jeopardize longstanding rate structure practices by which the carriers have maintained uniform charges for communications service of like quality and reliability without regard for differences in the types of facilities that are employed to furnish the service. By such practices. carriers have been able to predicate their rates upon the composite or average costs of the total mix of their facilities. This practice has promoted the improvement and expansion of service by encouraging carriers to modernize their plant promptly with reasonable assurance that their investments in existing plant will not be unduly affected. The Commission concluded that under the congressional mandate that the benefits from the new technology inure to the benefit of all the using public, it should adhere to the uniform rate approach. Otherwise, it ran a real risk that the international rate structure would be converted into a pattern of disparate rates, with one level of rates applicable to foreign points which can be served via satellite because of the availability of ground stations at those points, and with another higher level of rates applicable to those foreign points served by terrestrial type facilities. As the Commission also indicated in its memorandum opinion, a separate schedule of rates would probably not benefit even that small group of users which could take advantage of low charges for leased services furnished directly by Comsat via satellites. Certain of these users, such as the Government, require leased facilities to points not served by satellites. They also require submarine cable or radio facilities to points served by satellites for reasons of diversification. In addition, they have heavy requirements for message telephone, message telegraph and Telex services. Under the existing rate approach. by which the carriers predicate their charges upon the average or composite cost of all types of facilities, any satellite economies would be reflected in the rates for leased services whether furnished by cable or satellite. It could also make possible reductions in rates for messagetype services. Thus, for the legal and policy reasons I have briefly discussed, the Commission concluded that Comsat may not serve any noncommon carrier until it has secured appropriate authorization from the Commission and, as a corollary, until the Commission has fixed the terms and conditions under which Comsat may be licensed to furnish such service directly. In the implementation of this policy, the Commission will require a showing that the requirements of particular users are of such unique or exceptional nature that such requirements cannot be satisfied by the conventional carriers. In the case of the Government. Comsat will be authorized to furnish service directly to it, whenever there is a showing that the direct service is required to meet unique or exceptional Government needs or is otherwise required in the national interest, in circumstances where those needs cannot be effectively met under the carrier's approach. The Commission emphasized in its authorized user decision that in all cases where national interest circumstances warrant, it would act promptly to authorize Comsat to provide service directly to the Government at just and reasonable rates. In the past week, Comsat filed with the Commission an application for authority to furnish 30 satellite channels directly to the Government. The Commission will act upon that application in accordance with the policies enunciated in its memorandum opinion, subject, of course, to any change or modification thereof that may result from its action on the pending petitions for reconsideration. As yet, interested carriers have not yet had an opportunity to comment on the application. When such comments are received, the Commission will give them, as well as the advice of the DTM, appropriate consideration in connection with its disposition of the application. Indeed, I wish to emphasize that on this and other similar important matters, we will continue to follow our policy of maintaining close coordination with interested Government agencies, and particularly the DTM. You will appreciate that any definitive comments by me on this application are thus inappropriate and indeed impossible at this time. I would like to point up one other recent development in this area. ITT World Communications just recently filed application for authorization to lease satellite channels from Comsat in order to provide the services required by DCA to Japan, Thailand, and the Philippines. The application is pending comments from other carriers and interested persons. In the application there is a showing by ITT as to rates it proposes to file in the event that it is granted the authorization requested and DCA orders the leased channels from ITT. Those rates would apply to all leased channel circuits of ITT to the Pacific points involved, whether furnished via cable or satellite, and are substantially below the currently applicable rates of ITT. Implementation of the proposed services and rates would result in