[Pages H2823-H2850]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

COMMUNICATIONS SATELLITE COMPETITION AND PRIVATIZATION ACT OF 1998

Mr. DREIER. Mr. Speaker, by direction of the Committee on Rules, I
call up House Resolution 419, and ask for its immediate consideration.
The Clerk read the resolution, as follows:

H. Res. 419

Resolved, That at any time after the adoption of this
resolution the Speaker may, pursuant to clause 1(b) of rule
XXIII, declare the House resolved into the Committee of the
Whole House on the state of the Union for consideration of
the bill (H.R. 1872) to amend the Communications Satellite
Act of 1962 to promote competition and privatization in
satellite communications, and for other purposes. The first
reading of the bill shall be dispensed with. General debate
shall be confined to the bill and shall not exceed one hour
equally divided and controlled by the chairman and ranking
minority member of the Committee on Commerce. After general
debate the bill shall be considered for amendment under the
five-minute rule. It shall be in order to consider as an
original bill for the purpose of amendment under the five-
minute rule the amendment in the nature of a substitute
recommended by the Committee on Commerce now printed in the
bill. The committee amendment in the nature of a substitute
shall be considered as read. No amendment to the committee
amendment in the nature of a substitute shall be in order
unless printed in the portion of the Congressional Record
designated for that purpose in clause 6 of rule XXIII.
Printed amendments shall be considered as read. The chairman
of the Committee of the Whole may: (1) postpone until a time
during further consideration in the Committee of the Whole a
request for a recorded vote on any amendment; and (2) reduce
to five minutes the minimum time for electronic voting on any
postponed question that follows another electronic vote
without intervening business, provided that the minimum time
for electronic voting on the first in any series of questions
shall be 15 minutes. At the conclusion of consideration of
the bill for amendment the Committee shall rise and report
the bill to the House with such amendments as may have been
adopted. Any Member may demand a separate vote in the House
on any amendment adopted in the Committee of the Whole to the
bill or to the committee amendment in the nature of a
substitute. The previous question shall be considered as
ordered on the bill and amendments thereto to final passage
without intervening motion except one motion to recommit with
or without instructions.

The SPEAKER pro tempore. The gentleman from California (Mr. Dreier)
is recognized for 1 hour.
(Mr. DREIER asked for and was given permission to revise and extend
his remarks and to include extraneous material).
Mr. DREIER. Mr. Speaker, for purposes of debate only, I yield the
customary 30 minutes to my very good friend, the gentleman from South
Boston, MA (Mr. Moakley), pending which, I yield myself such time as I
may consume.
Mr. Speaker, this modified open rule provides for consideration of
H.R. 1817, the Communications Satellite Competition and Privatization
Act of 1998. The rule provides for 1 hour of general debate equally
divided between and controlled by the chairman and ranking minority
member of the Committee on Commerce.
The rule makes in order as an original bill for the purpose of
amendment

[[Page H2824]]

the amendment in the nature of a substitute recommended by the
Committee on Commerce now printed in the bill, which shall be
considered as read.
The rule further provides for consideration of only those amendments
that have been preprinted in the Congressional Record. The rule also
allows the Chairman of the Committee of the Whole to postpone votes
during consideration of the bill and reduce voting time to 5 minutes on
a postponed question if the vote follows a 15-minute vote. And finally,
the rule provides for one motion to recommit, with or without
instructions.
Mr. Speaker, the United States is the leader of the international
information-based economy. My home State of California is home to many
industries that create and exploit the core technologies of the
information economy, including telecommunications and satellite
producers.
The goal of this legislation is to bring satellite communications
into a new era of competition. We get there by encouraging an
international cartel of largely government-run national
telecommunications monopolies to undergo a process of competitive
privatization. The winners will be the consumers of international
telecommunications services, who will enjoy lower prices, better
services, and technological innovation.
Without question, there are very legitimate areas of debate regarding
the best means of moving to a private, free market in international
satellite communications. Because of the complex nature of the
international satellite cartel, this is a modified open rule that does
not block any germane amendment from being considered by the full House
as long as the amendment has been preprinted in the Record.
Mr. Speaker, this rule is deserving of bipartisan support, as is the
bill. I look forward to the House working its will on the amendments
submitted that have been printed in the Record, with the hope that the
final product is something that can be signed into law so that we more
fully enjoy the fruits of our information-based economy.
Mr. Speaker, I reserve the balance of my time.
Mr. MOAKLEY. Mr. Speaker, I yield myself such time as I may consume.
I thank my colleague, my dear friend the gentleman from California
(Mr. Dreier), my chairman in waiting, for yielding me the customary
half-hour. It might be a longer wait than he anticipates.
Mr. Speaker, I rise in support of this open rule, although I do not
understand the need for the preprinting requirement. There were only
two recorded votes in committee. There is nothing in the bill that
could not be handled in a totally open rule.
Today's rule will make in order the Communications Satellite
Competition and Privatization Act, which will end the COMSAT monopoly.
In 1962, Mr. Speaker, President Kennedy established an international
satellite system which gave rise to two huge satellite cooperatives,
INTELSAT and Inmarsat.
Since these cooperatives are so big and so powerful, they completely
had the entire market on satellite programs. Right now, any
communications committee that wants to use the INTELSAT or the Inmarsat
to transit into or out of the United States has to buy access through
the COMSAT Corporation.
This bill will open competition in the international communications
satellite system by encouraging INTELSAT and Inmarsat to privatize. It
would help level the playing field and allow competing satellite
companies to get into the business. Since the United States is such a
leader in satellite technology, this privatization should be very good
news for us.
COMSAT can continue to provide any service it wishes. It will just
have to be subject to competition from other private-sector companies.
So people who depend upon international communications, especially for
international calls, the Internet, cellular phones, and video, can
expect to see lower prices and much more choice in services.
So I urge my colleagues to support this rule.

{time} 1045

Mr. Speaker, I yield 5 minutes to the gentleman from Massachusetts
(Mr. Markey), the ranking minority member on the Subcommittee on
Telecommunications, Trade, and Consumer Protection, the person who has
all the questions and all the answers.
Mr. MARKEY. Mr. Speaker, I thank the gentleman from Massachusetts
(Mr. Moakley) for yielding me this time, and I thank everyone who has
participated in this enormously important debate.
As has been pointed out by the gentleman from Massachusetts, back in
1962, largely in response to the challenge from the Soviet Union with
the launch of Sputnik and the paranoia which overtook the West, the
United States not only began a process of putting a man on the Moon and
developing intercontinental ballistic missiles at a pace that had not
yet been matched in our country, but it also helped to organize
something which would create an international satellite consortium
using government-based entities to launch these satellites, because
there was no private sector capacity within the West in order to
accomplish these goals.
This consortium, INTELSAT, later matched by another group called
Inmarsat for satellite-based maritime communications, became the basis
for, the foundation for, international satellite competition. It served
us very well, as did most monopolies, in electricity, in local
telephone, in long distance telephone, in cable in the initial stages
of these industries. But over time it became clear that private sector
competition in each one of these industries was possible. In each case,
of course, the incumbent monopolist argued that it would be a takings,
it would be illegal to take away this monopoly which had been granted
by the government. But the reality was that the government had made a
decision initially in order to grant to one entity the ability to be
the first into the field, in order to establish it, but always retain
the right to be able to break up the monopoly when private sector
competition arrived.
Today we are going to debate the last frontier of monopolies, this
one in outer space, this one where INTELSAT and Inmarsat, with its
American signatory, COMSAT, seeks to retain its monopoly access to this
satellite communication internationally. What our legislation does is
break it up. It says to COMSAT, it says to INTELSAT, it says to
Inmarsat, ``You must privatize. You must move to the private sector.
You must give access to every other private sector company to that
which you have.'' That is the objective of this legislation.
The gentleman from Virginia (Mr. Bliley), the chairman of the full
committee, has been the leader on this issue, driving it as an
important final stage of our efforts to have privatized this
international telecommunications industry.
Now, these two entities, INTELSAT and Inmarsat, two international
orbiting cartels, are not going to simply wake up one day and say,
``Fine, take back our monopoly,'' because we have been waiting for the
last 20 years for them to do that. It is not going to happen. They are
not going to shed themselves of their privileged access to
international frequency spectrum. They are not going to voluntarily
give up their immunity from antitrust law. They are not going to
compete against American-based satellite companies on an even ground,
simply because we ask them to do so politely.
This legislation and the rule which accompanies it is a fair set of
recommendations for the debate, and then for the substantive decision-
making here on the floor. I hope that the Members today understand how
historic this debate is. It really will help to revolutionize the way
we communicate on this planet.
Mr. MOAKLEY. Mr. Speaker, I have no further requests for time, and I
yield back the balance of my time.
Mr. DREIER. Mr. Speaker, I rise in strong support of this very fair
and balanced modified open rule and urge my colleagues to join in
supporting it and to support the legislation that will follow.
Mr. Speaker, I yield back the balance of my time, and I move the
previous question on the resolution.
The previous question was ordered.
The resolution was agreed to.
A motion to reconsider was laid on the table.
The SPEAKER pro tempore (Mr. Shimkus). Pursuant to House Resolution
419 and rule XXIII, the Chair declares the House in the Committee of

[[Page H2825]]

the Whole House on the State of the Union for the consideration of the
bill, H.R. 1872.
The Chair designates the gentleman from Kansas (Mr. Snowbarger) as
Chairman of the Committee of the Whole, and requests the gentleman from
Illinois (Mr. LaHood) to assume the chair temporarily.

{time} 1050

In the Committee of the Whole

Accordingly, the House resolved itself into the Committee of the
Whole House on the State of the Union for the consideration of the bill
(H.R. 1872) to amend the Communications Satellite Act of 1962 to
promote competition and privatization of satellite communications, and
for other purposes, with Mr. LaHood (Chairman pro tempore) in the
chair.
The Clerk read the title of the bill.
The CHAIRMAN pro tempore. Pursuant to the rule, the bill is
considered as having been read the first time.
Under the rule, the gentleman from Virginia (Mr. Bliley) and the
gentleman from Massachusetts (Mr. Markey) each will control 30 minutes.
The Chair recognizes the gentleman from Virginia (Mr. Bliley).
Mr. BLILEY. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, I rise in support of H.R. 1872, the Communications
Satellite Competition and Privatization Act of 1998. Today I ask that
all Members support this bill and oppose all amendments.
Let us ask a question, if we had it all to do over again, would we
want to use the model of the United Nations for supplying international
communications? Would we trust an important part of the information age
to intergovernmental organizations? Or instead would we rely on the
free market? If the last three decades have taught us anything, Mr.
Chairman, it is the failure of central planning and the inefficiency of
government-run industry. If we have learned anything, it is that we
should trust the marketplace.
The international satellite communications market is dominated by
INTELSAT for fixed services like voice and video, and Inmarsat for
mobile services like maritime and aeronautical. These intergovernmental
organizations want to use their market power to expand into advanced
services that the private sector is chomping at the bit to provide,
like Internet access, direct broadcast services and hand-held phones.
These intergovernmental organizations, or IGOs, are run by a
combination of the world's governments and owned by a consortium of
national telecommunications monopolies. By government monopolies, for
government monopolies, of government monopolies. Their supporters call
them a cooperative. Where I come from, that is called a cartel. Either
way, it is high time for them to be privatized.
On that there is little disagreement. But more than just privatized,
they must be privatized in a pro-competitive manner, in a manner that
fosters competition. A privatized monopoly is still a monopoly
nonetheless, and in a manner that relies on the marketplace, not on
governments. In the current structure, the owners of the IGOs are the
foreign telecom monopolists that often control licensing decisions and
almost always control market access. Thus they have the ability and the
incentive to keep U.S. satellite competitors from coming into their
countries and competing against INTELSAT and Inmarsat. If we remove
these distorting incentives, our communications satellite and aerospace
industries, the most competitive in the world, will have a fair shot at
breaking into foreign markets. But if we are to bring technology of
modern telecommunications to all parts of the globe, if we are to make
international telecommunications truly affordable, then we have to
muster the courage to privatize the cartels and force them to compete
on a level playing field, putting our faith in the private sector and
the free market.
The gentleman from Massachusetts (Mr. Markey) and I have introduced
this legislation to do just that. It encourages privatization of the
IGOs in a way that fosters competition rather than snuffing it out. It
provides for privatization of INTELSAT by 2002 and Inmarsat by 2001,
more than enough time for these organizations to privatize. More
importantly, it requires privatization in a way that fosters
competition. If they do not privatize in a pro-competitive manner, the
bill limits these organizations' access to American markets for non-
core services. Moreover, if they do not make progress towards
privatization, they cannot provide under new contracts highly advanced
services better left to the private sector.
The only effective way to get the IGOs to move is to use access to
the U.S. market as leverage. The IGOs are immune and privileged treaty-
based organizations. You cannot sue them, you cannot tax them nor can
you regulate them. We have to use the only lever that we have, market
access. The bill's mechanisms are akin to telling the Japanese that
they cannot bring in all the cars they want unless they allow imports
of American products. COMSAT, the U.S. signatory, and IGO reseller, is
like the Isuzu dealer in Bethesda. The Isuzu dealer is a U.S. company
but they are selling a foreign product. Here COMSAT is selling a
foreign, intergovernmental product. By the way, our bill expressly
permits COMSAT to sell any service it chooses if it does so over a
system independent from the IGOs. Only where they choose to use the IGO
facilities and if the IGOs do not progress toward a pro-competitive
privatization would market access be threatened. The threatened
restriction is on IGO services, so it could apply to any distributor of
IGO services whether that is COMSAT or a new competitor after COMSAT's
monopoly is eliminated.
Our legislation will eliminate COMSAT's monopoly by permitting
competition for access to the IGOs. Such competition is called direct
access. According to the FCC, COMSAT's average margin in reselling
INTELSAT service is an amazing 68 percent. Not bad if you can get it,
but very bad if you happen to be a consumer. Every cent of COMSAT's
high prices comes from the pockets of American consumers. But COMSAT
has used its position as the monopoly provider of IGO services to force
users to sign long-term take-or-pay contracts so they will not be able
to take advantage of the competition direct access will permit. Thus
the bill provides what is called ``fresh look,'' which allows consumers
to have a one-time chance to renegotiate monopoly take-or-pay
contracts.
During the committee process, we defeated an amendment that would
have eliminated using access to the U.S. market as a lever. We defeated
an amendment to eliminate the potential restrictions on expansion if
progress is not made toward privatization. We defeated an amendment to
strike out fresh look. We accepted amendments which went a long way
toward meeting concerns some Members and COMSAT had raised, and made
other changes to accommodate their concerns. And the bill passed by
voice vote.
The bill has been endorsed by every private satellite services
company from GE to Motorola, TRW to Boeing, Teledesic to PanAmSat. It
has also been endorsed by major users of the systems, AT&T, MCI and
Sprint, maritime users and a variety of ethnic groups because of
consumer cost savings that will come with the bill. Over 40
endorsements and counting. The U.S. signatory to the IGOs, COMSAT, of
course, opposes it and they will oppose any effort at reform. It ends
their monopoly and would force the IGOs to give up their special
advantages when they privatize. A level playing field is not welcome
when you have been the government-backed monopolist. They will use
every tactic they can to trip up reform. We will have amendments that
may sound reasonable, but in effect remove any incentives for the IGOs
to privatize. I urge Members to ignore the rhetoric and oppose all
amendments.
H.R. 1872 is, in the words of one industry coalition, a moderate and
balanced approach. Consumers and taxpayers will benefit from the lower
prices it will bring, and businesses and their employees will benefit
from the new markets it will open.
Mr. Chairman, I reserve the balance of my time.
Mr. MARKEY. Mr. Chairman, I yield my time to the gentleman from
Michigan (Mr. Dingell), and I ask unanimous consent that he be
permitted to control that time.
The CHAIRMAN pro tempore. Is there objection to the request of the
gentleman from Massachusetts?

[[Page H2826]]

There was no objection.
Mr. DINGELL. Mr. Chairman, I yield myself 6\1/2\ minutes.

{time} 1100

Mr. Chairman, I want to express affection and respect for my good
friend, the chairman of the committee, the gentleman from Virginia (Mr.
Bliley) and I also want to express the same good feelings towards my
friend from Massachusetts (Mr. Markey). They are fine Members, and the
fact we have a difference here does in no way diminish my respect or
affection for either of these fine gentleman.
The simple fact of the matter, however, is this is a bad piece of
legislation. It is unfair, it subjects the taxpayers of the United
States to large liability under the Tucker Act, and I am talking about
billions of dollars. This Congress has learned before that this is a
risk, but it appears that we have to relearn the unfortunate lessons
that we learned when we wrote the legislation on Conrail and when we
did away with the unfortunate New York Central Railroad, and the
bankruptcy and the reorganization by statute. We subjected the
taxpayers to about $6\1/2\ billion in liabilities because we interfered
with the contracts, we interfered with the business, and we interfered
with the goodwill and the going value of the corporation, and it cost
the taxpayers dearly. This is not a mistake which we should repeat
today.
Mr. Chairman, H.R. 1872 has laudable goals. Unfortunately this
legislation is going to fail. It is anticompetitive, it is anticonsumer
and, worse, it is unconstitutional. The bill would impose draconian
measures which would limit not only INTELSAT or Inmarsat, but it would
also limit their U.S. customers. The bill unilaterally dictates
complete privatization by legislative edict. If it were that simple,
these treaty organizations could have long since been privatized.
I would point out these are treaty organizations. The United States
cannot unilaterally impose its will on better than 141 sovereign
nations who are party to these treaties. The bill disregards the cold
hard fact that the United States has but one vote in the governance of
INTELSAT and Inmarsat. Congress cannot change that unfortunate
international reality.
It should be clear to anyone that this approach has no chance of
success. If any foreign country wants to scuttle privatization efforts,
this train will be immediately derailed and vital American interests
will suffer.
The interesting thing is that foreign countries cannot only hurt
Inmarsat and INTELSAT in this process, but, very frankly, they can hurt
American corporations and American competitiveness and American
business going well beyond these two entities.
I for one cannot support a bill that holds American interests hostage
to the whims of 141 countries and that makes American carriers,
innocent of wrongdoing, who have been held to be nondominant carriers
just recently by the FCC, be at the mercy of foreign competitors.
When service restrictions contained in this bill kick in, hundreds of
millions of dollars in American investments in satellite equipment will
be made obsolete overnight.
If this were not bad enough, COMSAT, which is a private corporation
publicly traded on the U.S. stock markets, will be ruined financially.
Congress made a policy decision to fund these international satellite
systems by putting private capital at risk instead of taxpayers' money,
and when those private taxpayers' moneys and those stockholders' moneys
are lost, the Federal Government will have a liability under the Tucker
Act.
It should be noted that the United States Government encouraged and
in many instances required COMSAT to invest in these systems in
exchange for the responsibility and the opportunity to earn a
reasonable return. That would be taken away from COMSAT.
And the practical result of this is again liability on the part of
American taxpayers because of an unconstitutional action and an
unconstitutional taking by this Congress of property belonging to
private American citizens, which subjects this government immediately
to redress under the Tucker Act.
For the government to breach this bargain, obliterating the value of
this investment, then serious constitutional concerns are raised under
the takings clause of the fifth amendment. The report can tell my
colleagues until the committee is blue in the face that this is not
going to be the fact, but be assured that it will be, and my colleagues
are playing fast and loose with the taxpayers' money if they vote for
this legislation. This provision alone will subject American taxpayers
to claims for damages running to billions of dollars.
It should also be noted that this claim will fail. There is no reason
to believe this, given the clear Supreme Court's precedents on these
matters. And I would note that American users, as well as Inmarsat and
INTELSAT, will suffer and will face the severe adverse impact that will
flow from an unwise, unconstitutional, and unnecessary governmental
action.
In any event, this Congress should not be willing to throw away
billions of taxpayers' dollars on a litigation strategy that at best is
no more than a crap shoot.
In sum, H.R. 1872 is a bad bill. It is in desperate need of radical
surgery. It contains more constitutional law problems than a first year
law school exam.
I urge my colleagues to join in defeating what is here, an ill-
conceived budget-breaking bill that is going to waste taxpayers' moneys
without any benefit to the taxpayers or to the country; and it will
subject, I reiterate, our constituents to claims for billions of
dollars in damages, with no hope or expectation of gain for the
country, for competitiveness, or anything else.
Mr. Chairman, I urge the rejection of the bill, and I urge the
adoption of the amendment which will shortly be offered by my good
friend from Louisiana (Mr. Tauzin).
Mr. Chairman, I reserve the balance of my time.
Mr. BLILEY. Mr. Chairman, I yield 4 minutes to the gentleman from
Louisiana (Mr. Tauzin).
Mr. TAUZIN. Mr. Chairman, let me first tell my colleagues that there
is good news and bad news today. The good news is that this bill in
this form will never see the light of day; it will not get through this
Congress. It will not see the light of day in the Senate and should not
in its current form. The bad news is the same; that this bill could
fail, it could not become law because of its current form.
What I am rising today to ask this House to consider are amendments
to this bill to put it in the shape so that it can become good law, the
Senate and the other body can in fact take it up, and we might
accomplish the goals of this legislation.
Let me first commend the gentleman from Virginia (Mr. Bliley) and the
gentleman from Massachusetts (Mr. Markey) for the goals of this
legislation. It is indeed on target. It is designed to privatize these
treaty organizations and encourage that process as rapidly as possible.
Unfortunately, the bill is weighed down with several provisions
which, as the gentleman from Michigan (Mr. Dingell) pointed out, are
clearly takings under the fifth amendment of the United States
Constitution and which clearly will subject the Federal Government to
the possibility of huge settlements and huge lawsuits against this
government for taking private property without compensation.
Later on in this debate, the gentlewoman from Maryland (Mrs. Morella)
and I will be offering amendments to deal with those sections of the
bill. If those amendments are adopted, this bill will be put into
shape, and then it should become law, and maybe it will have a chance
on the other side. If those amendments fail, then I predict this bill
will never see the light of day and will never become law in this
Congress, and that is a shame. I should hope we have the good sense to
pass those two amendments.
In the course of this debate, I will point out to my colleagues that
in this bill is a provision that abrogates private contracts. In this
bill Congress will be changing private contracts and allowing people to
get out of contracts they signed. In the course of this debate, I will
show my colleagues that one of the competitors to COMSAT took this
issue to court and lost; lost in Federal district court and in their
request to have these contracts abrogated. And now in this bill we are
being asked as a Congress to change that

[[Page H2827]]

Federal court decision and to permit the abrogation of those long-term
contracts.
Just on April 24, our FCC ruled that those COMSAT contracts were not
monopolistic contracts, were entitled to the respect of law, and yet
this bill will permit those contracts to be abrogated. By congressional
action it will say that customers who signed the contract can get out
of it when they want to, when the time comes in just a couple of years
for them to do so.
In short, we will be presenting to our colleagues in this debate
today several ways in which this bill can be improved so that it can go
forward and hopefully become law. Without those changes, this bill will
amount to congressional authorization of taking of private property
from an American private corporation, will damage the facility of that
corporation to provide service to American customers, and will in fact
deny those American customers the right to use that American
corporation in the facilitation of services for their customer base.
In short, this bill as it is currently written is going down, if not
here, somewhere in this process.
Today we will have an opportunity to fix it in two very important
aspects: to remove those private takings of private property without
compensation, to protect the American taxpayer from these lawsuits and
to protect the customers of a private American company from abrogation
of their contract rights.
Mr. DINGELL. Mr. Chairman, I yield 3 minutes to the distinguished
gentlewoman from California (Ms. Eshoo).
Ms. ESHOO. Mr. Chairman, I am pleased to rise in support of H.R.
1872, legislation which will bring about the privatization of INTELSAT
and Inmarsat.
When Neil Armstrong took the first steps on the surface of the Moon
in 1969, the world was able to watch each step because of a successful
Cold War collaboration known as INTELSAT. It was a network of three
satellites at the time, just enough to provide global coverage of the
Moon landing. It is now a network of 24 satellites offering voice,
data, and video services around the world. Combined with Inmarsat's
eight satellites, these ventures should be viewed as two of the most
important successful international cooperation efforts ever undertaken.
The United States demonstrated great leadership when it helped create
INTELSAT. I think we must demonstrate our leadership once again in
making the changes necessary to fit our times by privatizing INTELSAT
and Inmarsat. There is agreement on the goal of privatization, but how
we get there is the key question. During subcommittee and full
committee consideration of the bill, sponsors sought to address many of
the concerns raised.
I commend the gentleman from Virginia (Mr. Bliley) and the gentleman
from Massachusetts (Mr. Markey) on their efforts to bring us closer to
a consensus. I realize some still have reservations about the bill, but
it is important to recognize that compromises and concessions have been
made.
Concerns were raised about service restrictions on COMSAT. Those
provisions were moderated. Concerns were raised about so-called fresh-
look provisions. Those provisions were moderated. At some point, we
need to ask whether those seeking further compromise are asking for
changes to improve the bill or to kill it.
In closing, I want to bring to the attention of my colleagues my
concerns with INTELSAT's current plan to spin off a private entity.
Ever since the Subcommittee on Telecommunications, Trade, and Consumer
Protection of the Committee on Commerce held a hearing on competition
in the satellite industry over a year and a half ago, I have
consistently raised concerns that any privatized spinoffs from INTELSAT
or Inmarsat must be pro-competitive. The process of privatization we
are supporting today is undermined if the privatized entity is created
with unfair competitive advantages.
I look forward to moving this bill today, and I ask my colleagues to
keep in mind whether those that are opposed are doing it to kill the
bill or really to improve it.
With that, Mr. Chairman, I urge my colleagues to support H.R. 1872.

