Page:CAB 129 post war memoranda 73-38.pdf/4

 Printed for the Cabinet. February 1955

CONFIDENTIAL

C. (55) 39

12th February, 1955

CABINET

TRANSATLANTIC TELEGRAPH CABLE

The Commercial Cable Company of America (C.C.C.) want to lay a new transatlantic telegraph cable following the route U.S.A., Nova Scotia, Newfoundland, Greenland, Iceland, Scotland. The cable would give 120 telegraph circuits. It would cost them about $25 millions of which about $17 millions would be spent in this country on cable and repeaters.

2. The probable but undisclosed object of the proposal is to put the C.C.C. in a dominant position as regards transatlantic telegraph traffic in relation to other American external telegraph carriers and to ourselves. The United States Chiefs of Staff have, however, expressed the opinion that the cable has a definite potential strategic value; our own Chiefs of Staff have endorsed this view and undertaken that account will be taken of it. There is no backing from the North Atlantic Treaty Organisation.

3. There are already telegraph cables between this country and the U.S.A. which are owned, and worked at both ends, by two American companies, one of which is the C.C.C.; the licences of these companies to operate here are time­ expired. We have limited cable capacity to Canada, but none to the U.S.A. In collaboration with the American Telephone and Telegraph Company and the Canadians we are putting in a new transatlantic telephone cable which should be working by the end of next year. Although primarily a telephone cable this will also give us more telegraph channels to Canada and, if the United States Government would agree, some to the U.S.A. also. Any chance of using the new telephone cable for telegraphs to the U.S.A. would be lost if the proposed C.C.C. cable were laid.

4. Our present telegraph service to the U.S.A. is by radio which is not really competitive with the American cable system. It is partly because we cannot as yet give such good service, and partly for political reasons, that we have not terminated the time-expired licences of the American companies to operate here. The political reasons are likely to be valid for some time, but clearly we do not want to strengthen the position of the foreign companies. The proposed telegraph cable would do just that for the C.C.C. We should lose any opportunity to negotiate for a greater share of the transatlantic telegraph traffic. We should have to continue to rely on radio, or to lease American owned circuits, and might even be finally forced right out of the U.S.A. telegraph business. We should imperil our present small profit on this service and forgo the possibility of earning a net annual profit for the sterling area as a whole of about £½ million. This would be forthcoming if the American carriers ceased their operations in the United Kingdom and we had a half share with the Americans in a modern transatlantic telegraph system such as could be provided over our telephone cable.

5. We have to consult our Commonwealth Partners in the Commonwealth Communication System before granting any new concessions and they are not