In the Matter of AMERICAN TELEPHONE & TELEGRAPH CO. Revisions to American Telephone & Telegraph Tariff F.C.C. No. 263,
LONG-DISTANCE MESSAGE TELECOMMUNICATIONS SERVICE
Transmittal No. 10664
FEDERAL COMMUNICATIONS COMMISSION
20 F.C.C.2d 886 (1969)
RELEASE-NUMBER: FCC 69-1407
December 23, 1969 Adopted
BY THE COMMISSION: COMMISSIONERS BURCH, CHAIRMAN; AND COX CONCURRING AND ISSUING STATEMENTS; COMMISSIONER JOHNSON DISSENTING AND ISSUING A STATEMENT.
[*886] 1. The Commission has before it for consideration (a) a petition, filed December 10, 1969, by the National Association of Regulatory Utility Commissioners (NARUC), requesting suspension or rejection of the above-captioned tariff revisions now scheduled to become effective January 1, 1970; (b) a petition, filed December 5, 1969, by the city of New York (New York) seeking rehearing with regard to such tariff revisions; (c) a petition, filed December 12, 1969, by the Independent Group (consisting of U.S. Independent Telephone Association, G.T. & E. Service Corp., United Utilities, Inc., National Telephone Cooperative Association, and Continental Telephone Service Corp.) concurring in NARUC's petition; and (d) numerous letters from individual State regulatory agencies and others also supporting the aforesaid petition of NARUC.
2. The tariff revisions referred to by the aforementioned parties were filed by American Telephone & Telegraph Co. (A.T. & T.) under transmittal No. 10664 on December 2, 1969, to become effective January 1, 1970. They were submitted by A.T. & T. in connection with the Commission's recently completed comprehensive review of the Bell System's interstate operations and earnings requirements and are designed to accomplish reductions amounting to $150 million in the rates for long-distance message telecommunications service (longdistance telephone). These are the rate reductions referred to in the Commission's public notice of November 5, 1969 (F.C.C. 69-1210, 38859).
3. As one of the bases for suspension (and impliedly for formal investigation), NARUC alleges that the revised tariff schedules will create an unlawful discrimination in that they provide for reduced rates applicable to customer dialed calls only. It is alleged that such a reduced rate discriminates against subscribers who have not been provided with dial service or whose dial service is not equipped for [*887] outward customer dialing of toll calls, and against those subscribers with outward customer toll dialing capabilities who seek to place calls to other telephone stations not equipped for inward toll dialing. These allegations of NARUC are not borne out by the specific language of the tariff. The tariff specifically provides that dial station-to-station rates apply where an operator is required to complete a call because of the unavailability of facilities for customer dial completion.
Furthermore, this same tariff language has been construed by the telephone company to provide for the application of the currently effective lower customer dial rates between midnight and 7 a.m. to the cases presented by NARUC. Accordingly, NARUC's contention with respect to this point is not well taken.
4. As a second basis for suspension and investigation, NARUC states that the revised rates will aggravate already intolerable disparities between intrastate toll rates and interstate toll rates thereby unreasonably and unjustly discriminating against the intrastate toll users and unreasonably granting a preference and advantage to the interstate toll users. However, the mere allegation that different rates apply for allegedly the same service in different jurisdictions does not constitute a showing of unlawful discrimination, preference, or advantage. Such a difference in rates for what appears to be the same service can properly arise if the unit costs of furnishing the service differ in the interstate and intrastate jurisdictions because of length of haul, traffic density, technological differences or like considerations. Also, differences may arise from differences in the statutory or other bases for ratemaking in the various State and local jurisdictions as applied to local telephone exchange or intrastate toll service or both.
