Index

Commercial Space and United States National Security

Linda L. Haller
Space Commission Staff Member
and
Melvin S. Sakazaki
System Planning Corporation

Prepared for the Commission to Assess United States National Security Space Management and Organization

The information presented in this paper is based on research done by the author. Although it was prepared for the Commission in conjunction with its deliberations, the opinions expressed in this paper are those of the author alone and do not represent those of the Commission or any of the Commissioners.

I. Introduction
II. Background

A. U.S. Leadership in Space through Government and Commercial Enterprise

1. Origins of the U.S. Commercial Space Sector
2. Commercial Space Sector

B. U.S. National Security Space Policies
C. National Security Implications of Satellite Infrastructure

1. U.S. Critical Infrastructure
2. Satellite Infrastructure

III. Remote Sensing Satellite Services

A. Background
B. Commercial Applications
C. Remote Sensing Satellite Programs and Companies

1. United States
2. Foreign Programs and Satellite Systems

D. National Security Implications

IV. Location, Navigation and Timing Satellite Services

A. Background
B. Commercial Applications

1. Navigation Services
2. Timing Services

C. Technological Trends
D. National Security Implications

1. U.S. GPS System
2. Foreign Navigation and Location Satellite Systems

V. Communications Satellite Services

A. Background
B. Communications Satellite Technology and Investment Incentives
C. Principal Applications

1. Voice, Messaging and Tracking Services
2. Broadband and Internet Services
3. Satellite Television Services
4. Satellite Radio Services
5. Service to Rural and Unserved Areas
6. Disaster Relief and Emergency Services
7. Enabling Services

D. Business and Regulatory Trends

1. Privatization and Competition
2. Business Trends by Region

E. National Security Implications of Globalization

1. Challenges
2. Opportunities

VI. Weather Satellite Services

A. Background
B. Principal Applications
C. Foreign Weather Satellite Programs
D. Public Good Versus Commercial Product
E. National Security Implications

VII. Interagency Coordination and Legal and Regulatory Environment

A. Interagency Coordination

1. A National Policy Approach
2. Pending Agenda Items

B. Satellite Regulatory Issues

1. Radio Frequency Spectrum and Orbital Locations
2. Licensing of Satellite Systems
3. Export Licensing

VIII. U.S. Government Use of Commercial Satellites for National Security

A. Background
B. Commercial Communications Satellite Services
C. Commercial Satellite Imagery

IX. Conclusions and Recommendations

A. Conclusions
B. Recommendations

X. Summary

I. Introduction

Commercial satellite services are important to United States (U.S.) national security in several ways. Commercial satellites provide services and products to the U.S Government for defense and intelligence missions.(1) Commercial satellites are part of the nation's critical telecommunications infrastructure and support many other U.S. critical infrastructures, including banking, finance and transportation.(2) In addition, commercial satellites are integral to daily life and commerce.

Commercial satellites enable U.S. companies to participate in the market, teachers to educate the nation and farmers to grow America's crops. From residents at the base of the Grand Canyon(3) to explorers at the South Pole,(4) satellites deliver communications, information, navigation, Internet, rescue,(5) disaster relief, emergency(6) and other services to people, businesses and organizations.(7) In these regards, the U.S. commercial space sector contributes to the strength of the U.S. economy and to the position of the United States as the world leader in space.

As described below, the United States relies heavily on commercial space services and technologies. That reliance likely will magnify as information and communications become more integral to U.S. defense and intelligence missions and more imbedded in American commerce and activity.(8) With reliance comes vulnerability. At the same time, commercial satellite services provide means for adversaries to act against the interests of the United States, posing national security risks. Commercial space, however, also presents opportunities. It offers faster, innovative technologies and services, increasing efficiency and broadening the types of applications. Commercial satellites provide the means for the United States to advance and protect--at home and abroad--the principles upon which this country was formed and stands today.

This paper provides background research for the Report of the Commission to Assess U.S. National Security Space Management and Organization (Commission).(9) In 1999, Congress chartered the Commission, directing it to assess U.S. national security space, including management and organization changes that could strengthen U.S. national security.(10) In its assessment, the Commission identified four space sectors: defense, intelligence, commercial and civil. The Commission considered the role of the commercial space sector in the United States and the world, including the growing interdependence of the four sectors and the rise in international space programs. The Commission studied the extent to which the United States relies on space, and the ensuing vulnerabilities, risks, threats and opportunities arising from that reliance. The Commission assessed opportunities for the U.S. Government to use the commercial space sector for national security space functions. Finally, the Commission studied ways to leverage the commercial space sector to strengthen U.S. national security.

This paper describes four types of satellite services: (1) remote sensing satellite services; (2) location, navigation and timing satellite services; (3) communications satellite services; and (4) weather satellite services.(11) The paper discusses the principal commercial applications of each service, its technological characteristics, financial value and expected growth, as well as national security implications. The paper also discusses global business trends, U.S. and international legal and regulatory issues and interagency coordination. In addition, the paper addresses U.S. use of commercial satellite services and products for defense and intelligence missions.

This paper is a survey of commercial satellite applications and developments. It intends to provide an overview of the four satellite services rather than a comprehensive treatment of the commercial space sector. References to particular companies and countries are to illustrate satellite applications and trends; omission of others is unintentional. This paper is based on multiple sources. In addition to the research that the paper cites, resources include: briefings before the Commission to Assess National Security Space Management and Organization, interviews with more than 50 U.S. Government and industry members, including representatives of the National Security Council (within the Defense Policy and Arms Control Directorate), Office of Science and Technology Policy (within the Division of Technology), Department of Defense,(12) Department of State,(13) Department of Commerce,(14) Department of Transportation (Coast Guard), Department of Justice (Criminal Division), Federal Bureau of Investigation (Office of General Counsel), Federal Communications Commission,(15) Wall Street financial firms, satellite companies and private entities. The factual information below attempts to be as current and accurate as possible as of the time of publication. Given the dynamic nature of the commercial satellite industry, however, it is possible that information may have changed since that time.

II. Background

A. U.S. Leadership in Space through Government and Commercial Enterprise

1. Origins of the U.S. Commercial Space Sector

The U.S. space industry has evolved into four sectors. These are: the defense, intelligence, commercial and civil space sectors. Since the start of U.S. space activities decades ago, the vision and efforts of scientists, entrepreneurs, private companies and government officials have made the U.S. space sectors what they are today. The world lead of the United States in space is the result of U.S. Government and commercial enterprise.

In 1919, an American scientist, Robert H. Goddard, published a landmark paper that established the foundation for the development of U.S. rockets.(16) On October 13, 1936, an Army Air Corps Lieutenant met with Dr. Goddard to assess military applications of Goddard's study. In 1945, Arthur C. Clarke first wrote of geosynchronous satellites. A 1946 RAND Corporation study predicted that earth satellites would "inflame the imagination of mankind, and would probably produce repercussions in the world comparable to the explosion of the atomic bomb."(17) On October 1947, a U.S. Navy V-2 rocket took the first photograph of the Earth from an altitude of 100 miles.