substantial savings to all users, including the Government. The other international carriers have also advised the Commission of their intention to file substantial rate reductions if the carriers, rather than Comsat, were to be awarded the contracts to provide service to the Government. This concludes my prepared statement, Mr. Chairman, and I hope it has been helpful in setting forth the Commission's responsibilities and actions in this area. (The text of the public notice and decision on the authorized user issue follows:) FEDERAL COMMUNICATIONS COMMISSION, FCC 66-563-84980 Public Notice-C COMSAT MAY FURNISH SATELLITE SERVICES AND CHANNELS ONLY TO OTHER COMMON CARRIERS EXCEPT IN UNIQUE CIRCUMSTANCES The Commission announced today that other than communications common carriers-persons and entities, including the U.S. Government, may obtain telecommunications channels or services directly from the Communications Satellite Corp. (Comsat) only in those instances where appropriate authorization has been issued by the Commission upon a finding that there are unique or exceptional circumstances warranting such authorization. The Commission reached this determination at a special meeting relating to its proceeding, In the Matter of Authorized Entities and Authorized Users Under the Communications Satellite Act of 1962 (Docket No. 16058). In reaching its decision, the Commission considered the provisions of the Communications Satellite Act of 1962, its legislative history and the various briefs and comments filed in the proceeding. The Commission concluded that, in keeping with the intent of Congress, Comsat, which was established pursuant to the act, was to have as its principal operating function the furnishing, for hire, of communication satellite channels and services to communications common carriers, who in turn would employ such facilities to furnish service to the public and the Government. The Commission further concluded that it would be in derogation of the policy of the act, destructive of fair competition, and incompatible with the maintenance of a sound commercial telecommunications system for Comsat to compete with carriers that are required to secure international circuits from it in furnishing communications services to the public and the Government; and, therefore, that Comsat should be limited to furnishing services to others than carriers in only those cases where there are unique or exceptional circumstances warranting the authorization. The Commission noted that the Communications Satellite Act permits Comsat to contract with authorized users, including the Government, for the services of the satellite system. The crucial question to be determined, therefore, is how and under what circumstances such contracts may be entered into. In this connection, the Commission noted that a controlling factor is the express policy of the act that the Commission should "insure that any economies made possible by a communications satellite system are appropriately reflected in rates for pub lic communication services." The Commission believes that if the Government or others were to obtain all services and, particularly, individual channels or groups of channels in the satellite system, without any restrictions, directly from Comsat, there would be serious adverse effects upon the well-being of the commercial telecommunications industry and the general public it serves. Thus, the Commission pointed out that because the Government is a principal source of overseas traffic and revenues to the common carriers, substantial diversion of Government telecommunications business to Comsat could seriously jeopardize the viability of those carriers who are expected to maintain and operate an efficient network of both cables and satellite circuits serving the general public at reasonable rates. Accordingly. it will be the policy of the Commission to authorize Comsat to furnish the services in the system, or to lease channels directly to the Government only when it is clearly established that there are unique and exceptional circumstances. A current example of such circumstances is the authorization given to Comsat to provide the services of a specially created system directly to the Government to meet the unique needs of NASA's Apollo program. The Commission also announced that, in furtherance of the aforementioned statutory policy with respect to rates, it expects the common carriers promptly to give further review to their current rate schedules and file revisions which fully reflect the economies made available through the leasing of circuits in the satellite system. Failure of the carriers to do so promptly and effectively, the Commission stated, will require the Commission to take such actions as are appropriate. The Commission made this announcement in advance of issuing the text of its formal decision because of the great importance of this matter and the desirability of early clarification which it deemed to be in the public interest. Adopted: June 23, 1966. BEFORE THE FEDERAL COMMUNICATIONS COMMISSION FCC 66-677 86505 In the