Foreign Relations of the United States, 1961–1963, Volume XXV, Organization of Foreign Policy; Information Policy; United Nations; Scientific Matters

435. Memorandum From the Deputy Assistant Secretary of State for International Organization Affairs (Gardner) to the Deputy Assistant Secretary of State for Economic Affairs (Blumenthal)¹

Washington, October 4, 1962.

SUBJECT

• U.S. Policy on the Organization of Global Satellite Communications

This memorandum, written in haste amid the usual distractions of a General Assembly, seeks to outline a U.S. position on the organization of an international satellite communications system-a position which will be needed in forthcoming talks with the United Kingdom and Canada and subsequently in consultations with other countries.

I. Objectives

The President’s policy statement of July 24, 1961,² Part D of the U.S.-sponsored General Assembly Resolution 1721 (XVI),³ the Communications Satellite Act of 1962,⁴ and other official statements have identified the basic objectives of U.S. policy in the field of satellite communications. For the purpose of this memorandum, the most important of these objectives are the following:

(1) To get a communications satellite system operating as soon as possible, for reasons of prestige and foreign policy;

(2) To realize the economic and technical benefits from this improvement in communications (more channels, intercontinental television, possibly lower costs);

(3) To achieve political gains resulting from increased international communication, including communication with Communist countries;

(4) To augment the economic development of less developed countries and our political relations with them by means of a global system which links low traffic areas as well as the main industrial countries;

(5) To make the most efficient use of the limited number of radio frequencies available for space communications as well as other communications.

II. The Central Question

One of the primary issues to be resolved at an early stage is whether there will be one global satellite communication system or several competing systems organized by the Communist Bloc, the Commonwealth and Europe, the U.S. and others.⁵

All but the first of the five policy objectives outlined above argue for a single satellite system:

1. From the economic and technical point of view, satellite systems offer such a vast increase in the capacity for communications that it is doubtful that the capacity of several systems could be fully utilized in the foreseeable future. Moreover, several systems with different kinds of equipment would require the duplication of ground installations. Finally, the use of several systems would reduce the flexibility which one system offers for routing communications in the most efficient possible way. For all of these reasons, the establishment of several different systems might prejudice opportunities for substantial reductions in communications rates.

2. From the point of view of the political gains resulting from increased communications, a number of different systems would reduce the possibility for the worldwide exchange of programs. The opportunity to link the Soviet Bloc into a global communications network would be lost. There would be competition between the Soviet Bloc, the U.S., the Commonwealth and Europe to link less developed countries on an exclusive basis. United States access to certain less developed countries might thereby be lost.

3. From the point of view of our relations with less developed countries, a number of competing systems may result in uneconomic expansion in the communication facilities of certain politically favored countries and the neglecting of less favored ones. Instead of having access to all countries, the less developed countries will be “adopted” as members of more or less exclusive communications clubs.

4. From the point of view of the scarce frequency spectrum, several competing systems would be extremely wasteful and would be likely to get in the way of one another as well as other communication needs.

If, for all the reasons given above, we are to achieve a single international satellite system, this has important implications for U.S. policy. Our position on the host of organizational questions which arise in the establishment of a satellite system must be sufficiently attractive to other countries so as to dissuade them from establishing competing systems and to persuade them to join us in the establishment of a single network. If the U.S appears to be seeking a satellite network which is essentially U.S. owned and managed, there is little doubt but that the Soviet Union and the Commonwealth (possibly in conjunction with Western Europe) will develop their own self-centered satellite systems. Thus the devising of a genuine international arrangement with widespread participation in ownership and management is a prerequisite to the achievement of a single system.

There are at least two reasons why the U.S. should express its views now about establishing a genuine international arrangement:

In the first place, this will help foreclose the establishment of competing systems. The possibility of a Commonwealth satellite system is now under consideration. The forthcoming talks with the United Kingdom and Canada provide an important opportunity to influence Commonwealth policy. The same is true of any further discussions we may have with the Soviet Union either in the International Telecommunications Union (ITU) or pursuant to the Dryden-Blagonravov talks.

