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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** DA 97-826 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Communications Satellite Corporation's ) ) Petition for Declaratory Ruling ) File No: I-S-P-92-001 or, in the Alternative, For Partial ) Waiver of Structural Separation ) File No: I-S-P-91-004 Requirements ) ) Request for Waiver of Structural ) File No: 136-SAT-DR-95 Separation Allowing Comsat's ) World Systems Division to Provide ) Sales, Engineering, Billing, and ) Administrative Support to Corporate ) Affiliate for the Resale of Cellular ) Communications Service to Ships ) Memorandum Opinion and Order Adopted: April 18, 1997 Released: April 18, 1997 By the Chief, International Bureau: INTRODUCTION 1. By this Memorandum Opinion and Order we grant final approval to Comsat for the provision of maritime, aeronautical, and land-mobile value-added services, on an unseparated basis. Our decision today is without prejudice to the Commission's decision on Comsat's cost accounting procedures which are currently being reviewed by the Commission's Common Carrier Bureau. In 1993, the Commission waived its structural separation requirements to permit Comsat to provide certain maritime value-added services on an unseparated basis, subject to the establishment of non-structural safeguards and cost accounting procedures to prevent anticompetitive conduct. In 1996, the International Bureau granted Comsat relief for certain aeronautical and land mobile value-added services under the similar conditions. BACKGROUND 2. In the 1980's, the Commission permitted Comsat to offer competitive non- INTELSAT/Inmarsat services that were not inconsistent with its statutory mission. However, the Commission required Comsat to provide its jurisdictional and non-jurisdictional services in two separate corporate units to prevent potential anticompetitive conduct. 3. In 1991, Comsat petitioned for a declaratory ruling that the Commission's structural separation requirements do not preclude CMC -- the corporate unit that provides jurisdictional Inmarsat services -- from providing "ancillary" non-jurisdictional services to its maritime customers, or alternatively, for a partial waiver of those requirements to allow CMC to provide four categories of "value-added" services to its maritime customers on an unseparated basis. These value-added services are: (1) enhanced services using, or accessed via, Comsat's maritime satellite services, such as SeaMail and Global Positioning System services; (2) personal computer communications software used in conjunction with Comsat's maritime services; (3) supplemental non-Inmarsat maritime communications services provided on a resale basis, such as the resale of maritime cellular services; and (4) the resale and/or installation of shipboard equipment and programming to be used with Comsat's maritime communications services. 4. The Commission, in its 1993 Maritime Structural Relief Order, denied Comsat's declaratory ruling request but conditionally granted Comsat a waiver of the structural separation requirements to permit Comsat to offer certain value-added maritime services on an unseparated basis, through CMC. As a condition to the waiver granted in the Maritime Structural Relief Order, the Commission required Comsat to develop certain nonstructural safeguards to protect Comsat's customers and competitors from potential anti-competitive behavior by Comsat. Specifically, the Commission required Comsat to develop nonstructural safeguards concerning non-discrimination in the provision of its Inmarsat satellite services, public disclosure of satellite network information, and the use of customer proprietary network information ("CPNI"). In addition, it required Comsat to certify that it would not bundle these value-added services with its tariffed jurisdictional services. The Commission further conditioned its waivers on Comsat developing accounting safeguards and cost allocation procedures to assure that Comsat's nonjurisdictional value-added maritime services are not subsidized by jurisdictional activities. In 1995, the Commission conditionally granted Comsat's Cost Accounting Manual. 5. In 1995, Comsat requested a similar declaratory ruling or partial waiver to provide value-added services in connection with its Inmarsat aeronautical and land mobile services. The International Bureau ("Bureau") expanded the partial waiver to Comsat's aeronautical and land mobile services, subject to conditions similar to those outlined in the Commission's Maritime Structural Relief Order. Specifically, the Bureau required Comsat to file non-structural safeguards for its aeronautical and land mobile in accordance with the guidelines established in the Maritime Structural Relief Order or, in the alternative, demonstrate how the non-structural safeguards already developed for value-added maritime services are sufficient for application to Comsat's aeronautical and land mobile services. 