Quarrels over Comsat

While the Early Bird satellite sits in peaceful orbit 22,300 miles above the Atlantic, things are anything but peaceful back on earth for its owner, the Communications Satellite Corp. Comsat, whose only product so far is Early Bird, has become involved in a series of bitter controversies over the use of the world's first commercial communications satellite. Last week the biggest fuss yet was raised on both sides of the Atlantic over the rates that Comsat plans to charge for sending TV programs overseas via its drum-shaped, 85-Ib. mainstay. All three major U.S. TV networks lodged protests with the Federal Communications Commission over Comsat's proposed rate schedule, due to go into effect next week when commercial service begins.

If the FCC approves, Comsat will charge the networks $3,350 per hour for the use of its satellite in off-peak hours and $5,245 per hour between 8 a.m. and 2 p.m., when transatlantic telephone circuits are busiest. Such prices, charged NBC, are so high that they "will preclude TV usage of the 88 satellite system"; in similar statements, the other networks agreed. The FCC has agreed to investigate Comsat's announced rates, is asking the corporation to explain why they are based on a 12% return on investment after taxes when other international communications corporations are regulated to earn only 8.5%. Comsat's answer to the charge: the risks are infinitely greater, including a projected 25% failure rate for future satellites.

Behind the Scenes. The cold cost fact for the networks is that Comsat's fees are only the beginning; they simply cover transmission between the U.S. ground station at Andover, Me., and the satellite. In addition, users must pay American Telephone & Telegraph $1.15 per airline-mile for transmitting their programs between their studios and Maine. Then there are charges on the other side of the Atlantic. Meeting in Lisbon two weeks ago, the 22-nation organization of European postal authorities established fees for transmitting signals between the satellite and the receiving stations, which so far exist at Goonhilly Downs in England, at Raisting in West Germany, and at Pleumeur-Bodou in France. The reported fee: $5,450 an hour. All these fees combined seemed more than the networks in the U.S. and abroad were willing to bear. Last week TV systems in Britain and continental Europe indicated that they had no interest in receiving further satellite programs, and angry U.S. networks made the shutdown almost complete, using only one of the 14 free hours set aside for broadcasting.

The furious hassle over rates overshadowed crucial behind-the-scenes maneuverings in other areas. Many U.S. companies are fully aware of the commercial potential that Comsat has brought to industry, and are challenging the right of the common carriers--A.T. &T., RCA Communications, Inc., International Telephone & Telegraph Corp., and Western Union International --to monopolize the lucrative position of middleman between Comsat and its customers. The carriers have applied for permission to lease 226 of Early Bird's 240 voice channels, but some of their customers, such as the Associated Press, United Press International, and the Washington Post are seeking to deal directly with Comsat for their own channels, and the networks seem likely to follow suit soon.

Executive Nightmares. The common carriers, meanwhile, have their own quarrel with Comsat. The three ground P.M.S. relay stations that will eventually exist when the entire satellite system is lofted, of which the Andover, Me., station is the first, have been awarded to Comsat by the FCC, at least temporarily. Last week A.T. &T. and I.T.T. both asked that ownership of these stations be removed from Comsat, calling such ownership an "unwarranted monopoly" and arguing that the FCC had failed to "follow the mandate of Congress that it not prefer Comsat in its award of licenses for ground stations."

As if that did not sufficiently complicate matters, the American Broadcasting Co. has gone even farther and announced plans to construct its own domestic satellite system, thus challenging the dominance of the common carriers. That may start a number of other corporations thinking; U.P.I, has already made sounds about its own satellite. Considering that Comsat has also announced that it may someday launch satellites to handle airline plane-to-ground communications, the entire prospect was enough to give some nightmares to the heads of the powerful--but conventional--U.S. communications companies.

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