| Home > 106th Congressional Bills > S. 376 (es) To amend the Communications Satellite Act of 1962 to promote competition and privatization in satellite communications, and for other purposes. [Engrossed in Senate] ...
S. 376 (es) To amend the Communications Satellite Act of 1962 to promote competition and privatization in satellite communications, and for other purposes. [Engrossed in Senate] ...
S.376 One Hundred Sixth Congress of the United States of America AT THE SECOND SESSION Begun and held at the City of Washington on Monday, the twenty-fourth day of January, two thousand An Act To amend the Communications Satellite Act of 1962 to promote competition and privatization in satellite communications, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This Act may be cited as the ``Open-market Reorganization for the Betterment of International Telecommunications Act'' or the ``ORBIT Act''. SEC. 2. PURPOSE. It is the purpose of this Act to promote a fully competitive global market for satellite communication services for the benefit of consumers and providers of satellite services and equipment by fully privatizing the intergovernmental satellite organizations, INTELSAT and Inmarsat. SEC. 3. REVISION OF COMMUNICATIONS SATELLITE ACT OF 1962. The Communications Satellite Act of 1962 (47 U.S.C. 701) is amended by adding at the end the following new title: ``TITLE VI--COMMUNICATIONS COMPETITION AND PRIVATIZATION ``Subtitle A--Actions To Ensure Pro-Competitive Privatization ``SEC. 601. FEDERAL COMMUNICATIONS COMMISSION LICENSING. ``(a) Licensing for Separated Entities.-- ``(1) Competition test.--The Commission may not issue a license or construction permit to any separated entity, or renew or permit the assignment or use of any such license or permit, or authorize the use by any entity subject to United States jurisdiction of any space segment owned, leased, or operated by any separated entity, unless the Commission determines that such issuance, renewal, assignment, or use will not harm competition in the telecommunications market of the United States. If the Commission does not make such a determination, it shall deny or revoke authority to use space segment owned, leased, or operated by the separated entity to provide services to, from, or within the United States. ``(2) Criteria for competition test.--In making the determination required by paragraph (1), the Commission shall use the licensing criteria in sections 621 and 623, and shall not make such a determination unless the Commission determines that the privatization of any separated entity is consistent with such criteria. ``(b) Licensing for INTELSAT, Inmarsat, and Successor Entities.-- ``(1) Competition test.-- ``(A) In general.--In considering the application of INTELSAT, Inmarsat, or their successor entities for a license or construction permit, or for the renewal or assignment or use of any such license or permit, or in considering the request of any entity subject to United States jurisdiction for authorization to use any space segment owned, leased, or operated by INTELSAT, Inmarsat, or their successor entities, to provide non-core services to, from, or within the United States, the Commission shall determine whether-- ``(i) after April 1, 2001, in the case of INTELSAT and its successor entities, INTELSAT and any successor entities have been privatized in a manner that will harm competition in the telecommunications markets of the United States; or ``(ii) after April 1, 2000, in the case of Inmarsat and its successor entities, Inmarsat and any successor entities have been privatized in a manner that will harm competition in the telecommunications markets of the United States. ``(B) Consequences of determination.--If the Commission determines that such competition will be harmed or that grant of such application or request for authority is not otherwise in the public interest, the Commission shall limit through conditions or deny such application or request, and limit or revoke previous authorizations to provide non-core services to, from, or within the United States. After due notice and opportunity for comment, the Commission shall apply the same limitations, restrictions, and conditions to all entities subject to United States jurisdiction using space segment owned, leased, or operated by INTELSAT, Inmarsat, or their successor entities. ``(C) National security, law enforcement, and public safety.--The Commission shall not impose any limitation, condition, or restriction under subparagraph (B) in a manner that will, or is reasonably likely to, result in limitation, denial, or revocation of authority for non-core services that are used by and required for a national security agency or law enforcement department or agency of the United States, or used by and required for, and otherwise in the public interest, any other Department or Agency of the United States to protect the health and safety of the public. Such services may be obtained by the United States directly from INTELSAT, Inmarsat, or a successor entity, or indirectly through COMSAT, or authorized carriers or distributors of the successor entity. ``(D) Rule of construction.