The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight the U.S. position on Indonesia from Assistant Secretary of State Stanley Roth; two views of the satellite problem that caused millions of pagers and similar things to go silent; today's Senate floor debate on the tobacco bill; a conversation with Robert Crandall, who stepped down today as head of American Airlines; and a poetry farewell to Frank Sinatra, read by Robert Pinsky, the Poet Laureate of the United States. It all follows our summary of the news this Wednesday. NEWS SUMMARY

JIM LEHRER: Secretary of State Albright called on President Suharto of Indonesia today to preserve his legacy by permitting a transition to democracy. Suharto announced Tuesday he would step aside after implementing political reform and holding elections, but he did not say when that would be. Albright spoke to U.S. Coast Guard Academy graduates in Connecticut.

MADELEINE ALBRIGHT, Secretary of State: President Suharto has given much to his country over the past 30 years, raising Indonesia's standing in the world and hastening Indonesia's economic growth and integration into the global economy. Now, he has the opportunity for an historic act of statesmanship, one that will preserve his legacy as a man who not only led his country but who provided for its democratic transition.

JIM LEHRER: Thousands of Indonesians matched against Suharto in a half dozen cities today. They called for his immediate resignation. Some 10,000 students occupied the parliament building in Jakarta. Many blamed Suharto for austerity measures imposed to resolve the worst economic crisis there in three decades. More than 500 people died in violent riots last week. We'll have more on this story right after the News Summary. There was a new kind of communication disruption across the U.S. today. A major satellite lost touch with Earth last night, causing pagers and radio and television relays to go dead. An estimated 80 percent of forty to forty-five million beepers in the U.S. were affected. We'll have more on this story later in the program. The U.S. trade deficit rose to an all-time high in March, the Commerce Department reported today. The $13 billion gap was blamed on the financial crisis in Asia. Week currencies there slowed U.S. exports to the region and made Asian goods cheaper for American buyers. The Treasury Department announced a new look for the $20 bill today. It will have a larger, off-center portrait, cleaner lines, and more blank space. Andrew Jackson, the seventh president, will remain on the front, the White Housed on the back. It will be put into circulation in the fall. Treasury Secretary Rubin, Federal Reserve Chairman Greenspan, and U.S. Treasurer Mary Ellen Withrow presented the new bill. Rubin said it was aimed at stopping counterfeiters.

SECRETARY RUBIN: We still face enormous challenges if we are going to stay ahead of the curve. Each introduction marks a new stage in the government's assault on would-be counterfeiters, but it also gives us a fresh opportunity to convey an important message to the people who use our currency, the role the public must play to keep our currency secure. Unless those who use United States currency assume responsibility to examine it, the security features cannot stop counterfeiting.

JIM LEHRER: The tobacco bill stalled in the Senate today. Senators had hoped to vote on it before the Memorial Day recess, but debate on dozens of amendments have slowed things down. The bill would raise cigarette prices by $1.10 a pack and collect $516 billion from the tobacco industry over 25 years. Most of that money would go to combat teen smoking and recover medical costs of smoking illnesses. We'll have excerpts from today's floor debate later in the program. The House voted today to limit future high technology exports to China. The vote was four hundred and seventeen to four. The restriction was attached to an amendment to a $270 billion defense spending bill. Yesterday, House Speaker Gingrich announced plans to investigate a Clinton administration decision concerning China. It centers on allegations the transfer of U.S. satellite technology was allowed in exchange for campaign contributions arranged by the Chinese government. In the Senate today Majority Leader Lott announced a similar inquiry. And that's it for the News Summarytonight. Now it's on to the U.S. position on Indonesia, the big satellite problem, the tobacco debate in the Senate, Robert Crandall of American, and a poetic farewell to Frank Sinatra. UPDATE - NATION ON EDGE

JIM LEHRER: The Indonesia story. We begin with an update from there by Ian Williams of Independent Television News.

IAN WILLIAMS, ITN: By first light the armed forces had shut down Jakarta. Tens of thousands of soldiers threw a ring of steel around the center of the capital. In the face of such overwhelming odds, the opposition retreated, calling on protesters to stay away. Beyond the armor, the national monument and the vast emptiness of Monass Square, which the opposition had vowed to fill with hundreds of thousands of protestors. Instead, the country's most prominent opposition leader joined the students occupying parliament. He claimed a general had told him the army didn't care if Indonesia suffered a massacre like that in Tiananmen Square in China. And he wasn't prepared to take that risk.

MAN: one to sacrifice innocent people Suharto

IAN WILLIAMS: He called on the army to make a clear choice, either continue to protect one man whose family has plundered the nation or protect the interests of the Indonesian people. And where they were free to do so, the people made their feelings know across the country today. An estimated quarter of a million took to the streets of Jock, Jakarta, denouncing President Suharto, a message repeated in several major cities. The only protests allowed in the capital were to parliament, the authorities intent on trying to contain the demonstrations. And among those who marched arm in arm with the students were professionals. There were lawyers who say Suharto will manipulate a planned committee on reform, the membership of which will be announced tomorrow.

MAN: And we do not agree also to the appointing of the committee of reformation by him. We are afraid of any engineering.

IAN WILLIAMS: Again, the ambiguous attitude of some soldiers was clearly on display, though not among those, many of them special forces who'd sealed off the center of the capital, blocking people's power from entering the heart of Jakarta. So the army has thwarted today's people's protests by shutting the people out of the city. It's been a massive, if rather crude, show of force, but an effective one, at least for the moment.

JIM LEHRER: To the American response and to Margaret Warner.

