102/12–2254

Memorandum by the Staff Director of the Cabinet Committee on Telecommunications Policy and Organization (Clark) to the Members of the Committee

secret
  • Subject:
  • Transmittal of Draft Report

There is attached a draft of a report for consideration of the Committee. The first six pages of the draft are essentially a condensation of the briefing presented on December 13. The balance is concerned with draft statement of objectives, recommended policies, [Page 442] and the action programs and organization believed necessary to implement the objectives and policies.

This draft represents a very broad and aggressive approach to the entire problem. However, I believe that some such approach is necessary to protect the national interest and further the national objectives.

The draft is based on about six weeks’ intensive study of this problem by our staff, but it essentially embodies the combined experience of about one-hundred years of private, military and Government experience at all levels in telecommunications and directly related problems which have been brought together within our staff. We submit the draft for the consideration of the Committee.

As indicated, we have prepared twenty copies, but the copies to the members of the Committee and one copy to the Assistant Director for Telecommunications, ODM, are the only ones which have been permitted outside of our staff group.

Ralph L. Clark

[Attachment]

Draft Report of the Cabinet Committee on Telecommunications Policy and Organization 1

[Extract]

secret & privileged

Introduction

The President, by letter of August 26, 1954,2 appointed us as a Committee to review the existing body of telecommunications legislation and policy and implementing organization and to prepare recommendations for the consideration of the President.

The guidelines of our work as laid down in this letter were:

1.
To consider this task as a matter of urgency.
2.
To take a broad approach which comprehends the over-all needs of the nation and understands the special problems and capabilities of all forms of telecommunications.
3.
To view the problems of telecommunications as elements of a broad requirement that the U.S. have a comprehensive up-to-date national telecommunications policy which will be consistent with [Page 443] the broad public interest and directly contribute to the realization of national and international objectives of the U.S.
4.
To make sure that the Government provides effective leadership in assuring that our national telecommunications policy and programs help enable our public and private telecommunications organizations to play their proper roles in strengthening the economic, social and political bonds of those nations which share with us the desire for peace and progress.

It was suggested also that the primary objectives of this study would not require us to devote time or attention to the domestic broadcasting services.

In response to these instructions, the members of the Committee have examined existing telecommunications legislation, policies, practices, facilities and organizations. We have drawn freely upon the many studies, publications and official Government reports dealing with this subject. Liaison was established with the Chairman of the Federal Communications Commission, and with those agencies of the Executive Branch of the Government concerned with communications, largely through the Office of the Assistant Director for Telecommunications, Office of Defense Mobilization.

Throughout the course of the study, the Committee and its staff have kept in close touch with the Office of Defense Mobilization to the end that the work of the Committee would not interfere with or impede the discharge of urgent responsibilities of the Office of Defense Mobilization in the field of telecommunications. The Committee had before it a report by the President’s Communications Policy Board, March 1951, which embodied the views of the industry leaders as of that date on many of the specific problems under consideration. Western Union and RCA have also informed the Staff of their current views with respect to these problems. The Chairman plans to meet with industry leaders to obtain their current views during the week of January 10th.

The Committee has made an assessment in a general way of the importance of telecommunications to the nation.

The central question is whether or not the strategic capabilities of telecommunications shall be employed by and for the nation as a whole or whether telecommunications is to continue as a fragmented service provided by and for each separate agency of Government and for the public by competing private organizations.

If telecommunications is to be provided on an agency and company basis, the problems of concern to the Government are few and relatively simple. They involve public regulation and international resource management of the use of the radio spectrum.

The force of events and circumstances shape the answer to the question. All world powers openly utilize telecommunications as a [Page 444] national instrument as this country does its mail service. Further, telecommunications itself is an area of direct conflict and a theatre of cold war because of the active and latent challenge of Soviet jamming capabilities. For these two reasons it will become increasingly difficult and ultimately impossible for this country to continue to meet its communications needs on an agency and individual (competitive) company basis.

Policy direction and support of this nations telecommunications activities must be raised to the Government level if the national welfare and national security are to be adequately served.

