the Communications Act of 1934, as Amended, to Construct and Operate Channel Facilities for
Rendition of CATV Channel Service at Rome, Ga.
File No. P-C-7103
FEDERAL COMMUNICATIONS COMMISSION
16 F.C.C.2d 491 (1968); 15 Rad. Reg. 2d (P & F) 755
RELEASE-NUMBER: FCC 68-1152
November 26, 1968 Adopted
BY THE COMMISSION: COMMISSIONER BARTLEY ABSTAINED FROM VOTING; COMMISSIONER COX CONCURRED AND ISSUED A STATEMENT; COMMISSIONER WADSWORTH WAS ABSENT; COMMISSION JOHNSON DISSENTED AND ISSUED A STATEMENT; COMMISSIONER H. REX LEE DID NOT PARTICIPATE.
[*491] 1. The Commission having under consideration the above captioned application for authority to continue operation of its facilities presently providing CATV channel service to Rome TV Cable Co., Inc., at Rome, Ga., and for authority to extend and operate such facilities to other areas of Rome, Ga.;
2. It appearing, That the filing of the application has complied with the requirements of part 63 of the Commission's rules; the pertinent parts of the stayed decision of the Commission in docket 17333, which was released June 26, 1968; and the Commission's published interim procedures concerning such applications;
3. It further appearing, That no protests have been filed against the grant of the application for facilities used to deliver nine out-of-town television stations (seven non-educational and two educational) to the CATV system at Rome;
4. It is hereby certified, That the continued operation and expansion of the CATV channel service facilities as set forth in the aforementioned application is in the public interest, convenience, and necessity;
5. Accordingly, It is ordered, That authority is hereby granted for the construction and operation of the facilities specifically described in said application; the construction and operation of the facilities specifically described in said application;
6. It is further ordered, That no service other than the CATV channel service described in said application shall be furnished by applicant over the facilities authorized herein without prior authorization by the Commission.
FEDERAL COMMUNICATIONS COMMISSION, BEN F. WAPLE, Secretary.
[*492] CONCURRING STATEMENT OF COMMISSIONER KENNETH A. COX
I concur fully in the action granting the application of Southern Bell Telephone & Telegraph Co., for authority to construct and operate CATV channel facilities to serve a non-affiliated customer in Rome, Ga. This statement is intended as a response to the dissenting opinion of Commissioner Johnson.
I agree, of course, that the issues facing us in connection with cable television are important and require our early and creful consideration. I also agree that at some time in the future the CATV industry may develop in such a way that we will have to consider whether it should be subjected to common carrier regulation. For the present, however, I think the actual conduct of the business of distributing television signals by cable to subscribers for a monthly fee is not a common carrier activity, and the Commission has so held. See Frontier Broadcasting Co. v. Collier, 24 F.C.C. 251; Philadelphia Television Broadcasting Co. v. F.C.C., 1 F.C.C. 2d 765, aff'd. 123 U.S. App. D.C. 298, 359 F. ed., 282; United States v. Southwestern Cable Co., 392 U.S. 157, 169. As cable television is now conducted, the cable operator selects the programs which are relayed to his subscribers, and neither the latter nor the proprietors of the stations whose signals are carried have hired the cable facilities for the purpose of the transmission of intelligence which they originate. I therefore think that the present nature of the industry simply does not fit the common carrier pattern, though I believe that cable service may well be a utility which should be regulated as such.
As I have indicated on a number of occasions -- most recently in a speech to the convention of the National Association of Regulatory Utility Commissioners on November 13th -- I believe that at some future time cable operations may evolve in such a way that it will be necessary and desirable to treat them as common carrier operations. But I do not think we really have the option now of deciding that cable operations should be forced into the common carrier mold, since I see no way in which we could require the various parties concerned to adjust their relationships so as to fit common carrier concepts. Nor do I see any immediate need to do so. Even if cable operators make otherwise unoccupied channels available to others for the dissemination of program matter -- as is proposed in our latest notice of inquiry and proposed rulemaking as to CATV matters (F.C.C.-1176), such common carrier functions would represent only a small part of the cable service. While some common carrier concepts would have to be made applicable, this would fall far short of full common carrier regulation. I do not see how our action here can "substantially inhibit our future flexibility" in dealing with such developments.
