FOREIGN CARRIERS SAID TO FACE BARRIERS IN U.S. MARKET

“It is necessary to ensure that the U.S. market is open to European and foreign country operators that are potential new entrants in the market, as well as to provide regulatory certainty to companies interested in investing in these new technologies in the U.S.,” EC said. FCC spokesman said Commission couldn’t comment on report till it was read.

European Union (EU) recognized some “gradual improvements” in U.S. situation since last year, but it said because of “protectionist” bills introduced in Congress in 2000 and 2001 and lengthy proceedings to allow transfer of licenses, “market access is still not fully ensured and this situation is not in line with the market access policy advocated by the U.S.” EC said current situation provided competitive advantage to significant number of U.S. companies that already had access to EU market.

FCC needs to clarify “public interest” criteria when referring to Sec. 310 of Communications Act, EC said. It said even though FCC said entry by carriers of WTO countries was procompetitive, “unclear” public interest criteria still could invoke denial of license to foreign operator for different reasons, such as “trade concerns,” “foreign policy concerns” and “very high risk to competition.” EC said although FCC intended to deny market access on that basis in exceptional circumstances, “which are not well defined, the direction retained by the FCC remains of concern to the EU and raises questions as to the compatibility of the FCC rules with U.S. WTO commitments.” U.S. also needs to clarify current universal service and access charge regimes, “in particular with a view to ensuring that foreign consumers are not subsidizing universal service obligations in the U.S.,” report said.

“The U.S. Administrations holds the view that it is not necessary to adopt specific legislation to abolish… investment restrictions,” since FCC can waive them under current law by using “public interest,” EC said: “This situation, however, does not provide certainty to European operators.” For example, it said, FCC proceeding in Sept. 2000 on application by Deutsche Telekom (DT), VoiceStream and Powertel for transfer of control of licenses from latter 2 to DT, and ended in April 2001, “shows that foreign investment in the U.S. still faces uncertainty and lengthy proceedings.” Commission said legislation introduced by Sen. Hollings (D- S.C.) in 2000 and 2001 would, if adopted, “constitute a clear violation of U.S. commitments in the WTO on foreign investment and would negatively affect the interest of European companies.” EC said it would “remain vigilant and oppose any action, through legislation or otherwise, that would undermine U.S. WTO commitments.”

FCC left Sec. 310 of Communications Act of 1934 “basically unchanged” after Congress voted Communications Act of 1996, EC said. It said Sec. 310 restrictions on holding and transfer of broadcast and common carrier radio communications licenses imposed “additional obstacles” on foreign-owned U.S. operators in obtaining licensing. EC said “the U.S. broadcasting market today is hardly accessible to foreign media companies.”

EC said it expected recent federal court rulings to lead to relaxation of media ownership rules within U.S. market and to another round of media acquisitions in U.S. in coming months, with acquisitions by current TV station owners, such as Viacom, Disney and News Corp., and first-time acquisitions by large U.S. cable operators. “Non-U.S. companies will not be able to participate in this development because of the existing foreign ownership restrictions,” EC said. It said expected consolidation within U.S. broadcasting market “will raise market entry costs for foreigners considerably” in future.

U.S. satellite service sector also is hard to enter for European companies, report said. It cited lengthy proceedings, “conditionality” of market access and de facto reciprocity-based procedures as major barriers to U.S. satellite market. “In the past few years, European satellite carriers have encountered serious problems in serving the U.S. market,” report said. Commission said cases, such as Inmarsat Ventures, New Skies Satellites, Eutelsat and SES Global, revealed that proceedings by FCC on spectrum allocation and licensing “are not always carried out in an objective, transparent, timely and nondiscriminatory manner,” and raised concerns as to their compatibility with U.S. WTO commitments.

EU expressed “serious concern” that statutory privatization criteria of ORBIT Act applied to no other foreign or domestic competitors and could lead FCC to limit those entities’ access to U.S. market and reduce competition, contrary to intent of Act to promote it. “In that respect, the Act violates WTO obligations and if used against EU operators’ interests, the EU reserves its rights of arbitration procedures under the WTO,” it said. EU emphasized need for enhanced cooperation between EU and U.S. EU Trade Comr. Pascal Lamy said: “Tackling bilateral trade obstacles is essential to transatlantic confidence-building. It is therefore important to advance in the Positive Economic Agenda adopted at the EU-U.S. summit in May 2002.”