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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** DA 97-1741 Before theFEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of the Application of) ) COMSAT CORPORATION ) File No. )14-SAT-ISP-97 Petition for Partial Relief From the Current) Regulatory Treatment of Comsat World) Systems' Video and Audio Services) ORDER Adopted: August 14, 1997 Released: August 14, 1997 By the Chief, International Bureau: I. Introduction 1. The Commission recently granted Comsat Corporation's ("Comsat") request that the Commission waive Sections 61.38 and 61.58 of the Commission's Rules applicable to Comsat's tariff filings for its switched voice and private line services and permit Comsat to file tariffs for these services on 14 days' prior notice, with a presumption of lawfulness and with minimal cost support data. The Commission declined to extend the waiver to the company's international video transmission services. Comsat now requests that we waive the same Rules applicable to the company's international video transmission services and extend the same relief to those services. 2.In this order ("Order"), we grant Comsat's request in part and deny it in part pursuant to Section 1.3 of the Commission's Rules. We grant Comsat's request to file tariffs on 14 days' prior notice with a presumption of lawfulness ("streamlined tariff relief") for its international full-time video transmission services ("full-time video services"). The full-time video services market is substantially competitive to warrant granting Comsat limited, streamlined tariff relief. This relief will enable Comsat to more rapidly respond to the needs of its customers for this service. We deny Comsat's request for streamlined tariff relief in respect of its international occasional-use and short-term video transmission services (collectively, "occasional-use video services") rate increases because this market lacks substantial competition. However, we grant streamlined tariff relief for occasional-use video service rate decreases because lower rates are in the public interest. We only grant relief to Comsat as expressly conferred herein and do not prejudge or limit the Commission's actions in pending or future proceedings. II. Background 3.Title II of the Communications Act of 1934, as amended, requires that a common carrier file with the Commission a schedule of charges ("tariffs") for its wire or radio communication services and grants the Commission authority to issue regulations related thereto. The Commission's regulations require a dominant carrier to submit explanatory materials and data supporting a new or changed tariff as well as set forth specific notice periods that must expire before a dominant carrier's tariff will become effective. 4.In International Competitive Carrier, the Commission found that Comsat was a dominant carrier in the provision of INTELSAT space segment, international video transmission and multi-purpose earth station services. As a dominant carrier, Comsat has been subject to the tariff regulations in Sections 61.38 and 61.58 of the Commission's Rules requiring that data submissions and advance notice be provided to the Commission in connection with any new tariff or change to an existing tariff. 5.In 1996, Comsat petitioned the Commission for streamlined tariff relief for all of its INTELSAT common carrier services. The Commission partially granted Comsat's petition by waiving the tariff requirements in Sections 61.38 and 61.58 for Comsat's switched voice and private line services, subject to certain conditions. The Commission concluded that substantial competition in the market for switched voice and private line services was an adequate substitute for the Commission's tariff regulations. Streamlined tariff relief was in the public interest because less burdensome tariff requirements would avoid delays in the availability of new services and price reductions. The Commission's August 1996 Order, however, declined to extend streamlined tariff relief to Comsat's international video transmission services because INTELSAT possessed strong competitive advantages over its competitors in this market. Also in the August 1996 Order, the Commission delegated authority to the International Bureau and Common Carrier Bureau to act upon any future Comsat request demonstrating changed circumstances warranting streamlined tariff relief for its international video transmission services. 6.Two months after the release of the Commission's August 1996 Order, Comsat re- petitioned the Commission requesting streamlined tariff relief for the company's international video services. In support of its request, Comsat submitted an updated market analysis which focuses on developments in the international video services market since 1994 (the "1996 Brattle Report"). Comsat relies on the 1996 Brattle Report to support its claim that effective competition exists in the international video services market. The 1996 Brattle Report cites Comsat's decline in market share and the increasing strength of the competition in the market resulting from announced satellite industry mergers, particularly the combination of the satellite operations of PanAmSat Corporation ("PanAmSat") and Hughes Electronics Corporation ("Hughes"), as evidence that effective competition exists. In addition, Comsat points out that effective competition also exists in the occasional-use video services market as evidenced by Comsat's low revenues from this service in 1995, the global coverage now provided by its competitors' occasional-use video service offerings and the prevalence of resale of INTELSAT and separate systems capacity for occasional-use service. 7.Comsat's Petition was placed on Public Notice and comments were received from three parties. Generally, the commenters oppose streamlined tariff relief for Comsat's occasional-use video services. Because Comsat's customers still rely heavily on INTELSAT for these services, they argue that this market is not subject to effective competition. Commenters also request that the Commission postpone consideration of streamlined tariff relief for the international video transmission services market until the completion of the INTELSAT restructuring. They assert that after such restructuring market data will be available to gauge the effect that a proposed INTELSAT affiliate will have on competition in these markets and that it would be premature for the Commission to change the regulatory treatment of Comsat's international video transmission services before such a restructuring. Finally, the commenters urge the Commission to deny Comsat's Petition because market conditions have not changed since the Commission denied Comsat streamlined tariff relief in its August 1996 Order. 