Feature N° 4

GMPCS: THE REGULATORY DILEMMA

This article is the last in a series of four features on the new Global Mobile Communications by Satellite (GMPCS) prepared for the media for the forthcoming World Telecommunication Policy Forum, to be held in Geneva on October 21-23. The article provides an overview of the key regulatory issues which need to be addressed before the full-scale successful implementation of GMPCS services can proceed.


The new Mobile Satellite Systems which are planned to come into operation in the next five years bring with them the promise of a range of exciting new services, including seamless international telephone calls to virtually anywhere in the world using handheld mobile phonesets. But these systems, known as GMPCS systems, or more often (but not always correctly) as Big and Little LEO satellites, will also be accompanied by a myriad of complex political, economic and regulatory problems.

For this reason, the International Telecommunication Union (ITU) has convened a new event, known as the World Telecommunication Policy Forum, to take place in Geneva this October. The event is open not just to the ITU's 186 Member States, but also to its Sector Members, comprising around 400 private companies, and to academic and research organizations working in the field of telecommunications, the media and the general public.

The Forum will be held over three days, from 21-23 October, and will focus on the policy and regulatory (rather than technical) issues related to the proposed launch of these new GMPCS systems. In addition, a Special Information Session has been arranged for the Sunday prior to the opening of the meeting, to provide information on the characteristics and proposed services of the various GMPCS systems, and to foster an exchange of views between system operators and government regulators on the practical aspects of system implementation.

Whilst the ITU is optimistic of a positive outcome for the Forum, there will certainly be a great deal of vigorous debate, accompanied by energetic lobbying on the part of would-be operators. Certainly, the major players in the MSS market, having spent much time and energy in system design and financing, will be anxious to clear the way for their satellites to begin offering services to as many users as possible, as soon as possible.

Although there remain some technical hurdles to overcome in what are, after all, extremely complex satellite constellations, it is the issues of licensing and regulation which still represent the biggest stumbling blocks for MSS operators. Questions of regulation, licences for service operation, for equipment use, and for use of the radio-frequency spectrum, as well as of interconnection, customer billing, revenue sharing, local carrier bypass and international accounting rates are just a few of the important issues that the Forum will be tackling during its 3-day session.

Global Regulation?

The role of telecommunications regulators has, until now, been confined to national markets. Regulators have been put in place with generally good results by many governments, as part of the process of market liberalization. The role of the regulator is that of an impartial arbiter, whose mandate is to ensure that governments' telecommunication policy objectives are achieved, that competition is fair, and that consumer interests are protected.

Regulation is desirable to promote healthy competition between rival operators and to protect the interest of the telecommunications consumer. What is not clear, however, is how private global systems that provide end-to-end services in many countries can be most effectively regulated. For a start, there is no pan-national organization now in place which could fulfill this function. Even the International Telecommunication Union - the only really global representative body in the telecommunications field - will not be able to help, since it has neither the resources nor supra-national powers.

Some industry observers have proposed the creation of an international satellite regulatory body, but this seems an unlikely solution. First, a set of generally agreed satellite regulations would have to be drawn up, since none exist at present. And second, an internationally representative board would have to be established - but at whose cost? Industry funding would not appear to be feasible, since an effective regulator must be seen to be completely impartial. But above all, perhaps, is the fact that governments are not likely to want to surrender their sovereignty rights.

The most likely resolution of the issue of regulation will probably take the form of a generally agreed-upon harmonization of national approaches, with perhaps some level of industry self-regulation. This system has in fact worked reasonably well in other industries, such as broadcasting and advertising. However, the telecommunications market can be volatile and highly competitive. Countries which liberalized their existing markets without putting a regulator in place, such as New Zealand, have frequently found their courts quickly clogged with claims of unfair practices.

Licensing

The issue of licensing may well prove to be the biggest headache for would-be GMPCS operators. At present, there is no mechanism for the global licensing of such a service. Carriers in the past have simply obtained operating licenses on a country by country basis, through their respective governments. It seems likely that this system will continue to operate for the foreseeable future, at least.

The concern, though, is that the logistics and cost of lengthy licensing negotiations in every country of operation have the potential to hold up the implementation of new satellite systems. At the TELECOM 95 event last year, a speaker from Iridium claimed that if licensing agreements were needed between each of the ITU member countries, this would add up to more that 16,000 individual agreements. Equally, Globalstar has been quoted as saying that setting up the operational licences for its system would be the single biggest task it would have to accomplish. When considering that this rates the chore of licensing higher than designing, launching and operating a large, moving constellation of satellites, one gets some appreciation of the problems involved.

