Market for Satellite Communications and the Role of Intergovernmental Satellite Organizations

Date: 
April 03, 2001
Docket Number: 
Docket No. 000410098-1077-02
[Federal Register Volume 66, Number 64 (Tuesday, April 3, 2001)]
[Notices]
[Page 17686-17687]
From the Federal Register Online via the Government Printing Office [http://www.gpo.gov/]
[FR Doc No: 01-8065]


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DEPARTMENT OF COMMERCE

National Telecommunications and Information Administration

[Docket No. 000410098-1077-02]
RIN 0660-ZA12


Market for Satellite Communications and the Role of 
Intergovernmental Satellite Organizations

AGENCY: National Telecommunications and Information Administration, 
Commerce.

ACTION: Notice, request for comments.

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SUMMARY: The Department of Commerce requests comments regarding the 
advantages accorded signatories of the International Telecommunications 
Satellite Organization (INTELSAT), in terms of immunities, market 
access, or otherwise, in the countries or regions served by INTELSAT, 
the reason for such advantages, and an assessment of progress toward 
fulfilling a pro-competitive privatization of that organization. The 
Department notes that Inmarsat privatized on April 15, 1999 and 
INTELSAT plans to privatize by July 18, 2001. The International Anti-
Bribery and Fair Competition Act of 1998, Public Law 105-366, 
implements the Organization for Economic Cooperation and Development 
(OECD) Convention on Combating Bribery of Foreign Public Officials in 
International Business Transactions (the OECD Convention). In that 
legislation, the U.S. Congress imposed certain reporting requirements 
for the Department of Commerce to begin in 1999 and to continue 
annually for the next five years. The Secretary of Commerce issued the 
first report in July 1999 \1\ and the second in July 2000.\2\
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    \1\ See Addressing the Challenges of International Bribery and 
Fair Competition--The First Annual Report Under Section 6 of the 
International Anti-Bribery and Fair Competition Act of 1998, July 
1999 (available at http://www.mac.doc.gov/TCC/BRIBERY/oecd_report/
>).
    \2\ See Addressing the Challenges of International Bribery and 
Fair Competition--The Second Annual Report Under Section 6 of the 
International Anti-Bribery and Fair Competition Act of 1998, July 
2000 (available at http://www.mac.doc.gov/TCC/BRIBERY/oecd_report_2000/>).
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    The House report on the legislation expresses an expectation for 
extensive fact-findings on the nature of the market for satellite 
communications and, in particular, the role of the then 
intergovernmental satellite organizations (ISOs) INTELSAT and Inmarsat. 
The report required by the legislation monitors the implementation and 
enforcement of other nations' commitments under the OECD Convention and 
tracks the reduction of privileges and immunities for the ISOs. This 
Request for Comments (RFC) will assist the Secretary of Commerce in 
responding to those reporting requirements.
    Moreover, on March 17, 2000, the President signed into law the 
Open-Market Reorganization for the Betterment of International 
Telecommunications (ORBIT) Act, Pub. L. 106-180. This legislation seeks 
to ``promote a fully competitive global market for satellite 
communications services for the benefit of consumers and providers of 
satellite services and equipment by fully privatizing the 
intergovernmental satellite organizations, INTELSAT and Inmarsat.'' Id. 
at sec. 2. In addition, the ORBIT Act requires the President to provide 
an annual report to Congress on the progress of privatization in 
relation to the objectives, purposes, and provisions of the Act, 
including the ``[v]iews of the industry and consumers on 
privatization'' and the ``[i]mpact privatization has had on United 
States industry, United States jobs, and United States industry's 
access to the global marketplace.'' See id. at sec. 646(b)(3) and (4). 
The first such report was released on February 27, 2001.\3\ By this 
public notice and RFC, we are also soliciting the views of the industry 
and consumers on such privatization.
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    \3\ See Department of State, Report to Congress, Report Pursuant 
to Section 646(a) of Section 3 of the Open-Market Reorganization for 
the Betterment of International Telecommunications Act (Pub. L. 106-
180), (Feb. 2001) [``ORBIT Report''].

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DATES: Comments must be received by May 3, 2001.

ADDRESSES: The Department invites the public to submit written comments 
in paper or electronic form. Comments may be mailed to Milton Brown, 
National Telecommunications and Information Administration (NTIA), Room 
4713, U.S. Department of Commerce, 14th and Constitution Avenue, N.W., 
Washington, DC 20230. Paper submissions should include a version on 
diskette in ASCII, Word Perfect (please specify version), or Microsoft 
Word (please specify version) format.
    Comments submitted in electronic form may be sent to 
privatization@ntia.doc.gov>.

[[Page 17687]]

    Electronic comments should be submitted in the formats specified 
above.
    All comments will be posted on NTIA's web site at http://www.ntia.doc.gov/>.

FOR FURTHER INFORMATION CONTACT: Milton Brown, NTIA/OCC, (202) 482-
1816.

