Space Law TOP
Contents Intoroduction Preliminaries Chapter 1 Chapter 2
Chapter 3 Chapter 4 Appendix Index

II. Introduction Policy Statement


As the Commission recognized in the 1970 Report (22 FCC 2d at 88, 95–96), and as confirmed by the applications and responses filed pursuant to that Report, the satellite technology has the potential of making significant contributions to the nation's domestic communications structure by providing a better means of serving certain of the existing markets and developing new markets not now being served. There are concrete proposals before us for the use of communications satellites to augment the long-haul terrestrial facilities of existing carriers for point-to-point switched transmissions services, and to connect off-shore distant domestic points (i.e., Alaska, Hawaii, Puerto Rico) to the contiguous states. There are also proposals for the use of satellites as a means of providing point-to-multipoint services, such as program transmission, although plans for such use are now most tentative and uncertain. Other proposals reflect the view that the most important value of domestic satellites at the present time lies in their potential for developing new markets and for expanding existing markets for specialized communications services.


Notwithstanding the specific proposals that have been submitted, the true extent and nature of the public benefit that satellites may produce in the domestic field remains to be demonstrated. The United States has a well-developed and rapidly expanding complex of terrestrial facilities, and advances in terrestrial technology and operations can be expected to continue the present trend toward reduced transmission costs and more efficient services. Although pointing to some increased operational flexibility in the routing of its traffic, the predominant terrestrial carrier. AT&T, disclaims that the satellite technology presently offers any cost savings or other marked advantages over terrestrial facilities in the provision of the switched services that constitute the bulk of its traffic, message toll telephone (MTT) and wide area telephone service (WATS). At the same time, there is an uncertainty, that can only be resolved by actual operating experience, as to whether the time delay inherent in voice communications via synchronous satellites will provide an acceptable quality of service to the general public when domestic telephone traffic is routed indiscriminately and on a large scale basis via satellite and terrestrial facilities.


Although the satellite technology appears to have great promise of immediate public benefit in the specialized communications market, here too there are uncertainties as to how effectively and readily satellite services can develop or penetrate that market. Thus, in the area of point-to-multipoint transmission, the commercial broadcast networks are as yet undecided as to whether to use this technology in whole or in part. We do have a concrete proposal for a CATV network from Hughes, expressions of interest by public broadcasting and other educational entities, and the possibility of interest by independent suppliers of program material to CATV and broadcast outlets. Moreover, several system applicants, in addition to seeking to attract program transmission business, have premised their proposals on the sale of other specialized services—in part as a complement to existing or proposed terrestrial offerings, but in the main with the expectation of expanding existing special service markets and developing new markets. To be sure, the applications generally do not identify specific services that are new or innovative. However, in our judgment, the uncertainties as to the nature and scope of the special markets and innovative services that might be stimulated will only be resolved by the experience with operational facilities.


Under the circumstances, we will be guided by the following objectives in formulating the policies to govern our licensing and regulation of the construction and use of satellite systems for domestic communications purposes, namely:


to maximize the opportunities for the early acquisition of technical, operational, and marketing data and experience in the use of this technology as a new communications resource for all types of services;


to afford a reasonable opportunity for multiple entities to demonstrate how any operational and economic characteristics peculiar to the satellite technology can be used to provide existing and new specialized services more economically and efficiently than can be done by terrestrial facilities;


to facilitate the efficient development of this new resource by removing or neutralizing existing institutional restraints or inhibitions; and


to retain leeway and flexibility in our policy making with respect to the use of satellite technology for domestic communications so as to make such adjustments therein as future experience and circumstances may dictate.


We are further of the view that multiple entry is most likely to produce a fruitful demonstration of the extent to which the satellite technology may be used to provide existing and new specialized services more economically and efficiently than can be done by terrestrial facilities. Though specialized services constitute a relatively small percentage of AT&T's total traffic, it is presently the predominant terrestrial supplier of specialized services. There is some existing and potential competition from Western Union and any new specialized carriers authorized pursuant to the Commission's decision in Specialized Common Carrier Services (29 FCC 2d 870). But the capacity of their terrestrial facilities is small compared to those of AT&T or the high capacity facilities proposed by the satellite system applicants.2 The presence of competitive sources of supply of specialized services, both among satellite system licensees and between satellite and terrestrial systems, should encourage service and technical innovation and provide an impetus for efforts to minimize costs and charges to the public.

2 The Commission has also authorized terrestrial facilities to various miscellaneous carriers providing program transmission service to CATV systems and broadcasters.

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