stated, however, that those departments and agencies of Government having national defense and security responsibilities, could not be expected to place primary reliance upon the established carriers unless the carriers establish an acceptable record of responsiveness to Government requirements particularly witht regard to speed and continuity of service. In addition, I mentioned the cost factor as being very critical, and stated that while the carriers certainly are entitled to a reasonable rate of return on their capital, it must be clear that if the carriers impose charges for Government services in such a manner that those charges are subsidizing other types of service to the public, the result is not fair to the Government. I urged you, therefore, as I urged the other carrier representatives, to re-examine critically these rate structures, particularly in the overseas private line service, with a view toward a substantial downward revision. I also recall that I elaborated considerably on the responsiveness element. I stated that the world situation being what it is today the Defense Department frequently develops communications support requirements on very short notice. If in attempting to meet those requirements through the carriers the Defense Department is injected into the middle of a barrage of pleadings, complaints and petitions for injunction filed by the various carriers who may wish to provide service you can well appreciate the reluctance which the Department may have to go this route in the future. I stated that all of us and especially the carriers should work to ensure that completely adequate responsiveness to the needs of the Government is realized. In order to improve this situation I am urging the enactment of legislation which would permit the FCC when it should conclude that the public interest would be served, to authorize a merger of the international carriers. As you well know, the Intragovernmental Committee on International Telecommunications, which I have been co-chairing, and which has been meeting for over two years, has submitted a report to the Congress recommending the enactment of permissive merger legislation in the international communications carrier field. The legislation would authorize the FCC to permit specific mergers when it concluded that the merger would be in the public interest. I feel that if a merger of some, or all, the international carriers is permitted industry responsiveness cannot help but be improved. In any event, I am sure that ITT as well as the other carriers will have an opportunity to comment formally on this proposed legislation in the near future. I appreciated the opportunity to discuss these matters informally with you and Harold Geneen and trust that additional informal discussions can be held when appropriate. In view of your request that your letter to me be included in the Committee record I feel that I should respond so as to prevent any misunderstandings of the discussions which took place. I am sending a copy of this letter to Chairman Holifield with the request that it also be included in the record. Sincerely, J. D. O'CONNELL. (Whereupon, at 12:05 p.m., the subcommittee recessed, to reconvene at 10 a.m., August 31, 1966.) GOVERNMENT USE OF SATELLITE COMMUNICATIONS WEDNESDAY, AUGUST 31, 1966 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON MILITARY OPERATIONS OF THE COMMITTEE ON GOVERNMENT OPERATIONS, Washington, D.C. The subcommittee met, pursuant to recess, at 10 a.m., in room 2247, Rayburn Office Building, Hon. Chet Holifield (chairman of the subcommittee) presiding. Present: Representatives Chet Holifield and William L. Dickinson. Also present: Herbert Roback, staff administrator; Douglas G. Dahlin, counsel; and J. P. Carlson, minority staff. Mr. HOLIFIELD. The committee will be in order. Mr. ROBACK. Mr. Chairman, yesterday we asked Mr. O'Connell to inquire into the status of certain materials for the record. Today he might submit those which he has, and make such observations as he wishes. STATEMENT OF HON. JAMES D. O'CONNELL, DIRECTOR OF TELE- Mr. O'CONNELL. I will proceed then, Mr. Chairman. NASA ATS SATELLITE FREQUENCIES Mr. O'CONNELL. We discussed the ATS situation and the actions which the office took in connection therewith. I have here the chronologically arranged records of what took place in that connection. You will recall that the question was asked as to whether the FCC had initiated a request to us. The answer to that question is, no, they 67-906-66- -23 did not. The action was initiated in my office in response to a request which NASA had made for the assignment of the frequencies. I would like to extend my remarks that I made yesterday to clarify this whole picture. The frequency management community has a philosophy that extends from the ITU to the FCC, to my office. We all have a philosophy, which makes a very significant difference between an experimental assignment and an operational one. For example, the ITU authorizes experimentation to take place anywhere in the spectrum on a noninterference basis so long as the experimentation does not interfere with other services. We have had in my office-the FCC has had a policy-on frequencies for experimental purposes which authorizes use for a period of 2 years. We have recently extended that 2-year experimental authorization to a "life of the project" authorization; that is, during the life of a project. But, generally speaking, an experimental authorization means something temporary and not a long-term extensive operational right to use that partciular part of the spectrum in extenso. This is particularly significant in terms of suceeding generations of equipment. In other words, if we are in an era of rapidly developing technology, and subsequent generations of equipment are going to be more efficient, experimental authorizations may be given rather than permanent ones, because future generations may make better use of the spectrum. Now, with respect to the potentials for utilizing the ATS satellites. If, as and when their experimental purposes have been served, and if there is a use for those satellites, if they are still in service and if there are ground stations to accommodate them, there is no reason why they could not be used upon the submission of another application for such use. Conceivably they could be leased to Intelsat, if Intelsat felt that they could be used effectively, and if the ground stations could accommodate the service. So, we should not consider that they are foreclosed indefinitely and permanently from any other potential use or that leftover