5. NARUC further alleges that the interstate rate reductions will cause reduced rates and revenues for the 1,850 independent telephone companies without their having had an opportunity to be heard or to participate in the alleged closed rate negotiations between A.T. & T. and the Commission. It is true that at the present time virtually all of the independent telephone companies furnish interstate toll telephone service under joint tariffs filed by A.T. & T., and that under such a tariff structure, the reductions in rates will apply to the total charges for interstate toll service furnished jointly by the independent companies and the Bell System. However, it does not follow that each independent company will suffer diminished revenues by virtue of such overall reductions in the joint through rates. The traffic composition of a particular company may be such that the reductions in specific rates may not materially affect the revenue from the interstate toll calls in which that company participates. Moreover, a company participating in joint rates which is adversely affected by a reduction in such rates has alternatives readily available to it to remedy such adverse effect. Thus, it may elect to establish its own rate at a compensatory level and cease to participate in the reduced joint rate or it may seek a revision in its share of the joint rate either by negotiation or by petition to the appropriate regulatory authority. In any case, the instant petition fails to adduce any evidence, or even to allege, that, by virtue of the revised rates, any independent company will receive inadequate compensation for its interstate toll service.
[*888] 6. NARUC alleges that stimulation in calling which will be caused by the proposed reduced rates will further aggravate what it terms the existing grave telephone service situation. It also alleges that the changed hours of discount rates will move portions of present traffic into peak hours at distant locations. However, the petition makes no specific showing, other than such conclusory statements, as to the amount of stimulation which may be expected to result or the respects in which the existing or future telephone facilities are or will be inadequate to accommodate any such increased traffic. It is sufficient to note that the Bell System companies, which are aware of their service obligations and existing problems, proposed these rate schedules in the confidence that they can meet service requirements.
7. NARUC states that the interstate rate
reduction will cause a further burden on the capital requirements of the
8. NARUC finally requests that the proposed rates be rejected or suspended until due consideration can be had by the Commission on a petition for rulemaking relative to certain new and complex proposed changes in jurisdictional separation procedures filed concurrently with the instant petition. NARUC's petition for rulemaking was placed on public notice on December 12, 1969 (RM-1543). In this connection, we have suggested to NARUC that, to facilitate expedition, the NARUC-FCC staff committee of technical experts be convened as soon as possible in order to consider the proposed changes. We have also urged that such meetings commence as early in January as possible. We have again stated, as we indicated in our report and order of January 29, 1969, in docket No. 17975, that we intend to continue our cooperation with the NARUC and look to these joint studies as the prime forum for providing the expertiese and guidance required in this complex area of separations procedures. In the meantime, we see no need to deprive the public of the benefits of the substantial rate reductions now scheduled to go into effect on January 1, 1970. So far as any change in separations procedures is concerned, if rate adjustments should prove to be necessary as a result of any separations changes which may eventuate, such adjustments may be made at the appropriate time.
10. The gravamen of the city of
11. Disregarding its
misconstruction of the effect of the Commission's public notice and treating
the pleading as a petition for investigation, it is still defective. Its sole basis for alleging the unlawfulness
of the proposed tariff schedules appears to be that the Commission has
indicated such schedules may produce a return somewhat in excess of that found
to be reasonable in 1967. This fact, if
proven, is not sufficient to establish the unlawfulness of the proposed
rates. It is will settled that the
question of what is a fair rate of return is dependent on the facts and
circumstances prevailing at the time of its determination.
12. With respect to New York's request for an accounting order, it should be noted that, even were its allegations sufficient to raise a question as to the unlawfulness of the proposed rates, New York cites no provision of the Communications Act which confers authority for the Commission to enter an accounting order with respect to reduced rates. Section 204 authorizes us to issue accounting orders when increases, but not reductions, in rates are filed, 47 U.S.C. 204.
13. In view of all of the foregoing, we conclude that the aforementioned requests should be denied.
14. Accordingly, It is ordered, That the
petitions of the National Association of Regulatory Utility Commissioners
(NARUC), the city of
FEDERAL COMMUNICATIONS COMMISSION, BEN F. WAPLE, Secretary.
CONCURRING OPINION OF CHAIRMAN DEAN BURCH
There is an old saw among lawyers that "if you're weak on facts, argue the law; if you're weak on the law, argue the facts; if you're weak on both the law and the facts, pound the table." This statement is in response to Commissioner Johnson's table pounding dissent.
To place it in proper perspective the dissent violently castigates the Commission for negotiating promptly the largest interstate rate reduction in history. A rate reduction 25 percent greater than the Commission was able to prescribe, with Commissioner Johnson's concurrence, in a decision and order issued almost 2 years after the institution of formal hearing procedures in 1965.