In the second place, this will help us secure the necessary frequency assignments for space communications at the International Telecommunications Union (ITU) conference in October 1963. Other countries will be more likely to accept a self-denying ordinance not to use certain frequencies for conventional communications (as well as reasonable ground rules for space communications) if they think they are “going to get something” through participation in an international arrangement on the basis of mutual benefit.

Bearing all these points in mind, there is nevertheless an outer limit to United States willingness to “internationalize” satellite communications. This limit is set primarily by our concern with the first objective mentioned above, namely, the achievement of an operating system as soon as possible. Multilateral participation in satellite communications must not be pressed to the point where it delays the establishment of the system. This could easily happen if American efforts in research and development were held back by an excessive “farming out” of tasks to other countries or if negotiations bogged down in political controversy. Moreover, the United States domestic satellite corporation will be unwilling to invest the necessary financial and human resources if the international arrangements prove unacceptable.

The central question, therefore, is to develop a satellite arrangement which is “international” enough to assure foreign participation in a single enterprise and yet which safeguards the U.S. position sufficiently to assure rapid progress and vigorous participation by the U.S. corporation. It may turn out that an arrangement achieving both these purposes is not capable of achievement, but we have the obligation to try.

III. Policy Issues

In reality, there are not simply the two alternatives of a United States system versus an international system. There is a whole spectrum of conceivable arrangements between the two extremes. The variety of arrangements can be seen only when we have identified the principal questions which may call for international negotiations. A summary of these questions follows:

A. Questions relating to participation before establishment of the system.

1. Research and development. Is the United States to do all the research and development, or is this to be “farmed out” to the Commonwealth, the Europeans and the Soviet Bloc on some basis of comparative advantage?

2. Manufacture. Is the United States to manufacture all of the components of the system (ground equipment, satellites, boosters) or are foreign countries to participate?

3. Launch. Is the United States to launch all the satellites, or is the Soviet Union (and eventually Europe) to launch some of the satellites?

4. System design. To what extent is the type of system to be employed (e.g., Telstar versus Syncom) to be determined unilaterally by the United States or on the basis of agreement with other countries? (This decision has important consequences for foreign interests: Syncom means cheaper and simpler ground installations, and thus less burdens on the less developed countries; Telstar offers greater opportunities for frequency-sharing.)

5. Global coverage. How rapidly and to what extent is there to be global coverage of low traffic areas?

B. Questions relating to ownership and management of satellites.

1. Investment. Who is to contribute, and on what basis, to the cost of the satellite portion of the system? (The cost of constructing and launching the satellites accounts for over half the cost of the satellite system.)

2. Revenue sharing. Who is to share, and on what basis, in the revenue to be attributed to the satellite portion of the system?

3. Control. Who is to allocate the voice channels in the satellites to different uses (e.g., 600 telephone channels versus one TV channel)? Who is to allocate the channels as between different countries capable of using them at the same time? Who is to determine when satellite service is to be discontinued or when satellites are to be replaced?

C. General operating problems.⁶

1. Rate-making. How are rates to be established? Is there to be a unitary rate system, i.e. one rate between any two points of the system, regardless of the volume of traffic (a subsidy to communication with low traffic areas)? Will rate-making policy take into account the desire to protect existing investment in cables? Will the emphasis be on relatively high rates to recoup existing investment quickly, or on relatively low rates with a view to the long-term elasticity of demand and the political benefits of increased communication? How will decision-making on these various subjects be shared as between participants in the system?

2. Technical ground rules. How will technical compatibility of different system components be assured (e.g. between ground stations and satellites and between different satellites where manufacturing has been done in different countries)? What ground rules with respect to non-interference and cooperation will be required and how will they be enforced? For example, what collective sanctions might be undertaken to deal with countries seeking a “free ride” on the system?

