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                                          Before theFEDERAL COMMUNICATIONS COMMISSION
                    Washington, D.C.  20554
                                

In the Matter of                   )
                              )
New Skies                     )    File Nos.   See Attachment A
Satellites, N.V.                   )         
                              )         
For Authorization                  )         
to Access the U.S. Market               )         
                              )    
                              )    
          
                    ORDER AND AUTHORIZATION 

Adopted:  August 6, 1999                     Released:  August 6, 1999

By the Commission:  
                                
                       TABLE OF CONTENTS
                                
Topic                                                   Paragraph Number

I.  INTRODUCTION                                       1
II.  BACKGROUND                                             3
A.  Creation of New Skies                                        4
B.  Continuity of Services                                       10
III.  DISCUSSION                                            15
A.  DISCO II Standard                                       17
B.  INTELSAT Assembly of Parties Decision                             22 
C.  Analysis of New Skies's Relationship with INTELSAT                27
     1.  Ownership                                          28
     2.  Privileges and Immunities                               41
     3.  Arm's-Length Relationship between INTELSAT and New Skies          44
          a.  Separate Officers/Directors/Employees                   44
          b.  Transitional Agreements Between New Skies and INTELSAT  48
          c.  Assignment of Customer Contracts/Leaseback Arrangements 62
     4.  Conclusions Regarding New Skies's Relationship with INTELSAT      69
D.  Other Public Interest Considerations                              74
     1.  Prohibition Against Exclusive Arrangements                   74
     2.  Technical Considerations                                75
IV.  CONCLUSION                                             80
V.  ORDERING CLAUSES                                        82



                        I.  INTRODUCTION

1.   By this Order, we authorize certain U.S. earth stations to provide fixed-satellite services (FSS) to,
from, and within the United States via New Skies Satellites, N.V. (New Skies).  New Skies is the spin-off
of the International Telecommunications Satellite Organization (INTELSAT).   First, we grant over one
hundred modification applications filed by U.S. earth station licensees to access various New Skies
satellites.  This grant will ensure continuity of service to those operators using the New Skies satellites
prior to the transfer from INTELSAT.  Second, we grant pending applications by U.S. earth station entities
to provide domestic and international FSS services in the United States via the New Skies satellites for the
first time.  

2.   The United States supported the decision of the 1998 INTELSAT Assembly of Parties to take the
first step toward privatization by creating New Skies.  We welcome the opportunity to authorize, for the
first time, provision of satellite service in the United States using satellites licensed by the Netherlands, a
member of the World Trade Organization (WTO).  Moreover, we believe that authorizing entry will
provide a basis for New Skies to move forward with a substantial initial public offering (IPO).  In applying
the standard we established in the DISCO II Order for affiliates of intergovernmental satellite organizations
(IGOs), we find that New Skies's entry into the U.S. market will not pose a very high risk to competition
that cannot be cured by conditions, and thus does not warrant a denial of the applications.  We find,
however, that New Skies has yet to complete the full transition to a company independent of INTELSAT,
as contemplated by the INTELSAT Assembly of Parties in creating New Skies.  Until New Skies
completes this transition, there remains a potential for harm to competition in the U.S. market, and the
competitive benefits that would result from a new, independent competitor will not be fully realized.  We,
therefore, limit the term of the earth station licenses granted here to three years.  The three-year license
term is intended to encourage New Skies to become independent of INTELSAT in a timely manner,
consistent with the Assembly Decision.  As discussed below, at any time during the three-year license
term, the Commission may consider appropriate action to extend the earth station licenses for a full ten-
year term upon a showing by New Skies that it is independent of INTELSAT.  In the interim, we will
impose a requirement that New Skies file quarterly with the Commission a status report on its plans for an
initial public offering and other steps it has taken towards independence.

                         II.  BACKGROUND
3.   INTELSAT is an IGO created to own and operate the first commercial global satellite system. 
Currently, INTELSAT has 143 member governments, a global system of 19 geostationary satellites, and
over $900 million in annual operating revenues.  INTELSAT provides wholesale satellite capacity ("space
segment") to its Signatories that invest in its system and to other "direct-access" users.  INTELSAT's
capacity is predominately used for FSS services such as transmission of voice, data, and video
programming from a fixed location in one country to a fixed location in another.  INTELSAT's Signatories
and, in some countries, providers with direct access to INTELSAT space segment capacity provide
communications services to individual homes and businesses on a retail basis as well.  Although
INTELSAT originally provided basic telephone connectivity and television feeds, it has added new services
over time, particularly multi-point and high-speed data communications.

          A.  Creation of New Skies

4.   In 1998, INTELSAT created New Skies as a separate, private satellite company.  International
negotiations among the members of INTELSAT culminated with a March 1998 INTELSAT Assembly of
Parties Decision that spun New Skies off from INTELSAT as a separate but affiliated company. 

5.   The United States provisionally associated with the Assembly Decision, and acknowledged that
numerous uncertainties regarding the restructuring of New Skies remained and that resolution of these
uncertainties will ultimately determine whether the creation of New Skies advances or frustrates
competition in the satellite services market.  The United States stated:

                    We fully expect the outcome to be pro-competitive.  But, if it is not, each Party will have
          the prerogative, and indeed the obligation, to take whatever corrective measures it deems
          appropriate to protect against or prevent the distortive effects of a non-competitive
          outcome.

6.   The United States further stated that the FCC would need to issue authorizations for earth stations
to operate with New Skies's satellites, and that the FCC would base its review of the applications on
statutory public interest requirements, competition policy factors, and Commission rules implementing the
WTO Basic Telecom Agreement.  

7.   New Skies was incorporated in the Royal Kingdom of the Netherlands (The Netherlands) on April
23, 1998.  New Skies became operational November 30, 1998, after INTELSAT transferred to New
Skies various assets including five operational satellites. 

8.   The company was formed through the issuance of 9,000,000 shares of common stock to
INTELSAT for 9,000,000 Dutch Guilders.  New Skies was paid 4,500,000 Dutch Guilders upon
incorporation with the remaining 4,500,000 Dutch Guilders paid prior to the asset transfer discussed
above.  New Skies and INTELSAT entered into an agreement whereby INTELSAT received an
additional 1,000,000 shares of New Skies's stock in exchange for the contribution of certain assets,
including five operational satellites and one satellite under construction (K-TV satellite), related
assignments with associated frequencies to New Skies, and a cash contribution of $60 million.  Most of
the customer service contracts were assigned to New Skies or continued through "leaseback"
arrangements.  New Skies and INTELSAT also entered into several service agreements by which
INTELSAT provides, on a transitional basis, operational and other support to continue satellite services
until New Skies can provide such functions on its own.  

9.    INTELSAT incurred costs related to the study and creation of New Skies and incurred internal
costs associated with the construction of the K-TV satellite totaling $22,000,000.  A note agreement was
signed on November 30, 1998 between INTELSAT and New Skies obligating New Skies to reimburse
INTELSAT for these costs.  The $22,000,000 note bears interest at six percent payable semi-annually, and
repayment of the note is required in full within thirty days following an initial public offering by New
Skies.  On the closing date (November 30, 1998), INTELSAT distributed 90 percent of its shares in New
Skies to its investment shareholders (its Signatories).  INTELSAT holds the remaining 10 percent interest
in New Skies in a nonvoting trust.  

          B.  Continuity of Services

10.  The Assembly Decision endorsed several means to ensure continuity of services once satellites
were transferred to New Skies.  These measures included contract novation or assignment, leaseback
arrangements or other "temporary measures."  The Assembly Decision recognized that:

                    the issuance of landing rights or operating licenses and any limits on their scope and
          duration is the sovereign right of each country to determine and actions by governmental
          authorities may be guided by competition principles.