The Commission need not apologize for its negotiations or for the results achieved. Perhaps the reductions are less than we would have ordered after another hearing, and perhaps not. The fact is, interstate users will enjoy immediate and substantial benefits, and without having to await the uncertain outcome of another hearing.
So much for what the Commission did. Even more important is what we did not do.
First, we did not, and in fact could not, as a matter of law, in these continuing surveillance proceedings change the rate of return findings and conclusions made after our hearing in docket No. 16258. Any allegation that the Commission has approved or authorized a [*891] return of 8 to 8.5 percent is erroneous and should be rejected. We did express the view that, under current conditions, earnings in excess of 7.5 percent, after the substantial reduction of rates to be effective January 1, 1970, would not necessarily be unreasonable. (See concurring statement of Commissioner Cox.)
Second, as Commissioner Johnson should well know, our forecast that under the proposed rate schedule with current traffic trends and the stimulation resulting from the rate reductions, the company might well reach the 8- to 8.5-percent range of return before the end of 1970, does not mean that the Commission will not take further action if such earnings are achieved. The Commission made clear in its public announcement of November 5, 1969, that in the first half of 1970 or well within the next 6 months we will again review A.T. & t/.'s level of earnings with a view to procuring any future adjustments that may be justified.
Third, I confess I do not understand the comments of Commissioner Johnson with respect to separations. So far as I can determine, separations has been the subject of continuing and detailed study. There has been no refusal to consider all alternatives in the pricing of telephone service. To the contrary, anyone aware of what we have been doing would know there have been frequent and significant changes in separations procedures. In fact, since the early 1950's some $800 million of revenue requirements have been transferred from the intra to the interstate jurisdictions. These transfers have for the most part been reflected in lower charges to American consumers of local exchange and intrastate toll service. This is emphatically not a record to be ashamed of, nor a sign of obliviousness to the interests of the local exchange user.
the dissent makes the statement that "So little information has been filed
by Bell that it is impossible to tell whether the rate changes will result in
any reductions at all," and that "No information has been furnished
to indicate how Bell arrived at these reductions, or what alternatives were
presented and rejected by the company." It is obvious from an examination
of the tariff schedules that reductions in charges to the public will result. When the station day rate for customer
dialed calls across the country during the business day are reduced from $1.70
to $1.40, or from $1.25 to $0.90 in the evening, anyone can determine whether
there has in fact been a reduction in rates.
The Commission has volumes of data from
Fifth, we did not ignore the effect of the possible reduction in the Federal corporate surtax if the pending income tax legislation becomes [*892] law. We specifically referred to it as one of the matters which we would take into account, when the uncertainty was removed, in the course of out 1970 review.
Sixth, Commissioner Johnson takes us to task for permitting rate increases to go into effect in November 1969 for television program transmission and teletypewriter exchange (TWX) services with offsetting decreases not to be effective until February 1970. The TWX increases did not go into effect in November as Commissioner Johnson states but were in fact suspended along with radio transmission and Telpak rate increases until February. At that time even though the rate increases are subject to hearing and could be disallowed with refunds ordered, the Bell System agreed to put offsetting toll rate decreases in effect. In view of this and the minuscule effect upon the rate of return of the television program rate increases for the 3-month period, it did not seem inappropriate to allow all offsets to be made effective at the same time, February 1, 1970.
Seventh, we are fully aware of the methods by which the Bell System companies computed the reductions and the traffic volumes used. This matter was discussed with the company and was resolved to the Commission's satisfaction on the basis of current traffic levels.
before closing I must express a personal distaste for broadside attacks upon
the intelligence and integrity of my fellow Commissioners and our undermanned
staff. We do not "sit by, smugly,
ratifying rate reductions
CONCURRING STATEMENT OF COMMISSIONER KENNETH A. COX
I concur in this decision, but wish to add the following comments. The Commission has not fixed a rate of return as a result of its recent negotiations with A.T. & T. It has recognized that, in the face of undisputed changes in conditions since 1967, a level of earnings somewhat above the maximum then formally prescribed is not now unreasonable, but has indicated that it will be prepared to give further consideration to the matter if and when the company's rate of return reaches still higher levels.
we have obtained present reductions in rates to the maximum degree possible
through our continuing surveillance procedures. If
FURTHER CONCURRING STATEMENT OF COMMISSIONER KENNETH A. COX
I had thought that the brief concurring statement which I filed earlier would suffice, but in view of Commissioner Johnson's response to the Chairman's concurring opinion I wish to add a few further comments.
