To Operate Experimental CATV Systems in the Philadelphia, Pa., Television Market
File No. CATV 100-50
FEDERAL COMMUNICATIONS COMMISSION
9 F.C.C.2d 1013 (1967); 11 Rad. Reg. 2d (P & F) 155
RELEASE-NUMBER: FCC 67-1030
September 12, 1967 Adopted
BY THE COMMISSION: CHAIRMAN HYDE CONCURRING AND ISSUING A STATEMENT IN WHICH COMMISSIONER COX JOINS; COMMISSIONER BARTLEY DISSENTING; COMMISSIONER JOHNSON DISSENTING AND ISSUING A STATEMENT IN WHICH COMMISSIONER LOEVINGER JOINS.
[*1013] 1. Suburban Cable TV Co., Inc., a wholly owned subsidiary of Triangle Publications, Inc., requests authority to establish an experimental CATV operation in designated communities of the Philadelphia, Pa., suburban area. More specifically, Suburban proposes to establish CATV systems with head-ends located in Perkasie Borough and Upper Pottsgrove Township which would provide subscribers with service from stations providing a predicted grade B or better signal to designated communities. Suburban would also, upon Commission approval of the instant request, establish CATV systems with head-ends located in Schuylkill Township and Downingtown Borough to provide service from the local (predicted grade B or better signal) stations and from the New York VHF independent and educational television stations (channels 5, 9, 11, and 13) to designated communities. In addition, all systems would provide a cable channel for weather service and Associated Press news. Suburban's petition for authorization of an experimental CATV operation in the Philadelphia suburbs is opposed by Chester County Broadcasting Co., the licensee of radio station WCOJ in Coatesville, Pa., and by the licensees and/or permittees of channels 3, 17, and 29, Philadelphia. n1 The licensees of channel 2, Salt Lake City, Utah, and channel 35, Erie, Pa., Cosmos Cablevision Corp., Television Communications Corp., The Jerrold Corp., and Cox Cablevision Corp., support Suburban's experimental proposal.
n1 Opposition to petition for authorization of experimental CATV operation, filed July 7, 1966, by Chester County Broadcasting Co.; opposition to petition for authorization of experimental CATV operation, filed July 25, 1966, by Westinghouse Broadcasting Co.; opposition to petition for authorization of experimental CATV operation, filed July 25, 1966, by WIBF Broadcasting Co.; response and request for participation by Philadelphia Television Broadcasting Co. (station WPHL-TV, Philadelphia, Pa.), filed July 26, 1966.
[*1014] 2. Suburban contends that the facts concerning CATV impact can be obtained only from a detailed study of operating systems in a major market which contains viable UHF stations. The essential element in Suburban's proposal to conduct an experimental CATV program is the concurrent operation of systems limited to predicted grade B or better signals and of systems which would also deliver the distant signals noted above. Such a controlled experiment, it is asserted, could furnish the Commission with valuable information to determine the actual effects of CATV operations in certain suburban communities adjacent to a large metropolitan area upon the development and maintenance of local UHF stations. In effect, Suburban proposes to establish a test laboratory in the following communities in Chester, Montgomery, Bucks, and Berks Counties (all in Pennsylvania): n2
n2 Figures given are derived from the 1960 U.S. census of population.
I. LOCAL SIGNALS ONLY II. LOCAL AND DISTANT SIGNALS
Perkasic System Downingtown System
Perkasie Borough (4,650)
Downingtown Borough (5,598)
Sellersville Borough (2,497) East Caln Township (758)
Hatfield Township (5,759) Malvern Borough (2,268)
East Rockhill Township (1,990)
Upper Pottsgrove System Phoenixville Borough (13,797)
Upper Pottsgrove Township (1,987) Tredyffrin Township (16,004)
Lower Pottsgrove Township Schuylkill Township (3,461)
(3,824) Spring City Borough (3,162)
Limerick Township (5,110)
Trappe Borough (1,264)
West Pottsgrove Township (3,501)
Boyertown Borough (4,067)
Suburban urges that careful observation of the responses of these communities to new CATV systems for a 3-to 5-year period would be most valuable to the Commission in measuring the actual effect of CATV in the Philadelphia market.
