FCC Seeking Less-Restrictive Global Market : Communications: Its plan would expand foreign ownership when home countries provide similar access to investment opportunities.

In a bold overhaul of the rules governing foreign ownership of U.S. communications firms, the Federal Communications Commission on Tuesday proposed scrapping the 60-year-old limits on foreign ownership in cases where other countries open their markets to U.S. companies.

The new rules, likely to be adopted following a comment period, are designed both to help pry open foreign telecommunications markets and to spur investment and competition in the burgeoning domestic communications industry.

Currently, federal law limits foreign investments in U.S. communications companies to between 20% and 25%, although the FCC has the discretion to waive those strictures. The FCC’s proposal would scrap the restrictions in cases where a company’s home country is open to “effective market access” by U.S. firms--and would implement even more stringent limits for companies whose home markets are closed.

“This is significant,” said Eli M. Noam, director of the Columbia University Institute for Tele-Information in New York, who called the proposal the communications equivalent of “unilateral nuclear disarmament.”

The rule change comes in the midst of a highly contentious FCC review of Fox Broadcasting Co.’s ownership structure. General Electric’s NBC television network, the NAACP and others--noting that Fox’s parent company, News Corp., is Australian--have claimed that Fox’s ownership arrangement violates the FCC’s current foreign-ownership rules. But the new rules would not apply retroactively and thus wouldn’t affect the Fox case, an FCC official said.

But the regulations could apply in another high-profile case: Sprint Corp.’s bid to sell 20% of the company to Deutsche Telekom and France Telecom for $4.2 billion. If the FCC doesn’t approve the transaction before the regulations are adopted, the Sprint alliance could be subject to the new rules--and the companies would be hard-pressed to show that France and Germany have open markets.

Indeed, many countries have highly restrictive rules which prevent foreign investment in the communications business and effectively preclude competition of any sort in telephone and television services. With the notable exception of Britain, Western European nations in particular have been very slow to open their markets to competition.

Under the new rules, companies from countries that didn’t allow competition could only buy minority interests ranging from 10% to 25% in U.S. communications companies. The FCC will wait until after a 30-day comment period expires before determining the exact percentages.

Most industry officials praised the FCC’s proposal.

“This FCC action to support open markets around the world . . . will help ensure that customers have choice, that technological development quickens and that economies thrive,” Vic Pelson, AT&T;’s chairman of global operations, said in a statement. The rule change came in part in response to a petition from AT&T.;

The U.S. telecommunications industry has grown increasingly global in recent years, with the nation’s biggest phone companies and cable concerns announcing alliances with overseas partners. And foreign companies have been vying to make investments in the U.S. market.

Some countries are more than open to participation by foreign firms: Many U.S. phone companies--and especially regional Bell operating companies, including Pacific Telesis--have been investing aggressively overseas.

For example, the Chicago-based regional phone company Ameritech recently acquired a $438-million stake in the Hungarian telephone company Matav and joined with Philadelphia-based Bell Atlantic and Denver-based cable TV operator Tele-Communications Inc. to purchase a 51% stake in Sky Entertainment Network Television Ltd. of New Zealand.