Freedom and Satellites

The Wall Street Journal, 05/08/91

The revolts of 1989 from Tiananmen to Wenceslaus Squares
showed that the spread of democracy and freedom has been
abetted by the fax machine and satellite. So why are
lobbyists and some U.S. officials trying to block competition
in global telecommunications?

That’s exactly what’s happening in a remarkable lobbying
campaign to prevent greater competition to Intelsat, the
global satellite cartel. PanAmSat, a 1980s’ start-up that
serves such companies as CNN, is petitioning to tap into the
American telephone-switching network. Intelsat is now the
only satellite system that has that right, a restriction that
lets it dominate the international market for satellite
telephone calls and switched-data transfers (such as this
editorial). How the Bush administration decides the issue
will say a lot about what it means by a “new world order.”

PanAmSat is trying to do in international markets what MCI
did in domestic long-distance service by fighting to end
AT&T’s monopoly. Global competition would help reduce prices
for international long-distance calls, which are still
dominated in most of the world by government-owned
monopolies. More broadly, more competition would make it
easier and cheaper for more of the world’s people to tap into
the information age.

So why would anyone want to stop it? The answers are the
power of the status quo and some outmoded notions about
national security. Naturally Intelsat, a user-owned
cooperative involving 119 nations, doesn’t want to lose its
privileged status. But the irony is that Intelsat (founded in
1965) is by now so well established that it could do very
well in a competitive marketplace.

The same isn’t true of a company called Comsat, which has
the sole right of access to Intelsat from the U.S. No other
U.S. company — not AT&T, not CNN, no one — can deal
directly with Intelsat. Comsat charges fees to access
Intelsat, a windfall that has let it grow so fat it can
afford to buy such things as the Denver Nuggets. Comsat would
suffer in a competitive world satellite market, which is why
it’s paying so many big-time lobbyists to stop any change.

The National Security Agency also frets that greater
satellite communications will make it harder to listen in on
our adversaries. But that’s not really true. Satellites are
easy to tap, no matter who owns them. More important, if
satellite progress is slowed down, countries will simply turn
to fiber-optic phone cables, which are much harder to tap
than satellites. Our spooks will be shooting themselves in
the ear.

Our hawkish credentials are as good as anyone’s, but the
NSA’s objections reveal a shortsightedness about U.S.
security. Isn’t it in our interest to spread pluralism and
democracy in the world? So shouldn’t we encourage the spread
of technology that furthers that goal? In Argentina, PanAmSat
has already made it possible for private TV and
communications networks to compete with the state-owned
monopoly. These will help sustain Argentina’s democracy —
and so make it more difficult for a Saddam-style tyrant to
emerge in the Western Hemisphere.

Comsat says it too favors “liberalization,” but only by
treaty and not unilaterally by the U.S. Yet the U.S. is the
only important country that bars even consulting with another
Intelsat member about gaining access to domestic networks. In
any case, we’ve always thought the U.S. was supposed to lead
the cause of freedom and competition, not follow India or
Germany. The State Department especially should understand
all this, but Jim Baker’s point man on this issue, Bradley
Holmes, seems more interested in protecting Third World
monopolies.

George Keyworth, science adviser to former President
Reagan, argues that the Intelsat monopoly (and other U.S.
regulations) also “constrains one of the areas where the U.S.
is most competitive-information.” It’s no accident that
comments in support of the PanAmSat request have come from
C-Span, the big TV networks, U.S. makers of earth stations,
and even AT&T.

Intelsat was founded in 1965 by U.S. initiative and
there’s no doubting its success. But time and technology have
changed the world. Nations — and more important, individual
citizens and businesses — can be wired faster and more
cheaply if satellite networks are open to complete
competition. A country that prizes freedom should be the last
to block this progress.