Carlin Communications, Inc. v. F.C.C.

• Decision Date: 11 April 1986
• Docket Number: D,No. 638,638
• Parties: CARLIN COMMUNICATIONS, INC. and Drake Publishers, Inc., Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents. ocket 85-4158.
• Court: U.S. Court of Appeals — Second Circuit

Page 846

787 F.2d 846

CARLIN COMMUNICATIONS, INC. and Drake Publishers, Inc., Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents.

No. 638, Docket 85-4158.

United States Court of Appeals Second Circuit.

Argued Dec. 19, 1985.

Decided April 11, 1986.

Lawrence E. Abelman, Abelman Frayne Rezac & Schwab, New York City (Marianne F. Murray, of counsel), for petitioners.

Sue Ann Preskill, Washington, D.C. (Richard K. Willard, Hermes Fernandez, Jack D. Smith, Daniel Armstrong, of counsel), for respondents.

Before: OAKES, KEARSE, and PIERCE, Circuit Judges.

OAKES, Circuit Judge:

We are not without empathy towards a federal agency torn between a congressional directive on the one hand and a court-imposed constitutional limitation on the other hand. Congress has directed the Federal Communications Commission ("Commission" or "FCC") to make regulations restricting access by minors to "dial-a-porn," the shorthand nomenclature of a telephone service that provides a caller with sexually explicit messages. 47 U.S.C. Sec. 223(b)(2) (Supp. I 1983).

Under section 223(b)(2), compliance with these regulations establishes a defense to criminal prosecution for violating section 223(b)(1): making "any obscene or indecent communication for commercial purposes to any person under eighteen years of age...." This prohibition was enacted by a Congress well aware that not only were "very complex issues" relating to "technical feasibility" involved, 105 Cong.Rec. E5966-67 (daily ed. Dec. 14, 1983) (remarks of Rep. Kastenmeier), but that under the Constitution the adult population may not be reduced to "hearing only what is fit for a child." Id. at E5966 (citing Butler v. Michigan, 352 U.S. 380, 383, 77 S.Ct. 524, 526, 1 L.Ed.2d 412 (1957)). The regulations are to "permit adult access while limiting children's access," having in mind that "[i]f ... no such regulations are feasible, then less restrictive measures rather than broader restrictions will have to suffice to avoid any constitutional infirmity." 105 Cong. Rec. at E5966.

When the FCC's dial-a-porn regulations first came before us, we held that they were both overinclusive and underinclusive, Carlin Communications, Inc. v. FCC, 749 F.2d 113 (2d Cir.1984) ("Carlin I "). The Commission had sought to restrict the dial-a-porn operation of petitioner Carlin Communications, Inc. ("Carlin"), and its related corporations to the hours between 9 p.m. and 8 a.m. Eastern Time. 47 C.F.R. Sec. 64.201 (1985). Without declaring that regulation impermissible, we held that the record was insufficiently developed to uphold it. Specifically, while holding that "[t]he interest in protecting minors from salacious matter is no doubt quite compelling," 749 F.2d at 121 (citing Ginsberg v. New York, 390 U.S. 629, 88 S.Ct. 1274, 20 L.Ed.2d 195 (1968)), we nevertheless found that the Commission had "failed adequately to demonstrate that the regulatory scheme is well tailored to its ends or that those ends could not be met by less drastic means." 749 F.2d at 121. In fact, the time-channeling regulation denied adults access to dial-a-porn messages during daytime hours but did not prevent minors from calling the service during nighttime hours. Moreover, we expressed concern that the Commission had not adequately examined other alternatives that might better serve the competing interests at stake. We noted, for example, that it might be possible to "giv[e] subscribers the option of blocking access to certain telephone numbers from their premises," id. at 122 (footnote omitted), or to "requir[e] each caller to provide an access number for identification to an operator or computer before receiving the message." Id. After further development of the record, the Commission has approved a regulation that adopts this second suggestion. We are, however, on the record as developed before the Commission, not yet convinced that the regulation was chosen with the appropriate constitutional strictures in mind even though more "comprehensive investigation and analysis," We therefore grant the petition to review, continue the stay of the FCC order, which we granted pending appeal, and remand to the Commission. The stay, however, is granted only at the behest of the petitioners here, Carlin and Drake Publishers, Inc., and not on behalf of any of their affiliates or any other corporations located anywhere else in the United States and applies only to dial-a-porn service providers on the New York Telephone Company ("NYT") system. We are cognizant of the representation of petitioners' counsel at oral argument and otherwise that the petitioners do business only in the State of New York (even though long distance telephones may access their services). We also are aware of the very thorough and persuasive presentation before the Commission by the NYNEX telephone companies (NYT and New England Telephone and Telegraph Company) dated May 14, 1985, and incorporated in the record before us. Irrespective of whether the regulation may conceivably be valid as applied to the rest of the country, it is clearly arbitrary and capricious as to dial-a-porn providers on the NYT system.

id. at 123, was given on this trip around.

