Burns to Introduce Satellite Privatization Bill

(January 25, 1999)  Sen. Conrad Burns released a draft copy of a satellite privatization bill on January 22 which he intends to introduce shortly.  The House, but not the Senate, passed a similar bill in 1998.  This bill would push for privatization of INTELSAT and COMSAT.

Presently, there are two intergovernmental satellite organizations (IGOs) -- INTELSAT (International Telecommunications Satellite Organization) and Inmarsat (International Mobile Satellite Organization system).  COMSAT, created by the Communications Satellite Act of 1962 (47 U.S.C. 701 et seq.), is the American signatory.

As an intergovernmental treaty organization, the Congress cannot pass a law mandating the privatization of INTELSAT.  Hence, the bill offers advice to privatize, and backs it up with the threat that if privatization in a pro-competitive manner does not take place, then INTELSAT's access to the U.S. market would be denied.

The IGOs have focused on phone service.  New private ventures, such as Teledesic, plan to provide worldwide broadband Internet access.

Many Members of Congress, supported by the private satellite ventures, sought unsuccessfully to pass similar legislation in the just ended 105th Congress.  Rep. Tom Bliley (R-VA), the Chairman of the House Commerce Committee, sponsored the "Communications Satellite Competition and Privatization Act of 1998, HR 1872 EH.  It passed the House overwhelmingly on May 6, 1998, but did not pass in the Senate, and thus lapsed when the Congress adjourned.

Sen. Conrad Burns (R-MT)

"This issue has been a slow-burner, but I think we're hitting a point where it's clear to Congress that we have to move," Sen. Conrad Burns (R-MT) said in a press release.  "The bill takes a carrot-before-the-stick approach that is fair to industry, but most importantly, it ensures that a privatized satellite industry will be able to provide us with communications services at a reasonable cost."  Sen. Burns is Chairman of the Senate Communications Subcommittee, which has jurisdiction over this issue.

Sen. Burns' bill would change U.S. satellite policy.  It provides that: "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 ..."

The bill further provides that:

"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."  (Parentheses in original.)

Also last week, Sen. Burns and Rep. Bliley wrote a letter to FCC Chairman William Kennard asking that the Federal Communications Commission take no action that would allow Lockheed Martin to purchase more than 10 percent of COMSAT.

The January 21 letter urges that the FCC "not take any action to permit any company to purchase more than 10 percent of COMSAT... "  The FCC is considering granting "authorized common carrier" status to Lockheed Martin, a change the company seeks in hopes of acquiring a significant interest in COMSAT.

They further stated that:

"Satellite reform must be comprehensive, and absent overall satellite privatization legislation, no company should be able to own over 10 percent of the U.S. Signatory. Comprehensive reform is the best way to promote a pro-competitive privatization of the intergovernmental satellite organizations, and deregulate COMSAT. Commission action at this time may have the unintended effect of producing uncertainty in the satellite market since Congress is considering legislation on this very issue. Therefore, we strongly urge that the Commission not take any action to permit any company to purchase more than 10 percent of COMSAT, through the potential authorized common carrier exception, a reverse merger, asset transfer or other similar method."