{time} 1115

Mr. BLILEY. Mr. Chairman, I yield 1 minute to the gentleman from Ohio
(Mr. Gillmor).
Mr. GILLMOR. Mr. Chairman, I thank the Chairman for yielding, and I
rise in support of H.R. 1872. This bipartisan bill, of which I am a
cosponsor, is intended to bring competition to the intergovernmental
satellite organizations, INTELSAT and Inmarsat. It will also remove
COMSAT's monopoly over access to these organizations.
Fundamentally, this bill is a major policy decision that commercial
satellite services should be provided by the private sector worldwide
and not by the government. The government consortia may have been
needed to run an international satellite system in the 1960s, but after
almost 40 years, things change. We need to update our laws and our
regulations to reflect the current marketplace.
In addition, increasing the competitive nature of the international
satellite marketplace is very important to ensure that private American
satellite companies can compete on a level playing field. And today,
the playing field is tilted toward INTELSAT and Inmarsat. These
organizations are owned by monopoly providers of telecommunications
services worldwide. Working in cartel fashion, they have tried to keep
competition from developing.
There are two other important provisions in this bill providing for
``direct access'' and ``fresh look,'' and I presume my time has
expired.
Mr. DINGELL. Mr. Chairman, I yield 4 minutes to the distinguished
gentleman from Maryland (Mr. Wynn).
Mr. WYNN. Mr. Chairman, I thank the gentleman from Michigan (Mr.
Dingell) for yielding me this time, and for his leadership on this
issue.
Mr. Chairman, I rise today in strong opposition to H.R. 1872, and
also in strong support of the Tauzin and the Morella amendments which
are to come. This legislation, should it pass without these amendments,
will set back 3 decades of American leadership in international
satellite communications and reverse the trend toward increasing
competition in the satellite industry.
The legislation before us today establishes unrealistic timetables
and conditions for the privatization of INTELSAT and Inmarsat,
prohibits any organization from being used to provide critical noncore
satellite services to customers in the United States if the bill's
rigid privatization deadlines are not met, and that is just not right.
Now, this legislation has laudable goals, and I appreciate its
intent. Unfortunately, its approach is somewhat bludgeon-like, and the
sponsors have taken a somewhat misguided and punitive approach, an
approach that is so unfair that it has been denounced in publications
as ideologically diverse as the Washington Times and the Boston Globe.
They would have us believe that COMSAT is a monopoly. They would have
us believe that COMSAT is in fact the Microsoft of the satellite
industry.
COMSAT is a United States company that is going to be punished by
this bill. It is a publicly traded, U.S. company. It is not true that
it is a monopoly. In fact, there are currently more than 20 competitors
for COMSAT with more than $14 billion in investments and $40 billion in
stock. If this is not competition, I do not know what is.
If we look a little further, in 1988 COMSAT controlled 70 percent of
the market. That is not true today; they only control 21 percent. In
fact, on April 28 of this year, the FCC declared that COMSAT is
nondominant in most of its market. This effectively eliminates
arguments that we will hear that we are trying to get rid of some
terrible monopoly. The monopoly does not exist.
What we have is a United States company that is going to be severely
punished as a result of this legislation.
COMSAT has represented the United States' interests in international
satellite communications for 30 years. The company has played a leading
role in moving toward privatization. The plans that are adopted
currently by INTELSAT reflect the involvement of COMSAT.
Since its inception, COMSAT has never wavered from its mandate to
provide satellite communications to some of the most remote parts of
the world. It has done outstanding work. But now,

[[Page H2828]]

they are faced with an unprecedented legislative attack that will put
this U.S. company out of business, this company that hires over 1,000
American citizens.
What does this bill do? It imposes some very un-American things on an
American company. It imposes service restrictions on the new satellite
communications service that COMSAT could offer to its customers. This
would include high-speed data services, Internet access services, and
land mobile communication; basically, taking the heart out of COMSAT's
business. But even worse, it would abrogate contracts; that is,
existing contracts could be set aside under the terms of this
legislation to the detriment of COMSAT, all supposedly to promote
privatization. In fact, this approach would undercut active efforts
that are going on today to move toward privatization by imposing these
unrealistic timetables.
Mr. Chairman, I think we do need to take a stand for privatization,
but we need to be careful where we stand. We should not punish U.S.
companies, we should not punish U.S. employees for actions by
international organizations that they cannot control. We need to take a
look at amendments that could help this bill, amendments we will hear
about from the gentleman from Louisiana (Mr. Tauzin) and from my
colleague, the gentlewoman from Montgomery County, Maryland (Mrs.
Morella). I think if we add these amendments, we can improve this bill.
But as it stands, this bill is an unconstitutional taking from a U.S.
company. It is punitive, it is unfair, and I hope this House will
reject it.
Mr. BLILEY. Mr. Chairman, I yield 2 minutes to the gentleman from
Florida (Mr. Stearns), a member of the committee.
Mr. STEARNS. Mr. Chairman, I rise in support of H.R. 1872.
I do not think there is anybody in this House that disagrees that we
have to deregulate, and I am glad that the former speaker indicated he
also agrees that we need to deregulate. So the goal of this legislation
is to privatize INTELSAT and Inmarsat satellite systems, of which
COMSAT is the U.S. representative; and even COMSAT itself agrees that
we need to deregulate.
I am glad to point out that I have worked hard to ensure that the
results will be INTELSAT and Inmarsat and their spin-offs will be
healthy, private companies able to compete in the competitive satellite
marketplace. Working with the chairman of the committee, the gentleman
from Virginia (Mr. Bliley), we were able to improve the bill in the
committee process to make it more equitable and measure up to the
approach of privatizing systems.
The original text of the bill inserted a retroactive date of May 12,
1997 in certain sections of the bill and, in effect, would have hurt
COMSAT from making use of the significant investments in replacement
satellites and in satellites for new orbital slots which they made
since May 12, 1997. We were able to compromise and used the date of our
Committee on Commerce markup of March 25, 1998 as the date of cutoff
for replacement satellites in orbital slots. This change will allow
COMSAT, as a U.S. representative to the INTELSAT and Inmarsat system,
the use of hundreds of millions of dollars in investment. I bring that
to the attention of my colleagues who are not in favor of this bill,
because that amendment moved forward to give more equitableness to the
COMSAT deregulation portion here.
Mr. Chairman, I am also sympathetic to the comments of the gentleman
from Louisiana (Mr. Tauzin), and I welcome the debate on this about the
``fresh look'' provisions in the bill and the debate in which we will
be talking about what will be raised in the amendments. I think we need
to look at all of the problems and make this the best bill possible to
ensure that the potential financial liability to the U.S. taxpayer is
resolved.
Mr. DINGELL. Mr. Chairman, I yield 2 minutes to the distinguished
gentleman from Florida (Mr. Deutsch).
Mr. DEUTSCH. Mr. Chairman, I rise in support of this legislation. I
am going to focus on two issues that several of my colleagues have
raised. The first is whether or not there is an existing monopoly in
satellite telecommunications internationally. The facts are, contrary
to what the gentleman from Maryland (Mr. Wynn) has mentioned, I guess
it is in the eyes of the beholder how we look at it, but let me talk
specifically about facts.
If one is in the United States of America and he wants to make a
phone call or receive video from a location overseas that is serviced
through a satellite system, the only way to do it, the only way, is
through COMSAT. That is a statutory monopoly that this Congress had
granted and has granted and is the existing law. That is a fact; there
is a statutory monopoly in terms of communications through the INTELSAT
system.
There are alternative ways, but in some locations there are not. In
fact, if one wants to call Africa or Asia, or if one wants to send
video from Iran back to America, there is just no other alternative. So
that is the first issue. There is a statutory monopoly.
Let me also respond, we are going to have several amendments on this,
but I think it is going to be the heart of a lot of the debate that is
going to take place this morning, the issue of whether we are
abrogating contracts and what that means. Since there is an existing
monopoly, that monopoly had the power to have contracts, essentially
forced contracts, monopoly contractual terms on a variety of consumers
throughout the United States of America. And just as has been done
previously in telecommunications issues, specifically regarding when
AT&T broke up in terms of long-distance service, in a monopoly
situation which did exist and does exist today, when we are breaking up
the monopoly, which is appropriate in terms of service and price for
our economy and every citizen of the United States, we have to view how
those contracts were established, and those contracts were established
in a monopoly situation. So it is clearly appropriate for us to make
that change which is not precedent-making, which we have done
previously on several occasions in telecommunications in addressing
monopoly situations.
Mr. BLILEY. Mr. Chairman, I yield 1 minute to the gentleman from
Kentucky (Mr. Whitfield).
Mr. WHITFIELD. Mr. Chairman, I rise today to commend the gentleman
from Virginia (Mr. Bliley), the chairman of the committee, and the
gentleman from Massachusetts (Mr. Markey) for the fine work that they
have done on this bill, and to urge my colleagues to support H.R. 1872.
This base bill aims to eliminate the last statutory monopoly in the
U.S. telecommunications market by subjecting COMSAT to competition and
taking steps to privatize INTELSAT and Inmarsat. Monopolies and
organizations like international consortia may have made sense back in
the 1960s when Congress first passed the Satellite Act, but they do not
make sense today.
Having said that, I do think we need to examine thoroughly the Tauzin
and Morella amendment. But the world has changed dramatically in the
years since Congress enacted the Satellite Act. Technology and the
economy have evolved to the point that it is possible for private
companies to do what once we thought only governments could do.
So I rise in support of this bill.
Mr. DINGELL. Mr. Chairman, I yield 2 minutes to the distinguished
gentleman from Texas (Mr. Green).
(Mr. GREEN asked and was given permission to revise and extend his
remarks.)
Mr. GREEN. Mr. Chairman, I would like to thank my good friend from
Michigan, our ranking member (Mr. Dingell) for allowing me to speak for
2 minutes.
I rise in support of H.R. 1872, the Communications Satellite
Competition and Privatization Act. In committee several modifications
were indicated to accommodate the concerns that I had, as well as other
Members, and we believe that we have addressed the legitimate issues,
and I urge my colleagues to support the bill.
I want to thank the gentleman from Virginia, (Mr. Bliley) and the
gentleman from Massachusetts (Mr. Markey) for addressing the issues of
the maritime concerns. Mr. Chairman, I would like to ask unanimous
consent to place into the Record a letter to the Chairman of the
committee, the gentleman from Virginia (Mr. Bliley) from the Chamber of
Shipping of America in support of the bill, in support of

[[Page H2829]]

the changes that were made, both in the committee and in the chairman's
mark.
H.R. 1872 will start the privatization of both INTELSAT and Inmarsat.
These global satellite network systems help provide services such as
telephoning long distance and maritime safety services. The maritime
industry plays an important role in my district, particularly because
of the Port of Houston.
During committee consideration, concerns were expressed about the
impact of this privatization effort on maritime safety services. I am
particularly concerned with the Global Maritime Distress and Safety
Service which is provided by COMSAT using the Inmarsat satellite
system. Currently, the GMDSS that is connected to a ship's
communication systems allows a vessel to reach maritime rescue services
at the push of a button. The modifications made in committee and
supported by the letter that I will put into the Record will take
positive steps to maintain and assist and improve the GMDSS.
These modifications ensure that maritime safety devices and services
will always be available to our shipping industry. For example, a
provision was added which clarifies that the United States will not
oppose the registration of orbital locations for Inmarsat replacement
satellites.
H.R. 1872 also requires the FCC to consider equipment cost and design
change and design life of maritime communications equipment when making
a licensing decision. This provision, added, makes sure that the
maritime industry's investments in communications equipment are not
rendered useless or become too costly because of competition. This bill
will help increase marketplace choice, and again, I urge passage of
this bill. Mr. Chairman, at this time I include for the Record the
letter previously referred to.

Chamber of Shipping of America,

Washington, DC, April 29, 1998.
Hon. Thomas J. Bliley,
Chairman, House Commerce Committee, U.S. House of
Representatives, Washington, DC.
Dear Chairman Bliley: The purpose of this letter is to
express our appreciation for your willingness to respond to
our concerns outlined in our letter of February 26, 1998,
with regard to the Communications Satellite Competition and
Privatization Act, H.R. 1872.
As we indicated previously, our members are the end users
of these systems and, as such, generally support the concept
of privatization since, if properly done, will ultimately
result in better service at a lower cost to the end user.
As you recall, our concerns related to continuity of
service of the GMDSS and commercial maritime functions, as
well as the need to mitigate substantial investments in new
equipment by users who have recently made expenditures for
equipment which interfaces with existing systems.
On review of the substitute bill and amendments as reported
out of your Committee, we are pleased to find provisions that
address our concerns, specifically as follows:
Section 601(b)(3), Clarification: Competitive Safeguards
relating to the existence of non-core services at competitive
rates, terms, or conditions.
Section 624 (2) and (7) relating to preservation,
maintenance and improvement of the GMDSS.
Section 681(a) (11) and (21), Definitions relating to non-
core services and GMDSS.
We understand these considerations to be several of many
which the FCC will consider in future action. We urge you to
include in the record language that reemphasizes these issues
which are so critical to the continued safety of mariners
worldwide and the continued reliability of the U.S. maritime
industry.
Mr. Chairman, we know this has been a challenging issue for
all involved and we truly appreciate your leadership in
assuring the concerns of the maritime industry are adequately
addressed. We look forward to continued work with you and
your Committee in the future.
Sincerely,
Kathy J. Metcalf,
Director, Maritime Affairs.

Mr. OXLEY. Mr. Chairman, I yield 1 minute to the gentleman from New
Jersey (Mr. Frelinghuysen).
Mr. FRELINGHUYSEN. Mr. Chairman, I want to commend the gentleman from
Virginia (Mr. Bliley) and the gentleman from Massachusetts (Mr. Markey)
for authoring this legislation.
Two years ago we passed historic legislation that has put us well
down the road towards bringing telecommunications competition to all
markets within the United States. With H.R. 1872, we take another major
step towards reaching the same objective in the provision of
international satellite services.
As we take this step, I want to draw attention to one of the bill's
most important features, a provision called ``fresh look.'' ``Fresh
look'' is a tool that is intended to accelerate the transition from
monopoly to competition by giving purchasers of service a window of
opportunity to renegotiate long-term contracts entered into under the
assumption that the seller was and would continue to be the sole
provider of service. It is a tool that has been used by the Federal
Communications Commission in several proceedings. It has also been used
by State public utility commissions in California, Colorado, Michigan
and Ohio.

{time} 1130

While the ``fresh look'' tool should not be abused, it is useful when
employed, as it would be under this bill, to ensure that consumers are
ready to realize near-term benefits from the opening of the market to
competition.
Mr. Chairman, I support the bill and most particularly the open
``fresh look'' provisions.
The CHAIRMAN pro tempore (Mr. LaHood). The Chair would advise both
sides they each have 13 minutes remaining.
Mr. DINGELL. Mr. Chairman, I yield 4 minutes to the distinguished
gentleman from Massachusetts (Mr. Markey).
Mr. MARKEY. Mr. Chairman, I thank the gentleman from Michigan (Mr.
Dingell) very much for yielding me this time.
Mr. Chairman, in 1945, a visionary, Arthur C. Clarke, began this
international space odyssey in writing an article which pointed out
that by the positioning of satellites at a point over the Earth's
equator, it would be possible to create an international
telecommunications satellite-driven system for all the entire world.
Now, this vision of Arthur C. Clarke was one that only really began
to be implemented in 1962 with the creation of INTELSAT, a government-
driven organization, necessarily because of the need for the missiles
to shoot the satellites up and the government contracts to construct
the satellites.
However, as the years have gone by, it has become clear that private
sector companies as well can compete in this marketplace, and there
have been dozens of companies, many of them successful, which have
begun the process of entering these marketplaces. And so now the test
for American and international policymakers is to match the vision of
Arthur C. Clarke with the philosophy of Adam Smith. That is roofless,
Darwinian capitalism. We must ensure that we have made a full injection
into this international satellite cartel of the reality that they are
competing for business with other companies.
Now, America has the lead in this field. We are number one, looking
over our shoulders at number two and number three. The major obstacle
to us leaping out into an almost insurmountable lead is this
international cartel; government-granted, government-sanctioned, and 30
years old. It is time for us to end this cartel and allow these
American-based satellite companies to get out and into international
markets.
Now, why is this important? It is because as this Congress has voted
for NAFTA, for GATT, for the WTO, we are essentially saying as a
country that we are going to allow our low-end jobs to go to Third
World countries. That is what we are saying. But in turn what we are
saying, quite self-confidently, is that we believe that we can capture
the lion's share of the high-end jobs, the technology-based jobs, the
jobs that relate to the high education in our country.
We cannot allow an international cartel to continue to wall out
American companies from the marketplaces of this planet because that is
where our great high-tech education-based opportunities lie.
Otherwise, we have the worst of all worlds. Our low-end jobs go as
Third World countries produce these manual labor products, but we do
not gain access to the markets in these countries around the world
where we can market our high-end products.
This bill telescopes the time frame that it will take for America to
have its companies gain access to every single country in the world
with the satellite-based services, and in every one

[[Page H2830]]

of the service areas. That is why we bring this bill to the floor
today.
And it is not to put COMSAT out of business. COMSAT will remain in
business. It will remain competitive. It will remain with the capacity
to enter into any one of these markets, but only at the point at which
it is privatized, only at the point at which COMSAT, with INTELSAT, has
given up its monopoly.
Mr. Chairman, I again thank the gentleman from Michigan (Mr. Dingell)
for the time that he has yielded to me, and I hope that this
legislation passes.
Mr. OXLEY. Mr. Chairman, I yield 4 minutes to the gentleman from
Georgia (Mr. Norwood).
Mr. NORWOOD. Mr. Chairman, I thank the gentleman from Ohio (Mr.
Oxley) for yielding me this time. I appreciate the time and effort to
discuss something that I find myself in agreement with.
And I congratulate the gentleman from Virginia (Chairman Bliley) on
his good works in this, and it is a pleasure for me to follow the
gentleman from Massachusetts (Mr. Markey), my friend. It is not often
that we agree, and it is great to hear the gentleman have discussions
about Adam Smith.
Mr. Chairman, it is a pleasure to ask all of my colleagues to support
H.R. 1872, a long overdue piece of legislation. The law we seek to
amend here today is about as outdated as rotary dial telephones, and as
obsolete as rabbit ears on a television set.
When the Satellite Act was written, a government-run consortium made
sense. Today it simply does not. Private companies across the globe can
now offer competitive, high-quality international satellite service,
but only if we empower them to do so by passing this legislation, H.R.
1872, and eliminating the competitive advantages enjoyed by INTELSAT
and Inmarsat.
A recent study prepared by the Satellite Users Coalition documented
that passage of H.R. 1872 would produce cost savings reaching as high
as $2.9 billion for the American consumers over the next 10 years.
Additionally, this study went on to say and calculated that through the
expected competition brought about by meaningful reform, consumers
around the world could expect savings of $6.9 billion over that same
period.
The most important consumer benefit, though, Mr. Chairman, however
may not be the savings but rather the wealth of new innovation that
competition will invariably bring to the satellite industry. More than
30 years ago, governments around the world had the best intentions when
they took a risk and created an international satellite system. Back
then, the goal was to push technology forward and expand the reach of
the communication industry. Today it is clear that INTELSAT and
Inmarsat have served their purpose.
Therefore, I urge my friends and colleagues to support H.R. 1872 and
help us bring real competition to the market for satellite
communications as soon as possible.
Mr. OXLEY. Mr. Chairman, I yield myself 1\1/2\ minutes.
Mr. Chairman, I rise in support of H.R. 1872 and commend the
gentleman from Virginia (Chairman Bliley) and the gentleman from
Massachusetts (Mr. Markey) for their strong leadership in bringing this
issue to the floor.
There can be no doubt that the time has come for privatizing and
restructuring the intergovernmental satellite organizations. While
there may be some differences of opinion on the components as we move
forward, there is certainly unanimity about the fact that privatization
and increased competition in satellite communications are best for the
marketplace and best for the consumer.
To illustrate this point, it is worth noting that a significant
development has occurred since the Committee on Commerce acted on the
bill. The international government organization INTELSAT, consisting of
142 member countries, agreed on March 30 of this year to move toward
privatization by creating a private company separate from INTELSAT to
compete in the commercial satellite marketplace. The member countries
of INTELSAT, after a lengthy negotiation process heavily influenced by
the United States, came to a unanimous agreement to voluntary spin off
assets and create a new competitive entity.
While some may question whether this privatization effort is
sufficiently procompetitive, it strongly demonstrates the recognition
around the globe of the need to privatize and enhance competition in
the international satellite market.
Mr. Chairman, I also believe that it clearly demonstrates the extent
to which the leadership of the gentleman from Virginia (Mr. Bliley) has
garnered the attention of the industry and the markets, and for that
the courage and leadership shown by the gentleman from Massachusetts
(Mr. Markey) and the gentleman from Virginia (Mr. Bliley) are to be
commended.
Mr. Chairman, I encourage all Members to support this legislation.
Mr. BLILEY. Mr. Chairman, I yield 1 minute to the gentleman from New
York (Mr. Forbes).
Mr. FORBES. Mr. Chairman, I thank the gentleman from Virginia for
yielding me this time.
Mr. Chairman, I rise today in support of H.R. 1872, a much-needed
measure which will provide improved and cost-effective international
communications by allowing dozens of private sector companies to
compete in the marketplace.
As we look to the global marketplace and we can think about the many
people who have come to contribute to the greatness of this land, we
know that there is a great need out there for many Americans, American
consumers, to take advantage of lower cost in international
communications. This measure provides for that in a different time in a
different place. This measure is now greatly needed to replace the
government-sponsored corporation that had a lock on this marketplace.
This is about real people needing to communicate in a cost-effective
manner. Not about multinational corporations, real people who believe
that this measure is long overdue: The Polish American Congress, the
Hispanic Council on International Relations, the National Association
of Latino and Appointed Elected Officials, the Armenian National
Committee of America, the Cuban American Council, the National Council
of La Raza and the Puerto Rican Legal Defense and Education Fund. These
are real people who want to take advantage of lower cost communications
and I urge adoption of the Bliley-Markey bill.
Mr. BLILEY. Mr. Chairman, I yield 1 minute to the gentleman from
Connecticut (Mr. Shays).
(Mr. SHAYS asked and was given permission to revise and extend his
remarks.)
Mr. SHAYS. Mr. Chairman, I thank the gentleman from Virginia (Mr.
Bliley) for this time, and also commend the gentleman from
Massachusetts (Mr. Markey) for their bill and rise in strong support.
Mr. Chairman, I believe in real competition and meaningful choice,
and this bill offers that.
Today the House will be considering important legislation designed to
bring satellite communications technology into the modern age. I would
like to commend the Chairman of the Commerce Committee, Mr. Bliley, and
his original cosponsor, Mr. Markey, for introducing H.R. 1872, the bill
to privatize the intergovernmental satellite organizations. It has been
endorsed by every private satellite services company and the major
users of satellite services.
Two intergovernmental organizations dominate international satellite
communications. They are called INTELSAT and Inmarsat. They are owned
by a cartel like structure of all the world's state telephone
companies. The same companies that control access to national markets,
and thus keep out American companies that want to compete with these
organizations.
H.R. 1872 privatizes the intergovernmental satellite organizations,
and even more, does so in a pro-competitive manner. Now, they will
never privatize pro-competitively on their own--they like either the
status quo or a privatized monopoly. That is why the bill uses access
to the U.S. market for advanced services as a lever to make sure they
are privatized pro-competitively.
Comsat has a monopoly over sales of intergovernmental organization
services in the U.S.--over 90 other countries permit competition for
access to these organizations, and this bill brings us into line with
the rest of the world. It also allows customers to renegotiate long-
term ``take or pay'' contracts they were forced to sign by the COMSAT
monopoly. Of course the monopoly wants to keep them locked in so
consumers do not get the benefits of competition. But the bill, through
the

[[Page H2831]]

very important ``fresh look'' provision allows customers to get the
benefits of competition. I urge members to vote for the bill and oppose
amendments designed to eliminate fresh look or the bills market access
leverage.
Supporters of the status quo will try to divert the issue with
rhetoric about takings or punishment of the monopoly, but these
arguments are just a smokescreen for protecting the incumbent. Support
H.R. 1872 today--reform is long overdue. Customers need lower prices,
and new, American, competitors need access to foreign markets.
Mr. BLILEY. Mr. Chairman, I yield 2 minutes to the gentleman from
Virginia (Mr. Davis).
(Mr. DAVIS of Virginia asked and was given permission to revise and
extend his remarks.)
Mr. DAVIS of Virginia. Mr. Chairman, we are dealing with a structure
today that is a dinosaur and H.R. 1872 remedies that. Thirty-five years
is a long time since the original act and in the communications
industry it is even a longer time. And since the act was passed
originally, technology, the worldwide industry structure have changed
dramatically. A monopoly structure might have been required at the time
to develop a global network, but today it has become a problem, a
dinosaur keeping rates far above the costs and limiting the service and
facility innovation that we would otherwise get.
This legislation solves that problem. It opens up the international
satellite markets to facilities-based competition, and it properly
restricts the activities of the international satellite organizations
until this goal is well on its way.
It permits providers other than COMSAT to directly access INTELSAT
and Inmarsat so that rates for end users can go down more immediately.
It allows customers to take advantage of these lower rates by
permitting them to renegotiate contracts agreed upon when only a
monopoly existed before.
As for COMSAT and the international organizations, it allows them to
move ahead in this new competitive environment so long as they operate
in the best interest of a competitive marketplace.
Mr. Chairman, if we want the 21st century to be America's century, we
need to continue to restructure our competitive environment so that we
can compete and maintain our edge globally and this legislation does
that. This opens up tremendous potential for U.S. consumers and
industry. I think that it is particularly good for the end users, the
consumers around the globe.
And just as we have seen in the domestic telecommunications market,
competition brings lower rates, better services, and increased
technological innovations.

