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The context of your letter indicates that you have not yet granted our request of June 24, 1966, for an opportunity to submit revised quotations for the 30 Pacific circuits. This request was submitted because of two significant developments which occurred subsequent to June 17, 1966, the date for submission of revised price quotations. As outlined in our June 24 letter, these developments were: (a) Notice from Comsat on June 22 of a reduction in its estimated charges to WUI for satellite circuits in the Pacific; and (b) the announcement of June 23 by the Federal Communications Commission that Comsat may furnish satellite services and channels only to authorized common carriers, including Western Union International, except in unique circumstances.

You refer, in your letter of July 1, to the Armed Service Procurement Regulations (ASPR). We submit for your consideration several questions which arise from application of the ASPR to your proposal “to definitize a contract with Comsat.” The view of the Commission's announcement of June 23, we respectfully submit that Comsat is not a "qualified" source of supply for these channels in accordance with ASPR 1-302.2, nor is Comsat "qualified and eligible to receive an award under applicable laws and regulations," as required by ASPR 1-903.1(v).

Moreover, in view of the Commission's announcement, Comsat would not be in a position to execute a contract containing the following standard provision inserted by the Department of Defense in its contract for communications facilities and services :

"The services and facilities furnished hereunder shall be in accordance with all tariffs, rates, charges, rules, regulations, or requirements which may be lawfully established and applicable to similar services and facilities furnished or offered by the company to the general public or its subscribers, or at rates, terms and conditions of services as may be agreed upon, subject, where appropriate, to jurisdiction of Federal, or State regulatory bodies.” (Emphasis added ; see article 6a in contract No. DCA-20-6, Oct. 1, 1963.)

We would appreciate an explanation of the above-quoted statement in your letter of July 1 to the effect that Comsat offers the greatest assurance of the earliest possible service. Comsat is under a mandate from Congress to establish the commercial communications satellite system “as expeditiously as practicable." (Communications Satellite Act of 1962, sec. 102(a).) This duty of Comsat is not conditioned upon its providing channels direct to entities other than authorized communications carriers.

In view of the above circumstances, Western Union International again respectfully requests that we be accorded the opportunity to submit revised quotations for the 30 Pacific circuits. Very truly yours,

H. G. CATUCCI, Vice President.

DEFENSE COMMUNICATIONS AGENCY,

Washington, D.C., July 18, 1966. Mr. H. G. CATUCCI, Vice President, Western Union International, Inc., Washington, D.C.

DEAR MR. CATUCCI: I am in receipt of your letter of July 13 in which you request an opportunity to submit revised price quotations and question the authority of DCA to contract directly with Comsat for satellite communications circuits in the Pacific area.

The DCA is well aware of the Comsat notice on June 22 relating to the reduction in its estimated charges to record carriers for satellite circuits in the Pacific and the announcement on June 23 by the Federal Communications Commission of its intent to issue an opinion and order in docket No. 16058. Specifically, you refer to ASPR 1–302.2 and 1-903.1(v) and a provision of DCA's basic agreement as basis for disqualification of Comsat as a contractor of the DCA in view of this.

The DCA views Comsat, in accordance with the requirements of ASPR, as a qualified source of services and qualified and eligible to receive an award of contract, if selected. The Federal Government has stated as you know, in FCC docket No. 16058, that as a matter of law it has a right to contract directly with Comsat as an "authorized user,” if such is in its best interest. Further, DCA has no reason to believe that Comsat will not file a tariff with the FCC as required by its basic agreement. Accordingly, the DCA sees no contradiction to its determination that Comsat offers the greatest assurance of the earliest possi. ble service.

In view of the above, there appears to be no justification for a request by DCA for submission of revised quotations for the 30 Pacific circuits. Sincerely,

GEORGE E. PICKETT, Major General, U.S. Army, Deputy Director, DC8.

WESTERN UNION INTERNATIONAL, INC.,

August 2, 1966. Col. LEE M. PASCHALL, U.S. Air Force, Assistant Director, Programs and Requirements, Defense com

munications Agency, Washington, D.C. DEAR COLONEL PASCHALL: By letter dated July 26, 1966, the Defense Communications Agency notified Western Union International, Inc., that the Communications Satellite Corp. was awarded a contract to provide 30 satellite circuits in the Pacific. At a debriefing in your office yesterday, you indicated that copies of the CSA and the general contract with Comsat could be made available to Western Union International only upon written request.

Accordingly, would you kindly arrange to furnish this corporation with a copy of the CSA covering the 30 circuits and the general contract with Comsat. We understand that both of these documents are unclassified.

