Carlin Communications, Inc. v. F.C.C.
| Decision Date | 04 April 1988 |
| Docket Number | D,No. 87,87 |
| Citation | 837 F.2d 546 |
| Parties | CARLIN COMMUNICATIONS, INC., Sapphire of Arizona, Inc., Joy Communications of California Inc., Lynx Communications of California Inc., Sable Communications of California Inc., Sapphire of Colorado Inc., Sapphire Communications of Florida, Inc., Sapphire Communications of Georgia Inc., Sapphire of Iowa, Inc., Sapphire Communications of Kentucky Inc., Sapphire of Louisiana Inc., Joy Communications of Maryland Inc., Sapphire Communications of Maryland Inc., Joy Communications of Michigan Inc., Sapphire of Michigan Inc., Sapphire of Minnesota Inc., Sapphire of Nebraska Inc., Sapphire of Nevada Inc., Sapphire of Oregon Inc., Joy Communications of Pennsylvania Inc., Sapphire Communications of Pennsylvania Inc., Sapphire Communications of Texas Inc., Sapphire of Virginia Inc., Sapphire of Washington Inc., and Sapphire of Washington D.C. Inc., Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION and The United States of America, Respondents, Ameritech Operating Companies, American Telephone and Telegraph Co., BellSouth Corporation, Southern Bell Telephone and Telegraph Co. and South Central Bell Telephone Co. ("BellSouth Companies"), Bell Atlantic, and Pacific Bell, Intervenors. ocket 87-4054. |
| Court | U.S. Court of Appeals — Second Circuit |
Norman S. Beier, New York City (Lawrence E. Abelman, Peter J. Lynfield, Carldad Pineiro Scordato, Abelman Frayne Rezac & Schwab, New York City, of counsel), for petitioners.
Diane S. Killory, General Counsel, F.C.C. (Daniel M. Armstrong, Associate General Counsel, Sue Ann Preskill, Counsel, F.C.C., Washington, D.C.; Richard K. Willard, Asst. Atty. Gen., Barbara L. Herwig, John C. Hoyle, Dept. of Justice, Washington, D.C., of counsel), for respondents.
Alfred Winchell Whittaker, Kirkland & Ellis, Washington, D.C., for intervenor Ameritech Operating Co.
Jim G. Kilpatric, Basking Ridge, N.J., for intervenor American Tele. & Tele. Co.
R. Frost Branon, Jr., BellSouth Corp., Atlanta, Ga., for intervenor BellSouth.
John M. Goodman, Bell Atlantic, Washington, D.C., for intervenor Bell Atlantic.
Michael H. Salinsky, Pillsbury, Madison & Sutro, San Francisco, Cal., for intervenor Pacific Bell.
Robert T. Perry, Media Law Clinic, New York Law School, New York City (Connie Moyer-Goodman, John W. Olivo, Jr., Ellen Rossner, Student Interns, of counsel), for amicus curiae New York Civ. Liberties Union.
Before OAKES and KEARSE, Circuit Judges, and BONSAL, District Judge. *
The Federal Communications Commission ("Commission" or "FCC") has once again issued regulations establishing a defense to prosecution under section 223(b) of the Federal Communications Commission Authorization Act of 1983, 47 U.S.C. Sec. 223(b) (Supp. I 1983), which regulates interstate "dial-a-porn" services. The Commission adopted the Third Report and Order, Enforcement of Prohibitions Against the Use of Common Carriers for the Transmission
of Obscene Materials, FCC 87-143, 2 FCC Rcd 2714 (1987), 1 in response to this court's decisions in Carlin Communications, Inc. v. FCC, 749 F.2d 113 (2d Cir.1984) ("Carlin I "), and Carlin Communications, Inc. v. FCC, 787 F.2d 846 (2d Cir.1986) ("Carlin II "). The regulations in the Third Report and Order establish that providers of "obscene or indecent" messages ("the providers") have a defense to prosecution if they (1) require payment by credit card before transmission of the message; (2) require an access code before transmission of the message, issue the code by mail after reasonably ascertaining through receipt of a written application that the applicant is at least eighteen years old, and establish a procedure to cancel the code upon notice that it was lost, stolen, or used by a minor; or (3) scramble their messages so that they can be received intelligibly only by using a descrambling device. In addition, where a provider subscribes to mass announcement services ("MAS") tariffed at the Commission, prior to transmission of the message, it must request in writing that the carrier providing the service identify all adult telephone messages on consumers' bills. 52 Fed.Reg. 17,76 0, 17,761 (1987) (to be codified at 47 C.F.R. Sec. 64.201). The issue presented here is whether this regulating scheme is a feasible and effective method for restricting minors' access to obscene telephone messages, without unreasonably interfering with the constitutional rights of the service provider to send, and adults to receive, such messages.
