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

I submit a proposed draft of the President’s 1966 report to the Congress as required by the Communications Satellite Act of 1962.2 This report emphasizes positive accomplishments. It does not describe the hazards which INTELSAT and Comsat face. Some of these hazards are:

Actions of certain international record carriers indicate that they consider it to be in their corporate interest to emasculate INTELSAT, the single global system, and ComSat.
Certain major aerospace manufacturers both here and abroad deprecate the value of INTELSAT and the single global system. They favor many proliferating domestic and regional systems. Obviously these would provide a larger market for their products.
France has been promoting within Europe a regional communications satellite system which will compete with INTELSAT, and will probably join the Soviet Molnya system.
There has not been established within the Executive Branch a national policy which clearly delineates the effect on INTELSAT, the single global system, and the encouragement to the formation of regional systems which would be involved by the establishment of a separate domestic satellite system in the near future and in the same frequency bands as the international system. A strong Executive Branch position on a national policy is needed urgently which states that the United States, until approximately 1972, will obtain domestic communication services through INTELSAT.
Certain members of INTELSAT who derive a favorable balance of payments under present arrangements are not supporting the U.S. policy of actively encouraging the establishment of satellite communications facilities for the developing nations. This has resulted in inadequate progress toward the design of low cost earth terminals and satellite systems—concepts which are needed to promote early effective and economical use in the developing nations.
Major continental European nations are critical of the “excessively dominant” position of the United States in the decisions of the [Page 174] International Consortium. Actions to reduce U.S. dominance and to obtain a manager other than Comsat are expected during the 1969 negotiations to extend the existing Interim Agreement or consummate a more permanent one.
Action by the United States to embark upon separate domestic or regional enterprises prior to 1969 will have a serious negative impact on the single global system, the International Consortium, the 1969 renegotiations, and ComSat’s future as Manager for INTELSAT.
The recent FCC action to adopt a 50–50 shared ground station ownership formula between Comsat and the communications common carriers has not reduced conflict as had been hoped. ComSat’s investment capital potential has been cut in half but the record carriers still want more. A merger of Comsat with the six other U.S. international carriers is becoming increasingly vital.
The general disorder of U.S. international telecommunications has been and is a serious obstacle to progress in commercial communication satellites and is a threat to their future. It is also creating increasing pressures to reverse the trend toward greater Government use of the international common carriers and causing serious consideration of programs to step up the capacity of the Government’s own communication satellite systems. Diversion of Government traffic from the carriers will further jeopardize the future viability of Comsat and the global system.
Communication satellites are in such an early stage of their technological and systems development that present systems should soon be made obsolete by the new developments. But research and development efforts by Comsat and NASA are inadequate to push progress fast enough. I am increasing the efforts of my office to push for faster progress.

The national policy established by the President and the Congress is to give first priority to the successful achievement of a single international global system at the earliest possible time. It is a sound policy which makes paramount the objectives of world peace and understanding. The importance of the single global system to achieve these objectives cannot be overemphasized. Executive Branch departments are working diligently to reduce the hazards and obtain the objectives sought by the Communications Satellite Act, but success is far from certain as yet. The trend appears to be toward progressively more serious obstacles. Further discussion of these obstacles is contained in the attachment.

In a subsequent report I will set forth the steps being taken by my office and other Government agencies to cope with these hazards. Some of my proposals for Government actions are included in the attached summary.

J.D. O’Connell
  1. Source: Johnson Library, National Security File, Subject File, Communications (Nat’l Communications System, COMSAT, etc.), Vol. III [2 of 3], Box 6. Confidential.
  2. Not found attached; a copy is ibid., White House Central Files, UTI—Communications/Telecommunications (Conf/Declass).