8.PanAmSat and Hughes claim that the 1996 Brattle Report is flawed because it fails to consider INTELSAT's market share and market power. Both parties argue that Comsat does not own any satellites and is merely the exclusive United States supplier for the INTELSAT satellite system. Therefore, Comsat's competitors are really competing against the INTELSAT satellite system and INTELSAT's market share, global connectivity and transponder capacity are relevant, not Comsat's. In addition, they assert that Comsat and INTELSAT enjoy certain privileges and immunities that distort competition in the international video transmission services market. For example, Hughes is concerned that Comsat has the potential to cross- subsidize its international video transmission services with revenues from the INTELSAT "core" telephone business services. Consequently, Comsat's and INTELSAT's market power cannot be measured solely in terms of market share. 9.Generally, the Network broadcasters (collectively, the "Networks") support Comsat's request for streamlined tariff relief, except for occasional-use video service rate increases. Specifically, the Networks support streamlined tariff relief for Comsat's (a) full-time video services, (b) occasional-use video service rate reductions and (c) new service offerings (including negotiated contract tariff arrangements) in the occasional-use video services market. The Networks also support granting Comsat authority to use INTELSAT space segment for the provision of international and domestic video service offerings because the market for these services is subject to effective competition. 10.Comsat filed reply comments. It responds that all commenters concede that the international full-time video services market is highly competitive and that Comsat's relationship with INTELSAT confers on it no market power or unfair advantage. Comsat does, however, agree to drop its request for streamlined tariff relief for its occasional-use video service rate increases if we provide such relief for rate decreases. On February 11, 1997, PanAmSat replied to Comsat's reply comments reiterating PanAmSat's opposition to Comsat's request for streamlined tariff relief for its international video transmission services. III. Discussion 11.In International Competitive Carrier the Commission determined that Comsat was a dominant carrier in the provision of its international telecommunications services, and therefore, was not entitled to streamlined tariff relief in the provision of such services. Subsequently, the Commission's August 1996 Order waived the tariff requirements set forth in Sections 61.38 and 61.58 of the Commission's Rules applicable to Comsat's international switched voice and private line services but declined to extend the waiver to Comsat's international video transmission services. Comsat now requests a waiver of Sections 61.38 and 61.58 of the Commission's Rules applicable to Comsat's international video transmission services. Before we can waive these tariff rules and grant Comsat the streamlined tariff relief it requests, we must find that substantial competition exists in the international video transmission service market for which Comsat is seeking relief. 12.Section 203 of the Communications Act of 1934, as amended, requires a common carrier to file a schedule of charges for its wire or radio communications between the different points on its own system. This provides the Commission and the public with an opportunity to inspect and review a carrier's proposed charges prior to their effective date. Section 203 also authorizes the Commission to issue regulations carrying out the provisions of Section 203. Based on this delegation from Congress, the Commission issued Part 61 of its Rules which contains the regulations affecting a common carrier's schedule of charges. 13.Comsat requests a waiver of two regulations in Part 61 of the Rules that apply to Comsat's tariffs for international video transmission services: Sections 61.38 and 61.58. Section 61.38 requires a dominant carrier with gross annual revenues exceeding or estimated to exceed $500,000 to submit explanations and data supporting new tariff offerings or changes to a tariff. Section 61.58 sets forth the notice period that must elapse before a new or changed tariff filing with the Commission becomes effective. As discussed in the Commission's August 1996 Order, Comsat is currently subject to a 45 day notice period before its tariff filings are effective and detailed cost data supporting the proposed tariff must accompany such filing. Non-dominant carriers, on the other hand, are allowed significantly greater flexibility, filing tariffs on a much shorter (one-day) notice period without cost support data. Underlying the different cost support and notice requirements for dominant and non-dominant carriers in the Commission's Rules is the view that competition can effectively limit the ability of a carrier to exercise market power and impose unjust and unreasonable rates. When a carrier faces substantial competition, intensive scrutiny of the proposed rates is less necessary, making long notice periods and detailed cost support less necessary. Regulatory requirements that are more extensive than necessary may, in fact, hinder competition. 14.In such cases, the Commission may waive its Rules for good cause shown, in whole or in part, at any time. Waiver is appropriate if special circumstances warrant a deviation from the general rule and such deviation would better serve the public interest than would strict adherence to the general rule. We conclude below that Comsat has shown that a waiver of Sections 61.38 and 61.58 of the Commission's Rules with respect to tariff filings for full-time video service and tariff filings for occasional-use video service rate decreases are justified. Sections 61.38 and 61.58 continue to apply to Comsat's tariff filings proposing rate increases for occasional-use video service because current competitive market conditions are insufficient to limit Comsat's ability to exercise market power. 15.In its August 1996 Order acting on Comsat's initial request for streamlined tariff treatment, the Commission set forth the relevant standard for waiver of Sections 61.38 and 61.58 of the Commission's Rules applicable to Comsat's regulated services. The Commission determined that if the relevant product market served by Comsat was substantially competitive, then it would waive these tariffing requirements and grant streamlined tariff relief. Therefore, our analysis in acting on Comsat's instant waiver request will first focus on identifying the relevant product or service markets ("service market") in which Comsat provides international video transmission services. 16.A relevant service market exists when there are no close demand substitutes for that service. In International Competitive Carrier, the Commission relied on both demand and supply substitutability in defining relevant service markets. Recently, the Commission conducted a rulemaking proceeding and adopted an analytical framework that relies exclusively on demand considerations to define the relevant service market for domestic and international services. 