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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
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
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
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
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
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.
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.
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
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