that you were not personally informed as to the name of the protestant in your personal discussion only because at the outset of your discussion at the State Department you insisted that you not be told the name. Under the circumstances I must conclude that Comsat chose to remain officially ignorant while unofficially having full knowledge as to the background of the protest. I would like now to deal with the reason why ITT went to the State Department. As you know, officials of ITT have had a number of discussions with officials of Comsat over the last 2 years in which we outlined our great concern over Comsat's policy of refusing to recognize American carriers operating abroad and of insisting on dealing only with government agencies in countries where American private carriers had traditionally handled the international communications activities. As we have consistently pointed out, there is no requirement in the law that Comsat deal only with governments and, in fact, the law clearly recognizes that Comsat may deal with either governments or with private carriers abroad. Moreover, it is our understanding that the State Department expects Comsat to support the U.S. established carriers abroad as national policy. In addition to our discussions with Comsat officials, I outlined my concern over this policy at one of the early board meetings after I was elected a member of the Comsat board. Despite our protests, Comsat has continued its policy of dealing only with governments and has gone further in pointing out the availability of IADB and AID funds. It is clear that this not only runs counter to national policy but will have the effect of delaying the introduction of satellite communications in Latin America and of seriously jeopardizing the present investment of American carriers in this area. Your memorandum of January 20, 1966, entitled "Corporate Policy on International Contacts" does not in any way ameliorate the situation. As you know, we as well as yourself and all other international carriers were invited to appear before the Inter-Governmental Committee. In the course of that discussion, we pointed out, as we had previously in our many conversations with Comsat officials, that Comsat's activities abroad were endangering our investments and our long-time franchises in a number of countries. At that time Mr. Price of the State Department requested that we advise him of any specific situations which might arise in the future where we felt Comsat's activities were so endangering our operations. Prior to the time your representatives visited the Philippines, we briefed your staff fully on our position in the Philippines and the activities we were then engaged in to get a satellite ground station in operation. Before your representatives visited the Philippines we had agreement by the Public Service Commission on our proposal both under the old government and reaffirmed by the new government. After your representatives' visit we were advised by the Government that they wished to reopen the matter as they were then thinking in terms of a Government operation. Since your people choose not to deal with American carriers operating abroad we, if course, have no way of knowing precisely what was said to the Philippine Government that brought about this result. However, in our view, it is the result that counts. Without going into great detail here, I can also state that we have had similar results in Latin American countries where we have old, long-term international franchises and have substantial investment which would be imperiled by Government ownership. In this connection we have been informed repeatedly that your representatives have indicated availability if IADB and AID financing to Governments where private companies have offered to install ground stations to upgrade their present communication facilities. Mr. Price told Mr. Aibel that Embassy reports on the Comsat visit to the Philippines disclosed that Comsat representatives suggested that funding for earth stations could possibly be secured from AID. I think you should be aware, if you are not already aware, that it is contrary to U.S. Government policy for either AID or the IADB to loan money where private capital is available as it has been in each of the cases where American carriers are now operating abroad. I must say in all candor, Jim, that I am at a complete loss to understand Comsat's insistence on the continuation of a policy which cannot possibly help Comsat and very likely will harm American investment abroad. However, so long as this policy is continued, we will be forced to take such action as we can in order to minimize the harm to our position. Sincerely, T. B. WESTFALL. DEFENSE COMMUNICATIONS AGENCY, Mr. JOSEPH J. GANCIE, Vice President, ITT World Communications, Inc., DEAR MR. GANCIE: Your letter of February 24, 1966, to Admiral Boyle concerning commercial satellite service reveals a possible misunderstanding which should be clarified. Your statement that you now understand that DCA has inquired only of Comsat for channels because DCA has been so directed by higher authority does not accurately reflect the situation. The inquiry to Comsat concerning the provision of certain communications services is in accord with the current practice of obtaining international communications service from the carrier providing the transoceanic segment of that service; requiring that carrier to insure the technical sufficiency of the channel and to make necessary arrangements with the foreign correspondent. There are significant operational and administrative advantages which accrue from this practice. In summary, the DCA was not directed to secure satellite channels solely from Comsat but was merely following its longstanding practice with respect to international circuits. Sincerely, LEE M. PASCHALL, Colonel, U.S. Air Force, Assistant Director, Rear Adm. F. D. BOYLE, ITT WORLD COMMUNICATIONS INC., U.S. Navy, Deputy Director, Communications Satellite Project Officer, Defense Communications Agency, Washington, D.C. DEAR ADMIRAL BOYLE: Thank you very much for affording us the opportunity on February 11 to discuss with you and your associates the requirements of the Defense Communications Agency (DCA) for satellite