AN EXPLGBAHON OF THE mammcmefis SATELLITE CORPORARON THESIS FOR THE DEGREE OF B. A: MICHIGAN STATE UNIVERSITY KAYASMITH 19.68 ‘ 94.44....“ ' - -.‘. rm. LICW" Lfl' ~‘.'..‘7:';-'.‘: '7 I :3. x: -: J .3 a"? I u”. "I? ."i l . I ABSTRACT AN EXPLORATION OF THE COMMUNICATIONS \ SATELLITE CORPORATION by Kay Smith The Communications Satellite Act of 1962 created a communications satellite system for the United States. This Act established the Communications Satellite Corporation (COMSAT), as the U.S. representative in charge of Satel- lite Communications. This thesis considers the creation of COMSAT, the implementation of changes needed to regu- .late the system-and the problems faced by COMSAT today. In the technical section,‘particular attention is given to the evolution of technology, which in turn, has improved communication networks. The socialization of technology has been necessary in order for man to best use his knowledge for serving communication needs; accord- ingly, the need to structure satellite technology is dis- cussed. Developing an organization to coordinate satellite operations was a difficult task.“ Technical, political, economic and legal complications were involved. These ‘ vfactors influenced the legislation creating the Communis cations Satellite Corporation, and have subsequently .1 Kay Smith influenced the operations of the.satellite system. Con- sideration is made of these intrinsic factors and their effect on the domestic and international communications ‘ \. An exploration is made of COMSAT's role as manager systems. of the International Telecommunications Satellite Consor- tium (INTELSAT), which was created in 196R to coordinate Eva global satellite network. COMSAT must integrate domestic and international satellite policy, a responsibility which is increasingly more difficult to meet. Regional and domestic satellite systems are gaining support and causing factions within the international system. There are, in conclusion, inferences about the future of satellite com- munications drawn from present controversy. Q l a L AN EXPLORATION OF THE COMMUNICATIONS SATELLITE CORPORATION o By Kay A. Smith- A THESIS Submitted to Michigan State University in partial fulfillment of the requirements for the degree of MASTER OF ARTS ' _______ ‘ College of Communication Arts Department of Television and Radio 7' ’ .' \‘ - 1968 ‘ :I 9 M125 merg 1°“,qu . COPYRIGHT BY KAY A. SMITH 1968 ‘K ..... Dedicated to: .' Jane and mm... Smith 111 'm—vw--o-..._ —- ACKNOWLEDGMENTS \ ‘\ My appreciation is extended to my advisor, Dr. walter B. Emery, who guided the development of this thesis, and to the members of the Federal Communications Commission . and the Communications Satellite Corporation who facili- tated this research. - iv TABLE OF CONTENTS Chapter ‘ Page I. A Look at Satellite Communications Today. . .. l Advancing Technology. . . . . .' 6 Creating the Cdmmunications Satellite . ' . Corporation . ... . . . . . . .{‘ V The Developing Philosophy . . . . . . . 13 II. 'Semaphore to Satellite. . . . . . . . . 17 . Conquering Long Distance Communications . . l7 Broadcasting Comes of Age . . . . . . . 20 The Evolution of Satellites . t u- .' . . 23 Satellite Design . . . . . . . . ‘. . 26 Rising Controversy . . . . . . . . . 31 III.. Technical, Political, Economic and ' Legal Delemas o o o o o o o o o 0', o 35 Presidential Policy . . ~ . ' ... . 35 The Real Issue: Public versus Private. Ownership. . . . . . . . . Technical Involvement . . . . -. . . . A3 Political Complications. . . . . . . . 45 Economic Implementations . . . . . . . “9 Controversy of Antitrust and Monopoly . . . (553 IV. Legislative History and Regulatory Changes . i. 62 Senator Kerr' 3 Proposal: Common Carrier ' 6 2 Ownership. . . . ._ . . . . The Administration's Bill . . . . . . . 6A The Minority Opposition. . . . . . . . 66 The Administration's Modified Proposal. .. . 68 Legislation in the House and Senate. . . . 69‘ ‘Implementing Change . . . . . . . . (73) V. Operations in a Complex Structure . . . . . A 81 Cooperation Between COMBAT and Govern- ment Agencies . . . . . . . . . fl. s 81, COMSAT and International Relations . , , , a85 INTELSAT'S Achievements. .. . .. . . . . L873 International Challenges . . . . . . 92 COMSAT Involvement in Domestic Issues . . . 97 Presidential Task Forces . . . . . . . 100 Observations and Inferences . . . . . . 101 APPENDIX . . . . . . . . . . . . . 3": 105 BIBLIOGRAPHY . . . . . . . . . . . . . . 127 vi CHAPTER I ~. A LOOK AT SATELLITE COMMUNICATIONS TODAY ‘~ The ultimate result will be to encourage and facilitate world trade, education, entertain- ment and many kinds of professional, political and personal discourses which are essential to healthy human relationships and international understanding.1 ,1 President John F. Kennedy Upon signing the Communications Satellite Act of August 31, 1962 Satellites have provided Channels of communications . since 1965.6 Like the conventional cable systems, satel- lites can relay messages around the globe. As the demand for communication channels increaSes, both cable and satel- lite systems will be expanding to meet growing needs. Nations of the world will be called upon to work closely together to establish the best possible communications .network. A President Lyndon Johnson wanted to declare the posi- tion of the United States on international communications. He did this in his statement-to’the Congress of the United 1The First Five Years, Communications Satellite Cor- poration, Washington, D. C. (1968), p. 1. \ \.- States on August 1“, 1967, in which he established the Presidential Task Force to investIgate the future direc- tion of communication systems.2 The Task Force is a committee which is re-evaluating the usefulness of both. the conventional cable and the“ satel- lite communications systems. Decisions made by the Task Force should be reported in August, 1968 and should indi- . cate the emphasis the U. S. will place on expanding each ocommunication system. ,‘ Satellites are ourlnewest form of international com- '!municatiOns. A brief historical sketch of communications .systems in the U. S. will indicate the character of our ‘ satellite system. _‘¢r The Communications Act of 1934 provides a blueprint .for federal involvement in communications. This Act “Created the Federal Communications Commission (FCC), with the responsibility to regulate our privately operated systems. Among its dutIes, the FCC regulates the power of broadcast stations, assigns frequencies for broadcasting, grants licenses and determines fair rates for communication carrier services. A “ The Communications Satellite Act of 1962 gave addi- - .-..t.ional responsibility .to the FCC: it was-now authorized. ¥ 2Message on Communications Policy to the Congress of tlae‘United States, White House Release, Washington, D. C. (1967), p0 “. ‘ u to regulate the newly created Communications Satellite <.Corporation (COMSAT). COMSAT was created by the U.S. Congress to establish a commercial communications satel- lite system in conjunction and COOperation with other countries. This system was to be extended to all inter- ested countries in hOpes of promoting world peace and understanding.3 Because COMSAT was officially designated .ias the only U.S. satellite communications corporation, it "was made responsible to. the public for developing the best satellite system possible.' '/1 Directors of COMSAT were concerned with organizing pan international communications satellite system. Informal- I conferences among European nations and COMSAT led to formal \ ‘agreements to establish an international organization. In \ "August, 196A, seventeen nations meeting in Washington, D.C. rsigned the Special Agreement creating the International vTelecommuniCations Satellite Consortium (INTELSAT). The 'goal of INTELSAT is to Sprovide for the establishment of a . single global commercial communications satellite system at the earliest practical date . . . and to provide for Ithe design, development, construction, establishment, ’ImaintenanCe and Operation" of this system.“ 3"Tne Communications Satellite Act of 1962, " Public law 87- 62", 87th Congress, H.R.110A0 (August 31,19625, p. 10 u"InternatiOnal Telecommunications Satellite Consor- ‘tium (INTELSAT)," Treaties and Other International Acts, Series 56116, p. it. COMSAT was designated as the U.S. representative to 'INTELSAT. It was also appointed director of INTELSAT by the member nations. Thus, COMSAT's responsibilities grew " from being in Charge of the U.S. satellite system to‘man- I aging the world organization. ? More than five years have passed since COMSAT was ' formed. It has been active in engineering a satellite o'communications system to service two-thirds of the world. I ~rComp1etion of the worldqwide system is scheduled for , «2. December, 1968.5 With responsibility for directing INTELSAT, COMSAT nofficials are now concerned with-the meetings scheduled for 1969 to reorganize INTELSAT. Before these meetings, «President Johnson's Task Force will confirm U.S. position .on satellite communications. At the time he appointed the Task Force, President Johnson said: A global system eliminates the need for dupli- _cation in the space segment of communications facilities, reduces the cost to individual nations, and provides the most efficient use of the electromagnetic frequency spectrum through -“which these communications must travel. Satellite communications are potentially efficient and beneficial. Older nations, which support heavy com- munications flow among themselves, stand to benefit from k. .5Communications Satellite Corporation Annual Report 126 , COMSAT, Washington, D.C. (1968), p. 7. 6Message on Communications Policy to the Congress QI‘the United States, p. A. . a satellite communications system. .But the President also made special note of the value of Satellite communications for underdeveloped nations He said: A global system is particularly important ‘ for less developed nations which do not receive \ the benefits of speedy, direct international communications. Instead, the present system of communications-- --encourages indirect routing through major nations to the developing countries --forces the developing nations to remain dependent on larger countries for their links to the rest of the world, and --makes international communications service to these developing nations more expensive and of lower quality.7 To clarify the United States' position in interna- tional communications, President-Johnson enumerated our objectives. Although COMSAT is a profit-making corpora- tion, one of his major concerns is the development of an international communications satellIte system in the pub- lic interest. This system must not be extended only to the nations which support the heaviest traffic flow and (:ontribute the most to economic gains. It should empha- size communications growth in the lesser developed nations where, perhaps, there is the greatest need. With this in mind, and with the knowledge that technologists are advanc- 'thg rapidly, the Presidential Task Force has set out to better define the U.S. role in the system. ‘ '7Ibid. ' CR\I 6 Advancing Technology The public, generally, is aware that space explor— ation is increasing at an amazing rate. What the public may 'not realize is that many of the predictions so often made in :current publications are technically feasible today or wIll 'be within a few 'years' time. But there are organizational, ,reconomic and political problems. For example, TV Guide8 grocently predicted that by .1980 broadcasting directly into .the home from any point on the globe would be a reality. 'This prospect may 'seem visiOnary to some but the fact is 6 that direct transmission could be technically feasible ' within two years. The organization of this technology will take much more time. Who will control such a system? How Will it be financed? These are some of the complexities involved. ' ' ' Just to lend some perspective to the.rapid develOp- (ment of international communications, a brief look at pre- ’ “mt systems is appropriate. It was not until 1956 that ’r the 1‘ 1rst transoceanic voice cables were installed. Trans- 1 Atlantic conversations before that time were conducted via audio. This first telephone cable system, supporting (thirty two-way circuits, was. installed by the American {pelephone and Telegraph Company (AT&T) at a Cost of about \ no" “ 8mm Television Will be Like 5, lo, 20 Years From 9 TV Guide (April 13-19, 1968), p. 12. . f1rty million dollars.9 Now, in 1968, fOur underwater ‘cables have been installed, spanning the Pacific, and con- (necting North America with the Orient.10 During the mid-1950's another form of international I \ xcommunications was initiated. The Soviet Union was experi- .' menting with launching a space communications vehicle. {The first artificial satellite was sent up by the Soviets on October 5, 1957, establishing a milestone in the era of I ' cortlmunications.l.:L This achievement brought into focus three 5 ‘ realizations: l) launch’firehicles are powerful enough to :11 ft into orbit artificial satellites; 2) artificial satel- ‘lites can function in space; and 3) the use of artificial /satellites for communication purposes is feasible. Most likely, the first real attempts to use artifi- -‘cial satellites for communications were made by the United :EStates. On August 12, 1960, the National'Aeronautics and -';Space Administration (NASA) launched Echo I, a passive I .' 8atellite designed to reflect communication messages sent I [I from one point on earth to another.12 This was accomplished ' 9"Are We Planning Effectively for the Use of Tomor- Powvs Communications Resources?," Speech delivered by Dr. JOSeph V. Charyk, President, Communications Satellite Cor- p0ration, Washington, D.C. (February 5, 1968), p. 3. C 10"New Communications Era," Communications Satellite Orporation, Washington, D.C. (1967), P- 3- . 11From Semaphore to Satellite, International Telecom- m‘lnication Union,_Geneva (1965), p. 283. \ 12Ibid., p. 291. V (fire-transmitting these signals in an amplified form. four short years after the installation of the first AT&T transatlantic voice circuit cable. Great technological ,Steps were being made. ‘ On July 10, 1962, NASA launched the first active [satellite geared for communications. Telstar I wéé capable 'qf not only receiving communication messages, but also of, 13 ELSeveral forms of communication were transmittable via 1 Telstart telegraphy,.te1ephony, television and data col- -1ection were a part of this multipurpose system. The -:first live television transmissions shared by the United States, England and countries on the European Continent 'were dramatic.'* These experimental forms of international space communications were to lead to the establishment of INTEL- SAT I and INTELSAT II satellite systems, connecting two- thirds of the world in instantaneous, multipurpose com- "munications.lu And twenty-five years ago we would not ~have dared to dream . . Creating the Communications Satellite Corporation During this early period of satellite development, the Congress of the United States became concerned with .13Ibid., p. 292. - 1“Dallas-W. Smythe, "Public Benefit gs, Private Privi- lege," Nation, CLXLIII (October 21, 1961), p. 26“. establishing a sateIlite system. Interests also were being aroused in many sectors of American life. Common carriers, inv1>lved‘for many years with the establishment of efficient conununications both in the U.S. and abroad, turned tfieir attention toward satellite communications. These Companies included: American Telephone and Telegraph Company (AT&T), ”Radio Corporation of America (RCA), International Telephone t and Telegraph (ITT) and Western Union International (WUI‘). American Telephone and Telegraph, which had done xmx<311advance research in Communications exhibited special interest. As early as 1960, AT&T suggested it be given tHIGB exclusive rights to experiment with and establish a communercial satellite communications system serving the Urrixbed States, Great Britain and Western Europe.15 But this request was not realized because U.S. congressmen did hfirb» want to hastily grant one company a mbnopoly in space c=<>Ulmunications . 16 . ' ' The aircraft industry also felt it had a contribu- 1:1431': to make. Lockheed Corporation proposed that a satel- lite corporation be formed by the communications and space e"ll-lzlpment industries in which Cooperative efforts would be made. under one management.l7 JThis'was not only a method of getting. the aerospace industries involved in the coming "’” 16 .15Ibid., p. 265. Ibid. ' "“7 ‘ 1'ISmythe, p.26". 10 spacecommunications, but was, Loekheed directors thought, a way of securing an efficient program for immediate advancement . 18 Hughes Aircraft Corporation had also done a Cbnsid- erable amount of research. Many of the early launch‘ing facilities Came out of the Hughes laboratories, and the National Aeronautics and Space Administration had first contracted with Hughes to develop a synchronous orbit satellite.” At the same time;;there were individuals and groups concerned with the political implications of this new communications system. How would prOblems regarding IJJrogram exchange be handled? Would a commercially oriented system be- able to handle effectively international rela- tionships? Would" conflicting national interests be resolved? A An international communications sytem would involve eXChanges Swith private as well as governmental agencies of Other countries. Careful political maneuvering would be required. Senators Kefauver and Long were the two princi- Dal opponents of a privately owned corporation. They pro- posed establishing agovernmentally owned and operated Byatem. They gave. two reasons for this: 1) A government agency could be guided by the Department of State, which 18Ibid. 19"}Iughes Urges Profit-Making Public Communications Satellite System, " Aviation Week and Space Technology, Lxxv (November 13, 1961), p. 26. .l- 11 was accustomed to handling political relationships, 2) U.S. citizens had been paying taxes allocated to space research, and because of these payments, the citizens had a rightful interest in the satellite system. It should therefore be a government system representative of all people}0 By the time Telstar I was launched in July, 1962, congressmen had already spent a great deal of time in debate. The issues with which they were concerned had to do with the ownership and control of the system. Resolv- 1ng these issues and writing legislation would be dif- ficult. .Yet decisions had to be made promptly if forth- coming technology was to be utilized effectively. The bill to establish a privately owned and operated communications satellite system entered the House ‘in May, 1962. This bill did not meet as much opposition as did a similar bill introduCed in the Senate. There, heated debates ensued between thosefavoring a private system and those backing a government system. . In May, a bill to establish the private company was approved in the House; and in August after two-hundred proposed amend- ments, a similar bill was finally approved by the Senate?1 ‘ 20"U.S. Skeptical of Satellite Ownership Plan," Avia- n Week and Space Technology, LXXV (November 13, 1961), 26c ' ’210rrin E. Dunlap, Jr., Communications in Space, New York, 1961!, p. 131. ¥ tio D. 12 On August 31, 1962, President Kennedy signed the Communications Satellite Act. This law prescribes the strnzcture of the Corporation, sets forth its duties, responsibilities and its relationships with foreign oom- murrication entities. This Act states: \ Section 102) The Congress hereby declares that it is the policy of the United States to estab- ‘lish, in conjunction and in cooperation with other cOuntries, as expeditiously as practicable, a commercial communications satellite system, as part of an improved global communications net- work, which will be responsive to public needs and national objectives, which will serve the. communications needs of the United States and other countries, and which will contribute to world peace and understanding.22 TWI€2_Act further provides that the President of the USA BTIEIJJJ (Section 201) . . . aid in the planning and development and foster the execution of a ’ national program for the establishment and operation, as expeditiously as possible, of a commercial communications satellite system.23 The National Aeronautics and SpaCe Administration 18’ concerned with technical research and development. . Beszides contributing to research design, it provides launching facilities for the Communications Satellite coPporation (COMSAT), the costs of which are to be paid by COMSAT on a'reimbursable basis?” ,‘22"TheCommunications Satellite Act of 1962," p. 1. I . 