volume of government traffic which, by bearing its proportionate share of costs 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 costs 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 users 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 have 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 1962: **** [T]he bill provides *** that the new Corporation would be a commen 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 unpre cedented 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 the 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 its 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.' 993 That such a relationship should be established is only fair since the policy of the legislation would appear to bar the entrance into the satellite field by the carriers in competition with the global system Comsat is directed and authorized 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 govern ment 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 provid communications services in addition to the supply of the satellite channels, such antimight not be in accord with the policy set forth in Bureau of the Budget Instruction 6: issued in 1959. 2 Hearings Before the Senate Committee on Commerce on S. 2814, 87th Cong., 2d Sess. p. 71 (April 11, 1962). Letter, dated July 26, 1962, from the Honorable Newton H. Minow to the Honorab Mike Mansfield, printed at 108 Cong. Rec. 14900 (1962). Thank once again for your patience in letting me present these views, both in person and in this letter. Very truly yours, HOWARD J. AIBEL, Antitrust and Government Regulatory Counsel. Mr. BEN F. WAPLE, ITT WORLD COMMUNICATIONS INC., Secretary, Federal Communications Commission, Dear Mr. WaPLE: We refer to your letter of September 28 regarding the letter to General Starbird of September 9, over my signature, in which you ask for 'full amplification" regarding certain "representations" made in the September O letter. Discussions and correspondence with the overseas correspondents of this company are continuous, as is true, we are sure, with respect to our competitors. Such recent discussions and correspondence in the past few months which have reference to the matters referred to in our letter of September 9 and yours of September 28 were and continue to be of an exploratory and preliminary nature, not as yet, in our opinion, requiring a report pursuant to Section 43.52. As a result of discussions which have been had with our overseas correspondents, we are confident that we are in a position to establish the arrangements referred to In my September 9 letter. However, those discussions were general in nature and cannot properly be called "negotiations" within the meaning of Section 43.52. Nonetheless, and in view of your inquiry, we are pleased to summarize the bases for 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 Sydney, Australia with executives of the OTC looking toward a subsequent agreenent for interconnection of the ITT World Communications Pacific cable system complex with that of SEACOM (and COMPAC). These discussions were coninued in New York in mid-July. Communications via satellite was a topic of general discussion in these meetings. The present and future facility requirenents of NASA (including those for the Apollo program) were discussed freely to the extent both of us had information. The OTC expressed its willingness and desire, as a connecting carrier and partner, to meet us (ITT) with any and all requirements we have or may have in the future with respect to NASA needs, as 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 Lonlon separately with the BPO and C&W regarding matters of mutual concern nd interest. Important among these were possible plans in connection with the South Atlantic cable systems including links between the Virgin Islands, Antiqua nd Ascension. In addition the plans for the establishment of an earth station t 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 more formal reporting to the Commission. During a trip which I made to Europe in August, I engaged in correspondence ither directly or through representatives, with officials in Spain particularly oncerning the then indicated requirement by NASA for its Apollo program for acilities connecting with the Canary Islands via an earth station at that point. Assurance was received of cooperation by the Spanish operating entity in the vent that ITT was successful in receiving an award from NASA to meet its equirements. 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 tated in my letter of September 9 to General Starbird; however, we have not ngaged in negotiations looking toward the establishment of such arrangements nd will only do so when we have the details of NASA's specific communications eeds. 