channels to and from the Philippines and to and from Thailand. We sought that opportunity solely because, as a common carrier serving the needs of DCA for communications channels, as well as other needs, we believe we are in a position to supply the desired satellite channels. We were concerned over the fact that we had not heard directly of requirements for satellite channels. ITT World Communications had learned of this need only indirectly from Comsat. It is now understood, as you explained, that inquiry was made by DCA only of Comsat because DCA has been directed by higher authority to secure satellite channels solely from Comsat. As you know, ITT World Communications stands ready to serve such needs and would welcome an inquiry should such instructions change. Thanks once again for your courtesy. Sincerely yours, JOSEPH J. GANCIE, Vice President. COMMUNICATIONS SATELLITE CORP.. HOWARD J. AIBEL, Esq., Antitrust and Government Regulatory Counsel, International Telephone & Telegraph Corp., New York, N.Y. DEAR MR. AIBEL: Please refer to your letter to me of March 25 concerning principally a letter from Mr. John T. Griffith of Comsat, to Mr. Rodriquez, Chairman, National Economic Council of the Philippines Government, dated February 28, 1966. As you are no doubt aware, Mr. Griffith's letter was brought to my attention by Mr. Westfall after the last meeting of our board of directors, with the request that it also be brought to the attention of Mr. McCormack. As Mr. Westfall is aware, Mr. McCormack was leaving on the weekend immediately following the Friday board meeting for Europe. Accordingly, it was not possible for Mr. McCormack to communicate with Mr. Westfall with reference to the letter prior to his departure. I have no doubt that he will talk with Mr. Westfall after his return, which we expect will be about April 11. Your letter repeats at length a point of view which has been previously expressed with respect to the nature of our activities abroad, and continues to reflect a substantial misunderstanding on the part of ITT as to such activities. In view of the repeated explanation of the approach which has been taken by Comsat representatives abroad in encouraging satellite communication, I see no point in further discussion of this subject by letter. DEAR MR. THROOP: It has appeared to us at ITT that Comsat has embarked upon a course designed to interfere with and disrupt long existing franchises and other advantageous relationships with foreign governments in many of the developing areas of the world pursuant to which ITT has and does offer to provide international telecommunications services to and from those lands. Further, since Comsat's conduct does not appear to be directed to the promotion of its own business, but rather, directed to the disruption of our business through promoting government ownership and operation of international telecommunications facilities in derogation of our existing franchises, the propriety of Comsat's action, to say the least, is obscure. The impact of Comsat's activities has been greater than otherwise would have been the case if Comsat were a more conventional commercial enterprise. Since Comsat's representatives may call on foreign governments as an instrumentality of the Government of the United States in connection with participation by those foreign governments in Intelsat, Comsat's representatives appear to be cloaked with a special status. It has appeared to us that, at the very least, the limitation of the official mission of Comsat's representatives has not been made clear to many foreign governments, with the result that conversations which go beyond participation in the space segment consortium appear to be similarly suggestions of the U.S. Government. In such a context, discussion of the possibility of Government ownership of ground stations takes on special significance to a foreign government. We believe that Comsat has a special duty to avoid even the appearance that the U.S. Government or Comsat encourages Government ownership and in fact, should promote the ability of American-owned companies to continue to serve in those lands. We have suggested that the interests of all would be served if in those instances where American-owned companies are franchised carriers serving the country, representatives of those companies were invited to participate in Comsat's meetings with the governments in those lands. Since this suggestion has been rejected, we have no direct knowledge of what has been said by Comsat's representatives at those meetings. However, we have received reports from time to time that suggestions have been made by Comsat's representatives which, in these circumstances, make it appear that Comsat actively promotes such government ownership in derogation of the existing carriers' position. For instance, we have been told that it has been suggested that AID funds or international bank financing might be available to fund a governmentally owned station, and that two governments were offered the use of transportable earth stations owned by Comsat for use prior to completion of construction of permanent facilities owned by the governments. As I said earlier, we have no direct knowledge of what was said; however, we do know from direct experience that the effect of Comsat's visits has been to delay us in our efforts to install ground stations. Our protests and complaints have been met by your associates with vehement denials that they have in any way encouraged government ownership and opera tion of international telecommunication facilities in preference to ownership by private entities. It was therefore with surprise and dismay that I read a copy of a letter recently forwarded to me which purports to be from Mr. John T. Griffith, Pacific-Asia supervisor, Communications Satellite Corp., which is addressed to Mr. Filesion Rodriquez, Chairman, National Economic Council, Republic of the Philippines, Manila. In his letter Mr. Griffith states the following: "The [Comsat] team will have to reach an understanding with your entity— the Public Works and Communications Department-for the charges that will accrue from providing service commencing in 1967 to our customer, the U.S. Government, through a Philippine earth