Mr. ROBACK. Do you know at this time whether you will be paying the same as DOD?

Mr. SOHIER. Again, on that

Mr. ROBACK. That is, the same in the sense that a rate that will finally be filed will not make any distinction between the two? I understand what you have negotiated here.

Mr. SOHIER. I believe that is the case. Again based on the extent to which our service uses the capacity of the satellite, so I think that the rates will be the same.

USE OF APOLLO CIRCUITS

Mr. ROBACK. You are hiring these channels on a 24-hour basis, right?

Mr. SOHIER. They are for continuous use; yes.

Mr. ROBACK. Do you anticipate they will be useful for any other communications, purchased either by yourself or any other agency, or will they be standby when not in use?

Mr. SOHIER. Well, the first answer to that is, of course, they go to specific places, ships in three oceans and several foreign locations, and whether they are actually going to be useful to anyone else is a question of whether anyone else wants to communicate with any of those three places, and the likelihood of any requirement developing is pretty small.

I should say, however, on the second point that we have had difficulty with the foreign entities in getting them to agree that the contract with NASA should also include other Government requirements. This is, this runs against the practice among international carriers when they deal even with their own governments. If the Australian communications entity is dealing with their Ministry of External Affairs, the contract is for their requirements, and if some other element of government wants to use some of the channels that have been purchased they have to pay a surcharge of some 33 percent. This has been the tradition in the industry.

Mr. ROBACK. These are dedicated circuits as far as the foreign entity is concerned, dedicated to NASA?

Mr. SOHIER. That is right.

Mr. ROBACK. And dedicated to Apollo.

Mr. SOHIER. But we have not reached agreement on this point. We have been very forceful in holding out for the inclusion of the U.S. Government, not just NASA.

Mr. ROBACK. If these are idle for 6 months, for example, you would want some other Government user to use them?

Mr. SOHIER. Yes; very much so. We think the U.S. Government is the contracting party and not just NASA, but we recognize that the U.S. Government has dealt with these entities in the past on the basis of just the agency requirements. We think that this is not desirable. This is really what has been the major negotiating point.

Mr. ROBACK. Is your contract with Comsat a contract that gives you that privilege?

Mr. SOHIER. We would have had no difficulty with Comsat if we had not started having difficulties with the foreign entities on the point. We had a provision agreed to, which is not in the contract now.

We have left it out; it is really unresolved. We have no doubt that given the very small requirements that we expect to develop, that Comsat itself would have no objection to accommodating other Government requirements over what we purchased. But, of course, it has no practical bearing except to the ships if the foreign entities do not accord a similar right to NASA.

Mr. ROBACK. Do these restraints being imposed in the foreign negotiation also apply to NASA using these satellites for other than Apollo purposes; for example, if you want to pass administrative traffic?

Mr. SOHIER. I do not believe that has been imposed or discussed or presented as a problem. It is really NASA as a

Mr. ROBACK. When do you anticipate this issue will be resolved? Mr. SOHIER. I think very shortly.

Mr. ROBACK. Will you submit to us a statement in writing as to what the problem is and how it has been resolved?

Mr. SOHIER. Yes, indeed.

(The following statement was furnished for the record:)

The problem referred to may be described as follows:

In negotiating with the Australian communications company (Overseas Telecommunications Commission (Australia) —OTC (A)) for circuits between the satellite and the earth station at Carnarvon, Australia, and, separately, with the British company (Cable & Wireless, Ltd.-C&W) for circuits between the satellite and the earth station at Ascension Island, NASA sought to obtain agreement that the circuits would be available for use for the transmission of official messages of any U.S. Government agency, and not solely for NASA traffic. Both companies argued that their agreement to permit such “multipleuse" of the circuits would be contrary to long-standing business practice of their companies, and of all British Commonwealth telecommunications companies. Where multiple use is permitted, normal Commonwealth-company practice is to require the customer to pay a surcharge of about 38% for the lease of the circuit. NASA consistently rejected any proposal that a surcharge be paid.