I found Commissioner Johnson's original dissent objectionable on much the same grounds stated in the Chairman's concurring opinion. Although I think he knows better, Commissioner Johnson persists in refusing to recognize the true character of the Commission's continuing surveillance procedures. On the one hand he shows no sign publicly of understanding that continuing surveillance is a process of negotiation in which the assent of A.T. & T. must be won, n1 so that in the nature of things the Commission cannot exact the very last dollar in rate reductions which it might wish to obtain for the public if it were in a position to prescrible rates -- which can only be done after a formal hearing. And conversely, he will not concede publicly that our processes have secured for the public the largest reduction in telephone rates in history now and not 18 to 24 months hence, after a long and complex hearing. I have been through two rounds of continuing surveillance, as well as our formal rate proceeding in docket No. 16258. Each procedure has its advantages and disadvantages, but I have been satisfied thus far that in most cases we should proceed informally in order to get substantial benefits for telephone users as quickly as possible. I believe we have done just that in this instance.
n1 The Commission, of course, does
not have to accept the company's first statement as to what it will agree to in
the way of rate reductions -- and in my experience it has certainly never done
Commissioner Johnson disagreed with the result reached, the other five
participants agreeing that a reasonable adjustment of earnings had been
negotiated. He now maintains his
position by voting against denial of petitions for reconsideration filed by the
National Association of Utility Commissioners (NARUC) and by the city of
n2 This is the staff he now terms "able and hard working," but that is not the way he often characterizes them in Commission meeting, with the result, I think, of serious impact on morale.
In my years at the Commission I have concluded that dissenters have a very real advantage in the fact that their opinions are not operative acts. Since no direct consequences will flow from what they write, they can exercise a freedom of position and expression which might become embarrassing if their views were to become the rulings of the Commission and actually shape the industries we are charged to regulate. I am often in dissent myself, so try not to abuse this freedom -- though whether I am successful or not I cannot say. In this case I think the Commission has acted responsibly, with respect both to the interests of the users of interstate telephone service and the interests of the shareholders of A.T. & T., and that Commissioner Johnson's colorful table pounding is without substantial factual or legal foundation, though no doubt well designed to attract popular support for his position.
In the addendum to his opinion, Commissioner Johnson addresses himself to seven points which he says the Chairman had made in his concurring opinion. I would like to comment on each of these.
First, the Chairman said that the Commission had not changed our conclusions as to rate of return reached in 1967 in docket No. 16258 (our formal rate case); that we had indicated that, under current conditions and after the substantial reduction in rates agreed to, earnings in excess of 7.5 percent would not necessarily be unreasonable; but that any allegation that the Commission has authorized a return of 8 to 8.5 percent is erroneous. Commissioner Johnson had made such a charge in his initial dissent, and persists in this view in his addendum, claiming, apparently, that acceptance of earnings in excess of 7.5 percent, coupled "with specific references by company and Commission to 8 and 8.5 percent," really establishes the truth of his original charge that "8 to 8.5 percent is the rate of return now permitted by this Commission." In the first place, earnings of 7.6 or 7.7 percent would be in excess of 7.5 percent -- but would not be in the range 8 to 8.5 percent. Thus our recognition that earnings outside the range 7 to 7.5 percent are permissible -- a result clearly contemplated as possible in our 1967 decisions in docket No. 16258 -- does not prove Commissioner Johnson's claim that we have acquiesced in earnings in the range of 8 to 8.5 percent. Nor do our specific references to that range prove his point. What we said in our November 5, 1969, public notice announcing the results of our continuing surveillance negotiations was: (a) That 1969 interstate earnings are expected to exceed 8 percent -- but obviously the $150 million rate reduction will now reduce that earnings level; (b) that existing growth trends in traffic, revenues, and earnings are expected to continue; (c) that this expectation is substantiated by A.T. & T's forecast of interstate operating results for 1970 which, under present rates (i.e., those in effect before the $150 million rate reduction), ranges to levels above 8.5 percent, depending on economic conditions; (d) that based on experience with past rate reductions, we anticipated that interstate revenues and earnings will be stimulated by the very reductions in rates the company would file; (e) that we anticipated that the $150 million rate adjustments would not, in themselves, prevent the company -- at some unspecified future time -- from achieving earnings in the range of 8 to 8.5 percent, in view of the growth trends and stimulative effects already referred to; (f) but that we would maintain continuing surveillance and take such action as may be appropriate in the light of future conditions. I think it is clear that the last statement contemplates action, above and beyond the $150 million reduction already negotiated, to counteract any rise in earnings we might believe to exceed reasonable levels.
