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statements and analyses of estimated costs or other evidence of reasonable value, be solicited from the maximum number of qualified sources.

ITT World Communications Inc. believes that it is uniquely qualified to provide the communications channels needed by NASA, and hereby proposes to fulfill such needs on an annual lease basis. It is requested that the same information and schedules supplied to Comsat be furnished to ITT World Communications Inc. so as to permit us to develop a firm cost quotation.

As you know, ITT World Communications Inc., as an international common carrier, for many years has been and is furnishing to various agencies of the United States Government, including NASA, leased channels for record, data and alternate voice data communications, as well as other common carrier communication services. These facilities and services are being provided over all types of existing communications media, including very high frequency, ultrahigh frequency, high frequency radio and submarine cables. We are confident that as a common carrier, we can provide essential overall systems operating services more reliably, more expeditiously and at lower costs, as a result of our long standing experience as an operating company in establishing conditioned and tested user-to-user configurations over a variety of communications media, and as a consequence of long term relationships with foreign communications entities evolved over the years in the course of day-to-day operation of communications systems. We believe that our extensive experience over half a century in rendering such services can provide valuable benefits to those who wish to use new communications media such as communications satellites for the purpose of establishing a dedicated international communications network.

In requesting that ITT World Communications Inc. be given an opportunity similar to that afforded to the Communications Satellite Corporation to submit a proposal covering the aforementioned communications requirements of NASA, we are confident that as a common carrier, we are better qualified to meet overall systems requirements, and that neither shortness of time nor other factors justify a "sole source" procurement from Comsat. Comsat is bound by statute to provide equal access to satellite communication channels to all communications car: riers as that term is defined in the act, and hence, its partial ownership and the control over such resources which such ownership would otherwise imply is not a basis which will support sole source procurement from it.

It must be noted that the Federal Communications Commission has pending before it a special inquiry entitled "On the Matter of Authorized Entities and Authorized Users under the Communications Satellite Act of 1962” (Dkt. No. 16058). Only the FCC is statutorily empowered to authorize Comsat to provide commercial services. One of the issues to be resolved by the Commission in the course of disposing of this pending matter is whether Comsat should be authorized as a matter of sound regulatory policy to deal directly with governmental agencies such as NASA. It would appear that neither the inquiry nor this particular issue will be resolved within a time frame needed to meet the communications requirements of the Apollo program.

On the other hand, as noted above, communications common carriers such as ITT are presently clearly authorized by the Satellite Communications Act to proceure channels from Comsat. Hence, to assure the procurement of these channels on a timely basis and avoid the delays inherent in regulatory proceedings, it is necessary to procure them from a communications common carrier.

Even though we are not in possession of the full set of data provided to Comsat, we have developed tentative plans as to the facilities, arrangements and services which ITT World Communications Inc. will supply to fulfill the requirements. These facilities, arrangements and services include, among other important items to be detailed in our full quotation, the following:

(1) ITT World Communications Inc. is in a firm position to establish arrangements with foreign entities which are planning to operate ground station facilities on Ascension Island, the Canary Islands and Carnarvon, Australia. ITT World Communications Inc. is further in a position to provide channel terminations at the east and west gateways to the United States and to secure channels from the gateways to the communications satellite from Comsat and from the International Consortium, thus assuming overall systems management, and providing one point of responsibility for NASA in an end-to-end, user-to-user communications network. We are informed that Comsat is prepared to launch the necessary satellites as part of the international global system contemplated by the Communications Satellite Act of 1962, and that it is confident that the Interim Committee of the International Consortium will approve this venture. We have received assurances from the governmental entities which will own and operate the ground station facilities on foreign territory that they will cooperate with us fully in the establishment of a communications network for NASA. As noted above, Comsat is required by statute to afford communications common carriers nondiscriminatory access to such a satellite system, and ITT World Communications Inc. is prepared to seek FCC authorization to acquire such channels on an expedited basis.

(2) ITT World Communications Inc. is in a position to establish alternate communication channels through submarine cable facilities for backup use or a primary basis. These channels will link Puerto Rico, Antigua and Ascension Island, and interconnect at Ascension Island with the South Africa-Ascension Island-Cape Verde-Canary Islands-Lisbon cable system recently announced. As you may be aware, the United States Air Force is presently planning to utilize this projected cable system to obtain a large bandwidth between Antigua and Ascension Island to satisfy missile range requirements for both the United States Air Force and NASA.

