[Federal Register Volume 64, Number 194 (Thursday, October 7, 1999)]
[Rules and Regulations]
[Pages 54561-54564]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-26148]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Chapter 1
[IB Docket No. 98-192; FCC 99-236]
In the Matter of Direct Access to the INTELSAT System
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: In this document, the Commission adopts a policy to permit
Level 3 direct access to the International Telecommunications Satellite
Organization (``INTELSAT'') satellite system from earth stations within
the United States, for the purpose of providing international satellite
services. As a result of this decision, U.S. carriers and users of
INTELSAT may enter into contractual agreements with INTELSAT for
ordering, receiving, and paying for services at the same rates INTELSAT
charges its Signatories, in lieu of having to go exclusively through
Comsat, the U.S. Signatory to INTELSAT. Comsat is permitted, however,
to file a tariff with the Commission that requires Level 3 direct
access customers to reimburse it for certain costs incurred in its
unique role as the U.S. Signatory to INTELSAT. The document denies
requests made by telecommunications carriers for ``fresh look'' at
their long-term contracts with Comsat and ``portability'' of the
INTELSAT space segment capacity they use that is held by Comsat.
Finally, the document limits involvement by dominant foreign INTELSAT
Signatories under a specific circumstance and requires that INTELSAT
waive its immunities under certain limited circumstances. With this
decision, the United States joins 94 other INTELSAT signatory countries
that already permit direct access to INTELSAT from earth stations
within their countries. Implementing direct access from the United
States will lower prices, enhance competition, and lead to greater
efficiency and flexibility in the use of INTELSAT space segment
capacity.
DATES: Effective December 6, 1999.
FOR FURTHER INFORMATION CONTACT: Michael McCoin, International Bureau,
Satellite Policy Branch, (202) 418-0774, or email at mmccoin@fcc.gov.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report
and Order in IB Docket No. 98-192, FCC 99-236, adopted September 15,
1999, and released September 16, 1999. The complete text of this
Commission Report and Order is available for inspection and copying
during the weekday hours of 9:00 a.m. to 4:30 p.m. in the Commission's
Reference Information Center, Room CY-A257, 445 Twelfth Street, S.W.,
Washington, D.C., or may be purchased from the Commission's duplicating
contractor, International Transcription Service, (202) 857-3800, 2131 M
Street, N.W., Washington, D.C. 20036. The complete text is also
available under the file name
[[Page 54562]]
fcc99236.wp on the Commission's internet site at http://www.fcc.gov/
Bureaus/International/Orders/1999.
Summary of the Report and Order
1. This Report and Order permits Level 3 direct access to the
INTELSAT satellite system from earth stations in the United States for
the provision of international satellite services, subject to certain
conditions and limitations. The Report and Order affirms the
Commission's tentative conclusions in the Notice \1\ that the
Commission has authority under the Communications Satellite Act of 1962
(``Satellite Act'') to permit Level 3 direct access and that such
action would not be a ``taking'' of private property without ``just
compensation'' under the Fifth Amendment to the United States
Constitution. The document concludes that direct access is in the
public interest. Specifically, the Commission finds that direct access
will result in (1) cost savings, greater efficiency, flexibility, and
control over facility use by U.S. customers; (2) competitive pressure
on Comsat rates and the rates of competing satellite operators; and (3)
enhance the ability of U.S. carriers to compete globally with foreign
counterparts that already may obtain satellite capacity directly from
INTELSAT.
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\1\ In the Matter of Direct Access to the INTELSAT System, IB
Docket No. 98-192, File No. 60-SAT-ISP-97, Report and Order, 63 FR
58755, (November 5, 1998) (``Notice'').