{time} 1145

The very same benefits are going to come from this important bill in
the international satellite marketplace. I think it deserves the
support of everyone in this Chamber.
Mr. DINGELL. Mr. Chairman, I yield 1 minute to the distinguished
gentleman from Tennessee (Mr. Tanner).
Mr. TANNER. Mr. Chairman, I rise today in support of H.R. 1872, the
Communications Satellite and Privatization Act of 1998.
I believe this legislation will speed the transformation of two
international satellite governmental bodies into competitive commercial
organizations. The bill will bring competition to the international
satellite industry and ultimately, in my judgment, lead to lower
telephone rates on long distance international calls and improved
services.
Long distance companies use satellites to complete many of their
calls so the rates they pay for satellite time directly affects the
rates consumers pay for international calls. More to the point, our
constituents who have family members and friends serving in the
military, the foreign service, or simply doing business overseas, will
be able to reduce their long distance bills.
When the satellite technology was in its infancy in the early 1960s,
it made sense for our government and many partnering governments to get
together and boost the satellite industry. Today, though, it makes
sense, with so many potential competitors, to open competition within
this market in an effort to speed the benefit of lower international
phone bills.
Mr. BLILEY. Mr. Chairman, I yield 2 minutes to the gentleman from
Mississippi (Mr. Pickering).
Mr. PICKERING. Mr. Chairman, I rise in support of the effort to bring
competition to this very important effort in communications and
satellites. In my home State of Mississippi, WorldCom, who would have
believed the number one provider of Internet services would come from a
rural State like Mississippi? This is what we have been trying to do
since the telecommunications bill.
If we look at our efforts since 1994 to bring competition and
deregulation in market after market, whether it is agriculture or
telecommunications, and this is one more important area where we can
make a difference by supporting this very important piece of
legislation that will bring more competition, more choice, lower
prices, and technology and innovation to the marketplace.
So with great honor, I rise in support of the efforts today of the
gentleman from Virginia (Mr. Bliley) and the gentleman from
Massachusetts (Mr. Markey) and look forward to supporting this very
important legislation.
Mr. DINGELL. Mr. Chairman, I yield myself 7 minutes.
Mr. Chairman, this is a most remarkable piece of legislation. It is a
wonderful solution. It is a wonderful solution seeking most actively
for a problem. As a matter of fact, it is rushing wildly from point to
point to find some problem that it can solve.
In the process, it is knocking over the crockery and going to create
enormous damage for the people of this country, for American industry,
and for American telecommunications industries. It also is going to
create enormous problems for the taxpayers of this Nation by subjecting
them to enormous liability for an unconstitutional taking under the
Tucker Act.
The allegation is made that COMSAT is a monopoly. The simple fact of
the matter is that within the last week, on April 24, as a matter of
fact, the FCC declared that the COMSAT Corporation is a nondominant
telecommunications carrier.
As reported in the Wall Street Journal, FCC has found that COMSAT
does not wield market power in 130 countries where it offers telephone
services, 54 countries where it transfers occasional use of video, and
in all countries where it offers long-term video needs.
COMSAT has better than 20 major competitors. It is the major
competitors of COMSAT who are around here whining for relief. Who are
these unfortunate, penniless, downtrodden competitors of COMSAT? They
are PanAmSat, and this bill has been described as a PanAmSat relief
bill by Wall Street.
PanAmSat just merged with Hughes and expects, if we pass this
legislation, that they are going to cut a fat hog which will be paid
for by the taxpayers, because we are expropriating, by the enactment of
this legislation, property which belongs to COMSAT, Loral and AT&T
which just merged, poor downtrodden, barefoot telecommunications
giants; and Orion and Columbia, plus a wide array of others.
There is no real problem with monopoly here. Indeed, the market share
of COMSAT has been declining. Another interesting thought, COMSAT is
spinning off now its satellite services in which it invested its
shareholders' money. Those are going into competition.
Talk about INTELSAT. INTELSAT is not a monopoly. It has a number of
other competitors who are up there providing telecommunications
services. This curious piece of legislation, I want to observe, is
going to have virtually no consequences in terms of real increase in
competition because, first of all, the competition that we are supposed
to be trying to enforce is not being imposed on U.S. companies, but
rather, we are trying to impose it on other companies in other
countries around the world. A most remarkable set of circumstances, to
assert the long reach of the arms of the United States Congress, to
impose on other countries and on their industries' deregulation, a most
curious practice.
But the last thing to which I want my colleagues to devote their
attention is the simple fact that under the Tucker Act, the United
States Congress is here engaging in an unlawful, unconstitutional, and
improper and wrongful taking of assets belonging, not to the
government, and not to a

[[Page H2832]]

wrongdoer, but simply to a U.S. corporation, COMSAT, and also an
interference in the contract rights of companies which are subscribers
and purchasers of service from COMSAT.
This action alone will subject the United States to billions of
dollars in lawsuits and probably billions of dollars in compensation
that we will have to pay, because we have interfered with the contract
rights, not just of COMSAT, but in the contract rights of people who do
business with COMSAT. We have interfered in a way which diminishes the
value of the stock of the stockholders and the assets of COMSAT. Apart
from the fact that this is wrong, it is also something which is
protected by the Constitution.
Some of my friends have said, well, the Congress reserved to itself
the right to amend the statute. We always do that. But we cannot, under
the Constitution, reserve to ourselves the right to take the property
of an American corporation.
The Congress did this a while back. Not many of my colleagues
remember the time that we passed the Penn Central reorganization. But
because we took property from Penn Central, the American taxpayers
wound up having to pay $6.5 billion.
Penn Central is no longer a railroad. They are a holding company.
They are listed on the New York Stock Exchange. They are making fine
earnings on the basis of investments that they made with the money by
which the Congress mistakenly enriched them because they did an
unlawful taking; and under the Tucker Act, they are able to sue.
Let us just look at some of the liabilities that we are absorbing. I
asked the staff to inquire to find out what it is that we will be
looking at in terms of additional liability for the taxpayers. I remind
my colleagues, these are American taxpayers who are going to have to
pay.
I would tell my colleagues that over $3 billion is the potential
liability for INTELSAT's business. That includes revenue from
restriction on additional services, direct access, and ``fresh look,''
$623 million for restriction on replacement satellites carrying noncore
services and a number of other items.
In addition to that, there will be over $4 billion in liabilities
potential to Inmarsat from business losses there, over $157 million
from restriction on additional services, $327 million from the ``fresh
look'' provisions of the legislation, and other liabilities that this
Congress is assuming on behalf of a bunch of fat cats who, I reiterate,
are seeking to cut a fat hog at the expense not just of COMSAT, but at
the expense of the American taxpayers.
When, in a few years, my colleagues observe that a lawsuit has been
filed, get a hold of our wallet and be prepared to defend what we have
done today, because we will have dissipated billions of dollars of the
taxpayers' assets, and we will have imposed upon the United States an
extortionate, unsatisfactory, and outrageous liability for serious
constitutional misbehavior and for improper taking of property
belonging to American citizens.
We are not playing games. We are not playing with foreigners. We are
beating American citizens for the benefit of just a few fat cats who
are doing splendidly and who, in terms of their earnings and their
market share, are growing at an extraordinary rate.
Ask yourself, my colleagues, is this the way that this Congress
should spend the budget surplus? Do we want to dissipate money because
we have done something egregiously stupid today?
Mr. Chairman, I reserve the balance of my time.
Mr. BLILEY. Mr. Chairman, how much time do I have remaining?
The CHAIRMAN. The gentleman from Virginia (Mr. Bliley) has 4 minutes
remaining, and the gentleman from Michigan (Mr. Dingell) has 1 minute
remaining.
Mr. BLILEY. Mr. Chairman, I yield 1 minute to the gentleman from
California (Mr. Cox).
Mr. COX of California. Mr. Chairman, I am pleased to rise in support
of H.R. 1872, the Communications Satellite Competition and
Privatization Act, which will bring a notable and lasting achievement
for the current Congress.
I would particularly like to commend the work of the gentleman from
Virginia (Mr. Bliley), the chairman of the Committee on Commerce, whose
diligent efforts have made it possible for us to bring this important
privatization initiative to the floor. It has significant bipartisan
support.
The law that we are amending today, the Satellite Communications Act,
was enacted in 1962. That was less than 5 years after the launch of
Sputnik. We have to remember that, at that time, it was widely assumed
that no private company could ever assume the financial burden of
putting a satellite into orbit.
It should not have come as a surprise, therefore, that the 1962
Satellite Communications Act gave COMSAT and INTELSAT, the
intergovernmental treaty organization which COMSAT helped create, a
virtual monopoly on the world's international satellite business. It
remains a profitable monopoly.
We have come a long way since 1962, and the myth that no private
company could afford to get in the satellite business has long since
been shattered. This is the right bill. I urge support for H.R. 1872.
There is no longer any defensible reason for governments to be in the
business of providing commercial satellite services.

{time} 1200

Mr. DINGELL. Mr. Chairman, could the Chair tell us how much time is
remaining?
The CHAIRMAN. The gentleman from Michigan (Mr. Dingell) has 1 minute
remaining. The gentleman from Virginia (Mr. Bliley) has 3 minutes
remaining and the right to close.
Mr. DINGELL. Mr. Chairman, I yield back the balance of my time on the
understanding the gentleman from Virginia is going to close.
I have made such good speeches, I am sure they will benefit the
gentleman in his closing remarks.
Mr. BLILEY. Mr. Chairman, I yield myself the balance of my time, and
the first thing I would like to do is read a list here of who is
supporting this bill:
AMSC, Boeing, Columbia Communications, Constellation Communications,
Echostar, Final Analysis, GE Americom, ICG Satellite Services, Iridium
LLC, Loral, Leo One USA, MCHI, Motorola, Orbital Communications, Orion
Network Systems, PanAmSat, Sky Station International, Stratus Mobile
Networks, Teledesic, TRW Space and Electronics Group, World Space
Management Corporation.
Satellite users in support of the bill: AT&T, Coalition of Service
Industries, General Electric Company/NBC, MCI, Sprint,
Telecommunications Industry Association, World Com.
Ethnic groups: Americans For Tax Reform, Republican National Hispanic
Assembly, Armenian National Committee of America, ASPIRA, Cuban
American National Council, Hispanic Council on International Relations,
National Association of Latino Elected and Appointed Officials,
National Council of La Raza, Polish American Congress, Puerto Rican
Legal Defense Fund.
I would also like to speak about the so-called ``taking.'' This bill
does not, does not, result in an unconstitutional taking of COMSAT's
property. Our bill does not take COMSAT's property in its contracts. We
merely give customers the right to renegotiate. This type of economic
regulation is constitutional.
The FCC has used ``fresh look'' four times in the past and no one
claimed takings. We are not like the Penn Central Railroad. That was
track and other equipment. We do not take any of their equipment.
In 1962, Congress reserved the right to regulate satellites at any
time and to change the deal. COMSAT has no reasonable expectation
amounting to a property right that the regulatory regime would not be
altered. The Supreme Court in 50 years has not ruled on a ``fresh
look'' case. Not in 50 years.
The share of the market for international satellite-based public
switch network service, voice and facsimile, 90 percent of it, is held
by COMSAT and INTELSAT. AT&T, MCI and Sprint, yes, they have cables,
but they have to have a contract with COMSAT for redundancy in case the
cable gets severed so they do not lose their customers.
I urge all Members to resist amendments and to support the bill as
reported by voice vote out of the committee.
Mr. TOWNS. Mr. Chairman, I rise today in support of H.R. 1872, the
Communications

[[Page H2833]]

Satellite Competition and Privatization Act. This legislation will
serve to create a competitive, free enterprise environment in both the
domestic and international satellite marketplace.
As our global economy moves towards a more competitive marketplace,
H.R. 1872 would also bring lower prices, increase competition, and spur
technological innovation. Although I applaud the goals of H.R. 1872, I
believe that certain provisions within the bill are misguided and
punitive.
Specifically, H.R. 1872 contains restrictions that will limit the
services that Comsat can offer using its satellite services. The
current language provides that if certain rigid milestones are not met,
Comsat would be forced to stop marketing certain services offered. If
adopted, this provision would give rise to a ``takings'' claim under
the Constitution, and would result in tremendous tax liabilities for
consumers. As a supporter of fair and open competition, I cannot
condone such punitive measures, and will support the amendment offered
by the gentlelady from Maryland, Representative Connie Morella, which
would permit Comsat to continue to use its property and prohibit the
FCC from implementing the service restriction in a manner that would
result in a government ``takings''.
H.R. 1872 also contains a provision that would severely limit
Comsat's ability to engage in binding contractual agreements.
Proponents of the measure argue that ``Comsat has `locked up' the
market with long-term contracts'' and, therefore, customers of Comsat
should be afforded the opportunity to unilaterally breach their
contracts so that they make them a ``fresh look'' at any available
competitor in the marketplace. While I agree that every business should
be given an opportunity to compete on a level playing field, I also
believe that the stability of our global marketplace depends on
maintaining fairly bargained contractual agreements. To date, there has
not been any evidence to prove any anti-competitive contractual
negotiations by any of the satellite companies. The strength of the
U.S. economy, and even the world economy, depends on contractual
stability. This overarching principle secures my support for the
amendment offered by the gentleman from Louisiana, Representative Billy
Tauzin (R-LA).
Let me be clear. I believe that H.R. 1872 will promote fair and open
competition in the global satellite industry. Moreover, I believe H.R.
1872 will create jobs for all of our communities. At the end of the
day, the most important question we must ask ourselves is what did we
do to benefit the citizens of this great country.
Mr. Chairman, I urge my colleagues to vote Yes on the Morella and
Tauzin amendments and Yes on the final passage of H.R. 1872.
Mr. DINGELL. Mr. Chairman, I would like to call my colleagues'
attention to the extraordinary discrepancies between the black-letter
law of the statutory text and the contents of the Committee Report. If
any of my colleagues would like to know why the judiciary pays little
attention to the legislative history when attempting to interpret the
statutes we write, the Report to accompany this bill provides a
magnificent example. The Committee Report on H.R. 1872 is as accurate a
reflection of intentions of the Committee when it considered H.R. 1872
as was yesterday's Washington Post, although I think that the Post made
better reading.
While this is unfortunate, and will contribute to the decline in the
importance of committee reports as legislative history, I am
particularly concerned about the way in which the Report treats the
Committee's work with respect to proposed Section 641, and in
particular those dealing with ``Direct Access.''
During the Telecommunications Subcommittee's consideration of H.R.
1872, I offered an amendment to proposed Section 641 which made
significant revisions in the ``Direct Access'' provisions. After I
offered and explained my amendment, it was accepted by the Chairman of
the Committee and approved without dissent.
The provisions in the Committee Report do not reflect the plain text
of my amendment, nor my intentions as its author.

Legislative History of Section 641

Section 641 is entitled ``Direct Access; Treatment of
COMSAT at Nondominant Carrier.'' This Section requires the
Commission to take those actions that may be necessary to
permit providers and users of telecommunications services to
obtain direct access to INTELSAT and Inmarsat
telecommunication services. Section 641 also requires the
Commission to act on Comsat's petition to be treated as a
non-dominant carrier, and to eliminate any of its regulations
on the availability of direct access to INTELSAT or Inmarsat,
or to any successor entities, after a pro-competitive
privatization of this intergovernmental treaty organizations
(``IGOs'') is achieved consistent with this statute.
Subsection 641(1) addresses direct access to INTELSAT
telecommunications service through either purchases of space
segment capacity in accordance with subsection 641(1)(A) or
through investment in INTELSAT in accordance with subsection
641(1)(B).
Specifically, Subsection 641(1)(A) provides that providers
or users of telecommunications service may purchase space
segment capacity from INTELSAT, as of January 1, 2000, if the
Commission determines that (i) INTELSAT has adopted a usage
charge mechanism that ensures fair compensation to INTELSAT
signatories for support costs that such signatories would not
otherwise be able to avoid under a direct access regime (for
example, costs for insurance, administrative, and other
operations and maintenance expenditures); (ii) the
Commission's regulations ensure that no foreign signatory,
nor any affiliate of a foreign signatory, is permitted to
order space segment directly from INTELSAT in order to
provide any service subject to the Commission's jurisdiction;
and (iii) the Commission has in place a means to ensure that
carriers will be required to pass through to end-users
savings that result from the exercise of such authority.
Subsection 641(1)(B) requires that providers or users of
telecommunications service may obtain direct access to
INTELSAT telecommunications services through investment in
INTELSAT as of January 1, 2002, if the Commission finds that
such investment will be attained under procedures that assure
fair compensation to INTELSAT signatories for the market
value of their investments.
Subsection 641(2) addresses direct access to Inmarsat
telecommunications services through either purchases of space
segment capacity in accordance with subsection 641(2)(A), or
through investment in Inmarsat in accordance with subsection
641(2)(B).
Specifically, subsection 641(2)(A) provides that providers
or users of telecommunciations service may purchase space
segment capacity from Inmarsat, as of January 1, 2000, if the
Commission determines that (i) Inmarsat has adopted a usage
charge mechanism that ensures fair compensation to Inmarsat
signatories for support costs that such signatories would not
otherwise be able to avoid under a direct access regime
(for example, costs for insurance, administrative, and
other operations and maintenance expenditures); (ii) the
Commission's regulations ensure that no foreign signatory,
nor its affiliate, is permitted to order space segment
directly from Inmarsat in order to provide any service
subject to the Commission's jurisdiction; and (iii) the
Commission has in place a means to ensure that carriers
will be required to pass through to end-users savings that
result from the exercise of such authority.
Subsection 641(2)(B) requires that providers or users of
telecommunications service may obtain direct access to
Inmarsat telecommunications services through investment in
Inmarsat as of January 1, 2001, if the Commission finds that
such investment will be attained under procedures that assure
fair compensation to Inmarsat signatories for the market
value of their investments.
Subsection 641(3) requires the Commission to act on
Comsat's petition to be treated as a non-dominant carrier for
the purposes of the Commission's regulations according to the
provisions of section 10 of the Communications Act of 1934
(47 U.S.C. Sec. 160).
Subsection 641(4) requires the Commission to eliminate any
regulation on the availability of direct access to INTELSAT
or Inmarsat or to any successor entities after a pro-
competitive privatization of those intergovernmental
satellite organizations is achieved.

Critique of Legislative History

The language contained in the Committee Report is replete
with instances in which the report is substantially more
punitive to Comsat than the text of the legislation adopted
by the Committee. As discussed below, the portion of the
Report describing Section 641 is filled with inconsistencies
and descriptions of provisions that neither appear in the
text nor were discussed by the Committee. Not only are there
numerous internal inconsistencies, but when the description
in the Report is compared with the actual text of H.R. 1872,
the factual misrepresentations become apparent.
The first sentence of this portion of the Report says that:
``New sections 641(1) and 641(2) require the Commission to
permit competitors to offer services through direct access to
the INTELSAT and Inmarsat systems.'' The legislation requires
the Commission to permit providers and users of
telecommunications services to obtain telecommunications
services directly for INTELSAT and Inmarsat.
The Report also states that if ``the Inmarsat Operating
Agreement is terminated, former signatories, including COMSAT
for the provision of services in the United States, should
not be the exclusive distributors of Inmarsat services.'' The
Report continues: ``the U.S. Administration and the
Commission should, in the public interest, ensure that any
Inmarsat privatization plan includes direct access until
full privatization is fully implemented.'' Neither of
these provisions are contained in the text of the bill,
nor were they discussed when my amendment was accepted.
In its description of sections 641(1)(A)(i) through (iii),
the Report again misrepresents the requirements of the
statute. First, the Report states that these sections
``describe the circumstances which the Commission should
determine are present when the Commission implements direct
access through