In 1958, Congress formally established a civilian space agency in the "National Aeronautics and Space Act of 1958." The Act established the National Aeronautics and Space Administration (NASA) as a civilian agency to develop a comprehensive program for research and development in aeronautical and space services.(18) In addition, the Act provided for development of space technology for civilian applications such as communications satellites and sought "the preservation of the role of the United States as a leader in aeronautical and space science and technology."(19)

Four years later, in the Communications Satellite Act of 1962 (Satellite Act), Congress laid the foundation for the world's first global communications satellite system.(20) Congress declared that "it is the policy of the United States to establish, in conjunction and cooperation with other countries, as expeditiously as practicable, a commercial communications network, which will be responsive to the needs and national objectives, which will serve the communications needs of the United States and other countries, and which will contribute to world peace and understanding."(21) Eventually, that global satellite system became the International Telecommunications Satellite Organization (INTELSAT) system.(22)

INTELSAT began as an intergovernmental, treaty-based satellite organization of thirteen members and one geosynchronous satellite. INTELSAT, which now has 144 members and approximately 20 satellites, will become a private company in July 2001.(23) In the Satellite Act, Congress established COMSAT as the first private U.S. satellite corporation to operate for profit.(24) Congress created COMSAT to facilitate development of the global INTELSAT system and to provide for the widest possible participation by private enterprise in that system.(25) INTELSAT launched its first satellite, Early Bird, in 1965. As an initial commercial satellite provider, INTELSAT benefited from U.S. taxpayer-funded research and development conducted in the pioneering days of space communications. (26) INTELSAT also benefited from government policies designed to assure its early commercial success so as to achieve the broader public policy goals intended by its creation.(27)

After the INTELSAT global system was operating, the United States began to explore the possibility of authorizing "domestic" satellite systems to serve the United States. On January 23, 1970, the Executive Office of the President submitted a memorandum to the Federal Communications Commission (the independent U.S. agency responsible for licensing communications systems) setting forth several satellite policy objectives, many of which still apply:

The Executive Office of the President recommended:

It is most important that the establishment and operation of domestic facilities be consistent with our obligations and commitments to Intelsat and the International Telecommunication Union, with other foreign policy considerations, and with national security communications requirements.... It also is important that provision be made for use of domestic satellite services by national security and emergency preparedness agencies when appropriate.(29)

Two months later, the Federal Communications Commission issued its landmark Domsat I decision. That decision and its sequel, Domsat II,(30) gave birth to the U.S. satellite industry. In those orders, the Federal Communications Commission established its "Open Skies" policy--the hallmark of U.S. satellite policy today. The Federal Communications Commission found that satellite technology has the potential of making significant contributions to the nation's domestic communications structure by providing a better means of serving existing markets and developing new markets not now being served. The Open Skies policy was based on the agency's conclusion that the public interest would best be served at this initial stage by affording a reasonable opportunity for entry by qualified applicants. The agency established a framework of maximum flexibility and minimal regulation. Recognizing as well the uncertainties regarding the potential success of commercial communications satellites and the availability of other terrestrial alternatives, the Federal Communications Commission let market forces and competition drive the satellite industry. It opened the U.S. satellite market to any number of satellite operators to provide any type of domestic satellite services in the United States. A competitive U.S. satellite industry subsequently developed, contributing substantially to the strength of the United States in the global satellite market.

The U.S. Government has continued to play a substantial role in facilitating a competitive global satellite market and influencing the direction of INTELSAT. After recognizing the benefits of a global satellite telecommunications system and the benefits of U.S. participation in such a system by creating the framework for INTELSAT, in the 1980s-90s, the United States and other governments authorized other communications satellite systems to introduce competition in the international satellite market.(31) After those systems became operational and eventually more competitive, in the mid-1990s, the U.S. Government undertook efforts to encourage INTELSAT to become more competitive as well, recognizing the strong public interest benefits that would result. "The privatization of INTELSAT is a policy goal of the United States."(32)

As discussed in Section V. below, in response to competition and the interests of governments for a more competitive satellite market, INTELSAT inaugurated a multi-year effort to restructure. In 1998, INTELSAT spun-off five satellites to a separate entity, New Skies Satellites, N.V., which is based in the Netherlands and now competes with INTELSAT.

In March 2000, Congress passed the "Open Market reorganization for the Betterment of International Telecommunications Act" (ORBIT), establishing competitive criteria for the full privatization of INTELSAT in order to serve the U.S. market.(33) Thereafter, in August 2000, the Federal Communications Commission authorized INTELSAT to operate in the United States effective upon its privatization, and conditioned upon compliance with ORBIT.(34) The agency took this forward-looking action to "promote competition in the provision of satellite communications services through the privatization of INTELSAT in a manner consistent with U.S. law."(35)

This history shows that the development of U.S. space assets is the result of a strong connection between government and industry. That connection has benefited both, as well as the public overall. U.S. industry has profited from U.S. Government research and technology. At the same time, the U.S. Government has relied on commercial satellite services and products for numerous defense and intelligence purposes over many years. For example, the U.S. Government used commercially developed direct broadcast television technology in conceptualizing its Global Broadcast Satellite system and used commercial remote sensing data in Desert Storm. Since the inauguration of U.S. space efforts decades ago, the four space sectors have been linked. As delineated below, today, they are becoming increasingly interdependent.

2. Commercial Space Sector

The space industry is transforming and growing. In the past, the manufacturing and launch components of the industry were strong segments. That strength, however, is shifting to satellite services. For example, over the last decade, the U.S. defense industry generally has been operating at flat levels.(36) The growth rate for manufacturers of launch vehicles and satellites "has been relatively flat" while ground segment industry "has been a source of tremendous growth."(37) For example, in its Satellite Communications 2001 Outlook and Investment Guide, C.E. Unterberg, Towbin ranks manufacturing and launch services segments lower than most other segments of the commercial communications satellite industry.(38) One prediction is that infrastructure and manufacturing, which represent about half of space industry revenues, will grow minimally in the next five years.(39)

At the same time, the satellite industry is growing in both the United States and worldwide. The Satellite Industry Association estimates that 2000 worldwide revenues for the commercial satellite industry will be $82.6 billion.(40) This figure, which includes commercial communications satellite services, launch services, manufacturing of satellites and of ground equipment, as well as sale of remote sensing imagery and value-added services, represents nearly a 100% increase since 1996 when global satellite industry revenues were $44.8 billion.(41) According to the Satellite Industry Association, U.S. satellite industry revenues represent nearly half of worldwide revenues: an estimated $37.5 billion.(42) That amount is nearly twice U.S. satellite revenues in 1996: $19.6 billion.(43) One prediction is that satellite services and applications will more than double by 2005, representing more than two-thirds of space industry revenues.(44) ING Barings estimates that global commercial satellite service revenues will more than triple by 2009.(45)

Several factors influence the viability and growth potential of particular commercial satellite services. These are for example: technology, cost, competing services, regulatory policies and the economy.(46) The technical ability of satellites to cover large geographic areas and to provide views from space, make satellites advantageous for several applications. For example, and as elaborated in Section V. below, communications satellites offer these technological advantages and economic efficiencies:

Availability of competition from other services and technologies has a substantial impact on the satellite industry. For example, at this time, imagery from airplanes represents the largest part of the imagery market. Remote sensing satellites, however, can see much larger areas of the earth than that visible from airplanes and are equipped to produce images of higher resolution. Another example of the varying viability of satellite technology is the U.S. Global Positioning Satellite (GPS) System. The timing feature of the GPS system has wide commercial, government and societal applicability. To date, however, there is no comparable timing capability available in the world.

