Case Study: The Privatization Of INTELSAT

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This paper discusses the privatization of INTELSAT. I argue that the privatization of the global satellite network was crucial for further the development of the company. The United States had benefited the most from the privatization along with many but not all the member countries of the international organization. In 1961 the U.N. General assembly claimed, “communication by means of satellites should be available to the world as soon as practicable on a global and non-discriminatory basis”. (Doyle, 431) Ten years after in 1971, 85 nations formed a public intergovernmental organization called the International Telecommunications Satellite Organization (INTELSAT). The main purpose of this intergovernmental company was to provide international broadcast services, thus enabling its customers to rapidly communicate between widely spread locations across the globe. However, the company lost its intergovernmental status in 2001, 37 years after the formation and became an ordinary private company,…show more content…
The company was formed during the Cold War by Western Block countries, but interestingly, it functioned according to socialist principles. INTELSAT was a natural monopoly protected by the agreement, which aimed to “veto the development of any separate international satellite systems projected to cause “significant economic harm” to INTELSAT”. (Kenneth, 1323). This did not permit other private companies to enter the satellite industry. Market forces were not the main determinants of the prices as in a conventional capitalism model. Instead, the company used method of price-averaging operating the system of subsidization where the rich regions financed the poor ones (Thussu, 99). It is important to understand that the goal of the company was not to maximize the profits and wealth of the owners, but to increase the prosperity of the public, providing it with global universal

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