The 29th Assembly of Parties (AP) of the International Telecommunication Satellite Organisation (ITSO) was held from 30 January to 2 February in Washington, D.C., where Portugal, as a Party, was represented by the Autoridade Nacional de Comunicações (ANACOM). According to a decision from the previous AP (29 June-1 July 2004), this session was only to be held in June/July 2006. However, it was brought forward due to the urgent need to deal with some problems that ITSO has meanwhile faced. For in the last year there have been a number of disputes between Intelsat, Ltd., and ITSO, specifically regarding fulfilment of the public service obligations incumbent on the former. The main charge made by the ITSO director general concerns a systematic lack of information meant to be provided by Intelsat, Ltd., namely since the last change in the company?s roll of shareholders (Zeus Acquisition). Such behaviour by the company has been cause for concern, as it may put at risk the main obligation imposed on Intelsat, Ltd., that of comprehensive coverage by means of LCOs (lifeline connectivity obligations), i.e., the obligation to guarantee connectivity for countries whose international, and often domestic, interconnections are very dependent on the use of Intelsat, Ltd., satellites, in some cases exclusively. Parallel to this, it is also symptomatic and quite worrisome that Intelsat, Ltd., is breaching other conditions imposed on it during the reorganisation, which was the result of difficult and protracted negotiations between the various players then involved. The following situations of most concern regarding the real intentions of Intelsat, Ltd., were clearly identified by the director general at this 29th AP:
- the company stopped considering the Public Services Agreement in its obligations (the PSA was quite simply removed from the statutes) when Intelsat, Ltd., was acquired by the four investment funds (Zeus Acquisition). This was supposed to be prohibited in practice, as shareholder unanimity would be needed to remove the PSA. However, when the four investment funds took control of 100% of the share capital, such was promptly and pointedly carried out;
- failure to update the LCO Pricing Index Basket ? according to what was agreed in 2001, Intelsat, Ltd., must revise the price index when the recorded decline reaches 15%. The tariff reduction did not happen because, according to Intelsat, Ltd., it was not justified given that the actual variation was on the order of 5%. However, according to ITSO calculations, based on information provided by the company to third parties, it was more likely around 35%;
- sharp drop in the submission of information to ITSO, which has stopped receiving the periodical reports on the LCO Pricing Index Basket, Common Heritage (orbital positions and associated spectrum), thus hindering the oversight task incumbent on ITSO and which Intelsat, Ltd., while not clearly admitting it, seems to be questioning;
- new Intelsat, Ltd., board of directors, without the presence of the regional representatives. Since the Zeus Acquisition, the board of directors no longer has regional representatives present, thus hindering even more ITSO?s access to information;
- the fact that Intelsat, Ltd., is increasing the distribution of dividends is originating an increase in the company?s own debt, i.e., at this pace the Intelsat, Ltd., shareholders will have a rapid return on the investment made during the Zeus Acquisition and will increasingly augment the company?s debt;
- the process of buying PANAMSAT (company competing with Intelsat, Ltd.) and consequent increases in the debt of Intelsat, Ltd., which may create a situation bankruptcy under chapter 11 of American law, with a risk of loss of assets (Common Heritage), as well as the end of the public service obligations;
- breach of commitments assumed with ITSO regarding the obligations of Intelsat, Ltd., with the Intelsat Retiree Association (IRA).
As expected, these issued took up a considerable part of the AP?s work, generating long and heated discussion. Portugal presented an example of how, in an analogous situation, the problem of the failure of Eutelsat SA to provide information to EUTELSAT IGO was resolved. The AP later adopted, based on a German proposal, which merited broad support from almost all the represented Parties, a number of decisions among which the following stand out:
- to ask the Parties from the USA and the United Kingdom, as Notifying Administrations for assigning the frequencies associated to orbital positions (Common Heritage), to proceed in accord with their obligations with Intelsat, Ltd., with a view to the latter?s adherence to the PSA;
- to ask the director general to facilitate outside help from an intermediary selected jointly by ITSO and Intelsat, Ltd., so that same can help resolve the situation of the failure by Intelsat, Ltd., to send information deemed sufficient and necessary by ITSO;
- to ask the director general to take the necessary steps with a view to ensuring that the PSA will be respected, to be for that end advised by the ITSO executive body and by the ITSO Advisory Committee (a six month deadline to finish this process was imposed);
- to ask Intelsat, Ltd., to immediately give the director general a seat on the board of directors as an observer (this would enable greater access to information, resolve the regional representation of Parties meanwhile lost on the board, and alert the same to various political considerations that should always be present together with the commercial conditions governing the provision of service by Intelsat, Ltd.);
- to ask the director general to ensure resolution of the non-revision of the LCO Pricing Index Basket;
- to ask Intelsat, Ltd., to again include in its obligations the references, meanwhile removed, concerning Public Service Obligations;
- to call an Extraordinary Assembly of Parties, to take place in Washington, D.C. by September 2006, to review the situation and reaffirm the need for the ITSO?s oversight role and to immediately ask the director general to prepare recommendations should the proposed measures fail (one of the measures may lead to court proceedings, a situation which should only be used if there is no significant progress regarding the Parties ? such situation, besides being very onerous for the Parties, as there are no ITSO funds for same, could be a strong argument to convince Intelsat, Ltd., as it would most likely depreciate the value of its shares in the stock market and hinder the PANAMSAT acquisition process, etc.).
The USA, Canada, United Kingdom and Australia disassociated themselves from such decisions, as they did not agree with all the decisions (specifically because they doubt the underlying effectiveness of some of the proposals).
The AP also made other decisions concerning the organisation?s current management:
- Approved continuation of the ITSO Advisory Committee with the same structure and terms of reference (Portugal is not a member).
- Approved the budget for the 2007/08 biennium, studied the External Audit report, noting the saving of 36,440 dollars which were transferred to the Reserve Fund. The director general was authorised to use the same Fund to meet the organisation?s costs for an eventual extraordinary AP held this year. A Compensation Committee was also established to review the director general?s salary, as well as to grant a performance bonus.
- Elected the eleven members of the ITSO Panel of Expert Jurists.
- Congratulated the director general for ITSO?s contribution (Global Broadband Satellite Infrastructure Initiative) to the World Summit on the Information Society (WSIS).