3. Chester County Broadcasting Co., a Commission licensee and the holder of several CATV franchises in Chester County, advocates denial of Suburban's request since it believes the test suggested would have adverse effects upon Chester County Broadcasting's competitive status and would result in pressure from other communities to be provided with distant signals. Channels 3, 17, and 29, Philadelphia, also oppose the Suburban proposal. Their oppositions, in general, claim that: (1) The purpose of the experimental proposal is obscure and existing CATV systems, such as Triangle's Binghamton, N.Y., operation (Empire State Cable TV Co., Inc.), could provide relevant data; (2) the institution of Suburban's systems as proposed would result in the fractionalization of the audience available to support local UHF stations; and (3) the proposed experiment violates the Commission's policies governing experimental authorizations and there is no provision in the Commission's regulations for the licensing of CATV systems.
4. Philadelphia is currently ranked as the fourth television market based upon a total net weekly circulation of 2,060,400. Philadelphia is assigned three commercial VHF channels (3, 6 and 10) and these [*1015] channels provide NBC, CBS programming, respectively. Of the three commercial UHF assignments in Philadelphia (17,23, and 29), two (17 and 29) are operational as independent stations and the remaining assignment has an outstanding construction permit. One (*35) of the two noncommercial educational assignments (*35 and *57) is also operational. Additionally the UHF commercial assignment at Burlington, N.J., (48), which is included within the Philadelphia market definition of the American Research Bureau, operates as an independent station. The communities involved in the experimental proposal vary in their distances from Philadelphia from 10 to 35 miles and, with the exception of Boyertown Borough, are included within the U.S. census definition of the Philadelphia Standard Metro-Metro Statistical Area (4,342,897).
5. In the Second Report and Order (2 FCC 2d 725), we concluded that the question of CATV entry into the major markets presents a substantial problem which requires exploration in appropriate evidentiary hearings and, therefore, the section 74.1107 hearing requirement was imposed upon those CATV systems in the top 100 television markets which proposed to import distant signals. This requirement, it was expected, would provide the information which we indicated was necessary to enable proper Commission evaluation of the impact of CATV development in the major markets. We believe it appropriate to continue with that method of proceeding and deny the subject requests for operation of CATV systems in the Philadelphia area, on an experimental basis. We note that there are deficiencies with respect to the proposed experiments. n3 But in any event, we believe that at this juncture and with the possibility of new important developments (e.g., in the copyright field), authorization of an experiment of this nature is inappropriate. Accordingly, the Suburban request for authority to operate experimental CATV systems in the Philadelphia market will be denied although, as Suburban requests in the event its experimental proposal is denied, its petition will be retained and will be treated as a section 74.1107 waiver request for all listed CATV systems when consolidated consideration of pending market proposals is ripe.
n3 Petitioner fails to supply adequate information concerning the nature of the sample areas in terms of social, economic, and demographic characteristics and makes no attempt to indicate the sampling techniques to be employed in determining the CATV system's impact on local UHF stations.
Accordingly, It is ordered, That the petition for authorization of experimental CATV operation, filed by Suburban Cable TV CO., Inc., on June 1, 1966, Is denied.
It is further ordered, That said petition Is retained with the same file number (CATV 100-50) and Will be processed as a petition for waiver of the hearing requirement of section 74.1107 of the rules for all CATV systems listed.
FEDERAL COMMUNICATIONS COMMISSION, BEN F. WAPLE, Secretary.
CONCUR BY: HYDE
CONCURRING STATEMENT OF CHAIRMAN HYDE IN WHICH COMMISSIONER COX JOINS
In view of the dissenting opinion, I believe it advisable to state more fully the reasons why I agree with the majority opinion.