6. In August 1996, the Bureau, approved Comsat's maritime nonstructural safeguards, but determined that Comsat's submission did not adequately address CPNI safeguards to protect customer CPNI. The Bureau also noted that Comsat is required to comply with the CPNI provisions of the 1996 Act. The Bureau required Comsat to: (1) establish procedures to restrict CPNI access for customers that do not authorize such; (2) provide customers with annual notification of their right to restrict or permit access to CPNI; and (3) obtain customer approval before using or disclosing customer CPNI. Comsat's CPNI submission is discussed later in this document. In addition, the Bureau required Comsat to provide documentation that value-added providers, using the Inmarsat network, will be permitted to participate in the Inmarsat/ACTOM process. 7. September 1996, Comsat filed documentation of Inmarsat's decision to make its System Definition Manual process available, on a confidential basis, to value-added providers that use the Inmarsat system. October 1996, Comsat filed its Non-accounting Compliance plan for its aeronautical and land mobile services. Included in this submission was Comsat's proposed interim CPNI safeguards for maritime, aeronautical, and land mobile services. 8. Customer Proprietary Network Information: In 1996, Congress added a new Section 222 to the Communications Act of 1934, as amended, which sets forth, among other things, the manner in which telecommunications carriers must maintain the confidentiality of CPNI. The 1996 Act provides that the term telecommunications carrier includes any provider of telecommunications service, except aggregators. Comsat, as a provider of telecommunications services, is subject to these CPNI requirements. CPNI is defined in the Telecommunications Act of 1996 ("1996 Act") as: (A) information that relates to the quantity, technical configuration, type, destination, and amount of use of a telecommunications service subscribed to by any customer of a telecommunications carrier, and that is made available to the carrier by the customer solely by virtue of the carrier-customer relationship; and (B) information contained in the bills pertaining to telephone exchange service or telephone toll service received by a customer of a carrier. 9. Section 222(c)(1) provides, in part, that "[e]xcept as required by law or with the approval of the customer, a telecommunications carrier shall only use, disclose, or permit access to individually identifiable CPNI in its provision of (A) the telecommunications service from which such information is derived, or (B) services necessary to, or used in, the provision of such telecommunications service." Section 222(d) sets forth three exceptions to Section 222(c)(1), and allows a carrier to use, disclose or permit access to individually identifiable CPNI: "(1) to initiate, render, bill, and collect for telecommunications services; (2) to protect the carrier's rights or property of the carrier, or to protect users of those services and other carriers from fraudulent, abusive, or unlawful use of, or subscription to, such services; or (3) to provide any inbound telemarketing, referral, or administrative services to the customer and the customer approves of the use of such information to provide such service." All telecommunications carriers are required to disclose CPNI, upon "affirmative written request by the customer, to any person designated by the customer." 10. Last year, in response to requests from telecommunications carriers, the Commission issued a Notice of Proposed Rulemaking ("CPNI Notice") to clarify carriers' obligations under Section 222. Comsat must comply with any requirements the Commission establishes in its CPNI proceeding. Our decision today addresses only the "interim" CPNI procedures that must be maintained by Comsat. 