11.  Following New Skies's creation, the Commission notified U.S. earth station licensees, previously
authorized to operate with the INTELSAT satellites transferring to New Skies, that they would need to
modify their licenses in order to continue to serve the United States using a New Skies satellite.  The
Commission stated that it would consider these applications subject to the framework established in the
Commission's DISCO II Order implementing the U.S. WTO Basic Telecom Agreement's satellite
commitments appended to the World Trade Organization's General Agreement on Trade in Services
(GATS).  The Commission subsequently released a second Public Notice listing the modification
applications that had been accepted for filing and establishing a pleading cycle to accept comments from
interested parties.  

12.  In order to continue providing services to customers after the asset transfer but prior to a
Commission decision on the modification applications, licensees also submitted requests for Special
Temporary Authority (STA) to operate pursuant to Section 309 of the Communications Act and Section
25.120 of the Commission's rules.  

13.  On November 30, 1998, the International Bureau released an Order granting over 90 STA requests
upon transfer of the satellites to New Skies.  In the STA Order, the Bureau stated that in order to evaluate
the modification applications, in accordance with the framework adopted in the DISCO II Order, it would
need a complete record that includes final copies of all support service agreements negotiated between
INTELSAT and New Skies as well as other relevant documentation.  The STA Order ensured that earth
station licensees could continue operations using the New Skies satellites, pending final action on the
underlying modification applications.  In addition, on June 9, 1999, the Bureau granted STA requests for
earth stations seeking to access the New Skies satellites, for the first time, to provide new services.

14.  PanAmSat Corporation (PanAmSat) filed a Petition to Deny the earth station applications seeking
to access New Skies's satellites.  New Skies, Kelly Broadcasting Systems, Inc. (Kelly Broadcasting), BT
North America, Inc. (BTNA), Comsat Corporation (Comsat) and USA Teleport, Inc. (USA Teleport) filed
Oppositions to PanAmSat's Petition to Deny.  The Royal Netherlands Embassy and the European
Commission filed letters in support of New Skies's entry into the U.S. market.  PanAmSat filed Reply
Comments.  BTNA, New Skies, and Comsat also filed Reply Comments.  In February of 1999, New
Skies filed documents requested by the Bureau in the STA Order.  New Skies has filed additional ex parte
letters on several subsequent occasions.  PanAmSat filed a response to New Skies's ex parte letters. 
Columbia Communications Corporation (Columbia) and Ellipso, Inc. (Ellipso) filed ex parte letters asking
the Commission to defer action on the New Skies applications until New Skies can make a showing that it
has been privatized and is operating independent of INTELSAT.  Williams Communications, Inc., also
filed an ex parte letter asking the Commission to approve the New Skies applications.  We also have
received letters from Members of Congress, some supporting New Skies's entry into the U.S. market and
others expressing their opposition to New Skies's entry into the U.S. market.  PanAmSat, however,
requests that the Commission authorize New Skies for a limited two-year term because of various
competitive concerns.
 
                        III.  DISCUSSION

15.  New Skies was created to provide multi-regional video distribution, interactive multimedia services
to residential and business customers and DTH satellite services.  The intent, according to New Skies,
was to create a new, effective competitor free from the constraints INTELSAT has experienced as an IGO
in responding to competition, but not having the attributes that INTELSAT's competitors have contended
give an IGO competitive advantages.  The Assembly Decision states that the Assembly's goal was to create
a new company that ultimately would become independent of INTELSAT.  The United States supported
the Assembly Decision, provided that it would result in true separation and independence between
INTELSAT and New Skies.

16.  The United States had two primary concerns during negotiations to create New Skies: (1) that New
Skies not be accorded preferential market access or unfairly benefit from its INTELSAT heritage; and (2)
New Skies and INTELSAT not be able to engage in collusive or market distorting behavior through cross-
subsidization and other means.  Additionally, the United States recognized that the benefits of introducing a
new competitor would not be fully realized if New Skies operated as a mirror image of INTELSAT.  These
concerns and the U.S. policy goal that New Skies be independent of INTELSAT were reflected in our 1997
DISCO II Order implementing the WTO Basic Telecom Agreement.  The action we take here, under the
Commission's DISCO II standard, is intended to be consistent with and ensure the fulfillment of the 1998
Assembly Decision.

          A.  DISCO II Standard

17.  In November 1997, the Commission issued regulations implementing our commitment under the
WTO Basic Telecom Agreement to open the United States's FSS and mobile satellite service markets to
satellites licensed by WTO countries.  In the DISCO II Order we adopted a presumption in favor of entry
for non-U.S. satellites licensed by a WTO member.  We also stated that the presumption could be
rebutted by a showing of potential for competitive harm.  In these cases, we reserved the right to attach
conditions to any grant of authority.  In the DISCO II Order, we also held that, in the exceptional case, in
which an application would pose a very high risk to competition in the U.S. satellite market, we would deny
the application.
  
18.  In the DISCO II Order, we recognized that prospective affiliates of IGOs, such as INTELSAT or
Inmarsat, raised special competition concerns because of their unique institutional heritage.  Thus, we set
forth specific criteria to apply in determining whether an application to serve the U.S. market by an IGO
affiliate, with satellites authorized by a WTO country, raises the potential for competitive harm. 
Specifically, we stated that we would consider any potential anticompetitive or market distorting
consequences of continued relationships or connections between the IGO and its affiliate, particularly, the
risk or likelihood of collusive behavior or cross-subsidization.

19.  We stated that we would evaluate the ownership structure of the IGO affiliate, including its
affiliation with INTELSAT, the effect of INTELSAT and Signatory ownership, and whether the affiliate
can directly or indirectly benefit from IGO privileges and immunities.  We also stated we would evaluate
whether an arm's-length relationship exists between the IGO and the affiliate.  This evaluation would
consider the extent to which there are separate directors, officers, employees, and accounting systems, as
well as fair market valuing for permissible business transactions, verifiable by an independent audit and
consistent with normal commercial practices.  We noted that, in conducting our analysis, we would
consider other issues, such as the extent of common marketing or recourse to the IGO's assets for credit or
capital, and whether the IGO registers or coordinates spectrum or orbital locations on behalf of its
affiliate.
     
20.  Finally, the DISCO II Order stated that the Commission, when considering the competitive impact
of the IGO affiliate's entry into the U.S. market, would specifically consider any arrangements agreed to by
the United States as a result of any international negotiations.  Thus, we must consider the effect of the
Assembly Decision in applying our DISCO II standards to applications seeking to operate with New Skies
for services, to, from and within the United States.

21.  The concerns we raised in the DISCO II Order regarding the legacy of IGO affiliates, and their
potential to undermine competition, were well-founded.  A GAO Report has found that approximately 94
percent of INTELSAT's Signatories are partially government-owned, and 83 percent are completely
government-owned and operated.  Moreover, 71 percent of the Signatories also operate as their country's
regulatory authority, responsible for decisions on licensing, spectrum allocation and market access.  Most
of the high-growth markets for new video services are located in countries in which the Signatory is also the
regulatory authority.  The GAO Report also notes that independent satellite systems have long complained
that the Signatories were using their authority to favor INTELSAT by authorizing earth stations only if
they serve INTELSAT's satellites, assessing prohibitively high tariffs on smaller earth stations used by
private satellite systems, and denying or restricting access to necessary radio spectrum within the countries
for the transmission of satellite signals.  In view of the potential of many Signatories to either control or
influence the terms of access to their national markets, the creation of a global satellite provider owned by
INTELSAT and its Signatories raised concerns that such provider would enjoy privileged market access in
a number of countries or that its competitors would be denied significant market access opportunities.

          B.  INTELSAT Assembly of Parties Decision

22.  In view of these concerns, the Assembly undertook measures to assure the independence of New
Skies from INTELSAT and a pro-competitive outcome of the creation of New Skies.  The Assembly
decided: (1) that there should be a "natural dilution" of Signatory ownership in New Skies through an initial
public stock offering (IPO) and voluntary share trading;" and (2) to adopt various competitive safeguards
to assure fair competition between New Skies and its competitors.  These provisions were central to U.S.
support for the Assembly Decision.