Indeed, the Chairman's second point was precisely -- as outlined above -- that our forecast that the company might reach the 8-8.5 percent range of return before the end of 1970 did not mean that the Commission would not take further action if such earnings were achieved. Beyond that, he reiterated that we had made clear that we would again review A.T. & T.'s level of earnings in the first half of 1970 in order to effect any adjustments that may then be justified. To which Commissioner Johnson, in his addendum, replies: "What a shame the public must pay unnecessarily high rates in the interim" (emphasis his). In my judgment it would have been an even greater shame if we had done what he now seems to say we should have -- that is, rejected the company's offer to reduce rates and proceeded with a formal rate case designed to achieve even further reductions. During that interim the public would have to pay $150 million more per year than the rates he already terms unnecessarily high. I cannot understand his refusal to recognize this simple fact. I raised this point with him in the meeting at which we considered the petitions for reconsideration. He did not answer then and he does not do so now.
Third, the Chairman indicated that he could not understand Commissioner Johnson's comments as to separations, and denied his implication that we had refused "to consider all the alternatives in the pricing of telephone service." Indeed, we are now considering the only alternative NARUC has proposed, but are doing so through the long-existing joint staff committee looking toward possible revision of our rules. That is the appropriate machinery for such adjustments in separations, not the suspension or rejection of the new tariffs urged by NARUC in its petition herein. To this, and other comments on the separations problem, Commissioner Johnson now makes a completely diversionary rejoinder. He asks where -- if separations has, as the Chairman said, been the subject of continuing and detailed study -- are the FCC standards in this area? The answer is that they are set forth in our rules specifying the current separations procedures, and are explained in the memorandum opinion and order adopting the rules and in our 1967 decision in docket No. 16258 (see 9 F.C.C. 2d 88 ff, especially pp. 108-111). It is not incumbent on the Chairman to suggest "some common sense rationale for 'separations' standards and formulae." The Commission has fixed procedures after a lengthy hearing proceeding followed by a rulemaking proceeding -- in both of which Commissioner Johnson participated. If he -- or NARUC -- believes that that is sound basis for now revising those procedures, the burden is upon them to make the case for such change.
the Chairman addressed himself to Commissioner Johnson's statement in his
original dissent that: "So little information has been filed by
claims that the final outcome can be computed with precision, but our staff has
verified the price cuts of the tariff changes and is satisfied that they are
designed to produce the desired result.