By contrast, there are numerous telecommunications services available and many provide strong competition to commercial satellite communications services. As described in more detail in Section V. below, competition is stronger against certain types of communications satellite services than others, based largely on technology, demographics and cost. For example, the satellite telephony market, particularly the global mobile market, has had difficulty competing with terrestrial wireless services. Generally cheaper and quicker to build and install than satellite systems, cellular telephone systems have been deployed rapidly and widely around the globe.

B. U.S. National Security Space Policies

Space is becoming increasingly important in U.S. national security strategy. U.S. forces must have information superiority in every mission area and assured access to and use of space.(47) The 1999 National Security Strategy states that:

We are committed to maintaining U.S. leadership in space. Unimpeded access to and use of space is a vital national interest--essential for protecting U.S. national security, promoting our prosperity and ensuring our well-being.... We will maintain our technological superiority in space systems, and sustain a robust U.S. space industry and a strong, forward-looking research base. We also ... will continue to pursue global partnerships addressing space-related scientific, economic, environmental and security issues.(48)

The 1999 U.S. National Security Strategy provides that "vital interests" of the United States include: "the economic well-being of our society, and the protection of our critical infrastructures--including energy, banking and finance, telecommunications, transportation, water and systems and emergency services."(49)

In September 1996, President Clinton issued the National Space Policy.(50) It establishes five U.S. goals:

(1) Enhance knowledge of the Earth, the solar system and the universe through human capital and robotic exploration;

(2) Strengthen and maintain the national security of the United States;

(3) Enhance the economic competitiveness, and scientific and technical capabilities of the United States;

(4) Encourage State, local and private sector investment in, and use of, space technologies;

(5) Promote international cooperation to further U.S. domestic, national security, and foreign policies.(51)

The National Space Policy declares that the United States "will conduct those space activities necessary for national security"(52) and that "[c]ritical capabilities for executing national security missions must be assured."(53) It provides that the "fundamental goal of U.S. commercial space policy is to support and enhance U.S. economic competitiveness in space activities while protecting U.S. national security and foreign policy interests. Expanding U.S. commercial space activities will generate economic benefits for the Nation and provide the U.S. Government with an increasing range of space goods and services."(54) The National Space Policy also states: "U.S. Government agencies shall purchase commercially available space goods and services to the fullest extent feasible and shall not conduct activities with commercial applications that preclude or deter commercial space activities except for reasons of national security or public safety."(55)

C. National Security Implications of Satellite Infrastructure

1. U.S. Critical Infrastructure

Commercial satellites are part of the U.S. critical infrastructure. The 1998 Critical Infrastructure Protection Policy (Presidential Policy Directive 63) defines "critical infrastructures" as "those physical and cyber-based systems essential to the minimum operations of the economy and government."(56) "They include, but are not limited to, telecommunications, energy, banking and finance, transportation, water systems and emergency services, both governmental and private." (57) The "telecommunications" infrastructure, also called the "information and communications" infrastructure, includes "satellite service."(58)

According to the 1997 President's Commission on Critical Infrastructure Protection, the U.S. communications and information infrastructure sector:

generates more revenue than most nations produce.... We have led the world into the information age, and in so doing have become uniquely dependent on its technologies to keep our economy competitive, our government efficient, and our people safe. (59)

As a result, the sector "has swiftly become essential to every aspect of the nation's business, including national and international commerce, civil government, and military operations."(60) Thus, like highways and airways, water lines and electric grids, services supplied from space already are an important part of the U.S. and global infrastructures. As such, they raise national security considerations.

The Critical Infrastructure Protection Policy established a program to assure the continuity and viability of U.S. critical infrastructures. This policy set a national goal that by 2000, the United States shall have achieved an "initial operating capability" and no later than by 2003, the United States shall have achieved and shall thereafter maintain the ability to protect our nation's critical infrastructures from intentional acts that would significantly diminish the abilities of:

As the 1997 President's Commission on Critical Infrastructure Protection found, the nation's critical infrastructures have become more interconnected and vulnerable. While in the past, many of these systems were physically separate, as a result of advances in information technology and greater efficiency, today, many of the systems are more automated and interdependent. For example, the nation's electrical energy infrastructure is linked to the communications infrastructure: the distribution portion of the bulk power grid involves telecommunications networks, including satellite systems.(62) The country's air transportation infrastructure is linked to satellites: modernization of the National Airspace System will depend on GPS and GPS augmentation as its sole navigation and landing systems.(63)

The interdependence of U.S. critical infrastructures has "created new vulnerabilities to equipment failures, human error, weather and other natural causes, and physical and cyber attacks."(64) For example, "Possible exclusive reliance on GPS and its augmentations, combined with other complex interdependencies, raises the potential for 'single point failure' and 'cascading effects.'"(65) As the Critical Infrastructure Protection Policy White Paper states:

Because of our military strength, future enemies, whether nations, groups or individuals, may seek to harm us in non-traditional ways including attacks within the United States. Our economy is increasingly reliant upon interdependent and cyber-supported infrastructures and non-traditional attacks on our infrastructure and information systems may be capable of significantly harming both our military power and our economy.(66)

Addressing those vulnerabilities "will necessarily require flexible, evolutionary approaches that span both the public and private sectors, and protect both domestic and international security."(67)

2. Satellite Infrastructure

Security and Reliability

Like most U.S. infrastructure, satellites and their supporting systems are susceptible to a variety of security and reliability risks. These include, but are not limited to:

Satellites may malfunction. For example, in May 1998, the Galaxy IV satellite suddenly malfunctioned, shutting down 80% of the nation's 40-45 million pagers, as well as video feeds for cable and broadcast transmissions.(69) At that time, paging companies, which have operated on lower margins than networks and thus, had less back-up capability, took weeks in some cases to fully restore paging service because thousands of ground antennae had to be repointed to other satellites. With greater redundancy measures available, the networks were able to switch relatively quickly to other satellites.

There are mechanisms to address system failures. Satellite systems generally include replacement satellites that can be launched or moved into the orbit of an inoperable satellite. In addition, innovative backup options are emerging. For example, a new U.S. company, AssureSat will offer on-orbit back-up capacity for lease to companies in need of substitute or additional capacity.(70) Hughes Global Services is reconfiguring satellites for new owners that do not need the same level of capability as a satellite's original owner.(71) This type of service will provide important safeguards and minimize the effects of service outages and delays. It also will provide financial benefits to the satellite industry because most satellite insurance covers only the book value of the hardware and does not cover losses due to lack of service.

III. Remote Sensing Satellite Services

A. Background

Remote sensing satellites operate by detecting various forms of electromagnetic radiation reflected from objects near the surface of the earth. The satellite sensors receive visible light (optical), thermal (infrared), or radio waves (radar). Optical sensors provide images that are similar to eyesight and therefore are more easily interpreted by humans. Optical sensors require that a satellite pass over an area during sunlight and in cloud-free atmospheric conditions. Infrared sensors are capable of detecting thermal radiation in darkness but are hampered by cloud cover. Radar sensors require neither sunlight nor cloud-free conditions and are not affected by water vapor in the atmosphere.(72)

The resolution of the images produced by remote sensing satellites depends on the quality and type of sensors. The latest generation of commercial remote sensing satellites is capable of producing panchromatic images of less than one-meter resolution. Through such high-resolution images, one can identify objects on the ground that are the size of vehicles. By comparison, the best available imagery from older remote sensing satellites was slightly more than five-meter resolution. Through those images one could detect only larger objects the size of bridges and roads.

