A decision by the U.S. Government to cut out the middleman from international satellite access could yield hefty savings to American consumers, up to 71 percent by one estimate.
On September 15, the Federal Communications Commission struck down a virtual monopoly on access to nineteen satellites owned by the international conglomerate Intelsat.
Previously, all requests to use those satellites for service in the U.S. went through Comsat, the sole U.S. signatory and investor in Intelsat, which marked up prices between 18 and 270 percent, according to the FCC.
The commission says prices for satellite access could fall by 10 to 71 percent.
The U.S. now joins 94 of Intelsat’s 143 member nations which allow direct access to the satellites.
"U.S. companies will be able to compete on a level playing field with foreign companies that already have direct access to the Intelsat system," the FCC said in a statement.
The reaction by U.S. firms has been positive.
"Anything that eliminates a middleman for the networks really does us a service," said Steven Washington, the manager of news traffic operation for ABC News.
Washington said the network relies on Intelsat satellites for 80 percent of its international broadcasts.
MCI Worldcom says the ruling will likely lead to lower prices for its customers.
"Overall we think that getting direct access is a positive thing," said Peter Lucht, a spokesman for the company. "We expect our customers to benefit."
But Lucht added that the FCC ruling stopped short of eliminating the role of Comsat completely. In certain markets in which Comsat has an exclusive right to operate, he says, firms will still need to pay Comsat mark-ups.
Also, the FCC will still require U.S. firms dealing directly with Intelsat to pay a 5.58 percent surcharge to Comsat for expenses it incurs as a signatory to the international conglomerate.
The FCC ruling also steered clear of a controversial clause called fresh look, a provision lobbied for by private industry which would allow firms to renegotiate their contracts with Intelsat, skipping over Comsat completely if they choose.
Comsat insists that the ruling is unfair and non-beneficial, saying it "does nothing except impose an over-regulatory structure on top of a market that the FCC's analysis says is already fully competitive."
"Comsat has reduced its rates to major telecommunications companies by more than 55 percent over the past 6 years," says Comsat spokesman Jay Ziegler. "Our question is, when and where have those savings been realized by long distance consumers?"
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