LETTER TO ALLEN W. DULLES FROM F. C. ALEXANDER

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78S05450A000300010003-6
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 23
• Document Creation Date: December 27, 2016
• Document Release Date: April 24, 2013
• Sequence Number: 3
• Publication Date: October 19, 1955
• Content Type: LETTER

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CIA-RDP78SO545OA000300010003-6 1Nl1AL 6EUKET
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CENTRAL INTELLIGENCE AGENCY Vf% 1
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Director of Communications
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FROM
INITIALS
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Assist. to the Director
21 Oct
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APPROVAL ? INFORMATION 1 SIGNATURE
ACTION II DIRECT REPLY 0 RETURN
II COMMENT II PREPARATION OF REPLY II DISPATCH
I CONCURRENCE L1 RECOMMENDATION I FILE
Rem
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SECRET CONFIDEN CLASSIFIED
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EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF DEFENSE MOBILIZATION
WASHINGTON 25, D. C.
October 19, 1955
STAT
Honorable Allen W. Dulles
Director
Central Intelligence Agency
Washington, D. C.
As a matter of information and to complete your
records, you will find attached copies of the following papers
which have been filed with the Federal Communications Commission
in connection with the application of the American Telephone
and Telegraph Company for a cable landing license:
Petition For Rehearing On Behalf Of
RCA Communications, Inc.
Petition For Rehearing On Behalf of Globe
Wireless Ltd.
Opposition Of American Telephone And Telegraph
Company To Petitions Of RCA Communications, Inc.,
And Globe Wireless Ltd. For Rehearing.
Opposition Of American Telephone And Telegraph
Company To Petition Of Western Union For Rehearing.
Opposition Of Hawaiian Telephone Company To
Petition For Rehearing Of The Western Union
Telegraph Company.
Reply Of The tdestern Union Telegraph Company.
Protest In Behalf Of The Western Union Telegraph
Company.
Sincerely yours,
. Alexander
Deputy Assistant Director
for Telecommunications
Attachments (7)
STAT
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EXECUTIVE OFFICE OF THE PRESIDENT h I SO
OFFICE OF DEFENSE MOBILIZATION
WASHINGTON 25. D. C.
October 19, 1955
Honorable Allen Dulles
Director
.Central Intelligence Agency
.w'asbington, J. C.
As a latter of information and to conplete your
records, you =.: rill find attached copies of the follot:iu papers
which hav6 been filed with the Federal Co znunicatione Coiziission
in connection frith t h-_ application of the Anerican x elephonj
and i legraph Company for a cable landing license:
Petition For Rehearin } Cn Behalf of
RCA C orimuni cations, Inc.
Petition ; or Rehearing On j3chalf of Globe
tireless Ltd.
Opposition Of tAnerican i':lepho e And Telegraph
Cci,ipany To Petitions Cf RGA Co unicatione, Inc.,
Ax d Globe ?irelccs Ltd. For Rehcaring.
Opposition Of Arorican Telephona And Telegraph
Company To l eti tion Of "eotor union -or Rohearir-.
Opposition Of 1Iat:*aiic 3olcp:ion3 CoL,ipany To
Petition for Rehearing Of he o";-:ctcra `,anion
Tulle raph Co :pan r.
Reply Of The Union. olegraph Co.:ipany.
Protest In ?chaif of The ~:ectc rn Union i,Wlegraph
Corpany.
Sincerely yours,
F. C. Alexander
Daputy Asti,cant Director
for Telocoi.unications
Attachn:nts (7)
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 Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington 25, D. C.
In the Matter of the Application of )
AMERICAN TELEPHONE AND )
TELEGRAPH COMPANY )
For authority under 'Section 214 of the )
Communications Act of 1934, as amended, ) FILE NO. P-C-3630
to construct and operate twin.deep-sea )
submarine cables between Point Reyes,
California and Koko Head, Oahu, Hawaii )
In the Matter of )
License authorizing the landing and )
operation of twin submarine cables
between Point Reyes, California and )
Koko Head, Oahu, Hawaii by the American ) FILE NO. S-C-L-14
Telephone and Telegraph. Company )
PETITION FOR REHEARING ON BEHALF OF
RCA COMMUNICATIONS, INC.