Satellite imagery has been available publicly through the U.S. Landsat program since 1972. Since then, the United States has made available for civil purposes remote sensing imagery and data from its Landsat satellites, first operated by NASA and later transferred to the National Oceanographic and Atmospheric Administration (NOAA).(73) After passage of the Landsat Commercialization Act of 1984, the U.S. government privatized the Landsat program, which eventually failed.(74) In the 1992 Land Remote Sensing Policy Act, the Landsat program was transferred back to the U.S. government.(75) In 1994, Presidential Decision Directive 23 gave NASA, NOAA, and the U.S. Geological Survey joint responsibility over the Landsat program.(76) Until the mid-1990s, Landsat, Spot Image and the Indian Space Research Organization (ISRO) were the only sources of commercial satellite imagery.

At present, aerial imagery, rather than satellite imagery, has the largest share of remote sensing revenues.(77) The satellite remote sensing segment, however, is expected to grow at a faster rate than the aerial segment. (78) Industry analysts expect that over 40 remote sensing satellites will be launched in the next decade.(79) Frost & Sullivan estimated that the remote sensing sector generated about $2.3 billion in revenues in 1998 and expects revenues to reach $5.1 billion by 2004.(80) Governments are the main customers of remote sensing products and this trend is likely to continue as commercial high-resolution satellite imagery becomes available at lower costs.(81)

There have been two key technological advances in satellite remote sensing in the last decade: higher resolution and smaller satellites. For example, prior to the launch of Space Imaging's Ikonos satellite, the best commercially available imagery was six-meter panchromatic resolution imagery produced by the Indian IRS series of satellites. Higher resolution improves the image and broadens its possible uses. Reduction in the size of satellites is significant because it lowers launch costs. For example, earlier remote sensing satellites weighed between 1,000- 2,000 kg and typically cost between $300 million and $350 million per satellite to manufacture and launch. Newer satellites weigh between 68-720 kg and can be launched on less powerful rockets for under $150 million, including manufacturing costs.(82)

B. Commercial Applications

There are a number of commercial applications for satellite remote sensing. These include for example, agriculture, civil and urban planning, environmental and pollution monitoring, geological exploration, forestry, insurance and terrestrial mapping. In agriculture, remote sensing satellites enable identification of insects, disease and irrigation problems. Remote imagery can assist local governments with urban planning, property appraisal, emergency planning and response, and infrastructure management. Color and near-infrared images have been used to identify vegetation species and land cover and to measure environmental factors that could affect ecosystems. The insurance industry is another market for satellite remote sensing. Property loss evaluation and risk assessment problems also lend themselves well to satellite imaging solutions.(83)

Exploration of oil, gas, and mineral deposits is a major market opportunity for the commercial remote sensing industry. As the current sources of supply of natural energy deposits decreases, governments and corporations will continue to seek new methods to identify and locate large supplies of natural energy resources. Oil and gas deposits can be identified by combining imaging products with other types of geological data such as seismic assessments and geological interpretations. Mapping also may improve from remote sensing applications: one meter spatial resolution satellite data would close the gap between satellite imaging products and the aerial photographs currently being used for smaller scale mapping.(84)

Some companies are exploring the commercial market for satellite-based radar remote sensing. Unlike visual imagery, which requires sensors to detect light reflected off objects on the earth's surface, radar signals are unaffected by cloud cover and darkness. Radar signals thus enable the satellite to obtain images 24 hours a day in atmospheric conditions that otherwise would render most other types of imaging satellites useless.

Spot Image has estimated that commercial radar imagery generated about 15% percent of the global market revenues in the satellite imagery segment in 1999.(85) The prospects for a large commercial market, however, are uncertain at this time. The current generation of radar remote sensing satellites in orbit is more applicable for scientific and geologic purposes than for commercial purposes. For example, radar imagery may be used to monitor glacial movements(86) to map regions such as rain forests where cloud cover is a problem and to conduct environmental monitoring.(87)

A number of governments and companies in the United States, Canada and Germany have plans to launch commercial satellites with high-resolution radar sensors within the next few years. In June 1998, the Department of Commerce issued the first-ever license to build and operate a commercial radar imaging satellite to RDL Space Corporation.(88) In November 2000, however, RDL surrendered its license after NOAA alleged that the company committed government-contract fraud.(89) NASA is attempting to finance and build a radar imaging satellite.

Canada's Radarsat 1 satellite contains synthetic aperture radar sensors with ground resolution capabilities of about 10 meters. A second Radarsat satellite with ground resolution capabilities of its SAR sensors to three meters is scheduled for launch in 2002. European companies, with assistance from European governments, are designing a radar imaging satellite predominantly for commercial applications.(90) One such program consists of a two-satellite system, called TerraSAR, being designed by the German Aerospace Center (DLR industry, DASA) (now part of the Franco-German-Spanish industrial consolidation in EADS), the British National Space Center and Matra Marconi Space U.K. The satellites, tentatively scheduled for first launch in 2004, reportedly will carry X-band and L-band radars capable of producing images with a resolution of one meter.(91)

C. Remote Sensing Satellite Programs and Companies

1. United States

U.S.-based companies began to enter the commercial satellite imaging market in the mid-1990s. It has taken longer than anticipated to deploy remote sensing satellite systems because of regulatory issues, funding considerations and technical problems. Today, EarthWatch Inc. and Space Imaging offer one-meter resolution imagery.(92) In 2001, Orbimage plans to launch a one-meter resolution satellite and the world's first hyperspectral imaging satellite.(93)

In December 2000, the Department of Commerce, National Oceanic and Atmospheric Administration (NOAA), which licenses the operation of remote sensing satellites in the United States, authorized Space Imaging and Earth Watch to provide half-meter imagery--the highest resolution imagery ever authorized in the United States.(94) Space Imaging plans to provide half-meter imagery in 2004, when it launches a second satellite. Under U.S. regulation, however, commercial providers cannot release half-meter imagery until 24-hours after it is obtained. The purpose of the restriction is "to mitigate concerns that foreign governments could use the photographs to conduct military operations against U.S. forces."(95)

2. Foreign Programs and Satellite Systems

Several foreign countries currently have or are developing remote sensing capabilities. Among these, France, Japan, India, Israel, Russia and China/Brazil have the most substantial capabilities. More than 20 nations plan to launch their own remote sensing satellites by 2005.(96)

France is a strong foreign player. With cooperation from Belgium and Sweden, beginning in 1982, the French space agency Centre National d'Etudes Spatiales (CNES) developed the Spot Image remote sensing satellite system.(97) The Spot program now includes commercial satellites capable of providing panchromatic images at 10-meter resolution,(98) sensors for vegetation and biosphere applications and a Pastel optical terminal that can provide intersatellite laser connectivity.(99) Spot Image's customers include military users.(100)

U.K.-based Surrey Satellite Technology Ltd. is building a "Disaster Monitoring Constellation" (DMC). The system consists of five satellites that will provide satellite coverage of participating countries affected by disaster once every 24 hours. The Surrey system will offer 36-meter resolution images from satellites at 425-mile polar orbits. The British government and Algeria have announced that they will acquire the first two DMC satellites.(101)

