Issues in International Telecommunications

The question of government regulation of the Communications Satellite Corporation (Comsat) is paramount because of Comsat's market power in providing international satellite circuits to U.S. users. Comsat is the monopoly supplier of INTELSAT international satellite links. However, Comsat's satellite monopoly does not translate into a full monopoly of U.S.-overseas communications links, since undersea cable is a substitute. Taking into account advances in cable technology, and especially the introduction of fiber optics, Comsat's market power is being eroded and government regulation is becoming less important. However, the Federal Communications Commission (FCC) imposes circuit-loading restrictions that force AT&T to use a greater number of satellite circuits, essentially guaranteeing Comsat a portion of AT&T's traffic. This report discusses the history of the FCC's attempt to regulate Comsat, assesses FCC actions to reduce Comsat's market power, and evaluates the past effects of and future needs for such regulation.