MARGARET WARNER: As we just reported, Secretary of State Albright today urged President Suharto to seize what she called the opportunity for an historic act of statesmanship. For more on the U.S. view we turn now to the State Department's point man on Indonesia, Assistant Secretary of State for East Asian and Pacific Affairs, Stanley Roth.Welcome, Mr. Secretary. What did the Secretary of State mean by what she said today?

STANLEY ROTH, Assistant Secretary of State: I think when she called for historic act of statesmanship, she was referring to the opportunity that President Suharto has to move in a timely and credible fashion to implement the transition process that he announced yesterday. As you know, he called for a process for elections in which he would not compete, therefore, if one has free and fair elections, one is, by definition, having a democratic process and, of course, if he's not running, it means that it will certainly be a transition. She was trying to state that this should take place as soon as possible for the good of the Indonesian people.

MARGARET WARNER: So when reports today characterized it, essentially she was urging him to step down, is that correct?

STANLEY ROTH: This should not be misunderstood as a call for an immediate step down today. We have studiously avoided deciding how political reform in Indonesia should take place. We don't believe it should be an American plan. It should be an Indonesian plan. But what we do believe is that there has to be a process of political reform. It has to be credible. It has to result in a democratic transition. And we think the sooner it takes place, the better for the good of the Indonesian people.

MARGARET WARNER: Now a newspaper in Indonesia called Kompas is reporting and the American wires picked up that Suharto, they're saying, is going to after he names this reform council tomorrow turn over power to his vice president, Mr. Habibi. What do you know about that?

STANLEY ROTH: Jakarta is awash in rumors at the moment. I cannot confirm that. We'll just have to wait and see, but for now we do not know that to be a fact.

MARGARET WARNER: Did President Suharto know what the Secretary of State was going to say before she said it today?

STANLEY ROTH: In the immediate sense, of course not. This was not something that we had previewed for them. But in the larger picture the United States' message has been very consistent and very public. Secretary Albright made a public statement last week, as did President Clinton, as did the G-8 leaders in Birmingham, and all of those focused on three points. First, there has to be political reform. Otherwise, Indonesia is not going to break out of this cycle of violence. Second, this reform should occur through a process of dialogue between the Indonesian government and its citizens, and, third, while this process is taking place, there has to be restraint by all parties, and certainly that means the security forces has peaceful demonstrations take place.

MARGARET WARNER: But the idea that you just reiterated today that this should also happen as quickly as possible. I mean, has the U.S. government been in private contact? Are we in private, direct contact with President Suharto now, and are we telling him that privately?

STANLEY ROTH: Again, we are not trying to micro-manage the political process in Indonesia. We are allowing them to do come up with an Indonesian solution to an Indonesian political crisis. And we have studiously avoided taking a position on whether it should be days, weeks, or how they do it. We tried to outline the broad principles under which political reform should take place.

MARGARET WARNER: Now, what I'm driving at is: Are we in direct contact with him? Are U.S. officials seeing him at all?

STANLEY ROTH: We have not had any direct face to face contact that I'm aware of in the past few days with President Suharto. And we are not negotiating the terms of a political deal with him. This is an Indonesian affair.

MARGARET WARNER: All right. Now, you talked about timely and as soon as possible. Mike McCurry, the White House press secretary, today said swiftly. What are we talking about? I know you're not trying to micro-manage or dictate a timetable, but let me ask it another way. President Suharto Tuesday was talking about what sounded like a fairly lengthy process of reform, several months. Some observers said it would take into next year. Do you think that is feasible?

STANLEY ROTH: Let me say first that there are many different ways in which a transition to democratic government could take place in Indonesia, and these different scenarios would have different time frames. What we are interested in and the reason we have said we would like to see it happen as soon as possible is because obviously Indonesia is paying a terrible price and particularly the poorest people, more than a hundred million people in Indonesia, themselves, who are suffering now as a result of the political chaos, the near shutdown of the economy, and, of course, the tragic violence that took place last week, by some estimates 500 people, and the possibility that more could occur if the cycle of violence is not broken. Therefore, we believe it's not only in the interest of the outside world and of the region for reform to occur as soon as possible but the Indonesian people, themselves.

MARGARET WARNER: Now maybe if you put on your analyst's hat a little bit, your reading of the intentions of the opposition say and the students do you think the situation is such that they would be willing to accept some sort of a process that would take months and months and in which President Suharto, himself, would preside over the transition, or do you think what we're probably looking at is that as they are saying publicly now, they want him to step aside while whatever transition takes place takes place?

STANLEY ROTH: Again, I'm not going to be able to go much further than I've already gone. There are many different ways of achieving the same objective, and the Indonesians have to decide it. And one can see the timetable taking place over a period, you know, different periods of time, depending on the path they choose. All we feel appropriate for the United States is that we need to break out of this cycle, they need to have political reform, and they need to do it peacefully.

MARGARET WARNER: What is your reading based on American contacts with President Suharto and his government of he, himself? For instance, when he made this announcement Tuesday that he was ready to step aside, you heard right in our tape piece a lot of skepticism from people over there that he really meant what he said. Do you think he means what he says?

STANLEY ROTH: It's always difficult to step into the head of a leader of another country. Let me simply say that this was obviously a major change for Suharto, himself. Only a few weeks ago, before he left for Africa for a non-ally movement meeting, he had made clear that political reform will have to take place after the year 2003, which is when his current term expires. Obviously, he, himself, has been enormously influenced by the developments that have occurred, by the demonstrations, I assume by the fatalities last week, and the economic implications of this for the Indonesian people. So I assume that he has made a decision that he will step aside. This was a huge announcement yesterday that he would call for earlier elections and that he would not run.

MARGARET WARNER: Does the U.S. know what he wants to step aside sooner rather than later, what he personally is concerned about, cares about, the price, if you would, for stepping aside?