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2. INTELSAT is a 143 member intergovernmental organization that
owns and operates a global system of satellites. It is located in
Washington, D.C. and is a key provider of satellite transmission
capacity for both U.S. commercial and governmental use. In 1992,
INTELSAT developed procedures for non-Signatories to obtain space
segment capacity directly from INTELSAT rather than requiring access
through the national Signatory. Level 3 direct access requires a
customer to enter into a service agreement with INTELSAT that sets
forth the general terms and conditions for INTELSAT supply of its space
segment capacity. Through the service agreement, a customer is able to
access INTELSAT space segment directly at INTELSAT tariff rates, known
as INTELSAT Utilization Charges (``IUC''). Level 3 direct access
customers have no investment obligations in the INTELSAT system and no
governance rights within the organization. A Signatory, such as Comsat,
permitting Level 3 direct access would still earn a return on its
investment in proportion to space segment capacity used by a Level 3
direct access customer in its country (currently between 14 and 18
percent).\2\
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\2\ Under the INTELSAT Operating Agreement, the Board of
Governors establishes a target rate of compensation (return) for
shareholders' (``Signatories'') invested capital. All shareholders
are entitled to the target rate of return, which is periodically
adjusted by the INTELSAT Board of Governors. See INTELSAT Operation
Agreement, Article 8.
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3. The Commission initiated this proceeding as a result of requests
in an earlier proceeding by United States carriers and other users of
INTELSAT to permit direct access to the INTELSAT system as a condition
for granting Comsat non-dominant status in its provision of INTELSAT
services.\3\ Although the Commission did not require that direct access
be permitted as a condition to granting Comsat non-dominant status, it
committed to initiating this proceeding ``expeditiously to explore the
legal, economic, and policy ramifications of direct access.'' \4\ In
the Notice, the Commission tentatively concluded that the Commission
has authority under the Satellite Act and the Communications Act of
1934 (``Communications Act'') to permit United States carriers and
other users to obtain Level 3 direct access to the INTELSAT system. The
Notice requested comment on whether Level 3 direct access would result
in benefits to carriers, other users, and end users, and whether it
would enhance competition.
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\3\ Comsat Corporation Petition pursuant to Section 10(c) of the
Communications Act of 1939, as amended, for Forbearance from
Dominant Carrier Regulation and for Reclassification as a Non-
Dominant Carrier, FCC 98-78, 63 FR 25811, (May 11, 1998) (``Comast
Non-Dominant Order'').
\4\ Comsat Non-Dominant Order, 63 FR 25811.
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4. In adopting this policy, the Commission concludes that Level 3
direct access will benefit U.S. INTELSAT customers in the form of a
cost savings of between 10 and 71 percent off Comsat tariff rates. The
document notes, however, that because Comsat must continue to incur
expenses in its role as the U.S. Signatory to INTELSAT, the Commission
will allow it to require that direct access customers pay Comsat a
surcharge to recover certain Signatory expenses. The Commission finds
that a 5.58 percent surcharge to be reasonable based on the record
before us. Comsat will be allowed to file a tariff with the Commission
to collect the surcharge.
5. To guard against unfair competitive distortions in the U.S.
market, the Commission limits in the United States direct access
participation of INTELSAT Signatories or affiliates that control 50
percent or more of all the INTELSAT capacity consumed in that Signatory
or affiliate's respective home market. These Signatories, however, will
still be allowed Level 3 direct access from the United States to
locations other than these markets. The Report and Order states that
this limitation will remove the incentive for Signatories to support
the lowering of INTELSAT tariff rates to uneconomic levels--levels that
do not reflect INTELSAT's full costs of providing direct access in the
U.S. market.
6. The Commission also states that it would expect INTELSAT to
voluntarily waive its immunity from suit and process to cover any
direct marketing of services and any negotiation of agreements with
U.S. carriers that would lead to the provision of services and rates
not included in the INTELSAT IUC or pursuant to service agreements
different from what INTELSAT generally offers under Level 3 direct
access.
7. The Commission does not grant the requests of carriers seeking
fresh look at their long term carrier contracts with Comsat for
INTELSAT space segment capacity. The Report and Order concludes that
the carriers had not met the standard for fresh look and that the
circumstances surrounding the consummation of these contracts supports
leaving them as is. This Commission also did not act on carriers
requests for portability of their INTELSAT capacity, obtained through
Comsat, because the current record is insufficient. Specifically, the
Report and Order noted that there is no evidence that INTELSAT capacity
will not be available due to Comsat's control of INTELSAT spectrum
capacity from the United States. The Commission, however, said it would
consider the issue of portability if direct access customers
demonstrate that Comsat's control of space segment capacity prevents
realization of direct access benefits, and commercial solutions do not
appear available.
