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20December 10
ACMA REVIEW OF SATELLITE FILING AND COORDINATION
POLICIES AND PROCEDURES
SUBMISSION BY BRAMEX PTY LTD
Background on Bramex
Bramex is a registered Australian Government Lobbyistwhichprovides consulting services on technical and regulatory matters in telecommunications and radiocommunications. It has provided consulting services to two major international satellite operators continuously for more than a decade, assisting them in their relationships with the Australian Government and in their representation at many meetings of the International Telecommunication Union and the Asia Pacific Telecommunity. These meetings have considered satellite communications in depth, including international procedures for satellite filing and coordination.
One Bramex principal has experience in the satellite communications industry dating back to its inception in the 1960s, in the Australian Defence Force, the Australian Public Service and in private industry including BellSouth and Optus. This included close involvement in Australia’s first satellite filings, the Aussat networks, in the early 1980s and subsequently the sale of Aussat and its satellites in 1991.
Another Bramex principal has more than two decades experience in public and private sector policy development and management procedures with a focus on achieving outcomes efficient for users.
Bramexappreciates the opportunity to participate in the consultation process and to submit its views to the ACMA
Introduction
The discussion paper draws attention to Australia's obligations under the International Telecommunication Union (ITU) Treaty and the ITU Radio Regulations relating to satellite coordination and notification processes. The paper also covers the Australian national legal framework of the ACMA Act 2005and the Radiocommunications Act 1992.
Two of the objectives of the Radiocommunications Act mentioned are particularly relevant to satellite coordination and notification processes, namely:
- to provide a responsive and flexible approach to meeting the needs of users of the spectrum (Section 3(c)), and
- to provide a regulatory environment that maximises opportunities for the Australian communications industry in domestic and international markets (Section 3(g)).
These objectives are particularly relevant becauseindustry is significantly dependent on government to assist it in achieving its business plans for provision of space services. Operators must rely on government to progress the necessary ITU processes in an efficient and timely manner. This is a major risk in a competitive international environment.
There is no mention in the reference to enabling legislation Section 9(b) of the ACMA Act, also relevant,which contains an additional important objective:
- "to advise and assist the radiocommunications community"
Administration of legislation is usually conducted within a framework of government policy, consistent with the legislation. In this discussion paper there is no mention of the“Australian Government Space Engagement Policy Framework and Overview” November 2006, re-endorsed in March 2008, which begins with the statement on Page 1:
“Space is important to Australians – we are sophisticated users of space for national security, communications and broadcasting, environmental and natural resource management, weather forecasting, and navigation and timing services”.
The first element in the policy framework on Page 2 is:
“(…) participating in and supporting global cooperative and trading arrangements to achieve strategic, economic and social outcomes”
On Page 3, the Government’s space activities fall under four broad themes. The first of which is:
“Ensuring access to space services”, the first of three primary categories being “communications and broadcasting”
The Minister, in his first major industry speech to ATUG on 12 March 2008, made manyreferences to the importance of competition, including the statement:
“(…) competition will remain a cornerstone of telecommunications policy”.
Satellite communications are an integral part of competition in national and international services, both between satellite services themselves and with terrestrial services. The Minister also said in the context of the new broadband network that:
“(…) this includes the use of wireless and satellite technologies”.
Bramexsuggests that administration of the legislation should be consistent with this government framework, which gives clear encouragement of space activities as a matter of national policy. However the discussion paper, while speaking positively of Section 3 of the Radiocommunications Act, immediately follows with the statement," In the design of its new model for satellite filing and coordination work, the ACMA aims to maximise overall public benefit by reducing the number of ‘paper satellites’.
This is hardly a positive statement.Bramexsuggests that this is not an appropriate primary objective. Rather a primary objective, consistent with government policy, should be to offer maximum encouragement and assistance to any organisation which has a reasonable prospect of entering the space communications business, regardless of the fact that a proportion of "paper satellites" are likely to result.
Business Considerations in Filing Satellites
The prospects for a new satellite network are significantly more uncertain than most business activities. The principal risks are:
- coordinating certainty of technical design with filing lodgement of technical parameters (to prevent loss of competitive advantage through late filing),
- uncertainty of the outcome of the coordination process,
- time taken to construct the satellite,
- potential for launch failure,
- the ITU seven-year window to launch,
- change in business conditions prior to launch,
- change in business conditions over a potential 20 year life of the satellite,
- sovereign and other regulatory risks.
