WPCJ 2J BNLZTimes Roman3|o]\  PCP"S^*8DSS888S^*8*.SSSSSSSSSS..^^^Jxooxf]xx8Axfxx]xo]fxxxxf8.8NS8JSJSJ8SS..S.SSSS8A.SSxSSJP!PZ8*888888888888S.xJxJxJxJxJooJfJfJfJfJ8.8.8.8.xSxSxSxSxSxSxSxSxSxSxJxSxSxSxSxS]SxJxJoJoJoJoJxSfJfJfJfJxSxSxSxSxSxSxS8S8S888SA8xSf.f8f8f8f.xSxSxSxSxSxo8o8o8]A]A]A]Af8f8f8xSxSxSxSxxSfJfJN:*LS8JSSSSS.4}}S2S}2.JJS88SS]]8J2t^^\\^^ee*C^.wR)Ewn\1fy\r\Sxx\rHP LaserJet 4 PostScriptHPLA4POS.PRS]\  PChhhhe#2pP2]|LX%} X4#XR  P7jQXP#  "S^2CRddCCCdq2C28dddddddddd88qqqYzoCNzoozzC8C^dCYdYdYCdd88d8ddddCN8ddddY`(`lC2CC!CCCCCCCCCCd8YYYYYYzYzYzYzYC8C8C8C8ddddddddddYdddddodYYYYYYdzYzYzYzYdddddddCdCdCCCdNCdz8zCzCzCz8dddddCCCoNoNoNoNzCzCzCdddddzYzYNF2[dCYddddd7>d<d<$8YYdCCddooCYȾd<d<$8YYdCCddooCYȾd<d<+8oodCCddddCoȾ$;%C<&<'=a4IndentedLeft-indented text$Qp- ? ` `  a.` 'a5IndentedLeft-indented text%[ܽ ? ` `  '(1) hh-a6IndentedLeft-indented text&dK ? ` `  'hh-(a)4a7IndentedLeft-indented text'l݇ ? ` `  'hh-4i)h:2A(>)su?*O?+q7Aa8IndentedLeft-indented text(u-b ? ` `  'hh-4:a)ppAa1InterrogatoresStarts with A. at margin, 1 at first indent)UZZI.header4 *l4 <D!#FxX  Pg9CXP#a2InterrogatoroDStarts with A. at margin, 1 at first indentk*<+KL2C,qA-qKB.qB/q-Ca3InterrogatoroDStarts with A. at margin, 1 at first indentk*<,MNa4InterrogatoroDStarts with A. at margin, 1 at first indentk*<-OPa5InterrogatoroDStarts with A. at margin, 1 at first indentk*<.QRa6InterrogatoroDStarts with A. at margin, 1 at first indentk*Para. `"(#ENo.  X"-X` hp x (#%'0*,.8135@8: v o yO-ԍxEuropean Commission FNPRM Reply Comments at 2; Government of Japan FNPRM Comments at 2;  {O-Japan Sat FNPRM Comments at 2. See also Deutsche Telekom FNPRM Reply Comments at 5; France Telecom FNPRM Reply Comments at 5; Space Communications FNPRM Comments at 5 (criticizing vagueness of proposal). For example, according to Deutsche Telekom, given the similarity between the burden standard and the ECOSat test, it is possible that the Commission will consider elements of the ECOSat while assessing applications by WTO Members. Deutsche Telekom FNPRM Reply Comments at 5. Deutsche Telekom also argues that the uncertainty of the "very high risk to competition" rule would have a "significant impact" on a satellite operator's financing and planning, which would be problematic because of the high financial investments  {O]-required for satellites. Id.  The European Commission claims that if adopted, the proposal would erect additional burdens for foreign companies wishing to enter the U.S. satellite market. The Government of Japan requests that we make publicly available the  X1-detailed criteria that we would employ and apply our rules consistent with the GATS.Y?1o yO-ԍxGovernment of Japan FNPRM Comments at 2.Y France Telecom contends that Commission action under the guise of competition could  X -contradict market access commitments.\@ Xo yO -ԍxFrance Telecom FNPRM Reply Comments at 45.\ Deutsche Telekom claims that the proposed presumption is vague and incompatible with the GATS because the U.S. Schedule of Specific Commitments does not contain a rebuttable presumption for market access where there is a  X -"very high risk to competition."A o {OW$-ԍxDeutsche Telekom FNPRM Reply Comments at 7. See also European Commission FNPRM Reply Comments at 2. GlobeCast contends that the proposal creates a "loophole for the Commission to abrogate the WTO Basic Telecom Agreement at its sole discretion," BA,-(-(ZZ "  X-whenever it decides that a nonU.S. licensed satellite is a competitive threat."OBo yOy-ԍxGlobeCast FNPRM Comments at 3.O ICO argues that the GATS requires WTO Members to use the WTO dispute settlement mechanism, rather than exclusion from domestic markets, as a means of resolving claims that the markets of other WTO Members are not sufficiently open to competition. In addition, it states that the Commission may not take the level of a Member's commitments into account in the absence  X-of a specific reservation to that effect.LCXo yO-ԍxICO Reply Comments at 5, 7.L  X_- xDiscussion  X1-x&39. ` ` We adopt our proposal to apply a presumption in favor of entry in considering applications to access nonU.S. satellites licensed by WTO Members to provide services covered by the U.S. commitments under the WTO Basic Telecom Agreement. Specifically, we will presume that satellite systems licensed by WTO Members providing WTOcovered services satisfy the competition component of the public interest analysis. As discussed in the  X -Further Notice,D o {OW-ԍxSee supra  27; see also Further Notice at  1319. and supported by the parties to this proceeding,OE zo {O-ԍxSee supra  36.O market access commitments made by WTO Members under the WTO Basic Telecom Agreement and the procompetitive obligations of the GATS and the Reference Paper, will help ensure the presence and advancement of competition in the satellite services market and yield the benefits of a competitive marketplace to consumers in the United States and other countries. These benefits include greater availability of satellite services from a larger number of providers, more efficient and innovative services, lower prices, higher quality, and, overall,  X-more choices for users and consumers in the selection of satellite services.WF o {O-ԍxFurther Notice at  16.W Thus, these benefits will further the Commission's goal of promoting a competitive satellite services  X-market in the United States.GGo {O@-ԍxId. at  13. G  X-x'40.` ` We find that adopting the Commission's proposal to replace the ECOSat test with a presumption in favor of entry will best balance the concerns articulated by the parties. The changes resulting from implementation of the commitments of WTO Members, along with new, more global satellite system designs, will open foreign markets and increase competition in the worldwide satellite services market. We therefore will not conduct an ECOSat test with respect to nonU.S. satellite systems licensed by WTO Members and, instead, will presume that entry will promote competition. This approach will have"90 G,-(-(ZZ" significant public interest benefits. First, it will facilitate entry by the 130 Members of the WTO, including our major trading partners. Second, it will avoid detailed, factintensive ECOSat analyses by the applicant and the Commission, thereby expediting the entry process. The opportunity to serve the U.S. market under a presumption in favor of entry, coupled with the procedural ease of the framework we adopt today, will advance entry of new competitors and services into the U.S. satellite services market. By enhancing competition, this approach will provide U.S. consumers with additional choices among providers, reduce prices, and increase the quality and variety of services.  XH-  X1-x(41.` ` We also adopt the proposal to allow parties to rebut the presumption of entry by showing that grant of an application by a nonU.S. satellite system licensed by a WTO Member would cause competitive harm in the United States satellite market. In most cases,  X -our rule prohibiting exclusive arrangements will adequately address competition concerns.PH o yOe -ԍxThis rule prohibits licensees from entering arrangements with foreign countries to be the exclusive  {O--provider of a particular satellite service in that country. See, e.g., 47 CFR  25.143(j). As described below, all satellite systems serving the United States, including any nonU.S. licensed system, will be prohibited from  {O-serving from the United States on a route involving a country with which it has an exclusive arrangement. See  {O-infra Section III.B.4.a.P It is possible, however, that this prohibition would be insufficient to prevent anticompetitive harm in the United States. Where necessary to constrain the potential for anticompetitive  X -harm in the U.S. market for satellite services, we reserve the right to attach additional conditions to a grant of authority, or, in the exceptional case in which grant would pose a very high risk to competition, to deny an application. Prospective circumstances that could give rise to competition concerns include some of those identified by the parties: market concentration, discrimination, below average variable cost pricing, monopoly supply of service, as Space Communications states, or where the applicant has market power and could use that power to raise prices and limit output in the U.S. satellite market, as ICO suggests. Based on the development of the satellite market thus far, it has not been necessary to devise or impose competitive safeguards other than the rule against exclusive arrangements. Should  X-such a need arise, the Commission would devise and apply appropriate conditions.  X-  X- x)42. ` ` We also are concerned with the impact of granting an authorization to an applicant that is unlikely to abide by the Commission's rules and policies. The past behavior of an applicant may indicate that it would fail to comply with the Commission's rules and, as a result, could damage competition in the U.S. market and otherwise negatively impact the public interest. The public interest may therefore require, in a particular case, that we deny the application of an earth station applicant or space station operator that has engaged in adjudicated violations of Commission rules, U.S. antitrust or other competition laws, or in demonstrated fraudulent or other criminal conduct. This approach is consistent with our" ~H,-(-(ZZ"  X-treatment of U.S. applicants.I$o {Oy-ԍxSee Policy Regarding Character Qualification in Broadcasting Licensing, 102 FCC 2d 1179, 119597,  {OC-120003 (1986), modified, 5 FCC Rcd 3252 (1990); MCI Telecommunications Corp., 3 FCC Rcd 509, 515 n. 14 (1988) (stating that character qualifications standards adopted in the broadcast context can provide guidance in the common carrier context). We find that such conduct demonstrates that an entity is likely to evade our rules and thus may pose a very high risk to competition.  X-x*43.` ` We expect that, given the procompetitive changes in the global satellite services market resulting from the WTO Basic Telecom Agreement, and our ability to impose license conditions, it would be necessary to deny an application involving a nonU.S. satellite licensed by a WTO Member on competition grounds only in exceptional circumstances. This approach is consistent with our statutory requirement to grant licenses that serve the public interest, as well as with our obligations under the WTO Basic Telecom Agreement.  X -x+44. ` ` As proposed, we will apply the rebuttable presumption paradigm to a satellite system licensed by any WTO Member, including Members that did not make specific market access commitments for satellite services. We do so for three reasons. First, we find that the general obligations of the GATS provide some protection against discriminatory conduct. As described above, all WTO Members are governed by the GATS and must comply with the GATS obligations of MFN and transparency. Consequently, a WTO Member that did not make a market access commitment for satellite services must nonetheless afford no less favorable treatment to a U.S. satellite system than it does to a system licensed in any other country if the WTO Member decides to open its market. In addition, all WTO Members must make public all their measures relating to services. Second, the increased competitive environment for global satellite and telecommunications services resulting from the WTO Basic Telecom Agreement, coupled with the regulatory mechanisms available to us and our trading partners to guard against anticompetitive consequences, will help prevent harm to competition in the U.S. market. Third, we find that to exclude WTO Members that did not make market access commitments, or distinguish among those based on the quality of their WTO commitment or the extent of the implementation of their commitment, could be interpreted by other WTO Members as discriminating among "like" service suppliers, and could therefore raise an MFN issue. Thus, adopting such a policy could negatively affect  X|-relations with our trading partners or discourage open entry policies in countries that also are  Xe-implementing the WTO Basic Telecom Agreement. T he success of the WTO Basic Telecom Agreement depends on prompt, effective implementation of U.S. commitments, as well as those of our trading partners.  X -  X -x,45. ` ` We disagree with AT&T that the test should be "substantial risk," rather than  X-"very high risk" to competition.KJo yOW%-ԍxAT&T FNPRM Comments at 13.K AT&T's standard would undercut the presumption in favor of entry by making it easier to oppose entry. As explained above, the commitments and obligations of countries bound by the GATS and the WTO Basic Telecom Agreement will" DJ,-(-(ZZ" generally enhance competition in the United States satellite services market. If adopted, AT&T's suggestion would undermine the commitments made under the WTO Basic Telecom Agreement and the good faith efforts of the WTO Members to implement their commitments. As noted, we expect that only in exceptional cases will we deny applications based on competition grounds.  Xv- x-46.` ` We find unpersuasive the European Commission's position that the Commission may not review or deny applications in order to protect competition in the U.S. market. The GATS does not specify a single mechanism for addressing potential anticompetitive practices in the telecom services sector. The United States has traditionally relied on regulatory enforcement and antitrust actions, and remains free to do so. Analyzing competitive impact is an integral part of the Commission's public interest analysis. The Communications Act charges the Commission with "regulating interstate and foreign commerce in communication by wire and radio so as to make available, so far as possible . . . a rapid, efficient, Nationwide, and worldwide wire and radio communication service with  X -adequate facilities at reasonable charges...."DK o yO -ԍx47 U.S.C.  151.D In carrying out that charge for over 60 years,  X-the Commission has sought to promote competition in the U.S. market.LXo {O-ԍx See, e.g., Policy & Rules Concerning Rates for Competitive Common Carrier Services and Facilities  {Oc-Authorizations Therefore, CC Docket No. 79252 , First Report & Order, 85 FCC 2d 1 (1980); Second Report &  {O--Order, 91 FCC 2d 59 (1982); recon. 93 FCC 2d 54 (1983); Third Report & Order, 48 Fed. Reg. 46,791 (1983);  {O-Fourth Report & Order, 95 FCC 2d 554 (1983), vacated, AT&T v. FCC, 978 F.2d 727 (1992), cert. denied, MCI  {O-Telecommunications Corp. v. AT&T, 113 S.Ct. 3020 (1993); Fifth Report & Order, 98 FCC 2d 1191 (1984);  {O-Sixth Report & Order, 99 FCC 2d 1020 (1985), rev'd, MCI Telecommunications Corp. v. FCC, 765 F.2d 1186 (D.C. Cir. 1985).  Indeed, we have consistently considered competition issues when authorizing U.S. satellite companies to serve  Xb-the United States.M^bo {O-ԍxSee, e.g., Revision of Rules and Policies for the Direct Broadcast Satellite Service, 11 FCC Rcd 9712  {O-(1995). See also Hughes Communications, Inc. and Affiliated Companies and Anselmo Voting Trust/PanAmSat  {OK-Licensee Corporation and Affiliated Companies, 12 FCC Rcd 7534 (1996). When the United States entered into the WTO Basic Telecom Agreement, it did so with the understanding that its obligations would be carried out  X4-consistent with U.S. law.,NX4 o yO-ԍxThe final offer in the WTO basic telecom negotiations included a cover note which stated that "foreign investors will receive national treatment in accordance with U.S. law." Communications from the United States, "Conditional Offer" (Feb. 12, 1997).,  X-x.47.` ` We also do not agree with those parties that argue that the standard under which we could deny an application involving a nonU.S. WTOlicensed satellite is vague, erects additional barriers for foreign entities, or violates our national treatment obligations. First, we have provided guidance in the discussion above regarding application of the standard. Second, we expect denial of such applications for competitive reasons to occur only"N,-(-(ZZR" in exceptional circumstances. Third, because we also consider competition factors in evaluating entry by U.S. companies, this approach does not treat U.S.licensed satellite systems more favorably than foreign systems. Similarly, the standard of entry does not discriminate impermissibly among foreign providers in a manner inconsistent with our MFN obligations, as Deutsche Telekom argues. Whether a measure accords less favorable treatment within the meaning of GATS Article II (MFN) must be decided on a casebycase basis by considering whether the services or service suppliers are like, and then analyzing the  X_-structure and application of the measures.uO_o {O-ԍxSee, e.g., USTR Foreign Participation Reply Comments at 1011.u The analysis focuses not on whether the treatment of like foreign or like domestic suppliers is identical, but rather whether the treatment modifies the conditions of competition in favor of foreign service suppliers of a particular origin or domestic service suppliers. In this case, we are not discriminating among like service suppliers. Rather, we are treating all carriers that have the ability to distort competition similarly, while treating carriers that do not have that ability similarly.  X -x/48.` ` In addition, we are not persuaded by Deutsche Telekom's and ICO's argument that we may not consider competition because we have not scheduled such consideration in the U.S. Schedule of Specific Commitments. We note USTR's comment that the negotiating history of the GATS shows that, rather than prohibiting all domestic regulation of basic telecommunications services, Article XVI only prohibits WTO Members from maintaining or adopting the types of quantitative or economicneeds based limitations and measures listed in Article XVI (unless such limitations are included in a WTO Member's Schedule of Specific  X-Commitments).PZo yO(-ԍxUSTR Foreign Participation Comments at 7, n. 13, citing GATS Secretariat, "Initial Commitments in Trade in Services: Explanatory Note," MTN.GNS/W/164 (Sept. 3, 1994). The standard of review we adopt is not the type of limitation prohibited by Article XVI. Therefore, there is no need for the United States to have included the competition analysis as a limitation on its market access commitments in its Schedule of  X-Specific Commitments.@Qo {O;-ԍxId. at 8.@  X-x049. ` ` We do not accept the notion that we should depend on other countries' implementation of their commitments and the WTO dispute mechanism in lieu of applying competition factors in our regulatory process. There is nothing in the GATS that requires us to refrain from regulating because other WTO Members have an obligation to regulate. Access to WTO dispute settlement does not eliminate the need for and the appropriateness of our regulation of telecommunications services in order to safeguard competitive  X -opportunities.@R Do {O%-ԍxId. at 9.@ WTO dispute settlement is an effective remedy, but one that takes some time to obtain. In addition, it is not a remedy that the Commission can seek directly, but depends on Executive Branch action. We have a separate statutory obligation to regulate and enforce"R,-(-(ZZZ" our rules that cannot be stayed while the Executive Branch seeks relief in an international tribunal. x  X-x` `   (2) hhDetermining a Satellite's WTO Status  X- xBackground  X_-x150.` ` In the Notice, the Commission proposed to evaluate whether U.S. satellite operators have effective competitive opportunities in the market of the administration licensing or coordinating the nonU.S. satellite ("home market") before allowing that satellite  X -access to the U.S. market. As discussed above, the Commission, in the Further Notice, proposed to apply a presumption of entry with respect to satellites licensed by WTO Members. This raises the possibility that satellite operators from nonWTO countries might seek to obtain a satellite license from a WTO Member an incentive we do not wish to create.  X- xPositions of the Parties  Xf-x251.` ` Lockheed Martin advocates that the test to determine whether a satellite system  XO-qualifies for WTO status should be an applicant's "home market."USOo yO-ԍxLockheed Martin FNPRM Comments at 3.U According to Lockheed Martin, an applicant's "home market" should be its principal place of business because that is where the operator is likely to have the most direct economic ties and to participate in the  X -domestic process.:T Xo {O-ԍxId.: Orion recommends that we consider the home markets of each of the  X-major investors in the foreignlicensed system.Uo yO-ԍxOrion NPRM Comments at 8. Orion continues to believe that a home market analysis is appropriate. Orion FNPRM Comments at 6.   h  X-x352.` ` Columbia argues that the presumption in favor of entry for satellites licensed  X-by WTO Members should not apply where the satellite is U.S.owned.PVBo yO-ԍxColumbia FNPRM Comments at 67.P Columbia's concern is that U.S. companies may acquire licenses in WTO Members to avoid the U.S. regulatory  X-process.W"o {O#-ԍxId. at 67 (submitting that the Commission "should not countenance, on the basis of sound telecommunications and trade policies, U.S.based companies bypassing U.S. regulatory processes in favor of buying access to the orbit from lawless island states, and then obtaining access to the U.S. market by virtue of our commitments as a WTO member country"). To prevent this possibility, Columbia recommends that we require U.S. companies seeking to offer new service in the U.S. market (excluding legitimate joint ventures with existing operators) to obtain a U.S. license to initiate service, regardless of whether a non"R W,-(-(ZZ"ԫU.S. licensee would be permitted into the market based on such a license. It claims that this approach would not disadvantage nonU.S. companies visavis domestic operators, and thus,  X-would not violate the spirit of the WTO Basic Telecom Agreement.@Xo {OK-ԍxId. at 7.@ GE Americom disagrees. It argues that the parity that it and others have advocated in this proceeding adequately assures that foreignlicensed carriers, whether U.S. entities or not, will be treated no more favorably than U.S. entities seeking U.S. licenses to provide carriage in the United  Xv-States.[YvZo yO -ԍxGE Americom FNPRM Reply Comments at 3 n.4.[  XH- xDiscussion  X -x453.` ` We adopt the proposal to determine the WTO status of a space station based on the country or administration that grants the license or is responsible for coordinating the system internationally. We find that this approach is the most relevant and practical way of determining WTO status for purposes of applying the presumption in favor of entry. As  X -explained in the Notice, it is almost always true that the nationality of the satellite owner is the same as that of the licensing country or administration of the system and that the primary service supplier's principal place of business will be located where the satellite is licensed or  X{-coordinated.IZ{o {O-ԍxNotice at  24.I We recognize that a satellite system licensed by a WTO Member may have majority investment from a nonWTO country, but do not expect this situation to be common enough to justify a departure from the predictable and administratively simple rule we proposed. In addition, we recognize that in rare situations a satellite's licensing administration simply may be a "flag of convenience" used to circumvent an ECOSat analysis. The U.S. obligations under the WTO Basic Telecom Agreement relate only to  X-services and service suppliers of WTO Members; it does not relate to those of nonĩWTO countries. Thus, in appropriate cases, we would consider, as Lockheed Martin suggests, a system operator's principal place of business, and other relevant factors, and would not limit our inquiry to the licensing administration only.  X-x554. ` ` We decline to adopt Columbia's proposal that we not apply the presumption in favor of competition for satellites licensed in WTO Members where the satellite is U.S. XR-owned.P[R|o yO"-ԍxColumbia FNPRM Comments at 67.P Columbia's concern that some U.S. companies might acquire licenses in WTO countries to avoid the U.S. regulatory process is misplaced. Any U.S. company that obtains a license in another country and later seeks to provide satellite services in the United States will  X -be subject to the same rules and requirements as any other applicant.M\  o {O&-ԍxSee Section III.B.3.b.M For example, a U.S." \,-(-(ZZy" company that owns a foreignlicensed satellite will be required to demonstrate compliance with all Commission technical and qualification rules before we will permit it to serve the United States. Furthermore, adoption of Columbia's suggestion would restrict U.S. satellite operators' rights to obtain satellite licenses in any country of their choice, thereby infringing on independent business strategies and decisions. Finally, Columbia or any other entity will be free to demonstrate that provision of service in the United States by a U.S. owned, but not U.S.licensed satellite would cause competitive harm in the United States.  XH-x` `   (3)hhRoute Markets  X1-  X -xBackground  X -x655.` ` In the Notice, the Commission proposed to consider the "route market" that  X -is, the country where the satellite transmission will originate or terminateI] o {OP-ԍxNotice at  27.I when determining whether to grant a nonU.S. satellite access to the United States. For example, if a nonU.S. satellite licensed in Country X proposes to provide service between the United States and Countries A and B, the Commission would perform an ECOSat test on Countries X, A, and B. If Country B fails, service between the United States and Country B would be prohibited. The rationale for this proposal is that, if the nonU.S. applicant were permitted to serve Country B, it would have a competitive advantage over U.S. providers unable to serve that market. Such an approach also would provide no incentive for Country B to open its market to U.S. operators. x  X-x756.` ` In refining the route proposals after the WTO Basic Telecom Agreement, the Commission proposed that it would not need to perform an ECOSat analysis on route markets originating or terminating in WTO Members' territories (WTO route market). It recognized, however, that there may be cases where an earth station applicant will want to access a WTO Member satellite to provide WTOcovered services between the United States  X~-and nonWTO markets.o^~Zo {O-ԍxFurther Notice at  25.o The Commission stated that applying an ECOSat test to the nonWTO route markets would allow us to promote effective competition through broader market  XP-access.F_Po {O -ԍxId. at  25.F The Commission's rationale was that a nonWTO country has no obligation to open its telecommunications markets to the United States or any other country. Thus, applying an  X"-ECOSat test to nonWTO route markets would allow us to open U.S. markets in a manner  X -consistent with the objective of promoting a competitive satellite market in the United  X-States.:`~o {O#&-ԍxId.: x"`,-(-(ZZ;"Ԍ X- x857. ` ` At the same time, however, the Commission recognized that this proposal could have negative implications regarding U.S.licensed satellites. It would be contrary to  X-the policy adopted in an earlier Commission decisionao {OK-ԍxAmendment of the Commission's Regulatory Policies Governing Domestic FixedSatellite and Separate  {O-International Satellite Systems, 11 FCC Rcd 2429 (1996) (DISCO I). allowing any satellite licensed in the United States to provide service to any foreign country without additional Commission  X-authorization.Qb$o {Oy-ԍxFurther Notice at  26.Q If the Commission applied an ECOSat test to a nonWTO route, it might have to apply it to U.S. satellites seeking to serve nonWTO routes because of national  Xv-treatment concerns, which would limit the flexibility of those licensees.;cvo {O -ԍxId. ;  XH- x958. ` ` As an alternative, the Commission proposed not to apply an ECOSat test in cases involving satellites licensed to WTO Members serving nonWTO routes, so as to afford  X -these satellites the same flexibility as U.S. satellites.Gd Ho {O-ԍxId. at  27. G In addition, it stated that concern regarding competition in nonWTO routes possibly could be remedied by prohibiting nonU.S. licensed satellites from entering into exclusive arrangements with the country in which they  X -wish to operate a prohibition currently imposed on most U.S. licensed systems.;e o {O`-ԍxId. ;  X -  X -xPositions of the Parties  Xy-x:59. ` ` Most parties commenting on the Further Notice argue that the ECOSat test  Xd-should not apply when a WTO satellite is serving a nonWTO route.f dl o yO-ԍxCOMSAT FNPRM Comments at 78; COMSAT FNPRM Reply Comments at 2, 45; European Commission FNPRM Reply Comments at 4; France Telecom Reply Comments at 5, note 4; GE Americom Comments at 35; GE Americom FNPRM Reply Comments at 13; GlobeCast FNPRM Comments at 34;  yO-Government of Japan FNPRM Comments at 2; Hughes FNPRM Comments at 89; Hughes FNPRM Reply Comments at 4; ICO FNPRM Comments at 1215; ICO FNPRM Reply Comments at 4; Japan Sat FNPRM Comments at 2; Lockheed Martin FNPRM Comments at 45; Lockheed Martin FNPRM Reply Comments at 2, 6; Loral FNPRM Comments at 46; Motorola FNPRM Comments at 5 and n.12; PanAmSat FNPRM Comments at 45; Qualcomm FNPRM Comments at 45; Space Communications FNPRM Reply Comments at 7; Teledesic  {O!-FNPRM Comments at 34. Compare Orion FNPRM Reply Comments at 34. Generally, these commenters agree that if we were to apply the ECOSat test to nonU.S. satellites under the U.S. national treatment obligation, we might be obligated to apply the same test to U.S.  X-companies a result the commenters oppose because it would defeat the objective of DISCO">f,-(-(ZZ)"  X-I and burden U.S. licensed systems serving nonWTO routes.go {Oy-ԍxSee e.g., COMSAT FNPRM Comments at 79; European Commission FNPRM Reply Comments at 4; France Telecom Comments at 5 n.4; Government of Japan FNPRM Comments at 2; Hughes FNPRM Comments at 89; ICO FNPRM Comments at 13; Motorola FNPRM Comments at 5 and n.12; Orion FNPRM Reply Comments at 34; Qualcomm FNPRM Comments at 4; Skybridge FNPRM Comments at 5; Teledesic FNPRM Comments at 3. The Government of Japan requests that, with a view toward promoting multilateral liberalization and expanding the telecommunications market worldwide, we should ensure GATS consistency, especially  X-national treatment, and not apply the ECOSat test in this context.Yhzo yO -ԍxGovernment of Japan FNPRM Comments at 2.Y  X-x;60.