Cable television has developed to this point in three general forms. The earliest, and still the most common, involves the private entrepreneur who decides to go into the cable business, gets a local franchise to do so, arranges with the local telephone or power company for space on its poles, and then either constructs, or arranges for the construction of, his own complete system consisting of head-end equipment, feeder and distribution cables, and droplines to subscribers' homes. The [*493] second form involves the same private entrepreneur, but in this case he may or may not have a local franchise and, instead of arranging to build his own physical facilities, he goes to the local telephone company and asks it to construct channel facilities for him. As suggested, this may obviate the need for a franchise since the telephone company already has one, and this approach also substitutes a channel leasing arrangement for the pole line attachment agreement involved in the first form. In some cases, the cable operator constructs his own headend facility and simply arranges for the telephone company to construct distribution lines; in others, the telephone company constructs the entire facility, and other variations are possible. The third form is very like the second, except that instead of the independent entrepreneur, an independent telephone company may establish a cable subsidiary or other related entity and then agree to construct and lease channel facilities to the latter so that it can engage in the non-common carrier business of selling a television signal distribution service.
The Commission ruled some 2 years ago that, while CATV operations do not constitute common carriage, the furnishing by telephone companies of channels of communications to CATV operators is a common carrier undertaking. We therefore required telephone companies to file tariffs covering the provision of such service. See Common Carrier Tariffs for CATV Systems, 4 F.C.C. 2d 257, 260. And we held in General Telephone Co., of California et al., 13 F.C.C. 2d 448, that the provision of such channel service is an interstate common carriage service and that, therefore, telephone companies must obtain section 214 authorization from us before constructing facilities to provide this service.
That is precisely what Southern Bell has done here. Rome Cable Television Co., Inc., got a franchise from the city of Rome on December 19, 1966, to provide cable service in that community. On June 16, 1967, it ordered channel facility service from Southern Bell, having indicated in an earlier letter that "we place ourselves in Southern Bell's hands in this vital matter, because of the planning, engineering, construction, and maintenance capabilities of your organization." On October 26, 1967, Rome Cable started service with the lines which had then been constructed, adding service thereafter as additional stages of construction were completed. When we issued our decision in the General Telephone case, supra, Southern Bell was faced with the necessity of applying for section 214 authorization both for the facilities already constructed -- the head-end facility, 21.7 miles of feeder cable, and 71.9 miles of distribution cable -- and for authority to construct 24.7 miles of planned feeder cable and 116.2 miles of planned distribution cable. Southern Bell did so file on July 31, 1968 and, in view of the stay of our General Telephone decision which we granted (14 F.C.C. 2d 170), it proceeded properly in accordance with paragraph 34 of our initial section 214 decision. However, on August 9, 1968, we specified interim procedures to govern these matters, and these required more information than had been supplied in the initial filing. Southern Bell therefore filed an amended application on September 20, 1968. It notified the city of Rome of this filing, and the Commission sent copies to the Governor of Georgia, to the Department of Defense, and to the National Cable Television Association.
[*494] In some of our earlier orders and decisions in this area, we had indicated that our primary concerns -- aside from the fundamental question of whether we have section 214 jurisdiction over telephone companies' provision of CATV channel facilities -- involved situations in which the telephone company was doing business with its own subsidiary or another related entity or in which there were a number of parties interested in providing cable service, and one of them had gone to the telephone company while the others were applying for local franchises to enable them to construct their own facilities. Cases in the former category involve a danger that the telephone company may favor its subsidiary or related company and unfairly shift costs attributable to the cable operation to the users of other telephone services. The second category involves the risks that the telephone company may harass those cable aspirants who have not chosen to take channel service from the company by delaying negotiation of pole line agreements, by exacting unreasonable charges for such attachments, or by imposing unreasonable conditions on the cable operator.
It has been alleged in some cases that a telephone company has so delayed entry of an independent operator that it has given an unfair head start to its own channel service customer. The action we have now taken in granting Southern Bell's application for Rome and in delegating authority to the Chief of our Common Carrier Bureau to grant similar applications does not affect these two categories of troublesome cases. Those situations are to be presented to us and will be disposed of on a case by case basis after consideration of the relevant facts in each instance.
