Hawaiian Telephone Company v. FCC
| Decision Date | 03 May 1974 |
| Docket Number | No. 73-1018.,73-1018. |
| Citation | 498 F.2d 771 |
| Parties | HAWAIIAN TELEPHONE COMPANY, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and The UNITED STATES of America, Respondents. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Thomas J. O'Reilly, for petitioner.
Gregory M. Christopher, Counsel, F. C. C., with whom John W. Pettit, Gen. Counsel, Joseph A. Marino, Associate Gen. Counsel, F. C. C., and Howard E. Shapiro, Atty. Dept. of Justice, were on the brief, for respondents.
Before ROBINSON, MacKINNON and WILKEY, Circuit Judges.
Hawaiian Telephone Company HTC seeks review of an order of the Federal Communications Commission granting authority to RCA Global Communications, Inc. RCA to provide private-line voice-only telephone service between the United States Mainland and Hawaii. We find that the FCC did not comply with its statutory mandate, and therefore remand to the FCC for further action in conformity with our opinion.
At issue is the nature and scope of communications service to be available between the U. S. Mainland and Hawaii. Service is usually categorized as either voice-only, which is the traditional telephone service, or record, which includes telegraph, teletype, facsimile, data, alternate voice/data, and simultaneous voice/data. Both the record and voice-only service can utilize two systems of charges: the message system, where a charge is made for each use, or the leased channel system, where payment of a flat rate provides unlimited service.
On the Mainland to Hawaii route several carriers historically have provided a variety of service. Before 1955 AT&T provided voice-only service on the route; in contrast, RCA and two others provided record services. After a U.S. Defense Department request in 1955 for construction of an oceanic cable along the route, AT&T along with HTC agreed to construct the cable on the condition that they could also supply record service. The FCC granted AT&T permission, on the grounds that harm to RCA would be minor, as compared with great national defense needs.1 Apparently as a quid pro quo, RCA was licensed in 1959 to provide voice service to Hawaii on a leased channel basis;2 however, RCA did not utilize its license, but surrendered it in 1965.3
In 1965 RCA was joined by ITT and Western Union International WUI in objecting to the Data-Phone service rencently introduced by AT&T in conjunction with HTC.4 RCA also sought withdrawal of permission for AT&T to provide record service, apparently in an attempt to create the competitive situation usually found elsewhere. Normally on international routes AT&T is limited to providing voice-only service and cannot compete with RCA for record service. The FCC denied RCA the relief sought from competition in record services.5
RCA and ITT petitioned the FCC in 1966 to expand their Datel service to make it competitive with AT&T and HTC's Data-Phone. Under the originally authorized Datel service, voice communication was limited to cues such as those to start or stop transmission. RCA and ITT's petitions to expand Datel to allow conversation as well as transmission of data were granted by the FCC.6
Later in 1966 RCA sought authority from the FCC to lease and operate satellite channels from the Communications Satellite Corporation COMSAT. While at first RCA only desired to use the satellite channels to provide service similar to that provided by radio and cable, RCA subsequently applied for permission to use the channels for leased channel voice-only service. This was a departure from RCA's previous provision of service, and was opposed by HTC and AT&T. After comments by the interested carriers, the FCC authorized RCA temporarily to lease and operate the satellite channels, but limited to record type service. No permanent action was undertaken at that time.
In 1969 RCA petitioned for permanent approval of its satellite channel leases, to be used for both record and voice-only services, and requested additional satellite leases. Again HTC and AT&T objected, but no agency action occurred until 8 June 1972, when the Telegraph Committee of the FCC adopted a memorandum order granting RCA permanent authority to provide voice-only and record service via satellite facilities. HTC then sought review by the full FCC. On 13 November 1972 the FCC denied HTC's application for review and affirmed the order of the Telegraph Committee.7 HTC then lodged an appeal pursuant to 47 U.S.C. § 402 challenging the FCC approval of RCA voice-only services.
The issue before the court is whether the FCC has complied with statutory requirements when it approved RCA's application for voice-only service. We find that the FCC has not conformed to the requirement that it find the public convenience and necessity dictate the new service. We remand to the FCC for reconsideration and articulation of this most significant factor. In so doing, we make no suggestion whatsoever as to how we might find that the public interest might best be served.
The Communications Act of 1934, 47 U.S.C. § 214(a), requires that before a carrier undertakes to construct or operate a new line it must obtain from the FCC certification "that the present or future public convenience and necessity require or will require" the new service. The rules of the FCC regarding applications for certification carry forward the statutory mandate by requiring that applications include a "summary of the factors showing the public need for the proposed facilities,"8 and a description of current service and "reasons why existing facilities are inadequate."9
In granting RCA certification the FCC necessarily approved RCA's application, which nowhere specified or summarized factors demonstrating public need for additional services. RCA simply noted on its amended application that HTC and AT&T had applied for satellite facilities to complement their cable voice-only service to Hawaii, and that RCA also wished to be enabled to provide leased channel voice-only service via satellite.10
Not surprisingly, AT&T and HTC opposed RCA's application. In its reply RCA noted the exclusive authority of those two carriers to furnish leased channel voice service via cable, and suggested the exclusivity should not be extended to satellite service. RCA suggested that in view of its "historical role" and "equity" it should be permitted to provide the new service.11 RCA's update of its application, which was filed in May 1969, did not add any statement regarding public necessity.
The tenor of the RCA application, approved by the FCC, and the subsequent exchange of views illustrate a major defect we discern in the Commission's unanalytical approach to its responsibilities. Not only did the FCC place a value unsupported by the record on the virtues of competition, but the FCC really focused on equalizing the position of competitors. This is true in the FCC action made the subject of this review; it is also apparent in the whole history of Hawaii-Mainland communications detailed above. We shall see more of this below.
The Telegraph Committee approved RCA's application for satellite voice service on 9 June 1972. Its memorandum opinion recited the points made by the various carriers and noted that, unlike the case of other international routes, competition concerning record service on the Hawaii routes existed between RCA and other international record carriers on the one hand, and AT&T and HTC on the other hand. Citing ITT World Communications, Inc.,12 the Committee concluded it would "be equitable and in the public interest"13 to allow RCA to compete with AT&T and HTC on leased channel voice service. This conclusion, the Committee felt, was supported by the "past precedent" of an authorized voice-only service via radio which had been granted to RCA but never utilized, and by the fact that the economic impact on AT&T and HTC would be minimal. The Committee then concluded that RCA "has shown a need for the facilities" and that approval of the application "will serve the present and future public convenience and necessity,"14 and granted RCA the certificate.
Upon review the FCC affirmed the Telegraph Committee grant. The Commission relied on its decision in ITT World Communications, Inc., in which it allowed ITT to provide Datel to Hawaii because of the previously favored position of AT&T and HTC in providing Data-Phone. Since the Telegraph Committee opinion followed the "policy and precedent" of the ITT decision, the Commission concluded it would be "equitable" to give RCA the certificate desired, absent a showing of serious adverse effect on HTC and AT&T.15
Then, after determining that the effect on HTC revenue would be minimal, the FCC briefly referred again to the public interest:
This then...
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