Final Regulatory Flexibility Analysis
8. As required by section 603 of the Regulatory Flexibility Act
(``RFA''), an Initial Regulatory Flexibility Analysis (``IRFA'') was
incorporated in the Notice to this Report and Order. See 5 U.S.C. 603.
The RFA, see 5 U.S.C. 601 et seq., has been amended by the Contract
With America Advancement Act of 1996, Public Law 104-121, 110 Stat. 847
(1996) (``CWAAA''). Title II of the CWAAA is the Small Business
Regulatory Enforcement Fairness Act of 1996 (``SBREFA''). See In the
Matter of Direct Access to the INTELSAT System, IB Docket No. 98-192,
File No. 60 SAT-ISP-97, Notice of Proposed Rulemaking,
[[Page 54563]]
13 FCC Rcd 22013, 22052-54 (1998). The Commission then sought written
public comment in that proceeding, including comments on the IRFA. No
party filed comments in response to the IRFA. This Report and Order
promulgates no new rules and our action here does not affect the
previous analysis in the Notice. The Commission certifies that there
will be no significant effect on a substantial number of small
entities.
A. Need for and Objectives of Rules
9. In this Report and Order, the Commission permits direct access
to the INTELSAT satellite system, in lieu of users having to obtain
service through Comsat Corporation. This will result in a variety of
benefits to users and ultimately consumers including: cost savings of
between 10-71 percent over Comsat rates, greater efficiency, and
flexibility and control over facility use. In addition, this action
will place competitive pressure on the current rates for satellite
capacity and enable U.S. carriers to compete more effectively globally.
B. Summary of Significant Issues Raised by Public Comments in Response
to the Regulatory Flexibility Analysis
10. No comments were submitted in direct response to the RFA.
C. Description and Estimates of the Number of Small Entities to Which
the Rules Will Apply
11. The RFA generally defines the term ``small entity'' as having
the same meaning as the terms ``small business'', ``small
organization'', and ``small governmental jurisdiction''. See 5 U.S.C.
601(6). The RFA has been amended by the Contract With America
Advancement Act of 1996, Public Law 104-121, 110 Stat. 847 (1996)
(``CWAAA''). See 5 U.S.C. 601 et seq. Title II of the CWAAA is the
Small Business Regulatory Enforcement Fairness Act of 1996
(``SBREFA''). In addition, the term ``small business'' has the same
meaning as the term ``small business concern'' under the Small Business
Act. See 5 U.S.C. 601(3) (incorporating by reference the definition of
``small business concern'' in 15 U.S.C. 632). Pursuant to the RFA, the
statutory definition of a small business applies ``unless an agency,
after consultation with the Office of Advocacy of the Small Business
Administration and after opportunity for public comment, establishes
one or more definitions of such term which are appropriate to the
activities of the agency and publishes such definition(s) in the
Federal Register.'' 5 U.S.C. 601(3). A small business concern is one
which (1) is independently owned and operated, (2) is not dominant in
its field of operation, and (3) satisfies any additional criteria
established by the Small Business Administration (``SBA'').
12. The Commission has not developed a definition of small entities
specifically applicable to this situation. Therefore, the applicable
definition of small entity is the definition under the SBA rules
applicable to Communications Services, ``Not Elsewhere Classified.''