D. Questions relating to ground terminals.

1. Ownership. Who is to own (invest in, derive revenue from, control) the ground stations?

2. Location. Who is to determine the location of a ground terminal in a region where only one is economically justified? (Quite apart from advantages in terms of prestige and technology, the location of a ground terminal in a specific country enables that country to “black-out” its neighbors from the global system for political and military purposes.)

E. Questions relating to assistance to less developed countries.

1. The construction of ground terminals. Who is to pay for (and supervise the construction of) ground installations in less developed countries which lack the financial and other means to construct them?

2. Operating ground terminals. Who is to supply the personnel (or train indigenous personnel) to operate the ground terminals in less developed countries?

3. Assistance to internal communications. Who is to supply technical assistance and capital aid to develop the internal communications networks of less developed countries to the point where they can be meaningfully linked into the satellite system?

F. Public uses of the system.

1. National information activities. Will the USIA, Moscow Radio and other national institutions be permitted to use the system for broadcasts serving national political objectives? Will they pay the commercial rate or a specially low rate?

2. United Nations. Will the United Nations and its Specialized Agencies be permitted to use the system? Will they pay the commercial rate or will they be given a specially low rate? (During the experimental phase of another year or two the UN will be using Telstar without charge to broadcast its proceedings, but what happens afterwards?)

G. Questions relating to broadcasting.

1. The exchange of broadcasts between nations. What agreements will be made as to the dissemination of foreign broadcasts on national networks?

2. Control of content. Will there be any restrictions whatever on the content of programs that are sent out by means of the system? (See, e.g., the Soviet proposal to outlaw “war propaganda in outer space”.)

IV. Institutional Alternatives

As noted earlier, the choice is not simply between a “U.S. system” and an “international” system. The various questions outlined above are susceptible to a wide variety of answers—answers which represent—many points in the spectrum between the “U.S.” and “international” extremes. As a practical matter, however, certain extreme possibilities can be eliminated at the outset. For example, no one seriously advocates United States domination of the entire satellite system, since it is generally agreed that foreign countries will want to own and operate the ground stations located on their territories. On the other extreme, no one seriously advocates establishing a United Nations agency in which management of the system would be shared on the basis of one country, one vote.

As a practical matter, there are three principal institutional alternatives for dealing with the questions listed above:

A. A “United States-controlled” system. One possible alternative would be a system which, for want of a better name, could be described as “United States controlled.” Foreign countries would own and manage the ground stations in their territories. The ground stations in the United States would be owned and managed either by the U.S. corporation itself or by the common carriers. But the satellites would be owned by the U.S. corporation. The U.S. corporation, under government regulation, would carry on the research and development; would determine the most satisfactory system to be established and the extent to which it would be global; would control procurement of system components; and would arrange for launching with the U.S. Government. It would put up the money for the manufacture and launch of the satellites; would collect the revenue attributable to them; and would control the allocation of the voice channels by renting them out to different users in the U.S. and abroad. For the most part, questions of rate making and technical ground rules would be negotiated bilaterally with individual foreign countries linked into the system, although some of these questions might be discussed in the ITU. The construction of ground terminals in less developed countries and capital aid to these countries would be the responsibility mainly of the U.S. corporation and the United States Government.

B. International system: functional approach. This is not really one alternative but a group of alternatives. The approach would be unilateral, bilateral, regional and multilateral (through the ITU or elsewhere) in accordance with the particular functional problem. Ownership would be shared, either on an undivided basis (each country would have a percentage share in all the satellites) or on a divided basis (each country would own particular satellites which might finance, manufacture or launch). The allocation of channels as between uses and users might be carried out bilaterally and regionally for particular satellites at particular times. The decision as to the allocation of ground stations in a particular region might be left to the countries of the region. Questions of technical and financial assistance might be taken up in institutions such as UN Expanded Program of Technical Assistance (ETAP), the Special Fund, International Development Association (IDA) or the Organization for Economic Cooperation and Development (OECD).