[[Page H2834]]

purchases of space segment capacity from INTELSAT.'' First,
the provisions of the bill do not require the Commission to
implement direct access. Rather, the bill requires the
Commission to ensure that it is possible for carriers and
users to obtain direct access. Additionally, this statement
suggests that the Commission's analysis will be conducted
simultaneously with the occurrence of direct access, when in
fact the plain language of the legislative text requires that
the Commission determine if the conditions set forth in
sections 641(1)(A)(i) through (iii) are met prior to
permitting direct access.
The Report's description of the conditions for ensuring
direct access is possible is also inaccurate. In particular,
sections 641(1)(A)(ii) and (2)(A)(ii) require that no foreign
signatory or its affiliate are permitted to provide INTELSAT
or Inmarsat services from the United States. The text of the
Report incorrectly limits this condition to foreign
signatories. Moreover, the Report claims that sections
641(1)(A)(iii) and (2)(A)(iii) require the Commission to
ensure that carriers pass savings through to end-users. The
statute, however, requires only that the Commission have ``in
place a means to ensure'' that carriers will be required to
pass savings through to end-users.
The description of sections 641(1)(A)(i) and (2)(A)(i) also
diverges from the text of the bill. In particular, the text
of H.R. 1872 does not contain the limitations on ``unavoided
costs'' that the Report suggests. For example, the Report
provides that ``the only costs covered by this section are
those unavoidable signatory expenses in excess of all
payments to signatories from the IGOs.'' This limitation is
not present in the legislative text. Rather, the text of H.R.
1872 only refers to ``support costs that such signatories
would not otherwise be able to avoid . . .'' Moreover, the
Report states that: ``If such costs are in excess of or not
covered by the IUC or by other payments to INTELSAT or
Inmarsat, then this section shall be satisfied if INTELSAT or
Inmarsat has in place or create a mechanism or other
methodology or legal regime which permits (or does not
preclude) parties . . . to adopt means to ensure that such
unavoidable, excess signatory costs are covered by payments
from other direct access providers or otherwise covered or
fairly compensated.'' Again, there is no such provision in
the statute.
The Report contains a requirement that the Commission
implement new subsections 641(1)(a)(ii) and 2(a)(ii) in a
manner consistent with U.S. obligations in World Trade
Organization (``WTO'') and to consult with Executive Branch
agencies in this regard. Again, the text of the statute
contains no such provision. Moreover, direct access itself
appears to be inconsistent with the United States' Schedule
of Specific Commitments agreed to in the WTO Basic Telecom
Agreement.
In particular, the U.S. Schedule of Specific Commitments
limits, inter alia, direct access to INTELSAT and Inmarsat to
Comsat, the U.S. Signatory to those IGOs, for the provision
of basic telecommunications services. As the Commission noted
in implementing the WTO, this Schedule makes no distinction
with respect to international service and U.S. domestic
services. Rather, it maintains access to INTELSAT and
Inmarsat satellites through Comsat for the provision of any
service, domestic or international. Thus, any action by the
U.S. Government permitting carriers to have direct access to
space segment from INTELSAT will conflict with this Schedule
of Specific Commitments because it will permit carriers to
circumvent Comsat.
In describing subsections 641(1)(A)(iii) and (2)(A)(iii),
the Report states that: ``The Committee does not intend for
the Commission to implement any form of carrier regulation or
reporting requirement that would reinstate or be tantamount
to dominant carrier regulation on carriers found to be non-
dominant before the Committee's consideration of H.R. 1872 .
. . [however] [t]he foregoing sentence does not apply to
COMSAT . . .'' This provision penalizes Comsat by name even
in those markets where the Commission has determined it is
non-dominant. Needless to say, there is no basis for the
provision contained in the Committee Report, either in the
text of the legislation or in the Committee debate when the
provision was adopted.
In its description of subsections 641(1)(A)(iii) and
(2)(A)(iii), the Report states that the requirement that the
Commission has in place a means to ensure that carriers will
be required to pass through to end-users savings that result
from the exercise of direct access authority will be met ``if
the Commission finds that competition resulting from direct
access will result in savings to consumers over what they
might pay in the absence of direct access.'' Thus, if one
were to rely on the description in the Report one would
assume that the Commission has an affirmative obligation to
undertake an analysis of whether competition will result in
savings to consumers. By contrast, the text of the
legislation requires only that the Commission have a means in
place to ensure that cost savings are passed on to end users.
Once again, the text of the bill contradicts the description
of that provision in the Report.
Finally, the Report describes subsection 641(4) as
requiring ``the Commission to sunset any regulation providing
for direct access to INTELSAT or Inmarsat when these
organizations fully privatize . . . ``It is unclear how the
Commission would ``sunset'' a regulation. Actually, the
statute requires the Commission to ``eliminate'' any
regulation on the availability of direct access. Moreover,
the Report limits the scope of this provision to INTELSAT and
Inmarsat and neglects the fact that ``any successor
entities'' of INTELSAT and Inmarsat are included in the
statute.
The legislative history contained in this Committee Report
constitutes a monument to those who would dismiss committee
reports as legitimate expressions of Congressional intent.
This legislative history is fraught with factual
inconsistencies and would lead even the staunchest defender
of statutory construction to cringe. It is a blatant attempt
to rewrite a bill through its legislative history. As a
member of Congress, I am, quite frankly, offended by this,
although I cannot say that I am surprised by it. We should
aspire to have as our legacy statutes of major importance
that speak to the public in plain and ordinary terms. As an
integral part of those statutes, the legislative history
should enhance, not attempt to redefine, the fruits of our
efforts. As the Supreme Court has held: ``In ascertaining the
meaning of a statute, a court cannot, in the manner of
Sherlock Holmes, pursue the theory of the dog that did not
bark.'' See Harrison v. PPG Industries, Inc., 446 U.S. 578,
592, 64 L.Ed. 2d 525, 100 S. Ct. 1889 (1980).
Ms. DeLAURO. Mr. Chairman, I rise in support of the Communications
Satellite Competition and Privatization Act.
This bill will privatize the two Intergovernmental Satellite
Organizations, Intelsat and Inmarsat--opening the international
satellite market to the wide range of American firms eager to compete
in it. American ideas and ingenuity have made this country great. It is
our responsibility, as members of Congress, to encourage these values,
not stifle them.
Passage of this bill also will represent a victory for average
American consumers. Privatization of this market will save consumers as
much as $2.9 billion over the next decade. At a time when American men
and women work hard every day to find new ways to make ends meet for
their families, it is essential that we help them in their search.
We need a modern satellite market that provides America and the world
with high-quality products at affordable prices. We need to continue to
encourage the hard work and innovation that has made this nation a
world leader. Support the Communications Satellite Competition and
Privatization Act.
Mr. WATTS of Oklahoma. Mr. Chairman, I rise in support of H.R. 1872,
the Communications Satellite Competition and Privatization Act of 1998.
In 1962, the U.S. became part of the international satellite
communications organizations. These monopoly organizations are a relic
of an earlier time when there were only a few network television
stations and rotary phones were the norm. The telecommunications
industry changes rapidly each year and we are over a generation away
from 1962.
It was not too long ago that cellular phones were cutting edge
technology and the Internet was used exclusively by university
professors. Now millions of Americans are enjoying these
telecommunications services as markets are deregulated in this country.
H.R. 1872 continues this trend which will potentially create thousands
of new jobs, save U.S. consumers billions of dollars, and create new
markets for U.S. businesses.
I commend the work of Commerce Committee Chairman Tom Bliley and
Congressman Markey for their work in crafting this important bi-
partisan bill.
Mr. ADERHOLT. Mr. Chairman, I rise today in support of H.R. 1872
which would open the international satellite market to full competition
and encourage the long-overdue privatization of Intelsat and Inmarsat.
H.R. 1872 is a good bill, and it has been endorsed by a wide variety
of concerned citizen groups, including Americans for Tax Reform, which
notes that ``this bill will lower the costs of satellite communications
to government--money that would otherwise come out of the pockets of
hard-working Americans.''
And if saving the American taxpayer money is not in and of itself
sufficient reason to vote for H.R. 1872, Americans for Tax Reform also
correctly notes that we should be trying to expand the reach of the
free market, not letting United Nations-like organizations and state-
owned foreign telephone companies keep U.S. firms from gaining access
to foreign markets. H.R. 1872 would solve these problems and get the
government out of the way so that America's telecommunications and
aerospace industries can provide new and innovative services to
consumers around the world.
I urge my colleagues to join me in supporting H.R. 1872.
Mr. DAVIS of Florida. Mr. Chairman, as a co-sponsor of this important
legislation, I rise today in strong support for H.R. 1872, the
Communications Satellite Competition and Privatization Act. In short,
this bill will reform our 1960's era satellite telecommunications
policy and promote competition in satellite services and technology.
Over thirty-five years ago, when Congress passed the 1962
Communications Satellite

[[Page H2835]]

Act, it was believed that only governments could finance and manage a
global satellite system. Today, the rapid advances and growth within
the telecommunications industry far surpass anything we could have
imagined in the early 1960's. Today, there is no longer a need for a
privileged international organization to provide satellite
communications services in competition with private commercial
services. Passage of this legislation will break up the last lawful
telecommunications monopoly in the United States and bring greater
competition, innovation, and efficiency to the international satellite
industry.
This bill embodies the belief that open competitive markets will
result in greater benefits to the industry, the economy, and most
importantly, the consumers. While over 85 other nations have allowed
direct access to INTELSAT and Inmarsat services, the United States
market remains monopolized by COMSAT. The result is that U.S. satellite
consumers pay inflated prices. A recent study showed that the
privatization called for under H.R. 1872 would save consumers $2.9
billion over the next ten years. Furthermore, this legislation will
save U.S., taxpayers $700 million by cutting the costs of government
communications.
Mr. Chairman, the bill before us today will finally bring satellite
communications policy into the modern era. It recognizes that the
current system distorts the marketplace and takes reasonable and modest
steps to ensure competition bringing lower prices and higher quality
services for satellite users. This bill is good for consumers, good for
businesses and workers, and good for the United States taxpayer. I urge
all of my colleagues to support H.R. 1872.
Mr. HASTERT. Mr. Chairman, we all know satellite technology is moving
at light-year speed, and that our manufacturers are the best in the
world. However, the 30-year-old law under which they operate needs to
be updated for the twenty-first century.
Private companies like Motorola, PanAmSat and Teledesic are planning
ventures that would have been unthinkable three decades ago. Consider
Motorola for a moment--Its network of more than 60 satellites, known as
Iridium, will soon begin providing voice and paging services. Further
down the road is its proposal to complete a network of more than 70
satellites, known as Celestri, in order to provide high-speed data and
video services worldwide.
Mr. Chairman, I believe the effect of this legislation will be a boon
to consumers as they benefit from the increased efficiency and lower
costs that competition brings. Although IntelSat and InMarSat have
served us well, we all know it's time for these organizations to join
other cold war relics on the scrap heap of history.
Mr. LUCAS of Oklahoma. Mr. Chairman, I rise today in support of H.R.
1872, the Communications Satellite Competition and Privatization Act of
1998.
When Congress set up a satellite monopoly with the Satellite Act of
1962, few people could imagine a day when you could warm up dinner in
60 seconds with a microwave or put a plastic card into an automatic
teller machine to get money 24 hours a day. And Congress did not think
that private industry could afford to put satellites up into space.
With that 1960's logic, Congress created a satellite monopoly to ensure
the United States would not be left behind.
Clearly, my friends, times have changed since then, and now we have
many private businesses that are ready to invest in the satellite
industry. In short, the private sector is ready for competition in this
industry. But the major roadblock to competition is an outdated Federal
law that needs to be brought into the 1990's and bridge us to next
Millennium. That's why I'm supporting H.R. 1872, a bill that breaks
down decades old barriers to competition by eliminating the bottleneck
that has kept satellite rates artificially high. It's time for
government to get out of the way and let competition brings its
benefits of lower rates and enhanced technology to the satellite
industry.
Mr. BLILEY. Mr. Chairman, I yield back the balance of my time.
The CHAIRMAN. All time for general debate has expired.
Pursuant to the rule, the committee amendment in the nature of a
substitute printed in the bill is considered as an original bill for
the purpose of amendment under the 5-minute rule and is considered
read.
The text of the committee amendment in the nature of a substitute is
as follows:

H.R. 1872

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Communications Satellite
Competition and Privatization Act of 1998''.

SEC. 2. PURPOSE.

It is the purpose of this Act to promote a fully
competitive global market for satellite communication
services for the benefit of consumers and providers of
satellite services and equipment by fully privatizing the
intergovernmental satellite organizations, INTELSAT and
Inmarsat.

SEC. 3. REVISION OF COMMUNICATIONS SATELLITE ACT OF 1962.

The Communications Satellite Act of 1962 (47 U.S.C. 101) is
amended by adding at the end the following new title:
``TITLE VI--COMMUNICATIONS COMPETITION AND PRIVATIZATION
``Subtitle A--Actions To Ensure Procompetitive Privatization

``SEC. 601. FEDERAL COMMUNICATIONS COMMISSION LICENSING.

``(a) Licensing for Separated Entities.--
``(1) Competition test.--The Commission may not issue a
license or construction permit to any separated entity, or
renew or permit the assignment or use of any such license or
permit, or authorize the use by any entity subject to United
States jurisdiction of any space segment owned, leased, or
operated by any separated entity, unless the Commission
determines that such issuance, renewal, assignment, or use
will not harm competition in the telecommunications market of
the United States. If the Commission does not make such a
determination, it shall deny or revoke authority to use space
segment owned, leased, or operated by the separated entity to
provide services to, from, or within the United States.
``(2) Criteria for competition test.--In making the
determination required by paragraph (1), the Commission shall
use the licensing criteria in sections 621 and 623, and shall
not make such a determination unless the Commission
determines that the privatization of any separated entity is
consistent with such criteria.
``(b) Licensing for INTELSAT, Inmarsat, and Successor
Entities.--
``(1) Competition test.--The Commission shall substantially
limit, deny, or revoke the authority for any entity subject
to United States jurisdiction to use space segment owned,
leased, or operated by INTELSAT or Inmarsat or any successor
entities to provide non-core services to, from, or within the
United States, unless the Commission determines--
``(A) after January 1, 2002, in the case of INTELSAT and
its successor entities, that INTELSAT and any successor
entities have been privatized in a manner that will not
harm competition in the telecommunications markets of the
United States; or
``(B) after January 1, 2001, in the case of Inmarsat and
its successor entities, that Inmarsat and any successor
entities have been privatized in a manner that will not harm
competition in the telecommunications markets of the United
States.
``(2) Criteria for competition test.--In making the
determination required by paragraph (1), the Commission shall
use the licensing criteria in sections 621, 622, and 624, and
shall not make such a determination unless the Commission
determines that such privatization is consistent with such
criteria.
``(3) Clarification: competitive safeguards.--In making its
licensing decisions under this subsection, the Commission
shall consider whether users of non-core services provided by
INTELSAT or Inmarsat or successor or separated entities are
able to obtain non-core services from providers offering
services other than through INTELSAT or Inmarsat or successor
or separated entities, at competitive rates, terms, or
conditions. Such consideration shall also include whether
such licensing decisions would require users to replace
equipment at substantial costs prior to the termination of
its design life. In making its licensing decisions, the
Commission shall also consider whether competitive
alternatives in individual markets do not exist because they
have been foreclosed due to anticompetitive actions
undertaken by or resulting from the INTELSAT or Inmarsat
systems. Such licensing decisions shall be made in a manner
which facilitates achieving the purposes and goals in this
title and shall be subject to notice and comment.
``(c) Additional Considerations in Determinations.--In
making its determinations and licensing decisions under
subsections (a) and (b), the Commission shall take into
consideration the United States obligations and commitments
for satellite services under the Fourth Protocol to the
General Agreement on Trade in Services.
``(d) Independent Facilities Competition.--Nothing in this
section shall be construed as precluding COMSAT from
investing in or owning satellites or other facilities
independent from INTELSAT and Inmarsat, and successor or
separated entities, or from providing services through
reselling capacity over the facilities of satellite systems
independent from INTELSAT and Inmarsat, and successor or
separated entities. This subsection shall not be construed as
restricting the types of contracts which can be executed or
services which may be provided by COMSAT over the independent
satellites or facilities described in this subsection.

``SEC. 602. INTELSAT OR INMARSAT ORBITAL LOCATIONS.

``(a) Required Actions.--Unless, in a proceeding under
section 601(b), the Commission determines that INTELSAT or
Inmarsat have been privatized in a manner that will not harm
competition, then--
``(1) the President shall oppose, and the Commission shall
not assist, any registration for new orbital locations for
INTELSAT or Inmarsat--
``(A) with respect to INTELSAT, after January 1, 2002, and
``(B) with respect to Inmarsat, after January 1, 2001, and
``(2) the President and Commission shall, consistent with
the deadlines in paragraph (1), take all other necessary
measures to preclude procurement, registration, development,
or use of

[[Page H2836]]

new satellites which would provide non-core services.
``(b) Exception.--
``(1) Replacement and previously contracted satellites.--
Subsection (a) shall not apply to--
``(A) orbital locations for replacement satellites (as
described in section 622(2)(B)), and
``(B) orbital locations for satellites that are contracted
for as of March 25, 1998, if such satellites do not provide
additional services.
``(2) Limitation on exception.--Paragraph (1) is available
only with respect to satellites designed to provide services
solely in the C and Ku, for INTELSAT, and L, for Inmarsat,
bands.

``SEC. 603. ADDITIONAL SERVICES AUTHORIZED.

``(a) Services Authorized During Continued Progress.--
``(1) Continued authorization.--The Commission may issue an
authorization, license, or permit to, or renew the license or
permit of, any provider of services using INTELSAT or
Inmarsat space segment, or authorize the use of such space
segment, for additional services (including additional
applications of existing services) or additional areas of
business, subject to the requirements of this section.
``(2) Additional services permitted under new contracts
unless progress fails.--If the Commission makes a finding
under subsection (b) that conditions required by such
subsection have not been attained, the Commission may not,
pursuant to paragraph (1), permit such additional services to
be provided directly or indirectly under new contracts for
the use of INTELSAT or Inmarsat space segment, unless and
until the Commission subsequently makes a finding under
such subsection that such conditions have been attained.
``(3) Prevention of evasion.--The Commission shall, by
rule, prescribe means reasonably designed to prevent evasions
of the limitations contained in paragraph (2) by customers
who did not use specific additional services as of the date
of the Commission's most recent finding under subsection (b)
that the conditions of such subsection have not been
obtained.
``(b) Requirements for Annual Findings.--
``(1) General requirements.--The findings required under
this subsection shall be made, after notice and comment, on
or before January 1 of 1999, 2000, 2001, and 2002. The
Commission shall find that the conditions required by this
subsection have been attained only if the Commission finds
that--
``(A) substantial and material progress has been made
during the preceding period at a rate and manner that is
probable to result in achieving pro-competitive
privatizations in accordance with the requirements of this
title; and
``(B) neither INTELSAT nor Inmarsat are hindering
competitors' or potential competitors' access to the
satellite services marketplace.
``(2) First finding.--In making the finding required to be
made on or before January 1, 1999, the Commission shall not
find that the conditions required by this subsection have
been attained unless the Commission finds that--
``(A) COMSAT has submitted to the INTELSAT Board of
Governors a resolution calling for the pro-competitive
privatization of INTELSAT in accordance with the requirements
of this title; and
``(B) the United States has submitted such resolution at
the first INTELSAT Assembly of Parties meeting that takes
place after such date of enactment.
``(3) Second finding.--In making the finding required to be
made on or before January 1, 2000, the Commission shall not
find that the conditions required by this subsection have
been attained unless the INTELSAT Assembly of Parties has
created a working party to consider and make recommendations
for the pro-competitive privatization of INTELSAT consistent
with such resolution.
``(4) Third finding.--In making the finding required to be
made on or before January 1, 2001, the Commission shall not
find that the conditions required by this subsection have
been attained unless the INTELSAT Assembly of Parties has
approved a recommendation for the pro-competitive
privatization of INTELSAT in accordance with the requirements
of this title.
``(5) Fourth finding.--In making the finding required to be
made on or before January 1, 2002, the Commission shall not
find that the conditions required by this subsection have
been attained unless the pro-competitive privatization of
INTELSAT in accordance with the requirements of this title
has been achieved by such date.
``(6) Criteria for evaluation of hindering access.--The
Commission shall not make a determination under paragraph
(1)(B) unless the Commission determines that INTELSAT and
Inmarsat are not in any way impairing, delaying, or denying
access to national markets or orbital locations.
``(c) Exception for Services Under Existing Contracts If
Progress Not Made.--This section shall not preclude INTELSAT
or Inmarsat or any signatory thereof from continuing to
provide additional services under an agreement with any third
party entered into prior to any finding under subsection (b)
that the conditions of such subsection have not been
attained.
``Subtitle B--Federal Communications Commission Licensing Criteria:
Privatization Criteria

``SEC. 621. GENERAL CRITERIA TO ENSURE A PRO-COMPETITIVE
PRIVATIZATION OF INTELSAT AND INMARSAT.

``The President and the Commission shall secure a pro-
competitive privatization of INTELSAT and Inmarsat that meets
the criteria set forth in this section and sections 622
through 624. In securing such privatizations, the following
criteria shall be applied as licensing criteria for purposes
of subtitle A:
``(1) Dates for privatization.--Privatization shall be
obtained in accordance with the criteria of this title of--
``(A) INTELSAT as soon as practicable, but no later than
January 1, 2002, and
``(B) Inmarsat as soon as practicable, but no later than
January 1, 2001.
``(2) Independence.--The successor entities and separated
entities of INTELSAT and Inmarsat resulting from the
privatization obtained pursuant to paragraph (1) shall--
``(A) be entities that are national corporations; and
``(B) have ownership and management that is independent
of--
``(i) any signatories or former signatories that control
access to national telecommunications markets; and
``(ii) any intergovernmental organization remaining after
the privatization.
``(3) Termination of privileges and immunities.--The
preferential treatment of INTELSAT and Inmarsat shall not be
extended to any successor entity or separated entity of
INTELSAT or Inmarsat. Such preferential treatment includes--
``(A) privileged or immune treatment by national
governments;
``(B) privileges or immunities or other competitive
advantages of the type accorded INTELSAT and Inmarsat and
their signatories through the terms and operation of the
INTELSAT Agreement and the associated Headquarters Agreement
and the Inmarsat Convention; and
``(C) preferential access to orbital locations, including
any access to orbital locations that is not subject to the
legal or regulatory processes of a national government that
applies due diligence requirements intended to prevent the
warehousing of orbital locations.
``(4) Prevention of expansion during transition.--During
the transition period prior to full privatization, INTELSAT
and Inmarsat shall be precluded from expanding into
additional services (including additional applications of
existing services) or additional areas of business.
``(5) Conversion to stock corporations.--Any successor
entity or separated entity created out of INTELSAT or
Inmarsat shall be a national corporation established through
the execution of an initial public offering as follows:
``(A) Any successor entities and separated entities shall
be incorporated as private corporations subject to the laws
of the nation in which incorporated.
``(B) An initial public offering of securities of any
successor entity or separated entity shall be conducted no
later than--
``(i) January 1, 2001, for the successor entities of
INTELSAT; and
``(ii) January 1, 2000, for the successor entities of
Inmarsat.
``(C) The shares of any successor entities and separated
entities shall be listed for trading on one or more major
stock exchanges with transparent and effective securities
regulation.
``(D) A majority of the board of directors of any successor
entity or separated entity shall not be subject to selection
or appointment by, or otherwise serve as representatives of--
``(i) any signatory or former signatory that controls
access to national telecommunications markets; or
``(ii) any intergovernmental organization remaining after
the privatization.
``(E) Any transactions or other relationships between or
among any successor entity, separated entity, INTELSAT, or
Inmarsat shall be conducted on an arm's length basis.
``(6) Regulatory treatment.--Any successor entity or
separated entity shall apply through the appropriate national
licensing authorities for international frequency assignments
and associated orbital registrations for all satellites.
``(7) Competition policies in domiciliary country.--Any
successor entity or separated entity shall be incorporated
and headquartered in a nation or nations that--
``(A) have effective laws and regulations that secure
competition in telecommunications services;
``(B) are signatories of the World Trade Organization Basic
Telecommunications Services Agreement; and
``(C) have a schedule of commitments in such Agreement that
includes non-discriminatory market access to their satellite
markets.
``(8) Return of unused orbital locations.--INTELSAT,
Inmarsat, and any successor entities and separated entities
shall not be permitted to warehouse any orbital location
that--
``(A) as of March 25, 1998, did not contain a satellite
that was providing commercial services, or, subsequent to
such date, ceased to contain a satellite providing commercial
services; or
``(B) as of March 25, 1998, was not designated in INTELSAT
or Inmarsat operational plans for satellites for which
construction contracts had been executed.

Any such orbital location of INTELSAT or Inmarsat and of any
successor entities and separated entities shall be returned
to the International Telecommunication Union for
reallocation.
``(9) Appraisal of assets.--Before any transfer of assets
by INTELSAT or Inmarsat to any successor entity or separated
entity, such assets shall be independently audited for
purposes of appraisal, at both book and fair market value.
``(10) Limitation on investment.--Notwithstanding the
provisions of this title, COMSAT shall not be authorized by
the Commission to invest in a satellite known as K-TV, unless
Congress authorizes such investment.

``SEC. 622. SPECIFIC CRITERIA FOR INTELSAT.

``In securing the privatizations required by section 621,
the following additional criteria with respect to INTELSAT
privatization shall be applied as licensing criteria for
purposes of subtitle A:

[[Page H2837]]

``(1) Number of competitors.--The number of competitors in
the markets served by INTELSAT, including the number of
competitors created out of INTELSAT, shall be sufficient to
create a fully competitive market.
``(2) Prevention of expansion during transition.--
``(A) In general.--Pending privatization in accordance with
the criteria in this title, INTELSAT shall not expand by
receiving additional orbital locations, placing new
satellites in existing locations, or procuring new or
additional satellites except as permitted by subparagraph
(B), and the United States shall oppose such expansion--
``(i) in INTELSAT, including at the Assembly of Parties,
``(ii) in the International Telecommunication Union,
``(iii) through United States instructions to COMSAT,
``(iv) in the Commission, through declining to facilitate
the registration of additional orbital locations or the
provision of additional services (including additional
applications of existing services) or additional areas of
business; and
``(v) in other appropriate fora.
``(B) Exception for certain replacement satellites.--The
limitations in subparagraph (A) shall not apply to any
replacement satellites if--
``(i) such replacement satellite is used solely to provide
public-switched network voice telephony or occasional-use
television services, or both;
``(ii) such replacement satellite is procured pursuant to a
construction contract that was executed on or before March
25, 1998; and
``(iii) construction of such replacement satellite
commences on or before the final date for INTELSAT
privatization set forth in section 621(1)(A).
``(3) Technical coordination among signatories.--Technical
coordination shall not be used to impair competition or
competitors, and coordination under Article XIV(d) of the
INTELSAT Agreement shall be eliminated.

``SEC. 623. SPECIFIC CRITERIA FOR INTELSAT SEPARATED
ENTITIES.

