American Telephone and Telegraph Company v. FCC

• Decision Date: 19 October 1973
• Docket Number: Docket 73-1806.,No. 1115,1115
• Parties: AMERICAN TELEPHONE AND TELEGRAPH COMPANY, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and UNITED STATES of America, Respondents, Data Transmission Company et al., Intervenors.
• Court: U.S. Court of Appeals — Second Circuit

487 F.2d 865 (1973)

AMERICAN TELEPHONE AND TELEGRAPH COMPANY, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and UNITED STATES of America, Respondents, Data Transmission Company et al., Intervenors.

No. 1115, Docket 73-1806.

United States Court of Appeals, Second Circuit.

Argued August 17, 1973.

Decided October 19, 1973.

COPYRIGHT MATERIAL OMITTED

Hugh B. Cox, Washington, D. C. (Michael Boudin, Washington, D. C., J. Hugh Roff, Jr., Alfred C. Partoll, F. Mark Garlinghouse and Harold J. Cohen, New York City, on the brief), for petitioner American Telephone and Telegraph Company.

Joseph A. Marino, Counsel, FCC, Washington, D. C. (John W. Pettit, Gen. Counsel, and Philip V. Permut, Counsel, FCC, Washington, D. C., on the brief), for respondent FCC.

Thomas E. Kauper, Asst. Atty. Gen., and Howard E. Shapiro, Atty., Dept. of Justice, Washington, D. C., for respondent United States.

William J. Byrnes, Washington, D. C. (Michael H. Bader, John Wells King and Haley, Bader & Potts, Washington, D. C., on the brief), for intervenors Microwave Communications, Inc. and MCI Telecommunications Corp.

Joseph M. Kittner, Washington, D. C. (Edward P. Taptich, Norman P. Leventhal, Joseph DeFranco, Howard Monderer and McKenna, Wilkinson & Kittner, Washington, D. C., Robert J. Kaufman, New York City, on the brief), for intervenors American Broadcasting Companies, Inc., Columbia Broadcasting System, Inc. and National Broadcasting Co., Inc.

William B. Lawless, New York City (Mudge Rose, Guthrie & Alexander, New York City, on the brief), for intervenor National Easter Seal Society for Crippled Children and Adults.

Michael L. Glaser, Francis E. Fletcher, Jr. and Glaser & Fletcher, Washington, D. C., John M. Scorce, Vienna, Va., for intervenor Data Transmission Co.

Louis L. Hoynes, Jr., Robert J. Kheel, Alexander H. Hadden and Willkie, Farr & Gallagher, New York City, Paul A. Porter, James F. Fitzpatrick, Gary G. Gerlach and Arnold & Porter, Washington, D. C., for intervenor Commissioner of Baseball.

E. William Henry and Ginsburg, Feldman & Bress, Washington, D. C., for intervenor UPITN Corp.

Before MANSFIELD, MULLIGAN and TIMBERS, Circuit Judges.

TIMBERS, Circuit Judge:

On this petition by American Telephone and Telegraph Company (AT&T) to review that part of an order¹ of the Federal Communications Commission (Commission) which denied special permission to file occasional user tariff revisions applicable to AT&T's private line service for transmission of television programs, the principal issue is whether the Communications Act of 1934 (the Act) authorizes the Commission to require AT&T to obtain special permission prior to filing such revised tariffs. We hold that it does not.

We grant the petition to review and we set aside the order to the extent that it denies special permission to AT&T to file its occasional user tariff revisions. We also direct the Commission to accept the tariffs in question without further delay and to permit AT&T to place its proposed new rates in effect immediately.

I.

A brief summary of prior proceedings in the context of the Commission's pending investigation of AT&T's rate structure is believed necessary to an understanding of our rulings on the legal issues raised by the instant petition.

In 1965, the Commission initiated an investigation of AT&T's rate levels and rate structure. The purpose of the investigation in part was to determine appropriate ratemaking principles and factors which should govern rate limits for each of the principal categories of service provided by AT&T. Docket No. 16258, 2 F.C.C.2d 871 (1965), reconsideration denied, 2 F.C.C.2d 173 (1965). Specifically, in Phase I-B of this Docket, the Commission was concerned with the rates charged by AT&T for its "competitive" services, such as private line service,² and the rates charged for "non-competitive" services, such as long distance message telephone service. The Commission was particularly concerned as to whether the latter were subsidizing the former.

In 1968, AT&T filed a revised tariff providing for an increase in rates for its competitive private line telephone and telegraph services. On April 12, 1968, the Commission suspended the effectiveness of the revised rates and ordered an investigation into their lawfulness. Docket No. 18128, 12 F.C.C.2d 1028 (1968). Ultimately, the record of Phase I-B of Docket 16258 was incorporated³ into Docket 18128. 18 F.C.C.2d 761 (1969). In October 1969, hearings were ordered to commence. 20 F.C.C.2d 383 (1969).

