Page 142 - Communication Commerce and Power The Political Economy of America and the Direct Broadcast Satellite

132 Communication, Commerce and Power

state structures to redress unforeseen problems emerging as a result of
re-regulation.
A catalyst for this and other regulatory and more general concep-
tual changes in US policy were technological advancements involving
telesatellites. When Intelsat was first established, the capacity of satel-
lites to focus transmissions onto particular regions through spot
beams was limited. With advancements in transponder technologies
and power capabilities, not only could pre-specified areas be serviced
but spot-beam locations could be modified in accordance with shifting
market strategies or demands. As of 1985, the French Telecom 1
telesatellite possessed the capacity to redirect its transmissions to
markets outside of Western Europe. Moreover, similarly capable
systems were about to be launched in Europe and elsewhere. Apart
from US companies seeking to provide international telecommunica-
tion services, some West European and Japanese PTTs also favored
some degree of international regulatory liberalization in order to take
advantage of their existing or planned telesatellite capabilities. But the
main proponents of liberalization were large business users seeking
lower rates and more specialized services. As David Markey told a
5
Congressional hearing in 1985 (when Markey was the Assistant Secre-
tary for Communications and Information at the Department of
Commerce and, as such, a spokesman for the Reagan administration),
'We just want competition, which we think will be to the benefit of the
American user. ' 6
The general shift from behavioral to structural regulation produced
some important unanticipated results. One result of the adoption of a
structural regulation/liberalization model involved the dramatic
decline in the US share of the world telecommunication hardware
market following the AT&T divestiture. While in 1987 the US equip-
ment and services market accounted for 40 per cent of the world
market, since 1984 domestic employment in this sector had fallen by
30 per cent. More importantly, in 1986, for the first time, the United
7
States posted a trade deficit of $2.6 billion in high technology goods -
a remarkable decline from its $27 billion surplus six years earlier. 8
As this chapter chronicles, this mounting crisis generated a rare
consensus among US-based corporations in this policy field.
Competition in the American market was workable only if domestic
liberalization reforms could be exported to foreign markets. Rather
than a reassertion of behavioral regulation at home, foreign commu-
nication policy officials were compelled to reform international com-
munication regimes. In other words, the State Department, the FCC,