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In the Matter of AMERICAN TELEPHONE & TELEGRAPH CO., ITT WORLD COMMUNICATIONS INC., RCA COMMUNICATIONS, INC., WESTERN UNION INTERNATIONAL, INC. Applications for Authorization To Participate in the Construction and Operation of an Integrated Submarine Cable and Radio Systems Between the U.S. Mainland and Spain, Portugal, and Italy, and for a License To Land and Operate a Submarine Cable Comprising Part of That Integrated Cable-Radio System

Files Nos. P-C-7022, S-C-L-40


13 F.C.C.2d 235, 261 (1968)


May 22, 1968 Adopted

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[This Web page reproduces only the opinion of Commissioner Nicholas Johnson in this case.  The other rather lengthy opinions may be found in the Lexis or Westlaw commercial online services, or the F.C.C. Reports in print.]


Transatlantic Cable (II)

The Commission here formally acknowledges and approves by order what it invited by "informal letter" to A.T. & T. last February -- authorization for the building of a new transatlantic cable between the United States and Spain with connections to Portugal and Italy.  I dissented to that decision because there was no economic justification for building the cable.  Despite the opportunity to make such a case during the interim, the applicants and the Commission have not been able to do so and I, therefore, adhere to my dissent of last February.  See A.T. & T., 11 F.C.C. 2d 957, 960 (1968). I will not repeat the substance of that opinion here.

In plain language, the Commission is saying today that the best way to provide 720 additional communications circuits between the United States and Spain, Portugal, Italy, and connecting points for the next 25 years is to allow private companies to make an estimated $90 million investment in a cable and other facilities.  (This will be 720 of a projected 5,200 transatlantic channels by about 1975.) This expense will be recaptured from consumers in telephone bills over the life of the cable -- in addition to operating expenses and a "fair rate of return." As an added bonus, A.T. & T. is to provide most of the equipment from its manufacturing subsidiary.

This decision is made despite the fact that probably by the time the cable is operational, and  [**64]  certainly within the next 5 years, providing an additional 720 circuits through a high-capacity (thousands of circuits) satellite could be done for virtually no additional investment or operating expense.

At least the Commission has today come around to a less hypocritical position on the merits of its decision.  It has now simply abandoned its earlier effort to provide economic justification for its action.  Thus, the Commission says in paragraph 22 of its opinion, [We] do not believe that any useful purpose would be served by going over relative costs.  * * *; [*262] and in paragraph 24, [We] do not feel it necessary to make definitive findings on the relative economic merits of TAT-5 and present satellites, those now being constructed and those proposed for the early 1970's -- as though decisions about the proper mix of satellites and cables in the Atlantic for the next 25 years could be made without such findings!

In my judgment, such other "reasons" as the Commission is able to muster for authorizing the cable are not sufficient, alone or together, to justify the investment proposed here.

And, of course, it is not adequate to only compare satellites and cables as point-to-point carriers -- a kind of communications distribution system which the satellite has rendered nearly obsolete.  For it is now possible to communicate with any point on earth without the added cost of expensive landline interconnection of trans-ocean cable terminal and ultimate inland destination.  The remotest point on earth, once equipped with an earth receiving station, can be reached as cheaply as a major urban center.  As population, trade, and communication needs shift, the satellite merely redirects its beam -- the cable owner must lay another multi-million-dollar cable.  It is almost impossible to compare the costs of a point-to-point system with a system that covers the earth.  It is certainly unfair to make economic judgments about the communications satellite as a system for moving information between two fixed points.  But the economics of satellite communications are such that even when they are used to provide this uneconomic point-to-point service they are still cheaper than cables.

This is one instance in which consistency is a very expensive hobgoblin.  I regret the Commission's insistence on holding to its February invitation.
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