There are two reasons for this request. First, we require these documents in order to completely evaluate the award which was made to Comsat. As an unsuccessful bidder whose quoted prices were lower than those of Comsat, at least for the first year, we feel that we should be afforded every opportunity to inquire into and determine the basis of the award. Although we were afforded some opportunity yesterday to discuss this matter we find it difficult if not impossible to completely evaluate this award unless we have copies of these documents for review.

As long as these documents are withheld there will exist serious questions and doubts in our minds regarding the award. In order to dispel these questions and doubts, it would appear to be in our mutual interests that these documents be made available.

Secondly, inasmuch as it is possible that Western Union International may become an assignee of all or part of this contract, we need to know as soon as possible the full extent and nature of the obligations which we may assume In the interest of facilitating possible assignments of this contract and the expeditious establishment of service to the Department of Defense, we would very much appreciate the early granting of this request.

Again, let me thank you for giving us the opportunity yesterday to discuss some of the aspects of this award. Very truly yours,

HENRY G. CATUCCI, Vice President.

WESTERN UNION INTERNATIONAL, INC.,

August 25, 1966. Col. LEE M. PASCHALL, Assistant Director, U.S. Air Force, Programs and Requirements, Defense Communications Agency, Washington, D.C.

DEAR COLONEL PASCHALL: On August 2, 1966, I wrote you a letter requesting a copy of all the communication service authorizations and the general contract with Comsat covering the 30 Pacific satellite circuits to Thailand, Philippines, and Japan.

Since we have not yet received these documents, it would be appreciated if you would have them sent to us as soon as possible. Warm personal regards, Sincerely yours,

HENRY G. CATUCCI,

Vice President.

DEFENSE COMMUNICATIONS AGENCY,

Washington, D.C., August 30, 1966. Mr. HENRY G. CATUCCI, Vice President, Western Union International Inc., Washington, D.C.

DEAR MR. CATUCCI: Receipt is acknowledged of your letter requesting a copy of the CSA and general contract entered into by DCA with Comsat for communications satellite service in the Pacific.

As you are aware, the matter of the award to Comsat and its legality were subjects of discussion with DCA in the hearings held on August 15, 16, and 17 by the Military Operations Subcommittee of the Government Operations Committee of the House of Representatives. Further, the legal authority of DCA to enter into this contract was upheld in a decision (opinion No. B-159632) rendered on July 26 by the Comptroller General. Accordingly, there appears to be no basis for your conclusion that was long as these documents are withheld there will exist serious questions and doubts in our minds regarding the award."

A discussion of the assignment clause in the CSĂ, its purpose and legality, was also made a matter of public record by the subcommittee. The conclusion that çou now need to know as soon as possible the full extent and nature of the obligations which (you) may assume (under the assignment clause)” is premature. The Government is not at this time considering an assignment of the contract.

For the above reasons, release of the CSA and general contract at this time would not appear to be justified. Sincerely,

LEE M. PASCHALL,

Colonel, U.S. Air Force,

Chief, DCS Programs and Requirements. Mr. HOLIFIELD. The next witness is Mr. Bertram B. Tower, ITT World Communications, Inc.

Mr. Tower, would you take your place and introduce your associate for the record.

STATEMENT OF BERTRAM B. TOWER, CHAIRMAN OF THE BOARD,

ITT WORLD COMMUNICATIONS, INC.; ACCOMPANIED BY JOHN A.
HARTMAN, JR., VICE PRESIDENT AND GENERAL COUNSEL,
AMERICAN CABLE & RADIO CORP. (ITT)
Mr. TOWER. Thank you, Mr. Chairman. With me is Mr. John A.
Hartman, Jr., who is our vice president and general counsel.

Mr. HOLIFIELD. You may proceed with your statement.
Mr. TOWER. Thank

you, sir. I am Bertram B. Tower, chairman of the board of ITT World Communications, Inc. ITT Worldcom is a wholly owned subsidiary of American Cable & Radio Corp., and is the international telecommunications operating arm of International Telephone & Telegraph Corp., in the United States. We appreciate the opportunity the committee has accorded us to present our views.

ITT Worldcom operates a record communications network of cable and radio channels, including satellite channels, and in cooperation with correspondents abroad we provide communications services to virtually every area of the world. Affiliated companies provide record and voice communication services in Puerto Rico, the Virgin Islands, other Caribbean locations, Central and South America and also in the Philippine Islands.

We also operate transatlantic record communication services in England and Canada. Together with our affiliates and connecting carriers, we provide voice-data transmission services, leased telegraph circuits, teleprinter exchange service, message services, and ship-shore marine radio services. Additionally, we furnish various specialized press, facsimile, and broadcast program services. We operate our own high frequency radio systems. We both own and lease channels in transatlantic, transpacific, and Latin American area coaxial cables.

