Ameritech Corp. v. US, 93 C 6642

Decision Date28 October 1994
Docket Number94 C 4089.,No. 93 C 6642,93 C 6642
Citation867 F. Supp. 721
PartiesAMERITECH CORPORATION, Illinois Bell Telephone Company, and Michigan Bell Telephone Company, Plaintiffs, and Consolidated Communications, Inc. and Illinois Consolidated Telephone Company, Intervenor-Plaintiffs, v. UNITED STATES of America, Federal Communications Commission, and Janet Reno, in her official capacity as Attorney General of the United States of America, Defendants.
CourtU.S. District Court — Northern District of Illinois

COPYRIGHT MATERIAL OMITTED

Albert Calille, Michigan Bell Telephone Co., Detroit, MI, Howard J. Roin, Christine Ann Pagac, Michael W. McConnell, Mayer, Brown & Platt, Chicago, IL, and Thomas Byron H., III, Mayer, Brown & Platt, Washington, DC, for plaintiffs.

Linda A. Wawzenski, U.S. Attys. Office, Chicago, IL, James J. Gilligan, U.S. Dept. of Justice, Civ. Div., Washington, DC, and L. Michael Wicks and Daniel R. Hurley, U.S. Attys. Office, Chief Affirmative Litigation Div., Detroit, MI, for defendants.

Joseph A. Morris, Morris, Rathnau & DeLaRosa; Santiago A. Durango, Bell & McGurk, Ltd.; and James Arthur McGurk, Chicago, IL, for amici curiae.

Allan Horwich and Owen Eliot MacBride, Schiff, Hardin & Waite, Chicago, IL, for intervenors-plaintiffs.

Thomas W.B. Porter and Donald S. Young, Dykema Gossett, Detroit, MI, for movants.

MEMORANDUM OPINION

GRADY, District Judge.

Ameritech Corporation and Illinois Bell Telephone Company filed this lawsuit against defendants United States of America, the Federal Communications Commission ("FCC"), and Janet Reno, in her official capacity as the Attorney General of the United States (collectively "the Government"), seeking a declaratory judgment and injunctive relief under 28 U.S.C. §§ 2201 and 2202. The lawsuit raises a First Amendment challenge to a provision of the Cable Communications Policy Act of 1984, 47 U.S.C. § 533(b), which prohibits the plaintiff local and regional telephone companies from providing cable television directly to customers within their service areas.

On the same date, Ameritech and Michigan Bell Telephone Company filed a virtually identical action against the same defendants in the Eastern District of Michigan. See Ameritech Corp. v. United States, No. 93-CV-74617-DT (E.D.Mich. Nov. 1, 1993). On June 14, 1994, United States District Judge Patrick J. Duggan transferred the Michigan action to this court for consolidation with the action filed here. The Michigan case (N.D.Ill. No. 94 C 4089) has been consolidated for all purposes with this case (No. 93 C 6642).

The court has granted two additional parties, Consolidated Communications, Inc. ("CCI") and Illinois Consolidated Telephone Co. ("ICTC"), leave to intervene as plaintiffs in this action.

Now before the court are the parties' cross-motions for summary judgment. After considering the parties' briefs, which were originally filed in the Michigan action, along with the parties' supplemental memoranda and the submissions of the amici curiae in this case, the court grants plaintiffs' motions for summary judgment and denies defendants' motion, for the reasons discussed below.

BACKGROUND

Cable television is defined broadly as a communications medium in which video programs are transmitted to the homes of subscribers along a closed network of wires or cables, which are often buried underground or attached to utility poles. Cable television differs from broadcast television in that the latter's signals can be received free of charge through the air with a standard television set and antenna. Cable operators ordinarily charge their subscribers a monthly fee for the transmission of video programs along the cable network. Cable is believed to have been born in 1948 in rural Pennsylvania and Oregon, where a handful of entrepreneurs sought to bring television to residents who were too far away from the nearest broadcasting station to pick up the signal through the air.1 Today the cable television industry is a $20 billion business with access to more than 90 percent of American homes, according to the FCC. In re Telephone Company-Cable Television Cross-Ownership Rules, Second Report and Order, Recommendation to Congress, and Second Further Notice of Proposed Rulemaking, 7 FCC Rcd. 5781, 5848 (1992) ("FCC Video Dialtone Order") (Plaintiff's Motion for Summary Judgment, App. Tab 5). Congress has found that more than 60 percent of American households with television sets actually subscribe to cable, and that for these households, cable has replaced broadcast television as the primary provider of video programming. See Turner Broadcasting Sys., Inc. v. FCC, ___ U.S. ___, ___, 114 S.Ct. 2445, 2454, 129 L.Ed.2d 497 (1994).

A detailed discussion of the relevant regulatory history of the cable television industry is contained in US West, Inc. v. United States, 855 F.Supp. 1184, 1186-88 (W.D.Wash.1994). To summarize, the FCC in 1970 issued a rule prohibiting telephone companies from providing cable television service to customers in their service areas, citing the likelihood of "undesirable consequences" stemming from "the monopoly position of the telephone company in the community, as a result of which it has effective control of the pole lines (or conduit space) required for the construction and operation of CATV cable systems." Id. at 1186 (quoting Applications of Telephone Companies for Section 214 Certificates for Channel Facilities Furnished to Affiliated Community Antenna Television Systems, Final Report and Order, 21 FCC2d 307, 324 (1970)). Congress codified the 1970 FCC rule in the Cable Communications Policy Act of 1984:

(1) It shall be unlawful for any common carrier ... to provide video programming directly to subscribers in its telephone service area, either directly or indirectly through an affiliate owned by, operated by, controlled by, or under common control with the common carrier.
(2) It shall be unlawful for any common carrier ... to provide channels of communication or pole line conduit space, or other rental arrangements, to any entity which is directly or indirectly owned by, operated by, controlled by, or under common control with such common carrier, if such facilities or arrangements are to be used for, or in connection with, the provision of video programming directly to subscribers in the telephone service area of the common carrier.

