[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 376 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                 S. 376

     To amend the Communications Satellite Act of 1962 to promote 
  competition and privatization in satellite communications, and for 
                            other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            February 4, 1999

    Mr. Burns (for himself, Mr. McCain, Mr. Dorgan, Mr. Bryan, Mr. 
 Brownback, and Mr. Cleland) introduced the following bill; which was 
  read twice and referred to the Committee on Commerce, Science, and 
                             Transportation

_______________________________________________________________________

                                 A BILL


 
     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 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; hereinafter the ``Satellite Act''), 
        and by its critical contributions, through its signatory, 
        COMSAT Corporation (hereinafter ``COMSAT''), 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) 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.
            (4) In the 37 years since enactment of the Satellite Act, 
        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 
        had previously had the capabilities to offer.
            (5) 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 alternative 
        to terrestrial communications systems, particularly in lesser 
        developed countries.
            (6) 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.
            (7) 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.
            (8) Transforming INTELSAT from an intergovernmental 
        organization into a conventional satellite services company is 
        a key element in bringing about the emergence of a fully 
        competitive global environment for satellite services.
            (9) Consistent with United States obligations under the WTO 
        Basic Agreement on Telecommunications Services and to prevent 
        the potential distortion of competition in the United States 
        market, a pro-competitive privatization of INTELSAT is an 
        appropriate prerequisite to granting INTELSAT direct access to 
        users in the United States market.
            (10) It is in the interest of the United States to remove, 
        by January 1, 2002, the reservation in the Fourth Protocol to 
        the General Agreement on Trade in Services regarding INTELSAT's 
        access to the United States market through COMSAT, but such 
        reservation cannot be removed without adequate assurance that 
        the U.S. market for satellite services will not be disrupted by 
        such INTELSAT access.
            (11) The Satellite Act, and other applicable United States 
        laws, need to be updated to encourage the pro-competitive 
        privatization of INTELSAT 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. REVISION OF COMMUNICATIONS SATELLITE ACT OF 1962.

    (a) Creation of Corporation.--Section 301 of the Communications 
Satellite Act of 1962 (47 U.S.C. 731) is amended to read as follows:

``SEC. 301. CREATION OF CORPORATION.

    ``The Corporation shall be subject to the provisions of this Act. 
The right to repeal, alter, or amend this Act at any time is expressly 
reserved.''.
    (b) Satellite Services Competition and 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.

``SEC. 602. ROLE OF COMSAT.

    ``(a) Advocacy.--As the sole United States signatory to INTELSAT, 
COMSAT shall act as an advocate of pro-competitive privatization of 
INTELSAT, and shall exercise its voting rights with INTELSAT consistent 
with that mission and the United States instructional process.
    ``(b) Annual Reports.--COMSAT shall report annually to the 
Committee on Commerce of the House of Representatives and the Committee 
on Commerce, Science, and Transportation of the Senate on the progress 
being made by INTELSAT to privatize in a pro-competitive manner.

``SEC. 603. RESTRICTIONS PENDING PRIVATIZATION.

    ``(a) INTELSAT Access to United States Market.--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, COMSAT) or end users 
in the United States prior to achieving a pro-competitive privatization 
certified by the President pursuant to section 612.
    ``(b) Service Restrictions.--Until the President makes a 
certification pursuant to section 612, the following services provided 
by the INTELSAT system shall not be authorized in the United States by 
the Federal Communications Commission: direct-to-home satellite 
services, direct broadcast satellite services, satellite digital audio 
radio services, and satellite communications services in the Ka Band. 
The preceding sentence may be waived by the President if the President 
finds that the provision of such service would enhance national 
security or serve a vital public interest. This provision is not 
intended to disrupt or otherwise jeopardize the continuing provision of 
existing authorized services in the United States via the INTELSAT 
system.

                ``Subtitle B--Privatization of INTELSAT

``SEC. 611. PRIVATIZATION.

    ``The President shall secure 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.

