Senator DIRKSEN. Specifically, there is no bill before the subcommittee by reference? Senator KEFAUVER. That is correct. Senator DIRKSEN. I think we ought to look down the road a little bit. The question is: What kind of action does the committee propose when it has no bill? It cannot report anything. It can make actually no official recommendations. It could make nothing more than suggestions, when the space bill, which has now been completed, goes to the Commerce Committee. Senator KEFAUVER. That is correct. This committee, of course, is required to study and make a complete, comprehensive, and continuous study on matters of concentration, antitrust, and monopoly. That may be necessary and desirable, and I take it that we will not know until we have heard the testimony, but we may have some recommendations to make in connection with antitrust and monopoly provisions in whatever bill is finally presented to the Senate for action. Senator DIRKSEN. Yes. I make only one further observation. Senator KEFAUVER. We have a letter from Senator Kerr. I think my letter to Senator Kerr should be made a part of the record and then his reply thereto, in which Senator Kerr suggested that it was proper to hold hearings in connection with antitrust and monopoly aspects of the space bill. (The letters referred to follow :) Hon. ROBERT S. KERR, Chairman, Committee on Aeronautical and Space Sciences, MARCH 20, 1962. DEAR BOB: When I testified before the Committee on Aeronautical and Space Sciences on March 6, 1962, on satellite communications legislation, I said that there were serious antitrust problems involved, and that there were several witnesses whose testimony would be extremely helpful to the Senate in considering the legislation. At that time, you said the antitrust phases of the legislation were "not within the purview either of [your] hearings or of the jurisdiction of the committee." Witnesses to testify on the antitrust aspects were not called and, I believe, your hearings have now been concluded. I am still of the opinion that a number of serious anticompetitive problems do exist in the proposed legislation. It would seem advisable to have these problems considered by the Senate subcommittee specifically charged with jurisdiction over antitrust problems before any action is taken by the Senate as a whole. Further, a number of requests by Senators and others have been made of me, as chairman of the Subcommittee on Antitrust and Monopoly, to hold such hearings without delay. Also, just today in testimony before the House Commerce Committee, the Attorney General stated that he did not know whether the various proposed bills constituted an exemption from the antitrust laws and, if so, the extent of the exemption. In view of the importance of this matter, I know you will agree that the antitrust aspects should be thoroughly considered. I have no desire to hold up the progress of any legislation. Therefore, it is my intention to have a brief hearing on the technical antitrust facets of the proposals beginning on March 29. I would appreciate any suggestions that you might have. With kind regards. Sincerely, ESTES KEFAUVER, Chairman. U.S. SENATE, COMMITTEE ON AERONAUTICAL AND SPACE SCIENCES, The Honorable ESTES KEFAUVER, DEAR ESTES: Thank you very much for your letter of March 20 in which you indicated your concern with respect to possible antitrust problems involved in satellite communications legislation. As you will recall at the time you testified before the committee, I did indicate that antitrust phases were not within the purview of the jurisdiction of the Senate Space Committee and that certainly nothing the committee reported out would contemplate bringing about a situation that would intentionally violate the Sherman Act. I further stated that there would be nothing in this legislation that would repeal the Sherman antitrust law nor prevent the amending of it to any extent the Congress felt would be necessary to meet new and arising situations. I appreciate your desire not to hold up the progress of any legislation on this matter and certainly if the Subcommittee on Antitrust and Monopoly of the Judiciary Committee feels that there are problems involving antitrust procedures, it would certainly be within the purview of that subcommittee to hold hearings in connection with this matter and I am sure you will do so. With kind regards, I am, Sincerely, ROBERT S. KERR, Chairman. Senator DIRKSEN. Mr. Chairman, you did appear before the Space Committee? Senator KEFAUVER. I appeared before the Space Committee. Senator Kerr said that he would not have a hearing on my bill, which was filed, and he would not have a hearing on the antitrust and monopoly aspects of the other bills. He said that was not in his committee's jurisdiction. We can put in the record the exact language of his remarks. Senator DIRKSEN. And, as I understand it from reading the transcript, the Space Committee gave every opportunity to the Department of Justice, and particularly the Antitrust Division, to appear; if Judge Loevinger wanted to appear, that they would set aside a day and let them have ample time for that purpose. Senator KEFAUVER. No, the situation was that they had asked the Department of Justice to send one witness. The Department of Justice could select the witness. They selected Mr. Katzenbach, not Judge Loevinger. Can we get on with Senator Yarborough at this point, and then there is a great deal about this to be discussed this afternoon? Senator DIRKSEN. My statement speaks for itself. So I have no purpose in laboring this, except I am still dubious about the jurisdiction. Ralph, will you proceed? Senator KEFAUVER. Senator Yarborough has taken a great deal of interest in this matter, and we are delighted to have him as our witness this morning. If you do not finish today, Senator Yarborough, we will endeavor to accommodate you on Monday. Your full statement will be made a part of the record in case you do not wish to read any of the quotations. Will you proceed, Senator Yarborough? STATEMENT OF HON. RALPH W. YARBOROUGH, U.S. SENATOR FROM THE STATE OF TEXAS Senator YARBOROUGH. Thank you. Mr. Chairman, it is an honor to appear before this distinguished subcommittee this morning, as it begins another in its great series of inquiries in behalf of the public interest. I particularly appreciate the courtesy of the subcommittee in letting me appear now, since I have a ticket and am scheduled to go back to Texas this afternoon. It will be my first trip home since January 1. That is the longest period of time that I have been away from my home State since my oversea service in World War II. And so I particularly appreciate the courtesy of the committee in relieving me from coming back this afternoon. I think it entirely appropriate that this Antitrust and Monopoly Subcommittee should begin to gather evidence on the monopoly implications of the great new potential business of communications by earth satellites. We are at the brink of another great forward step in communications technology; now is the time to determine to what extent we wish Government policies to encourage true American business competition in this great new enterprise. Let me stress that this is a new venture, a turning point, as were the Panama Canal, or the Atomic Energy Commission in their inception. We have here no established pattern either of Government ownership or private ownership that should be followed; instead, we must rationally