[*1016] First, I recognize that the matter is one of great importance to the "public interest in the larger and more effective use of radio" (sec. 303(g) of the Communications Act of 1934, as amended). For that reason, we acknowledged in the second report the need for further careful study, and stated that as we gained additional experience we would review our policies. I would therefore ordinarily be most receptive to the idea of a test such as proposed here, in order to obtain further data. And, I fully agree that any defects in the test might be remedied by appropriate conferences with the party proposing it.
Where I disagree with Commissioner Johnson is his summary disposal of the crucial consideration that we are on the threshold of most significant changes in this area -- namely, that there will be legislative copyright developments that will have great impact on CATV's development.
If, then, we were to authorize the test in question, we would be collecting information -- available in a few years or so -- as to what effect importation of distant signals, such as those of the New York independents, has on the development of independent UHF stations in a a market such as Philadelphia. Yet, we now stand on the verge of a conplete revision of copyright legislation which will define more specifically the liability of CATV systems. In my judgment -- and it is one which I believe is shared by many other knowledgeable observers -- it is most unlikely that there will be a CATV operation such as proposed in the test in a large market like Philadelphia, a year or so from now. The pertinent legislative proposals all speak in terms of a compulsory license for underserved areas -- an entirely different situation not involved in the suggested test -- but contemplate substantial copyright liability for cable operations in the major, well-served television markets. The question of whether certain programming carried by distant stations will be available in a particular cable community, and if so at what cost, will necessarily affect the form, if not the feasibility, of CATV operation in cities like Philadelphia.
I will not here speculate on what the nature of a CATV operation in a market such as Philadelphia might be, after these copyright developments have occurred. Suffice it to say that CATV operations in these major markets will not, I am sure, continue to stand outside the program distribution process; that when they are brought within that process, it will mean a significantly different kind of operation; and that I therefore simply do not see what useful purpose would be served by authorizing the proposed test. It would necessarily be designed to collect data about a situation which would shortly undergo change.
I do not mean by the foregoing to indicate that when these developments take place, there will automatically be no more hard questions of CATV communications policy left for consideration by this Commission. Perhaps there will be. But the short answer is that we must await the developments -- and particularly congressional action as to copyright -- before we can determine what judgments, if any, we are called upon to make in the wake of such changes.
Meanwhile, we are going forward with many hearings designed to explore questions as to the impact of importing distant signals. I have [*1017] much greater confidence than Commissioner Johnson in the possibility of developing factual records in these proceedings which will add to our fund of information in this area. I do not believe that a limited test in one market which will require substantial time should be substituted for the proceedings in which we are now engaged in accordance with the plan embodied in the Second Report and Order.
The implications of the growth and potential of cable television are, by any standard, among the most important questions confronting this Commission. The cable that now carries television signals may someday be suitable for the "home communications center": facsimile printing, closed circuit television, picture telephone, data transmission for a computer console for information retrieval or teaching machine, and other wonders to come. Today the cable -- with 12, 20, or potentially more television channels -- offers the possibility of a dramatic increase in program diversity over what is presently available to most viewers. At the same time, CATV potentially threatens the strength and perhaps even the continued existence of stations providing useful local programming, especially developing UHF stations -- stations today providing the programming for cable television.
Thus, like any technological innovation, cable television offers the Nation a mixture of promise and peril. What course should responsible officials take to maximize the benefits and minimize the costs? On this troublesome question self-serving speculation abounds. Those with a financial stake in the cable business herald its advantages with beguiling enthusiasm, and understandable impatience with the FCC's seeming foot dragging and its paternal anxiety for the economic well being of local broadcasters. Local broadcasters, for their part, predict extinction for the local television station and allude darkly to the impending demise of the local democratic process. The FCC has set forth its controlling policy in a 95-page document ambiguously entitled The Second Report and Order.
There is, in short, no lack of opinions. What is needed are facts.