service life has to be wasted. The only authorization NASA has now is for experimental purposes. This is consistent with past practices in similar cases, and there are certain limitations, consistent again, with the ITU provisions of noninterference. I wanted to explain this more adequately than I did yesterday. Mr. ROBACK. Who is responsible for approving a frequency for an experimental satellite? I presume this problem was one in which there was no one in a position to really approve the frequency. NASA may have written its own specification for a frequency. I do not know how or why they chose that commercial frequency. We tried to find out before. Mr. O'CONNELL. Well, it started really before the determination had been made that the 4 and 6 GHz frequency bands would be utilized for non-Government uses. Also, the early technology imposed cost and time restraints on going above the 4-6 GHz bands. Mr. ROBACK. Is that signed off, is that now decided? Mr. O'CONNELL. That is decided, although a final, formal Mr. ROBACK. Is that still an issue in suspension? Mr. O'CONNELL. No. That has been agreed upon. This more or less had to be agreed upon when the licensing of Comsat on behalf of Intelsat came Mr. ROBACK. So if NASA decided at some time to have an ATS to the second power, you might say, then it would not be involved in this kind of problem. Mr. O'CONNELL. Well, they would undoubtedly choose the 7 and 8 GHz bands in which to operate this experimental Mr. ROBACK. If they had a 7-8, which was a subject of possible change or conversion in the course of this discussion, could then the Defense Department, let us say, have utilized that satellite for traffic, or any other Government agency? Mr. O'CONNELL. Well, it is certainly possible. Mr. ROBACK. I mean, that would be a more likely use. Mr. O'CONNELL. This would be the subject of another consideration, another study, and another determination as to whether, in fact, this was justified. I will hand these papers in covering the NASA ATS proceedings. (The documents referred to appear in app. 4.) EUROPEAN EARTH STATION CAPACITY Mr. ROBACK. Have you any other observations? Mr. O'CONNELL. I would like to correct certain other statements which I made yesterday. The European earth station complex can accommodate 180 channels, not the 120 as I mentioned yesterday. These channels are available on a 16-hour-a-day basis, 5 days a week to England, France, Germany, and 24 circuits are available on Saturday and Sunday with Italy. However, the present limitation on European circuits appears to be the European toll terminal capacity which, it appears, is limited at the present time to 100 circuits. Europe just does not have the toll terminal capacity to accommodate more than that at the present time. INTELSAT III ISSUES Mr. O'CONNELL. Another point which I should make is that in connection with the TRW and other proposals on Intelsat III, all proposals included foreign participation. In fact, such participation was called for in the RFQ, and it is provided for in article X of the international agreement which also I am furnishing to the committee for their use. There was a little bit of an implication that something different was done by TRW than was done by other bidders. Mr. ROBACK. We were not making any imputations. I was asking as to what the role of the contractor might be, you might say, in softening up the foreign participants in favor of one system rather than another, or in terms of getting a go-ahead without being subjected to FCC scrutiny. I was raising the question in that context. I was not accusing any particular contractor. Mr. O'CONNELL. Right. It is provided for in the international agreement, in article X. Mr. ROBACK. So that Comsat, reviewing proposals in response to offers, would look at the foreign participation as to the makeup of the subcontractor list, so to speak. Mr. O'CONNELL. Right. Mr. ROBACK. They would make an evaluation, and they would have to evaluate for purposes, technical as well as diplomatic, perhaps, what foreign contractors submissions were most appropriate, were the best. Mr. MORRIS. Mr. Roback. I might clarify here. Actually, evaluation is done by Intelsat, the ICSC of Intelsat. The manager, of course, assists in that activity. Article X, just to read one sentence from it, which has been given to you here today: When proposals or tenders are determined to be comparable in terms of quality, price, and timely performance, the committee and the corporation, as manager, shall also seek to insure that contracts are so distributed that equipment is designed, developed and procured in the States whose governments are parties to this agreement in approximate proportion to the respective quotas of their corresponding signatories. and so forth. Mr. ROBACK. So it is probably good business for an enterprising American fabricator of satellites or components to license his counterpart in one of these countries; so then he could be sure, for example, that foreign proposals would be equivalent to the domestic one if they came from the same American firm. Mr. O'CONNELL. We also have an interest in passing space knowhow and new technologies to our foreign friends and members of the consortium. Mr. ROBACK. That is governed by certain protocols and conventions which have to be observed. You cannot just go beating the bushes, peddling your hardware overseas. You are constrained in some respects as to what kind of technologies, for example, you can pass; isn't that so? Mr. O'CONNELL. Yes; that is right. POLICY ON USE OF COMMERCIAL COMMUNICATIONS The next item. We have added the complete statements, because a question was raised on Monday of differences between them-the statement of President Eisenhower concerning commercial application of communications satellites, the statement of President Kennedy, and a third one, "Industry-Department of Defense Cooperation in Satellite Based Telecommunications." The latter is a statement signed September 7, 1961, by Roswell Gilpatric, Deputy Secretary of Defense. We will pass the two reports of the President to you now. Mr. ROBACK. Those are reports respecting what, now? Mr. O'CONNELL. The policy concerning use of commercial companies to furnish commercial satellite service. Mr. ROBACK. Did you contribute one of those? Mr. O'CONNELL. It is my mission to prepare the annual report of the President to Congress in connection with the Comsat Act. These reports are prepared in draft form to the President. Mr. ROBACK. I discussed with Secretary Horwitz the change in wording and formulation from one year to another year in what the |