The licensing issue is further complicated when you consider that the matter is not simply one of issuing an operating licence. Since each country manages its own radio frequency spectrum allocations, each administration also has to approve spectrum assignments for the new service. In many cases, this may mean reassignment of existing services out of the appropriate band to make way for the GMPCS service, and may have widespread implications for installed equipment throughout a given country.

A related problem is that of type approvals. At present, each country licences telecommunications equipment for operation within its own telecommunications environment. If handsets and other equipment were licensed on a global basis, would this give rise to interference with other equipment and/or services in some countries? And what about issues of equipment safety? Countries have their own safety standards, yet it may be unfeasible for operators to tailor their handsets to suit the regulations of a number of different markets. How will a safe operating standard be determined on an international basis?

This issue could perhaps best be resolved by the establishment, by international consensus, of a set of agreed-upon standards for GMPCS operation and equipment, which would enable countries to enter into 'mutual recognition' agreements. In this way, equipment manufactured in any country conforming to this standard could be licensed to operate in the other countries without the need for extensive testing.

Local Network Bypass

Of concern to PTTs in developing countries is the potential for bypass of the public switched telephone network (PSTN) by the new GMPCS carriers. While it is true that calls initiated on a GMPCS system will generally need, at some point in their journey to their destination, to interconnect with the fixed line network, or with other cellular networks, it is also possible in some systems for users to make end-to-end calls which travel directly over the GMPCS satellites.

Some commentators have claimed that GMPCS operators will aim to bypass other networks, so that they can reap the entire cost of a call without the need to reimburse other carriers. The operators themselves disagree, however, pointing out that the advent of cellular systems has not resulted in a decline in call volume over the fixed line network in most countries. Rather, they say, the new services have encouraged people to make more calls. The market has grown, and everyone has been a winner. Whether the same model holds true for the new systems remains to be seen, and until the systems become operational many PTTs will remain nervous. Those in the developing world, especially those with an unreliable or limited communications infrastructure, would be hardest hit by network bypass. Any system that reduces the international traffic which provides the main source of revenue for network maintenance and expansion may seriously affect these countries' ability to operate their own networks.

International Accounting Rates

The International Accounting Rate system is the globally agreed mechanism which provides the framework within which carriers agree on what to reimburse to other carriers for handling their traffic to other countries. For example, if you were to use Telstra in Australia to call a friend in Paris, the call would travel over Telstra's own network, then via fibre optic cable or geostationary satellite to Europe, and would finally terminate on equipment used by France Telecom. Telstra has an obligation to reimburse France Telecom, and any other interconnect carrier which may have been used along the way, for the cost of bearing the call. This reimbursement is known in telecommunications circles as the settlement of accounts.

Will GMPCS services be governed by the same set of rules? Recently, some GMPCS operators petitioned the FCC in the US for exemption from the accepted accounting rate regime. Settlement payments will almost certainly still be paid, at a commercially-negotiated rate. But what will this mean for fixed line and cellular operators a better or worse deal?

Challenges and Opportunities

The outline above merely touches upon the many complicated issues likely to beset operators and governments alike in the setting up of GMPCS services. The ITU's World Telecommunication Policy Forum will adopt a general approach, hoping for widespread agreement on a set of principles which will enable the industry to move forward.

The Forum's decisions, such as they may be, will have no binding force on either operators or administrations or, for that matter, on the manufacturers who will produce the equipment for the systems. Instead, it is hoped that governments and the industry will work together to facilitate the transition to a global mobile environment. Would-be operators are very keen to get the show on the road as far as policy is concerned. Many of them are promising service in the next two or three years, and will not want to jeopardize the huge investment and their hard work by getting bogged down in legalistic details. Despite the areas of concern, there are certainly many potential benefits inherent in GMPCS technology. Finding solutions to the issues outlined above may well, on occasion, require a re-think of the classical approaches.

The Forum, then, will be about finding some government and industry consensus on the fundamental issues, and resolving fears and real problems, before the momentum is lost. If successful, it will pave the way for the deployment and development of the most sophisticated communications systems the world has ever seen the systems we will be using into the 21st century.

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