23Ibid., p. 3. -11. -2"Ibid. 13 The Federal Communications Cpmmission has the re- sponsibility of regulating COMSAT as provided in amendments to the Communications Act of 19311.25 The FCC also enforces the procurement regulations designated in the Communica- tions Satellite Act.26 \ The Corporation itself was set up under the rules of .private corporations in the District of Columbia.27 As a i ' private corporation, COMSAT is authorized to "plan,'ini- tiate,'construct, own, manage and Operate itself or in conjunction with foreign: governments or business entities "28 Through a commercial communications satellite system. the 1962 Communications Satellite Act, COMSAT has been given the responsibilities of shaping the direction of 'the United States' participation in an international com- munications satellite system. . The Developing PhilosOphy The Communications Satellite Corporation has a pro- 1 1‘eean character. Its multiple positions are: l) the pri- Vately operated corporation responsible to its stock- hOIders; 2) the U.S. representative in INTELSAT; and 3) the manager of INTELSAT, an International Consortium of, 8Sixty-two nations engaged in’communication exchange via Batéllite.. y'25lbid., p. u 26Ibid. ‘ 28 27Ibid.,p. 5 Ibid., p. 7. — 1A James McCormack, Chairman of COMSAT, has expressed sajdsfaction with the structure of the agency and its pat- tern of operation, and speculates on greater achievements: The commercial utilization of space for communica- tion purposes--a dream for the future when Congress passed the Satellite Act--is today a reality. Iflkthis sixth year of the Act, there can be no question as to the bright hopes for the future of global satellite com- munications. To the extent that this new ability to communicate can indeed help to bring peace and under- standing to this troubled world, we shall all have rea- son for gratification.29 We want to bring into being as the formative period of the global system is rounded out, a set of satel- lites which will give the world a quality of communi- cations, a reliability of service, a flexibility and versatility of service, such as has not before been known.except in limited, highly developed areas.30 That is, our objective is to such a good job that everyone will want to keep us in it--at least for a few more years while we complete the initial task of a first class global system.31 It can be said that there are four distinCt communica- tions capabilities inherent in satellites which have changed World communications . l) Satellites_potentially have a very high capacity for circuits at a low cost. 2) Satellites potentially have high quality trans- mission. 3) Satellites have versatility, that is, they can serve a multimedia function. A) Satellites have flexibility; they are capable of multi-point networking.32 29"Statement of Chairman James McCormack on the Occasion- ‘31' the Fifth Anniversary Commemoration of COMSAT, " Communica- tions Satellite Corporation, Washington, D. C. (1968), p. 2. 1 30Ibid., p 7 311b1d 32"Are We Planning Effectively for the Use of TOmOr- J='<>w's Communication Resources," pp. 2-3. - ,*..a-I 0" 15 These factors make it possible to look at interna- tional communications in a new light. No longer is there total dependency on traffic through major communications centers of the world, often resulting in delays in trans- mission.~ Instantaneous and continuous service should be available to all nations, large and small. Within the framework of a satellite system, this goal is possible. .Here is an opportunity to free nations of the world from archaic international communications structure. But much of satedlite deveIOpment has been and still is dependent on the American Communications Satellite Cor- ,poration. This corporation has provided a useful mechanism zind effective leadership for progressive development. Now - five years since its inception, the corporation has advanced :far enough to make evaluation possible. In forming this corporation, the Congress of the 'United States knew that an entity to guide technological advancements was needed. It knew that whatever entity was formed would establish a basis for world—wide satellite communications. It knew that both private and public inter- .ests were involved. With these factors in mind, Congress created COMSAT.‘ This paper deals first with the need for an * organization to guide technological adVancement. Secondly,“ .it considers the faCtors which influenCed the decisions. to make the Communications Satellite Corporation the unique 16 structure it is, a private corpbration with public respon- sibilities. And thirdly, it touches on the important problems which must be met to make the corporation and Q. its work most effective. _ . - \ E i A CHAPTER II CONQUERING LONG DISTANCE COMMUNICATIONS Conquering long distances has been among the most fascinating 'phases in man's attempt to communicate with others. ~ One. of the first‘men to conquer distance was Frenchman Claude Chappe, who completed his 230 kilometer . semaphore system between Paris and Lille in 1793.1 The 'French Revolution was taking place then, and the efficient. communications system aided King Louis XVI in locating and controlling revolutionary forces. Chappe's semaphore communications, as well as systems to follow, had an impact on the immediate environment. ‘ The semaphore had not been installed'throughout Ehlrflape before experimentation began on a faster means of conununication. One of the first men to exhibit his inven- tion was S. T. Von Soemmerring, who demonstrated his crude telegraph for a group of sosientists and friends at the Mu1"l_ich Academy of Science in 1809. ' Baron Schilling, a Russian diplomat assigned to Munich, was One of the fortunate men who observed Von \ - 1From Semaphore to Satellite (Geneva, 1965), pp..ll-12. O‘N. .‘ -‘-' '- 1 . .‘r amide, pp. 22-230 1 - . . _ .17 l8 Soemmerring's telegraph.3 Schilling experimented with a similar model, and it was then that a third man became very interested. William E. Cooke stOpped in Munich on his réturn to England from military duty in India. There he saw Schilling's telegraph and took his observations back to London with him.” Once in London, Cooke set out to con- yince investors to finance experimentation. While he obtained support from some people, his earnest attempt to install a telegraph system along the Liverpool-Manchester - Railway line was vetoed by the owners. They felt the telegraph was a frivolous toy.5 ' Cooke's efforts were boosted by the aid of.a noted I British scientist, Charles Wheatstone. Together they _ secured a contract to install telegraph lines with the Great Western Railway. The telegraph proved to be so laelpful in establishing an efficient train schedule that Iiithin the next twenty years, telegraph lines had been erected by almost every major railway company in England. .The social impact of the rapid telegraph system was demonstrated in the capture of a murderer on January 1, 18A5. The telegraph Operator in the London Paddington Station received a message from Slough. It informed him that a murder had been com- mitted, and that the suspect had boarded the 3Ibid. ”Ibid., p. 25. 5Ibid. I ”WMMM-M’" " 7,. J S t .- Q 3 s 9 ’? l Ethan‘s“ 14:" P i IE _' l9 7:A2 train to Paddington, sitting in the last compartment of the second first class carriage. Policemen waited for him at the Paddington Station and when John Tawell, the murderer, was later hanged, the telegraph had indeed become the talk of the town. ‘ The public was aware that they had entered a new communi- cations world. Coincidently, it was that same day, January 1, 18A5, that Samuel Morse'made history in the United States. 1H} opened a telegraph line between Baltimore and Washing- His first message, "What hath God wraught?" ‘tom, D.C. 7 laegan a_new communications era in the United States. By this time, many advanced countries were ready to par- ticipate effectively in the long distance communications breakthrough . On the European continent five years later, Julius Renter completed his telegraph line connecting Berlin With Brussels and Paris. This line became an important mmeans of quick communication of politieal, financial, and economic news of Western Europe. I I Following the establishment of the Reuter's New (3ontinental Service came the challenge to connect the lEurOpean continent and the British Isles with the new ‘world. The combined knowledge of American and British Scientists produced a (durable underwater‘cable to protect ‘3he telegraph lines. After a few unsuccessful attempts 6Ibid., p. 27 , 7Ibid., p. 28. 8Ibid., p._29. ; -, u-‘i-s J" "'3“ 1' ' "“I‘eeeived- it 20 to lay the Cable, completion finally came in 1858. ‘The success of th; first transatlantic telegraph cable was due in large part to the persistent efforts of American Cyrus W; Field, who was able to Connect Valentia, Ireland wdth Trinity Bay, Newfoundland. The first message was senE‘on July 28, 1858. It simply announced the completion of the cable. 9 Broadcasting Comes of Age ' It was some time before the marvel of telegraph sys- tems was to be surpassed. ‘ Although experiments were being 'carried Out in many'countries, the man generally credited with the invention and development of the wireless is Guglielmo Marconi. His early experiments were conducted a1: 111s family's estate near Bologna, Italy. But beCause Marconi’did not receive much encouragement in his own country, hevmoved to London, where he established .the .Wire- less Telegraph and Signal Company Ltd. in 1897.10 Marconi's experimental wireless was successful. Land to ship transmissions were made before 1900, and in 1901 the t.13r'st transatlantic wireless message was sent. George Kel'llpt and George Paget sent the message--a simple letter ,, . 8"--from Cornwall, England to Newfoundland, where Marconi ' 11 -+ This success meant that the laying \ ‘ - J 10 f‘ 91Lid., p. 30. ILid., p. 129. ( . 11Orrin E. Dunlap, Jr., Communications in Space New York, 19614), p. 12. 21 ' of underwater cables could be overcome ;by the transmission of a single wireless message. The world was growing smaller. ‘ About the same time Marconi was working on develop- 1ng the wireless, Reginald Fessenden, a Canadian, was d;Eam- 1mg of transmitting voice via the air waves. Fessenden maintained that voice transmission should be a continuous wave, not the interrupted burst Marconi was using. 0n ChristmasEve 1906, Fessenden transmitted the human voice to ships at sea.12 With this accomplishment, radio was on. .the way to' becoming the best and most efficient medium for long distance communicatiomyet devised. ' ‘ Television is often thought of as the video eye of radio. But quite surprisingly, experiments to transmit a Picture were recorded more than a decade before Marconi .experimented with wireless at his country villa. The German scientist, Paul Nipkow, invented a mechanical Bealining disc capable oftransmitting a crude picture in 188;. .13 ' A few years later, in 1895, Sir William Crookes of England invented the cathode-ray tube, which was through 1“ '-B-°.1_e.ntific gadgetry at the time. But Karl F. Braun p l 1"aErilc‘ Barnouw , 'A Tower in Babel (New York, 1965) s . ‘ 92‘ - ‘ - 13mn1ap, p.\.71. luIbido ’ .p0 75. . ‘ .,-..\-. .- V 1 vv—w 22 discovered ten years later that the cathode-ray tube was capable of emitting light rays. He subsequently invested a series of components necessary for the electronic trans- mission of pictures--the electronic gun, the deflecting plates and the flourescent screen.15 Braun's apparatus was capable of transmitting still pictures, but moving pictures were yet to be perfected. -' This was left to the ingenious Vladimir K. Zworykin, a Russian scientist who had moved to the United States. Zworykin continued experiments until he produced an elec- tronic scanning eye, which could receive signals from a moving electronic gun. His invention was called the ico- noscope and-it was demonstrated in 1923.16 Television, '33 we know it, was then available in a rather crude form. Although much experimentation was condu¢ted during the following decade, television design was for the most Dart halted during the Second World War. Science was concentrated in other areas. But following the war, tele- vision was developed and the medium became popular in many Darts of. North America. and Europe. 1 Man struggled to conquer long distances with radio. and television as he did with other forms of communications. Greater triumphs came in 1962 with the launching of the \ ,15Ib1d. .xg 16Ibid. '— 23 Telstar Satellite. The satellite provided the link needed for efficient intercontinental television service as well as another link for radio, telephone, telegraph and data transmission.17 The satellite, like communicatioh mile- stones before it, became a symbol of a new age.‘ Again, the world stood on the threshold of an exciting new com- munications era. -.-\ The Evolution of Satellites ,zi?’ Man's dreams ofithe distant and mysterious, coupled with scientific research, have often lead him down unex- plored but profitable pathways. Such was the birth of communications satellites. . Karl Frederick Gauss dreamed of communicating in . 18 He thought the language space as far back as 1850. of space communications would be a mathematical one. Gauss labored over elaborate communication systems, but .was unable to produce even a crude model. The first real indication that sizable rockets could be lifted off the ground came in 19uu. The Germans .had attacked London in September, 194fl, with liquid fuel ‘ V-2 rockets.19 These weapons were to pave the way for (I 171b1d., p. 292. 18From Semaphore to Satellite, p. 291. '19Ib1d2, p. 283. ' 2“ more powerful and efficient launch vehicles, which would ultimately transport satellites into space. ‘The following year, British scientist Arthur Clarke ‘9 published an article in the Wireless World Journal pre- dicting revolutionary trends in space communications. Clarke had big dreams and his predictions indicated this: It would be possible to construct a space sta- tion . . . The station would be provided with living quarters, laboratories and everything 'needed for comfort of its crew who would be relieved and provisioned by a regular rocket service . . . It could be provided with re- ceiving and transmitting equipment, and could act as a repeater to relay transmissions be- tween any two points on the hemisphere be- -.. neath . . . 20 Clarke's predictions of space stations is yet to be realized, but his design of communication transmission was soon to be fulfilled. Certain essential technological capabilities were "needed before space communications could be initiated. The first of these was a large and powerful launch vehicle. ‘This rocket must "be accelerated toga minimum speed to -iovercome permanently the effects of gravity. That speed .13 known as the velocity of escape and is a little more 'than 7 miles per second or 25,000 miles per hour."21 Once this capability was realized with the success:_-- :ful launch of German rockets, satellites were loaded ~ 20Arthur C. Clarke, Voices From the Sk (New York, 1965), p. 121. 21Dunlap, p. 128. 25 abroad and sent into space. The‘first satellite was orbited by the Soviets in 1957, and with it the door to communication satellites was opened.22 It became apparent that gathering information.from satellites fell into two distinct categories. The first of these is tracking information, which provides necessary . data on the location of the satellite.23 The second cate- ‘gory is telemetry, which provides information on the con; dition and operation of the satellite, and the communica- tions speaker.2n On the basis of these two types of information, the ground tracking and data-handling system computes bearing data and-determines proper commands to be transmitted to the satellite. It Also many different commands are needed to operate ficommunication satellites properly: These commands take ‘the form of radio'signals, and they order mechanisms to 13erform duties such as starting and stopping data trans- mnission, firing a rocket and operating'cameras.25 A fourth essential function is control. Control is. the ability to direct. the spacecraft and the network of . ground stations in cooperative efforts. Control is fiiyided into two types. The first is control of the ¥ ”...-.-- . ...—- _ - - 22From Semaphore to Satellite, p. 291. 23G. E. Mueller and E. R. Spangler, Communication siggteliites (New York, 196a), p. 180. , 9 2"11mm. 2SFrom Semaphore to Satellite, p. 28h. 26 orbital velocity and the altitude of the satellite in orbit.26 The second is control of earth station equip- ment to properly track, transmit and receive communi- cation signals.27 A K ., I With the perfection of these four interrelated functions-stracking, telemetry, command and control--pro- ductive ventures into communication satellites were possi- ble. The United States government and private industries collaborated on satellite design and development. Satellite Design The United States' pioneering efforts to launch satellites paid off late in 1958 when the Score satellite was put into orbit. This satellite was equipped with a radio and tape recorder which repeated messages upon com- mand. The United States Signal Corps launched Score on December 18, 1958,. and the satellite remained operational for twelve days.28 Our first passive satellite specifically designed for communications was Echo I, which was launched by NASA on August 12, 1960. Echo I was, a 100-foot aluminized plas- tic balloon which reflected the first two-way satellite . 