In negotiating on this point, NASA conceded that its position was taken mainly because it considered that a point of basic principle was involved-i.e., that the U.S. Government should be treated as being a single customer for the circuits. As a practical matter, it will not in fact be feasible for the circuits involved to be used for transmission of traffic for other U.S. agencies, except possibly under unusual or emergency conditions, because of the requirement for the full time availability of the circuits to meet NASA's operational needs. Both companies have agreed to permit use of the circuits for all traffic, under unusual or emergency conditions, as a reasonable exception to their normal rule against multiple use.

Since the issue involved was recognized on both sides to be more theoretical than real, agreement was reached that it would be unnecessary to resolve it definitively in connection with signing the contracts for the communications services to be furnished by the two companies. It is therefore planned that both contracts will omit any definition of the use which may be made of the circuits for transmission of traffic of U.S. agencies other than NASA. If in the future use of the circuits for such non-NASA traffic (on other than an unusual or emergency basis, which will be permitted) were to become feasible, negotiations will be reopened for the purpose of defining the conditions of use explicitly.

NASA has agreed to this solution of the problem as the best means of resolving the impasse which had developed, and because it is essential that the contracts be signed promptly. NASA has made it clear to both companies that in deferring final resolution of the issue at this time, it has not in any way receded from its position on the point of principle involved. Similarly, it is mutually understood that OCT(A)'s and C&W's agreement to sign contracts without specifically defining the permissible use is without prejudice to their position on the multiple user issue.

STATE DEPARTMENT ROLE

Mr. ROBACK. Apparently the State Department does not have much of a role in this thing. They appeared here and did not know very much about your dealings with these foreign entities in this area, although you were supposed to have pretty good relations with the State Department in one capacity or another.

What role did the State Department play? Did they give you any help? Did you go to them and ask them to use their good offices so that you could get a more favorable rate?

Mr. SOHIER. No; we have not gone to the State Department and asked them to make a major thing out of this. For one thing, we have been hopeful that we could, perhaps, resolve it ourselves. Second, we are quite aware of the fact that business has been done otherwise over a number of years, and it is hard now to contract on a new basis.

Mr. ROBACK. You mean NASA has been doing business with international counterparts, I mean with foreign entities, over a period of time

Mr. SOHIER. Yes.

Mr. ROBACK (continuing). On their own?

Mr. SOHIER. Yes, we have.

Mr. ROBACK. Is this governed by any treaty or executive order or any instruction, or is this just a matter of working relationships which NASA has evolved over time?

Mr. SOHIER. There are contracts with foreign communications entities, rather standard kinds of communications contracts.

I might say that only two of the three foreign entities posed this as a problem; one of them did not; and, as you are aware, the Department of Defense did not run into the same problem, I believe. Mr. ROBACK. We are aware of that.

Mr. SOHIER. So it really becomes a question of the individual country and the attitudes of the Government and of their communications entity.

COMSAT ROLE

Mr. ROBACK. Did you ask Comsat to be your spokesman in this regard?

Mr. SOHIER. We did, and we got excellent cooperation from Comsat, both in terms of analyzing the rates, but it does not appear-well, they did the best they could.

Mr. ROBACK. And they came to a point where they felt, since a position had been taken, it was not up to them to try to change it.

Mr. SOHIER. I may be confusing something else here. Let me back off just 1 minute, Mr. Roback.

We had excellent cooperation with them at the outset when it was a question of whether we could deal through Comsat rather than directly through the foreign carriers, and they did their best to persuade the foreign carriers to deal through Comsat, and were unsuccessful.

USE OF APOLLO CIRCUITS

I think on the question of other Government use of the channels that we are purchasing, that Comsat is in a difficult position within Intelsat

on this issue, and so they did not get into the act, as far as I know, with the foreign entities on this point. There were discussions at the Intelsat level on the thing and, of course, the whole service was justified to Intelsat as being for Apollo, and I guess it was felt there would be some sensitivity to raising the prospect of other use of these particular channels. At any rate, we ran into, we have run into, very, very strong opposition from two of the three carriers on this point.

