Evening star. [volume], February 25, 1940, Image 8

About Evening star. [volume] (Washington, D.C.) 1854-1972

Image provided by: Library of Congress, Washington, DC

                
F. C. C. Recommends
Cable and Radio
Monopoly for U. S.
Commission Minority
Holds International
System Is 'Undesirable'
By WILLIAM J. WHEATLEY.
Consolidation of all international
eable and radio telegraph facilities
Into one monopolistic unit, under
stringent governmental control, is
recommended in a report sent yes
terday to Senator Burton K.
Wheeler by the Federal Communi
cations Commission. The report
contains a minority viewpoint which
holds that a unified international
Bystem is neither justifiable nor
desirable and which strongly sup
ports *the opinion of the Navy De
partment that national defense re
quires the segregation of cables and
radio telegraph.
The general basis for the monop
olistic recommendation is that of
protecting the cables from finan
cial destruction through the ad
vancement of radio and the increas
ing use of the air mail for trans
oceanic communication. Another
ground is that a monopoly would
be in better position to deal with
systems in foreign countries which
are owned, controlled or dominated
by the countries in which they
operate.
It was disclosed at the commis
sion s offices that the final vote was
four to three, revealing a new line
up within the commission on pol
icy matters. The majority vote
was by Chairman Fly and Commis
sioners Payne, Walker and Thomp
son. The “no” voters were Com
missioners Brown, Case and Craven.
Avoided Dissenting Report.
Inclusion of the minority view
point in the paper sent to Senator
Wheeler, it was learned, was a move
of the majority to ward off what
■would have been a dissenting re
port. Efforts to mould the two
widely divergent viewpoints within
the commission was one of the
reasons, it was explained, for the
long period required to perfect the
final draft. This international re
port is the second and last phase
of a study of the telegraph situa
tion. The first on the domestic
problem was sent to the Senate
several weeks ago. While it was
not unanimous, the difference in
that regard was not as wide as on
the international report.
The new report says the competi
tive situation in the international
field is complicated by the fact that
American carriers are forced to
make arrangements with foreign
countries for the handling of inter
national communications. These ar
rangements in the past, it was
added, seldom have been to the ad
vantage of the American carriers,
due to the fact that the foreign
governments conduct their negotia
tions through a monopoly. In only
a few countries, it was pointed out,
are American carriers permitted to
compete among themselves for
traffic on foreign shores.
The commission said that there
Is serious doubt whether the cable
carriers can continue for long in the
face of vigorous competition by the
financially secure radio carriers and
ever-growing radio telephone and
air mail services. Under a unified
system, it was asserted, it may be
expected that rates will tend to be
based more largely on costs in the
radio field than telegraph.
Points for Monopoly.
From the standpoint of national
defense, the more important ele
ments to be considered, the report
reads, are the adequacy of a unified
Bystem in scope and service, the
maintenance of all possible alterna
tive cable and radio routes, the elim
ination of foreign influence and
ownership, the undivided loyalty of
employes and managerial interests
and a sound financial structure.
The report, however, says that it
has been told by the Navy Depart
ment that the interests of national
defense require the segregation of
cable and radio carriers in the inter
national field. One reason which is
advanced in support of this position,
it was added, is the possibility that,
under a single unified system, the
interests favorable to cable operation
might be dominant and thus be in a
position to retard the development
of radio as a means of communica
tion.
The minority on the commission,
it was asserted in the report, con
tend that the fostering oi at least a
limited competition will result more
quickly in improved service at
cheaper rates for^the public. This
group also is of *tne opinion that
much competition will afford greater
flexibility not only from the stand
' point of Government regulation but
also from the standpoint of nego
tiation with foreign correspondents.
Doctrine of Competition.
The minority contends further,
the report reads, that the economic
situation at present does not pre
clude fostering of the doctrine of
competition, at least between radio
and cables generally, and on the
Pacific at least between two radio
carriers and one cable carrier.
Neither is it believed that present
economic conditions in the interna
tional telegraph field justify the
conclusion that maintaining compe
tition on a limited scale will result
in abandoning the much desired
cables.
The minority contended also that,
because the incentive to make im
provements in either cable or radio
communication will not be stimulated
by monopoly, a telegraph communi
cation monopoly in the international
’ field will not lead ultimately to
cheaper rates and better service.
In addition to Western Union,
major international cable carriers
are All American Cables & Radio,
Inc.; Commercial Cable Co., the
r French Telegraph Co., and Com
mercial Pacific Co. In 1938 these
five companies had revenues of
$16,613,263 from international opera
tions, the report said.
Major radiotelegraph companies,
in addition to R. C. A. Communica
tions, are Globe Wireless, Ltd.;
Mackay Radio and Telegraph Co
(California), Mackay Radio and
Telegraph Co. (Delaware), Press
Wireless, Inc.; Tropical Radio Tele
graph Co., and United States-Liberia
Radio Corp. The commission said
their revenues totaled $23,436,404 in
1938.
The report said that the Western
Union Telegraph Co. handles the
most business of the cable carriers
in the international field and R. C.
A. Communications, Inc., handles a
slight majority of the business in
the radiotelegraph field. Practically
all business originating in, termi
nating in and transiting the United
States is handled by 12 cable and
radiotelegraph carriers.
A
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