Federal Communications Commission v. Rca Communications Mackay Radio Telegraph Co v. Rca Communications

• Decision Date: 08 June 1953
• Docket Number: 568,Nos. 567,s. 567
• Citation: 73 S.Ct. 998,346 U.S. 86,97 L.Ed. 1470
• Parties: FEDERAL COMMUNICATIONS COMMISSION v. RCA COMMUNICATIONS, Inc. MACKAY RADIO & TELEGRAPH CO., Inc. v. RCA COMMUNICATIONS, Inc
• Court: U.S. Supreme Court

346 U.S. 86

73 S.Ct. 998

97 L.Ed. 1470

FEDERAL COMMUNICATIONS COMMISSION

v RCA COMMUNICATIONS, Inc.

MACKAY RADIO & TELEGRAPH CO., Inc.

v. RCA COMMUNICATIONS, Inc.

Nos. 567, 568.

Argued April 29 and 30, 1953.

Decided June 8, 1953.

Robert L. Stern, Acting Sol. Gen., Washington, D.C., for Federal Communications Commission.

Mr. Ralph M. Carson, New York City, for Mackay Radio & Tel. Co.

Mr. John T. Cahill, New York City, for respondent.

Mr. Justice FRANKFURTER delivered the opinion of the Court.

The Mackay Radio and Telegraph Co. (Mackay) provides radiotelegraph service between the United States and a number of foreign countries. Over the opposition of RCA Communications, Inc. (RCAC), which provides similar service by means of a total of 65 circuits including ones to Portugal and The Netherlands, the Federal Communications Commission authorized Mackay, at that time authorized to communicate with 39 overseas points, to open two new circuits, to Portugal and The Netherlands. RCAC claims that duplicate circuits, already authorized for RCAC and Mackay to 11 other points, are not here 'in the public interest,' in that Mackay has been unable to show any tangible benefit to the public, such as better, cheaper or more comprehensive service, to be derived from the authorization of Mackay's circuits. RCAC also urges, as a second objection to the authorizations, that because of Mackay's corporate affiliation with The Commercial Cable Co. (Commercial), which conducts cable service to these points in competition with another cable carrier, Western Union, as well as with radiotelegraph service, authorization of Mackay would lessen competition between radio and cable service and would weaken the competitive efficiency of Commercial, in violation of § 314 of the Communications Act, 47 U.S.C.A. § 314.

The Commission found that competition, that is, duplication of radiotelegraph facilities, would not impair the ability of the existing radio carrier, RCAC, and cable carriers to render adequate service. More facilities are at present authorized than are necessary to handle the present and expected volume of telegraph traffic under normal operating conditions, but Mackay's proposed service would be adequate and would not require substantial new investment. For such reasons the Commission concluded that competition was 'reasonably feasible.' In addition, although it did 'not appear that Mackay's proposed service to each of the points at issue will result in lower rates or speedier service, or will otherwise be superior to or more comprehensive than the service now available via RCAC,' the proposed service would be superior to that now provided by Mackay itself and its affili- ated cable company, Commercial. Finding that 'over-all competition for telegraph traffic generally' would be increased, and more effective radiotelegraph competition introduced, the Commission concluded that duplicate facilities should be authorized because of the 'national policy in favor of competition.' From this policy, the Commission said, it follows that 'competition' is in the public interest where competition is 'reasonably feasible.' The Commission, with two members dissenting, thereupon authorized Mackay's proposed service to Portugal and The Netherlands. —- F.C.C. —-. RCAC sought review and was successful in the Court of Appeals on its claim that an applicant must demonstrate, as the Commission found that Mackay had failed to do here, that tangible benefit to the public would be derived from the authorization. 91 U.S.App.D.C. 289, 201 F.2d 694, Prettyman, J., dissenting.

We granted certiorari because this case, the first in which the grant of duplicate radiotelegraph circuits has been challenged in the courts, presents an issue of primary importance in authorization, under the Federal Communications Act of 1934, of international radiotelegraph circuits. 345 U.S. 902, 73 S.Ct. 650.

With the chaotic scramble for domestic air space that developed soon after the First World War, Congress recognized the need for a more orderly development of the air waves than had been achieved under prior legislation.¹ Although the Radio Act of 1912 had forbidden the operation of radio apparatus without a license from the Secretary of Commerce and Labor, judicial decision left him powerless to prevent licensees from using unassigned frequencies, to restrict their transmitting hours and power, or to deny a license on the ground that a proposed station would necessarily interfere with existing stations.² See National Broadcasting Co. v. United States, 319 U.S. 190, 212, 63 S.Ct. 997, 1007, 87 L.Ed. 1344. Congress thereupon, in the Radio Act of 1927, created the Federal Radio Commission with wide licensing and regulatory powers over interstate and foreign commerce.

