Mackay Radio & Tel. Co. v. Federal Communications Com'n, 6970.

Citation97 F.2d 641
Decision Date11 April 1938
Docket NumberNo. 6970.,6970.
PartiesMACKAY RADIO & TELEGRAPH CO., Inc., v. FEDERAL COMMUNICATIONS COMMISSION (R. C. A. COMMUNICATIONS, Inc., et al., Interveners).
CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)

Donald R. Richberg, Raymond N. Beebe, and Adrien F. Busick, all of Washington, D. C., and Howard L. Kern and John H. Wharton, both of New York City, for appellant.

Hampson Gary and James A. Kennedy, both of Washington, D. C., for appellee Federal Communications Commission.

Manton Davis, of New York City, Richard A. Ford, of Washington, D. C., and Chester H. Wiggin and Frank W. Wozencraft, both of New York City, for intervener R.C.A. Communications, Inc.

Ralph H. Kimball, of New York City (Francis R. Stark, of New York City, of counsel), for intervener Western Union Telegraph Co.

Before GRONER, Chief Justice, and MILLER and EDGERTON, Associate Justices.

EDGERTON, Associate Justice.

Appellant, a Delaware corporation, is a public service radiotelegraph carrier which has repeatedly been licensed by the Federal Communications Commission. It furnishes to the public point-to-point service within the United States, ship-to-shore service, and direct service to four countries in Europe and five in South America. It is a unit in the system of the Mackay Companies, sometimes called the International System. The associated Mackay Radio & Telegraph Company, a California corporation, reaches certain transpacific points. Other units in the system are the Postal Telegraph Land Line System and the Commercial Cable Company.

Appellant applied to the Communications Commission for licenses to operate a direct public radiotelegraph service between its stations on Long Island and the stations of the Norwegian government near Oslo, Norway. In January, 1936, the Commission (Telegraph Division), pursuant to sections 307(a) and 309(a) of the Communications Act of 1934, 48 Stat. 1064-1105, as amended by 49 Stat. 1475, 50 Stat. 56, 189-198, 47 U.S.C.A., §§ 307(a), 309(a), 151-609, held a public hearing to determine whether "public interest, convenience, or necessity would be served" by granting the licenses. On June 3, 1936, it made a negative finding on that question, and denied the applications. The full Commission affirmed the decision and order of the Telegraph Division. Appellant appealed to this court under section 402 of the Communications Act, as amended, 47 U.S.C.A. § 402. R. C. A. Communications, Inc. (hereafter called RCAC) and the Western Union Telegraph Company (hereafter called Western Union) intervened.

Both Western Union and the Commercial Cable Company have cables to England, where their traffic for Norway is transferred to one of several foreign connecting carriers. The French Telegraph Cable Company has cables from New York to France, and there transfers Norwegian traffic to a radio circuit. The appellant handles traffic by radio from the United States to Copenhagen, whence it is forwarded to Norway by connecting carriers. Appellant's traffic to Norway is small, and is carried at a loss. Appellant has no traffic from Norway, as the Norwegian administration has a financial interest in sending messages to the United States by a direct circuit. There is only one direct service, whether by cable or radio, between the United States and Norway; that is the radio circuit operated at the American end by the intervener RCAC, and at the Norwegian end by the Norwegian Department of Telegraphs.

The several carriers handled during the first ten months of 1935 the following percentages of the telegraph business, including radio, between the United States and Norway:

                                        Eastbound         Westbound
                  Western Union          22.93              5.32
                  Commercial Cable
                    Company              14.44              7.03
                  French Telegraph
                    Cable Company          .94               .00
                  Mackay Radio &amp
                    Telegraph Company
                    Inc.                  1.01               .00
                  RCAC                   60.68             87.65
                                        ______            ______
                                        100.00 per cent.  100.00 per cent
                