Faced with this need, what has the Commission done? The FCC has today refused Suburban Cable Company, Inc., permission to conduct a controlled experiment, designed to test the actual impact of CATV operations on UHF prosperity in suburban Philadelphia. I cannot join my colleagues in this decision. (Nor, I note, can Commissioners Bartley and Loevinger.) I find it puzzling, and, indeed, somewhat depressing. By denying this petition we serve no cause save ignorance, further denying ourselves the opportunity to obtain hard empirical data concerning one of the most vital issues before us.
I have no quarrel with the principle relied on by the majority, that this case should be governed by the CATV rules promulgated in March of 1966 in the Commission's Second Report and Order. Ad hoc departures from administrative policies serve neither the agency nor [*1018] its constituents, as I have argued elsewhere (American Television Relay, Inc., 6 FCC 2d 837, 843 (1967)). But the CATV rules do not embody a policy. Their aim was to temporize -- to give the Commission time in which information could be gathered and analyses completed, so that sound and durable policy determinations could be made at a later date. As we stated at the time:
Our purpose is to take hold of the future -- to insure a situation where we or the Congress, if it chooses, can make the fundamental decisions in the public interest upon the basis of adequate knowledge. (Second Report and Order, 2 FCC 2d 725, 785 (1966).)
By stifling this proposal to create a real-life laboratory in suburban Philadelphia, we hollow this briefly glimpsed ideal. How ironic that in the second report we cite the Philadelphia metropolitan area as the most archetypal instance of "the most critical question posed" by the burgeoning popularity of cable television. That question, we said, was how to "mesh" the growth of CATV with the growth of UHF broadcasting.
What does Suburban Cable propose? Philadelphia now has three local UHF independent stations. Suburban Cable proposes to enlist subscribers in a small bloc of Philadelphia suburbs. Half their subscribers would be served with local signals only. The other half would receive the local stations and distant signals from New York independent channels 5, 9, 11, and 13. Viewing habits could be compared. This experiment, thus, could provide an excellent empirical test of the hypothesis that the importation of distant signals from strong and well-financed independents in cities like New York, Washington, and Los Angeles would inhibit the growth of local UHF independents in other, smaller metropolitan areas.
It is this hypothesis which underlies the current FCC policy to prohibit such importation. But this hypothesis is only that: a hypothesis. Its validity depends upon the outcome of its testing with facts, empirical data which the Commission simply does not have available to it. This experiment could provide us with such information.
What could this experiment tell us? It could tell us whether suburban Philadelphians really will, as UHF advocates fear, prefer supposedly superior programming brought in from afar to the local news and talent on local UHF stations. It could tell us specifically, which distant programs are preferred over which local programs, and vice versa, and what specific kinds of viewers prefer what kinds of programs. It could tell us whether UHF's are local in any significant respect other than the location of their transmitting equipment. The experiment would indicate the kinds of responses CATV and UHF operators would make to each other -- whether one or the other's programming would turn out to be so much more popular that its competitor would simply have to close down, whether they would divide the market with substantially similar kinds of programming, or whether the increased potential for diversity would produce an offering of very different types of services to the viewer.
To these questions, and others like them, this Commission must have answers if it is to make conscious and wise policy choices about the appropriate [*1019] mesh for CATV and UHF nationwide. If errors are to be made how much better to make them for hundreds of viewers than for millions. Our judgments turn on questions of fact -- social and economic data, not fact in the sense that lawyers understand the term. They are not the sort of questions which can meaningfully be answered in adjudicatory hearings alone. Cross-examination may inform a judge or a jury about the credibility of a defendant's alibi. But courtroom tactics cannot inform a policymaking body about patterns of social behavior -- especially when the contestants have no data on which to base their arguments. If such questions were critical to the future course of a private corporation's development, or to the validity of a tenet of social science, neither a board chairman nor a professor would consider hiring two lawyers to thrash the matter out before him in order to develop the true facts of the case.
For the FCC to continue to rely on hearing procedures alone for these factual questions is to assure the perpetuation of a crossfire of speculation and counter speculation. The danger is great that the temporary rules laid down in 1966 as a stop-gap measure will harden into permanence. Or perhaps some other compromise, equally arbitrary, will be struck between the parties at interest. In any event choices altogether crucial to the future of television will be made by default.