SUPPLEMENTARY INFORMATION:

Background

    INTELSAT is a treaty-based global communications satellite 
cooperative with 144 member countries. INTELSAT was created to enhance 
global communications and to spread the risks of creating a global 
satellite system across telephone operating companies from many 
countries.\4\ Inmarsat was created to improve the global maritime 
communications satellite system that would provide distress, safety, 
and communications services to seafaring nations in a cooperative, 
cost-sharing entity. In April of 1999, Inmarsat was fully privatized by 
transferring its assets and operations to Inmarsat Ltd., a U.K. 
corporation that enjoys no privileges or immunities. INTELSAT divested 
some of its satellites in 1998 to New Skies Satellites, NV, a 
Netherlands corporation, and plans to be fully privatized by July 18, 
2001.\5\ As an intergovernmental satellite organization, INTELSAT is 
governed by ``Parties'' and managed by ``signatories.'' The Parties are 
the national government members of the organizations who have signed 
the INTELSAT Agreement. Signatories are designated by each party to 
participate in the commercial operations of the organization. They hold 
ownership interests in varying degrees. They also assist with the 
operation and management of the systems and are distributors of ISO 
services in their own countries. Signatories may be government-owned or 
controlled telecommunications monopolies or other telecommunications 
service providers. The publicly traded COMSAT Corporation (a wholly-
owned subsidiary of Lockheed Martin Corporation) is the U.S. Signatory 
to INTELSAT.\6\ INTELSAT is currently subject to oversight by the 
Assembly of Parties, and signatories are subject to oversight by their 
respective governments.
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    \4\ See Treaty on Principles Governing the Activities of States 
in the Exploration and Use of Outer Space, Including the Moon and 
Other Celestial Bodies.
    \5\ Although both ISOs will be fully privatized, two small 
residual intergovernmental organizations, ITSO from INTELSAT, and 
IMSO (International Mobile Satellite Organization) from Inmarsat, 
will remain to monitor the performance of certain public services.
    \6\ COMSAT is now merged into Lockheed Martin Corporation.
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    To implement public service obligations effectively and as part of 
INTELSAT's unique treaty status as an international organization, it 
benefits from certain privileges and immunities. As such, it is, until 
privatization, generally immune from suit, including private or public 
prosecution on antitrust charges.\7\ Moreover, INTELSAT does not pay 
taxes on revenues, and exemptions extend to import duties and taxes, 
communications and property taxes. Signatories, however, are subject to 
national taxes, including taxes on their share of the organization's 
distributed returns.
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    \7\ We note that the ORBIT Act limits privileges and immunities 
previously afforded COMSAT as the U.S. Signatory to INTELSAT. See 
Public Law 106-180, sec. 642(b).
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    The International Anti-Bribery and Fair Competition Act of 1998, 
Public Law 105-366, requires the Secretary of Commerce to submit a 
report to the House of Representatives and the Senate that contains 
information regarding the OECD Convention including the following: (1) 
A list of countries that have ratified the Convention; (2) a 
description of the domestic laws enacted by each party to the 
Convention that implements commitments under the Convention; and (3) an 
assessment of the measures taken by each party to the Convention during 
the previous year to fulfill its obligations under the Convention. See 
Public Law 105-366, sec. 6(a). Accordingly, the Secretary of Commerce 
is required to report, inter alia, on the ``terms of market access, 
government ownership, government contracts or connections, privileges 
and immunities, favorable treatment by national regulatory authorities 
or tax treatment * * * in the countries or regions served by the 
[INTELSAT], and the reasons for such advantages.'' H.R. Rep. No. 105-
802, at 9 (1998). In preparation for this report, the Secretary of 
Commerce is required to seek and incorporate comments from the private 
sector, including competing satellite companies and satellite services 
users. Id. The Secretary of Commerce issued the first two reports in 
July 1999 and July 2000.\8\
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    \8\ Supra n. 1, 2.
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    NTIA is now formally soliciting public comment for the Secretary's 
third annual report on the advantages, in terms of immunities, market 
access, or otherwise, in the countries or regions served by INTELSAT, 
the reasons for such advantages, and an assessment of progress toward 
fulfilling a pro-competitive privatization of this organization. ``Pro-
competitive privatization'' is defined as ``privatization that the 
President determines to be consistent with the United States policy of 
obtaining full and open competition to such organizations (or their 
successors), and nondiscriminatory market access, in the provision of 
satellite services.'' See Public Law 105-366, section 5(a)(2). 
Respondents may find it useful to review the full text of the 
International Anti-Bribery and Fair Competition Act of 1998.
    On March 17, 2000, the President signed into law the Open-market 
Reorganization for the Betterment of International Telecommunications 
(ORBIT) Act. Public Law 106-180. The purpose of the ORBIT Act is ``to 
promote a fully competitive global market for satellite communications 
services for the benefit of consumers and providers of satellite 
services and equipment by fully privatizing the intergovernmental 
satellite organizations, INTELSAT and Inmarsat.'' Id. at sec. 2. To 
achieve this goal, the ORBIT Act provides specific criteria for 
licensing and market access for INTELSAT, Inmarsat and New Skies 
Satellites, and changes the statutes affecting COMSAT. In addition, the 
ORBIT Act requires the President to provide an annual report to 
Congress on the progress of privatization in relation to the 
objectives, purposes, and provisions of the Act including the ``[v]iews 
of the industry and consumers on privatization'' and the ``[i]mpact 
privatization has had on United States industry, United States jobs, 
and United States industry's access to the global marketplace.'' See 
id. at section 646(b)(3) and (4). By this public notice and RFC, we are 
also soliciting the views of the industry and consumers on the 
privatization of INTELSAT and Inmarsat with respect to the goals of 
achieving a pro-competitive privatization of these organizations. 
Respondents may find it useful to review the full text of the ORBIT 
Act.

    Dated: March 28, 2001.
Kathy Smith,
Chief Counsel.
[FR Doc. 01-8065 Filed 4-2-01; 8:45 am]
BILLING CODE 3510-60-P