C. International system: corporate approach. Under this alternative, there would be an international institution to handle most of the specific problems enumerated in Section III. Since U.S. participation will be in the form of a private corporation, an inter-governmental agency would not be desirable. Instead, there would be created an international corporation on the model of Eurochemic, the European company established for the processing of chemical fuels. Eurochemic was chartered by the Organization for European Economic Cooperation (OEEC), but its shares are held by governments and private firms. An international satellite corporation could be established on the same model. Its charter could be worked out through inter-governmental negotiations either in the ITU or elsewhere. Some of the shares of the corporation would be held by the United States satellite corporation. The remainder of the shares would be held by foreign public corporations such as the British Post Office or foreign government departments as in the case of the Soviet Union. A small Board of Directors would make fundamental management decisions, but there could be periodic meetings of all interested governments to review the operations of the corporation and make general recommendations. The latter function might be served by the ITU Plenipotentiary Conference. Voting in the Board of Directors could be based in part on financial contribution, in part on use of the system, and in part on other criteria which would give some voice to small and less developed countries. Under any rational formula, the United States would have at least one-third to two-fifths of the votes and would have a majority in conjunction with its European allies. For political reasons qualifying majorities might be necessary to safeguard what the Soviet Union and other countries might regard as fundamental interests.

The difficulties with all three of these alternatives are readily apparent. Alternative A is almost certainly destined to produce competing systems from the Soviet Bloc and the European-Commonwealth group. Alternative C poses political and organizational problems of great difficulty. In the present political climate, it is not easy to imagine an effective working relationship on the Board of Directors between Soviet and American representatives. Alternative B, for all its advantages of flexibility, may fail to provide an adequate structure for an efficient international approach.

V. Future Strategy

The choice between the three principal alternatives outlined above is of great importance. All of its implications will not be clear until we know more about the technical details of the system. It is obvious that we cannot commit ourselves to any institutional design at this early date. There are, however, some things that can be done in our conversations with other countries even at this stage:

1. We can impress other countries with our technical superiority in satellite communications and our determination to press ahead with the speediest development of the system. This will strengthen our bargaining power.

2. We can say that we desire a single commercial system rather than competing systems. We can cite all the reasons given in Part II of this memorandum and emphasize that these are not just matters of U.S. interest but of interest to all countries.

3. We can say that we favor a truly international system, with foreign participation in ownership and management of the satellites as well as in ownership of ground stations in other countries.

4. We can spell out the major questions which will have to be decided in the years ahead along the lines of Part III above and invite an exchange of views as to different ways of dealing with them.

5. We can outline alternatives B and C—the functional approach and the corporate approach—while indicating that the United States has not reached a decision between them.

These above points should be the major themes in our conversations with the United Kingdom and Canada and with other countries in the months ahead. Points 1 through 4 should also be outlined in our speeches on outer space at the current United Nations General Assembly and in the report to the International Telecommunications Union which we are requested to submit by December 31.

1. Source: National Archives and Records Administration, RG 59, IO/OES Files: Lot 68 D 379, K–11, Negotiations on International Organization, 1963. Official Use Only. Drafted by Gardner on October 3. Copies were sent to Assistant Secretary Cleveland, OES, and Gil Carter (E).
2. See Document 433.
3. This resolution was adopted unanimously by the UN General Assembly on December 20, 1961. For text, see American Foreign Policy: Current Documents, 1961, pp. 1202–1205.
4. Public Law 87–624 of August 31, 1962. (76 Stat. 419)
5. It is generally agreed that U.S. needs for military communications will require a separate U.S. system for this purpose. [Footnote in the source text.]
6. The problem of frequency allocation is not discussed here on the assumption that it will continue to be handled in the ITU. [Footnote in the source text.]