` ` Commenters generally advocate that instead of the ECOSat test, we should  Xx-apply the presumption in favor of entry where a WTOlicensed satellite seeks to provide service to or from the United States, regardless of whether the route is a WTO Member or  XJ-not.iJ o {O-ԍxE.g., COMSAT FNPRM Comments at 8; GE Americom FNPRM Comments at 4; ICO Comments at 13. Teledesic contends that, although it is theoretically possible for a foreign operator to gain a competitive advantage over U.S. operators by entering nonWTO routes that are closed to U.S. operators, based on the number and scope of the market access commitments in the WTO Basic Telecom Agreement, the likelihood is "insufficient to justify the reregulation of  X -international satellite services."Qj o yO;-ԍxTeledesic FNPRM Comments at 34.Q COMSAT specifically advocates that the corresponding  X -burden on the opposing party to demonstrate a very high risk to competition apply as well.Nk , o yO-ԍxCOMSAT FNPRM Comments at 78.N  X -x ` `  X -x<61. ` ` Columbia contends that, where a satellite is licensed by a WTO Member, and the entity that controls the satellite is from a nonWTO country that is the route market to be  X{-served, we should apply an ECOSat test to the nonWTO route market.;lX{ o yO-ԍxColumbia FNPRM Comments at 45. Thus, according to Columbia, an ECOSat test should apply, for example, where a space station is licensed in South Africa, controlled by an entity from China, and that entity seeks to provide service from the United States to China. ; According to Columbia, a company from a country not subject to WTO requirements and dispute resolution procedures should not be able to avoid the ECOSat test simply by obtaining a license from a  X6-WTO Member.@m6o {O"-ԍxId. at 5.@ Columbia asserts that this approach should help deter forum shopping by  X-companies that benefit in their actual home markets from restrictive entry policies.:nno {O>%-ԍxId.: It claims that this approach would not violate national treatment because the same test would be applied if the foreigncontrolled company sought a U.S. license directly to serve its nonWTO"n,-(-(ZZ'"  X-market.;oo {Oy-ԍxId. ; Hughes disagrees, arguing that national treatment requires the Commission to afford all foreignlicensed satellites providing covered services the same opportunities that  X-U.S. satellites are afforded under DISCO I.TpZo yO-ԍxHughes FNPRM Reply Comments at 45.T  X-x=62. ` ` Some parties suggest methods for guarding against market distortions that could result from service to a nonWTO country by a WTOlicensed satellite. COMSAT states that we should grant such applications absent a demonstration that authorizing service between the United States and a nonWTO country would pose a very high risk to competition in the U.S. satellite market that could not be addressed by conditions on the grant  X3-of the authorization.Nq3o yO -ԍxCOMSAT FNPRM Comments at 78.N Several other parties suggest extension of the rule prohibiting U.S. X -licensed satellites from entering into exclusive arrangements with nonU.S. satellites.rX zo yOG-ԍxGlobeCast FNPRM Comments at 3; Hughes FNPRM Comments at 9; Hughes FNPRM Reply Comments at 5; Loral Comments at 6; Orion FNPRM Reply Comments at 34; COMSAT FNPRM Reply Comments at 5; Qualcomm FNPRM Comments at 45. This would ensure that no satellite system of a WTO Member that provides service in the United  X -States can gain an unfair advantage in any foreign market.TsZ o yO9-ԍxOrion questions whether we have the authority to impose such a prohibition on WTO Members, absent a showing that the exclusive arrangement will have a "very high risk to competition." Orion FNPRM Comments  {O-at 1415. We disagree. See infra Section III.B.4.a.T GE Americom points out,  X -however, that in some markets, a de facto policy of exclusivity may exist even in the absence of an exclusive route agreement with the satellite services provider, and suggests that we consider this possibility in evaluating whether service to a given nonWTO route creates a  X-risk to competition.t o yO-ԍxGE Americom FNPRM Comments at 4. Orion supports this position. Orion FNPRM Reply Comments at 4.  Xf-x>63. ` ` PanAmSat supports not applying the ECOSat test to avoid creating a  XO-procedure "for a problem that may prove nonexistent."NuOo yO!-ԍxPanAmSat FNPRM Comments at 5.N PanAmSat also recommends, however, that the Commission reconsider applying the ECOSat test to the route market if  X!-competitive disparities arise between U.S. licensees and other WTO Member licensees.@v!o {Ov$-ԍxId. at 5.@ GE " 6v,-(-(ZZF"  X-Americom, Orion, and COMSAT concur.wo yOy-ԍxGE Americom FNPRM Reply Comments at 89; Orion FNPRM Reply Comments at 4 n.9; COMSAT FNPRM Reply Comments at 5. PanAmSat suggests further that if we were to apply the ECOSat test, we could employ a rebuttable presumption that the provision of service between the United States and a nonWTO route market by both U.S.licensed  X-satellites and other WTO Member satellites is in the public interest.Vx o yO-ԍxPanAmSat FNPRM Comments at 56, n.10.V The presumption then could be overcome regarding a particular nonWTO route market upon a demonstration that U.S. licensees are not afforded access to such market. According to PanAmSat, if service to the nonWTO route market would not serve the public interest, then neither U.S.licensed satellites, nor satellites licensed by other WTO Members, would be permitted to serve the route. PanAmSat contends that because the presumption would apply equally to U.S. licensed  X1-satellites and other WTO Memberlicensed satellites, it would satisfy national treatment.:y1o {O-ԍxId.:  X - xDiscussion  X -  X - x?64. ` ` As suggested in the Further Notice,Qz Bo {O-ԍxFurther Notice at  28.Q and overwhelmingly endorsed in the record, we will not evaluate the effective competitive opportunities in the route market for nonU.S. satellites licensed by a WTO Member providing WTOcovered services. Thus, we  X-will not perform an ECOSat test on any route, whether a WTO route market or a nonWTO route market. We take this approach for two reasons.  XO-x@65. ` ` First, we do not currently evaluate the route markets served by U.S.licensed  X8-satellite systems. In DISCO I, we permitted U.S. satellites to provide both domestic and international services according to their business plans, regardless of the route. The purpose of this approach was to provide licensees flexibility in system offerings and encourage development of global, innovative services for the benefit of U.S. consumers. That policy is equally compelling today and we will continue to follow it. Furthermore, as the majority of parties asserted, applying a route market analysis to nonU.S. satellites licensed by WTO Members providing WTOcovered services, while not doing so for U.S.licensed satellites, could raise national treatment concerns. We find that we can further our procompetitive  X-objectives and at the same time address any potential anticompetitive concerns resulting from service on a nonWTO route by prohibiting a nonU.S. licensed satellite from entering an exclusive arrangement with the country it wishes to serve, a restriction that currently applies  X=-to U.S.licensed satellites as well.5{X=o yO%-ԍxWe agree with Teledesic, for example, that the likelihood of competitive harm in the United States from a foreign operator serving nonWTO routes that are closed to U.S. operators is not sufficient to justify a change in our flexible regulatory policies.5 Moreover, parties are free to raise concerns that entry by"= {,-(-(ZZ" the WTO satellite will create anticompetitive consequences in the U.S. market because of a closed route market.  X-xA66. ` ` Our second consideration relates to the GATS and the benefits of the WTO Basic Telecom Agreement. As described above, because all WTO Members are governed by the general obligations of the GATS, including MFN and transparency, the GATS provides some protection against discriminatory conduct on a route. In addition, increased competition in the global satellite market resulting from commitments in the WTO Basic Telecom Agreement, and the regulatory mechanisms available to us and our trading partners to guard against anticompetitive consequences, will help prevent harm to competition in the U.S. market.  X -xB67.` ` Further, we find it unnecessary to adopt Columbia's suggestion that we apply an ECOSat analysis to a nonWTO route market where the satellite is licensed by a WTO  X -Member and the controlling entity is from a nonWTO route market.Y| o yO7-ԍxColumbia FNPRM Comments at 45.@Y As previously discussed, we will look to the ownership of the satellite, rather than to the licensing administration, if we are presented with evidence that the licensing administration is simply a  Xy-"flag of convenience" used to circumvent an ECOSat analysis.U}yXo {O-ԍxSee supra Section III.B.1.a.2.U Finally, we do not adopt a rule requiring us to apply an ECOSat analysis to the route market where competitive disparities arise between U.S. licensees and other WTO Members, as PanAmSat suggests, or a  X4-rule requiring us to consider de facto exclusivity in the absence of an exclusive route  X-agreement, as GE Americom suggests. In all cases, where the presumption in favor of entry applies and we do not conduct an ECOSat analysis, opponents may demonstrate that entry will nevertheless pose a risk to competition in the United States, and in the exceptional case in which grant would pose a very high risk that cannot be cured by conditions placed on the license, we will deny the application. We will thus examine whatever potential competitive harms exist in this context, which is consistent with international agreements and should satisfy both PanAmSat's and GE Americom's concerns. "g},-(-(ZZ"  X-x ` `  b.` NonWTO Member Satellites Providing WTOCovered  X-Services (#  X-x` `  (1)hhGeneral Framework  X- xBackground  X_-xC68.` ` In the Notice, the Commission proposed to examine "effective competitive opportunities" in both the foreign "home market" of the nonU.S. satellite and "route markets"  X3-to which service from a U.S. earth station is proposed.~3o {O -ԍxNotice at  2, 27, 3743; see also Further Notice at  4. Thereafter, in the Further Notice, the Commission tentatively concluded that an ECOSat test should be applied with respect to the home markets of satellites licensed by nonWTO countries, regardless of whether the route market is a WTO Member country or not. Further, the Commission proposed to apply a separate ECOSat test to the route market when the route market is a different nonWTO  X -country.Q Zo {O-ԍxFurther Notice at  23.Q The Commission proposed to continue to apply an ECOSat test in these circumstances because nonWTO countries have assumed no obligations under the WTO Basic Telecom Agreement specifically or under the GATS generally. They have made no binding commitments to open their satellite services markets or to abide by procompetitive regulatory principles. Thus, reasoned the Commission, allowing nonU.S. satellites licensed by nonWTO countries to serve the United States could adversely affect competition in the United States by giving the nonU.S. operator a competitive advantage over its U.S. counterparts.  X- xPositions of the Parties  X-xD69. ` ` The commenters generally support implementation of an ECOSat analysis in  X-this context.o {OK-ԍxWe also incorporate here those comments filed in response to the Notice that remain pertinent to the  {O-general discussion of the ECOSat test. See, e.g., AT&T NPRM Comments at 5; Columbia NPRM Comments at 11; General Instrument NPRM Comments at 3; HBO NPRM Comments at 1213; ICO NPRM Comments at 1023; Keystone NPRM Comments at 45; Lockheed Martin NPRM Comments at 34; MCI NPRM Comments at 312; PanAmSat NPRM Comments at 23; OrbComm NPRM Comments at 3; Orion NPRM Comments at 612; Teledesic NPRM Comments at 34; Lockheed Martin FNPRM Comments at 34; Orion FNPRM Comments at 6; Qualcomm FNPRM Comments at 5; Motorola FNPRM Comments at 5; GE Americom Reply Comments at 5; Lockheed Martin Reply Comments at 6; GE Americom FNPRM Comments at 5 (making a distinction in evaluating applicants from nonWTO countries by urging that the Commission evaluate the home market of the  {MW$-foreignlicensed provider).  Many contend that, absent a home market analysis, the Commission would" ,-(-(ZZ" have no relevant basis for evaluating the accessibility of a nonWTO market or for exercising  X-any leverage to persuade those countries with closed markets to open them.o yOb-ԍxOrion FNPRM Comments at 6; Qualcomm FNPRM Comments at 5; Motorola FNPRM Comments at 5.  X-xE70.` ` Some commenters argue that application of the ECOSat test may harm U.S. licensed systems seeking access to foreign markets and may result in retaliatory measures  X-from other countries.Xo yO-ԍxPanAmSat FNPRM Comments at 45; Hughes FNPRM Comments at 5; COMSAT FNPRM Reply Comments at 6. CC/Networks claim that they rely on satellite technology for overseas video and associated audio transmissions and consider transoceanic fiber less efficient  X_-regarding cost, connectivity, technical performance, and operational flexibility.Q_o yO -ԍxCC/Networks NPRM Comments at 12.Q They argue that limiting broadcast and cable operators' use of satellite capacity will hinder their ability to  X1-provide television coverage of international events, especially fastbreaking news.:1@o {O"-ԍxId.: To the contrary, Columbia argues that we should apply the ECOSat test to all types of services in a  X -fair and evenhanded manner.V o yO-ԍxColumbia FNPRM Reply Comments at 56.V It maintains that Networks's need for transmission capacity can best be met by considering, as part of the general public interest inquiry, whether U.S. satellites are available to provide this transmission capacity.  X -  X -xF71. ` ` A few commenters favor a less rigid ECOSat test, which would permit each applicant to demonstrate whether a home market test, route market test, or critical mass test,  Xy-is appropriate for its proposal.Uyb o yO-ԍxTelesat NPRM Reply Comments at 14. U In order to remedy concerns about foreclosing competitive entry by U.S.licensed satellites into foreign markets, Hughes proposes that we generally allow entry of foreignlicensed satellites into the United States to compete in the provision of  X4-satellite services, absent a showing that the licensing administration imposes significant  X-protectionist barriers that shield its satellite industry from competition.M o yO-ԍxHughes FNPRM Comments at 12.M Hughes argues that, by applying the ECOSat test in this flexible manner, the Commission can best demonstrate to foreign administrations the benefits of implementing a procompetitive satellite regulatory  X-policy.$ o {O $-ԍxId. Hughes proposes that an earth station applicant seeking access to a nonU.S.licensed satellite would  {O$-have the initial burden of demonstrating that the foreign satellite's home and route markets do not impose de jure  {O%-barriers to U.S.licensed satellites seeking to compete in the provision of the same satellite services. If no de  {Oi&-jure barriers existed, the burden would shift to parties opposing entry of the foreignlicensed satellite to"1',-(-(&"  {OX-demonstrate that de facto barriers existed on the satellite's home or route markets. Hughes adds that the Commission would consider next, "communications and competitionrelated issues as well as national security,  {O-foreign policy and trade issues raised by the Executive Branch." Id. at 13. Hughes notes that none of the parties disputed its proposal for a modified ECOSat"!,-(-(ZZ"  X-test.Ro yOe-ԍxHughes FNPRM Reply Comments at 7.R In addition, Hughes argues that none of the parties deny that a strict reciprocity test will undermine the Commission's goal of opening foreign markets to competition if foreign administrations impose equally rigid reciprocity tests to evaluate the entry by U.S.licensed  X-satellites.;Do {O -ԍxId. ;  X- xDiscussion  X_-xG72.` ` We adopt the proposal to apply the ECOSat test to nonU.S. satellites licensed by nonWTO countries. This approach is necessary to ensure that participants in the global satellite services market are on equal footing and that applicants from nonWTO countries are not able to distort competition to the detriment of U.S. operators. Fair and vigorous competition among multiple providers leads to lower prices and more innovative service offerings for satellite communications users in the United States and throughout the world.  X -Applying the ECOSat test will confirm that foreign markets do not have de jure or de facto  X -barriers that impede opportunities for U.S. providers to enter and compete in those markets prior to permitting operators from such countries to compete in the United States. Unlike WTO Members, including those that have not made specific commitments of market access, nonWTO countries are not subject to the general obligations of the GATS. Most nonWTO countries have made little progress toward promoting competition and opening their markets. To the extent that some have allowed foreign entry and have begun to liberalize their markets, they are not obliged under the GATS to refrain from discriminating against U.S.licensed satellite operators. Thus, the potential for anticompetitive conduct continues to exist with respect to applicants from nonWTO countries.  X-xH73. ` ` For these reasons, we are not persuaded by the commenters' arguments against applying the ECOSat test to nonU.S. satellites licensed by nonWTO countries. In response to some commenters' concerns about possible negative effects of this rule on the efforts of U.S.licensed systems to access foreign markets, we point out that our primary focus is on increasing competition in the United States market, and on realizing the benefits of such  Xg-competition for U.S. users here.)Xgo yO#-ԍxWe also recognize, however, that the opening of markets abroad also will facilitate greater competition in the satellite services market worldwide, including in this country, and the policies we adopt today are also designed to further that goal. ) If this policy causes other countries to adopt an ECOSat test for U.S. satellite operators seeking to provide service in that country, we find it, on balance, a minimal burden when compared to the possibility that unrestricted entry by"9" ,-(-(ZZ" foreignlicensed satellite systems would distort competition in the U.S. market. Hughes's  X-proposed test would not suffice because, for example, Country X may permit some foreign satellites to serve its market while blocking U.S. satellites, falling short of Hughes's "significant protectionist barrier" measure. If we permit a satellite licensed by Country X to serve the U.S. market, that operator could have a competitive advantage in the United States because of its more comprehensive service offerings. Indeed, competition could be distorted in the United States even if a foreign country does allow entry by U.S. satellites if that country erects obstacles that prevent such competition from being effective as a practical matter, such as government subsidization of the nonU.S. system. In this case, the nonU.S. operator could have a competitive advantage in the United States because of an ability to offer lowercost service. Consequently, we find that our proposed test for determining whether U.S. operators have effective competitive opportunities in a foreign country provides an evenhanded approach that allows the greatest degree of access to nonU.S. systems  X -consistent with the public interest. In addition, we reject Hughes's suggested ECOSat test.M o {OP-ԍxSee supra n.136.M  X -It is equally necessary to examine both de jure and de facto barriers because de facto barriers  X -can be as impeding as de jure barriers and more difficult to detect. Hence, the applicant should bear the burden to demonstrate the absence of both.  X-  Xh-xI74. ` ` We recognize the Networks' concern that our policy could inhibit the coverage  XQ-of fastbreaking news or other special events. We point out, however, that we will not apply an ECOSat test in the vast majority of cases where the Networks will be receiving foreign video transmissions. In particular, we will not apply an ECOSat test when the satellite relaying the foreign transmissions into the United States is licensed by a WTO Member, or, as discussed below, is operated by an IGO affiliate satellite or an IGO satellite providing  X-international service.`Zo {O-ԍxSee infra Sections III.B.1.d. and II.B.2.` We will apply the ECOSat test only where the satellite is licensed by a nonWTO country. In these cases, an ECOSat test is a minimal burden compared to the market distorting impact and competitive harm in the United States that may result if a U.S.licensed system is denied access in the relevant foreign market. Further, the Networks may apply for an earth station license to communicate with specified nonWTO satellites. In considering whether to grant that application, we could consider, regardless of the outcome of the ECOSat analysis, whether other satellites are available to provide this transmission capacity. An earth station license carries a tenyear license term; no further applications will be necessary for the Networks to access that nonWTO satellite once a license is granted.  X-  X-xJ75. ` ` In applying the ECOSat test, we will examine whether the country in which the nonU.S. satellite is licensed provides effective competitive opportunities for U.S.licensed  X -satellites to serve the foreign market. We will look at de jure barriers to entry, such as  X!-statutory or regulatory prohibitions against service by U.S. providers, as well as de facto"!#,-(-(ZZ "  X-barriers. For example, a country may permit U.S. entities to provide FSS service, but impose more stringent technical requirements on U.S. providers than on its own providers.  X-x` `   (2) hhHome Markets (#h  X- xBackground  X_-xK76. ` ` In the Notice, the Commission proposed to look first at the country of license, or the "home market," when evaluating effective competitive opportunities for U.S.  X3-providers.F3o {O -ԍxId. at  18.F For example, if a satellite licensed by Country X seeks to serve the U.S. market, the first step would be to determine whether U.S.licensed satellites may provide analogous services to, from, or within Country X. The Commission recognized, however, that the country of license approach had two shortcomings. First, if the Commission were to look only at the licensing country, satellite operators from closed markets might seek to obtain a satellite license from a country with an open market. In effect, such satellite operators could forum shop to find an administration that would most likely pass the ECOSat test. The Commission therefore sought comment on the possibility of looking at ownership in addition to the country of license, for example, evaluating each investor's home country or those of  Xd-the most substantial investors.JdZo {Oo-ԍxNotice at  30. J  X6- xPositions of the Parties and Discussion  X-  X-xL77.` ` Commenters supporting application of an ECOSat test uniformly support  X-applying this test to the "home market" of the satellite.po yO-ԍxLockheed Martin FNPRM Comments at 3, Orion FNPRM Comments at 6.p Some question, however, whether the "home market" should be the country that licenses a satellite or the administration that coordinates it or some other measure, such as the nationality or principal place of business of the owner. For reasons discussed above in determining the WTO status of the satellite in  X-question,U|o {O-ԍxSee supra Section III.B.1.a.2.U we will look to the licensing country or coordinating administration to determine the home market. In determining the home market, we will, however, entertain requests to  Xg-consider other factors, such as the nationality or principal place of business of the owner.Ogo {O&#-ԍxSee id.` ` (#` O  XP- "9$,-(-(ZZ"  X- x` `  (3) Route Markets  X- xBackground  X-  X-xM78. ` ` In the Notice, the Commission proposed to conduct a separate ECOSat analysis of the "route market" or markets if different from the home market. It defined the  Xx-route market as the market in which the satellite transmission originates or terminates.Kxo {O-ԍxNotice at  27. K The Commission stated that applying an ECOSat test to the nonWTO route markets would allow it to promote effective competition through broader market access. Specifically, because some countries may offer landing rights to satellites from certain foreign countries but not others, U.S. satellites may have opportunities to compete in some route markets but not others. Making a decision on market access for a nonU.S. system based solely on the openness of that system's home market would therefore leave open the possibility that the nonU.S. satellite, once it entered the U.S. market, might be able to serve some routes on which U.S. satellites are prevented from competing. This result would distort competition in  X -the United States. Consequently, in the Further Notice, the Commission proposed that when a nonWTO satellite provides service involving a different nonWTO market, it would apply two separate ECOSat tests: the first test would be applied on the nonWTO home market as discussed above; the second ECOSat test would be conducted on the nonWTO route market. If the nonWTO route market did not provide U.S. operators with effective competitive opportunities to serve that market, the Commission would not permit the nonU.S. satellite to provide any service between the United States and that route market.  X- xPositions of the Parties  X- xN79. ` ` Most commenters agree that a route market ECOSat test is necessary to avoid  X-distortion of competition.Zo {O-ԍxSee, e.g., DirecTV NPRM Comments at 1214; MCI NPRM Comments at 67; PanAmSat NPRM Comments at 23; WorldCom NPRM Comments at 5. They contend that a separate ECOSat test should be applied to each nonWTO route market. Some commenters, however, argue that the ECOSat test should not be applied in cases where, as a practical matter, only nonWTO satellites can  Xi-access the route market.fio yO -ԍxQualcomm FNPRM Comments at 5; KDD NPRM Comments at 2.f Qualcomm, for example, argues that application of the ECOSat test would only delay the implementation of innovative satellite services where effective competitive opportunities for U.S.licensed or other WTO Member satellites cannot effectively  X$-exist.T$Do yO%-ԍxQualcomm FNPRM Comments at 5.T " %,-(-(ZZy"Ԍ X-xO80. ` ` Lockheed Martin, on the other hand, does not endorse the application of an  X-ECOSat test to route markets.[o yOb-ԍxLockheed Martin FNPRM Reply Comments at 6.[ Lockheed Martin believes that if a satellite operator is subject to competition in its home market then it is significantly less likely to have market  X-distorting capabilities in other route markets that its serves.@Xo {O-ԍxId. at 6.@  X-xP81.` ` Other commenters, while not opposing a route market analysis in theory, argue  Xv-that route markets are difficult to defineqvo yO -ԍxLoral NPRM Reply Comments at 6; Transworld NPRM comments at 23.q or that a route market test is insufficient because,  X_-in certain situations, de facto barriers may be difficult to prove._zo yO -ԍxLockheed Martin FNPRM Comments at 3; Lockheed Martin FNPRM Reply Comments at 2. CC/Networks recommends that the Commission allow all U.S.authorized earth station licensees to access nonU.S. satellites immediately for specified route markets once a nonU.S. satellite has satisfied the  X -ECOSat test requirements.Q o yO-ԍxCC/Networks NPRM Comments at 22.Q Further, ICO argues that a route market analysis would be impractical with global satellite systems, such as mobile satellite service (MSS) systems, that  X -could conceivably serve over 200 countries.M o yO9-ԍxICO FNPRM Comments at 1314.M COMSAT agrees that applying an ECOSat test in these circumstances could, in fact, impede the development of the global MSS  X -market.S * o yO-ԍ xCOMSAT FNPRM Reply Comment at 5.S  X- xDiscussion  Xd- xQ82.` ` We adopt the following rules regarding nonU.S. satellites licensed by non XM-WTO Members: We will not apply an ECOSat test to WTO Member route markets served by nonU.S. satellites licensed by nonWTO countries. We will, however, apply an ECOSat  X!-test to all nonĩWTO route markets served by nonU.S. satellites licensed by nonWTO countries. If a nonWTO satellite serves one or more different nonWTO route markets, we will apply an ECOSat test to the nonWTO home market, as well as an ECOSat test to each nonWTO route market. Discussion of each rule follows.  X-xR83.` ` First, as to WTO routes, we will not apply an ECOSat test here for the same  X-reasons discussed above regarding WTOMemberlicensed satellites .U o {O&-ԍxSee supra Section III.B.1.a.3.U As stated, all WTO Members are governed by the general obligations of the GATS. The GATS provides some"&L ,-(-(ZZ" protection against discriminatory conduct on a WTO route. In addition, increased competition in the global satellite market resulting from commitments under the WTO Basic Telecom Agreement and the regulatory mechanisms available to us and our trading partners to guard against anticompetitive consequences, will help prevent harm to competition in the U.S. market.  Xv-xS84. ` ` Second, as to nonĩWTO routes, it is necessary to apply an ECOSat test to all routes because the home market inquiry is, by itself, insufficient to protect U.S. satellite operators from distortion in the U.S. satellite market. Each satellite typically covers many different countries and a satellite's pointtomultipoint capability makes it possible for the same satellite to be used simultaneously for transmissions between other countries and the United States. U.S. satellite operators must obtain an authorization from all countries in which they seek to provide service. It is possible that certain nonWTO countries may prohibit access by U.S. satellites, while allowing access by satellites from other countries. In this scenario, the nonU.S. satellite granted access to that market would have a competitive advantage over U.S. systems by virtue of its broader service area. We cannot ignore this potential competitive distortion.  