For example an operator filing a network in good faith in the early 2000s would have faced a major downturn in telecommunications marketsand two general financial crises, leading to significant business plan changes. Major mergers occurred in the satellite business in this period due to changed business conditions, leading to rationalisation of the number of active satellites and the number of new launches.
All satellites are paper satellites until they are launched or otherwise placed in an orbital position. The nature of the ITU process, which for valid reasons associated with the international nature of space, is such that a coordination procedure is necessary but is also conducive to a regime in which a substantial proportion of satellites notified will never fly. They will be paper satellites.
Focussing too strongly on paper satellites will stifle innovation in Australia and drive potential filings, which have a chance of providing long-term benefit to Australia, to administrations with less onerous regulatory regimes, to the detriment of the Australian economy.
The questions in the discussion paper are answered with the above points in mind.
Question 1: Advantages or disadvantages of the existing model
Bramex in recent years advised an established worldwide satellite operator onACMAprocedures. That operator concluded that they were unnecessarilycomplex, though not as complex as those of some other administrations, and decided to file with the ITU through another administration, even though its business included services to Australia and it felt that Australia could be an appropriate filing administration. This was an opportunity lost to involve Australia more closely in the development of an advanced satellite system.
In our view, the ACMA asks questions for reasons not reasonably related to a filing,leading to cost and delay for the operator, with possible lost priority in the ITU “queue”.
The current model places no obligations on the ACMA to achieve necessary action with the ITU in a timely manner. A system which has no reasonably predictable target dates for completion of action and takes the best part of a year to finalise its own internal approvals has to be faulty.
Question 2: The classificationchange from ‘additional’ to ‘spectrum management’
Bramex commends this change as a correct interpretation of the legislation and also as a matter of common sense. There appears to be little logic in the law requiring a potential operator to undertake the essential national and international legal and technical procedures of satellite filing and coordination through a government authority, the ACMA, but at the same time saying that whether or not the ACMA agrees to undertake the activityis optional.
The corollary of refusal of a reasonable request to file a network is that the operator either abandons its plans or goes to a foreign administration, even though it might be an Australian business designed to serve Australia.
Such an optional interpretation may account for the fact that previously there has seemed to be some reluctance by the ACMA to undertake the activity, regardless of the Government Space Policy mentioned above.
Question 3: The manual of procedures—its form or content
The manual at 35 pages is significantly too long, containing subject matter which is not necessary, for example most of Page vii which covers various treaties having no bearing on satellite filing.
It includes restrictions, for example on Page ix, which have no rationale in relation to large operators with world-wide networks for whom four networks, is a small number. Such restrictions automatically limit Australia to participation on a small scale, leaving other administrations such as the UK to have a much larger role in international coordination, when theirgeographical size makes use of satellites almost an optional extra in their communications activities.
The assessment criteria are unduly restrictive, for example on Page xi, the Australian benefit claimed "should be limited only to that derived from the use of the radiofrequency spectrum", a requirement which seems to be at odds with the government space policy, which is much broader, for example facilitating competition.
Also on the same page the ACMA requires detailed technical information on the type of service to be provided to end users. The operator may be a wholesaler, as in the case of the NBN, where the type of service for end users is up to the retailer who deals with the end user.
The requirement for a business plan on Page xiii seems to be unnecessary and outside the responsibilities of the ACMA. As far as we are aware, no business plan whatever is required of other radiocommunication licensees, including those with valuable public mobile telephone licences serving millions of users.
Regarding the assessment of NGSO systems on Pages xiii and xiv, , the words could hardly be less welcoming to file in Australia, even though the system may include services of value to Australian users.
The final "unwelcome" statement is that "Incomplete applications may be returned to the operator and not assessed", an implicit judgement that those who plan to launch and operate a multi-billion dollar systemsusing spectrum-efficient high technology may not be able to fill in the ACMA's forms properly.
A clearly inappropriate statement of policy is contained on Page xxii, as follows:
"The ACMA does not consider satellite systems to be stand-alone assets to be traded for profit, and will not condone such misuse of satellite systems. The ACMA considers satellite systems as a tool to facilitate international sharing of spectrum.
The aim is to explicitly outline the relationship between the satellite system, the satellite operator and the ACMA. Previously, there have been cases where a satellite operator believes that they ‘own’, and so have a saleable right to the satellite system, attempting to use the satellite system as an asset which could be traded."
