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The subcommittee met, pursuant to notice, at 11 a.m., in room 5110, Dirksen Building, Hon. John O. Pastore, presiding.

Senator PASTORE. The hour of 11 has been reached and we will call this hearing to order.


Today the Director of the Office of Telecommunications Policy is appearing before the committee to inform us of the activities of that Office over the past year and to outline its plans for the coming year. These activities are set out in great detail in a report submitted to the Committee by the Office of Telecommunications Policy, and at this point that report will be inserted in the record.

Over the past months, Dr. Whitehead, your speeches, interviews and policy statements regarding broadcasting have caused a good deal of concern because they have touched upon the very sensitive areas of censorship, the first amendment, and government influence over the broadcast media.

For instance, in your recent speech in Indianapolis, you spoke of network news and licensee responsibility, and referred to "elitist gossip,” “consistent bias," and "ideological plugola" among network


Subsequently, in a public address in New York City you went to great length to explain that the meaning of your Indianapolis speech had been misinterpreted and misunderstood by a great number of people.

In any event, Doctor, one of the main reasons you are here today is to clarify your position once and for all.

You have also spoken publicly about public broadcasting in ways that have lead many people to wonder if you aren't really trying to make the Corporation for Public Broadcasting moribund.

Stripped of all rhetoric and subtleties, you told told the educational broadcasters that by your standards they were not programing their stations properly, so unless they changed-and you were quite specific Staff members assigned to this hearing: Nicholas Zapple and John D. Hardy.


as to how-permanent financing would always be a thing of the future. As part of your announced effort to help public broadcasting, you have also persisted in urging 1-year authorizations for the Corporation despite the repeated testimony of experts that a 2-year authorization is the minimum necessary if the Corporation is to have the financial stability to function and plan effectively.

Congress, of course, created the Corporation and gave it a mandate. Many of us still believe the way to change that mandate or to assure it is being carried out is through Congress, and not by OTP recommending funding which is patently inadequate.

And this, Dr. Whitehead, is another very important reason for your appearance today.

I would hope, therefore, you will disdain generalities, and explain precisely what you mean in these very sensitive areas. You owe the American people that much.

When the Office of Telecommunications Policy was created it appeared there was an agency of government which would develop an overall telecommunications policy for the country. At least many of us in Congress were under the impression that this was the issue with which OTP would be concerned.

We supported the reorganization plan because initiative from the executive branch was long overdue and answers had to be forthcoming if the American public was to receive maximum benefits from communications technology.

When Dr. Whitehead appeared before the committee in 1970, I recited in detail the history of our efforts to obtain such a policy, and emphasized the urgency of the matter. He agreed with the committee, and stated his intention to proceed.

I do know that this committee has specifically urged the interested agencies of Government to adopt a policy regarding provision of satellite communications for international civil aviation; and about a year ago the President instructed Dr. Whitehead to proceed with an updated statement of policy in this area.

For whatever reasons, an aeronautical communications satellite is not yet a reality. The same may be said of a maritime satellite.

In August 1971 this committee asked for the administration position regarding CATV. In Dr. Whitehead's report to this committee last year he said:

There is urgent need for policies to guide the development and regulation of cable in such a fashion that its enormous benefits can be rapidly achieved without depriving the society of its healthy programing industry and its essential broadcasting services.

I would hope Dr. Whitehead will tell us specifically when we may expect policy recommendations and legislation to implement them.

Our witness today, Dr. Clay T. Whitehead, is Director of the Office of Telecommunications Policy. This office was established by the Reorganization Plan No. 1 of 1970. Dr. Whitehead serves as the adviser to the President of the United States on all telecommunications matters. I have a prepared statement which I will not read, but will insert in the record.

I see that you have a written statement, Dr. Whitehead. In the spirit of the first amendment, I will not deny you from reading it. I would assume that it contains the good things that you have done. We are also

going to talk to you a little about a few of the speeches that you have made.

