DirecTV challenges Canadian satellite company’s plans to launch TV service in U.S.

The U.S. Federal Communications Commission (FCC) is wading into a battle between satellite TV giant DirecTV and Ciel Satellite Group over the Ottawa company’s plan to use an orbital slot that includes the U.S. as well as Canada. Ciel’s ability to serve all of North America could depend on both the FCC, and its ability to launch a satellite on time. The dispute was triggered by an application by El Segundo, CA-headquartered DirecTV asking the FCC to approve a test payload that may interfere with Ciel’s orbital rights. “The FCC has not been leading the way on this,” says Gregory Peckover, senior analyst at Euroconsult in Montreal. “They could have ordered (DirecTV) not to put the capacity up on their launch, but they didn’t do that. If Ciel gets its satellite up and executes then I am certain the FCC will assume their responsibilities and ask (DirecTV) to coordinate with Ciel.” In 2007, Industry Canada awarded Ciel the right to operate a satellite (Ciel-6) at the 103W position to provide direct-to-home (DTH) satellite television services throughout North America. The orbital rights awarded to Canada by the International Telecommunication Union also include Mexico, Central and South America and the Caribbean market. “Industry Canada was pretty shrewd on this,” says Peckover. “They got a jump on the ITU and won Canada a significant number of priority orbital slots. In some sense, Canada is sitting on a wealth of orbital spectrum capacity.” Ciel has an initial payload under construction, and intends to have it launched and in service at the 103W orbital position by 2012. The problem is that DirecTV is seeking approval from the FCC to operate its test payload at the same slot. DirecTV received its approval in July from the FCC to launch the RB-2A satellite, now called DirecTV 12, which will deliver 200 high definition channels. Technically, the two satellites can co-exist but it would require each side to make compromises to avoid signal interference. “All we are asking is that the FCC recognize and acknowledge that there is market risk (to DirecTV),” says Bernie Haughian, VP of market development at Ciel. “When we are there in 2012 we will have priority on that slot, and DTV will have to acknowledge this and coordinate with us.” DirecTV has suggested that Ciel’s licence is for “Canada only”, suggesting that Ciel or any other foreign operator could be denied U.S. market access, regardless of their ITU priority. “The World Trade Organization obliges the U.S. to have an open market,” says William Bitove, an industry analyst with Forecast International Inc. “However, from time to time, the U.S. government has ordered the FCC to protect U.S. assets. It is unclear if the FCC will be forced to act in this manner for the (DirecTV) vs. Ciel case.” Bitove adds that there is no direct precedent for this, though Peckover from Euroconsult suggests Ciel is on firm ground – assuming it can launch in time. “There is no issue with landing rights,” says Peckover. “The FCC has been open to landing rights to international players. Overall, I don’t forsee any problems because Industry Canada works closely with the FCC.” “Probably (DirecTV) is hedging its bets,” says Andrea Maleter, technical director at analyst firm Futron Corp, referring to the possibility that Ceil won’t meet its 2012 launch deadline. Ciel has until 2013 to use the slot or lose its priority status. Maleter rejects Ciel’s own description of the conflict as a David and Goliath battle. True, DirecTV is the biggest U.S. satellite DTH company, with 18 million U.S. subscribers and another six million in Latin America, but Ciel has powerful backing. “Ciel has money behind it from SES World Skies,” says Maleter, referring to the Luxembourg-based company that is one of the largest satellite operators in the world. “For a year SES has had an agreement with Echostar and the Dish Network. Ciel and Dish are well-coordinated – it gives Ciel access to a different market”. The Dish Network is a direct competitor to DirecTV, and covets access to the U.S. market through the Ciel satellite. For its part, even though Ciel says it has ITU priority at 103W, it agrees that the FCC is within its rights to award spectrum to DirecTV for use in the U.S. as long as DirecTV adheres to international coordination rules of non-interference. “Our first response is to the FCC; Industry Canada is also talking to the FCC,” says Haughian from Ciel. “If that doesn’t resolve it, then it goes to the ITU level, where there are arbitration opportunities. It could ultimately boil up to a trade issue, but we don’t want to go there.” That said, if Ciel doesn’t get its satellite up in time, it could be in trouble. “If Ciel doesn’t execute by the 2013 deadline then they will be forced to kiss it good bye,” says Peckover. “DirecTV is smart – they are preparing themselves to use that slot.” The FCC is expected to release its decision in the first quarter of this year.

DirecTV challenges Canadian satellite company’s plans to launch TV service in U.S.

News | 01/04/2010 6:13 pm EST

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