Howard R.. Hawkins
Frederick M. Porter,
Attorneys for RCA Communications, Inc.
October 7, 1955.
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0 Before the 0
FEDERAL COMMUNICATIONS. COMMISSION
Washington 25, D. C.
In the Matter of the Application of )
AMERICAN TELEPHONE AND )
TELEGRAPH COMPANY )
FILE NO. P-C-3630
For authority under?Section 214 of the )
Communications Act of 1934, as amended, )
to construct and operate twin deep-sea )
submarine cables between Point Reyes, )
California and Koko Head, Oahu, Hawaii )
In the Matter of )
License authorizing the landing and )
operation of twin submarine cables )
between Point Reyes, California and ) FILE NO. S-C-L-14
Koko. Head, Oahu, Hawaii by the )
American Telephone and Telegraph )
Company )
PETITION FOR REHEARING ON BEHALF OF
RCA COMMUNICATIONS, . INC.'
Statement.
RCA Communications, Inc. petitions the Commission to reconsider
its orders of September 8 and 19, 1955, (the Orders) and include a
provision as follows:
"The cable facilities herein, authorized, shall not be used to
provide record communication services between the United
States and Hawaii, unless and until prior authorization for
such use has been granted by the Commission upon specific
application therefor. "
* This petition is filed under Section 405 of the Communications Act
and Sections 1. 891-96 of the Commission's. Rules and Regulations.
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The Orders authorize the American Telephone and Telegraph
.Company (the AT&T) to construct and operate twin submarine cables
for telephone and telegraph communication between the United States
and Hawaii.
In. effect, these Orders permit the unique and strategically
placed AT&T-in addition to its present telephone service-to invade
the highly competitive field of overseas record communiations.. Such
action is a momentous step--unprecedented in the field of communica-
tions.
The Orders, insofar as they permit the AT&T to enter the
overseas telegraph field, were actually adopted by a minority of the
Commission. Only three Commissioners favored such action.
Commissioners Bartley and Lee would reserve the issue of telegraph
.service, and Commissioners Webster and Mack did not participate in
the decision.
. RCA urges that the Commission include in the Orders the con-
dition stated above, not in any way for the purpose of precluding the
availability of the cable facilities for national defense, but rather to
safeguard the maintenance as well of a strong and virile radio medium
and better to serve the public interest. Radio has made striking
contributions in recent decades to the advance of international com-
munications.. Radio has pioneered new communication services at
low cost for the public.
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Preoccupation with or undue concentration on the cable facilities
may. well cripple the radio and thus impair, rather than promote, the
over-all national interest. The elimination or strangulation of the
radio service between the United States and Hawaii, telephone or tele-
graph, would be hazardous for the Nation.
RCA and the AT&T presently provide a total of fourteen single
sideband radiotelephone channels. Standby radiotelephone facilities
of RCA are also available for service. .. RCA has always provided
whatever additional facilities are required at its stations for telephone
service. No official complaints have ever been received either from
the Hawaiian Telephone Company or the AT&T that RCA's circuits
have not been entirely adequate.
. However, it is not the purpose of this petition to belabor such
obvious truisms as that radio is vital, that the cable can be cut or
become unavailable for extended periods, and that radio is far more
economical than the cables,
. Moreover, to suggest that the radiotelegraph between the United
States and Hawaii-providing regular message, teleprinter exchange,
facsimile, and leased channel or private line services-is inadequate
or insufficient for telegraph requirements is to disregard the indis-
putable facts. This is especially true in communication between the
United States and Hawaii. . The radio path is perhaps the easiest and
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most solid of all overseas radiotelegraph circuits. Equipped with
modern devices, RCA's eight radiotelegraph channels with Hawaii
are among the most modern and reliable (98 to 99 per cent) telegraph
.circuits in the world.
Even if some. special Government need. should exist for cable
facilitie with Hawaii, this fact clearly would not justify the unres-
tricted entrance of the AT&T into the overseas telegraph field.
