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involve the private sector in an operational ERIS. Private sector investment and involvement will provide a much greater 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 authorized to establish and operate a system, we question whether the incentives to recover costs through marketing, development 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 suggestion 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 requirement 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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The

MARISAT program. Since COMSAT General was primarily responsible for the development and implementation of that program, I believe it may be useful to briefly describe its development. 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. 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 investment 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 transfer to the private sector responsibility for operational implementation of services which have been the subject of Government experimental programs. Communications satellites

are a primary example of this policy. Second, it would 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 date. Third, we believe there would be substantial savings to the taxpayer. Fourth, resolution of the question of respective governmental and private sector roles at this time would remove uncertainties and enlist the resources 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 their efforts through a bureaucratic mechanism such as a "change board." Such a concept may be appropriate to administer Government procurement programs but it appears particularly inappropriate to administer an operational system whose primary purpose should be to provide services 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 implementation 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 a 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