If we do feel that the rates are too high, and the Government has felt over a period of the past 2 years that the rates being paid for leased cable circuits are too high, our action is to go to the FCC with a statement of fact and a request for establishment of a more equitable tariff. Mr. DICKINSON. Let me pursue your statement just a bit further. Reading again now, it says, "It has been the consistent position," this is your statement on page 68 and at the top of page 69, "It has been the consistent position of the executive branch that the establishment of policy under which the Government procures service directly from Comsat is an executive branch responsibility." Mr. O'CONNELL. This doesn't say anything about the tariff. Mr. DICKINSON. This would necessarily preclude FCC from making this decision, wouldn't it? Mr. O'CONNELL. No, sir. Mr. DICKINSON. Why would that not be so? Mr. O'CONNELL. Because Mr. DICKINSON. The only thing the FCC has got to say about whether or not you deal directly with them is to determine whether they are authorized users by their definition, unless I am mistaken, and this says that they don't have a thing to say about that. Mr. O'CONNELL. They set the rates, sir. Mr. DICKINSON. Yes, they set the rates. But they also make a determination of unique and vital. Mr. O'CONNELL. Our interruption of the act is that assuming that we follow the tariffs established by the FCC-that the Government under the act and as stated therein has the authority to procure service directly from Comsat as it sees fit. Mr. DICKINSON. With no regard to any limiting or qualifyingMr. O'CONNELL. Right. Mr. DICKINSON. Factors as imposed by FCC? Mr. O'CONNELL. Exactly. Mr. DICKINSON. And that Mr. O'CONNELL. This really is— Mr. DICKINSON. Even though Congress, in its act setting it up, says "Congress hereby declares it is the policy of the United States," and so forth, you feel they have expressly delegated to the executive the right to make further policy by the act. Mr. O'CONNELL. And in subsection 201 (a) the President is given explicit responsibility Mr. DICKINSON (reading): Aiding, planning and development and fostering the execution of a national program for the establishment, operation as expeditiously as possible of a commercial communications satellite system. This you interpret as giving the Executive the right to set policy? Mr. O'CONNELL. Under subsection 201 (a) (6), the act states: Take all necessary steps to insure the availability and appropriate utilization of the communications satellite system for general governmental purposes, except where a separate communications satellite system is required to meet unique governmental needs or is otherwise required in the national interests. Mr. DICKINSON. Yes, so we are right back to that again. Mr. O'CONNELL. The uniqueness, as mentioned here, pertains to a separate Government system, not to the use by the Government of a commercial communications satellite system. There is nothing that indicates or infers that the Government needs have to be unique in utilizing the commercial communications satellite system. The only mention is uniqueness. Mr. DICKINSON. You are reading 201(a) (6); is that right? Mr. DICKINSON. Of the Communications Satellite Act of 1962. All right. Mr. O'CONNELL. Of course, the fact that the act explicitly states that the Government has the right to put up its own satellite system accords it a special position not enjoyed by any other agency or user. Mr. DICKINSON. Which is what we are also dealing with here. Mr. O'CONNELL. It should follow that, a lesser included right is the appropriate utilization of the commercial communications satellite system for general governmental purposes. In fact, the general governmental purposes rather clearly states that they are not unique. Mr. DICKINSON. Yes, I agree. Did the Department of State play any part at all in the matter of the 30 voice circuits in the Pacific that Comsat proposes to provide to the Defense Communications Agency directly without going through authorized carriers? Were they involved in this? Mr. O'CONNELL. I think not. That is, as to the question of governmental use or the direct contracting with Comsat. With respect to encouraging the Philippines and Thailand to join Intelsat and generally to handle the international matters involved there as between the United States and these governments they were involved. Mr. DICKINSON. Would you say that Comsat was a quasi-governmental corporation? Mr. O'CONNELL. Let's say it is an unique private company[laughter] rather than a quasi-governmental corporation. Mr. MORRIS. Perhaps also we should note that the corporation submits a report to the President and the Congress which is quite unique as far as a private corporate entity. Mr. DICKINSON. One other question and I will have done with this for the time being. Mr. O'Connell, do you think that the State Department participation in the acquiring of the 30-circuit capability gave Comsat any advantage that the other common carriers did not have so far as rates or any other things are concerned in dealing with foreign countries and in fact being able to accomplish this contract? Mr. O'CONNELL. It is the general policy of the State Department not to show preference to any one commercial organization. I believe that in response to certain inquiries they received in one instance that they declined to furnish any information, because they thought it might be taken as assisting one against another. I believe that they are quite meticulous in observing the policy that they have of not taking sides or helping one company as compared to another. Mr. DICKINSON. As a general rule, but we have already established the fact that this is a unique corporation. Mr. O'CONNELL. Now, on the other hand Mr. DICKINSON. Yes, let's get to the other hand. [Laughter.] You know about these one-armed lawyers. [Laughter.] Mr. O'CONNELL. In accordance again with the act, various agencies of the Government are charged with assisting and promoting the growth of this new facility to provide all the nations of the world. with improved and increased communications, and so forth. We have all been engaged in studying this and coming up with ideas as to how we could promote earth stations in more and more of the countries of the world. The State Department held an international meeting here. There were representatives, I think, of about 52 or 53 nations. It was a week's session in which both policy and technical data were provided, costs, and so forth, as to what was involved in an earth station and what would be required to get one. Our various companies that design and manufacture earth stations were strongly represented at these meetings. In fact, they participated in a major way in setting up the affair. A great deal of enthusiasm was shown on the part of various countries' representatives. In some cases, where they had thought it might be beyond their means before they came to the session, they went away feeling that perhaps it was not. In this way and in the general promotional area of assisting in the dissemination of information and better knowledge, the State Department certainly helps in spreading the idea of satellite communications. It is anxious to assist, where it can, in getting more earth stations established in more countries. Mr. DICKINSON. Thank you. Mr. MOORHEAD (presiding). The committee will stand in recess until 10 o'clock tomorrow morning, when we will continue to hear from you, Mr. O'Connell, and your associates. You have a long statement and a lot of ground to cover, and we appreciate your being here. Mr. O'CONNELL. Thank you very much, Mr. Chairman. (The following additional material was furnished for the record :) Mr. T. B. WESTFALL, DEAR TED: This is in response to your letter of July 13, 1966, referring to the meeting which I and two members of my staff had with you, Mr. Geneen, Mr. Aibel, and Mr. Gancie on June 22, 1966. I have consulted with the members of my staff who were present at the meeting, and it is our feeling that the letter generally contains interpretations of my remarks at the meeting, as will as conclusions and opinions which go far beyond the scope of our discussion. As you know, my staff and I met not only with your company, but with representatives of the other carriers which had submitted bids to the Defense Communications Agency to provide thirty voice circuits via satellite between Hawaii and Japan, Thailand, and the Philippines. The purpose of the meetings was not to become involved either in the business of the DCA-which is to review the bids and make a decision as to which carrier is best qualified to meet the DCA service requirements-or in those areas which are the proper function of the FCC. Rather, my purpose was to discuss the matter in my role as Director of Telecommunications Management with a view toward putting the matter in proper perspective from the overall telecommunications management point of view. If you recall, I stated very clearly at our meeting that I was firmly committed to the principle that the Government in fulfilling its general telecommunications requirements ought to look primarily to the established common carriers. I 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 |