From the creation of the fixed satellite services, or FSS, industry in the 1960s until the late 1980s, INTELSAT—an intergovernmental treaty-based organization—held a near monopoly over international satellite communications. Since the late 1980s, however, the FSS industry has evolved into a highly competitive, global industry. Due in large part to pressure from governments seeking to promote competition in the international satellite services market, INTELSAT began a privatization process in the late 1990s.

According to Euroconsult 2004, the FSS industry generated revenues of approximately $6.6 billion in 2003, with the industry average rate per transponder per year (expressed in 36 MHz units) at approximately $1.4 million for new contracts entered into in 2003.

The FSS industry is characterized by significant barriers to entry. For technical reasons, operators must maintain certain minimal separations between any two satellites that use the same frequency band(s) to serve the same or similar geographic regions. As a result, there is a limit on the number of satellites that can be placed into service over any geographic area, as well as a limit on the number of satellites that can be placed into service worldwide. In addition, the capital costs of procuring a satellite, the financial and technical resources required to operate a satellite system and market its capacity, and regulatory requirements further restrict entry into the market. Regulatory issues arise both in securing the governmental approvals that are necessary to use scarce orbital locations and radio spectrum, as well as in securing the governmental approvals required to provide services to, from, or within a country.

According to Euroconsult 2004, worldwide transponder demand has grown in 24 of the past 25 years and grew in excess of a 5% compound annual growth rate from 1998 to 2003. Looking forward, Euroconsult estimates that transponder demand will grow during the period from 2004 to 2009 at a 4% compounded annual growth rate worldwide and at a 6% compounded annual growth rate in the markets.

The Company currently broadcasts more than 400 channels of entertainment and news programming to cable networks, broadcast affiliates and consumers' homes around the world. From DTH transmissions in India and West Africa to full-time contribution feeds for broadcasters in Europe and the Middle East, the Company has the technological resources, global reach and commercial experience to enable its customers to deliver their programming to markets anywhere in the world. The Company’s end users range from top media and entertainment companies to leading broadcasters and news agencies. The Company’s video services can be grouped into two types: video distribution and video contribution. The Company is a leading provider of satellite capacity for the distribution of international, regional and national television and cable programming to markets around the world, such as Latin America, India and Africa. Broadcasters and news programmers who require a reliable transmission link use the Company’s satellites to transmit regular television contribution feeds as well as special events, such as the Olympics and fast-breaking news stories, back to their video production facilities.

The Company offers telecommunications companies, service providers, network integrators, ISPs and other resellers high-speed connections directly to the Internet backbone. The Company’s Internet-related service offerings include one-way and two-way satellite-based links between an ISP's PoPs or a customer's premises and the global Internet backbone, bypassing shared ground networks and the associated congestion points—as well as any terrestrial connectivity gaps—to deliver Internet content to even the most remote locations at high speeds. IPsys served over 100 customers in approximately 40 countries as of December 31, 2004. the Company’s IPsys offering includes several distinct services: IPsys Premier, IPsys Direct, and IPsys Burst.

The Company also provides satellite capacity for voice applications. Historically, the Company provided most of its voice services to major post, telephone and telegraph administrations, or PTTs. More recently, the Company has begun to market voice services to governmental users and to newly-authorized mobile telephone, local and long distance service providers in countries undergoing telephony deregulation or where there is a lack of ground-based infrastructure to support voice services.

Cost of operations for the three month period ended March 31, 2005 decreased by $2.8 million, or 20%, to $11.0 million from $13.8 million for the three months ended March 31, 2004.

For the three month period ended March 31, 2005, selling, general and administrative expenses increased $2.6 million, or 22%, to $14.3 million from $11.7 million for the three months ended March 31, 2004.

Depreciation expense decreased by $2.4 million, or 9%, to $23.5 million for the three month period ended March 31, 2005 from $25.9 million for the three months ended March 31, 2004.

Interest expense for the three month period ended March 31, 2005 increased by $18.5 million to $18.8 million, compared to $0.3 million for the three months ended March 31, 2004.