U.S. Races Deadline to Launch Satellites

The U.S. is in danger of losing international rights to choice locations for satellites that could be used to deliver broadband data services nationwide.

The U.S. is in danger of losing international rights to choice locations for satellites that could be used to deliver broadband data services nationwide. Experts blamed licensing delays, technical indecision and the state of financial markets.

If U.S. companies that hold licenses to the orbital "slots" dont have operational satellites in orbit by deadlines ranging from late 2004 to early 2006, the rights will revert to an international oversight body. According to most analysts and operators, it takes several years to design, fund and launch a satellite, so it appears almost certain the U.S. will lose some of those slots, said Edward Achtner, who has researched the issue for his firm, FCCFilings.com.

In that case, those slots would be available to other nations that have already filed petitions with the International Telecommunication Union in Geneva. And the ITU, a branch of the United Nations, intends to hold "hard and fast" to its deadlines, said Roger Smith, head of the space service department at the ITU.

The satellites at issue would use what is called the Ka band, which operates at a much higher frequency than the C band and Ku-band used by satellites that now deliver data and direct-broadcast video to customers. Ka-band satellites offer the chance to beam far more data on far more channels than existing satellites can send.

Operators planning to launch Ka-band satellites said they will offer modestly priced two-way high-speed data connections, including Internet service, to customers through an antenna similar to that now used for direct-broadcast television. That could be a boon to businesses and consumers who cant get broadband connections over DSL or cable modems.

But for all the promise, delivery has turned into a nightmare. The Federal Communications Commission awarded the first licenses for Ka-band satellites in 1997. So far, not a single satellite is in orbit, and only three are in progress. Three companies have had their licenses yanked by the FCC for failing to meet construction milestones.

"My concern is that the FCC is going to study the issue to death and well get past the point where companies can deploy," said Cheryl Crate, vice president at operator Pegasus Communications, which has applied for a license.

License holders have been waiting for nearly four years for approval of key technology linking data from different satellites in the Ka-band. The approval came from the FCC in January. But the international deadlines havent been pushed back.

An FCC official, who asked not to be named, said the agency couldnt have acted on the technology any earlier because of delays at the ITU over technical issues and because the technology wasnt developed enough.

Meanwhile, another group of hopefuls that began applying in 1998 for a second round of licenses has nothing to show for their efforts. The FCC has yet to award a single second-round license, and probably wont until later this year. Some of the hopefuls said many first-round license holders do not intend to complete their projects, but retain the valuable licenses and frustrate the efforts of newer companies to get into the field.

The FCC official said the agency is watching the situation, but must go through normal processes to consider appeals of its decision to rescind some of the licenses. The official also said the agency has pressed the hopefuls to agree on their own plan to divide the licenses. But that has failed because there are too many applicants and too few of the coveted slots that cover the full continental U.S.

Making matters worse is the state of the financial markets. The projected cost of some of the Ka-band systems described to the FCC range from $207 million for a single satellite to $5.1 billion for a 20-satellite system proposed by Hughes Electronics.

"Its going to be very hard to raise all the money for people to build these," said Kalpak Gude, vice president of government and regulatory affairs at PanAmSat, whose first-round license was pulled by the FCC. The company is appealing the decision.