47 U.S.C. § 533(b)(1), (2).

The term "common carrier" includes telephone companies, which carry interstate wire communications for hire. See 47 U.S.C. § 153(h). "Video programming" is defined as "programming provided by, or generally considered comparable to programming provided by, a television broadcast station." 47 U.S.C. § 522(19). The FCC has interpreted that definition as including any video programming comparable to that provided by broadcast television in 1984, the year of enactment. FCC Video Dialtone Order, 7 FCC Rcd. at 5820. By prohibiting telephone companies from providing "video programming," § 533(b) on its face keeps telephone companies out of the television business altogether in the companies' service areas. Because the plaintiff telephone companies, by virtue of their existing telephone service networks, are in a position to provide video programming along those networks to their telephone subscribers, § 533(b) affects plaintiffs most acutely by preventing them from competing in the potentially lucrative cable television market. Thus plaintiffs challenge the statute as being unconstitutional "on its face" and "as applied." The statute's applicability to over-the-air television broadcasting by plaintiffs' is not at issue, as plaintiffs apparently have no interest in broadcasting.

The parties do not dispute that by its terms, § 533(b) does not bar telephone companies from providing: video programming to consumers outside their service areas; other information services taking the form of visual images — but not "video programming" — to consumers within their service areas; or, video programming to any consumer, if such programming is transmitted indirectly through some other independent entity's facilities (for example, by producing a video program and marketing it to cable or broadcast operators). See Chesapeake & Potomac Tel. Co. v. United States, 830 F.Supp. 909, 922-23 & n. 19 (E.D.Va.1993). Plaintiffs argue that § 533(b) nonetheless places impermissible restrictions on speech by preventing them from providing cable television to their own customers along their own networks.

Congress made no findings of fact at the time it enacted § 533(b), which left little in the way of legislative history. US West, 855 F.Supp. at 1187. A House of Representatives committee report stated that § 533 "establishes clearly-defined cross-ownership rules and standards to prevent the development of local media monopolies and to encourage a diversity of ownership of communications outlets." Id. (quoting H.R.Rep. No. 934, 98th Cong., 2d Sess. 55 (1984), reprinted in 1984 U.S.C.C.A.N. 4655, 4692).

As the Government points out in its brief, Congress and the FCC began to rethink § 533(b)'s cross-ownership ban by the late 1980s and early 1990s. See Defendants' Memorandum in Support of Their Motion, and in Opposition to the Plaintiffs' Motion, for Summary Judgment ("Defendants' Memorandum"), at 11. Several legislative attempts to repeal § 533(b) at that time failed, while the FCC embarked on a five-year rule-making process that culminated in 1992, when the FCC formally reversed course and recommended § 533(b)'s repeal. The agency stated that although the 1970 FCC rule and its statutory successor had given cable television operators "an opportunity to firmly establish themselves as viable competitors," the cable industry's "enormous growth" since then had "attenuated" the once-feared risks of anticompetitive behavior by the telephone companies. FCC Video Dialtone Order, 7 FCC Rcd. at 5848.

The Government does not dispute that the FCC's 1992 decision...

To continue reading

Request your trial
5 cases
  • Candy Lab Inc. v. Milwaukee Cnty.
    • United States
    • U.S. District Court — Eastern District of Wisconsin
    • 20 Julio 2017
    ...dialing machine resulting in a message from a robot. Even more apt is the district court's decision in Ameritech Corp. v. United States , 867 F.Supp. 721, 732 (N.D. Ill. 1994), which held that discrimination between interactive versus traditional television programming was not premised on t......
  • Chesapeake and Potomac Telephone Co. of Virginia v. U.S.
    • United States
    • U.S. Court of Appeals — Fourth Circuit
    • 21 Noviembre 1994
    ...carrier. Neither of these paragraphs is implicated here.2 See infra Section III.3 The federal district courts in Ameritech Corp. v. United States, 867 F.Supp. 721 (N.D.Ill.1994), and US West, Inc. v. United States, 855 F.Supp. 1184 (W.D.Wash.1994), reached the same conclusion. Similar litig......
  • Southern New England Telephone Co. v. US
    • United States
    • U.S. District Court — District of Connecticut
    • 28 Abril 1995
    ...1994 WL 779761, at * 2 (D.Me.1994); Bellsouth Corp. v. United States, 868 F.Supp. 1335, 1344 (N.D.Ala.1994); Ameritech Corp. v. United States, 867 F.Supp. 721, 737 (N.D.Ill.1994). See also GTE California, Inc. v. FCC, 39 F.3d 940, 951 (9th Cir.1994) (Noonan, J., To date, the Second Circuit ......
  • U.S. West, Inc. v. U.S.
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • 17 Febrero 1995
    ...F.3d 181 (4th Cir.1994) ("C & P"); NYNEX Corporation v. United States, No. 92-323-P-C (D. Maine Dec. 8, 1994); Ameritech Corp. v. United States, 867 F.Supp. 721 (N.D.Ill.1994); BellSouth Corp. v. United States, 868 F.Supp. 1335 (N.D.Ala.1994). We join those other courts in finding that Sec.......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT