U.S. Seeks Inquiry on Satellite Licenses

WASHINGTON — The Clinton administration asked federal regulators Monday to open an inquiry into foreign ownership of high-power satellite licenses. The move casts uncertainty on plans by Rupert Murdoch and MCI Communications Corp. to beam hundreds of TV channels directly into American homes.

“We believe that significant policy questions continue to exist regarding foreign ownership of DBS [direct-broadcast satellite] subscription services on U.S.-licensed satellites,” the Departments of State and Commerce and the Office of the Trade Representative wrote Reed Hundt, chairman of the Federal Communications Commission.

“For this reason, we recommend full commission review of such issues before reaching a final determination” on British Telecom’s proposal to take over MCI, they added.

A government attorney, speaking on condition of anonymity, said the administration hasn’t taken a position on whether British Telecom should be able to hold the DBS license if the merger is approved.

The letter was sent to prod the FCC into opening the inquiry, the attorney said. The administration didn’t identify specific policy concerns.

In general, U.S. regulations bar foreign companies from owning more than 25% of a U.S. telephone or broadcast business.

Last year, MCI and Murdoch’s Australia-based News Corp. started a direct-broadcast satellite business shortly after MCI won the last remaining license to provide such service in the United States.

The government attorney said the administration “has no specific concerns about Murdoch’s involvement with the license.”

Jonathan Sallet, MCI’s chief policy counsel, said that were the FCC to open an inquiry as the administration requested, he doesn’t expect it would delay FCC action on the merger. News Corp. had no immediate comment.

In December, the FCC’s International Bureau issued MCI the DBS license, even though the telephone giant had announced plans to merge with London-based British Telecom.

Competitors, including cable TV giant Time Warner Inc., had complained that the $682.5-million license would belong to a foreign company if the merger went through.

The FCC is reviewing the proposed merger and had no comment on the administration’s letter.

At the time the bureau granted the license, the FCC said approval was “entirely separate and distinct” from the agency’s review of the proposed merger.

The agency said foreign-ownership complications would be considered when it decided whether to approve the proposed merger.