As a general statement, Australia is a market economy with that status having clear bi-partisan political support and satellite systems are no different from any other asset. The Commonwealth itself sold the original Aussat satellite system to Optus , which on-sold the satellites to a bank and leased them back. Approaching 50 % of the world's geostationary satellite systems have changed ownership, as part of company assets in the last decade. Licences for other radiocommunication systems in Australia have long been able to be transferred as part of the sale of companieswith the new owner /licenseehaving the same rights and regulatory obligations as the original owner.
In short, to create a workable manual around half the current length of the proposed manualmay need a working party led by the ACMA and including industry representatives.
Question 4: The applicant must demonstrate that it has the technical and financial credentials required for the coordination of the satellite network and design of the physical satellite.’ Financial due diligence requirement
This question is difficult in that it assumes that there cannot be potentially successful new start-ups in this industry. Further, existing successful operators may from time to time have temporarilyweakbalance sheets and be operating at an accounting loss.
Probably more important is the business track record of the corporation or the business reputation of promoters of start-ups. An example is Teledesic, a planned world-wide NGSO broadband system, which had majorfinancial backers such as Mr Bill Gates, employing staff with known experts in satellite communications. Had it chosen to request filing through Australia, it is unlikely that it would havepassed the current or proposed ACMA assessment criteria.
As it happened, this system never flew because of a major financial downturn but the filing and coordination knowledge gained in Australia, including in the ACMA, may have been well worth the Australian effort.
Probably a better approach is that the ACMA is not prescriptive as to what is required for individualapplications, leaving the applicant to explain simply its credentials. It is questionable whether the ACMA has the legislative mandate or the capacity to do financial due diligence.
Question 5: In relation to milestones, the ACMA invites comment on any tool currently used that would enable the ACMA to assess the present state of coordination for the satellite network.
The ACMA shouldconsider whether in normal circumstances it should require milestones, given that it is imposing a requirement in addition to those mandated by the ITU. Basically the ITU requires a satellite to be placed in its orbitalposition within seven years, a figure debated at length in the ITU this decade and decided in a WRC.
Should the ACMA require anything extra, other than obtaining reports and justification from the filing operator if there appears to be a gross irregularity? The proposed annual meeting between the ACMA and the operator should be sufficient to discuss progress.
Question 6: Proposed methodology for coordination between Australian satellite networks. Comments on the balance between protecting existing and facilitating new satellite networks.
Bramex has no difficulty with the proposals regarding other Australian satellite systems.
On the balance, the principles should be:
- the existing service has priority and should not be significantlydisadvantaged through technical interference by a new entrant,
- even so, the incumbent has the responsibility to operate in the most spectrum-efficient manner possible, consistent with its sunk costs in technology and the practicality and cost of anyupgrades needed to accommodate new entrants.
Question 7: The ACMA invites comment on the change to charging.
Bramexbelieves that charging is not a contentious issue provided that it is cost-basedon the basis of efficient provision of the ACMA services to the operator.
Question 8: Comment on the deed poll.
Bramexwelcomes this change as a commendable simplification from earlier deeds.
Question 9: The ACMA invites comment on any other aspect of the new model.
Bramex believes that the key to the way forward in the ACMA filing and coordinatingsatellites as a spectrum management function under the legislation is operation on the premises that:
- all flings are lodged for a legitimate business reason unless it becomes evident that the opposite is the case,
- consequently, excessively fine filters in justification and lengthy prescriptive rules are not required.
Operation in this way will simplify procedures and help achieve the government's broader aims in reducing regulation which slows economic progress.
Summary of Key Points
Bramex
- supports the ACMA intention to conduct satellite filing and coordination as a spectrum management function, agreeing that compliance with the Radiocommunications Act and the ACMA Act is required,
- suggests that governmentspace policy should also guide the ACMA in its administration of the legislation,
- considers that the new Deed is an excellent advance over the old Deed but the Manual of Procedures needs major reworking in conjunction with industry - it is too long, too prescriptive and unwelcoming to potential filing parties,
- believes that the assumption that paper satellites are a problem in the Australian context in incorrect, noting that all filings represent paper satellites until they are placed in orbit,
- suggests ACMA procedures should be based on the initial premise that filing parties have legitimate reasons for filing and the competence to proceed with coordination and subsequent network operations unless there are clear indications to the contrary,
- believes that statements about trading assets have no basis in government legislation and policy and should therefore be removed.
Ross Ramsay
Bramex Pty Ltd