``SEC. 612. PROVISION OF SERVICES IN THE UNITED STATES BY 
              INTERGOVERNMENTAL SATELLITE ORGANIZATION AFFILIATES.

    ``(a) In General.--In order to achieve the objectives and carry out 
the purposes of the Open-market Reorganization for the Betterment of 
International Telecommunications Act, the Commission--
            ``(1) shall apply a presumption in favor of entry to an IGO 
        affiliate licensed by a WTO Member for services covered by U.S. 
        commitments under the WTO Basic Telecom Agreement;
            ``(2) may attach conditions to any grant of authority to an 
        IGO affiliate that raises the potential for competitive harm; 
        or
            ``(3) shall in the exceptional case in which an application 
        by an IGO affiliate would pose a very high risk to competition 
        in the U.S. 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 under (a)(2), the FCC shall consider any 
potential anti-competitive or market distorting consequences of 
continued relationships or connections between an IGO and its 
affiliates, including:
            ``(1) whether the affiliate is structured to prevent 
        practices such as collusive behavior or cross-subsidization;
            ``(2) the degree of affiliation between the IGO and its 
        affiliate;
            ``(3) whether the 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;
            ``(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;
            ``(7) the existence of common marketing;
            ``(8) the availability of recourse to IGO assets for credit 
        or capital; and
            ``(9) whether an IGO registers or coordinates spectrum or 
        orbital locations on behalf of its affiliate.
    ``(c) Sunset.--The provisions of this section shall cease to have 
effect upon the certification by the President pursuant to section 
613(b).

``SEC. 613. CERTIFICATION.

    ``(a) Application.--Upon a final decision of the INTELSAT Assembly 
of Parties creating the legal structure and characteristics of the 
privatized INTELSAT, INTELSAT shall file a request with the President 
for certification that the privatized INTELSAT's entry into the United 
States market for satellite services will not distort competition in 
that market.
    ``(b) Certification.--Upon application by INTELSAT, the President 
shall make such determination in accordance with the pro-competitive 
criteria in subsection (c), and shall take into consideration all other 
relevant competitive factors, including factors related to other 
competitors in the United States and global market for satellite 
services.
    ``(c) Criteria.--In making a determination pursuant to subsection 
(b), the President shall determine that a privatized INTELSAT--
            ``(1) has no privileges or immunities limiting legal 
        accountability, commercial transparency or taxation;
            ``(2) has submitted to the jurisdiction of competition and 
        independent regulatory authorities of a nation that is a 
        signatory to the World Trade Organization Agreement on Basic 
        Telecommunications and that has implemented or accepted the 
        agreement's reference paper on regulatory principles;
            ``(3) can offer assurance of an arm's-length relationship 
        in all respects between itself and any affiliate, including New 
        Skies, and in particular with respect to technical, financial, 
        and management contracts;
            ``(4) can demonstrate that the valuation of assets to be 
        transferred post-privatization is in accordance with generally 
        accepted accounting principles;
            ``(5) has access to orbital locations and associated 
        spectrum post-privatization in accordance with the same 
        regulatory processes applicable to other commercial satellite 
        systems;
            ``(6) conducts technical coordinations post-privatization 
        under normal, established ITU procedures;
            ``(7) has an ownership structure in the form of a stock 
        corporation or other similar and accepted commercial mechanism, 
        and a commitment to a timely initial public offering has been 
        established for the sale or purchase of company shares;
            ``(8) does not enter into agreements or arrangements to 
        secure exclusive access to any national telecommunications 
        market; and
            ``(9) will have accomplished a privatization consistent 
        with the criteria listed in this subsection at the earliest 
        possible date, but not later than January 1, 2002.

``SEC. 614. FCC REVIEW OF LICENSE APPLICATIONS.