29 x'elay telephone conversations'lacross the United States. - 26G. E. Meuller and E. R. Spangler, p. 95. \ 1 291pm. 27 On January 25, 1961, NASA'launched Echo II, which was also designed for communications. Experimentation A‘wgmw'”'.'~“mhfl-m‘m 'MflN.-ya with Echo II was performed Jointly by American and British scientists, who found operations in good order.30 \. By the summer of 1961, several private industries had announced their experimental satellite programs. All _these programs dealt with perfecting active satellites, ' capable of receiving signals, translating them into the I appropriate frequency or form, and then retransmitting 1 them greatly amplified. Passive satellites merely reflect .---l-i- signals which strike their surface. Because of the differ- ence in amplification, active satellites require less com- ‘ plicated ground equipment for sending and receiving signals. /, ' In order to promote the least complenground network, United . 31 ‘ States companies strove to perfect better satellites. _ Among the active satellite designs were those of N AT&T and General Electric. Both companies planned a low altitude, random orbit network of thirty to sixty-five sat- ellites providing global coverage.32 The advantage of the low altitude satellite was that rockets capable of orbiting ' a satellite at an altitude of 3,000 to 6,000 miles were -- '—. N already available. However, as many as fifty or sixty ’“satellites would be needed to give complete global coveragéTf" j-30From'semaphore'to Satellite, pp. 271-272. 31Dallas W. Smythe, "The Space Giveaway,“ The Nation, CXCIII. 32Ibid. 28 Also, very complex tracking equipment was needed to follow the satellite in its orbit around the earth. A completely different satellite system was pro- posed by Hughes Aircraft. It was a high altitude,‘synchro- nous orbit system. The advantage of the high altitude satellite is that the orbit is synchronous with the earth's” rotation,_and the satellite appears stationary. This sta- 'tionary target requires less complicated ground equipment for tracking and is less expensive. Also, only three or four satellites are needed for global coverage. Unfor- tunately, this system had an apparent disadvantage-~rockets were not yet powerful enough to place the satellite 23,300 miles above the earth, the orbital path needed for a syn- 33 -chronous system. .By summer, 1962, some private companies were ready to launch their satellites. The first one was Telstar I, the low altitude satellite built by AT&T and launched by NASA on July 10 .8 Telstar I transmitted telephone conver-h :sations, television pictures and telephoto data within a stew hours after the‘launch.35 Earth stations at Andover, .ldaine, Pleumur-Bodou, France,and Goonhilly, England par- 1:1cipated in these Telstar transmissions. k 33Ibid. 3uIbid.' j 35Philip J. Klass, "Telstar Performs Perfectly in liarly Test," Aviation Week and Space Technology, LXXVII (July 16,1960), p. 26. 29 Results of the Telstar experiments were so favorable that Leonard Jaffe, a NASA director, declared that NASA would favor a Telstar type satellite system. Jaffe made this statement in September of 1962, at which time he \ predicted the synchronous orbit satellite would not be functional until 1967.36 Hughes Aircraft, which was developing the synchronous orbit system, bitterly denounced .Jaffe's statement and guaranteed successful orbit of their Syncom satellite by 1961!.37 8 In December, 1962, RCA and NASA announced the launch of the Relay satellite, the first active communications satellite. On December 13, Relay was put into random ,orbit, but because of technical problems, the satellite was not operational until January 3.38 Tests demonstrated that Relay could perform retransmission functions, and for the first time, scientiSts were sure the active satel- lite was a usable communications tool.. Relay's first come munications took place between the United States and Brazil, but later experiments also included Western Europe and Japan. 8 During this same period, late in 1962, the military's Advent satellite,program was under attack from the House 36”NASA Sees Telstar-Type Satellite as Best for , . World-Wide System," Aviation Week and Space Technology, LXXVII (September 2“, 1962), p. HO. \ _” 37Ibid. 38Dunlap,‘p. 151. 30 Space Sciences Subcommittee. The Advent project was referred to "as breeding a lack of cooperation between the Army and the Airforce, and was said to‘have little to_show for the $120 million invested in the proJect."39 Controversy over project Advent deterred progress and was discouraging to researchers working on the synchronous orbit satellite. However, competition was not to subside. Hughes Air— 'craft provided the breakthrough in developing the high alti- tude satellite. On February 1A, 1963, almost a year ahead of schedule, Hughes' Syncom I was launched. Many scientists at Bell Laboratories and at NASA had doubted the Hughes satellite couldbe placed’in orbit, but Syncom I proved no Ironically, it was the communications this was possible. device onboard which failed to operate, making the Hughes effort rather disappointing. Syncom II was to follow in July, 1963. Ground sta- tions were erected in Lakehurst, New_Jersey and Lagos, Nigeria for these experiments."1 Perfect transmission of telephone, teletype and facsimile processes took place. In an.historic telephone conversation with Prime Minister Balewa of Nigeria, President John F. Kennedy praised syncom as a technical Tour De Force.u2' 3“Subcommittee Urges Strong Single Manager for New Advent Program," Aviation Week and Space Technology, LXXVII (November 19, 1962), p. 117. . qurom Semaphore to Satellite, p. 293. ulDunlap, p. 153. yzlbid. 31 Rising Controversy Technological developments did not advance without disagreements among the competing companies. The scramble to develop the first satellite system was motivated‘ty many factors--by the desire to have a system accepted by the government, by the drive to become established in space communications and, perhaps most of all, by the profit- making motive. The estimated profit margins ranged widely. In 1961, Dr. Berkner, a space scientist reporting to the FCC, esti- mated a communications satellite system would be a $100 . billion business byl980."3 He also estimated that communi- uu cation rates would be reduced by 20 per cent. “Contrarily, 'Leland Johnson of the Rand Corporation, suggested the system would not even be profitable until 1970."5 But no matter what the estimate, the main factor remained--that companies were proposing satellite systems and pursuing research projects in hopes of securing a part of that "pie in the sky." General Electric, even formed the Communication Satellites, Inc., to handle its ’ research and future contracts.”6 u3Asher Brynes, "Big Business in Space," New Repub- lic CXLVI-(April 23, 1962), p. 9. _ nu Ibid. “5U.S., Congress, Senate, Committee, on Judiciary, .Anti-Trust Problems of Space Satellite Communication System, ZHcaring before Sub-Committee on Anti-Trust and Monoply 6f_the ‘COmmittee of Judiciary, Senate, 87 Cong., 2nd Sess., 1962, 75. yélbid., p. 85. 32 Another interested company,.AT&T, proposed a $170 million investment in its research program. This partic- ular program was planned under the assumption that AT&T would be given government support.“7 As previously‘men- tioned, RCA was also investing in a satellite project" which was to become their Relay system. Two major aerospace industries were investing heavily in space research. By 1961, Lockheed had already put $500,000 into designing satellite components.”8 And Hughes Aircraft undoubtedly invested heavily in research, for Hughes contributed much scientific knowledge towards developing high altitude satellites. 0 While these several industries engaged in competi- ' tive systems and conflicting dialogue, the FCC was studying the problem. In 1961, an FCC report seemed to favor keep- ing the investments in satellite communications within the .international communications field. One report said "The result of encumbering the system with complicated and <3ostly corporate relations is the disrupting of operational ' Iaatterns that have been established in the international‘ (sommon carrier industry, and the impeding of effective IPegulation of the rates and/service of the industry.“49 ”Ibid., p. an. "819.19: p. 85- ” "9"Genera1 Electric, with prospect dimed by the FCC, IDrops bid for Communication Satellite," Science, CXXXIV _: (October 6, 1961), p. 993. "—"'"'"’ 33 So the emphasis seemed to be on the.five international com- mon carriers--the American Telephone and Telegraph Company, International Telephone and Telegraph, Radio Corporation of America, Western Union International and Hawaiian‘Tele- phone Company. 1 \ In addition to FCC opinions, there were other fac- tors pressing the Government into forming some communications satellite policy. In July, 1961, the United Research Cor- poration reported to the Government on the management of a satellite system. The corporation recommended that private ownership be deferred while an interim public ownership company be established to get the satellite network under way.50 This report also said that private investment should be included at a later date if the government felt a private communications company could be operated in the public interest. - - . "'_ Later that year, the United States Information Agency (USIA) also pressured the United States Government, urging decisions concerning future satellite management. . USIA directors urged a system be established as quickly . as possible by whatever method or organization.51 These pressures forced the government to produce a communications satellite policy. The private industries . 50"Prospect of Federal pwnership Arises for Communi— - cation Satellite," Aviation Week Aid Space Technology, XXV (July 3, 1961), p. 31. .' 51Ibid., p. 3h. 3A were chanting about their respective plans, the FCC was issuing Opinions and research corporations were making ,recommendations. ”Prompted by all this, President Kennedy asked Con- gress to investigate the various problems and propesals and to embody into law a national policy for the control and development of satellite communications. CHAPTER III TECHNICAL, POLITICAL, ECONOMIC AND ‘ . LEGAL DELEMMAS Presidential Policy President Kennedyfbecame aware of the need for an organization to guide space communication development as technology was advancing. -In order to establish_guidelines for the structure of the system, an official policy was formed. On July 24, 1961, he held a press conference to call attention to this policy: On May 25, 1961, I asked Congress for additional funds to accelerate the use of space satellites for world wide communications. Also, on June 15, ' I asked the Vice President to have'the Space Coun- cil make the necessary studies and policy recom- ‘mendations for the optimum development and operation 'of such a system. This has been done. The primary guideline for the preparation of such recommenda- tions was that public interest objectives be given the highest priority. I again invite all nations to participate in a ~communications satellite system, in the interest of world peace and closer brotherhood among peoples throughout the world.1 The President also listed specific policy require- ments. This policy was formed after research and recom- mendationsmby several government agencies and was as I :follows: 1John F. Kennedy,’De'artment of State Bulletin, XLV (July-December, 1961), p. 573. ' . 35 36 A. Policy of Ownership and Operation of the U.S. portion of the system is favored, providing that such ownership and operation meet the following policy requirements: 1. New and expanded international communication services be made available at the earliest practicable date; \ 2. Make the system global in coverage so as to provide efficient communication service throughout the whole world as soon as tech- nically feasible, including service where individual portions of the coverage are " not profitable; 3. Provide opportunities for~foreign partici- 'pation through ownership or otherwise in the commercial satellite system; A. Nondiscriminatory use of and equitable access to the system by present and future .authorized Common carriers; 5. Effective competition, such as competitive bidding, in the acquisition of equipment used in the system; » 6. Structure of owneréhip or control which ‘ will assure maximum possible competition; ‘~\ 7. Full compliance with antitrust legislation and with_the regulatory controls of the Government; 8., Development of an economical system, the benefits of which will be reflected in overseas communication rates.2 The Government respOnsibilities were also delineated and equally demanding. B. Policy of Government Responsibility ~In addition to its regulatory responsibilities, the U. S. Government will. \‘ 721bid. 37 1. Conduct and encourage research and develop- ment to advance the State of the Art and to . give scientific and technological progress; 2. Conduct or maintain supervision of inter- national agreements and negotiations; \. 3. Control all launching of U.S. spacecraft; a. Make use of the commercial system for gen- eral governmental purposes and establish a separate communications satellite system when requested to meet unique Government, needs which cannot, in the national interest be met by the commercial system; “W5."Assure the effective use of the radio fre- quency spectrum; 6. Assure the ability to discontinue the elec- tronic functioning of satellites when re- quired in the interest of communication efficiency and effectiveness; 7. Provide technical assistance to newly developed countries in order to help attain an effective global system as soon as prac- ticable; ' 8.' Examine with other countries the most con- structive role for the United Nations, including the ITU, in international space communications.3 President Kennedy also urged cooperation of the government agencies: I have urged the full cooperation of all agencies of the government in the vigorous implementation of the policy stated herein. The National Aeronautics and Space Council will provide continuing policy, coordination and will also have responsibility for , recommending to me any actions needed to achieve full and prompt compliance with the policy. With the guidelines provided here, I am anxious that 31bid.,.p.\37u. 38 development of these new technologies bring the farthest corner of the globe within reach by voice and visual communication, fairly and equitably available for use, and proceed with all possible promptness. This presidential policy had great impact on the. debates concerning initial ownership and operation of'the satellite system during the next thirteen months. This .policy was to be bitterly debated, strongly supported by . some and adamantly Opposed by others._ During the long and tedious hearings on communication satellites, the 'President's statement was the real focus of attention and discussion. . A part of Kennedy's space communications had ties with the political past." While still in office in 1959, President Eisenhower issued a policy statement consistent with the Republican tradition of private ownership: '. The government should aggressively encourage private enterprise in the establishment and operation of satellite relays for revenue pro- ducing purposes.5 Although DemOcratic liberalism prevalent in Ken- nedy's administration was more favorable to Government participation, Kennedy chose to follow the private enter- prise route for space communication control. Considering the times and the values that Americans generally attach lulbidr~w_ - 5H.._Margolis, "Space Communications: the Future is not faraway but the Major Policy Questions are Unre- solved," Science, CXXXIII (June 19, 1961), p. 1813. 39 tolprivate enterprise, the Kehnedy Administration made a viable choice. To support private enterprise in space would be controversial, but to support government owner- ship contrary to general societal values would be much ‘\ more extreme. The Real Issue: Public Versus Private Ownership Discussion was direCted toward the question of ownership. *Should the U.S. support a privately owned company and if so, should it be owned by the communications common carriers or by private individuals? ,Or should the, Communications satellite company be publically owned and Operated by the Government? Many agencies made recommendations to the President concerning these questions.' The administration's National .... --- - ...- --..—w---—.-—- -.— —..~——-—-—.._ —.——- A1 Aeronautics and Space Council (NASC)'reCOmmended that the corpOration be conducted by private enterprise, operated _ in the public interest, and encouraged to develop rapidly.6 ' Further support for private enterprise came from the Department of Justice. Assistant Attorney General, Nicholas Katzenbach, emphasized this point in hearings before the Senate Subcommittee on Antitrust and Monopoly. He stated that the Justice Department was in full support~~ -of private enterprise according to the Presidential policy A ”a ‘ 6H. Margolis, "Science and the News," Science, pCXXXIV (July 21, 1961), p. 178. . N0 of July 2“, 1961. He also placed emphasis on public interest and the importance of competition.7 - A somewhat different perspective was voiced by Assistant Secretary of Defense John H. Rubel, who dis- cussed communication needs. He pointed out that the Defense Department was one of the major users of existing 'communication facilities and would also use a satellite system extensively.. But for security reasons, the Depart- ment oleefense needed some communication facilities sep- arate from commercial cable facilities and probably would , need some separate satellite facilities too. He concluded: "I do not think that our primary conCern is in the manner in which ownership is finally vested; I think a major con- cern, however, is in the manner in which the operation is conducted."8 Added to these opinions of government agencies were many Opinions fromjprivate industry. From all these recommendations, three major management proposals emerged: 1) a private corporation owned by the communication common carriers; 2) a private corporation owned by stockholders 7U.S., Congress, Senate, Committee on the Judiciary, Antitrust Problems of the Space Satellite Communications System, Hearings before the Subcommittee on Antitrust and Monopoly of the Committee on the Judiciary, Senate, 87 Cong., 2d Sess., A62, p. 26. ' 8U.S., Congress, Senate, Committee on Small Business, Space-Satellite Communications, Hearings before the Sub- , committee on Monopoly of the Select Committee on Small Business, Senate, 87 Cong., First Sess., 1962, p. 63.. H1 from the general public; and 3) a public corporation owned by the government. .One of the most impressive studies in support of common carrier ownership was submitted to the FCC by the Lockheed Corporation on April 3, 1961. This proposa was titled "Telesat," and it outlined recommendations for technology, ownership, operation, financing and foreign participation.9 In its original form, the plan called for a wideebase ownership, but it was later changed to support common carrier ownership. -The Lockheed report was followed by an FCC-appointed consortium composed of ten common carriers. On October 13, 1961, the consortium reported favoring common carrier ownership. The American Telephone and Telegraph_Company was to contribute $50 million forginitial Operations, with other companies contributing lesser amounts._ The board was to be made up of two representatives from each company investing over $500,000, three members appointed by the .government and one member representing all other companies investing less than $500,000.10 9U. 8., Congress, House, Committee on Science and Astronautics, Communication Satellites, Hearings before - the Committee on Science and Astronautics, House of Repre- sentatives, 87 Cong., First Sess., 1961, p. All. . 