(3) ITT World Communications Inc. plans to establish an earth station at Puerto Rico, subject to FCC authorization. Puerto Rico at present is linked with the United States mainland by means of two submarine cable systems and a projected third system is planned for operation late in 1967. Puerto Rico, of course, will be a terminal on the aforementioned submarine cable linking Antigua and Ascension Island. In addition to the commercial submarine cable systems between the United States mainland and Puerto Rico, the existing government owned cable from Cape Kennedy to Antigua also transits Puerto Rico. This coordination of satellite and cable channels places Puerto Rico in a preferred position as the eastern gateway to the United States for land and space program communications. To expedite the availability of communications channels to NASA, ITT World Communications Inc. is prepared to establish the Puerto Rican earth terminal on an accelerated basis.

As soon as we receive the requested detailed information regarding the specific communications needs anticipated by NASA, we will undertake to prepare a formal quotation. Very truly yours,

B. B. TOWER

INTERNATIONAL TELEPHONE & TELEGRAPA CORP.,

Nero York, N.Y., September 29, 1965. WALTER D. SOHIER, Esq., National Aeronautics and Space Administration, Washington, D.O.

DEAR MR. SOHIER: Thanks once again for giving me the opportunity two weeks ago today to review with you the background of Mr. Tower's letter to General Starbird and the interests, both the public interest and that of ITT World Communications, Inc., which we feel are at risk in the proposed direct procurement by NCS of satellite channels from Comsat for use by NASA in the Apollo program. Your courtesy and patience are very much appreciated; the efforts which you and your associates made to explain how the matter appears from your side of the table were particularly helpful to me.

I have been mulling over one of the points which was made, the point that you at NASA are uniquely qualified to make sure that the system which is put together by Comsat is of the optimum configuration so that channels can be procured by NASA at the least possible cost consistent with desired performance and reliability levels.

As I said during our conversation, it is clear that there is no group which has more experience or is better qualified in the satellite communications field. ITT Worldcom recognizes these qualifications and believes that they should be used to assist Comsat in designing the proposed system. Indeed, these qualifications are recognized in the Communications Satellite Act itself. Thus, in section 201 (b), NASA not only is directed to consult with Comsat with respect to the technical characteristics of the communications satellite system, but also to assist the corporation in the conduct of its research and development program by providing not only satellite launching, but also associated services which, in the judgment of NASA, appear to be necessary for the most expeditious and economic development of the satellite system. NASA is also directed to advise the FCC on these matters prior to licensing of the system. In light of this

statutory mandate, it would appear that NASA could and should have the same major role in the determination of the characteristics of the satellite system and the costs of such a system, regardless of whether the telecommunication channels are procured by NCS or NASA directly from Comsat or through a common carrier such as ITT Worldcom.

We believe that the national interest would be promoted if the government continued to procure its telecommunications services from the established common carriers.

My recollection of our talk leads me to attempt again to explain one point which I made, that regarding the overall policy implications of direct government procurement from Comsat. It has long been recognized that the government's telecommunications business is vital to the good health of the nation's telecommunications industry. The importance of the Federal Government's international record telecommunications traffic, which now includes alternate voice data, to the international record carriers was concisely put in the 1951 report, "Telecommunications-A Program for Progress," issued by the President's Communications Policy Board, in the following terms:

“Federal Government agencies now decide, at something less than top level, the amount and type of record telecommunications matter that is to be transmitted to overseas or foreign points by means of facilities controlled by the Federal Government and established primarily for purposes of national defense. Too great a diversion is not conducive to the best health of the Nation's telecommunications networks.