    ``(a) Application.--If the President makes such a certification 
pursuant to section 613, the following applications and Letters of 
Intent to provide satellite communications services by or via the 
privatized INTELSAT, internationally or within the domestic United 
States, otherwise permitted by law, may be filed with the Commission 
provided that no instrument of authorization may be granted prior to 
the implementation of the certified privatization:
            ``(1) Applications for a satellite Earth station or space 
        station under title III of the Communications Act of 1934 (47 
        U.S.C. 301 et seq.).
            ``(2) Letters of Intent to provide service in the United 
        States via non-U.S.-licensed space segment.
            ``(3) Applications under section 214 of the Communications 
        Act of 1934 (47 U.S.C. 214).
    ``(b) Public Interest Determination.--Except as provided in 
subsection (c), nothing in this Act shall restrict or expand the 
Commission's ability to make a public interest determination concerning 
any application pertaining to a privatized INTELSAT's entry into the 
United States market.
    ``(c) Effect of Presidential Certification on Commission 
Deliberations.--The Commission shall be bound by the President's 
privatization certification made pursuant to section 613 for purposes 
of any license application, including space segment and Earth station 
applications, pending before the Federal Communications Commission 
which pertains to a privatized INTELSAT's entry into the United States 
market.

``SEC. 614. FAILURE TO PRIVATIZE IN A TIMELY MANNER.

    ``(a) Report.--In the event that INTELSAT fails to fully privatize 
as provided in sections 611 and 612 by January 1, 2002, the President 
shall--
            (1) immediately commence deliberations to determine what 
        additional measures should be implemented to ensure the rapid 
        privatization of INTELSAT;
            (2) no later than March 31, 2002, issue a report 
        delineating such measures to the Committee on Commerce of the 
        House of Representatives, and Committee on Commerce, Science, 
        and Transportation of the Senate; and
            (3) withdraw as a Party from INTELSAT.
    ``(b) Reservation Clause.--The President may determine that, in 
consideration of progress made, it is in the national interest of the 
United States to provide a reasonable extension of time for completion 
of privatization.

             ``Subtitle C--COMSAT Governance and Operation

``SEC. 621. ELIMINATION OF PRIVILEGES AND IMMUNITIES.

    ``(a) In General.--COMSAT shall not have any privilege or immunity 
on the basis of its status as a signatory or a representative of the 
Party to INTELSAT, except that COMSAT retains its privileges and 
immunities--
            ``(1) for those actions taken in its role as the United 
        States signatory to INTELSAT upon instruction of the United 
        States Government;
            ``(2) for actions taken when acting as the United States 
        signatory in fulfilling obligations under the INTELSAT 
        Operating Agreement;
            ``(3) for INTELSAT signatory activities which COMSAT does 
        not support; and
            ``(4) in accordance with any other exceptions as the 
        President shall make in accordance with subsection (b).
    ``(b) Exceptions.--The President, or the President's designee, 
shall ensure that any action authorized by the exception is consistent 
with the purposes of this Act and COMSAT's responsibilities as the 
United States signatory.
    ``(c) No Joint or Several Liability.--If COMSAT is found liable for 
any action taken in its status as a signatory or a representative of 
the Party to INTELSAT, any such liability shall be limited to the 
portion of the judgment that corresponds to COMSAT's percentage of the 
responsibility, as determined by the trier of fact.
    ``(d) Prospective Effect of Elimination.--The elimination of 
privileges and immunities contained in this section shall apply only to 
actions or decisions taken by COMSAT after the date of enactment of 
this section.

``SEC 622. ABROGATION OF CONTRACTS PROHIBITED.

    ``Nothing in this Act or the Communications Act of 1934 (47 U.S.C. 
151 et seq.) shall be construed to modify or invalidate any contract or 
agreement involving COMSAT, INTELSAT, or any terms or conditions of 
such agreement in force on the date of enactment of the Open-market 
Reorganization for the Betterment of International Telecommunications 
Act, or to give the Commission authority, by rule-making or any other 
means, to invalidate any such contract or agreement, or any terms and 
conditions of such contract or agreement.

``SEC. 623. PERMITTED COMSAT INVESTMENT.