STANLEY ROTH: He has not defined this not only for us but as far as we know for the Indonesian people, themselves, and this is one of the remaining steps that needs to be done, is to put the how into the general statement that there's going to be a democratic transition.

MARGARET WARNER: From what you're saying, I'm surmising but tell me if this is true that the U.S. is not playing a role, for instance, as a broker or carrying messages back and forth between the opposition and the Suharto government or President Suharto, that we're not in there mediating or brokering. Are we, or aren't we?

STANLEY ROTH: That's correct. We're notplaying a mediating role. We have stated the broad principles, the direction in which we think things should go. We have coordinated with other countries, most notably the G-8 at Birmingham, and so that there be a firm international message of the need for political reform, as well as restraint in terms of dealing with demonstrators. But we have not tried to serve as a broker in this process.

MARGARET WARNER: How powerless do you think the situation we just saw how powerless do you think it is in terms of the possibility of it spinning out of control?

STANLEY ROTH: Having witnessed the events of last week in which we saw a week that began with Jakarta completely peaceful, then the tragic shooting of at least six students by security forces, and then the eruption of violence across Jakarta and some other locations in Indonesia all indicate that the possibility for violence can escalate very quickly, and almost from a complete stop. So that we are very worried that the situation could spin out of control. We're seeing very large demonstrations, 10,000 students or so on the grounds of parliament, 1/4 million people demonstrating in Joe, Jakarta, in Eastern Java is extraordinary. There are 50,000 students in another city. All of this has enormous potential if there is not restraint in dealing with the demonstrators, and that's why we continue to emphasize the importance of that point, even as the Indonesians continue to work on the political resolution.

MARGARET WARNER: All right. Now, you're, of course, talking about restraint on the part of the military. First of all, do you think President Suharto has control of that?

STANLEY ROTH: There is no reason at this point to think that President Suharto is not in control of the military.

MARGARET WARNER: Okay. And what is your reading of the military's intentions here and their aims?

STANLEY ROTH: The military is obviously in a difficult position. And I think you can tell this from the words of General Rolanto, the chief of staff, last week. On the one hand, he feels responsibility to maintain order that cannot, you know, condone the rioting and looting, which led to the tragic deaths of hundreds of people in the burning of the shopping malls. At the same time these made it very clear that the Aubry, the Indonesian armed forces, do not want to be shooting their own citizens, the students, that he has called for an investigation into this murder of the six students that I mentioned previously, so they are trying to play a role as one of the key institutions in Indonesia, even in the constitution, the Indonesian military has a special role, and also the defenders of law and order, that's a tough line.

MARGARET WARNER: So when Amin Reis, one of the opposition leaders, says, as he did today, that he's been told the military doesn't care if the Tiananmen-style massacre takes place. Do you think do you share that concern at all?

STANLEY ROTH: Well, certainly, that is not what the chief of staff, Gen. Rolanto, has said both publicly and privately, and I can assure you we've had numerous communications with him, both at the civilian side and the military side, to emphasize the importance of restraint. And he has many times reiterated his own commitment to that.

MARGARET WARNER: So how long do you think the military will, for instance, let all these tens of thousands of students occupy the parliament building and compound?

STANLEY ROTH: Hopefully until there is a political resolution and they're willing to leave peacefully.

MARGARET WARNER: You say we're in great contact. The U.S. government is with the Indonesian military. How much leverage do you think the U.S. has either with the Indonesian military and with President Suharto?

STANLEY ROTH: I believe that Indonesians are very cognizant of the depths of the economic difficulties that they currently face and the fact that they need international help, including American help to get out of it, and that consequently that if there is a violent resolution of the crisis, that this will have serious consequences for that. So I think there is inherently leverage, but they're also being driven by the domestic considerations, not the least of which is their perceived need for law and order, and so they're split.

MARGARET WARNER: All right. Well, Mr. Secretary, thank you very much.

STANLEY ROTH: Thank you.

JIM LEHRER: Still to come on the NewsHour tonight, the bad satellite, the tobacco debate, Barbara Crandall, and some poetry for Sinatra. FOCUS - OUT OF TOUCH

JIM LEHRER: The satellite glitch, Spencer Michels begins.

SPENCER MICHELS: Across the country late yesterday, millions of beepers went silent. That meant that as many as 90 percent of the nation's 40 million pager users didn't get their messages. Doctors were among the first affected--hospitals page them in emergencies. At Valley Medical Center in Fresno, California, operators resorted to old-fashioned technology--2-way radios, telephones and the public address system.

DR. ALEX PACHNANDA, Surgeon: Sometimes you're busy in other parts of the hospital. Like right now I'm in the ER. I'm not sure what is going on on the floor. You know, I would get a page hopefully but not right after here, I'll head up to the floor and make sure everyone's okay.

SPENCER MICHELS: Others felt the impact too. It was harder, sometimes impossible, to get approval for credit card payments. And small businessmen--like this man who owns a refrigeration company--claim they lost customers. Some radio and television stations couldn't get their signals transmitted. Programming on National Public Radio failed to reach its affiliates all over the country, and some stations had to record feeds off telephone lines, losing quality in the process. CNN's Airport Television Network programmed specifically for waiting passengers--was knocked off the air. The problem was a malfunctioning communications satellite calledGalaxy Four. The $250 million, five-year-old satellite is owned by Panamsat, a subsidiary of Hughes Electronics. Galaxy Four is one of one hundred eighty-seven satellites in orbit at 22,000 miles above the Earth's surface. They transmit information from one part of the globe to another. At about 6 o'clock Eastern Time yesterday, Galaxy Four's control system failed, as did its backup switch. The satellite lost its orientation to the Earth and spun out of the proper position to transmit data. Other communications technologies, such as cellular phones, were not affected by the Galaxy Four problem because they work on a separate system. Panamsat says it's now working on an alternative to Galaxy Four.

