76. Memorandum From the President’s Special Assistant for Telecommunications (O’Connell) to President Johnson1

Recent events indicate that the future of the Communications Satellite Corporation and of United States participation in the development and operation of the global commercial communications satellite system are in jeopardy in several ways:

The European partners in the international consortium dedicated to the establishment of a single global commercial communications satellite system find that their financial interests are better served by the continued use of cable systems in which they have larger ownership participation than they have in the communications satellite consortium.2
It appears that foreign members of the international consortium consider that their chances of exercising influence in effecting advantageous changes in the agreement establishing interim arrangements for the global commercial communications satellite system will be greatly enhanced in 1969, when definitive arrangements are to supersede interim arrangements, if there is lack of progress and coverage of the global system. Furthermore, delays in progress will facilitate foreign-owned cable system extension.
Actual and now anticipated usage of the initial Early Bird communications satellite is falling seriously behind the projected usage upon which tariffs were determined. Prospects are for continued serious short falls in usage and the resulting financial embarrassment of the Communications Satellite Corporation.

The President has indicated interest in recommendations made by Ambassador Korry for U.S. assistance to African nations in attaining early communications satellite service to further assist in the development of these nations and to bring them closer to the United States. To attempt to provide such service by a government-owned system would be contrary to established U.S. national policy and international agreement. Direct aid to the Communications Satellite Corporation and the international consortium might be politically criticized as subsidy.

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There is a possibility that the Soviet Union may act soon to assist lesser developed nations attain communications by satellite. Early action by the United States is necessary to preclude this possibility.

The National Aeronautics and Space Administration has stated an urgent requirement to obtain communication services from the Communications Satellite Corporation. No facilities exist to provide acceptable service to meet this requirement.

In response to a request for proposal, the Communications Satellite Corporation on August 26, 1965, submitted a proposal to provide communications services to meet the NASA Apollo Program requirements.3

Contracting with the Communications Satellite Corporation on a commercial common carrier basis to meet the NASA requirement is consistent with established policy (National Security Action Memorandum No. 338) and U.S. international agreement dedicated to the early establishment of a single global commercial communications satellite system.

It is my view that satisfaction of the NASA requirement through contract with the Communications Satellite Corporation will accomplish the following important objectives:

Substantially advance the advent of global commercial communications satellite service through availability of the capacity of the satellites in excess of that required for the Apollo requirement;
Reduce the opposition of the international communications satellite consortium members to rapid growth of the global system;
Make possible early availability of communications satellite service for lesser developed nations at reduced cost; and
Strengthen the position of the United States in the 1969 international revision of the present interim arrangements and thus further the objectives of the Communications Satellite Act of 1962.

I strongly recommend that the President support me in the policy position that the urgent NASA requirement for communication satellite service in support of the Apollo Program be met through the Communications Satellite Corporation and that the Administrator, National Aeronautics and Space Administration immediately enter into direct negotiations for such services. The requirement and the procurement of services should be coordinated with the Executive Agent, National Communications System, to determine whether additional features or [Page 146] arrangements can be effected to enhance the contribution of the specialized services to the National Communications System without unduly jeopardizing the primary objectives for which the communications are being provided.

J.D. O’Connell
  1. Source: Johnson Library, White House Central Files, FG 806, COMSAT CORP. Confidential.
  2. According to unattributed typed notes attached to this memorandum (not printed), the principal problem was lack of European interest. Of the 240 available circuits, only 61 were under contract. “Principal trouble is Great Britain. With only a small ownership in Comsat, they are not eager to destroy their valuable cable business by building up Comsat.”
  3. According to the attached, typed notes, NASA’s Apollo needs would require the equivalent of 120 circuits. The only possible rival for the business was the Department of Defense. “If COMSAT does not get this contract, the company will face serious difficulties.” But the NASA contract would “give Comsat a wider global range because of the satellites to be launched to handle the NASA requirement.”