requirements for satellite circuits in this part of the world. We are also planning to meet some of the needs of our commercial common carriers for badly needed additional capacity between Hawaii and the manland for both telephone and record traffic. There is also a great interest in the potential of Hawaii-mainland and transpacific felevision transmissions which will now become possible for the first time. In the Atlantic, simultaneous satellite access by multiple stations becomes possible for the first time as well as television transmission without interruption of other communications circuits.

Thus, a large step will be taken this fall toward the fulfillment of the congressional mandate to us to establish a worldwide communications satellite network as expeditiously as practicable. Unfortunately, since a decision has yet to be reached as to the ownership and location of a second large antenna on the east coast, certain commercial traffic, including television, passing through the second Atlantic satellite will have to be routed via the Canadian station at Mill Village in Nova Scotia until a proper second facility is available in this country. Under FCC auspices, Comsat and the carriers have been meeting in recent weeks to determine if unanimity can be reached on an arrangement for a procedure which would permit the expedited construction of a second large antenna to be initiated. To date this has not been achieved.

In the Pacific area, initial requirements appear to be such that the bulk of the capacity of the satellite may be utilized almost from the outset. Accordingly, we have been exploring energetically the desirability of a second Pacific satellite and the construction of additional antennas in Hawaii and on the west coast to utilize such a satellite. The latter items, of course, are the long leadtime elements. In any event, such facilities will be required at the latest in mid-1968 when the new generation of satellites, the Intelsat III type, will become available. These satellites will have about five times the capacity of the Intelsat II satellites and should have a lifetime of about 5 years compared to the goal of 3 years for the Intelsat II type.

The impetus to the acceleration of an extended communications satellite service prior to the original goal of establishment of a complete global capability by 1968 was the expression of interest by NASA in communications satellite services in connection with the Apollo program. These discussions were initiated in mid-1965 and included consideration of the feasibility of establishing appropriate satellite facilities as well as necessary ground facilities in this country and abroad.

In a letter to the corporation from Assistant Secretary of Defense Solis Horwitz dated July 26, 1965, the National Communications System requirements to provide communications to three Apollo program insertion injection ships and to tracking stations at Carnarvon, Australia, the Ascension Islands, and the Canary Island were outlined. Secretary Horwitz requested that the corporation supply, for planning purposes, its capabilities to provide this service, the technical approach and the cost and time schedules involved in providing such service. Three days later, the corporation formalized its preliminary thinking on the technical aspects in requests for proposals to the industry for satellites and associated equipment and for transportable

satellite earth stations.

About a month later, on August 26, 1965, Comsat submitted its proposal to Secretary Horwitz. It provided a system concept, milestone schedule for the establishment of the facilities, the technical approach to providing the service and a schedule of estimated costs for the service. Comsat also took up the matter with the Interim Communications Satellite Committee with a view to seeking approval for the development and launching of the necessary satellites to provide the service to NASA. Approval in principle was given at the meeting of the committee on September 28, 1965. The following day the corporation submitted an application for a construction permit to the Federal Communications Commission.

On October 8, 1965, Dr. Seamans, of NASA, informed the corporation that, and I quote: "The Secretary of Defense, in his capacity as Executive Agent for the National Communications System, has authorized NASA to act as his representative in conducting immediate negotiations with the Communications Satellite Corp. for the purpose of definitizing the arrangements under which the corporation will provide commercial communications satellite service to NASA in connection with the Apollo program." It also requested advice as to whether the corporation was prepared to proceed immediately in this matter.

On October 14, 1965, the corporation formally advised Mr. Seamans that it was proceeding on an immediate basis to take all actions to provide the service requested by NASA.

On October 29, 1965, the Interim Communications Satellite Committee formally approved the Intelsat II spacecraft contract which had been negotiated with the Hughes Aircraft Co., and on November 10 and November 15, 1965, respectively, the FCC approved the spacecraft construction permit and Comsat issued an award notice to Hughes.

On December 1, 1965, the FCC approved the transportable earth station construction permits and the contract for production of the transportable earth stations was awarded to Page Communications Engineers, Inc.

The final NASA service agreement was signed on July 5, 1966, and on the following day, Comsat filed with the FCC its draft tariff for the Apollo service.

