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In Re Cease and Desist Order To Be Directed Against COMMUNITY CABLEVISION CORPORATION

OPERATOR OF A CATV SYSTEM AT BRYAN, TEXAS

 

Docket No. 18922 Files Nos. SR-17012, SR-27014

 

FEDERAL COMMUNICATIONS COMMISSION

 

27 F.C.C.2d 475

 

RELEASE-NUMBER: FCC 71-131

 

February 10, 1971 Released

 

 Adopted February 9, 1971

 


COUNSEL:

APPEARANCES

Charles V. Wayland and Martin R. Leader (Fisher, Wayland, Duvall, Southmayd & Cooper) on behalf of Channel 6, Inc.; Henry A. Kelly (Fulbright, Crooker, Freeman, Bates & Jaworski) on behalf of Community Cablevision Corporation; and Michael W. Faber and Thomas B. Fitzpatrick on behalf of the Chief, Broadcast Bureau, Federal Communications Commission.


JUDGES:

BY THE COMMISSION: CHAIRMAN BURCH CONCURRING AND ISSUING A STATEMENT IN WHICH COMMISSIONERS BARTLEY, JOHNSON AND WELLS JOIN; COMMISSIONER HOUSER NOT PARTICIPATING.


OPINION:

 [*475]  1.  This proceeding was initiated by an Order to Show Cause, FCC 70-776, 24 FCC 2d 294, released July 16, 1970, directing Community Cablevision Corporation (Community) to show cause why it should not be ordered to cease and desist from violation of Section 74.1105 of our Rules and the interim processing procedures in Docket No. 18397 on its CATV system at Bryan, Texas.  In the interim, in order to prevent the expansion of a service which might have to be withdrawn in the event of a decision adverse to Community, we issued a stay pendente lite forbidding Community's further offering of the disputed signal to new subscribers, FCC 70-1026, 25 FCC 2d 703, released September 28, 1970.  In view of the novel issue presented, the issuance of the stay, and the necessity of an expeditious resolution of this matter, we ordered that the closed record be certified to the Commission for final decision ( FCC 70-1191, 26 FCC 2d 289, released November 6, 1970).

2.  A pre-hearing conference was held before Hearing Examiner Millard F. French on September 11, 1970.  The hearing was held and the record was closed on September 29, 1970.  Proposed findings of fact and conclusions of law were filed by the Broadcast Bureau on October 21, 1970; and by Community and Channel 6, Inc. on November 2, 1970.  A reply was filed by Channel 6, Inc. on November 16, 1970.

3.  The basic findings of fact are not in dispute, having been stipulated by the parties.  On November 17, 1969, Community, operator of  [*476]  a CATV system in Bryan, Texas, gave Section 74.1105 notification of its intention to carry KPRC-TV (NBC), Houston, Texas.  It failed, however, to serve a copy on Channel 6, Inc., licensee of KCEN-TV, Temple, Texas, which places a predicted Grade B contour over a portion of Bryan.  Temple is 19 miles closer to Bryan than is Houston, and KCEN-TV is the closest NBC affiliate to Bryan.  Community concedes that Channel 6, Inc. was entitled to notification of its intention to carry KPRC-TV, the NBC affiliate at Houston.  On January 14, 1970, Channel 6, Inc. filed an objection to Community's proposed carriage of KPRC-TV, but carriage of that station on Community's Bryan CATV system was nevertheless commenced on March 4, 1970.  n1 The KPRC-TV signal had been carried on a competing cable system in Bryan, Midwest Video CATV (Midwest), from 1954 through May 1966.  Midwest dropped its carriage of KPRC-TV for undisclosed reasons, and has never reoffered the signal to its Bryan subscribers.

4.  Community contends that its violation of Section 74.1105 is technical and non-injurious to KCEN-TV because the signal is grandfathered.  The grandfathering claim rests on Midwest's carriage of KPRC-TV on the grandfathering date of March 17, 1966, specified in Section 74.1105(d) n2 which provides as follows:

n1 Community gave Channel 6 the Section 74.1105 notice on January 23, 1970.  In view of the protest previously filed by Channel 6, Inc., this notice has no decisional significance.

n2 Community also refers to the February 15, 1966, grandfathering date specified in Section 74.1107(d).  Since Section 74.1107 relates to communities within the predicted Grade A contour of a major television market, and Bryan is not within such a market the February 15, 1966, date is not controlling here.