Appellant contends that the Commission committed error of law in failing to interpret "public convenience, interest or necessity" as necessarily requiring the licensing of a competing radio circuit to Norway so as to end what appellant describes as the monopoly of RCAC. In Federal Radio Commission v. Nelson Bros. Bond & Mortgage Co., 289 U.S. 266, 285, 53 S.Ct. 627, 77 L.Ed. 1166, 89 A.L.R. 406, the Supreme Court said: "In granting licenses the commission is required to act `as public convenience, interest or necessity requires.' This criterion is not to be interpreted as setting up a standard so indefinite as to confer an unlimited power. * * * The requirement is to be interpreted by its context, by the nature of radio transmission and reception, by the scope, character, and quality of services." Part of the context is section 1 of the Communications Act, 47 U.S.C.A. § 151, which states that the Commission is created "for the purpose of regulating interstate and foreign commerce in communication by wire and radio so as 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 communication service with adequate facilities at reasonable charges." Nothing is said here about competition and monopoly. Appellant cites sections 311, 313, and 314 of the act, 47 U.S.C.A. §§ 311, 313, 314, as showing that Congress considers competition in radio to be, inevitably, in the public interest. Sections 311 and 313 deny licenses to radio concerns which violate the anti-trust laws. Section 314 forbids the acquisition of each other's stock, etc., by radio concerns on the one hand and wire-telegraph or cable concerns on the other, with the purpose or effect of substantially lessening competition or restraining commerce, or "unlawfully to create monopoly." To prohibit concerns "unlawfully to create monopoly" is to recognize that monopoly may be lawful, as most public utility monopolies are. These sections do not show, as appellant's argument implies, a congressional belief that two radiotelegraph circuits are necessarily better than one. Such a belief would be as strange as a belief that two telephone systems, or two railroads, are necessarily better than one. It is obvious that two concerns are sometimes worse than one. Sometimes the traffic will not support two; and even when it will, there may be inadequate individual and social compensation for the wastes of duplication. If Congress had had the odd intention of requiring the Commission to issue a second license wherever a first had been issued, Congress could easily have said so.

The Transportation Act of 1920 requires a railroad to obtain a certificate of "public convenience and necessity" before constructing a new line, and a finding of "public interest" before acquiring another line by lease or stock purchase. 49 U.S. C.A. §§ 1(18-22), 5(2), 20a (2).1 As the Supreme Court intimated in Federal Radio Commission v. Nelson Bros. Bond & Mortgage Co., 289 U.S. 266, 285, 53 S.Ct. 627, 77 L.Ed. 1166, 89 A.L.R. 406, the meaning of that language throws light on the meaning of "public interest, convenience or necessity" in the Communications Act of 1934. In the New York Central Securities case, New York Cent. Securities Corporation v. U. S., 287 U.S. 12, 53 S.Ct. 45, 77 L.Ed. 138, the court sustained orders of the Interstate Commerce Commission, based on a finding of "public interest," which authorized the leasing of the Big Four and the Michigan Central Railroads to the New York Central. The court said: "The term `public interest' as thus used is not a concept without ascertainable criteria, but has direct relation to adequacy of transportation service, to its essential conditions of economy and efficiency, and to appropriate provision and best use of transportation facilities." 287 U.S. 12, 25, 53 S.Ct. 45, 48, 77 L.Ed. 138. The purpose of the requirement "is to prevent interstate carriers from weakening themselves by constructing or operating superfluous lines, and to protect them from being weakened by another carrier's operating in interstate commerce a competing line not required in the public interest." Texas R. R. Co. v. Northside Railway Co., 276 U.S. 475, 479, 48 S.Ct. 361, 362, 72 L.Ed. 661. Congress recognized "that competition between carriers may result in harm to the public, as well as in benefit." Texas & Pacific Railway Company v. Gulf, C. & S. F. Ry. Co., 270 U.S. 266, 277, 46 S.Ct. 263, 266, 70 L.Ed. 578. "Accordingly, the Commission has denied construction applications where existing services were deemed reasonably adequate, where needless duplication of facilities would result, and where the traffic relied upon would be secured largely at the expense of other roads." Sharfman, Interstate Commerce Commission, Vol. III-A, p. 356.

Though the Communications Act forbids the licensing of concerns which violate the anti-trust laws, is does not apply to the radiotelegraph business the policy of free competition, but a contrary policy. Free competition means that all are free to compete. The Communications Act forbids competition by all who cannot prove that their entry will serve the "public interest, convenience or necessity." Appellant does not contend that the Commission must license every one who may wish to conduct a radiotelegraph business with any part of the world. But that conclusion would follow if appellant were right in its premise that the policy of the anti-trust acts is the measure of the Commission's duty. If appellant, and it alone, were licensed to compete with RCAC, all others would be excluded from direct radio communication with Norway. Such a situation would stand, with regard to the anti-trust laws, exactly as the present RCAC "monopoly" stands. Either situation would be...

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