Communication Breakdown?: The Future of Global Connectivity After the Privatization of INTELSAT

In 1971, 85 nations (including the United States) formed the International Telecommunications Satellite Organization “INTELSAT,” a public intergovernmental treaty organization. INTELSAT was charged with operating the world’s first global telecommunications satellite system, in order to guarantee the interconnectedness of the world’s communications systems and the availability of international telecommunications service to every nation on earth. By the late 1980s, however, INTELSAT’s operations began to experience substantial competition from the private sector. In 2000, the proliferation of privately-owned telecommunications satellites and transoceanic fiber optic cables led the U.S. Congress to mandate the privatization of INTELSAT. That privatization process began in 2001, and was substantially completed on January 28, 2005, when INTELSAT’s former satellite system was sold to private investors for $5 billion dollars. The privatization of INTELSAT has been said to threaten universal global connectivity and/or the continuation of international telecommunications service to developing countries. Are the legal safeguards instituted during the privatization (which include the maintenance of a residual treaty organization) sufficient to dispel such economic and political threats? Economically, the privatized satellite system is now legally obligated to serve developing countries at rates no higher than those charged prior to privatization. It likely will remain capable of honoring this legal commitment. Even if its business operations fail, however, this commitment would survive a bankruptcy. Politically, the privatized satellite system has been rendered subject to U.S. law., including U.S. international trade policies. Current U.S. law, however, strongly protects the satellite system’s ability to serve every country on earth. Congress, of course, retains power to amend U.S. law. But certain political safeguards, including U.S. participation in the World Trade Organization, would interpose significant obstacles to any Congressional attempt to implement telecommunications sanctions as a means of advancing U.S. foreign policy. Accordingly, the privatization of INTELSAT is unlikely to undermine the universal global connectivity of the world’s communications systems