10H. Margolis, "The Consortium PrOposal: Private . Industry Offers a Plan for Developing Satellite Communi- ‘cations," Science, CXXXIV (October 20, 1961), p. 1226. 42 Of the ten common carriers, only Western Union sub- mitted a dissenting opinion favoring wider ownership.11 Protests against the consortium proposal came from other private industries. General Electric opposed the2Qonsor- tium's plan with its proposal for Communications Satel- Alites, Inc., which was to be open to all interested com- panies.1-2 The General Electric plan was supported by the Justice Department,’which encouraged maximum parti- cipation in the space field. The Hughes Aircraft Corporation also favored a cor- poration Open to all interested cOmpanies. -It, like other aerospace companies, did not want to be excluded from a potentially profitable market.13 ' Another proposal favored government ownership. Senators Estes Kefauver (D. Tenn ) andeilliam Fitts Ryan (D. NY.) were major contenders for this proposal. They made two main arguments-~one conCerning vested pub- .lic interest; the other, competition. Kefauver and Ryan quoted Dr. E. Welsh of the Admin-I istration's Space Council as saying that 90 per cent of . ~ llIbid.' . 12"G. E. Moves Fast for Place in Space," Business Week (May 6,1961), p. 29. l3"Hughes Urges Profit Making Public Communications Satellite System," Aviation Week and Space Technology, .LXXV (November 27, 1961), p 75- - "3 our.space communications capability had been financed with tampayers' money.lll Because of this vested interest, the senators believed the public had a right to ownership, and that this right should be exercised through a g3vernment agency. \ Secondly, they argued that in forming one private company to own and operate satellite communications the ‘ government would be granting a monopoly.15 A monopoly 'by definition, would preclude competition. . Dallas Smythe, professor at the University of 1111- nois, added a third argument. The military was probably the biggest user of international communication facilities. As its major user, he argued, the government should have some right to ownership. These three positions, Common carrier ownership, wide-base ownership, and government ownership, were the major issues being debated during the July, 1961, to August, 1962, period. Technical Involvement Technical terminology pervaded much of the discussion in the formation of a communications Satellite corporation. luEstes Kefauver and William Pitts Ryan, "Big Busi- ~ness in Space. A Case for Government Ownership," New Republic, CXLVI (June 11,1962), p. 18. 15ILid., p. 20. 16Dallas W. Smythe, "The Space Giveaway,"'Nati on, CXCIII (October 1“, 1961), p. 2A3. UM But of all the factors involved, this one seemed to have the least bearing on the type of corporation formed. Regardless of the corporate structure or ownership, the .goal of establishing the most efficient global network remained.~ . . \ .An important question was: WOuld satellites pro- vide an efficient communications system? They were thought to have distinct advantages: 8 “\ l) WHigh capacity, low costs--satellites would be a lot cheaper if the demand for service . would be great enough; _;2); Versatility--satellites are capable of simul- taneous transmission of information; tele- phone, telegraph, television, radio, data and .facsimile;-and 1 3) F1exibility--satellites are capable of relay- ing communication simultaneously to all points within the line of sight.1 -'__HmjrAnother.concern was whether or not there would be any technological'advantage in using satellites rather than cables, which already had established major communi- cation pathways throughout the world. vlf satellites would not yield a better service, then they should not replace cables. But-the three distinct characteristics-- high capacity, versatility and f1exibility--cou1d make satellites very valuable, and probably, provide a good alternative service. "I 17"Comsatand the Emerging Global System," Dateline, ,,XI*(1967),‘p. 51,“ \ "5 A third technological question related to low versus high altitude satellites. The merits and demerits of eaCh have already been discussed in Chapter two. The low alti- tude, random orbit satellite was supported by AT&T.and General Electric. The high altitude, synchronous orbit satellite was favored by Hughes, Lockheed and RCA. The National Aeronautics and Space Administration was simul- taneously working on the prOjects with all these companies in a tOtal effort to develop the best technical system. To the extent that technology became involved in “the communication satellite debates, time became a crucial factor. It was important that a workable system and Core porate structure be established as quickly as possible.-. The investigations in the Senate and the House were directed toward this end. 1 Political Complications The government wassgreatly concerned with the rela- tionship between foreign relations and the communications satellite system. There were two basic questions: How can the.system be made truly global, available to all nations, large and small? And, how can this be accomplished and still be consistent with traditional American foreign policy? If a private satellite system was to be estab- “lished, how-would foreign relations be conducted and inter- 'national contrasts made and be in accord with_Department of ‘ State policies? ' A6 The United States sought advice from the United Nations. The U. N. had developed a space program, the fourth part of which dealt with space communications. This policy stated that with the aid of satelites, com- munications among the continents would be immeasurably 18 easier. The U. N. resolution also stated: _3 1. That satellite communication should be available ' to the nations of the world as soon as practicable .on a global and‘non-discriminatory basis; ‘12." That the U. N. should be able to use the communi- cation satellites in communicating with represen- w tatives around the world and for broadcasting programs of information and education; and 3. That technical assistance and economic aid to develop the internal communication systems of the lesger developed countries (LDC) should be .given.1 . . . . The United States Government recognized the value of this plan, and President Kennedy made it a part of the national policy. I 6 Other questions were raised regarding U. S. relations with the Soviet Union. 'Could East and West take part in a single system? In 1962, the United States and the Soviet Union reached an agreement to COOperate with the World Meteorological Organization (WMO) to establish a world-wide ' 20 ! .weather forecasting system. Negotiations for data 18U.S. Department of State Bulletin, XLVI (January- June,~1962), p. 589. 191bid., pp. 589-590. 20C.~Brownlow, "COOperative Satellite Programs to be Discussed by U.S.--U.S.S.R.," Aviation Week and Space Technology, LXXVI (June 25, 1962), p. 76. N7 collection centers were agreed upon.21 However, there were problems. Some argued that if the U. 8. created a privately owned Satellite system, the Soviets would not t - ’Vparticipate because they would not be favorably disposed to a capitalistic corporation. \ Turning to another crucial question, how could the State Department effectively guide private enterprise toward establishing desirable international relations? ' Mr. James E. Dingman, vice president of AT&T, related the State Department's function in the past: . . . the State Department has been very helpful in working with us in working out these agreements with these countries, and the communication agencies in these countries, whatever they may be. We would. expect the State Department would still continue to be very helpful.22 As explained by Mr. Dingman, private industry accepted the State Department's guidance in negotiating inter- national agreements. And, the State Department seemed to accept private enterprise as a workable organ if the criteria set forth by President Kennedy were met.23 21Ibid. 22U. 8., Congress, Senate, Committee on Small Busi- ness, Space Satellite Communications, Hearings before the Subcommittee on Monopoly of the Select Committee on Small Business, Senate, 87 Cong., First Sess., 1961, p. 260. 23U.TS., Congress, House, Committee on Interstate and Foreign Commerce, Communication Satellites, Hearings -before the Committee on Interstate and Foreign Commerce, House of Representatives, 87 Cong., First Sess., 1961, PD- 172-173 'H8 Philip J. Farley, representing the Department of State, elaborated on the necessity for cooperation between private industry and the government in dealing effectively with foreign governments: ~ ‘ Accordingly, international factors can be expected to have a direct bearing on the author- izing and regulatory functions of the FCC if the United States is to approach this field through a private venture and if such a private venture is to be fully responsive to needs of public policy. The longstanding effective working rela- “rtionship between the FCC and the Department of State will provide a firm basis for the Joint consultation and consistent action that may be increasingly necessary in the field. The director of the United States Information Agency (USIA) at that time, Edward R. Murrow, expressed approval of.a privately owned satellite system. 'Murrow thought a private enterprise system was satisfactory for the,dissemination abroad of news and information about the U.S. However, his major concern was getting services at low costs so that the USIA would be able to afford 'them‘fl.25 This point lead to another question. Would a pri- vately owned satellite corporation supply low cost services to the U.N. and special U.S. Agencies such as the USIA? And would'the corporation provide service to lesser 2f‘Ibid. 25U. 8., Congress, Senate, Committee on Commerce, Communications Satellite Legislation, Hearings before the Committee on Commerce, Senate, 87 Cong., Second Sess., 1962, p. 280. w—v m“ '-'-—vm‘_-|~r- .‘ A l _ CXLVI (April 23, 1962), p. 9. \ #9 developed nations even if it meant a financial loss? These were some of the Questions raised by those who opposed the privately owned system. Senator Wayne Morse (D. Ore.) argued that ascor- poration established as a profit—making'enterprise‘would not attempt to furnish these services at a loss, and that _government regulation would not sufficiently guarantee 26 If asprivately operated system were these services. established and profitable, it would be very difficult if not impossible to change its structure to accommodate foreign policy, he said.27 Accordingly, Morse favored government operation. Economic Implications , Debates over the economics of a satellite system were among the most controversial.. The biggest question was whether the space system would be profitable, and if so, when. As-mentioned in chapter two, estimates ranged from a $100 billion business by 1980 to the pos— sibility of no profit until 1970.?8 26U. 8., Congress, Senate, Committee of the Judiciary, Antitrust Problems of the Space Satellite Communications System, Hearings before the Subcommittee on Antitrust and Monopoly of the Committee of the Judiciary, Senate, 89 Cong., Second Sess., 1962, p. 75. 27Ibid. I 28Asher Brynes, "Big Business in Space," New Republic 50 Two major topics in economics were presented: 1) Can satellites provide a better means of communications than-conventional cable systems and do it at lower costs? 2) How will the cost of satellite communications‘effect \ the rates charged by the common carriers? Satellites can be more or less expensive than cables depending on the demand for service. Mr. Leland L. Johnson of the Rand Corporation.attempted to clarify this: The primary importance for which communication . satellites hold promise is to provide long distance, primarily transoceanic voice channels at a cost . lower than that entailed in alternative communi- CatiOn techniques, such as employment of submarine cables. Two salient characteristics of nearly all proposed satellite systems are (1) they embody a voice-channel capacity large relative to those typi- cally observed between'major cities around the world, and (2) they entail a large initial cost. In order .to make the.cost per voice channel competitive with that of alternative transmission techniques, the demand for communication services must be rela— ‘tively high to absorb the large capacity offered.29 ' ; There was evidence at that time to indicate the demand would be increasing. Overseas telephone traffic had steadily increased since l9fl6. If the growth rate remained constant, the annual number of overseas messages would reach ten to twelve million by 1970 and forty mil- .lion by 1980.30 Traffic growth increased even more during 290.3., Congress, Senate, Committee on Small Business, Space Satellite Communications, Hearings before the Sub- committee on Monopoly of the Select Committee on Small Business, Senate, 87 Cong., First Sess., 1961, pp. 87-88. '30William Meckling, "Economic‘Potential of Communi- cation Satellites," Science, CXXXIII (June 6, 1961), p. 1890. 51 the 1955 to 1961 period and, based on those increases, there might be as many as twenty million messages per year by 1970 and one hundred million by 1980.31 In any case, a substantial increase in demand was indicated. Either many additional cables or a satellite system would‘be . needed to meet this demand. The debates centered around determining which would be the better investment. A second topic concerned rates charged for service. Hopefully, the new high capacity satellite would be able to provide services at lower costs.‘ Yet, satellites had 'not yet been proven capable of performing high capacity communication skills. Besides technological uncertain- ties, there remained many uncertainties about establishing a satellite network. Since no precedent existed, specu- lation was the only method of forecasting future expendi- tures and future receipts as well as forecasting the demand for service.32 With these risks involved, the international common carriers thought they would be best suited to take these risks because of their past experience.; The common carrier consortium, which reported in October, 1961, suggested the satellite corporation be a non-profit one. Instead, they asked to be‘allowed to absorb the costs of establishing V 7* 311b1d..' _ 321bid., p. 1885. 52 the satellite system in their rate base structure.33 Repre- senting the FCC,chairman Newton Minow explained the rate- making process: Under ordinary circumstances involving the intro- duction of new facilities, carriers are able to ‘. include in their general rate bases the relatively high costs of their existing plant and thus, in effect, average such costs for ratemaking purposes. Thereby, a return on the capital invested in the new facilities is not dependent solely upon the revenues produced by those facilities during their initial years of operation. This has the advantage of facilitating the introduction and application of new facilities in an orderly systematic manner with a minimum of impact on rates charged the public.3” Although the carriers seemed to agree to this struc- ture, there were two positions opposing this plan. The first related to AT&T's ability to own so much of the com- mon carrier system and thereby have so much influence over expenditures and receipts, and subsequently determine the rate P9§9t. Fear that AT&T would contract for equipment solely with its own subsidiary, Western Electric was expressed. Contracts made with only one company would eliminate competition among suppliers of space equipment and would be contrary to the Presidential policy based on ‘competition. Not only would competition be eliminated, but AT&T could be paying Western Electric exorbitant prices for equipment and, in turn, using these expenditures 33Katherine Johnson, "U.-S. Skeptical of Satellite Ownership Plan," Aviation Week and Space Technolggy, LXXV (November 13, 1961), p. 26. - 3RD. S. Congress, House, Committee on Interstate and Foreign Commerce, Communication Satellites, Hearings before the Committee on Interstate and Foreign Commerce, House of Representatives, 87 Cong., First Sess., 1961, p. A03. 53 as a basis for determining rates. In this way, AT&T would be making profit on both transactions. Senator Kefauver questioned FCC chairman Minow on . ' ~. this possibility: Since the FCC has regulatory power oven. rates it can investigate rate structure. IIt can also investigate-costs for equipment but does not have legal ‘ power to change these costs, even though it can make sug-- 'lgestions for change.‘ Chairman Minow told of recently con- ducted investigations into Western Electric prices. The FCC indicated prices ought to be lowered and as a result, ' prices had been reduced by almost $32 million.35 ‘ This reduction indicated that the FCC did have influ- -ence over the operations of the communications industries. Still, more evidence against FCC effectiveness was sub- mitted.' Until 1960, there had never been an investigation~ 'into international rates because there were not enough ' 36 ~ people on the FCC staff to perform the task. This was of particular interest because satellite services would be 0“ international. Past records indicated that charges for services would be left pretty well to the controlling com- mercial company. For this reason, Senator Kefauver and others doubted the FCC's regulatory effectiveness. _ *1 350.S., COngress, Senate, Committee on the Judiciary, Antitrust ProblemS'Of‘the'Space‘Satellite‘Communications System, Hearings befafe the Subcommittee on Antitrust and Monopoly of the Committee on the Judiciary, Senate, 87 Cong., 2d-Sess.,-l962, p. 283. 