Xd-xT85. ` ` We recognize that applying an ECOSat analysis to each nonWTO route market served by a global satellite system, such as a lowearth orbit MSS or a fixedsatellite service system, will be cumbersome. An alternative would be to determine whether there is some critical mass of route markets open to U.S. satellite systems to satisfy us that effective competition will not be distorted in the United States. If so, we could dispense with a routebyroute analysis for global systems altogether. The commenters' positions varied on what would constitute a critical mass of open route markets, and on how to determine whether a critical mass has been reached.  X- xU86. ` ` We find that there is no single method to measure whether a critical mass has been reached that would work in every case. This is because, from a provider's perspective, critical mass depends in large part upon its individual business plans. For example, a company intending to provide global service may be satisfied that a critical mass has been achieved if a majority of the world's largest markets are open to U.S. satellite services. A country targeting the Asian market could, in contrast, legitimately argue in the same  X -environment that a critical mass has not been reached if several of the world's closed markets are in Asia. Consequently, we cannot devise a critical mass test that would uniformly apply to all satellite services. We also are concerned that a critical mass test would not encourage countries to open closed markets to U.S. satellite services, to the detriment of U.S. consumers. We conclude that the most practical approach, and the most appropriate and forceful way to promote competition in the United States and around the world, is to look at each of the actual routes that will be served. Thus, we will apply an ECOSat test to each nonWTO route market served by a nonWTO satellite.  X>&-xV87. ` ` We disagree with Lockheed Martin, the only party that opposes generally applying a route market ECOSat analysis, which argues that the test is not necessary because"''',-(-(ZZ%"  X-competition in the route market is not likely to be distorted if the satellite operator is subject to competition in its home market. Contrary to that position, our route market analysis is  X-designed to promote competitive conditions in the United States by addressing a nonU.S. system's ability to serve markets not open to U.S operators. x  X-xW88.` ` In response to Qualcomm's suggestion that we not apply the ECOSat test  Xz-where only nonWTO countries are able to serve a route market, we point out that we will consider such circumstances in applying the ECOSat test. For example, if U.S. operators are not serving a particular route market because they do not have satellites with coverage areas allowing them to serve that route, the nonWTO satellite providing service to that route market would not fail the ECOSat test on that basis. In that case, we would not preclude a nonU.S. satellite from providing service between the United States and that market. In  X -applying the ECOSat test, we are looking for artificial barriers blocking access to that market by U.S. operators.  X -x` `   (4) hhSatellite Service Distinctions(#h  X- xBackground  XS-x X89.` ` In applying the ECOSat test, the Commission proposed in the Notice to focus on the specific satellite service that the nonU.S. system seeks to provide in the United States and determine whether U.S. satellite systems would be permitted to provide the same type of service in the relevant foreign country. For example, if there were a request to provide mobilesatellite service (MSS) in the United States using a satellite licensed by nonWTO Country X, the ECOSat analysis would focus on whether a U.S. satellite could provide MSS  X-in Country X.Lo {OD-ԍxNotice at  3334.L The Commission proposed to look at three service categories in making this analysis: DTH (including DBS service), Fixed Satellite Service (FSS) and MSS. The Commission noted, however, that if another country draws finer distinctions when considering whether to allow U.S. satellites to provide services (such as distinguishing between Very Small Aperture Terminal (VSAT) and voice fixedsatellite services), it might consider applying the same distinctions when considering a request involving a satellite licensed in that  XA-country.:AZo {OL -ԍxId.:  X*-  X-xY90. ` ` Nevertheless, the Commission recognized in the Notice that this basic approach may not be adaptable to all satellite services in all instances. For example, an MSS system providing service between the United States and another country could consist of satellite transmissions that do not involve earth stations in the United States. By illustration, a telephone call could travel via an MSS system link from a telephone in the United States by cable to Poland, and then from there by satellite to China, where it could be received by a""(,-(-(ZZ!" handheld telephone (earth station). The Commission pointed out that because the earth station is in a foreign country and would be licensed by that country, there would be no vehicle by which to apply an ECOSat analysis. Given this, it proposed to evaluate effective competitive opportunities for MSS providers on a global basis by considering whether some critical mass of foreign markets is open to U.S. licensed systems before a nonU.S. system  X-could provide any service in the United States. x  Xa- xPositions of the Parties  X3-xZ91. ` ` Most commenters support our proposal to adopt a servicebyservice approach  X -in applying the ECOSat test so as to ensure effective competition regarding each service.;X o yO -ԍxAT&T NPRM Comments at 7; DirecTV NPRM Comments at 1415; General Instrument NPRM Comments at 4; HBO NPRM Comments at 15: Loral NPRM Comments at 25; Motorola NPRM Comments at 19; MCI NPRM Comments at 12; Telesat NPRM Reply Comments at 1718; WTCI NPRM Comments at 12.;  X -Indeed, DirecTV asks us to consider new services as they evolve.z o yO-ԍxDirecTV NPRM Reply Comments at 14; General Instrument NPRM Comments at 4.z Columbia suggests that  X -we further subdivide service categories to include video, voice, and data services.N xo yO-ԍxColumbia NPRM Comments at 13.N AirTouch objects to the critical mass alternative to cover satellite service systems that do not have a satellite component in the United States. AirTouch asserts that the critical mass approach would be burdensome to administer because it would be difficult to determine which markets are relevant and sufficiently open to warrant regulatory streamlining, and that the approach would create too much uncertainty for foreign providers trying to plan their  Xd-businesses.Qdo yO-ԍxAirTouch FNPRM Comments at 34. Q  X6- xDiscussion x  X-x[92. ` ` We adopt the proposal to apply the ECOSat test, when applicable, on a  X-satelliteservicespecific basis. As recognized in the Notice, we may find that a particular country permits U.S. satellites to provide some, but not all, satellite services. We agree with the commenters that in these cases the public interest would be best served by permitting satellites licensed by such a country to enter the U.S. market to provide those services that can be competitively offered by U.S. satellites in that country, but not for other satellite services. We also adopt the proposal to specify DTH (including DBS service), FSS, and MSS as our service categories in applying the ECOSat test. Consistent with our treatment of voice and nonvoice MSS in the same service category for ECOSat purposes, we will  X;-consider DARS, an audio satellite service established after the Notice was issued that provides service directly to consumers, in the same category as DTH. We may further subdivide these categories, as Columbia suggests, if another country makes such distinctions in deciding"),-(-(ZZy" whether to allow U.S. satellite systems to serve its market. We find, however, that it will be sufficient and administratively simpler to apply the three broader service categories as a rule of thumb.  X-x\93. ` ` We will not adopt the proposal to require some critical mass of foreign markets to be open to U.S. satellite operators before we would permit a nonWTO MSS system to provide the landline portion of its service in the United States. As previously discussed, there is no objective way in which to define a critical mass and such a standard would not, in any case, further our goals of opening markets and promoting global competition. Rather, we will  X1-rely on the policies and rules adopted in our companion Foreign Participation Report and  X -Order to govern foreign entry through terrestrial facilities.  X - x` ` c.  NonWTO Covered Services (#  X -  X -xBackground  X-x]94. ` ` As discussed above, the U.S. Schedule of Specific Commitments to the WTO  X}-Basic Telecommunications Agreement excludes DTH, DBS, and DARS.V}o {O-ԍxSee supra Section III.B.1.a.1. V Many other WTO Members, including many of the United States' major trading partners, did not include these services in their market access commitments, creating a potential market imbalance. To resolve this imbalance, the United States made no market access or national treatment commitments and took an MFN exemption for these services. x  X-x^95. ` ` Thus, because the WTO Basic Telecom Agreement will not do as much to advance our goal of promoting a competitive satellite marketplace for these services, in the  X-Further Notice, the Commission proposed to  apply the ECOSat test to all requests for access by nonU.S. satellite systems for delivery of DTH, DBS, and DARS services into the United  X-States.TZo {O-ԍxFurther Notice at  2022.T In conducting an ECOSat test, the Commission proposed to evaluate both de jure  X-and de facto constraints on entry by U.S. satellite operators.po {O!-ԍxNotice at  3742; Further Notice at  4.p The Commission sought comment on the continuing need to encourage open markets for these services, and on the application of an ECOSat test to achieve that goal. "A*~,-(-(ZZ"  X- xPositions of the Parties  X-x_96. ` ` Several commenters support the proposal to use an ECOSat test for non X-covered services.-Xo yO-ԍxLockheed Martin FNPRM at 5; MPAA FNPRM Reply Comments at 2; Hughes FNPRM Comments at 1314 (arguing that the modified ECOSat test applied on a servicebyservice basis, affords foreign administrations flexibility to open their markets to competition).- MPAA recommends, however, that the Commission include in its rules provision for eliminating the ECOSat test should future GATS negotiations yield market access commitments by WTO Members that provide an open, competitive global environment with respect to DTH, DBS, and DARS services, allowing the United States to remove its  XH-MFN exemptions in these services.PHo yO -ԍxMPAA FNPRM Reply Comments at 3.P Hughes further argues that the ECOSat test should bar entry only where a foreign country imposes significant protectionist barriers against U.S. X -licensed satellites.[X xo yOC-ԍxHughes uses Canada as an example where Canada continues to impose barriers that prevent U.S.licensed DBS and DTH service providers from competing in the Canadian market resulting in providers such as DIRECTV's Canadian affiliate being barred from the Canadian market. Hughes FNPRM Comments at 16.[ x  X -x`97. ` ` Many commenters, however, object to applying the ECOSat test to these non X -covered services. o yO-ԍxNetworks FNPRM Comments at 5; European Commission FNPRM Reply Comments at 3. Specifically, the European Commission argues that the U.S. MFNexemption might negatively impact the economic viability of nonU.S.licensed satellite systems, since satellite systems normally provide both telecommunications and DTHDBS transmission services. The scope and economic impact of the U.S. MFN exemption, the European Commission contends, depend on the "precise definition of DTH and DBS television services, and of digital audio services," which the European Commission urges us  XK-to define._K( o yO$-ԍxEuropean Commission FNPRM Reply Comments at 3._ The European Commission also claims that these services are broadcast services and therefore the United States is required to provide market access and MFN treatment under  X-its 1994 WTO commitments on audio visual services.: o {O -ԍxId.:  X- xDiscussion  X-  X-xa98. ` ` We will apply the ECOSat test to requests involving provision of DTH, DBS,  X-and DARS by nonU.S. satellites. Specifically, we will apply the test to the home market of the nonU.S. satellite, as well as to all routes that the nonU.S. satellite proposes to serve. "+J ,-(-(ZZo" The ECOSat test is necessary because of the continuing need to encourage open markets for  X-these services and to avoid anticompetitive conduct in the U.S. market.o yOb-ԍxAs discussed below, we will not apply the ECOSat test to requests to provide these services by entities  {O*-licensed by nations with which we have bilateral agreements. See Section III.B.1.e.  X-xb99. ` ` In applying the ECOSat test, we will examine effective competitive  X-opportunities for U.S.licensed satellites to serve the foreign markets. We will look at de jure barriers to entry, such as statutory or regulatory prohibitions against service by U.S. providers. These could include absolute or partial bars, as well as direct or indirect ones. For example,  Xa-a foreign country could prohibit outright U.S. satellites from providing any home  XL-programming services by U.S. entities or could prohibit any indirect U.S. ownership. It also  X7-could prohibit video, but not audio services. By contrast, de facto barriers would constitute  X" -barriers that are not per se prohibitions, nor not necessarily formally adopted by the country's government, but that exist and, in practice, act as impediments to entry. For example, a country may permit U.S. entities to provide DTH service, but may impose more stringent technical or programming requirements or higher fees on U.S. providers than on its own  X -providers. By discriminating against U.S. providers, any such de facto barriers would severely curtail, if not wholly eliminate, the ability of U.S. satellite entities to do business in the foreign market. As a result, the companies in the home market of the foreignlicensed satellite would be able to serve a market closed, in whole or in part, to U.S. companies. Denying competitive opportunities to U.S. entities in the foreign market, while allowing them for the country's own companies, would give the foreignlicensed satellite a competitive advantage over U.S. entities, causing competitive distortions.  X-xc100. ` ` Furthermore, we find that Hughes's proposed modified ECOSat test does not  X-adequately address our concern that any artificial entry barriers foreign administrations place on traffic to or from the United States, even those not arising to the level of "significant  X-protectionist barriers," could distort competition in the United States.  X-  X-xd101. ` ` We disagree with the European Commission that these services are broadcasting services. The Commission has specifically concluded that it will not regulate  Xs-DTH and DBS as broadcasting services.s"o {OF-ԍxIn the Matter of Subscription Video, 2 FCC Rcd 1001, aff'd 849 F.2d 665 (1988). Rather, the Commission regulates these services as basic telecommunications services. As such, the U.S. exclusion of these services from market access commitments and the MFN exemption taken during the WTO basic telecommunications negotiations are valid. Therefore, applying the ECOSat test to nonWTO covered services is fully consistent with our GATS obligations. With respect to Deutsche Telekom's concern about applications to provide both WTOcovered and nonWTO covered",,-(-(ZZ"  X-services over a nonU.S. satellite,Ao yOy-ԍxDeutsche Telekom FNPRM Reply Comments at 4. Teledesic withdraws its proposal in comments and  {OA-reply comments in the Notice that the Commission establish a fourth service category called the "Interactive Broadband Satellite Services" and apply a critical mass test for this category. It now contends that there are likely to be so many competing IBSS providers from so many countries that the Commission need not worry about competitive distortions in the U.S. market. Teledesic FNPRM Comments at 56.A we clarify that we will address such requests separately,  X-under the rules we adopt for each situation.  X-  X-x` ` d. Intergovernmental Satellite Organizations and Their Affiliates  X-x ` `  (1)Introduction  X_-xBackground  XH-  X1- xe102.` ` In the Notice and Further Notice, the Commission addressed issues relating to  X -opening the U.S. domestic satellite market to INTELSAT and Inmarsat, and their affiliates.x zo {OG-ԍxNotice at  6274; Further Notice at  3136.x INTELSAT and Inmarsat are treatybased, intergovernmental organizations (IGOs) designed  X -to ensure worldwide satellite communications.\~ o {O-ԍxNotice at  6264. The International Telecommunications Satellite Organization (INTELSAT) operates  {Ou-a global system that provides fixed satellite service for voice, data, video and audio communications See Agreement Relating to the International Telecommunications Satellite Organization, Aug. 20, 1971, 23 U.S.T. 3813, T.I.A.S. No. 7532. The International Mobile Satellite Organization (Inmarsat), which provides global maritime and aeronautical mobile satellite communications services, has for several years been in the process of  {O-amending its Agreement in order to provide land mobile satellite services. See Convention on the International Maritime Satellite Organization, Sept. 3, 1976, reprinted Inmarsat Basic Documents (4th Ed. 1989).\ These organizations have certain privileges and immunities that provide them competitive advantages over competing satellite providers. For example, they are immune to suits in court (with limited exceptions for commercial contracts), including jurisdictional, discovery and asset immunity from antitrust laws. They also enjoy taxfree status. For example, they are exempt from income, corporate and property taxes, and customs and other duties in the host countries and other member states. Their size and the fact that their members are the primary, if not exclusive, providers of fixed and mobile maritime services in most major markets gives them a special, and possibly dominant, position in the global market. Further, COMSAT, by virtue of the Communications Satellite  X-Act of 1962\R o yO""-ԍx47 U.S.C.  701744 (Satellite Act).\ and the 1978 International Maritime Satellite Telecommunications Act,[o yO#-ԍx47 U.S.C.  751757 (Maritime Act).[ is the U.S. signatory to the IGOs. COMSAT provides INTELSAT and Inmarsat space segment capacity to users in the United States. COMSAT pays taxes, but as we discuss below, indirectly benefits from IGO immunity from suit, including suit based on U.S. antitrust laws. "-r,-(-(ZZq"Ԍ X-xf103. ` ` In the Notice, the Commission asked whether, and under what conditions, it should permit INTELSAT and Inmarsat to serve the U.S. market, recognizing that home market and route market analyses would be analytically difficult to apply with respect to  X-applications from these entities.[\o {O6-ԍxNotice at  6465. We noted, in particular, that 136 countries are members of INTELSAT and 78 are  {O-members of Inmarsat. Id. In addition, both of these organizations provide global services. INTELSAT membership has grown to 141 countries and Inmarsat to 80.[ In the Further Notice, the Commission asked whether the WTO Basic Telecom Agreement will result in a critical mass of open markets among IGO member countries that is sufficient to presume that the Commission can rely on competitive  Xz-market forces and forego an ECOSat analysis.Qzo {O -ԍxFurther Notice at  33.Q The Commission also proposed to treat IGO affiliates as it would treat any other nonU.S. satellite system. That is, the Commission would not apply an ECOSat test if the IGO affiliate is a satellite system licensed by a WTO Member and providing covered services.  X -x Position of the Parties  X -  X -xg104. ` ` Several commenters argue initially that we should not address access to the U.S. market by INTELSAT, Inmarsat, or IGO affiliates in this proceeding, and that instead  X -we must establish a new proceeding in which to do so." ~o {O-ԍ xSee, e.g., GE Americom NPRM Reply Comments at 17; GE Americom FNPRM Comments at 67; GE Americom FNPRM Reply Comments at 67; Orion NPRM Comments at 13; Orion FNPRM Comments at 8; Orion FNPRM Reply Comments at 89; Columbia FNPRM Reply Comments at 2; Loral FNPRM Comments at 10 (do not address access involving IGO affiliates); PanAmSat FNPRM Reply Comments at 56.  GE Americom points out that there is no need to complete consideration of entry questions involving IGOs prior to January 1, 1998, when the WTO Basic Telecom Agreement goes into force, because IGOs do not derive  Xf-benefits from the Agreement.Sfh o yO-ԍxGE Americom FNPRM Comments at 6. S  X8-xh105.` ` Orion, for example, argues that a new proceeding is necessary because IGOs present significant and complex factual and legal issues that have not been sufficiently  X -aired.r  o yO -ԍxOrion FNPRM Comments at 89; Orion FNPRM Reply Comments at 89. r These commenters also assert that a new proceeding is particularly appropriate to address access by IGO affiliates, given pending proposals for restructuring and  X-privatization. o yO$-ԍxGE Americom FNPRM Comments at 17; Loral FNPRM Comments at 1011; PanAmSat FNPRM Reply Comments at 6. Loral contends that a new proceeding regarding the affiliates would examine questions relating to: the proper level of ownership by IGOs, signatories and predecessors; which IGO assets and how many may be transferred without unduly disadvantaging".,-(-(ZZ" competition; what level of government financing of an IGO affiliate is anticompetitive; and what opportunities for crosssubsidization and nonarm's length transactions exist in the IGO  X-affiliate context and what steps need to be taken to prevent each.Po yOK-ԍ xLoral FNPRM Comments at 1112.P    X-xi106.` ` COMSAT, in contrast, opposes a new proceeding, noting that this rulemaking was established to address entry by nonU.S. satellites into the U.S. market, including IGOs  Xv-and their affiliates.UvXo yO -ԍxCOMSAT FNPRM Reply Comments at 910.U COMSAT notes that the Further Notice specifically asked for comment  Xa-related to the IGOs and their affiliates.;ao {O -ԍ xId.; ICO objects to inclusion of ICO in any future proceeding, arguing that it should be treated like satellites from other WTO Members and that  X3-any such proceeding should addresss only future IGO affiliates.S3zo yO^-ԍxICO FNPRM Reply Comments at 1011.S  X -x Discussion  X -  X -xj107.` ` We find that a new proceeding is not needed neither for the IGOs nor IGO  X -affiliates because we are only setting a framework for entry here. The Notice and Further  X -Notice specifically addressed the unique competitive concerns relevant to entry by IGOs and IGO affiliates, and specifically requested comment on the standard to be applied for access to these satellite systems. We recognize that issues related to restructuring or privatization of  Xh-INTELSAT and Inmarsat currently are the subject of international negotiations9h o yO#-ԍxThe Commission is committed to seeking substantial reform of the IGOs. The United States has taken a lead role on these issues. INTELSAT is considering the creation of an affiliate, possibly in 1998, to provide DTH, video and multimedia services. Inmarsat is considering full privatization of its commercial and operational arm, possibly in 1998, with a residual, scaled back IGO remaining to maintain its commitment to observe public service obligations, such as provision of maritime distress and safety services. 9 and that the  XQ-issue of ICO independence from Inmarsat is currently before this Commission.Q o {O-ԍxSee Application of COMSAT for Authority to Participate in the Procurement of Facilities of the ICO Global Communications Limited System (File No. 106SATMISC95) (filed May 1, 1995). Any specific concerns about whether, and to what extent, entry by a particular IGO or IGO affiliate would be anticompetitive are more appropriate in the context of a specific license application. As discussed below, the outcome of pending proceedings could be taken into account in conducting a public interest determination regarding a particular application. We therefore conclude that a separate proceeding is unnecessary and turn to the substantive issues of what entry test to apply to IGOs and IGO affiliates. "/,-(-(ZZo"  X-x` ` (2) Intergovernmental Satellite Organizations  X-  X-x Background  X-  X-xk108. ` ` In the Notice, the Commission noted that IGOs present certain analytical issues within the framework it was proposing to apply to nonU.S. satellites. First, IGOs have no single home market, unlike private satellite operators, which are incorporated in and licensed by an individual country. Second, the Commission recognized that because IGOs were created to provide ubiquitous service and serve virtually every country from the United States,  X3-it may be difficult to apply a route market analysis to an application involving an IGO.Q3o {O -ԍxNotice at  6465. Q The Commission proposed several alternative standards for deciding whether earth stations  X -could access an IGO satellite for the provision of U.S. domestic service:  X -Xx(1)X` ` The degree of openness of all various route markets served by the IGO  X -(or at least all the markets of the IGO's members);F Zo {O-ԍxId. at  66.F `  X-Xx(2)X` ` The degree of openness of the number of countries constituting the minimum level of concurrence required for any official act of an  Xf-IGO;Ffo {O-ԍxId. at  67.F or `  X8-Xx(3)X` ` A determination of whether the IGO, as result of its intergovernmental status and global dominance, would be in a position to diminish  X -effective competition in the United States.F ~o {O9-ԍxId. at  68.F `  X-xl109. ` ` As to provision of international service involving the United States, the Commission tentatively concluded that it would not be in the public interest to apply the  X-ECOSat test.Fo {Oq -ԍxId. at  70.F The Commission reasoned that there are still many nations in the world that are connected to the United States only by satellite, and any policy that makes it more difficult to reach these points would unduly constrain the already limited service to them. The Commission also stated that such an approach might be inconsistent with the statutes governing U.S. participation in INTELSAT and Inmarsat and established U.S. policy for use  X=-of those systems for certain international services.x=o {O&-ԍxNotice at  6970. See 47 U.S.C.  753(c)(3)(A).x As a result, the Commission proposed to"=04 ,-(-(ZZ"  X-continue licensing international communications over INTELSAT and Inmarsat without  X-applying an ECOSat test.  x  X-xm110. ` ` In the Further Notice, the Commission revisited these proposals in light of the successful conclusion of the WTO Basic Telecom Agreement. Initially, the Commission noted that because IGOs are intergovernmental treaty organizations, they do not benefit from that Agreement, which covers only services or service suppliers of WTO Members. Consequently, the Commission noted that the United States owes no market access, national  XL-treatment or MFN obligations to the IGOs.QLo {O -ԍxFurther Notice at  32.Q  X -xn111. ` ` The Commission asked, however, whether the commitments made under the WTO Basic Telecom Agreement constitute a critical mass of open satellite markets sufficient  X -to presume that allowing entry by IGOs for provision of U.S. domestic service would enhance  X -competition in the United States.F Zo {O-ԍxId. at  33.F In that regard, the Commission noted that 51 of the 141 INTELSAT members made full or partial market access commitments in basic telecom services under the WTO; these 51 members, including the United States, own 80% of the shares of INTELSAT. In addition, 49 of the 80 Inmarsat members made commitments on basic telecommunications services. All 30 countries that made market access commitments  Xh-for mobile satellite services in the WTO Basic Telecom Agreement are Inmarsat members.Fho {O-ԍxId. at  32.F  X:-x Position of the Parties  X#-  X -xo112. ` ` Space Communications, Motorola, and PanAmSat support applying some form  X-of ECOSat test to all or particular IGOs seeking entry to provide domestic service in the  X-United States.~o yO-ԍxAMSC NPRM Comments at 5; Space Communications NPRM Comments at 8; PanAmSat NPRM Comments at 5; Motorola NPRM Comments at 4144. PanAmSat strongly opposes allowing U.S. earth stations to use INTELSAT capacity for the provision of U.S. domestic services because of enormous competitive  X-advantages the IGOs derive from their privileges and immunities.No yO9!-ԍxPanAmSat FNPRM Comments at 6.N Some parties assert that  X-IGOs are not covered by the WTO Basic Telecom Agreement,f o {O#-ԍxSee, e.g., AMSC FNPRM Reply Comments at 10; Lockheed Martin FNPRM Comments at 7; Orion NPRM Reply Comments at 78. while PanAmSat specifically claims that IGOs should not be treated as if they were WTO satellites because access by the"1 ,-(-(ZZP" IGOs was discussed in detail during the WTO basic telecommunications negotiations and  X-rejected by the negotiators.wo yOb-ԍxPanAmSat FNPRM Reply Comments at 67; AMSC FNPRM Reply Comments at 10.w  X-xp113. ` ` Other commenters recommend that we not impose an ECOSat test either on IGOs in general or with regard to specific IGO services. INTELSAT asserts that the ECOSat test is ineffective when applied to IGOs, because IGOs have no control over the domestic  Xv-policies of its sovereign members.MvXo yO -ԍxINTELSAT NPRM Comments at 9.M Furthermore, INTELSAT and COMSAT argue that a test imposed on IGOs does not motivate foreign countries to open their markets to U.S.  