Image: AT&T's Telstar I and II were not really NASA spacecraft, but NASA was able to claim participation in the program because of its involvement in launching them.
AT&T designed, built, and payed for the launches with its own funds. The Telstar I and II spacecraft were prototypes for a constellation of 50 medium orbit satellites that AT&T was working to put in place. When the Kennedy Administration decided to give the monopoly on satellite communications to Comsat, AT&T's satellite project was halted.
J. R. Pierce and his associates at Bell Labs worked throughout the second half of the 1950's on satellite communications concepts. In the fall of 1960, AT&T began development of a satellite communications system called Telstar. The operational system would consist of "between 50 and 120 simple active satellites in orbits about 7,000 miles high."
Using large launch vehicles that were then being developed, it was envisioned that "a dozen or more of these satellites could be placed in orbit in a single launching." With the satellites in random orbits, Bell Labs figured that a "system of 40 satellites in polar orbits and 15 in equatorial orbits would provide service 99.9 per cent of the time between any two points on earth. A.T.& T. has proposed that the system contain about 25 ground stations so placed as to provide global coverage." (Pierce, pg. 101)
The cost of such a system would be high, Pierce estimated it at $500 million in his 1961 article, but that was not a detriment from AT&T's standpoint. As a monopoly at the time, AT&T's rates were regulated. These rates included an amount that allowed AT&T to recover its costs as well as make a profit. The costs of the satellite system would be passed on to consumers just as the high costs of undersea cables were. Higher cost investments by the monopoly allow higher profits, so the complex Telstar system was attractive to AT&T.
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