11. Comsat outlines its proposed CPNI safeguards for its provision of maritime, aeronautical and land mobile services. First, Comsat requests that its CPNI obligations for its integrated satellite and value-added offerings be met by its compliance with CPNI requirements contained in Section 222 of the 1996 Act and related CPNI rules to be adopted by the Commission. Comsat sets forth proposals for interim CPNI safeguards. DISCUSSION 12. We will first address the outstanding requirements regarding Comsat's maritime non-structural safeguards. In our Maritime Safeguards Order, we directed Comsat to: (1) demonstrate that value-added providers, that use the Inmarsat system, may participate in the Inmarsat/ACTOM process; (2) provide customers with annual notification of their CPNI rights; (3) obtain prior customer approval before using or disclosing CPNI for purposes other than provision of the telecommunications services from which the information was derived; and (4) establish procedures to restrict CPNI access for customers that do not authorize access to their CPNI. We will next address Comsat's compliance with our Aeronautical/Land Mobile Structural Relief Order. Finally, we will discuss Comsat's CPNI submission for its maritime, aeronautical,and land mobile services. A. Maritime Safeguards 13. Inmarsat/ACTOM Process. Comsat filed a letter on September 27, 1996 with an attached statement from Inmarsat authorizing value-added providers, that use the Inmarsat system, to participate in the Inmarsat/ACTOM System Definition Manual process on a confidential basis. We find that this letter satisfies the requirement that Comsat demonstrate that value-added providers, that use the Inmarsat system, may participate in the Inmarsat/ACTOM process. B. Aeronautical and Land Mobile Safeguards. 14. In our Aeronautical/Land Mobile Structural Relief Order, we instructed Comsat to file plans non-structural safeguards as applied to value-added land mobile and aeronautical services to: (1) ensure non-discrimination in the provision of satellite service; (2) timely disclose satellite network information; (3) provide customers with annual notification of their right to restrict or permit access to CPNI; (4) obtain customer approval before using or disclosing customer CPNI; and (5) develop cost accounting mechanisms to prevent subsidization of value- added services by jurisdictional ratepayers. In the alternative, we directed Comsat to demonstrate how non-structural safeguards already developed for value-added maritime services would be sufficient for Comsat's aeronautical and land mobile services. Comsat outlines several reasons its maritime safeguards are appropriate for its aeronautical and land mobile services. First, Comsat argues that its maritime, aeronautical, and land mobile services are integrally related to one another in that these services involve use of the same Inmarsat space segment, common ground resources, and common and contiguous spectrum. Comsat also notes that in many cases, the same customers are offered maritime, aeronautical, and land mobile value-added services. Therefore, Comsat asserts that adopting different safeguards for the different categories of service could cause unnecessary confusion. We find that the safeguards approved for Comsat's maritime services will adequately protect its aeronautical and land mobile customers. 15. Non-Discrimination in Provision of Service. We find that Inmarsat's automated demand-assigned procedures is an adequate safeguard against discrimination in the provision of satellite services. These procedures require that Comsat assign land earth stations and individual terminals to the first available channel on a call by call basis with priority given only to distress and safety calls. 16. Disclosure of Satellite Network Information. We also find that Comsat has demonstrated adequate procedures to ensure timely disclosure of network information to competing value-added providers. First, value-added providers, that use the Inmarsat network, can participate in the Inmarsat SDM process and Comsat's U.S. Customer and Manufacturer Industry Advisory Group ("IAG") briefings. SDMs provide detailed technical information regarding Inmarsat's maritime, aeronautical, and land mobile systems and services. IAG briefings provides customers and manufactures an opportunity to discuss network information about upcoming maritime, aeronautical, and land mobile specifications, as well as proposed changes that Comsat proposes to offer its land earth stations. Comsat also maintains that it will continue to conduct open meetings, which are open to all interested parties and often include non-proprietary information related to new or modified Inmarsat service specifications. C. Customer Proprietary Network Information 17. Comsat requests that its CPNI obligations for its integrated satellite and value- added offerings be met by its compliance with CPNI requirements contained in Section 222 of the 1996 Act and related CPNI rules to be adopted by the Commission. CMC proposes interim CPNI procedures for its maritime, aeronautical, and land mobile offerings, including Comsat's Mini-M service. Comsat requests that we apply a "basket" approach to its offering, consistent with the proposals in the Commission's CPNI Notice. Specifically, Comsat requests that all