23.  The Assembly noted that in order to raise the very sizeable requirement for development capital,
that New Skies [INC] will have early in its existence, "an IPO will take place by the end 1999 and, subject
to market conditions being favorable, as end early as June 1999."  The Assembly, however, declined to
mandate a specific date for the IPO and did not specify a percentage of Signatory ownership that should be
targeted for dilution.  Instead, with the objective of ensuring independence from INTELSAT, the Assembly
created an ex post review process that focused on the ownership structure of New Skies.  Specifically, the
ex post review process provides that "natural dilution" should achieve a "substantial" non-Signatory
ownership in New Skies at the end of a fixed period of time.  The review process requires that New
Skies's "best efforts to achieve an appropriate level of non-Signatory ownership will be considered by
competition authorities" and that authorities "will monitor and regulate INC's commercial activities,
including its efforts to increase the level of or accelerate the pace of non-Signatory ownership, in
accordance with national and multinational competition law and regulatory policy."

24.  The INTELSAT Assembly also concluded that it was necessary to adopt "meaningful and effective
safeguards to assure fair competition between INC and its competitors."  These competitive safeguards
were intended to ensure that New Skies did not derive competitive advantages from its relationship with
INTELSAT and the Signatories.  The safeguards include: (1) a waiver by INTELSAT and the Signatories
of their privileges and immunities with respect to their relationship with New Skies; (2) location of New
Skies's headquarters operations in a country that honors international discovery requests; (3) no
participation by nor responsibility of INTELSAT for ITU registration or coordination activities on behalf
of New Skies after transfer of the satellites; and (4) a clearly defined and visible arm's-length relationship
between New Skies and INTELSAT.

25.  The language in the Assembly Decision ensuring an arm's-length relationship between New Skies
and INTELSAT mirrors the DISCO II standard for IGO affiliates.  Under the Assembly Decision, a proper
arm's-length relationship between New Skies and INTELSAT requires: 
(1) separate officers, directors, employees, headquarters and accounting systems; (2) fair market value for
permissible transactions verifiable by an independent audit process as appropriate and consistent with
normal commercial practice; (3) no common marketing or recourse to INTELSAT assets for New Skies
credit; (4) transitional contracts valued at a verifiable fair market price for a limited period of time to be
negotiated between the Board of Governors and New Skies management after which New Skies would be
able to procure such services through open competitive tender; and (4) Party inspection of all contracts and
transaction between INTELSAT and New Skies.  Finally, as to the transitional services, the INTELSAT
Assembly concluded that "it is essential that the duration of the transitional services be limited and that a
pure arm's-length relationship between INTELSAT and New Skies is established as soon as possible."  

26.  In addition, the Assembly Decision provides for: (1) a commitment from New Skies not to seek
exclusive authorization to provide services in any country or region; and (2) an agreement by Signatories
subscribing to New Skies not to foreclose landing rights to New Skies's competitors where the Signatories
have such authority under national law.  Finally, the INTELSAT Assembly recognized that any limits on
the scope and duration of landing rights or operating licenses "is the sovereign right of each country," and
that "actions by governmental authority may be guided by competition principles." 

          C.  Analysis of New Skies Relationship with INTELSAT

27.  As an IGO affiliate, New Skies's entry into the U.S. market must be analyzed in accordance with
the IGO affiliate standard adopted in the DISCO II Order.  In applying the DISCO II standard to the earth
station applications seeking to operate with New Skies satellites, and consistent with the INTELSAT
Assembly Decision, we consider the potential for any anticompetitive or market distorting consequences of
continued relationships or connections between New Skies and INTELSAT.  For purposes of this analysis,
we address: (1) the ownership structure of New Skies; (2) privileges and immunities; and (3) arm's-length
safeguards.

               1.  Ownership

28.  Market Access.  PanAmSat argues that because New Skies is 90 percent owned by INTELSAT's
Signatories, the vast majority of whom control landing rights in their home countries,  New Skies holds an
advantage over PanAmSat and other competitors when trying to gain market access. According to
PanAmSat, New Skies's owners have the ability and the incentive to discriminate against New Skies's
competitors in their home markets.  PanAmSat contends that even a Signatory with a small stake in New
Skies stands to gain by ensuring that New Skies provides satellite services to that Signatory's home market
rather than an unaffiliated competitor.  

29.  Moreover, New Skies's current ownership structure also could create the potential for collusion
among its current investors.  For example, New Skies's current owners, which include some of the largest
telecommunications providers in the world, potentially could use New Skies to coordinate certain business
activities to the detriment of consumers.  Because many of the Signatories are still the dominant suppliers
of telecommunications services in their respective countries and presumably have an incentive to slow the
rate of competition into their countries, they might find New Skies a vehicle through which to come
together and attempt to restrain or reduce competitive entry and competitive price pressures in their
respective countries.

30.  New Skies and other commenters in this proceeding dispute these concerns.  First, New Skies
claims that the DISCO II Order states that when non-U.S. satellite service providers, such as New Skies,
are licensed by WTO Members, they are not subject to a market entry analysis.  New Skies and USA
Teleport argue that the DISCO II Order states that the WTO status of the country authorizing the satellites
seeking to serve the United States, and not the ownership structure of the satellite operator, is dispositive of
market entry.  We disagree with New Skies and USA Teleport that the DISCO II Order foreclosed an
evaluation of the ownership structure of the satellite operator.  The IGO affiliate standard adopted in the
DISCO II Order specifically provides that in assessing the competitive effect of an IGO affiliate entering
the U.S. market, we must consider "the ownership structure of the affiliate and the effect of IGO and other
Signatory ownership .  . ."  In addition, the ex post review process, adopted in the Assembly Decision,
compels New Skies to provide to competition authorities in the jurisdictions in which it operates
information regarding its ownership makeup and other information required of commercial companies.  

31.  Second, New Skies, BTNA, and Comsat assert that, in any event, Signatories owning New Skies's
shares committed, in the Assembly Decision, that they would not foreclose landing rights to New Skies's
competitors.  Moreover, New Skies and Comsat state that only nine of New Skies's shareholders directly
hold more than two percent of New Skies's shares, noting that all are from WTO member countries and
must comply with the non-discrimination obligation under the WTO Agreement.  New Skies contends that
its remaining shareholders each holds less than two percent of New Skies's shares, with the vast majority of
these entities holding interests of less than one percent.  According to New Skies, these small ownership
interests would not induce shareholders to favor New Skies if another business deal was more attractive.  
  
32.  Despite New Skies's assertions to the contrary, we recognize and share PanAmSat's concerns that
New Skies's current ownership structure, if left intact, could give New Skies an advantage when seeking
market access.  The WTO protections cited by New Skies as limiting the ability of INTELSAT's
Signatories to discriminate, in terms of market access in favor of New Skies, are not available in countries
that are not members of the WTO.  We note that both non-WTO Signatories and New Skies may benefit
by restricting market access to New Skies's competitors.  First, Signatories from non-WTO countries hold
ten percent of New Skies's voting shares.  These non-WTO investors account for approximately 30
percent of the world's population and 18 percent of world Gross Domestic Product (GDP).  In addition,
the non-WTO investors in New Skies are among the 71 percent of INTELSAT Signatories that are wholly
or partially owned by the national government or an agency of the government and continue to control or
influence access to a significant amount of international telecommunication traffic.  Moreover, barriers to
entry (i.e., obtaining landing rights) in many of these non-WTO countries make it difficult for satellite
service providers, including U.S. satellite providers, to begin providing services in these markets.  A non-
WTO member country, whose Signatory is also an  investor in New Skies, has the financial incentive and
the ability to permit New Skies entry into its market while discriminating against other satellite competitors
(such as PanAmSat, Loral-Orion, Columbia and GE American).  The Signatories may either deny access
or permit access to New Skies's competitors under less favorable terms and conditions.  This type of
preferential market access may pose competitive concerns.
 
