VIEWS ON FORD FOUNDATION PROPOSAL

Mr. ROBACK. Well, the Ford Foundation came in with a proposal which apparently does not recognize Comsat as a chosen instrument. Have you given study to the Ford Foundation's proposal?

Mr. DUNCAN. Yes, we have, Mr. Roback.

Mr. ROBACK. What are your views?

Mr. DUNCAN. It covers a lot of territory, Mr. Roback.

Mr. ROBACK. Give us the highlights. Have you any kind of an analysis that you want to submit?

Mr. DUNCAN. Well, Mr. Hough, vice president of A.T. & T., testified before Senator Pastore's Subcommittee on Communications of the Commerce Committee of the U.S. Senate and if you would like for me to do it, I would like to read his summary of our position which, I think, outlines our position at the present time very well.

"The Bell System believes that the Ford Foundation's recommendations, bearing as they do on matters of vital public interest, merit careful and objective consideration.

"Certainly the benefits to be derived from educational broadcasting warrant a vigorous search for the best means of realizing the potential of this medium. And it is apparent that communications satellites, together with other technological advances now in prospect, afford great opportunity for enhancing TV and other forms of communications. Searching analysis and deliberate judgment will be necessary if we are to come up with the right answers in these two areas. In our view, these rights answers must reflect a balanced consideration of the public interest in the economical utilization of communication resources, and the public interest in the effective development of the instructional, educational, and cultural potential of broadcasting. However, our preliminary analysis of the technical and economic aspects of the Ford Foundation proposal indicates a basis for concern as to whether the projected economies and therefore the anticipated benefits to educational broadcasting can in fact be realized."

Mr. ROBACK. In other words you do not think their proposal was supportable on the argument that savings would be available that could be channeled into educational television?

Mr. DUNCAN. We are saying that we think that the proposal requires a great deal of study and that we have some doubt as to whether the projected economies can in fact be fully realized.

Mr. ROBACK. In other words, you did not think much of the study. I mean, restating it in a commonsense way.

Mr. DUNCAN. I would not say that.

Mr. ROBACK. You considered that the proposal in effect bypassed the industry?

Mr. DUNCAN. This whole thing, we think, is an important thing that merits serious study. We are in the process

Mr. ROBACK. That means you are opposed to it. We understand that language, too.

Mr. DUNCAN. And we are meeting with the various people involved to explore this.

Mr. ROBACH. But you do not really think it is a very practical proposal as far as operations go, do you?

Mr. DUNCAN. We do not think that there should be a separate system just for this purpose. We think that it should be incorporated in the overall communications systems that we have.

Mr. ROBACK. Since this deals with the field of television, which is a lucrative field, do you consider that this proposal will skim the cream off the industry revenue, divert it from the established carriers?

Mr. DUNCAN. I think that the total costs to the television industry, as well as other industries, will be less if television and all other types of communications are handled by common carriers utilizing whatever type of facilities are best available.

Mr. ROBACK. Can I construe that as a "Yes" answer to my question? I asked if it would skim the cream. Are you saying "Yes"? I do not want to force something that will be embarrassing.

CIRCUIT RELIABILITY

Mr. DUNCAN. I do not think it is a matter of skimming the cream in this particular instance, Mr. Roback.

Mr. DAHLIN. Mr. Duncan, do you have any data on 99.5 percent reliable circuits?

Mr. DUNCAN. What type of circuits are you speaking of?

Mr. DAHLIN. Do you normally consider the cable circuits to be 99.5 percent reliable?

Mr. DUNCAN. Our cable circuits are, in fact, 99.95 percent reliable. That happens to be the figure that we have this year on our cable circuits for the Government private line service.

Mr. DAHLIN. Have the Early Bird circuits been 99.5 percent reliable?

Mr. DUNCAN. I do not have comparable figures on this because we do not provide any of these private lines on Early Bird. In fact, I do not have available with me

Mr. DAHLIN. How do you calculate reliability?

Mr. DUNCAN. It is the percent of time that the circuit is available to the customer contrasted with the amount of time that he wants it, 100 percent of the time.