of its maritime, aeronautical, and land mobile satellite services, including "supplemental non-Inmarsat communications services" be included in one basket. Under this approach, Comsat could use the CPNI from one service within a basket to market other services within that same basket. Moreover, if the Commission adopts its proposed local, interexchange, and CMRS baskets, Comsat requests that its maritime, aeronautical, land mobile, and associated value-added services be included in either the CMRS basket or interexchange basket. Alternatively, Comsat requests that all of CMC's "basic" satellite services be included in one basket and all of the associated value-added services that are subject to Section 222(c)(1) be included in a separate basket. 18. Comsat proposes the following interim CPNI procedures. First, Comsat states that it will provide its customers annual notification of their CPNI rights, via bill insert or data transmission. Second, Comsat maintains that it will prohibit its sales and marketing employees from using individual customer CPNI derived from the telecommunications services of one basket to sell or market other services not within the same basket without prior customer authorization. Comsat proposes that prior oral authorization is sufficient and would reduce delay, costs, and administrative burdens on sales efforts. Comsat states that it will bear the burden of proving oral approval in the event of a dispute. Third, Comsat represents that it will maintain its current policy to only disclose CPNI to persons designated in a customer's written request. Fourth, Comsat states that, upon a customer's request, it will restrict access to the customer's CPNI. Comsat also maintains that it will protect the confidentiality of all proprietary information it receives. 19. Because we cannot interpret or prejudge any aspect of the Commission's CPNI proceeding, we decline to adopt a basket approach for Comsat's interim procedures. Rather, as an interim measure, and only until the Commission's decision in the CPNI rulemaking, we will accept Comsat's proposal to obtain prior customer approval before using the CPNI derived from its provision of basic maritime, aeronautical, or land mobile services to market its value-added offerings. As proposed by Comsat, this authorization may be oral or written, but Comsat will bear the burden of proving oral consent in the event of a dispute. In addition, as Comsat suggested, it must notify customers of Comsat's intended use of their CPNI and the customer's right to restrict access to CPNI. Finally, Comsat must protect the confidentiality of all proprietary information that it receives, but disclose CPNI to any person designated in a customer's written request. Comsat subsequently will be required to comply with the CPNI requirements developed by the Commission in its CPNI proceeding. 20. We approve the non-structural safeguards developed by Comsat for its maritime, aeronautical, and land-mobile non-structural safeguards. Comsat must still obtain Commission approval of its cost accounting procedures before it may market and provide maritime, aeronautical, and land-mobile value-added services through its CMC business unit. Furthermore, Comsat must comply with any CPNI requirements the Commission establishes in its CPNI proceeding. ORDERING CLAUSES 21. Accordingly, IT IS ORDERED THAT Comsat's non-structural safeguards developed for its maritime value-added services ARE APPROVED. 22. IT IS FURTHER ORDERED THAT Comsat's non-structural safeguards for its aeronautical and land-mobile value-added services ARE APPROVED. 23. IT IS FURTHER ORDERED THAT Comsat must obtain prior customer authorization before using the CPNI derived from its provision of basic maritime, aeronautical, or land mobile services to market its value-added offerings. 24. IT IS FURTHER ORDERED THAT restrict access to a customer's CPNI by any CMC sales or marketing employees or agents, upon a customer's request. 25. IT IS FURTHER ORDERED THAT annually notify its customers, via bill insert or electronic transmission, of their CPNI rights, including a customer's right to restrict CMC employee access to its CPNI. 26. IT IS FURTHER ORDERED THAT Comsat must disclose CPNI to all persons designated by a customer's via written request. 27. This Order is issued under Section 0.261 of the Commission's rules, 47 C.F.R.  0.261, and is effective upon adoption. Petitions for reconsideration under Section 1.106 or applications for review under Section 1.115 of the Commission's rules, 47 C.F.R.  1.106 and 1.115, may be filed within thirty days of the public notice of this order (see 47 C.F.R.  1.4(b)(2)). FEDERAL COMMUNICATIONS COMMISSION Peter Cowhey Chief, International Bureau