33.  Second, as we have recognized, many large multinational corporations seek to develop
relationships with telecommunications companies that can provide telecommunications services to, from,
and within many countries in all parts of the world.  As we explained above, because of New Skies's
ownership structure and its relationship with INTELSAT and its Signatories, New Skies may be able to
obtain access to some countries that other competing satellite companies will be unable to obtain.  Clearly
this would give New Skies a competitive advantage in obtaining multinational corporate clients.  If New
Skies simply offered lower prices or better services than its competitors because it were more efficient, the
fact that it attracted customers away from competitors would not raise competitive issues here.  However,
to the extent that New Skies may be able to use its relationship with INTELSAT and its Signatories to
prevent other companies from providing services to the same number of foreign countries, or could make it
more costly for competitors to provide service into some of the countries in which they were able to obtain
access, then New Skies would indeed pose a potential for competitive harm.  

34.  These potential advantages might enable New Skies to outbid or underprice its rivals.  In the
extreme case, New Skies might even be able to drive some of its weaker competitors out of business, or at
least reduce the probability of new entry by additional satellite competitors.  If New Skies were successful
in such a strategy, it would then have more power in the future to raise prices or dictate other terms and
conditions to its customers in a market that had become less competitive.  In order to ensure that New Skies
becomes independent and does not have the incentive and ability to engage in activities that could
potentially harm competition, we grant the earth stations accessing the New Skies satellites licenses that are
shorter in duration than a full 10-year term license.  This approach allows us to engage in the ex post
review process adopted by the Assembly of Parties, which specifically calls for authorities such as this
Commission to consider efforts to increase the level of or accelerate the pace of non-Signatory ownership. 

35.  We recognize that 90 percent of New Skies voting shares are held by Signatories from WTO
countries that must adhere to the general WTO principles of most-favored nation (MFN) and
Transparency, that the individual INTELSAT Signatory investors have a relatively small ownership stake
in New Skies, and that fifty-six members of the WTO, also members of INTELSAT and investors in New
Skies, agreed to open markets for all or selected services provided by satellites.  The general MFN
obligation requires a WTO Member to treat all foreign satellite operators the same once it opens its market
to a particular foreign operator.  Our concerns regarding the potential for New Skies's current owners to
unfairly restrict market access by New Skies's competitors and to coordinate business strategies to the
detriment of consumers are lessened, to some extent, by these factors, which  may reduce the incentive of
the shareholders to restrict market access or use New Skies to coordinate their business activities.  The
presence of these factors add to our conclusion that the risk of competitive harm is not so high as to
warrant denial of the applications and find instead, that a three-year license term is appropriate given the
potential for competitive harm.

36.  Initial Public Offering.  According to PanAmSat and Columbia, in view of New Skies's current
relationship with INTELSAT and its Signatories, the Commission should not grant a permanent
authorization to New Skies at this time.  They argue that if the Commission were to grant New Skies
permanent authority to serve the U.S. market prior to the IPO, there would be no realistic opportunity to
assess the effect of the IPO on the ownership structure.  Moreover, PanAmSat argues that New Skies has
done no more than make preliminary plans to have an IPO.

37.  New Skies asserts that it intends to dilute ownership through an IPO and voluntary share trading in
public markets.  However, as a new business, New Skies notes that its bankers have advised it that prior
to an IPO, New Skies must: (1) complete the task of establishing its corporate infrastructure and largely
assume those limited functions now being performed by INTELSAT; (2) establish a credible commercial
track record; and (3) clearly articulate a long-term growth strategy.  New Skies also asserts that its
management is committed to completing the IPO and plans to commence an offering in the first quarter of
2000 in order to: (1) raise much-needed capital for fleet expansion and replacement; (2) satisfy the desires
of many of its shareholders to create the means for them to monetize their stake in New Skies; and (3)
create a "currency" with which management can pursue strategic acquisitions and other transactions.

38.  As described above, the Assembly Decision does not legally commit New Skies to hold an IPO; it
simply states that reliance on natural dilution through an IPO and voluntary share trading on public
markets are means to achieving "substantial non-Signatory ownership."  Moreover, the Assembly
Decision states: 

                              Interested national and multinational competition authorities will communicate
               their views regarding the appropriate levels for non-Signatory ownership in New
               Skies, and will review the plans of New Skies's board and management to achieve
               those levels.

39.  The U.S. Statement to the Assembly Decision, however, emphasized the importance of achieving
New Skies's independence from INTELSAT in a timely way.  Fundamentally, the U.S. Statement affirmed
that New Skies's independence is based on "the speed with which INC [New Skies] proceeds with an IPO
and the size of that IPO."  Yet, New Skies indicates that an IPO will be held in the first quarter of 2000,
and not in 1999 as anticipated by INTELSAT, because of market conditions.  Therefore, it is now clear
that New Skies will not be able to fulfill the expectations that an IPO would be held in 1999 -- expectations
upon which the United States relied when associating with the Assembly Decision. 

40.  We realize that there was a five-month delay in New Skies becoming operational, and that this may
have been a cause of the delay in the IPO.  We also recognize that the timing and size of the IPO is
dependent upon numerous market factors.  We therefore will not mandate that New Skies hold an IPO
within a specified time.  Nevertheless, we agree with Comsat that the Assembly Decision provides for a
process by which regulatory authorities can monitor New Skies's efforts to achieve a reasonable level of
non-Signatory ownership, and to take appropriate action if New Skies fails to do so.  We also believe
that non-Signatory ownership in New Skies remains essential to achieve an independent New Skies, and is
necessary to avoid the potential for New Skies to secure market access advantages over its competitors. 
Therefore, consistent with our DISCO II standard and the Assembly Decision, and in recognition of the
public interest benefits to be gained from this decision, as described herein, we encourage New Skies to
continue its efforts to become independent of INTELSAT as anticipated by the Assembly Decision,
including achieving a substantial level of non-Signatory ownership.  We also impose quarterly reporting
requirements on New Skies as to its progress toward this goal.  Such a report shall include information on:
(1) selection of an investment bank/underwriter; (2) filing of the registration statement with the Securities
and Exchange Commission; (3) completion of relevant financial analysis and due diligence; and, (4) a copy
of the Preliminary Prospectus and the Final Prospectus (when made available to the general public).

          2.  Privileges and Immunities

41.  INTELSAT is entitled to immunity from national laws and courts.  For example, INTELSAT does
not have to pay corporate taxes and is not subject to employment laws, and is completely immune from
antitrust suits.  In contrast, New Skies does not have any privileges and immunities and will be subject to
antitrust actions.  Moreover, the Assembly agreed to a limited waiver of INTELSAT's immunity from
suit involving matters that relate to its relationship with New Skies.

42.  PanAmSat states that the ongoing relationship between New Skies and INTELSAT  gives New
Skies an advantage over other competitors.  New Skies responds by arguing that the Assembly Decision
incorporates a number of safeguards to ensure that the creation of New Skies will enhance competition,
including the decision that New Skies has no "privileges and immunities" and will be subject to lawsuits
and discovery requests just like any other Netherlands corporation. 

43.  The Assembly Decision does not extend INTELSAT's privileges and immunities to New Skies. 
Therefore, New Skies will operate in the U.S. market subject to the same laws that apply to U.S. satellite
service providers.  Moreover, the Assembly Decision specifically waives INTELSAT's privileges and
immunities with respect to INTELSAT's relationship with New Skies.  INTELSAT's waiver provides
additional safeguards against INTELSAT and its Signatories when engaging in activities on behalf of New
Skies.  Given that New Skies is not afforded the competitive benefit of privileges and immunities and
INTELSAT has waived its privileges and immunities with respect to its relationship with New Skies (as an
additional safeguard against competitive harm), we find that no market distorting consequences exist with
regard to INTELSAT's privileges and immunities.