17.After identifying the relevant service markets, we will analyze whether or not such markets are substantially competitive. Previously, the Commission found Comsat to be a dominant carrier possessing market power that limited competition in the international video transmission services market. When evaluating the competitiveness in a service market it is appropriate to look at demand and supply elasticities, market share, whether the dominant carrier had unique cost advantages, and whether it enjoyed special market power because of its sheer size or access to resources. When examining demand and supply elasticities, the Commission considers competitors' capacity, entry barriers, the sophistication and relative bargaining power of customers in the marketplace, pricing trends, and loss of customers. A key factor the Commission relied upon in the August 1996 Order in evaluating supply elasticity was whether separate systems now competing with INTELSAT possessed the global reach of INTELSAT in terms of connectivity and transponder capacity. We will consider these factors in determining whether or not substantial competition exists in the relevant service markets comprising the international video transmission services market. A.Relevant Service Markets 18.In analyzing the international video transmission services market, the Commission's August 1996 Order determined that the relevant service market is the video and associated audio services market. Since the release of the August 1996 Order, additional market studies and data filed by Comsat and supplied by the commenters and other government agencies analyzing competition among satellite companies in the international video transmission services market leads us to conclude that this market is actually comprised of three separate and distinct service markets: (1) regional video transmission services; (2) international (or transoceanic) full-time video services; and (3) international (or transoceanic) occasional-use and short-term video services. The 1996 Brattle Report, the comments of the Networks and the United States General Accounting Office Report entitled Competition Issues in International Satellite Communications ("GAO Report") similarly categorize the services provided in the international video transmission services market. Because occasional-use and short-term video service constitute flexible, on-demand use of satellite circuits from different geographic origination and termination points, this Order considers them to be sufficiently similar so as to include them both in the "occasional-use video services" market. 1.Determination of Appropriate Markets 19.For an international video transmission service to be considered a separate service market no demand substitutes can exist for such service. Demand substitutability refers to a user's ability and willingness to switch between various services in the international video transmission services market. Factors influencing demand substitutability include service quality, relative prices, availability and geographic coverage, as well as the marketing of the service. Grouping regional video transmission service, full-time video service and occasional- use video service into one or more relevant service markets is important because we can then analyze each service market separately to ascertain whether or not substantial competition exists in a market warranting the streamlined tariff relief being sought by Comsat. 20.The pleadings and the GAO Report lack any information about changes in service quality and price affecting service demand but they do offer some information about the geographic coverage and marketing aims of regional video transmission service providers that can be used to analyze the demand substitutability of regional video transmission, full-time video and occasional-use video services. a.Regional Video Transmission Service as a Separate Market 21.According to the Networks and the GAO Report, the geographic coverage of a regional video transmission services provider is limited to a particular region and third parties utilize these services primarily for direct-to-home television broadcasting and transmissions to cable head-ends within a geographic region. Full-time and occasional-use video services, on the other hand, use satellites for the transmission of video for news programming between geographic regions and across oceans. Full-time and occasional-use video services are provided to intermediaries --- network broadcasters --- located anywhere in the world for re- distribution to end-users. Network broadcasters utilize full-time video service for the frequent transmission of video programming over the same dense routes (e.g., between North America and Europe) and occasional-use video service for the short-term transmission of video programming from different origination and termination points from one day to the next. Thus, it is unlikely that a satellite network designed to provide regional coverage would be technically capable of providing full-time and occasional-use video service outside of its regional coverage area. Although the 1996 Brattle Report points out that regional video transmission service providers are rapidly expanding their geographic coverage area, neither Comsat nor any of the commenters have provided evidence in the record that regional satellite systems are now competing against INTELSAT in the provision of full-time and occasional-use video services. 22.In addition, the GAO Report indicates that users of satellite video services select a regional satellite system based on its geographic coverage and number of antennae or satellite dishes that can receive signals from it in a particular geographic region. News-gathering organizations and broadcasters that use full-time and occasional-use video services need the flexibility to transmit satellite news feeds from many different geographic regions to a central location where broadcasts are produced before being retransmitted by satellite to multiple locations in different geographic regions for final distribution. It is clear that there is a difference in the geographic scope requirements of users of regional video transmission services versus users of full-time and occasional-use video services. Regional video transmission service is provided to end-users in a particular geographic region, whereas full-time and occasional-use video services are provided to network broadcasters for video transmissions that originate and terminate in different geographic regions. Therefore, we conclude that low demand substitutability exists between regional video transmission service versus full-time and occasional-use video services and that the regional video transmission service market is separate and distinct from the full-time video and occasional-use video services