The Committee offers a statement of what it believes the broad national and international telecommunications objectives of this Government should be. In recommending policies, action programs and organizational changes, the Committee has set forth the concepts and the mechanisms which it believes can best accomplish the national objectives and lead to solutions of the many particular problems. We believe that the guidelines laid down by the Committee will facilitate the solution of day-to-day problems, and be flexible enough to meet changing national and international conditions.

I. Importance of Telecommunications to the United States

The importance of communications, especially rapid communications, to this nation increases as our interests, activities and responsibilities are extended further and further across the face of the globe, and as the speed of transport gets greater and greater. The international telegraph, telephone and radio are the great universal catalysts of trade and culture, but for this nation, they are even more. Upon their efficiency depends whether the United States will grow in the future, as Great Britain has in the past, as a center of world thought and trade, and influence. Our Constitution recognized the importance of communications to the thirteen original States, by providing for a national postal system as a Federal monopoly and the building by the Federal Government of post roads. Today, rapid electrical communications are equally important to this nation as the power center of the free world. The importance of telecommunications as the “voice of command” for the military can hardly be overstated in the light of current weapons and military technology. In the philosophical sense, many mathematicians and scientists consider that modern communications theory is the key concept of 20th Century science.

II. Summary of Present U.S. Situation in Telecommunications

The Committee believes that the present U.S. situation in telecommunications is generally unsatisfactory, and in particular respects, is dangerously and critically so. The situation is as follows: [Page 445]

1.
This country is unable to use its telecommunications resources to effectively support national policies. Its international communications is fragmented between eleven carriers operating under a concept of regulation, and its Government communications are managed on an agency basis to serve respective and restrictive agency needs.
2.
There is no coherent body of national telecommunications policy and there is no satisfactory machinery for making telecommunications policy at the Government level.
3.
The United States is unable to exercise effective leadership and strong influence throughout the world with respect to the conditions, methods, rates, etc. under which international telecommunications will be carried on. The U.S. position in telecommunications is in sharp contrast with its over-all position in world affairs.
4.
This nation is in a poor competitive position as a world carrier of telecommunications. It cannot compete on a broad front with the British Commonwealth system except possibly in the field of international telephone service, and the Soviet Union is rapidly bringing itself into a strategic and powerful position in telecommunications. Reviving interest of Germany in international telecommunications is a potential factor.
5.
The international telecommunications of this country are insecure against potential disruption from jamming action by the Soviets. This country is presently highly dependent for its civil and military communications upon radio, which can be seriously disrupted by existing Soviet jamming systems. There are, however, some cables to Europe and South America, and a new telephone cable to the United Kingdom is under construction.
6.
There is a questionable future for the international record commercial carriers because of their over-all financial position in the face of fragmentation, competition, and foreign monopolies, and the long range future of essential elements of military communications are equally uncertain because of the uncertainties of political relationships in such countries as Japan and Germany.

. . . . . . .

10.
The 11 United States international carriers, in addition to competing with each other on foreign soil, must deal with and compete with state monopolies in almost all countries of the world. Within the United States competition is limited largely to a few gateway cities and distorted as a result of Western Union control of the distribution of international traffic between the 11 carriers and the fact of Western Union ownership of international cables.
11.
To a continually increasing extent, London is becoming the switching and control center for our essential world telecommunications, and a series of actions on the part of the U.S. has contributed to this trend.
12.
This country’s domestic record telecommunications system is not adequately interconnected with the domestic systems of the other countries of the world. The teletypewriter exchange service of this country is not interconnected with a similar European-wide system. In the telephone field, service is offered to over 100 countries with dependency entirely upon radio links rather than cables [Page 446] which would be more reliable. This results over-all in poor service based on domestic standards.

III. U.S. Objectives in Telecommunications

In the furtherance of the national economic, political and security interests, the United States must possess domestic and international communications systems capable of transmitting the aural and written word by wire, cable, radio or other electronic means, so as to make available, so far as possible, to all of the people of the United States a rapid, efficient, national and world-wide electric communications service, with sufficient facilities at reasonable charges that will not only accommodate all peacetime requirements, but will be capable of satisfying, to the maximum extent practicable, the expanded requirements of a state of hostilities.