COMPARABLE DOD AND NASA COSTS

If we could go back a minute, Mr. Roback, I have some figures here that relate to the question you raised earlier on channels purchased by the Department of Defense and by NASA. This is in the Pacific. DOD purchased 30 channels. The cost is $6 million per year. These are rounded off. The power required could be expressed, in terms of 170 units of power.

NASA purchased 14 channels, that is 12-voice/data and 2 teletype. They cost $4.5 million per year, for 150 units of power. That is a comparable charge.

Mr. ROBACK. In terms of power.

Mr. SOHIER. Yes.

Mr. ROBACK. Not in terms of the channels?

Mr. SOHIER. That is correct.

RETURN OF INVESTMENT COST

Mr. ROBACK. There is not any question, though, that the combined services of NASA and the Defense Department will amortize this whole investment over a 3-year period. Is there any question in your mind about that? It would be roughly $58 million.

Mr. SOHIER. The total capacity of the satellites is not taken up by NASA and the Department of Defense. So there may be commercial users of either or both satellites, and to the extent there is commercial use they will share in the amortization.

Mr. ROBACK. Well, do you think they cannot put up two plus two backup satellites for $58 million and operate them for 3 years? What do you think, Mr. Jaffe?

Mr. JAFFE. This is a new satellite. We have had no experience with it. It is a little difficult to determine what the failure rateMr. ROBACK. It is a souped-up Syncom.

Mr. JAFFE. It is a considerably souped-up Syncom.

Mr. ROBACK. Well, how souped-up is it over Early Bird?

Mr. JAFFE. It is roughly twice the size, and I would estimate it at least twice the complexity, perhaps a little more than that. So it is very difficult to determine or to assess the lifetime of this particular satellite at this particular time.

Mr. ROBACK. With more experience in the technology, it is becoming easier to assure the lifetime of satellites.

Mr. JAFFE. That is correct.

Mr. ROBACK. So the fact that it is a little more complicated should not overlook the fact of accumulating operating experience. You are getting some ideas about satellite tenure, lifetime. In any case, do you think you could put up these satellites for $58 million over a 3year period?

Mr. JAFFE. Yes; I think you could put four satellites up for $58 million.

Mr. ROBACK. That is what I asked you. Thank you.

INTELSAT II CAPACITY OVER NASA/DOD NEEDS

How does the capacity situation stand, Mr. Sohier? Now, as between the two Government users and the remainder of the system, how much capacity is residual, as you understand it?

Mr. SOHIER. Well, I have the figures here only of NASA's use of the capacity of the satellite. We have had to add to that the Department of Defense, and then see what is left, and again this depends on what ground stations you are talking about.

Mr. ROBACK. You said there was residual power, and we want to know how substantial it is.

Mr. SOHIER. It is quite substantial in the Atlantic, as I recall, but we can provide the combined figure and what is left over, for the record.

(The following statement was furnished for the record:)

The Pacific satellite has a capability for 480 units of power. Of this, the DOD is utilizing 170 units of power, NASA is using 151.6 units of power. There will be 158.4 units of power or 33% of the satellite left for other service. The Atlantic satellite has a capability of 480 units of power. Of this, NASA is utilizing 315.4 units of power. There will be 164.6 units of power or 34.3% of the satellite left for other service.

COST OF APOLLO/COMSAT SERVICE

Mr. ROBACK. I would also ask you to supply for the record a statement of the communications costs, to include-over a 3-year periodnot only the contract with Comsat but the contracts with the foreign entities, the contracts for the ship conversions, and whatever costs go with that over a 3-year period, and any land line adjuncts. In other words, what we want to do is to get a general idea of the total cost for the Apollo communications.

Mr. SоHIER. Fine.

(The following statement was furnished for the record:)

Mr. ROBACK. How much of the service, Mr. Buckley, is provided by NASA? You are picking up the tab for the ships. What about the ground portions the portions of the ground communications? For example, all this feeds in to your station in Houston?

Mr. BUCKLEY. Yes, sir.