Based on past experience, I believe that even though we must start with
the Chairman denied Commissioner Johnson's charge that we had ignored the
the Chairman pointed out that Commissioner Johnson was in error in saying that
we had permitted rate increases for TWX service to go into effect before the
offsetting message toll reductions (which have just now been filed). At to the increased television program
rates, which did go into effect last October, he pointed out that they would
have minimal effect, over the 4 month period involved, on the company's rate of
return. He also noted that Bell had
agreed to file reductions in message toll rates, effective February 1, 1970,
even though the increases in Telpak, TWX, and radio and television transmission
rates have all been challenged and accounting orders issued by the
Commission. This means that the
increases may have to be refunded, though the company will have no
corresponding right to recoup the sums lost through the message toll
reductions. Under these circumstances
the Commission concluded that it would be reasonable to have all the offsetting
reductions effective at the same time; namely, February 1, 1970, the date to
which the effectiveness of three of the four tariffs in question had been
suspended. n3 To all of this Commissioner Johnson
now responds that the $15 million in television transmission increases was more
significant than the $6 million in TWX increases -- as to which he concedes he
was in error. But by the same token,
the $75 million aggregate for the other three services was more significant
than the sum involved in the television increases. Theoretically, it would perhaps have been neater to have had each
increase associated with a contemporaneous offsetting reduction in message toll
rates, since it was agreed that
n3 In other words,
the Chairman said that we were aware of the methods by which
the Chairman expressed distaste for broadside attacks upon his colleagues and
the staff, objecting to broad generalities devoid of factual basis. He said that we do not "sit by, smugly,
ratifying rate reductions
Reductions in rates for interstate long distance telephone calls will be submitted shortly by the Bell System telephone companies to the Federal Communications Commission. It is expected that the reduced rates will save users of telephone service about $150 million per year.
In addition, A.T. & T. has previously agreed to file reductions of about $87 million representing an offset to increases in revenues resulting from higher rates recently filed for program transmission, Telpak and teletypewriter exchange (TWX) services when the latter increases become effective. The Commission anticipates that the new rates will permit the companies to achieve earnings in a range needed to attract capital under today's conditions.
Commissioner Johnson points out that A.T. & T. grossed over $14 billion last year, which he points out is roughly 100 times our current rate reduction. I don't know what relevance this is supposed to have. It would seem that the more significant figure would be some $4,300 million revenues from interstate operations, from which A.T. & T. derived $785 million in earnings. Our $150 million represents approximately 3.5 percent of the former and, and after allowing for the effect of federal income taxes, some 9 percent of the latter -- certainly more relevant ratios than the one Commissioner Johnson uses.
says that our task is to find the appropriate level for
Commissioner Johnson then makes what seems to me an incredibly inappropriate reference to current concern for law and order. He says this concern should not be limited to those crimes it is easiest for the poor and disadvantaged to commit -- a proposition with which I agree, though its relevance to the matter in hand escapes me. He then says that a rigorous enforcement of the public interest should also apply to "the white collar corporate criminal" who is capable of "robbing" the American people of more money through a "single price fixing conspiracy" than they will lose in all the robberies, burglaries, and larcenies committed during a year. What is this supposed to mean? Does he claim to have identified some corporate criminal or some price fixing conspiracy in the context of our negotiation for the current reduction in interstate rates? If not, I find these references in extremely bad taste.
He concludes by saying that it is our responsibility not just to reduce A.T. & T.'s rates, but to reduce them to the proper level -- which, in his "judgment" we have not done. He then says: "It is neither 'table pounding' nor attacks on anyone's 'intelligence' or 'integrity' to state this blunt fact." Somehow his "judgment" has ripened into a "fact," though I have tried to suggest some grounds for questioning his judgment, and even the asserted facts upon which it is claimed to rest. He then turns to a popular song writer for the lines: "I'll tell you the truth, I know it ain't wrong," and adds "The truth may hurt a little; but it ain't wrong."
Earlier in his second opinion he says he deliberately used the word "smugly" in its dictionary sense of "narrowly contented with one's own accomplishments." I think perhaps there is an element of smugness in his conclusion that he alone has the "truth" of this complex matter. Certainly he has raised some valid questions, but I think he has tried to convert them into a critique of our action which simply will not hold water. When he sticks to the facts and the law and their reasonable interpretation I applaud his
efforts. In this case, however, I think he has, indeed, simply been pounding the table.
