American Telephone and Telegraph Company has advised the Commission in Docket No. 13522, by letter of March 21, 1961, that "Use of the United States portion of the satellite system [which AT&T proposes] would be made available, of course, to all international communications carriers serving the United States for any services they now are, or may in the future, be authorized to provide by the FCC under the Communications Act."

We understand AT&T's statement to mean that it would not restrict the use of its proposed satellite system by other international carriers for any service which the Commission authorizes them to provide, including voice transmission. If this understanding is correct, AT&T's position on principles applicable to the use of a proposed satellite system appears to be similar to our position.

As the Commission indicated in its Notice of Inquiry, international cooperation and agreement on frequency allocations and other essential matters are required before a useful and efficient world-wide satellite system will be feasible. Also, substantial research and development remain to be concluded.

Fortunately, positive steps are being taken to meet these needs. At this point in time, however, we lack the concrete type of information that will be essential to formulate desirable plans for satellite communication. For example, we are presently only able to make assumptions as to the reliability and longevity of satellites in the space environment. Yet, the economics of the system are subject to considerable variation, depending directly upon the reliability of satellites under actual conditions that will be encountered in outer space. Until the gaps in the knowledge are more adequately filled, comments with respect to plans and participation in satellite communications necessarily must remain subject to qualification and revision based upon future developments.

In light of the foregoing considerations, we offer the following responses to the questions set forth by the Commission.

Responses to Commission's Questions

1. Assuming the authorization of a single or limited number of satellite communication systems will best serve the public interest, what plan of participation is best designed to provide equitable access to, and nondiscriminatory use of, satellite communication facilities, by existing and future international communication common carriers and others? Should such a plan include participation of manufacturers of satellite communication and launching equipment? Specify in detail the features of the plan including the financial and operational arrangements related to the ownership and use of the system.

We believe that a plan incorporating the three basic principles previously referred to and complying with other legal requirements would best serve the public interest. This would provide equitable access to, and non-discriminatory use of, satellite communications facilities by existing and future international communications carriers.

Communications satellite systems will be natural extensions of present systems. They will be used in international transmission to supplement, rather than to displace, present and future submarine cables and high-frequency radio systems.

On the basis of this approach, international carriers desiring to supplement their facilities with satellite transmission may file applications for construction permits and station licenses covering their ground stations, in accordance with Title III of the Communications Act and the Commission's Rules and Regulations. The grant of the applications would authorize transmission via space satellites which may be provided as discussed below. Financial and operational arrangements relating to the ownership and use of ground transmitting and receiving stations would not appear to present new or difficult problems, as they could be similar to those which presently exist for high-frequency point-to-point radio systems.

Similarly, each participating overseas administration could establish, own and operate its own ground stations for transmitting and receiving communications via the satellite repeaters. No fundamental changes in operations would be necessary. Since the international

carriers and their connecting overseas administrations could have individual access to the satellites from their own ground stations, they could continue to conduct their business of serving the public and all nations as economically and efficiently as possible.

This approach of allowing international carriers to supply their own facilities wherever possible would be preferable to leasing facilities from another entity. See Commercial Cable Co. et al., 28 F. C. C. 283, 293 (1960).

The Commission's question assumes authorization of a single or limited number of commercial satellite systems. On this basis four principal alternatives exist as to who should provide, own and operate the space satellites. We will first list the alternatives and then discuss each briefly.

1. Government ownership and operation.

2. One company ownership and operation.

3. Joint venture of several companies for ownership and operation. 4. Government ownership but private operation.

United States participation in the field of international commercial communications is by means of privately financed and privately operated facilities. For the Federal Government to own and operate the entire commercial satellite communications system could be disruptive and not in keeping with our national tradition of reliance upon private industry for international communications facilities.

The second and third alternatives would involve a departure from the long-established situation in international radio communications. International voice communications have been provided primarily by a single company, but international record communications have been provided by several companies.

Ownership or control by a single company of a satellite system could result in prejudice to the interests of other companies and to their ability to serve the public. It could also mean that the technology

of satellite communications might consist principally of the technology of a single company.

Satellite systems will be of greater capacity than present systems and, according to studies, of lower cost per channel when substantially utilized. They will also be especially useful in providing new broadband services. Such new services have become possible with the rapid advance of the electronic art. They involve the use of very broad bands for alternate or simultaneous transmission of voice, data and all types of intelligence, which may be converted to basic impulses indistinguishable from each other as to type of communication. This development has already had an effect on the historical distinction between voice and record services and is a step toward obliterating such distinction.

For the owner of a single commercial satellite system to preempt this new field could raise serious problems with respect to competition and the public interest.

It is no doubt true, however, that single company ownership of a commercial satellite system might raise less problems if the system is strictly regulated as to access and use in accordance with the three basic principles already discussed.

We have studied the feasibility and desirability of a joint venture of several companies to develop and operate a commercial satellite system. These activities have included a joint study with Lockheed Aircraft Corporation and General Telephone & Electronics Corporation of the "common carriers' carrier" concept suggested by Lockheed. We have not, as yet, determined our interest in the common carriers' carrier approach, but the joint study has been helpful in focusing on the complex problems and indicating possible solutions.

Some form of joint venture may, if consistent with applicable legal principles, offer promise as a means to develop and establish commercial satellites. It appears from studies, however, that a joint venture would not be economically feasible by private enterprise without the telephone as well as telegraph traffic volumes.

It is apparent that the cost of the satellite system will be borne by the public, regardless of whether the system is owned by a single carrier, several carriers or the Government. A common carrier company would include its costs in determining the level of its tariff charges payable by the public for communications services.

In addition to the regulatory problems, there are various financial, legal, technical and other problems associated with joint ventures. Many of these problems are within the areas normally the responsibility of management of private enterprise. Before a useful and feasible joint venture plan could be specified, these problems would have to be considered and resolved by all the participants. International carriers should of course have the opportunity to participate in the ownership of any commercial satellite system.

If communications satellites should become available as an outgrowth of the Government's development programs, the utilization of them for commercial purposes should be the responsibility of authorized international carriers. International communications services would then continue to be provided by private enterprise in accordance with traditional communications policy in this country. Such use would be analogous to the conditions in other public service industries, such as the use of airports for air transport service and the highways for bus and trucking services.

2. Specify in detail, with supporting briefs, how such plan would comply with existing laws and policies (particular attention being given to Sections 313 and 314 of the Communications Act and pertinent antitrust statutes).

For the reasons already discussed, a plan of participation in satellite communications incorporating the three basic principles set forth appears to be consistent in such respects with existing law and policies, including $313 and 314 of the Communications Act and pertinent antitrust statutes. In Federal Communications Commission v. RCA Communications, Inc., supra, the Supreme Court considered 313 as well as 314 of the Communications Act.