DAN MARCUS, VP Corp. Communications, PanAmSat: If we can't use Galaxy Four, then what we will do is move that traffic. Some of that can be done immediately. For some of the television traffic, for instance, where we would actually move a satellite in the location where Galaxy Four is today, that would take a couple of days.

SPENCER MICHELS: Company spokesmen say that thousands of satellite dishes may have to be repositioned to receive signals from the satellites that will be used to replace Galaxy Four.

JIM LEHRER: More now from Joseph Pelton, Professor of Telecommunications at George Washington University, author of 16 books, including "The Satellite Revolution," and Clayton Mowry, the director of the Satellite Industry Association, which represents satellite manufacturers and service providers, including Hughes Electronics.Is there anything you can add to that as to what went wrong?

CLAYTON MOWRY, Satellite Industry Association: Well, I think what we saw today was a lot of people that were relying on satellite technology. They didn't have the proper backup for some of the services there because satellites have historically been so reliable, some 99 percent success rate, and that because of that, we're perhaps a victim of our own success here. They didn't have the backup plans in place for the paging networks and some of these other services to switch them over quickly.

JIM LEHRER: So what happened to Galaxy Four? We still don't know what went wrong, right?

CLAYTON MOWRY: There was something to do with the processing unit that keeps it oriented to the

JIM LEHRER: Gadget Number Four didn't work right.

CLAYTON MOWRY: Gadget Number Four.

JIM LEHRER: Number Five, et cetera. Is it history now, Galaxy Four?

CLAYTON MOWRY: They are still reviewing that. To my understanding, they've told all their customers not to expect that satellite to come back on line.

JIM LEHRER: Would you Professor Pelton, would you expect it to come back on line? Do you think it's over?

JOSEPH PELTON, George Washington University: They've indicated that in two days they will have a replacement satellite in position to take over the service. If it is only just a processor problem, there may be a way using backup for facilities to get control of the satellite and bring it back. But right now what probably should have happened is there should have been a contingency plan that immediately switched over to other satellites and had people to reposition to other satellites, rather than the long delay that did occur.

JIM LEHRER: Now, you don't send somebody up there to fix a satellite. How do you fix a satellite?

JOSEPH PELTON: Well, these satellites are a tenth of the weight of the Moon.

JIM LEHRER: Which is how many miles?

JOSEPH PELTON: Well, it's 22,300 miles, more or less.

JIM LEHRER: Okay.

JOSEPH PELTON: So that's a long, long way. We have had some repairs of like Hubble, and

JIM LEHRER: That's the Hubble Telescope.

JOSEPH PELTON: Yes. The Hubble Telescope. And those are in lower orbit, and we can get up there with a shuttle to do some repairs and recovery, but these satellites are way too far out to so the repair has to be done by electronics and by commands to back up facilities you don't send

JIM LEHRER: In other words, essentially, you send up a radio message, right?

JOSEPH PELTON: Right.

JIM LEHRER: And hopefully there's something in there that you can switch it over

JOSEPH PELTON: Switch it over.

JIM LEHRER: And it just hasn't worked.

JOSEPH PELTON: Well, not yet. And right now the solution is to move to a different satellite that will be in position in about two days, as Dan Marcus had indicated, and then see whether they in the longer term can get the satellite back and in operation. You know, there's like 200 of them up there now, and there are plans to launch over 1,000 of them in the next five to ten years. So we have to have better contingency plans because we rely on these services for the banks and everything. And so we need to have those backup plans, rather than assume that the satellites even though they're 99 percent reliable will always be there and always get things right.

JIM LEHRER: Mr. Mowry, that was one of the things that's come out of this story, is this development, is that for us to discover how dependent we are on the satellite. Give us we know about pagers. We know now about NPR. We know about the CNN Airport thing. What else is dependent what else works off satellite that we use every day?

CLAYTON MOWRY: Satellites touch just about every aspect of your life. When you get up in the morning, and you turn on the television, most of those feeds are coming to your cable system, or coming via satellite. When you go and use our bank card at an ATM machine, there's a good chance that they're going to have a small dish on the top of that bank transmitting back and forth your account data. If you're going to Wal-mart to do some shopping, good chance that their inventory is going to be tracked by your purchases there via satellite so just about every aspect of your life and probably things that a lot of people don't think about day to day.

JIM LEHRER: And 170 are up there. Now, these are commercial satellites, the 170, right/

CLAYTON MOWRY: Right.

JIM LEHRER: How did they get up there?

CLAYTON MOWRY: Well, they're launched on expendable rockets that go up that drop off their stages as they reach higher orbits, and they're placed into these geo stationary positions above the Earth at 22,000 miles.

JIM LEHRER: And who

JOSEPH PELTON: But in the future we're going to have a lot in low Earth orbit as well. There's the Teledesic system that plans to launch 288 satellites in low Earth orbit versus Bill Gates' system, and there are others in medium Earth orbit. So we're going to have satellites in different orbits providing a wide range of services.

JIM LEHRER: And a thousand, do you agree with that number, Professor Pelton's number?

CLAYTON MOWRY: Yes, I do. Over the next 10 years we expect better than 1,000 satellites to be launched.

JIM LEHRER: What's the need? What's driving the need for these?

CLAYTON MOWRY: Well, part of it is new services that are provided because of improvements in technology, things like digital technology, smaller handsets, more powerful spacecraft to be able to provide services to consumers. Things like Direct TV and Dish Network and Prime Star now have brought consumers directly into an interface with satellite technology on

JIM LEHRER: What do you mean?

CLAYTON MOWRY: Well, they're getting their programming

JIM LEHRER: You're literally watching the television programs like this one

CLAYTON MOWRY: That's right.