“If our national policy recognizes the desirability of strong private American companies operating in the international telecommunications field, there must be some form of control to insure that a substantial amount of Government message business is handled by commercial agencies, so that the Federal Government does not, perhaps unwittingly and by unilateral action of independent agencies, bring about a total or partial collapse of commercial facilities by eliminating their largest customer-the Government * * *”

That government policy regarding the obtaining of communications services from common carriers rather than directly has remained the policy of the United States government should be clear from the following testimony of Mr. Webb before the Senate Committee on Commerce in 1962:

"Now let me add, Mr. Chairman, there is one other need that this Nation has. We have heavy commitments and heavy responsibilities all around the world. Some of these involve the deployment of our military forces, some involve the deployment of other agencies of the Government engaged in activities, such as foreign aid and many other types of relationships with other governments. The ability to have secure communications capable of doing the work needed by the agencies of the U.S. Government is very important. It is the policy of the Government to use the common carriers for this type of traffic wherever possible, so the total government, including our military services, does have a direct interest in the large expansion of communications capability which the satellite will make possible and also in the wide geographic coverage that can be achieved in this way more rapidly, more economically, than by any other means available to us-provided, Mr. Chairman, that it is proved possible to operate and use these satellites in the space environment over long periods of time, because each one is very expensive in itself, the launching, tracking, and all the other operations associated with it * * *.

"If the Government should need, let us say, 15 to 25 percent of the additional service provided here, then there would be a choice, I believe, among the common carriers as to how they routed that service. If they routed all of the Government service over the satellite system and all of the other serv. ices over the older system, this would produce one kind of situation. I think, Senator, that in some of the less traveled areas of the world, undoubtedly, the traffic generated by the interests of the Government will be very large proportionally to other traffic."

That the Federal Government is an extremely important user of all of the international record carriers is clear from the fact that the Federal Government is far and away the largest single customer which ITT Worldcom has had in the last several years. In 1965 it is anticipated that the revenues received for services rendered to the government will be approximately 10% of total revenues. As it is a common carrier with a public service obligation to provide service to all users, regardless of the relative unprofitability of serving some of them, ITT Worldcom is concerned that direct procurement from Comsat will "skim the cream,” that is, withdraw the support of the large

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volume of government traffic which, by bearing its proportionate share of ents jointly allocable to all services, makes a very large contribution to these costs because of the large volume. Loss of this support could require increases in rates to the other users in order to permit the carriers to cover those cans and earn a reasonable rate of return. Such increases in rates will inevitably discourage use, thus threatening an ever descending spiral of higher costs, reductions in service, higher rates, and lower use, which is just the reverse of what is in the public interest. On the other hand, greater overall use of the common carriers could lead to reduced costs for all users, including the government.

We recognize that the government is expressly singled out from all other use in that Comsat is empowered by statute to lease channels directly to governmental agencies ; however, there is still the question of whether the government should seek such channels directly as a matter of policy. It is an issue quite close to the issue of whether the government serves itself or secures its services from the common carriers since the same policy considerations apply. Thus, it was never intended that Comsat would be an ordinary common carrier serving all who need service, but rather that it would serve other carriers which hare such a public service obligation. The relationship between the carriers and Comsat was described by then Chairman Minow in the following terms in testimony before Congress on the measure which became the Communications Satellite Act of 1942:

** * * [T]he bill provides * * * that the new Corporation would be a common carrier within the meaning of the Communications Act. We feel that this is going to be a very unique carrier. It will not be rendering service directly to the public: it will be rendering service only to the other carriers. It's going to be an unprecedented kind of an entity.” And then later in a letter to Senator Mansfield, he wrote as follows:

"[U]nlike air, ground, and water transportation services, which compete in ihe same market, the satellite corporation and the carriers do not so compete. The market to be served by the corporation consists of the carriers who will use it facilities. The market to be served by the carriers will be the senders and recipients of communications traffic. The corporation will depend upon the carriers for its revenues; the carriers will depend upon the corporation for facilities. Thus, this will not be a situation in which one enterprise is motivated to control another enterprise in order to stifle competition, to the public detriment. On the contrary, the interest of the carriers will be in promoting the success of the corporation, thereby promoting their own success, with resulting benefits to the public."

That such a relationship should be established is only fair since the police of the legislation would appear to bar the entrance into the satellite field bs the carriers in competition with the global system Comsat is directed and author. ized to create. Direct procurement by NASA threatens to upset this balance change the relationship, and produce wasteful, unintended competition between the carriers and their supplier of satellite channels. It threatens particularly the economic vitality of the international record carriers and diminishes the possibility that these carriers will be able to offer to all users, including the government an increasingly competitive, attractive alternative to the voice mode in international communications.

