FCC OKs deal, will revisit BT merger issue

WASHINGTON – Over the objections of Time Warner and other cable industry companies, the FCC Friday awarded MCI a license to operate a DBS satellite covering the entire continental U.S.

The Federal Communications Commission did say that it will revisit questions raised by the cable industry about MCI’s foreign ownership. That review will come when the FCC looks at the telco’s plan to merge with British Telecommunications.

“Our action today does not in any way prejudge whether or not the commission should eventually approve MCI’s applications to transfer control of its DBS authorization and other authorizations and licenses to BT,” said Don Gips, FCC international bureau chief. The international bureau oversees satellite-related matters.

Key to ASkyB

News Corp. is depending on the slot to launch its ASkyB DBS service. According to the plan currently on file at the FCC, News Corp. and MCI plan to operate the DBS slot in a 50/50 joint venture. However, MCI has said publicly that it wants to reduce its stake in the DBS satellite slot, which it picked up at a government auction with a winning bid of $682.5 million. Once MCI actually takes possession of the license, it will make it easier to sell all or part of its stake in the license. MCI has made a 20% down payment and must now pay the balance before the FCC formally awards the license.

The Clinton administration has officially notified the FCC that it has an interest in BT’s plans to acquire MCI and thus, indirectly, the U.S. DBS slot. “There will be full opportunity for the public and executive branch to file comments,” said Gips.

Sat exemption

But in an important interim decision, the FCC found that foreign ownership rules do not apply to satellite services that sell programming by subscription. When the FCC reviews the BT/MCI merger application, it may consider the openness of Britain’s market as a factor in approving the deal. Because the United Kingdom is considered to be one of the world’s most open telecommunications markets, objections over trade barriers are not expected to derail the deal. In their filing with the FCC last week, the two companies insisted that “BT is fully qualified to be in ultimate control of MCI’s DBS operations.”

Also on Friday, the FCC awarded a DBS license to Echostar. Unlike MCI’s DBS slot, the Echostar license does not reach much of the Eastern U.S. Echostar agreed to pay $52.2 million for the license at a government auction earlier this year.

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