In the early 1990s, a satellite entrepreneur named Matt Nilson persuaded the Kingdom of Tonga — population then barely a hundred thousand, with no space industry of any description — to file for a string of geostationary orbital slots at the International Telecommunication Union. Through its agent Tongasat, the kingdom became, for a time, one of the largest claimants of orbital positions on Earth, leasing its paper rights to commercial operators for millions of dollars. The industry was scandalised; one aggrieved operator went so far as to park a satellite in a Tongan slot in protest. But nothing in the rules had been broken, and that was precisely the point. Tonga had discovered that in the international spectrum regime, as in shipping, sovereignty itself is a marketable asset.
Three decades later, the practice Tonga pioneered has moved from scandal to standard practice — and from the geostationary arc to the mega-constellation era, where the numbers have become surreal. In 2021, Rwanda’s regulator filed for a constellation of more than three hundred thousand satellites on behalf of E-Space, a venture founded by Greg Wyler — roughly thirty times the number of active satellites then in orbit, filed through a state with no prior presence in the industry. Papua New Guinea has filed for the American operator Omnispace; the Solomon Islands for Australia’s Fleet Space. Nor is the phenomenon confined to small states and start-ups: OneWeb has filed portions of its system through the United Kingdom, France and Mexico, and SpaceX — the operator least in need of anyone’s flag — has made filings through the United States, Norway, Germany and, in a pleasing historical rhyme, Tonga. Researchers totting up the paper concluded that humanity has now proposed, across all ITU filings, more than a million satellites. Most will never exist. All of them sit in the queue.
Why the system permits it
The flag-of-convenience option is not a loophole; it is a load-bearing feature of the regime’s architecture. The ITU is a treaty organisation of sovereign equals, and its Radio Regulations assign the right to file for spectrum and orbits exclusively to member-state administrations — any administration, for any operator, with no requirement of incorporation, ownership or industrial presence connecting the two. A filing is a sovereign act. The ITU’s Radiocommunication Bureau examines filings for procedural and technical conformity, not for the credibility of the venture behind them, and it has neither the mandate nor the means to ask why a Pacific microstate is sponsoring a hundred-thousand-satellite broadband system.
This design reflects the regime’s founding bargain. Smaller and developing states, wary of a spectrum order carved up by the space powers, insisted on formal equality of access — and equatorial and small states have long argued, not unreasonably, that orbital resources above their heads should not belong exclusively to nations rich enough to build satellites. Sponsoring foreign operators is, on this view, exactly how a small state exercises its equal right: it converts a treaty entitlement into fees, prestige and a seat at the industry’s table. The line between “flag of convenience” and “legitimate industrial strategy” is, uncomfortably, a matter of perspective.
What the shoppers are buying
Operators choose their administrations the way shipowners choose registries, and the considerations are precisely analogous. Fees vary enormously between administrations, as does the speed and predictability of processing. So does the depth of due diligence: some administrations interrogate business plans, financing and milestones before lending their flag; others ask little. Transparency varies — some publish the commercial party behind each filing, others obscure it. And regulatory philosophy differs: an operator may find one administration’s ongoing supervision, milestone enforcement and licence conditions congenial, and another’s oppressive.
Three further motives are less obvious. Multi-flagging is a portfolio strategy: filing components of a system through several administrations diversifies political risk, hedges against any one regulator’s demands, and can capture different priority dates in different bands — which is why sophisticated incumbents with excellent home regulators still file abroad. Speed to priority matters most of all: in a first-come-first-served queue, an administration that files months faster delivers real option value. And occasionally the flag is the relationship: E-Space’s Rwandan filing is inseparable from its founder’s history of partnership with Kigali, and Rwanda’s own ambition to build a space sector from the regulatory layer upward — a strategy, it should be said, with entirely respectable precedents in Luxembourg’s satellite industry and Liberia’s maritime registry.
What the sponsoring administrations earn is the mirror image: filing and licence fees (for a microstate, non-trivial), the industrial-policy hope that regulatory hospitality seeds a domestic sector, and leverage — a state that sponsors a constellation matters, at the margin, in rooms where it otherwise would not.