          3.  Arm's Length Relationship between INTELSAT and New Skies

               a.  Separate Officers/Directors/Employees

44.  Under New Skies's Articles of Corporate Governance, New Skies is governed by a Supervisory
Board which is equivalent to a Board of Directors, and a Management Board that comprises the officers of
the company.  Members of the Supervisory Board are appointed and dismissed by New Skies's
shareholders.  However, the New Skies Articles of Association provide that no member of the
Supervisory Board may be a concurrent member of INTELSAT's Board of Governors or an employee of
INTELSAT.  The General Meeting of New Skies's shareholders also determines the number of members
of New Skies's Management Board.  The Management Board is in charge of the day-to-day management
of New Skies.  

45.  PanAmSat argues that although INTELSAT's management and employees are barred from
participating as members of New Skies's "Supervisory Board," this restriction is virtually meaningless
because there are no requirements that the members of New Skies's "Management Board" be independent of
INTELSAT.  According to PanAmSat, there is nothing to prevent INTELSAT's management from
participating in or even controlling the Board of Management or taking executive positions in the
company.  Moreover, PanAmSat and Columbia argue that New Skies's current Supervisory Board
members have close connections to INTELSAT's Signatories.  We also note that, if the management
were not independent, New Skies's current ownership structure could create the potential for collusion
between New Skies and INTELSAT.  Instead of deciding when, where, and how to compete in a manner
designed to advance its business interests, New Skies's current owners could control the operations of the
company in a manner that advances the interests of INTELSAT.  Absent separate officers, directors, and
employees, New Skies and INTELSAT might have an incentive to share marketing information or
implicitly or explicitly make arrangements to divide up markets in terms of either services supplied or
particular country routes or regions of the world to be served.  If implemented, such a strategy could reduce
or prevent competition between the two companies and thus make it easier for them to raise prices with
respect to those geographic markets or particular services.  In other words, the two entities might find it in
their interest to collude in setting prices or determining what services to provide.

46.    According to New Skies, its current management team and five of the nine current members of the
Supervisory Board have no ties to INTELSAT or its Signatories.  This action, according to New Skies,
underscores its commitment to operate as a stand-alone commercial satellite operator wholly independent of
INTELSAT.  Furthermore, New Skies asserts that the Supervisory Board cannot have any INTELSAT
officers, employees or Governors as reflected in the New Skies's Articles of Association.  Comsat,
BTNA, and New Skies claim that PanAmSat's contentions that INTELSAT will control the day-to-day
operations of New Skies are false.  Comsat cites the Assembly Decision's language calling for "separate
officers, directors, and employees," and also notes that the creation of the dual board system was necessary
to comply with Netherlands law.

47.  We recognize PanAmSat's concerns that no specific language exists in New Skies's Articles of
Association that prohibits INTELSAT employees and or management from exerting control of New Skies's
Management Board.  However, we note that several members of New Skies's Management Board were
employed by PanAmSat before being employed by New Skies.  Moreover, no member of New Skies's
Management Board is currently employed or controlled by INTELSAT.  Therefore, we find that New
Skies has separate officers, directors, and employees, consistent with our DISCO II Order and the
Assembly Decision.

          b.  Transitional Agreements between New Skies and INTELSAT

48.  In the course of creating a separate affiliate, the INTELSAT Assembly approved several draft
service agreements to ensure the continuation of service while New Skies builds the necessary technical
infrastructure to support the operation of the transferred satellites on its own.  Following the creation and
incorporation of New Skies, INTELSAT and New Skies negotiated the final terms of the agreements.

49.  Transition Services Agreement.  The Transition Services Agreement embodies several agreements
under which INTELSAT provides New Skies with information services support, financial and
administrative support, service booking support, K-TV ground networking support, K-TV construction and
launch support services, contract administration, certain customer support services, satellite management
services, and various engineering services.  The Transitional Services Agreement expires November 30,
1999.  

50.  PanAmSat claims that the Transition Services Agreement enables INTELSAT to manage and
operate New Skies's satellite system and provide technical/operational services free without an arm's-length
contract.  According to PanAmSat, the relevant agreements do not specify a term, the required level of
performance, or pricing for the services.  According to PanAmSat, a failure to specify terms, performance
measures, and pricing robs New Skies of its ability to terminate the agreement if INTELSAT fails to
perform its obligations.  

51.  New Skies responds by stating that the vast majority of the services provided under the Transition
Services Agreement have expired and the balance will expire upon the in-orbit delivery of the K-TV
satellite.  Specifically, New Skies states that the information systems support, financial and
administrative systems support, booking services support, and all customer service contracts have
expired.  Moreover, New Skies argues that those arrangements had not been open ended, as claimed by
PanAmSat, but had been subject to limits on duration and defined cost methodologies.

52.  In addition, New Skies, Comsat and BTNA explain that the INTELSAT Board of Governors
approved an INTELSAT management proposal that the price for the services would be negotiated using the
methodologies and assumptions (including a cost plus 20 percent mechanism) incorporated in a December
1997 presentation to the INTELSAT working party.  According to New Skies, such cost plus pricing is a
common commercial practice and ensures there will be no cross-subsidy from INTELSAT to New Skies. 


53.  We recognize the need for INTELSAT to perform certain transitional services for New Skies in
view of the fact that New Skies inherited five operational satellites with existing customers before it could
hire employees and obtain workplace arrangements required to commence and develop operations. 
Moreover, in the case of ICO Communications Ltd., we recognized that Inmarsat would provide various
development and support services to ICO similar to those provided by INTELSAT to New Skies.  New
Skies also informed the Commission that all but the K-TV Ground Network System contract have
expired.  We, therefore, find that because all of the transitional services agreements have expired, or in
the case of the KTV Ground Network System, is expected to expire shortly, these agreements do not create
any potential for competitive harm. 

54.  Space Segment and Satellite Communications Services Agreement.  These two agreements were
negotiated between INTELSAT and New Skies to provide control services for the operation of the
satellites.  The Space Segment Services Agreement involves the operation and control of the satellite bus
and payload.  This Agreement expires eighteen months from the date of the asset transfer, with two options
to extend for six month period.  The Satellite Communications Services Agreement involves the
operation, control, and monitoring of traffic on the satellite.  This agreement expires on November 30,
1999.  

55.   PanAmSat and Columbia claim that INTELSAT will manage and operate the New Skies's satellite
system under the terms of these agreements.  PanAmSat contends that INTELSAT will perform virtually
all technical functions relating to the management and operation of New Skies's satellite system, including
carrier management and associated services. According to PanAmSat, such services go beyond tracking,
telemetry and control (TT&C).  PanAmSat asserts that this will put INTELSAT in the middle of New
Skies's day-to-day management by having INTELSAT develop link budgets for particular customer
applications, assign carriers, and analyze and respond to issues of carrier performance. Moreover,
according to PanAmSat, such an agreement cedes to INTELSAT control over New Skies's long range
system planning decisions.

56.  New Skies states that under the Space Segment Services Agreement, it will obtain certain technical
services from INTELSAT that include TT&C functions (with outsourcing of TT&C being a common
practice in the satellite field).  According to New Skies, these services will be provided pursuant to an
arm's-length contract negotiated between New Skies and INTELSAT.  New Skies also explains that this
arrangement is not open-ended, but is subject to a limit on duration and a specific pricing term (cost plus
20 percent).  With regard to the Satellite Communications Services Agreement, New Skies states that it
intends to take over operations within the twelve month term.     
57.  We do not believe that the Space Segment Services contract poses potential competitive concerns. 
The Space Segment Service Contract only provides control services for the satellites, i.e. keeps the
satellites in their proper place and altitude and changes the configuration of the communications payloads
as requested by New Skies.  This arrangement is similar to the contract between Columbia
Communications Corporation and INTELSAT for the control of Columbia's 515 satellite.  The Satellite
Communications Services Contract, however, encompasses both the activation of new carriers and the
maintenance of existing carriers, and may give INTELSAT direct contact with New Skies customers. 
We find that this agreement while necessary for transitional purposes, involves the type of contacts with
INTELSAT that are not normally appropriate under an arm's-length relationship and may increase the
potential for competitive harm.   However, we find that ending the satellite communications services
contracts at the early date anticipated by New Skies will eliminate competitive concerns regarding
INTELSAT's access to New Skies customers.  We require New Skies, in its quarterly report to the
Commission, to include information on its progress towards terminating the remaining agreements with
INTELSAT (i.e., Satellite Communications Services Contract and the K-TV contracts).