``In securing the privatizations required by section 621,
the following additional criteria with respect to any
INTELSAT separated entity shall be applied as licensing
criteria for purposes of subtitle A:
``(1) Date for public offering.--Within one year after any
decision to create any separated entity, a public offering of
the securities of such entity shall be conducted.
``(2) Privileges and immunities.--The privileges and
immunities of INTELSAT and its signatories shall be waived
with respect to any transactions with any separated entity,
and any limitations on private causes of action that would
otherwise generally be permitted against any separated entity
shall be eliminated.
``(3) Interlocking directorates or employees.--None of the
officers, directors, or employees of any separated entity
shall be individuals who are officers, directors, or
employees of INTELSAT.
``(4) Spectrum assignments.--After the initial transfer
which may accompany the creation of a separated entity, the
portions of the electromagnetic spectrum assigned as of the
date of enactment of this title to INTELSAT shall not be
transferred between INTELSAT and any separated entity.
``(5) Reaffiliation prohibited.--Any merger or ownership or
management ties or exclusive arrangements between a
privatized INTELSAT or any successor entity and any separated
entity shall be prohibited until 15 years after the
completion of INTELSAT privatization under this title.

``SEC. 624. SPECIFIC CRITERIA FOR INMARSAT.

``In securing the privatizations required by section 621,
the following additional criteria with respect to Inmarsat
privatization shall be applied as licensing criteria for
purposes of subtitle A:
``(1) Multiple signatories and direct access.--Multiple
signatories and direct access to Inmarsat shall be permitted.
``(2) Prevention of expansion during transition.--Pending
privatization in accordance with the criteria in this title,
Inmarsat should not expand by receiving additional orbital
locations, placing new satellites in existing locations, or
procuring new or additional satellites, except for specified
replacement satellites for which construction contracts have
been executed as of March 25, 1998, and the United States
shall oppose such expansion--
``(A) in Inmarsat, including at the Council and Assembly of
Parties,
``(B) in the International Telecommunication Union,
``(C) through United States instructions to COMSAT,
``(D) in the Commission, through declining to facilitate
the registration of additional orbital locations or the
provision of additional services (including additional
applications of existing services) or additional areas of
business, and
``(E) in other appropriate fora.

This paragraph shall not be construed as limiting the
maintenance, assistance or improvement of the GMDSS.
``(3) Number of competitors.--The number of competitors in
the markets served by Inmarsat, including the number of
competitors created out of Inmarsat, shall be sufficient to
create a fully competitive market.
``(4) Reaffiliation prohibited.--Any merger or ownership or
management ties or exclusive arrangements between Inmarsat or
any successor entity or separated entity and ICO shall be
prohibited until 15 years after the completion of Inmarsat
privatization under this title.
``(5) Interlocking directorates or employees.--None of the
officers, directors, or employees of Inmarsat or any
successor entity or separated entity shall be individuals who
are officers, directors, or employees of ICO.
``(6) Spectrum assignments.--The portions of the
electromagnetic spectrum assigned as of the date of enactment
of this title to Inmarsat--
``(A) shall, after January 1, 2006, or the date on which
the life of the current generation of Inmarsat satellites
ends, whichever is later, be made available for assignment to
all systems (including the privatized Inmarsat) on a
nondiscriminatory basis and in a manner in which continued
availability of the GMDSS is provided; and
``(B) shall not be transferred between Inmarsat and ICO.
``(7) Preservation of the gmdss.--The United States shall
seek to preserve space segment capacity of the GMDSS.

``SEC. 625. ENCOURAGING MARKET ACCESS AND PRIVATIZATION.

``(a) NTIA Determination.--
``(1) Determination required.--Within 180 days after the
date of enactment of this section, the Secretary of Commerce
shall, through the Assistant Secretary for Communications and
Information, transmit to the Commission--
``(A) a list of Member countries of INTELSAT and Inmarsat
that are not Members of the World Trade Organization and that
impose barriers to market access for private satellite
systems; and
``(B) a list of Member countries of INTELSAT and Inmarsat
that are not Members of the World Trade Organization and that
are not supporting pro-competitive privatization of INTELSAT
and Inmarsat.
``(2) Consultation.--The Secretary's determinations under
paragraph (1) shall be made in consultation with the Federal
Communications Commission, the Secretary of State, and the
United States Trade Representative, and shall take into
account the totality of a country's actions in all relevant
fora, including the Assemblies of Parties of INTELSAT and
Inmarsat.
``(b) Imposition of Cost-Based Settlement Rate.--
Notwithstanding--
``(1) any higher settlement rate that an overseas carrier
charges any United States carrier to originate or terminate
international message telephone services, and
``(2) any transition period that would otherwise apply,

the Commission may by rule prohibit United States carriers
from paying an amount in excess of a cost-based settlement
rate to overseas carriers in countries listed by the
Commission pursuant to subsection (a).
``(c) Settlements Policy.--The Commission shall, in
exercising its authority to establish settlements rates for
United States international common carriers, seek to advance
United States policy in favor of cost-based settlements in
all relevant fora on international telecommunications policy,
including in meetings with parties and signatories of
INTELSAT and Inmarsat.
``Subtitle C--Deregulation and Other Statutory Changes

``SEC. 641. DIRECT ACCESS; TREATMENT OF COMSAT AS NONDOMINANT
CARRIER.

``The Commission shall take such actions as may be
necessary--
``(1) to permit providers or users of telecommunications
services to obtain direct access to INTELSAT
telecommunications services--
``(A) through purchases of space segment capacity from
INTELSAT as of January 1, 2000, if the Commission determines
that--
``(i) INTELSAT has adopted a usage charge mechanism that
ensures fair compensation to INTELSAT signatories for support
costs that such signatories would not otherwise be able to
avoid under a direct access regime, such as insurance,
administrative, and other operations and maintenance
expenditures;
``(ii) the Commission's regulations ensure that no foreign
signatory, nor any affiliate thereof, shall be permitted to
order space segment directly from INTELSAT in order to
provide any service subject to the Commission's jurisdiction;
``(iii) the Commission has in place a means to ensure that
carriers will be required to pass through to end-users
savings that result from the exercise of such authority;
``(B) through investment in INTELSAT as of January 1, 2002,
if the Commission determines that such investment will be
attained under procedures that assure fair compensation to
INTELSAT signatories for the market value of their
investments;
``(2) to permit providers or users of telecommunications
services to obtain direct access to Inmarsat
telecommunications services--
``(A) through purchases of space segment capacity from
Inmarsat as of January 1, 2000, if the Commission determines
that--
``(i) Inmarsat has adopted a usage charge mechanism that
ensures fair compensation to Inmarsat signatories for support
costs that such signatories would not otherwise be able to
avoid under a direct access regime, such as insurance,
administrative, and other operations and maintenance
expenditures;
``(ii) the Commission's regulations ensure that no foreign
signatory, nor any affiliate thereof, shall be permitted to
order space segment directly from Inmarsat in order to
provide any service subject to the Commission's jurisdiction;
``(iii) the Commission has in place a means to ensure that
carriers will be required to pass through to end-users
savings that result from the exercise of such authority; and
``(B) through investment in Inmarsat as of January 1, 2001,
if the Commission determines that such investment will be
attained under procedures that assure fair compensation to
Inmarsat signatories for the market value of their
investments;
``(3) to act on COMSAT's petition to be treated as a
nondominant carrier for the purposes of the Commission's
regulations according to the

[[Page H2838]]

provisions of section 10 of the Communications Act of 1934
(47 U.S.C. 160); and
``(4) to eliminate any regulation on the availability of
direct access to INTELSAT or Inmarsat or to any successor
entities after a pro-competitive privatization is achieved
consistent with sections 621, 622 and 624.

``SEC. 642. TERMINATION OF MONOPOLY STATUS.

``(a) Renegotiation of Monopoly Contracts Permitted.--The
Commission shall, beginning January 1, 2000, permit users or
providers of telecommunications services that previously
entered into contracts or are under a tariff commitment with
COMSAT to have an opportunity, at their discretion, for a
reasonable period of time, to renegotiate those contracts or
commitments on rates, terms, and conditions or other
provisions, notwithstanding any term or volume commitments or
early termination charges in any such contracts with COMSAT.
``(b) Commission Authority To Order Renegotiation.--Nothing
in this title shall be construed to limit the authority of
the Commission to permit users or providers of
telecommunications services that previously entered into
contracts or are under a tariff commitment with COMSAT to
have an opportunity, at their discretion, to renegotiate
those contracts or commitments on rates, terms, and
conditions or other provisions, notwithstanding any term or
volume commitments or early termination charges in any such
contracts with COMSAT.
``(c) Provisions Contrary to Public Policy Void.--Whenever
the Commission permits users or providers of
telecommunications services to renegotiate contracts or
commitments as described in this section, the Commission may
provide that any provision of any contract with COMSAT that
restricts the ability of such users or providers to modify
the existing contracts or enter into new contracts with any
other space segment provider (including but not limited to
any term or volume commitments or early termination charges)
or places such users or providers at a disadvantage in
comparison to other users or providers that entered into
contracts with COMSAT or other space segment providers shall
be null, void, and unenforceable.

``SEC. 643. SIGNATORY ROLE.

``(a) Limitations on Signatories.--
``(1) National security limitations.--The Federal
Communications Commission, after a public interest
determination, in consultation with the Executive Branch, may
restrict foreign ownership of a United States signatory if
the Commission determines that not to do so would constitute
a threat to national security.
``(2) No signatories required.--The United States
Government shall not require signatories to represent the
United States in INTELSAT or Inmarsat or in any successor
entities after a pro-competitive privatization is achieved
consistent with sections 621, 622 and 624.
``(b) Clarification of Privileges and Immunities of
COMSAT.--
``(1) Generally not immunized.--Notwithstanding any other
law or executive agreement, COMSAT shall not be entitled to
any privileges or immunities under the laws of the United
States or any State on the basis of its status as a signatory
of INTELSAT or Inmarsat.
``(2) Limited immunity.--COMSAT and any other company
functioning as United States signatory to INTELSAT or
Inmarsat shall not be liable for action taken by it in
carrying out the specific, written instruction of the United
States issued in connection with its relationships and
activities with foreign governments, international entities,
and the intergovernmental satellite organizations.
``(3) Provisions prospective.--Paragraph (1) shall not
apply with respect to liability for any action taken by
COMSAT before the date of enactment of the Communications
Satellite Competition and Privatization Act of 1998.
``(c) Parity of Treatment.--Notwithstanding any other law
or executive agreement, the Commission shall have the
authority to impose similar regulatory fees on the United
States signatory which it imposes on other entities providing
similar services.

``SEC. 644. ELIMINATION OF PROCUREMENT PREFERENCES.

``Nothing in this title or the Communications Act of 1934
shall be construed to authorize or require any preference, in
Federal Government procurement of telecommunications
services, for the satellite space segment provided by
INTELSAT, Inmarsat, or any successor entity or separated
entity.

``SEC. 645. USE OF ITU TECHNICAL COORDINATION.

``The Commission and United States satellite companies
shall utilize the International Telecommunication Union
procedures for technical coordination with INTELSAT and its
successor entities and separated entities, rather than
INTELSAT procedures.

``SEC. 646. TERMINATION OF COMMUNICATIONS SATELLITE ACT OF
1962 PROVISIONS.

``Effective on the dates specified, the following
provisions of this Act shall cease to be effective:
``(1) Date of enactment of this title: Sections 101 and
102; paragraphs (1), (5) and (6) of section 201(a); section
301; section 303; section 502; and paragraphs (2) and (4) of
section 504(a).
``(2) On the effective date of the Commission's order that
establishes direct access to INTELSAT space segment:
Paragraphs (1), (3) through (5), and (8) through (10) of
section 201(c); and section 304.
``(3) On the effective date of the Commission's order that
establishes direct access to Inmarsat space segment:
Subsections (a) through (d) of section 503.
``(4) On the effective date of a Commission order
determining under section 601(b)(2) that Inmarsat
privatization is consistent with criteria in sections 621 and
624: Section 504(b).
``(5) On the effective date of a Commission order
determining under section 601(b)(2) that INTELSAT
privatization is consistent with criteria in sections 621 and
622: Paragraphs (2) and (4) of section 201(a); section
201(c)(2); subsection (a) of section 403; and section 404.

``SEC. 647. REPORTS TO THE CONGRESS.

``(a) Annual Reports.--The President and the Commission
shall report to the Congress within 90 calendar days of the
enactment of this title, and not less than annually
thereafter, on the progress made to achieve the objectives
and carry out the purposes and provisions of this title. Such
reports shall be made available immediately to the public.
``(b) Contents of Reports.--The reports submitted pursuant
to subsection (a) shall include the following:
``(1) Progress with respect to each objective since the
most recent preceding report.
``(2) Views of the Parties with respect to privatization.
``(3) Views of industry and consumers on privatization.

``SEC. 648. CONSULTATION WITH CONGRESS.

``The President's designees and the Commission shall
consult with the Committee on Commerce of the House of
Representatives and the Committee on Commerce, Science, and
Transportation of the Senate prior to each meeting of the
INTELSAT or Inmarsat Assembly of Parties, the INTELSAT Board
of Governors, the Inmarsat Council, or appropriate working
group meetings.

``SEC. 649. SATELLITE AUCTIONS.

``Notwithstanding any other provision of law, the
Commission shall not have the authority to assign by
competitive bidding orbital locations or spectrum used for
the provision of international or global satellite
communications services. The President shall oppose in the
International Telecommunication Union and in other bilateral
and multilateral fora any assignment by competitive bidding
of orbital locations or spectrum used for the provision of
such services.
``Subtitle D--Negotiations To Pursue Privatization

``SEC. 661. METHODS TO PURSUE PRIVATIZATION.

``The President shall secure the pro-competitive
privatizations required by this title in a manner that meets
the criteria in subtitle B.
``Subtitle E--Definitions

``SEC. 681. DEFINITIONS.

``(a) In General.--As used in this title:
``(1) INTELSAT.--The term `INTELSAT' means the
International Telecommunications Satellite Organization
established pursuant to the Agreement Relating to the
International Telecommunications Satellite Organization
(INTELSAT).
``(2) Inmarsat.--The term `Inmarsat' means the
International Mobile Satellite Organization established
pursuant to the Convention on the International Maritime
Organization.
``(3) Signatories.--The term `signatories'--
``(A) in the case of INTELSAT, or INTELSAT successors or
separated entities, means a Party, or the telecommunications
entity designated by a Party, that has signed the Operating
Agreement and for which such Agreement has entered into force
or to which such Agreement has been provisionally applied;
and
``(B) in the case of Inmarsat, or Inmarsat successors or
separated entities, means either a Party to, or an entity
that has been designated by a Party to sign, the Operating
Agreement.
``(4) Party.--The term `Party'--
``(A) in the case of INTELSAT, means a nation for which the
INTELSAT agreement has entered into force or been
provisionally applied; and
``(B) in the case of Inmarsat, means a nation for which the
Inmarsat convention has entered into force.
``(5) Commission.--The term `Commission' means the Federal
Communications Commission.
``(6) International telecommunication union.--The term
`International Telecommunication Union' means the
intergovernmental organization that is a specialized agency
of the United Nations in which member countries cooperate for
the development of telecommunications, including adoption of
international regulations governing terrestrial and space
uses of the frequency spectrum as well as use of the
geostationary satellite orbit.
``(7) Successor entity.--The term `successor entity'--
``(A) means any privatized entity created from the
privatization of INTELSAT or Inmarsat or from the assets of
INTELSAT or Inmarsat; but
``(B) does not include any entity that is a separated
entity.
``(8) Separated entity.--The term `separated entity' means
a privatized entity to whom a portion of the assets owned by
INTELSAT or Inmarsat are transferred prior to full
privatization of INTELSAT or Inmarsat, including in
particular the entity whose structure was under discussion by
INTELSAT as of March 25, 1998, but excluding ICO.
``(9) Orbital location.--The term `orbital location' means
the location for placement of a satellite on the
geostationary orbital arc as defined in the International
Telecommunication Union Radio Regulations.
``(10) Space segment.--The term `space segment' means the
satellites, and the tracking, telemetry, command, control,
monitoring and related facilities and equipment used to
support the operation of satellites owned or leased by
INTELSAT, Inmarsat, or a separated entity or successor
entity.
``(11) Non-core.--The term `non-core services' means, with
respect to INTELSAT provision, services other than public-
switched network voice telephony and occasional-use
television, and with respect to Inmarsat provision, services
other than global maritime distress and safety services or
other existing maritime or aeronautical services for which
there are not alternative providers.

[[Page H2839]]

``(12) Additional services.--The term `additional services'
means Internet services, high-speed data, interactive
services, non-maritime or non-aeronautical mobile services,
Direct to Home (DTH) or Direct Broadcast Satellite (DBS)
video services, or Ka-band services.
``(13) INTELSAT agreement.--The term `INTELSAT Agreement'
means the Agreement Relating to the International
Telecommunications Satellite Organization (`INTELSAT'),
including all its annexes (TIAS 7532, 23 UST 3813).
``(14) Headquarters agreement.--The term `Headquarters
Agreement' means the International Telecommunication
Satellite Organization Headquarters Agreement (November 24,
1976) (TIAS 8542, 28 UST 2248).
``(15) Operating agreement.--The term `Operating Agreement'
means--
``(A) in the case of INTELSAT, the agreement, including its
annex but excluding all titles of articles, opened for
signature at Washington on August 20, 1971, by Governments or
telecommunications entities designated by Governments in
accordance with the provisions of the Agreement, and
``(B) in the case of Inmarsat, the Operating Agreement on
the International Maritime Satellite Organization, including
its annexes.
``(16) Inmarsat convention.--The term `Inmarsat Convention'
means the Convention on the International Maritime Satellite
Organization (Inmarsat) (TIAS 9605, 31 UST 1).
``(17) National corporation.--The term `national
corporation' means a corporation the ownership of which is
held through publicly traded securities, and that is
incorporated under, and subject to, the laws of a national,
state, or territorial government.
``(18) COMSAT.--The term `COMSAT' means the corporation
established pursuant to title III of the Communications
Satellite Act of 1962 (47 U.S.C. 731 et seq.)
``(19) ICO.--The term `ICO' means the company known, as of
the date of enactment of this title, as ICO Global
Communications, Inc.
``(20) Replacement satellites.--The term `replacement
satellite' means a satellite that replaces a satellite that
fails prior to the end of the duration of contracts for
services provided over such satellite and that takes the
place of a satellite designated for the provision of public-
switched network and occasional-use television services under
contracts executed prior to March 25, 1998 (but not including
K-TV or similar satellites). A satellite is only considered a
replacement satellite to the extent such contracts are equal
to or less than the design life of the satellite.
``(21) GMDSS.--The term `global maritime distress and
safety services' or `GMDSS' means the automated ship-to-shore
distress alerting system which uses satellite and advanced
terrestrial systems for international distress communications
and promoting maritime safety in general. The GMDSS permits
the worldwide alerting of vessels, coordinated search and
rescue operations, and dissemination of maritime safety
information.
``(b) Common Terminology.--Except as otherwise provided in
subsection (a), terms used in this title that are defined in
section 3 of the Communications Act of 1934 have the meanings
provided in such section.''.

The CHAIRMAN. No amendment to the committee amendment is in order
unless printed in the Congressional Record. Those amendments shall be
considered read.
During consideration of the bill for amendment, the Chair may accord
priority in recognition to a Member offering an amendment that he has
printed in the designated place in the Congressional Record. Those
amendments will be considered read.
The Chairman of the Committee of the Whole may postpone a demand for
a recorded vote on any amendment and may reduce to a minimum of 5
minutes the time for voting on any postponed question that immediately
follows another vote, provided that the time for the voting on the
first question shall be a minimum of 15 minutes.
Are there any amendments to the bill?
Mr. DAN SCHAEFER of Colorado. Mr. Chairman, I move to strike the last
word.
Mr. Chairman, the purpose, of course, would be to engage the chairman
of the full committee, my good friend from Richmond, Virginia, in a
colloquy.
I would like to personally thank the gentleman from Virginia (Mr.
Bliley) for his work in moving this very important bill forward and his
leadership on this issue over the past number of years.
We can all agree that government should not be providing commercial
services, especially in advanced telecommunications. We can likewise
agree that the intergovernmental satellite organizations should be
privatized in a manner that creates a level field for all competitors.
Now, given that all these organizations are intergovernmental
organizations, the United States must inevitably engage with our global
partners as we move forward to privatization. We operate in a global
interconnected world today, with a complex web of economic undertakings
binding us to countries around the world. We all know that.
For instance, the United States and approximately 100 other countries
that participate in INTELSAT and Inmarsat are members of the World
Trade Organization, the WTO. We, therefore, have obligations to these
countries, as they do to us, pursuant to agreements in the WTO. With
respect to satellite services, we have an obligation to our WTO
partners under the Fourth Protocol of the General Agreement on Trade
and Services, which governs basic telecommunications services.
Now, I would like to ask the chairman, is the bill intended to be
consistent with U.S. obligations under WTO on the provisions of the
basic telecommunications services?
Mr. BLILEY. Mr. Chairman, will the gentleman yield?
Mr. DAN SCHAEFER of Colorado. I yield to the gentleman from Virginia.
Mr. BLILEY. The gentleman is correct. My bill is intended to be
consistent with the WTO.
As the gentleman may know, I was a strong supporter of the WTO basic
telecommunications agreement, which will open the world's markets to
other telecommunications companies. For the price of improved access to
the global market for our telecom companies, the U.S. Government has to
permit foreign investment in this market. Given the competitiveness of
our telecom companies, that is a good bargain.
I support playing by the rules and I believe this bill is consistent
with our obligations. But nothing in the WTO agreement says we cannot
protect competition in our market. We are permitted to do so under the
WTO services agreement. If necessary, we will vigorously fight for our
beliefs and rights within the WTO and protect the integrity of U.S.
competition policy.
So my bill uses an entry test of not causing competitive harm. As
long as the IGO's privatized entities meet the criteria and will not
cause competitive harm, and their entry is otherwise in the public
interest, the FCC may authorize their use. A competition entry test in
the public interest is consistent with our WTO obligations.
Mr. DAN SCHAEFER of Colorado. Reclaiming my time, Mr. Chairman, I
appreciate the gentleman's remarks. As the gentleman knows, I am very
interested in seeing that the commission, when making its determination
whether to license or authorize the use of privatized entities, act in
a manner consistent with U.S. obligations under the WTO agreement on
basic telecommunications.
Now, I would ask the gentleman one final question. Is this
legislation intended to ensure that the FCC not only take notice but,
as much as practicable, act in a manner consistent with the WTO
agreement on basic telecommunication services?
Mr. BLILEY. If the gentleman will continue to yield, we intend by
this legislation that the FCC will implement this satellite reform
legislation in a manner consistent with our obligations under the WTO
basic telecommunications agreement.
However, the bill does not mandate that, because foreign parties may
differ with the FCC's reading of the public interest or whether the
future structure of an IGO spin-off or successor entity will harm
competition in this market. If it did mandate that the FCC act
consistently with our WTO obligations, then that privatized entity or,
more precisely its government, could go off to Geneva and petition the
WTO for a panel against the United States due to the FCC finding.
While I support the principles of the WTO and believe the U.S. should
live up to its obligations, I do not wish to invite WTO panels. I do
not want our bill to become an avenue for a recovering monopolist, to
use a phrase of my cosponsor, to slow down reform by causing trouble
for the United States in Geneva. Rather, the bill relies on a perfectly
acceptable ``measure,'' to use WTO parlance, a competition test, as the
entry standard that should guide the FCC in making decisions on the
section 601.
Mr. Chairman, I thank the gentleman for addressing this important
issue.
Mr. DAN SCHAEFER of Colorado. Mr. Chairman, I thank the chairman of
the full committee.
Mr. DINGELL. Mr. Chairman, I move to strike the last word.

[[Page H2840]]

I simply want to commend the gentleman from Colorado for what it is
he has done. This treaty violates the INTELSAT agreement and the basic
telecom agreement of the World Trade Organization.
It also would have the practical effect of insisting on specific
results and would impose sanctions on INTELSAT in violation of that
treaty if those results are not achieved. The sanctions would violate
that treaty further by expelling INTELSAT from the U.S. market in
violation of that treaty agreement.
In addition to that, it would violate the Inmarsat agreement by
preventing COMSAT and Inmarsat from providing certain specifically
required, economically viable service to U.S. consumers. It also
punishes COMSAT in the event foreign participants do not meet the
privatization criteria and time schedule, something which is, again, in
violation of that treaty.
Now, in addition to that, COMSAT would be barred from providing many
services to American and foreign participants under the treaties
requiring those actions, to which this Nation is a signatory. It also
imposes requirements for spin-offs which do not, I believe, comply with
the requirements of the treaty.
It also violates the WTO basic telecom agreements' open market
requirements because, in point of fact, it tends to close rather than
to open markets and reduce rather than increase competition. It would,
in fact, imperil the entire future of the WTO agreement entered into
with 68 other countries.
The comments of the gentleman from Colorado were appropriate and
should be considered as my colleagues prepare to vote against this
outrageous bill.