Mr. DAHLIN. Do you find some outages in any mode?

Mr. DUNCAN. That is correct.

Mr. DAHLIN. You normally have some outages; but cable is normally 99.5 percent reliable?

Mr. DUNCAN. We do not have any particular standard. Our standard is to be just as good as we possibly can.

Mr. DAHLIN. Do you have any radio circuits?

Mr. DUNCAN. Various kinds lots of radio circuits.

Mr. DAHLIN. Does the same standard apply to them?

Mr. DUNCAN. I assume you are now speaking of high-frequency radio circuits. Those circuits are not available at anything like 99.5 percent of the time for one reason that the propagation conditions vary from hour to hour during the day. There are some times of the day in some places of the world where you simply cannot get a high-frequency radio signal through on any radio circuit, high-frequency radio circuit, with the variation of the transmission path, you have to shift frequencies to different frequencies, so you can get the maximum utilization, and this shift of frequencies takes some time, so you do

not get anything like 99.5 percent availability on high-frequency radio circuits.

CABLE PROPOSAL

Mr. DAHLIN. With respect to the 720-circuit capacity cable you talked about, is there any present contest on whether that cable should go in? Have you got an application filed? Is there any opposition? Mr. DUNCAN. We have an application filed to put this cable in, to put a 720-circuit cable in, from Florida to St. Thomas, and there are other applications in for satelite service between the mainland of the United States and that same general area.

Mr. ROBACK. Will this pose the issue I asked about earlier; namely, whether the cables should go in, in competition with satellites when there is an affirmative statutory duty to promote satellite

communications?

Insofar as I know, there is no affirmative duty to promote cable communications.

Mr. DUNCAN. I do not know that this would be the particular issue involved, Mr. Roback. We think that the whole field would be considered, including the relative economics of the various types of services.

Mr. ROBACK. Are you contending that it is more economical to have cable services to the Virgin Islands

Mr. DUNCAN. Yes.

Mr. ROBACK (continuing). Than satellite service?
Mr. DUNCAN. Yes.

Mr. ROBACK. So strictly on a dollar and cents basis

Mr. DUNCAN. This is one of the factors involved. However, this does not necessarily mean that in the long-term period there should not be both. There are advantages and disadvantages of the various types of facilities which have to be taken into consideration in addition to the economics involved.

Mr. ROBACK. But if you win out or lose out, does that mean that the alternative mode, in this case, probably will not show up for many years, because the need will not be there?

Mr. DUNCAN. No; I do not think so.

Mr. ROBACK. The need will not be there.

Mr. DUNCAN. I do not think so. For example, it is possible that the satellite service might be provided for television use and that we might be using some of the facilities on the satellites for telephone use, to provide diversity, even though we have the cables.

VIEWS ON MERGER PROPOSALS

Mr. ROBACK. Well, this competitive problem has persuaded some people in the Government, and out, to try to organize the industry in a better way so that they could be more competitive, or if not more competitive, that there will not be any competition, since they are regulated anyway.

What is the A.T. & T. view of the merger issue?

Mr. DUNCAN. Well, we have no quarrel with the proposed legislation permitting a merger. We would quarrel with it if it were mandatory.

Mr. ROBACK. You figure the industry will not be able to get together anyway?

Mr. DUNCAN. No; I would not say that. We do not feel any particular need for a merger involving the telephone industry.

Mr. ROBACK. You do not feel your competitive position is threatened, whether by Comsat or anybody else?

Mr. DUNCAN. I do not think our competitive position is particularly threatened, and we are not opposing any proposed merger, for example, of the telegraph carriers.

Mr. ROBACK. I mean, you have not gone on record as taking a position on it, is that right?

Mr. DUNCAN. No.

Mr. ROBACK. I do not want to ask you to give an off-the-cuff position. Mr. DUNCAN. Not yet, but in due course we will.

