FCC Terminates Sat Warehousing and Vertical Foreclosure Proceeding
Few responses to Notice of Inquiry received
April 21, 2014
Last week the FCC announced that it was terminating proceedings that stemmed from its 2013 issuance of a Notice of Inquiry initiated to explore allegations that certain fixed satellite service (FSS) operators were: (1) "warehousing" satellite orbital locations and frequency assignments, and (2) foreclosing competitors from purchasing capacity on their satellites (vertical foreclosure).
That docket was opened to build a record that would allow the FCC to evaluate claims of anti-competitive behavior that were originally raised in the context of the Eleventh Orbit Act Report to Congress on the privatization of Intelsat and Inmarsat.
Several "integrators" alleged that following recent consolidation and vertical integration by FSS providers, they were being foreclosed from securing satellite bandwidth capacity and as such were less able to compete against FSS providers, resulting in harm to government and corporate customers.
Only four comments were filed in response to the Notice of Inquiry. These came from Intelsat License LLC, SES S.A. and the Satellite Industry Association. Joint comments were filed by EchoStar and its wholly owned subsidiary Hughes Network Services, LLC.
Regarding the vertical foreclosure questions, Intelsat and SES stated that further action by the Commission was unwarranted. No integrator or other potentially affected party filed comments on this issue. As expected, all of these commenters generally agreed that the warehousing questions assume a non-competitive industry and that codifying rules in this area would greatly restrict operator flexibility. All four recommended the Commission terminate the warehousing portion of the proceeding.
In an Order
released April 15, the FCC terminated the proceeding, stating: "With respect to vertical foreclosure, we close the proceeding given the limits of the record and information on this issue. With respect to the warehousing issues, we conclude that the record does not provide a basis for taking further action at this time."