Spectrum rights and orbital positions: what do space operators need to know?14 November 2024

Two additional points:

• spectrum management and the prerogatives of allocating spectrum usage rights are sometimes entrusted to separate bodies. This is the case in France, for example, where spectrum management – including representing France’s interests within the ITU and reviewing applications for authorisation of usage rights for satellite systems – is the responsibility of a specialist public body, the Agence Nationale des Fréquences radio-électriques (ANFR) with authorisations granted by separate ministerial or administrative authorities (“ARCEP” or “ARCOM” depending on frequency); and
• unlike in the USA, which may have justified the FCC’s decision to impose a fine on Dish Network, national legislation governing space activities may provide for an authorisation regime distinct from rights to use the radio spectrum or orbital positions. For example, France’s Space Operations Act requires satellite operators to obtain authorisation for in-orbit control. In principle, this authorisation is subject to several obligations, including de-orbiting. It is therefore based on this type of authorisation that fines could be imposed.

The reservation of orbital positions is organised differently, involving the submission of reservation applications by national governments on behalf of national operators. These applications are registered by the ITU, subject to two conditions: the lodging of a security deposit and a deadline for bringing the satellite system into service. In principle, a satellite system must be brought into service within seven years of the date of registration of the reservation request file. These precautions are designed to prevent a state from freezing orbital positions indefinitely.

Orbital positions and spectrum usage rights have become objects of commerce

Requests to reserve an orbital position, commonly known as “filings”, are being transferred. Spectrum usage rights can be leased or even sold.

The result is a secondary market in these positions or rights of use, which today is the subject of explicit legal provisions authorising it or, when these provisions are insufficient or non-existent, of a customary rule based on known and tolerated practices.

As previously indicated, ITU filings are conditional on the reservation beneficiary’s satellite system being brought into service within a maximum of seven years, from the date of registration of each filing. The requesting state is therefore notified of a commissioning date as well as the allocated operator. As this deadline approaches, it is not uncommon for the satellite system not to be put into service. It is therefore in the interest of the beneficiary to relinquish its authorisation in favor of operators who covet the allocated orbital position, but who had no access to it since it had been reserved for its initial assignee, and who can deploy their system within the required timeframe.

As the frequency spectrum is a scarce resource, it is also desirable for the rights of use granted to be able to circulate from one operator to another.

Orbital positions and spectrum usage rights are therefore the subject of an original ownership regime, involving a succession of dismemberments: in principle, the state is the “owner” of the frequency spectrum or the ITU filing; rights to use the spectrum or orbital positions are then the subject of authorisations granted by the competent bodies of each state to the operators concerned, who can in turn transfer these rights to third parties (another operator, banks, creditors, etc.).

The existence of this secondary market has given rise to related questions and practices including disputes. Can positions and rights of use be valued? The answer is yes, a value can be given to each transaction, which depends on market structure and demand elasticity. Can valued positions and rights-of-use be capitalised in the sense of a value entered on the assets side of an operator’s balance sheet? Once again, the answer is yes. Company takeovers now include the value of spectrum usage rights or orbital positions in determining the purchase price.

Orbital positions and spectrum usage rights can give rise to obligations and penalties

Obtaining the necessary authorisations is already a requirement, subject to sanctions. However, the granting of these authorisations gives rise to obligations which are themselves subject to penalties. The example given above involving Dish Network provides an illustration,  and the table below shows that what has been observed in the USA is fully transposable to Europe.

Sanctions take the form of fines, the amount of which can quickly become a deterrent. Because of their size, they can be even more restrictive for the punished companies as they cannot be covered by insurance.