Space Is Big Business

In 1984, millions of people around the world watch the Olympic Games, beamed by satellite from Los Angeles. As they watch this athletic spectacle, viewers are bombarded with advertisements from Toyota, IBM, Coca-Cola, General Motors, and Nestles.

Satellites have become symbols of the modern age and the preeminence of American technology. Their development has made instantaneous communication a tact of life for millions of people. Long distance telephone services, global television coverage of international events, and modern weather forecasting would be all but impossible without these technical marvels floating around in the sky.

Satellites have also become symbols of the power of multinational corporations. In the last decade, the manufacture and operation of satellites has become big business. Over a dozen companies currently manufacture satellites, while several dozen corporations have their own satellite networks under development. By the end of the decade, revenues from these systems will exceed $2.5 billion a year.

It is undeniable that the average person benefits from the increased communication made available by this new technology. But there is a darker side to the corporate domination of satellite manufacture and use. Satellite communication gives giant corporations a high degree of control over their global operations and an unprecedented ability to impose their values, culture, and political influence on local communities. Many Third World countries see the U.S. domination of satellite technology as a form of cultural imperialism. And, as business communication becomes more and more lucrative, the basic communication needs of the average person are being left behind.

Just a handful of powerful corporations are behind the growing satellite industry, but their decisions have great social and political ramifications.

The satellite bureaucracy

Unlike most countries in the world, the United States does not have a government telecommunications system. Instead, this important service is managed by a private company, the Communications Satellite Corporation (Comsat), and regulated by the Federal Communication, Commission (FCC).

Established in 1962 by an act of Congress, Comsat was mandated to develop and operate an international satellite system. By virtue of a decision by the FCC prohibiting AT&T and ABC Television from launching their own satellites, Comsat established control over the U.S. domestic market.

In 1964, Comsat initiated the International Telecommunications Satellite Organization (Intelsat), a profit-making inter-governmental organization designed to provide communications services to countries throughout the world. The international treaty establishing the 106-member organization stipulated that no other international telecommunications system could be built without the permission of Intelsat. Because Comsat was the sole operator of Intelsat's satellites, this agreement granted Comsat and U.S. satellite makers a virtual monopoly over the production of international communications satellites.

In 1971, the FCC announced its "Open Skies" policy which permitted companies other than Comsat to launch their own satellites. This decision was paralleled by the loosening of the relationship between Comsat and Intelsat, so that Intelsat began operating satellites on its own. Comsat, however owns 24 percent of Intelsat.

Currently, Intelsat is used for communication between two or more countries, or for internal communication within small countries. The organization provides international telecommunications to 170 countries, while its 15 satellites provide domestic service to 23 countries. This number is expected to double by the end of the decade.

Membership in Intelsat is limited to pro-Western countries (Soviet bloc countries belong to Intersputnik) and voting power is based on use. Thus, as in the World Bank or the IMF, wealthier countries have a disproportionate share of the votes, with the U.S. claiming over onethird. Other countries with large shares are Britain, France, Germany, Italy, and Japan.

Intelsat, however, remains closely identified with American interests. As a result, several regional and national satellite systems have begun to emerge. In 1977, a number of European countries formed Eutelsat to provide service to the European business community: the first Eutelsat satellite was launched aboard the European Space Agency's Ariene booster ,this past June. Twenty-one Arab countries have joined together to form Arabsat, and are presently constructing their first satellite. And a number of individual countries are developing their own domestic satellite ' networks, including Japan-which plans to launch 50 satellites in the next 17 years-and India, Italy, Sweden, and China.

The satellite makers

Three American companies dominate the communications satellite market: Hughes Aircraft, RCA, and Ford Aerospace. Hughes, the most commercially oriented of the three, has established a regular satellite production line to meet the needs of a variety of customers, including private satellite operators Comsat, Western Union, Satellite Business Systems, and AT&T, as well as the governments of Canada, Indonesia, Australia, and Mexico. Over two dozen communications satellites manufactured by or with Hughes are now in orbit, with as many on order.

