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Discussion Draft Copy of S ____.
Satellite Services Competition and Privatization Act of 1999.

Date:  January 22, 1999, released by the Office of Sen. Conrad Burns.  (This is not a copy of an introduced bill.)
Source: Office of Sen. Conrad Burns.
Editor's Notes:  This document was created by scanning a paper copy, and converting it to HTML.  The conversion process eliminated double spacing and line numbering.  Also, some fonts, sizes, and cases were changed.


Preliminary Staff Draft

106th Congress
1st Session
S. _____

IN THE SENATE OF THE UNITED STATES

Mr. BURNS introduced the following bill; which was read twice and referred to the Committee on _______


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 "Satellite Services Competition and Privatization Act of 1999".

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 promoting the privatization [begin page 2] of the intergovernmental satellite organization, INTELSAT, and reforming the regulatory framework of COMSAT Corporation.

SEC. 3. FINDINGS.

Congress makes the following findings:

(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 et seq.), and by its critical contributions, through its signatory, 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) By statute, COMSAT, a publicly traded corporation, is the sole United States signatory to INTELSAT and, as such, is responsible for carrying [begin page 3] out United States agreements under 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 the 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 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.

[begin page 4]

(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 World Trade Organization 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.

[begin page 5]

(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 United States market for satellite services will not be disrupted by such INTELSAT access.

(11) The Communications Satellite Act of 1962, 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.

The Communications Satellite Act of 1962 (47 U.S.C. 701) is amended by adding at the end the following new title:

[begin page 6]

"TITLE VI - SATELLITE SERVICES COMPETITION AND PRIVATIZATION

Subtitle A - Transition to a Privatized INTELSAT

"SEC. 601. POLICY OF THE UNITED STATES.

"It shall be the policy of the United States--

"(1) to 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) to 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. 662. ROLE OF COMSAT.

"(a) ADVOCACY.--As the sole United States signatory to INTELSAT, COMSAT shall act as an advocate of a pro-competitive privatization of INTELSAT, and shall exercise its voting rights with INTELSAT consistent with that mission and the United States instructional process.

[begin page 7]

"(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 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, direct-to-home satellite services, direct broadcast satellite services, and satellite digital audio radio services, as well as satellite communications services in the Ka Band provided via the INTELSAT system shall not be authorized in the United States by the Commission. However, that limitation may be waived upon a finding by the President 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 [begin page 8] of existing authorized services in the United States via the INTELSAT system.

"(c) NEW SATELLITE PROCUREMENT PROHIBITED.--The United States shall not authorize COMSAT to participate in the procurement by INTELSAT of any new satellites other than those enumerated in the INTELSAT procurement plan in effect as of January 1, 1999. However nothing in this Act is intended to prevent COMSAT's participation in INTELSAT's procurement and use of replacement satellites where failure to do so would jeopardize or disrupt the provision of existing authorized satellite services 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. CERTIFICATION.

"(a) APPLICATION.--Upon a final decision of the INTELSAT Assembly of Parties creating the legal structure and characteristics of the privatized INTELSAT, INTELSAT may file a request with the President for certification that the privatized INTELSAT's entry into the [begin page 9] 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 discretionary, pro-competitive, criteria in subsection (c), and shall take into consideration all 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 consider whether 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 arms-length relationship in all respects between itself and New Skies, [begin page 10] but 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 accepted commercial practice;

"(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 International Telecommunications Unions 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) commits not to enter or seek to 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 that January 1, 2002.

[begin page 11]

"Sec. 613. FCC PREVIEW OF LICENSE APPLICATIONS.

"(a) Application.--If the President makes such a certification pursuant to Section 612, 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.), letters of intent to provide service in the United States via non-United States-licensed space segment, or applications under section 214 of that Act (47 U.S.C. 214), pertaining to satellite communications services, to be provided by or via the privatized INTELSAT, internationally or within the domestic United States, as otherwise permitted by law, may be filed with the Commission.

"(b) PUBLIC INTEREST DETERMINATION.--Except as provided in (c), nothing in this Act shall restrict or expand the Commissions 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 612 for purposes of any license application, including space segment and earth station applications, pending before the Commission which pertains to a privatized INTELSAT's entry into the United States market.

[begin page 12]

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

"(a) REPORT. In the event that INTELSAT failes 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; and

"(2) by not later than March 31, 2002, issue a report delineating such measures to the Committee on Commerce of the House of Representatives, and the Committee on Commerce, Science, and Transportation of the Senate.