While we assume familiarity with our prior decisions in Carlin I and Carlin II, for ease of consideration here we briefly review the FCC's past efforts to regulate adult telephone message providers. In its First Report and Order, the Commission sought to restrict the operation of petitioner Carlin Communications, Inc. ("Carlin"), and other adult telephone message providers to the hours between 9:00 p.m. and 8:00 a.m., Eastern Time. 49 Fed.Reg. 24,996 (1984). We held those regulations both overinclusive and underinclusive; the time-channeling regulations denied adults access to dial-a-porn messages during daytime hours but did not prevent minors from calling the service during nighttime hours. Carlin I, 749 F.2d at 121. We concluded that the Commission had "failed adequately to demonstrate that the regulatory scheme [wa]s well tailored to its ends or that those ends could not be met by less drastic means." Id.
Following Carlin I, the Commission adopted a Second Report and Order on October 10, 1985 (published October 22, 1985, 50 Fed.Reg. 42,699). In the Second Report and Order, the Commission rejected all network blocking by which outgoing calls are impeded at telephone company central offices. It found exchange (three- or four-digit) blocking constitutionally flawed because it blocked all "dial-it" messages and ineffective since MAS numbers are not legally or technically required to be assigned to 976 exchanges. It rejected line number (seven-digit) blocking as inadequate to handle the large number of adult message providers currently in operation. The Commission also rejected message scrambling. Although scrambling is technologically feasible and relatively simple, the Commission concluded that it misallocated the burdens by requiring adults who desire to hear the messages to install descrambling devices at a cost of $15 or $20 each. 50 Fed.Reg. at 42,704 paras. 21, 22. The Commission concluded in the Second Report that the most effective means of restricting minors' access to dial-a-porn services, while at the same time minimizing restrictions on adults, was to require providers to send messages only to adults who first obtained an access code or paid by credit card. Id. at 42,707 para. 32.
In Carlin II, we found that the Commission's findings relative to network blocking were fully supported by the evidence and clearly not arbitrary and capricious. However The Commission released its Third Notice of Proposed Rulemaking on July 18, 1986, some three months after our decision in Carlin II. 2 The Commission first observed that total calling volume to the New York Telephone and New England Telephone and Telegraph Companies' ("NYNEX") "dial-it" system had declined from 471 million calls in 1984 (1.29 million per day) to 159 million calls in the months of January to April 1985 (435,000 per day). Of these, 97 million were made to "adult entertainment numbers" in 1984 (266,000 per day), while 26 million (72,000 per day) were made to such numbers between January and April 1985. In fact, NYNEX had reported that, during the first four months of 1985, total MAS calling volume had risen to 1.32 million calls per day while adult entertainment calls had dropped to 218,000 per day.
we held that the Commission did not adequately consider customer premises blocking and, in particular, the feasibility of shifting the cost of blocking to message providers. See 787 F.2d at 855-56. This failure was particularly troubling because access codes were feasible only with two-way transmission. We therefore set aside the regulation as to the one-way, New York Telephone MAS network. Id. at 857. In neither Carlin I nor Carlin II was it necessary to or did we pass on the constitutionality of section 223(b)
Next, the Commission briefly reviewed ways to restrict minors' access to these messages. It noted that New York Telephone Co. ("NYT") planned to install a separate, dedicated one-way system with screening capability. The so-called Varick Cut-Thru System would permit the dial-a-porn operator to implement an access code verification procedure. A screening mechanism at the telephone company's central office would send dial-a-porn calls to the providers' offices where access codes could be verified and the adult messages transmitted directly to the caller. The Commission noted that the Varick system would have a capability of 30,000 calls per hour, sufficient to handle the 9,089 calls per hour made to adult programming during early 1985. The Notice also discussed the costs and problems associated with customer blocking devices and scrambling. Finally, to comply with Carlin II, the Commission sought public comment on the feasibility, the costs and cost allocation, the benefits, and the efficacy of access codes, blocking equipment and scrambling in the region served by NYT. In particular, the Commission sought comment concerning the feasibility of implementing access codes in one-way systems such as NYNEX; the status of the proposed Varick system, and the ability of subscribers to obtain the identity, address, and number of adult telephone message providers.
In response to the Third Notice, the Commission received numerous comments and reply comments. Comments from the following entities are included in our record: Carlin; American Telephone and Telegraph Co. ("AT & T"); Ameritech Operating...
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