In terms of satellite operations, we provide, through the Early Bird, communication services with Europe, including television operation. With the support of ITT Federal Laboratories, we made possible live television coverage of the Project Gemini reentry and recovery operations through our transportable earth station abroad U.S. Navy aircraft carriers. These historic broadcasts have been witnessed by millions of American and foreign television viewers. I might add here, that our station is aboard the carrier Guam at this moment, and we hope to provide the coverage of the splashdown on Thursday.

Our company and other companies within the ITT system have been closely associated with space communications technology since its inception, both in terms of hardware and operations. The ITT Federal Laboratories' earth station at Nutley, N.J., was the first licensed by the FCC for experimental earth-space communications. Apart from providing the shipboard systems for the Gemini splashdown TV broadcasts, ITT transportable earth terminals are in use in the United States and abroad. ITT equipment has played an important role in the Relay, Telstar, Syncom, and Early Bird satellite programs. In addition, ITT has contributed much of the scientific instrumentation aboard the Nimbus, OGO, Ranger, and Snap space vehicles.

A further example of our commitment to the satellite communications field is the fact that our parent, ITT, is the second largest stockholder in the Communications Satellite Corp.—Comsat.

In short, we are dedicated to the advancement of satellite technology, the development of satellite communications, and the success of Comsat as the U.S. vehicle designated by Congress to develop the space segment of the global satellite communications system.

Despite our active interest in and support of the satellite program. however, we have been confronted with various activities and positions of Comsat which are of considerable concern not only to us but to the other international carriers as well. These problems primarily relate to the role which Comsat has played and that which, in our opinion. they should play in the provision of communications services in the international field. I shall cover this matter in more detail later on in my testimony, particularly with respect to the "authorized user” ques. tion and the award of a communications service authorization by DCA to Comsat for 30 Pacific satellite channels. At this point, I wish only to make our position clear—we fully endorse the FCC's polier decision regarding the use of the established carriers by Government entities to meet their satellite communications requirements.

Before getting into this subject and in order to bring the factual situation more sharply into focus, I should like briefly to describe the services my company provides to the U.S. Government and why it is that satellite communications are important, in fact vital, to our present and future operations.

SERVICES RENDERED TO THE FEDERAL GOVERNMENT

ITT Worldcom provides all classes of international record communications services to all subscribers; the U.S. Government, the Department of Defense included.

Over the years, our service offering and use by the Government has grown from traditional message transmission, through telex and standard leased circuits to broadband service utilizing full voice channel capability. Subscribers may use broadband circuits for either high-speed data transmission, including facsimile and photo reproduction, or a combination of high-speed data with alternate use of voice transmission.

At the present time, we are furnishing the Government with 36 broadband channels in the Atlantic, Pacific, and Caribbean areas. In addition, the Government is leasing 17 conventional circuits. At present rates the annual revenue from such leases is about $5 million and represents approximately 58 percent of our total leased channel revenues and over 13 percent of our total overall revenue. More than $3 million of this $5 million represents circuits leased to DOD. In 1962, revenue from leases to the U.S. Government was less than $1 million and constituted less than 5 percent of our total revenue.

Obviously, leased services have represented an essential area of growth in recent years for ITT Worldcom and for the industry as a whole.

They are a vital factor in maintaining profitable operation, and in fact, maintaining the international communications industry in a viable condition. Our experience is very similar to that of the other U.S. international record carriers and we should all be aware that the loss of revenues from leased services to the U.S. Government could be disastrous to the international record companies. FC('pointed to this serious problem in its recent authorized user decision.

OUR ROLE IN THE SATELLITE COMMUNICATIONS FIELD

Historically, ITT Worldcom and its affiliated and predecessor companies have provided the United States and its Western Hemisphere neighbors with cable and radio circuits interconnecting almost every point of the globe. Our first cable was between Galveston, Tex., and Veracruz, Mexico, in 1878. Our first transatlantic cable was laid in 1884. By 1928 we had approximately 50,000 miles of ocean cables between United States and Europe and throughout Latin America.

We were the first U.S. commercial company to provide radio telegraph service when a network between San Diego, Los Angeles, San Francisco, and Portland was opened in 1911. The following year we established the first commercial transoceanic radio telegraph service between San Francisco and Hawaii. Subsequently, we installed repeater systems in our telegraph cables to expand their capacity and expanded our high frequency radio facilities and operations throughout the world.

Since the late 1950's we have quickly converted our old cable operations to the new coaxial cables as they came into being. At the same time, we have kept pace with the development and use of VHF and UHF radio. In short, we developed, installed, and used each new

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