Comsat, AT&T Agree on Satellite Capacity
Oct. 09, 1987
WASHINGTON (AP) _ Communications Satellite Corp. and American Telephone & Telegraph Co. said Friday they have agreed on a plan for future use of Comsat's international satellite capacity for overseas telephone traffic.
The agreement proposes to eliminate the Federal Communications Commission's role in deciding how to split transmission of AT&T's international voice traffic between its own undersea cables and Comsat's network, an issue that for years has resulted in protracted proceedings.
The plan was submitted for approval to the FCC, which is reviewing its rules governing AT&T's transmission mix.
FCC spokesman John Kamp said ''our initial impression is that it's a good idea. It may be helpful to consumers and to the industry.''
Comsat Chairman Irving Goldstein called the agreement ''one of the most important in Comsat's life,'' providing the company with assurances it needs to make investments in satellites in the 1990s and allowing it to compete with fiber-optic cable.
Analysts have said fiber-optic cable could give Comsat competitive trouble, but Comsat and AT&T officials said the agreement reaffirms AT&T's commitment to satellites as part of their transmission mix.
The first trans-oceanic fiber-optic cable will handle calls across the Atlantic beginning next year. It is owned by more than two dozen companies, including AT&T.
Comsat, a publicly traded company created by Congress, controls U.S. access to Intelsat, a consortium of 114 countries that provides international telecommunications through a global satellite network.
Under the agreement, AT&T will keep its existing 20,000 Comsat circuits and will place an average of 34 percent of all additional circuits with Comsat through 1994. In addition, as AT&T converts from analog to the more advanced digital circuits, each added digital circuit on Comsat will be under a 10-year contract.
AT&T, the nation's largest long-distance telephone company and the only one whose rates are regulated by the FCC, will send about 61 percent of its international phone calls via satellite by the end of this year, the companies said.
''This arrangement assures AT&T of a continuous supply of high-quality international circuit capacity at reasonable rates,'' said Bill Ohnsorg, AT&T director of international policy and plans.
The Comsat rates in the agreement for digital circuits, which can handle the traffic of about four analog circuits, will result in a ''significant cost savings'' for AT&T, the companies said in a joint statement. Under terms of the agreement, the rates also would be available to other long-distance carriers.
By the early 1990s, AT&T plans to move 85 percent of its calls on digital circuits.
AT&T spokeswoman Edith Herman said ratepayers could benefit from the cost reductions and technological improvements, but because these improvements would be phased in over seven years, AT&T can't predict if any cost savings would accrue to ratepayers.