matter of authorized entities and authorized users under the Communications Satellite Act of 1962 Docket No. 16058 MEMORANDUM OPINION AND STATEMENT OF POLICY By the Commission: Commissioner Johnson not participating. PRELIMINARY STATEMENT 1. During April, May, and June 1965, the Commission received requests from several concerns (including press wire services, a newspaper, a television network, and an airline) for information regarding procedures to be followed in order that such concerns might be authorized to obtain satellite telecommunication services directly from the Communications Satellite Corp. (Comsat). On May 28, 1965, Comsat forwarded to the Commission its initial tariff, offering channels of communication via satellite to communications common carriers only. In an accompanying letter of transmittal, the corporation stated that in the event that any other entities, foreign or domestic, were to be authorized to obtain channels directly from Comsat, it would expect to supplement its tariff to provide for the offering of such channels. 2. On June 16, 1965, the Commission issued a notice of inquiry stating that the foregoing developments presented issues concerning the extent to which, as a matter of law, entities in the United States other than communications common carriers can be authorized, under the Communications Satellite Act of 1962 (Satellite Act), to obtain telecommunication services directly from Comsat; the extent to which, as a matter of policy, such entities should be authorized to obtain services; the nature and scope of such services; the type of entities which may be deemed eligible to obtain the services; the nature and extent of the authorization required; and the policies and procedures which the Commission should establish to govern applications for such authorization. 3. Legal briefs and comments were received on or before November 1, 1965, from Aeronautical Radio, Inc. (ARINC) and the Air Transport Association of America (ATAA), filing jointly; the American Telephone & Telegraph Co. (A.T. & T.); the Columbia Broadcasting System, Inc. (CBS); the Communications Satellite Corp. (Comsat); the Administrator of General Services (GSA); the G.T. & E. Service Corp. (G.T. & E.); the Hawaiian Telephone Co. (Hawaiian); the International Business Machines Corp. (IBM); the International Educational Broadcasting Corp. (IEBC); ITT World Communications, Inc. (ITT); Merrill Lynch, Pierce, Fenner & Smith, Inc.; the Communications Committee of the National Association of Manufacturers (NAM); United Press International, Inc. (UPI); the United States Independent Telephone Association (USITA); Western Union International, Inc. (WUI); and the Western Union Telegraph Co. (WU). 4. In addition to the briefs and comments received from the above listed parties, general comments or statements were received from American Broadcasting Co., Inc. (ABC); the American Communications Association (ACA); the American Newspaper Publishers Association (ANPA); the American Petroleum Institute (API); the American Trucking Association (ATA); the Associated Press (AP); the Communications Workers of America, AFL-CIO (CWA); Dow Jones & Co., Inc.; Eastern Airlines, Inc.; RCA Communications, Inc. (RCAC); and the Washington Post Co. (the Post). 5. On or before January 3, 1966, reply comments were received from ARINC and ATAA filing jointly; A.T. & T.; the Association of American Railroads (AAR); Comsat; GSA; Hawaiian; IBM; ITT Worldcom; RCAC; WUI; and WC. 6. An analysis of the briefs, comments, and reply comments indicates that the filing parties have focused primarily on the initial question of the notice of inquiry, i.e., the extent to which, as a matter of law, entities in the United States other than communications common carriers may be granted access to the facilities and services of Comsat. The second point to which attention was given is the question of policy relating to noncarrier access to the satel lite system directly through Comsat. Relatively few parties addressed them. selves to the questions of the nature of authorized entities, the nature and scope of authorized services, and the policies and procedures to be adopted by the Commission for handling and disposing of applications for authorization of direct access to the satellite system. 7. We shall discuss first the basic legal questions raised and then the policy issues. However, the two are interrelated and aspects of policy are necessarily developed in the ensuing discussing of the legal issues. BASIC LEGAL ISSUES 8. The critical question is the extent to which the Satellite Act contemplates, permits, or requires that Comsat be authorized to provide service directly to entities other than carriers. In general, respondents to our notice took one of the following positions: (a) The terrestrial carriers allege that the Satellite Act does not con template or permit Comsat to be authorized to provide service to any noncarrier entity, with the possible exception of the Government; (b) The noncarrier entities allege that the act contemplates that Comsat should be permitted