As a matter of fact, I want to say, at this juncture, that I have read your speeches several times, both with reference to public television, and also commercial television. I read your speech of December, the one you made in Indianapolis-four times.

I have read the speech that you made at the Americana in New York-I have read that twice. In your Americana speech, you said your Indianapolis speech was greatly misunderstood. I am going to give you an opportunity, today, to explain yourself so that we can all understand you.

I want to say this. There has been a tremendous amount of alarm generated by your recent speeches in all sectors of our country.1 There has been a barrage of editorial comment on some of the statements that you made. There seems to be a feeling that somehow, there is an antipathy on the part of the administration toward the networks. In an interview, for example, you talked about the dominance of the networks, and how it is affecting the growth of CATV.

We would like to have you get into that. In other words, I think, for your benefit, and for the benefit of everyone concerned, I think we ought to put our cards right on the table today, and get a clear understanding of exactly what we mean.

I want to say this to you; there is some justification for this alarm on the part of people. Not to long ago, as you will recall, a certain commentator-I'll mention his name-Dan Schorr was being investigated by the FBI, under the pretext that he was being considered for a position that he had never heard about and nobody had ever asked him about. He wasn't even interested.

Naturally, of course, a lot of people were disturbed, that the strong arm of the White House might be reaching out to inhibit the independence of the broadcast media. I think that if there are any unreasonable fears, they should be allayed here, today; and on the other hand, if there is any justification for some of these matters that you have discussed I think we ought to scrutinize them very closely. In the long run, we want to preserve the spirit of the Constitution.

I am one of those who is a firm believer in freedom of expression. I have had my gripes with the broadcasting industry, and I don't want to be placed in the position of being the devil's advocate today. I have praised the industry and I have criticized it. But, through it all I am a firm believer in the freedom of expression. I come from a State whose capitol has one of the four unsupported domes in the world. There is an inscription on that dome, and it captures the spirit of America, I think.

Indeed, it is the spirit of Rhode Island which is the cradle of religious freedom. It is a statement made by Tacitus, and the translation is, "Rare the felicity of the times, when it is free to think as you like and say what you think."

That is the predicate on which America was built. That is the predicate of the first amendment. I hope that we can take it from there. Senator BAKER. Mr. Chairman, I commend you on an eloquent and timely opening statement.

1 A compilation of newspaper articles appears at pp. 55.

I would not burden the committee with a long, detailed dissertation of my own, except to say that I recall that Dr. Whitehead in a previous appearance before this subcommittee, in connection with the confirmation of the Deputy Director of his office, said, that he conceived his job to be to dramatize the work of OTP.

I hope you do not think me frivolous, when I say, you sure have dramatized the job of OTP in the last several months.

I too have read carefully, and considered the legislative proposals, that have emanated from your office. I think they are of a high order, competence, and show a great amount of thought and concern.

They meet headon many issues that have been languishing for a long time. At the same time, there are many of your proposals and some of your statements that have been highly controversial, and that may or may not be fully understood or misunderstood.

For my part, I look forward to these hearings and your appearance before this subcommittee as an opportunity to thoroughly ventilate your viewpoints with respect to specific legislative proposals, such as license renewal, cable TV copyright, and many, many others, as well as your more general points of view vis-a-vis, the role of television, of network television, and network news coverage.

Whether that is coupled with specific legislative proposals or whether it is not in your point of view, is also an important matter.

So, I join with the chairman in welcoming you to this subcommittee hearing, and we look forward to a lively and energetic conversation, and I once again, say, if you set out to dramatize the job of OTP, some of your speeches have certainly been successful.

Senator PASTORE. Any further comments on the part of the members of the committee, before we hear from Dr. Whitehead? Senator Moss. Not at this point.

Senator PASTORE. You may proceed, Doctor.


Dr. WHITEHEAD. Thank you, very much, Mr. Chairman.