(d) The provisions of this section do not apply to any signals which were being supplied to subscribers in the community of the CATV system on March 17, 1966, unless it is proposed to extend lines into another community.

Community contends that the signal is grandfathered to the Bryan subscribers rather than to a particular cable system; and that this view is supported by the wording of the Second Report and Order, by Commission precedent, and by the policy of the Commission to avoid substantial disruption of service to cable subscribers.  If Community's carriage of KPRC-TV is not grandfathered within the meaning of Section 74.1105(d), it is in violation of Section 74.1105(c) of our Rules and may be subject to a cease and desist order.

5.  Community's conclusion that signals are grandfathered to subscribers or cities rather than to CATV systems is not supported by the wording of the Second Report and Order.  n3 The wording of paragraph 148 (2 FCC 2d at 785), upon which Community relies, does state that:

n3 CATV Amendments of Parts 21, 74, and 91 of the Commission's Rules, Dockets Nos. 14895, 15233, and 15971, FCC 66-220, 2FCC 2d 725 (1966).

We do not intend to disrupt the existing situation, by withdrawing from any CATV subscriber any signal which he was receiving as of February 15, 1966, in the top 100 markets or which he is presently receiving in other markets.

 

However, the report clearly indicated that the purpose of our grandfathering provisions in Sections 74.1105(d) and 74.1107(d) was to avoid disruption which predictably would be occasioned by the application of new CATV rules to those systems already in operation.  Paragraph 68 (2 FCC 2d at 753) is patently clear.  Therein the Commission stated:

In this connection, we emphasize that we intend to make every effort, consistent with the public interest, to avoid disrupting existing service to the public  [*477]  in applying the carriage provisions of the rules to systems now in operation. (emphasis added)

 Paragraph 147 (2 FCC 2d at 784) speaks of grandfathering in terms of "an operating system." Further, paragraph 147 states: "We shall not 'grandfather' systems coming into operation after February 15, 1966," and paragraph 148 states, "We therefore shall 'grandfather' all systems which were in operation upon February 15, 1966...." Community was not an operating system on the "grandfather" date, nor has it shown any nexus with Midwest.  The Second Report, therefore, supports the view that the carriage of KPRC-TV is not grandfathered to the subscribers of the city of Bryan, nor to Community.

6.  Community would also find KPRC-TV grandfathered to it by virtue of the rationale of our decisions in Kar Mel CATV Systems, Inc. n4 and Twin County Trans-Video, Inc. n5 In those cases new cable systems were allowed to carry distant signals in competition with CATV companies carrying grandfathered signals.  However, we did not grandfather the signals to the city, but rather granted a waiver of Section 74.1107 to the new cable system based on the competitive realities of a situation where the existing CATV was then providing the distant signals and was authorized to continue such carriage.  Herein, Midwest Video ceased carriage of KPRC-TV three to four months after the grandfathering date and has not offered the discontinued distant signal for more than four years.  Consequently, those "unusual circumstances" upon which we predicated our Kar Mel and Twin County decisions are not present here, and the cases lend no support to Community's grandfathering claim. 

n4 FCC 67-1324, 10 FCC 2d 961, FCC 68-557, 12 FCC 2d 901 (1968).

n5 FCC 67-155, 6 FCC 2d 575 (1967).

7.  Community's final grandfathering claim rests on our policy to avoid substantial disruption to cable subscribers, by not withdrawing the signals they were receiving on the grandfathering date.  Our new CATV rules did not disrupt Midwest's carriage of KPRC-TV; the signal was voluntarily dropped by Midwest, and it has not been available to the residents of Bryan for a period of approximately four years.  Thus, the cable subscribers' viewing habits were interrupted or disturbed by Midwest's termination of carriage in 1966, not by our refusal to find the KPRC-TV signal grandfathered to the city of Bryan.  n6

n6 We cannot consider the disruption to Community's subscribers who have viewed KPRC-TV since March 4, 1970.  Had Community given KCEN-TV Section 74.1105 notification, the mandatory stay provisions of Section 74.1105(c) would have prevented any entrenchment and the issue of grandfathering would have been threshed out before the signal was offered to Bryan subscribers.  A cable system cannot build up equities in derogation of our rules.  CATV Notice of Proposed Rulemaking and Notice of Inquiry, paragraph 53, footnote 25, FCC 68-1176, 15 FCC 2d 417, 438.