Amendment No. 6 Offered by Mrs. Morella

Mrs. MORELLA. Mr. Chairman, I offer an amendment.
The CHAIRMAN. The Clerk will designate the amendment.
The text of the amendment is as follows:

Amendment No. 6 offered by Mrs. Morella:
Page 6, after line 8, insert the following new subsection:
``(e) Takings Prohibited.--In implementing the provisions
of this section, and sections 621, 622, and 624 of this Act,
the Commission shall not restrict the activities of COMSAT in
a manner which would create the liability for the United
States under the Fifth Amendment to the Constitution.
Page 11, after line 11, insert the following new
subsection:
``(d) Takings Prohibited.--In implementing the provisions
of this section, the Commission shall not restrict the
activities of COMSAT in a manner which would create a
liability for the United States under the Fifth Amendment to
the Constitution.

Mrs. MORELLA. Mr. Chairman, I had submitted two amendments for H.R.
1872, and so I want to clarify for my colleagues that I am only
offering one of those amendments, the one that deals only with the
question of takings under the fifth amendment.
My amendment addresses a fundamental problem with H.R. 1872. As
reported by the Committee on Commerce, the bill contains service
restrictions which, when implemented, will constitute an
unconstitutional taking of COMSAT's property, and so my amendment just
very simply cures that problem.
I know that the gentleman from Virginia, my good friend and chairman
of the committee, contends these restrictions do not constitute a
taking, but I must respectfully disagree. Quite frankly, if it does not
constitute a taking, then this amendment is completely in order. Why
not put it into the bill?
Mr. Chairman, the United States induced private investors to fund
COMSAT by offering the company an opportunity to earn a profit by
helping to serve the communications needs of the United States and
other countries. That is a quote.
The United States also instructed COMSAT to sign the INTELSAT and
Inmarsat operating agreements, which are binding on the parties.
COMSAT's investments were made in reliance on existing law.
The United States cannot take COMSAT's property by deliberately
destroying its value without paying compensation. This is particularly
true where, as here, the investments were compelled by Federal law. And
in accordance with that law and with government approval, COMSAT has
acquired an investment interest in satellites, orbital positions and
spectrum, as well as other costs associated with the establishment,
operation, and maintenance of a global satellite system.

{time} 1215

And yet this Federal law statute would prohibit COMSAT from using or
earning a return on those investments. Putting a company in such a
position would be a compensable taking, and the liability for this
taking is massive.
COMSAT has invested billions of dollars in its space-based assets and
millions more on the ground. Unless my amendment is adopted, the U.S.
Treasury and, ultimately, the taxpayers will have to foot the bill.
These are not opinions that I cooked up myself. They are shared by
many, including some of our colleagues on the Committee on Commerce.
They are also shared by Nancie Marzulla. She is the president of
Defenders of Property Rights. In a recent column in the Washington
Times, Ms. Marzulla addressed the takings aspect of H.R. 1872. She
said, ``Some in Congress and elsewhere seem to have forgotten the
Constitution's fifth amendment prohibition against uncompensated
takings.'' She notes correctly that ``The Government would have to
compensate COMSAT for taking the company's property in violation of the
fifth amendment's guarantee against uncompensated takings. The U.S. is
liable for just compensation not just when it physically seizes real or
personal property, but also, as Justice Holmes said in 1922, `If
regulation goes too far, it will be recognized as a taking.' ''
I also want to point out the Washington Legal Foundation that the
chairman of the committee admires so, and many of us do, agrees that
these provisions are an unconstitutional taking of COMSAT's property.
In an analysis prepared at my request, WLF has concluded that H.R. 1872
would indeed effect a compensable taking of private property belonging
to COMSAT, as well as a material breach of the terms of the compact
between the United States and COMSAT.
Mr. Chairman, I include the following for the Record:
Washington Legal Foundation,

2009 Massachusetts Avenue, N.W.,

Washington, DC, April 29, 1998.
Hon. Constance A. Morella,
U.S. House of Representatives, 2228 Rayburn House Office
Bldg., Washington, DC.
Re H.R. 1872--The Communications Satellite Competition and
Privatization Act of 1998
Dear Representative Morella: In response to your written
request for counsel, the Washington Legal Foundation (WLF)
has undertaken a legal analysis of H.R. 1872, ``The
Communications Satellite Competition and Privatization Act of
1998.'' In particular, we have considered whether H.R. 1872
in its present form would constitute a ``taking'' by the
federal government (subject to just compensation under the
Fifth Amendment to the United States Constitution) or a
breach of compact between the United States and COMSAT
Corporation.
After careful consideration of H.R. 1872, WLF has concluded
that H.R. 1872 would indeed effect a compensable taking of
private property belonging to COMSAT, as well as a material
breach of the terms of the compact between the United States
and COMSAT. WLF's conclusion should not be construed as
endorsement or opposition to H.R. 1872. WLF is a nonprofit
group organized under 26 U.S.C. Sec. 501(c)(3) and does not
engage in any lobbying activity.
Background. The current wave of telecommunications reform
comes from a shift in how the economics of communications
networks are generally understood. Whereas it was once
assumed that these networks were natural monopolies, experts
in the field now believe that these facilities can be
provided (and are best provided) by multiple competitors.
Nowhere is this shift more clear than in satellite
communications. In the 1960s and 1970s, it was universally
believed that the establishing and maintaining a network of
satellites was so complicated and expensive that only a
global consortium could do it. Thus, the United States
spearheaded the formation of two treaty-based international
satellite organizations (ISOs), INTELSAT and Inmarsat, to
carry out this mission.
Since that time, private companies such as PanAmSat, Loral,
Motorola, and Teledesic have launched (or made plans to
launch) their own satellite networks. The success of these
companies has demonstrated that government involvement is no
longer needed to ensure the provision of satellite services.
Accordingly, the United States has begun the delicate process
of negotiating with other countries--most of whom do not
fully share the U.S.'s faith in the marketplace--to privatize
the ISOs. These efforts have already borne fruit; INTELSAT
has agreed to spin off

[[Page H2841]]

six of its satellites to a private company, and Inmarsat
has agreed to privatize all but its public-safety
services.
Several members of Congress, believing that privatization
cannot be achieved unless mandated by the U.S., have
introduced legislation intended to force the ISOs to
privatize. H.R. 1872 would close the U.S. market to INTELSAT
and Inmarsat, their privatized spin-offs and successors, and
all U.S. entities that use their facilities, unless the ISOs
meet the bill's rigid criteria, and do so by dates certain.
H.R. 1872 has been criticized by some for hamstringing the
government's ability to negotiate with other countries, and
for adopting--allegedly for the purpose of enhancing
competition--a protectionist strategy that benefits certain
U.S. satellite companies by excluding their most likely
international rivals from the market. What has received less
attention is that H.R. 1872 would effect the largest
confiscation of private property in recent times, exposing
the U.S. to billions of dollars in claims for compensation.
The problem is this: The United States actually does not
hold any investment in the ISOs. Private investors have
committed massive amounts of capital to fund the ISOs, and
they have done so at the behest of the U.S. government, in
furtherance of declared national policy. When Congress passed
the Communications Satellite Act of 1962, 47 U.S.C.
Sec. Sec. 701 et seq., it determined that ``United States
participation in the global system shall be in the form of a
private corporation, subject to appropriate regulation.'' 47
U.S.C. Sec. 701(c). Congress therefore authorized the
creation of a new company, COMSAT, to be the sole operating
entity in INTELSAT. In 1978, Congress also made COMSAT the
sole U.S. participant in Inmarsat.
By statute, COMSAT is a ``corporation for profit'' and not
``an agency or establishment of the United States
government.'' 47 U.S.C. Sec. 731. It has never been funded or
otherwise subsidized by the United States. Rather, Congress
authorized and expected COMSAT to raise capital by selling
shares of voting capital stock ``in a manner to encourage the
widest possible distribution to the American public,'' 47
U.S.C. Sec. 634(a), and by selling its securities to private
investors. See 47 U.S.C. Sec. Sec. 721(c)(8), 734(c).
COMSAT's stock trades on the New York Stock Exchange, and its
current market capitalization is over $2 billion.
The INTELSAT and Inmarsat Operating Agreements (which
COMSAT was directed by the U.S. government to sign) obligate
COMSAT to meet periodic capital calls. At the end of 1997,
COMSAT owned roughly 18% of INTELSAT, with a carrying value
of approximately $402 million, and roughly 23% of Inmarsat,
with a carrying value of approximately $223 million. COMSAT
is pledged to invest another $332 million in INTELSAT. In
addition, it has invested hundreds of millions in
shareholder capital outside the ISOs in order to provide
INTELSAT and Inmarsat services to the U.S. public.
H.R. 1872 could substantially impair, or perhaps destroy,
that investment. The bill sets conditions for privatization
that the State Department concedes are too onerous for other
countries to accept. The entity that INTELSAT recently agreed
to privatize would not qualify, nor would the privatized
Inmarsat. Some have argued that the bar has intentionally
been set too high, at the request of U.S. companies seeking
protection for competition, so that the market-closing
sanctions that accompany a failure to meet the criteria will
be triggered.
During the transition to privatization, H.R. 1872 would
effectively bar the ISOs from deploying satellites to new
orbital locations or replacing obsolete satellites at the end
of their lives. Moreover, H.R. 1872 declares that if
``substantial and material progress'' is not made, year by
year, toward meeting the bill's conditions, COMSAT will be
barred from providing high-speed data, Internet, and land
mobile service--even though it relies on such services now
for significant portions of its revenue. In addition, COMSAT
would be frozen in time while the rest of the marketplace
moved forward; it could not provide additional services, or
additional applications of existing services.
If privatization is not achieved in exactly the time and
manner specified, the bill would limit COMSAT to the
provision of so-called ``core'' services, defined as force
telphony and occasional use services for INTELSAT, and
emergency services (now provided at no charge) for Inmarsat.
But the refuge of these ``core'' services may well be
illusory, because changes in technology are causing these
markets to disappear. Voice traffic, for example, is
migrating rapidly from satellites to fiber-optic cables, and
a voice-only provider likely would see its market slip away
in a world of converging voice and data services.
Moreover, H.R. 1872 imposes further sanctions that could
cripple COMSAT whether or not the ISOs privatize. Most
significantly, the bill would give every one of COMSAT's
customers the unilateral right to abrogate its contracts with
the company. Such sweeping Congressional abrogation of the
private contract rights of a single company--without any
judicial determination of wrongdoing--may be unprecedented in
U.S. history .
Constitutional Analysis. WLF has concluded that, if
adopted, H.R. 1872 would effect a substantial compensable
taking of private property. The bill would impair COMSAT's
substantial investments in and for INTELSAT and Inmarsat,
thus imposing on COMSAT's shareholders virtually the entire
cost of a congressional policy change. The Takings Clause
of the Fifth Amendment is ``designed to bar Government
from forcing some people alone to bear public burdens
which, in all fairness and justice, should be borne by the
public as a whole.'' Armstrong v. United States, 364 U.S.
40, 49 (1960). Congress may not induce a company to invest
its private capital, and then turn around and declare that
policy changes have made the investment unnecessary,
without compensating that company for the assets dedicated
to public use.
WLF has concluded that if H.R. 1872 passes, COMSAT may have
legitimate claims for compensation for its taken investments.
Government's regulation of the uses to which private property
may be put can ``take'' that property, just as if the
government had seized the property. See Lucas v. South
Carolina Coastal Council, 505 U.S. 1003, 1017-18 (1992);
Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155,
163-64 (1980). The Supreme Court has articulated three
factors that determine whether usage regulation goes so far
as to constitute a taking: ``the economic impact of the
regulation on the claimant,'' the ``extent to which the
regulation has interfered with distance investment-backed
expectations,'' and ``the character of the governmental
action.'' Penn Central Transp. Co. v. City of New York, 438
U.S. 104, 124 (1978).
H.R. 1872 bears all the indicia of a regulation that, in
Justice Holmes's words, goes ``too far.'' Pennsylvania Coal
v. Mahon, 260 U.S. 393, 415 (1922). Based on WLF's
understanding of the situation, the bill would have a
devastating economic impact on COMSAT, immediately stranding
hundreds of millions of dollars of investments made to
provide (and useful solely for providing) banned services,
and ultimately relegating the company to providing an ever-
shrinking core of services with ever-more-obsolete
technologies. Moreover, H.R. 1872 appears to interfere with
COMSAT's investment-backed expectations. If COMSAT had not
legitimately expected that it would be allowed to pursue a
profit on its INTELSAT and Inmarsat investments, it would
have been irrational for COMSAT to have made them, and for
its shareholders to have contributed capital to the company.
Nor does H.R. 1872 merely ``adjust the benefits and burdens
of economic life to promote the common good,'' with only an
incidental effect on COMSAT. Connolly v. Pension Benefit
Guaranty Corp., 475 U.S. 211, 225 (1986). It is true that
COMSAT's actions have always been subject to regulation, cf.
id. at 226-227. But H.R. 1872 goes well beyond the ordinary
regulatory adjustment that such an actor must expect. It
rejects the most basic premise of COMSAT's existence: that a
global ``commercial communications satellite system,'' built
``in conjunction and cooperation with other countries,'' will
best ``serve the communications needs of the United States
and other countries.'' 47 U.S.C. Sec. 701(a). In light of
this language, the backers of H.R. 1872 cannot reasonably
maintain that COMSAT should have expected that the U.S. would
seek to exclude INTELSAT and Inmarsat from the market
altogether. See Ruckleshaus v. Monsanto Co., 467 U.S. 986,
1010-11 (1984) (where company submits trade secrets to EPA
upon statutory assurance that EPA will not disclose them,
later amendment of statute to permit disclosure works a
taking); United Nuclear Corp. v. United States, 912 F.2d 1432
(Fed. Cir. 1990) (where mining company invested $5 million to
explore for uranium on tribal lands in reliance on Interior
Department approval, company could not be expected to foresee
Interior's decision six years later to allow tribe to cancel
the land claims, and decision worked a compensable taking).
Finally, H.R. 1872 does not ``substantially advance'' its
stated regulatory goal: securing the privatization of
INTELSAT and Inmarsat. See Lucas, 505 U.S. at 1016. To the
contrary, by setting the bar as high as it does, the bill
guarantees that privatization will fail and that COMSAT will
be expelled from the U.S. market. Congress may legitimately
decide that it no longer wants COMSAT to serve its historic
role. But if it does so, it is required by the Fifth
Amendment to compensate COMSAT's shareholders for the capital
they have put in public service at the government's request.
Please let us know if you seek further legal counsel from
WLF on this issue.
Sincerely,

Daniel J. Popeo,

General Counsel.
____

[From the Washington Times, Apr. 27, 1998]

Deregulation or Plain Old Theft?

(By Nancie G. Marzulla)

More than 30 years ago, hundreds of Americans invested in
an idea: that communications satellites could benefit their
nation and the world. The result was COMSAT, a Maryland-based
shareholder-owned company that successfully launched the
United States to the apex of the satellite industry.
Today, however, if a bill now being considered in Congress
passes, these investments will be in jeopardy. Some in
Congress and elsewhere seem to have forgotten the
Constitution's Fifth Amendment prohibition against
uncompensated ``takings.'' In their quest for deregulation,
they've proposed federal legislation that could end up
costing the U.S. Treasury hundreds of millions, if not
billions, of dollars to cover COMSAT's takings claims.
In the process, these ``takers'' would be sending a clear
message to current and future investors: Risk your money, but
don't

[[Page H2842]]

expect the government to play by the rules if your investment
pays off. With that kind of federal attitude, what sane
investor would risk their hard-earned capital on today's
fledgling companies that take huge financial and
technological risks at the request of the government, as
COMSAT did in the 1960s.
In the Communications Satellite Act of 1962, Congress
commissioned COMSAT to ``establish in conjunction and in
cooperation with other countries, as expeditiously and
practicable, a commercial communications satellite system.''
At the time, this task was recognized to be a risky financial
and technological undertaking. Congress's mandate led to the
creation of the International Telecommunications Satellite
Organization (INTELSAT), an international consortium that now
includes some 140-member countries. A similar international
organization, the International Mobile Satellite
Organization, or ``Inmarsat'' was formed in 1978.
As the U.S. representative to INTELSAT and Inmarsat, COMSAT
has been bound by those organizations' operating agreements
which (among other things) obligate COMSAT to meet all of
INTELSAT and Inmarsat's capital investment calls. Moreover,
COMSAT must seek FCC approval for every investment.
In exchange for living within these constraints, COMSAT was
afforded an opportunity to earn a reasonable return on its
investments. It also was given exclusive franchise in selling
services using INTELSAT AND Inmarsat satellites for
communications to and from the United States. Access has
never been a problem for customers: these services are
energetically offered to all at non-discriminatory rates.
During the 1960s and 1970s, INTELSAT and Inmarsat
satellites were the only ``birds'' in the sky American
telephone companies and television networks needing satellite
services had to purchase them from COMSAT. But since the
early 1980s other companies have been allowed to launch
competing communications satellite systems. These systems
have been extremely successful.
In addition to the growth of new, rival service providers,
new technologies also have created more competition for
satellites. For example, higher capacity fiber-optic undersea
cable has become the favored mode of transmitting phone calls
internationally. Today, 117 countries are directly connected
to the United States by fiber-optic cable.
As a result of these technological and marketplace
development, COMSAT now has only 21 percent of the market for
international voice communications and about 42 percent of
the market for international video transmission.
There are still those who inexplicably view COMSAT, a
relatively small player in the communications marketplace, as
a monopoly despite the fact that numerous suppliers serve the
market today. Believers in the ``monopoly power'' of COMSAT
have introduced a bill in Congress that would, among other
things:
Authorize customers to abrogate their existing contracts
with COMSAT;
Require the immediate surrender of allocated orbital slots
(essentially a parking place for a satellite in outer space)
not in actual commercial use, despite the millions of dollars
COMSAT, INTELSAT, and Inmarsat have invested in satellites
intended for those slots;
Terminate existing services that COMSAT is providing to
customers, as well as restricting the company's participation
in new services (such as Internet access, high-speed data and
interactive services) thus depriving Americans of advanced
computer and video technologies.
Maybe some in Congress believe that this is the definition
of progressive, fair and pro-competition legislation, but
COMSAT and its shareholders aren't laughing about a bill that
would knock this competitor out of the market in the name of
competition.
This bill would breach COMSAT's implicit but enforceable
regulatory compact with the federal government. As the
Supreme Court recently said when enforcing promises made by
bank regulators to savings and loans institutions, Congress
is free to change its policies and, as a result, to break a
pledge to a private party. But if Congress does so, it must
``insure the promise against loss arising from the promised
condition's nonoccurrence.''
The government also would have to compensate COMSAT for
taking the company's property in violation of the Fifth
Amendment's guarantee against uncompensated takings. The U.S.
is liable for just compensation not just when it physically
seizes real or personal property but also, as Justice Holmes
said in 1922, ``if regulation goes too far it will be
recognized as taking.''
Clearly, it is going ``too far'' to require COMSAT and its
investors to bear the burden of a congressional decision to
reverse course and exclude treaty organizations and their
signatories from almost the entire field of satellite
communications. If Congress were to order this, it would have
to compensate companies for investments they made at the
government's behest and approval--investments made
specifically to solidify the U.S. as the satellite industry
leader.
The provision that would invalidate existing contracts is
even a more obvious and aggressive taking of private
property. It is well recognized that contract rights are
property rights, protected by the Constitution. Congress can
no more abrogate existing contracts than it can take away
tangible personal property without just compensation. Yet
this bill would void current and future agreements negotiated
between COMSAT and other parties.
Of course, deregulation must be pursued with vigor. At the
same time, promises governments made to private companies,
and on which investors based their investment, must be kept.
Deregulation cannot be an excuse for the uncompensated
confiscation of private property.

Mr. Chairman, the service restrictions of H.R. 1872 are not only
unconstitutional, they are anticompetitive and they are anticonsumer.
They will remove a competitor from the marketplace, and therefore, they
will then deny consumers, including the U.S. Government, an alternative
service provider. COMSAT's competitors will have succeeded in ejecting
a major player from the communications marketplace. They are the only
beneficiaries of these provisions.
So, Mr. Chairman, we also put satellite reform, but we must proceed
in a way that is fair to the customers, fair to COMSAT, and above all
else consistent with the Constitution. We must avoid enacting a law
that is found to be unconstitutional and that exposes the Treasury to a
multibillion-dollar liability for damages.
Mr. Chairman, I ask my colleagues to support this amendment.
Mr. BLILEY. Mr. Chairman, I rise in opposition to the amendment of my
good friend, the gentlewoman from Maryland (Mrs. Morella).
Before I begin, let me share with my colleagues an interesting bit of
history. The phrase ``red herring" comes from the practice of dragging
a smoked and, thus, red herring across the path of a track of dogs
trying to follow a scent. The idea was to use the scent to distract
them from that prey.
In this case, the taking issue is being used in an attempt to
distract Members from the real issue, which is that without incentives
that could cost the intergovernmental satellite organizations money,
they will never privatize in a procompetitive manner.
The amendment is an attempt to tie down the FCC through litigation.
Currently, if COMSAT has a takings claim, it can sue the FCC. Just like
anyone else, if there were a taking, they could go to court. Why do
they want this amendment? To tie the bill in knots through litigation,
that is why.
The amendment offered in committee by the gentleman from Maryland
(Mr. Wynn), the colleague of the gentlewoman, was offered which also
sought to cause fundamental problems for the bill. The gentleman from
Maryland (Mr. Wynn) failed by a vote of 37-to-8. This one dresses the
knife up in takings clothing possibly in the hope that many of my
conservative colleagues who care about takings will join the
gentlewoman in attacking our carefully crafted legislation.
I have to tell my colleagues that I do not think the amendment of the
gentlewoman from Maryland (Mrs. Morella) is designed to fix the takings
problem. It is designed to protect her constituent COMSAT. And it does
that well. It says that the FCC shall not restrict the activities of
COMSAT in a manner which would create liability for the U.S. under the
fifth amendment, which would mean COMSAT could go to the courts as soon
as the FCC issued a decision and tie the bill up for years. COMSAT's
whole strategy is to delay reform. This would play right into their
hands.
What the amendment does not take into account is that we already have
a Constitution with the fifth amendment that protects against takings.
There is also a remedy. Under current law, if they think there is a
taking, they can sue, but under the same laws applicable to any other
company.
Once again, the intergovernmental satellite organizations and the
U.S. affiliate, COMSAT, want to continue the special advantages they
have always had.
Now, I thought I would take a moment to address the takings issue
itself. The committee has thoroughly analyzed that there are no
takings. CRS has looked at the issue. They found that ``a review of the
bill's text reviews no provisions likely to cause constitutional
takings.'' The committee's analysis, which quotes at length from the
CRS, is available in the committee report.
I would now like to read a letter dated May 5 from the Washington
Legal Foundation to me.

Dear Chairman Bliley, this is in response to your letter
requesting a clarification of

[[Page H2843]]

WLF's views regarding the Communications Satellite
Competition and Privatization Act in light of concerns that
WLF's views had been mischaracterized.
I want to make it very clear that the Washington Legal
foundation does not in the any way oppose your bill or in any
manner support amendments to your bill. WLF does not engage
or partner in any lobbying activity whatsoever. In fact, some
members of the WLF's own advisory boards disagree with the
WLF's legal analysis of the takings clause in connection with
this legislation.
Unfortunately, when we sent our analysis to Members who
requested it, we did not anticipate that it would be used as
the basis for any legislative tactics or strategy which would
oppose your satellite reform bill. We take no legislative
position whatsoever. We are grateful for your leadership on
free enterprise issues and appreciate the opportunity to
clarify this matter for you. Sincerely, Daniel J. Popeo,
General Counsel.

