Senate Group All Hung Up on Foreign Telcos

SAN FRANCISCO (07/20/2000) - In a secretive move to prevent foreign telecom carriers from acquiring their U.S. competitors, the Senate Appropriations Committee amended a budget bill earlier this week that would block the U.S.

Federal Communications Commission from approving such mergers.

The amendments were crafted by Ernest Hollings, a Democrat from South Carolina, and inserted into the Commerce, Justice and State appropriations bill, which controls funding for the FCC. If enacted, it would bar the FCC from spending any money to consider a request by any non-U.S. carrier that is at least 25 percent owned by a foreign government to take control of a U.S. carrier.

Current U.S. law already bars such purchases but allows the FCC to make exceptions.

Deutsche Telekom AG, still 59 percent owned by the German government, has reportedly bid for U.S. wireless carrier VoiceStream and has also recently been linked with U.S. long-distance carriers Sprint Corp. and Qwest Communications International Inc. The FCC would have to approve any of those deals.

The bill was approved by the committee on Tuesday but still must be considered by the full Senate, where some lawmakers will try to remove the global merger-blocking provision.

John McCain, a Republican from Arizona, who chairs the Senate Commerce Committee that oversees telecom policy, has objected to Hollings' attempt to execute such a major rule change through the appropriations process instead of through the relevant oversight committee.

Even if approved by the Senate, the provision could be removed when House and Senate conferees meet to hash out the final compromise budget to send to President Clinton.

Hollings also has introduced a stand-alone bill to bar foreign telecom acquisitions though that proposal is unlikely to be considered any time soon, given how little time remains in this year's congressional session.

Concerns about the issue first arose last month when a group of 30 senators, including Hollings; Majority Leader Trent Lott, a Republican from Mississippi; and Minority Leader Tom Daschle, a Democrat from South Dakota, sent a letter to the FCC urging the agency not to allow acquisitions unless foreign governments reduced their ownership stakes below 25 percent.

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