This chapter is based on research performed as part of the history project of the European Space Agency (ESA) in collaboration with John Krige and Lorenza Sebesta. For this history project, the author conducted a special study of the launching of the telecommunications satellite program of the European Space Research Organization (ESRO), a multinational space organization created in Europe in the early 1960s, whose activities ESA took over in 1975. The following is a discussion of the results of that study, which can be found in detail in two ESA History Study Reports.1
The United States dominated the history of satellite communications up to the end of the 1970s. Europe was a latecomer. Although the first plans for a joint European communications satellite program were elaborated in 1965, many years passed before the program was implemented and a European satellite finally was launched. Only at the end of 1971, in fact, did the ESRO member states approve a program aimed at developing an experimental satellite, and not until 1978 did that satellite, named the Orbiting Test Satellite (OTS), leave the launch pad. ESA approved the second phase of the telecommunications program in February 1978, with the aim of developing an operational satellite, named the European Communication Satellite (ECS). The first ECS was placed in orbit in 1983; three others followed in 1984, 1987, and 1988, respectively, thus completing the ECS system.
By the time the first ECS satellite began operating, however, six Intelsat V satellites already were orbiting over the Earth's oceans. Also, domestic communications satellites had been under development by private companies in the United States for ten years, and some 18 U.S. satellites were in orbit. Meanwhile, Intelsat itself was providing domestic services in more than 20 countries; Canada already had launched seven Anik satellites; Japan, India, and Indonesia also had acquired independent space communications capability; and in Europe, two Franco-German Symphonie satellites were approaching the end of their orbital life after several years of good performance. While not all these spacecraft were as complex and up to date as the ECS, the European system was certainly too late to play a major role in the competitive market of space communications.
Why did it take such a long time to develop a European communications satellite program? To answer this question, one must first consider two main aspects. The first is the institutional framework in which the program was to be developed. Two multinational space organizations existed in Europe during the 1960s and early 1970s: one was devoted  to scientific research (ESRO), and a second, called the European Launcher Development Organization (ELDO), whose original mission was to build a rocket called Europa, became devoted to launching heavy satellites into near-Earth orbits. The eventual involvement of ESRO and ELDO in the new field of geostationary communications satellites implied a change in their charter and operational program. This change was not easy, owing to their different missions, structures, and memberships. Only six European countries, plus Australia, were members of ELDO, whose programs were defined essentially at the governmental level. Each member state was responsible for a specific task vis-à-vis the final goal of building the three-stage Europa vehicle and associated facilities, and each had a different level of financial and technical commitment. ESRO, on the other hand, consisted of ten member states, each of which contributed financially in proportion to their gross national product, and the European space science community defined its programs.
ESRO member states were not equally interested in communications satellites; some of them were firmly against the organization's involvement in space applications. ELDO, for its part, was hampered by severe technical, financial, and managerial problems that resulted in a dramatic series of test launch failures of the Europa rocket. As a consequence, strong disagreements existed among ELDO member states about the viability of a European launcher for geostationary satellites. A collaborative European effort in  satellite communications could only be developed within the framework of a comprehensive space policy in which national economic interests and political goals could be satisfied. The development of such a policy required many years of laborious negotiations.
The second reason why it took so much time to develop a European communications satellite program was the question of users. During the 1960s and 1970s, all European countries provided telecommunications services through state-owned operators. These state telecommunications administrations had the authority to act as the monopoly providers of all services considered at that time as suitable for a European satellite system--namely, international telephony, telex and data transmission, and international television distribution within the Eurovision network.
The state telecommunications administrations, while interested in supporting research and development studies of communications satellites, were hardly optimistic about the economic prospects of a European system. According to their estimates, in fact, the large investments required for procuring and launching satellites, as well as for building the necessary ground stations, would be greatly in excess of the savings achieved by transferring traffic from the terrestrial cable network to a satellite system. Over the short average distances between European centers, and without the problems posed by large oceans or vast undeveloped regions, it made no sense to put sophisticated transponders as high as 36,000 kilometers in the sky and to build huge antennas on the ground.
