Foreign Relations of the United States, 1964–1968, Volume XXXIV, Energy Diplomacy and Global Issues

86. Report Prepared in the Department of State and the Agency for International Development¹

Washington, June 27, 1966.

SUBJECT

• Communication Satellite Earth Station Construction in Less-Developed Countries—NSAM 342

Background

In June 1965 the Early Bird satellite was placed in commercial operation. Additional satellites will be launched this year and next, as indicated in Annex I.² Earth stations required to receive and transmit messages via satellites are now in place in the United States, Canada, United Kingdom, France, Germany, Italy and Japan. Many more are planned in other developed countries. None have been built in less-developed countries.

The Communications Satellite Act of 1962 contemplates a single global system providing communication by satellite to less-developed as well as developed countries. In NSAM 342, Annex II,³ you requested that active steps be taken to encourage construction by selected less-developed countries of earth stations linking these countries to the global system. You asked that State and A.I.D., by July 1, 1966, determine the countries to be included in this program of encouragement and recommend appropriate action, if any, to be taken. You also directed that, to the extent possible, less-developed countries be encouraged to construct earth stations with their own resources, and that in cases involving United States financial or technical assistance, no special funds be requested other than those included in fiscal year 1966 and 1967 appropriations.

Conclusions

1. Prospects for early construction of earth stations are quite good in a few less-developed countries. In most LDCs, however, stations will not be built on a timely basis without some active United States governmental encouragement.

2. The absence of earth stations in LDCs to date is not particularly surprising. The basic characteristics of the satellites to be used in the global system (and thus the required earth stations) were not determined until April 1966 after experience with Early Bird had been evaluated. Moreover, earth stations make no sense in many of the poorer LDCs which lack the requisite local communication system.

3. In any program of assistance by the United States to extend the global system to less-developed countries the following countries should be given priority:

• Central America (one station serving all 6 countries)
• Colombia*
• Chile*
• Brazil*
• Nigeria*
• Ethiopia*
• Kenya, Tanzania, Uganda (through their East African Common Services Organization (EACSO)
• Turkey
• Pakistan*
• India*
• Thailand*
• Philippines
• Korea

*Member of INTELSAT.

The criteria used in the selection of these countries are set out in Annex III.⁴

4. There are three principal factors which tend to slow down the establishment of earth stations in developing countries. First, these countries require time to make the decision to build a station. This is not surprising considering how new this development is and the difficulty of allocating scarce resources. Second, the countries frequently have difficulty in determining the national policy as to the ownership of these stations—should they be nationally owned or should foreign interests be encouraged to participate in the ownership. Third, as earth stations involve a foreign exchange cost of $3 to $5 million, many countries will require some financial assistance.

5. The United States can help overcome the first and last of these three obstacles, and has indeed begun to do so. Through discussions with Embassy officials and visits from technical experts from Comsat Corporation and other United States companies, as well as by sponsorship of an international seminar on earth station technology, the United States has helped the LDCs understand how the global system functions and the kind of earth stations that are needed by such systems. In the area of financial assistance, the United States has indicated to Ethiopia, Nigeria and the three East African Common Services nations willingness to consider assistance via the Export-Import Bank or A.I.D. A fuller description of United States activities to date is attached in Annex IV.

6. The United States Government is by no means the only source of financial assistance. The available sources include the following:

1. Private companies and communication carriers (with or without help of the Export-Import Bank)

2. World Bank (I.B.R.D.)

3. Inter-American Development Bank (and similar regional development banks)

4. Export-Import Bank

5. United States Government assistance through A.I.D.

Financing plans generally contemplate that the country will finance the local current component. A few countries, such as Brazil and the Philippines, may also be able to finance all or a part of the foreign exchange requirements. A discussion of each of these sources is attached at Annex V.⁵