Specifically, the Committee believes that telecommunications should be made to serve as an instrument of national policy, and that the nation’s communications activities and telecommunications resources be directed and managed so that they:

1.
Make the maximum contribution to the security of the nation at the least practicable cost.
2.
Most effectively support this country’s international military, political and economic policies devoted to the cause of peace and progress in the world.
3.
Provide the public and the Government of this country with the best practicable telecommunications services, domestically and internationally, at the lowest possible cost.

IV. Recommended Policies

We recommend the adoption of the following policies as necessary to the satisfactory solution of the major national telecommunications problems and the achievement of our national objectives.

1. Utilize the telecommunications resources and activities of the nation as a binding force within the free world, by provision of adequate service and insofar as practicable equalization of rates within the free world area.

The deliberate and effective use of telecommunications to facilitate trade within the free world area, to promote cultural and informational exchange leading to better identity of common interests and objectives can over a period of years become a very effective force in holding together the free world to resist the pressures of Soviet communism. This nation can accomplish this by providing better service than now exists and adequate service where none exists, and to the extent that proves practicable, bring about an equalization of rates within the free world area.

2. Promote and foster a United States dominated globe girdling trunk line communications system, using both cables and radio, and [Page 447] such Government and private installations and facilities and such foreign facilities as are available or necessary.

Such a system will permit interconnection with the national internal systems of the various countries throughout the world and will serve to link the commerce, government and peoples of the countries throughout the free world. There is need for such a system. The British Commonwealth system partly meets this requirement for written messages, but it has inherent possibilities for manipulation to serve unilateral British ends. It is by current technical and operating standards partly obsolete. Centralization in London makes it vulnerable as a system. Each of the three U.S. military services have in being or programmed the basic ingredients of such a world girdling system, but each of these systems is available only for U.S. Government traffic and they are largely temporary in nature since the foreign terminal and relay points are tied to military base agreements. The military systems do not connect with the public systems of this or other countries.

3. Provide for the special requirements and needs of such activities and programs as military, diplomacy, intelligence, etc. insofar as possible within the broad concept of a single, permanent, integrated and adequately financed U.S. international telecommunications system.

We believe that the three military services and other areas of Government activity require, and will continue to require, special operating networks and communications systems on an earmarked or exclusive use basis but within the framework of an over-all national system. We also believe that a greater pool of residual facilities and communications capabilities, instantly available to whichever area of national activity (military, diplomatic, economic, etc.) requiring it, can be created and maintained through such a single system.

When the military need is paramount it will have first call on such residual capabilities in the same way that it has first call on domestic telephone and telegraph capabilities. When the diplomatic need is paramount the organizations of diplomacy will have first call, etc.

4. Adopt the “national instrument” concept in lieu of the policy of required competition between the American carriers and with foreign monopolies.

Rates of American international carriers are rigidly regulated but competition is not. These eleven carriers are required to compete for foreign business in the face of foreign domestic and international monopolies. Foreign carriers can and do play one American company against another. We believe that aside from the question of the prosperity and health of the private carriers, it is impossible [Page 448] for this country to effectively utilize the resources of the private companies as an instrument of national policy if these companies are required to compete with each other for the business and favor of foreign monopolies.

5. Minimize the vulnerability of this nation’s radio communications to Soviet jamming by all practicable means—by direct Government action and by Government financial assistance as necessary.

Until the vulnerability of this nation’s radio communications and those of most of the other countries of the free world are materially reduced, our communications with our own establishments overseas and with friendly countries will be uncertain and in constant jeopardy. We urgently recommend that all practicable steps be taken immediately to reduce this vulnerability of not only our military communications, but our other Government and commercial communications and those of countries whose interests are identified with ours. This vulnerability provides an opportunity for the use of the Soviet jamming capabilities as an instrument for blackmail to be applied to countries throughout the world, both small and large.