I object to Commissioner Johnson's reference to "one of the Commission's corporate clients." I do not regard Southern Bell as a client of the Commission, nor do I think my colleagues do so. It is a regulated carrier, many of whose operations are subject to our jurisdiction and upon whose applications we are required to pass. I agree with the positions of the telephone industry in some cases, and disagree strongly in others. This Commission grants hundreds of applications by the Bell System and other telephone companies for construction of facilities subject to our jurisdiction. Since the Rome application does not fall within either of the two troublesome categories referred to above, since it complies with our interim procedures and policies, since it presents no problems on its face, and since no objections have been filed against it, it is my best judgment that the application should be granted.
I find nothing in Commissioner Johnson's dissent to change that opinion. He states that the matter was brought to the Commission "in a spirit of great urgency without even coordinating with the other interested bureaus -- let alone giving the public an opportunity to be heard." It is true that the matter was first placed on our agenda without coordination with the CATV task force or other bureaus, but the chief of the task force was alerted to this and was advised that the matter could be passed over for consideration at a later meeting if he so desired. It was passed over 1 week and he did file a memorandum setting forth his views which was considered by the Commission before granting the application. While Commissioner Johnson still feels the matter "has not been fully investigated, discussed or argued before the Commission," it was given more consideration than we are able to devote to many items of business. So far as I can tell, [*495] Commissioner Johnson was afforded an opportunity to present his views, and I do not believe he advanced any grounds requiring further investigation. The urgency arose from the fact that 5 months had then elapsed since our decision in the General Telephone case and we had accumulated a substantial backlog of section 214 applications. Orderly discharge of our business requires that they be disposed of as quickly as possible. In addition, in some cases we had been advised that matters were especially pressing. Rome Cable's franchise is exclusive only until March 13, 1969. Both it and the city government have been receiving complaints from residents in those parts of Rome which have not yet received service because our ruling interrupted construction. The public was given as much opportunity to be heard as is ever afforded in connection with telephone construction applications -- in addition to the notice referred to above, this application was placed on Commission public notice which was released to the press. While it is true that the full gamut of all the conceivable policy issues surrounding the question of whether cable television should eventually be treated as a common carrier service have not been discussed, as indicated above, I believe the facts as to this application were fully and completely considered. In addition, I have since examined the file on the matter and find no basis for further investigation.
Commissioner Johnson's first basic ground for dissent is that the regards this as another instance in which the Commission is "making decisions with immense future impact on our society without the slightest information or consideration as to where we are going or what we are trying to achieve." I do not think this is true. We have not, of course, decided in detail what we think the communications system of this country may, or should, be at some specified future date, and where precisely cable television should fit into the overall picture. I agree that we should give careful attention to such long range questions, but I do not think that in the meantime we should suspend processing applications which we have invited. I have not approached this matter in an effort to determine "what the FCC can do for the telephone company" but rather in terms of whether Southern Bell has complied with our section 214 ruling and with our announced interim policies, and whether the application seems fair on its face and is unopposed. When we have decided that the telephone company should be doing something for the country which it is not now doing, I will then be quite prepared to require it to take steps to meet the deficiency.
I think Commissioner Johnson's reference to possible impact of this action on the development of picturephone service is not really relevant. I think the Bell System has a substantial investment in the development of such a service, and that it will go ahead with its plans to initiate it, by degrees, as it finds public demand for such a service. The company has been pursuing these plans at the same time it was building channel facilities for cable operators, so it apparently sees no inconsistency between the development of a two-way capability for picturephone and a one-way capability for distribution of television signals. It seems to me quite likely that even the latter will eventually evolve into a two-way capacity, so I really think Commissioner Johnson's concern here is baseless.
[*496] I also disagree with Commissioner Johnson's second area of concern. In some situations I have joined him in expressing the belief that the Commission was not properly considering the public interest, either on its own initiative or when requested to do so by individual members of the public or by organized groups. But I don't see the applicability of this concern here. I don't think it requires any great courage or foolhardiness -- although it may involve expense -- for an individual to challenge a particular applicant. Indeed, we have a number of cases in which parties have done just that in connection with telephone company applications for construction of CATV channel facilities. I think that when anyone files an application in accordance with the rules and policies of the Commission, and due notice of such filing is given, we have to proceed to dispose of the matter on the basis of the application alone if no one advises us that there is something wrong. Here Rome Cable ordered service from Southern Bell, to be provided under a tariff of a kind the Commission required the company to file with us. We have not yet considered the terms of that tariff, but are prepared to hear any complaint that anyone who feels that it is unfair may wish to make. In all other areas of telephone service we do assume -- and I think correctly -- that the construction by a telephone company of facilities to meet public demand, in the absence of evidence to the contrary, is in the public interest. I think it is sound policy to proceed on the same basis in handling properly filed applications for authorization to construct CATV channel facilities.
