Developments - 1998

In 1998, the House of Representatives overwhelmingly passed H.R. 1872, The Communications Satellite Competition and Privatization Act of 1998, by a vote of [403-16]. This bill had been introduced the year before by Rep. Bliley (R-VA) and Rep. Ed Markey (D-MA). The bill was developed in response to a study on the subject of competition in the international satellite market that Chairman Bliley had requested from the General Accounting Office.

GAO Report has a considerable amount of background information on the issue. Hearings were held before the House Subcommittee on Telecommunications, Trade, and Consumer Protection in September 1997, and mark-up was in the subcommittee and full House Commerce Committee in March 1998.

A large number of companies and organizations were supporters of H.R. 1872 and few opposed it other than Comsat. However, a number of amendments were made to modify the bill before it went to the floor. See the House Report on H.R. 1872. Other amendments were defeated on the floor, as reflected in the floor debate.

In the meantime, Senator Inouye introduced the companion bill to the original version of H.R. 1872, S. 1328. Senator Burns, Chairman of the Communications Subcommittee of the Senate Commerce Committee, also introduced a bill on international satellite reform,S. 2365 that took a significantly different approach. Although the Subcommittee held hearings on S.2365, the bill was criticized both on the Hill and in industry as not being strong enough and the 105th Congress ended without further committee action on the bill.

However, two other events did take place in the fall of 1998 of significance to this issue. First, the Congress passed legislation to implement changes to the Foreign Corrupt Practices Act (FCPA), S. 2375, the International Anti-Bribery and Fair Competition Act of 1998. Section 5 of S. 2375 addresses the privileges and immunities that the intergovernmental entities enjoy which give them a significant advantage over their private competitors. This section clarifies that Intelsat and Inmarsat, and their U.S. signatory, Comsat, have no immunity for acts they take in connection with their commercial telecommunications activities.

Second, in September 1998, Lockheed Martin, proposed to merge with Comsat in a two step acquisition process that would require Congress to change Comsat's ownership restrictions as well as get approval from the Federal Communications Commission ("FCC"). Because Lockheed Martin needs a change to Section 304 of the 1962 Communications Act in order to complete its deal, both Lockheed Martin and Comsat are now pushing to get international satellite reform legislation passed.