XH-satellite systems, as many countries do not seek access to the U.S. market.Ho yO -ԍxINTELSAT NPRM Reply Comments at 4; COMSAT NPRM Reply Comments at 17; COMSAT NPRM Comments at 2023. COMSAT also argues that there is no evidence in the record to suggest that provision of domestic services by COMSAT would have anticompetitive effects. COMSAT NPRM Comments at 1220. This argument, however, does not go to whether an entry test is necessary but whether the analysis under any such test has been satisfied. BTNA claims that it is unnecessary to subject traditional Inmarsat domestic services to a competitive entry  X -test while COMSAT contends that no test is necessary for INTELSAT or Inmarsat.h o yOc-ԍxBTNA FNPRM Comments at 2; COMSAT FNPRM Comments at 13. h Lockheed Martin proposes that the core treatybased services offered by INTELSAT and Inmarsat not be subject to any ECOSat analysis and instead continue to be authorized in the  X -same manner as they have been in the past. ( o yO-ԍxLockheed Martin FNPRM Comments at 7. Inmarsat's core services are international maritime distress and safety services. COMSAT also argues in the alternative that the Commission should apply the same treatment to provision of service using INTELSAT and Inmarsat satellites as the Commission proposes for satellites licensed by WTO  X-Members.u o yO-ԍxCOMSAT FNPRM Comments at 912; COMSAT FNPRM Reply Comments at 1012.u ` `  Xb-xq114.` ` The Networks argue that an ECOSat test should not be applied to transmission  XK-of video services using INTELSAT because of a shortage of capacity.$ZKo yO !-ԍxNetworks FNPRM Comments at 8 9. In the alternative, the networks argue that the Commission should grandfather existing services provided by INTELSAT or should determine that the critical mass test has  {O"-been met. Id.$ In response, Columbia states that the networks have not made a sufficient case for special treatment of video services. It notes that shortage of capacity can be a factor considered in application of the ECOSat test and, where there are no other options, override the absence of effective"22,-(-(ZZ("  X-competitive opportunities.Vo yOy-ԍxColumbia FNPRM Reply Comments at 45.V GE Americom disagrees that there is a shortage of capacity,  X-noting the recent launching of a new GE Americom satellite.WXo yO-ԍxGE Americom FNPRM Reply Comments at 8.W   X-xr115.` ` Deutsche Telekom objects to a route market analysis because it would allow  X-the Commission to deny entry if only one of the IGO's route markets is not open.^o yO= -ԍxDeutsche Telekom FNPRM Reply Comments at 9. ^ In addition, Deutsche Telekom notes that the route market analysis ignores the fact that many IGO member countries made satellite commitments as a result of the WTO basic  X_-telecommunications negotiations.;_xo {O -ԍxId. ; In contrast, Space Communications suggests that the route market analysis would be effective in ensuring INTELSAT does not discriminate in  X1-various route markets.b1 o yO-ԍxSpace Communications FNPRM Reply Comments at 78.b  X -xs116. ` ` With respect to our critical mass proposal, Deutsche Telekom and OrbComm suggest that the critical mass test would not be appropriate because of the difficulty of  X -determining what number of countries constitute a critical mass.z o yO -ԍxDeutsche Telekom FNPRM Reply Comments at 9; OrbComm NPRM Comments at 46.z The Networks and COMSAT argue that a critical mass of markets has been reached as a result of the WTO  X -basic telecommunications commitments.r * o yO-ԍxCOMSAT FNPRM Comments at 14; Networks FNPRM Reply Comments at 8. r In contrast, PanAmSat argues that a critical mass  X-has not been reached. It further argues that a critical mass test would allow INTELSAT to discriminate in markets in which it has market power and to crosssubsidize its service  Xd-offerings in markets in which it does not.Sd o yO-ԍ xPanAmSat FNPRM Comments at 67. S Space Communications agrees that the critical  XM-mass test would enable INTELSAT to discriminate in many markets.bMJ o yOH -ԍxSpace Communications FNPRM Reply Comments at 78.b AT&T argues that the Commission should examine the openness of all the various route markets served by the  X-IGO.Jo yO#-ԍxAT&T NPRM Comments at 16.J ORBCOMM believes that the Commission should use a combination of both the critical mass test and the effect on competition to determine whether IGO entry is appropriate. "3j,-(-(ZZ" The critical mass analysis would be the initial hurdle, which, if passed, would be followed by  X-an analysis of the effect on competition.No yOb-ԍxOrbComm NPRM Comments at 45.N  X-xt117.` ` Some commenters support the Commission's proposal to evaluate service over an IGO satellite on the basis of whether the service would diminish effective competition in  X-the U.S. market for satellite services.|Xo yO-ԍxMotorola FNPRM Comments at 6; INTELSAT NPRM Comments at 7; KDD NPRM Comments at 3. A number of commenters suggest that if an effect on competition test were applied to IGOs, the test would be  {O& -met, noting that limited Intelsat capacity is available for domestic services. See INTELSAT NPRM Reply Comments at 57; COMSAT NPRM Reply Comments at 22; CC/Networks NPRM Reply Comments at 89;  {O -HBO NPRM Comments at 20. In this Report and Order, we are establishing the test that a service provider wishing to access an IGO must meet, not whether that test has been met. Thus, these comments are not relevant to the proposals at issue in the current proceeding.  COMSAT states that, if an entry test is necessary, it should be limited to determining whether the proposed service would diminish effective  X_-competition in the United States.M_o yO-ԍxCOMSAT FNPRM Comments at 13.M Loral disapproves of such a test because it represents no  XH-improvement from a critical mass test and does not create incentives to open markets.PH, o yO%-ԍxLoral NPRM Reply Comments at 8.P  X1- Lockheed Martin, however, favors a test involving whether the entrance of an IGO provides  X -additional market advantages to an entity that has the ability to distort competition.[ o yO-ԍxLockheed Martin NPRM Reply Comments at 15.[ OrbComm supports a combination of the effect on competition and critical mass  X -approaches.N L o yO-ԍxOrbComm NPRM Comments at 46.N AMSC urges the Commission to examine carefully the impact that IGO access to the United States has on the international frequency coordination process and the ability of  X -regional and domestic systems to compete.I o yOK-ԍxAMSC NPRM Comments at 5.I GE Americom suggests the Commission adopt  X -the proposals in legislation currently pending before Congress. lo {O-ԍxGE Americom FNPRM Comments at 7. See "Communications Satellite Competition and Privatization Act of 1997," H.R. 1872, 105th Cong., 1st Sess. (1997).  Xy-x Discussion  Xb-  XK-xu118. ` ` As an initial matter, we find unpersuasive suggestions that no standard for review should be established for IGOs until a final decision is made concerning their"44,-(-(ZZ"  X-privatization.o {Oy-ԍxSee Columbia NPRM Comments at 22; GE Americom NPRM Comments at 11; Orion NPRM Comments at 15; AT&T NPRM Comments at 14; Lockheed Martin NPRM Reply Comments at 16. We are not ruling on applications to provide domestic service in this Report  X-and Order.  Rather, we are establishing the standard that we will use to judge license applications when we receive them. We share the concerns expressed by many commenters about the special advantages accorded IGOs as a result of their treatybased status. The test that we establish today is designed to take those special advantages into account in determining whether service may be provided through an IGO in the U.S. domestic market. Since COMSAT is currently the sole provider of INTELSAT and Inmarsat capacity in the United States and the U.S. has no obligation to allow access under the WTO Basic Telecom Agreement, the entry standard we set out is limited to applications from COMSAT.  X -xv119. ` ` We reaffirm our conclusion that we have no WTO obligation to allow the IGOs access to the U.S. market. As an organization created by treaty, an IGO is not a service supplier of a WTO Member and therefore does not derive any benefits from the WTO Basic Telecom Agreement. Thus, we find no merit in COMSAT's argument that we should  X -treat IGOs as if they were service suppliers of a WTO Member.L "o yO-ԍxCOMSAT FNPRM Comments at 9.L As PanAmSat, AMSC and Orion correctly point out, participants in the WTO basic telecommunications negotiations  X-were unanimous that IGOs were not service suppliers of a WTO Member.o yO-ԍxPanAmSat FNPRM Reply Comments at 6; AMSC FNPRM Reply Comments at 10; Orion FNPRM Comments at 7. Therefore, we agree with AMSC that we have no obligation under the WTO Basic Telecom Agreement to  Xf-treat IGOs as if they were licensed by WTO Members.Qf o yO!-ԍxAMSC FNPRM Reply Comments at 10.Q  X8-xw120. ` ` We find unconvincing BTNA's argument that the United States has an  X!-obligation to provide WTO Member companies direct access to Inmarsat.!o {Ol-ԍxBTNA FNPRM Comments at 3. See also Government of Japan FNPRM Comments at 3. This argument is premised on BTNA's incorrect conclusion that the U.S. Schedule of Specific Commitments only limits access to INTELSAT and Inmarsat with respect to international service and not  X-U.S. domestic service., o {O!-ԍxBTNA FNPRM Comments at 3, n.5. See also COMSAT FNPRM Reply Comments at 12. The U.S. Schedule of Specific Commitments makes no such distinction; rather it maintains access to INTELSAT and Inmarsat satellites through COMSAT  X-for the provision of any service, domestic or international.  X-xx121.` ` Although we are free to apply an ECOSat test to IGO provision of domestic services, we agree with Columbia that there is no reasonable means of applying such a test to"m5 ,-(-(ZZ1"  X-IGOs. We confirm the conclusion in the Notice that the IGOs have no home market.Io {Oy-ԍxNotice at  65.I As  X-we stated in the Notice, INTELSAT and Inmarsat are headquartered in the United States and United Kingdom, respectively, and the United States and United Kingdom forward these organizations' space station information to the ITU for registration and coordination purposes. However, the highest authority in each organization is national governments. It is unrealistic to treat the United States or the United Kingdom, respectively, as the home market, or to treat  Xz-any single nation as the home market.:zZo {O -ԍxId.:  XL-xy122.` ` We conclude that a route marketXLo yO -ԍxThe use of the term "route" market in the IGO context is a misnomer. In effect, the Commission proposed to apply a "home" market test looking at whether IGO Signatories allow U.S. satellite systems to provide domestic satellite services. test will not achieve our objective of promoting competition in the United States or opening foreign satellite markets. In the  X -Notice, one of the alternative approaches that the Commission proposed to look at was the openness of all the various route markets served by an IGO or at least the markets of its  X -Signatories.O o {O-ԍxNotice at  66.O This would require us to evaluate whether all of an IGO's Signatories allow U.S. satellite systems to provide domestic services in the Signatories' markets prior to granting COMSAT authority to provide domestic service via that IGO. We find that this sets an unnaturally high barrier because the existence of market barriers in a small number of countries would preclude approval of COMSAT's application. It also does not make sense because many of the smaller Signatories may not have policies in place or a need to establish policies to regulate domestic satellite services.  X:-xz123.` ` We also conclude that a critical mass test is not appropriate. As we noted in  X#-our discussion of critical mass in relation to nonWTO satellite systems,U#o {Or-ԍxSee supra Section III.B.1.b.3.U there is the  X -question of what constitutes critical mass and whether it has been reached.Z 0 o {O-ԍxCompare COMSAT FNPRM Comments at 1314, n.19 and Networks FNPRM Comments at 8 (both arguing that a critical mass had already been achieved) with PanAmSat FNPRM Comments at 67 (arguing that critical mass approach is inadequate).  Furthermore, the existence of a critical mass depends on the market plans of individual satellite systems and cannot devise a critical mass test that would uniformly apply to all satellite services. Even if we were able to determine what constituted a critical mass, as PanAmSat notes, a critical mass test would not prevent an IGO from engaging in crosssubsidization or otherwise taking advantage of its special status. In addition, we are concerned that applying the critical mass test would not encourage the opening of foreign markets to U.S. satellite services. A"6R ,-(-(ZZP" "critical mass" concept implies that all countries need not open their markets. Allowing countries with closed markets to serve the United States because a critical mass of open markets in other countries has been achieved, would provide no incentives for the closed market to open.  X-x{124.` ` The fact that there is no appropriate way of applying an ECOSat test to IGOs does not mean that we will allow IGOs free access to the U.S. domestic market. We  X_-conclude that we will adopt the third alternative proposed in the Notice ĩ an examination of the competitive effect of IGO entry.  X -x|125.` ` We agree with Columbia that IGOs have unique characteristics as treatybased  X -organizations that could enable them to distort competition.N o yO~ -ԍxColumbia FNPRM Comments at 2.N Among these characteristics is the immunity INTELSAT and Inmarsat enjoy from suit, including suit under the U.S. antitrust laws. COMSAT, in its role as the U.S. Signatory to INTELSAT and Inmarsat, also benefits from these immunities. We conclude that INTELSAT, Inmarsat, and COMSAT should be  X -subject to the same rules as their competitors before COMSAT will be allowed to provide domestic service via INTELSAT or Inmarsat. COMSAT states that it has never claimed immunity as a common carrier and argues that it would enjoy no special advantages over  Xf-other providers of satellite services in the United States.SfXo yOo-ԍxCOMSAT FNPRM Reply Comments at 13.S These arguments, however, overlook the benefits that COMSAT derives in its signatory capacity from the IGOs' immunities. In that capacity, COMSAT participates in business and commercial decisions  X!-protected by this immunity.N@!o yO-ԍxCOMSAT is a member of the INTELSAT Board of Governors and Inmarsat Council and participates in decisions on rates, services, financing, purchase of satellites, development of business plans and other matters normally related to the commercial operation of a satellite system. These decisions provide the basis upon which COMSAT offers service for U.S. customers. These decisions are also made by COMSAT's competitors, but by contrast they are subject to U.S. antitrust laws governing such activities. COMSAT is subject to instruction and guidance from the U.S. Government in its role as U.S. signatory to INTELSAT and Inmarsat. U.S. Government instructions are issued on limited topics involving public policy and national interest issues and normally do not involve purely commercial matters. N The courts have held that COMSAT, acting in its capacity as U.S. Signatory to INTELSAT and Inmarsat, has immunity from liability under the U.S.  X-antitrust laws. o {O!-ԍxSee AlphaLyracom Space Communications, Inc. v. Communications Satellite Corp. (COMSAT), 1990  {O^"-WL 135637 at 67 (S.D.N.Y. 1990), aff'd in part and rev'd in part, AlphaLyracom v. COMSAT, 946 F.2d 168  {O(#-(2d Cir. 1991); cert. denied, AlphaLyracom v. COMSAT, 502 U.S. 1096 (1992). See also AlphaLyracom Space  {O#-Communications, Inc. v. COMSAT, 1996 WL 897666 (S.D.N.Y.), aff'd, AlphaLyracom v. COMSAT, 113 F.3rd  {O$-372 (2d Cir. 1997). See also, SeeFone, Limited v. Communications Satellite Corporation, U.S. Court of Appeals for the Fourth Circuit, No. 961672 (unpublished decision, July 8, 1997). We find that this extension of immunity provides COMSAT a competitive"7r,-(-(ZZ"  X-advantage.$o {Oy-ԍxSee United States Government Accounting Office, Report to the Chairman, Committee on Commerce,  {OC-House of Representatives, Competitive Impact of Restructuring the International Satellite Organizations, GAO/RCED971 (Oct. 1996), at 334, stating that "immunity from lawsuits may allow the organizations [INTELSAT and Inmarsat] to act in the market in ways that competitors cannot under U.S. antitrust laws." It allows commercial decisions and activities to be conducted under a cloak of immunity unavailable to COMSAT's competitors. Because of concern over potential harm to the U.S. market for satellite services, we conclude that this is not a situation that we are willing to extend to the U.S. domestic satellite market.  X-x}126.` ` As a result, we will require COMSAT to make an appropriate waiver of  Xv-immunity from any suit as part of its application to provide domestic services via INTELSAT  Xa-or Inmarsat.ao {O -ԍxSee Merger of MCI Communications Corp. and British Telecommunications plc, FCC 97302 at 41, n. 135 and at 125 (rel. Sept. 24, 1997). If COMSAT makes an appropriate waiver,ao yO -ԍxIn order to ensure COMSAT's ability to carry out its signatory responsibilities, we recognize that COMSAT's immunity should be retained when it is carrying out instructions from the U.S. Government. we will look to COMSAT to  XJ-show that entry into the United States domestic market by an INTELSAT or Inmarsat satellite  X5-would promote competition and is otherwise in the public interest. Prospective circumstances that could give rise to competition concerns include market concentration, discrimination, and below average variable cost pricing. If there is no other way to address the competitive risks, we may deny the application. If there is a shortage of video transmission capacity, as the Networks argue, we would take this into account in considering whether access to INTELSAT or Inmarsat would distort competition in the U.S. market.  X-x~127. ` ` We adopt the tentative conclusion in the  Notice that we will evaluate access  X-requests involving international communications over INTELSAT and Inmarsat without  Xj-applying the ECOSat test.Ijf o {O-ԍxNotice at  70.I Instead, we will treat applications from COMSAT to provide international services via INTELSAT or Inmarsat on a casebycase basis as we have done in the past. In ruling on these applications, we are fully prepared to address questions about  X%-foreign market access or competition issues in the course of an application proceeding.Z% o {O-ԍxSee pending COMSAT applications: 1) Application (1SATP97) for authority to participate in INTELSAT KTV program; 2) application (CSS93009(1)A) to participate in INTELSAT program to construct INTELSAT 805 and 806 satellites. Use  X-of these satellite systems for international services is provided for under the Satellite Act, the Maritime Act, and previous Commission authorizations, and is wellestablished as a matter of  X-practice. As stated in the Notice, there are many nations in the world that are connected to the United States only by satellite, and any policy that makes it more difficult to reach these points over INTELSAT would unduly constrain the already limited service to these points. Similarly, Inmarsat remains the only twoway satellite communications system recognized"8,-(-(ZZ3" today by the International Maritime Organization as a Global Maritime Distress and Safety System provider, and we believe international services over Inmarsat should remain robust until global maritime and distress and safety services are provided by multiple private systems. For both domestic and international services applications, we will also consider  X-spectrum and other appropriate considerations discussed in Section III.B.25.pXo yO-ԍxAMSC urged us to consider the impact that IGO access has on the international frequency coordination process. AMSC NPRM Comments at 5. As we discuss below, spectrum availability and frequency coordination are always considered in our licensing process. The standard for entry will not eliminate these considerations.p  Xv-x128. ` ` We also conclude that we will not apply an ECOSat test to other IGOs, such as Eutelsat or Palapsat, that seek to serve the U.S. market, either for domestic or international services. We agree with Lockheed Martin that the competitive concerns related to  X1-INTELSAT and Inmarsat do not apply to these smaller satellite organizations.U1o yO -ԍxLockheed Martin FNPRM Comments at 8.U These entities do not have the same global coverage, market power or breadth of membership as INTELSAT and Inmarsat. As a result, we will presume that entry by these entities is  X -procompetitive. If grant would pose a risk to competition (either through the existence of immunities or other conditions) in the U.S. satellite market, we may impose conditions on the  X -authorization. If conditions would not suffice, we may deny the application.  0  X-x` `  (3)IGO Affiliates  Xb-x Background  XK-  X4-x129.` ` In the Notice, the Commission acknowledged that the IGOs were studying various proposals to streamline their organizations to enable them to respond better and faster  X-to competitive pressures.Pxo {O1-ԍxNotice at  7174.P The Commission noted that if the IGOs are to provide services in competitive markets, they cannot be permitted to leverage the benefits of their intergovernmental status to distort competition unfairly. The Commission also recognized that any IGO affiliate may be able to take advantage of these privileges if it were not truly independent. For these reasons, the Commission asked whether affiliates of IGOs should be  X-treated as intergovernmental or private entities.F o {OP!-ԍxId. at  64.F  Xg-x130. ` ` In addition, the Commission proposed to treat IGO affiliate satellites like any other nonU.S. satellite seeking access to the U.S. market, although the Commission proposed to scrutinize, as part of the public interest analysis, the affiliate's independence from any IGO  X"-or its Signatories. Thus, in the Notice, the Commission proposed to apply an ECOSat test, as well as other public interest factors. The Commission stated that any views expressed by" 9,-(-(ZZy" the Executive Branch regarding the extent to which the affiliate's structure is consistent with  X-U.S. policy would be a prominent part of the analysis.Fo {Ob-ԍxId. at  73.F Finally, the Commission proposed to apply this standard of review to any request to transfer existing IGO licenses to an affiliate  X-and to new services via an affiliate.FZo {O-ԍxId. at  74.F@h  X-x131. ` ` In light of the WTO Basic Telecom Agreement, in the Further Notice, the Commission proposed that IGO affiliate satellites from WTO Members would be accorded the  Xa-same treatment as any satellite system of a WTO Member.Qao {O -ԍxFurther Notice at  34.Q Therefore, the Commission proposed not to apply an ECOSat test to IGO affiliate satellites licensed by a WTO  X3-Member.F3~o {Ob-ԍxId. at  35.F The Commission reiterated its concern, however, that the unique relationship between an IGO and its affiliate could pose a very high risk to competition in satellite services to, from and within the United States. The Commission noted that in the WTO Basic Telecom Agreement, the United States had preserved its ability to protect competition in the U.S. market, including the possibility of not granting market access to a future IGO  X -affiliate satellite.: o {O-ԍxId.: In support of this position, the Commission cited the U.S. Trade Representative's statement that the United States has no obligation to permit market access to a future privatized affiliate, subsidiary, or other IGO spinoff that would likely lead to  X{-anticompetitive results.* {o {O-ԍxId. See Letter from Charlene Barshefsky, U.S. Trade Representative Designate to Ken Gross, President and Chief Operating Officer, Columbia Communications (Feb. 12, 1997) (USTR Letter), stating in part: XxWe have also concluded that the United States cannot be forced to grant a license to a privatized intergovernmental satellite organization (ISO) (should the ISO change its treaty status and incorporate in a country) or to a future privatized affiliate, subsidiary or other form of spinoff from the ISO. Existing U.S. communications and antitrust law, regulation, policy and practice will continue to apply to license applicants if [the WTO Basic Telecom Agreement] goes into effect. Both Department of Justice and FCC precedent evidence longstanding concerns about competition in the U.S. market and actions to protect that competition. We have made it clear to all our negotiating partners in the WTO that the United States will not grant market access to a future privatized affiliate, subsidiary or other form of spinoff from the ISOs, that would likely lead to anticompetitive results. Ɩ As a result, the Commission proposed not to apply an ECOSat test to IGO affiliate satellites of WTO member countries, but to review the affiliate's relationship to its IGO parent to ensure that grant would not pose a very high risk to competition in the U.S. satellite market, through, for example, collusive behavior, crosssubsidization, denial of"8:,-(-(ZZH"  X-market access, and directly or indirectly benefitting from IGO privileges and immunities.Qo {Oy-ԍxFurther Notice at  36.Q Finally, the Commission noted that this test would apply to evaluation of requests to use satellites of future IGO affiliates.  X-x Position of the Parties  X-  Xv-x132.` ` A number of commenters agree that IGO affiliate satellites should be treated  X_-the same as other nonU.S. satellites._Zo yOj -ԍxLockheed Martin FNPRM Comments at 8; Deutsche Telekom FNPRM Reply Comments at 10; COMSAT FNPRM Comments at 19; European Commission FNPRM Reply Comments at 4. USTR states that application of the ECOSAT test  XH-should be governed by whether the licensing authority is a WTO Member.RHo yO -ԍxUSTR FNPRM Reply Comments at 67.R Deutsche Telekom argues that the Commission has to grant the same rights and privileges to IGO affiliates licensed by WTO Members as it does to other satellite systems licensed by WTO  X -Members.t  Bo yO-ԍxDeutsche Telekom FNPRM Reply Comments at 10. Loral stated that IGO affiliates were not entitled to benefit under the WTO agreement. Loral FNPRM Comments at 12. This statement is inaccurate. If an IGO affiliate is a "service supplier" of a WTO Member, it is entitled to the benefits of the WTO Basic Telecom Agreement. t COMSAT states that the competitive review envisioned for all nonU.S. satellites should be sufficient to detect any affiliate relationships or structures that pose a risk  X -to competition.S  * o yO-ԍxCOMSAT FNPRM Reply Comments at 17.S It argues that any further inquiry would set a bad precedent for other  X -countries.P  o yO)-ԍxCOMSAT FNPRM Comments at 1920.P Lockheed Martin agrees, stating that the Commission would need to consider any potential anticompetitive or market distorting consequences of a continued relationship  X-between an IGO and its affiliate.U J o yO-ԍxLockheed Martin FNPRM Comments at 8.U France Telecom states that if an entry test is necessary, any conditions should be narrowly crafted so as to avoid hampering the ability of the affiliate to compete fairly and effectively. Furthermore, direct or indirect government ownership of an  XK-IGO affiliate should not prevent it from obtaining a license.Z Ko yO!-ԍxFrance Telecom FNPRM Reply Comments at 4.Z "4;j ,-(-(ZZ"Ԍ X-x133.` ` Others argue that IGO affiliate satellites should be subject to more rigorous  X-scrutiny than other satellite systems from WTO Members. "o yOb-ԍxTRW FNPRM Comments at 6; GE Americom FNPRM Comments at 6; PanAmSat FNPRM Comments at 7; Orion FNPRM Comments at 8; Columbia FNPRM Comments at 3; Space Communications FNPRM  {O-Comments at 9. See also Loral FNPRM Comments at 6 (although Loral urges the Commission to seek further comment to develop rules and standards under which an IGO affiliate may serve the U.S. market). Orion argues that the  X-Commission must aggressively police IGO affiliate satellites to ensure that only bona fide  X-independent affiliates are permitted into the U.S. market.Lo yO -ԍxOrion FNPRM Comments at 11.L Orion urges us to adopt a broad definition of affiliates, not limited to those entities under common ownership or control, and asks us to look at any preferential contractual arrangements between an IGO affiliate and IGO  Xx-signatory administrations that would enable it to act in an anticompetitive manner.FxBo {Ok -ԍxId. at note 21.F PanAmSat notes that it is appropriate and necessary to inquire whether the affiliate could pose a significant risk to competition and whether the affiliate is structured to prevent practices  X3-such as collusive behavior, crosssubsidization and denial of market access.P3o yO-ԍxPanAmSat FNPRM Comments at 78.P Space Communications supports the Commission's decision to review the affiliate's relationship to its IGO parent and suggests that the Commission consider structural factors that could lead to  X -collusive behavior, crosssubsidies and the denial of market access.` d o yO-ԍxSpace Communications FNPRM Reply Comments at 9.` TRW agrees with the Commission's assessment of the inherent risk to competition posed by IGO affiliates in the  X -U.S. marketplace.I o yOe-ԍxTRW FNPRM Comments at 4.I Loral argues that, because of their ownership interest, IGO signatories will give IGO affiliates preferential treatment over other private systems. Loral also notes  X-that IGO signatory ownership may make it easier for IGO affiliates to raise capital.K o yO-ԍxLoral FNPRM Comments at 8.K Columbia argues that the streamlined WTO model should apply only to entities that have an entirely separate investment structure and no special treaty privileges. If any vestigial IGO  XM-entity remains, Columbia argues, the Commission should review those ties.NMo yO!-ԍxColumbia FNPRM Comments at 3.N  X-x134.` ` A number of commenters cite the letter from U.S. Trade Representative Barshefsky, quoted above, for the proposition that we should closely scrutinize IGO  X-affiliates.o {OF&-ԍxSee, e.g., Columbia FNPRM Comments at 4; Orion FNPRM Comments at 1011.  