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 policy 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. FCC 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

media of record communications as the art progressed, investing many millions of dollars in the process.

The point that we are making here is that our company, as well as the other established international communications companies. have seen many changes in communications techniques and developments over a great many years. In this same timespan we have continued to provide a vital public service. We have kept pace with these developments and have been an integral part of them. The development and use of new media of communications are part of the normal growth of communications companies and the new medium of satellites cannot be considered a thing apart.

Therefore, we view, as important objectives, the integration of these new communications satellite services with the communications services provided through other media such as the coaxial cables and high frequency radio, and the maintenance of all such facilities on a supplementary and complementary basis, in an economically sound condition.

We became involved in satellite communications technology in its earliest days from both an engineering and an operational standpoint. I have already commented on our participation in the various satellite projects and have stressed our active interest in technical development of the satellite field.

Apart from the technical aspects, we participated in the ad hoc committee established by the FCC to determine the proper structure for the future development of commercial satellite communications. When Congress determined that communications satellite development on a global scale should be in the hands of a new corporation, ITT supported the new vehicle by providing more than 10 percent of the original capital.

What I have said about our company and its role in communications is true generally of all the carriers in the industry. Together, the carriers have advanced the communications art to the level we enjoy today. The record is clear that over the years the industry has served the best interests of the Nation in war and in peace. At the same time, the industry has provided good wages and jobs for millions of workers and an adequate return on their investments to hundreds of thousands of shareholders.

RELATIONSHIP WITH COMSAT

With our very substantial investment in Comsat and knowing that this new medium of communications, the satellite, will do much to meet the needs for expanding global communications requirements, we are fully in support of Comsat in its mission of creating an operational commercial global satellite system at the earliest possible time.

However, as we have indicated earlier, we do have serious concern as to some of the activities and postures of Comsat which go far beyond the role for which that corporation was designed.

We feel, in fact, that these actions threaten the viability of the existing general public service international carriers.

One of the outstanding problems is Comsat's effort to acquire a monopoly of satellite earth stations in the United States. Congress accorded Comsat a monopoly in the U.S. interest in the space segment of the satellite system but reserved the question of earth station owner

ship and operation to the regulatory judgment of the FCC. We have indicated earlier that the satellite system is an alternate and complement to existing communications facilities and have expressed our belief that the general public service carriers must have a direct interest in satellite facilities as an extension of their existing operations.

As the committee knows, the FCC, by interim decision, awarded the initial three ground stations temporarily to Comsat. The issue is again before the FCC through conflicting applications which are currently the subject of meetings between the common carriers, including Comsat. The effort is to find an acceptable compromise basis to permit rapid development of the satellite system through the establishment of a needed ground station.

The second major issue between Comsat and the carriers is the question of "authorized user" which has been aired at length before the committee. This question is of paramount importance to all the carriers.

Before we get into the specific problem of the 30 Pacific circuits, I would like to summarize briefly our position with respect to the Commission's "authorized user" decision. As I have stated, we strongly support the Commission's position as a matter of governmental policy. The subject has been thoroughly briefed before the FCC by many parties speaking for governmental agencies, the common carriers and large users of communications facilities. The record before the Commission is, I am sure, available to this committee and the principles involved have been discussed in prior testimony. I do not propose to go into detail with respect to the legal arguments which have been advanced.

First of all, it is quite apparent that Comsat was not designed to fulfill the role of a general public service communications carrier. Comsat has no charter right to operate by modern cable or to use other forms of radio communications. We believe that Comsat was designated to be a common carrier's common carrier and not a competitor of those carriers which have a responsibility to serve not only the Government but all users through all available media.

Furthermore, as we have indicated, the Government services and the revenue from such services are of critical importance to the general public service carriers. To deprive those carriers of revenues from such governmental communications services would seriously and adversely affect both the carriers and the existing global communications network of which they are a part. It would impair their competitive capacity rather than maintaining and strengthening competition as Congress intended. It would, in fact, diminish their ability to provide real support to the establishment of the satellite system. We have therefore, consistently opposed and will continue to oppose Comsat's efforts to serve large users directly, including the U.S. Government.

Surely, Congress did not intend to discriminate in favor of one group of shareholders to the detriment of another group. Comsat has some 175,000 stockholders, investing $100 million. The carrier industry, on the other hand, has over 3.3 million shareholders in companies with activities in excess of billions of dollars.

We agree with the Commission that there may be instances of unique and exceptional circumstances in which the general service public carriers may not be equipped or prepared to provide a particular

service to the U.S. Government which is in the national interest, but we insist that Comsat's role in serving the Government directly should be so limited.

We do not believe that Congress intended to disenfranchise the established carriers by enactment of the 1962 Satellite Act, nor do we believe it contemplated the replacement of existing facilities by satellites. Here, again, I emphasize the fact that the satellite is simply another development in the communications art which cannot be isolated from other media to communications. To be effective and to contribute fully to the art, the satellite system rather must be integrated with existing and future systems.

The record before you shows a consensus of view, both on the part of the communications industry and the U.S. Government users and agencies that integration of satellites with existing systems is essential in the national interest; further, that it is imperative to our defense needs to maintain existing forms of communication by means of cable and high frequency radio. The satellite, glamorous as it is, is not the "end-all" in the development of communications media. There will be new types of very high-capacity coaxial cables in the future and we are not far from the use of laser communications.

In the light of the expressed need of the U.S. Government and particularly, DOD for alternate and supplementary media of communications, it would be most shortsighted for the U.S. Government to deal directly with Comsat at the expense of the general public service carriers. Comsat has nothing to offer except satellite circuits and has no responsibility for maintaining alternate media. On the other hand, the general service public carriers do provide cable facilities, satellite channels and high frequency radio.

We must, therefore, strongly object to the position which has been taken by the U.S. Government agencies in the 30-Pacific-circuit situation. The committee has been advised of the initial DOD approach to those 30 circuits on the basis of Comsat being a sole source and the fact that it was months after Comsat had negotiated for such 30 circuits with DCA and entities abroad that the general public service carriers were officially brought into the picture. In this connection, I would like to make part of the record a letter of August 30, from Mr. Westfall to General McCormack, which relates to the sequence of events in the 30-circuit problem. I won't bother to read from the letter. The letter is rather lengthy. It is about an eight-page letter. but it spells out, item by item, just exactly what happened, and much of this has already been put in the record.

Mr. HOLIFIELD. Without objection, it will be considered for the record. Do you have copies of it that you might pass up?

Mr. TOWER. The committee has been served copies and counsel have been.

Mr. HARTMAN. We have more here if you need it.

Mr. HOLIFIELD. It is appended.

(The letters referred to appear at the end of Mr. Tower's testimony.) Mr. TOWER. It is appended, yes.

Our company had been trying for some months to interest countries in the Pacific, including the Philippines and Thailand, in the establishment of earth stations to support the satellite system. In fact. we submitted proposals for such stations, but at that time we had no specific requirements to stimuate a sense of urgency on their part.