On July 22, 1966, NASA and Comsat completed and signed the launch services agreement for launching of the Intelsat II satellites and under the provisions of this agreement, we, about 2 weeks ago, set an initial launch date for the last week in October. While this represents a delay of 4 to 6 weeks in our original goal, it appears that a satellite has been developed with a performance capability substantially exceeding the initial goal. In any event, the total development schedule has been an extremely short one for a program that has required the design and fabrication of a satellite substantially different than that of Early Bird and with a capability exceeding the Early Bird performance by more than a factor of two.

The proposed schedule of charges to NASA has been predicated on the basis that NASA, over the 3-year scope of the program, will pay its proportionate share of the costs of the program.

Intelsat and the Communications Satellite Corp., of course, are assuming the risk of marshaling the necessary commercial commu

nications traffic that must bear the balance of the costs of the system. Above all, they are also assuming the risks of launch failure and of failure in satellite operation during the projected lifetime of 3

years.

Your committee has been reviewing in some detail the development of the program to provide 30 satellite circuits to the DCA to meet urgent expanded communications requirements in the Pacific area. Accordingly, I will not attempt to repeat a discussion of all of the events that have taken place to date. Let me at the outset, however, reiterate that the corporation's sole motivation has been to be as responsive as possible to an urgent need, a service of national importance and to proceed as expeditiously as possible to take all the necessary steps to make this service available at the earliest date. It is our interpretation of the law that there are no restrictions on the Government dealing directly with the corporation when the executive branch of the Government decides that it desires to do so. This corporate position was fully reviewed, discussed, and approved by our board of directors. It represents our initial position in the "authorized user” matter and continues to be our position in our petition for reconsideration of the FCC's "authorized user" policy formally issued on July 20, 1966. It would be, indeed, a sorry situation if the availability of these facilities to meet important needs of our Defense Department were allowed to be delayed or frustrated by actions aimed at winning a particular position or establishing a particular precedent. We will continue to do our utmost to provide the service as efficiently and as promptly as possible.

As you know, in the late fall of last year, discussions were held at the request of DCA to explore the possibility of meeting certain NCS requirements, through the use of capacity in the Intelsat II Pacific satellite and the establishment of appropriate earth station facilities. Based on these discussions, Comsat performed various economic, traffic, and operational analyses with respect to various communications plans and their alternative links and also initiated discussions with the appropriate Pacific region countries as to their participation in the international telecommunications satellite consortium and also as to their capability and interest in providing suitable earth station facilities.

Early in January of this year, DCA provided to Comsat a more detailed exposition of performance requirements for analysis. This resulted in the development of a basis for appropriate negotiation with the telecommunications administrations in the respective countries. Discussions were held with the international telecommunications entity of Japan, known as KKD (Kokusai Denshin Denwa Co.) telecommunications authorities in Thailand, and telecommunications authorities in the Philippines.

As a result of these negotiations, Comsat has arrived at a definitive agreement with KDD and, on the basis of a memorandum of understanding concluded some time ago, is working out the terms of such an agreement with the telecommunications administration in Thailand. We have also entered into an agreement with the Thailand administration providing for a lease to it of a temporary transportable earth sation to be used pending the completion of a large permanent facility.

At the present time, the Philippine Government has not yet made a final determination as to the entity that would be responsible for its satellite communications. Hence, no final action has been taken with respect to the proposed memorandum of understanding and proposed lease agreement which were discussed with its representatives.

The results of our efforts were communicated informally to the DCA in April of this year and included our determination as to the feasibility of providing the desired service as well as cost estimates for this service.

On May 2, 1966, DCA requested the submission by the corporation and other international carriers of proposals for the providing of 30 Pacific satellite circuits, to consist of 10 circuits between Hawaii and each of Japan, Thailand, and the Philippines. Comsat submitted its proposal on May 31, 1966. In its request for such proposals, as noted by the Department of Defense in a subsequent public announcement, it "stressed the urgency of the requirements to meet current military activities connected with southeast Asia." On July 1, 1966, DCA issued to Comsat a notice of award indicating

The Department of Defense has concluded that the carrier whose proposal offers the greatest advantage to the Government and affords the greatest assurance of providing the earliest possible service is the U.S. Communication Satellite Corp. The Department of Defense intends, therefore, to initiate immediately negotiations to definitize a contract with your corporation.