Indeed, Columbia contends that the letter supports the proposition that an IGO"<6,-(-(ZZ'"  X-affiliate has to be totally devoid of IGO ownership to qualify for entry.No yOy-ԍxColumbia FNPRM Comments at 4.N COMSAT argues that the USTR's letter does not establish a separate standard for IGO affiliates. Rather, according to COMSAT, the letter states that IGO affiliates will be treated the same as all other applicants and that this scrutiny should detect any anticompetitive relationships  X-between the IGOs and their affiliates.SXo yO-ԍxCOMSAT FNPRM Reply Comments at 17.S @  Xv-x135. ` ` Comments are divided as to whether ICO should be treated as an IGO affiliate, subject to greater scrutiny when it applies for a license, or as any other WTO satellite  XH-system.XHo yO -ԍxLoral FNPRM Comments at 1317; TRW FNPRM Comments at 47; Hughes FNPRM Comments at 10, Reply Comments at 56; ICO NPRM Comments at 4244, FNPRM Comments at 1516, Reply Comments at 16; COMSAT FNPRM Comments at 19. Some commenters see no rational basis for distinguishing between an existing and  X1-future IGO affiliate.e1o yO-ԍxTRW FNPRM Comments at 4; Loral FNPRM Comments at 14.e Hughes notes that ICO had not been considered as a future IGO  X -affiliate during the basic telecom negotiations and should not be treated as one now.T o yOc-ԍxHughes FNPRM Reply Comments at 56.T  X -x Discussion  X -x136.` ` We affirm the tentative conclusion in the Further Notice that we should treat  X -IGO affiliate satellites  ( o {O-ԍxFor the purpose of this Report and Order, an IGO affiliate is an entity created by an IGO, in which an IGO and IGO signatories maintain ownership interests. ICO falls within our definition of an IGO affiliate.  licensed by WTO Members like other satellites licensed by WTO Members. Thus, for services covered by U.S. commitments under the WTO Basic Telecom Agreement, we will apply the presumption in favor of entry to an IGO affiliate licensed by a WTO Member. We reserve the right, however, to attach conditions to the grant of authority or, in the exceptional case in which an application would pose a very high risk to competition in the U.S. satellite market, to deny the application. In determining whether an application to serve the U.S. market by an IGO affiliate raises the potential for competitive harm, we will consider any potential anticompetitive or market distorting consequences of continued relationships or connections between an IGO and its affiliate. For example, we will look at whether the affiliate is structured to prevent practices such as collusive behavior or crosssubsidization, the degree of affiliation between the IGO and its affiliate, and whether the affiliate can directly or indirectly benefit from IGO privileges and immunities. We will also consider the ownership structure of the affiliate, the effect of IGO and other Signatory ownership, and the existence of clearly defined armslength conditions governing the affiliateIGO relationship. We anticipate that armslength conditions would include separate officers,"g= ,-(-(ZZ1" directors, employees, and accounting systems, and fair market valuing for permissible business transactions between an IGO and its affiliate that is verifiable by an independent audit and consistent with normal commercial practice. There should be no common marketing or recourse to IGO assets for credit or capital. It is also essential that an IGO not register or coordinate spectrum or orbital locations on behalf of its affiliate.  Xv-x137. ` ` We recognize that the creation of IGO affiliates will result from international negotiation among INTELSAT or Inmarsat members. Our competition review will reflect any arrangements agreed to by the United States as a result of such negotiations. As we stated in  X1-the Notice, due to the role of the Executive Branch in the negotiation of the creation of any IGO affiliate, we will take into account views expressed by the Executive Branch on the competitive nature of requests for IGO affiliate entry as part of our public interest analysis.  X -x138.` ` We will apply the ECOSat test as described above to IGO affiliate satellites from nonWTO countries. Similarly, we will treat an IGO affiliate's provision of DTH, DBS and DARS in the same manner as other nonU.S. satellites systems providing those services. IGO affiliates also will be subject to the same spectrum availability considerations, licensing, and operating requirements, and other public interest factors discussed below.  XM-x ` ` e. Bilateral Agreements (#  X6-  X- xBackground  X-  X-x139.` ` In the Further Notice, the Commission recognized that to continue our goal of enhancing competition in the global satellite market, the United States may enter bilateral  X-agreements with individual countries for the provision of satellite services.Qo {O>-ԍxFurther Notice at  29.Q Indeed, the United States recently completed a bilateral agreement with Mexico for DTHFSS and DBS  X-service, services which are not covered under the WTO Basic Telecom Agreement.>Zo yO-ԍxAgreement between the Government of the United States of America and the Government of the United Mexican States Concerning the Transmission and Reception of Signals from Satellites for the Provision of Satellite Services to Users in the United States of America and the United Mexican States, April 26, 1996. Protocol Concerning the Transmission and Reception of Signals from Satellites for the Provision of DirecttoHome Satellite Services in the United States of America and the United Mexican States, November 8, 1996.> The  X-Commission noted that it expects any such agreements to benefit U.S. operators by providing  Xi-them with market access to a country on a national treatment basis.Qi o {O$#-ԍxFurther Notice at  29.Q  X;-x140. ` ` The Commission proposed to evaluate applications based on bilateral satellite services agreements in the same manner that we proposed to treat applications to access"$>,-(-(ZZz"  X-satellites licensed by WTO Members for the provision of covered services.Fo {Oy-ԍxId. at  30.F Specifically, the Commission proposed not to apply the ECOSat test to these applications, but to evaluate such applications under a presumption that entry will promote competition unless an opposing party demonstrates a very high risk to competition in the United States satellite market that could not be addressed by conditions on the license. The Commission sought comment on this proposal.  X_- xPositions of the Parties  XH-  X1-x141. ` ` The commenters support our proposal.X 1Zo yO< -ԍxGE Americom FNPRM Comments at 45; GE Americom FNPRM Reply Comments at 23; Hughes FNPRM Comments at 1516; Hughes FNPRM Reply Comments at 67; Orion FNPRM Comments at 7 n.13; PanAmSat FNPRM Comments at 8 n.16; Qualcomm FNPRM Comments at 67. In addition, the European Commission reiterates its position that DTHFSS, DBS, and DARS effectively are covered under the WTO Agreement, and thus, should not be subject to an ECOSat test. European Commission FNPRM Reply Comments at 23. We note that despite our overall treatment of DTHFSS, DBS, and DARS as noncovered WTO services, our treatment of those services in the context of bilateral agreements will achieve the result the European Commission seeks a presumption in favor of entry of enhanced competition, and no application of the ECOSat test.X They claim that an ECOSat test would be "redundant" because the purpose of a bilateral agreement is to enhance competition by permitting foreignlicensed satellites to offer new services to U.S. consumers, and opening foreign markets to U.S.licensed satellites.  X -x142. ` ` Some parties make recommendations about how we should execute bilateral agreements. Orion suggests that we conduct bilaterals as expeditiously as possible and that we not halt service while negotiations are underway. It recommends that, rather than freezing earth station applications involving services under discussion, we grant special temporary  Xb-authority for foreign systems to operate in the United States.!"b* o yO=-ԍxOrion FNPRM Comments at 7. Orion claims, for example, that the Commission's freeze on earth station applications to communicate with the Mexican Telecom system during the sixmonth negotiation period between the United States and Mexico on an FSS protocol, affected the ability of Orion and other U.S. licensee  {O-to obtain licenses for services they wanted to provide via the Telecom system. Id. GE Americom urges us to retain authority to monitor competitive conditions and compliance with the terms of a bilateral agreement, as well as the power to revoke or condition authorizations as necessary to address  X-competitive concerns.S"o yO"-ԍxGE Americom FNPRM Comments at 45.S PanAmSat suggests that, if a bilateral agreement governs two or more satellite services, the Commission should retain authority to deny access to operators"?",-(-(ZZ" licensed by the foreign country for all such services if U.S. licensees subsequently are denied  X-access regarding the provision of any of the services covered under the bilateral agreement.h#Xo yOb-ԍxPanAmSat FNPRM Comments at 8 n.16. For example, according to PanAmSat, if a bilateral agreement covered both FSS and DTH and the nonU.S. party subsequently denied U.S. operators access to its market for FSS services, the U.S. could deny both DTH and FSS services to operators licensed by the nonU.S. party. h  X-  X- xDiscussion  X- x` `   X-x143. ` ` We adopt our proposal to review applications to access a satellite licensed in a foreign country with which the United States has an existing bilateral agreement involving the particular type of satellite service to be provided based on a presumption that entry will promote competition. In such cases, the bilateral agreement would itself grant U.S. companies the right to enter a foreign country's market for that particular satellite service market and affords various other rights and protections concerning the delivery of service in that market. In essence, a bilateral agreement acts as a gateway to, and a guarantee of, increased competition in the two countries at both ends of the agreement. Thus, we find that in these situations, there is no need to conduct an inquiry into the effective competitive opportunities in the other country's market.  X-x144.` ` Consistent with the framework we adopt today for satellites licensed by WTO Members, where we also rely on a presumption of enhanced competition, opposing parties will have the opportunity to demonstrate, and we may determine on our own motion, that grant of the application would cause competitive harm to the U.S. satellite market. In addition, the application will be subject to other public interest requirements, and must comply with Commission technical and service rules, as discussed below.  X-x145. ` ` We have noted the suggestions about how we should conduct bilateral negotiations. Expeditious action to advance competition in satellite services and development of global systems for the benefit of United States consumers is a paramount Commission goal. This objective will continue to be part of our approach as we enter bilateral  X-discussions. Commenters such as PanAmSat and GE Americom can be assured that we will retain authority to monitor competitive conditions and compliance with the terms of a bilateral agreement, as well as our authority to revoke or condition authorizations as necessary to address any competitive concerns that might develop. In addition, we will not adopt a rule requiring us to take action on pending earth stations during bilateral discussions, as Orion suggests. Rather, we will make an assessment of the best way to proceed based on the circumstances at the time. x  X- x` ` 2. Spectrum Availability  X!-x146.` ` In both the Notice and Further Notice, the Commission proposed that it would consider other public interest factors. These factors include, for example, spectrum""@#,-(-(ZZ!" availability, foreign ownership, legal, technical, and financial qualifications, operating requirements, and national security, foreign policy and law enforcement and trade policy  X-concerns.j$o {OK-ԍxNotice at  48; Further Notice at  37.j We first discuss spectrum availability.  X-  X-x147. ` ` In the Notice and Further Notice, the Commission stated that spectrum  X-availability constraints often impact the satellite licensing process.j%Zo {O-ԍxNotice at  50; Further Notice at  38.j For example, the Commission often receives more applications for proposed satellites than it can accommodate in the spectrum available for a specific service. The Commission noted that in such cases it would not be able to accommodate all proposed nonU.S. satellites any more than it could accommodate all proposed U.S. satellites. Similarly, the Commission noted that where it already has licensed the maximum number of satellites that can be accommodated in a particular frequency band, we would not be able to offer opportunities for new entrants, including nonU.S. satellite systems. Further, it stated that it did not expect to require existing U.S. satellite systems to change their licensed operating parameters or to decrease their capacity in order to accommodate additional nonU.S. systems.  X-x148.` ` Commenters generally agree with our proposal to consider spectrum availability  X{-in determining whether to grant a nonU.S. satellite access to the U.S. market.&{o yO-ԍxAMSC FNPRM Comments at 46; Loral FNPRM Comments at 21; COMSAT FNPRM Reply Comments at 18. COMSAT asks that any decisions based on spectrum availability be reasonable and objective in order to  XM-preclude the appearance of protectionist or discriminatory treatment.S'MDo yOB-ԍxCOMSAT FNPRM Reply Comments at 18.S  X-x149.` ` We adopt our proposal to consider spectrum availability as a factor in determining whether allowing a foreign satellite to serve the United States is in the public interest. We envision that issues of spectrum availability may arise regardless of whether the foreign operator seeks to use a proposed or existing nonU.S. satellite to serve the United States. First, a foreign operator may choose to participate in a U.S. space station processing round, a vehicle by which we concurrently consider all requests to implement satellites in the same frequency bands. Given the scarcity of available orbit and spectrum resources, it often is not possible to issue licenses to all entities that participate in a processing round. This situation undoubtedly will intensify as foreign satellites enter the market. We emphasize that the rules and policies we adopt in any subsequent processing round will apply to both U.S. and nonU.S. applicants. We agree with COMSAT that these procedures should be transparent and nondiscriminatory. As a result, however, we may be forced to deny a pending application, whether relating to a U.S. licensed or nonU.S. licensed space station, or to otherwise deny a request to serve the United States through a foreign satellite. "A',-(-(ZZZ"Ԍ X-ԙx150.` ` Further, spectrum considerations may arise in cases where the foreign service provider seeks access to the U.S. market by filing an earth station application to access an operating nonU.S. satellite. In these cases, we must determine whether, and to what extent, the proposed U.S. service will impact existing operations in the United States. We believe that, in the majority of cases, nonU.S. satellites meeting Commission technical requirements will be able to be coordinated to operate compatibly with U.S.licensed systems. Nevertheless, there may be exceptional cases where grant would create debilitating interference problems or where the only technical solution would require U.S.licensed  XH-systems to significantly alter their operations.Q(Ho {O -ԍxFurther Notice at  38.Q In these cases, we would impose technical constraints on the foreign system's operations in the United States or, in cases where any such measures would be insufficient to remedy the technical problem, deny the request. We  X -consider the same factors in acting on similar requests from U.S. applicants.)Z Zo {O-ԍxSee, e.g., GE American Communications, Inc., 3 FCC Rcd 6871 (1988) (denying GE's request to operate a high powered satellite at an orbital location from which it would cause unacceptable interference to adjacent U.S. satellites).    X -  X - x` ` 3. Eligibility Requirements x  X - x` `  a.Foreign Ownership  Xy-x 151.` ` In the Further Notice, the Commission recognized that, as a result of the explosive growth of global satellite networks generally and open entry policies under the WTO Basic Telecom Agreement, there likely will be an increase in foreign investment in satellite facilities that serve the United States. Consequently, foreign ownership issues may arise. Section 310(b)(4) of the Communications Act authorizes the Commission to allow up to 100 percent indirect foreign ownership in common carriers. To the extent that Section 310 applies to an application for an earth station license to serve the United States as a common  X-carrier, we will apply the rules established in our concurrent Foreign Participation Order.l*|o {O-ԍxSee Foreign Participation Order, Section III.D.l  X-As discussed fully in that Order,;+o {O-ԍxId. ; we find that easing foreign investment in U.S. common carrier wireless markets will serve the public interest. Therefore, we adopt a rebuttable presumption that applications by investors from WTO Member countries to exceed the 25 percent foreign ownership limitation under Section 310(b)(4) will promote competition.  XT- "TB+,-(-(ZZ"  X-x` `  b. Legal, Financial, and Technical Qualifications  X- xBackground  X-x ` `  X-x152. ` ` In the Notice and Further Notice, the Commission proposed to require foreignlicensed satellites to comply with all Commission qualification requirements for the particular satellite service involved before we would grant them access into the U.S. market. It did so to promote the efficient use of the scarce and valuable orbit/spectrum resource to the ultimate  XJ-benefit of U.S. consumers.,Jo {O -ԍxNotice at  17 and 5456; Further Notice at  3746, 50, and 53.  X - xPositions of the Parties  X -x153. ` ` Most commenters support our proposal to require foreign operators to meet the  X -same qualification criteria we impose on U.S. applicants.,-Z Zo {O-ЍxSee GE Americom FNPRM Comments at 9; Motorola FNPRM Comments at 67. See, e.g., AMSC FNPRM Reply Comments at 89; Loral FNPRM Comments at 2324; Orion FNPRM Comments at 14; UTC FNPRM Comments at 2; Winstar FNPRM Comments at 12., PanAmSat asserts that this is necessary "to ensure fair and effective competition," while Orion observes that waiving obligations for nonU.S. satellites would create an incentive for U.S. entities to circumvent  X-Commission rules by obtaining licenses from other countries.t.|o yO-ԍxPanAmSat FNPRM Comments at 8; Orion FNPRM Reply Comments at 5 n.12.t In contrast, ICO, Columbia, and Lockheed Martin urge that where a foreign operator has received a license from another administration and international coordination has been completed, further Commission review is unnecessary because the operator already has demonstrated to a regulatory body that it is  X6-qualified to hold a license./6 o yO-ԍxICO FNPRM Comments at 1011; Columbia FNPRM Comments at 78; Lockheed Martin FNPRM Reply Comments at 3. Hughes states that applying any U.S. qualification requirements to nonU.S. operators that go beyond technical compatibility could deter foreign entry and  X-deprive U.S. consumers of the benefits of added competition.U0d o yO-ԍxHughes FNPRM Reply Comments at 910.U It further argues that, if adopted, our proposed qualification requirements could cause other countries to adopt similar duplicative requirements or impose retaliatory space station licensing or other burdensome requirements on U.S. licensed satellite operators seeking to provide service in foreign  X-markets.:1 o {OQ$-ԍxId.:  X~- "~C 1,-(-(ZZP"  X-x Discussion  X- x154. ` ` Through numerous rulemakings intended to authorize innovative commercial satellite services, the Commission has developed various qualification requirements that are designed to maximize the number of competitive systems available to customers while  X-ensuring spectrum efficiency.2~o {O-ЍxSee, e.g., Amendment of the Commission's Rules to Establish Rules and Policies Pertaining to a Mobile  {O-Satellite Service in the 16101626.5/2483.52500 MHz Frequency Bands, 9 FCC Rcd 5936 (1994) (adopting rules to accommodate five Big LEO systems, requiring each to be capable of serving the United States at all times);  {Ob -Licensing of Space Stations in the Domestic FixedSatellite Service, 54 Rad. Reg. (P&F) 577 (1983) (reducing orbital spacings between U.S. satellites to 2 degrees and adopting more stringent technical requirements to permit closer spacings).  To this end, we require U.S. satellite applicants to demonstrate their legal, financial, and technical qualifications to hold a license before we will grant such applications. Given the differences in the technical, spectrum, and sharing  XH-characteristics in different satellite services (e.g., Big LEO as compared to Little LEO systems), the Commission has adopted qualification requirements that differ somewhat from service to service.  X -x155. ` ` In adopting a framework under which to consider U.S. market access by nonU.S. satellites, we recognize the importance of proceeding cautiously before restricting or conditioning entry by foreign operators. We proceeded cautiously when we adopted and  X -refined our rules for domestic entry. From the beginning, our "Open Skies" policy was designed to allow the maximum number of U.S. satellites to operate with maximum  X}-flexibility in the United States.3}o {O<-ԍxDomestic Communications Satellite Facilities, 22 FCC 2d 86 (1970) (Domsat I). This policy, however, did not mean that U.S. entry into the domestic satellite market was unlimited. Our entry standards necessarily balanced our goal of promoting competition with the recognition that the orbit and frequency spectrum was a  X8-limited and valuable resource.48o {O-ԍxSee Domestic Communications Satellite Facilities, 35 FCC 2d 844 (1972) (Domsat II). We designed technical requirements to accommodate the maximum number of systems in orbit and to ensure that a proposed system would be compatible with ongoing and future operations in a particular frequency band; we adopted financial requirements to ensure that orbit and spectrum resources are used efficiently, not wasted, by requiring applicants to demonstrate that they are fully capitalized and financially able to implement systems; and we imposed legal requirements to ensure that licenses are not awarded to entities previously found to have violated U.S. laws or Commission rules.  X-x156. ` ` We conclude that it is necessary to apply these same considerations to requests to serve the United States using foreignlicensed satellites. First, technical requirements must be met because allowing a foreignlicensed satellite to provide service into the United States may cause unacceptable interference with U.S. systems and possible service disruptions to";D2 4,-(-(ZZ" customers. Other countries have not adopted the same spectrummaximizing technical requirements that we have imposed, such as two degree orbital spacing between geostationary orbit satellites, power limitations, and stringent outofband emission limits. Thus, it is necessary to examine a nonU.S. satellite's compliance with Commission technical requirements prior to granting a request to serve the United States. x  Xv-x157. ` ` Second, we must apply our financial rules to all systems serving the United States, including those involving nonU.S. space stations. The Commission's financial  XH-requirements, established under Section 308(b) of the Communications Act,G5Ho yO -ԍx47 U.S.C.  308(b).G are based on our repeated experience that undercapitalized companies have difficulty raising the hundreds of millions of dollars needed to finance a satellite system, even after receiving a Commission license. Historically, such companies have tied up valuable orbit resources for years while attempting, often unsuccessfully, to build their proposed systems to the exclusion of other financially qualified entities. Reserving orbit locations or spectrum for future nonU.S. satellites without examining whether the operator is financially qualified to build the system could block entry by other U.S. or foreign companies that have the financial capability to proceed, ultimately delaying service to the public. It is therefore necessary to continue to apply our financial qualification rules to any entity seeking to serve the United States.  XK-x158. ` ` Third, consistent with the Commission's public interest responsibilities under  X4-Sections 308 and 309, we impose legal qualifications to U.S. licensees.64Xo yO=-ԍx47 U.S.C.  308(b), 309. Section 308(b), for example, permits us to consider character and citizenship qualifications. One of the purposes of our legal requirements is to ensure that entities providing satellite services in the United States will abide by Commission rules. This is especially important for satellite services, where the costs and value of a system are high, and technical coordination and interference concerns are paramount. We realize that there is no guarantee that an entity will comply with our rules, but find that certain information may provide relevant indicia of compliance. For example, violations of law by an applicant, particularly those relating to  X-credibility, may be evidence that it will not comply with Commission rules.:7\o {O-ԍxSee, e.g., Policy Regarding Character Qualifications in Broadcast Licensing, 102 FCC 2d 1179, 1195 {O-97, 120003 (1986), modified, 5 FCC Rcd 3252, 3252 (1990); MCI Telecommunications Corp., 3 FCC Rcd 509, 515 n.14 (1988). : Thus, it is vital that the Commission obtain assurance that an applicant will follow the rules that we have established over the years to maximize the development of efficient, compatible, and innovative satellite systems in the public interest.  X -x159.` ` Consequently, we conclude that when considering a request for authority to use a nonU.S. space station to serve the U.S. market, we must apply the same qualification criteria with respect to the foreign space station as we do for a U.S. licensed space station. "E7,-(-(ZZ<" We find that requiring prospective foreign entrants to meet the same qualification requirements we apply to U.S. applicants is consistent with our MFN and national treatment obligations under the GATS. If this policy causes other countries to adopt licensing requirements for U.S. satellite operators seeking to provide service in that country, as Hughes suggests, we find it on balance to be a minimal burden when compared to the possibility that unrestricted entry by foreignlicensed satellite systems would vitiate our orbit efficiency policies. Indeed, we do not expect other countries' licensing requirements to be a burden in most instances. Most of our largest trading partners are WTOmember countries, where U.S. operators must receive national treatment.  X - x` ` 4. Operating Requirements  X - x 160.` ` As described above, in the Notice and Further Notice, the Commission proposed that, once operational, a nonU.S. satellite system serving the United States whether licensed by a WTO member or not would be subject to the same ongoing requirements that apply to U.S. satellites. We address certain specific rules below.  X{-x` `  a.Prohibition Against Exclusive Arrangements  Xd- x  XM- xBackground  X6-x ` `   X-x161. ` ` In the Further Notice, the Commission proposed to apply to the prohibition against exclusive service arrangements applicable to U.S. satellite operators providing  X-international services to nonU.S. licensed satellite operators as well.Y8o {Ol-ԍxFurther Notice at  4142. Y An exclusive arrangement generally would take the form of an agreement between a space station operator or service provider that establishes a particular satellite as the only permissible facility by which to offer a particular satellite service between the United States and the foreign country. The prohibition was intended to facilitate global competition by furthering the use of multiple satellite systems in other countries and to ensure that all U.S. licenses have an opportunity to provide truly global service. The Commission stated that it intended to construe this prohibition bearing in mind that spectrum coordination and availability in particular countries may limit the number of systems that can provide service to that country.  X -x162. ` ` In the Further Notice, the Commission proffered two alternative approaches to applying this restriction to foreign satellite operators. First, under the narrow approach, the Commission suggested that it could condition any authority for the foreign system to serve the United States on the foreign satellite not providing service between the United States and any specific country with which such satellite already has entered into an exclusive  X"-arrangement.:9"Zo {O&-ԍxId.: Under the broader approach, the Commission suggested that it could subject""F9,-(-(ZZ!" an authorization to the general condition that the licensee may not serve the U.S. market at all  X-if it maintains exclusive arrangements with any country.Q:o {Ob-ԍxFurther Notice at  43.Q  X- xPositions of the Parties  X-x  X-x163. ` ` Most commenters generally support conditioning grant of any authorization to serve the United States through the use of a nonU.S. satellite on the prohibition against  Xa-exclusive arrangements.;aZo yOl -ԍxColumbia FNPRM Comments at 5; PanAmSat FNPRM Comments at 89; PanAmSat FNPRM Reply Comments at 3; Motorola FNPRM Comments at 4 and n.7. Columbia additionally supports license revocation for violation of  XJ-the condition.N<Jo yO -ԍxColumbia FNPRM Comments at 5.N PanAmSat specifically asserts that all foreign systems serving the U.S. market including those from WTO and nonWTO countries and for covered and uncovered services must be subject to the prohibition against maintaining an exclusive relationship  X -with any foreign country.t= Bo yO-ԍxPanAmSat FNPRM Comments at 89; PanAmSat FNPRM Reply Comments at 3.t It claims that the ability of a nonU.S. system to serve some  X -routes closed to U.S. systems will disadvantage U.S. systems on all routes.P> o yOu-ԍxPanAmSat FNPRM Comments at 89.P Orion notes, however, that the Commission may lack the authority to condition licenses involving WTO member satellites, absent a showing that the exclusive arrangement will create a very high risk to competition in the U.S. market. Orion suggests, therefore, that we may be able to  X-condition authorizations regarding nonWTO satellites.O?b o yO-ԍxOrion FNPRM Comments at 1415.O  Xh-x164. ` ` On the other hand, TMI opposes our proposal to extend the prohibition on exclusive arrangements to nonU.S. satellites. TMI contends that the proposal is unworkable, unreasonably vague, inconsistent with the Commission's policies for telecommunications carriers, and would violate MFN and national treatment because most U.S. satellite licensees,  X -including AMSC, are not subject to such a rule.