National Ass'n of Regulatory Utility Com'rs v. F. C. C.

• Decision Date: 10 February 1976
• Docket Number: No. 75-1075,75-1075
• Citation: 174 U.S.App.D.C. 374,533 F.2d 601
• Parties: NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents. Manhattan Cable Television, Inc., et al., Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 601

533 F.2d 601

174 U.S.App.D.C. 374

NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents Manhattan Cable Television, Inc., et al., Intervenors.

No. 75-1075.

United States Court of Appeals, District of Columbia Circuit.

Argued Nov. 5, 1975.

Decided Feb. 10, 1976.

Stephen G. Kraskin, Deputy Asst. Gen. Counsel, Washington, D. C., for petitioner. Paul Rodgers and Kenneth E. Hardman, Washington, D. C., were on the brief for petitioner.

Sheldon M. Guttmann, Counsel, Federal Communications Commission, Washington, D. C., with whom Ashton R. Hardy, Gen. Counsel, Joseph A. Marino, Associate Gen. Counsel, Washington, D. C., at the time the brief was filed. Carl D. Lawson and John J. Powers, III, Attys., Dept. of Justice, Washington, D. C., were on the brief for respondents.

Thomas J. O'Reilly, Washington, D. C., with whom Lloyd D. Young, Washington, D. C., was on the brief for intervenor United States Independent Telephone Association.

J. Laurent Scharff and W. T. Pierson, Jr., Washington, D. C., were on the brief for intervenor Manhattan Cable Television, Inc.

Stuart F. Feldstein, Charles S. Walsh, John V. Kenny and Samuel Cooper, III, Washington, D. C., were on the brief for intervenor, National Cable Television Association, Inc.

Before LUMBARD, ^* Senior Circuit Judge for the Second Circuit, WRIGHT and

WILKEY, Circuit Judges.

Opinion for the Court filed by Circuit Judge WILKEY.

Concurring Opinion filed by Circuit Judge LUMBARD.

Dissenting Opinion filed by Circuit Judge WRIGHT.

WILKEY, Circuit Judge:

This action is before the court on petition for review of one aspect of FCC policy pertaining to cable television, as enunciated and clarified in recent Commission reports. Petitioner's sole objection is to the Commission's pre-emption of state common carrier regulation over the use of cable system leased access channels for two-way, point-to-point, non-video communications. ¹ This court has jurisdiction to review the Orders under 47 U.S.C. § 402 (1970) and 28 U.S.C. § 2342 (1970).

The challenged pre-emption is part of a comprehensive plan for the regulation of cable television systems, which the Commission has been developing and refining since asserting jurisdiction over cable operations in 1966. ² In particular, the pre-emption grows out of the Commission's decision in 1972 requiring that cable operators provide four categories of access channels, in addition to any broadcast or cablecast ³ programming which they chose to transmit. ⁴

Under regulations promulgated at that time, ⁵ cable operators in major television markets ⁶ were required to set aside public, education, local government and leased access channels, to be made available for programming free from content control by the cable operator. ⁷ The regulations provide for mandatory expansion of access channelling when certain usage levels for existing channels are achieved, ⁸ and require that the education, local government, and at least one public access channel be made available without cost to the users. ⁹

The leased access requirement involves no discrete allocation of space for one particular purpose, as is involved in the other access channel requirements. The regulations require that "portions" of bandwidth be set aside for the use of paying customers, with the proviso that such commercial operations are subject to displacement if the special purpose access channels experience greater demand than they can satisfy. ¹⁰ The regulations also require that stations which must provide access channelling also must develop a two-way communication capability, ¹¹ so that among the many uses to which leased access bandwidth may be put is two-way communications in a partly or wholly non-video mode. With regard to the leased access bandwidth, cable operators are required to "establish rules requiring first-come, nondiscriminatory access," to prohibit certain uses of the facilities (gambling, obscenity), to establish a rate schedule, and to keep a public record of all requests for time. ¹² "On at least one of the leased channels, priority shall be given to part-time users. . . . " ¹³

The 1972 Order initially established the general policy of leaving the access channels, including the leased access bandwidth, free of state or local regulation. ¹⁴ It was not until 1974 that the Commission made reference to the pre-emption of all regulation of the leased access bandwidth, and, more particularly, of regulation of any two-way, intrastate, non-video communications which might be carried via the cable system. ¹⁵