determine the best course, and follow it. What the Congress does in this matter is setting, Mr, Chairman, not only a new pattern in space communications, but in my research, so far as I have been able to find, if this space communications is given away to a private carrier, it will be the first Governmentcreated, private monopoly created by the U.S. Government in U.S. history. That is so far as my present research. I am continuing to research that. That would be true. ONLY ONE SYSTEM Technical and economic factors indicate that for the foreseeable future there will be only one satellite communications system for commercial use. For this reason it is inevitable that there will be a national monopoly in the field of satellite communications. It must be borne in mind that we are not confronted with a choice between Government ownership and private competitive free enterprise. The question which Congress must decide is whether we are to have a satellite system owned and operated by the Government for the benefit of all the people or whether we are going to turn this vast potential resource over to a private monopoly to be operated primarily for the financial benefit of a relatively small segment of the population-a favored few. Let me emphasize here that the question is not one of being for or against the participation of the existing communications companies and equipment manufacturers in this great technological venWe will need their help, their great technical competence and ture. experience, to obtain the maximum benefits from a communications satellite system. And, Mr. Chairman, the bill of which the chairman is the present author does not contemplate that the Federal Government will enter the manufacturing business. It would buy the equipment from private companies. It would rent space on these communications satellites for private companies. It would further free enterprise. It would not be in violation of that principle. We will welcome their partnership as they freely compete for business, but the question is who will have economic control, who will reap the cream of the returns on the major investments already made and to be made. GOVERNMENT INVESTMENT A workable satellite communications system is possible only because of vast expenditures of taxpayer dollars. By the end of fiscal 1963 NASA and the Department of Defense will have spent more than $470 million on satellite communications alone, on the satellites themselves, Mr. Chairman. Estimates of the cost to the taxpayers of our space program, mainly the rocket systems which will put these satellites in space, to date, run as high as $25 billion. Without these billions that have been spent on the space program, our communications technology would be of little value. John H. Rubel, Assistant Secretary of Defense, has said at a hearing: About 90 percent, I would say, of the problem associated with the communications satellite system really doesn't have much to do with communications, Mr. Chairman. It has to do with launch vehicles, it has to do with space craft that you put into orbit, it has to do with controlling those space craft when they are up there in orbit, it has to do with the life of electronic and mechanical equipment in space. All of these art technologies and techniques that are being developed by the Department of Defense, partly as part of our communications satellite efforts, but not exclusively so *** I just can't imagine that this kind of effort could successfully be undertaken by any organization other than both the NASA and the Department of Defense *** There has been some confusion as to the role played by private companies in the financing of research in the field of space communications. So that there can be no mistake on this matter, I would like to refer to a recent statement of Dr. E. C. Welsh, executive secretary of NASA. He stated: The taxpayers have financed in excess of 90 percent of this space communication competence. Regardless of any decision which may be made relating to ownership, the Government will continue to carry out vast research and development that is essential to a satellite communications system. James E. Webb, NASA Administrator, recently testified as follows: It is contemplated that the National Aeronautics and Space Administration will continue to do active research and development on the technology involved in using communications satellites and the tie-in with communications satellite systems. the [communications] industry is not capable of doing the research that we do. For instance, these boosters are very expensive, and the only way you really find out if equipment works is to send it on a rocket out and put it up and work it. U.S. expenditures on our space program for the next 10 years are expected to be in the range of $35 billion, including our project to put a man on the moon. And even the space research involved in our moon shot will be directly related to our understanding of space communications problems. Clearly the American people as a whole have supplied most of the investment for making satellite communications possible. Advocates of private ownership have expressed views that members of the general public, having made the program possible, should now be allowed to invest additional money in a private corporation in order to share in the profits of a satellite system. The logic of this limited view escapes me. It is my belief that all the American taxpayers who have contributed so much already should receive the beenefits of their investment automatically and directly. And Mr. Chairman, I might say parenthetically there that the investors in private corporations will still make their profits, can still invest, because the Government would buy equipment from private manufacturers and would lease space on these communications satellites for present communication systems to use all competitively and all on an equal basis. The investors in those private communications companies would profit by this great expenditure of 25 billion of the taxpayers' money. GOVERNMENT INVOLVEMENT The Government will be deeply involved in the operations of this satellite system. Under both plans proposing private ownership the Government still would be required to: (1) Furnish launch vehicles. (2) Launch the satellites and provide launch crew and associated services. (3) Consult with the private corporation regarding technical specifications for satellites and ground stations and in determining the number and location of such facilities. (4) Coordinate continuing governmental research and development with the activities of the private corporation. (5) Insure that the satellite system established is technically compatible with existing facilities with which it will interconnect. (6) Insure that present and future access to the system on an equitable and nondiscriminatory basis is made available to all authorized communications carriers. Mr. Chairman, that would be a true use of the private enterprise system if the Government owns this, to assure that there will be a nondiscriminatory use of these satellite communication systems. (7) Preserve competition in the field of supplying goods and services to the corporation. (8) Supervise any change in the internal structure of the private corporation. (9) Insure that opportunities are provided for foreign participation in the system. Since this is worldwide, we cannot exclude other nations from putting their systems up there. |