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One Last Win For The Gipper
Intelsat success.


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Neal B. Freeman

The Washington Post reported last week, in a routine business-section story, that Intelsat Ltd. will float a public-stock offering in the next few months. Just another garden-variety IPO, it would appear, except for the Post’s throwaway line that Intelsat “has an unusual history.”

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Well, yes.

Born in the ebullient days of the Kennedy-Johnson Sixties–when the country was in full bear-any-burden, pay-any-price mode–Intelsat was conceived as a big idea. In those days, you couldn’t just pick up a telephone and let your fingers do the walking from one end of the known world to the other. Networks for voice communication were a sometime-somewhere thing, and e-mail was a term not yet coined to describe a buzz notion that excited only the most fevered of technophiles. When you made a phone call, or transmitted alpha-numeric information, you could do so only along the prescribed pathways set by the great national telephone companies: along the famous “twisted pairs” that ran from one population center to another. If they didn’t happen to connect to where you wanted to send your message, you had only one alternative. It tended to be slow, expensive, and of dubious reliability. It was called the United States Postal Service.

The Intelsat idea was thus infused with both grand aspirations and the power to unite on an intimate level. Suppose you could knit together the human family by building a global telecommunications system? Suppose you could allow information to flow freely across national borders so as to spread ideas, and open minds, and lift aspirations, and build communities? The Intelsat idea seemed to touch all of the New Frontier’s hot buttons simultaneously–it was new, it was big, it was James Bondish, it would project American leadership, and–not all that incidentally–it would make the post-Sputnik Russians look like a bunch of techno-klutzes.

From Kennedy to Johnson to Nixon, a series of U.S. presidents made the global satellite system happen. It was a rare triumph of government-sponsored enterprise that, at the macro level, empowered businesses first to multinationalize and then to globalize, even as it permitted friends and families, at the micro level, to connect and reconnect. Looking back over the decades, the Intelsat system stands out as one of the more important public initiatives undertaken during that period.

But flash forward, if you will, to 1983. Ronald Reagan is now in the White House and feeling his ideological oats. His political sister, Margaret Thatcher, is shaking up the political economy across the pond with her campaigns for “privatization” of state-owned assets–with public housing, with Jaguar motor cars, and most pertinently with British Telecom, the U.K.’s version of Ma Bell. Intelsat, for its part, has by this time evolved into a very large and not very wieldy IGO–an Inter-Governmental Organization built along the lines of its bureaucratic brethren, the United Nations and the World Health Organization and the like. Intelsat board meetings lasted a full week, the organization’s business was conducted in a Berlitz-catalog of languages, and the conflicting interests of more than 100 sovereign nations had to be carefully tended. Suffice it to say that at Intelsat in the ’80’s, cost-efficiency was not Job One.

It was against this background that Reagan appointed me to represent him in the international satellite system, asking me to look into “this privatization thing.” I saluted, clicked heels, and strode off to shape up the international satellite business. That was 1983. As I remember it, I was young then. What the Great Communicator had failed to tell me was that the Intelsat organization was governed by a treaty and that privatization, accordingly, would require the approval of (ultimately) 146 signatories to that treaty. Some of these countries, I now confess, were new to me. Many of them were difficult. One was French.

Thus began the long, hard slog through the tangled jungles of diplomacy, bureaucracy, technology, and high finance that brought us to yesterday’s little story in the Washington Post. (Along that path, I should stress, I never played a particularly heroic role; my distinction was that, at Day Last, I was the sole survivor of the hardy crew that had set out on Day First. A colleague described my functional role, somewhat uncharitably I thought, as “turning thousands of bureaucrats into hundreds of business people.”) With its forthcoming IPO, Intelsat will be a profitable, fully competitive public company, with a market capitalization of $2 billion-plus and a mandate to serve customers around the world with constantly improving communications services at free-market prices. Not bad for a day’s work, or even a couple of decades’. As so many other people have come to conclude on so many other occasions: “What do you know? Reagan had it right.”

Neal B. Freeman, chairman of the Blackwell Corporation in Vienna, Va., has just retired as a director of Intelsat Ltd.



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