markets. b.Full-Time and Occasional-Use Video as Separate Markets 23.We next turn to analyzing the demand substitutability between full-time video service and occasional-use video service. Although the service quality, availability and geographic coverage of full-time and occasional-use video services may be similar, users demand these services for different reasons. This dissimilarity underlying users' preferences for these services is sufficient to warrant classifying them as separate service markets. A key point of differentiation between full-time and occasional-use video services is how the services are utilized by users. As discussed, full-time video services generally are used to transmit broadcasts over the densest traffic routes, whereas occasional-use video services are used for coverage of fast-breaking news stories from anywhere on the globe. Users of full-time video service plan ahead and enter into long-term contracts to secure the satellite capacity needed for fixed-route transmissions. Conversely, occasional-use video services are ordered on short notice and from different origination and termination points from one day to the next. Demand for occasional- use video service arises the moment a newsworthy event happens. It is less predictable than the demand for full-time video service. Thus, full-time video service is not a good substitute for occasional-use service except in those instances where the fast-breaking news story is occurring in a location where a user already has full-time video service transmission capability. 24.Comsat's submissions included data identifying its share of the international video transmission services market for the Atlantic Ocean, Pacific Ocean and Latin American regions. The information in the record is insufficient to conclude that the international video transmission services market constitutes several regional markets instead of a global market. Because Comsat's competitors provide full-time video and occasional-use video services to these regions and these regional routes exhibit other sufficiently similar competitive characteristics, we will treat them as one global market for full-time video and occasional-use video services. 25.In light of the low degree of demand substitutability among regional video transmission, full-time video and occasional-use video services, we conclude that each of these services comprises a separate relevant service market in the international video transmission services market. B.Substantial Competition 26.Having identified the regional video transmission, full-time video and occasional- use video services markets as three separate and distinct service markets, we now must determine whether or not substantial competition exists in these service markets. The presence of substantial competition would warrant our waiving the tariff rules and granting Comsat the streamlined tariff relief it seeks. Although the regional video transmission services market is a separate relevant service market, Comsat is not authorized in the United States to use INTELSAT's transmission capacity to provide the services typically provided by regional satellite system providers. Therefore, our substantial competition analysis will focus on the full- time and occasional-use video service markets in which Comsat is a participant. In evaluating the competitiveness in these service markets we will analyze demand and supply elasticities, Comsat's unique cost advantages, if any, and whether Comsat's size or access to resources continue to cloak it with special market power. 1.Full-Time Video Services a.Demand Elasticity and Market Share 27.Demand elasticity refers to the willingness and ability of Comsat's customers to switch to another satellite provider or otherwise change the amount of services they purchase from Comsat in response to changes in the price and quality of Comsat's full-time video services. High demand elasticity indicates customers' willingness and ability to switch to another satellite provider in order to obtain price reductions and desired features. It also indicates that the particular service market is subject to competition. 28.Today, the full-time video services market displays increased demand elasticities that were not on the record when the Commission adopted its August 1996 Order. This increase in demand elasticity is evidenced by the improved bargaining power of Comsat's customers and the decline in Comsat's market share in the international video transmission services market. First, Comsat's largest customers of full-time video services, the broadcast networks, support streamlined tariff relief for full-time video services and agree that this market is now subject to more effective competition. The Networks opposed streamlined tariff relief for Comsat's international video transmission services when the Commission adopted its August 1996 Order. In addition, in 1995 and 1996 it appears that Comsat lost more full-time video lease customers than it added as new customers because its customers migrated some of their full-time video leases to Comsat's competitors. These facts indicate that the bargaining power of customers in the full-time video services market has increased. The 1996 Brattle Report also confirms that the Networks are utilizing non-INTELSAT satellites for full-time video services. Second, since the close of the record relied upon by the Commission in issuing its August 1996 Order, the 1996 Brattle Report indicates that Comsat's share of the international video transmission services market declined from 80 percent in 1993 to 45 percent in 1996 while the international video transmission services market grew by 20 percent per year during the same time period. This market share data is based on the number of transponders utilized for Comsat's full-time and occasional-use video services markets. Although this data may overstate Comsat's market share in the full-time video services market, we have used this data as an approximation for Comsat's full-time video service market shares. In our view, this measure, rather than one based on percentage of industry revenues, is more indicative of Comsat's actual market shares because, as the Networks point out, Comsat's revenues are limited to those derived from half-channels and Comsat does not receive revenues from earth station or other value-added services that are provided by its competitors and included in their revenue figures. 