That satellite system and one to provide safety and rescue at sea were developed and implemented by governments that joined together to form INTELSAT and the International Mobile Satellite Organization (Inmarsat). 1.1.) This is particularly useful in television/video service. The U.S. signatory, the private corporation COMSAT, is subject to U.S. government regulation in its responsibilities in this capacity. Intergovernmental and Regulatory Framework for a Global System

With passage of the Communications Satellite Act of 1962, the United States set a goal for the nation, and the world, to create a commercial communications satellite system that would, among other things, “serve the communications needs of the United States and other countries and . At the same time, these international satellite organizations believe that they have certain disadvantages in competing with private companies. We found that competition developed differently in two primary markets for international communications services. In the international television/video market, the restrictions on satellite systems were less pronounced. A Variety of Factors May Influence Competition

The institutional framework that defines the market for commercial international satellite services provides an array of factors that may influence competition within the market. On the other hand, many members of INTELSAT and Inmarsat believe that the organizations themselves are disadvantaged because they are obligated to provide universal service at nondiscriminatory prices and because their intergovernmental structure can cause sluggish decision-making in a rapidly changing market. In the market for international phone service, where policies by the U.S. government, INTELSAT, and other countries’ licensing authorities impeded U.S. satellite firms from providing service, competition emerged primarily from an alternative to satellites: fiber-optic cables. In the segment of the market for regional broadcasts, a few U.S. and foreign satellite companies have become viable competitors. However, in the segment of the market for international and/or transoceanic broadcasts, INTELSAT remains dominant because of its extensive network and capacity. The Impact of Competitive Factors Causes Concerns About Competition in the Emerging Market for Mobile Services

Inmarsat is currently the dominant provider of global mobile satellite communications services, with 70 percent of its business providing maritime services. We believe that our discussions of likely competitive advantages for the intergovernmental organizations and selected satellite markets accurately reflect the potential impact of attributes of the institutional framework for providing satellite services and the current market activity:
Many experts we spoke with believe that the signatories, as the investors in INTELSAT and Inmarsat, have a financial interest in the success of the organizations. Options for Resolving Competitive Issues

A variety of options for resolving the competitive issues discussed in chapter 3 have been suggested by interested parties, and many are being pursued. Depending on what changes are made and how they are implemented, changes in the status of the intergovernmental organizations could potentially address most of the concerns about competition held by both the companies and the intergovernmental organizations.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the institutional framework for providing international communications satellite services, focusing on: (1) the International Telecommunications Satellite Organization (INTELSAT) and the International Mobile Satellite Organization (Immarsat); (2) elements of that framework that appear to hinder competition; and (3) key options that could resolve the competitive issues.

What GAO Found

GAO found that: (1) with the Communications Satellite Act of 1962, the United States initiated the creation of a framework for providing an international commercial satellite system; (2) the United States joined other countries to form INTELSAT and Inmarsat and establish their respective satellite systems for basic telecommunications services and safety at sea; (3) each country names a signatory, usually a telecommunications entity, to participate as an investor in the systems; (4) the signatory for the United States is COMSAT Corporation, a private corporation that was created by the 1962 act; (5) three U.S. agencies have primary responsibility for overseeing U.S. membership in the organizations and for instructing the U.S. signatory in its representational role; (6) this institutional framework creates an array of factors that may hinder competition in the market for commercial international satellite services; (7) at the same time, many signatories of INTELSAT and Inmarsat believe that their obligations to provide universal service at nondiscriminatory prices, as well as their intergovernmental structure, hinder their ability to compete in a rapidly changing market; (8) GAO's analysis showed that the development of competition differed in two primary markets for international communications services; (9) in the market for international telephone service, where separate U.S. satellite systems were largely restricted from providing service, competition emerged primarily from an alternative medium: fiber-optic cables; (10) in the market for certain types of international television/video service, such as regional broadcasting, U.S. satellite companies, as well as other international, regional, and domestic systems, have become viable competitors; (11) for other types of television/video service, such as transoceanic transmissions, INTELSAT remains dominant because of its extensive network and capacity and its access to many markets; (12) Inmarsat is currently the dominant provider of global mobile satellite communications services, with 70 percent of its business providing maritime services; (13) a variety of options for resolving the concerns about competition have been suggested, and many are being pursued; (14) changes that would eliminate the intergovernmental organizations could potentially resolve many competitive issues but are not likely to be adopted because such proposals lack support; (15) more likely are changes in the role of the intergovernmental organizations, such as the creation of one or more private companies, or affiliates, with little or no intergovernmental ownership; and (16) these proposals have the potential to address many of the concerns about competition held by both the other satellite companies and the intergovernmental organizations.