This is the first occasion that I have had to appear before this subcommittee to discuss the activities of the Office of Telecommunications Policy, and I appreciate the opportunity.

I share your feeling that the open exchange of views and the airing of these matters is of utmost priority, and I welcome the opportunity to do that, today.

I have prepared a statement covering the programs and activities in the Office in 1972 and 1973. With your permission, I will introduce that for the record, and briefly summarize it here.

Senator PASTORE. Without objection, so ordered.

(Copy of Office of Telecommunications Policy's activities and programs 1972-73 follows:)


Calendar 1972 was the second full year of operation of the Office of Telecommunications Policy. The following report summarizes the principal activities of the Office in the four broad areas of its concern, and sets forth the principal programs contemplated during the present year. Omitted are those activities related to internal organization and management, and also to routine operations, such as review of legislation referred for comment by the Office of Management and Budget.



Common carrier communications is for the most part a monopoly public utility service provided by the Bell System and independent telephone companies. The performance of the industry has come under increasing criticism in recent years, and it has been proposed that various segments of common carrier operations be opened to competition. In response to such proposals the carriers have asserted that the benefits of economy of scale and operational integrity derived from integrated ownership and operation far outweigh any potential customer benefits from competition.

GTP has initiated several investigations into these questions. The ultimate aims of these studies are, first, to develop recommendations as to which aspects of common carrier operation can safely be opened to increased competition, and which should remain under integrated control; and, second, to determine the regulatory principles and practices best designed to ensure that noncompetitive operations remain efficient and innovative.

Principal studies and findings to date include the following:

1. Domestic Satellite Communications

OTP has consistently found that there are insufficient economies of scale in domestic satellite communications to warrant government restriction of competition. It therefore recommended to the FCC that any technically and financially qualified applicant be allowed to establish and operate satellite systems on a competitive basis, and participated in the FCC hearings on this subject. Subsequently, the FCC adopted what is essentially an open entry policy with respect to the provision of communications services via domestic satellites.

2. Specialized Communications Carriers

The entry of new communications carriers offering "specialized" services (generally any services other than public telephone, e.g. data, private line, video interconnection) in competition with the existing telephone carriers was approved in principle by the FCC, but a number of issues which could determine the practical feasibility of competitive entry were left unresolved--such as the allowable monopoly pricing response and interconnection constraints.

To assess the implications of these issues for long-range public policy, OTP initiated three major programs. First, OTP undertook a major study to identify and quantify scale economies in the provision of all significant voice, data, and video common carrier services by individual functional areas (i.e., long-haul transmission, toll switching, local distribution, terminal supply, and general provision of service). This is necessary in order to decide where monopoly should be protected from competition or is inevitable, from where it is not. OTP also explored various pricing policies with a view toward determining which of these policies would promote the greatest efficiency in the monopoly area, as well as prevent hidden subsidies from arising, and best promote competition.

Second, OTP began to investigate the technical and economic implications of alternative interconnection policies which, among other factors, will be a major determinant as to whether competition in the supply of terminal equipment (e.g., telephone and data sets) to be used with the existing telephone network is viable. This investigation will serve as the basis for recommendations for new legislation or regulatory policy.

Finally, OTP began an examination of the benefits and feasibility of a brokerage market-i.e., a market in the resale of communications services by noncommon carriers and an evaluation of possible impact of removing current restrictions on such activities on common carrier operations, revenues, revenue requirements and service arrangements under various policy alternatives.

Taken together, these three programs will provide guidelines for public policy regarding the major structural characteristics desirable in this industry group. 3. Common Carrier Regulation

Even if it is feasible to allow new communications services to develop on a competitive, rather than monopoly basis, and to introduce competition into selected existent aspects of common carrier operations, this will affect only about 10-20% of current total common carrier operations. Most common carrier operations, notably the public telephone service, will continue to be monopolistic for some time.

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