GOVERNMENT USE OF SATELLITE COMMUNICATIONS TUESDAY, AUGUST 30, 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, William S. Moorhead, and William L. Dickinson. Also present: Herbert Roback, staff administrator; Douglas G. Dahlin, counsel; Paul Ridgely, investigator; and J. P. Carson, minority staff. Mr. HOLIFIELD. The subcommittee will resume its hearings. I understand that you did not quite finish your report yesterday. Let us accept the balance of it for the record, and start in on the questioning. Then as we get to that part, we will discuss some of the matters. STATEMENT OF HON. JAMES D. O'CONNELL, DIRECTOR OF TELECOMMUNICATIONS MANAGEMENT, EXECUTIVE OFFICE OF THE PRESIDENT; ACCOMPANIED BY FRED W. MORRIS, JR., ASSOCIATE DIRECTOR (ADVANCED CONCEPTS AND TECHNOLOGY); WILLIAM E. PLUMMER, ASSOCIATE DIRECTOR (FREQUENCY MANAGEMENT); COL. HAROLD R. JOHNSON (U.S. AIR FORCE), ASSISTANT DIRECTOR FOR PLANS AND PROGRAMS; VICTOR F. EVANS, DEPUTY ASSOCIATE DIRECTOR OF TELECOMMUNICATIONS MANAGEMENT (NATIONAL COMMUNICATIONS); RALPH L. CLARK, SPECIAL ASSISTANT FOR INTERNATIONAL TELECOMMUNICATIONS STUDY; CHARLES E. LATHEY, SPECIAL ASSISTANT FOR TELECOMMUNICATIONS MOBILIZATION PLANNING; AND JOHN J. O'MALLEY, ASSISTANT LEGAL COUNSEL-Resumed Mr. O'CONNELL. Very good, Mr. Chairman. Mr. ROBACK. You have a lengthy statement, and it will probably take some time to go over it, Mr. O'Connell. So, in the course of the interchange, undoubtedly the members will have occasion to refer to the portions that you have not covered. Of course, the subject of the FCC decision on authorized user has had a great bearing upon this problem of Government procurement, and your office in one way or another has been involved. Now, our attention was drawn to several articles in the newspapers about a letter you had written to the Chairman of the FCC, and after we had seen those newspaper references, we asked your office for a copy of this letter, which was sent, and which is still marked "for official use only." In view of the fact that this letter has been quoted in extenso, as the literary fellow said, by the Wall Street Journal and others, do you have any objection to having it placed in the public record? Mr. O'CONNELL. Well, actually I do not have any objection. I discussed this at some length with Chairman Hyde as to whether it should be released entirely, since it had been quoted out of context in the press, and we thought that it would better not to create any additional excitement about the letter by publishing it several days after it had been quoted. This would restart the excitement all over again. I have no objection to it. Mr. ROBACK. It will be submitted for the record, Mr. Chairman. Mr. HOLIFIELD. It will be accepted. Mr. ROBACK. For the committee's consideration. (The document, above referred to, follows:) Hon. ROSEL H. HYDE, EXECUTIVE OFFICE OF THE PRESIDENT, OFFICE OF THE DIRECTOR, Washington, D.C., June 28, 1966. Chairman, Federal Communications Commission, DEAR MR. CHAIRMAN: I appreciate your taking the time last Tuesday to discuss the matter of Government utilization of communications satellite services. I also appreciate your calling me on Thursday to advise that the Commission would be issuing a public notice that day which would state, among other things, that the Communications Satellite Corporation (Comsat) would be authorized to provide service directly to the Government only in those cases where there are unique or exceptional circumstances warranting the authorization. My staff and I have studied the public notice. As you realize, we are disappointed that the Commission contemplates taking a position which would attempt to restrict the right of procurement of communications satellite services by the Government. As I pointed out to you in our meeting on Tuesday, we are of the opinion that Congress gave the Government the right to directly procure communications satellite services from Comsat. Based upon our meeting of last Tuesday, I feel that there may be some misunderstanding as to our position in this matter. The main reason I am writing now is to clarify that position to the extent that it may not be completely understood by the Commission. In the first place, I recognize the Commission's concern that commercial communications satellite service should be implemented in a way which is not unduly disruptive to established communication systems. We recognize the Commission's right to prescribe the relationship that ought to exist between Comsat and the carriers. We disagree, however, with the Commission's position that it has the authority, under the Communications Satellite Act of 1962 and/or the Communications Act of 1934, to prescribe the conditions under which the Government can obtain service from Comsat. This subject has been discussed with other departments, and agencies of the executive branch, including the Department of Justice. All are in complete agreement that the Communications Satellite Act of 1962 clearly designates the Federal Government as an authorized user. I wish to make it clear, however, that the Department of Justice is the appropriate agency to speak on any legal interpretations involved. Aside from the question of congressional intent, as expressed in the Communications Satellite Act of 1962. I would like to point out some of the effects which can be foreseen if the Commission should rule to regulate Comsat's right to provide service to the Government or to affect the Government's authority to deal directly with Comsat. A major purpose served by the Communications Satellite Act in granting the Government authority to deal directly with Comsat will be to expedite the furnishing of service under any conditions, particularly emergencies. In the past, formal procedures and legal restrictions have sometimes created delay and uncertainty concerning the provision of common carrier services to the Government. The Government needs an assured and uncomplicated responsiveness in the provision of all types of communication services if it is to cope adequately with the world requirements of the present day. Unless the provision of communication services can be made adequately responsive to the needs of the Government, it would appear important to review the general question of whether the Government should continue the policy of relying upon the common carrier/regulatory systems for the provisions of the bulk of its services. You know that our policy position has been to utilize the common carriers to the maximum extent possible, considering responsiveness, reliability, assurances of service in the