It is true that the question of our section 214 jurisdiction was originally a part of an overall proceeding which was also designed to consider alleged abuses in the cable field by telephone companies. The basic question of jurisdiction was taken out of that case and given expedited treatment. The other charges will be considered in due course in regular hearings. If in those cases, or in others not yet instituted, we find defects in the tariffs the telephone companies have filed to cover this service, we will have full authority to require necessary modification.
I think Commissioner Johnson exaggerates the telephone company's power "to see to it that no one ever complains in the future to this Commission." While I recognize that the Bell System and the telephone industry in general are large and powerful business entities, and that this carries with it a degree of political influence and of economic power over the actions of others, I do not think that we are anywhere near the point where individuals feel they cannot complain to the Commission or that such complaints will not receive proper consideration.
Nor can I agree that we have not indicated standards to be applied by the Common Carrier Bureau in handling other section 214 applications. We have concurred in their recommendation that they should bring to us all those cases in which a telephone company is doing business with a cable subsidiary or other related entity and all those in which there is complaint or dispute about provision of cable service in a community. n1 We have told the Bureau to grant only those remaining [*497] applications which comply with our interim policies and which, on their face, seem sound and in compliance with our decision in the General Telephone case.
n1 In my opinion, they should also make special inquiry in those cases where they are informed that other parties had at one time sought to build their own cable facilities, to be certain that their withdrawal was not occasioned by improper activities of a telephone company.
Commissioner Johnson makes the point that a common carrier offering is supposed to be available to anyone who can pay for it, and asks "can anyone believe that, in the community of Rome, Ga., the Bell Co. will now stand ready to lay duplicating cable systems to every person who would establish one?" He also asks whether such a course would be desirable. I think the latter question does raise substantial issues. However, Southern Bell can be required to construct facilities for anyone who wishes to enter into competition with Rome Cable, since it has offered this service to the public generally. I agree that it is not likely that a second, duplicating system will be built in Rome; however, it is not common for two nontelephone systems to be built in the same area. This does not turn on whether the system is constructed by a telephone company or by a private cable entrepreneur, but is simply a reflection of the economics of the cable business in its present form. If anyone should decide to build a second system in Rome, I expect that Southern Bell's tariff would insure that other users of telephone service would not be burdened by the provision of additional channel facilities. I do not think that the likelihood of competition in providing cable television in Rome turns on whether Southern Bell is authorized to construct the balance of the system originally ordered by Rome Cable.
Commissioner Johnson asks the rhetorical question "Does anyone really know what is going on at the FCC?" I would certainly not want to say that I know all that is going on at all stages in connection with the very complex responsibilities of this agency. However, I think I know what was involved in Southern Bell's application in Rome, and that I know enough about the present and future relationship between the telephone and cable industries to make the judgment that this application should be granted.
The issues surrounding the future growth and development of the cable television industry are among the most significant communication policy questions now confronting the country and this Commission.
One of the central issues is the extent to which cable television distribution should be treated as a common carrier activity. Should the public be accorded rate and quality-of-service protection from what appears to be essentially a monopoly service -- protection characteristic of government regulation of public utilities? Should cable television channels be made available to all potential program originators willing to pay the leasing charge (as telephone service is now made available), or should the operator of the system be in the position to determine all the information that the citizens of a given community can obtain (or by precluded from obtaining) by cable? Should such services be offered (a) only by the telephone company, (b) only by companies other than the telephone company, or (c) in a competitive environment in which private entrepreneurs must compete with the telephone [*498] companies at the same time they are doing business with them (through pole attachment agreements, and so forth)?
