China has begun discussion with Communication Satellite Corp. (Comsat) about establishing an extensive domestic satellite system in the world's most populated nation.
Comsat President Joseph Charyk, who revealed the negotiations in response to a question at the Washington firm's annual meeting here yesterday, said a number of discussions have been held with Chinese representatives.
Under proposals being discussed, Comsat would provide technical assistance to China in building a network of satellites and earth stations, Charyk indicated.
In a separate development yesterday, the Federal Communications Commission approved a Comsat request to reduce international rates by 15 percent, across-the-board, effective today. Comsat asked for the rate cut after reporting a surge in profits during the first quarter of 1979.
The new rates will mean a reduction in Comsat revenues of $16 million a year and the FCC said pointedly that it expects communications firms that use Comsat's satellite facilities, such as Amercian Telephone & Telegraph Co., to pass on cost savings to their own customers in the form of lower charges.
Founded in 1963, Comsat is engaged in providing international maritime and U.S. domestic satellite communications. More than half of the company's revenues come from services provided through satellites of the International Telecommunications Satellite Organisation (Intelsat), in which Comsat is the U.S. representative, joining 101 other countries.
Significant reductions in international communications tariffs and new competive pressures are propelling Comsat into other ventures, however, as a source of continued business growth.
A possible agreement to provide technical assistance would be one such new venture. China also has invited Amercian Telephone & Telegrah Co. representatives to Peking next month to discuss rapid growth in telephone volume between the two countries.
Comsat's Charyk said yesterday that continued growth in telephone communications with China would benefit Comsat. An earth station of the Washington firm, located in California, now handles the China-U.S. business, which expanded more than 300 percent in the first quarter of 1979 to 6,400 calls.
Meanwhile, there have been a series of signification developments related to Comsat's quest for expanded business. Comsat Chairman Joseph McConnell, who retired after yesterday's meeting and was replaced by former Aluminum Co. of Amercian Chairman John D. Harper, discussed many of the recent trends in a farewell address to the meeting.
McConnell and chief executive Charyk noted that:
Comsat completed the acquisition on Monday of Environmental Research & Technology Inc., of Concord, Mass., for $19.6 million. Through ERT, as a subsidiary, Comsat will enter the growing business of environmental information. A large portion of ERT's business is collection of data on air and water quality, as well as transmission of the data-for which satellite technology can play a role.
A new subsidiary-Comsat General TeleSystems Inc.-has been established to develop and manufacture a variety of such specialized telecommunications products as signal processing equipment, earth station components and fiber optic communications equipment.
Comsat will join other nations in the near future to establish a global maritime communications system under an International Maritime Satellite Organization (Inmarsat). Legislation passed by Congress last year permits Comsat to arrange for direct access to the developing maritime system-rather than just relaying message of other communications firms as under the current international satellite system.
A joint venture, Satellite Business Systems Inc., is moving forward with plans for a satellite launching late in 1980 and the startup of initial domestic satellite communications services the following year, despite legal challenges that have threatened delay. SBS is owned by a Comsat subsidiary, Aetna Life & Casualty and International Business Machines Corp., the IBM-Comsat combine has been alleged to be an antitrust violation but the full U.S. Court of Appeals here moved last week to vacate a three-judge panel's decision last year, which had reversed earlier FCC approval of the SBS system.
On other matters, Charyk warned yesterday that some proposals to re-write the nation's communications laws would undermine Comsat. He said a plan of Rep. Lonel Van Deerlin (D-Calif.) would encourage growth of AT&T's monopoly power in the international area, by permitting the Bell System to build cables and other transoceanic facilities without prior government approval.
A separate proposal by Sen. Ernest Hollings (D-S.C.), Charyk said, would gut Comsat's business by ending its role as U.S. representative in the international satellite system. Comsat would be paid for facilities assumed by a new international facilities management firm but would lose its steady revenues.
Recalling recent Senate testimony, Charyk said "I could not believe that one risk Comsat investors were assuming. . .was that, once the global satellite system had achieved both economic and technological success, it would be taken away . . . by the government that had set the policy and encouraged stockholder participation in the first instance."
In response to a question from professional stockholder and annual meeting gadfly Lewis D. Gilbert, McConnell said Comsat is studying a dividend reinvestment plan.
Two new directors - both recent appointments by President Carter - attended yesterday's meeting. They are Atlanta Life Insurance Co. President Jesse Hill Jr. and Tobin Enterprise President Joan F. Tobin. A third presidential appointee - AFL-CIO President George Meany - was absent because of ill health.
Comsat has 12 other directors, elected by the stockholders. All incumbents were reelected yesterday. A local science writer, Lillian Levy, lost heavily in her second bid to be elected to the board. She praised Carter for adding minority and female representation to the board for the first time, however. CAPTION: Picture 1, From left, at Comsat annual meeting yesterday, president Joseph Charyk, outgoing chairman Joseph McConnell and corporate secretary Robert Schwartz. McConnell later was succeeded by director John Harper.; Picture 2, Professional stockholder Lewis Gilbert raises question about Comsat report. Photos by Fred Sweets-The Washington Post