The number two satellite maker is RCA Astro-Electronics Division, which has built over 125 satellites, primarily for NASA and the Pentagon. Third place among the manufacturers is held by Ford Aerospace, which has been the prime contractor for the fifth generation Intelsat satellites, and the experimental CS-2 Japanese communication satellite. TRW, General Electric, and Lockheed make military communication satellites, and Rockwell builds military navigation satellites. Following the lead of RCA, both Hughes and Ford Aerospace plan to expand into operating networks of their own satellites within the next few years.

For the time being, only four U.S. firms operate U.S. domestic communications satellites: Comsat, RCA Americom, Western Union, and Satellite Business Systems. Comsat is by far the largest, with seven satellites generating an estimated $80 million in 1983 revenue. RCA Americom, which began service in 1973, brings in about the same income with five satellites in orbit, as does Western Union, ' which started operation in 1974. The services these satellites provide range from long-distance telephone calls, the leading service in the 1960s, to the transmission of movies to cable TV operations, the fastest growing service throughout the 1970s.

Telephone and television services-the mainstays of the telecommunications industry of the 1960s and 1970s-provide a direct benefit to the average person. But from the beginning, corporations have looked to satellite communications as a means to simplify their business practices.

Who does the industry serve?

The founding of Intelsat, for example, led to the development of a truly international currency market in the mid-1960s. As it became increasingly possible to monitor financial developments across the planet-virtually at the moment they occurred-corporations with cash on hand were able to move their holdings or currency from one country to another in response to the slightest change in interest rates or the latest political developments.

More recently, services which benefit the average consumer have been outpaced by services to big business. Satellite Business Service Systems (SBS), a consortium formed in 1980 by Comsat, IBM, and Aetna Life Insurance, has launched three satellites to provide communications and data transmission for large global corporations. Despite losing money in its first year, SBS is now signing up more customers, as corporate managers increasingly recognize and appreciate the greatly expanded controls and coordination that satellite links provide.

The instant communication of vast amounts of corporate data has changed the way multinational corporations do business. Prior to the advent of satellite communications, managers of local subsidiaries often serving a local market were relatively free to conduct their marketing and labor relations in a manner that was in some sense responsive to local conditions. But along with the computerization of many business functions, satellite links now permit managers to directly intervene in activities in overseas subsidiaries. From General Motors' headquarters in Detroit, for example, auto executives can control the speed and output of assembly lines around the world.

Satellite links also permit the relocation of data processing activities to low wage areas in the Third World, as well as the relocation of plants to areas where manufacturing activities are managed by "remote control." Datamation, the computer industry magazine, recently reported that American Airlines has closed down a data entry operations in Tulsa, Oklahoma "and is in the process of hiring 200 Barbadians to perform this work. American will employ a satellite to link its data entry operations in Barbados with its data processing center in Tulsa." And some auto industry analysts predict that engineers may soon be able to transmit three dimensional images of auto parts by satellite from central computers to numerically controlled machine tools in another country, where the design would be transformed into a metal auto part.

These new opportunities have not escaped the attention of Intelsat. Intelsat Director-General Santiago Astrain, a Chilean, has noted that by using satellites, "operations can be centrally integrated while exploiting resources and employing personnel in all parts of the world with complete flexibility... If robotic manufacturing and telerobotic devices follow the same pattern of rapidly decreasing costs-and this is quite likely-the impact upon jobs, job location, and worldwide commercial organizations and management would be far-reaching and swift."

Despite a slow start, satellite services to business are predicted to be the major growth area in the coming decade. Spurred by the new opportunities and a handsoff attitude on the part of the FCC, a number of companies are planning to enter the field.

Some of the largest companies and projects:

• American Satellite, a consortium of Fairchild Industries and Continental Telephone, which presently owns a network of over 200 ground stations serving government and industry, plans to launch two satellites of its own to replace the space it currently rents on Western Union's satellites.