These issues have been addressed by New York City Mayor John Lindsay's Advisory Task Force on CATV and Telecommunications, a report on cable television and cable telecommunications in New York City, and are among those considered by the President's Communications Policy Task Force. (Weekly Compilation of Presidential Documents, Aug. 21, 1967, pp. 1146-54.) They have been the subject of study by numerous research and academic institutions. They have even been raised by the FCC majority in the recent proposed rulemaking regarding cable television adopted December 12, 1968. F.C.C. 68-1176.
They have not -- as today's decision makes clear -- been fully and appropriately addressed by this Commission in today's majority action by three of the seven Commissioners. n1 The Commission has today simply concluded that the telephone company can build, own and lease a CATV system in all instances in which no one formally protests to the FCC. The matter was brought to the Commission by the Common Carrier Bureau in a spirit of great urgency, without even coordinating with the other interested bureaus -- let alone giving the public an opportunity to be heard. It has not been full investigated, discussed or argued before the Commission -- a fact not altered by the weeklong delay to hear from the chief of the CATV task force. *
n1 Commissioner Cox has now drafted a characteristically thoughtful and constructive effort to explain at least his own rationale for this decision. I do not find it, however, altogether persuasive. For example, he says:
"I believe that at some future time cable operations may evolve in such a way that it will be necessary and desirable to treat them as common carrier operations. But I do not think we really have the option now of deciding that cable operations should be forced into the common carrier mold. * * *"
I do not urge that cable operations be forced into the common carrier, or any other, mold. I do urge that this Commission has an obligation to examine the public interest factors involved in cable operations, and propose whatever procedures and protections we think most appropriately fit the situation. If, however, a majority of this commission believes that it will be necessary and desirable to treat cable operations as common carrier activity at some future time, then I think we have an affirmative obligation to evaluate what we are doing today in light of its impact upon our capacity to take such a step in the future. And I believe that, whatever we may think or say we are doing, the practical impact is to substantially inhibit our future flexibility in dealing with issues now before us in other proceedings. As even Commissioner Cox concedes, in classic understatement, "it is true that the full gamut of all the conceivable policy issues surrounding the question of whether cable television should eventually be treated as a common carrier service have not been discussed. * * *"
* Hurriedly brought to the Commission on Nov. 20, 1968, promptly disposed of Nov. 26, with public release on Nov. 27, I am now startled to discover the Bureau inexplicably held the sec. 214 authorization while Commissioner Cox and I leisurely concluded our exchange of views this, the week of Feb. 10, 1969.
My first concern arises out of my repeated observation that this Commission continues to persist in making decisions with immense future impact on our society without the slightest information or consideration as to where we are going or what we are trying to achieve. The questions before us are ones of policy -- and the answers we give will substantially determine our Nation's communications systems for decades. And yet we are addressing the issues before us in the most legalistic, narrowly-conceived, decisionmaking framework imaginable. We have available to us little more than the information Bell wants us to have. We have little or no idea of the long-range effect of our decision. As one small example that pales in insignificance compared to the questions of media content control, what is the impact of our decision upon Bell's Picturephone? We are now being exposed to a national campaign of ATT advertising (paid for by telephone subscribers) [*499] advising that ATT now stands for the "Anywhere anyTime anyThing network." Yet suppose that ATT and the other telephone companies gain substantial investment in the one-way multichannel systems of cable television. Will this investment have no impact on Bell's incentive to innovate with the two-way video of Picturephone?
A second area which concerns me is our extension of the principle that this Commission will only be forced into considering the public interest when a citizen gets up enough courage, or is so foolhardy, as to challenge one of the Commission's corporate clients. The telephone company is apparently to be presumed to be operating in the public interest, and to be given whatever it wants, unless someone complains. n2 I believe we should ask not what the FCC can do for the telephone company, but what the telephone company can do for our country. And yet the FCC's rather peculiar and contrary doctrine is now to be extended to the telephone/CATV field -- despite the fact that the very proceeding in which we asserted section 214 jurisdiction over telephone company construction began in order to examine charges of tariff abuse by the very telephone companies that are now to be given carte blanche. n3 These abuses -- which, if true, could lead to substantial revisions in the tariffs if not the outright declaration of their per se unlawfulness -- are now to languish in a proceeding before a hearing examiner with no prospect that it will reach the Commission in the relevant future. If Bell is to be allowed to compete with other private entrepreneurs, surely the recent FCC regulatory history has demonstrated a need to insure that the competitive environment is fair to all parties -- especially to anyone who would dare challenge Bell. Needless to say, by this action the FCC gives the telephone company every incentive to see to it that no one ever complains in the future to this Commission. Presumably Bell by now enjoys sufficient political and economic power to effect that end in most cases.
n2 As Commissioner Cox says in his separate opinion:
"[We] * * * assume * * * that the construction by a telephone company of facilities to meet public demand, in the absence of evidence to the contrary, is in the public interest."
