U.S. URGED TO REVAMP SATELLITE EXPORT LICENSING CONTROLS

August 30, 2002 |Miscellaneous

LONG BEACH, Cal. -- “Fundamental reform” of export licensing controls is needed for survival of U.S. satellite business, Boeing Vp-Govt. & Legislative Affairs Loretta Dunn told International Satellite & Communications Exchange (ISCE) Conference here Thurs. Dunn said she had led industrywide effort to modify controls since satellites were placed on munitions list and licensing was moved to State Dept. from Commerce Dept. in 1998 after 2 U.S. companies were accused of passing sensitive technical information to Chinese following launch failures. Satellites should be licensed as commercial products, Dunn said: “It’s critical for industry to move forward. We need rationalized and streamlined” approach to licensing. She said industry wanted “to move satellites back to Commerce, but we don’t want to change any of the safeguards.” Dunn said not one U.S. satellite export license request had been rejected since new guidelines had been in place.

U.S. companies received just one satellite order this year, Dunn said, and were are “relying 100% on government to keep production going.” Global market can’t support 5 companies, and U.S. operators fear there could be only one American manufacturer and 2 foreign companies left if trend continues. Satellite industry has worked toward “incremental” changes, including expedited licensing process, increased funding for Dept. of Defense and installation of new software for electronic processing, Dunn said: “We've done a lot of work… The State Dept. is doing as good a job as they can” because its primary job has been regulating military exports. She said State Dept. wasn’t concerned with “meeting delivery schedules and satisfying customers.”

Passage of Berman-Rohrabacher Amendment, which has been tacked onto pending re-authorization of Export Administration Act, will help, Dunn said. Primary goal of bill would be to regulate satellites as commercial item on par with terrestrial and cellular competitors. Commercial satellites that offer video, Internet and voice services no longer would be classified as arms export. Under amendment, Congress could review any satellite agreement with China and State Dept. and DoD could veto any license. Licensing of launch vehicles also would remain at State Dept and technology control plans still would be required. House is expected to act in fall, officials said.

“Foreign customers feel like they are last on the list,” said Telesat Canada Vp-Space Systems Roger Tinley: “The decision the U.S. has to make is whether or not they are going to turn the commercial satellite business over to foreign competitors.” With purchase of 16 satellites from U.S. companies, Telesat is “well-placed to judge” impact of export control regulations, he said. “It has had a negative impact” on U.S. sales: “The real issue is that U.S. companies can’t satisfy their customers with these controls.” He said there was no reason to impose controls “on run-of- the-mill” commercial satellites.”

Satellite operators can’t answer many questions during marketing process that will help customers make decision on whether to buy because of export controls, Tinley said. He said blackout period also was restrictive. “People you are dealing with can’t talk to you and there is information that you need to know if something goes wrong,” Tinley said. Export controls also have hurt insurance underwriting because “underwriters won’t insure anything they don’t understand,” he said. He said foreign companies had “a real risk” of claim’s not being paid that would put them out of business following anomaly. “If there is an in-orbit problem, you have to tackle it quickly,” especially if you are leasing transponders,” Tinley said: “The goodwill of foreign customers has eroded.”

State Dept. “doesn’t have a separate policy for dealing with exports,” Defense Technology Security Administration Dir.-Space David Garner said, and primary function of agency is to protect national security. Dunn said State Dept. had met goal of improving licensing process and time for license review had been reduced to 10.5 days from 65 days.

Bush Administration is committed to streamlining export controls, said James Jochum, asst. secy.-Export Administration, Bureau of Industry & Security in Dept. of Commerce: “We are sensitive to the economic downturn and we have met with many of the companies.” President Bush wants to make regulations “efficient and effective,” he said, and govt. wants to “reduce the amount of items” on restricted list and by doing so it “would be good for the economy and good for national security” because of limited resources available. “We want to focus on items that gives us the greatest amount of concern,” Jochum said. Bottom line is if item is available from foreign competitor or in mass market, it shouldn’t be regulated, he said. Office of Technology evaluation also was established to look at emerging technologies, he said: “We will be able to make better decisions. We haven’t been doing a good job.”

Establishing export controls “wasn’t the right decision to make and it didn’t solve the problem,” said attorney George Grammas. However, restrictions affect only companies with contracts of more than $14 million, he said. He said he didn’t have problem with keeping licensing oversight with State Dept., but “there are some things we can do to improve” system. Satellite Industry Assn. Pres. Richard DalBello said: “We need to fix the system we have in place.” -- Bruce Branch

ISCE Conference Notebook…

“Space is a tough place to make a buck,” Satellite Industry Assn. Pres. Richard DalBello said Wed. in state of industry address at International Satellite & Communications Exchange (ISCE) Conference. He said satellite industry had “tough, physical environment,” but there still were “variables” that would help companies rebound. DalBello said there had been declines in satellite manufacturing revenue across world. Launch industry, for example, suffered dropoffs of 40% globally and 59% in U.S., he said: “However, the ground equipment market showed a modest 11% increase.” Satellite radio and Internet services could spur future growth if satellite operators targeted their services to meet needs of those niche markets, DalBello said. He said U.S. operators had been hurt by: (1) Increased competition of foreign suppliers. (2) Fluctuation in international exchange rates. (3) “General feeling” that U.S. satellite export control policies were “barrier to commerce” -- perception is that U.S. is “unfriendly to satellite sales.” DalBello said “this isn’t the time for a wild celebration and not the time for despair. There is a tremendous opportunity on the horizon.”

SatCom announced availability of advanced phased array smart antenna for mobile multimedia satellite communications. SatCom PASSPort flat-panel antenna systems can be used as alternative to traditional DBS dishes. Antenna is equipped with automatic controller that aims at satellite. Automatic acquiring model also is designed to receive DirecTV, DISH and Bell Express Vu programming in N. America.

Global Synergies introduced satellite e-mail, data and GPS tracking services. Network enables customers to send and receive e-mail and other critical data at prices that are more than 90% cheaper than traditional satellite systems, company said. For example, it said, sending half-page e-mail via traditional satellite systems could cost more than $9.50 compared with 60 cents on Global Synergies network.