[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.
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