Congress did not purport to transfer its legislative power to the unbounded discretion of the regulatory body. In choosing among applicants, the Commission was to be guided by the 'public interest, convenience, or necessity,' a criterion we held not to be too indefinite for fair enforcement. New York Central Securities Corp. v. United States, 287 U.S. 12, 53 S.Ct. 45, 77 L.Ed. 138. The statutory standard no doubt leaves wide discretion and calls for imaginative interpretation. Not a standard that lends itself to application with exactude, it expresses a policy, born with exactitude, it expresses a policy, born is 'as concrete as the complicated factors for judgment in such a field of delegated authority permit'. Federal Communications Comm. v. Pottsville Broadcasting Co., 309 U.S. 134, 138, 60 S.Ct. 437, 439, 84 L.Ed. 656.

Congress might have made administrative decision to license not reviewable. Although it is not suggested—or implied by the grant of power to review—that Congress could not have reserved to itself or to the Commission final designation of those who would be permitted to utilize the air waves, precious as they have become with technological advance, it has not done so. On the other hand, the scope of this Court's duty to review administrative determinations under the Federal Communications Act of 1934, 48 Stat. 1064, as amended, 47 U.S.C. § 151 et seq., 47 U.S.C.A. § 151 et seq. has been carefully defined. Ours is not the duty of reviewing determinations of 'fact,' in the narrow, colloquial scope of that concept. Congress has charged the courts with the responsibility of saying whether the Commission has fairly exercised its discretion within the vaguish, penumbral bounds expressed by the standard of 'public interest.' It is our responsibility to say whether the Commission has been guided by proper considerations in bringing the deposit of its experience, the disciplined feel of the expert, to bear on applications for licenses in the public interest.

In this case, the Court of Appeals has ruled that the Commission was guided by a misinterpretation of national policy, in that it thought that the maintenance of competition is in itself a sufficient goal of federal communications policy so as to make it in the public interest to authorize a license merely because competition, i.e., deplication of existing facilities, was 'reasonably feasible.' RCAC relies on the holding of the Court of Appeals that the Commission must decide, in the circumstances of the application, that competition is not merely feasible but beneficial.

The Commission has not in this case clearly indicated even that its own experience, entirely apart from the tangible demonstration of benefit for which RCAC contends, leads it to conclude that competition is here desirable. It seems to have relied almost entirely on its interpretation of national policy. Since the Commission professed to dispose of the case merely upon its view of a principle which it derived from the statute and did not base its conclusion on matters within its own special competence, it is for us to determine what the governing principle is. Cf. Federal Radio Comm. v. Nelson Bros. Bond & Mortgage Co., 289 U.S. 266, 276, 53 S.Ct. 627, 632, 77 L.Ed. 1166.

That there is a national policy favoring competition cannot be maintained today without careful qualification. It is only in a blunt, undiscriminating sense that we speak of competition as an ultimate good. Certainly even in those areas of economic activity where the play of private forces has been subjected only to the negative prohibitions of the Sherman Law, 15 U.S.C.A. § 1 et seq., this Court has not held that competition is an absolute. See Chicago Board of Trade v. United States, 246 U.S. 231, 38 S.Ct. 242, 62 L.Ed. 683; cf. Mason, Monopoly in Law and Economics, 47 Yale L.J. 34.

Prohibitory legislation like the Sherman Law, defining the area within which 'competition' may have full play, of course loses its effectiveness as the practical limitations increase; as such considerations severely limit the number of separate enterprises that can efficiently, or conveniently, exist, the need for careful qualification of the scope of competition becomes manifest. Surely it cannot be said in these situations that competition is of itself a national policy. To do so would disregard not only those areas of economic activity so long committed to government monopoly as no longer to be thought open to competition, such as the post office, cf., e.g., 17 Stat. 292 (criminal offense to establish unauthorized post office; provision since superseded), and those areas, loosely spoken of as natural monopolies or—more broadly—public utilities, in which active regulation has been found necessary to compensate for the inability of competition to provide adequate regulation. It would most strikingly disregard areas where policy has shifted from one of prohibiting restraints on competition to one of providing relief from the rigors of competition, as has been true of railroads. Compare, e.g., United States v. Trans-Missouri Freight Ass'n, 166 U.S. 290, 17 S.Ct. 540, 41 L.Ed. 1007, and United States v. Joint-Traffic...