dissent to the Commission's rejection of petitions to suspend the rate
reductions filed by A.T. & T. as a result of the Commission's continuous
surveillance decision. I would suspend
these rate reductions for 1 day, institute formal proceedings on rate of return
and separations, and make the city of
already outlined my disagreement with the majority in the conduct of this
matter. A.T. & T., -- F.C.C. 2d --
(1969). F.C.C. 69-1210, November 5, 1969; see also letter from Commissioner
Nicholas Johnson to Senator Warren G. Magnuson, December 10, 1969. Briefly, I believe the Commission accepted
too little in the way of reductions by
any formal hearings in which aggrieved parties might be heard, the Commission
has decided that
NARUC petition raises serious questions which the Commission should
resolve. Separations policy calls for a
quantity and quality of research and systematic economic analysis which this
Commission has so far been unwilling to undertake. I do not believe we serve the interests of the American consumers
of local exchange and intrastate toll service by our refusal to consider all
the alternatives in the pricing of telephone service. It is easy to sit by, smugly ratifying rate reductions
dealing with the petition of the city of New York the majority disingenuously
relies on the California PUC case ( The Public Utilities Commission of the
State of California v. United States, 356 F. 2d 236 (9th Cir. 1966), cert.
denied, 385 U.S. 816 (1966), affirming F.C.C. 65-93 (1965)), despite the fact
that the case before us raises an entirely
[*894] different legal
situation. Not only has the F.C.C. here
made its decision on continuous surveillance after a formal rate proceeding in
which a rate of return was specified, but the Commission in this continuous
surveillance proceeding recognized the need for some sort of consumer
representation by appointing special staff counsel. Finally, the city of
also instructive to examine the rate reductions that
The Commission has very little data, and almost no capacity to evaluate what it does have. It has given little consideration to the peaking characteristics of message toll telephone service (MTT), or the effect of the reductions on telephone system utilization.
the Commission ignores the fact that
In November 1969 the Commission allowed $20 million in rate increases to go into effect for the television program transmission service and the teletypewriter (TWX) service. These increases were to be offset by reductions in the MTT service. But the offsetting reductions are now to not be made until February 1970.
Commission has refused to direct
We are used to telephone regulation that is more designed to serve corporate interest than consumer interest. That's not new. But a new and basic question in this proceeding is whether the Commission can insulate the company and the Commission from review by parties who feel themselves aggrieved. Perhaps it can. But if so it is a sad commentary on the present state of control of monopoly enterprise generally, and of the telephone company in particular.
ADDENDUM TO DISSENTING OPINION OF COMMISSIONER NICHOLAS JOHNSON
Since the preparation of this opinion, Chairman Burch has chosen to issue a rather disturbing document of his own. As the November 5 Commission decision and press release was one of the first important matters in which Chairman Burch participated (some 2 days after joining the Commission), his concern is understandable. Unfortunately, I have just received the Chairman's decision and can therefore give it only a brief reply.
Many years ago I, too, was introduced to the threadbare debater's canard about pounding facts, law, and tables. Most of us stopped using it after the first year in law school. For it is generally dusted off and used only by those who feel themselves unable to deal with either facts or law and must therefore resort to diversionary tactics of anecdote or ridicule.
The Chairman makes a number of points concerning the dissenting opinion. All are either wrong, fail to meet the objections raised, or actually support the dissenting opinion.
For example, the Chairman states:
First, * * * Any allegation that the Commission has approved or authorized a return of 8 to 8.5 percent is erroneous and should be rejected. We did express the view that, under current conditions, earnings in excess of 7.5 percent, * * * would not necessarily be unreasonable. [Emphasis added.]
If we are to take seriously the warning contained in the first sentence, and reject any allegation that the Commission has approved an 8 to 8.5 percent rate of return, we must accordingly reject the Chairman's next sentence. For that is precisely what he suggests. Once we untangle that sentence's "not-un" construction ("would not * * * be unreasonable"), it becomes: "earnings in excess of 7.5 percent * * * [*896] would * * * be reasonable." And that, to course -- taken with specific references by company and Commission to 8 and 8.5 percent figures -- was precisely my point.
The Chairman's remaining points ("Second" through "Seventh") can be treated briefly.
"Second" -- I am pleased that the Commission will review A.T. & T.'s earnings in the months to come. What a shame the public must pay unnecessarily high rates in the interim (which was, after all, my original point).
"Third" -- if, indeed, separations has been the subject of continuing and detailed study, where are the FCC standards in this area? If the Chairman is privy to some commonsense rationale for separations standards and formulas developed by this Commission's staff, I would appreciate his sharing them with his fellow Commissioners. (I do not see any reference to such rationale in the Chairman's opinion. An oversight, perhaps.)