@  o yO -ԍxTMI FNPRM Supplemental Comments at 811; Space Communications FNPRM Reply Comments at 5  {Ow!-(citing Further Notice at  42). TMI also submits that in most cases access to nonU.S. satellites will be triggered by a user request through an earth station  X-application.[AL o yO$-ԍxTMI FNPRM Supplemental Comments at 9 n.18.[ It states that such users usually will have no knowledge of the satellite operator's nonU.S. business practices, and that it would be unrealistic to hold an earth station"GA,-(-(ZZ"  X-operator responsible for compliance with this limitation.:Bo {Oy-ԍxId.: Space Communications claims that a prohibition against exclusive arrangements even if such arrangements do not adversely affect market access for U.S. competitors is unnecessarily broad and not likely to  X-foster innovation or competition.`CZo yO-ԍxSpace Communications FNPRM Reply Comments at 5.`  X-x165.` ` TMI, in addition, claims that our alternative proposal to impose a broad condition prohibiting the nonU.S. provider from serving the U.S. market at all if it maintains  X_-exclusive arrangements with any country "would plainly negate the United States' WTO schedule of market opening commitments," and would violate the MFN and national  X3-treatment provisions of the GATS.D3o {O -ԍxTMI FNPRM Supplemental Comments at 8 n.16 (citing Further Notice at  43). Instead, TMI recommends that we review, on a casebycase basis, the anticompetitive impact, if any, of an exclusive arrangement entered into by a nonU.S. satellite operator. TMI contends that our policies barring anticompetitive practices, together with our complaint procedures, provide sufficient regulatory safeguards to  X -deter arrangements that may substantially impair competition for U.S. satellite services.E" |o {O-ԍxTMI FNPRM Supplemental Comments at 11. See AirTouch FNPRM Comments at 4 (asserting that if a nonU.S. licensed MSS provider seeks to serve a nonWTO market (as well as the U.S. market), the Commission can address any competition concerns by applying the same rules to those entities that it applies to U.S. licensed systems, citing the prohibition on exclusive arrangements).  X -x Discussion  X{-x166. ` ` The goal of our exclusive arrangement prohibition is to maximize fair and effective competition. TMI correctly notes that certain U.S. satellite operators, including AMSC, are not subject to this license condition. The more recently licensed satellite operators are, however, subject to this prohibition, including Big LEO and 28 GHz  X-licensees.Ff o {O6-ԍxAmendment of the Commission's Rules to Establish Rules and Policies Pertaining to a Mobile Satellite  {O-Service in the 16101626.5/2483.52500 MHz Frequency Band, 11 FCC Rcd 12861 (1996), 61 FR 9944 (March  {O-12, 1996) (Big LEO Recon); Rulemaking to Amend Parts 1, 2, 21, and 25 of the Commission's Rules to Redesignate the 27.529.5 GHz Frequency Bands, to Reallocate the 29.530.0 GHz Frequency Bands, to  {O\!-Establish Rules and Policies for local Multipoint Distribution Services and for Fixed Satellite Services, FCC 97378 (released October 15, 1997), 62 FR 61448 (November 18, 1997) (KaBand Service Rules). Further, the Commission recently adopted service rules in the second processing  X-round for the Little LEO service prohibiting exclusive arrangements.G^o {O$-ԍxAmendment of Part 25 of the Commission's Rules to Establish Rules and Policies Pertaining to the  {Oi%-Second Processing Round of the NonVoice, NonGeostationary Mobile Satellite Service, FCC 97370 (released  {O3&-October 15, 1997), 62 FR 59293 (November 3, 1997) (Second Round Little LEO Report and Order). To continue to advance these procompetitive objectives, we expect to apply this prohibition to future U.S."H G,-(-(ZZ" licensees. Similarly, we will apply the prohibition to nonU.S. operators as we grant them access to the U.S. market. We will therefore attach a condition to entry into the U.S. market that prohibits a foreign operator from providing any service between the United States and  X-any country with which such satellite has an exclusive arrangement. We will not, however,  X-adopt the alternative proposal prohibiting any service in the United States if the foreign  X-operator has one such agreement. Such a broad condition would go beyond our defined goal of protecting effective competition in the United States. x  XN-x167. ` ` Thus, we will prohibit a nonU.S. satellite operator from providing service between the United States and any country in which it has entered into an exclusive agreement to provide satellite capacity for a particular service. This approach is consistent with our national treatment and MFN obligations under the GATS because we will be treating nonU.S. satellites the same as U.S. satellites, and will treat all nonU.S. satellites similarly. Finally, in response to TMI's claim that this would be inconsistent with the Commission's policies for international telecommunications carriers, we note that our approach here is based on spectrum, competitive and other characteristics unique to the satellite environment.  X-x ` `  b.Other Service Rules  XQ- xBackground  X:-  X#-x 168. ` ` In the Notice and Further Notice, the Commission proposed to hold foreign entrants to all other service rules imposed on U.S. licensees. The Commission raised, as an example, the rule that requires Big LEO licensees to be capable of providing continuous  X-service in the United States.OHo yOY-ԍx47 CFR  25.143(b)(2)(iii).O The Commission proposed to extend this to all nonU.S. Big LEO operators as well. The commenters raised the applicability of four other service rules,  X-which we discuss below.XIXo {O-ԍxFurther Notice at  3944.X   X- xPositions of the Parties  XV-x 169. ` ` Loral and UTC contend that we should extend to nonU.S. licensed systems operating within the United States the Commission rule on relocating microwave operators  X(-from the 2 GHz frequency band.(J$(o {O"-ԍxLoral FNPRM Comments at 24 (citing Amendment of Section 2.106 of the Commission's Rules to  {O#-Allocate Spectrum at 2 GHz for Use by the MobileSatellite Service, FCC 9793 (released March 14, 1997); UTC FNPRM Comments at 3. ( They claim that if nonU.S. satellites were exempt, they would be unjustly enriched by receiving the benefit of access to cleared spectrum without sharing the financial burden imposed on U.S. licensees, which would distort competition in"IJ,-(-(ZZ<"  X-the United States.K"o yOy-ԍxLoral FNPRM Comments at 24; UTC FNPRM Comments at 3. UTC submits that utilities depend on reliable and secure communications to assist them in carrying out their public service obligations and many operate private networks in the 2 GHz band. According to UTC, any relocation of incumbent licensees in that  {O-band should not impair incumbents operationally or financially. Id.  Hughes, by contrast, advises that the Commission should proceed cautiously in imposing obligations on foreign licensees such as paying for relocation costs of  X-incumbent licensees.YLo yO5-ԍxHughes FNPRM Reply Comments at 10, n.26.Y  X-x170. ` ` Second, some parties ask us to extend the universal service requirements recently adopted for U.S. satellite operators to nonU.S. satellite operators providing domestic  Xv-service.M$vBo {Oi -ԍxFederalState Joint Board on Universal Service, Report and Order, CC Docket No. 9645, FCC 97157  {O3-(released May 8, 1997) (Universal Service Report and Order). See, e.g., AMSC FNPRM Reply Comments at 9; Loral FNPRM Comments at 27; GE Americom FNPRM Comments at 11, n.2; GE Americom FNPRM Reply Comments at 9; Orion FNPRM Reply Comments at 5. Loral states that the Universal Service Report and Order exempts from universal service contributions foreign satellite operators that provide international service only, that is, foreign operators that provide satellite service between the United States and another country  X3-but do not provide any domestic interstate service.N"3. o {O-ԍxLoral FNPRM Comments at 27 and n.50 (citing Universal Service Report and Order at  779). In reply comments, GE Americom states that "fees and contribution requirements must be equitably assessed against all satellite operators serving the U.S. market," but does not specifically assert support for universal service contributions. GE Americom FNPRM Reply Comments at 9.  It adds that the Order appears to impose contribution obligations on U.S. licensed service providers (including Loral Skynet)  X -that provide international and domestic interstate satellite services a result it contends is  X -"patently unfair" and inconsistent with national treatment.LO o yO-ԍxLoral FNPRM Comments at 27.L Loral recommends that the Commission ensure that our rules do not arbitrarily advantage entities that provide satellite services to or from the United States but that do not provide domestic, interstate satellite services. GE Americom favors parity with respect to universal service contributions, asserting that any disparate treatment between U.S. and nonU.S. providers would harm competition in  X-the U.S. satellite services market.]Po yO -ԍxGE Americom FNPRM Comments at 1112 and n.2.]  Xh- x` `  XQ-x171. ` ` Third, AMSC asserts that nonU.S. systems operating in the "Lband" frequencies should be required to comply with requirements for provision of priority and preemptive access to safety services, and for the provision of relay services for persons with  X -hearing and speech disabilities.PQ 8o yO&-ԍxAMSC FNPRM Reply Comments at 9.P" JQ,-(-(ZZ "Ԍ X-x` `   X-x172. ` ` Fourth, some parties suggest that nonU.S. satellite providers be required to pay the regulatory fees associated with holding a space station license as a means of paying their  X-fair measure of the costs of Commission activities.Ro {O4-ԍxSee, e.g., AMSC FNPRM Reply Comments at 9; GE Americom FNPRM Comments at 11; GE Americom FNPRM Reply Comments at 9; Orion FNPRM Reply Comments at 5; PanAmSat FNPRM Reply Comments at 3. PanAmSat recommends that regulatory and application fees applicable to nonU.S. licensed systems be adjusted based on the amount of Commission resources required to authorize access to those systems. PanAmSat FNPRM Reply Comments at 3.  They argue that, because the Commission will not be issuing space station licenses to foreign operators, these operators will be exempt from paying this fee, which would afford foreign operators an unfair  Xv-competitive advantage in the United States.Svzo yO -ԍxGE Americom FNPRM Comments at 11; Loral FNPRM Comments at 24, 25 and n.46 (citing 47 CFR  1.1156). Loral argues that the Communications Act gives the Commission authority to amend the regulatory fee schedule when there are changes in law (here, the WTO Basic Telecom Agreement), and recommends that we do so for FY  X1-1998.OT1o yO-ԍxLoral FNPRM Comments at 2627.O PanAmSat argues that equitable and nondiscriminatory application of regulatory fees and costs is required to comply with the Unite States' national treatment obligations under the  X -GATS and will create a level competitive playing field.TU b o yO-ԍxPanAmSat FNPRM Reply Comments at 3.T Lockheed Martin concurs that nonU.S. licensed satellite operators should pay fees to cover the costs of Commission activities, but argues that the Commission does not coordinate foreign satellite systems internationally. Consequently, it argues that nonU.S. operators should not be required to pay that portion of  X -the annual fees associated with international coordination activities.]V o yOJ-ԍxLockheed Martin FNPRM Reply Comments at 45.]  Xy- xDiscussion x` `  XK-x173.` ` In general, we will require nonU.S. satellite operators to comply with all Commission rules applicable to U.S. satellite operators. To do otherwise would place U.S. and foreign operators on an uneven competitive footing when providing identical satellite services in the United States and would defeat our public policy objectives in adopting these service rules in the first place. We will consider requests for waivers of any rules, by foreign or domestic providers, on a casebycase basis. We find that this overall approach does not violate U.S. national treatment obligations because we will be treating foreign service  X-suppliers identically to U.S. service suppliers with respect to their provision of service within the United States. As to the parties' specific recommendations, we agree with Loral and UTC that we should require satellite systems operating in the 2 GHz band in the United States to bear a proportionate share of the terrestrial relocation costs; and with AMSC that foreign"gK V,-(-(ZZ" satellite operators in the Lband should comply with priority and preemptive access requirements for aeronautical safety services and relay service requirements. We will address issues relating to fees in a separate proceeding.  X-x174. ` ` In responding to assertions that all satellite operators, regardless of whether they provide interstate telecommunications, should be required to contribute to universal  Xv-service support mechanisms, we rely on the Commission's analysis in the Universal Service  Xa-Report and Order.fWao {O-ԍxUniversal Service Report and Order at  779.f In that Order, the Commission determined that, pursuant to Section 254 of the Act, carriers that provide only international telecommunications but not interstate telecommunications services, are not required to contribute to universal service support  X -mechanisms.KX Zo yO) -ԍx47 U.S.C.  254(d). Section 254(d) of the Act states: XxX` ` Every telecommunications carrier that provides interstate telecommunications services shall contribute, on an equitable and nondiscriminatory basis...to preserve and advance universal service.x` K The Commission recognized that, by this decision, some providers of international service would be required to contribute and some would not. Expressing a preference for a more competitively neutral outcome, the Commission concluded, nonetheless, that Section 254 of the Act does not permit us to assess contributions on the revenues of carriers that do not provide interstate telecommunications. Further, however, the Commission stated that, should the competitive concerns arising from this decision become significant, it would revisit the issue. In addition, it is noteworthy that some parties have petitioned the Commission to reconsider this decision. Finally, the Commission's interpretation of Section 254 of the Act does not, contrary to the assertion of parties, violate national treatment obligations, because any carrier, regardless of where it is licensed or located, that provides both interstate and foreign telecommunications services must contribute to the extent that it provides both interstate and foreign telecommunications.  X-x` ` 5. Foreign and Domestic Policy Factors  X- xBackground  X- x175.` ` In both the Notice and Further Notice, the Commission proposed to examine other factors that bear on whether the grant of the application is in the public interest,  Xk-convenience and necessity.jYk o {O&#-ԍxNotice at  48; Further Notice at  15.j The Notice specifically noted that we would consider issues of national security, law enforcement, foreign policy and trade policy brought to our attention by  X?-the Executive Branch in reviewing license applications.  "LY,-(-(ZZ["  X- xPositions of the Parties  X-x176.` ` Executive Branch commenters strongly support our consideration of these  X-additional public interest factors.mZo yO4-ԍxDOD FNPRM Comments at 34; USTR FNPRM Reply Comments at 45.m Lockheed Martin acknowledge both the validity of national security and law enforcement concerns, while Deutsche Telekom notes that examination of national security concerns is permitted by the GATS in very narrow  Xv-circumstances.[XvXo yO -ԍxLockheed Martin FNPRM Reply Comments at 56; Deutsche Telekom FNPRM Reply Comments at 12 (arguing that the GATS Agreement contains a very specific exception under which a WTO Member country may act on behalf of its national security).  XH-x177.` ` Many other commenters object to the Commission's proposal to consider foreign policy and trade policy issues raised by the Executive Branch in determining whether to grant access to nonU.S. satellites systems, on the grounds that such considerations are  X -inconsistent with GATS obligations.\  xo yO,-ԍxGovernment of Japan FNPRM Comments at 2; Telesat FNPRM Comments at 5; Lockheed Martin FNPRM Comments at 5; ICO FNPRM Comments at 10; Skybridge Comments at 3; AirTouch FNPRM Comments at 2; Deutsche Telekom FNPRM Reply Comments at 11; GE Americom FNPRM Reply Comments at 4; France Telecom FNPRM Reply Comments at 34; Lockheed Martin FNPRM Reply Comments at 5. For example, the Government of Japan takes particular issue with considering foreign policy and trade concerns, arguing that we should  X -eliminate those from consideration.Y] ` o yO-ԍxGovernment of Japan FNPRM Comments at 2.Y Similarly, Skybridge states that denial of a license to a WTO satellite system based on either foreign policy or trade concerns would raise serious questions with respect to U.S. compliance with the GATS. According to Skybridge, discriminatory treatment of prospective licensees from WTO Members based on trade  Xy-concerns is essentially a repudiation of MFN treatment.Q^y o yO-ԍxSkybridge FNPRM Comments at 34.Q France Telecom and Lockheed Martin also argue that the Commission must be very careful that this assessment is neither used nor perceived as a surrogate for considerations of trade issues that were put to rest with the U.S. commitment in the WTO Basic Telecom Agreement to open our telecommunications  X-market._ o yON!-ԍxFrance Telecom FNPRM Reply Comments at 4; Lockheed Martin FNPRM Reply Comments at 5.  X-x Discussion  X-x178.` ` We agree with comments of the Executive Branch supporting consideration of national security, law enforcement, foreign policy and trade policy concerns. In general, objections to the Commission considering these issues focus on inconsistency with the GATS. "M_,-(-(ZZo" We conclude that nothing in the GATS precludes us from considering such concerns. There is no bar in GATS Article VI (Domestic Regulation) as long as our consideration is objective, transparent, impartial and reasonable. Nor does the MFN obligation automatically bar consideration of any particular factor. It provides merely that like service suppliers have to receive like treatment. Similarly, the national treatment obligation does not exclude consideration of these other public interest factors. In a particular case, where we do consider these other public interest factors, we will be mindful of U.S. WTO obligations to the extent  X_-that the exemptions in the GATS specifically do not apply.g`_o {O-ԍxSee GATS Articles XIV and Article XIV bis.g We do not expect to receive recommendations from the Executive Branch in connection with these other public interest factors that are inconsistent with U.S. international obligations.  X - x179.` ` We recognize that other federal agencies have specific expertise in matters that may be relevant in particular cases. In any given case, an application by a foreign applicant may raise questions, for example, about this country's international treaty obligations. In addition, we realize that foreign participation in the U.S. telecommunications and satellite market may implicate significant national security or law enforcement issues uniquely within the expertise of the Executive Branch. The Commission will consider any such legitimate concerns as we undertake our own independent analysis of whether grant of a particular authorization is in the public interest.  X4-x180.` ` DEFERENCEWe emphasize, however, that we expect national security, law enforcement, foreign policy and trade policy concerns to be raised only in very rare circumstances. Contrary to the fears of some commenters, the scope of concerns that the Executive Branch  X-will raise in the context of applications for earth station licenses is narrow and well defined. National security and law enforcement concerns have long been treated as important public  X-interest factors by this Commission.CaZo {O-ԍXxId. (#C We note that, during our two years' experience in  X-administering the Foreign Carrier Entry Order, with approximately 140 authorizations granted to carriers with foreign ownership, the Executive Branch has never asked the Commission to deny an application on national security or law enforcement grounds. Similarly, we note that the Executive Branch, during the last two years, has never informed us that a foreign policy concern dictated that a Section 214 or Section 310(b)(4) application be denied. We expect this pattern to continue, such that the circumstances in which the Executive Branch would advise us that a pending matter affects national security, law enforcement, or obligations arising from international agreements to which the United States  X-is a party will be quite rare. Any such input would, however, be important to our public interest analysis of a particular application. We thus will continue to accord deference to the expertise of Executive Branch agencies in identifying and interpreting issues of concern related to national security, law enforcement, and foreign policy that are relevant to an application pending before us.""Na,-(-(ZZ!"Ԍ X-ԙx181.` ` USTR has asked, after coordination with other Executive Branch agencies, the Commission on four occasions during the last two years not to act on certain applications  X-because of trade concerns.4bo yOK-ԍXxLetter from Jeffrey M. Lang, Deputy United States Trade Representative, to Roderick K. Porter, Deputy Chief, International Bureau, Federal Communications Commission (Aug. 8, 1996); Letter from Donald S. Abelson, Chief Negotiator, Communications and Information, United States Trade Representative, to Roderick K. Porter, Deputy Chief, International Bureau, Federal Communications Commission (Oct. 3, 1996); Letter from Donald S. Abelson, Chief Negotiator, Communications and Information, United States Trade Representative, to Roderick K. Porter, Deputy Chief, International Bureau, Federal Communications Commission (Oct. 31, 1996); Letter from Larry Irving, Assistant Secretary, National Telecommunication and Information Administration, Department of Commerce, Jeffrey M. Lang, Deputy United States Trade Representative, and Ambassador Vonya McCann, U.S. Coordinator, International Communications and Information Policy, Department of State, to Reed Hundt, Chairman, Federal Communications Commission (Mar. 7, 1997).(#4 We note that all these requests occurred before the effective date of the WTO Basic Telecom Agreement. The Agreement changes the U.S. Government's trade obligations affecting basic telecommunications services. USTR has indicated that it  X-expects any Executive Branch concerns communicated to the Commission under our new rules to be fully consistent with U.S. law and international obligations, including the WTO  X_-Basic Telecom Agreement. USTR has also specified the scope of its authority to  XH-communicate trade policy concerns to the Commission in its reply comments.kcH( o {O!-ԍxUSTR Foreign Participation Reply Comments at 6 n.11.k In light of the WTO Basic Telecom Agreement, we expect to receive input from USTR on specific applications far less often than we have in the past. We will continue to evaluate any such input as part of our public interest determination, consistent with U.S. law and U.S. international obligations, including the WTO Basic Telecom Agreement.  X -x182.` ` We emphasize that the Commission will make an independent decision on applications to be considered and will evaluate concerns raised by the Executive Branch agencies in light of all the issues raised (and comments in response) in the context of a particular application. We expect that the Executive Branch will advise us of concerns relating to national security, law enforcement, foreign policy, and trade concerns only in very rare circumstances. Any such advice must occur only after appropriate coordination among Executive Branch agencies, must be communicated in writing, and will be part of the public  X-file in the relevant proceeding.d o yO -ԍXxTo the extent the Executive Branch must share classified information with Commission staff, such information is not subject to public disclosure.(# "Od,-(-(ZZ"  X-x C.` ` Access Procedures Đ  X- x` ` 1.  Framework  X-  X- x183.` ` To implement our framework allowing nonU.S. satellites to serve the United States, we must adopt licensing procedures that ensure that prospective foreign providers  Xv-receive fair consideration. In both the Notice and Further Notice, the Commission stated that it did not intend to issue separate (and duplicative) U.S. licenses for those space stations under the jurisdiction of another licensing or coordinating administration. Instead, it envisioned two procedural avenues by which foreign space stations could serve the U.S.  X -market.xe o {O -ԍxNotice at  1315; Further Notice at  4749.x  X -x184.` ` The first procedure would be used when the service provider or satellite operator participates in a U.S. space station "processing round" as a means of ensuring that an  X -existing or planned foreign satellite will have access to the orbit or spectrum resources needed to serve the United States. The Commission generally considers applications for satellite systems that will operate in the same frequency bands in discrete processing rounds to ensure that all potentially competing applications are considered concurrently. These processing rounds are established by Public Notices announcing a "cutoff date" for filing applications to be considered in the round. In order to participate in a space station processing round, the Commission proposed to permit a service supplier to file an application for a U.S. earth station that would operate with a foreign satellite by the cutoff date specified in the Public Notice. Alternatively, the foreign space station operator could file, by the cutoff date, a "letter of intent" to use its nonU.S. satellite to provide service in the United States through future earth stations that may or may not be ultimately licensed to it.  X-x185.` ` Once a request for U.S. access through a nonU.S. licensed satellite is properly before it in a processing round, the Commission would consider it, together with any  X~-applications for U.S.licensed satellites that are properly filed.f~Zo yO-ԍxApplicants wishing to use nonU.S. licensed satellites will generally be required to provide the information listed in Section 25.114 of our rules. 47 CFR  25.114. We will however, not require foreign applicants to provide financial information if the nonU.S. licensed satellite is inorbit and operating or to provide technical information when the international coordination process for the nonU.S. satellite has been completed.  {O -See Section III.C.2. If, in processing that group, the Commission authorizes a nonU.S. satellite to serve the United States, it will provide this authority, in an earth station license or, in the case of a letter of intent, as a "reservation" or"PP f,-(-(ZZ" "designation" of frequencies or orbit locations or both, in the attendant service Report and  X-Order.igXo yOb-ԍxWe reiterate our intent to hold nonU.S. satellite operators to the same rules as we do our U.S.licensed space station operators. Failure to comply with these requirements could result in revocation of the earth station license or reassignment of previously reserved or designated spectrum or orbit locations.i  X-  X-x186.` ` The second procedure by which the Commission could consider foreign requests for U.S. access involves the earth station licensing process independent of a  X-processing round. In the Further Notice, the Commission noted its expectation that this procedure would be used where an earth station to be located in the United States seeks to access a nonU.S. satellite that is already operating and for which the international coordinated process, pursuant to the regulations of the International Telecommunication Union  X3-(ITU), has been initiated.Qh3o {O -ԍxFurther Notice at  55.Q There, it would grant an earth station license provided that the proposed system met our public interest analysis.  X -x187.` ` The commenters support the proposal not to relicense nonU.S. satellites. They also support our proposal to permit foreign satellites access to the United States through  X -an earth station license.i zo {O-ԍxSee, e.g., Telesat FNPRM Comments at 7; Loral FNPRM Comments at 21; Hughes FNPRM Comments at 2124. No one objects to the alternative proposal to allow foreign satellite operators to participate in Commission space station processing round by filing a letter of intent to use the satellite to provide service in the United States. Indeed, Hughes notes that it favors the flexibility that would be afforded to nonU.S. system operators by alternative  Xd-licensing procedures.Pjdo yO-ԍxHughes FNPRM Comments at 1819.P  X6-x188.` ` Consequently, we adopt our proposed procedural framework for accessing the U.S. market. We will not issue a separate, and duplicative, U.S. license for a nonU.S. space station. Issuing a U.S. license would raise issues of national comity, as well as issues regarding international coordination responsibilities for the space station. We will, instead, license earth stations located within U.S. territory to communicate with particular nonU.S. satellites. As with other U.S.licensed earth stations, we will not require the prospective earth station operator to obtain a construction permit. Rather, the applicant may begin construction before it obtains a station operating license at its own risk. We also adopt our proposal to implement a procedural framework that allows space station operators and service providers two methods for accessing the U.S. market through a nonU.S. satellite: (1) by participating in a U.S. space station processing round through an earth station application or letter of intent; or (2) by filing an earth station application that we may consider independent of a processing round.""Qd j,-(-(ZZ"Ԍ X-ԙ x` ` 2. Information Requirements  X- x189.