YOU ARE AT:Archived ArticlesWHITE HOUSE COMSAT CONCERNS WILL NOT PREVENT VENTURE ACTIVITY

WHITE HOUSE COMSAT CONCERNS WILL NOT PREVENT VENTURE ACTIVITY

WASHINGTON-The Clinton administration has signaled problems with Comsat Corp.’s planned investment in a global pocket telephone system developed by the International Mobile Satellite Organization, but said it is still willing to support the firm’s participation in the telecommunications venture.

“The Executive Branch believes that the Commission should not authorize Comsat’s application until Comsat establishes that the affiliate is bound by the Inmarsat principles and the Commission is satisfied that the Services Contract is cost-based,” the administration stated in a Sept. 29 letter to Federal Communications Commission Chairman Reed Hundt.

But the administration added “if the issues*…*are addressed and remedied the application could be granted subsequently.”

The letter was signed by Ambassador Vonya B. McCann, U.S. coordinator for International Communications and Information at the State Department and Larry Irving, head of the National Telecommunications and Information Administration.

Comsat, a Bethesda, Md., communications and entertainment firm, is the U.S. signatory to Inmarsat, a London-based consortium of 79 member nations created in 1976 to improve distress and sea communications.

Comsat intends to invest $147 million-about a 10 percent share-in ICO Global Communications Ltd. (formerly Inmarsat-P), which wants to offer handheld pocket telephone service around the world by 2000.

ICO’s $2.6 billion global wireless network will be comprised of 10 intermediate circular orbit satellites.

Inmarsat will hold a 15 percent interest in ICO, though Inmarsat members can hold a higher stake in ICO than their ownership percentage in Inmarsat.

American firms want assurances that ICO is not accorded the kind of special treatment enjoyed by Inmarsat that could be turned into an unfair competitive advantage over competitors in the emerging mobile satellite communications industry. Hughes Electronics Corp. could become the next big investor in ICO.

The White House apparently shares some of those concerns regarding the arms-length relationship between Inmarsat and ICO. Areas presenting problems to the administration include the services contract, cross-subsidization, name and logo, market access, privileges and immunities, ownership and treaty law.

The FCC in January granted low-earth-orbit mobile telephone satellite licenses to Motorola Inc., TRW Inc. and Loral-Qualcomm L.P.

Despite its desire for changes in Comsat’s application at the FCC, the administration said its concerns should not be interpreted as the death knell for Comsat’s filing.

“We have been clear all along that we are interested in competition but in having a level playing field for all entrants,” said Richard DalBello, assistant director of the White House Office of Science and Technology Policy. DalBello said the letter is an interim step in a complex bureaucratic process.

Comsat responded with the following statement: “The Executive Branch has repeated pre-existing conditions that already have been largely accepted by Inmarsat. Comsat agrees with these principles and we can and we will meet them as we go forward with our plans to invest and participate in the ICO Global Communications handheld business. Thus, the Executive Branch letter should be viewed as a road map for the early approval of our application before the Federal Communications Commission. Comsat looks forward to taking part in what is shaping up to be a competitive global handheld marketplace.”

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