8.  We therefore find that the signal of station KPRC-TV, Houston, Texas, is not grandfathered to Community.  Section 74.1105(d) is inapplicable and does not obviate Community's obligations under Section 74.1105.  Community commenced carriage of KPRC-TV before the Commission ruled on the protest filed by Channel 6, and its action constituted a violation of Section 74.1105(c).  The only question remaining for consideration is whether the public interest would be served by the issuance of a cease and desist order.  For the reasons set  [*478]  forth below we conclude that the issuance of such an order is required in the public interest.

9.  Since Community was not authorized to carry the signal of KPRC-TV, and the CATV system was not in operation on December 20, 1968, its carriage of that station is inconsistent with proposed small market Rule 74.1107(d) which provides in pertinent part: n7

n7 Further Notice of Proposed Rulemaking (Docket No. 18397), FCC 69-516, 22 FCC 2d 603, 611 (1969).

(d) Carriage of distant signals in smaller television markets.

(1) No CATV system operating in a community located, in whole or in part, within the specified zone of a commercial television broadcast station assigned to a smaller television market shall extend the signal of a television broadcast station beyond the predicted grade B contour of such station, except as authorized in subparagraphs (2), (3), and (4) of this paragraph; Provided, however, That such a system may carry additional distant signals if the system has the express authorization of the originating station to retransmit the program or programs on any additional signals to be extended.

(2) The system may carry such distant signals as may be necessary to furnish to its subscribers the signals of a full network station of each of the national television networks counting any full network stations carried on the system pursuant to   73.1103(a) of this chapter, provided that the distant signals are obtained from the closest full network station in the region or in the State of the system and do not include more than one full network station of the same network.

10.  KCEN-TV places a predicted Grade B contour over a portion of Bryan and it is a full network NBC station.  Furthermore, Temple is 19 miles closer to Bryan than Houston, and KPRC-TV, also an Nbc/ affiliate, does not place a predicted signal over any part of the CATV community.  Thus, by carriage of the Houston signal, KPRC-TV, Community is importing a second NBC network signal into Bryan, a smaller television market, in contravention of proposed Rule 74.1107 (d)(2) n8 and of the interim procedures which were established by the Commission for the processing of applications consistent with the proposed rules.  n9

n8 The public interest considerations which prompted our proposal of this rule are fully set forth in the Notice of Proposed Rulemaking and Notice of Inquiry in Docket No. 18397, released December 13, 1968 (15 FCC 2d, 417 at 439, 440).

n9 CATV Interim Procedures, FCC 69-515, 22 FCC 2d 589, 591, 598, 16 RR 2d 1517. See also Notice of Proposed Rulemaking and Notice of Inquiry, FCC 68-1176, 15 FCC 2d 417, 33 F.R. 19028; Further Notice of Proposed Rulemaking, FCC 69-516, 22 FCC 2d 603.

11.  Community further alleges that the Bryan citizens were accustomed to viewing the signal over cable, and worked for the renewed availability of such cable reception, and it argues that these are public interest considerations which justify its continued carriage of the distant signal.  The record indicates that one of the factors considered in granting the local franchise to Community was its proposed carriage of KPRC-TV.  In addition, Community cites the affidavits of three of the five Bryan City Commissioners as support for its factual contention although each affiant stated that he was "acting on my own accord, and not on behalf of the City Commission." However, that argument should have been advanced in opposition to the protest of Channel 6, Inc.  It is not a defense to a cease and desist order for the commencement of service in violation of the provisions of Section 74.1105(c).  If Community believed that the carriage of KPRC-TV should be permitted by reason of these considerations, the proper procedure was to await the resolution of the issues by the Commission rather than to  [*479]  commence operations in defiance of the rules.  See All Channels Cable TV, Inc., FCC 70-939, 25 FCC 2d 379, released September 4, 1970.  n10

 

n10 The additional exhibits proffered by Community in support of its claim that the residents of Bryan desired carriage of the KPRC-TV signal were properly rejected since they are without decisional significance in this show cause proceeding.

 

We believe that the Commission's comments in rejecting a suggestion that in connection with the processing of applications which are consistent with the proposed rules, the provisions of Section 74.1105(c) not be applied are particularly pertinent here where the carriage of KPRC-TV is inconsistent with the proposed rules.  We stated: n11

 

n11 CATV Interim Procedures, FCC 69-515, 22 FCC 2d 589 at 595.

