February 7, 1995
Re: Market Entry and Regulation of Foreign-affiliated Entities
Global business and global competition require global telecommunications services. By one estimate, the global telecommunications services industry will generate close to $1 trillion in revenue by the end of the decade. Access to foreign markets is therefore critical to the competitiveness of American companies seeking to enter this worldwide telecommunications market. The U.S. communications market is attracting foreign investment and increasing numbers of foreign carriers. Yet a recent study concludes that prohibitive market entry and foreign investment regulations of our trading partners are restricting the ability of our carriers to compete globally.
The Notice of Proposed Rulemaking we adopt today asks fundamental questions about the relevance of asymmetric market conditions to the entry of foreign entities into U.S. communications markets. Our approach is both cautious and well-reasoned. The Notice tentatively proposes to make the openness of a foreign carrier's home markets an explicit factor in our public interest analysis of that carrier's Section 214 application to enter the international services market in the United States. It further asks whether this same market access approach is appropriate when considering requests under section 310(b)(4) to exceed the statutory benchmarks for foreign ownership of radio licensees.
The Notice correctly notes the historical difference in the FCC's treatment of foreign ownership of broadcast radio facilities and common carrier facilities. I support our affirmation of the continued need under our public interest analysis for heightened scrutiny where a foreign entity will exercise editorial control over the content of transmissions.
Market access will not be the only factor in our analysis, nor will it be dispositive. We will continue to consider other public interest factors in making our determinations, such as the promotion of competition in global markets, the presence of cost-based accounting rates and any national security implications.
FCC consideration of foreign market access in these contexts should be welcomed by those countries, like the United Kingdom, that have significantly liberalized their telecommunications markets, and should provide renewed incentive to those markets that are moving, although more slowly, toward liberalization. I believe that this Notice reflects the good faith of the United States by proposing a further liberalization of our telecommunications market and by clarifying our policy on foreign carrier entry.
The Notice lays important groundwork as U.S. companies move increasingly into the global telecommunications services market. A thorough examination of the issue of market access also signals to the world our awareness that open markets are essential components in a Global Information Infrastructure (GII). As Vice President Gore stated in his speech to the World Telecommunications Development Conference in Buenos Aires, Argentina: "The commitment of all nations to enforcing regulatory regimes to build the GII is vital to world development and many global social goals."
I welcome the debate on this extremely important subject.