58.  Ensured Capacity Rights (ECR) Agreement.  The ECR Agreement gives INTELSAT the right,
over a 25 year period, to obtain under certain circumstances, New Skies capacity for a fixed fee.  The ECR
Agreement addresses INTELSAT's concern over its ability to provide, on a commercial basis, the space
segment required for international telecommunications services on a non-discriminatory basis to all areas of
the world.  Indeed, the United States participated in the negotiation leading to the ECR Agreement and
ultimately agreed to ensure that members of the developing world have access to space segment capacity, if
needed.  The ECR Agreement mandates that New Skies submit a bid for the provision of ECR capacity to
be carried out by INTELSAT.  New Skies is obligated to submit a bid if New Skies possesses spare
space segment capacity.  New Skies also is required to market, sell, or lease, as an agent for INTELSAT,
excess capacity beyond the ECR capacity.  

59.  PanAmSat argues that the ECR Agreement gives INTELSAT special rights to obtain New Skies
capacity at fixed rates for a 25-year term.  PanAmSat further argues that given the nature of the satellite
business, particularly the boom and bust cycles that occur as shortages of capacity turn into gluts and back
to shortages, the ability to secure capacity at fixed prices is an extraordinary right.  New Skies responds
that several Signatories insisted on providing INTELSAT with the ability, in very limited circumstances, to
obtain capacity from New Skies to support lifeline services in INTELSAT's role as "carrier of last
resort."  In addition, New Skies adds that the circumstances under which these rights might be exercised
are limited.  New Skies also asserts that the agreement specifies a "cost plus" basis for determining the
charges New Skies will assess for the ECR capacity, ensuring that no-cross subsidy from New Skies to
INTELSAT occurs.  Conversely, INTELSAT is not obligated to accept the New Skies ECR proposal
should alternative capacity be available at a lower cost to INTELSAT, thus ensuring that no cross-subsidy
is created by the cost plus formula included in the agreement.   

60.  Comsat further explains that the ensured capacity rights mechanism was an essential element of the
transfer of the six INTELSAT satellites.  This provision, according to Comsat, is designed to reassure the
developing world that the spin-off would not place in jeopardy INTELSAT's obligation to provide universal
service.  Moreover, Comsat points out that the United States actively participated in these discussions
and did not object to the inclusion of the ECR Agreement in the overall restructuring package.  Finally,
Comsat argues that the ECR Agreement does not raise any possibility of cross-subsidization from
INTELSAT to New Skies.  The benefit, if one exists, actually goes to INTELSAT, according to Comsat. 


61.  Overall, we conclude that the ECR Agreement does not create competitive concerns and, moreover,
that it may provide an important benefit to some entities in the developing world.  The ECR Agreement
concerns the equivalent of only one transponder on a satellite that typically carries 24 to 36 transponders. 
Thus, the potential competitive harm of any agreement involving such a small fraction of satellite capacity
would be insignificant.  Moreover, the ECR Agreement would appear to be more of a commercial burden
rather than an unfair competitive benefit to New Skies since INTELSAT obtains the use of the transponder
capacity at a fixed rate.  In addition, we recognize the importance of such an agreement to INTELSAT
members from the developing world.  Given the importance of this agreement to the developing world and
the context in which it was negotiated, we believe that the benefits of this agreement outweigh any potential
for competitive harm.  

          c.  Assignment of Customer Contracts/Leaseback Arrangements

62.  The five operational satellites transferred from INTELSAT to New Skies were serving  customers
under existing contracts when the transfer occurred.  In addition, there were commitments to customers in
the form of guaranteed reservations and first refusal reservations for capacity on the satellites to be
transferred to New Skies.  The Assembly Decision endorsed the principle of contract novation as a basis
for transferring customer commitments to New Skies and that principle is reflected in New Skies's
Subscription Agreement.  The Assembly Decision recognized, however, that it may not be possible for
national regulatory authorities to complete, prior to the transfer, the process of obtaining landing rights
approvals to permit service continuity for services on the satellites transferred to New Skies.  Therefore,
as temporary measures, the Assembly endorsed and the Board of Governors subsequently approved
assignment of contracts and leaseback arrangements as a means to assure service continuity following
transfer of the satellites.

63.  Leaseback arrangements are governed by the Transponder Leasing Agreement between
INTELSAT and New Skies that establishes the terms by which INTELSAT leases capacity from New
Skies for use by Signatories.  A number of the customer contracts are subject to a leaseback mechanism so
that INTELSAT can continue to provide a pre-existing service to the customer.  New Skies is denied a
relationship with the customer in the Leaseback arrangements.  Instead, the customer continues a direct
relationship with INTELSAT.  Novation of the INTELSAT contracts, on the other hand, requires each
customer to renegotiate the terms of each contract with New Skies and enter into new contractual
commitments with New Skies.  This option is ideal because it ensures that New Skies has the direct
relationship with its customers as the Assembly intended.  New Skies, thus far, has not been able to novate
successfully any of the customer contracts associated with the five satellites transferred from INTELSAT
to New Skies.  

64.  Assignment of the contracts means that INTELSAT "assigns" its contractual commitments and
delegates its contractual duties to New Skies.  Assigning the customer contract obligates New Skies to
perform INTELSAT's contractual commitments using portions of the space segment transferred from
INTELSAT to New Skies.  However, if New Skies is not able to perform its obligations, INTELSAT
remains responsible for the performance of the customer contracts.  The majority of the customer contracts
were assigned to New Skies by INTELSAT, including Comsat's contracts with INTELSAT to provide
service in the U.S. market.

65.  PanAmSat claims that the strongest evidence of INTELSAT's role as the de facto operator of New
Skies's system is the overall contract approach of "assigning INTELSAT customer contracts to New
Skies."  PanAmSat argues that the assignment of customer contracts has been designed so that, in effect,
nothing changes between INTELSAT and its Signatories as to the contracts being assigned.  PanAmSat
also contends that the Signatories will still receive INTELSAT ownership share credit for their use of New
Skies's satellite capacity and, absent INTELSAT's consent, payments will be made to INTELSAT and then
remitted to New Skies.  PanAmSat also asserts that New Skies may not shift a Signatory customer to
another satellite unless INTELSAT gives its consent.  Furthermore, PanAmSat notes that assignment of
its Signatories customer contracts to New Skies makes INTELSAT a guarantor of New Skies's capacity. 
PanAmSat claims that back-up protection will be provided irrespective of whether the customer's existing
agreement calls for any such protection.  PanAmSat argues that INTELSAT will provide back-up capacity
without charge to New Skies.

66.  New Skies argues that the Assembly Decision provides for both assignment, leaseback and
novation of INTELSAT's contractual obligations to its customers in order to ensure continuity of service. 
Moreover, New Skies contends that it has replaced INTELSAT in its direct operational relationship with
the customers and that New Skies will assume full responsibility for billing and collection for services it
provides under the assigned contracts.  New Skies also argues that it will have complete authority to shift
the Signatory customers to another New Skies satellite without INTELSAT's consent.  New Skies asserts
that in accordance with normal commercial practice, New Skies has the right to enforce the assigned
contracts and the responsibility for asserting any claim against customers under the assigned contracts, and
bears related expenses.  Finally, New Skies contends that INTELSAT is not acting as a guarantor of
New Skies capacity.  Instead, according to New Skies, INTELSAT created an exception in one instance,
whereby it would retain responsibility (through a leaseback arrangement) for the provision of lifeline public
switched network requirements in Portugal.   

