Congress Hung Up on Foreign Ownership

As Deutsche Telecom awaits U.S. government approval of its proposed VoiceStream purchase, Congress continues its dialogue about limiting foreign ownership of U.S. broadcast and telecommunications companies.

During the past two months, the House of Representatives and the Senate have pondered a measure known as the Foreign Government Investment Act of 2000. The measure, currently parked in the Senate's Commerce, Science and Transportation committee and the House Subcommittee on Telecommunications, Trade and Consumer Protection, would prohibit granting broadcast or spectrum licenses to ventures or corporations controlled by foreign governments.

The act would tie the FCC's hands in this matter, making exceptions to the rule unlawful. Under the measure, any business in which a foreign government holds more than a 25% interest would be barred from FCC licenses.

Predictably, the European Commission objects to the proposed legislation. In late July, the Commission's Washington delegation wrote a letter to U.S. senators and representatives in which it condemned the measure as unnecessary.

"The U.S. executive branch already possesses all the necessary legal instruments to examine, on a case-by-case basis, whether notified mergers with U.S. telecommunications companies pose a very high risk for competition in the U.S. market or a risk to national security," the European Union (EU) officials wrote.

The EU delegation also asserted that new companies entering the U.S. market would increase competition, improve services and ultimately, benefit American consumers. On the other side of the issue, the officials said the proposed measure runs contrary to the United States' World Trade Organization commitments.

In addition to a vigorous argument against the Foreign Government Investment Act, the delegation's correspondence included several tables, detailing U.S. companies' telecom holdings in EU member countries. (See table.