6. Manage the use of the radio spectrum to achieve the nation’s telecommunications objectives, for cross support of other national telecommunications policies and to enhance its usefulness as a national and international resource.

This country will be stronger and the free world will be stronger as there is more communication rather than less. The absence of management of the use of the radio spectrum at the national and international level makes it very easy for the Soviets through the latent threat of jamming, through preclusive use of frequencies to reduce and make more difficult the flow of communications throughout the world. This nation can ill afford to continue its use of the radio spectrum on the basis of squatters rights, the falacious concept of “warehousing”, competition, and regulation. If the use of the radio spectrum can be managed to support national telecommunications objectives and to implement national telecommunications policy, the position of this nation in the world will be greatly enhanced.

7. Regain leadership of the free world in promoting the use of telecommunications for the pursuit of peace, progress and the common defense.

If this country is to achieve its objectives in telecommunications, it is essential that it regain leadership, at least of the free world, in this area. Our far-flung interests, commitments and responsibilities, which are vitally dependent upon communications in every dimension, make it essential that we strive to place ourselves in an internal position and to formulate sound and effective policies [Page 449] which will place us in a position of leadership of the free world in this area.

8. Achieve strength for negotiating with foreign countries on telecommunications matters.

Having established a clear and unified long range national purpose this country will be in a stronger position to negotiate with foreign countries on cable-landing rights, frequency management, rates, and other matters. The strategic importance of telecommunications to the security and future of this nation warrant the utilization to a greater degree of basic elements of national strength in carrying on telecommunications negotiations with foreign countries. For example, we believe that appropriate features of the aid and loan programs should be utilized in securing strategic concessions of a telecommunications nature from foreign countries. After having achieved the essentials for a global telecommunications system, the mere offer of access to the use of this system on favorable terms will be an attractive inducement to many countries to grant further desirable rights and concessions to this country.

Negotiations for military communications bases should to the extent possible be carried on within a framework broader than just the military necessity, but looking toward a degree of permanence and utility that extends beyond the immediate military use of the particular radio or cable installations. Commercial companies should always be assisted and guided by the Government in negotiating with foreign governments for telecommunications concessions in view of the importance of these negotiations to the security and over-all objectives of this nation.

9. Exploit, fully and promptly, new technological developments applicable to telecommunications so that full advantage will accrue to the nation and to the users of such U.S. international system as may subsequently be established.

Technological developments which will contribute in a practical manner to the security of our communications, to their economy, or to the quality of service, should be widely adapted within the concept of the national system to the extent that security indicates whether their origin be commercial, Government or military.

10. Progressively obtain maximum compatibility of U.S. and free world communications systems and maximum interchangeability of essential parts.

We believe that continuing and positive efforts should be made through the most appropriate channels to secure the highest practicable degree of compatibility of U.S. international and domestic systems with the systems of free world countries, and that the essential functional elements of these systems be interchangeable to the highest degree that is practicable in order that peacetime traffic [Page 450] may be speeded, operating costs lowered and maximum security against disruption and failure of free world communications from enemy action be obtained. The ability of the system of one country to work with that of another country or as part of a larger system without the re-handling and re-processing of traffic will greatly strengthen the over-all free world telecommunications position.

. . . . . . .

12. Supplement the existing intercity telephone and telegraph line system to the extent necessary to provide for re-routing and by-passing of essential traffic in the event of enemy attack. The Government should finance such supplemental facilities to the extent that is necessary to prevent rate increases arising therefrom.

The kind of system which will provide the best service at the lowest rates is probably not the one which will provide the maximum security against enemy attack. The defense of the nation is a Federal responsibility, and the Federal Government should make sure that communications are secure against enemy attack. To the extent that the communications carriers can do this they should be encouraged although Government assistance may become necessary.