11
There is no evidence in the application of the AT&T which, supports
the unrestricted licensing of such company to engage in the overseas
telegraph business,
This .is recognized by the Commission's Order itself, which
contains no "finding" that any unfulfilled need exists for additional
telegraph facilities. It is pointed up by the statements of Commis-
sioners Bartley and Lee:
. Commissioner Bartley:
"I believe we should maintain our long established U.. S.
policy in overseas communications, that voice and record
communications services should be operated separately
and competitively. I would include in this authorization a
provision 'that the cable landing facilities herein authorized
shall not be used to provide. telegraph or facsimile service
between.the United States and Hawaii unless and until prior
authorization for such use has been granted by the Commis-
sion upon proper application therefor.'"
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"I concur in the action of the Commission insofar as it
relates to the provision of telephone service over the cable
facilities proposed by the American Telephone and Telegraph
Company herein. Insofar as telegraph service over such
facilities .is concerned, I would, however, reserve the right
to examine in detail at the proper time the question of whether
the American Telephone and Telegraph Company should be
permitted to operate telegraph. services between the United
States and Hawaii."
The AT&T states in its application that the cable facilities would
not be available for service in any event until sometime in 1958. The
question whether or on what conditions the AT&T should be permitted
to use those facilities for telegraph purposes clearly cannot be appro-
priately or, adequately evaluated at this early date.. This is repeatedly
confirmed by the AT&T in its statement of September 2, 1955. This
statement was filed in support of the application and in response to
several questions raised by the Commission's staff. The AT&T con-
cedes that it does not have the information to answer various questions
which the staff considered essential for a determination of this cause.
Questions with such far-reaching implications as the entrance of the
AT&T into the overseas record communications field should not be
determined in a vacuum.
In this case,. RCA'.s plea to the Commission is to maintain control-
its regulatory jurisdiction-over the volatile situation created by the
AT&T's construction and operation of the cable facilities involved.
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Such jurisdiction cannot appropriately be surrendered to the AT&T
so that it-rather than the Commission--will determine when, where
and under what circumstance the cable facilities will be used in the
record communications field.
Under the circumstances, the proper procedure at this time is
to reserve that question for later consideration and determination,
if necessary, upon specific application in light of all relevant factors.
RCA urgently requests the Commission not to license the AT&T to
enter the overseas record communications field, with its destructive
effects, in the absence of the necessary factual showing upon which
to make its determination or without a thorough investigation of the
inherent problems.. In other words, the Orders are strikingly
premature and unjustified insofar as they authorize the AT&T to
enter the overseas telegraph field.
The procedure of permitting the AT&T to go forward with its
project while reserving the question of any record communications
use for later consideration and determination, if necessary, and upon
specific application, in the light of all relevant factors, should be
acceptable to all who are interested in a fair and orderly determina-
tion of this important question. There would be no prejudice or
delay of the project. . At the same time, the dangers would not be
present of unwarranted injury to the over-all public interest from
hasty or ill-considered action.
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The Orders Disregard Commission Precedent.
On March 2, 1955, the Commission authorized the AT&T to
construct microwave facilities to be used in connection with its pro-
jected Atlantic cable. In a letter to RCA (and presumably to other
carriers) on the same date, the Commission stated as follows:
it. . . it does not appear to be either necessary or appropriate
now to pass upon the question whether, or to what extent, use
may be made of such facilities in connection.with overseas
telegraph operations.. That issue will be resolved at such time
as a specific application is considered which raises that prob-
lem. . Thus, in considering the AT&T applications today, the
Commission has retained complete control over the possible
use of the subject microwave facilities, insofar as telegraph
service between points in the United States and points in the
United Kingdom, or beyond, are concerned, by directing that
any grant of these applications be conditioned upon the follow-
ing terms:
The facilities herein authorized. shall not be used to
provide telegraph service between the United States, on
the one hand, and the United Kingdom or beyond the United
Kingdom, on the other hand, unless prior specific autho-
rization for such use has been granted by the Commission
upon proper application therefor. "
This sound precedent is equally applicable to the AT&.Tas Hawaii
cable and points to the appropriate action. At that time, the Com-
mission made special note of the fact that "the Commission has
retained complete control" * over the possible use of the facilities
for telegraph service.
* Emphasis ours throughout.