Why it is nonetheless a problem
The difficulty is not that any single convenience filing is illegitimate. It is that the practice, at scale, corrodes the three things the regime exists to provide.
First, the integrity of the queue. First-come-first-served only functions if the queue bears some relationship to reality. A million proposed satellites — filed cheaply, through administrations with no incentive to filter — clogs coordination with phantom counterparties. Every genuine new entrant must now negotiate around paper systems that will never fly, held by parties whose motives may include being bought out of the way. The queue’s signal degrades towards noise, and the analytical burden of distinguishing load-bearing filings from bluff grows every fortnight the circulars publish.
Second, supervision. The Radio Regulations assume the notifying administration supervises its networks: that it can compel an operator to eliminate interference, enforce licence conditions, and answer for the system internationally. An administration of a few dozen regulatory staff sponsoring a constellation of thousands of satellites cannot meaningfully do any of this. The maritime world learned where that leads: flags competing on laxity, and the substance of regulation migrating away from the flag altogether.
Third, accountability for the commons. The filing state is, in practice, the first regulatory gate for questions the ITU does not itself police — orbital debris commitments, disposal plans, the sheer prudence of a proposed system’s scale. When the gate-keeping state has no capacity and every fee-based incentive to wave traffic through, the space-sustainability consequences are externalised onto everyone.
Can the regime hold?
The ITU’s existing anti-abuse machinery — the seven-year bringing-into-use deadline, the ninety-day occupation test, the post-2019 milestone regime that trims constellation filings to the satellites actually flown — attacks warehousing, not flag-shopping. It bites on time, not on jurisdiction, and a determined operator with one launched satellite and a friendly administration can navigate all of it.
The reform options in circulation are easy to list and hard to enact: fees scaled to constellation size, so that a three-hundred-thousand-satellite filing costs something commensurate with the queue space it consumes; performance bonds returned on deorbit; caps on filed constellation sizes or on filings per system; and transparency requirements exposing the beneficial operator behind every flag. Each founders on the same political economy. The ITU runs on one state, one vote; the states whose sovereignty the reforms would discipline are numerous, and the sovereign right to file is exactly the equal-access principle the majority has spent decades defending. Nobody should expect the flag of convenience to be legislated away in Geneva — the maritime precedent is instructive, because convenience registries were never abolished either.
What the maritime world did instead is the most useful lens for what comes next. Shipping’s answer to the failure of flag-state supervision was port-state control: the states where ships actually call inspect them, detain them, and enforce standards the flag would not. Orbit has an exact analogue, and it is already the regime’s quiet centre of gravity — market access. A constellation can be filed through any flag it likes, but it earns revenue only in the countries that licence it to serve their territory, and those states can and increasingly do demand what the filing state never asked: debris-mitigation plans, interference accountability, milestone credibility, even beneficial-ownership disclosure. The United States’ conditions on foreign systems seeking American customers already function this way. If the flag-of-convenience problem is contained in the coming decade, the containment will come not from Geneva but from the licensing offices of the markets worth serving — regulation following the money, as it usually does.
What it means in practice
For operators, the flag is a strategic choice with a risk profile, not a procurement decision. The convenient administration’s advantages are real; so is the dependency. A filing held through a state with which your founder’s relationship is personal, or whose regulatory politics may turn, is an asset with counterparty risk — and financiers, insurers and acquirers have begun pricing it that way. For investors, the due-diligence question writes itself: not just what does this company hold, but through whom, on what terms, and how durable is the relationship that holds it. And for the states themselves, the Tongan precedent cuts both ways — the fees were real, but so was the notoriety, and three decades on, the registries that prospered in shipping were those that eventually sold credibility rather than laxity.
The deeper lesson is the one the maritime century teaches. Flags of convenience are not an aberration of regimes built on sovereign equality; they are their shadow, permanent and ineradicable. The question is never whether jurisdiction-shopping exists, but where the countervailing discipline comes from. In orbit, that discipline is assembling now — in market-access offices, in insurance terms, in the diligence practices of capital — and the operators and administrations that understand where enforcement actually lives will navigate the next decade considerably better than those still arguing about Geneva.