13. Establish telecommunications attachés in the significant foreign mission of the U.S.

The primary purpose would be to further United States global telecommunications interests, report on new developments and techniques in the art as may originate in foreign lands. These attachés while serving in the foreign missions of the Department of State would report direct to the officer in the Executive Branch as well as through the Department of State. The attachés shall be selected on the basis of technical experience and qualifications from private industry, Government and the military services. They shall be considered as specialists and shall not be employed, promoted or terminated according to the same criteria of fitness and performance as are general Foreign Service officers.

V. Action Programs To Carry Out These National Policies

We have found that many of the action programs necessary to implement the recommended national policies cannot be initiated without legislative authority of one kind or another and without basic changes in organization. This is true because of the divided authority between the FCC and the Executive and because of the basic principle in the Communications Act of 1934 requiring competition between international carriers, and the achievement of the public interest, convenience, and necessity merely through regulation. The action programs outlined below are in some cases interlocking [Page 451] and interdependent; some are short range and others will necessarily extend over an indefinite period of time.

Some of these action programs can be carried out by the Executive Branch within present legislative authority while in the case of others for which legislation is required the Executive may either take the initiative in proposing legislation or may rely upon the appropriate committees of the Congress to initiate legislation. It is intended that these action programs will be implemented through private enterprise whenever possible.

We believe the following are the principal action programs necessary to carry out the recommended national telecommunications policies and should be adopted by the Government.

1.
Plan in broad outline the essential features of the world-wide trunkline communications system utilizing both cables and radio and such private and Government installations and facilities as may be practicable, taking into account the special needs of the military services and other activities of the Government and the conditions and economics of the telecommunications industry. Such a system should be planned to implement the policy recommendations under Section IV above.
2.
Provide by contract or other appropriate means for the construction of essential international trunkline elements in the world system utilizing to the maximum practical extent the resources, know-how, and experience of private companies and Government organizations in this field.
3.
Study and come to a conclusion as to the most appropriate and equitable means of consolidating existing international commercial carriers into one or more national instruments such that American competition will be with foreign systems and not between elements of the American system.
4.
Study and reach a determination of the special communications activities and requirements of the military, diplomacy, intelligence, etc. which require special facilities within the framework of an over-all national system and upon the basis of these determinations the agencies concerned shall take steps to make adequate provision for these needs. As to the general communications requirements of these activities, such as administrative, information, etc., a determination shall be made as to how they can be best met within the framework of a single permanent integrated national system.
5.
Make studies and arrive at determinations as to the conditions, criteria and rate schedules under which non-military traffic will be handled over elements of the military system. This shall be done within the concept that the elements of the military systems having such capabilities shall not be competitive with non-military [Page 452] circuits or capabilities but shall be a part of a national system for this purpose.
6.
Determine the methods and means whereby a low international press rate can be made available to American news agencies on a basis generally competitive with that offered by the British Empire communications system.
7.
Should after adequate study of the problem, undertake negotiations with foreign governments and telecommunications administrations looking toward the gradual establishment of a system of equalized rates between the countries of the free world. This shall be closely coordinated with our national military, economic, and political objectives, policies, and commitments.
8.
Manage the allocation and use of the radio spectrum by all United States users, public and private, upon the basis of need, current use, and effect upon the over-all national position in the use of the radio spectrum. Management of the families or bands of frequencies allocated for the domestic broadcasting services shall be the responsibility of a separate regulatory body.
9.
Review its treaties, executive agreements, international plans and understandings within the framework of the above stated objectives, policies, and action programs and, to the extent that such agreements, treaties, understandings, etc. do not support and contribute to the realization of these objectives and the implementation of these policies, shall take all practical steps to secure the revision of such agreements, treaties, etc. This review shall also take into account the broader common interests, objectives and security of those countries to which the United States is tied by common economic, political and security interests.
10.
Review on a current and continuing basis the loan and aid programs to determine if they can effectively contribute to a strengthened national position in negotiating with foreign countries on telecommunications matters without serious impairment of the primary objectives of such programs.
11.
Currently and continuously examine new technological developments applicable to telecommunications to determine the applicability to domestic and international systems and, to the extent that it is in the national interest, to the systems of other free world countries. Discreet systems, techniques, and developments having peculiar or special application to such specialized communications activities as serve the military, diplomacy, intelligence, etc., shall be maintained on a security basis but reviewed periodically.
12.
Currently and continuously review the compatibility of the major military trunkline systems and the interchangeability of major elements of such systems, with each other and with other U.S. communication systems, domestic and international, and [Page 453] should actively promote such compatibility and interchangeability to the maximum practicable extent.
13.
Undertake studies on a periodic basis of the compatibility of all U.S. systems with each other and with the systems of other free world countries and should undertake such programs as may be practicable to develop conversion and interconnection mechanisms, procedures, and equipment as will increase the compatibility of the systems on a short time basis and at minimum cost.
14.
Consider regular mail, air mail, and the various forms of electrical communications as alternate means of communicating, each having its individual characteristics and capabilities for serving the general and specialized needs of Government and the public. Rates, subsidies and taxes relating thereto should be reviewed in the light of such considerations.