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This action by the Commission has not delayed or impaired the
availability of the AT&T's Atlantic cable. The project has gone for-
ward on schedule and in normal course. At the same time, the Com-
mission continues in a position to take whatever action may be necessary
or appropriate to serve the public interest.
On November 3, 1953, the Commission had stated, in a letter
to the AT&T, as follows:
". . . the entrance of the American Telephone and Telegraph
Company into the highly competitive field of international
telegraph communications between the United States and
.Europe raises certain problems which require a thorough
investigation before their resolution. "
Many of these same problems are inherent in the case of AT&Tss
Hawaii cable. However, such problems were not investigated or
resolved prior to the Orders.
Similarly, the Commission retained complete control and juris-
diction over proposed cable facilities at. the time the Commercial
Cable Company requested approval of a new Atlantic cable. This
cable project also involved considerations similar to those present
here; yet the Commission, in its approval of the project in principle,
reserved the right, upon proper application, to impose such terms
and conditions as required in the public interest upon thorough investi-
gation.of the facts and considerations which may be brought to the
Commissions s attention.
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This precedent has been also disregarded by the Commission in
the Orders.
Questions involved in the Commercial Cable Company case
are not unlike questions inherent in the instant proceeding, such as
the economic operation of the cable and the possible competitive effect
on the other United States companies in the international telegraph.
industry. The differences. weigh heavily in favor of conditioning the
instant grant to the AT&T.. This case involves, in addition, all of
the unresolved questions inherent in the AT&T's entrance into the
overseas telegraph field.
The AT&T would be a competitor engaged, not only in the
overseas telegraph service, but also engaged in domestic telegraph
communications. Because of AT&T's control over landline telegraph
facilities, a factual situation would inherently arise like that which
has been the chief source of difficulty in relations between the inter-
national telegraph carriers and Western Union-a situation where
the Congress has found divestment to be the remedy. However, no
consideration has been given to this problem in the Orders nor is
its solution a matter which appears to have been considered by the
Commission.
The Congress has established a national communications policy
that domestic (which includes contiguous foreign countries) and over-
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seas telegraph operations shall be carried on by separate carriers.
This determination by Congress stems in no small measure from
the characteristics of the different operations involved. This policy
is set forth in. Section 222 of the Communications Act.. By its terms,
it provides for the regulation of telegraph communication with Hawaii
in the same manner as with other overseas points.
The AT&T is neither an international nor an overseas telegraph
carrier within the meaning of this policy of Congress. . The mere
assertion by the AT&T that service with.Hawaii is "interstate"
(AT&T Statement of September 2, 1955, page 8) does not provide the
answer. The intent of Congress in this field is apparent and not
confined to the purposes of domestic merger. It is significant that
the Communications Act was specifically amended in 1943 to provide
for this existing policy of Congress.
The Featherbedding of Telegraph Facilities.
The several telegraph carriers providing service between the
United-..States and Hawaii have available more than adequate facilities
to provide the needed public services. These facilities are maintained
not only by RCA but also by Mackay Radio and Telegraph. Company,
Inc. and Globe Wireless, Ltd. All types of telegraph. service are
offered.
. RCA has pioneered with.Hawaii the message telegraph, the
teleprinter exchange service, facsimile, and leased channel or private
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line service. These are the very services (except possibly for mes-
sage telegraph) which the AT&T now seeks to duplicate over its
proposed facilities.
The AT&T's assertion that general telegraph requirements will
significantly increase through introduction of the cable facilities or
that any unfulfilled demand exists which is not now being satisfied by
the existing carriers is pure speculation. Rather, a grant to the
AT&T of authority to provide telegraph service would constitute a prime
example of featherbedding telegraph facilities and allow the AT&T,
through its private line and teletypewriter exchange services, to
cream-skim the three international carriers which presently serve
Hawaii.
That such action is contemplated by the AT&T is apparent from
its applications, because the AT&T argues that unless it is allowed to
invade the telegraph field, its cable project will be less profitable
than would otherwise be the case, and the economic burden would be
shifted to other users of its Nation-wide services. Conversely, if
the AT&T is permitted to siphon off such revenues from the existing
carriers, their operations will have to be curtailed or the economic
burden of maintaining unprofitable or marginal operations with Hawaii
shifted to other users of their services.