JIM LEHRER: And it's coming into your television set directly from a satellite.

CLAYTON MOWRY: A small, 18-inch pizza pan-size dish on your house can deliver 175 channels of programming.

JOSEPH PELTON: The book "Satellite Revolution," the revolution is this idea of going directly to the consumer, rather than through the traditional carriers like AT&T. And so now the aerospace companies are now providing services directly to the consumer. It started with the direct broadcast, but now starting in September, Iridium, which is a Motorola subsidiary, is going to provide direct cellular telephone services from the satellite. And so this is going to continue to change satellite services directly to end users.

CLAYTON MOWRY: Let me add

JIM LEHRER: Yes, go ahead.

CLAYTON MOWRY: I just might add there that the DBS products that I talked about that bringing television

JIM LEHRER: That's direct broadcast satellite.

CLAYTON MOWRY: Yes. Bringing the television directly into the homes, that's the fastest selling consumer electronics product of all time.

JIM LEHRER: All right. Now, let me ask you a real quick dumb question. Is there room up there for all these satellites?

JOSEPH PELTON: Well, it is getting crowded, and we have found better and better ways to reuse frequencies and to deal with inter-system interference, but actually I'm heading up a study at George Washington University, which is funded by the Japanese, the Canadians, the Europeans, and NASA, to look at new ways to try to get the satellites to not interfere with each other, because we are worried about how to make all these systems work and not interfere with one another.

JIM LEHRER: Do you see this as a problem?

CLAYTON MOWRY: Space is a big place, but that said, there are a lot of potential issues for interference or knocking into space junk that may be up there, particularly in the lower Earth orbit, so it is something that the industry is looking at and studying, and I'm happy to hear about this project.

JIM LEHRER: How much Spencer Michels said in the setup that Galaxy Four was a $250 million satellite. Is that what they go for these days?

CLAYTON MOWRY: They range in price, but that is about par for that kind of that's a very capable spacecraft, highly capable, high

JOSEPH PELTON: In other words, that includes the launch services, which is a big part of it, but we mentioned over a thousand satellites proposed. And the combined cost of these systems is about $80 billion. So essentially this is, if you will, a wireless way to get broad band access to cyberspace. And it's this broad band access to the Internet that is driving a good deal of this

JIM LEHRER: You're going to have to explain that. What do you mean?

JOSEPH PELTON: Well, in other words, people today have modems that go through like America Online and other

JIM LEHRER: Through telephone lines.

JOSEPH PELTON: Through telephone lines.

JIM LEHRER: Right.

JOSEPH PELTON: And it's very slow. And they wait, and particularly when they're trying to get a video image, and they wait, and they wait, and so now people say we want faster access, and this faster access is either going to have to come through fiber or so- called cable TV modems or through satellites. And the satellite industry says we want a share of that market.

JIM LEHRER: And the business explain the business side of this now, the Hughes owns this Galaxy Four. Now how do they make money on that?

CLAYTON MOWRY: Well, they contract with paging companies, broadcasters

JIM LEHRER: They pay what how do they how is the rate determined? Say NPR or a pager company pays to Hughes for Galaxy Four

CLAYTON MOWRY: It's based on the amount of capacity of the spacecraft that they're using, much like billing for a telephone call and the amount of call traffic that might be carried over a particular telephone line or fiberoptic cable, they contract for a segment of that satellite dedicated capacity to be able to provide their service for you a paging service or a broadcast service.

JIM LEHRER: It's like leasing a line, a telephone line.

CLAYTON MOWRY: Absolutely.

JIM LEHRER: And how does that who sends how do these satellites get up there?

CLAYTON MOWRY: They're launched in space

JIM LEHRER: By whom?

CLAYTON MOWRY: Well, there's a number of launch vehicle companies here in the United States.

JIM LEHRER: These are private companies.

CLAYTON MOWRY: Yes. Lockheed-Martin, Boeing Corporation, in Europe they have a consortium called Arianasbas that launches from French Guyana. The Russians launch and the Chinese launch.

JIM LEHRER: What's it cost, an average satellite launch?

CLAYTON MOWRY: Well, it ranges roughly for these larger class of spacecraft from about $50 million to about $110/120 million.

JIM LEHRER: Anything you want

JOSEPH PELTON: Well, what I would say is that the biggest barrier to cost is the launch services, that the satellites have gotten better, more reliable, faster, and lower in cost, but the launch is the main barrier to getting the service effectively.

JIM LEHRER: Gentlemen, sorry to ask you such basic questions, but this is a new, new world we're in, and a lot of people don't know about satellites, including me. Thank you both very much. FOCUS - SMOKIN' DEBATE

JIM LEHRER: Day two of the Senate debate over the tobacco bill. Kwame Holman reports.

KWAME HOLMAN: The Senate's focus on tobacco legislation also was the first order of business at the White House today. Before an audience of about 1400 children on the South Lawn, President Clinton reiterated his support for comprehensive legislation aimed at reducing teen smoking.

PRESIDENT CLINTON: This bill is our best chance to protect the health of our children, to keep them from getting hooked on cigarettes ever. It is a good, a strong bill. Congress should pass it and pass it now.

KWAME HOLMAN: Even as the president was urging swift action on tobacco legislation, however, the Senate was moving slowly.

SEN. JOHN ASHCROFT, [R] Missouri: I reassert my right to the floor and if the Senator from Utah is asking me a question, I would ask him to request my yielding for purposes of the question.

KWAME HOLMAN: With none of the usual limits on debate in place, Republican John Ashcroft, an opponent of the Senate's tobacco bill, was able to monopolize the floor time this morning, pausing only to allow a handful of like-minded Republican Senators to ask questions.

