Rene Anselmo Can Sure Dish It OutTodd Vogel
It isn't your average New York Times ad. The cartoon, which first appeared on May 6, looks like the work of an adolescent. In 17 panels, it depicts a Don Quixote-like hero and his dog, Spot, as they fight an international satellite monopoly. At one point, Spot lifts his leg on a vamp who speaks for the monopoly.
The comic-strip hero--and the man who placed the ad--is Reynolds V. "Rene" Anselmo, owner and chairman of a small satellite company called Pan American Satellite (PanAmSat). He addressed the quirky ad to President Bush, asking for his help against the International Telecommunications Satellite Organization (Intelsat), the global consortium that controls most international satellite telephone calls.
Anselmo drew no immediate response from the Bush Administration. But that hasn't deterred the 65-year-old entrepreneur, who says that Bush needs to do more to dislodge the 119-nation Intelsat--and spur sluggish foreign regulators to action. "There's no rational way to deal with these people," he says.
Don Quixote himself might have said as much. But while Anselmo has earned a reputation as an eccentric--he was arrested last year for painting over real estate "for sale" signs he found offensive--he's up to serious business. He's trying to shake up the satellite business just as William G. McGowan of MCI Communications Corp. shook up U. S. long-distance calling by challenging American Telephone & Telegraph Co.'s monopoly.
Anselmo began by attacking less-regulated niche markets, such as private business communications. He aims to revise regulations blocking him from the lucrative market of international phone calls. He wants access to the public switched network, the system used for making phone calls (unless you're on a leased circuit, such as a tie line between offices in London and New York).
'DOMINO EFFECT.' Anselmo has powerful allies, such as IBM, AT&T, Citicorp, and the television networks, all of which want more flexibility and lower satellite rates. If he succeeds, Intelsat faces a fight for its main earnings generator of 27 years. A victory in the U. S. would accelerate the reordering of the business worldwide and may prompt the governments that own Intelsat to rethink their own restrictive regulatory policies. "He could cause a domino effect," says one European Commission official.
Intelsat is already under pressure to lower rates to compete with the fiber-optic cable networks that cross the oceans. And it's showing bruises as a result. In 1990, it posted its first revenue drop since it was founded in 1964--an 18.8% plunge, to $498.6 million.
Other companies are poised to follow PanAmSat. Orion Network Systems Inc. in Rockville, Md., hopes to launch its first satellite in 1993. It's planned for business data, but Chairman John Puente says he wouldn't rule out carrying regular phone traffic, too, if permitted. And the South Pacific nation of Tonga is trying to raise $500 million for satellites to serve Asia. "We see ourselves in the same light as PanAmSat," says Tongasat founder Matt C. Nilson.
But Intelsat won't give up its monopoly without a fight. Public network traffic accounted for 65% of its revenue last year. Intelsat officials argue that it must have a monopoly to fulfill its mission of providing access to satellites for all countries. Competitors, it says, will skim the best customers, making it harder to charge uniform rates worldwide.
As a treaty organization, Intelsat decides who may compete with it. Last year, in a concession to the U. S., it allowed rival carriers to transmit public network calls--but only up to 100 calls at a time. Anselmo was hardly satisfied: "That's like a phone booth in New York City," he complains. He pressed ahead with a $ 1.5 billion antitrust suit against Intelsat's U. S. member, Communications Satellite Corp., challenging the system. A federal judge dismissed the suit, but Anselmo has appealed.
Anselmo embarked on this crusade by accident. Born in Medford, Mass., he joined the Marine Corps at 16 and flew 37 missions as a tail gunner. After attending the University of Chicago, where he studied theater and literature, he spent 12 years in Mexico producing soap operas and other programs.
The idea for PanAmSat grew from his work as a Spanish-language TV executive, when he saw how poorly Intelsat served Latin America. From 1963 on, he ran the U. S.-based Spanish International Network Inc. (SIN), now Univision, and some affiliated TV stations. In 1986 he was forced out after a tiff with SIN's Mexican founders and the Federal Communications Commission, which said the stations were foreign-controlled. He left with $100 million for his share of the properties.
Anselmo had formed PanAmSat two years earlier, in 1984, and sought loans to launch his first satellite, named after Latin American liberator Simon Bolivar. Spurned by banks, Anselmo put up $85 million of his own. He rented space on France's Ariane 401 in 1988, getting a 30% discount because it was the new rocket's first shot. But when it lifted off, he was recuperating from quintuple-bypass heart surgery.
He took it easy--briefly. "After the operation, I didn't care about anything anymore," he says. He tended more than 20,000 daffodils and tulips at his Greenwich (Conn.) estate and had more than 80,000 bulbs planted along nearby roads. Local eyesores such as "for sale" signs "make me sick," he says. His personal cure for this ugliness led to his arrest, spray can in hand. A misdemeanor charge was dropped on a technicality.
WAR BUCKS. Anselmo's hunch on the satellite business is apparently paying off. When he started PanAmSat, he said he didn't expect it to break even for six years. But in 1990, PanAmSat and its marketing arm earned more than $600,000 on revenues of $16.7 million. The gulf crisis temporarily swelled bookings from news stations, nearly quadrupling revenues for the first quarter, to $9.1 million. So PanAmSat moved from a $1.3 million first-quarter loss in 1990 to a $5 million profit this year. Anselmo hopes to raise money for three new satellites over the Atlantic, Pacific, and Indian Oceans. He says he can more easily convince backers that his birds will pay off if he can carry phone traffic as well as private business traffic and television.
But even if Anselmo gets Intelsat to lift its restrictions on access to the public switched network, he still has to persuade national phone companies and ministries to send calls via PanAmSat rather than Intelsat. That won't be easy. Even in Western Europe, which is deregulating more rapidly than the developing world, several countries are resisting competition to state-sanctioned monopolies. "We're not likely to change the laws," says John Rietbroek, director of policy affairs at the Dutch ministry in charge of satellite transmission.
Anselmo isn't likely to take that kind of resistance sitting down. Who knows? Some day, the Europeans may be seeing Anselmo-inspired cartoons of their own.