-- I cannot believe that the Chairman really meant to urge that
-- this is another rather startling "now you see it, now you don't"
one-two sentence punch. Sentence one:
"we did not ignore" the effect of the surtax reductions. Sentence two: "we will consider it next
year." Again, that was precisely my point: the Commission opts to support
the company's desire -- in the meantime -- to gouge the consumer with excess
rates which all concede he should not have to pay. The fact that this illegality will be reviewed by the FCC
sometime in 1970 is little comfort now.
Further, there is no uncertainty involving the surtax, as the Chairman
suggests. President Nixon has already
enacted the surtax reduction into law, and we have known all along precisely
what its effects would be on
-- the Chairman is quite correct that TWX rate increases (of some $6 million)
do not go into effect until February 1970.
He glosses over the more important fact, however, that television
program transmission rates (of some $15 million) -- more than twice the TWX
rate increases -- have gone into effect as of November 1969. The Commission permitted television program
transmission service rate increases to begin in November 1969, yet postponed
offsetting reductions to February 1970, because this would have a minuscule
effect ($15 million), and it was "not * * * inappropriate" [emphasis
added] to postpone the offsetting reduction for 3 months. If the benefit to the public was minuscule,
then the detriment to A.T. & T. must also be minuscule. Why not, then, give the benefit to the
public? Surely A.T. & T. wouldn't
mind a minuscule bone of public interest tossed to its subscribers. Does anybody [*897] really understand
why this Commission is so solicitous of T.T. & T. that it resolves even
minuscule differences in A.T. & T.'s favor? We could have said it would be "not * * *
inappropriate" for the offsetting reductions to begin simultaneously with
the rate increases.
-- the Chairman is wrong. I attended
the continuous surveillance hearings; he did not. None of us were able to determine, through questioning, how the
Bell System companies made their computations -- since all rested on data
Now a brief word in response to the Chairman's "Finally":
I think it clear from my earlier disagreements with the majority on this matter, my dissenting opinion in this instance, and this addendum, that my views do not rest on "broad generalities devoid of any reference to fact. * * *" I deliberately used the word "smugly," in its dictionary sense -- meaning "narrowly contented with one's own accomplishments." The thrust of my dissent was not to argue the Commission had accomplished nothing, but that it had accomplished for too little -- all the while announcing to the world the magnificence of its supposed feat (in a press release coauthored with A.T. & T.).
Chairman takes apparent pride in our recently negotiated $150 million rate
reduction during a period of rampant inflation. Putting aside the FCC's contribution to this rampant inflation
when it accepts increases in
It was Anatole France who observed that "the law, in its majestic quality, forbids all men to sleep under bridges, to beg in the streets, and to steal bread -- the rich as well as the poor." Fortunately, however, there are a few laws even more directly applicable to the rich as well. For example, poor citizens as well as rich corporations are equally forbidden to charge excess rates for providing telephone service.
Similarly, "law 'n order," about which this administration has expressed such concern, should not apply only to those crimes which [*898] it is easiest for the poor and disadvantaged to commit. A rigorous enforcement of the public interest (or just and reasonable rates) should also apply to the white collar corporate criminal, who is capable of robbing the American people of more money with a single price fixing conspiracy, say, than they will lose in all the robberies, burglaries, and larcenies committed throughout the entire United States during a year.
It is this Commission's responsibility not just to reduce A.T. & T.'s rates to 60 miles per hour, but to reduce them to the speed limit, the proper level. This we have failed to do in my judgment. It is neither table pounding nor attacks on anyone's intelligence or integrity to state this blunt fact.
Former President Harry S Truman was once similarly charged with giving the Republicans hell. "I never give them hell," he said.
"I just tell the truth and they think it is hell." Put to music:
Come all you good people and
I'll sing you a song
I'll tell you the truth, I
Know it ain't wrong. n1
n1 "The Song of Hard Times," Hard Times, Mar. 10-17, 1969.
The truth may hurt a little; but it ain't wrong.