Report No. IN 99-7                      INTERNATIONAL ACTION      February 9, 1999
                                                        
                                
COMMISSION FURTHER DEREGULATES COMSAT, REPLACING RATE OF RETURN
REGULATION ON NON-COMPETITIVE ROUTES WITH INCENTIVE-BASED PRICE
      POLICY AND REQUIRING COMSAT TO LOWER CONSUMER RATES.

     The Commission has further deregulated Comsat Corporation by eliminating burdensome
rate of return regulation on non-competitive "thin-route" and occasional-use "single carrier"
markets.  In its place, the Commission adopted an incentive-based price policy for Comsat's
provision of INTELSAT services in these non-competitive markets.   

     This deregulatory approach toward Comsat's "thin-route" and occasional-use "single
carrier" markets should benefit customers immediately by lowering the cost to Comsat's
customers of acquiring INTELSAT satellite services.  This action is one of a number of steps the
Commission has taken towards streamlining its regulatory approach in the provision of satellite
services. 
     
     In April 1998, the Commission reclassified Comsat as a non-dominant carrier for most of
its services, on most of its routes, and eliminated all rate regulation for INTELSAT services
markets on routes deemed "competitive."  That decision eliminated rate regulation in markets that
account for approximately 92 percent of Comsat's INTELSAT revenues.  However, those
markets that continue to be "non-competitive" had remained subject to rate-of-return regulation.   

     In this action the Commission adopted incentive-based price regulation policies in lieu of
rate-of-return regulation of Comsat's provision of INTELSAT services in markets that are "non-
competitive".  This incentive-based approach should encourage growth, facilitate productivity
improvements, and result in reduced rates to consumers.  It also adopted a process to determine
in the future when Comsat markets should be reclassified as non-dominant as competition is
introduced.  

     The Commission ordered that Comsat will reduce rates for switched-voice service by
four-percent annually.  Second, Comsat will cap rates for private line service at existing levels. 
Third, Comsat will implement an immediate one time four-percent rate reduction for occasional-
use video services on all routes.  Additionally, Comsat may not charge rates, on any of the routes
where it is still dominant, that exceed the rates it charges on competitive routes and Comsat will
not raise rates for services in the future.  Finally, the Commission adopted a more efficient and
streamlined procedural approach by which newly "competitive" switched-voice and private line
markets can be reclassified as "thick" routes and occasional-use markets can be reclassified as
"multi-carrier" markets as competition is introduced and, thus, be declared non-dominant and no
longer subject to any price regulation.

     Action by the Commission February 4, 1999, by Report and Order (FCC 99-17). 
Chairman Kennard, Commissioners Ness, Furchtgott-Roth, Powell and Tristani.
     

                            - FCC - 
                                

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     International Bureau Contact:   Michael McCoin (202) 418-0774