29.A closer look at Comsat's market shares by region reveals a consistent decreasing trend in Comsat's market share for international video transmission services between 1993 and 1996: on its transatlantic routes, its market share declined from 83 percent to 53 percent; on its transpacific routes, its market share declined from 96 percent to 44 percent; and on its routes to Latin America its market share declined from 54 percent to 25 percent. Comsat's decreasing market shares for its international video transmission services supports the view that Comsat is either losing its long time full-time video service customers or is losing the battle for new full- time video service leases, or some combination of the two. The 1996 Brattle Report's analysis of annual turnover in its transponder video leases confirms that Comsat is losing customers. Comsat's overall international video transmission service market share of 45 percent is also significantly below AT&T's 59 percent share of the international telephone service market when the Commission reclassified AT&T as a non-dominant carrier in the provision of international telephone service. b.Supply Elasticity 30.Two factors determine supply elasticity in a market. One is if existing competitors have or can relatively easily acquire significant additional capacity, then supply elasticities tend to be high. The other factor is low barriers to entry. Barriers to entry may be legal (e.g., governmental imposed restrictions), economic (e.g., capital costs, economies of scale) or technological (e.g., a new innovation protected by a patent). Even if existing competitors lack excess capacity, supply elasticity tends to be high if new suppliers can enter the market relatively easily. 31.The record indicates that Comsat's competitors have excess capacity available to offer full-time video services to Comsat's current customers if Comsat raised its prices. Based on data in the 1996 Brattle Report, the unutilized 27/36 MHz transponder capacity for PanAmSat, Orion and Columbia, Comsat's competitors in this market, on transatlantic and transpacific routes increased significantly from 1993 to 1996. Moreover, the 1996 Brattle Report projects that in 1996 Comsat's competitors will have more idle 27/36 MHz transponder capacity on their transatlantic and transpacific routes than Comsat will be utilizing to provide full-time and occasional-use video service to its customers. For example, in 1996, Comsat's competitors were projected to have approximately 90 unutilized transponders available on these routes, while Comsat was projected to be utilizing approximately 70 transponders for full-time and occasional- use video services. Neither PanAmSat, Hughes nor the Networks contested this market data. This idle capacity provides Comsat's competitors with enough capacity to serve all of Comsat's customers should they choose to migrate away from Comsat because of a Comsat price increase. We also think it is relevant that PanAmSat through its PAS-4 satellite has the capacity to provide full-time video service directly to the Indian Ocean region from the United States, whereas Comsat is unable to provide direct full-time video service to that region without using multiple satellites and, presumably, charging a higher price. Although not all of the idle capacity of Comsat's competitors will be utilized for full-time video services, this idle capacity indicates that supply elasticity is high in the full-time video services market. 32.Legal barriers to entry in many countries make it difficult for a United States satellite service provider to begin providing services in the full-time video services market. Historically, the most significant entry barrier in international telecommunications has been obtaining an operating agreement with the monopoly telecommunications service provider before providing service to a particular country. In the case of United States satellite service providers, a significant legal barrier to entry continues to be authorization to provide service in a particular country, including the authority to transmit and receive from an earth station within a country (sometimes referred to as landing rights). Thus, a United States satellite service provider seeking to provide full-time video service in a country must first obtain authorization from that country. The Networks state that they have become less reliant on INTELSAT for full-time video services, especially over dense routes, because these routes have become subject to more effective competition since 1994. Moreover, we note that under the World Trade Organization's ("WTO") Basic Telecommunications Services Agreement (the "WTO Agreement") concluded earlier this year, 49 WTO member countries, including most countries that constitute origination and termination points in the full-time video service market, have committed to offering market access for satellite service and facilities in their countries. Thus, the legal barriers in the full-time video service market do not appear significant and as the commitments made under the WTO Agreement are implemented in 1998 and beyond, we are hopeful that the WTO member countries where it remains difficult to obtain the required authorizations will over time be replaced with more open markets. 33.In addition, economic and technological barriers to entry also can make it difficult for another satellite service provider to enter the full-time video service market. A new entrant would require a substantial capital investment in constructing, launching and operating additional satellites to achieve the global coverage required to provide full-time video service. Fiber-optic cable is an alternative technology for the international transmission of video signals. However, fiber-optic cables are not a cost-efficient means to transmit video at this point and do not interconnect with all geographic markets. The 1996 Brattle Report suggests that fiber-optic cable will become a viable means for transmitting video in the future, however, the record identifies only one such point-to-point fiber-optic video link currently in existence: between the United States and the United Kingdom. The small capacity and fixed location of this single fiber-optic link mitigates against its existence having any significant impact on the provision of full-time video services. Nevertheless, several satellite companies, including PanAmSat, Columbia and Orion, have established themselves as effective competitors in the full-time video services market. These companies have supplied additional capacity to the full-time video services market notwithstanding the economic and technological barriers to entry that exist in this market. c.Cost Advantages 34.Hughes raises a concern that Comsat has the potential to cross-subsidize its international video transmission services with revenues from its core telephone business. Hughes offers no support in the record for its concern about the potential for cross-subsidization. Presumably, Hughes is concerned that Comsat will include in its switched voice and private line tariffs costs that are not related to the provision of these services. However, as a common carrier, Comsat's rates must be just and reasonable, and the Commission may conduct a hearing on its own initiative or upon receipt of a complaint to determine the lawfulness of Comsat's rates. In addition, the Commission in its August 1996 Order found the