Report of the Fifth Annual Review Meeting of the GMPCS-Mou Group (Doc. 10-E)

- 1 -

Document 10-E

7 June 2003

Original: English

REPORT OF THE FIFTH ANNUAL REVIEW MEETING

OF THE GMPCS-MoU GROUP

The Fifth Annual Review Meeting of the GMPCS-MoU Group (hereinafter referred to as the Group) was held on 7 June 2003, immediately after the Radio Assembly 2003 and preceding the World Radiocommunication Conference (WRC-03), in Room B in the ITU Tower in Geneva.

Chairman Mr. E. N. OLEKAMBAINEI opened the Meeting (Agenda Item 1), by welcoming and thanking the participants for the trust that the Group placed in him from the beginning of the GMPCS-MoU process. He spoke about the fact that GMPCS technologies and services have come of age with service delivery and technological improvements. He praised industry and governments for their persistence in achieving the goals of GMPCS.

The Chairman next introduced the Director of the Telecommunication Development Bureau (BDT), Mr. Hamadoun TOURE, who made the opening remarks. Mr. TOURE spoke of the financial challenges of the industry, which are similar to those of the telecommunication industry and the ITU itself. However, those challenges should not stop the progress made towards the global circulation of GMPCS terminals. He restated the commitment of ITU and the BDT to the process. Current events, such as the Algerian earthquakes, show the need for GMPCS services. He told the participants that Administrations, which participated in the last ITU Council meeting, voiced strong support for the GMPCS-MoU.

The Chairman next presented the Draft Agenda (Document 1-E) (Agenda Item 3). After assigning documents and contributions to the relevant Agenda Items, he proposed various amendments. The Agenda was adopted as Document 1-E (Rev1).

The Chairman then introduced Mr. Max-Henri CADET, Manager of the GMPCS-MoU Project to present the Report by the Project Manager (Document 3-E) (Agenda Item 4). His presentation focused on the depository role of the Secretary General and the GMPCS-MoU Registry. Mr. CADET explained the process of marking GMPCS terminals for global circulation. After receiving the System Operator Letter, the Terminal Manufacturer Letter and the Type Approval Letter, the Secretary-General sends an Acknowledgement of Receipt letter to the Manufacture. The letter authorizes the Manufacturer to place the GMPCS-MoU Mark on the registered terminal. The Chairman then invited questions and comments about the Report.

The Chairman delayed discussions on Financial Matters (Agenda Item 5); and he turned to Agenda Item 6, by inviting representatives of the system operators to present their status reports.

Mr. Zahid Zaheer, Regulatory Affairs Manager, introduced Document 5 on behalf of Thuraya, a System Operator. The Document dealt with the status of the company’s commercial operations. A second satellite is planned for launch on 10 June 2003 and a third satellite under development to cover South East Asian countries. Thuraya sold 175,000 terminals with 140,000 in circulation.

Mr. Zaheer also discussed the ITU-D GMPCS Regional Workshops organized in cooperation with the GMPCS Operators. The workshops, which include one-on-one meetings between operators and regulators, assist regulators with the implementation of a regulatory framework for GMPCS systems. Two workshops are planned for next year, one for the Asia-Pacific countries and the other for the African countries. As before, the workshops will be financed by industry.

Mrs. Mary Kay Williams, Vice President, Corporate Relations, Final Analysis Communications, introduced Document 6 dealing with the status of the small low-earth orbit satellite systems or little LEOs. The industry is seeking support for WRC-03 Agenda Item 1.16, which deals with allocations on a worldwide basis for feeder links in bands around 1.4 GHz to the non-GSO MSS with service links operating below 1 GHz. Mrs. Williams referred to 1996 when the GMPCS industry was “exploring the dark”. Industry has move forward through the darkness of the last seven (7) years with a lower profile, but it is growing and viable. The vitality is evident in the proposals for WRC-03, which will have an impact on competition and greater availability of services due to lower prices. Mrs. Williams solicited the support of both Administrations and industry for the relevant WRC-03 agenda items.

Next, Iridium Satellite LLC presented its status report. Ms. Patricia Mahoney, Vice President, Regulatory & Spectrum Affairs, discussed the current status of the system. The company is supported by a multinational investor group and reintroduced commercial service in April 2001. The system is fully operational with sufficient spare for high reliability and current configuration is expected to be operational until 2013. Iridium holds a license in the 2GHz. Ms. Mahoney thanked Administrations for their support for the GMPCS-MoU, which dates back to the first World Telecommunication Policy Forum (Geneva, 1996), as well as the ITU General Secretariat and the GMPCS MoU Project Manager for their efforts. Iridium will continue to participate in the GMPCS-MoU process as both a System Operator and, in the future, as a Terminal Manufacturer.