It is no altogether clear, at least to me, why the majority has chosen to reject this proposed experiment. First, the majority notes that there are deficiencies in the proposal. Second, the Commission opinion (and Chairman Hyde's separate concurrence) seem to reject the very principle of conducting experiments when it says, "* * * in any event, we believe that at this juncture and with the possibility of new important developments (e.g., in the copyright field), authorization of an experiment of this nature is inappropriate."
As for deficiencies in the proposal, this may well be true. I do not want to be understood as endorsing the precise package Suburban Cable has presented. What I do endorse is the principle of conducting experiments such as this one. Given the peculiar significance of the Philadelphia market, why not begin there? If we consider the instant proposal inadequate, why not encourage and aid the petitioner in designing a better one -- rather than simply noting its deficiencies in our opinion rejecting the proposals? Let us convene the parties, members of our own staff, and outside experts in sociological and economic surveying. Their task would be to help us settle on the kinds of questions the experiment should be designed to answer, and how it should be structured to insure meaningful results. Such questions could include those which I have mentioned above, as well as others. Methodological refinements of the petitioner's proposal might include strictures as to number and date of surveys (before the experiment is begun, after it is terminated, and one or two times during its life). They would also relate to the kinds of data to be gathered (such as census-type facts on population composition; technical facts respecting types and quantities of receiving equipment; viewing habits; and general use of leisure time). Perhaps the most appropriate experiment could and should be conducted in some other city, where it would cause even less disruption.
However a final proposal might look, it is clear that some sort of [*1020] empirical investigation is a prerequisite for rational policymaking for cable television. It is also clear that the Philadelphia metropolitan region provides a useful setting for a specific project.
The Commission's disinclination to experimentation generally because of the potential relief from copyright charges seems to suggest a notion that the Commission can leave fundamental cable television policy decisions up to Congress and the register of copyrights at the Library of Congress. This is a false hope. Whatever decisions may ultimately come from deliberations concerning the copyright status of cable television transmission, the hard questions of communications policy reflected in the Second Report and Order will remain.
Chairman Hyde, especially, believes that we should delay this experiment until Congress settles the question of the copyright obligations owed by CATV men to the broadcasters whose signals they carry. Unfortunately, the legislative struggle over that question is presently stalemated. No one can predict whether Congress will act on copyright and CATV in this session -- or in the next session for that matter.
This case represents as well as any an instance of a game that too often afflicts relations among the institutions of our Federal Government. The game is called "pass the buck." The fact is that no one wants to decide this question. It is politically hot, and analytically difficult. Reluctance to rush to results is at least understandable, and may even be commendable on the part of others.
But it is quite inappropriate, in my judgment, for the FCC to play this game, for the Federal Communications Commission to defer to the blind struggle for influence on Capitol Hill. To the extent the Commission performs a useful purpose, it is to guide the solution of difficult problems of communications policy, like the question of the appropriate role for cable television. Congress created the FCC precisely because the Nation needed a repository of expertise and planning capacity to clarify the values at stake, to state alternatives, and to measure their effect.
I do not urge that the FCC should seize from Congress issues of such national importance that they can only be resolved there. Quite the contrary. Where such issues lie before our Nation, however, I believe the FCC should contribute to, not merely wait for, their solution. It is we, not Congress, that should be gathering data, analyses, and expert opinion and pointing up alternative policy courses. If, through wisdom or cowardice, we are to defer to Congress' decision the least we can do is contribute our best efforts to making it a wise decision.
By turning down this proposed experiment, the Commission forecloses the availability of information vital to answering some of the most significant questions before it. Such information could be grasped with insignificant cost to the parties, no cost to the Commission, and without inhibition on its freedom to set a new course in the future. I cannot withhold comment on our choice to abandon rather than harvest such a potentially rich crop.