The Japanese government has supported the development of indigenous satellite technologies, even while it has continued purchasing images from companies in the United States and elsewhere.(102) The Japanese government continues to fund satellite development by Japanese companies despite the fact that those satellites cost about 50% more than similar U.S. satellites.(103)

The Indian Space Research Organization, which was established in 1972, monitors India's remote sensing satellite programs. Following its first launch in 1987, India now has four Indian Remote Sensing (IRS) satellites in orbit. Its most advanced in orbit IRS satellite is capable of producing panchromatic images at about six-meter resolution.(104) India plans to launch a series of remote sensing satellites through 2003, which include the IRS-P6 with a reported 2.5-meter resolution capability.(105) India's commercial activities for its remote sensing satellites include distribution relationships with EOSAT in Norman, Oklahoma and Euromap, a subsidiary of GAF located in Munich, Germany.(106)

Although many of the Israeli remote sensing programs are military in nature, the Israel Space Agency, founded in 1983, has conducted a significant amount of research and other such activities with American and European partners in the area of civil space. The Eros satellite program is being developed through West Indian Space, a joint venture between IAI and Core Software Technology of Pasadena, California.(107) The Eros satellites will have resolution capabilities of about one meter in the panchromatic range, making them competitive with those offered by U.S.-based companies.(108) Russian remote sensing satellites purportedly are capable of mapping the earth's surface at one-meter resolution.(109) According to the Russians, the electro-optic cameras aboard its satellites can cover 60,000 square kilometers of the earth's surface with one picture, a capability, they claim, that U.S. cameras do not possess.(110)

In 1988, China and Brazil established a joint program to cooperate on the development of an earth resources satellite. In October 1999, China and Brazil launched the ZY-1 satellite with 20-meter resolution(111) and in 2000, the ZY-2 satellite.(112)

D. National Security Implications

The commercial satellite remote sensing sector has important implications for U.S. national security--both as challenges and opportunities. The objective of Presidential Decision Directive 23 is "to support and enhance the U.S. industrial competitiveness in the field of remote sensing space capabilities while at the same time protecting U.S. national security and foreign policy interests."(113)

Foreign suppliers such as Spot Image of France have an established market for imagery data from their commercial satellite operations. The Japan NASDA ALOS (Advanced Land Observation Satellite),(114) a mapping and environmental research applications satellite with resolution in the 2.5-meter range, is considered by some observers to be "nothing more than a Japan Defense Agency mission in disguise."(115) Moreover, the technologies on these ostensibly commercial programs are likely to be adapted for the reconnaissance satellites currently being developed by Mitsubishi Electric Corporation as the lead contractor.(116) India views its remote sensing space programs as a matter of national prestige; Prime Minister A.B. Vajpayee, who presided over India's nuclear tests in May 1998, has praised the scientists at ISRO, saying that satellites are part of "the cardinal principle of self reliance."(117) By offering its satellite imagery on the commercial market, India can gain needed funding to support its space development programs.(118) Israel's expertise in military imaging satellites will increase its competitiveness in the commercial market. Israel expects to sell its satellite products to both government and commercial users.(119)

As the global market is becoming increasingly competitive, the challenge to U.S. industry to compete is greater. At the same time, U.S. Government regulation requires companies to permit the U.S. government access to all records for satellite tasking and to notify the U.S. government of any new foreign customers.(120) In addition, U.S. government regulation prohibits U.S. companies from offering better than two-meter resolution images of Israel on the commercial market.(121) These regulatory restrictions create impediments and uncertainties with consequence.

Slowing growth of the U.S. remote sensing satellite industry not only has economic and market effects, but also affects availability of commercial satellite imaging products for the U.S. Government. The success of U.S. remote sensing satellite companies could potentially benefit the U.S. government by creating a solid base of American suppliers to support the government's requirements for satellite imaging data. For example, the National Imagery and Mapping Agency (NIMA)(122) plans to buy $35 million worth of commercial imagery and ground equipment in fiscal year 2001 for uses ranging from military planning to disaster relief operations.(123) It has noted that the organization would like to purchase more commercial satellite imagery but the existence of a single supplier (at this time) has limited its plans. In addition, in support of the U.S. Government's recent half-meter license authorization, NIMA noted that the use of commercial imagery is important to relieve pressure on heavily tasked U.S. intelligence sources.(124)

An independent Commission established by Congress to review NIMA (NIMA Commission) stated in its December 2000 report that it "endorses the move to allow US companies to move to higher resolution as required by the competition and demanded by the marketplace. It will demonstrate continued technical superiority and signal US government intent to keep US companies in the forefront."(125) The NIMA Commission also explained that "improved resolution clearly allows new information to be extracted from an image. As imagery moves ... to one meter and below, military applications move beyond terrain analysis, through gross targeting, to precision targeting, bomb damage assessment, order-of-battle assessment, to technical intelligence findings."(126)

(Section V.E. below, which discusses the implications of multinational alliances and globalization with respect to communications satellites, is generally applicable to other satellite services, including remote sensing satellites. In addition, Section VII. below, which discusses legal and regulatory issues and the need for interagency coordination involving all four space sectors, has applicability to remote sensing satellite services.)

IV. Location, Navigation and Timing Satellite Services

A. Background

Global Positioning System (GPS) satellites broadcast signals that allow receivers to derive precise timing, location and velocity information. The U.S. GPS consists of three components: the space segment, the control segment and the user segment. The GPS space segment, which the Department of Defense owns and operates, consists of a minimum of 24 satellites (six planes of at least four satellites each) in near-circular semi-synchronous orbits (one orbit every 12 hours) evenly spaced around the earth. Each plane is inclined 55 degrees to the Earth's equator. This configuration allows any GPS user anywhere on the earth to see at least four satellites.(127) The satellites carry very stable atomic clocks that are used to derive the ranging signals.

The Department of Defense also owns and operates the GPS operational control segment, which consists of monitor stations, ground antennae and a master control station. The five monitor stations located around the world track and monitor GPS satellite navigation and timing signals to estimate the orbits and clock behavior. The four ground antennae located around the world upload information to the satellites and monitor satellite state of health. The Master Control Station in Colorado Springs processes data, generates satellite commands and new navigation updates provided to the satellites once or twice daily.

The user segment consists of GPS receivers that are hand carried or installed on aircraft, ground vehicles, or sea-going vessels. The receivers, which are owned by both civilian and military users, detect, decode and process the signals transmitted by the satellites. The receivers convert the signals into position, velocity, and time estimates, allowing the user to determine a location instantaneously with a high degree of accuracy.

The U.S. Government originally developed GPS for military applications with limited provisions for civil access on a subscription basis. The Department of Transportation is the lead agency for all federal civil GPS matters. The Department of State is charged with developing bilateral and multilateral guidelines on the provision of GPS services. Since 1984, however, the U.S. government has allowed free public access to GPS signals, albeit at a downgraded quality.(128) In May 2000, the U.S. government ended the practice of downgrading the quality of signals from its GPS satellites.(129) The ending of "Selective Availability" allowed users worldwide to obtain location accuracy within less than10 meters.(130) The improved accuracy is expected to increase the use of GPS-related technology in the commercial market.