But from where, one might ask, do we expect such evidence to come -- the telephone company? He goes on to say that:
"[When] anyone files an application in accordance with the rules and policies of the Commission, and due notice of such filing is given, we have to proceed to dispose of the matter on the basis of the application alone if no one advises us that there is something wrong."
In one sense, of course, he is right. We must act upon the papers presented to us by parties outside the Commission. If only the applicant files an application or statement that is all that is before us. But the Communications Act is very clear in its injunction that those of us on this Commission must make our own investigation and judgment of what serves the "public interest" -- independent of whether anyone comes in from the outside to urge it or not. Indeed, Commissioner Cox has often recognized, as he says, that "in some situations * * * the Commission was not properly considering the public interest * * * on its own initiative. * * * " I believe this is such a situation. He disagrees.
n3 But for today's decision one would have assumed that the Commission had urged its section 214 authority on the assumption there were to be some section 214 applications it would not approve. That now appears not to be the case.
Meanwhile, back in Rome, Ga., the Southern Bell Telephone Co., can now go ahead, with FCC imprimatur, and construct the Rome CATV system.
One big issue in the Rome case is whether the Commission can issue a section 214 certificate before settling the question of whether a leaseback is a common carrier activity. The tariff that is filed is often a codification of negotiations under way between the telephone company [*500] and a prospective CATV operator. Since, generally, only one person can take advantage of the tariff, what kind of common carrier undertaking is that? (Can anyone believe that, in the community of Rome, Ga., the Bell Company will now stand ready to lay duplicating cable systems for every person who would establish one? Would that be desirable, in view of the wastage of facilities, and the complexity of Federal-State-local relations in the regulation of cable systems?) And some of the remaining issues in the 214 proceeding as well as the Commission's CATV rulemaking concern the nature of this common carrier offering.
The Rome action is also unfortunate in that it tends to undercut the Commission's early 214 decision. For, by today's decision, the Commission is authorizing the granting of a certificate to cover a flagrant case of uncertificated construction. A routine grant of this application largely nullifies the grandfather provision established by the 214 decision. That decision stated that facilities built after October 21, 1966 were built with knowledge by the phone companies of their possible unlawfulness, and thus no equities would attach because of money spent after that date. The Rome facilities were all built after this cutoff date -- but no real effort is made to reconcile this fact with the grandfather provisions. The Rome decision is, thus, precedent for the grant of almost any application.
We tell our Common Carrier Bureau to grant all other section 214 applications for which there are no protests -- as the Bureau has asked us to do -- without any meaningful enunciation of the standards it is to apply in doing so, and without the institution of even the most elementary management information reporting system for following up and reporting back to the Commission what is subsequently done by the Bureau under this new-found delegated power. A common carrier offering is to be available to anyone who can pay for it.
The Common Carrier Bureau will grant the 214 applications as fast as it can. Because of the nature of its traditional clientele (ATT), it is not accustomed to receiving applications in large numbers, and the backlogging of requests is already building up. As a result, it has taken to putting out orders that provide:
[This] authorization is not to be construed to relieve applicant's
customers * * * from compliance with the requirements of part 74, subpart K, of
the Commission's rules, or any rules that may be promulgated by the Commission
in docket No. 18397, or any Commission order that may be issued pursuant to
part 74, subpart K, of the Commission's rules and regulations.
(See, e.g., Chesapeake & Potomac Telephone Co. of Virginia, File No. P-C-7112, released Dec. 30, 1968.) This is an old bureaucratic dodge. It results in construction being completed and service locked in without regard to whether it fits any rational overall CATV scheme.
Does anyone really know what is going on at the FCC? If so, the evidence is not readily apparent. I must regretfully dissent.