"(b) UNITED STATES CLAUSE.--Among the measures that the President shall consider is whether the United States should withdraw as a Party from INTELSAT.

"(c) RESERVATION CL&W.--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 [begin page 13] or a representative of the Party to INTELSAT, except that COMSAT retains its priviledges 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 his 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.

"(e) 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, such liability shall be in proportion to its ownership interest in INTELSAT.

"(d) PROSPECTIVE EFFECT OF ELIMINATION.--The elimination of privileges and immunities by reason of this [begin page 14] section shall apply only to actions or decisions taken by COMSAT after the date of the enactment of this section.

"SEC 622. ARROGATION 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 already in force on the effective date of this 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. PERMI'M'ED COMSAT INVESTMENT.

"Nothing in this section 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 section.

[begin page15]

"Subtitle D - General Provisions

"Sec. 631. REGULATORY PARITY.

"All satellite system operators and satellite service providers providing similar services shall be subject to comparable domestic United States regulatory treatment, such as those pertaining to common carrier or non-common carrier status, imposition of regulatory fees, and other such matters.

"SEC. 632. PROMOTION OF EFFICIENT USE OF ORBITAL SLOTS AND SPECTRUM.

"All satellite system operators authorized to access the United States market are encouraged to 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 are encouraged to relinquish their rights to these resources.

"SEC. 633. 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 [begin page 16] anything in this title or that Act be construed to result in a bias against the use of INTELSAT through existing or future contract awards.

"SEC. 634. 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. 635. RELATIONSHIPS TO OTHER LAWS.

'Whenever the application of the provision of this Act shall be inconsistent with the provisions of the Communications Act of 1934 (47 U.S.C. 151 et seq.), the provisions of this Act shall govern. However, the regulatory reform provisions of section 10 of the Communications Act of 1934 (47 U.S.C. 160) shall continue to apply to any provision of this Act and to any regulation applied to COMSAT pursuant to this Act.

"Subtitle E--Definitions

"SEC. 641. DEFINITIONS.

"(a) In General.--In this title:

[begin page 17]

"(1) INTELSAT.--The term 'INTELSAT' means the International Telecommunications Satellite Organization established pursant to the Agreement Relating to the International Telecommunications Satellite Organization (INTELSAT).

"(2) COMSAT.--The term 'COMSAT means the corporation established pursuant to title III.

"(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) INTERNATIONAL TELECOMMUNICATION UNION.--The term 'International Telecommunication Union' 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 [begin page 18] and space uses of the frequency spectrum as well as use of the geostationary orbital arc.

"(6) Privatized INTELSAT.--The term 'privatized INTELSAT' means any entity created from the privatization of INTELSAT from the assets of INTELSAT.

"(7) 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 .

"(8) 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.

"(9) INTELSAT AGREEMENT.--The term 'INTELSAT agreement' means the agreement relating to the International Telecommunications Satellite Organization ('INTELSAT'), including all of its annexes (TLAS 7532, 23 UST 3813).

"(10) 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 [begin page 19] at Washington on August 20, 1971, by Governments or telecommunications entities designated by governments in accordance with the provisions of the INTELSAT Agreement.

"(11) REPLACEMENT SATELLITE.--The term 'replacement satellite' means a satellite that takes the place of a satellite that (A) is either in operation as of the date of enactment, or is scheduled to be launched pursuant to the INTELSAT procurement plan of January 1, 1999, and (B) is unable to commence or perform operations for which it is intended, either because of failure in launch or deployment of the satellite in its appropriate orbit, or because of any other operational failure of the satellite.

"(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 [begin page 20] 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.--The term 'existing authorized services' means all services authorized to be provided by COMSAT via the INTELSAT system as of January 1, 1999.

"(b) Common Terminology.--Except as otherwise provided in subsection terms used in this title that [begin page 21] are defined in section 3 of the Communications Act of 1934 (47 U.S.C. 153) having the meanings provided such terms in that section.".

SEC. 5. REPEAL OF OWNERSHIP AND STRUCTURAL PROVISIONS RELATING TO COMSAT.

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) Section 102(c).

(2) Subsections (a) and (b) of section 201.

(3) Paragraphs (1) through (10) of section 201(c).

(4) Sections 302, 303, and 304.

(5) Section 305(c).

(6) Section 402.

(7) Section 403(a).

(8) Section 404.

 

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