shortest possible time, and reasonable comparative costs. We have been working toward the development of an overall pattern of procedures which would permit both this office and the Commission to seek new and more responsive ways for the common carrier/regulatory systems to meet the needs of the Government. The Commission's public notice indicates an entirely different approach to this serious problem. It is my hope that a careful review of governmental needs in the present day will make it possible for us to work together toward the improvements that are needed. I am also hopeful that we can avoid the necessity of a lengthy review of this matter in the courts and in the Congress. It has never been our position that because the Government has the right to procure services directly from Comsat that such right should be exercised indiscriminately and without taking into account the impact that such direct acquisition of services may have on the industry. I should also make it clear that even in those instances where direct service is authorized we have always recognized the right of the FCC to establish rate schedules as well as to issue appropriate licenses and permits. The question of cost is also an important element of this matter. On the basis of the recent common carrier tariff filings for cable circuits in the Pacific, the charges proposed by Comsat for the half-circuit cost associated with a current Department of Defense procurement amounted to an overall saving on the order of $6 million for 30 voice channels over a 3-year period. These savings are obviously substantial and, in the interest of Government economy, should be given serious consideration. Since the Commission has, in the past, followed the policy of respecting the findings of the executive branch with respect to matters of urgency and military necessity, I am assuming that the Commission does not intend to change this policy and to enter upon an alternate course of questioning the nature of governmental need of contracts placed for the provision of communications satellite services. In view of the potential problems and conflicts introduced by that portion of the Commission's public notice of June 23, 1966, which deals with the U.S. Government as an authorized user, I would like to suggest reconsideration by the Commission and further effort to reach a cooperative policy which will better serve the needs of the Federal Government. Sincerely, J. D. O'CONNELL. EFFECT OF FCC POLICIES Mr. ROBACK. Now, this letter, in essence, takes issue with the FCC decision or, at least, the public notice that preceded the decision. That was a preliminary statement of the FCC's position in the form of a public notice that was issued in June. Your letter expresses concern that this could complicate or interrupt procurement of Government services, and it contains, among other things, the following sentence: Unless the provision of communication services can be made adequately responsive to the needs of the Government, it would appear important to review the general question of whether the Government should continue the policy of relying upon the common carrier/regulatory systems for the provision of the bulk of its services. Does this statement mean that, if the FCC is going to interpose obstacles to procurement, the Government might rely more heavily on its own system; is that one interpretation? Mr. O'CONNELL. I think so. We really did not visualize that it would ever get to that. I think I cover this whole area pretty well in my statement on the responsibilities of the communications industry to the Government, in which I mention that I have discussed the need for the Government to foster more extensive and rapid growth of our commercial and international communications system, and to contribute to this objective by using that system. Then I go on to say, but if this is done, and it is being done to a considerable extent, there is a concomitant and reciprocal obligation that the regulatory system and the carriers meet the requirements of the Government in every essential way that they could be met in a Government owned and operated system. Mr. ROBACK. What part of your statement are you reading from? Mr. O'CONNELL. Page 61. This portion is addressed to this very point and to the very question that you have asked. I think it puts it in a better perspective than my letter did. Mr. ROBACK. Well, a regulatory system, in the nature of the case, has to do with competing interests, and it has to do with certain administrative provisions that are customary or have evolved over the years whereby all parties are allowed to come in and all interferences or oppositions are allowed to be made. The Commission has to have an inquiry, an examination, and a record, and a decision on the record, and the right of judicial review after administrative remedies are exhausted. That is the nature of the regulatory system. Mr. O'CONNELL. Right. Mr. ROBACK. Now, is the sense of your testimony that the technology of satellite communications is clashing with the conventional regulatory system, so that one or the other has got to give? Mr. O'CONNELL. No, not at all. Mr. ROBACK. What is the sense of your statement? Mr. O'CONNELL. It is that we should try to achieve, in the context of our time and the urgency for satisfying requirements for Government purposes and crises, and during the emergencies that take place from time to time, that we have different and more urgent needs now than we had some years ago; and that, where the regulatory system, properly designed to protect the interests of all concerned, appears to delay this, that shortcuts be taken to enable the service to be furnished while the arguments, the proper legal remedies, the filings, the oppositions, and so forth, take their normal course, but that they not be allowed to delay the prompt immediate rendition of service. Mr. ROBACK. Accepting that as an understandable and perhaps desirable proposition generally, what do you do in a given case? We have a given case; namely, the Government decided at the end of 1965 and the beginning of 1966 that it was fighting a war in Vietnam, and, so far as communications were concerned, had a requirement. That is an urgent and critical requirement so far as the need is concerned. It may not be, in the view of some, sufficiently critical to conform to a policy of using Government-owned rather than leased communications, but nevertheless there was a requirement. Once that requirement arises, once the Government enters into renewable yearly contracts for a 3-year or open-ended period, those |