I am bringing before the committee a motion which seeks Dáil approval for the amendment made to the agreement setting up Intelsat, the International Telecommunications Satellite Organisation. Dáil approval is required to enable Ireland to ratify the amended agreement which allows for the restructuring of Intelsat from an intergovernmental organisation providing satellite services into a private company overseen by a restructured intergovernmental oversight body. This is a straightforward ratification of an internal international agreement. I shall deal with five main areas - the background to Intelsat, the reason for its restructuring, the implementation of the restructuring plan, the ratification process and its implications.
The genesis of Intelsat was in the 1960s when the possibilities offered by space were beginning to be recognised. During this period the United Nations passed resolutions calling for a global communications system. Subsequently, Intelsat was formed to provide international telecommunications services using satellites. In 1973 it was formally established as an intergovernmental organisation with member states investing in it, the level of investment being in proportion to their use of the system. In Ireland's case responsibility for these investments rested initially with the Department of Posts and Telegraphs, later with Telecom Éireann and finally with Eircom. In 1997, following authorisation from Eircom, RTE also invested in Intelsat. This enabled it to directly access the satellite network. Other Irish companies or individuals wishing to access the Intelsat satellite services could not do so directly; they could only do so by arrangement with Telecom Éireann. Since August 2000 Irish companies have been able to access Intelsat satellite services directly. ComReg now oversee the administrative regulatory aspects previously handled by Eircom.
Since Intelsat was set up in 1973 the international telecommunications market has changed dramatically. Increased liberalisation and ownership changes in telecommunications have contributed to a seismic change in the environment in which Intelsat was operating. Facing increasing competition, it was recognised that it needed to restructure if it was to continue to thrive and be in a position to meet its important core principles of ensuring the availability of global communications, serving less developed or under-serviced countries and ensuring non-discriminatory access to a global communications network by all member countries.
To meet these challenges Intelsat restructured in July 2001 from an intergovernmental organisation to a private company, Intelsat Limited, and an intergovernmental oversight body, the ITSO, based in Washington DC. This restructuring followed agreement in November 2000 by member states to amend the original agreement setting up Intelsat. The ITSO essentially oversees the company and ensures it meets key public service obligations. The relationship between the ITSO and Intelsat Limited is covered by a legally binding public services agreement. The ITSO has no operational or commercial role in relation to Intelsat Limited and plays no role in setting policy for its governance.
Before the restructuring Intelsat had been afforded certain diplomatic privileges. An existing Government order, the Intelsat (Designation of Organisational Immunities of Organisation, and its Officers and Employees) (Amendment) Order 1993, is in place under section 40 of the Diplomatic Relations and Immunities Acts 1967 and 1976, as amended. My officials are examining amending secondary legislation, if necessary, in order to amend the privileges and immunities in order that they are retained by the ITSO and removed from the company in accordance with the amended agreement. It is intended that this legislative issue will be tidied up following ratification of the amended agreement by Ireland.
The privatised company, Intelsat Limited, is owned by those who invested in Intelsat before its restructuring. Eircom and RTE are entitled to a shareholding of 0.037% and 0.086% of the company, respectively. When Eircom was privatised in 1999, its assets transferred with it, including its Intelsat shareholding. The RTE shareholding is currently held by RTE Commercial Enterprises Limited, a wholly owned subsidiary of RTE.
The amended agreement to restructure Intelsat has been applied provisionally, pending entry into force. Ratification by two thirds of member countries is needed for the agreement to formally enter into force, that is, 96 of the 144 countries party to the agreement to restructure. The latest figure we have from the ITSO is that as of 15 May 2004, 93 countries have ratified the amended agreement. It is also necessary that the total shareholding associated with the ratifying countries or entities from those ratifying countries represents two thirds of the total shareholding. This second condition has been achieved.
The proposed amendments have no implications for Exchequer costs or staffing. There is no subscription charge for membership of the ITSO which is financed by retention of certain financial assets when Intelsat Limited was set up. The ITSO remains in place as an intergovernmental oversight body to ensure the company continues to meet its core obligations.