This definition provides that a small entity is one with no more than
$11 million annual receipts. 13 CFR 121.201, Standard Industrial
Classification (SIC) Code 4899. According to the Census Bureau data,
there were a total of 848 communications services in operation in 1992
that fall under the category of Communications Services, Not Elsewhere
Classified. Of those, approximately 775 reported annual receipts of
$9.999 million or less and qualify as small entities. 1992 Economic
Census Industry and Enterprise Receipts Size Report, Table 2D, SIC 4899
(U.S. Bureau of the Census data under contract to the Office of
Advocacy of the U.S. Small Business Administration). The census report
does not provide more precise data. Comsat Corporation and Lockheed
Martin would be the only business affected by the policy enacted in
this Report and Order. Each of their annual receipts are in excess of
$11.0 million and, therefore, cannot be classified as a ``small
business.'' Accordingly, the number of small businesses impacted by the
policy change here is zero.
D. Description of Projected Reporting, Recordkeeping and Other
Compliance Requirements
13. The procedures for implementing Level 3 direct access to the
INTELSAT system from the United States, including the surcharge
element, will consist of several elements. Subsequent to release and
publication in the Federal Register, the International Bureau shall
issue a Public Notice establishing a 21-day period (from the date of
the public notice) for eligible carriers and users to notify the
Commission in writing that they want Level 3 direct access to INTELSAT.
The public notice also will specify the name and address for filing any
such notification. The International Bureau will forward the names of
all the eligible U.S. carriers and users to Comsat. Comsat shall be
required to inform INTELSAT within ten days of receiving these eligible
names that they are authorized to obtain Level 3 direct access from
INTELSAT without further approval of the U.S. Signatory--Comsat--
consistent with the procedures established by INTELSAT that permits
``blanket authorizations'' for Level 3 direct access. Any eligible
carriers and users, not part of the initial ``blanket authorization''
request sent to INTELSAT, may request that Comsat add them to the list
of carriers and users eligible for Level 3 direct access ``blanket
authorizations.'' Comsat will be required to inform INTELSAT within ten
days of receiving each such subsequent request. Within 60 days after
publication in the Federal Register of this Report and Order, Comsat
may file, on one day's notice, a tariff of the terms and conditions of
surcharges applicable to U.S. Level 3 direct access customers,
consistent with the findings in this Report and Order. The carriers and
users obtaining Level 3 direct access from INTELSAT shall pay Comsat
the surcharge specified in Comsat's effective tariff that is applicable
to the services obtained from INTELSAT. Finally, Comsat may establish
reporting mechanisms with INTELSAT for the limited purpose of assuring
that Comsat can identify the appropriate surcharge that U.S. direct
access customers must pay Comsat upon receipt of service from INTELSAT
under Level 3 direct access. Comsat may take appropriate steps through
INTELSAT to terminate a customer's Level 3 direct access status for
failure to pay the appropriate surcharge.
E. Steps Taken To Minimize Significant Economic Burden on Small
Entities, and Significant Alternatives Considered
14. This Report and Order promulgates no new rules or policies that
would effect small business concerns. The policies it does advance,
however, should positively impact competition in the satellite services
market.
Report to Congress
15. The Commission shall send a copy of this Report and Order,
including the status of the FRFA in a report to Congress pursuant to
the Small Business Regulatory Enforcement Fairness Act of 1996, 5
U.S.C. 801(a)(1)(A). Since this Report and Order promulgates no new
rules and does not affect the IRFA in the Notice, it is not necessary
to publish an FRFA in the Federal Register.
Ordering Clauses
16. Accordingly, it is ordered, that, pursuant to Sections 102 and
201(c)(2), (7) and (11) of the Communications Satellite Act of 1962, as
amended, 47 U.S.C. 701 and 721(c)(2), (7) and (11),
[[Page 54564]]
and 1, 2, 4(c), 201, 202, 214, 301, 303, 307, 308 and 309, of the
Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(c),
201, 202, 214, 301, 303, 307, 308 and 309 that on December 6, 1999
Level 3 direct access to INTELSAT shall be available to carriers and
users authorized to obtain INTELSAT space segment capacity for the
provision of telecommunications services to and from the United States
in accordance with the terms and conditions of this Report and Order
and those established by INTELSAT to implement Level 3 direct access.