--Nothing in this subsection is intended to preclude the Commission from acting upon applications of INTELSAT, Inmarsat, or their successor entities prior to the latest date set out in section 621(5)(A), including such actions as may be necessary for the United States to become the licensing jurisdiction for INTELSAT, but the Commission shall condition a grant of authority pursuant to this subsection upon compliance with sections 621 and 622. ``(2) Criteria for competition test.--In making the determination required by paragraph (1), the Commission shall use the licensing criteria in sections 621, 622, and 624, and shall determine that competition in the telecommunications markets of the United States will be harmed unless the Commission finds that the privatization referred to in paragraph (1) is consistent with such criteria. ``(3) Clarification: competitive safeguards.--In making its licensing decisions under this subsection, the Commission shall consider whether users of non-core services provided by INTELSAT or Inmarsat or successor or separated entities are able to obtain non- core services from providers offering services other than through INTELSAT or Inmarsat or successor or separated entities, at competitive rates, terms, or conditions. Such consideration shall also include whether such licensing decisions would require users to replace equipment at substantial costs prior to the termination of its design life. In making its licensing decisions, the Commission shall also consider whether competitive alternatives in individual markets do not exist because they have been foreclosed due to anticompetitive actions undertaken by or resulting from the INTELSAT or Inmarsat systems. Such licensing decisions shall be made in a manner which facilitates achieving the purposes and goals in this title and shall be subject to notice and comment. ``(c) Additional Considerations in Determinations.--In making its determinations and licensing decisions under subsections (a) and (b), the Commission shall construe such subsections in a manner consistent with the United States obligations and commitments for satellite services under the Fourth Protocol to the General Agreement on Trade in Services. ``(d) Independent Facilities Competition.--Nothing in this section shall be construed as precluding COMSAT from investing in or owning satellites or other facilities independent from INTELSAT and Inmarsat, and successor or separated entities, or from providing services through reselling capacity over the facilities of satellite systems independent from INTELSAT and Inmarsat, and successor or separated entities. This subsection shall not be construed as restricting the types of contracts which can be executed or services which may be provided by COMSAT over the independent satellites or facilities described in this subsection. ``SEC. 602. INCENTIVES; LIMITATION ON EXPANSION PENDING PRIVATIZATION. ``(a) Limitation.--Until INTELSAT, Inmarsat, and their successor or separate entities are privatized in accordance with the requirements of this title, INTELSAT, Inmarsat, and their successor or separate entities, respectively, shall not be permitted to provide additional services. The Commission shall take all necessary measures to implement this requirement, including denial by the Commission of licensing for such services. ``(b) Orbital Location Incentives.--Until such privatization is achieved, the United States shall oppose and decline to facilitate applications by such entities for new orbital locations to provide such services. ``Subtitle B--Federal Communications Commission Licensing Criteria: Privatization Criteria ``SEC. 621. GENERAL CRITERIA TO ENSURE A PRO-COMPETITIVE PRIVATIZATION OF INTELSAT AND INMARSAT. ``The President and the Commission shall secure a pro-competitive privatization of INTELSAT and Inmarsat that meets the criteria set forth in this section and sections 622 through 624. In securing such privatizations, the following criteria shall be applied as licensing criteria for purposes of subtitle A: ``(1) Dates for privatization.--Privatization shall be obtained in accordance with the criteria of this title of-- ``(A) INTELSAT as soon as practicable, but no later than April 1, 2001; and ``(B) Inmarsat as soon as practicable, but no later than July 1, 2000. ``(2) Independence.--The privatized successor entities and separated entities of INTELSAT and Inmarsat shall operate as independent commercial entities, and have a pro-competitive ownership structure. The successor entities and separated entities of INTELSAT and Inmarsat shall conduct an initial public offering in accordance with paragraph (5) to achieve such independence. Such offering shall substantially dilute the aggregate ownership of such entities by such signatories or former signatories. In determining whether a public offering attains such substantial dilution, the Commission shall take into account the purposes and intent, privatization criteria, and other provisions of this title, as well as market conditions. No intergovernmental organization, including INTELSAT or Inmarsat, shall have-- ``(A) an ownership interest in INTELSAT or the successor or separated entities of INTELSAT; or ``(B) more than minimal ownership interest in Inmarsat or the successor or separated entities of Inmarsat. ``(3) Termination of privileges and immunities.