Over the past three to four years, the location/navigation sector has been growing at an annual rate of about 20-25% and is expected to continue to become a major revenue-producing part of worldwide commercial space industry within the next five years. One estimate is that GPS equipment and services revenue will increase from about $6.1 billion in 1999 to about $16.1 billion in 2005.(131) GPS equipment and services are expected to produce about 10% of the total world space revenue by 2005.(132) The Department of Commerce estimates worldwide annual sales of GPS goods and service of at least $16 billion by 2003, with the United States expected to retain about a third of the global market share.(133)

B. Commercial Applications

The number of commercial applications for location/navigation satellite signals is increasing. The precisely timed signals emitted by the satellites can be used for a multitude of purposes, including the control of automated farm equipment, emergency location services, the timing of signals for the wireless telephone industry, and as the basis for a U.S. national air traffic control system.

1. Navigation Services

Over the near term, the GPS car navigation market is expected to increase in the United States, Europe and Japan. The International Trade Administration projects that the car navigation segment will continue to be the largest revenue-producing GPS segment through 2003, but growth in the segment is expected to slow as the market becomes saturated.(134) GPS signals can be combined with communications satellite assets to provide efficient routing and scheduling information, as well as the real time tracking of high-value or dangerous cargoes. GPS location signals can be used to track and locate most transportation vehicles in the ground, sea, or air.(135) GPS provides life-saving location and navigation information in search and rescue and emergency situations. For example, on December 17, 2000, U.S. Coast Guard helicopters rescued 34 crewmembers from a passenger ship, Sea Breeze I, which was sinking about 200 miles east of Cape Charles, Virginia. GPS technology allowed rescuers to identify the location of the ship and enabled the timely and successful rescue of the ship's entire crew.(136)

GPS signals are considered extremely reliable and efficient for aircraft tracking applications. In 2002, the Federal Aviation Administration (FAA) intends to implement an all-GPS location/navigation system throughout the National Airspace System (NAS) as a means to save on operating costs(137) to provide basic navigation capability.(138) Another valuable GPS application is related to emergency services. The Federal Communications Commission (FCC) has mandated that by October 2001, mobile cellular telephones must be capable of providing users' positions within 25 meters in case of an emergency.(139)

GPS technologies are extremely valuable for agriculture purposes, and can help guide farm equipment for planting and other uses,(140) increasing efficiency and reducing per acre costs.(141) GPS signals may be used to measure structural deformities in infrastructure such as bridges and railroad tracks(142) or to measure structural movements of hydroelectric dams or of high-speed rail tracks.

2. Timing Services

The extremely accurate atomic timing clocks in the GPS satellites transmit information to any point in the world, twenty-four hours per day. GPS clocks provide ideal solutions to many of these synchronization requirements.(143) It is becoming less expensive for telecommunications companies to deploy GPS receivers to synchronize their network clocks rather than maintain a separate timing system, which is not likely to be as accurate. These applications are expected to increase as new information technologies are developed and introduced. The range of applications for GPS and its necessity in an increasingly information-technology dominated world are making GPS an indispensable part of the infrastructure of modern global societies. The GPS timing segment grew at a rate of 65% in 1997, compared to the 23% rate in the overall GPS market itself.(144)

The timing mechanism in the GPS system is critically important to a number of other technologies and services. For example, technologies for the electronic switching and transmission of voice, data and video require extremely accurate time synchronization. Broadcast radio and television and wide and local area networks require accurate time transfer.(145) Cellular telephones that operate on a time-based technology also rely on accurate timing. Financial banking and the growing e-commerce industry, require some form of accurate synchronization to certify the time of transactions. Network routers and switches require timing synchronization that GPS signals can provide. Wireless telecommunications data transfer requires an independent timing source so that signals are not lost or dropped because of electronic interference with system clocks of wireless stations.

C. Technological Trends

The two most important technological trends in the GPS industry are the decreases in cost of GPS receivers and the productivity gains from embedded software. Hardware cost decreases have made GPS technology affordable to many more consumers and hardware size reductions have made GPS technology much more convenient. In 1983, when GPS commercial receivers became available, the cost was over $150,000 for equipment that weighed over a hundred pounds. In 1998, GPS receivers were available in handheld versions weighing less than 12 ounces for about $100.(146)

U.S. firms are principal providers of GPS products. Trimble Navigation, Orbital Science, Rockwell, and Motorola produce and package complete GPS user equipment, while Boeing Corporation manufactures GPS satellites. Outside of the United States, the Japanese market has the largest GPS revenues and is expected to increase in proportion to other regional markets in the short term, mostly because of car navigation sales.(147) Japanese companies involved in the manufacture of GPS receivers are Nippon Motorola, Mitsui, Pioneer Electronic, Sharp Sony and Toyota. The Japanese GPS industry tends to receive substantial support from the government and from private Japanese car and railroad manufacturers, which are major users of Japanese GPS equipment.(148)

D. National Security Implications

1. U.S. GPS System

Some of the GPS satellites currently on orbit lack redundancy and there is a small probability that three or more satellite could fail. The Department of Defense is committed to ensuring that adequate satellites are available, in orbit and ready for launch. Should the number of operational satellites fall below desired levels, however, GPS users in some areas could experience reduced accuracy and coverage could be affected that will be launched prior to the cessation of on-orbit satellites."(149)

2. Foreign Navigation and Location Satellite Systems

Foreign country development of navigation and location satellite services raise issues regarding radio frequency spectrum, interference and compatibility issues regarding the GPS system. In addition, the foreign satellite systems may be used for military purposes.

Russia has a navigation and location system called the Global Navigation Satellite System (GLONASS). It is similar to U.S.-based GPS, but is considered to be less reliable by most worldwide users. The European Union has plans for developing a constellation of global positioning satellites called Galileo.(150) A purpose of the project is to provide an alternative system in the event that the region would be denied access to the U.S. GPS system during a regional crisis within Europe.(151) In addition, the European Union expects to receive substantial industrial benefits from implementing a global navigation and positioning system, principally improving the technological competitiveness of European manufacturers.(152) The Galileo system has required negotiations between the United States and the European Union regarding coordination of links between the Galileo constellation and the U.S.-operated GPS system.(153)

The Japanese government also has studied the possibility of developing a navigation and location satellite system of its own. In 1996, Japan's National Space Development Agency (NASDA) submitted a plan to deploy a four-satellite test system in 2002 to support local GPS systems in Japan and the Asian region with the option of building a larger system later. Like the Europeans, Japanese observers have recognized that Japan should develop or at least explore alternatives to the U.S.-controlled GPS signals.

Given these foreign sentiments, it is likely that foreign nations, in addition to Russia, will begin to deploy their own navigation and locations systems within the next decade. Despite the technical considerations and costs of doing so, other countries have concerns about depending on the U.S. government for global positioning requirements. Once these countries deploy navigation and location systems of their own, they and others may derive similar national security, commercial, civil, economic and technological benefits that the U.S. GPS system affords this nation.

(Section V.E. below, which discusses the implications of multinational alliances and globalization with respect to communications satellites, is generally applicable to other satellite services, including location, navigation and timing satellite services. In addition, Section VII. below, which discusses legal and regulatory issues and the need for interagency coordination involving all four space sectors, has applicability to location, navigation and timing satellite services.)

V. Communications Satellite Services

A. Background

The commercial communications satellite sector provides an array of services to millions of users around the globe. Satellite communications services allow businesses to track inventory, a journalist to file a story from abroad, a U.S. Navy sailor to call home from sea, a student in Africa to access the Internet or a U.S. company to beam video programming in South America. Commercial satellite systems also support intelligence, defense and foreign policy missions of the United States and its allies.