17. It is further ordered that, following publication in the
Federal Register of this Report and Order, the International Bureau
shall release a Public Notice requesting authorized carriers and users
desiring to obtain Level 3 direct access to INTELSAT to so inform the
Commission within 21 days of the release of the Public Notice.
18. It is further ordered, that, in its capacity as the U.S.
Signatory to INTELSAT, and in accordance with procedures established by
INTELSAT permitting ``blanket authorizations'' for Level 3 direct
access, Comsat shall inform INTELSAT in writing within ten calendar
days of receiving the information from the International Bureau that
the identified authorized carriers and users responding to the Public
Notice may obtain Level 3 direct access from INTELSAT on the effective
date of this Report and Order, as provided in paragraphs 206 and 216,
without further approval of the U.S. Signatory.
19. It is further ordered, that, authorized carriers and users, not
identified as part of the initial ``blanket authorization'' sent to
INTELSAT by Comsat, may request Comsat to request adding them to the
list of named carriers and users eligible for Level 3 direct access and
Comsat shall so inform INTELSAT within ten days of receiving each such
subsequent request.
20. It is further ordered, that, within 60 days of publication in
the Federal Register of this Report and Order, Comsat may file, on one
day's notice, a tariff of the terms and conditions of the surcharge
applicable to U.S. Level 3 direct access customers which shall be
consistent with findings in the Report and Order.
21. It is further ordered, that, authorized carriers and users
obtaining Level 3 direct access from INTELSAT shall pay Comsat the
surcharge specified in Comsat's effective tariff that is applicable to
the services obtained from INTELSAT.
22. It is further ordered, that, in its role as the U.S. Signatory,
Comsat may establish reporting mechanisms with INTELSAT for the limited
purpose of assuring that Comsat can identify the appropriate surcharge
that U.S. direct access customers must pay Comsat upon receipt of
service from INTELSAT under Level 3 direct access.
23. It is further ordered, that, Comsat's tariff may provide that
failure to pay the appropriate surcharge will result in loss of a
customer's Level 3 direct access privileges.
24. It is further ordered, that the Comsat Corporation MOTION TO
STRIKE the ex parte filing submitted by counsel for the Satellite Users
Coalition, IS DENIED.\5\
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\5\ Comsat moves to strike the filing on September 9, 1999 by
the Satellite Users Coalition giving notice of an ex parte
presentation it made to Commission staff the previous day, prior to
release of the Sunshine Notice. See Letter from Comsat Corporation
to the Secretary, Federal Communications Commission, dated September
9, 1999. See also Opposition to Motion to Strike by Satellite Users
Coalition, IB Docket No. 98-192, File No. 60-SAT-ISP-97 (Sept. 13,
1999). See also Comsat Reply to Opposition to Motion to Strike, IB
Docket No. 98-192, File No. 60-SAT-ISP-97 (Sept. 14, 1999). Comsat
contends that receipt of this required filing the following day, by
staff not present at the September 8, 1999 meeting, constituted a
violation of our ex parte rules which prohibits presentations to
decision-makers on matters listed on the Commission's Agenda. See 47
CFR 1.1203(a). However, the oral and other information provided by
the Satellite Users Coalition on September 8, 1999, was
constructively available to all Commission decision-makers on that
date. In addition, the Satellite Users Coalition was required to
file this information for the public record by the end of the next
day in accordance with Section 1.1206(b) of our rules. 47 CFR
1.1206(b). As a result, service on decision-makers not present at
the September 8 meeting did not constitute a violation of
Commission's rules.
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25. It is further ordered, that, the Commission's Office of
Managing Director shall send a copy of this Report and Order, including
Final Regulatory, Flexibility Analysis, to the Chief Counsel for
Advocacy of the Small Business Administration.
26. It is further ordered, that policies and requirements
established in this Report and Order shall take effect December 6,
1999, or in accordance with the requirements of 5 U.S.C. 801(a)(3) and
44 U.S.C. 3507, whichever occurs later.
List of Subjects in 47 CFR Chapter 1
Communications common carriers, Telecommunications.
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 99-26148 Filed 10-6-99; 8:45 am]
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