In support of this pre-emption policy, the Commission rested primarily upon its overall statutory mandate ". . . to make available, so far as possible, to all the people of the United States a rapid, efficient, nation-wide, and world-wide wire and radio communications service. . . ." ¹⁶ The Commission reasoned that this language called for the development of "a nationwide broadband communications grid" in which cable systems should play an important part. It argued that the optimum development of cable would only be possible where that technology is treated as an "organic whole" under the sort of comprehensive plan which the Commission had adopted. ¹⁷ The Commission thus sought to bring the pre-emption of two-way intrastate, non-video communications within the 47 U.S.C. § 152(a) ¹⁸ grant of jurisdiction over activities "ancillary to broadcasting," which had been recognized in United States v. Southwestern Cable Company, ¹⁹ and United States v. Midwest Video Corporation. ²⁰ The issue before this court involves the construction of that "ancillary to broadcasting" standard, and its application to a set of facts which differs in some respects from those in Southwestern or Midwest. In determining whether there is Commission jurisdiction over activities on the basis of their relationship to broadcasting (which is subject to regulation under Title III of the Act ²¹, it is necessary to weigh the statutory purposes served by allowing such jurisdiction, against those which would thereby be impaired. Thus at the outset it is appropriate to inquire, as did the Supreme Court in Southwestern, ²² whether any statutory commandments are directly contravened by the asserted pre-emption of state power over these two-way, non-video communications by cable.

I. Impact of 47 U.S.C. § 152(b) ²³

Section 152(b) of Title 47 ²⁴ explicitly denies Commission jurisdiction over intra state common carrier operations, except as section 301 pertaining to radio may dictate to the contrary. ²⁵ This section of the opinion will deal with the common carrier and intrastate prerequisites of the jurisdictional exclusion. The proviso for Commission powers otherwise granted under § 301 will be considered briefly here and in Section II, dealing with the asserted statutory support for the Commission's pre-emption action.

A. Has the Commission attempted to pre-empt state and local regulation of common carrier activities?

The Commission argues that the two-way, non-video communications via cable, over which it has pre-empted state and local regulation, are not common carrier communications because they are carried on by entities (cable operators) previously adjudged to be non-common carriers. ²⁶ However, it has long been held that "a common carrier is such by virtue of his occupation," that is by the actual activities he carries on. ²⁷ Since it is clearly possible for a given entity to carry on many types of activities, it is at least logical to conclude that one can be a common carrier with regard to some activities but not others. Deferring to the next section any final ruling on the Commission's holistic view of cable operations, ²⁸ we will proceed at this point to examine the particular activities over which the pre-emption is asserted, to determine if they fall within the common carrier concept as used in the statute.

In a recent case of the same name as that now before the court, we set forth our understanding of the common carrier concept as invoked by the Communications Act. ²⁹ We concluded that the circularity and uncertainty of the common carrier definitions set forth in the statute ³⁰ and regulations ³¹ invite recourse to the common law of carriers. An examination of the common law reveals that the primary sine qua non of common carrier status is a quasi-public character, which arises out of the undertaking "to carry for all people indifferently. . . ." ³² This does not mean that the particular services offered must practically be available to the entire public; a specialized carrier whose service is of possible use to only a fraction of the population may nonetheless be a common carrier if he holds himself out to serve indifferently all potential users. Nor is it essential that there be a statutory or other legal commandment to serve indiscriminately; it is the practice of such indifferent service that confers common carrier status. ³³ That is to say, a carrier will not be a common carrier where its practice is to make individualized decisions in particular cases whether and on what terms to serve. ³⁴

A second prerequisite to common carrier status was mentioned but not discussed in the previous N.A.R.U.C. opinion. ³⁵ It is the requirement formulated by the FCC and with peculiar applicability to the communications field, that the system be such that customers "transmit intelligence of their own design and choosing." ³⁶

Applying these two tests to the two-way, point-to-point, non-video communications over which the Commission here asserts its pre-emptive power, we conclude that a common carrier activity is involved. We are able to reach this conclusion, even though there is no evidence before us arising from any actual operations in the two-way, non-video mode, by examining the nature of the projected activity and the regulatory framework in which it is expected to operate.

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