36Ibid. ‘vwr-W— 5h The second position opposing the common carrier rate structure was that of conflicting interests. The inter- national common carriers already controlled the conyentional communications systems. If they also controlled the\satel- lite system, they would be controlling two systems in com-- petition with one another for the same communication ser- vices, namely telephone, telegraph, data and facsimile. Sinceethe common carriersfhad stockholders for whom they had been making a profit, they would be obligated to con- tinue producing profits by means of conventional systems. I'This meant the satellite network would not be used until the conventional systems were filled. Mr. John Hartman representing ITT spoke about this conflict: '"I think it is safe to say . . . that the com— munication carriers willuse the most efficient, least expensive route available to them."37 ThiSostatement implied that the communication Systems would operate strictly on cost per service competition. Regardless, ‘ the fact remained that common carriers would own both ' the satellite system and its competitors. Finally, profit estimations entered the discussion. If the space communication business was profitable, and if only one company operated the business, this company would receive a guaranteed profit. Arguments developed 37Communications Satellite Legislation, testimony of John Hartman, pp. 212-215. , "Lm “an“.-cg. fl 55' challenging the government's right to create this monopoly. From this challenge evolved the most controversial issue-— antitrust and monopoly. 5' Controversy of Antitrust and Monopoly ‘\ During 1960, overseas telephone traffic increased 20 per cent.38 Growth and demand in international com- munications were so great that putting money into satel- lite research, with the'hopes of developing a less expen- sive system, appeared justified. uAccordingly, in April, 1960, the FCC began investi- gationsinto commercial satellite ownership. The purpose of the inquiry was to determine various methods by which all interested companies could participate.39 A report was issued (FCC docket lfl02), which held that ownership ’ should be limited to the common carriers in the communica- tions industry. Also announced was the FCC plan to form a consortium of international common carriers to advise on the corporate structure.u9 The consortium was to report to the FCC by October 13, 1961. The American Telephone and Telegraph Company had an initial plan for the consortium before the first meeting 38"Enterprise in Space," New Republic, CSLV (Sep- tember 11,1961), p. 6. 39"FCC Begins Exploratory Probe of Communication Sat- ellite Issues," Aviation Week and Space Technology, LXXIV (April 10, 1961), p. 3A. -uoDallas W. Smythe, "Public Benefit vs Private Prive- lege," Nation, CXCIII (October 21, 1961), p. 265. O 56 took place. This plan included.total ownership by the international common carriers, with the operation being fully subject to regulatory Jurisdiction of the FCC.“1 This proposal was supported by RCA, providing all‘earriers would have access to all communication facilities, par- ticularly to voice transmission over which AT&T had a monopoly at the time."2 It was apparent that AT&T would play a dominant role K- in the consortium's decision and would be the largest investor in the proposed company. At that time AT&T con- trolled about 80 per cent of international communications and was expected to contribute about that percentage of the initial capital for the establishment of the satellite corporation.“3 As was discussed previously in this chapter, the consortium did recommend a non-profit communications sat- ellite corporation, owned Jointly by the common carriers. As was also pointed out, an initial contribution of $50 million was to be made by AT&T, with other carriers con- ‘tributing lesser amounts. Each company giving more than $500,000 Would be represented by two board members, and ulPhilip J. Klass, "Joint Satellite System Gaining Support," AViation Week and Space Technology, LXXIV (May 8,1961). p. 3“ . uzIbid. “3"Satellite Competition Potential Disputed, " Avia- tion Week and Space Technology, LXXV (August 1", 19615, P- 33 57 the government would name three members. Companies con- tributing less than $500,000 would collectively have one member. It was during investigations in 1962 that FCC chair- \. man Minow presented his rationale for the Commissions sup- port of the common carrier design. The touchstone for resolving the conflict over ownership was the factor of HA "public interest." “Puplic interest" was considered to. be the "universal extension of the benefits of space com- munication; that is, improved.tele-communication service at the reasonable rates to the using public as rapidly as possible.“6 _ Chairman Minow's rationale was.based on the following:- 1): Communication service in this country is fur- nished by privately owned companies subject to federal regulation. ~ _ 2) Several,companies are involved in international communications--the major ones being AT&T; ‘”Western Union; Hawaiian Telephone Company; RCA; ‘ IT&T; Press Wireless, Inc.; and General Tele- phone and Electronics. ' \~ 3) Communication via satellite, though a new tech- nology, is just another means of providing international communications. Under no circum- stances should satellites replace other services, ' but rather a diversification in services should be maintained and integrated. A) The cost of satellites and launch vehicles makes a joint effort by all common carriers the MU. 8., Congress, House, Committee on Interstate and Foreign Commerce, Communications Satellites, Hearings before the Committee on Interstate and Foreign Commerce, House of Representatives, 87~Cong.,.First Sess., 1961, p. A02. “6 ”51bid.. Ibid., pp. 802-u03. V“ —— w—wur. _‘ Ml—uh-‘- 58 Vonly sensible approach to supplying this service to the public. 5) ,The common carriers have the experience and responsibility of previous international com- munication services and therefore best know the needs and demands. These carriers can‘best integrate satellite service if they openate the ‘services themselves instead of going to another party to do so. 6) International communications requires agreements with other nations and entails various technical standardization. The common carriers can best do this through their previous experience. 7): The initial cost of satellite operation will be high, and this investment can best be financed through the rate base structure of the common carriers. 7 Despite the past experiences of the common carrierS' in international communication service, the Justice Depart-. _ment spoke out against this plan and in favor of broadening the base for ownership. Mr. John James of the Justice Department requested the FCC seek alternative ownership plans.‘l8 ' ’ 0' 8 At that time, the Assistant Attorney General, Lee Loevinger, speaking for the Justice Department, enumerated . antitrust factors: ; A) To assure competition in the satellite communica- Vtion system, if it is to be privately owned, ‘ "7Philip J. Klass, "Commercial Satellite Ownership Limits will be Reconsidered," Aviation Week and Space Technology, LXXIV (June 12, 1961), p. 34. A8 "Justice Studies Carriers Plan for Non-Profit 'Satellite Operator," Aviation Week and Space Technology, LXXV (October 23, 1961), P. 28. 59' should be so organized that no single company is able. to dominate the System through ownership or through patent control, B) 'All communication common carriers should have equitable and nondiscriminatory access to the system; w C)“ All interested manufacturers should have‘an un- restricted Opportunity to participate in the furnishing of equipment; and D) Research and development conducted under Govern- 'ment contact or supported by public funds should be available to all companies interested in satel- lite communications. The Justice Department Opposed the AT&T and the con- sortium plans because it felt these criteria would not be effectively met. Rather, the Justice Department voiced approval of a broad-base ownership corporation because it felt such a plan took into consideration participation by all interested companies. Competition was thought to be better supported through this plan.5° The Department of Justice strictly upheld its opinions on competition, based upon President Kennedy' s policy state- ment. By excluding aerospace and manufacturing companies from ownership, the Justice Department voiced concern for ' fair competition. The communications companies involved in ownership might subcontract work to their own subsidi- aries, as indicated by previous records of AT&T. “9U. 8., Congress, Senate, Committee on Small Business, Space Satellite Communications, Hearings before the Subcom- mittee on Mono oly of the Select Committee on Small Busi- ness, Senate, 7 Cong., First‘Sess., 1961, p. 26. 5°Ibid. 60 Representative James Roosevelt (D. Calif.) pointed this out: if AT&T, whose assets of.$23 billion were greater than Standard Oil of New Jersey, General Motors and United States Steel combined, was given a dominant position in the satellite system, it could be expetted to do as it had done in the past--namely purchase virtually every piece of equipment from its wholly owned supplier, Western Electric, and conduct its research in the Bell Laboratories.51 Senator Wayne Morse emphasized the danger of mono- '_ poly. .Monopolies by definition represent the antithesis of free enterprise, for they are free from competition.52 Morse maintained that only the government would ensure competitive use of government and private resources needed to epeedily build the satellite.network.53 United Research attempted to dispel fears of mono- poly. "It suggested the corporation be initially owned by the government, with the clear understanding that later a.private enterprise system would be adopted. Hopefully, vthisplan‘would avoid corporate complications. Confusion and uncertainty prevailed during the com- munication satellite debates. Whether the issues were 51"General Electric, with Prospects Dimmed by FCC, Drops Bid for Communication Satellite," Science, CXXXIV '(October 6, 1961), p. 993. 52"Satellite Competition Potential Disputed," p. 33- 53Antitrust Problems of the Space Satellite Communi- cations system, Part 2, Testimony of Wayne Morse, p. 76. 61 technolegical, political, economic or legal, there was difficulty in achieving concensus, which further compli- cated the problem. This uncertainty pervaded the debates in Congress and in the legislation proceding the~passage of the Communications Satellite Act. CHAPTER IV ‘ .LEGISLATIVE HISTORY AND REGULATORY CHANGES‘ By December of 1961, many complications had arisen concerning the communications satellite system. Several companies had formed individual plans for develOping a satellite network. There were different recommendations from special advisory committees and the Consortium for an initial corporate structure. Nearly every_governmentv agency related to Space exploration had envisioned some organization which would be consistent with its own policy. Most of the tentative plans called for initial cooperation between government and private industry in establishing ' a network; however, different.organizational and Oper- ational plans were suggested. Early in 1962, the many suggestions for managerial structure were reduced to three basic proposals. Senator Herr's Proposal: Common Carrier Ownership The first proposal for a Satellite system brought before the Senate supported communications common carrier -.. ownership. “On January 11, 1962, Senator Robert Kerr (D.~ Okla.) introduced_Senate bill 2650 which embodied the 62 63 basic ideas set forth by the common carrier consortium in October of 1961.1 This bill proposed that the initial capital of $500 'million be raised through the sale of 5,000 shares of‘. stock costing $100,000 each. It was stipulated that only communication common carriers authorized by the Federal Communications Commission would be allowed to buy stock in the corporation.2 Since the stock was not to yield dividends, the common carriers would have been allowed to raise their rates to absorb the cost of the stock. This financial structure was similar to the original consortium sugges- tion that the common carriers invest in the satellite system without dividends and without profit, but with a . provision that net costs to be included in rate justifi- cations.3 I .' aThe board of directors was to be composed of two members from each company purchasing a minimum of $500,000 of stock. 'Two additional members were to be named by the ‘r. 1U.S., Congress, Senate, Senator Kerr speaking on the amendment of the National Aeronautics and Space Act of 1958, S. 2650, 87 Cong., 2d Sess., Jan. 11, 1962, Congres- sional Record, CVIII, 8A. j ‘ . 2U.S., Congress, Senate, Senator Kefauver Speaking on s. 2650, S. 2890, 87 Cong., 2d Sess., Feb. 26,1962, .Congressional Record, CVIII, 285M. 3H. Margolis, "Communication Satellites: Private’ Ownership and PublicControl, Neatly Packaged," Science, CXXXV (February 23, 1962), p. 653. 6“ users of the system which had made less than the minimum $500,000 stock purchase.“ The Kerr proposal had the support of most interna- tional common carriers. Newton Minow, FCC chairman, also supported this plan for it was his opinion and the opinion of the Commission that this corporate structure would most quickly and efficiently establish the satellite system.5r The Administration's Bill Disagreement with Kerr's proposal was voiced by many. The aerospace companies and the communication equipment industries wanted a wider ownership base. The Justice Department repeatedly urged.that ownership be open to all interested companies as well as private citi- zens.6 ,The most influential supporter of this private ownership plan was President john F. Kennedy. Shortly after the Kerr bill was introduced in the Senate, the Administration proposed Senate bill 281u.7 i “U.S., Congress, Senate, Senator Kefauver speaking on S. 2650,.S. 2890, 87 Cong., 2d Sess., Feb. 26, 1962, Congressional Record, CVIII, 285“. 5"Satellite Ownership," New Republic, CXLVI (March 12, 1962), p. 653. 6U.S., Congress, Senate, Committee on the Judiciary, Antitrust Problems of the Space Satellite Communications System, Hearings before the Subcommittee on Antitrust and .Monopoly, Senate on S. Res. 258, 87 Cong., 2d Sess., l962, p. 27. ' 7U.S.‘Congress, Senate, Senator Kerr speaking on the Administration's Communication Satellite Bill, S. 281“, 87th Cong., 2d Sess., Feb. 7, 1962, Congressional Record, CVIII, 1 A7. 65 The primary difference between S. 2650 and S. 281“ was ownership. The principle new feature of the Adminis- tration's bill was the provision for two classes of stock: Class A. Stock—~This would be open to the public to purchase at $1,000 per Share. One million shanes would initially be offered, but no individual would be allowed to purchase more than 15% of the authorized stock or more than 25% of the outstanding stock. Vote ing rights and dividends would be confined to class A stock,8 Class B. Stock-~This would be purchasable only by communication common carriers authorized by the FCC. These 10,000 shares at $25,000 each would not carry voting or dividend privileges, but rather the invest- ments would be included in the rate base.§ ' By proposing two_equa1 stock classifications, the Administration hoped to foster maximum participation in the corporation, and it also hoped to limit the influence_ 10 of any one company. In addition, the administration set the price of class A stock at $1,000 in order to limit Speculation by private citizens.11 , .' A second major difference between Kerr's bill and the Administration's proposal was government control. The Administration stipulated tighter government control on ser- vice rates and procurement, as well as a more active State Department role in negotiations with foreign countries.12 8Ibid. 9Ibid. . ‘ 10H. Margolis, "Communication Satellites: Private ,Ownership and Public Control, Neatly Packaged, " _Science, CXXV (Feb. 23, 1962), p.653. ,i 11Ibid. 12"Kennedy' '8 Satellite Relay Plan," Business Week, ,(February 10,1962), p. 36. '\ 66 " The Administration's bill; S. 281“, was introduced in the House as H.R. 110A0. Other similar proposals for some form of private satellite corporation were embodied in H.R. 10115; H.R. 10138; H.R. 107u7; H.R. 10772:\n.n. 11063; 3.3. 10808; and H.R. 10978, all of which came from the Committee on Interstate and Foreign Commerce. The Minority Opposition \- The greatest opposition to the private enterprise proposals came from a small block of senators who wanted to establish a government-controlled Communications Satel- lite Authority. Senators Kefauver, Morse, Yarborough and Gore introduced Senate bill S. 2890 for this purpose.13 Senator Kefauver cited the necessity of extensive government participation as a primary factor in his deci- sion to support the Authority. Kefauver noted the govern- ment would have the following responsibilities: 1) to supervise all relationships with fireign bodies; . 2) to insure foreign participation; 3)- to coordinate research and development; 'fl) to launch satellites; .5) to insure nondiscriminatory and equitable use 20f the system; and - ' 1h 6) to regulate the ratemaking process. According to Kefauver, it would be in the public interest to have the government in control of the entire system to k I 130.8. Congress, Senate, Senator Kefauver speaking on ‘the establishment of a Communications Satellite Authority, ES. 2890, 87th Cong., 2d Sess., Feb. 26, 1962, Congressional Record, CVIII, 2851! .. l”Ibid. 67 guarantee that these responsibilities would be effectively met. In the name of public interest, Kefauver introduced bill S. 2890: ' ‘ \ 1) to create the Communications Satellite Authority, ' an agency of the U.S. Government to own and con- trol the U.S. portion of the international system; 2) to lease communication channels to those authori- zed by the FCC; 3) to participate with foreign governments and to ~13 5 provide technical assistance to those countries "needing it; ' H) to have a board of nine appointed by the Presi- dent, four of the members being selected from , government positions and five from private - industry; 5) to pr0pose policies and board programs in the public interest; and 6) to establish an authority with an initial capi- talization of $500 million in bonds, with the principle and interest payable solely from net proceeds of the communication system.1 Avoiding a monopoly was the greatest concern of Aefauver and his colleagues. Since the government would .be using the services extensively, use of the satellite system would be guaranteed. The assertion was that the government would not be fostering private enterprise through a private corporation, but rather a private monopoly.16 There were two additional bills introduced in the Senate which took a similar point of view. House bill ,- 15Ibid. _ .16U.S. Congress, Senate, Senator Gore speaking on the "Commercial Communications Satellite System, 87 Cong., 2d ‘ Sess., June 18, 1962, COngressional Record, CVIII, 107h8-9. \ 68 9907 was to amend the Aeronautics and Space Act of 1958 to provide for a Communication Satellite Authority under government control.17 The second bill, H. R. 10629, made a like proposal.18 \ _ \ The Administration's Modified Proposal As the three proposals were presented to Congress, .it became apparent that concessions would have to be made for_any single proposal to gain sufficient support. Attor- ney General, Robert Kennedy, spearheaded the attempt to curb the common carrier prOposals by making several compro- '.mises:. 