SEN. ORRIN HATCH, [R] Utah: This is important. We're talking about really the real facts on this. We're not just trying to run some bill through just because some people want to do it. I think it deserves debate.

KWAME HOLMAN: Hatch and Ashcroft argued the tobacco bill places an unfair tax burden on low income families and will invite a lengthy court battle from tobacco companies.

SEN. JOHN ASHCROFT: They have indicated clearly that the additions and the aggravations and the different kinds of changes that have been made have made it impossible for them to continue in their support of the measure.

SEN. ORRIN HATCH: There's no doubt in my mind that they're not going to continue unless we get this into some reasonable pocket. Many people is the Senator aware that many people lost their breath when they first heard of $368.5 billion in the settlement figure given last June 20th by the attorneys general, the Castana Group, the tobacco companies? They were astounded. Is the Senator aware of that?

SEN. JOHN ASHCROFT: I am aware of it. And people lost their breath thinking that this was to be paid by the tobacco companies. They'll really lose their breath when they understand that these costs are mandated by the statute to be passed on to consumers.

SEN. ORRIN HATCH: I think the Senator is aware, is he not, that literally there will probably have to be tax increases enough to pay these, but if you don't have the voluntary consent of the companies, albeit kicking and screaming, then how do you make the bill constitutional in the end? Is the Senator aware of that?

SEN. JOHN ASHCROFT: I'm aware of the Senator's position.

SEN. ORRIN HATCH: Is the Senator aware of another position that this Senator has and I think many others as well? And that is if this bill passes in its current form and is not constitutional, that there will be at least 10 years of effective litigation by the tobacco companies who are not going to allow them to climb all over them, especially when they know these provisions are unconstitutional. Is the Senator aware of that?

SEN. JOHN ASHCROFT: I am aware of that, and during that period of time, the poor people, working class people of the United States, are going to have a very, very serious tax increase--

SEN. ORRIN HATCH: Is the Senator

SEN. JOHN ASHCROFT: as a result of this kind of greed expressed here

SEN. ORRIN HATCH: Is the Senator aware that we have 3,000 kids beginning smoking every day and 1,000 of whom will die a premature death because of tobacco?

SEN. JOHN ASHCROFT: I am aware of the fact that 3,000 children try smoking every day. I'm also aware that there are about 8,000 children, according to Gen. McCaffrey, that try drugs every day.

SEN. ORRIN HATCH: That's right.

SEN. JOHN ASHCROFT: And I'm very concerned that we not have a so-called pollution here that really shoves people even more into the drug category.

SEN. ORRIN HATCH: Is the Senator aware that if a young teen-ager smokes, there's a 20 times greater propensity to graduate to marijuana, and if that teen-ager then graduates to marijuana, there's an 85 times greater propensity to graduate to harder drugs?

SEN. JOHN ASHCROFT: I am aware of linkages that have been drawn between smoking, marijuana smoking, and hard drugs.

KWAME HOLMAN: After nearly four hours on his feet, Sen. Ashcroft gave up his right to speak. Florida Democrat Bob Graham obviously was frustrated by the pace of the debate.

SEN. BOB GRAHAM, [D] Florida: During those four hours of that filibuster 500 500 American youth under the age of 18 commenced their first use of tobacco products. I heard as I walked through the chambers during this four hours mocking comments. Does anybody believe that we are really here to try to reduce teen-age smoking? Does anybody really feel that we are here to reduce teen-age smoking? The answer is: Yes, we are here to reduce teen- age smoking. That is the only legitimate reason that we can be here.

KWAME HOLMAN: Massachusetts Edward Kennedy was equally passionate.

SEN. EDWARD KENNEDY, [D] Massachusetts: It's the tobacco industry that has targeted the needy and the poor and the working families of this country! It's the tobacco industry that's to blame. It isn't these families. How elite and arrogant it is for those voices on the other side of the aisle to cry these crocodile tears for working families and their children; they're going to get cancer, and they don't want to pay those taxes! Those working families care about their children! They care about them no less than those that come from a socioeconomic background! How arrogant can you be! How insulting can you be to make that argument on the floor of the United States Senate!

KWAME HOLMAN: But this afternoon the Senate rejected Kennedy's call to raise the per pack tax on cigarettes to $1.50 40 cents higher than called for in the Senate bill. The Senate also turned back Sen. Ashcroft's effort to block any tax increase at all. Both votes indicate the tobacco bill, though moving slowly, is making progress on the Senate floor. CONVERSATION - HIGH FLIER

JIM LEHRER: This was the last day on the job for Robert Crandall, the head of American Airlines. Our business correspondent, Paul Solman, of WGBH- Boston, has the Crandall story.

PAUL SOLMAN: A key figure in the airline industry since joining American Airlines in 1973, Robert Crandall is going out on top. CEO of American since 1985, the controversial Crandall has grown the company from $6 billion in revenues 12 years ago to $18 billion last year, from losses of nearly $1 billion as recently as 1992 to profits of almost $1 billion in 1997. More significantly perhaps, he's been a key player in a series of changes that have arguably revolutionized the industry. When Crandall was first named president of American in 1980, airline deregulation had just been introduced by the Carter administration. American, under Crandall, was worried, pointing to the tendency of airlines, if unregulated, to compete by cutting price and, thus, continually wiping out all profits. When deregulation came to pass, however, American began to innovate. American, like every other carrier, knew that the way to make money in the airline business is to increase the percentage of seats occupied on any given flight. That's because it costs almost nothing to stuff an extra passenger into a plane. Every added fare is almost pure profit. Thus, under Crandall's rein at American, innovations like the hub and spoke system came to the fore. Linking flights from various destinations to a hub city, you pick up more passengers per flight, can use smaller aircraft, and, thus, you up the percentage of seats filled on every leg of the journey. Another Crandall innovation, frequent flier miles to build brand loyalty. American also pioneered in computer reservation systems in order to save money, give American an edge over rivals, give American flexibility in pricing its seats versus the competition. Always worried about the tendency of airlines to price cut themselves to ruination in the early 80's American's outspoken boss was tape-recorded some would say set up by the CEO of now defunct Braniff Airlines, who got Crandall to say that if both airlines raised their prices, both would benefit. He was censured by the Justice Department for seeming to broach price fixing. Under Crandall American was a fierce competitor that fought hard to keep costs down, taking two major union strikes, flight attendants during Thanksgiving of 1993, pilots in 1997. At age 62, Crandall is now retiring. We caught up with him at American's Admirals Club on a busy, noisy day at LaGuardia Airport.