Mr. ROBACK. Well, do you have any views to give the committee, or are there any views you can give the committee, as you look down the road, about how this industry ought to be organized? There are many people who are making proposals and suggestions, and we want to get, if we can, the benefit of your wisdom.

Mr. DUNCAN. No; I have no views on this matter other than what I have just expressed.

Mr. ROBACK. Well, General O'Connell made the statement before our committee, as the Director of Telecommunications Management, that he conceived of the international record carriers merging with Comsat, and then they would be arrayed against A.T. & T. in some kind of a real competition. Does that sound like an attractive challenge?

Mr. DUNCAN. I do not have any views on this thing right now, Mr. Roback.

Mr. ASHLEY. I think we would endeavor

Mr. ROBACK. Would it be convenient to submit some views, or would you rather defer on this issue?

Mr. DUNCAN (addressing an associate). Do you wish to speak on it? Mr. ROBACK. Let us put it this way: If, upon reconsideration, you want to submit some views for the record next week, do so, but we are not making a mandatory request.

Mr. ASHLEY. I think we can say this much now, Mr. Roback. On the merger legislation, so long as it is permissive, we have, at least, come to the conclusion that we have no objection to that. The details, of course, of any particular bill, we would have to wait and see the bill. Mr. ROBACK. You would then take your position accordingly. Mr. ASHLEY. The position of Comsat being included in any such merger poses an entirely different problem. It would require a complete change in the nature of Comsat which, up to now, has been considered primarily a carrier's carrier. So, this opens up a wholly new field which, tentatively at least, we would think would change the whole characters of Comsat which is a chosen instrument, with a monopoly of the space segment.

Mr. ROBACK. Well, would permissive legislation requiring legislative authorization then make it incumbent upon the FCC, really, to approve any industry structure, or would this be, as you understand it, a legislative problem?

Mr. ASHLEY. Well, I think it would have to start as a legislative matter, and then the extent to which it would be delegated to the FCC

Mr. ROBACK. Permissive legislation is obviously for the Congress. But what I mean is, once the permissive legislation were enacted, would it then be a matter for the FCC to review and approve any given structure, reorganization of the industry?

Mr. ASHLEY. I believe the recommendation of the Intragovernmental Committee was that it would be subject to FCC approval, and we would think that that would make for a much more flexible arrangement. They would then be in a position to evaluate any particular proposal that was made.

REQUIREMENT FOR SINGLE SATELLITE RELAY

Mr. DAHLIN. A.T. & T. has conducted the most research, perhaps, and is most concerned about the problem of two-jump satellite communications, relay and echo. Does that enter into your views of the domestic system and satellite proposals for mid-range points, or this kind of problem?

Mr. DUNCAN. It very definitely does. I assume that you are speaking of the synchronous satellite, which is the type that we use now and the type that is generally under consideration, where you have an appreciable delay in a single jump.

Our views on this are that it is not going to be practical to introduce two satellite links using the synchronous satellite in a two-way telephone conversation, that the cumulative delay of two jumps would be so great that it would be objectionable to our telephone customers. Mr. DAHLIN. With military circuits, and circuit discipline, this is not such a large problem?

Mr. DUNCAN. It is difficut for me to judge the requirements of the military in those things. Obviously, if you use the equivalent of the push-to-talk arrangements whereby one person says their piece and then stops and the other persons says it, then there is no particular difficulty.

Mr. ROBACK. What is the consequence for satellite communications service of that position that two-jump service is not acceptable?

Mr. DUNCAN. I think the consequences are that for telephone message service we must make our plans and organize our facilities so that no more than one satellite jump would be on any particular connection.

Now, this satellite jump might be an overseas jump or it might be a domestic one, but not both.

Mr. ROBACK. Does that mean that to make a certain service acceptable, you would have to have more satellites or that you would use cables more?

I am not too clear what the consequences would be.

Mr. DUNCAN. It would mean, in any particular connection, you would have to have-you would limit it to one satellite to jump.

For example, if you were calling overseas via satellite, the domestic facilities on the two ends would have to be on some type of land-line facilities, whether cable, radio, or whatnot, and vice versa.