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Corporations: Comsat’s First Try

4 minute read

The Communications Satellite Corp. —Comsat to most Americans—stands unique among U.S. firms. Far more than just a business, it is the first venture into space by free enterprise. It was founded by Congress as the first chartered U.S. company in more than a century, and its stockholders range from the giant communications companies, which own 50%, to little investors all over the U.S. It has been watched with proprietary sternness by legislators and the White House, poked and prodded by Wall Street and followed with intense interest by millions of Americans. This week all eyes are on Comsat as it attempts to launch its first communications satellite, called Early Bird, from Cape Kennedy. If the shot is successful, Early Bird will soon provide the world’s first regular commercial communications via earth satellite; if anything goes wrong, the shot will be repeated within three months.

In either case, the 85-lb. Early Bird is destined for a high orbit (22,300 miles above the Atlantic at the equator), will eventually transmit TV broadcasts and telephone messages between Europe and North America. Within 40 hours after launch, it is scheduled to be in position, orbiting at the same speed as the earth’s rotation and thus, in effect, providing a stationary relay station in space. After several days of testing, it will beam a series of international telecasts. Then its 240 two-way voice channels will be switched on for telephone calls—Comsat’s first revenue-producing operation—and will provide 24-hour service to Europe. Later, after a network of satellites is launched, worldwide telephone service will be available.

Choosing a System. Long just a corporate abstraction, three-year-old Comsat is a brand-new company in a brand-new field. It not only has the unprecedented job of orbiting three to 18 satellites by 1967, but has had to negotiate with 45 foreign powers to persuade them to join the system. The U.S. Government estimates that by 1980 more than 78% of all international communications, including telephone, telegraph, television, data transmission and perhaps facsimile newspapers, will be carried by satellites. Comsat will be the prime carrier, the wholesaler of satellite communications.

Comsat has a lot riding on the Early Bird launch—a $3,000,000 investment in the satellite, $3,300,000 paid to the National Aeronautics and Space Administration to make the shot. The corporation also hopes to determine before the year is out which of three satellite systems—Early Bird or two medium-altitude systems—to use in the eventual global network. Even if successful, Early Bird will not mean any quick profits for the corporation. Last week, in an annual report to 190,000 stockholders, the company’s officials cautioned that “no assumptions as to the amount of earnings or their date of beginning should be made at this time.” The date may be as far off as 1970.

Target 1967. The complex and sensitive job of getting Comsat off the ground belongs to two men: Chairman Leo D. Welch and President Joseph V. Charyk. Welch, 66, a former chairman of Standard Oil of New Jersey, is concentrating on Comsat’s finances, running interference on Wall Street and with the communications industry. Canadian-born Charyk, 44, an aeronautics expert and former Under Secretary of the Air Force, oversees the company’s technical operations. No other corporate officers have ever been handed so many varied problems so fast. They have had to handle the housekeeping chores of starting a new company from scratch, the public sale of $200 million of stock, a constant round of proposals and appeals to regulatory agencies, the duty of answering to the President and Congress as well as to stockholders.

So far the flaps have been surprisingly few. In negotiations over whether Comsat or the communications users should own the permanent ground stations in the U.S., Comsat found itself at odds with its largest single stockholder—American Telephone & Telegraph. The question was tossed to the Federal Communications Commission, which must reach a decision soon so that Comsat can draw up a proposed schedule of rates. But these are minor irritations. Comsat still promises to give the world a revolutionary new communications system by the end of 1967.

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