Home > 106th Congressional Bills > S. 376 (rs) To amend the Communications Satellite Act of 1962 to promote competition and privatization in satellite communications, and for other purposes. [Reported in Senate] ...S. 376 (rs) To amend the Communications Satellite Act of 1962 to promote competition and privatization in satellite communications, and for other purposes. [Reported in Senate] ...
106th CONGRESS
1st Session
S. 376
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 12, 1999
Referred to the Committee on Commerce
_______________________________________________________________________
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''.
SEC. 2. PURPOSE.
It is the purpose of this Act to promote a fully competitive
domestic and international market for satellite communications services
for the benefit of consumers and providers of satellite services by
fully encouraging the privatization of the intergovernmental satellite
organizations, INTELSAT and Inmarsat, and reforming the regulatory
framework of the COMSAT Corporation.
SEC. 3. FINDINGS.
The Congress finds that:
(1) International satellite communications services
constitute a critical component of global voice, video and data
services, play a vital role in the integration of all nations
into the global economy and contribute toward the ability of
developing countries to achieve sustainable development.
(2) The United States played a pivotal role in stimulating
the development of international satellite communications
services by enactment of the Communications Satellite Act of
1962 (47 U.S.C. 701-744), and by its critical contributions,
through its signatory, the COMSAT Corporation, in the
establishment of INTELSAT, which has successfully established
global satellite networks to provide member countries with
worldwide access to telecommunications services, including
critical lifeline services to the developing world.
(3) The United States played a pivotal role in stimulating
the development of international satellite communications
services by enactment of the International Maritime Satellite
Telecommunications Act (47 U.S.C. 751-757), and by its critical
contributions, through its signatory, COMSAT, in the
establishment of Inmarsat, which enabled member countries to
provide mobile satellite services such as international
maritime and global maritime distress and safety services to
include other satellite services, such as land mobile and
aeronautical communications services.
(4) By statute, COMSAT, a publicly traded corporation, is
the sole United States signatory to INTELSAT and, as such, is
responsible for carrying out United States commitments under
the INTELSAT Agreement and the INTELSAT Operating Agreement.
Pursuant to a binding Headquarters Agreement, the United
States, as a party to INTELSAT, has satisfied many of its
obligations under the INTELSAT Agreement.
(5) In the 37 years since enactment of the Communications
Satellite Act of 1962, satellite technology has advanced
dramatically, large-scale financing options have improved
immensely and international telecommunications policies have
shifted from those of natural monopolies to those based on
market forces, resulting in multiple private commercial
companies around the world providing, or preparing to provide,
the domestic, regional, and global satellite telecommunications
services that only INTELSAT and Inmarsat had previously had the
capabilities to offer.
(6) Private commercial satellite communications systems
now offer the latest telecommunications services to more and
more countries of the world with declining costs, making
satellite communications an attractive complement as well as an
alternative to terrestrial communications systems, particularly
in lesser developed countries.
(7) To enable consumers to realize optimum benefits from
international satellite communications services, and to enable
these systems to be competitive with other international
telecommunication systems, such as fiber optic cable, the
global trade and regulatory environment must support vigorous
and robust competition.
(8) In particular, all satellite systems should have
unimpeded access to the markets that they are capable of
serving, and the ability to compete in a fair and meaningful
way within those markets.
(9) Transforming INTELSAT and Inmarsat from
intergovernmental organizations into conventional satellite
services companies is a key element in bringing about the
emergence of a fully competitive global environment for
satellite services.
(10) The issue of privatization of any State-owned firm is
extremely complex and multifaceted. For that reason, the sale
of a firm at arm's length does not automatically, and in all
cases, extinguish any prior subsidies or government conferred
advantages.
(11) It is in the interest of the United States to
negotiate the removal of its reservation in the Fourth Protocol
to the General Agreement on Trade in Services regarding
INTELSAT's and Inmarsat's access to the United States market
through COMSAT as soon as possible, but such reservation cannot
be removed without adequate assurance that the United States
market for satellite services will not be disrupted by such
INTELSAT or Inmarsat access.