Moreover, the diversion by the AT&T of telegraph revenue from
the existing carriers is especially crucial in view of the marginal
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nature of certain of the operations with Hawaii. In the past, the
Commission has warned of the dangers of unnecessary duplication.
In Mackay Radio and Telegraph Company, Inc., 8 F.C.C. 11, 20
(1940), the Commission stated:
"It must be borne in mind that the preservation of existing
facilities which have been satisfactorily serving the public
is of primary importance and that to intensify a highly
competitive: situation not justified by the traffic and revenue
available may be economically disastrous to the American
communications system as a whole. "
The very purpose of common carrier regulation provided by
Section 214 of the Communications Act, under which the AT&T ap-
plication was filed, is "to'prevent useless duplication of facilities
with consequent higher charges upon the users of the service."
In reviewing the economic conditions which led to the necessity
for a merger between Western Union and Postal, the Commission
stated in The Western Union Telegraph Company, 10 F.. C. C. 148,
162 (1943), as follows:
"Competitive practices have resulted in useless paralleling
of facilities, duplication of operations, and wasteful expendi-
tures of resources and manpower. Such competition has, in
large measure, been responsible for the unsatisfactory finan-
cial condition in which both Postal and. Western Union have
found themselves during the course of the last decade or more."
The AT&T itself has repeatedly urged before the Commission
that duplication of common carrier facilities is contrary to the public
interest.. For example, in American Telephone and Telegraph Com-
pany, etc.,. Docket No. 8963, 5 Pike & Fischer Radio Reg. 639, 651
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(1949), a case involving the question of duplication by Western Union
of AT&T's intercity video transmission facilities, the AT&T contended
as follows:
". . . duplication of facilities and, service is inefficient,
uneconomical and contrary to the public interest,. "
The Authorizations For Telegraph Service Are Not Justified.
The Orders broadly authorize the AT&T to provide telegraph
service. However, the recitals in the Orders are limited to the bare
conclusion that such facilities are needed for national defense or
Government purposes, and state as follows:
". . . in light of the foregoing representations from ODM, the
construction and operation of the proposed facilities for
telephone service between the United States and Hawaii are
desirable and in the public interest. "
The Orders do not "find" that the cable facilities are required
for telegraph service. The Orders thus constitute a clear violation
of established law requiring that administrative action must be sup-
ported by appropriate findings, which, in turn, must be based, on
substantial evidence.. Universal Camera Corp. v. National Labor
Relations Board., 340 U. S. 474 (1951); National Labor Relations
Board v. Pittsburgh Steamship Co., 340 U. S. 498 (1951); Saginaw
Broadcasting Co. v. Federal Communications Commission, 96 F.
2d 554M. C. Cir. 1938), cert. denied, 303 U.. S. 655.
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Moreover, the record before the Commission in this matter
would not support the necessary findings that the cable, facilities
are required for telegraph service.
. The burden of proof is on the applicant to show that the public
interest would be served by a grant of its application.. This burden
of proof is not discharged by merely referring to national defense
considerations and attempting to use such considerations as a
springboard to plunge the AT&T into overseas telegraph commu-
nications. Moreover, such an approach is not only contrary to
equity and sound principle, but to public interest as well. The
Commission should not countenance such an approach to licensing
under the Communications Act.
. The Dangerous Implications Involved.
On November 20, 1953, the AT&T advised the Commission
in connection with its Atlantic cable project that it "has no thought
of entering the field of international telegraph communications., "'
and would lease telegraph circuits for Government use only under
certain stated conditions. The AT&T added that "we plan no public
offering" in the telegraph field.
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On. February 3, 1955, however, in a letter to the Commission
seeking authority to construct microwave facilities to be used in con-
nection with such cable, the AT&T strongly urged that the Commission
authorize the facilities for "telegraph services between the United.
States and the United Kingdom or beyond without the prior consent
of the Commission."
As noted above, however, the Commission retained control of
the situation and inserted the condition with respect to telegraph.. ser-
vice. Nonetheless, this action of the AT&T demonstrates the neces-
sity for the Commission to include in the Orders the same provision.