1) reduction of the price of class A stock from $1,000 to $100 per share in order to make the stock more available to the common public; 2) concession of permitting the common carriers to ’ build, own and operate their own ground stations; the common carriers wanted this concession be- : cause they insisted the ground stations should -function as a separate unit in the global sys- tem, and be operated independently;l9 3) 'reduction of the extensive authority of the U. S. President to direct and intercede in the . private corporation; and h) recasting of the role of the State Department to that of foreign policy advisor and policy I '17U. S. Congress, House, House Representative W. F. Ryan speaking on the Communications Satellite System, H. R. 9907, 87 Cong., 2d Sess., Jan. 25, 1962, Congressional Record,‘998. 180. S. Congress, House, House Representative KowalSki speaking on the Communications Satellite System, H. R. 10629, 87 Cong., 2d Sess., March 8, 1962, Congressional Record, CVIII, 379M. .- 190. S. Congress, Senate, Committee on Aeronautical and Space Sciences, Senate Reports on Public_Bills, Report for the Committee on Aeronautical and Space Sciences, Senate Report 1319, 87 Cong., 2d Sess., 1962, p. 5. “A. 69 director instead of negotiator with foreign governments. 20 These concessions were made in an attempt to unify support for a single private enterprise bill. After Robert Kennedy's revisions, the merging of these factions~began. Senator Robert Kerr offered an analysis of this complex compromise: this is a compromise with which no one is entirely satisfied, but against which there would be no 21 unified and vigorous opposition. The Congressional debates subsequent to the compromise did not prove this true. Legislation in the House and Senate Modification of the Administration's bill-was intro- duced in the House. Discussion arose over ownership of the ground stations, the State Department's participation and FCC regulation. The House Committees on Interstate and. Foreign Commerce and Science and Astronautics had reviewed and approved the bill. It was then passed with minor changes on May 3, 1962 with the vote of 35A yeas, 9 nays and 7h abstentions.22 2°"Administration is Ready to Modify Its Stand on COMSAT, " Aviation Week and Space Technology, LXXVI (March 26,1962), p. 23. 21"Senate Space Committee Agrees on Compromise Gomsat Measure " Aviation Week and Space Technology, LXXVI (April 2, 19625, p. 20. , 220. S. Congress, House, Vote on House Bill llONO, H. R. llOHO, 87 Cong., 2d Sess., May 3, 1962, Congressional ‘Record CVIII, 7712. _designed to abolish monopoly. 7O Opposing this bill were the senators who supported the Cdmmunications Satellite Authority. Debate in the Senate ran the entire gamut of subjects from technology to foreign policy, and all debate was directed at denying pri- vate industry's ownership and operation of the satellite system. Senator Russell Long (D. La.) attacked the Adminis- tration's bill as violating the anti-trust laws. He main? tained a privately owned corporation created by the govern- ment would violate sections one and two of the Sherman Act and section seven of the Clayton Act, both of which are 23 ‘ Another argument against the Administration's bill opposed the regulation policy. The opposition claimed the FCC would not adequately regulate space communications Mbecause it could not adequately perform the regulatory aspects of domestic communication systems. This conclusion was based on a 1962 report by management consultants Boos, Allen and Hamilton, titled "An Organizational and Manage— ment Survey of the Federal Communications Commission." This report concluded that the Common Carrier Bureau of ‘the FCC did not have adequate resources, facilities, staff, -hnorubudget to fulfillits-statutory obligations. It was v_-,.,_‘ .-.mJlierefore :concluded .that-.—»it-—would ~not-be possible so.» this " 230. S. Congress, Senate, Senator Long speaking on Communication Satellite System, 87 Cong., 2d Sess., August 11, 1962, Congressional Record, CVIII, 16198-9. 71 bureau to adequately perform additional regulation in space communications.”4 'Senator Long also suggested the possibility of merger among the international telephone and telegraph cbmpanies to provide the most efficient service. _The telegraph traf- fic was serviced by several companies, while only AT&T was licensed to handle voice traffic. Long argued that ' the‘technological capabilities of the satellite permitted integration of the communication systems. And distinc-. tions complicating present telephone and telegraph service should be abolished and placed under government operation' to better serve the public.25 Other arguments related to questions pertaining to ratemaking, the taxpayers vested interest in the space pro- . gram and the State Department's responsibility. The issues , were still being debated on the Senate floor in August, ' and no solution seemed evident. The legislative process added many political and procedural complications, cloud- 'ing hopes of passing any bill. Opponents of the Adminis- .tration's bill resorted to filibustering and a stalemate '.ensued. 21'U.S. Congress, Senate, Senator Long on Communica- tions Satellite System, H.R. llONO (S. 2814), 87 Cong., 2688088., August 17, 1962, Congressional Record, CVIII, ,1 30. 25U.S. Congress, Senate, Senator Long speaking on -n.the Communications Satellite System, 87 Cong., 2d Sess., August 11, 1962, Congressional Record, CVIII, 16207. 72 Action had to be taken to side step the more than 200 amendments being proposed by the Opposition. Many people involved in political life, including Secretary of State Dean Rusk and Secretary of Defense Robert. McNamara, were called upon to testify on behalf of‘the Administration's bill. . Rusk assured the Senate that the pr0posed private corporation was in keeping with the policy of the Depart- ‘- ment of State. As he had told the Senate Committee on Foreign Relations, "the corporation . . . is in fact another evidence of the pragmatic ability of Americans to devise new institutions, new techniques and new organiza- tional forms to meet the practical demands of new situa- tions."26 Rusk emphasized that the bill provided ample ,government protection to insure.the public interest. And in this regard he urged the integration of governmental and industrial research.27 ’ Tension mounted in the Senate. The cloture ruling had been requested several times, and each time it was denied. Cloture had not been voted in 35 Years, but - after persistent requests, the ruling was finally brought 26Dean Rusk, "Foreign Policy Aspects of Space Com- munication," Department of State Bulletin XLVII (August ~ 27. 1962), p 316 I” , 271b1d. 73 to vote and passed on August lu,28 This limited the debate on the Communications Satellite Bill to one hour per sena- tor, and subsequently brought the bill to a vote. On August 17, a vote was finally taken, and’H.R. llONO was passed. There were 55 yeas, 11 nays and\23 votes were not cast.29 The House concurred with the Senate, and the Communications Satellite Act of 1962 (subsequently .referred to as the Act) was signed into law by President ,Kennedy onAugust 31, 1962.30 This law created a unique corporation-~a governmentally created private corporation. Implementing Change The Communication Act of 1962 delineates responsi- bilities of the corporation, the agencies of government and of the President. Policy and purpose are defined, (as well as the corporation's (COMSAT's) structure. How- ‘ever, many of the responsibilities and definitions were not made specific because there were many uncertainties at the time the Act was signed. . 28"Satellite Bill in Clear," Business Week (August .418, 1962), p. 299 290. 8., Congress, Senate, Vote on H. R. bill lthO, 87 Cong, 2d Sess., August 17, 1962, Congressional Record, CVIII, 16926. 300.8. Congress, H.R. llOAO, An Act to Provide for ,,the Establishment, Ownership, Operation, and Regulation of a Commercial Communications Satellite System, and for otggr Purposes, H. R. llOHO, 87 Cong., 2d Sess., August 13, ..- 19 7“ Since August, 1962, action has been taken by the FCC in an attempt to make the corporation and its functions efficient and its contracts equitable. Clarification of stock ownership was the first of these decisions? and it was made effective December 31, 1962. \ The authorization of common carriers was not made clear. ,The FCC decided that all common carriers were ,eligible to apply for authorization by the FCC, but they would not be able to own stock without authorization. Secondly, stock already purchased by an authorized carrier could be sold or traded to other authorized carriers with- out first notifying the FCC. However, authorized carriers could not, under any circumstances,zsell, trade or nego- tiate stock with an unauthorized carrier without the com- vmission's permission. This provision was entered as amend- ment 25.510. I ‘ ‘ Modification of this regulation became effective on August 10, 196A, upon the FCC's approval or fules in adop- tion of Docket No. 15H95 regarding the-transfer of stock. This provision stipulated that regulation pertaining to. _ the purchase of stock be applicable until June 1, 1965. / .o—D Also, an additional statement was added forbidding the' Corporation to take part in any transaction not approved by the FCC. This was the first time a specific ruling was made regarding the Corporation's responsibilities in stock purchases'and trade. 75 ‘A second point needing clarification was the procure- ment regulation. The Act merely gave the FCC the responsi- bility of insuring that all services, equipment and sup- plies be contracted on a competitive basis. The procurement regulations were established to guarantee fair compEtition. Docket 15123 clarifies the reasoning behind these regula— tions, which were made effective on February 2“, 1964. Incorporated in FCC Focket 15123 are the Corporation's _‘~- responsibilities pertaining to contracting. The methods of procurement are explicit: l) formal advertising by competitive bids and awards as prescribed further in the a. contents of the invitation for bids, b. publicizing the invitation for bids, 0., submission of bids by prospective contractors and 31 ‘d. evaluation and awards of bids; ' , 2) two-step procurement, consisting of the request ' for, and the submission, evaluation, and if necessary, discussion of, technical proposals without pricing; secondly, formally advertised 8‘ - procurement limited to contractors submitting32 ' technically acceptible proposals in step one, ' and 3) negotiation, under the circumstances allowing negotiation, which are limited to situations where it is not feasible or practicable to pro- cure prOperty or service through either formal advertising or two-step procurement, or if other- wise specifically authorized by the Commission.33 31U.S. Federal Communications Commission, Amendment of Part 25 of the Commissions' Rules and Regulations with ”respect to the Procurement of apparatus, equipment, and serwdces required for the establishment and operation of 1316 communications satellite system and satellite terminal .w~stations. Docket no. 15123, Washington, D. C., 196“. 321bid. 33Ib1d. 76 Another important decision included in this amendment was the listing of situations to which the procurement rules would be applicable. Any procurement in which the cost was $25,000 or more would be subject to procurement regulation, excepting cost of utilities, counseling ser- vices, and government services.3u In addition to these regulations, the FCC also recom- mended c00peration with the Small Business Administration (SBA). The FCC requested the advice of the SBA be sought even in contracts where the amount Was less than $25,000 in order to insure equitable opportunity fOr all interested companies.35 Slight modifications in these procurement regula- tions were made in February, 1968, when the State Depart- ment recommended the FCC adopt the international procure- ment regulations of INTELSAT. ' On February 2,1968,INTELSAT's Interim Communications Satellite Committee (ICSC) adopted regulations governing Procurement. 36 The stipulation slightly modified termi- nology and altered methods of procurement. The two-step 3"Ib1d. 351b1d., 36D. S. Federal Communications Commission, Amendment to Part 25, of the Commissions' Rules and Regulations, with :respect to the procurement of apparatus, equipment, and services required for the establishment and Operation of ‘the communications satellite system and satellite terminal stations. Docket no. 12338, Washington, D. 0., 1968. Av—v—-.-— -< 77 ' method of procurement was eliminated, but two additional methods were addedzl -1) 'direct source procurement, in which the party making procurement determines that competitive procurement is not possible, and \ 2) emergency procurement, when timely prior con- sultation with the committee (FCC) is not possible.37 The FCC found these modifications acceptable and made 'themra~part of the U.S. regulations. A third major decision pertained to the ownership. and operation of the ground stations. The FCC had five possible courses to consider in shaping a pblicy. Owner- ship privileges could be granted to: l) COMSAT alone; 2) A communications common carrier alone; 3) COMSAT and one or more common carriers Jointly; A) One or more common carriers jointly; or 5) Any other alternatives possible under Section 201 . (c) (r) of the Act.38 The FCC decision was in favor of COMSAT, giving the Cor- poration the sole responsibility for the design, construc- tion and operation of the three initial stations. The reasoning behind this decision was to provide for maximum (unity among the ground operations and get the network 'organized as quickly as possible. This amendment became 37Ib1d. ,./— 38U.S. Federal Communications Commission, Amendment to Part 25 of the Commission's Rules and Regulations with. respect to ownership and operation of initial earth stations " in the United States for use in connection with the pro- posed global commercial communications satellite system Docket no. 15735, Washington, D.C., 1965. 78 effective June 22, 1965, and was to expire in June, 1967, unless the Commission saw fit to change the ruling prior to the expiration date.39 Modification of this policy was made in December, 1966, at which time the Commission did feel a change was necessary. The number of earth stations was growing and the common carriers were interested in owning and operating the new stations. After soliciting opinions from the “ Corporation and the authorized common carriers, the FCC decided that a 50 per cent ownership by COMSAT and 50 per 'cent ownership by the common carriers would be equitable. . Whereas COMSAT owned all of.the three initial stations, it would now own 50 per cent of those and 50 per cent of the three propoSed operations. Quotas for carrier owner- ship were distributed according to the size of the company and the location of the earth stations.u0 ’ Coterminous ' Puerto Rico- QQEEEE! States fléfliii ‘Virgin Islands COMSAT . . 50.0% 50.0% 50.0% AT&T 28.5% --- ' --— Hawaiian Telephone --- 30.0% --- ITTPR-ITTVI , --- --- . 30.0% ITT . 7.0% ; 6.0% 11.5% RCAC ' 10.5% ‘ 11.0% "0.0% WUI A.0% 3.0% A.5% /’ 391bid. -» 'V uoIbid.,‘15735» Room 5"”. 79 Under the rapidly developing satellite system, the FCC felt this distribution was most equitable and encouraged speedy construction of ground facilities. The final decision issued by the FCC was the‘Authori-' zed Users decision. "During April, May and June, 1965, the Commission received requests from several concerns (including press wire services, a newspaper, a television 'network and an airline) for information regarding pro- cedures to be followed in order that such concerns might ' be authorized to obtain satellite telecommunication services .directly from the Communication Satellite Corporation.”1 A decision had to be made specifying the authorized 8 users of the Corpoartion's services. After reviewing the Act and soliciting opinions, the FCC drew these conclusions: 'a) COMSAT may, as a matter of law, be authorized to , provide service directly to non—carrier entities; / ‘X\ b) COMSAT is to be primarily a carrier's carrier and ‘4 ‘ in ordinary circumstances users of satellite fa~ cilities should be served by the terrestrial car- . riers,* and c) In unique and exceptional circumstances COMSAT , may be authorized to provide services directly to non-carrier users; therefore, the authoriza- tion to COMSAT to provide services is dependent upon the nature of the service, i.e., unique or exceptional, rather than the identity of the user. The United States Government has a special position because of its unique or national inter- est requirements;‘COMSAT may be authorized to provide service directly to the Government, when- ever such service is required to meet unique ”governmental needs or is otherwise required in .1, - -u1U.S. Federal Communications Commission, Authorized entities and authorized users under the Communications Sat- ellite Act of 1962, Docket no. 16058, Washington, D.C., 1966. *AT&T, Hawaiian Telephone, IT&T;RCAC, WUI. .~_‘,_.. fie —- 44 W. —~._ -wv—.-w_-— . 