We then proceeded to the negotiation of a communications service authorization. This was signed by DCA on July 26, 1966.

We are pleased with this expression of confidence in our ability to meet the needs of DCA with the greatest assurance of providing the earliest possible service and with the greatest advantage to the Government. We intend not to fail in that trust.

Mr. MOORHEAD. Dr. Charyk, on page 11 you refer to the FCC's authorized user policy which was issued. Could you briefly, for my benefit, tell me what the effect of that decision was.

Dr. CHARYK. Insofar as service to the Government is concerned. the FCC position is that the Government should be allowed to deal with the corporation only in the case of unique and special require

ments.

It is the corporation's reading of the law that there are no restrictions on the Government's ability to deal directly with the corporation whenever the executive branch of the Government decides that it is in the interest of the Government to do so. So we have a basic difference of opinion with the FCC. We have petitioned for a reconsideration of the FCC decision in this matter, and this is now pending. Mr. MOORHEAD. I thank you, sir.

Mr. HOLIFIELD. Mr. Dickinson.

Mr. DICKINSON. Well, to carry a little further the question just put to you, would you explain what you mean at the bottom of page 11 there when you say:

It would be, indeed, a sorry situation if the availability of these facilities to meet important needs of our Defense Department were allowed to be delayed

or frustrated by actions aimed at winning a particular position or establishing a particular precedent.

What does that mean?

Dr. CHARYK. Well, I should indicate that the communications carriers are taking the position that the corporation should be strictly a carrier's carrier. In other words, we should deal only with carriers. The corporation's position is that, as we read the law, the Government can deal directly with the corporation if it desires to do so. So that we do have a basic difference of opinion between Comsat and the carriers as to our ability to deal directly with the Government.

It is now a contentious item, and we are hoping for an early resolution so that there will not be any impediment placed in the way of providing this service under the most favorable conditions to the Government at the earliest possible date.

Mr. DICKINSON. That is what you meant by the sentence that I just read?

Dr. CHARYK. That is right. It is pretty easy to delay implementation of this program through various procedural techniques. We hope that this does not occur.

Mr. HOLIFIELD. Is that all?

Mr. DICKINSON. Yes.

Mr. HOLIFIELD. Mr. Roback.

Mr. ROBACK. What happens if the FCC does not come out with the required or desired permission, what is the next step?

Dr. CHARYK. We have filed an application which reiterates our original position, but it also indicates that if the FCC does not agree with our position it should waive its regulation in any event and permit the service to proceed on this basis pending a full discussion and consideration of the issue. This is included in our filing yesterday with the Commission.

(The application filed on September 6, 1966, referred to above, follows:)

Before the Federal Communications Commission, Washington, D.C.

File No. T-C-2021

In the Matter of Communications Satellite Corporation application for authorization to acquire 30 full-time units of satellite utilization in the INTELSAT II satellite, to acquire 10 full-time voice-grade circuits between the INTELSAT II Pacific satellite and each of Japan, Thailand, and the Philippines, and to provide through service directly to the Defense Communications Agency by combining such units and circuits

APPLICATION OF COMMUNICATIONS SATELLITE CORPORATION

Communications Satellite Corporation (“Comsat" or "Applicant") hereby applies, in compliance with the Commission's Order and Authorization, dated November 10, 1965 (File No. 3-CSS-P-66), Section 214 of the Communications Act of 1934, as amended ("Communications Act"), and the Memorandum Opinion and Statement of Policy in Docket No. 16058 (the "Decision") issued July 21, 1966, 4 FCC 2d 421, for authorization to acquire from the International Telecommunications Satellite Consortium (INTELSAT) 30 full-time units of satellite utilization ("units") in the INTELSAT II Pacific satellite, to acquire from the respective foreign communications entities 10 full-time voice-grade circuits between the INTELSAT II Pacific satellite and each of Japan, Thailand, and the Philippines, and to provide through service directly to the Defense Communications Agency (DCA) of the United States Department of Defense (DOD)