Market for Satellite Communications and the Role of Intergovernmental Satellite Organizations

DEPARTMENT OF COMMERCE

NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION

[Docket No. 990405086-9086-01]

RIN 0660-ZA08

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 intergovernmental satellite

organizations (ISOs), in terms of immunities, market access, or

otherwise, in the countries or regions served by the International

Telecommunications Satellite Organization (INTELSAT) and the

International Mobile Satellite Organization (Inmarsat), the reason for

such advantages, and an assessment of progress toward fulfilling a pro-

competitive privatization of those organizations. The International

Anti-Bribery and Fair Competition Act of 1998 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 that are due on July 1, 1999 and each of the next five

years. 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 ISOs, INTELSAT and

Inmarsat. The Department notes that Inmarsat is scheduled for

privatization on April 15, 1999. The reporting requirements monitor the

implementation and enforcement of other nations' commitments under the

OECD Convention and promote 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 regarding the

ISOs' privileges and immunities.

DATES: Comments must be received by May 12, 1999.

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, NW,

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

[email protected]. Electronic comments should be submitted in

the formats specified above.

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

1816.

SUPPLEMENTARY INFORMATION:

Background

INTELSAT is a treaty-based global communications satellite

cooperative with 143 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. 1 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. Inmarsat is scheduled for

privatization on April 15, 1999.

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\1\ See Treaty on Principles Governing the Activities of States

in the Exploration and Use of Outer Space, Including the Moon and

Other Celestial Bodies.

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As intergovernmental satellite organizations, both INTELSAT and

Inmarsat are governed by ``Parties'' and managed by ``signatories.''

The Parties are the national government members of the INTELSAT and

Inmarsat agreements. 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 publically traded Comsat Corp. is the U.S.

Signatory to INTELSAT. ISOs are subject to oversight by the Assembly of

Parties, and signatories are subject to oversight by their respective

governments.

To implement public service obligations effectively and as part of

the ISOs' unique treaty status, the ISOs benefit from certain

privileges and immunities. As such, these ISOs are generally immune

from suit, including private or public prosecution on antitrust

charges. Moreover, neither ISO pays taxes on revenues, and exemption

extends to import duties and taxes, communications and property taxes.

Signatories, however, are subject to national taxes, including for

their share of the organizations' distributed returns.

The International Anti-Bribery and Fair Competition Act of 1998

requires the Secretary of Commerce to submit a report to the House of

Representatives and the Senate which contains information regarding the

OECD Convention which includes 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 Pub. L. No 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 [ISOs],

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.

We are now formally soliciting public comment on the advantages, in

terms of immunities, market access, or otherwise, in the countries or

regions served by INTELSAT and Inmarsat, the reasons for such

advantages, and an assessment of progress toward fulfilling a pro-

competitive privatization of those

[[Page 17626]]

organizations. ``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 Pub. L. No 105-

366, sec. 5(a)(2). Respondents should find it useful to review the full

text of the International Anti-Bribery and Fair Competition Act of

1998.

Kathy Smith,

Acting Chief Counsel.

[FR Doc. 99-8952 Filed 4-9-99; 8:45 am]

BILLING CODE 3510-60-P