PAUL SOLMAN: Robert Crandall, welcome.

ROBERT CRANDALL, CEO, American Airlines: Thank you very much. Glad to be here.

PAUL SOLMAN: A lot of Americans feel air travel today is uncomfortable, the seats are too small, there's lots of delays, the food's no good, and the pricing's arbitrary. Are they wrong?

ROBERT CRANDALL: Yes, I think they're wrong in some respects and perhaps right in others. You know, the airline business is a big service business. We try to give people what they want. People have sent us a very clear signal through a lot of experiments that they would rather have lower prices than bigger seats. Now, we've tried that. Lots of airlines have tried that. And the consequence is what the industry tries to do is deliver the essentials: on time because the on time record is vastly better than it has been in years past; safe safety record's improved consistently since deregulation, if we all work hard to make it perfect; and inexpensive, and prices have, in real terms, gone down very consistently ever since deregulation and are 40 percent less today in then year dollars than they were when deregulation occurred.

PAUL SOLMAN: So we want smaller seats and lousy food?

ROBERT CRANDALL: No, we want when given a choice we would rather have lower prices than bigger seats.

PAUL SOLMAN: Deregulation is that the cause of all this and if it is, why did you oppose it when the Carter administration was proposing it?

ROBERT CRANDALL: Well, I think it's fair to say that what I said when deregulation was proposed, I said, look, you got to make a choice; this is a choice of social values versus economic values. I think you probably will get economic benefits from deregulation. And, in fact, we have, and I think those economic benefits have been greater than I thought they would be. On the other hand, there will be some social offsets. Some employees will take a hit, and some communities won't get the kind of service they'd like to have. And that's what you're hearing in Congress today, that we'd like it better if all cities had about the same level of service, as was true in the days of regulation. But deregulation has paid big economic dividends at some social cost.

PAUL SOLMAN: Because the smaller communities can't afford to maintain major airline service coming in and out of

ROBERT CRANDALL: Smaller communities don't have enough people to attract to attract the service that they would really like to have.

PAUL SOLMAN: A lot of your innovations, as I was reading over them, seem to be attempts to control, constrain potentially ruinous competition. Let me just tick off a few: frequent flier programs. One way analysts say you can look at that is you bribe customers to use your more expensive airline. Many of them are business passengers they're the higher-paying ones so they'll use American, as opposed to Southwest say or somebody because they'll build up the frequent flier miles, and it's not their money anyway, right?

ROBERT CRANDALL: Well, see, I'd interpret it a different way. I'd say what we've done is we've established differentiation between ourselves and others. So we give the consumer a choice. You've got this package of service on this airline, which includes frequent flier miles, and, indeed, everybody seems to think that's a good idea because you now get frequent flier miles on every airline. So we weren't trying to dissuade competition. What we were trying to do is differentiate our product in the minds of the consumer relative to other people. That's what every business does.

PAUL SOLMAN: What about the system of multiple pricing made possible, I guess, by computers, where you could price yourself on almost a day to day basis against smaller airlines?

ROBERT CRANDALL: Just the way every other product is priced. You want to buy this watch at the best price? You can't.

PAUL SOLMAN: How much

ROBERT CRANDALL: You can't, you see, because unless you go to every store in New York, you don't know what people are selling that watch for. On the other hand, you can go to any travel agent indeed, you can go on the Internet, look at every airline fare, offered by every airline in every market, anywhere in the world. We have almost perfect pricing. So we price our product just the way every other producer of goods and services prices their product based on the value of that product at the time you buy it.

PAUL SOLMAN: But, I mean, 1982, you're famous for this conversation with Howard Putnam, the CEO of Braniff Airlines and I took down what you said I'm not going to quote everything raise your GD fares 20 percent, I'll raise mine. The next morning you'll make more money and I will too.

ROBERT CRANDALL: I'm highly famous for that one of the more embarrassing things that I did and I've said that was that was a foolish thing to do.

PAUL SOLMAN: But the idea behind it is, look, if we all keep cutting price, we'll keep losing money like we have been for decades

ROBERT CRANDALL: Doesn't make any difference. That's the way the capitalist system works. The fact of the matter is everybody does keep cutting prices, and the public has been the beneficiary, and that is why I said it is it wasn't clear in the early 1990's that this business, which is very easy to enter, is very competitive with people who do keep cutting prices, all to the benefit of the consumer, it isn't clear that that business could ever be financially successful. Experience has proven that we can, in fact, compete and, as we get more efficient, we can within the context of that full, robust competition also profit.

PAUL SOLMAN: And you're surprised by that?

ROBERT CRANDALL: No. I'm not surprised by it. I'm pleased by it.