    ``Nothing in this Act shall be construed as precluding COMSAT from 
investing in or owning satellites or other facilities independent from 
INTELSAT, or from providing services through reselling capacity over 
the facilities of satellite systems independent from INTELSAT. This 
section 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.

                    ``Subtitle D--General Provisions

``SEC. 631. PROMOTION OF EFFICIENT USE OF ORBITAL SLOTS AND SPECTRUM.

    ``All satellite system operators authorized to access the United 
States market shall make efficient and timely use of orbital and 
spectrum resources in order to ensure that these resources are not 
warehoused to the detriment of other new or existing satellite system 
operators. Where these assurances cannot be provided, satellite system 
operators shall relinquish their rights to these resources.

``SEC. 632. PROHIBITION ON PROCUREMENT PREFERENCES.

    ``Nothing in this title or the Communications Act of 1934 (47 
U.S.C. 151 et seq.) shall be construed to authorize or require any 
preference in Federal Government procurement of telecommunications 
services, for the satellite space segment provided by INTELSAT, nor 
shall anything in this title or the Communications Act of 1934 be 
construed to result in a bias against the use of INTELSAT through 
existing or future contract awards.

``SEC. 633. SATELLITE AUCTIONS.

    ``Notwithstanding any other provision of law, the Commission shall 
not assign by competitive bidding orbital locations or spectrum used 
for the provision of international or global satellite communications 
services. The President shall oppose in the International 
Telecommunications Union and in other bilateral and multilateral fora 
any assignment by competitive bidding of orbital locations or spectrum 
used for the provision of such services.

``SEC. 634. RELATIONSHIPS TO OTHER LAWS.

    ``Whenever the application of the provisions of this Act is 
inconsistent with the provisions of the Communications Act of 1934, the 
provisions of this Act shall govern.

                       ``Subtitle E--Definitions

``SEC. 641. DEFINITIONS.