80 the national interest, in circumstances where the governments needs cannot be effecfifively met under the carrier's carrier approach. Although the Commission did not intend to authorize non- carrier users, provisions were made for authorization. These four topics-~stock ownership, procurement owner— ship, earth station ownership and authorized users have constituted the major decisi6ns made by the FCC amending the Act of 1962. Other decisions will undoubtably be forth- coming, but major decisions will probably be withheld until _ the Presidential Task Force has reported its findings. In the interim, COMSAT is carrying out its duties according to present law. The relationships of COMSAT to our industries, the U.S. government agencies and the .global communications satellite network are complex, and its problems are multiplying. ‘ CHAPTER v ,q OPERATIONS IN A COMPLEX STRUCTURE \ The Communications Satellite Corporation has assumed many roles since its inception in February of 1963. As a private corporation subject to governmental regulation, COMSAT has several responsibilities; its operations are many and complex. Besides dispersing business contracts among private industries, COMSAT must also coordinate , operations with seven government agencies, with INTELSAT; and with the communications common carriers. ' Cooperation Between COMSAT and . Government Agencies Coordination of COMSAT and government activities is the responsibility Of the U.S. President. Three Offices come' under his jurisdiction,and all three help to guide national policy pertaining to COMSAT. ' The first of these is the National Aeronautics and Space Council (NASC), of which the U.S. Vice President .is chairman. The NASC was created by the National Aero- nautics and Space Act of 1958 but has only been active . . ‘ '\\\\‘ ' 8 1 “V 'n-H'"Wid - 82 since 1961.1 Its primary function is to provide "for effective cooperation among all departments and agencies— Of the United States engaged in aeronautical and space "2 ~ 9 activities. The‘second Office responsible to the Presiden6\is that of the Special Assistant for Science and Technology, which has two distinct functions: (1) to coordinate the science efforts in government agencies through the Fed- eral CounCil for Science and Technology, and (2) to bring together eminent scientists from government, industry and the universities to advise the President through the President's Science Advisory Committee.3 The Office of Emergency Planning (OEP) is the third advisory reporting to the President. The responsibility for making radio frequency assignments was transferred Ito OEP from the now defunct Office of Defense Mobiliza- tion (ODM). As far as COMSAT is concerned, OEP is the administrator of radio frequencies used fOr space com- munications. All of these Offices, then, NASC, OEP and the Special Assistant for Science and Technology, guide the President in making policy statements pertaining to 'COMSAT's domestic and foreign Operations. lU.S., Congress, Senate, Committee on Aeronautical 'and Space, Communication Satellites: Technical, Economic, and International Developments, Staff Report for the Com- mittee on Aeronautical and Space Sciences, Senate, 87 Cong., -M2d Sess., 1962, p. 13. 1 2Ibid. _3Ibid., p. in. ‘Ibid., p. 17. The National Aeronautics and Space Administration (NASA) is vital to the operations of COMSAT because it provides launch facilities for communication satellites. The National Aeronautics and Space Act of 1958 giveSSNASA the responsibility of planning, directing and conductihg aeronautical and space activities.5 Accordingly, NASA is to provide launch facilities for COMSAT on a reimburs- able basis upon request. ‘- The Department of Defense (DOD) also has some re- lationship with COMSAT. The Defense Department is responsi- ble for "activities peculiar to or primarily associated with the development Of weapons systems, military Oper- 6 ations or the defense of the United States." .In order to fulfill these duties, the Department of Defense may utilize communication facilities provided by COMSAT, by any other common carrier or it may operate through its own system, the National Communications System (NOS). It is eVident, therefore, that COMSAT is a competitor for DOD's business. . In 1966, DOD and COMSAT prepared a contract without negotiating through the common carriers._ This contract later became a test case for the Authorized User decision. The Department of Defense needed thirty communication channels in the Pacific. COMSAT Offered to supply the \ \ °”‘ . 5Ibid., p. 15. 6 Ibid., p. 16. -—-v~v— *— _._...- 8” Channels at $8,000 per month, which was one-third the price charged by the common carriers for the same service.7 The carriers protested this contract. The FCC ruled in favor of the common carriers providing they would reduce‘their rates, which they did. The thirty channels have since been occupied by the Department of Defense, but COMSAT has been ordered to yield the contract to the common car- rier§:§ In this Thirty-Circuit decision, the FCC was very strict in its interpretation of the authorized users ruling, and COMSAT's attempt to expand its service on its own ini- tiatiVe was repressed. The FCC is given the responsibility for the regula- tion Of the technical activities of COMSAT. Accordingly, it has much influence on the carriers' relationship to COMSAT; rates charged for service; construction, ownership (and Operation of earth stations, and the expansion of ..a- services. The future direction of the carriers and the COMSAT will be determined by the FCC. Guidance in foreign affairs is the responsibility of 10 the Department of State. There are two basic functiOns of the State Department which effect COMSAT (l) initiating 7"Satellites Going Up, Prices Going Down, " Business Week (OctOber 1,1966), p. 116. 8Communications Satellite Corporation Annual Report ‘ 19m 7(February, 1968), p. 18. 9U S. Congress, Communications Satellites: Techni- cal Economic, and International Developments, p. 18. 10Ibid. 85 and preparing for,internationa1 conferences on communi- cations, and (2) meeting with Government-industry committees in the early stages of planning international meetings to .call attention to relevant foreign affairs.11 The Department of State also performs auxiliary functions, many Of which are directed toward promoting cooperation among the U. S. and foreign governments. A special meeting sponsored by the State Department called together7100 delegates from forty-three foreign countries for intensive briefings on ground stations. This meeting was held not only to disseminate new information, but also to encourage more countries to participate in the 12 INTELSAT program which COMSAT directs. Thus, during formal agreements and informal meetings, the Department Of State acts as a liaison for international affairs. COMSAT and International RelatiOns COMSAT's board Of directors had initial responsi— bilities of forming not only the domestic but also the international communications satellite system. The first objective was to secure a segment of the radio frequency spectrum for experimental satellite communications. In order to Obtain those frequencies, COMSAT representatives 'went to the 1963 Geneva Conference of the International 11Ibid., p. 19. 12"Satellites: A Fight at Home. . . . A Hard Sell Abroad,“ Business Week (May 21, 1966), p. N7. 86 Telecommunications Union, where revisions in international frequency assignments were being made. ,After reviewing requests for frequency assignments, the conference awarded the largest single allocation to the Communications Satel- lite Corporation.13 This task completed, COMSAT directors proceeded with conferences designed to create a workable international communications organization. ‘~—.During the remainder of 1963 and 196A, COMSAT Offi- cials and members of the Conference of European Post and Telegraph (CEPT) met and discussed plans for an interna- tional organization. COMSAT sought international partici- pation in a COMSAT global network, while CEPT representa- tives insisted on actually owning and operating part Of the system. ' ' The last of these conferences was held in Washington, 8D.C., in August, 196M. ‘Seventeen nations’drew up two agreements which created the International Telecommunica- tions Satellite Consortium (INTELSAT). The first was an intergovernmental Agreement Establishing Interim Arrange- l,ments for a Global Communications Satellite System. The second was a Special Agreement concluded among governments or their designated communication entities. The inter- ' gOvernmental Agreement provides that all ITU members may 13Leonard Jaffe, "Satellite Communications of the ‘Future,"‘Telecommunications‘Journal, XXXII (May 15, 1965), po' 19“. A ‘ . ‘ 87 join INTELSAT and that these agreements will stay in effect until reviewed on or before January 1, 1970, when ' revision will he required by Jaw.]“ The Interim Communications Satellite CommittEe . (ICSC) was established by the intergovernmental agr;2ment and is responsible for the design, deveIOpment, construc- tion, establishment, maintenance and Operation of the ‘spaCE‘segment of the global system.4 The space segment includes the communication satellites and the related equipment needed for tracking, control and command of the system.15 The ICSC is composed of members represented on a quota basis, with one representative from each member or group of members whose investment quota is not less 16 than 1.5 per cent of the total operational cost. i l COMSAT was designated as manager of INTELSAT by the initial members, and according to the policies of the ICSC, will direct the design, establishment,.operation , and maintenance of the space segment.17 INTELSAT's Achievements Several months of planning by INTELSAT members were rewarded by a successful launch in April, 1965. The first slu"International Conference Concludes Agreements Establishing Interim Arrangements for Global Communications," -’” Department49f‘3tate'Bulletin, LI (August 28, 196“), p. 281. 15Ibid.- ‘16U.S. Government, “International Telecommunications Satellite Consortium (Intelsat)," Treaties and other Inter— "national Acts, Series 56h6,~p. A. 17Ibid. CO 00 international communications satellite, Early Bird (Atlan- tic I), was put into an elliptical orbit and later maneu- vered into synchronous orbit 23,300 miles above the equator. Early Bird was to have an eighteen month service period, but now, more than three years later, Early Bird is‘etill providing communication service to North America and Europe.18I The first satellite in the Pacific region was launched latefiin 1966,but it failed to achieve synchronous orbit. Consequently, it provided only minimal communications between the U.S. mainland and Hawaii.19 sPacific I was the first INTELSAT II satellite, and it was launched on January 11, 1967. ,This satellite, like the fOllowing series II satellites, has a capacity- of 240 voice circuits. Service is provided by Pacific I .'Jbetween the U.S. and the Far East.' The second satellite (in this Series was Atlantic II, which was placed in orbit on March 223 1967, and it provides service to North America and Europe.20 The third satellite was Pacific II, , launched on September 27, 1967, and it provides service 21 for the U. 83, Philippines and the Far East. A fourth INTELSAT II satellite is kept in storage for emergency needs.22 18 Communications Satellite Corporation Annual Report il,‘ p0. .‘\.\‘ ' ‘ 19Ibid. “‘ZOIbid. ' 21Ibid. 22Ibid. ...-0 ‘ “- 89 The'INTELSAT II satellites are larger than those now deployed, having a capacity Of 1,200 voice circuits. There are three satellites planned for this series: one over the Atlantic, one over the Pacific and one over the Indian' Ocean. This series should be completed by mid-19693 and will complete the global satellite network.23 For the first time, we will experience complete and instantaneous world communications. "is INTELSAT III 1/2 satellite was planned. It was to be similar to the INTELSAT III satellites, but this one was to have a directional antenna, concentrating communica- tions between North America and Europe. However, before COMSAT Obtained FCC approval of this satellite, AT&T pro- posed the TAT-5 transatlantic voice cable at the request of the FCC. The criteria set up.by the FCC for acceptance of the cable were: (1) furnishing details which would clearly demonstrate that the cable would be in Operation by early 1970; (2) agreement to reduction of transatlantic service rates by 25 per cent; and (3) agreement on the pro- portionate fill of the cable and satellite facilities.2u Prior to the FCC's approval of the TAT-5 installa- tion, there were reports submitted by the common carriers claiming the cable to be the most economical system, while "pOMSAT praised the benefits of the satellite network. .The a- * - 23Ibid.\“n 2”Ibid. 90 Commission did approve TAT-5, which was to be jointly owned by AT&T, ITT World Com, RCA Communications and WU Inter- national in conjunction with Portugal, Spain and Italy.25 This approval precluded plans to orbit INTELSAT III 1/2, limiting INTELSAT's expansion and favoring the con§§ntional carriers. INTELSAT IV satellites are being designed. These will have a capacity of 5,000 voice circuits, and three or four will be launched to expand the capacity of the global network.26 'Satellites are not the only link needed for satel- lite communications; ground stations are needed to send and receive signals. The initial stations were located in Andover, iaine, Goonhilly Downs, England, and Pleumeru- ‘ Bodop, France. Since these stations were erected inl96fl, v-” the number has grown to sixteen. INTELSAT.p1ans to have forty earth stations in the global network by the end of 1969.27 . I In the U.S., COMSAT has helped to build six ground stations, each costing three to five million dollars. The ,first.three are located in Andover, Maine; Brewster Flat, 25Katherine Johnsen, "US Discloses Satellites vs. Cable Policy," Aviation Week and Space Technology, LXXXVIII (February 26,1968), pp. 19- 20. 2600mmunications Satellite CorpOration Annual Report /_2_Zf p' ° e\\ ' 27Ibid., p. ‘9. --.—O 91 Washington; and Paumalu, Hawaii. A second group of stations is scheduled to be completed at the end Of 1968. These will be.located at Etam, West Virginia; Jamesburg, Cali- fornia; and Cayey, Puerto Rico.28 COMSAT owns 50 per cent of each of these stations.i In addition, the Corporation also owns three portable ground stations which are located in Maine, Hawaii and the Philippines.29 . INTELSAT has Obligations in addition to establish- ing a\satellite and ground network. The Consortium also offers technical assistance to underdevelOped countries‘ which would like to participate in the Satellite system. Over forty countries have been aided in planning their future communication needs.30' _ COMSAT, as the director of INTELSAT, must lead developments-on the international,scale. However, COMSAT {is also responsible for domestic developments in space research. The Corporation is in the prOcess of building research facilities in Montgomery County, Maryland. COMSAT laboratories will research satellite systems, radio fre- quency‘transmission, communications processing, space- craft engineering and space physics.31 281pm. gglbid. 3°Ib1d. 31Communications Satellite Corporation Annual Report 1966 (February, 1967), p. ii. ' '_ ~\\ . . ,- 92 International Challenges COMSAT is being called upon to meet domestic and international challenges. Since INTELSAT has been oper- ational, the positions of COMSAT have been clarified by the Executive Office Of the President, the Departmeng‘of State and the FCC: COMSAT is (l) a U. S. corporation responsible both to its stockholders and for the public interest; (2) the U. S. representative to INTELSAT, and (3) t6; manager or INTELSAT. COMSAT accordingly must face-the total of domestic and international problems. COnventional cable systems are being challenged by communication satellites in the age-Old problem of vested interests versus the new technology. The challenge is an, economic one. COMSAT has lowered the rates for satellite service a few times, and each time, the owners Of the cables have been forced to lower their rates. In October, 1966, the common carriers made their first major rate re- duction in response to COMSAT's Offer to supply the De- partment of Defense with thirty voice circuits in the Pacific. The carriers Offered the following reductions ' in voice circuit rates:32 32"Satellites Goingup, Prices Going Down.” ‘\ p. 116. __.. h“m~.-.—~F...'. “'0‘ ' I“ . O! 93 1966 Rate Per Reduced Rate Per Area Month Month, Oct. 1966 San Francisco—Hawaii $16,922.50 $lN,000.00 San Francisco-Philippines 29,026.50 San Francisco-Japan 30,000.00 San Francisco-Australia 30,000.00 5 . Hawaii-Japan 2M,000.00 22,000.00 This trend in rates will cOntinue as the satellite network expands and pressures the conventional systems to lower rates, as was the case in the TAT—S decision. .~wi;Growth in satellite traffic has not been as rapid as once hoped. In February, 1968, 53“ (55 per cent) of the 960 circuits available had been leased.33 The remain- ing circuits have been used mostly for periodic television broadcasts. There are several reasons for this slow in- crease in use of satellites. Timing has been important. The number of ground stations has been slowly increasing and the global ground network will be completed during the 1969-70 period. Installing land lines connecting ground stations to the central points of distribution has also taken time. When the ground stations and inter- connecting lines are completed, demand for satellite ser- vice will increase. Additionally, cOnventional carriers have leased satellite circuits and have been slowly filling ‘satellites to capacity. The leased satellite circuits are , 33Katherine Johnsen, "U. S. Discloses Satellite vs. Cable Policy," p. 20. .....- . a 9 1.; expected to be filled during 1968,.when expansion will be needed.3u During this period, INTELSAT III satellites will be placed in orbit and expansion of the system will I. . . \ Meanwhile, an international issue is developing over begin. the establishment of regional satellite systems. INTELSAT's present goal is "to establish a single global commercial ‘communications satellite system as part of an improved _global communications network . . . which will contribute to world peace and‘understanding."35 COMSAT has been work- ing toward this end, and its position has been reinforced by President Johnson as Official U.S. pOlicy. Yet, fac- tions have risen within INTELSAT. The Europeans have formed their own space research programs. The European Launcher Development Organization .- "\ ITELDO) and the European Space Research Organization (ESRO) have attempted to place a satellite in orbit. Their satel- lites have been patterned after the INTELSAT series, but . their projects have not yet been successful.36 The European countries can choose from three alterna- tives for using their technology. They can continue to .develop their own program, turn their efforts toward { 3”Ib1d. ...—...:- ,4” 35U.S. Government, "International Telecommunications ’SateIlite Consortium (INTELSAT),"p. l. '36"European Communications Satellite Doomed," in the New York Times, Sunday, April28, 1968, p. “2. ' 95 developing the INTELSAT program or they can insist on the reorganization of INTELSAT during the 1969 meetings. The French have suggested a regional system in which INTELSAT would be changed to a regulatory body for "insuring con— _tinuity in a global communicatiOns satellite system'and preventing interference Of regional systems."37 Included in these proposals were two additional stipulations: (l) thatxeach nation should be represented by government agen— ‘Oies and not by private companies like COMSAT, and (2) four private consbrtiums should be established to finance,- .build, launch and Operate the four major systems in the global network. The four'systems suggested were: A (1) West Atlantic: to serve the United States, Canada, North and South America, and across the Atlantic; ' (2) East Atlantic: to serve intra-Europe, Europe- - Africa and Europe-Middle East regions; .‘x; (3) Indian Ocean: to serve Eastern EurOpe, Soviet ' Union and Indian Ocean countries; (A) Pacific Ocean: to serve Southease Asia, Aus- tralia, the Orient and across the Pacific.36 The French are striving for localization of control and investment and increased regional participation. Also,~ _the French maintain that the Soviet Union might incorporate. its own Molniya Satellite system into this regional plan, '/' ' 37D. E.'Fink, "Europe Unifying Policy for INTELSAT Talks," AViatiOn‘Week and Space'Technology, LXXXVIII (Nov- -... ember‘ 27, 1967), p. 69. 