The ORBIT Act, enacted in March 2000, was  designed to promote a competitive global satellite communication services  market. It did so primarily by calling for INTELSAT to be fully privatized. Such commitments resulted in member countries agreeing  to open markets to telecommunications services, such as global satellite  communications services. Most INTELSAT Privatization Steps Have Taken Place and Stakeholders Stated That Implementation of the ORBIT Act Was Not Inconsistent with U.S. The Congress and FCC have  extended this date three times and the current deadline for the IPO is June  30, 2005. Because Intelsat has not yet completed the IPO, some competing  satellite companies have stated that the privatization is not fully complete. Some parties have pointed out that there was a possibility that  implementation of the ORBIT Act could have given rise to action arguably  inconsistent with commitments that the United States made in  international trade agreements. However, we were told that actual  implementation avoided such outcomes and no disputes arose. Most companies and experts that we interviewed believe that, to date,  Intelsat’s privatization has been in accordance with the ORBIT Act’s  requirements, and some of these companies and experts that we  interviewed believe that FCC is fulfilling its duties to ensure that the  privatization is consistent with the act. Stakeholders Note Potential for Inconsistencies between ORBIT Act and International Trade Agreements, but Stated That Implementation of the Act Was Not Inconsistent with Those Agreements

We were told that there were potential inconsistencies between the ORBIT  Act and obligations the United States made in international trade  agreements. Stakeholders Attribute Recent Improvements in Market Access to Global Trade Agreements and Privatization Trends, Rather Than the ORBIT Act

According to most stakeholders and experts we spoke with, access to non- U.S. satellite markets has generally improved during the past decade. All five satellite  companies that we spoke with indicated that access to non-U.S. satellite  markets has generally improved. Most stakeholders that we spoke with attributed the improved access in  non-U.S. satellite markets to the WTO and global trade agreements and the  trend towards privatization in the global telecommunications industry,  rather than to the ORBIT Act. Additionally, two of the satellite  companies and one expert told us that the trend towards privatization in  the telecommunications industry—such as governments privatizing state- controlled telephone companies—has helped improve market access. According to several stakeholders,  market access was already improving when the ORBIT Act was passed. Some Companies Say That Market Access Challenges Remain and Suggest More FCC Action under the ORBIT Act to Address These Issues

Some satellite companies have stated that some market access problems  still exist, which they attribute to foreign government policies that limit or  slow entry. However, some other companies have a different view on whether Intelsat  has any preferential or exclusive market access advantages. Some Satellite Companies and FCC Differ on FCC’s Responsibilities under the ORBIT Act

Some of the companies we spoke with believe that FCC should take a more  proactive role in improving access for satellite companies in non-U.S.  markets. GAO response: The ORBIT Act’s requirement for an IPO does not  specifically state “equity IPO,” but states that Intelsat must hold an “IPO  of securities.” Nevertheless, in the context of Inmarsat’s required IPO,  which is also required under the ORBIT Act, FCC is currently reviewing  this very issue—that is, whether the IPO must be an offering of equity  securities.
Why GAO Did This Study

In 2000, the Congress passed the Open-market Reorganization for the Betterment of International Telecommunications Act (ORBIT Act) to help promote a more competitive global satellite services market. The ORBIT Act called for the full privatization of INTELSAT, a former intergovernmental organization that provided international satellite services. GAO agreed to provide federal officials' and stakeholders' views on (1) whether the privatization steps required by the ORBIT Act have been implemented and whether there were potential inconsistencies between ORBIT Act requirements and U.S. obligations made in international trade agreements; (2) whether access by global satellite companies to non-U.S. markets has improved since the enactment of the ORBIT Act and, if so, to what is this generally attributed; and (3) if any market access problems remain, what role does the Federal Communications Commission (FCC) have in addressing those problems under the ORBIT Act.

What GAO Found

Most of INTELSAT's privatization steps have taken place and a variety of stakeholders told us that implementation of the ORBIT Act was not inconsistent with the commitments that the United States made in international trade agreements. In July 2001, INTELSAT transferred its satellite and financial assets to a private company. FCC determined that this and other actions satisfied the ORBIT Act requirements for INTELSAT's privatization but noted that the company must hold an initial public offering (IPO) of securities by a required date. The current deadline for the IPO is June 30, 2005. Because Intelsat has not completed the IPO, some satellite companies assert that privatization is not fully complete. Some parties have pointed out that there was a possibility that implementation of the ORBIT Act could have given rise to action arguably inconsistent with commitments that the United States made in international trade agreements. However, we were told that actual implementation avoided such outcomes and no disputes arose. Most stakeholders and experts that GAO spoke with believe that access to non-U.S. satellite markets has improved, but few attribute this improvement to the ORBIT Act. These stakeholders and experts said that global trade agreements, such as the WTO's basic telecommunications commitments, and the global trend towards privatization of telecommunications companies have improved access in non-U.S. markets. Several stakeholders and experts told GAO that improvements in market access were already underway when the Congress passed the ORBIT Act and that the act has complemented ongoing trends towards more open satellite markets. Some satellite companies report continuing market access problems, but there are disagreements regarding whether FCC should investigate and resolve these problems. Some satellite companies that GAO spoke with report problems with access to non-U.S. satellite markets, which they attribute to countries with policies that favor domestic and regional satellite companies, countries exercising control over content, bureaucratic processes in various countries, and long-term business relationships between INTELSAT and various telecommunications companies. Most companies GAO spoke with report that Intelsat does not take active steps to acquire preferential or exclusive market access, and Intelsat itself stated that it does not seek nor, if offered, would accept preferential market access. Finally, some companies suggest that FCC should take a more proactive role in investigating market access problems, rather than assuming an adjudicative role. FCC said that evidence provided to the agency has not been sufficient to warrant action and also suggested that trade disputes are more appropriately addressed by the United States Trade Representative.