Mrs. MORELLA. Mr. Chairman, will the gentleman yield?
Mr. BLILEY. I yield to the gentlewoman from Maryland.
Mrs. MORELLA. Mr. Chairman, if in fact there is no takings problem,
then what is wrong with the amendment?
Mr. BLILEY. Reclaiming my time, the gentlewoman must not have been
listening. They have the right under the Constitution now by the fifth
amendment. What this does is it puts a chill on the FCC. As soon as
they do anything, they will can run into court and tie them up for
years. That is what the strategy of COMSAT is, delay, delay, delay,
hold their monopoly, get those 68 percent profits as long as they
possibly can; and if we are forced to privatize, set it up in such a
way that all we have done is change the name, but we still have the
monopoly.
Mr. WYNN. Mr. Chairman, I move to strike the last word.
Mr. Chairman, I would like to thank my colleague, the gentlewoman
from Montgomery County, Maryland, (Mrs. Morella) for her leadership on
this issue. It is a very important issue to one of our own companies,
COMSAT.
The question that is posed by this amendment is simply this:
deregulation or plain old theft? This the question was posed by Nancie
Marzulla, president of the Defenders of Property Rights, in an op-ed
piece in the April 27, 1998, edition of the Washington Times.
In her piece they state clearly that the sponsors in the quest for
deregulation have proposed Federal legislation that could end up
costing American citizens hundreds of millions, if not billions, of
dollars to cover COMSAT's takings claims. That is right, takings
claims.
As reported by the Committee on Commerce, this legislation contains
restrictions that will limit the services that COMSAT can offer using
its satellite assets. The restrictions take effect if rigid milestones
are not met for privatization. The critical point, however, is that
these milestones are not milestones within the control of COMSAT; they
are milestones beyond their control, in fact, in the control of
international organizations.
COMSAT is urging and helping move toward privatization, but they
cannot control the pace of privatization. Nonetheless, they would be
subject to unfair restrictions if our imposed milestones are not met.
And I do not believe that this is fair.
I know we have constitutional scholars in this body, and I call upon
them today. This is an unconstitutional taking. COMSAT is a private,
investor-owned company. COMSAT's contract rights are property; and
under the fifth amendment of the Constitution, the government simply
cannot take this property, which is what this legislation does, without
paying for it; and I fully expect that COMSAT will be filing claims on
this issue.
Should this occur, the money the U.S. taxpayers will have to pay as a
result of litigation will far exceed anything we are contemplating now
in the context of our tobacco concerns. The amendment being offered by
my colleague today will significantly reduce our liability and that of
our constituents by eliminating the takings provisions for the bill's
restrictions on COMSAT. The amendment does the right thing by allowing
COMSAT to continue to use its property, and I urge our Members to
support this amendment.
Now, I applaud the purpose of the chairman with this legislation, and
I think the intent is laudable and he has worked very hard. However,
the underlying theory of this legislation is quite flawed. The sponsors
of this bill would have us believe that COMSAT is a huge, untenable
monopoly. This is simply not true.
In fact, there are more than 20 current competitors to COMSAT, with
more than $14 billion in investments and $40 billion in stock value. If
this is not competition, I do not know what is. I do not think we can
ask for much more. But let us consider further.
In 1998, COMSAT controlled 70 percent of the international voice
traffic. Today they have only a 21 percent share. Significantly,
COMSAT's market share has declined. In 1993, COMSAT controlled 80
percent of the video market; today it controls 42 percent. Clearly,
competition is emerging under our present structure. We do not need
this piece of legislation to promote competition.
But finally and most telling, on April 28 of this year, the FCC
declared that COMSAT is nondominant in most of its market, thus
authoritatively eliminating the argument that we have to get rid of
COMSAT or punish COMSAT because it is an egregious monopoly.
Despite these facts, however, the sponsors of the legislation, so
intent on privatizing this industry, would subject our constituents to
potentially billions of dollars in liability as a result of litigation.
I think Ms. Marzulla put it best in her op-ed piece when she said,
``Deregulation must be pursued with vigor. At the same time, promises
governments made to private companies and on which investors based
their investment, must be kept. Deregulation cannot be an excuse for
the uncompensated confiscation of private property.'' And that is what
we are debating here today.
I urge my colleagues to support and adopt the Morella amendment. I
believe that this is a proper move and an appropriate step to making
this bill something that we can support.
Mr. WELDON of Florida. Mr. Chairman, I move to strike the requisite
number of words.
Mr. Chairman, I too oppose the amendment offered by the gentlewoman
from Maryland (Mrs. Morella). The Morella amendment is premised on the
notion that H.R. 1872, as reported out of the committee, would work a
taking of COMSAT's property. This proposition seems to me to be
entirely unfounded.
To begin with, I am at a loss to see any property that would be
impacted by the bill. The term ``property'' has a particular legal
meaning. It is not just a unilateral expectation, as the opponents of
this bill have suggested, but rather an entitlement based upon a
mutually explicit understanding.
The fact that COMSAT or its shareholders may have made investments
with the expectation that COMSAT would continue to operate as the
monopoly provider of INTELSAT and Inmarsat's services in the United
States does not give them a property interest in those investments.
Half the equation is missing.
To constitute property protected by the fifth amendment, COMSAT would
need to show that these expectations were based upon a mutuality of
understanding sufficiently well-grounded to create an entitlement
protected at law. Of course, any such claim would collide headlong with
the reality that when Congress established COMSAT in the 1962 Satellite
Act, it expressly reserved the right to modify COMSAT's role in the
market at any time.

{time} 1230

To the extent that COMSAT and its shareholders made investments based
on the provisions of the Satellite Act, they did so presumably knowing
of the risk that Congress might some day do so. It is absolutely
baffling to me that COMSAT could think that Congress created an
entitlement, a property interest, by the terms of the Satellite Act. In
any event, even if COMSAT had identified a protected property interest
that would be impacted by H.R. 1872, the legislation hardly would reach
the level of a regulatory taking, quote-unquote, under the Supreme
Court's cases.
The bill will without a doubt adjust the benefits and burdens of
economic life, quote-unquote, and end one of the last government
protected monopolies in the telecommunications field. It would not,
however, take any tangible property or vitiate any specific right or
assurance conferred by the government. I therefore urge the Members to
oppose this amendment.

[[Page H2844]]

Mr. DINGELL. Mr. Chairman, I move to strike the requisite number of
words.
(Mr. DINGELL asked and was given permission to revise and extend his
remarks.)
Mr. DINGELL. Mr. Chairman, the amendment gets to the nub of the
question. It says this, and I can understand why the opponents of the
amendment are so distressed about it, because it says,

In implementing the provisions of this section, the
Commission shall not restrict the activities of COMSAT in a
manner which would create a liability for the United States
under the Fifth Amendment to the Constitution.

What is wrong with that amendment? All it says is that the Commission
has to respect the Constitution and cannot create a liability on the
taxpayers because we have engaged in an unconstitutional taking or
because we have violated the provisions of the Tucker Act.
I want my colleagues to listen to what the Washington Legal
Foundation said. By the way, the gentleman from Virginia (Mr. Bliley)
is a major contributor to that agency and has sent them a wonderful
letter in which he told them how he wanted to support the good work of
that foundation. Here it is. This is what they had to say:

In response to your written request for counsel, the
Washington Legal Foundation has undertaken a legal analysis
of H.R. 1872. After the consideration of H.R. 1872, WLF has
concluded that H.R. 1872 would indeed effect a compensable
taking of private property belonging to COMSAT, as well as a
material breach of the terms of the compact between the
United States and COMSAT. WLF's conclusion should not be
construed as endorsement or opposition to H.R. 1872.

They are giving you a clear warning. The amendment says that the
Commission cannot subject your constituents and mine to that kind of
liability. I would want to observe something else. What this bill does
is to impair contract rights of COMSAT and to impair the value, the
good will and the corporate assets of that corporation.
The Supreme Court has been very clear on this point. They have said
that the most significant factor in determining whether economic
regulation constitutes a taking is the extent to which, and I quote now
from the Supreme Court, ``the regulation has interfered with the
owner's reasonable investment-backed expectations.'' That is from the
Penn Central case, Penn Central Transportation Company v. The City of
New York, 438 U.S. 104, 124, dated 1978.
They went on to say some other things which I think are important.
They went on to say, ``The simple words,'' and I am now interpolating,
the Supreme Court said ``that Congress may at any time alter, amend and
repeal this act * * * cannot be used to take away property already
acquired * * * or to deprive'' a private ``corporation of the fruits
already reduced to possession of contracts lawfully made.''
We are here with considerable diligence in this legislation
interfering in the contract rights of COMSAT. COMSAT's officers are, at
the proper responsibility and under the insistence of their
shareholders, most assuredly going to file suit under the Tucker Act. I
can offer my colleagues firm assurances that the judgment that will be
awarded to COMSAT will be most generous and it will be done at the
expense of your constituents unless this body has the wisdom to adopt
the amendment offered by the gentlewoman from Maryland.
It should be observed, this does not do anything, the amendment,
except to assure that there will be no liability imposed on our
constituents because of an unconstitutional taking by this body. I urge
my colleagues to keep that thought in mind. You have a responsibility
to pass legislation in this body which observes the Constitution, but
which also does not subject our taxpayers to a liability for wrongful
acts taken by this Congress.
I would urge my colleagues to keep carefully in mind that the sums
here are not piddling. They amount to billions of dollars. My question
to my colleagues, Mr. Chairman, is, do you want the responsibility on
your soul and on your conscience of having dissipated this enormous sum
of money and subjected your taxpayers to that kind of liability?
Mr. COX of California. Mr. Chairman, I move to strike the requisite
number of words.
Mr. Chairman, I think we have just heard from the ranking member on
the Committee on Commerce that he is prepared to accept as a norm for
debate and decision in the House in futuro the decisions of the
Washington Legal Foundation. I think that will actually help us a great
deal here in our deliberations in the House. I think he is quite right,
the Washington Legal Foundation is a fine outfit. I will look forward
to holding the ranking member to his new principle.
But the Washington Legal Foundation, which he sings the praises of,
has written us a letter subsequent to the one that he is describing
that says, ``I want to make it very clear, the Washington Legal
Foundation does not in any way oppose this bill or in any manner
support amendments to this bill.'' Specifically, the letter was written
so that we would all know that they oppose this amendment. That is the
position of the Washington Legal Foundation.
Furthermore, the Congressional Research Service has written us on the
same point telling us that it is their legal analysis that the impacts
described in the gentleman's presentation are not likely to support
successful takings claims. That is the view of the Congressional
Research Service.
So the question is not whether we are going to expose taxpayers to
spending huge amounts of money because Congress did something wrong.
This amendment would expose taxpayers to huge expenditures of their
hard-earned money because Congress did something right, which is to
take away the monopoly powers that this bill in fact takes away from
COMSAT. This is not a Fifth Amendment taking.
Private actors can be disadvantaged in any number of ways by
governmental action. A private landowner can discover that the value of
her real estate is reduced to zero because of the land being declared
essential habitat. That is an example of governmental action that ought
to be considered a taking and the landowner in that case ought to be
fairly compensated. But here our private actor is not some innocent
landowner trying to recover from government regulation. This is a
private company seeking to compel continued government protection for
the unique monopoly powers, the privileges and benefits that flow from
those monopoly powers that it enjoys. This is an anticompetitive policy
that is in fact hostile to true property rights. In fact, current law
unfairly restricts the ability of private companies to compete. Instead
it guarantees to COMSAT's investors monopoly-sized returns on their
investments.
What property does COMSAT have that it alleges is being taken? It
suggests that takings claims are raised by the ``fresh look''
provisions of this bill. That is the language that enables the FCC
beginning in 2000 to permit users or providers of telecommunications
services to renegotiate contracts they signed with COMSAT prior to the
repeal of its statutory monopoly as the only U.S. company authorized to
sell INTELSAT services. In other words, COMSAT wants to retain its
monopoly powers and anything less would be considered a taking.
The United States Supreme Court has repeatedly ruled that persons
doing business in a regulated marketplace should expect the legislative
scheme to change from time to time, even in ways that might be
unfavorable to their interests. This principle was most recently
reiterated by the Supreme Court in its unanimous 1993 decision in
Concrete Pipe, which quoted from the Court's 1958 decision in FHA v.
The Darlington. Here is what the Court said. ``Those who do business in
the regulated field cannot object if the legislative scheme is
buttressed by subsequent amendments to achieve the legislative end.''
Even if COMSAT were to pretend that it is not a participant in a
heavily regulated marketplace, and, that would be a tough argument for
COMSAT to make because they testified before Congress just last year
that their company is hamstrung by a burdensome regulatory regime,
Congress took special care when it created COMSAT in 1962 to let
investors know that there would be no guaranteed return on their
investment. These days COMSAT gets an 18 percent guaranteed rate of
return. These days INTELSAT gets immunity from antitrust lawsuits.
There is no doubt that H.R. 1872 will impair

[[Page H2845]]

COMSAT's ability to obtain monopoly rents in the international
satellite marketplace, and that is the purpose of the bill.
While the bill does end an obsolete and outdated international
monopoly, it does not deprive COMSAT of the right to compete in the new
competitive marketplace. Instead, COMSAT will be forced to compete. Nor
will H.R. 1872 bar COMSAT from providing service to the same customers
to whom it presently provides service. But apparently in COMSAT's view,
the company should be compensated by U.S. taxpayers if it is not
guaranteed anything less than the absolute right to sell its services
at inflated monopoly prices. That is a bad idea. Therefore, this
amendment is a bad idea. I urge my colleagues to reject it.
Ms. ESHOO. Mr. Chairman, I move to strike the requisite number of
words. Mr. Chairman, this amendment is searching for a problem that
does not exist. The argument that takings is an issue seems tenuous at
best. The gentleman from California (Mr. Cox) I think has done a superb
job of rolling out the case in detail on this issue because it defines
contracts as property, which I think is a new twist. I have not heard
of that one before.
I would congratulate those that are offering the amendment and
supporting it for coming up with such a unique take on this. But the
argument that takings is defined as property I think is faulty.
Furthermore, removing the FCC's ability to apply service restrictions,
or a fresh look, actually cuts out the heart of the bill. These
provisions are incentives to privatization and they are necessary
incentives and need to be retained. I would like to believe that COMSAT
and INTELSAT will act in all of our best interests without any
prodding, but that does not seem to be the case, nor does it seem to be
realistic.
As I warned in my opening statement, this amendment is designed to
kill the bill, not to amend it or to improve it. If Members of the
House wish to support and protect a monopoly, then they should vote for
this amendment. If they are in fact pro-competition and pro-
privatization, they should vote to oppose the amendment.
Mr. KLINK. Mr. Chairman, I move to strike the requisite number of
words.
(Mr. Klink asked and was given permission to revise and extend his
remarks.)
Mr. KLINK. Mr. Chairman, I rise in support of the Morella amendment.
The previous speaker, a dear friend of mine, had mentioned, and I, like
her, am not an attorney but I think it is very clear that contracts are
property. I think that the Supreme Court made that decision about a
century ago. Beyond that, this legislation may or may not lead to
privatization and competition in international communications. I do not
think that we are all very sure if exactly that is going to happen. I
have my doubts whether it will or not.
I think the approach has been backwards. But whether or not this
legislation succeeds in its goal, one thing is clear, that your
constituents will end up footing the bill. We could pass this bill, it
may fail to open up telecommunication markets in foreign lands, and
still could end up spending billions of dollars of your taxpayers'
money.

{time} 1245

We could end up with a very extensive status quo in
telecommunications.
Many of the investment decisions that COMSAT has made over the years
have been made at the urging of the United States Government, and if we
look at comments made by Nancie Marzulla, who is the President of
Defenders of Property Rights, she said that Congress would have to
compensate companies for investments they made at the government's
behest and approval, investments made specifically to solidify the U.S.
as the satellite industry leader.
Similarly, if we take a look at comments made by the Washington Legal
Foundation, if adopted, H.R. 1872 would effect a substantial
compensable taking of private property, and yet this legislation will
take away COMSAT's business, will force them to renegotiate contracts
that do reduce the value of their investments and really open up the
United States Government to liability for damage for takings of COMSAT
property. Those contracts are real property.
Now I am reminded a little bit in this legislation of an old movie. I
do not know how many of us in here remember the old movie ``Blazing
Saddles.'' They had a sheriff in there, Clevon Little, who held a gun
to his own head and said, as my colleagues know, ``If you don't let me
out of here, I'm going to shoot myself.'' That is really what this bill
does. If my colleagues view this as a United Nations of satellites, we
are holding a gun to our dear friend, Billy Richardson's head. And I
refer to him as ``Billy'' only because I have great affection and
friendship for the U.N. Secretary. It is like us holding a gun to his
head and saying to the other countries, if they do not do what we want
them to do, we are going to shoot our own representative.
Mr. Chairman, that would be foolish, and I think that that is what
this amendment tries to correct.
While the sanctions imposed by this bill may not work, they will cost
money.
My colleagues should support the Morella amendment, block the
sanctions that really do amount to a taking of property, try to save
our constituents money, try to keep the United States satellite
industry viable and competitive.
Mr. DINGELL. Mr. Chairman, will the gentleman yield?
Mr. KLINK. I yield to the gentleman from Michigan.
Mr. DINGELL. Mr. Chairman, I just want to ask a question to my
colleagues on the other side.
They said there is no taking here, and so we need to have no fear on
that. The gentlewoman from Maryland offers an amendment which says
there can be no taking. Well, if they do not intend to do a taking, if
the amendment says there is no taking, if in fact there is no taking,
what is wrong with the amendment?
I would think those who say there is going to be no taking here would
accept this amendment with vast enthusiasm and would be speaking for
it, not against it. I am curious. What is it that they are trying to
tell us; that there is a taking and so they do not want the amendment,
or that there is not a taking so the amendment is not needed? I do not
know.
But I do know one thing. If there is a possibility of the taking, we
better doggone well see to it that we adopt the amendment so that we do
not impose upon our constituents $6 or $7 billion of liability because
of the unwise action in this Chamber today.
Mr. KLINK. Mr. Chairman, I thank the gentleman from Michigan.
Mr. TAUZIN. Mr. Chairman, will the gentleman yield?
Mr. KLINK. I yield to the gentleman from Louisiana.
Mr. TAUZIN. Let me first commend the gentleman on his statement. I
cannot think of a better metaphor than the one he gave us that we are
literally telling a U.S. company, ``We're going to shoot you and your
customers if these international organizations don't do what we want.''
Do my colleagues know that in the bill is a provision that says even
if they do what we want, they still have to shoot themselves? I will
talk to my colleagues about that one in a minute.
Mr. KLINK. Mr. Chairman, I thank the gentleman for his insight, and I
thank the gentleman for his leadership on this issue.
Mr. TAUZIN. Mr. Chairman, I move to strike the requisite number of
words.
Mr. Chairman, first let me say that I am pleased that the Washington
Legal Foundation sent a letter of clarification to the chairman, the
gentleman from Virginia (Mr. Bliley). They should have because they are
503(c), they cannot lobby on a bill, they did not mean their letter to
the gentlewoman from Maryland (Mrs. Morella) to be a lobbying effort.
But notice they have not repudiated what they said. They have not said,
we change our mind, we change our opinion.
Here is what they said this bill does, and Members who are listening
in their offices or wherever they may be, I hope they pay close
attention to this. This is what the Washington Legal Foundation said
this bill does without the Connie Morella amendment:
It says that this bill provides that if INTELSAT and Inmarsat do not
privatize quickly enough, as this bill hopefully gets them to do, this
bill will punish COMSAT by telling COMSAT, this U.S. private company,
that they

[[Page H2846]]

no longer can offer new services to their customers. All they can offer
them is the old services they used to give them.
Well, as the Washington Legal Foundation points out, those core
services are illusory because there are changes in technology causing
those markets to disappear. If they cannot offer the new services, who
the heck wants to do business with them?
This bill literally says to COMSAT and its customers, ``Quit doing
business, shoot yourself in the head because you can't offer the new
services that all the other companies will be offering its customers.''
Why? Because Inmarsat and INTELSAT did not move fast enough to
privatize, even though they could not control that.
But it gets even worse. The bill also says that even if INTELSAT and
Inmarsat privatize at the speed of light, if they are faster than a
speeding bullet and stronger than a locomotive, and they get to this
world of privatization faster than the chairman wants; even if they do
that, this bill says that COMSAT's customers no longer have to keep
their contracts. They can renegotiate them with whenever they want.
They can leave doing business with COMSAT anytime they want.
Now put these two provisions together, and we really get the sense of
what this is all about. This bill says in effect that COMSAT may not be
able to offer its customers new services and, by the way, they can get
out of their current contracts. Now what do my colleagues think is
going to happen? If this bill passes without the Morella amendment, in
fact, COMSAT is going to lose those customers.
Why? One, we just abrogated their contracts; and, number 2, they just
found out that COMSAT may not be able to offer them any new services.
Why would someone stay with a company that came out with new services
when Congress just told them they do not have to keep their word, they
do not have to live up to the terms of their contract? Why would one
stay? They would leave.
And guess what? That is exactly what the people who are behind these
two provisions want. Why? Because they are competitors of COMSAT. They
would like to have those customers, and so they are asking us in
Congress to rearrange the customer base, to send customers away from
COMSAT and to send them to their competitors. That is exactly what is
behind these two amendments.
And if we do that, if we do that, the Washington Legal Foundation
warns us, warns us very clearly, that such sweeping congressional
abrogation of the private contract rights of a single company, without
any judicial determination of wrongdoing, may be unprecedented in U.S.
history. What an awful taking. We do not even get to go to court.
Congress says, ``Your property is gone.'' Congress says, ``Your
contracts are no good.'' Congress says, ``The company can't give you
any more services.'' Congress destroys a U.S. company. What an
unprecedented taking in U.S. history.
And the Washington Legal Foundation concludes by saying,

Congress may legitimately decide it no longer wants COMSAT
to serve its historic role, but if it does so, it is required
by the fifth amendment to compensate COMSAT's shareholders
for all the immense capital they have put in public service
at the government's request.

In short, we, the taxpayers and the citizens of this country, will
have an enormous legal bill to pay because we in Congress incurred that
debt, we in Congress abrogated contracts, we in Congress took away
private property without providing compensation.
I suggest to my colleagues if there is going to be no taking under
this bill, why not pass an amendment? If there is not going to be
taking under this ``fresh look'' approach under this restricted service
provision, if these contracts really will not get abrogated, if none of
this will really happen, then what is wrong with the Morella amendment
which says do not do it if it takes property under the fifth amendment.
Do it only if, and only if, we are not taking property without
compensation as a violation of the fifth amendment.
This amendment makes this a good bill. I urge my colleagues to adopt
it for the sake of the taxpayers and the citizens of this country; more
importantly, for those of us in Congress who have never been asked to
vote to abrogate private contracts.
Mr. KLUG. Mr. Chairman, I move to strike the requisite number of
words.
Mr. Chairman, I rise in opposition to this amendment and I want to,
if I can, address issues that have been raised by the last three
speakers, the gentleman from Pennsylvania (Mr. Klink), the gentleman
from Michigan (Mr. Dingell), and the gentleman from Louisiana (Mr.
Tauzin).
Now for everybody who is sitting back home, in their office, in the
Chamber, and really do not understand what we are arguing about in
terms of satellite communication, let us make it very simple. There is
a monopoly today, and today we are trying to end the monopoly. That is
what this entire debate is all about.
Now contracts are not in perpetuity. The United States over the
course of time makes lots of contracts. We buy everything from
airplanes to railroad tracks to nuclear weapons and paper clips and
staplers and cars and everything else in the world. We do not go to
General Motors, say we are only going to buy cars from General Motors
for the rest of our lifetime. We make a deal, the deal ends, and we
move on. And that is essentially the principle we are discussing today:
Can we end the deal with COMSAT?
Now everybody has said for the last 5, 6, 7 years that the monopoly
should be reformed, and guess who leads the opposition today to this
amendment? It is the monopoly itself because it wants to hold onto
power, it wants to eliminate competition, and it wants to keep all the
money for itself. Very simple rule in economics.
Now the gentleman from Pennsylvania (Mr. Klink) said, the last phrase
that he used was to say to keep the U.S. satellite industry viable and
competitive. There is no competition today. There is only one guy who
calls all of the shots. That is why every private satellite company
that wants to compete supports this bill, and it is why every major
user of satellite communications, the folks who buy stuff from COMSAT,
want the bill; because they want a choice. They understand this,
anybody who is listening to this debate today.
There are choices about what television stations to watch, what
newspapers to buy, where to buy groceries, where to fill up the car
with gasoline. And today, people who use satellite communication
services, the purchasers, do not have any competition; it is a
monopoly.
Now as to the heart of the amendment that this constitutes a taking,
keep in mind that the fifth amendment of the United States already
provides protection against anybody who thinks that their property has
been unjustifiably seized and who wants compensation from the United
States Government. There is a takings protection, and obviously
everything that Congress does has to abide by the Constitution, and
therefore COMSAT and anybody else we pass legislation affecting today
has the ability to appeal back to the fifth amendment.
Now, if the fifth amendment already protects them, then they do not
need this takings provision. If they need a takings provision, then it
is not applied to in the fifth amendment. And they are essentially
asking us to pass something that is already redundant and in fact is
enshrined in the basic document that this body has to live by.
So that raises the question who wants the takings provision in here?
And open up the mystery box, and reach inside, and who is inside there
with a business card? It is COMSAT; because what they want to say is,
``You can't pass go, you can't force competition in the industry unless
the FCC thinks it will do so.'' And so they can delay, by essentially
saying there cannot be a taking; so the FCC has to go to court to prove
that it is not a taking, and if it is not a taking, then we can go
forward.
It is a delaying tactic. It is legal jargon thrown out there, with no
sense of seriousness, and we have got one opinion that says there may
be a remote chance that there is a taking.
Now the Congressional Research Service that does work for Congress to
essentially figure out legal issues has said there is no taking, and
our best legal experts inside Congress itself say that there is
absolutely no reason for this taking provision because they are

[[Page H2847]]

protected by the fifth amendment; and secondly, because there is no
takings here whatsoever. We are simply saying, ``You've had an
exclusive deal for decades, you're the only people who run the
satellite business in this country, and we're saying in Congress it
comes to an end. It's over.''
The only way we are ever going to have competition for satellite
providers and purchasers of satellite services is by making sure that
COMSAT's monopoly comes to an end. And when monopolies come to an end
anyplace, in the railroads, in the steel industry, the kind of debate
we are now having about the computer industry in this country, the
basic underlying economic theory is that competition drives prices
down, it does not raise them.
And so if we take the argument of the gentleman from Pennsylvania
(Mr. Klink) to its logical conclusion, the only way we can have
competition and lower prices in the marketplace is if the government
gives everybody a monopoly, and then not only do we give them a
monopoly, we give them a monopoly for eternity. They can never have any
competition because that is a bad thing.
So for those of us in this body who are interested in competition,
who are interested in fundamental economics, the choice that is good
for the American consumer, then I urge the defeat of this amendment
because it is only a delaying tactic to make sure that a monopoly can
preserve its power as long as possible.

