broadcast,  internet  and  cable  companies  continue  to  be  the  core  FSS  customer  base. 
4
 5 
 Slide  14:  Relative  Use  of  FSS  Transponder  Capacity  2004 
 In  fact,  the  largest  users  of  satellite  capacity  are  the  broadcast  companies.  Whether  for  internal  distribution  of  programming  to 
 affiliates  or  to  the  cable  head-  end. 
 Opportunities  to  serve  new  customers  also  exist.  For  example,  future  use  of  Ka-  band  systems  will  offer  internet  over  satellite  by 
 early  next  year. 


 Slide  15:  US  Government  as  a  Commercial  Satellite  Customer 
 Government  use  of  commercial  satellite  services  to  protect  Americans  in  times  of  crisis  remains  strong. 


 Satellite  services  play  a  critical  role  for  police,  first  responders  and  the  media  in  emergency  situations. 
 They  are  also  a  primary  source  of  weather  monitoring,  communications  during  emergencies,  like  the  recent  hurricanes, 
 and  post-  crisis  rebuilding  efforts. 
 Opportunities  exist  here  for  FSS  providers,  as  well  as  for  providers  of  MSS  and  BSS  services. 


 Slide  16:  Satellites  and  Rural  Services 
 In  addition,  opportunities  exist  for  FSS  and  other  providers  to  further  serve  consumers  in  rural  America,  including  teachers, 
 doctors,  farmers,  ranchers  and  public  safety  officials. 
5
 6 
 Slide  17:  Optimizing  Opportunities:  Industry  Observations 
 Looking  at  the  industry  as  a  whole,  the  International  Bureau  has  seen  four  patterns  emerge: 


 First,  There  are  fewer,  but  stronger  competitors. 
 Second,  There  is  a  new  investment  paradigm;  more  applications  filed  by  private  equity  firms  to  purchase  satellite 
 assets.  For  example,  PanAmSat,  Intelsat,  and  New  Skies. 
 Third,  Satellite  operators  are  more  efficiently  managing  their  fleets.  And  finally, 


 Fourth,  Consumers  of  satellite  services  are  inspiring  operators  to  use  spectrum  innovatively. 


 Slide  18  :  The  Role  of  the  FCC 
 The  FCC’s  actions  have  facilitated  innovation  and  flexibility  in  the  U.  S.  satellite  industry.  In  the  public  interest,  in  the  last  year,  we 
 have  implemented  flexible  policies  with  respect  to  fleet  management,  adopted  efficient  licensing  procedures,  and  provided 
 global  representation. 


 Slide  19:  Licensing  Disposal  Speed 
 Last  year,  the  Commission  adopted  a  new  regime  for  space  station  licensing.  I  am  proud  to  say  that,  as  this  chart  demonstrates,  we 
 dramatically  reduced  the  time  it  takes  us  to  act  on  applications. 
 Our  new  procedures  have  been  effective  in  moving  forward  serious  applications  and  eliminating  the  more  speculative  ones. 
6
 7 
 Slide  20:  Conclusion 
 The  International  Bureau  believes  that  the  quicker  it  issues  licenses,  the  more  easily  investment  capital  can  be  secured,  the  sooner 
 satellites  can  be  built  and  launched,  and  the  faster  American  consumers  can  be  served. 


 While  only  a  small  segment  in  the  telecommunications  industry,  the  satellite  industry  nonetheless  plays  a  large  role  in  rolling  out 
 services  in  the  United  States  and  around  the  globe.  And  I  can  conclude  this  second  Satellite  Report  by  saying  that  the 
 Commission’s  new  processes  provide  a  clear  path  to  innovate  and  deploy  new  services. 


 Thank  you  for  the  opportunity  to  share  these  observations.  I  am  happy  to  take  questions. 
7