A study of the economics of supplying direct communication services to underdeveloped countries. Comparing the costs of satellite transmission with those of land microwave (for television and telephone) and with shipment of film (for television), the paper suggests that in a wide range of cases the satellite will be more costly than other means. It is concluded that U.S. space policy should be formulated so that there is no commitment to use satellites as a primary means of supplying direct communication to these countries. U.S. policy should stress that worldwide communication services will be provided in whatever manner is most efficient. This may involve satellite links over transoceanic routes with heavy traffic, combined with conventional links over routes of light traffic. 29 pp.