    ``(a) In General.--In this title:
            ``(1) INTELSAT.--The term `INTELSAT' means the 
        International Telecommunications Satellite Organization 
        established pursuant to the Agreement Relating to the 
        International Telecommunications Satellite Organization 
        (INTELSAT).
            ``(2) COMSAT.--The term `COMSAT' means the corporation 
        established pursuant to title III of this Act.
            ``(3) Signatory.--The term `signatory' means a Party, or 
        the telecommunications entity designed by a Party, that has 
        signed the Operating Agreement and for which such Agreement has 
        entered into force or to which such Agreement has been 
        provisionally applied.
            ``(4) Party.--The term `Party' means, in the case of 
        INTELSAT, a nation for which the INTELSAT agreement has entered 
        into force or been provisionally applied.
            ``(5) Commission.--The term `Commission' means the Federal 
        Communications Commission.
            ``(6) International telecommunication union.--The term 
        `International Telecommunication Union' (ITU) means the 
        intergovernmental organization that is a specialized agency of 
        the United Nations in which member countries cooperate for the 
        development of telecommunications, including adoption of 
        international regulations governing terrestrial and space uses 
        of the frequency spectrum as well as use of the geostationary 
        orbital arc.
            ``(7) Privatized intelsat.--The term `privatized INTELSAT' 
        means any entity created from the privatization of INTELSAT 
        from the assets of INTELSAT.
            ``(8) Orbital location.--The term `orbital location' means 
        the location for placement of a satellite in geostationary 
orbits as defined in the International Telecommunication Union Radio 
Regulations.
            ``(9) Space segment.--The term `space segment' means the 
        satellites, and the tracking, telemetry, command, control, 
        monitoring and related facilities and equipment used to support 
        the operation of satellites owned or leased by INTELSAT.
            ``(10) INTELSAT agreement.--The term `INTELSAT agreement' 
        means the agreement relating to the International 
        Telecommunications Satellite Organization (`INTELSAT'), 
        including all of its annexes (TIAS 7532, 23 UST 3813).
            ``(11) Operating agreement.--The term `operating agreement' 
        means, in the case of INTELSAT, the agreement, including its 
        annex but excluding all titles of articles, opened for 
        signature at Washington on August 20, 1971, by Governments or 
        telecommunications entities designated by Governments in 
        accordance with the provisions of The Agreement.
            ``(12) Headquarters agreement.--The term `headquarters 
        agreement' means the binding international agreement, dated 
        November 24, 1976, between the United States and INTELSAT 
        covering privileges, exemptions, and immunities with respect to 
        the location of INTELSAT's headquarters in Washington, D.C.
            ``(13) Direct-to-home satellite services.--The term 
        `direct-to-home satellite services' means the distribution or 
        broadcasting of programming or services by satellite directly 
        to the subscriber's premises without the use of ground 
        receiving or distribution equipment, except at the subscriber's 
        premises or in the uplink process to the satellite.
            ``(14) Satellite digital audio radio service.--The term 
        `satellite digital audio radio service' means a 
        radiocommunication service in which audio programming is 
        digitally transmitted by one or more space stations directly to 
        fixed, mobile, or portable earth stations, and which may 
        involve complementary repeating terrestrial transmitters, 
        telemetry, tracking and control facilities.
            ``(15) Direct broadcast satellite service.--The term 
        `direct broadcast satellite service' means a radiocommunication 
        service in which signals transmitted or retransmitted by space 
        stations are intended for direct reception by the general 
        public. In the Direct Broadcast Satellite Service the term 
        `direct reception' shall encompass both individual reception 
        and community reception.
            ``(16) Existing authorized services.--All services 
        authorized to be provided by COMSAT via the INTELSAT system as 
        of January 1, 1999.
            ``(17) IGO.--The term `IGO' means the Intergovernmental 
        Satellite organizations, INTELSAT and INMARSAT.
            ``(18) IGO affiliate.--The term `IGO affiliate' means any 
        entity in which an IGO owns an equity interest of 10 percent or 
        more.
    ``(b) Common Terms.--Except as otherwise provided in subsection 
(a), terms used in this title that are defined in section 3 of the 
Communications Act of 1934 (47 U.S.C. 153) have the meaning provided in 
such section.''.

SEC. 5. REPEAL OF OWNERSHIP AND STRUCTURAL PROVISIONS.

    Effective as of the date of the enactment of this Act, the 
following provisions of the Communications Satellite Act of 1962 (47 
U.S.C. 701 et seq.) shall cease to be effective:
            (1) Subsections (a) and (b) of section 201.
            (2) Paragraphs (1) through (10) of section 201(c).
            (3) Sections 302, 303, and 304.
            (4) Section 305(c).
            (5) Section 402.
            (6) Section 403(a).
            (7) Section 404.

SEC. 6. INTERNATIONAL MARITIME SATELLITE TELECOMMUNICATIONS ACT 
              AMENDMENTS.

    (a) Continuing Provision of Global Satellite Safety Services After 
Privatization of Business Operations of International Mobile Satellite 
Organization.--
            (1) Authority.--The International Maritime Satellite 
        Telecommunications Act (47 U.S.C. 751 et seq.) is amended by 
        adding at the end the following:

``SEC. 506. GLOBAL SATELLITE SAFETY SERVICES AFTER PRIVATIZATION OF 
              BUSINESS OPERATIONS OF INMARSAT.

    ``In order to ensure the continued provision of global maritime 
distress and safety satellite telecommunications services after 
privatization of the business operations of INMARSAT, the President may 
maintain on behalf of the United States membership in the International 
Mobile Satellite Organization.''.
    (b) Repeal of Superseded Authority.--
            (1) Repeal.--That Act is further amended by striking 
        sections 502, 503, 504, and 505 (47 U.S.C. 751, 752, 753, and 
        757).
            (2) Effective Date.--The amendments made by paragraph (1) 
        shall take effect on the date on which the International Mobile 
        Satellite Organization ceases to operate directly a global 
        mobile satellite system.
                                 <all>