to provide service to them and that the Commission should issue authorizations upon appropriate findings that the particular service sought would be in the public interest; (c) The Administrator of General Services (GSA) alleges that Comsat is authorized by the Satellite Act to provide service directly to the Government without restriction or limitation whenever the Government desires to take such service; (d) Comsat alleges that it should provide service to noncarriers when (i) the carriers fail to provide a requested service via satellite although capacity is available; (ii) there is a need for development of technology or provision of new satellite services and then only during the early de velopmental stage; and (iii) in which and any other case there is a finding that the public interest would be served by the authorization. Comsat also took the position that it is authorized by the Satellite Act to provide service direcly to the Government in any instance when the Government requests service. * * "" 9. We note that the term "authorized users" appears twice in the Satellite Act. The first time is in the section setting forth the policy and purpose of the act where, among other things, it is declared that "It is the intent of Congress that all authorized users shall have nondiscriminatory access to the system**** (sec. 102(c)). The second time is among the powers and purposes of Comsat when it is stated that Comsat is authorized "to contract with authorized users including the U.S. Government, for the services of the communications satellite system (sec. 305(b) (4)). Reference is also made to another term "authorized entities" in section 305(a)(2), which states that Comsat may "furnish, for hire, channels of communication to U.S. communications common carriers and to other authorized entities, foreign and domestic * * *" Neither the term "authorized user" nor "authorized entity" is defined in the Satellite Act, nor is the use of the different terms, "channels of communications" in 305 (a) (2) and "service of the communications satellite system" in section 305(b) (4), explained in the act or the legislative history. In addition to those terms the Satellite Act makes reference to "authorized carriers," particularly in see tion 201 (c) (2) and (c)(7). This term is defined in section 103 (7) as part of the definition of "communications common carrier".1 THE CONTENTION THAT "USERS" AND "ENTITIES" ARE "CARRIERS" 10. A.T. & T. contends that because there are different possible categories of "carriers" it was necessary "to recognize in the language of section 305 that Comsat could deal with foreign entities authorized by the Commission to act as earriers here in the United States." (A.T. & T. brief, Nov. 1, 1965, p. 13.) A.T. & T. also claims "it must be recognized that there are U.S. telecommunications en tities which operate offices abroad, such as RCA Communications, Inc., and Globe Wireless, Ltd.," (Ibid.) It is not explained why both classes of entities are not reasonably to be considered as included in the term "carriers," bu A.T. & T. concludes that because of the nondomestic status of these "carriers" they had to be referred to as "entities" or "users" in the act. This contention completely ignores the language of section 305 (a) (2) and (b) (4) and the broad language of section 102(c). 11. In particular, section 305 (a) (2) refers to "U.S. communications commer carriers and to other authorized entities, foreign and domestic." In section 305 (b) (4) the act provides that Comsat is authorized "to contract with authorized users, including the U.S. Government. ***" In these provisions it is clear that Congress contemplated that Comsat could be authorized to provide service directly to entities other than common carriers. We note that that finding is further supported by the declaration in section 102(c) that, “It is the intent of Congress that all authorized users shall have nondiscriminatory access to the system Since "authorized users" may include the U.S. Government, a noncarrier (section 305(b) (4)), and since under the act Comsat may be authorized to furnish channels for hire to carriers and "other authorized entities, foreign and domestic." 1 Communications Satellite Act of 1962, secion 103(7): "As used in this act, and unless the context otherwise requires the term 'communi cations common carrier' has the same meaning as the term 'common carrier' has whe used in the Communications Act of 1934, as amended, and in addition includes, but on for purposes of sections 303 and 304, any individual, partnership, association, joint-stack company, trust, corporation, or other entity which owns or controls, directly of indirectly. or is under direct or indirect common control with, any such carrier: and the term authorized carrier', except as otherwise provided for purposes of section 304 by section 304 (b)(1), means a communications common carrier which has been authorized by the Federal Communications Commission under the Communications Act of 1934, as amended. to provide services by means of communications satellites." |