Today, the commercial communications satellite segment represents a significant portion of the worldwide space industry. ING Barings estimates that global commercial communications satellite revenues in the year 2000 will total $50.1 billion, nearly double to $95.4 billion by 2005 and reach $121.7 billion in 2009.(154) Although competition from other types of telecommunications services--principally fiber--and regulatory policies affect the commercial communications satellite services segment, analysts forecast that the satellite industry will grow,(155) particularly for broadband and Internet services.(156)

The number of commercial communications satellites is expected to increase. Futron Corporation forecasts that the number of commercial communications geostationary satellites will almost double by 2010, from approximately 200 today to approximately 290 in 2005 and 375 in 2010.(157) Highest growth is expected in data communications, with business data communications accounting for about 60% of the geostationary commercial data communications satellite market.(158)

B. Communications Satellite Technology and Investment Incentives

The technological characteristics of any telecommunications source, as well as the geographic and demographic features of a service area, influence investment incentives and infrastructure deployment. For example, in urban areas in the United States with high-density population, the traditional infrastructure has been wireline networks. Areas with low-density populations, such as rural areas, however, generally have fewer wireline networks because the return on investment is not commercially viable. In some rural or remote areas, satellites provide basic telecommunications services. Satellites also are useful for serving geographic areas that have rough terrain where it is more difficult or expensive to install fiber networks. Where there are no ground-based telecommunication sources available--ships at sea, for example--satellites offer the only alternative.

Industry observers link the technological features of satellites to the industry's growth potential. ING Barings states that "While it is true that a host of terrestrial technologies ... will challenge broadband satellite networks for market share in the broadband sector, satellites are poised to claim a substantial portion of the total broadband market due to a number of advantages they hold over terrestrial competitors."(159)

Satellites have both technical limitations and advantages. For example, because of the far distance of satellites from the Earth, especially geosynchronous satellites, there is a slight delay in communication transmissions. Voice communications are especially affected by this delay. In addition, atmospheric conditions such as rain can affect quality. At the same time, satellite technology is improving. Technological developments permit more economical use. For example, satellites can operate on-orbit for longer periods of time, reducing replacement and launch costs. While Early Bird, the world's first commercial communications satellite, had a four-year consecutive lifespan,(160) a satellite's lifetime now is about 15 years.

Today's new, larger satellites can deliver more tailored and smaller spot beams to serve different types of customers. Differential capacity and longer satellite lifetimes allow for lower costs per digital bit of data than those offered by smaller satellite designs.(161) Multicasting eliminates need for redundant, multiple data streams when many users request identical data. Caching will enable the transmission to and storing of Internet data on local servers, reducing the need to retrieve data directly from the content source, thereby reducing congestion in the U.S. terrestrial backbone, particularly at frequently-accessed Internet sites. In addition, satellites are heavily used to "backhaul" Internet traffic to and from Internet Service Providers (ISPs) located outside the United States.

Very Small Aperture Terminals (VSAT) networks are particularly efficient means of point-to-multipoint distribution. VSAT networks consist of a satellite, a central ("hub") ground antenna about three to six feet in size, and up to thousands of remote smaller ground antenna.(162) VSATs provide two-way voice, data and video communications. They offer fast delivery, flexibility, low cost solutions, user control, low expansion costs, high reliability, predictability and overall network availability at levels up to 99.9%.(163) Financial institutions utilize VSAT networks for credit authorizations and on-line trading services; energy companies use VSATs to monitor pipelines; and shipping companies use VSAT networks to track shipping, provide on-time delivery, and conduct customer business. Wal-Mart, for example, uses a PanAmSat-based VSAT system to connect more than 3,000 of its stores, Sam's Clubs and distribution centers across the United States.(164)

Availability of sufficient satellite capacity also affects the industry's viability. Satellite companies often sell most of the capacity on a satellite prior to launch, leaving little excess capacity. In addition, broadband applications--for which satellites hold great potential--need tremendous amounts of bandwidth. The capacity on terrestrial wireline systems generally far exceeds satellite capacity.(165) Another concern is current delays in the development of new launch vehicles to launch the next generation of satellites, which are heavier due to enhanced capabilities. In addition, companies cite lack of public awareness of satellite technology and other factors as affecting the market. For example, lack of trained satellite service people in the quickly changing field of satellite technology is a another challenge.(166)

Financial, economic and competition factors substantially influence viability. As a result, the commercial communications satellite market has fluctuated. Competition from land-based systems, steep initial costs of designing, constructing and launching satellite systems, particular business plans and regulatory delay have created problems for some types of satellite services.(167) Consequently, some commercial satellite providers have been forced to change their marketing strategies, merge with other companies or file for bankruptcy.

Satellite systems that have experienced difficulty are global mobile low earth orbit (LEO) (nongeosynchronous) systems such as those of Iridium, Globalstar and ICO. These systems each involve large constellations, require high start-up costs and face stiff competition from terrestrial systems. For example, Iridium developed a global constellation of 66 LEO satellites to provide mobile telephone services. Iridium started operating in 1998, filed for bankruptcy in 1999 and became a new company, Iridium Satellite LLC in late 2000.(168) Globalstar, which is a consortium of international telecommunications companies led by U.S.-based Loral, provides global wireless digital telephone, data transmissions, paging, facsimile and position location services to mobile users worldwide, has encountered similar problems, stemming in part from a slow start-up in service. ICO, which originally planned a voice satellite service, and later filed for bankruptcy, has emerged as New ICO and entered an arrangement with Teledesic.(169)

In sum, some commercial communications satellite services have faced challenges. Others have been successful. Looking ahead, financial analysts see certain communications satellite services--television, radio and broadband, for example--as having long-term viability. In any event, as detailed in the following section, communications satellite services have many applications in American life and commerce.

C. Principal Applications

Commercial communications satellite systems provide a variety of services in the United States and around the globe. These include for example, telephone, electronic newsgathering, data, video, television, radio and Internet services to both fixed (stationary) and mobile users.

1. Voice, Messaging and Tracking Services

One of the first communications services by satellite was basic voice telephone service. Beginning in the 1960s and continuing today, COMSAT (now Lockheed Martin), provides international satellite telephony through the INTELSAT system using geosynchronous satellites. Thereafter, the former American Mobile Satellite Company (now Motient)(170) provided domestic voice services to fixed and mobile users through its own geosynchronous satellites. In recent years, other companies have developed new nongeosynchrounous satellite systems to deliver voice and other communications services. As described above, the satellite telephony segment has not proved to be as strong as other commercial satellite service segments.

Geosynchronous and nongeosynchronous satellites systems also provide data services. For example, LEO satellite systems operating in lower bandwidths provide data messaging services such as paging, e-mail and remote meter reading. These systems enable tracking of government assets, rail cars, trailers, locomotives, heavy equipment an containers, monitoring of environmental projects, remote electric utility meters, oil an gas storage tanks, wells and pipelines and messaging services for consumers, businesses and governments. Like LEO telephone satellite systems, LEO data systems generally have faced financial difficulties.