• A host of companies are preparing to enter the market for Direct Broadcasting Satellite service (DBS), which will use new high power satellites to broadcast television programming direct to small dishes atop homes in urban and rural areas not served by cable television. Beginning in 1985, eight companies plan to launch a total of 27 satellites that will in theory provide an aggregate of almost 100 channels of programming. Among the major corporations testing the water are veteran satellite operators Comsat, Western Union, and RCA. They have been joined by such established media firms as CBS Television and Hubbard Broadcasting, as well as newly formed venture capital outfits like Direct Broadcasting Television Corporation. The most recent, and certainly the most controversial, entry into this field, is Australian publisher Rupert Murdoch, who owns a global media conglomerate noted for its sensationalist news reporting.

  Although DBS systems will cost $500 million apiece, the profits could prove astronomical. Initially the programming will be on a subscription basis, with the viewer paying a monthly fee. But if the market develops to include tens of millions of households, advertisersupported programming will surely follow. With its specialized programming, DBS could prove to be a new and potent tool for the corporate shaping of popular tastes and attitudes.

• Teleconferencing may be the hottest telecommunications innovation of the next decade. Two-way television hookups allow groups of managers on opposite sides of the planet to conduct a meeting without ever leaving their respective offices. This not only cuts down on the time and expense of travel, but also allows top executives to meet with subordinates in widely scattered locations.

Ignoring consumers and the Third World

The rapid expansion of business telecommunications services and the continued dominance of the U.S. in satellite technology raises a number of issues for consumers and Third World countries.

The use of satellites for long-distance telephone service, for example, has proved to be a mixed blessing-and could end up actually decreasing telephone access for low-income people.

One of the factors driving AT&T to divest its local operating companies was the competition for more lucrative longdistance services from companies like MCI and Sprint, which are both rapidly expanding their operations. While the competition may reduce the costs to the consumer of long-distance phone calls, the loss of this offsetting revenue to local phone companies will increase the costs of local service.

In the opinion of some critics of the telecommunications industry, these growing costs are a direct result of the FCC's deregulation of the industry and the growing competition for long-distance services. A recent study of telephone rates by the Executive Board of the Communications Workers of America (CWA) charges that the FCC's "bias" towards competition "favors business over residential customers... New systems for transmitting data and for teleconferencing are of little direct benefit to the residential or small business phone user." The study predicts that, as a result of AT&T's divestiture of the Bell System, local rates will rise "dramatically," with Michigan projecting a 106 percent increase, Kansas 121 percent, and Florida as much as 243 percent.

The CWA study also raises the spectre of a cut-off of service for poor and rural people. "A doubling of phone rates," the study claims, "will reduce the number of phones per home to 71 percent for the moderately poor and to 64 percent for the very poor. A tripling of rates would drop these figures to 54 percent and 46 percent respectively." It adds, "The philosophy of driving down costs [for long distance], if carried to extremes, could make telephone service prohibitive in rural areas."

Although NASA is working on a new type of satellite to provide telephone service to rural areas, this effort receives little funding and will not be completed for many years.

One of the more sobering conclusions of the CWA study is the effect rising rates will have on minorities. "The greatest impact of rate increases will fall on the poor black population," the study says. Already, according to a 1981 Congressional study, one-fifth of the black and one-third of the Hispanic population of New York are without phones at home or nearby. "Strong regulatory control at federal and state levels is required to balance the equation," the study concludes.

"The key question is, who is the consumer?" asks George Kohl, a research economist with the CWA and a co-author of the report. In an interview with Multinational Monitor, Kohl pointed out that four percent of the users of long distance service receive 60 percent of the billing. These users, he says, include big insurance companies, banks, oil companies, and securities firms. According to Kohl, the average telephone bill of a multinational corporation is $300 million a year. Information handling accounts for the bulk of these costs-up to 30 percent of the total costs for securities firms, 20 percent for insurance companies, and 18 percent for banks. "They're the people pushing for low rates on long-distance services," he says. "The Fortune 500 benefits and it's me and you who pay for it."