ACeS was invited to make its status report. Mr. Irwis Sinisuka, Vice President, Engineering, described the system, which is made of a regional geostationary satellite providing coverage in East Asia. The company will begin manufacturing and introduce a new fix terminal and a tracking terminal. Market coverage, which includes GSM roaming, is expanding. ACeS will continue to register its terminals at the ITU to obtain the GMPCS-MoU Mark. Finally, Mr. Sinisuka thanked the ITU for the GMPCS-MoU process, which facilitates global circulation and licensing.

Mrs. Audrey Allison, Director of International Regulatory Affairs for Connexion by Boeing, a new service, spoke on behalf of the Boeing Company. She thanked the Management Team and the participants for their effort in sustaining their progress. Connexion by Boeing is a new aeronautical mobile satellite service (AMSS) providing in-flight broadband services. Commercial operations will begin in eight (8) months with links between leased transponders from fixed geostationary satellites, aircraft mounted antennas, earth stations and a network operation center. The company is seeking additional national authorizations and additional spectrum allocation for the service during WRC-03 (Agenda Item 1.11 -- to extend an existing secondary mobile satellite service allocation in the band 14-14.5 GHz to include aeronautical mobile satellite services). The proposal has received wide support. Finally, although Connexion by Boeing is not a traditional GMPCS service, the Boeing appreciates the opportunity to interact with the GMPCS-MoU Group.

Then, the Chairman called upon ICO Global Communications, Ltd. represented by Mr. Peter Natoli, Director Regulatory Affairs, Asia-Pacific. Although services have not started, the company has “weathered the storm”. Since reorganization, the company is re-evaluating its business plan. ICO is moving toward IP-based network with a terrestrial component. This move has led ICO and other mobile satellite operators to a regulatory filing in 2000 with the U.S. Federal Communications Commission (FCC) for ancillary terrestrial component (ATC). In January 2003, the FCC made a key decision to grant ATC to ICO, but it is subject to appeal. ICO has recently taken a controlling interest in Globalstar LP, which will provide revenue streams to develop the ICO system. Mr. Richard D. Parlow added a few words on behalf of Globalstar, which was not directly represented. A broad range of services will continue, including fixed services in remote locations. New gateways will be added to expand regional and global services. A number of new mobile, fixed, aeronautical and monitoring services will be introduced. The new relationship with ICO will bring new operational and organizational opportunities for ICO and the GMPCS industry as a whole.

Mrs. Ann Vandenbroucke, Manager, Policy and Regulatory Issues, Inmarsat Ltd. introduced Document 9. Since the establishment of the GMPCS-MoU, the company launched the regional BGAN service with a new land mobile terminal. The terminal, which was registered at the ITU by Hughes Network Systems, provides data IP-based service with Internet access of 1.44 K Bits per second. Inmarsat has moved from the status of an operator pre-existing the GMPCS-MoU to one that takes full advantage of the process to facilitate the circulation of this new terminal and future ones. The company is well advanced in building new satellites, a ground network and terminals for new applications. It will continue to use the GMPCS-MoU Mark and the framework to provide broadband satellite services. Some concern was raised about the budgetary problems because of the very strong need for the Group to continue its work. Mrs. Vandenbroucke expressed her thanks to the ITU Council, the Director of the BDT and the Project Manager for their support. She is looking forward to some pragmatism from the ITU Finance Department to find a way forward to continue the work of the Group, as well as the resumption of the beneficial workshops.

The Chairman invited questions and comments from the participants. The delegate from India extended its appreciation to the system operators for their status reports and the services provided to the remote and rural areas. He sought clarification regarding the proposed services of Iridium in the 2 GHz band. He also addressed a question to the Boeing regarding status of their current licenses. The representative of ACeS mentioned Agenda 1.31 (WRC-03) that seeks additional spectrum allocation. Thuraya supported ACeS comments because new satellites and services will require additional spectrum because of heavy use in the current allocation. Inmarsat concurred because the three companies are expending their services. It also hoped that Administrations would support the expansion of the L-Band. The delegate of WorldSpace Corp. proposed that the Group submit a document to the WRC-03 in plenary in support of various agenda items. He also added a plea for competition, especially in developing countries.

In response to the questions from India, the delegate of Iridium said that the 2 GHz allocations were originally made during WRC-92. The FCC invited applications from both entities seeking space segment licenses and planned systems seeking authorization to operate in the US. Some entities withdrew their applications and others lost their licenses for failure to meet certain milestones. Iridium’s intention is to seek a space segment and operating license in the U.S. only, much closer to 2007. The Boeing delegate responded that the current authorizations for Connexion by Boeing are provisional. Some countries have determined that no national authorization is needed; only a notification is necessary. The system received a 10-year blanket license from the U.S. for 800 aircraft (earth) stations on a non-interference and non-protection basis – a non-conforming use. After WRC-03, the Boeing will be seeking a domestic allocation of AMSS in the U.S. Under Agenda Item 1.11, the allocation would be made provisionally effective to avoid a delay while waiting for the Final Acts of WRC-03 to come into force.

