House bill seen as blow to Comsat Plan ending firm's role as sole U.S. global satellite carrier passes

Aim is to spur competition

Intelsat, Inmarsat would be privatized

AT&T applauds move

May 07, 1998|By Mark Ribbing | Mark Ribbing,SUN STAFF

In a stinging setback for Comsat Corp., the House of Representatives overwhelmingly approved a bill yesterday that would strip the Bethesda-based company of its right to be the sole U.S. conduit for international satellite communications.

Comsat is the designated U.S. member of the two international satellite organizations, Intelsat and Inmarsat, and has long held the exclusive right to provide their services to U.S. communications firms.

Proponents of the legislation say it would open up the burgeoning field of satellite communication to competition.

The legislation requires that the two organizations, which are now run by the member nations, be sold to private investors. Inmarsat, which provides mobile satellite communications for the maritime community and has 81 member countries, is to privatize by 2001. Intelsat, used primarily to transmit international telephone calls, is to go private by 2002; it has 143 member countries.

Once they become private, AT&T Corp., MCI Communications Corp. and other companies would be able to buy satellite services directly from them rather than having to go through Comsat.

The bill also would impose sanctions on Comsat if the mandated timetables were not met.

In addition, the bill would allow Comsat customers to renegotiate their contracts after Jan. 1, 2000.

Comsat, which says it supports the broad goal of privatization, vehemently objected to the proposed law, which has not yet been acted on in the Senate.

Warren Zeger, the company's vice president and general counsel, said the services and contract provisions amount to an unconstitutional taking of Comsat's private property. "We're not allowed to provide service over the satellites that we launched," he said. "The economic value of the satellites would be impaired, and that would constitute a taking."

But AT&T applauded the House's action. "We think it was the right thing to do," said company spokesman Wayne Jackson.

Comsat officials said that, with the Senate yet to act on the bill, it was premature to speculate on job losses or other consequences that could result from the legislation. Comsat has 1,300 employees overall, 1,000 of whom are at the company's facilities in Bethesda and Clarksburg.

Three members of the Maryland delegation -- Republican Constance A. Morella and Democrats Albert R. Wynn and Steny H. Hoyer, all of whom represent the Washington suburbs -- were among the leaders of the doomed effort to stop the bill, which passed 403-16.

Two representatives, including 3rd District Democrat Benjamin L. Cardin, voted "present" and the rest of the Maryland delegation voted in favor of the bill.

"I think there's a possibility for significant job losses," said Wynn. He said the bill's provisions would unfairly punish Comsat for any delays in the privatization of Intelsat and Inmarsat.

"A lot of things Congress wants to happen are outside Comsat's authority," he said.

One non-Marylander who opposed the bill, W.J. Tauzin, a Louisiana Republican, said, "This bill says [to Comcast], 'Stop doing business. Shoot yourself in the head.' "

Tauzin, a powerful member of the House Commerce Committee that originated the bill, called it "an unprecedented taking in U.S. history."

However, that was a minority viewpoint in the House yesterday. Edward J. Markey, a Massachussetts Democrat and a co-sponsor of the bill, said, "We are not putting Comsat out of business. We are allowing other companies to get into business."

He and other supporters of the legislation said giving Comsat a virtual monopoly over the American satellite communications market may have made sense in 1962, when Comsat was founded, but that this approach makes less sense now that numerous companies have developed satellite technology.

Pub Date: 5/07/98

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