Sam Simon, director of the Washington-based Telecommunications Research and Action Center, says that the heaviest users of the AT&T system-Exxon, General Motors, and Citibank - have threatened to set up their own "bypass" systems unless long-distance rates are lowered. It's "a classic case of corporate blackmail," he says, noting that there are currently no institutions to regulate the practice. "But they still have to plug into the local system, and that's why they're fighting access fees," he says. Seventy percent of the capital of longdistance calls, according to the CWA study, are tied up in local costs, with 30 percent in long-distance.

North/South issues

Although there are only about 100 communication satellites currently in orbit, they tend to be clustered in the part of the orbital arc above the equator that are best suited for serving North America and Europe. But these positions are in many cases also those best suited for serving Third World countries that lie along the same longitudes to the south of the industrial nations.

Particularly for the developing countries-who utilize 35 percent of satellite communications traffic-domestic communications satellites can be a key element in their national development programs. India experimented during the 1970s with using satellites to broadcast educational programming on farming and health care to more than a thousand rural villages. Thus it is important that the allocation of satellite orbits give priority to these applications.

The latest chapter in the contest between the U.S. and the Third World for control of outer space came at the Regional Administrative Radio Conference meeting in Geneva during June and July 1983. The conference, convened by the United Nations' International Telecommunications Union (ITU), met to decide how the countries of the Western Hemisphere should use its portion of the geostationary orbit for a new generation of satellites that will broadcast to small receiving dishes for homes or apartment buildings.

The meeting was a microcosm of the range of North/South conflicts. The disparity of the contest can be measured by the preparations of the contestants. The United States delegation included over 30 members in Geneva, who were in constant contact (via satellite) with more than 100 additional staff in Washington. The American delegation also brought its own computer to help it rapidly analyze the effects of various plans and options. In contrast, other countries, such as Bolivia, Chile, and all of the Central American states were forced to rely on plans prepared for them by the U.N. International Telecommunications Union.

The main conflict centered around the question of how these new satellites were to be used, which would determine such technical questions as the power of the satellite transmitters, the orbital spacing of the satellites, and the size of receiving dishes. The U.S., which has already granted a number of companies permission to build such satellites, wanted the conference to agree to technical specifications that would permit reception of satellite signals by very small dishes (about a yard in diameter) that could be mounted on the roof of a family home. The American delegation also sought provisions that would enable these satellites to be used for various advanced applications, such as High-Definition Television (which offers a TV picture equal in quality to that of a movie screen).

Less developed countries had little interest in such futuristic frills, and instead sought standards that would encourage community reception systems suited for apartment buildings and rural communities. Although the U.S. was forced to compromise on a number of issues, in the end of the American delegation declared that the U.S. would not abide by the conference's decision on the maximum power level for satellite transmitters. The issue is expected to be resolved at a subsequent conference.

The deregulatory frenzy at the FCC is resulting in fewer and fewer opportunities for the public interest to be weighed against the interest of the satellite companies. Meanwhile, U.S. official and corporate executives are arguing that the' U.S. should "go it alone" in space without regard for the wishes of international bodies like the ITU - just as it did with the Law of the Sea Treaty.

Thus, if present trends continue, communications satellites will increasingly be in the service of the large multinational corporations, helping them extend and consolidate their influence throughout the world.

But the dangers these attitudes present to consumers and Third World people are too great to ignore. Hopefully, along with the growth of big business in outer space will come a new batch of activists, demanding that the public interest in space and satellite technology be respected. As George Kohl of the CWA says, "The trickle down communications policy is just like in economics-it doesn't trickle."

John Pike is Multinational Monitor's defense correspondent.