This, then, was the background to the launching of satellite telecommunications in Europe. Starting the program required a redefinition of the respective roles of ESRO and ELDO within the framework of European space policy. ESRO was the obvious candidate to develop communications satellites, based on its experience gained in the field of scientific research. Indeed, ESRO's executive and technical staff enthusiastically looked forward to working on satellite communications. A balanced program of both scientific and applications satellites implied, in fact, a more efficient use of capital resources, a more equitable distribution of industrial contracts among member states, and interesting jobs for recruiting the best engineers. ELDO, for its part, would be called on to develop appropriate launch vehicles.
Following the successful launch and operation of Early Bird (Intelsat I), Comsat's first satellite, in March 1965, ELDO member states agreed in July 1966 to fund a program to make the Europa rocket capable of launching small satellites into geostationary orbit. Later that year, ESRO was charged with studying an experimental satellite for telephony and television services in Europe and the Mediterranean. At the same time, the European Space Conference came into being as a political forum for discussing a comprehensive space policy for Europe. At its second meeting, held in Rome in June 1967, the conference set up a special committee to elaborate a long-term program that included scientific research, applications, and launchers.
The transition from the study phase to actual development, however, encountered three main difficulties. First, important elements of the European space science community expressed concern about the eventual extension of ESRO into applications satellites. Many scientists feared that economic and commercial interests rapidly would eclipse scientific objectives and that political factors would dictate program priorities, rather than the need to investigate scientifically interesting phenomena beyond the atmosphere.
The second difficulty derived from the diverging visions of the ESRO member states about the prospects of satellite communications in Europe. For some, notably France and Germany, there was no doubt that Europe should undertake a vigorous effort in this field,  to reduce the perceived technological gap with the United States in this strategically important industrial sector. France went so far as to suggest that ESRO should concentrate on applications, leaving science to national space programs or multinational projects. Other ESRO member states held the opposite view. The British government, for example, following the advice of the powerful British Post Office, that country's state telecommunications administration, opposed any direct involvement in the space segment of satellite communications. They believed, in fact, that very few possibilities existed for autonomous European action in this field, because of both the strength of the American presence and the foreseeable small commercial demand for the kinds of satellites Europe could build and operate. For Britain, as well as for some of the smaller member states such as Switzerland and the Scandinavian countries, ESRO was doing well in science, and space research had to remain its main mission.
The third difficulty to the transition from the study phase to actual development of a European communications satellite system was the question of a launcher--namely, whether Europe should develop its own, more powerful launch vehicles or should rely on American rockets. Britain and France led the opposite camps. The British stressed the high cost and poor performance of the proposed ELDO launchers compared to American missiles; the French argued that Europe could not sustain a credible space policy without the availability of its own launchers.
The ambiguity of the U.S. position regarding the provision of their launchers fueled the controversy. NASA, in fact, had always been available to provide launch facilities for European scientific satellites, but it was by no means clear whether this availability would be extended to commercially oriented satellites. Eventually, the U.S. government stated that it would reserve the right to refuse launch facilities to European communications satellites potentially harmful to Intelsat's commercial interests. Britain claimed that the Americans should be trusted for their willingness to offer launch assistance to Europe whenever possible. In contrast, the American policy strengthened France's belief that Europe needed its own launchers to support a viable communications satellite program.
Political negotiations and technical studies dragged on for three years until the disagreement reached a breaking point at the fourth meeting of the European Space Conference, held in Brussels on 4 November 1970. Discussions were interrupted after the first day, as France, West Germany, and Belgium declared that they were prepared to go ahead on their own. There was no point, they said, in trying to define a European space policy when the partners' priorities differed so greatly. Britain announced its intention to leave ELDO, while France denounced the ESRO Convention.
After three more years of laborious negotiations, a solution emerged in the form of two package deals. These global agreements satisfied the national interests of all the countries by abandoning the ideal of a mandatory comprehensive space program. ESRO member states agreed on the first package deal in December 1971. It definitely transformed ESRO from an organization solely devoted to scientific research into one mainly involved in applications satellite programs, with only a minor fraction of its budget devoted to science. Only the scientific program remained mandatory, while all application programs were optional. The second package deal, agreed on in July 1973 during meetings of the European Space Conference, established the basic principles on which the new European Space Agency would be created two years later.