Meeting then turned to Agenda Item 5 (Financial Matters). The Chairman invited the ITU Finance Department to present the financial report after he informed the participants that the Management Team met with the Finance Department on 6 June 2003, the day before this meeting. Mr. Carlos SANCHEZ, acting Budget Officer, introduced Document 8, which contains a Financial Statement for 2000-2001 and a Provisional Financial Statement for 2002-2003. He also discussed the cost recovery methodology for reallocating the costs of various ITU activities. The methodology was submitted to Council and to the Plenipotentiary Conference and it is being revised. It is applied to all cost recovery activities, with the exception of the satellite network filings. Various cost drivers are used to calculate the cost recovery figures for the GMPCS-MoU Project as shown in Annex D.

Then, the Chairman invited Vice-Chairman Richard PARLOW to introduce Document 7. The Document addressed the history, background, recent developments and current status regarding reallocated costs and budgeting for 2004-2005. Starting with the debate surrounding the application of the methodology, he pointed out that determining the costs of the GMPCS-MoU Project was always based on a process of consultation with the Group. The current process has not been open and transparent; but cost recovery has to be auditable and clearly defined as costs actually incurred for the Project. In an attempt to resolve these issues, the Management Team and representatives of the GMPCS industry met with the Finance Department on 18-19 March 2003. During the meeting participants reviewed the financial status; discussed the reallocated and the Draft Budget for the 2004-2005.

The proposed funding in the Draft Budget led to the speculation that the ITU would eliminate the Project. The Chairman wrote to the Secretary-General to reaffirm the increasing importance of the Project and to propose a cost reduction program to match the current level of activities. The letter pointed out that charges should be consistent with relevant resolutions, such as Resolution 91 (Minneapolis 1998) and Council Resolution 1116. During Council 2003 many Administrations intervened to support the Project because of its importance to the ITU, Administrations, System Operators and users of GMPCS services. There is an indication that income would be adjusted for 2004-2005. The Group proposed new budget figures during the March meeting, which take into account additional income and cost reductions.

During the follow-up meeting on 6 June 2003 there was agreement that the system of reallocated costs is “broken”. The costs are neither realistic nor auditable and do not related to the level of products and services rendered. The following options were discussed: 1) Foregoing reallocated costs for 2002-2003 until an agreement is reached on the methodology; 2) Doing a detail review of the billing and 3) Using a project approach similar to the approach used in BDT. After holding internal discussions, the ITU will suggest a way forward and continue to work in consultation with the Group.

The Chairman summarized the lessons learned from the GMPCS-MoU Project. He proposed that the Group give the Management Team the authority to continue negotiations with the ITU. The delegate of Iridium supported the proposal and wanted to ensure that any proposed fee increases should be presented to the companies before any commitment is made. The Chairman and Mr. Parlow concurred. The Chairman added that the Finance Committee, which includes the Management Team and the financial contributors, would handle the negotiations with the ITU. The Finance Department added that the General Secretariat, based on instructions from the Member States and Sector Members, is seeking to improve the cost recovery methodology.

The meeting discussed Agenda Item 7, Review of the GMPCS-MoU, the Arrangements and its Annex. Inmarsat and Thuraya were invited to introduce Working Document 3 and Working Document 2 respectively. The Inmarsat delegate, Mr. Ethan Lavan, chaired the Correspondence Group (CG), which was established during the last Review Meeting (Istanbul, 17 March 2002). Its mandate includes the simplification and efficiency of the paperwork, and a review of the scope of the distribution model and the Group’s finances. Working Document 3 proposes to clarify the roles of the system operators, manufacturers and service providers. The system operator functions may include the space segment operator, the gateway operator and the distributor of services, which may be combined in various degrees. The delegate from Thuraya, Mr. Zahid Zaheer introduced Working Document 2 that simplifies the process by merging the Arrangements and the Implementation (Annex 1) into one document, without changing their substance. The Chairman confirmed that the proposals do not change the substance of the Arrangements and the Implementation documents. The meeting agreed to discuss only Working Document 3, which incorporates the proposals in Working Document 2.

At the request of the Chairman, the Group proceeded with the amendments, which would be submitted to the signatories for comments. The Chairman invited Mr. LAVAN to discuss the changes proposed in Working Document 3. After consultation the introduction, which was deleted in Working Document 3, was kept because of its historical value. The Note on page 4 was deleted, and the last paragraph is moved ahead of the paragraph beginning with “The following figure…” The delegate from Zimbabwe suggested that the figure should be labeled Figure 1 and he sought clarification about the relationship between Space Segment Operator and Public/end-user. Mr. LAVAN explained that it is possible for any given system to find a relationship or a subset of relationship in the diagram that is applicable to its business model. However, it is not likely that all the relationships would exist at the same time.