United States of America

Department of State
Department of Commerce
Office of the Trade Representative


Washington, D.C.

May 5, 1997

The Honorable Reed E. Hundt
Chairman
Federal Communications Commission
1919 M Street N.W.
Washington, D.C. 20554

Re: Application of MCI Telecommunications Corporation for
Authority to Construct, Launch and Operate a Direct Broadcast
Satellite System at 110º W.L.

Dear Chairman Hundt:

We refer to the International Bureau's December 6, 1996, Order finding MCI Telecommunications Corporation's Direct Broadcast Satellite (DBS) authorization ready for grant (the Order) and the January applications to the FCC for full Commission review of that Order. We note that MCI Communications Corporation and British Telecommunications plc (BT) presently have applications pending that request Commission approval of transfer of control to BT of licenses and authorizations held by MCI Communications Corporation's subsidiaries (GN Docket No. 96-245), including the aforementioned authorization.(1) In addition, we are aware that other DBS service providers have recently announced plans to enter into business relationships with companies that have foreign ownership above the statutory limit applicable to common carriers and broadcasters, including MCI and News Corporation, an Australian company.

Having reviewed the International Bureau's analysis of the issues presented by the particular facts in MCI's DBS construction and launch application referenced above, we understand the International Bureau's conclusion that MCI's subscription DBS service is neither a broadcast nor a common carrier service. Nevertheless, we believe that significant policy questions continue to exist regarding foreign ownership of DBS subscription services on U.S. licensed satellites. For this reason, we recommend full Commission review of such issues before reaching a final determination on any application that involves foreign ownership above the statutory levels applicable to common carrier or broadcast licensees.

Accordingly, we respectfully recommend that the Commission promptly undertake and conclude a rulemaking proceeding on whether and how foreign ownership restrictions and public interest criteria should be applied to subscription DBS services on U.S. licensed satellites, prior to reaching a final determination on any application that may be affected by the outcome of the rulemaking.

Sincerely, 

Amb. Vonya B. McCann	Hon. Larry Irving			Amb. Jeffrey M. Lang
U.S. Coordinator 		Assistant Secretary		Deputy U.S. Trade
International		 for Communications		 Representative
 Communications and 	 and Information			Office of the U.S.
 Information Policy	Department of Commerce		 Trade Representative
Department of State


cc: Commissioner Rachelle B. Chong
Commissioner Susan Ness
Commissioner James H. Quello

ENDNOTE:

1. MCI Telecommunications Corporation is a wholly-owned subsidiary of MCI Communications Corporation.