. . . . . . .

16.
Solve the problems of making available direct teletype service to foreign countries to the entire United States on a basis at least equal to that now limited to the principal international gateway cities of Washington, New York and San Francisco.
17.
Bring about conditions whereby the Teletypewriter Exchange System of this country may be interconnected with the comparable system in Europe to the end that Western Europe and the United States will be part of a single teletypewriter exchange system.
18.
Continue study of the adequacy of the intercity telephone and telegraph system in the event of various hypothetical kinds of attack upon this country and should make sure that communications are secure against enemy attack by encouragement of private carriers and financial assistance when necessary.
19.
The Department of State, upon the passage of necessary legislation, should undertake the establishment of diplomatic communications service within the framework of the national telecommunications system utilizing to the maximum extent possible the trunk-line facilities of such a system.

VI. Organization

We are convinced that these objectives can not be attained nor these policies implemented within existing Government organization and under existing legislation. The division of authority and responsibility between the Executive Branch of the Government and the Federal Communications Commission is an insurmountable obstacle. We believe that the activities of the Federal Communications Commission in the telecommunications field other than domestic broadcasting services must be carried on within the Executive Branch.

[Page 454]

The President is responsible for the national security, the conduct of foreign Relations, and the general direction of the activities of Government. If telecommunications is to play an effective role in these areas, authority and responsibility must be centralized in the Executive Branch.

We have considered various organizational possibilities within the Executive Branch and have concluded that a possibility is to substitute a Department of Communications for the present Post Office Department. The Department of Communications would be of Cabinet rank, would break down into two basic subdivisions; namely, the Postal Service and the Telecommunications Service. Another possibility is the establishment of a completely independent Cabinet level organization having the responsibilities and authorities, in the field of telecommunications, now lodged in the Federal Communications Commission and in the President, except those relating to oral and visual broadcasting services.

. . . . . . .

VII. Legislation

New legislation is basic to the accomplishment of the above objectives and the implementation of the recommended policies. Such legislation will:

1.
Establish the principle that telecommunications are to be used as an instrument of national policy.
2.
Establish the Department of Communications with authority over present postal activities and telecommunications, including:
a.
Centralized authority within the Executive over telecommunications and the use and allocation of the radio spectrum.
b.
Authority for promotion and direction as well as regulation of telecommunications.
c.
Provision for the existence of one or more private companies under the principle of national instrumentalities.
d.
Authority for the construction of telecommunications facilities in the national interest in instances where private companies are unable or unwilling to do so.
3.
Establish a Federal Radio and Television Commission to license and regulate the domestic broadcasting services comparable to present regulation by the Federal Communications Commission.
4.
Provide authority for Government communications facilities and systems to carry public traffic where such is in the national interest.

Legislation along other lines may be found to be desirable or necessary as action programs progress and new circumstances come into being.

  1. The source text bears the following typewritten statement: “Staff Draft No. 2, 20 December 1954, as revised January 3, 1955.” Discussion concerning domestic telecommunications matters in the draft report is omitted.
  2. Not printed; a copy is in Eisenhower Library, White House Central files, 1953–1961, Confidential file.