I am sure you understand that we are not seeking to compete with Comsat for the opportunity to create the satellite channels, and we are not suggesting that NASA contract with ITT Worldcom to provide the hardware. Rather, we are suggesting that the government continue its long standing policy of securing its communications facilities from common carriers. We believe that such procurement of the communications network needed for the Apollo program can be carried out in a timely fashion and in accord with other policy needs and considerations. We think that such procurement will provide the government and NASA with needed communications services which cannot be secured from Comsat.

1 During our meeting I suggested that to the extent that NASA, itself, would provide communications services in addition to the supply of the satellite channels, such acting might not be in accord with the policy set forth in Bureau of the Budget Instruction 66-9 issued in 1959.

2 Hearings Before the Senate Committee on Commerce on S. 2814, 87th Cong.. 24 Sess p. 71 (April 11, 1962).

's Letter, dated July 26, 1962. from the Honorable Newton H. Minow to the Honorable Mike Mansfield, printed at 108 Cong. Rec. 14900 (1962).

Thank once again for your patience in letting me present these views, both in erson and in this letter. Very truly yours,

HOWARD J. AIBEL, Antitrust and Government Regulatory Counsel.

ITT WORLD COMMUNICATIONS INC.,

New York, N.Y., October 7, 1965. [r. BEN F. WAPLE, ecretary, Federal Communications Commission, Pashington, D.C. DEAR MR. WAPLE: We refer to your letter of September 28 regarding the letter

General Starbird of September 9, over my signature, in which you ask for full amplification” regarding certain "representations” made in the September letter. Discussions and correspondence with the overseas correspondents of this comany are continuous, as is true, we are sure, with respect to our competitors. uch recent discussions and correspondence in the past few months which have eference to the matters referred to in our letter of September 9 and yours of eptember 28 were and continue to be of an exploratory and preliminary nature, ot as yet, in our opinion, requiring a report pursuant to Section 43.52. As a esult of discussions which have been had with our overseas correspondents, we re confident that we are in a position to establish the arrangements referred to 2 my September 9 letter. However, those discussions were general in nature nd cannot properly be called “negotiations" within the meaning of Section 43.52. Tonetheless, and in view of your inquiry, we are pleased to summarize the bases or the statements you refer to in our letter of September 9.

In early June of this year, Mr. Hennings and I engaged in discussions in Sydey, Australia with executives of the OTC looking toward a subsequent agreerent for interconnection of the ITT World Communications Pacific cable system omplex with that of SEACOM (and COMPAC). These discussions were coninued in New York in mid-July. Communications via satellite was a topic of eneral discussion in these meetings. The present and future facility requireients of NASA (including those for the Apollo program) were discussed freely

the extent both of us had information. The OTC expressed its willingness nd desire, as a connecting carrier and partner, to meet us (ITT) with any and Il requirements we have or may have in the future with respect to NASA needs, s they may be awarded to ITT in the competitive U.S. market.

In mid-August of this year, Mr. Hennings and I engaged in discusions in Lonon separately with the BPO and C&W regarding matters of mutual concern nd interest. Important among these were possible plans in connection with the outh Atlantic cable systems including links between the Virgin Islands, Antiqua nd Ascension. In addition the plans for the establishment of an earth station [ Ascension were discussed. Requirements by NASA for communication failities, in this area, as we then understood them, played a part in these discusions. These discussions are continuing but have not yet reached the point for ore formal reporting to the Commission. During a trip which I made to Europe in August, I engaged in correspondence ther directly or through representatives, with officials in Spain particularly oncerning the then indicated requirement by NASA for its Apollo program for fcilities connecting with the Canary Islands via an earth station at that point. ssurance was received of cooperation by the Spanish operating entity in the rent that ITT was successful in receiving an award from NASA to meet its quirements. Thus, we believe that we are indeed in a "firm position to establish arrangeents with foreign entities which are planning to operate ground stations," as I ated in my letter of September 9 to General Starbird; however, we have not igaged in negotiations looking toward the establishment of such arrangements nd will only do so when we have the details of NASA's specific communications peds. When such negotiations are undertaken, we shall advise the Commission accord with Section 43.52. We trust that the foregoing amplification will satisfactorily reply to your letter September 28. Very truly yours,

B. B. TOWER.

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