` ` Regardless of which procedural avenue prospective foreign service suppliers choose to request access to the U.S. market, the Commission proposed to require these  X-suppliers to provide detailed information about the nonU.S. space station and its operator.Qko {O-ԍxFurther Notice at  60.Q The purpose is to allow the Commission to determine whether operations via the nonU.S. satellite system comply or will comply with all Commission technical requirements, and that earth and space station operators meet all other applicable Commission qualification requirements. Specifically, the Commission proposed that all earth station applications and letters of intent be accompanied by an exhibit containing the information required by Section 100.13 (for DBS satellites) or Section 25.114 (for all other satellites) of its rules with respect  X -to the proposed nonU.S. satellite, together with an ECOSat showing if appropriate.Tl Zo yO-ԍx 47 CFR  25.114 and 100.13.T The Commission stated that this information would be used to perform spectrum management functions and to evaluate additional factors relevant to whether grant of access would be in the public interest. The Commission further stated that failure to require this information could constitute treatment more favorable for nonU.S. systems than for applicants seeking U.S. space station licenses. Nevertheless, the Commission said it would not require applicants to provide financial information if the nonU.S. licensed satellite is inorbit or to provide technical data when the international coordination process between the United States  XK-and the licensing administration has been completed.SmKo {O-ԍxFurther Notice at n.44, 50. S  X-x190.` ` Several commenters take issue with this proposal, arguing that requiring the  X-proposed information constitute relicensing.hn|o yO3-ԍxGE Americom FNPRM Comments at 910; Hughes FNPRM at 17.h This information, however, is necessary to ensure compliance with each of the Commission requirements that, as discussed above, will apply to nonU.S. satellites. We can only determine whether service by a nonU.S. satellite in the United States is in the public interest if we have before us all the information we require U.S. applicants to provide. We will, therefore, require all entities wishing to serve the United States with a nonU.S. satellite, regardless of whether the satellite is already licensed by another administration, to file, together with their earth station applications or letters of intent, an exhibit providing the information required in Section 100.13 for DBS satellites or an exhibit providing the information required in Section 25.114, including FCC Form 312, for all other satellites. We also require an ECOSat analysis (or ECOSat analyses), when appropriate.  X-x191.` ` We will not, however, require entities to file financial information if the nonU.S. licensed satellite is inorbit, or to file technical data when the international coordination"R n,-(-(ZZ;"  X-process for the nonU.S. satellite has been completed.Too {Oy-ԍxFurther Notice at  5354.T First, where the international  X-technical coordination process has been completed between the United States and the foreign satellite, we would not need additional technical information about the foreign satellite. This is because the United States and the relevant foreign administration will have exchanged extensive technical data about their respective systems during the course of the bilateral negotiations that lead up to a coordination agreement. This technical information is sufficient for us to determine whether the foreign satellite complies with Commission technical requirements. In all other cases, however, we would not have this information unless we specifically required the potential service supplier to file it. Similarly, where the foreign satellite is already inorbit, there is no concern about whether the prospective entrant is financially capable of building and launching its system. Consequently, financial information  X -is unnecessary in that instance.  X -x192.` ` We will streamline these procedures further where the Commission has already authorized a particular foreign satellite to provide a particular service in the United States. For example, if the Commission has authorized a satellite licensed to Country X to provide DTH service in the United States, we have determined, in the course of our review, that the foreign satellite system complies with all applicable Commission requirements and that Country X meets the ECOSat test. There is no need to require future earth station applicants to continue to provide this information. Rather, in those cases, we will allow the prospective foreign entrant to include an exhibit citing to the previous Commission grant of access for that satellite, and representing that it intends to use the satellite to provide the same services as those previously authorized, and that none of the system's operating parameters has changed.  X- x` ` 3. Licensing and Coordination Status of NonU.S. Satellites  X-  X- xBackground x  Xg-x193.` ` In the Further Notice, the Commission asked whether the nonU.S. satellite's licensing or international coordination status should be relevant in determining whether an earth station application or letter of intent is properly before us. In other words, the Commission asked whether it should consider granting access to a foreign satellite that is not  X -yet licensed or that is not yet fully coordinated. The Commission indicated in the Further  X-Notice that it would not necessarily require the foreign space station to be licensed before it would consider whether to allow that satellite access to the United States. Rather, the Commission proposed that nonU.S. satellites be eligible to participate in a processing round  X!-as long as its operator is pursuing a license from another administration. The Commission"!SZo,-(-(ZZ " also proposed that it would consider earth station applications outside of a processing round if  X-the satellite is already licensed and/or fully coordinated in accordance with ITU regulations.\po {Ob-ԍxFurther Notice at  49 and 52.\  X- xPositions of the Parties  X-x194.` ` Loral argues that the Commission should not accept requests to access non Xv-U.S. satellites unless the satellites have already been licensed.OqvZo yO -ԍxLoral FNPRM Comments at 2425.O It contends that this approach is necessary to avoid having to revoke authority to serve the United States in situations where the foreign administration does not grant the license. In contrast, Columbia and Lockheed Martin suggest that a space station license grant from a foreign administration should not be necessary. Rather, they recommend that a nonU.S. applicant submit, as part of its application to the Commission, proof of its filing of an application with a foreign  X -administration.yr o yO-ԍxColumbia FNPRM Comments at 8; Lockheed Martin FNPRM Reply Comments at 4.y  X -  X - xDiscussion  X- x195.` ` Generally, we require a space station to be licensed before we will license any earth station to communicate with that satellite. This prevents two possibilities: (1) that we will later have to revoke the earth station license if the space station is not ultimately licensed; and (2) that we will later need to act on an application to modify the earth station to reflect changes in the space station's operating parameters made during the licensing process, as is often the case. Accordingly, when U.S. companies file earth station applications to access U.S. space stations that have not yet been licensed, we return the applications as premature or dismiss them without prejudice.  X-x196.` ` Similarly, we will require the foreign space station to be licensed, or fully coordinated in those administrations that do not issue satellite licenses, in cases where an earth station operator seeks an immediate grant to access that satellite. If the space station is not licensed or coordinated, we will dismiss the earth station application, which may be refiled after the space station is licensed or coordinated. In contrast, we will not require a license as a prerequisite to participating in a U.S. space station processing round. Doing so would put prospective foreign entrants at a disadvantage. As noted, the Commission generally authorizes satellites in the context of discrete processing rounds. These processing rounds often involve new, innovative, and commercially unproven satellite services in frequency bands not previously used to provide satellite service. We generally attempt to license, from the group of pending applications, the maximum number of systems that can be accommodated in the available spectrum. If a prospective foreign entrant does not participate in a processing round, it runs the risk of being foreclosed from providing service in the"!Tzr,-(-(ZZ " United States in those bands because we cannot accommodate any additional systems.  X-Requiring the foreign entrant to secure a license from another administration before it can participate in a U.S. processing round, however, would place a burden on the foreign operator not placed on U.S. applicants. Instead, we will require a potential foreign entrant to submit, as part of its application to the Commission, proof that it is pursuing a license from a foreign  X-administration.   Xa- x` `  4.ReceiveOnly Earth Stations  XJ-  X3-xBackground x  X -x197.` ` Receiveonly earth stations are used predominantly to receive directtohome  X -video services, such as DTH and DBS services. In the Notice and Further Notice, the Commission proposed to continue to license receiveonly earth stations operating with non X -U.S. satellites, whether operating with WTO or nonWTO member satellites.~s o {O;-ԍxNotice at  7580; Further Notice at  5657.~ In doing so, the Commission recognized that it does not require receiveonly earth stations receiving U.S.originated signals over U.S. satellites to be licensed. The Commission noted that licensing receiveonly stations operating with nonU.S. satellites was necessary to ensure that the station's operation would facilitate competition in the United States by considering public interest factors such as equivalent competitive opportunities in the home market and content regulation. The Commission also noted that such licensing is the only regulatory point available to the Commission because it will not be issuing U.S. licenses to space stations licensed or coordinated by other administrations. The Commission proposed, however, to eliminate the licensing requirement for receiveonly earth stations operating with U.S.licensed systems for the reception of signals originating in other countries. The Commission reasoned that its technical and other concerns would be taken into account when it granted the space station license.  X- xPositions of the Parties  Xi-  XR-x198.` ` Hughes, PanAmSat, Space Communications, and AMSC support the proposal  X;-to continue to license receiveonly earth stations operating with nonU.S. satellites.t;Zo yOF -ԍxHughes FNPRM Comments at 2124; PanAmSat FNPRM Comments at 9; Space Communications FNPRM Reply Comments at 12; AMSC FNPRM Reply Comments at 11. Hughes argues that, absent licensing of the earth station used to access the foreign satellite, the Commission has no recourse against a nonU.S. satellite causing interference to other operations in the United States. AMSC similarly argues that, because the Commission has jurisdiction over the operation of satellite systems that provide service in the United States, it may choose to regulate the receiveonly terminals instead of the space segment. Hughes and PanAmSat further argue that licensing receiveonly earth stations would not violate national"!Ut,-(-(ZZ " treatment obligations because most services involving receiveonly earth stations are exempt from the WTO Basic Telecom Agreement.  X-x199.` ` In contrast, GlobeCast and Loral oppose licensing receiveonly earth stations.euo yO4-ԍxGlobeCast FNPRM Comments at 5; Loral Comments at 32.e Arguing that receiveonly earth stations are passive and cannot cause interference to other radio stations, GlobeCast claims that international receiveonly earth stations that are not subject to any international treaty restrictions should be free to operate without a license. It further claims that after the WTO Basic Telecom Agreement, the United States "no longer needs the market leverage that arguably was a reason to continue licensing international  X1-receiveonly earth stations."Ov1Xo yO: -ԍxGlobeCast FNPRM Comments at 5.O Loral argues that, if the nonU.S. satellite has been coordinated with the United States pursuant to ITU procedures, its operations in the United States should not cause interference or technical concerns. Loral recommends that, if the transmissions from the foreign satellite have not been coordinated, the Commission should require the satellite operator to file a letter of intent to serve the U.S. market, including copies of the appropriate ITU filings.  X-x200.` ` Telesat Canada, TMI, and France Telecom argue that under our GATS national treatment obligations, we cannot require licensing of receiveonly earth stations accessing  Xb-nonU.S. satellites.wbo yO-ԍxTelesat FNPRM Comments at 910; TMI FNPRM Comments at 11; France Telecom FNPRM Reply Comments at 5. Telesat further states that removing the licensing requirement for receiveonly earth stations operating with U.S. satellites has been a "progressive step in the promotion of competition through the streamlining of regulation," and that the same should be  X-done for receiveonly earth stations operating with nonU.S. satellites.x@o yO-ԍxTelesat FNPRM Comments at 910; TMI FNPRM Comments at 1114; France Telecom FNPRM Comments at 56. In addition, TMI argues that deregulating receiveonly mobile terminals would end the discriminatory treatment of these terminals compared to terminals for paging and similar message services, which, like  X-customer premises equipment, are not licensed by the Commission.Jyo yO! -ԍxTMI FNPRM Comments at 13.J  X- x` `  X- xDiscussion  X-  X|-x201.` ` In proposing continued licensing for receiveonly earth stations operating with nonU.S. satellites, the Commission's intent was to provide a vehicle by which we could  XN-examine factors specific to the nonU.S. satellite, such as equivalent competitive opportunities in the home market, content regulation, and spectrum management and other technical"9V( y,-(-(ZZ" considerations. It also was to provide the Commission with a regulatory control point for  X-transmissions entering the United States through foreign satellites.rzo {Ob-ԍxNotice at  75; Further Notice at  5658. r In short, the  X-Commission proposed to license the receiveonly terminal because we would not be licensing the satellite with which that earth station would be operating. If the downlink transmissions from the nonU.S. satellite interferes with other U.S. downlink transmissions, for example, licensing the earth station would provide us with our only means of maintaining control over the interfering transmissions into the United States. In addition, licensing the earth station would provide the only vehicle by which to evaluate effective competitive opportunities in foreign markets and other public interest considerations. We find that these concerns present a compelling argument to continue to require operators of receiveonly earth stations operating with nonU.S. licensed satellites to obtain earth station licenses.  X -x202.` ` In contrast, in cases where the Commission is licensing the space station, we see no need to continue to license the receiveonly earth station operating with that satellite, even if the transmissions originate in another country. Consequently, we adopt our proposal to eliminate the licensing requirement for all receiveonly earth stations operating with U.S. licensed satellites, regardless of where the signals originate.  Xf-x203.` ` We find that a continued licensing requirement for receiveonly earth stations operating with nonU.S. satellites does not violate any of the United States' GATS obligations. When the earth stations are used to receive directtohome video (or in the future, audio) services, as are the vast majority, such treatment would not implicate any national treatment obligations under the WTO Basic Telecom Agreement and the GATS. As noted above, the United States undertook no obligations with respect to these services. Indeed, even with covered services, such as oneway satellite paging services, where we will not apply an ECOSAT test, we would not be violating a national treatment obligation. For receiveonly earth stations accessing either U.S. or nonU.S. satellites, we need to make sure that there is no interference, and evaluate other public interest factors. For receiveonly earth stations communicating with U.S. licensed space stations, we are able to do so through the space station licensee. For receiveonly earth stations communicating with nonU.S. space stations, however, we would not be able to look to the space station operator because we will not be licensing it. Thus, as described above, licensing the receiveonly earth station provides us the necessary mechanism to make our treatment of foreignlicensed satellites comparable. We find that this is consistent with the GATS. As USTR points out, GATS treatment need not be identical. The issue is whether the conditions of competition have been modified to  X-favor certain foreign or domestic suppliers.W{Zo yO#-ԍxUSTR FNPRM Reply Comments at 11, n.16.W That is not the case here.  X!-x204.` ` To impose the least burdensome requirements possible while fulfilling our regulatory responsibilities, we will permit applicants to request "blanket" licenses for large""W{,-(-(ZZ!" numbers of technically identical receiveonly antennas, such as home "dishes." Blanket applications may be filed by the space station operator, the service supplier, the equipment manufacturer, or the electronics retailer. Further, in cases where we have previously granted a particular satellite access to the United States to provide DTH/DBS or other receiveonly services, we will allow the earth station applicant to include an exhibit citing to the previous Commission grant of access for that satellite and stating that it intends to use the satellite to provide the same services as those previously authorized.  XH-x205.` ` Last, the Commission currently exempts receiveonly earth stations operating with the INTELSAT K satellite or receiving Intelnet I services from INTELSAT satellites  X -from the licensing requirement.G| o yO -ԍx47 CFR  25.131(j).G We will continue this policy for this limited class of receiveonly earth stations.  X -x ` `  5. Changes to Application Form  X - xBackground and Positions of the Parties  Xy- x 206.` ` In the Further Notice, the Commission requested comment on any changes it should make to FCC Form 312 (Application for Satellite Space and Earth Station  XM-Authorizations), in light of rules or policies adopted in this Report and Order. Loral suggests two changes to make the application form consistent with the United States' WTO commitments: (1) request whether services to be provided by an FSS operator include broadcast video programming services for direct reception by customers; and (2) require applicants to provide copies of Appendix 4 and S4, as submitted to the ITU, as additional  X-information on satellite system parameters.L}Xo yO-ԍxLoral FNPRM Comments at 33.L PanAmSat argues that in addition to the service to be provided, the country in which the satellite is licensed or will be licensed, countries in which signals carried over the satellite will originate or terminate, and information regarding  X-de jure and de facto entry barriers, Form 312 should require applicants to identify whether the nonU.S. satellite is owned, operated, or controlled by an IGO affiliate that was created after  Xk-the release date of the Further Notice.Q~ko yO -ԍxPanAmSat FNPRM Comments at 910.Q PanAmSat asserts that this information will assist the Commission in ensuring that grant of the application will not pose a competitive threat to the U.S. market.  X(-  X- xDiscussion  X-x207.` ` To make it easier for foreign applicants to know what information and exhibits are necessary to provide with a request to access the United States, we will modify Form 312 to cover nonU.S licensed satellites as well as U.S. licensed satellites. To this end, we will"!Xx~,-(-(ZZ " add questions to the Form concerning the licensing administration, route markets to be served (for DTH/DBS/DARS services, satellites licensed by nonWTO Members) and type of service to be provided, and requesting an ECOSat analysis, where necessary. We will also add a question regarding ownership information, which was inadvertently omitted in adopting Form  X-312, and is to be answered by all applicants, including U.S. applicants.  Xx-x208.` ` We will not incorporate into Form 312 a requirement that prospective suppliers file their ITU submissions for the satellite, as Loral suggests. As discussed, the ITU information does not include all the information required by Part 25 of the rules. If ITU coordination has been completed, however, we will not require the prospective foreign entrant  X -to file any technical information.  X -x209.` ` Finally, we will not require an applicant to provide any additional ownership information regarding IGO affiliates, as PanAmSat advocates. As discussed above, the Commission has decided in this rulemaking to treat IGO affiliates the same as applicants from  X -other countries.S o {O$-ԍxSee supra Section III.B.1.d.S Parties, of course, may raise anticompetitive concerns regarding the grant of any application, which we will duly consider.  Xf- x` `  6.Global Mobile Personal Communications Systems  XO-  X8-x210.` ` In the Further Notice, the Commission noted that the ITU World Telecommunications Policy Forum held in October 1996 adopted a draft Memorandum of Understanding (MoU) establishing a working group to develop arrangements to facilitate the free circulation of global mobile personal communications (GMPCS) terminals. The Commission asked whether these arrangements would impact the Commission's licensing  X-process for mobile terminals.QZo {O-ԍxFurther Notice at  59.Q  X- x` `  X-x211.` ` Lockheed Martin and Loral contend that adoption of the GMPCS MoU does not impact our licensing scheme for blanket licenses for mobile terminals accessing a non Xk-U.S. system,Lko yO -ԍxLoral FNPRM Comments at 28.L although Lockheed Martin also suggests that it may be appropriate to consider  XT-whether the home market is a signatory to the Memorandum.UT|o yO"-ԍxLockheed Martin FNPRM Comments at 5.U  X&- x 212.` ` We agree that the GMPCS MoU does not alter our blanket licensing scheme for mobile earth terminals. Indeed, the MoU recommends blanket or class licensing for GMPCS terminals. Nevertheless, signatories to the MoU retain the authority to regulate their"Y ,-(-(ZZZ" telecommunications industries. Further, implementation of the arrangements or any of their provisions is voluntary.  X-x D. ` ` Enforcement  X-x213.` ` Though the Commission did not specifically address enforcement issues in the  Xv-Notice or Further Notice, GE Americom asserts that a "critical factor in the success of the Commission's policies in promoting competition" will be its ability to address competitive issues that may arise due to a foreign operator's failure to operate in accordance with  X3-technical and service requirements.Q3o yO -ԍxGE Americom FNPRM Comments at 8.Q GE Americom contends that we must monitor ongoing compliance with our rules and revoke any authorizations or impose conditions on  X -authorizations as warranted.d Xo {O-ԍxId.; GE Americom FNPRM Reply Comments at 89.d It suggests that the Commission provide a forum for consideration of these issues, but does not specify how such a forum should be  X -administered.Y o yOr-ԍxGE Americom FNPRM Comments at 89.Y Similarly, Space Communications urges us to impose severe penalties on satellite operators violating any route limitations included in their U.S. earth station license.  X-x214.` ` We agree that it is paramount that all operators providing satellite service in the United States comply with Commission rules and policies applicable to that particular satellite service. In addition, we often attach specific conditions to licenses relating to operating requirements, system implementation requirements, and technical parameters. Entities violating the terms of their license are subject to administrative penalties, including  X-monetary forfeitures and license revocation.`zo {OJ-ԍxSee 47 U.S.C.  501; 47 CFR  1.80.` We will continue our efforts to ensure compliance by all providers, whether U.S. or foreign, and to impose sanctions when appropriate. As always, we will fully explore any allegations of rule or license violations that are brought to our attention.  X- xE.` ` Consistency with GATS Obligations x  X~-x Position of the Parties  Xg-  XP- x215. ` ` A number of commenters question whether our proposed framework for evaluating requests to serve the U.S. via nonU.S. satellites is compatible with U.S. GATS  X"-obligations." o {O%-ԍxSee, e.g., ICO FNPRM Reply Comments at 5; Deutsche Telekom FNPRM Reply Comments at 2; European Commission FNPRM Reply Comments at 12. The European Commission argues that the proposed public interest test is not""Zf ,-(-(ZZ" compatible with GATS principles of objectivity, nondiscrimination, and transparency, nor with MFN obligations and market access commitments. The European Commission further states that the U.S. decision to conclude the WTO Basic Telecom Agreement indicates that WTO Members already satisfy U.S. public interest objectives and, therefore, the Commission should  X-not apply a public interest test to WTO Members.ao yO-ԍxEuropean Commission FNPRM Reply Comments at 12.a France Telecom notes that the broad  X-public interest criteria violates the U.S. market access commitments.ZXo yO-ԍxFrance Telecom FNPRM Reply Comments at 2.Z The Government of Japan states that the GATS does not allow application of a public interest test in a way that is inconsistent with the GATS. In addition, the Government of Japan urges the Commission to establish a period of time normally required to reach a decision concerning an application, as  X1-required by the Reference Paper.V1o yO -ԍxGovernment of Japan FNPRM Comments 4.V  X -x216. ` ` USTR asserts that the Commission can apply the public interest test and that no Members participating in the WTO basic telecom negotiations can claim surprise at its  X -continued use.Z xo yO-ԍxUSTR Foreign Participation Comments at 9.Z USTR argues that the United States did not give up its right to enforce domestic laws, regulations, and policies when it joined the WTO or agreed to the WTO Basic Telecom Agreement. According to USTR, the United States and other WTO Members remain entirely free to pursue legitimate policy objectives, such as the protection of  Xy-competition, national security interests, law enforcement, foreign policy and trade concerns.:yo {O2-ԍxId.:  XK-x Discussion  X4-  X-x217. ` ` We conclude that application of the public interest test with respect to  X-authorizations to access nonU.S. satellites is consistent with the GATS for several reasons.o yOQ-ԍxIn reaching this conclusion, we rely on the expertise of USTR, which has primary responsibility for  {O-issuing and coordinating guidance on interpretation of U.S. trade obligations. See 19 U.S.C.  2171(c)(1) (The USTR "shall issue and coordinate policy guidance to departments and agencies on basic issues of policy and interpretation arising in the exercise of international trade obligations considered under the auspices of the WTO.") First, we find unpersuasive the European Commission's conclusion that the U.S. decision to conclude the WTO Basic Telecom Agreement alone satisfies our public interest analysis. The United States' decision to participate in the WTO Basic Telecom Agreement relates only to its trade obligations and does not replace our separate statutory mandate to determine that grant would otherwise serve the public interest, convenience and necessity. Second, we find unpersuasive arguments that considering the public interest when evaluating requests by non"|[L ,-(-(ZZP"ԫU.S. satellites violates the United States' national treatment and MFN obligations under the GATS. The Commission has applied a public interest analysis as part of its regulatory structure since the Communications Act was passed in 1934. In fact, consideration of the  X-public interest is fundamental in carrying out the general powers of the Commission.No {O4-ԍxSee 47 U.S.C.  303.N We thus find unconvincing arguments that consideration of the public interest violates the U.S. national treatment or the MFN obligation.  X_-x218. ` ` Third, we find unconvincing the arguments of the European Commission and  XH-France Telecom that the public interest test violates the U.S. market access commitments.  We note USTR's comment that the negotiating history of the GATS shows that Article XVI  X -(Market Access) does not prohibit all domestic regulation of basic telecom services. Zo {O% -ԍxSee USTR Foreign Participation Comments at 7, n.13 (citing GATS Secretariat, "Initial Commitments in Trade Services: Explanatory Note," MTN.GNS/W/164 (September 3, 1994)). Rather, Article XVI only prohibits Members from maintaining or adopting the types of unscheduled limitations and measures defined in GATS Article XVI. We find that because the public interest analysis is neither a quantitative nor an economicneeds based limitation set out in Article XVI, there is no need for the United States to have included the test as a  X -limitation on its market access commitments in its Schedule of Specific Commitments.@ o {O -ԍxId. at 8.@  Xy- IV.xADMINISTRATIVE REQUIREMENTS  XK-x A.` ` Regulatory Flexibility Act   X-x219.