|Federal Communications Commission
1919 - M Street, N.W.
Washington, D.C. 20554
|News media information 202 / 418-0500
Fax-On-Demand 202 / 418-2830
This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action. See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).
COMMISSION DECLARES COMSAT NON-DOMINANT IN COMPETITIVE MARKETS;
ISSUES NPRM ON TRANSITION FROM RATE OF RETURN REGULATION TO
ALTERNATIVE INCENTIVE-BASED REGULATION IN NON-COMPETITIVE
AND COMMITS TO EXAMINE DIRECT ACCESS IN FUTURE PROCEEDING
The Commission has granted the request of Comsat Corporation for reclassification
as a non-dominant common carrier in five product markets, which account for approximately 85% of Comsat's INTELSAT revenues. Specifically, the Commission found Comsat non-dominant in the provision of INTELSAT switched voice, private line, and occasional-use video services to markets that it determined to be competitive. It also found Comsat non-dominant in the provision of full-time video and earth station services in all markets. In the markets where Comsat has been reclassified as non-dominant, Comsat will be allowed to file tariffs on one day's notice, without economic cost support, in the same form as filed by other non-dominant common carriers, and the tariffs will be presumed lawful. By virtue of finding Comsat non-dominant in these markets, the Commission is eliminating rate of return regulation in these markets.
The Commission also indicated it expeditiously would initiate a proceeding to explore the legal, economic and policy implications of enabling users to have direct access to the INTELSAT system. Approximately 94 other countries permit direct access to the INTELSAT system.
The Commission denied Comsat's non-dominant reclassification request with respect to switched voice, private line and occasional-use video services to non-competitive markets where it found that Comsat remains dominant. It also denied Comsat's request that the Commission forbear under Section 10 of the Communications Act from enforcing the Commission's dominant common carrier tariff rules in non-competitive markets. The Commission considered but rejected Comsat's three-year "price cap" and "uniform pricing" proposals for these markets, and found that Comsat did not satisfy the statutory requirements for forbearance relief under the circumstances. The Commission indicated, however, that it would favorably consider in its analysis of any forbearance request a commitment by Comsat to (a) allow U.S. carriers and users to obtain Level-3 direct access to the INTELSAT system and (b) make an appropriate waiver of its INTELSAT derived immunity from suit and legal process. Such actions would promote competitive market conditions in the INTELSAT markets in which Comsat remains dominant.
The Commission also indicated that it will consider replacing rate of return regulation for Comsat's dominant markets with an alternative form of incentive-based regulation and, as part of its reclassification decision, the Commission issued a Notice of Proposed Rulemaking seeking public comment on its tentative conclusions that any alternative incentive-based regulation plan to be adopted should (a) enable users on non-competitive routes to benefit from competitive rates; (b) remain in effect indefinitely; and (c) allow users to benefit from reduced rates due to increases in efficiency and productivity. Comsat will be subject to alternative incentive-based regulation once such regulation is adopted in this proceeding.
Finally, the Commission found that Comsat's continued dominance in the provision of switched voice, private line and occasional-use video services to non-competitive markets was an insufficient basis for continuing to require structural separation between Comsat's INTELSAT services and other activities. It concluded that the costs of imposing such a requirement would exceed any potential benefits to competition. The Commission granted Comsat's request for the elimination of structural separation for its INTELSAT services because structural separation is no longer necessary to safeguard Comsat's competitors from Comsat leveraging its monopoly jurisdictional services to gain an advantage in competitive markets in which it is operating.
The 63 countries in which Comsat will continue to be considered dominant for switched voice and private line services are:
2. American Samoa
8. Bosnia & Herzegovina
12. Cape Verde
13. Central African Republic
16. Cote d'Ivoire
19. French Polynesia
32. Maritime -Atlantic
33. Maritime -Pacific
36. Micronesia, Federated States of
37. Midway Atoll
42. New Caledonia
45. Northern Mariana Islands
46. Pacific Islands (Palau)
49. Saint Helena
51. Sierra Leone
59. Turks and Caicos Islands
61. Western Samoa
The 142 countries in which Comsat will continue to be considered dominant for occasional-use video service are:
News Media contact: Rosemary Kimball at (202) 418-0500.