The AT&T seeks in this instance to enter the overseas telegraph field
with Hawaii just as it sought to be free to enter the telegraph field
with respect to its Atlantic cable.
The problem is pointed up by the AT&T's Statement of
September 2, 1955, in.support of the instant application, as follows:
", . . the Bell System is now engaged in the construction of a
submarine cable system across the Atlantic Ocean and another
between Port Angeles,, Washington and Ketchikan, Alaska.
The applicant has contemplated that when sufficient growth
in business or opportunities to stimulate such additional busi-
ness are realized, additional submarine cable projects might
well be undertaken. One. such project has been a cable from 11
the mainland to the Hawaiian Islands. . .
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This development in the international communications field has
far-reaching and revolutionary implications. There are ten inter-
national telegraph carriers seeking to survive in a limited market.
None of these carriers except Western Union has general domestic
facilities over which international or overseas record communica-
tions must originate or terminate, and.Western Union is required to
separate its domestic and international facilities. . The nature and
scope of the domestic facilities of the AT&T are most comprehensive.
The combination of domestic facilities and expansion into the inter-
national or overseas field of telegraph communication by the AT&T
can only result in the demise or impairment of the international
telegraph industry as it has been known during its lifetime.
The effects are painfully apparent from the AT&T's sale of
overseas leased telegraph channels and related services generally.
The Commission's attention is also invited to the fact that
none of the international telegraph carriers is licensed to engage
in the international or overseas telephone service in competition
with the AT&T, although some of them have adequate facilities
usable for this purpose and overseas correspondents. ready and
anxious to provide the telephone service.
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The Orders should be revised to include a provision as follows:
"The cable facilities herein authorized shall not be used to
provide record communication services between the United
States and Hawaii, unless and until prior authorization for
such use has been granted by the Commission upon specific
application therefor. "
Respectfully submitted,
RCA COMMUNICATIONS, INC.,
By
Howard R.. Hawkins
New York, N.Y.,
October 7, 1955.
[Verification attached]
Frederick M. Porter.
Attorneys,
66 Broad Street,
New York 4, N. Y.
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VERIFICATION
THOMPSON H. MITCHELL, being first duly sworn, on oath
deposes and says:
That he is the President of RCA Communications, Inc. , a
petitioner in the above-entitled matter; that he has read the within
and foregoing petition for rehearing and knows the contents thereof;
that the matters and things therein stated are true of his own knowledge,
save and except those matters therein stated on information and
belief, and as to those he believes them to be true.
s l Thompson H. Mitchell
Subscribed and sworn to before me
this 6th day of October, 1955.
s/ Alfred Keiler, Notary Public
State of New York No. 41-2065200
Qualified in Queens County
Certificate filed in New York County
Commission- Expires March 30, 1957
[SEAL]
Declassified in Part - Sanitized Copy Approved for Release 2013/04/24: CIA-RDP78S05450A000300010003-6
 Declassified in Part - Sanitized Copy Approved for Release 2013/04/24: CIA-RDP78S05450A000300010003-6
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CERTIFICATE OF SERVICE.
I, MILDRED JOHNSON, hereby certify that on the 7th day of October,
1955, I served the foregoing. Petition for Rehearing on.Behalf of
RCA Communications, Inc. on the following, by mailing copies
thereof to them at the following addresses:
Harold G.. Cowgill, Esq., T. Brooke Price, Esq.,
Chief, Common. Carrier American Telephone and
Bureau, Telegraph Company,
Federal Communications 195 Broadway,
Commission, New York 7, N. Y.
Washington 25, D.. C.
George D.. Rives,. Esq.,
James A. Kennedy, Esq., Globe Wireless, Ltd.,
American Cable & Radio 111 Sutter. Street,
Corporation, San Francisco, California.
67 Broad Street,
New.York 4, N. Y. William Wendt, E.sq.,
The Western Union
Office of Defense Mobilization, Telegraph Company,
Washington 25, D. C. 60 Hudson Street,
New York 13, N. Y.
s l Mildred Johnson
Declassified in Part - Sanitized Copy Approved for Release 2013/04/24: CIA-RDP78S05450A000300010003-6