Evening star., 1940-02-25
F.C. {. Recommends
Cable and Radio
Monopoly for U. 5.
Commission Minority
Holds international
System Is 'UndesirobIe'
By WILLIAM J. wHEATLEY.


recommended in a report sent yes
terday to Senator Burton K.
Wheeler by the Federal Commune
cations Commission. The report
contains minority viewpoint which
holds that unified international
system 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.
1t was disclosed at the commits
slons offlces that the final vote was
Tour to three, revealing a new line
up within the commission on pol
ICY matters. The majority vote
was by Chairman Fly and Commits
sioners Payne. Walker and Thomp-
son. The mo" 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 q move
OF the majority to ward of what
would have been q 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
nnal draft. This international re.
port is the second and last phase
OF a study of the telegraph situa-
ton. 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
held 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,
governments conduct their negotia-
tlons through 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
system in scope and service, the
maintenance Of all possible alterna-
tive cable and radio routes, the elm
ination Of foreign influence and
ownership, the undivided loyalty of
employees and managerial interests
ana 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 means of communica-
ton.
The minority on the commission,
it was asserted in the report, con-
tend that the fostering OF at least a
limited competition Will result more
quickly in improved service at
cheaper rates for. the public. This
group also is Of the opinion that
much competition will afford greater
f1exibility 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 limited scale will result
in abandoning the much desired
cables.
The minority contended also that
because the incentive to make i'm
provements in either cable or radio
communication will not be stimulated
by monopoly, telegraph commune
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 Gables & Radio
Inc: Commercial Gable Co., the
French Telegraph Co., and Com
mercial Pacific Co. In 1888 these
i've companies had revenues o1
$16,613263 from international opera
tions, the report said.
Major radiotelegraph companies
In addition to r. c. A. Communica-
fiaras ara Glahe yxyireless I'd