The main element of the second package deal was the à la carte program system: each ESA member state contributed to the space agency's various programs in proportion to its own political, economic, and industrial interests. Through this second package deal, France took prime responsibility for the Ariane rocket development program and agreed to contribute 63 percent of the cost. Similarly, West Germany took prime responsibility for  Spacelab, a manned scientific laboratory to be carried in the Space Shuttle cargo bay, and Britain took responsibility for a maritime communications satellite.
It was within the framework established by the first package deal, however, that the satellite communications program finally came into being, with the support of eight of ESRO's member states (Belgium, Britain, Denmark, France, Italy, Sweden, Switzerland, and West Germany). It is important to note, however, that the program was divided into two different stages, each requiring approval by a qualified majority of the participating countries. Only the experimental phase of the program actually was approved; a decision on the operational phase was deferred until mid-1975.
The main reason for staggering the decision-making process was the persistent uncertainty about the commercial viability of the planned European communications satellite system. Unlike Intelsat, which was meeting a real need by improving communications between continents, a European satellite system seemed, on the evidence available, to be a luxury that Europe did not really need and that the state telecommunications administrations could not afford. According to a 1971 study prepared by the European Conference of Postal and Telecommunication Administrations (known by its French acronym, CEPT), the estimated operational cost of the system in the 1980s would be far in excess of the savings in the terrestrial cable network. Indeed, the CEPT study reported that terrestrial savings would not even cover the costs of the ground stations! The state telecommunications administrations made it clear that the development of the European space industry could not be financed by customers. The governments, in other words, had to pay the difference between the actual costs of the satellite system and those costs that users normally would have to pay.
The CEPT report raised great concern. It implied that potential satellite users would not use the system unless governments subsidized its operation. In the words of the British delegation to the ESRO Council: "Had the project under discussion been a U.K. national project it would certainly have been turned down in view of [this] report." In fact, the communications program was not a national project, but an international undertaking, as well as part of the much wider political context in which the first package deal was being discussed. The economic arguments in the CEPT report, however, could not be dismissed, so a program strategy was elaborated to allow the participating states to defer the decision on the program's operational phase.
Nonetheless, five years later the economics of European satellite communications were far from being settled. A 1976 CEPT study reported an estimated difference of about $200 million between the total operational cost of the satellite system and the terrestrial alternative. A solution seemed possible. The state telecommunications administrations would build and operate the ground stations, while management of the satellite segment would be entrusted to a new international organization, called EUTELSAT. ESA member states were expected to cover the shortfall in operating costs.
An agreement was not immediately at hand, however, and took another three years of harsh negotiations. The telecommunications administrations held a strong negotiating position. Indeed, they had never formally requested the introduction of a satellite system. Space policy, not the needs of the users, had motivated the ESA telecommunications program, and its member state governments could not help accepting the users' conditions to bring it to completion. So, in May 1979, ESA and EUTELSAT finally reached an agreement. ESA would contribute as much as 60 percent to EUTELSAT's operating costs.
From the users' point of view, it seems that none of the studies that examined the economics of the ECS program were able to demonstrate that its implementation would produce economic benefits in excess of the combined cost of the space segment and its associated ground station infrastructure. Wider economic arguments and political motivation provided the ultimate justification for program approval. Among those wider aspects are the following:
National governments had different views about the relative importance of these aspects, and these differences made launching the European communications satellite program such a long and complex process. In particular, the critical issue of launchers vis-à-vis the commercial prospects of application satellites was the real stumbling block that risked jeopardizing the entire European cooperative space effort. The 1973 package deal was a real landmark in the history of Europe in space, and it is fair to conclude by recalling that it was an Ariane rocket that put the ECS into orbit.
1. Arturo Russo, The Early Development of the Telecommunications Satellite Program in ESRO (1965-1971), ESA HSR-9 (Noordwijk: ESA, May 1993); Arturo Russo, ESRO's Telecommunications Program and the OTS Project (1970-1974), ESA HSR-13 (Noordwijk: ESA, February 1994). For the history of ESRO and ELDO, see John Krige and Arturo Russo, Europe in Space, 1960-1973, ESA SP-1172 (Noordwijk: ESA, September 1994).