Going back for a moment, in January 1968, after a trial type hearing, the Commission issued an initial decision that AT&T rates for contract and occasional users of the television transmission service were unjust, unreasonable and discriminatory within the meaning of Sections 201(b) and 202(a) of the Act, 47 U.S.C. §§ 201(b), 202(a) (1970). AT&T was ordered to file a new tariff. Hughes Sports Network, 25 F.C.C.2d 550 (1970), aff'd in part, 34 F.C.C.2d 641 (1972), reconsideration denied, 38 F.C.C.2d 1052 (1972), petition to review pending, No. 73-1216 (2 Cir. 1973). After AT&T filed a new tariff pursuant to the initial decision in Hughes, the Commission suspended it and ordered a hearing to investigate it. Docket No. 18684, 19 F.C.C.2d 1083 (1969). On June 10, 1970, Dockets 18128 and 18684 were consolidated. 23 F.C.C.2d 503 (1970).

During the pendency of the proceedings in these dockets, AT&T continued to file rate changes pursuant to Section 203 of the Act, 47 U.S.C. § 203.⁴ At first, when AT&T filed such rate changes, the Commission in some instances chose to suspend them for the statutory three month period and consolidated the investigations of the new rates into Dockets 18128 and 18684. This was done, for example, in an order acting upon a tariff filed by AT&T in December 1971 revising its rates for some private line services. 33 F.C.C.2d 522 (1972). At the conclusion of its opinion on this tariff, however, the Commission stated that "any further tariff revisions relating to the services under investigation will unduly disrupt or delay the conclusion of the case" in Dockets 18128 and 18684. It therefore provided in paragraph 11 of its order as follows:

"IT IS FURTHER ORDERED, That, in order to best conduce to the proper dispatch of the Commission and to the ends of justice, pursuant to Section 4(j) of the Communications Act of 1934, as amended, Respondents shall file no further tariff revisions relating to the services under investigation in Docket Nos. 18128 and 18684 prior to the entering of a final decision therein unless authorized by special permission of the Commission." 33 F.C.C.2d at 525.

AT&T filed a petition for reconsideration alleging that the special permission requirement was contrary to the statutory plan of the Act. The Commission on July 17, 1972 denied reconsideration and reasserted its claimed authority to issue the original order. 36 F.C.C.2d 484 (1972). The Commission also stated that, since in its view the services at issue in Dockets 18128 and 18684 embrace all of the principal services provided by AT&T, special permission would have to be sought for all major rate changes in these services. Furthermore, to assure expedition of AT&T's requests, the Commission ordered that proposed rate changes "be acted upon within thirty days from the date of receipt".⁵ AT&T did not seek review of this decision.

On October 16, 1972, AT&T filed Application Number 903 requesting special permission to file tariff revisions applicable to its television program transmission service. It sought to increase rates charged occasional users and to decrease rates charged contract users. The Commission did not act on this request within thirty days, as it had indicated in its order of July 17, 1972.

Seven months after the application was filed—on May 15, 1973—the Commission issued the order which is the subject of the instant petition to review. 40 F.C.C.2d 901 (1973). The order granted AT&T special permission to file contract user tariff revisions,⁶ but denied special permission, at that time, to file occasional user tariff revisions. The theory of the Commission's refusal to permit the filing of occasional user tariff revisions was that such filing would disrupt and delay the resolution of Dockets 18128 and 18684. The Commission also stated that, if the occasional rate proposals were filed,

"questions would be raised as to the lawfulness thereof, particularly with respect to our decision in Hughes Sports Network, Inc.; and, in view of the magnitude of the increases as to individual customers, it is questionable whether an accounting order with provision for possible refunds, would be an adequate safeguard of the rights of occasional users if we should later find the occasional rates to be unlawfully high." 40 F.C.C.2d at 903.

In the order under review, the Commission also stated that in Dockets 18128 and 18684 it would expedite resolution of the question of what the rate structure should be for program transmission service and that it would try to decide the issue within four months. The order provided that, if the issue were still unresolved after 120 days, i. e. by September 12, 1973, AT&T could then file the revised occasional user tariffs on 60 days notice. Such tariffs would then be subject to suspension under Section 204 for an additional three months beyond the 60 days notice period.⁷

On May 25, 1973, AT&T filed its petition to review the order in question, invoking the jurisdiction of this Court pursuant to 28 U.S.C. §§ 2342(1), 2343 and 2344 (1970). On May 31, upon application of AT&T, we ordered an expedited review.

II.

With this background of prior proceedings in mind, we turn directly to the legal issues raised by the petition to review.

At the outset we wish to make clear what is not involved. Despite the claims of certain of the intervenors, there is no issue before us with respect to the legality of AT&T's proposed tariff revisions. The...