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, NATIONAL COMMUNICATIONS SYSTEM, ITT WORLD COMMUNICATIONS, INC., DEAR MR. TOWER: Thank you for your letter of September 9th which offered the services of ITT World Communications to provide communications for National Aeronautics and Space Administration's Apollo Program. NASA requested that the Manager, NCS, initiate discussions with the Communications Satellite Corporation (COMSAT) on its behalf, to determine that corporation's capability and cost of meeting NASA's requirements for certain communications in support of the Apollo Program. Since the space segment of the system was the key element in meeting the NASA requirement, and since COMSAT is the only commercial carrier currently authorized to provide the satellites necessary for the space segment, it was felt that the interest of the Government would be best served by seeking direct arrangements with that Corporation for the system in accordance with NASA's request. It is assumed of course that the capabilities of ITT, and other com panies, will be considered in respect to the provision of related services. Proposals relating to these should be made to the COMSAT Corporation or NASA as appropriate. Sincerely, ALFRED D. STARBIRD, Lieutenant General, USA, Manager. OCTOBER 13, 1965. Mr. EDMOND C. BUCKLEY, Director, Office of Tracking and Data Acquisition, National Aeronautics and Space Administration, Washington, D.C.: In my letter to you dated August 6, 1965, we outlined to you a plan encom passing communications by submarine cables and by communications satellites in support of NASA requirements for the Apollo program. Part of this plaz was the establishment of a satellite earth station in Puerto Rico. This plan was referred to by Mr. Tower in his letter to General Starbird of September 2 In view of your accelerated schedule for Apollo circuits which will call for a satellite system by 1966 we are prepared to proceed forthwith to establish the Puerto Rico station to meet this schedule, first with portable equipment presently available and later with a permanent installation. The Puerto Rico station could handle the circuits from Ascension, Canary Islands, and the Atlantic and Indian Ocean tracking ships. From Puerto Rico to the mainland the circuits could be routed through available cable systems, such as the Air Force establishei cable between Cape Kennedy and Puerto Rico, the capacity of which is presently being enlarged. ITT proposes to establish the Puerto Rican earth station at no cost to the Government. ITT will quote to the Government channel lease costs as soon as charges for space segment utilization are made available by the International Satellite Consortium and by Comsat. An indication on your part of interest in this proposal would no doubt make these changes available to n at the earliest possible date. This proposal is subject to the FCC granting a construction permit for the Puerto Rico station and to the Commission approval of the channel lease rates I would appreciate an opportunity to discuss this proposal with you at your convenience at the earliest possible date. G. S. MAUKSCH, Director, Advanced Planning, ITT World Communications, Inc. NATIONAL AERONAUTICS AND SPACE ADMINISTRATION, Washington, D.C., October 20, 1965. Mr. G. S. MAUKSCH, Director, Advanced Planning, 1.T. & T. World Communications, Inc., New York, N.Y. DEAR MR. MAUKSCH: I have received your message of October 13, 1965, relati ing to your proposal to provide a communications satellite terminal at Puerto Rico to communicate with Ascension Island and the Canary Islands through a communications satellite. As General Starbird stated in his recent reply to Mr. Towers' letter of September 9, 1965, to which you refer in your message, *** the space segment of the communications satellite system is the significant element in meeting the NASA Apollo requirements. Since the Communications Satellite Corporation is the only commercial carrier currently authorized to provide the satellites necessary for the space segment, it was concluded that the Government's interest would best be served by seeking direct arrangements with the Corporation for a system which would be capable of fulfilling NASA's requirements. "Moreover, one of NASA's desires is in having communications from foreign stations reach the continental United States by the most direct means possible. The use of a satellite terminal in Puerto Rico would require additional cable links from that station to the United States." Accordingly, NASA has, at the request of the Executive Agent, National Communications System, entered into negotiations with the Communications Satellite Corporation to provide communications services from the United States to various foreign locations and to the Apollo tracking ships. The Corporation has, in turn, been discussing the foreign stations with their foreign partners in the International Satellite Consortium. Because of the extremely short time schedule for establishing this service, it is essential that these negotiations be carried out with the Corporation immediately. I thank you for your interest in this matter. Sincerely yours, EDMOND C. BUCKLEY, Director, Tracking and Data Acquisition. Mr. HOLIFIELD. Tomorrow we will have the FCC before the committee. The meeting stands adjourned. (Whereupon, at 12: 20 p.m., the committee adjourned, to reconvene at 10 a.m., on Wednesday, September 14, 1966.) |