Page 58 - Communication Commerce and Power The Political Economy of America and the Direct Broadcast Satellite

46 Communication, Commerce and Power

Preoccupied with the development of telesatellites in relation to
technological achievements in the Soviet Union, the formative regu-
latory arrangements that constituted the framework in. which these
were to be pursued were subjected to remarkably little Congressional
scrutiny. In May 1961, the FCC released a report stating that emer-
ging telesatellite applications should remain within its jurisdictional
sphere using those rules and regulations already governing the activ-
ities of common carriers. This approach constituted the de facto
exclusion from the regula~ory process of manufacturers like Hughes
Aircraft. Five months later, the FCC issued another report proposing
the establishment of a government-sanctioned corporation charged
with the responsibility of developing, operating and managing a single
telesatellite system for overseas communications. Private sector car-
riers, dominated by AT&T, would lease circuits from this so-called
'carriers's carrier.' The new entity also would be run by the established
carriers with some of its directors appointed by the US President. By
1962, neither Congressional legislators nor even State Department
officials could agree on the extent to which the private sector should
control this proposed monopoly. Nor was there ready agreement on
what private sector entities should be allowed to take part. Never-
25
theless, by the end of August 1962, the Communications Satellite Act
became federal law and Comsat (the Communications Satellite Cor-
poration) was established as the instrument through which a commer-
cial telesatellite system would be developed for American overseas
communications. 26 The Act charged the FCC with the responsibility
of formulating and enforcing the rules and regulations to carry out its
provisions. 27
A small number of Democratic Party Congressmen led the only
sustained resistance to the commercial monopoly implications of
Comsat. Driving legislation through, however, was both the urgency
of telesatellite developments in the minds of White House personnel
and the lobbying efforts of established domestic common carriers. 28
Throughout this period, AT&T officials claimed that telesatellite
systems were far too expensive in relation to established terrestrial
services for investments to be made toward their construction for
domestic use only. The overhead costs of establishing an international
telesatellite system, it was argued, could be justified, however, if the
common carriers already handling overseas telephone communica-
tions controlled the new technology without competition. As such,
executives representing AT&T argued that Comsat stock should be