Telecommunications: Competition, Capacity, and Costs in the Fixed Satellite Services Industry

Commercial satellites are used by the U.S. government to provide a variety of fixed satellite services, such as military communications. However, the number of satellite operators providing such service has declined since 2000. Further, until recently, three vendors, known as satellite service providers, had sole authority to contract with the Department of Defense (DOD) under its primary satellite contract. Among other things, GAO was asked to describe (1) changes that have occurred in the fixed satellite services industry since 2000 and the effects these changes could have on the relationship between satellite operators and service providers; (2) the technological, regulatory, and other factors that affect competition in the fixed satellite services industry; and (3) how costs for DOD to acquire fixed satellite services have changed since 2000 and contracting officials' views on the effects of changes in the industry and contracts on costs. To address these objectives, GAO reviewed demand and capacity data, economic literature, and international regulations; analyzed DOD commercial satellite procurement data; and interviewed satellite industry stakeholders. The Federal Communications Commission, DOD, General Services Administration, and the Departments of Justice and State reviewed a draft of this report. The agencies provided technical comments that GAO incorporated into the report as appropriate.