2. Broadband and Internet Services

The fastest growing commercial communications application for satellites is the provision of broadband services. Generally, broadband services are robust, content-oriented communications that use large amounts of capacity and move at fast speeds. Broadband applications include high-speed data over private corporate-based VSAT networks, business television services by satellite to corporations for distance training, teleconferencing, special events and Internet access. Wall Street analysts consider satellites to be well-positioned to provide broadband services.(171) Satellites avoid the congestion of Internet networks and efficiently address the asymmetrical flow of Internet traffic.(172) Merrill Lynch forecasts that future broadband opportunities "should provide a significant source of growth in the satellite sector over the next decade."(173) ING Barings projects that broadband satellite services will become a $20 billion industry by 2009.(174) C.E. Unterberg, Towbin, however, cautions that growth in the broadband satellite sector could be constrained by high space segment costs.(175)

Several satellite companies are providing either connectivity to the Internet backbone or Internet service directly, avoiding the terrestrial Internet network. For example, PanAmSat,(176) has provided international Internet services since the early 1990s, initially in collaboration with the National Science Foundation to connect Mongolia to the U.S. backbone.(177) Loral provides access to U.S.-based content to more than 130 Internet Service Providers in over 32 countries.(178) Africa Online(179) offers Internet access services to residential consumers, home offices and businesses.(180)

The potential for growth in broadband applications has encouraged development of new satellite systems that would provide broadband access directly to end users. These include the Hughes' Spaceway system, Lockheed Martin's Astrolink system, the Teledesic system and the Skybridge system. For example, ICO-Teledesic Global Limited, plans to be a global provider of wireless Internet-in the-SkyTM satellite communications service, including Internet Protocol-based mobile and fixed broadband services.(181) New ICO plans to offer satellite Internet service worldwide in 2003 and Teledesic intends to deliver broadband data and value-added services over a global network in late 2004.

3. Satellite Television Services

One of the most successful uses of satellites to date is the provision of television service by satellite. Called the "Direct Broadcast Satellite service (DBS)" or "Direct to Home" (DTH),(182) like cable television, this satellite service provides hundreds of channels of television programming directly to homes and businesses. DBS providers in the United States include EchoStar Communications Company (EchoStar), Hughes Network Systems (DirecTV) and Pegasus, which serves rural and unserved areas.(183)

DBS, which began in the United States in 1994, is a success. In 2000, there were approximately 15.94 million DBS subscribers in the United States, representing approximately 18.16% of the U.S. home subscription television market.(184) DBS provides direct competition to cable and other multichannel services. DBS providers have begun to offer interactive television. As of year-end 2000, there were approximately five million interactive-capable satellite households in the United States.(185) ING Barings predicts that U.S. DBS revenues in 2000 will be $7.9 billion and in 2009, triple to $23.1 billion. (186)

Although DBS is expected to continue to grow in number of subscribers and amount of revenues, it is not expected to exceed cable's share of the U.S. home subscription television market. For example, in 2008, though the number of U.S. subscribers will rise to 28.75 million, this figure will represent 27.4% of the subscription television market.(187) On the other hand, as DBS companies expand their offerings to include broadband applications, they are expected to "add a significant advantage in the competition for customers with digital cable."(188) "We believe that broadband data transmission applications and new interactive video services should continue to drive the [DBS] sector."(189) Some of these advantages are diminishing, however, as cable operators offer digital services that will match DBS channels and signal quality. Cable systems, are increasingly providing high-speed Internet access.

Satellite television services are widespread outside the United States where cable systems are not as prevalent as they are in the United States. Operators include both U.S. and non-U.S. entities, such as European based- SES Astra and EUTELSAT, a European treaty-based satellite organization, which delivers satellite television to millions of homes in Europe, Africa and Asia.(190) ING Barings estimates that international U.S. DBS revenues will more than double from $14.6 billion in 2000 to $32.8 billion in 2009.(191)

4. Satellite Radio Services

Satellites also provide radio services. This service is called the "Digital Audio Radio Satellite Service" (DARS). In 2001, for the first time in the United States, two U.S. DARS licensees, XM Satellite Radio and Sirius Satellite, are expected to deliver radio channels directly to vehicles and homes.(192) Financial analysts are positive about DARS. According to C.E. Unterberg Towbin, DARS "promises to revolutionize the radio industry, much the same way cable and satellite television revolutionized the television industry." (193) DARS is described as a "quintessential" satellite business because it can serve a large geographic region with hundreds of millions of consumers and its offerings of ethnic programming, world and business news, fewer commercials and digital quality "will drive consumers to satellite radio."(194)

DARS already is available in other countries. For example, WorldSpace provides DARS service in Africa and Asia and reportedly is forming an alliance with Alcatel to seek partners in a consortium to provide up to 100 channels of radio, plus short messaging services throughout Europe.(195)

5. Service to Rural and Unserved Areas

Traditionally, it has not been cost effective to deploy fiber systems in remote, low density areas. As a result, those areas have had inadequate telecommunications services. Largely through use of satellites and other wireless technologies, this situation is changing. Wall Street views rural and unserved regions as growth areas for the satellite industry. Governments and companies worldwide are undertaking efforts to increase telecommunications services to these areas. For example, various U.S. Government agencies and states have launched initiatives to encourage deployment of telecommunications services to unserved areas, including Native American lands.(196) "We remain committed to encouraging the expeditious delivery of telecommunications services, via satellite services, to unserved communities. The comments in this proceeding support our belief that satellites are an excellent technology for delivering these services."(197) In Somalia, where the state telephone system was destroyed by war, new satellite telephone booths enable residents to call anywhere in the world.(198) As a result of these measures, large populations of people that just a short time ago did not have even basic telecommunications capabilities readily available now have access to communications technology.

6. Disaster Relief and Emergency

Services Satellites are instrumental in delivering disaster relief and emergency services.(199) Satellites are particularly advantageous for emergency purposes in rural and remote areas that lack other communications capabilities.(200) For example, in Native American areas in the United States, satellite systems have been used to provide police dispatch and other emergency services to tribal residents. In addition, in emergency and distress situations, an individual can use a satellite telephone, like other phones, to call someone for assistance.(201)

7. Enabling Services

Commercial satellites enable various businesses and technologies to provide services.(202) As described above, satellites support some components of the U.S. critical infrastructures.(203) Many traditional over-the-air television and radio broadcasters, including the major networks, deliver programming to affiliates in the United States in part by satellite.(204) Satellites also deliver programming to cable television company facilities, which those companies then transmit via cable lines to their subscribers. As a result, consumers worldwide are able to see and hear in present time, up-to-the-minute news, sports and entertainment programming on a range of subjects and interests. Estimates are that approximately 30-35% of transponder capacity on commercial geosynchronous satellites is used to relay broadcast and cable television programming.(205) In addition, satellites are part of some terrestrial wireless networks. For example, they transmit information and communications in terrestrial wireless paging services.(206)

Commercial satellite systems provide protection services for communications networks. Massachusetts-based Wang Recovery Services uses a GE American Communications (GE Americom) satellite to provide telephone backup solutions in situations in which a company loses service because of the catastrophic failure of a telephone company's local central office or corporation's own network. Wang reportedly is working with GE Americom to offer its service in Europe.(207) In addition, Wang is now joining with California-based Esat Inc. to provide Esat's Internet and network continuity service via satellite. Esat also can provide a redundant satellite-powered virtual private network to substitute for failed systems. Rotterdam-based Satellite Safe Ltd. serves corporate clients in Europe and South Africa by detecting viruses that can cause significant damage to corporate networks in Europe and South Africa and distributes anti-virus software over satellite.(208) "The only w