{time} 1300

Mr. MARKEY. Mr. Chairman, I move to strike the requisite number of
words and I rise in opposition to the amendment.
Mr. Chairman, this is not a debate about takings. This is a debate
about givings. The givings of the American people for 35 years to a
single company and a single orbiting cartel. The American people gave
this company a domestic monopoly over resale of INTELSAT and Inmarsat
services. The American people gave to COMSAT and Inmarsat and INTELSAT
immunity from antitrust law. The American people gave them privileged
access to orbital slots and to spectrum. The American people gave them
access to all of these privileges because there were no other
companies, there was no other way of doing it; only by using this
mechanism could we create this industry.
Over the years, the American people have granted the same
opportunities to electric monopolies, to local telephone monopolies, to
long-distance monopolies, to cable monopolies. But we always reserve
the right, when technological change makes it possible, to introduce
competition. In fact, within the legislation that was passed in 1962,
the Congress expressly reserved the right to repeal, to alter, or to
amend the provisions of the 1962 COMSAT-INTELSAT Act. We reserved to
ourselves this right, as we always have.
Now, we can go back in history, all the way back to 1602 when Queen
Elizabeth had granted to one individual and one company a monopoly on
playing cards in England. Now, the Parliament ruled, after a point in
time, that other companies should be able to get into the business of
selling playing cards in England. It is the famous monopolies case.
Now, the courts in England ruled that the Parliament had the right to
have other companies sell playing cards, notwithstanding the original
monopoly.
Standard Oil, 1911 in the United States, says, we have got a
monopoly; the Congress has no right to break up our monopoly. The
Supreme Court of the United States in 1911 ruled, the Congress has a
right to break up monopolies, the Antitrust Division of the Justice
Department has the right to break up monopolies. And every electric
company, every telephone company, every cable company, every monopoly
for time immemorial has argued that it is a takings. It is not. It is a
givings. We gave it to them, and we have the right to take it back with
reasonable economic regulation, which does not put them out of
business.
We are not putting COMSAT out of business. We are allowing other
companies to get into business, because the reality is that for at
least the last 15 years, that taking has been COMSAT, INTELSAT and
Inmarsat blocking other American company's ability to get into these
markets.
The taking goes on every day when dozens of companies across America
do not create jobs because they are denied the opportunity. They have
had this right taken from them. The consumers do not have lower prices
because that opportunity has been taken from them. That is what this
legislation is all about. It is ending the giving, that we have been
undertaking for 35 years, to a monopoly. That is the privilege of the
Congress. We have always had this right and we will always retain that
right.
So I say to my colleagues, we have a choice. Support for the Morella
amendment is for a continuation of monopoly, of a global economic
cartel with COMSAT as its American subsidiary, its American affiliate
continuing on this tradition of denying American companies and American
workers the ability to get into these industries the way we shoot to
dominate the global marketplace.
I urge a very strong ``no'' on this amendment. For those of us who
believe in competition, for those of us who believe in opening up
markets, for those of us who believe that America is going to be the
dominant telecommunications leader, a vote ``no'' here guarantees that
we enter this world as its dominant power.
Mr. TRAFICANT. Mr. Chairman, I move to strike the requisite number of
words.
Mr. Chairman, I have listened to a lot of the debate, and I am
concerned about the giving as well, and sometimes we just give a little
bit too much of the rock away.
With that, I yield to the distinguished subcommittee chair, the
gentleman from Louisiana (Mr. Tauzin).
Mr. TAUZIN. Mr. Chairman, I thank the gentleman for yielding.
Let me point out that this is not about monopoly, it is not about
monopoly. COMSAT owns a franchise right to deliver services over these
international satellites, but they do not have a monopoly. That is
totally wrong. If COMSAT were a monopolist in this world of
international telephone and other data services, then there would not
be a Hughes or a PanAmSat Corporation, another private satellite
corporation. There would not be a Loral, there would not be a
Teledesic, a Columbia, Meridian, ELLIPSO, all private satellite
companies just like COMSAT, providing communication services in this
country and around the world. There would not be an undersea cable
taking so much business across the oceans and delivering communications
services across the world.
In fact, COMSAT's percentage of voice services right now is 22
percent. Does that sound like a monopoly? And have they signed monopoly
contracts? Well, here is what the FCC said on April 24, 1998, just a
couple of weeks ago, on that very point. It said that we conclude the
contracts that COMSAT has signed, the long-term contracts to AT&T and
MCI, actually permit AT&T and MCI to choose COMSAT's competitors for
services. Does that sound like a monopoly, where one signs a contract
that allows a company to use other competitors for services?
What I am trying to tell my colleagues is that this is not about a
monopoly, as much as my colleague may want to make it about a monopoly.
It is about whether or not one of these companies, COMSAT, which
happens to be the government franchisee on these international
satellite systems, which competes with all kinds of other private
companies: PanAmSat, Loral, Teledesic, Columbia, Meridian, ELLIPSO and
Cable Undersea, whether this one company and its customers are going to
be hammered with unconstitutional takings. That is what the issue is
all about.
Finally, let me make one other point. If any one of these companies,
PanAmSat included, thinks that COMSAT has an anticompetitive contract,
they have a remedy today. They can go to the FCC, they can go to the
Federal court and they can demand that that contract be abrogated.
In fact, PanAmSat took a case to the district court just recently.
Here is what the court said. Nothing in the record suggests that COMSAT
secured any of the contracts by means of anticompetitive acts against
PanAmSat. They threw PanAmSat out of court, and yet we in Congress are
going to overturn that court decision and abrogate those contracts.

[[Page H2848]]

No. The amendment protects against this taking, and my colleagues
ought to vote for it.
Mr. DINGELL. Mr. Chairman, will the gentleman yield?
Mr. TRAFICANT. I yield to the gentleman from Michigan.
Mr. DINGELL. Mr. Chairman, listen to the language of the amendment.
This is what it says: Takings prohibited. In implementing the
provisions of this section, the commission shall not restrict the
activities of COMSAT in a manner which would create a liability for the
United States under the fifth amendment to the Constitution.
That is all it says. It does not say the commission is supposed to
allow monopolies. It simply says, we are not going to subject the
taxpayers of the United States to a $6 billion or $7 billion liability
by taking property from COMSAT. If there is no taking under this
amendment, I say to my friends who oppose it, there is nothing for them
to fear. If there is a taking, by God, my colleagues better pray that
this is in the bill, because if it is not, my colleagues are going to
be trying to defend through our Constitution why they dissipated $6
billion or $7 billion of your constituents' and your taxpayers' money.
I thank the gentleman.
Mr. TAUZIN. Mr. Chairman, will the gentleman yield?
Mr. TRAFICANT. I yield to the gentleman from Louisiana.
Mr. TAUZIN. Mr. Chairman, let me summarize by pointing out that the
Morella amendment simply says, do not do anything that is going to take
private property that the taxpayers of America are going to end up
having to pay for.
Now, the opponents say, well, the fifth amendment already protects
them. It protects the company by making taxpayers liable.
That is not a good protection for us. If we want to protect the
American taxpayers, we tell this bill and we tell the FCC, do not do
anything that takes private property that American taxpayers are going
to end up having to compensate for. That is why we need to pass this
good amendment.
Mr. TRAFICANT. Mr. Chairman, in closing, I think the interpretation
of the Constitution has been so perverted I think we had better be very
specific on this takings issue.
Mrs. MORELLA. Mr. Chairman, will the gentleman yield?
Mr. TRAFICANT. I yield to the gentlewoman from Maryland.
Mrs. MORELLA. Mr. Chairman, I know there are some differences of
opinion in this Chamber and they are well founded, but all of us feel
that there should not be improper takings.
We have had a number of opinions on it. Therefore, this amendment
should be right in order and right in accord with what we have been
saying. So put this amendment in the bill, it will make a difference,
and this bill will then become law ultimately. Without it, there will
be problems.
Mr. PITTS. Mr. Chairman, I move to strike the requisite number of
words.
Mr. Chairman, I yield to the gentleman from Virginia (Mr. Bliley).
Mr. BLILEY. Mr. Chairman, I thank the gentleman for yielding.
The fifth amendment already addresses this; that is why we have a
Constitution, to protect us. Here, once again, COMSAT wants special
privileges. The Constitution is not good enough for COMSAT. They want
special protection for a reason to be able to stop the FCC from
implementing my bill, by tying it up in court. COMSAT's strategy is to
delay because they make a monopoly of profits under the status quo at
the expense of our constituents.
Let me say a couple of words about monopoly. COMSAT claims its share
of the market for all switch voice and private line services is 21
percent. The figure is irrelevant. International satellite delivered
services constitute a separate submarket within the larger market for
international telecommunication services, because satellites provide
more cost-effective service for thin traffic paths and because most
carriers prefer to use a mix of cable and satellite facilities,
international carrier 102 FCC.
COMSAT has virtually the entire market for international satellite
delivered telephone onto itself. Separate satellite systems generally
have not been able to carry public switch telephoning, which accounts
for less than 1 percent of PanAmSat's revenues, Economists
Incorporated, Market Power, Market Foreclosure and INTELSAT, February
16, 1998. By the time INTELSAT permitted separate systems to offer any
meaningful quantity PSN service in November of 1994, COMSAT had already
locked up the largest carriers to long-term contracts.
This amendment is a red herring; it is just a way for COMSAT to tie
up the FCC in court for years and to preserve their monopoly. I hope my
colleagues will vote the amendment down. I thank the gentleman.
Mr. DEUTSCH. Mr. Chairman, I move to strike the requisite number of
words.
Mr. Chairman, hopefully, Members are listening to the debate and
listening carefully, because there have really been a lot of red
herrings, as my Chairman has stated previously.
The facts of the monopoly issue of COMSAT are just a fact. We have
heard numbers thrown out: 20 percent of the market, 22 percent of the
market. In the specific area of international satellite communications,
it is 100 percent of the market. It is a monopoly. There is no way
around it. It is a monopoly, that is, a statutory monopoly that this
Congress granted for good reason many years ago.
But that monopoly that exists is a monopoly. If we are trying to
communicate with a phone call from here, Washington, D.C., to Africa,
to Asia, there is only one path to complete that phone call, and it is
through COMSAT, through INTELSAT, 100 percent.
There is no option to that whole aspect, and if one does not accept
that the monopoly exists, I guess if one wants to convince oneself that
it does not exist, I do not see how one can, but I guess if one wants
to, one can, then the next logical step I could understand one saying,
well, there is a taking going on in terms of saying that some of the
existing contracts need to be modified.

{time} 1315

I guess if we accept that there is not a monopoly, then there is a
logical step that we could take. But, again, I find it very, very
difficult even to perceive that argument.
But let me follow up though really with the fact that the monopoly
exists in terms of the issue of the taking. What has been spoken about
before, and I think from a Member perspective to completely understand,
is that those people who have contracts with COMSAT entered into those
contracts in an environment of dealing with a monopoly, a monopoly in
terms of the monopoly power that they had in terms of those contract
negotiations. This is not the first time this type of situation has
existed.
What I have pointed out previously and I think is absolutely
appropriate as an analogy is when AT&T was broken up for long distance
service, AT&T was a monopoly. It was broken up. When it was broken up,
the existing contracts were able to be modified. That is exactly what
is being done here.
It is not unprecedented. It has been done in other areas as well.
That is the policy implication behind what we are doing.
Mr. Chairman, I urge Members to oppose the amendment and support the
bill.
The CHAIRMAN. The question is on the amendment offered by the
gentlewoman from Maryland (Mrs. Morella).
The question was taken; and the Chairman announced that the noes
appeared to have it.

Recorded Vote

Mr. DINGELL. Mr. Chairman, I demand a recorded vote.
A recorded vote was ordered.
The vote was taken by electronic device, and there were--ayes 111,
noes 304, answered ``present'' 2, not voting 15, as follows:

[Roll No. 127]

AYES--111

Andrews
Archer
Baker
Barcia
Barrett (NE)
Bartlett
Berry
Blagojevich
Boehlert
Boehner
Bonior
Boucher
Brown (FL)
Calvert
Campbell
Chenoweth
Clayton
Clyburn
Condit
Conyers
Cummings
Davis (IL)
DeLay
Dingell
Dooley
Doolittle
Doyle
Ehrlich
Ensign
Farr
Fazio
Filner
Foley
Fowler
Frost
Furse
Gekas
Gilchrest
Goss
Granger
Gutknecht
Hall (OH)
Hall (TX)
Hamilton
Hilliard
Horn
Hoyer
John
Johnson (CT)
Johnson, E. B.
Johnson, Sam

[[Page H2849]]

Kaptur
Kilpatrick
Klink
Kucinich
Livingston
Maloney (NY)
Martinez
Mascara
McCarthy (MO)
McCarthy (NY)
McIntosh
Meek (FL)
Meeks (NY)
Menendez
Minge
Mink
Morella
Nethercutt
Northup
Nussle
Oberstar
Owens
Oxley
Pascrell
Paul
Payne
Peterson (MN)
Petri
Pombo
Pryce (OH)
Rangel
Redmond
Regula
Riley
Rivers
Rohrabacher
Royce
Sabo
Salmon
Scarborough
Schaefer, Dan
Schumer
Sensenbrenner
Sessions
Skelton
Stark
Stearns
Stenholm
Stokes
Tauzin
Taylor (NC)
Thomas
Thompson
Torres
Towns
Traficant
Upton
Watt (NC)
Wynn
Young (AK)

NOES--304

Abercrombie
Ackerman
Aderholt
Allen
Armey
Bachus
Baesler
Baldacci
Ballenger
Barr
Barrett (WI)
Barton
Bass
Becerra
Bentsen
Bereuter
Berman
Bilbray
Bilirakis
Bishop
Bliley
Blumenauer
Blunt
Bonilla
Bono
Borski
Boswell
Boyd
Brady
Brown (CA)
Brown (OH)
Bryant
Bunning
Burr
Burton
Buyer
Callahan
Camp
Canady
Cannon
Capps
Castle
Chabot
Chambliss
Clay
Clement
Coble
Coburn
Collins
Combest
Cook
Cooksey
Costello
Cox
Coyne
Cramer
Crane
Crapo
Cubin
Cunningham
Danner
Davis (FL)
Davis (VA)
Deal
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Diaz-Balart
Dickey
Dicks
Dixon
Doggett
Dreier
Duncan
Dunn
Edwards
Ehlers
Emerson
Engel
English
Eshoo
Etheridge
Evans
Everett
Ewing
Fattah
Fawell
Forbes
Ford
Fox
Frank (MA)
Franks (NJ)
Frelinghuysen
Gallegly
Ganske
Gejdenson
Gephardt
Gibbons
Gillmor
Gilman
Goode
Goodlatte
Goodling
Gordon
Graham
Green
Greenwood
Gutierrez
Hansen
Harman
Hastert
Hastings (WA)
Hayworth
Hefley
Hefner
Herger
Hill
Hilleary
Hinchey
Hinojosa
Hobson
Hoekstra
Holden
Hooley
Hostettler
Houghton
Hulshof
Hunter
Hyde
Inglis
Istook
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Jenkins
Johnson (WI)
Jones
Kanjorski
Kasich
Kelly
Kennedy (MA)
Kennedy (RI)
Kennelly
Kildee
Kim
Kind (WI)
King (NY)
Kingston
Kleczka
Klug
Knollenberg
Kolbe
LaFalce
LaHood
Lampson
Lantos
Largent
Latham
LaTourette
Lazio
Leach
Lee
Levin
Lewis (CA)
Lewis (GA)
Lewis (KY)
Linder
Lipinski
LoBiondo
Lofgren
Lowey
Lucas
Luther
Maloney (CT)
Manton
Manzullo
Markey
Matsui
McCrery
McDade
McDermott
McGovern
McHale
McHugh
McInnis
McIntyre
McKeon
McKinney
Meehan
Metcalf
Mica
Millender-McDonald
Miller (CA)
Miller (FL)
Moakley
Mollohan
Moran (KS)
Moran (VA)
Murtha
Myrick
Nadler
Neal
Ney
Norwood
Obey
Olver
Ortiz
Packard
Pallone
Pappas
Parker
Pastor
Paxon
Pease
Peterson (PA)
Pickering
Pickett
Pitts
Pomeroy
Porter
Portman
Poshard
Price (NC)
Quinn
Rahall
Ramstad
Reyes
Rodriguez
Roemer
Rogers
Ros-Lehtinen
Rothman
Roukema
Roybal-Allard
Rush
Ryun
Sanchez
Sanders
Sandlin
Sanford
Saxton
Schaffer, Bob
Scott
Serrano
Shadegg
Shaw
Shays
Sherman
Shimkus
Shuster
Sisisky
Skeen
Slaughter
Smith (MI)
Smith (NJ)
Smith (OR)
Smith (TX)
Smith, Adam
Smith, Linda
Snowbarger
Snyder
Solomon
Souder
Spence
Spratt
Stabenow
Strickland
Stump
Stupak
Sununu
Talent
Tanner
Tauscher
Taylor (MS)
Thornberry
Thune
Thurman
Tiahrt
Tierney
Turner
Velazquez
Vento
Visclosky
Walsh
Wamp
Waters
Watkins
Watts (OK)
Waxman
Weldon (FL)
Weldon (PA)
Weller
Wexler
Weygand
White
Whitfield
Wicker
Wise
Wolf
Woolsey
Yates
Young (FL)

ANSWERED ``PRESENT''--2

Cardin
Sawyer

NOT VOTING--15

Bateman
Carson
Christensen
Fossella
Gonzalez
Hastings (FL)
Hutchinson
McCollum
McNulty
Neumann
Pelosi
Radanovich
Riggs
Rogan
Skaggs

{time} 1340

Mrs. KENNELLY of Connecticut, Ms. MILLENDER-McDONALD and Messrs.
HEFLEY, MILLER of California, SPRATT, CASTLE, LEVIN, and FOX of
Pennsylvania changed their vote from ``aye'' to ``no.''
Mrs. JOHNSON of Connecticut, Ms. EDDIE BERNICE JOHNSON of Texas and
Messrs. DOOLEY of California, CLYBURN, OWENS, and STOKES changed their
vote from ``no'' to ``aye.''
So the amendment was rejected.
The result of the vote was announced as above recorded.

Amendment No. 8 offered by Mr. Traficant

Mr. TRAFICANT. Mr. Chairman, I offer an amendment.
The CHAIRMAN. The Clerk will designate the amendment.
The text of the amendment is as follows:

Amendment No. 8 offered by Mr. Traficant:
At the end of the bill, add the following new sections:

SEC. 4. COMPLIANCE WITH BUY AMERICAN ACT.

No funds authorized pursuant to this Act may be expended by
an entity unless the entity agrees that in expending the
assistance the entity will comply with sections 2 through 4
of the Act of March 3, 1933 (41 U.S.C. 10a-30c, popularly
known as the ``Buy American Act'').

SEC. 5. SENSE OF CONGRESS; REQUIREMENT REGARDING NOTICE.

(a) Purchase of American-Made Equipment and Products.--In
the case of any equipment or products that may be authorized
to be purchased with financial assistance provided under this
act, it is the sense of the Congress that entities receiving
such assistance should, in expending the assistance, purchase
only American-made equipment and products.
(b) Notice to Recipients of Assistance.--In providing
financial assistance under this Act, the Federal
Communications Commission shall provide to each recipient of
the assistance a notice describing the statement made in
subsection (a) by the Congress.

SEC. 6. PROHIBITION OF CONTRACTS.

If it has been finally determined by a court or Federal
agency that any person intentionally affixed a label bearing
a ``Made in America'' inscription, or any inscription with
the same meaning, to any product sold in or shipped to the
United States that is not made in the United States, such
person shall be ineligible to receive any contract or
subcontract made with funds provided pursuant to this Act,
pursuant to the debarment, suspensions, and ineligibility
procedures described in section 9.400 through 9.409 of title
48, Code of Federal Regulations.

Modification to Amendment No. 8 Offered By Mr. Traficant

Mr. TRAFICANT. Mr. Chairman, I ask unanimous consent that the
amendment be modified with the language at the desk.
The CHAIRMAN. The Clerk will report the modification.
The Clerk read as follows:

Modification to amendment No. 8 offered by Mr. Traficant:
In lieu of the matter proposed to be inserted by the
amendment, on page 33 after line 17, add the following:
(4) Impact privatization has had on U.S. industry, U.S.
jobs and U.S. industry's access to the global marketplace.

The CHAIRMAN. Is there objection to the modification offered by the
gentleman from Ohio (Mr. Traficant)?
There was no objection.
Mr. TRAFICANT. Mr. Chairman, I support this legislation. I want to
commend the gentleman from Virginia (Mr. Bliley), the gentleman from
Massachusetts (Mr. Markey), and the gentleman from Michigan (Mr.
Dingell), the gentleman from Louisiana (Mr. Tauzin) regardless of how
they feel on the issue.
The time has come for this legislation. I have some concerns. In this
legislation is a section that requires annual reports to the Congress
of the United States. The contents of those reports are listed to
include the following progress with respect to each objective since the
most recent preceding report. You see, these reports are to measure
whether or not this legislation is meeting the objectives and is
carrying out the provisions of its intent.
The first thing the bill calls for is the progress it makes to do
that; the second is the views of the respective parties with respect to
the privatization issue; finally, the views of the industry and
consumers on privatization.
Quite frankly, although I am concerned about the views, my biggest
concern is not about anybody's views, my big concern is about the
impact this legislation will have on jobs, the United States industry,
United States competitiveness, and our access to the global marketplace
from a competitive spirit.
The Traficant amendment simply says that there would be another
section in this report language that will ask for each year from the
President and the Commission to update us on the impact that
privatization has had on U.S. industry, United States jobs, and United
States industry's access to the global marketplace.
I would hope that the legislation would be accepted. It makes, in my
opinion, good sense.

[[Page H2850]]

Mr. Chairman, I yield to the distinguished gentleman from Virginia
(Mr. Bliley).

{time} 1345

Mr. BLILEY. Mr. Chairman, this gentleman has reviewed the amendment
and finds it acceptable and urges Members to vote for it.
Mr. MARKEY. Mr. Chairman, will the gentleman yield?
Mr. TRAFICANT. I yield to the gentleman from Massachusetts.
Mr. MARKEY. Mr. Chairman, I thank the gentleman very much and I want
to congratulate him on his amendment. I think he is adding
substantially to the nature of this bill, in the change which is taking
place internationally, its impact upon the United States, and how fully
we should understand it. I thank the gentleman very much.
Mr. TRAFICANT. Mr. Chairman, reclaiming my time, I appreciate the
gentleman's comments, and I am hoping that impact is going to be
favorable.
Mr. TAUZIN. Mr. Chairman, will the gentleman yield?
Mr. TRAFICANT. I yield to the gentleman from Louisiana.
Mr. TAUZIN. Mr. Chairman, I wanted to thank my friend for offering
the amendment, congratulate him on it, and suggest that not only do we
not have any opposition to the amendment, but we gratefully and warmly
embrace it, and I would urge all Members to support it.
The CHAIRMAN. The question is on the amendment, as modified, offered
by the gentleman from Ohio (Mr. Traficant).
The amendment, as modified, was agreed to.
The CHAIRMAN. The committee will rise informally.
The SPEAKER pro tempore (Mr. Duncan) assumed the chair.

____________________