PAUL SOLMAN: Antitrust in the smaller airlines today, the government is now saying, the Justice Department is saying that larger airlines like yours are basically pushing smaller airlines out of contention, out of business, because you price low in a market they're in until they get out of the market and then jack the fares back up, so there's a price at 10 o'clock you know that the smaller airline is running, you've got a 9:50 that's at a discount fare, a 10:30 that's at a discount fare everything else is higher, and so they

ROBERT CRANDALL: This is a very peculiar sort of argument. What the government is saying is, you know what we're going to do is we're going to prevent the major airlines from reducing prices and competing. I think the typical consumer is likely to say when they think about that, say, wait a minute, are we going to have a government that is going to say that American Airlines can't cut its prices so that I can fly more cheaply, that American Airlines isn't going to be allowed to compete with somebody that comes into its markets and seeks to take its business. I think that such re-regulation of the business, which is the exact opposite of what the government decided to do back in 1978, is going to be found intellectually wanting as people think about it.

PAUL SOLMAN: Re-regulation, you say that's what might happen in this case. The government moved ahead, but regulation was what you wanted back 20 years ago to begin with, no?

ROBERT CRANDALL: I hear you, but as I told you earlier in this talk, the fact is that I underestimated the power of the market to produce economic benefits. Deregulation has produced great economic benefit, and, in fact, there are some social offsets, but I think re-regulating the business, which is what the government now is talking about doing, is a bad idea, a step backwards in time, and a step backwards in terms of consumer benefits.

PAUL SOLMAN: You were known in your era as one of the very toughest and hardest bosses there was, particularly tooth and nail fights with unions, but not only that. Looking back, would you soften your style at all?

ROBERT CRANDALL: No. And I think I think the reality is that all that toughness was more a function of the media representation than of reality.

PAUL SOLMAN: You aren't coming across as terribly mean or tough here.

ROBERT CRANDALL: Well, that's right. And, in fact, if you look at all of the things that we've done at American, perhaps "the" most outstanding, most unusual thing we did in the early 1980's, between 1982 and 1992, we tripled the size of American Airlines, and we tripled the size of American because of some very unique, very original deals that we did with the unions in the early 1980's. So all that toughness, I think, is as much a byproduct of the media's desireto represent me in that way as reality.

PAUL SOLMAN: You're not a tough guy?

ROBERT CRANDALL: I'm tough enough to do what has to be done when it must be done.

PAUL SOLMAN: Superbowl during the Superbowl you called a meeting once, is that true?

ROBERT CRANDALL: Well, yes. I think that's right. But the fact is I think business is more important than Superbowls.

PAUL SOLMAN: You're a tough guy. You're a charming guy. You're a vital guy, as you made perfectly clear. Why are you quitting?

ROBERT CRANDALL: Because I've got a long list of other things I want to do. The reality is I've had a wonderful career at American. And I get up every day, and I am very intensely involved with airline, and I have fun. On the other hand, there's a long list of things I've never had time to do because of that intense involvement with the company. The company is at the moment in very good shape financially, good shape from a roof point of view, from a fleet point of view. I think the moment is at hand. There's a strong successor management team. I'm going to let them run the airline. I'm going sailing.

PAUL SOLMAN: Robert Crandall, thank you very much.

ROBERT CRANDALL: My pleasure. FINALLY - DEATH OF AN IDOL

JIM LEHRER: Finally tonight, some thoughts about Frank Sinatra, who is being buried today in Cathedral City, California. He died last Thursday at age 82. Here is NewsHour contributor Robert Pinsky, poet laureate of the United States.

ROBERT PINSKY, Poet Laureate: There's something special about stars who are part of your parents' generation, as Sinatra was for many of us, stars the same age as your mother and father, have the glamour of parents as seen by a six-year- old, the foolishness of parents as seen by a sixteen-year-old or the vulnerability of parents as seen by a thirty-five year old. Frank O'Hara captures all those feelings in a poem about another star of Sinatra's generation, Lana Turner. Never an artist of Frank Sinatra's stature, of course, but O'Hara's poem conveys the way these people come to mean a lot to us. The poem: "Lana Turner has collapsed. I was trotting along and suddenly it started raining and snowing and you said it was hailing, but hailing hits you on the head hard, so it was really snowing and raining, and I was in such a hurry to meet you. But the traffic was acting exactly like the sky, and suddenly, I see a headline. Lana Turner has collapsed. There is no snow in Hollywood. There is no rain in California. I have been to lots of parties and acted perfectly disgraceful, but I never have actually collapsed. Oh, Lana Turner, we love you. Get up." But that doesn't say much about Sinatra, the artist. For that, I'll turn to some lines by the great Roman poet Virgil. Virgil's epilogues are conversations in verse between singers about topics like love, death, and the art of singing. In the 9th Eclogue Virgil sounds for just a moment a little like the Johnny Mercer or Cole Porter or Gershwin songs Sinatra sang so memorably. Here in David Ferry's translation is a bit of Virgil's 9th Eclogue: "What was the song I heard you singing alone the other night under a cloudless sky? I remember the tomb. If I could remember the words, why are you gazing only at the old constellation rising in the sky, and then about that master among singers named Monachus, time takes all that we have away from us. I remember when I was a boy, I used to sing every long day of summer down to darkness, and now I am forgetting all my songs. My voice grows hoarse. I must have been seen by a wolf. But Monachus will sing the songs for you when he comes. The time for singing is when Monachus comes. RECAP

JIM LEHRER: Again, the major stories of this Wednesday, Secretary of State Albright called on Indonesia's President Suharto to allow a transition to democracy. Communication links across the U.S. were disrupted when a major satellite lost tough with Earth. Pagers and radio and television relays were hardest hit. And the Commerce Department reported the U.S. trade deficit rose to an all time high in March. An editor's note, before we go tonight: Last night, Roger Rosenblatt said the unisphere in Queens, New York was built for the 1939 World's Fair. Wrong. It was the 1964 World's Fair. We'll see you on-line and again here tomorrow evening. I'm Jim Lehrer. Thank you and good night.