incentive to ensure that user requirements are met and that

the market for services is fully developed.

Given the nature

of the governmental budgeting process, once funds are autho

rized to establish and operate a system, we question whether

the incentives to recover costs through marketing, develop

ment and provision of services will be as great as in the case of private sector investment and involvement.

The reports prepared for the Committee state

several reasons why private sector initiatives in areas

other than equipment supply to the Government have not been

forthcoming.

A possible means to encourage private initiatives

in assuming responsibility for operation of the system is suggested in the reports. As we understand it, the sugges

tion presented in the report envisions the Government as an

early and substantial customer of a privately operated system.

We support serious consideration of this suggestion as a means

by which to best ensure the successful establishment of an

operational ERIS.

In considering the level of private sector interest

in investment and involvement in an operational ERIS, the

extent of U. S. Government requirements for data services

and products and the degree to which it would be willing to satisfy its requirements by purchase from the private sector

is extremely important.

Since the Government presently is

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the largest single user of Landsat data in the United

States, a decision by the Government to satisfy its own

requirements for data products and services by purchase from

the private sector, and not to compete in the supply of such

services to its various agencies and to the public, will have

a major impact on the extent of private sector interest in

the establishment of an operational system.

Assuming there is a continuing Government require

ment for earth resources data products and services, as

would appear to be the case judging from the record to

date, such requirement could constitute a customer base for

a privately owned and operated system and make possible an

early transfer of responsibility for an operational system

to the private sector.

In our view, it would not be necessary

for the entire revenue requirements for such a system to

be met through provision of services to the Government.

Rather, the expectation that a fair portion of the system revenue requirements would be covered by the Government as

a customer could induce the private sector to undertake the risk of obtaining additional revenues required to earn a

reasonable return on investment through the marketing of

services to non-governmental and foreign customers.

The reports prepared for the Committee mention

several examples of this approach, one of which was the

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MARISAT program.

Since COMSAT General was primarily respon

sible for the development and implementation of that program,

I believe it may be useful to briefly describe its develop

ment.

The MARISAT system, which was placed in operation

last year to provide maritime communications services on a

global basis, is one of the most sophisticated communications

satellite systems ever launched.

Pursuant to contract with

the U. S. Navy, it provides communications service at UHF

frequencies to the Navy. It also provides services to other maritime and offshore interests at L-band frequencies. The

current system consists of three spacecraft in orbit, ground

control and communications stations in the United States and

a control station in Italy.

The total MARISAT system invest

ment is estimated to be in the neighborhood of $103 million.

COMSAT General embarked on this program after conclusion of a contract with the Navy which amounted to approximately 28 per cent of the estimated investment. Obviously, there

was an expectation that the remaining revenue requirements

necessary to obtain a reasonable return on investment could

be obtained through the sale of additional services to the Navy and the provision of L-band services to commercial

maritime and offshore interests.

Given that earth resources technology appears to

be ready for operational implementation now and that the private sector can make substantial contributions to the

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establishment of an operational ERIS, we believe the entry

concept presented above should be given careful consideration at this time. Such concept would appear to have significant

advantages for both the Government and the private sector.

First, it is consistent with traditional U. s. policy to

engage the resources, experience and capabilities of the private sector in a more meaningful manner and would provide the greatest incentive to develop the market for earth resources and services and make the benefits of the technology available to the peoples of the world at the earliest

and capabilities of the private sector at an early date.

Finally, we believe this concept can be implemented in a

manner which is consistent with the protection of legitimate

governmental and international interests.

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What is the strategy for institutional amalgamation?

The discussion surrounding this question illustrates that the primary concern is how to satisfy the concerns of the various Government agencies and coordinate and consolidate

on a dynamic basis to a world user community.

Given the

necessity to market, tailor and develop services to the

maximum extent in order to ensure the success of ERIS, the

time-consuming procedures inherent in administration by a

change board would probably delay the effective implementa

tion of ERIS considerably and seriously prejudice the

maintenance of U. S. leadership in this area.

In discussing a strategy for institutional

amalgamation, we note that two important groups apparently

have not been taken into consideration, i.e., users other

a

than governmental agencies and the private sector as potential system operator. In order to ensure non-governmental

user requirements are served and that the resources of the

private sector are brought to bear, we believe a different

strategy needs to be developed.

The suggestion that the