19.  In the first place, sections 74.1105(c) and 74.1109 are existing rules which must be followed until they are amended.  Even assuming that the automatic stay provision in section 74.1105(c) is procedural only, despite its substantial practical consequences for the parties and the public interest, and therefore subject to amendment without prior notice and an opportunity to be heard (sec. 4(b) and (c) of the Administrative Procedure Act, 5 U.S.C. 553(b) and (c)), we do not believe that such actions would serve the public interest.  We have previously set forth the basis for this provision: The necessity of resolving public interest questions before service is commenced in view of the general impracticability of withdrawing service to the public and our belief that this is 'a more orderly manner in which to proceed, rather than permitting a challenged service to start and later interrupting it.' See memorandum opinion and order denying reconsideration of the Second Report, 6 F.C.C. 2d 309, 323, and opinions there cited; cf.  United States v. Southwestern Cable Company, 393 U.S. 157, 178-181. These reasons are equally applicable to the processing of petitions under the interim procedures.

12.  We conclude that Community violated Section 74.1105(c) of the Rules when it commenced the carriage of Station KPRC-TV on its cable system at Bryan, Texas, on March 4, 1970, and that the public interest requires the issuance of a cease and desist order against further carriage of the station.

13.  We recognize that Bryan citizens may have a specific need or interest in particular programs available only from the Houston station, e.g., sporting events.  The Commission is not inflexible in the application of its rules.  Where a showing of public need is made and the importation of particular programs will not interfere significantly with our small-market policies, consideration may be given to a petition for a limited exception from the provisions of our rules (e.g., as to particular programs of special interest to the area for a specified  period of time).

14.  Accordingly, IT IS ORDERED, pursuant to Section 312(b) of the Communications Act of 1934, as amended, that Community Cablevision Corporation CEASE AND DESIST forthwith from violation of Section 74.1105(c) of our Rules and the interim processing procedures in Docket No. 18397 on its CATV system at Bryan, Texas, and specifically that it shall CEASE AND DESIST from supplying  [*480]  to its subscribers, without prior Commission approval, the signal of Station KPRC-TV, Houston, Texas.

 

FEDERAL COMMUNICATIONS COMMISSION, BEN F. WAPLE, Secretary. 


 

CONCURBY: JOHNSON

 

CONCUR:

CONCURRING STATEMENT OF CHAIRMAN DEAN BURCH IN WHICH COMMISSIONERS BARTLEY, JOHNSON AND WELLS JOIN

This case points up a difficulty which confronts this agency when it engages in overall rule making.  I fully recognize the need for such general rules.  But this approach carries with it the danger that the broad rule may not serve the public interest in some particular situation.  To meet this danger, the agency must be alert to the need for waiver.  Indeed, the Supreme Court has stressed this in U.S. v. Storer Broadcasting Co., 351 U.S. 192.

The basic service question here certainly appears to raise this consideration of a gap between a Washington-made general rule and the public interest in a particular situation.  For, what is at stake is the carriage of a single Texas signal (KPRC-TV (NBC), Houston) into a Texas community whose citizens, acting through their City Commissioners, have apparently authorized the competing community cable system so that this signal, with its programs of special interest to the area, can be viewed.  That is the thrust of the record evidence of the City Commissioners.  Further, the local Bryan station has not objected to the importation of the KPRC-TV signal, but rather the complaint has come from KCEN-TV, which is located some 66 miles from Bryan and in any event will be afforded same day non-duplication protection.

I recognize that the case presently turns on other issues -- and particularly, the requirement of compliance with our notification rule (Section 74.1105).  I have concurred precisely because it is sound policy to require compliance.  Similarly, I agree that it would be strained to find grandfathering in the circumstances here.

But I have also concurred because our opinion does leave open the question of waiver, upon a showing of public need and that the importation in question will not be contrary to our policies in this field.  (See par. 13).  I have not, I stress, prejudged the merits of any such waiver request.  I simply wish to make clear that our action today should not be taken as foreclosing such a request, since, as the record presently stands, there is a substantial question as to whether carriage of this signal, at least to some limited extent, will not serve the public interest, by making available in-State programming of particular interest to the community and without adverse consequences to local broadcast service.


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