Commercializing Outer Space: The Case of Communications Satellites

By Galloway, Jonathan F. | National Forum, Summer 1992 | Go to article overview

Commercializing Outer Space: The Case of Communications Satellites


Galloway, Jonathan F., National Forum


The initial idea for communications satellites was put forth by Arthur C. Clarke in 1945 in an article in Wireless World. Clarke envisaged a system of three satellites in geostationary orbit that would cover the earth with their footprints. The geostationary orbit is 22,300 miles above the equator, where the period of the satellite's rotation around the earth is the same as the earth's rotation, i.e., 24 hours. With some qualifications, such a satellite appears stationary from earth stations or ground terminals, which makes them efficient and economical to communicate with.

After 4 October 1957, with the launching of Sputnik, it was practical to realize Clarke's dream. On 25 May 1961, President John F. Kennedy committed the United States to leadership in the field of communications satellites. In 1962, the Communications Satellite Act "declared that it is the policy of the United States to establish, in conjunction and cooperation with other countries, as expeditiously as practicable a commercial communications-satellite system as part of an improved global communications network, which will be responsive to public needs and national objectives, which will serve the communications needs of the United States and other countries, and which will contribute to world peace and understanding." As a result, the Communications Satellite Corporation (Comsat) was formed as a private corporation in the District of Columbia.

In 1992, thirty years after the passage of the Comsat Act, it is appropriate to take measure of this and other goals of U.S. policy. In terms of commercialization, one should examine the structure of the market. Is it a competitive market both within the United States and globally? Or are there any monopolistic or oligopolistic features? One must also examine the actors in the market to see whether they are private corporations or governmental agencies. In this new age of privatization, deregulation, and entrepreneurship, do we see these forces present in the satellite-communications sector?

Technologically, one must examine new types of satellite-communications systems such as those in low earth orbit and the new services connected with them. We should also look at fiber-optic cables as a possible threat to the economic viability of satellites.

The technical aspects of communications satellites involve not only the manufacture of the satellites by such companies as Hughes, Aerospatiale, and British Aerospace but also the launching of the satellites into orbit on rockets made by such companies as McDonnell-Douglas, General Dynamics, Arianespace, and China's Great Wall Industry Corporation. Then there have to be earth stations, ground-based terminals, or even cellular phones to pick up or deliver signals to the satellites. Another very important aspect of the industry is the insurance coverage. In 1991, space-insurance premiums worldwide (for all types of launches) were $305 million.

Once launched, a communications satellite must be placed in a particular orbit and must use selected frequencies in order to be functional. The principal orbit for existing satellites is the geostationary orbit (GSO), although some satellites, such as the Russian Molniya satellites and others that are being planned for low earth orbit (LEO), use polar orbits. On a satellite a number of transponders receive uplink signals in one frequency from the earth, the oceans, or airspace, process the messages, and then downlink them in another frequency. Two of the most widely used frequency bands in satellite communications, the C band (4-6 GHz) and the Ku band (12-14 GHz), are allocated by the International Telecommunications Union (ITU), an international functional organization of 166 countries. Within countries, the frequencies are then assigned by such governmental regulatory agencies as the Federal Communications Commission (FCC). There has been some discussion about auctioning frequency space to the highest bidder. …

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