` ` As required by Section 603 of the Regulatory Flexibility Act, 5 U.S.C.  603 (RFA), the Commission prepared an Initial Regulatory Flexibility Analysis (IRFA) in the  X-Notice and Further Notice. The Commission's Final Regulatory Flexibility Analysis (FRFA),  X-Appendix D of this Report and Order, conforms to the RFA, as amended by the Contract with America Advancement Act of 1996 (CWAAA), Pub. L. No. 104-121, 110 Stat. 847  X-(1996).aZFo {O-ԍx 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 (CWAAA) of 1996, Pub. L. No. 104-121, 110 Stat. 847 (1996). Title II of the CWAAA is the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) a  X- x B. Paperwork Reduction Act  XR-x220.` ` This Report and Order contains new or modified information collections. A  X=-request for clearance of the information collections proposed in the Further Notice was"=\h ,-(-(ZZ"  X-submitted to Office of Management and Budget (OMB) and approved on October 13, 1997.No {Oy-ԍxSee OMB No. 30600678. N  X-The changes to the approved information collection adopted in this Report and Order will be submitted to OMB and will become effective upon approval by OMB.  X- V.xCONCLUSION  X-  Xx-x221.` ` In this Report and Order, we adopt a new standard for foreign participation in the U.S. satellite services market and implement the United States' obligations under the WTO Basic Telecom Agreement. The common sense rules and procedures we establish will provide opportunities for foreign entities to deliver satellite services in this country. The liberalized market conditions that will result from the WTO Basic Telecom Agreement will allow U.S. companies to enter previously closed foreign markets. These joint initiatives will benefit U.S. consumers by increasing the availability of various satellite services, providing more alternatives, reducing prices, and facilitating technological innovation. This new environment will encourage a more competitive satellite market in the United States, as well as spur development of broader, more global satellite systems. It will also foster greater opportunity for communications across national boundaries by making it easier for consumers worldwide to gain access to people, places, information, and ideas.  XO- VI.xORDERING CLAUSES  X!-x222.` ` Accordingly, IT IS ORDERED that, pursuant to Sections 1, 2, 4(i), 303(r), 308, 309, and 310 of the Communications Act of 1934, as amended, 47 U.S.C.  151, 152, 154(i), 303(r), 308, 309, and 310, the policies, rules and requirements discussed herein ARE ADOPTED and Part 25 of the Commission's rules, 47 CFR Part 25, IS AMENDED as set forth in Appendix C.  X-x223.` ` IT IS FURTHER ORDERED that authority is delegated to the Chief, International Bureau as specified herein, to effect the decisions as set forth above.  XR-x224.` ` IT IS FURTHER ORDERED that the Commission's Office of Managing  X;-Director SHALL SEND a copy of this Report and Order, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.  X-x225.` ` IT IS FURTHER ORDERED that the amendments to Part 25 of the Commission's rules, 47 CFR Part 25, FCC Form 312 and the Commission's policies, rules  X -and requirements established in this Report and Order shall take effect thirty days after publication in the Federal Register, or in accordance with the requirements of 5 U.S.C.  801(a)(3) and 44 U.S.C.  3507, whichever occurs later. The Commission will publish a ""]Z,-(-(ZZ!"  X-notice, following publication of this Report and Order in the Federal Register, announcing the  X-effective date of this Order. The Commission reserves the right to reconsider the effective date of this decision if the WTO Basic Telecom Agreement does not take effect on January 1, 1998. x` `  hhFEDERAL COMMUNICATIONS COMMISSION x x` `  hh x` `  hhMagalie Roman Salas x` `  hhSecretary" ^,-(-(ZZ"  X-  .#]\  PCP##C\  P6QP#X81Í ÍX01Í Í#o\  PCXP##XP\  P6QXP#APPENDIX A T  X- Commenters on the Notice of Proposed RulemakingĐTP  X-AirTouch Communications (AirTouch) Alpha Star Television Network, Inc. (Alpha Star) AMSC Subsidiary Corporation (AMSC) AT&T Corp. (AT&T) BT North America, Inc. (BTNA) Cacaos (Cacaos ) Capital Cities/ABC, Inc., CBS Inc., National Broadcasting Co., Inc., Turner Broadcasting xSystem, Inc. (CC/Networks) Charter Communications International, Inc. (Charter) Columbia Communications Corporation (Columbia) COMSAT Corporation (COMSAT) DIRECTV, Inc.; DIRECTV International, Inc.; Hughes Communications Galaxy, Inc. x(DirecTV) GE American Communications, Inc. (GE Americom) General Instrument Corporation (General Instrument) Home Box Office (HBO) ICO Global Communications (ICO) INTELSAT Japan Satellite Systems, Inc. (Japan Sat) Keystone Communications Corporation (Keystone) Kokusai Denshin Denwa Co., Ltd. (KDD) L/Q Licensee, Inc. and Loral Space Communications, Ltd. (Loral) Lockheed Martin Corporation (Lockheed Martin) MCI Telecommunications Corporation (MCI) Motorola Satellite Communications, Inc. and Iridium, Inc. (Motorola) National Telecom Satellite Communications, Inc. (NATSAT) Newcomb Communications, Inc. and Mobile Datacom Corporation (Newcomb) Orbital Communications Corporation (OrbComm) Orion Network Systems, Inc. (Orion) PanAmSat Corporation (PanAmSat)  X-Space Communications Corporation of Tokyo, Japan|7L yOV"-ԍxMotion for Latefiled initial Comments and Comments received July 31, 1996.| (Space Communications) Teledesic Corporation (Teledesic) TMI Communications and Company, L.P. (TMI) Transworld Communications (U.S.A.), Inc. (Transworld) TRW Inc. (TRW) Western TeleCommunications, Inc. (WTCI) WorldCom, Inc. (WorldCom) "<&_X,))ZZ%"  X- Reply Commenters on the Notice of Proposed RulemakingĐTP AirTouch Communications AMSC Subsidiary Corporation Associated Group Inc. (Associated) AT&T Corp. BT North America, Inc. Capital Cities/ABC, Inc., CBS Inc., National Broadcasting Co., Inc., Turner Broadcasting xSystems, Inc. Charter Communications International, Inc. Columbia Communications Corporation COMSAT Corporation DIRECTV, Inc. Embassy of Japan (Government of Japan) GE American Communications, Inc. GTE Airphone Incorporated (GTE) ICO Global Communications INTELSAT Lockheed Martin Corporation Loral Space & Communications Ltd. MCI Telecommunications Corporation Motion Picture Association of America, Inc. (MPAA) Motorola Satellite Communications, Inc. and Iridium LLC National Telecom Satellite Communications, Inc. Newcomb Communications, Inc. and Mobile Datacom Corporation News Corporation Limited (News Corp.) National Telecommunications and Information Administration (NTIA) Orion Network Systems, Inc. PanAmSat Corporation Teledesic Corporation TelQuest Ventures, Inc. (TelQuest) Telesat Canada (Telesat) TMI Communications and Company, LP (TMI) Transworld Communications (U.S.A.) Inc. TRW Inc. U.S. Department of State (State) Western TeleCommunications, Inc.""`,))ZZf!"  X-/APPENDIX B T  X-; Commenters on the Further Notice of Proposed RulemakingĐTP ABC, Inc., CBS Inc., National Broadcasting Company, Inc., and Turner Broadcasting xSystems, Inc. (Networks) AirTouch Communications, Inc. AT&T Corporation AMSC Subsidiary Corporation BT North America, Inc. Columbia Communications Corporation COMSAT Corporation Embassy of Japan GE American Communications, Inc. Globecast North America Inc. Hughes Electronics Corporation (Hughes) ICO Global Communications Lockheed Martin Corporation Loral Space & Communications Ltd. and L/Q Licensee, Inc. Morality in the Media, Inc. (Morality) Motorola Satellite Communications, Inc. and Iridium LLC Orion Network System, Inc. PanAmSat Corporation QUALCOMM Inc. (Qualcomm) Secretary of Defense (DOD) Skybridge LLC (Skybridge) Teledesic Corporation Telesat Canada TMI Communications and Company, LP TRW Inc. UTC Winstar Communication, Inc. (Winstar) ""a,))ZZ "  X-* Reply Commenters on the Further Notice of Proposed RulemakingĐTP AMSC Subsidiary Corporation Columbia Communications Corporation COMSAT Corporation Deutsche Telekom AG and Deutsche Telekom, Inc. (Deutsche Telekom) European Commission (European Comission) France Telecom (France Telecom) GE American Communications, Inc. Hughes Electronics Corporation ICO Global Communications Japan Satellite Systems, Inc.  X -Lockheed Martin Corporation\ 7L yO9-ԍxFiled Motion to Leave to File Late Comments\ Motion Picture Association of American, Inc. Orion Network Systems, Inc. Panamsat Corporation Space Communications Corporation TMI Communications and Company, Limited Partnership Office of the U.S. Trade Representative (USTR) "bX,))ZZt"  X- )APPENDIX C ă  X- U Rule Changes to 47 C.F.R. Part 25 of the Commission's Rules ă Part 25 of the Commission's Rules and Regulations (Chapter I of Title 47 of the Code of Federal Regulations) is amended as follows:  X_-1.xThe authority citation for Part 25 continues to read as follows: XxAuthority: Secs. 25.101 to 25.601 issued under Sec. 4, 48 Stat. 1066, as amended; 47 U.S.C. 154. Interpret or apply secs. 101104, 76 Stat. 419427; 47 U.S.C. 701744; 47 U.S.C. 554.  PART 25SATELLITE COMMUNICATIONS  X -2.xThe Table of Contents for Part 25 is amended to read as follows: * * * * * EARTH STATIONS  X-25.130` ` Filing requirements for transmitting earth stations.  X-25.131` ` Filing requirements for receiveonly earth stations.  X-25.132` ` Verification of earth station antenna performance standards.(#`  X-25.133` ` Period of construction; certification of commencement of operation.(#`  X-25.134` ` Licensing Provisions of Very Small Aperture Terminal (VSAT) Networks.(#`  X-25.135` ` Licensing provisions for earth station networks in the nonvoice, nongeostationary mobilesatellite service.(#`  X|-25.136` ` Operating provisions for earth station networks in the 1.6/2.4 GHz mobilesatellite service.(#`  XN-25.137` ` Application requirements for earth stations operating with nonU.S. licensed space stations.(#` * * * * * * * *  X -3.xSection 25.113 is amended by revising the first sentence of paragraph (b) to read as follows:  25.113 Construction Permits * * * * * (b) Construction permits are not required for satellite earth stations that operate with U.S.licensed or nonU.S. licensed space stations. * * * "(c,))ZZ'"Ԍ* * * * *  X-4.xSection 25.115 is amended by revising the first sentence of paragraph (c) to read as follows:  25.115 Applications for earth station authorizations * * * * * (c) Large Networks of Small Antennas operating in the 12/14 GHz frequency bands with U.S.licensed or nonU.S. licensed satellites for domestic services. * * * * * * * *  X -5.xSection 25.130 is amended by revising the first sentence of paragraph (d) to read as follows:  25.130 Filing requirements for transmitting earth stations * * * * * (d) Transmissions of signals or programming to nonU.S. licensed satellites, and to and/or from foreign points by means of U.S.licensed fixed satellites may be subject to restrictions as a result of international agreements or treaties. * * * * * * * *  X-6.xSection 25.131 is amended by revising paragraphs (b) and (j) to read as follows:  25.131 Filing requirements for receiveonly earth stations. * * * * * (b) Except as provided in paragraph (j) of this section, receiveonly earth stations in the fixedsatellite service that operate with U.S.licensed satellites may be registered with the Commission in order to protect them from interference from terrestrial microwave stations in bands shared coequally with the fixed service in accordance with the procedures of  25.203 and 25.25125.256 of this part. * * * * * (j) Receiveonly earth stations operating with nonU.S. licensed space stations shall file an FCC Form 312 requesting a license or modification to operate such station. Receiveonly earth stations used to receive INTELNET I service from INTELSAT space stations need not  X (-file for licenses. See Deregulation of ReceiveOnly Satellite Earth Stations Operating with" (d,))ZZ&" the INTELSAT Global Communications Satellite System, Declaratory Ruling, RM No. 4845, FCC 86214 (released May 19, 1986).  X-7. xA new Section 25.137 is added to read as follows:  25.137 Application requirements for earth stations operating with nonU.S. licensed space stations (a) Earth station applicants or entities filing a "letter of intent" requesting authority to operate with a nonU.S. licensed space station to serve the United States must attach an exhibit with  X -their FCC Form 312 application with information demonstrating that U.S.licensed satellite systems have effective competitive opportunities to provide analogous services in (1) the country in which the nonU.S. licensed space station is licensed; and (2) all countries in which communications with the U.S. earth station will originate or terminate. The applicant bears the burden of showing that there are no ,$Ide jure  ,$I practic ,$Is al  ,$I or legal constraints that limit or prevent access of the U.S. satellite system in the relevant foreign markets. The exhibit required by this paragraph must also include a statement of why grant of the application is in the public interest. This paragraph shall not apply with respect to requests for authority to operate using a nonU.S. licensed satellite that is licensed by or seeking a license from a country that is a member of the World Trade Organization for services covered under the World Trade Organization Basic Telecommunications Agreement. (b) Earth station applicants, or entities filing a "letter of intent," requesting authority to operate with a nonU.S. licensed space station must attach to their FCC Form 312 an exhibit providing legal, financial, and technical information for the nonU.S. licensed space station in accordance with Part 25 and Part 100 of this Chapter. If the nonU.S. licensed space station is in orbit and operating, the applicant need not include the financial information specified in  25.114(c)(17) and (c)(18) of this part. If the international coordination process for the nonU.S. licensed space station has been completed, the applicant need not include the technical information specified in  25.114(c)(511) and (c)(14) of this part, unless the technical characteristics differ from the characteristics established in that process. (c) A nonU.S. licensed satellite system seeking to serve the United States can be considered contemporaneously with other U.S. satellite systems if it is (i) in orbit and operating; (ii) has a license from another administration; or (iii) has been submitted for coordination to the International Telecommunication Union. "!e,))ZZ "  X- f ) APPENDIX D ă  X'  n FINAL REGULATORY FLEXIBILITY ANALYSISAMENDMENT OF THE \COMMISSION'S REGULATORY POLICIES TO ALLOW NONU.S. LICENSED ISPACE STATIONS TO PROVIDE DOMESTIC AND INTERNATIONAL SATELLITE  X'dkSERVICES IN THE UNITED STATES (International Satellite Services Order) Đ\  X_41.` ` As required by Section 603 of the Regulatory Flexibility Act, 5 U.S.C.  603 (RFA), the Federal Communications Commission ("Commission") prepared an Initial  X14Regulatory Flexibility Analysis (IRFA) in the Notice of Proposed Rulemaking (Notice) in IB  X 4Docket No. 96-111.`^ 7L {O 'ԍIn the Matter of Amendment of the Commission's Regulatory Policies to Allow NonU.S. licensed Space  {O_ 'Stations to Provide Domestic and International Satellite Service in the United States, Notice of Proposed  {O) 'Rulemaking, 11 FCC Rcd 18178 (1996) (Notice).`  After the conclusion of the World Trade Organization (WTO) Agreement on Basic Telecommunications Services (WTO Basic Telecom Agreement), the  X 4Commission released the Further Notice of Proposed Rule Making (Further Notice)  X 4requesting comment on the proposals in the Further Notice, including the IRFA.}^ 7L {Oz'ԍIn the Matter of Amendment of the Commission's Regulatory Policies to Allow NonU.S. licensed Space  {OD'Stations to Provide Domestic and International Satellite Service in the United States, Further Notice of Proposed  {O'Rulemaking, FCC 97252 (released July 18, 1997) (Further Notice). } The  X 4Commission's Final Regulatory Flexibility Analysis (FRFA) in this Report and Order conforms to the RFA, as amended by the Contract with America Advancement Act of 1996  X4(CWAAA), Pub. L. No. 104-121, 110 Stat. 847 (1996).aZ7L {O_'ԍ 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 (CWAAA) of 1996, Pub. L. No. 104-121, 110 Stat. 847 (1996). Title II of the CWAAA is the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) a  Xl' I. Need for, and Objectives of, the International Satellite Services Report and Order:  X>42.` ` In this Report and Order, the Commission promulgates rules for nonU.S. licensed satellites to provide satellite services in the United States. This action will advance the growth of global satellite services and create greater competition in the U.S. satellite market. Enhanced competition in the U.S. market will benefit U.S. consumers, including small businesses, by increasing the availability of various satellite services, providing more alternatives in the selection of communications services, reducing prices, and facilitating technological innovation. The Commission adopts these rules in part to reflect the liberalized market environment that will result from the WTO Basic Telecom Agreement. Specifically, the Commission adopts an open entry standard for applicants seeking to access satellite systems from WTO Members providing satellite services covered by the U.S. Schedule of Commitments under the WTO Basic Telecom Agreement (Fixed Satellite Services and Mobile"Zf6 ,))ZZA"  X4Satellite Services(MSS)).X7L yOy'ԍNoncovered services are those not contained in the U.S. Schedule of Commitments in the WTO Basic Telecom Agreement Direct to Home (DTH), Direct Broadcast Service (DBS) or Digital Audio Service (DARS). The Commission presumes that entry will be competitive in these cases. The Commission reserves the right, however, to attach conditions to a grant of authority or, in exceptional circumstances, where conditions may not adequately constrain the potential for anticompetitive harm in the U.S. market, to deny an application. In deciding whether to grant nonWTO country satellites access to the U.S. market or whether to allow any nonU.S. satellite to provide noncovered services in the United States, the Commission adopts the "ECOSat test." This test requires that U.S. satellite operators have "effective competitive opportunities" in the foreign market before allowing a satellite licensed by that country access into the United States.  X ' II. Summary of Significant Issues Raised by Public Comments in Response to the  X 'IRFA:  X 4 3.` ` No comments were filed in direct response to the questions posed in the IRFA  X 4in either the Notice or the Further Notice. In reply comments to the Notice, however, NATSAT argues that the Commission should not apply the ECOSat test to applications filed on or before July 15, 1996 by "designated entities" to resell MSS service in the United  X{4States.x{7L yO'ԍNATSAT NPRM Reply Comments at 1115 citing 47 U.S.C.  309(j).x It claims that such an exemption would be consistent with the directive Section 309(j) to ensure that small businesses and minority entrepreneurs have the chance to  XM4participate in the provision of spectrumbased services. In the Report and Order, the Commission does not adopt an ECOSat test with respect to WTOMember satellites providing WTOcovered services. Thus, small entities may access a large percentage of nonU.S. satellites without conducting an ECOSat analysis. Moreover, an ECOSat analysis is a minimal burden when compared to the possibility that unrestricted entry by foreignlicensed satellite systems would distort competition in the United States market.  X' III. Description and Estimate of the Number of Small Entities Subject to the Rules:  X44.` ` The Commission has not developed its own definition of "small entity" for purposes of licensing satellitedelivered services. Accordingly, we rely on the definition of "small entity" provided under the Small Business Administration (SBA) rules applicable to  X;4Communications Services, Not Elsewhere Classified.t;x7L yOd#'ԍ1987 Standard Industrial Classification Manual; 13 C.F.R. Part 121.t A "small entity" under these SBA rules is defined as an entity with $11.0 million or less in annual receipts.  X ' "g,))ZZ" IV. Summary of Projected Reporting, Record Keeping and Other Compliance  X'Requirements:  X45.` ` This Report and Order requires foreignlicensed systems serving the United States to comply with the same public interest standards that the Commission applies to U.S. satellites. First, foreignlicensed satellite systems must comply with the same technical requirements as a U.S.licensed satellite system. Without examining its technical compatibility with U.S.licensed satellites, a foreignlicensed satellite system may cause  XJ4unacceptable interference with U.S. systems and possible service disruptions to customers.]J {O 'ԍReport and Order at Section III.B.3.b.] Second, the Commssion requires foreignsatellite system applicants to comply with our  X 4financial rules, established under Section 308(b) of the Communications Act.: Z {O' 'ԍId.: Reserving orbit locations or spectrum for future satellites without examining whether the operator is financially qualified to build a system, which often costs hundreds of millions of dollars, could block entry by other U.S. or foreign companies that have the financial capability to proceed, ultimately delaying service to the public. Third, foreignlicensed satellite systems must comply with the Commissions legal qualifications consistent with Sections 308 and 309  X4of the Communications Act.:  {O/'ԍId.: The purpose of requiring compliance with legal requirements is to ensure that entities providing satellite services in the United States will abide by Commission rules. For example, certain information may provide relevant indicia of compliance. Violations of law by an applicant, particularly those relating to credibility, may be evidence that it will not comply with Commission rules. Thus, it is vital that the Commission obtain assurance that an applicant will follow the rules that the Commission has established over the years to maximize the development of efficient, compatible, and  X4innovative satellite systems.  V. Significant Alternatives and Steps Taken By Agency to Minimize Significant Economic Impact on a Substantial Number of Small Entities Consistent with Stated  X'Objectives:  Xg46.` ` The Commission will apply the same rules to foreignlicensed systems as have been applied to U.S. licensed systems. This approach will not impose any additional burdens on foreignlicensed satellite systems, small or large. Earth station operators seeking to access a nonU.S. satellite will be required to provide the same information regarding the satellite that U.S. satellite applicants must provide. This information is needed to ensure that transmissions from the space station into the U.S. do not cause technical interference into existing U.S. operations and that other Commission public interest objectives are met. The Commission expects, however, that the satellite information will be provided by the satellite operator to the earth station applicant because of their mutual business objectives. Thus, there"!h~ ,-(-(ZZ? " will be no economic impact on small businesses because there are no additional burdens being imposed. Certain information will not be required. First, where the international technical coordination process has been completed between the United States and the foreign satellite, additional technical information about that foreign satellite is not necessary. This is because the United States and the relevant foreign administration exchange extensive technical data about their respective systems during the course of the bilateral negotiations that lead up to a coordination agreement. This technical information is sufficient for us to determine whether the foreign satellite complies with Commission technical rules. The Commission finds that this new framework will benefit small businesses because earth station entities will have greater choice of space stations to access and opportunity to benefit from the other advantages of a more competitive market, such as reduced prices. In addition, small, local programmers will have access to a more competitive selection of satellite service providers. In this regard, our measures will advance the small business goals of Section 257 of the 1996 Act.  X 47.` ` Report to Congress: The Commission will send a copy of the Report and  X4Order including this FRFA, in a report to be sent to Congress pursuant to the Small Business  X}4Regulatory Enforcement Fairness Act of 1996, see 5 U.S.C.  801(a)(1)(A). A summary of  Xh4the Report and Order and this FRFA will also be published in the Federal Register, see 5 U.S.C.  604(b), and will be sent to the Chief Counsel for Advocacy of the Small Business Administration. "i ,-(-(ZZ"  X' z#=y   X'\STATEMENT OF FCC CHAIRMAN WILLIAM E. KENNARD ă  X4? November 25, 1997 ă   X4 "Re:X Rules and Policies on Foreign Participation in the U.S. Telecommunications Market, IB Docket No. 97142(#  XH4 "Re: XAmendment of the Commission's Regulatory Policies to Allow NonU.S. Licensed Space  "Stations to Provide Domestic and International Satellite Service in the United States, IB Docket No. 96111(#  "XAmendment of Section 25.131 of the Commission's Rules and Regulations to Eliminate  "dthe Licensing Requirement for Certain International ReceiveOnly Earth Stations, CC Docket No. 9323(#  "hXCOMMUNICATIONS SATELLITE CORPORATION Request for Waiver of Section  "25.131(j)(1) of the Commission's Rules as it Applies to Services Provided via the INTELSAT K Satellite, File NO. ISP92007(#  xEThese items illustrate what I have stressed since my first day as Chairman as the principles that  xshould guide the work of this agency, the three Cs: competition, community and common sense.  X4 xThey promote competition by opening up our telecommunications and satellite markets to foreign  xparticipation, ensuring that U.S. consumers will be confronted with an expanding array of choices  X4 xand lower prices. They promote community by establishing a framework that should make it  xeasier and cheaper for people around the world to communicate and exchange ideas. The items  XK4 x&takes a common sense approach to opening our markets. They replace a process that has, to this  xpoint, been extremely burdensome administratively the process of authorizing foreign  xIparticipation in our markets with a streamlined process that nonetheless gives us the ability to protect against the potential for anticompetitive harm where necessary.  xOver the past two years, the United States has led a revolution in the telecommunications sector.  xOn the domestic front, the Telecommunications Act of 1996 delivered a clear and compelling  xVblueprint for competition in telecommunications services. Internationally, the Commission acted  xdecisively to reform the antiquated system for delivering international services. At the same"3&j ,-(-(ZZ#E"  xtime, the United States challenged the nations of the world to build a global communications  xnetwork that brings the world together through communications and creates global opportunities.  xyIn February of this year, the United States reached a historic agreement with 68 other countries to open markets for basic telecommunications services around the world.  xZToday, the Commission considers rules governing foreign entry into the U.S. telecommunications  xjand satellite markets in response to the landmark agreement on telecommunications negotiated  xunder the auspices of the World Trade Organization (WTO). In that agreement, countries  x[representing 90 percent of the $600 billion global market for basic telecommunications services  xhave pledged to open their markets to international competition. Equally as important, almost  xall the participants bound themselves to observe a set of procompetitive regulatory principles  x0that closely follow the Congressional vision of free competition, fair rules, and effective  x{enforcement enacted in the Telecommunications Act. In light of the market opening and  xregulatory commitments contained in the WTO Basic Telecom Agreement, we expect to see a  xwidespread shift away from the monopoly provision of telecommunications and satellite services and toward competition, open markets and transparent regulation.  x/The rules we consider today will open the U.S. telecommunications and satellite markets to  x foreign investment and entry by foreign carriers. Such entry will introduce new sources of  xcompetition in the telecom and satellite markets in the United States and attract much needed  xinvestment capital. Increased competition will benefit American consumers by producing lower  xprices, greater service choice and innovation. Our marketopening actions will also assist the  xjU.S. telecommunications and satellite industries in their efforts to expand beyond our borders.  xKAs the world's leaders in telecommunications, our providers and manufacturers are wellequipped  xto take advantage of the foreign market opportunities that will follow on the heels of the actions  xwe take today. For example, the U.S. satellite industry holds 34 percent of the world satellite  xxmarket. Finally, the rules we approve today make sense by establishing clear and understandable  xstandards for entry, with streamlined procedures for most applicants and safeguards to prevent foreign carriers with market power from distorting competition in the U.S. market.  xLOur actions today once again put the United States in a leadership role of prompt and efficient  x{implementation of U.S. commitments in the WTO Basic Telecom Agreement. We will be  x=watching closely implementation by other countries. We expect that U.S. carriers will begin to"(0*0*0*&J"  xenter and compete in previously closed foreign markets. We will know that the revolution we  xstarted is successful if, in a few years, most of the world's traffic is carried between countries  xwhere competition has replaced monopolies, prices decline for international phone calls, and  xzthose lower prices translate into a significant increase in the size of the world's international  x services market. I also expect to see a dramatic increase in the number of people who have  xaccess to a telephone around the world. Our own experience shows that competition takes some  xMtime to flourish. The WTO Basic Telecom Agreement is the beginning of the revolutionary  xjourney to competition in many countries. With the adoption of the rules we are considering today, the U. S. will continue to spearhead that revolution.  z#=y