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] ...


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        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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