switched voice and private line services market that Comsat's competes in to be substantially competitive, except for thin routes. Substantial competition in this service market should exert competitive pressure on Comsat's ability to increase its rates for switched voice and private line services. Consequently, we view it as unlikely that Comsat will be able to cross-subsidize its full-time or occasional-use video services with revenues from its satellite delivered public switched telephone network services or its private line services. d.Size and Access to Resources 35.Another factor we considered in determining whether Comsat lacks market power in the full-time video services market is whether or not Comsat enjoys special market power because of its size or access to resources. One of the reasons that PanAmSat opposes Comsat's streamlined tariff relief request is because Comsat's competitors do not yet match the size of INTELSAT in terms of number of satellites and transponder capacity. INTELSAT operates 24 satellites, holds 29 orbital locations and maintains 883 international transponders while PanAmSat utilizes only 128 international transponders. Presumably, a smaller number of INTELSAT's transponders are actually available for international video transmission services because INTELSAT and Comsat also provides international telephone and other services. According to the 1996 Brattle Report, Comsat is also unable to provide direct uplinks to seven of INTELSAT's satellites that provide service to the Indian Ocean region. On the other hand, the 1996 Brattle Report indicates that PanAmSat operates four satellites currently and expects to have an additional four satellites operational by 1998. PanAmSat has received authority to construct, launch and operate PAS-9 and has filed applications to construct, launch and operate PAS-10, PAS-11, PAS-12 and PAS-13. PanAmSat merged its operations with a Hughes affiliate to form an international satellite network that will enable PanAmSat to take advantage of at least three Hughes satellites capable of providing full-time video services from the United States. These events will significantly expand PanAmSat's transponder capacity in the short-run and create opportunities for PanAmSat to increase its market share by cross-selling international video transmission services to Hughes' existing customer base. When Orion's and Columbia's satellites are considered, in the short-run, Comsat's competitors will have approximately 14 satellites operational compared to INTELSAT's 24 satellites. Thus, Comsat has demonstrated that its competitors have increased the number of satellites and transponders being utilized to provide full-time video services than was evident from the record relied upon in the August 1996 Order. 36.PanAmSat and Hughes also request that Comsat's Petition be denied because Comsat's status as a signatory to INTELSAT confers on Comsat special benefits that are difficult to measure in market power terms. PanAmSat and Hughes contend that Comsat's signatory status entitles it to special benefits including access to orbital locations, free of any one country's regulatory processes, operational advantages conferred upon INTELSAT's satellites by the Article XIV consultation process, privileges and immunities that insulate it from business risks and expenses that private companies face and financing options that are much more favorable than those available to private companies. As discussed above, we find that Comsat has demonstrated a diminution in INTELSAT's and Comsat's market power in the full-time video services market since the close of the record relied upon in the August 1996 Order. In International Competitive Carrier, the Commission found Comsat to be a dominant carrier possessing market power in the provision of television service because, at that time, Comsat was the only provider of television service. Today, PanAmSat, Orion, Columbia and other satellite carriers compete against INTELSAT and Comsat, and each other, in the full-time video services market. Increased competition in the international video transmission services market since the International Competitive Carrier decision has resulted in a decline of Comsat's market share and market power in this service market. We agree that Comsat benefits from the special benefits that result from its status as a signatory to INTELSAT. These special benefits constitute a competitive advantage to Comsat and INTELSAT in a competitive market. However, they have not insulated Comsat from a diminution of its market power in the full-time video services market. We are not persuaded that maintaining dominant tariffing requirements is a remedy to competitive harm that would be directly attributable to these special benefits. We note that in the August 1996 Order the Commission found that substantial competition existed in the international switched voice and private line telephone market, notwithstanding Comsat's special benefits. Here also, Comsat has demonstrated the existence of a sufficient level of competition in the full-time video services market to merit the streamlined tariff relief sought by Comsat. However, our limited action here does not prejudge Commission consideration of these issues in the context of the Comsat Non-Dominant Proceeding in which Comsat is seeking broader regulatory relief as discussed, supra, in footnote 7. 37.In light of the high demand and supply elasticities in the full-time video services market, Comsat's limited ability to cross-subsidize full-time video service rates and the improved satellite and transponder capabilities of Comsat's competitors, we conclude that substantial competition exists in the full-time video services market. Therefore, good cause has been demonstrated for waiving our tariffing procedures and granting Comsat limited, streamlined tariff relief for its full-time video services. 2.Occasional-Use Video Services 38.Unlike the full-time video services market, we find that the occasional-use video services market is not substantially competitive and, therefore, deny Comsat's request for streamlined tariff relief for rate increases for such services. However, as the Networks urge us, we grant Comsat's request for streamlined tariff relief for occasional-use video rate reductions because it will result in lower rates, which is in the public interest. 