(12) The Communications Satellite Act of 1962, and other
applicable United States laws, need to be updated to encourage
and complete the pro-competitive privatization of INTELSAT and
Inmarsat, to update the domestic United States regulatory
regime governing COMSAT, and to ensure a competitively neutral
United States framework for the provision of domestic and
international telecommunications services via satellite
systems.
SEC. 4. ESTABLISHMENT OF SATELLITE SERVICES COMPETITION; PRIVATIZATION.
The Communications Satellite Act of 1962 (47 U.S.C. 701) is amended
by adding at the end the following:
``TITLE VI--SATELLITE SERVICES COMPETITION AND PRIVATIZATION
``Subtitle A--Transition to a Privatized INTELSAT
``SEC. 601. POLICY OF THE UNITED STATES.
``It is the policy of the United States to--
``(1) encourage INTELSAT to privatize in a pro-competitive
manner as soon as possible, but not later than January 1, 2002,
recognizing the need for a reasonable transition and process to
achieve a full, pro-competitive restructuring; and
``(2) work constructively with its international partners
in INTELSAT, and with INTELSAT itself, to bring about a prompt
restructuring that will ensure fair competition, both in the
United States as well as in the global markets served by the
INTELSAT system; and
``(3) encourage Inmarsat's full implementation of the terms
and conditions of its privatization agreement.
``SEC. 602. ROLE OF COMSAT.
``(a) Advocacy.--As the United States signatory to INTELSAT, COMSAT
shall act as an aggressive advocate of pro-competitive privatization of
INTELSAT. With respect to the consideration within INTELSAT of any
matter related to its privatization, COMSAT shall fully consult with
the United States Government prior to exercising its voting rights and
shall exercise its voting rights in a manner fully consistent with any
instructions issued. In the event that the United States signatory to
INTELSAT is acquired after enactment of this section, the President and
the Commission shall assure that the instructional process safeguards
against conflicts of interest.
``(b) Annual Reports.--The President and the Commission shall
report annually to the Committee on Commerce of the House of
Representatives and the Committee on Commerce, Science, and
Transportation of the Senate, respectively, on the progress being made
by INTELSAT and Inmarsat to privatize and complete privatization in a
pro-competitive manner.
``SEC. 603. RESTRICTIONS PENDING PRIVATIZATION.
``(a) INTELSAT shall be prohibited from entering the United States
market directly to provide any satellite communications services or
space segment capacity to carriers (other than the United States
signatory) or end users in the United States until July 1, 2001 or
until INTELSAT achieves a pro-competitive privatization pursuant to
section 613 (a) if privatization occurs earlier.
``(b) Notwithstanding subsection (a), INTELSAT shall be prohibited
from entering the United States market directly to provide any
satellite communications services or space segment capacity to any
foreign signatory, or affiliate thereof, and no carrier, other than the
United States signatory, nor any end user, shall be permitted to invest
directly in INTELSAT.
``(c) Pending INTELSAT's privatization, the Commission shall ensure
that the United States signatory is compensated by direct access users
for the costs it incurs in fulfilling its obligations under this Act.
``(d) The provisions of subsections (b) and (c) shall remain in
effect only until INTELSAT achieves a pro-competitive privatization
pursuant to section 613 (a).
``Subtitle B--Actions to Ensure Pro-Competitive Satellite Services
``SEC. 611. PRIVATIZATION.
``(a) In General.--The President shall seek a pro-competitive
privatization of INTELSAT as soon as practicable, but no later than
January 1, 2002. Such privatization shall be confirmed by a final
decision of the INTELSAT Assembly of Parties and shall be followed by a
timely initial public offering taking into account relative market
conditions.
``(b) Ensure Continuation of Privatization.--The President and the
Commission shall seek to ensure that the privatization of Inmarsat
continues in a pro-competitive manner.
``SEC. 612. PROVISION OF SERVICES IN THE UNITED STATES BY PRIVATIZED
AFFILIATES OF INTERGOVERNMENTAL SATELLITE ORGANIZATIONS.