The NYT Mass Announcement Service ("MAS") is a one-way distribution system in which it is technically infeasible to provide the two-way access (which apparently is available in most other parts of the country) between the caller and the information provider on which the so-called "access code" regulation now espoused by the Commission is based. In short, the FCC regulations would put Carlin out of business in New York. While this might be a consummation devoutly to be wished by some, it comports neither with this court's prior ruling, nor with overall constitutional or statutory considerations. So stating, we do not decide the constitutionality or feasibility of the Commission's access code regulation insofar as it applies to dial-a-porn providers outside the NYT system. Nor do we express any opinion on the advisability or propriety of the Commission's imposing different requirements depending upon the telephone system involved.

FACTUAL BACKGROUND

We will assume a familiarity with our prior decision in Carlin I. To the extent necessary we will update the facts from the record before the Commission and this court.

We note that for the six months ending April, 1985, dial-a-porn calls appear to have leveled off at 6 to 7 million per month, approximating 15 to 18% of the total NYT MAS network calling volumes. Based on the NYT's MAS tariffs as of May 1985, which yield 2.0cents per call to the "provider" of services, it is evident that the gross revenue of the dial-a-porn service providers ¹ is in the vicinity of $130,000 per month. NYT receives 9.4cents per call (the average revenue per message of 11.4cents less 2.0cents) to compensate it for the services it renders to the information providers, including collecting revenues from customers. Thus, telephone company gross revenues from dial-a-porn exceed a half million dollars a month.

NYNEX normally does not keep data on usage of pay telephones by MAS callers in general or by dial-a-porn callers in particular. However, NYT did perform a study which found that out of 8,358 calls placed to the eight "adult entertainment" channels in the MAS network during the study period, only 144 or 1.72% were placed from coin lines. There was no indication what, if any, proportion of these 144 callers were minors. Telephone company data also point out that the incidence of interstate coin calling by minors to dial-a-porn is likely to be even less given the relatively high price--$2 or more--for the 57-second phone message, and the fact that any non-paid

use of a pay phone, presumably charging the call to a home or credit card number, to call dial-a-porn interstate would show up on a bill. Thus, it is apparent that any solution to the dial-a-porn problem would not necessarily be rendered unacceptable merely because it did not cover coin calling.

The Second Notice of Proposed Rulemaking

Following our decision of November 2, 1984, setting aside the time-channeling regulations, the FCC, in 50 Fed.Reg. 10510 (1985), issued a Second Notice of Proposed Rulemaking ("Second Notice") proposing "to amend its rules to provide a defense to enforcement of prohibitions against dial-a-porn services," id., and soliciting additional comments on its regulations. The Second Notice invited comment on a new approach that "responds directly to the need of parents to police the use of their telephones." Id. at 10512. Under this approach telephone companies would be required to report on monthly bills to their customers any local or long distance calls made to 976-type numbers ² and the dial-a-porn service providers would be required to reimburse the telephone companies for their administrative costs.

The Commission also called for comments on screening and blocking devices and services, i.e., blocking access to one or more pre-selected telephone numbers either by installation of specialized equipment at the local telephone company's central office or by the use of call-blocking technology in the telephone customer's own terminal equipment. Previously the FCC had concluded that blocking or screening would require time to develop and could entail costs that would outweigh the benefits to be obtained. In the Second Notice, the Commission noted that since its original hearings, "there have been significant changes in the telephone industry," id., and thus "[i]t is possible ... that screening at the originating central office is tenable." Id. With reference to a blocking device installed at the calling customer's premises, the Commission had originally concluded that " 'no existing commercial device has a screening capability that could be deployed within the subscriber's terminal equipment.' " Id. at 10513 (quoting 49 Fed.Reg. 24996, 24999 (1984)). This court had...