38Ibid. - - «MW "Ore. 96 in which the Soviets would have a larger influence than they would have in a single global system directed by a U. S.’Corporation.39 The final form of European policy, which undoubtedly will be influenced by the French, will have an effect on the reorganization of INTELSAT in 1969. COMSAT will be looking toward maintaining a single system; but in order to do this, U. S{'dominance probably will have to be reduced. COMSAT has recently established '1. ‘ a separate division within the Corporation for the purpose of handling INTELSAT's affairs.no Before this reorgan— ization, both domestic and international affairs were con- ducted by the same staff. This division now leaves the domestic branch with two positions—~the first as the U. S. representative to INTELSAT , and the second as manager of COMSAT Laboratories. Although the separation reduces the responsibilities of the domestic corporation, separating domestic and international business might put COMSAT into a betterbargaining position during the 1969 meetings, at which time it hopes to reaffirm its position as manager.ul 39Andrew G. Haley, "Competition in Satellite Com- munications?" Telecommunications Journal, XXXII (August, 1965). p. 323 no"New COMSAT Unit to Manage Global Network, " :Aviation Week and Space Technology, LXXX (January 15, 1968),' p. 39 , ulIbid.‘ ”‘x_ 97 INTELSAT's reorganization will have quite an impact on the future of satellite communications. Both the demand for satellite service, which will be influenced by the expansion of cable systems, and the possibility of initiating regional satellite services will effect rter- ganization. The position of regional systems in relation to the global network will have to be clarified. Rela- tionships among partners in the system pertaining to investments and responsibilities will have to be outlined. And finally, the appointment of the next manager will have to be made and the manager's role redefined. COMSAT Involvement in Domestic Issues COMSAT must deal with problems On the domestic as well as the international scene. A domestic counterpart of thé international move for regional satellites is irepresented by the plea for private domestic satellite systems. In 1966, the American Broadcasting Company (ABC) submitted a request to the FCC for its own satellite to “2 feed programs to ABC affiliates. The FCC did not grant 13:13 request, but instead asked for opinions from indus- try and COMSAT on this matter; a series of replies fol- lowed. The Ford Foundation proposed the Broadcasters' NOanrOfit Satellite SerVice (BNS) Operate a satellite ‘ ¥ L . “Z"FOurth Network," New Republic, CLV (September 17, 1966), p. 13. . ' 98 system solely for television. The three commercial net— works, American Broadeasting Company, Columbia Broad— casting System and National Broadcasting Company, would pay for the satellite, while educational television would receive free service. In addition, the estimated $30 \ million per year difference between the cost of land lines and satellite service would be put back into educa- tional television, which operates on a modest $10 million yearly budget.l43 ‘ About the same time Ford Foundation made its pro- posal, several other industries requested satellites. Among those submitting requests were some petroleum and trucking industries and the National Association of Manufacturers.uu ' COMSAT was quick to submit a reply in opposition to.separate domestic systems. In 1966, COMSAT revealed a $100 million plan for domestic satellites to include: (1) wide-band width digital data links; (2) interconnection of computer links, and (3) educational and commercial television connections.q5 Since then, COMSAT has offered a second proposal which it believes is better and more u3lbid., p. lu. , "uKatherine Johnsen, "COMSAT Reveals $110 Million Plan forvMid—l970's Domestic System," Aviation Week and Space Igphnology, LXXXV\(August 8, 1966), p. 27-28. “” “uslbid. 99 realistic. The system would cest about $57 million and would give complete communication service to the U.S., southern Canada and northern Mexico. Besides serving telephone, telegraph, data transmission and broadcasting needs, this plan also offers free color transmission to educational stations in each time zone.“6 COMSAT's Oppo- sition to other domestic satellite preposals is based on its claim to control of the domestic domain according to the Communications Satellite Act of 1962. The FCC has not yet issued a statement on domestic systems; action on this matter is pending until the decision is made. A second domestic issue concerns the merger of the international carriers. COMSAT is encouraging a merger of all common carriers in order to make the system more efficient.u7 The American Telephone and Telegraph Company presently has a monOpOly on international voice circuits, (while several companies compete for the telegraph and data transmission business. —The problem among common carriers is interconnection. SeldOm does one company control enough of the cable system to complete the route Of a message, thus interconnection among the carriers is required. Furthermore, the international carriers deemed -authorized users, AT&T, Hawaiian Telephone, ITT World Com, " “6"COMSAT Shows its Hand," Business Week (August 5, 1967)5 p. 98. x. c ‘ V "7Katherine Johnsen, "AT&T, COMSAT Clash on Merger Proposal," Aviation Week and Space Technology, LXXXIV '\ 100 RCA Communications and WU International do all the con- tracting for international service via satellite. These companies can choose whether to send the message via cable or satellite, and in this sense, the carriers are the controllers and competitors of the satellite systemi This duel role played by the common carriers, coupled with the necessity for interconnection, produces problems and inefficiencies in the U.S. communication network. Some common carriers have voiced an opinion on merger. Western Union and AT&T have supported a merger Of the telegraph industries, and Western Union will prob- ably concede to a merger of telephone and telegraph indus- tries, while AT&T will not.“8 As the only carrier with voice grade international circuits, AT&T wants to keep its monopoly. However, AT&T Officials have also stated that if a merger is recommended, it would support a total merger which would abolish the present voice, non-voice distinction.u9 The reasoning behind this is that, as COMSAT proposed, only complete merger will correct the inefficiencies in the U.S. system. Presidential Task Force The Presidential Task Force was appointed in August, 1967 for the—purpose Of examining U.S. telecommunication / | . ‘ggIbidL 'x\A91b1d. 59Ibid. 10 1 service and policy; the findings are to be reported before September, 1968. The decisions of this committee headed by Under Secretary of State Eugene V. Rostow will shape the future of U.S. conventional and satellite communica- tion systems. The report is expected to follow Pretident Johnson's policy for a single global communications net- work. However, some revisions to present policy are indi-- cated: (1) COMSAT owns 5H per cent of INTELSAT's stock and will'probably be expected to sell some Of this; (2) COMSAT also may be called upon to yield the directorship. ”The Task Force will also study other pressing mat- ters: (l) the use of the electromagnetic frequency spec- . trum and how it'can be employed most effectively; (2) the possibilities for a domestic satsllite system; (3) who should own the domestic system(s) and whether the satel- lites should serve a specific purpose or be Of a multi- purpose nature; (H) whether or not there should be a merger ‘of international carriers; and (5) how will these deci- sions effect COMSAT and its relationship to INTELSAT. Observations and Inferences COMSAT, as a corporation created by Congress, has been directed to perform certain duties. The Corporation Inust organize and Operate U.S. communication satellites ’Wand must work toward establishing an international satel- lite— network. “ COMSAT's efforts in INTELSAT have been 102 defined; COMSAT, as manager, has attempted to create a single global satellite network. ' Direction of the domestic operations has not been as clearly stated. In legislating the Act, congressmen solved the ownership dilemma, but left unclear manquther questions. Controversy has risen over the question of competition with the carriers, the share of the market between cables and satellites, access to the satellite system; ownership of ground stations and the structure of the domestic satellite system. These controversies have ,led to further arguments because COMSAT has attempted to compete with the terrestrial carriers. COMSAT has assumed the right to compete because Original legislation did not specify that it could not. I _ Decisions made by the FCC subsequent to the Act have made it quite clear that COMSAT will not compete "with but rather be an extension of the common carriers. A review of the important decisions will focus attention on the narrowing of COMSAT's business adventures. COMSAT originally owned all the ground stations and facilities, a privilege granted by the FCC in June, 1965. In December, 1966, the FCC mOdified this decision so that the carriers would own 50 per cent of the ground network. The next question will be whether the carriers will be permitted to Own the entire ground network, removing sta- ,tion ownership cempletely from COMSAT's domain. The Authorized Users decisiOn further restricted COMSAT by limiting access to satellite communications to the international common carriers, except in special cases of national concern. The Thirty~Circuit decision refused COMSAT the right to deal directly with the Departmbnt of Defense, indicating that special cases were not going to be easily justified. This reinforced the Authorized Users. decision. ““ ”Finally, the TAT-5 decision indicated that the FCC will attempt to divide communications traffic equally between the cables and satellite systems. This safe- guards the vested interests common carriers have in con- ventional systems and regulates the.growth'of the satellite network. ‘ . The combination of these decisions presents a nar- nrowing picture of COMSAT's functions, but disagreements arising in these situations will continue as long as .COMSAT's rights and privileges are unclear. Continual hassles over the expansion of communication systems, the share of the business and accessibility to the satellites “have been exasperating for all concerned. Perhaps the -merger of common carriers would alleviate some discontent. ‘ Delaying the decisibns on the domestic satellite issue will only lead to further complications, more argu- /, . ‘ments.over who will control the domestic system, how -“" traffic will be divided, what kind of satellites should 10?: be used and how the radio spectrum will be allocated. For the answers to these questions, those concerned must look to the report of the Presidential Task Force and subsequent rulings by the FCC. In order to redude the reoccurring conflicts ameng the communication indugtries,' modified legislation is needed. Clearer boundaries must be placed on COMSAT's rights and privileges. And finally, government agencies dealing with COMSAT, especially the FCC, should fulfill their duty of guiding a precise and comprehensive reform. APPENDIX sexes assumes swam page; ouma Ofipcmmu< . x soopmsmo .m o m Man on cowosOHHo ¢ A.CMhV moma cavemap¢ x *aaammpm .m im\masssaeeH . stupmoz when . 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Nations should have no hesitation in choosing the route ofAnte rnational cooperation . Plr" :c in 11' :M n 1“}? --".?:.';‘:er EI;-‘._":.iom‘. ~——-—o- ...—..-...“ -.__-. -.~ -_ .-. ----.-fl- _m—-.-_—- -...- Ln l TJLJLT I urge the (WIN Un‘ion mt‘. 119 “tion" of Pr): :tern IiilronW? tic) ioirl 1: ill ‘Ig: Ulll 5’11 “'1 3 :nLd (Mir ‘){_ ;"*11vx~: as nmmhm“ of _L- I"? 1.31.1: luicL../\ i... 1101 '3 pelltlr‘al organ— isati537*'lt holds no ideological {goal C}ICGpt that zit is good for nations to communicate efficiently with One an- other. ,It seeks no diplomatic €.dvantage. It is quite simply a cOOperative undertaking of many nations to finance an international communications system which is of advantage to all. In l9 3, this invitation was extended by the govern- ments of those nations which joined in the.creation of INTELSAT. Today, I FEEL w that invitation on behalf of our government. I have stated many times my-hope that our commercial activities with the Soviet Union and Eastern Europe will grow, that our contacts will increase, and that we will emphasize those matters in which our interests are common rather than dwelling on those issues which divide us. Here is a rare Opportunity to join in an activity to bring benefits to all nations and loss to none. Re- cently the Soviet Union ratified the treaty for the peace- ful uses of outer space. Nothing could better symbolize the truth that space belongs to all men, than an inter— national undertaking that permitS‘the free flow of communi- cations. I earnestly hope that the Soviet Union and the .nations of Eastern Europe will Join in this historic action. The Soviet Union is a leader in satellite technology. I am advised that there is no in: urmeuntaole technical ob— stacle to an eventual linking of the Soviet MOLNIYA system with the INTELSAT system. The peeples of the world could rightfully rejoice if our advances in satellite technology were accompanied by this act of global cooperation. 'Of course, this participation would require a ree vision of investment and voting ratios based on Soviet anticipated use of the system. Our representatives in INTELSAT are ready to participate in immediate discussions- to make that membership possible. ,/1 International Communications Ownership _ Most nations handle their international communications "through a "chosen instrument"-—generally, a government owned entity. The United States has no chosen instrument. Several F1 \.4 record carriers and one voice carrier handle international traffic. In addition, ComSat provides satellite circuits to these carriers. Our normal instinct is to favor the existence of multiple companies in each commercial field. We believe that competitive pressures—~among technologies as well as companies——will usually generate lower prices for the user. Congress recognized in 'he'1962 Act that ComSat would e required to deal with several international carriers. Yet, there is a legitimate question as to whether the present division of ownership continues to be in the public interest. Critics argue that: «.pilnternational communications are provided by an industry which is regulated in its rates and practices. Price competition, as we usually use that term, does not exist. -a Divided ownership has resulted in the con— struction and maintenance of expensive, dupli- cating communications facilities which increase operating costs and result in higher rates for the user. —-.Our nation is in a relatively poor bargaining position on communications matters with foreign counterparts since we do not speak with a single voice. -- Disputes,have existed between ComSat and the surface carriers over who should own the ground stations in the international system. -- Defense communications in the future could be subjected to delay. - Several proposals have been advanced which would affect our international communications posture. Legis— lation has been proposed to permit a merger of one or more of the international carriers.x It has been suggested that CknnSat should be permitted-~in certain circumstances——to contract directly with users other than the international common carriers. Questions have been raised whether additional communi- h on Nerrrr lroposal. fly? 'at ’3, 91:37:01“ Clad :IEV'C-(‘Hr‘ _)n hmmj' (J. 1"? , I 1‘:XXJ_ V (June 27 , l“bb p. 20. ‘ O Johnsen, Katherine. "Gomsat Reveals $110 Million Plan for 111(39/C'sDoxnnfixic Systemn" Aviaticmllfinflc and I . — r :"'rir'“—*-."=;'z . .- Spa ce Technolomy, LXKXV (fiugust o, 1966), pp. 2]— \. Johns en, Katherine. "U. S. Discloses Satellite vs. Cable Policy." Aviation Week and Shae; .echnolOaV LXXXVIII (PEUFpary 26, 1968), pn.19*’0. Johnsen, Katherine. "U. S. Skeptical of S: ltelli1e Owner- ship Plan." AVlation Peek ajd_Snace ”lechnolon_1 LXXV (November 13196l),p. at. Johnson, G. Griffith. "International Implications of Communication Satellite Activities." U. 8. Depart- ment of State Bulletin, XLVII (October 15, 1962), pp. 567-70. i Johnson, Iyndon B. "Inessage on Communications Policy to the Congres s of the United States." White House Release, Washington, D. C. August 1“, 1967. "Justice Studies Carriers Pl in for No n—Profit Satellite Operator." Avi_aW§ion We ek and Space Technoloxy, L7)LV (Octobe l” 23,1961), p. 2“. \ C Kefauver, Estes, nd William Fi tts Ryan. "3 1 Space: A Case for Government OWNCIIShi Republic, CXLVI (June ll, 1962), pp. 1 PuSlne as in H yyn .4:— (;.0U 11; Kennedy, John F. "Communicati ons Satellite Act Signe<3 my the Preside.nt." U. S. Department a? Strte Ru!2et{LJ XTVV (Sept ember 2H, l962), p, hnY. Kennedy, John F. "Communications Satellite Policy. ' H:_S._” Dena m_tment_gf State Pulletin, XLV (August 1“, "Kennedy‘ 5 Satellite Relay Plan.” Business Week, February 10,1962,p. 3t. ' Klass, Philip J. ”Ccmne ' al Satellite Olmner hip Lin its Will be Rec nv\ ‘- w cunt). DC)J. ‘\" — . " g.’¢113.0.u;l Senate, of the orcaking [19 1° 0 n out i e n r—~ o~ u _ ~ , ,. 'r 80 8.6630, U! C(211£:o , 21.1 fjéL‘ll‘. , 'Jalluary COU”YTV“WOW“1 1%mnrni, CVlII, EHi. Scn:1tor Kerr tion's Communication Cong., 2d Sess., February 1837. speaking on the Satellite Bill, 7, 1962. Congress Satellite 1962. Con Lon" ‘4‘) 2d Sess., Auglm on Communications til, ate, Senator 87 Cong., 2m <‘(D :3 ‘C‘ Congreeu, Communicat SCSEZ . , CVIII, 162 Cong 3ness, Satellite 2d Sess., CVIII, .(V be), Congr'e 2d 8088 o , CVTTT, Con3ees . {int .3. CI‘ILT‘ o .."\‘-‘:“S 16830. gsten. ngr re. sional Recipe, CVIII, 16198-9. Sene.te, Senatc;r l.org sp-ak5ng on the ions Satelli Sgstem. 87 Cong., 2d t 11,1962 C(n"re88lc’al Record: 07. Senate, Senator Long on L ammur.ic ~ a o a s stem. H. R. 110H0 (s. 281A), 87 ong., August 17, 1962. Con,rossional Record, Bill 11050, ion 7181 R. Conere Vote on H. 17, 1962 Senate, August 33 Recorfi } 169?6. on the Judi t)’ ~1"’)11sv( C one i t t e " :' the ~n31ce CL '3 7’1? .! I} . Communi- W-”‘-.fl Cdfjfllo on Anti Judie izry, Congress, --.. ..- o: an~nuu bei‘ore the buxLULR-bECe roooly of the Committee on the 87 Cong;, 2d Sess., 1962. iind set]\:i.t e , Committee on " ' I. i “J \. Anti‘rust Problem. of the Space Sate? i. Couturi— cations S»sien3. flezrilg before the SUhUchiTCSE on Antitrust and,Hono 0:01) of the CanjttéC of the Judiciary, Senate, 87 Cong., 2d Sess., 1962. Cong? 88, House, chmittee in internt?tn ard more in CorUnerwze. (Hntnkzn Eeégticnxe e‘r*E] ;g . ZieaJ"i1rr E»:— fore inn? Coquittae (n1 lnteia~44~~'a*'x ‘0"21;31(3vnrx;\2 House of RepreSentatives, £7 Cong., lot Tese., lgnl. 87 Con:., "I7'1,“@fifl'flmfllflfflfillmflifliflflf