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Statements: Kennard | Furchtgott-Roth
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Federal Communications Commission
445 12th Street, S.W.
Washington, D.C. 20554
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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).

September 15, 1999

ROSEMARY KIMBALL (202) 418-0511
MORGAN BROMAN (202) 418-0256

(IB DOCKET 98-192)

Washington D.C. As part of its ongoing effort to increase competition in telecommunications, the Commission has adopted a policy allowing United States users of International Telecommunications Satellite Organization ("INTELSAT") satellite services to have direct access to the INTELSAT system. This important action promotes competition in international satellite communications and strengthens the competitiveness of U.S. carriers and service providers in the global communications market. This follows Commission-ordered reductions in U. S. long-distance access charges that have greatly reduced consumer long-distance telephone calling rates.

As a result of the Commission action, the United States joins 94 other countries that already permit users of the INTELSAT system to access directly the INTELSAT satellite system rather than having to go through a national Signatory. Previously, U.S. users had to go through Comsat Corporation ("Comsat") exclusively to gain access to INTELSAT. Inter-exchange carriers, broadcast networks, and earth station operators will now be able to order, receive, and pay INTELSAT for use of satellite services at the same rates that INTELSAT charges its Signatories. As a result, U.S. companies will be able to compete on a level playing field with foreign companies that already have direct access to the INTELSAT system.

INTELSAT is a 143 member intergovernmental organization that owns and operates a global system of satellites. It is located in Washington, D.C. INTELSAT has and will remain a key provider of satellite transmission capacity for both U.S. commercial and governmental use.

In adopting this policy, the Commission concluded that direct access will benefit U.S. INTELSAT customers, who will gain a cost savings of between 10 and 71 percent off Comsat tariff rates, and achieve greater efficiency, flexibility, and control over facility use. The Commission also noted that direct access will put competitive pressure on Comsat rates and the rates of competing satellite operators, and enhance the ability of U.S. carriers to compete globally with their counterparts that obtain capacity directly from INTELSAT.

Because Comsat must continue to incur expenses in its role as the U.S. Signatory to INTELSAT, the Commission will now require direct access customers to pay Comsat a surcharge of 5.58 percent of the INTELSAT utilization charge to recover those expenses. The surcharge will be collected through a tariff to be filed by Comsat.

In addition, to guard against unfair competitive distortions in the U.S. market, the Commission limited direct access participation for those INTELSAT Signatories or affiliates that control or use 50 percent or more of all the INTELSAT capacity consumed in a Signatory's respective home market. Signatories limited in this manner, however, however, will still be allowed direct access from the United States to locations other than these dominant markets. This limitation will remove the incentive for Signatories to reduce direct access prices to uneconomic levels i.e., levels that do not reflect INTELSAT's full costs of providing direct access in the U.S. market -- by supporting the lowering of INTELSAT tariff rates.

The FCC decided not to grant requests of carriers seeking fresh look at long term carrier contracts with Comsat for INTELSAT space segment capacity, concluding that the carriers had not met the standard for fresh look. The Commission also decided not to act on carriers' requests for portability of their INTELSAT capacity, obtained through Comsat, because the current record is insufficient. 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.

The FCC noted that Congress is considering legislation on the issue of direct access to INTELSAT. While the Commission's decision in this proceeding is based on current law, it recognizes that Congress retains the prerogative to legislate in this area. Congressional action clearly would supersede any inconsistent action taken in this proceeding in the interim.

Action by the Commission September 15, 1999, by Report and Order (FCC 99- 236). Chairman Kennard, Commissioners Ness, Furchtgott-Roth, Powell and Tristani with Commissioner Furchtgott-Roth issuing a separate statement.


International Bureau contacts: Peter Pappas at (202) 418-0746; Jim Ball at (202) 418-0427, Doug Webbink at (202) 418-1494; and Michael McCoin at (202) 418-0774.

Report No. IN 99-28