station using the Pacific Intelsat satellite. The understanding would cover revenues mutually agreed upon for the years 1967, 1968, and 1969 to the Philippine earth station for the level of channels which I described to you in our earlier conversations. This understanding will then be used in Comsat negotiations with our customer, the U.S. Government, for a contract for these *** [illegible]. Subsequent to this contract execution, Comsat will execute a formal contract with your Philippine Government entity, preserving the features contained in our memorandum of understanding, which we hope to arrive at by March 5, 1966." As noted in the excerpt set forth above, communications services sought by Comsat from the Philippine Government are to be provided to the U.S. Government. For your convenience, a copy of this letter which, unfortunately, is not entirely legible, is enclosed. As perhaps you know, the Public Works and Communications Department of the Philippines is not, and has not been engaged in the providing of international telecommunications services to and from the Philippines. Such services are currently provided by an ITT company, by RCA communications, and by the Philippines Long Distance Telephone Co., a company affiliated with the General Telephone System. It therefore certainly is extraordinary that Comsat would be seeking a quotation from a Philippine Government entity not presently engaged in rendering such services in preference to the American companies currently providing such services. I thought that you might like an opportunity to make some comment or explanation. Very truly yours, HOWARD J. AIBEL, (COPY) Mr. FELISION RODRIQUEZ, Chairman, National Economic Council, Republic of the Philippines, Manila. COMMUNICATIONS SATELLITE CORP., DEAR MR. CHAIRMAN: Preliminary to our meeting on Wednesday, March 2, 1966, I am forwarding the following information to you so that you may have background of what I plan to discuss. This will afford you time to seek answers, if required. As a follow-on to your response to my request during our last meeting on Friday, February 21, 1966, the Comsat team from Washington will arrive in Manila on March 1, 1966. The team is composed as follows: Mr. Lewis Meyer, treasurer, Comsat. Dr. Hans Wiess, ground station engineer and Comsat technical representative. Mr. George Lawler, manager, marketing, and operations representative. The team will have to reach an understanding with your entity-the Public Works and Communications Department-for the charges that will accrue from providing service commencing in 1967 to our customer, the U.S. Government, through a Philippine earth station using the Pacific Intelsat satellite. The understanding would cover revenues mutually agreed upon for the years 1967, 1968, and 1969 to the Philippine earth station for the level of channels which I described to you in our earlier conversations. This understanding will then be used in Comsat negotiations with our customer, the U.S. Government, for a contract for these [illegible]. Subsequent to this contract exe cution, Comsat will execute a formal contract with your Philippine Government entity, preserving the features contained in our memorandum of understanding, which we hope to arrive at by March 5, 1966. You realize, of course, this must be done soon so that Comsat and the U.S. Government can commence the contract negotiations not later than April 1966. It would be most helpful if your entity-the Department of Public Works and Communications could have the necessary personnel available for meetings which should commence early on Wednesday, March 2, 1966. Details of a lease of the Comsat transportable station for 1967 are of importance also, if the Philippine Government intends to use this facility. Since the channels the U.S. Government desires in the Philippines must be distributed to the NCS-DCA [illegible] on Clark Air Force Base, [illegible] for such distribution must also be available. I would appreciate your letting me know, as soon as possible, the time and place where our discussions will take place so that I may have our team ready to commence on schedule. We must be prepared to go to Bangkok, Thailand, early in the week of March 7, 1966. I may be reached in care of Mr. Dawson Wilson, U.S. Embassy, telephone 5-80-11, extension 396, or at room 254, Manila Hotel. Sincerely, Mr. JOSEPH J. GANCIE, JOHN T. GRIFFITH, DEFENSE COMMUNICATIONS AGENCY, Vice President, ITT World Communications, Inc., DEAR MR. GANCIE: I am in receipt of your letter of August 24 in which you request a copy of the CSA executed by DCA and Comsat for communications satellite service in the Pacific. You state as your reasons for the request the existence of the assignment clause in the CSA and the possibility of the FCC and Congress requesting from you an analysis of the conditions of the CSA. As you are aware, the assignment clause existing in the CSA was a matter of discussion 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. Its purpose and legality were testified to by the DCA witnesses. Accordingly, your conclusion that the clause "remains nebulous and apparently without reference to authority guidelines" does not appear supportable. Your further conclusion that you are unable to respond to the FCC and to Congress as to whether you understand and accept the conditions of the CSA, is also noted. Since the Government is not at this time considering an assignment of the CSA, your concern as to whether you understand or accept the conditions of the CSA is premature. It would appear, therefore, that your response to the FCC and the Congress, should you be asked, would be to this effect. Further, it should be noted that the FCC and the Congress have a copy of the CSA and therefore are already aware of its terms and conditions. For the above reasons, the public release of the CSA at this time would not appear to be justified. Sincerely, LEE M. PASCHALL, Chief, DCS Programs and Requirements. INTERNATIONAL TELEPHONE & TELEGRAPH CORP., New York, N.Y., July 13, 1966. Gen. JAMES D. O'CONNELL, Director of Telecommunications Management, DEAR GENERAL O'CONNELL: Over the course of the last week or so, several reports have appeared in the press that you had written to the Federal Communi |