Intelsat Practices to Be Probed by FCC After Complaint

The U.S. Federal Communications Commission said it would explore allegations that satellite operators including Intelsat SA (I) have inhibited competition by failing to upgrade their gear.

The FCC in an order today said it was looking into “warehousing,” or tactics to limit capacity and keep competitors from buying capacity on satellites. Satellite services provider CapRock Communications Inc. said Intelsat and other fleet operators haven’t replaced aging satellites on a timely basis or haven’t installed updated technology, the commission said.

CapRock, a unit of Melbourne, Florida-based Harris Corp. (HRS), in 2010 told the FCC Intelsat was engaged in “aggressive, anti-competitive practices” leading to “a drastic increase in bandwidth prices.”

Intelsat operates “in a fully competitive manner,” Dianne VanBeber, a vice president for the Luxembourg-based company, said in an e-mailed statement today. “The satellite industry is fully competitive, as is evidenced by the number of new entrants to the sector over the past several years.”

The commercial satellite industry has evolved from a relatively nascent industry three decades ago to today’s mature industry with more than $168 billion in worldwide revenue, the FCC said. It said there has been industry consolidation, with smaller numbers of satellite operators controlling larger in-orbit fleets.

Marc Raimondi, a spokesman for Harris, didn’t immediately provide a comment on the order.

Intelsat, the world’s largest satellite services business, began trading in the U.S. in April. Shares were down 10 cents today to $23.24 at 3:03 p.m. New York time.

Intelsat was established in 1964 as the first commercial satellite-services provider, according to its website. Its European competitors include Paris-based Eutelsat Communications SA (ETL), London-based Inmarsat Plc (ISAT), and SES (SESG) SA, the world’s largest publicly traded satellite operator, also based in Luxembourg.

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net;

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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