67.  During the negotiations leading to the creation of New Skies, novation of Signatory contracts and
termination of leaseback arrangements proved to be major hurdles to the creation of New Skies because
INTELSAT's Signatories receive ownership share credit for their use of INTELSAT's satellites.  The
Assembly decided that if the customer contracts were "assigned" to New Skies, usage on the transferred
satellites could be recognized for INTELSAT investment share calculations.  Thus, if Signatories novate
their respective customer contracts, they lose INTELSAT ownership share credit; if INTELSAT assigns
the customer contracts to New Skies, the Signatories continue to receive INTELSAT ownership share
credit for using the satellites, despite the fact that the satellites are owned by New Skies. 

68.  We understand New Skies cannot unilaterally novate the existing assigned contracts, nor the
existing leaseback contracts.  However, nothing more clearly demonstrates that New Skies is not yet fully
independent of INTELSAT than its inherited customer base.  Moreover, the Signatories' continued reliance
on assignment and leaseback arrangements (with the exception of certain leasebacks intended to assure
lifeline services) originally established only as interim measures to assure continuity of service, will reduce
New Skies's effectiveness as a new competitor.  The fact that these artificial arrangements continue
apparently for the benefit of the Signatories makes it more difficult for New Skies to operate independently
of INTELSAT interests.  Moreover, unless the apparent impediments to the novation process are
removed, we recognize that New Skies's ability to establish a credible, commercial track record necessary
for it to undertake an IPO in the near future would be adversely affected.  Therefore, we find, consistent
with the intent of the Assembly Decision and under the terms of New Skies's Subscription Agreement with
INTELSAT, that New Skies must continue to use its best efforts to novate the assigned and leaseback
contracts in order to demonstrate its independence from INTELSAT.  Because an inherited customer base
provides New Skies an advantage over its competitors and clearly demonstrates a lack of an arm's-length
relationship between New Skies and INTELSAT, we require New Skies to report, on a quarterly basis, its
progress towards novating these contracts.  

          4.  Conclusions Regarding New Skies's Relationship with INTELSAT

69.  We find that New Skies has not yet achieved independence from INTELSAT because: (1) New
Skies has yet to conduct an IPO to achieve "substantial" non-Signatory ownership; (2) New Skies's
customer contracts have yet to be novated as anticipated by the Assembly Decision; and, (3) New Skies has
yet to terminate the remaining service agreements (such as the K-TV agreements and the satellite
communications services contract).  Until New Skies takes these steps to achieve independence from
INTELSAT, there remains a potential for harm to competition in the U.S. market and the benefits that
would result from a new, independent competitor will not be fully realized.  Based on the record overall and
the balance of public interest factors under the DISCO II Order, we conclude that a three-year license term
for earth station operators communicating with the New Skies satellites is more appropriate at this time. 
This approach is necessary because of the serious competition concerns resulting from New Skies's current
position as an affiliate of INTELSAT not yet independent of INTELSAT.  Specifically, because of its
continued ownership by INTELSAT and its Signatories, New Skies's relationship vis-a-vis INTELSAT is
largely unchanged since it was created by the INTELSAT Assembly in March 1998.

70.  The three-year license term will give us a full opportunity to monitor New Skies efforts to become
independent of INTELSAT, while creating a suitable incentive for the company to conduct an IPO creating
substantial non-Signatory ownership.  A limited, three-year license term is consistent with the Assembly
Decision, the IGO affiliate standard adopted in the DISCO II Order, and the Commission's rules.  This
approach will give New Skies the incentive and provide us a full opportunity to monitor New Skies's efforts
to become independent of INTELSAT.  The Commission will consider the appropriate action to extend the
three-year earth station licenses granted today to a normal, full "ten-year" license term, if New Skies
demonstrates on the record that it has achieved independence from INTELSAT.  New Skies may seek to do
so at anytime during the term of the licenses.   

71.  In order for the Commission to evaluate such a request, New Skies should submit information
regarding progress toward and results of: (1) a substantial IPO and any additional plans to increase non-
Signatory ownership; (2) termination of the remaining service agreements (with the exception of TT&C);
and (3) novation of contracts and termination of leaseback arrangements.  The Commission will place this
information on public notice and seek to act on any such request in a timely manner.  

72.  To encourage speedy achievement of independence from INTELSAT and to carry on the ex post
review process established by the INTELSAT Assembly, during the term of three-year license, New Skies
must file quarterly (based on a calendar quarter) with the Commission a status report on its plans for its
IPO and associated dilution of INTELSAT's Signatories's ownership as well as progress on novation of
customer contracts and termination of existing service agreements.  Such reports shall include information
on: (1) selection of an investment bank/underwriter; (2) filing of the registration statement with the
Securities and Exchange Commission; (3) completion of financial analysis and due diligence; (4) a copy of
the Preliminary Prospectus and the Final Prospectus (when made available to the general public); (5)
information on novation of its customer contracts; and, (6) information on termination of service
agreements between New Skies and INTELSAT.  

73.  Finally, this Order modifies existing earth station licenses and grants pending applications by earth
station entities to provide domestic and international FSS services in the United States via the New Skies
satellites.  Accordingly, we modify the existing earth station licenses, previously authorized for a full ten-
year license term, to reflect the three-year license term granted today.  The three-year license term pertains
to that portion of the earth station authorization applicable to the New Skies satellites.  Applications for
new earth station facilities are granted for a three-year license term, unless otherwise extended by the
Commission.  All of the earth station licenses granted today will expire on August 6, 2002 and any earth
station licenses subsequently granted for communications via New Skies's satellites, prior to August 6,
2002, also will expire on August 6, 2002.  

     D.  Other Public Interest Considerations  

          1.  Prohibition Against Exclusive Arrangements

74.  Exclusive arrangements generally take the form of an agreement between a space station operator
or service provider that offers a particular satellite system as the only permissible facility through which to
obtain a particular satellite service between the United States and another country.  Prohibiting these types
of arrangements is intended to facilitate competition by encouraging the use of multiple satellite systems in
other countries and to ensure that all parties have an opportunity to provide truly global service, which also
would facilitate competition in the U.S. market.  In the DISCO II Order, the Commission stated it would
apply all requirements imposed on U.S. satellite systems to non-U.S. systems as well, including the
prohibition on exclusionary arrangements.  Thus, if a provider (U.S. or non-U.S.) has an exclusive
arrangement, we will not authorize service by the provider between the U.S. and the country with which the
provider has such an exclusive arrangement.  We apply this requirement to New Skies.

          2.  Technical Considerations

75.  One of the cornerstones of the Commission's satellite licensing policies is two-degree orbital
spacing between geostationary satellites.  This policy permits the maximum use of the geostationary orbit. 
Applicants must demonstrate that they comply with the Commission's technical requirements designed to
permit two-degree spacing before they are authorized to provide service in the United States.  We license
non-compliant satellites as well as earth stations only when the applicants can demonstrate that their
operations cause no harmful interference to existing satellite operations.  Further, we condition any non-
conforming operations upon a licensee accommodating future satellite networks serving the United States
that are two-degree compliant.  The New Skies satellites do not meet the Commission's two-degree-
spacing requirements.  Consistent with our treatment of U.S. licensed systems, we permit New Skies to
provide service in the United States, on a non-interference basis to two-degree compliant operations.