``(a) In General.--With respect to any application for a satellite
earth station or space station under title III of the Communications
Act of 1934 (47 U.S.C 301 et seq.) or any application under section 214
of that Act (47 U.S.C. 214), or any letter of intent to provide service
in the United States via non-United States licensed space segment,
submitted by a privatized IGO affiliate or successor, the Commission--
``(1) shall apply a presumption in favor of entry to an IGO
affiliate or successor licensed by a WTO Member for services
covered by United States commitments under the WTO Basic
Telecom Agreement;
``(2) may attach conditions to any grant of authority to an
IGO affiliate or successor that raises the potential for
competitive harm; or
``(3) shall in the exceptional case in which an application
by an IGO affiliate or successor would pose a very high risk to
competition in the United States satellite market, deny the
application.
``(b) Determination Factors.--In determining whether an application
to serve the United States market by an IGO affiliate raises the
potential for competitive harm or risk under subsection (a)(2), the
Commission shall determine whether any potential anti-competitive or
market distorting consequences of continued relationships or
connections exist between an IGO and its affiliates including--
``(1) whether the IGO affiliate is structured to prevent
anti-competitive practices such as collusive behavior or cross-
subsidization;
``(2) the degree of affiliation between the IGO and its
affiliate;
``(3) whether the IGO affiliate can directly or indirectly
benefit from IGO privileges and immunities;
``(4) the ownership structure of the affiliate and the
effect of IGO and other Signatory ownership and whether the
affiliate is independent of IGO signatories or former
signatories who control telecommunications market access in
their home territories;
``(5) the existence of clearly defined arm's-length
conditions governing the affiliate-IGO relationship including
separate officers, directors, employees, and accounting
systems;
``(6) the existence of fair market valuing for permissible
business transactions between an IGO and its affiliate that is
verifiable by an independent audit and consistent with normal
commercial practice and generally accepted accounting
principles;
``(7) the existence of common marketing;
``(8) the availability of recourse to IGO assets for credit
or capital;
``(9) whether an IGO registers or coordinates spectrum or
orbital locations on behalf of its affiliate; and
``(10) whether the IGO affiliate has corporate charter
provisions prohibiting reaffiliation with the IGO after
privatization.
``(c) Sunset.--The provisions of subsection (b) shall cease to have
effect upon approval of the application pursuant to section 613.
``(d) Public Interest Determination.--Nothing in this Act affects
the Commission's ability to make a public interest determination
concerning any application pertaining to entry into the United States
market.
``SEC. 613. PRESIDENTIAL NEGOTIATING OBJECTIVES AND FCC CRITERIA FOR
PRIVATIZED IGOS.
``(a) In General.--Upon a final decision of the INTELSAT Assembly
of Parties creating the legal structure and characteristics of the
privatized INTELSAT and recognizing that Inmarsat transitioned into a
private company on April 15, 1999, the President shall within 30 days
report to the Congress on the extent to which such privatization
framework meets each of the criteria in subsection (c), and whether
taking into consideration all other relevant competitive factors, entry
of a privatized INTELSAT or Inmarsat into the United States market will
not be likely to distort competition.
``(b) Purpose of Privatization Criteria.--The criteria provided in
subsection (c) shall be used as--
``(1) the negotiation objectives for achieving the
privatization of INTELSAT no later than January 1, 2002, and
also for Inmarsat;
``(2) the standard for measuring, pursuant to subsection
(a), whether negotiations have resulted in an acceptable
framework for achieving the pro-competitive privatization of
INTELSAT and Inmarsat; and
``(3) licensing criteria by the Commission in making its
independent determination of whether the certified framework
for achieving the pro-competitive privatization of INTELSAT and
Inmarsat has been properly implemented by the privatized
INTELSAT and Inmarsat.
``(c) Privatization Criteria.--A pro-competitively privatized
INTELSAT or Inmarsat--
``(1) has no privileges or immunities limiting legal
accountability, commercial transparency, or taxation and does
not unfairly benefit from ownership by former signatories who
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