Commission launches investigations into global mobile satellite systems

By the year 2000 millions of subscribers worldwide are expected to be offered satellite personal communications services. This new phenomenon which is set to become a dominant feature of the international satellite market has attracted the attention of the European Commission ...

By the year 2000 millions of subscribers worldwide are expected to be offered satellite personal communications services. This new phenomenon which is set to become a dominant feature of the international satellite market has attracted the attention of the European Commission in the context of its competition policy.

The Commission has asked two mobile satellite systems (MSS), Globalstar and Iridium, to provide information on their system and partnership agreements. Inmarsat-P, another major MSS, has already notified the Commission of its relevant agreements. Since Iridium and Globalstar have not yet followed suit, the Commission has commenced investigations at its own initiative.

The aim of the investigation is to ensure level playing fields in the EU and, in particular, to assess the impact of the consortia on future competition in more localized markets.

The two consortia have been asked to provide a comprehensive description of their systems from a technical, financial and commercial point of view. The investigation also addresses the nature, terms and conditions of the distribution policies chosen by the consortia, the nature of links with cellular terrestrial networks and the access by competing MSS to infrastructure owned by partners in one of them.

Satellite-based, global mobile communications using hand-held terminals represent a market which is expected to result in revenues of ECU 10 to 20 billion during the next decade. The indirect effects on related markets will be much greater. Due to the scarcity of frequencies, the very heavy financial implications involved in operating the large number of satellites needed for such systems, and a high level of market uncertainty, it is unlikely that there will be more than a few major players. It is therefore particularly important that competition is maximized for the other, "downstream", elements of the market involving local service provision, distribution and equipment supply. Open, non-discriminatory and fair conditions regarding partnerships and agreements will need to be maximized.

The general service to be offered in the mobile satellite systems services market involves the full coverage of a roaming satellite system, using low earth orbit (LEO) or medium earth orbit (MEO) satellites, which will also support full user mobility, as well as offering the user a light hand-held portable terminal and identification by a single number anywhere in the world. It is clear that global service is becoming the most appropriate solution to solving an increasing number of communication needs. It is expected that mobile voice service will be the primary application for these networks, but two other significant segments will involve so-called mobile personal digital assistants, data transmission and paging.

In essence, MSS represents the ability to maximize the mobility of users, by providing global roaming and coverage in remote areas where terrestrial services may be uneconomic. "Global coverage" means not only that the user can move anywhere, but also that the communications system can "move" to serve new fixed or "stationary" users. Thus, these systems are not aimed only at the international business traveller. In fact, Commission studies predict that by far the greatest potential (in terms of numbers of subscribers) in the MSS market will be for communities in less-developed regions of the world as a substitute for "fixed service" where fixed networks have yet to be rolled out or are very poor. Central and Eastern European countries represent an important customer base in this context, which could be accessed from gateways within the EU. A third important use of MSS will be as a substitute for cellular mobile telephony in areas where the cellular network has failed to penetrate (i.e. rural parts of the developed world and both urban and rural parts of lower income countries).

MSS is expected to act as complement to both GSM and DECT wireless technologies as well as the public telephone network, enhancing universal service coverage since it is uniquely well suited to areas of low population density.