7. Firm decisions to build and finance earth stations will take some additional time—both for the LDCs involved and the potential sources of financial help. If it were vital that earth stations be constructed in the priority countries not just in the near future but on a crash basis, the United States could achieve this goal best by not waiting for other sources but rather by strong promotional efforts of the Export-Import Bank or, more likely, direct offers of A.I.D. assistance. This does not seem to be a necessary or desirable course of action. The field of satellite communication is so glamorous, the general interest so high, and the various plans for earth stations are being so actively pursued, that in most of the countries on the priority list other forms of financing will probably become available in the relatively near future. The reason A.I.D. has expressed willingness to help the African countries referred to in paragraph 5 is that these seemed to be unlikely to obtain other forms of assistance. For the same reason A.I.D. is prepared to consider possible assistance to Turkey, Pakistan and Korea, in each case with appropriate Export-Import Bank coordination. A country by country resume of prospects for financing of each of the selected countries is attached at Annex VI.⁶

Recommendations

In view of the above conclusions we recommend:

1. That the United States continue its present program of educating the LDCs as to (i) the value of membership in the global system, and (ii) the desirability, in selected LDCs, of establishing earth stations.

2. That we continue to encourage and stimulate sources of possible financial and technical assistance other than A.I.D. to provide such assistance to the countries on the priority list at an early date.

3. That A.I.D. continue to consider financing for earth stations in those countries on the priority list, assuming other financing is not available on reasonable terms and that the project satisfies development loan criteria.

4. That State and A.I.D. keep abreast of the progress in the construction of earth stations, and plans for such construction, and by January 1, 1967 report to you (a) the status of earth station construction in the priority countries, (b) whether, generally, anticipated assistance from non-United States Government sources has indeed materialized, and (c) what, if any, further United States Government action should be taken.

Annex IV

United States Government Actions to Date

1. In 1964 the Department of State in cooperation with the Communications Satellite Corporation initiated a program of visiting and contacting many nations, including each of the listed LDCs, to explain the potentials of satellite communications and to urge their membership in INTELSAT. Membership in INTELSAT has grown from the initial eleven signatories in August 1964 to fifty-two at the present. Of the listed LDCs, the following are INTELSAT members: Brazil, Chile, Colombia, Ethiopia, India, Nigeria, Pakistan and Thailand. These countries are committed to invest a total of approximately 7–1/2 million dollars in the space segment of INTELSAT. They are paying their monthly assessments regularly.

2. The United States Government has encouraged the construction of earth stations. The joint State/Comsat contacts promoting membership in INTELSAT also include discussions on technical assistance, and in depth discussions of such subjects as circuit requirements and site selections. With the Department’s active encouragement United States industry has been promoting the sale of earth stations throughout the world.

3. On May 16–27, the Department conducted a Seminar on Communications Satellite Earth Station Technology. From May 28–June 3 field trips to earth stations and space installations in this country and Canada were provided the foreign participants by United States industry and NASA. The Seminar provided delegates from thirty-five new or developing countries, as well as eleven more advanced countries, with basic knowledge and practical information on earth station economics, earth station technical requirements, and space segment access requirements. This information is useful to the LDCs in implementing their respective earth station programs. Commercial exhibits, field trips, and receptions provided opportunity for extended discussions between the participants at the Seminar and suppliers of earth station equipment.

1. Source: Johnson Library, National Security File, Charles E. Johnson Files, COMSAT—Educational Purposes, NSAM 342 (Domestic and Foreign), #3, Box 12. Confidential. Transmitted under cover of a memorandum from Read to Rostow through O’Connell. A typed cover note dated July 25 from Charles Johnson to William Bowdler, Edward Hamilton, William Jorden, and Howard Wriggins, reads: “This is an advance copy of a State Department report now being reviewed in the Office of Telecommunications Adviser prior to transmittal to the President through Walt Rostow. I would appreciate very much receiving your views with respect to the findings and conclusions covering the individual countries that you keep your eye on. For your information, those of us who have looked at the report feel that it does not reflect the urgency and importance attached to this project by the President in NSAM 342.”

   The report was finally submitted to President Johnson on July 28; see Document 87.

2. Not printed.
3. Printed as Document 82.
4. Not printed.
5. Not found attached.
6. Not found attached.