39.Comsat's submissions do not demonstrate that the occasional-use video market is substantially competitive. In addition, PanAmSat and the Networks both commented that the international occasional-use video services market is not yet competitive. The Networks, however, did not object to granting Comsat streamlined tariff relief for occasional-use video service rate reductions. The 1996 Brattle Report and the record fails to separately detail Comsat's loss of customers, market share and pricing trend data attributable to the occasional-use video service market. It is, therefore, difficult for us to address adequately the demand elasticity in this market. On the other hand, the 1996 Brattle Report and the commenters did provide some information that enables us to analyze the supply elasticity and characteristics of Comsat's size and resources that are evident in this submarket in order to determine if substantial competition exists. a.Supply Elasticity 40.First, we believe that this market lacks substantial competition because it is characterized by supply inelasticity. PanAmSat, the Networks and the GAO Report point out that Comsat's competitors have limited capacity to provide occasional-use video services and that users turn to INTELSAT for this type of service. The Networks rely on their own experience stating that PanAmSat, the largest United States international satellite carrier, has little or no available occasional-use capacity. As PanAmSat and other Comsat competitors prepare to launch new satellites that will provide additional transponder capacity, the capacity on these satellites is likely to be presubscribed for full-time video service leaving limited capacity available for occasional-use video service after satellite launch. Even if Comsat's competitors maintain available capacity on the transatlantic and transpacific routes and that digital compression technologies exist to increase transponder capacity for occasional-use video services as contended by the 1996 Brattle Report, this capacity cannot easily be made available to provide occasional-use video services in countries where Comsat's competitors lack landing rights. In addition, the fiber-optic video link between the United States and the United Kingdom is neither cost-effective nor suitable for video transmissions from one point to multiple locations at the same time as is required for occasional-use video services. Therefore, the existence of this fiber link does not alleviate any capacity shortage among Comsat's competitors in the occasional-use video service market nor would it be a viable alternative for use by Comsat's competitors in those countries where they lack landing rights. 41.Nor is it clear from the evidence in the record that the presence of resellers in the occasional-use video services market, which resell capacity on transponders leased from Comsat or its competitors, is an indication that this market is effectively competitive. Resellers acquiring capacity at retail rates would not be price competitive with Comsat and its competitors because the reseller would have a higher cost structure. Resellers acquiring capacity at cost would be able to compete with Comsat and its competitors on price, however, Comsat and its competitors would have a disincentive to lease capacity to resellers at such rates and, if they did, would have an incentive to impose anticompetitive restrictions on the resale of such capacity. The record's lack of evidence about this issue makes it difficult for us to make a determination about the rates at which resellers are acquiring capacity for resale in the occasional-use video services market and its impact on competition in this market. 42.On the other hand, Comsat's exclusive access to INTELSAT's excess transponder capacity and Comsat's competitors' lack of similar capacity for the provision of occasional-use video services confers market power on Comsat to set supracompetitive rates for occasional-use video service. Even sophisticated users like the Networks that possess significant bargaining power are left with little choice but to use the Comsat/INTELSAT satellite system for occasional-use video services because of its excess capacity and unique global reach discussed below. Comsat is the only choice and it is in a position to charge rates above competitive levels. Given Comsat's excess capacity in the occasional-use video services market and its competitors' lack of such capacity, we find it necessary to maintain our current tariff rules applicable to Comsat's occasional-use video service rate increases. 43.The same legal, economic and technological barriers to entry discussed for full- time video services exist in the occasional-use video services market. The experience of the Networks confirm the existence of legal barriers to entry in the occasional-use video services market. Similar to full-time video services, we believe that as WTO member countries implement their market access commitments made under the WTO Agreement, barriers to entry, particularly legal barriers, are likely to diminish. b.Size and Resources 44.Second, the Commission noted in its August 1996 Order that INTELSAT's global reach in terms of connectivity and transponder capacity represents a key advantage that it maintains over its competitors. In terms of connectivity, Comsat continues to have a significant advantage over its competitors in the occasional-use video services market because the INTELSAT system operates in more than 136 countries through a network of thousands of earth stations. Comsat's competitors appear to be expanding the global connectivity and coverage provided by their occasional-use video services, but the reality is that Comsat's competitors cannot yet offer the global connectivity provided by INTELSAT. We understand that Comsat and its competitors utilize so-called "fly away" earth stations for occasional-use video transmissions, but the record is devoid of any information regarding those countries in which Comsat's competitors have landing rights and are authorized to utilize earth stations for their occasional-use video transmissions and those countries in which they lack such rights and authorizations. The experience of the Networks, the primary users of occasional-use video services, supports this conclusion. PanAmSat, Comsat's largest competitor, still lacks earth station capacity and the in-place infrastructure necessary to send transmissions to an earth station in many foreign countries. And, limited landing rights in many countries actually prevent Comsat's competitors from accessing its earth stations from other parts of a foreign country which effectively restricts the mobility of a user of occasional-use video service in covering a fast-breaking news story or event that may be occurring in a location where the earth station is not located. Although the proposed combinations among Comsat's competitors, including, but not limited to, PanAmSat's combination with Hughes, and new satellite entrants into the international video transmission services market are expected to increase competition in the occasional-use video service market, we remain unconvinced from the record that Comsat's competitors yet are able to match INTELSAT's ubiquitous market access and occasional-use transponder availability. Comsat continues to benefit from INTELSAT's superior global connectivity in the occasional-use video service market and this militates against a finding that substantial competition exists in the occasional-use video services market. 