76.  Specifically, none of New Skies's satellites meets the polarization requirements of the
Commission's rules for the 4/6 GHz frequency band.  In addition, the New Skies's satellites typically do
not meet the FM/TV frequency plan requirement of the Commission's rules.  Also, except for
INTELSAT-K, none of the New Skies satellites will operate on permitted tracking, telemetry and
telecommand frequencies.  Further, the INTELSAT-513 at 183o E.L. does not meet the requirements
concerning saturation flux density, stationkeeping and polarization isolation in the 4/6 GHz frequency
band.

77.  These technical requirements facilitate coordination of satellite networks and if they are not met, it
will be difficult to coordinate the New Skies satellites with satellites serving the U.S. that are two-degree
compliant.  However, there are, at present, no U.S. or foreign licensed satellites serving the United States in
the vicinity of the New Skies satellites that have not been already coordinated with the New Skies satellites
prior to their transfer.  As a result, the New Skies satellites are not expected to cause harmful interference
to any U.S. or foreign licensed satellite serving the United States at this time.  For these reasons, we waive,
on our own motion, the technical requirements described above in order to permit New Skies to continue
service to its U.S. customers and we condition the earth station authorizations to this end.  

78.  In the future, should the Commission authorize access to the U.S. market by a satellite that is two-
degree-spacing compliant, and is located as close as two-degrees from a New Skies satellite, New Skies
would be expected to coordinate, in good faith, with the licensee of this satellite.  If a coordination
agreement is not reached, New Skies's operation must be on a non-interference basis relative to U.S.
services being provided by the compliant satellite.  

79.  We will not permit New Skies's satellite network operations to interfere with U.S. services being
provided by any authorized system that is two-degree spacing compliant, nor can New Skies claim
protection against interference to its operations caused by U.S. services being provided by the two-degree
compliant satellites.

                        IV.  CONCLUSION
     
80.  We conclude based on the record before us that New Skies entry into the U.S. market would not
pose a high risk to competition that could not be cured with conditions, and that, therefore, New Skies,
pursuant to DISCO II, should be permitted entry into the U.S. market.  We find, however, that  New Skies
has not achieved independence from INTELSAT, as anticipated by the Assembly Decision.  New Skies's
lack of independence from INTELSAT could give New Skies a market access advantage over its
competitors as a result of its continuing relationship with an IGO and its members.  For this reason and the
reasons discussed above, we grant three-year licenses to U.S. earth stations operating with New Skies.  

81.  We conclude that this approach is in the public interest because it allows the benefits of New
Skies's entry into the U.S. market while at the same time addresses the competitive concerns at hand.  Our
action today is consistent with and implements U.S. obligations contained in the schedule of commitments
under the WTO Basic Telecom Agreement which is part of the GATS, and the DISCO II Order
implementing those commitments domestically.  We believe that authorizing entry will provide sufficient
flexibility and certainty, for New Skies to move forward with an IPO at a time conducive to market
conditions.  Finally, entry into the U.S. market will enable New Skies to ensure continuity of services and
develop new service options and customer relations different from the Signatory customers assigned to it
upon transfer of the satellites from INTELSAT.  
                                 
                         V.  ORDERING CLAUSES

82.  Accordingly, IT IS ORDERED, that, pursuant to Sections 303(r), 308, 309, and 310, of the
Communications Act of 1934, as amended, 47 U.S.C.  303(r), 308, 309, and 310 pursuant to Sections
25.121(a), 25.137(c) of the Commission's Rules, 47 C.F.R.  25.121(a), 25.137(c), the earth station
applications listed in Attachment A, ARE GRANTED for a limited three-year term, until August 6, 2002,
to provide Fixed Satellite Services (FSS), excluding FSS Direct-To-Home services, to, from or within the
United States by accessing the New Skies 513, New Skies 703, New Skies 803, New Skies 806, and New
Skies K satellites;

83.  IT IS FURTHER ORDERED that the Petition to Dismiss, Deny, or Defer filed by PanAmSat
Corporation IS DENIED; 
 
84.  IT IS FURTHER ORDERED that all of the earth station licenses granted in this Order will expire
on August 6, 2002 and any earth station licenses subsequently granted for communications via New Skies's
satellites, prior to August 6, 2002,  also will expire on August 6, 2002, unless otherwise extended by the
Commission;

85.  IT IS FURTHER ORDERED that this authorization does not authorize New Skies to provide any
Direct-to Home (DTH) service, Direct Broadcasting Satellite (DBS) service, or Digital Audio Radio
Service (DARS) to, from, or within the United States;

86.  IT IS FURTHER ORDERED that at anytime during the three-year license term, New Skies may
make a showing, on the record, that it has achieved independence from INTELSAT and, upon a sufficient
showing, the Commission will consider the appropriate action to extend the earth station licenses to a full
ten-year term;

87.  IT IS FURTHER ORDERED that New Skies file quarterly reports with the Commission regarding
the status of: (1) its IPO and associated dilution of INTELSAT's Signatories ownership; (2) information on
New Skies's progress towards novating customer contracts; and, (3) information on New Skies's progress
towards terminating remaining service agreements between INTELSAT and New Skies.  These reports
shall include specific information on the IPO such as: (1) selection of an investment bank/underwriter; (2)
filing of the registration statement with the Securities and Exchange Commission; (3) completion of
financial analysis and due diligence; (4) a copy of the Preliminary Prospectus and the Final Prospectus
(when made available to the general public); and (5) information on novation of its customer contracts; 

88.  IT IS FURTHER ORDERED that the Commission waives Sections 25.210(a)(1) and (3),
25.211(a), 25.202(g), 25.210(c), 25.210(j)(1), 25.210(i) of the Commission's rules, 47 C.F.R. 
25.210(a)(1), 25.211(a), 25.202(g), 25.210(c), 25.210(j)(1), 25.210(i), to ensure that the space stations
may provide service to the U.S. market; 

89.  IT IS FURTHER ORDERED that access to New Skies satellite networks shall be in compliance
with the satellite coordination agreements reached between the United States and INTELSAT regarding the
operations of New Skies 513, New Skies 703, New Skies 803, New Skies 806 and New Skies K;

90.  IT IS FURTHER ORDERED that consistent with the satellite coordination agreements reached
between the United States and INTELSAT regarding the operations of New Skies 806, the Ku-band
frequencies on New Skies 806 have not been coordinated for operation over North America.  Ku-band
operations over the New Skies 806 satellite in the United States may not cause interference to, and may not
claim protection from, (1) any U.S.-licensed geostationary satellite network and (2) non-U.S.-licensed
geostationary satellite networks operating in conformance with international coordination agreements;

91.  IT IS FURTHER ORDERED that operations over the New Skies 513, New Skies 703, New Skies
803, New Skies 806 and New Skies K satellite networks shall not cause harmful interference to, nor shall
operators accessing these satellite networks claim protection from, U.S. services provided by U.S.
authorized satellite networks that are compliant with the Commission's two-degree spacing rules;

92.  IT IS FURTHER ORDERED that operations over the New Skies 513, New Skies 703, New Skies
803, New Skies 806, and New Skies K satellite networks shall not cause harmful interference to, nor shall
operators accessing these satellite networks claim protection from, United Sates-authorized services that
are compliant with the Commission's two-degree spacing rules and provided over non-United States
authorized satellite networks;

93.  IT IS FURTHER ORDERED that operations over and access to the New Skies 513, New Skies
703, New Skies 803, New Skies 806, and New Skies K satellite networks shall cease immediately upon
notification of harmful interference.  Complaints of all radio interference shall be forwarded immediately to
the Commission in writing;

94.  IT IS FURTHER ORDERED that this authorization is effective upon adoption.  Petitions for
Reconsideration, pursuant to Section 1.106 of the Commission's Rules, may be filed within 30 days of the
public notice of this Order. 47 C.F.R.  1.106.  This grant is also subject to Section 1.110 of the
Commission's Rules.  47 C.F.R.  1.110.
                         

                              Federal Communications Commission

                         


                              Magalie Roman Salas
                              Secretary