--The preferential treatment of INTELSAT and Inmarsat shall not be extended to any successor entity or separated entity of INTELSAT or Inmarsat. Such preferential treatment includes-- ``(A) privileged or immune treatment by national governments; ``(B) privileges or immunities or other competitive advantages of the type accorded INTELSAT and Inmarsat and their signatories through the terms and operation of the INTELSAT Agreement and the associated Headquarters Agreement and the Inmarsat Convention; and ``(C) preferential access to orbital locations. Access to new, or renewal of access to, orbital locations shall be subject to the legal or regulatory processes of a national government that applies due diligence requirements intended to prevent the warehousing of orbital locations. ``(4) Prevention of expansion during transition.--During the transition period prior to privatization under this title, INTELSAT and Inmarsat shall be precluded from expanding into additional services. ``(5) Conversion to stock corporations.--Any successor entity or separated entity created out of INTELSAT or Inmarsat shall be a national corporation or similar accepted commercial structure, subject to the laws of the nation in which incorporated, as follows: ``(A) An initial public offering of securities of any successor entity or separated entity-- ``(i) shall be conducted, for the successor entities of INTELSAT, on or about October 1, 2001, except that the Commission may extend this deadline in consideration of market conditions and relevant business factors relating to the timing of an initial public offering, but such extensions shall not permit such offering to be conducted later than December 31, 2002; and ``(ii) shall be conducted, for the successor entities of Inmarsat, on or about October 1, 2000, except that the Commission may extend this deadline in consideration of market conditions and relevant business factors relating to the timing of an initial public offering, but to no later than December 31, 2001. ``(B) The shares of any successor entities and separated entities shall be listed for trading on one or more major stock exchanges with transparent and effective securities regulation. ``(C) A majority of the members of the board of directors of any successor entity or separated entity shall not be directors, employees, officers, or managers or otherwise serve as representatives of any signatory or former signatory. No member of the board of directors of any successor or separated entity shall be a director, employee, officer or manager of any intergovernmental organization remaining after the privatization. ``(D) Any successor entity or separated entity shall-- ``(i) have a board of directors with a fiduciary obligation; ``(ii) have no officers or managers who (I) are officers or managers of any signatories or former signatories, or (II) have any direct financial interest in or financial relationship to any signatories or former signatories, except that such interest may be managed through a blind trust or similar mechanism; ``(iii) have no directors, officers, or managers who hold such positions in any intergovernmental organization; and ``(iv) in the case of a separated entity, have no officers or directors, who (I) are officers or managers of any intergovernmental organization, or (II) have any direct financial interest in or financial relationship to any international organization, except that such interest may be managed through a blind trust or similar mechanism. ``(E) Any transactions or other relationships between or among any successor entity, separated entity, INTELSAT, or Inmarsat shall be conducted on an arm's length basis. ``(6) Regulatory treatment.--Any successor entity or separated entity created after the date of enactment of this title shall apply through the appropriate national licensing authorities for international frequency assignments and associated orbital registrations for all satellites. ``(7) Competition policies in domiciliary country.--Any successor entity or separated entity shall be subject to the jurisdiction of a nation or nations that-- ``(A) have effective laws and regulations that secure competition in telecommunications services; ``(B) are signatories of the World Trade Organization Basic Telecommunications Services Agreement; and ``(C) have a schedule of commitments in such Agreement that includes non-discriminatory market access to their satellite markets. ``SEC. 622. SPECIFIC CRITERIA FOR INTELSAT. ``In securing the privatizations required by section 621, the following additional criteria with respect to INTELSAT privatization shall be applied as licensing criteria for purposes of subtitle A: ``(1) Technical coordination under intelsat agreements.-- Technical coordination shall not be used to impair competition or competitors, and shall be conducted under International
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