45.The WTO Agreement provides Comsat's competitors in the international video transmission services market with a greater opportunity to access markets worldwide. As Comsat's competitors are able penetrate these markets, their global connectivity will improve significantly. As a result, we expect that the superior global connectivity now enjoyed by INTELSAT will become a less significant factor in terms of assessing Comsat's market power in the occasional-use video service market specifically, and in the international video transmission services market, more generally. 46.Therefore, we find that Comsat has not demonstrated good cause for waiving our tariff rules for occasional-use video service rate increases. Accordingly, Comsat should continue to comply with Sections 61.38 and 61.58 of the Commission's Rules for tariff filings concerning occasional-use video service rate increases. Comsat has demonstrated good cause for waiving our tariff rules applicable to occasional-use video service rate decreases. C.Restructuring of INTELSAT 47.The commenters urge the Commission to defer all action on streamlined tariff relief until after INTELSAT is restructured. The Networks make a more limited request. They seek postponement of any Commission action relating to streamlining tariff relief for Comsat's occasional-use video service until after INTELSAT is restructured and Comsat's competitors obtain direct access to INTELSAT's facilities. We do not believe that we should delay in granting Comsat's request for streamlined tariff relief until after the INTELSAT restructuring is effective. As discussed above, we are granting Comsat's Petition for its full-time video services because we find that this market is subject to substantial competition. In a market where substantial competition exists, competitive market forces can substitute for regulation in protecting the public against unreasonably high rates for full-time video services. We do not believe that a sufficient connection exists between INTELSAT's restructuring and the limited, streamlined tariff relief we are granting to Comsat in this Order. The United States has taken the position that any INTELSAT restructuring promote competition in international satellite services. If this is not the case, there are regulatory responses available to the Commission to protect competition in the United States. In either event, our grant of limited, streamlined tariff relief for Comsat's full-time video service and for occasional-use video service rate decreases will not hinder our ability to monitor developments and take appropriate remedial action if there is harm to competition. IV. Conclusion 48.We conclude that granting Comsat's Petition in part to waive the applicability of Sections 61.38 and 61.58 of the Commission's Rules with respect to Comsat's full-time video services is in the public interest because our current tariff procedures are more extensive than necessary in light of the substantial competition in this market. Streamlined tariff relief for this service will promote competition in this market which is likely to stimulate price reductions and more rapid service delivery for users of full-time video services. For these reasons, we find that good cause is shown for grant of a waiver to permit streamlined tariff relief for Comsat's full- time video services. We decline to extend our waiver of the tariff rules and streamlined tariff relief to Comsat's occasional-use video services rate increases. Because Comsat's relationship with INTELSAT provides Comsat with excess capacity and superior global connectivity in this market, the record demonstrates that substantial competition does not yet exist in this market and that Comsat retains the market power to increase occasional-use video service rates above competitive levels. However, granting Comsat streamlined tariff relief for occasional-use video service rate decreases is likely to result in lower rates to the public. Thus, good cause exists to waive the tariff rules and grant streamlined tariff relief for rate decreases in this market. We preserve our right to review in advance any of Comsat's subsequent tariff filings for full-time video services and occasional-use video services and, if circumstances then warrant, to revisit the appropriateness of this waiver. 49.Comsat must still comply with Section 61.33 of our Rules which requires a concise explanation of the nature and purpose of the full-time video service or occasional-use video service tariff filing and whether the filing is for a rate increase or decrease. Comsat's full- time video service tariffs may be filed on 14 days' prior notice and will be presumed lawful for purposes of advanced tariff review. Interested parties may file petitions against these tariffs pursuant to the time tables prescribed in our existing rules. We will thus have an opportunity to identify and suspend and/or reject tariffs where necessary before they go into effect. We will reject any tariffs that conflict on their face with a statute or an agency regulation or order. 50.The presumption of lawfulness for purposes of advance review does not change the substantive standards to be used in evaluating a tariff in a complaint proceeding or tariff investigation. Post-effective review procedures, including the complaint process and our authority to initiate investigations and find tariffs unlawful after they take effect, will continue to apply as before. In addition, we retain authority to institute at any time investigations of Comsat tariffs after they become effective and to declare tariffs unlawful. We will also consider in the complaint process claims of unlawful actions by Comsat. V. Ordering Clauses 51.Accordingly, IT IS ORDERED, pursuant to Section 1.3 of the Commission's Rules, 47 C.F.R.  1.3, that a waiver of Sections 61.38 and 61.58 of the Commission's Rules, 47 C.F.R.  61.38, 61.58, IS GRANTED to Comsat Corporation and that Comsat Corporation is allowed to make tariff filings as described, supra, on 14 days' prior notice and with a presumption of lawfulness for its INTELSAT full-time video services and for its INTELSAT occasional-use video services rate decreases. A waiver of Sections 61.38 and 61.58 of the Commission's Rules is DENIED to Comsat Corporation for its INTELSAT occasional-use video service rate increases. 52.IT IS FURTHER ORDERED that this Order is issued pursuant to Section 0.261 of the Commission's Rules on Delegations of Authority, 47 C.F.R.  0.261. Petitions for reconsideration under Section 1.106 of the Commission's Rules, 47 C.F.R.  1.106, or applications for review under Section 1.115 of the Commission's Rules, 47 C.F.R.  1.115, may be filed within 30 days of the release date of this Order. See 47 C.F.R.  1.4(b)(2). 53.IT IS FURTHER ORDERED that this Order is effective upon release. FEDERAL COMMUNICATIONS COMMISSION Peter F. Cowhey Chief, International Bureau