ITT World Communications v. F. C. C.

• Decision Date: 25 August 1980
• Docket Number: 865 and 1279,D,Nos. 864,s. 864
• Citation: 635 F.2d 32
• Parties: ITT WORLD COMMUNICATIONS INC. and RCA Global Communications, Inc., Western Union International, Inc., Petitioners, v. The FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents, and TRT Telecommunications Corporation and The Western Union Telegraph Company, Intervenors. ockets 79-4220, 80-4003 and 80-4016.
• Court: U.S. Court of Appeals — Second Circuit

Page 32

635 F.2d 32

ITT WORLD COMMUNICATIONS INC. and RCA Global Communications, Inc., Western Union International, Inc., Petitioners, v. The FEDERAL COMMUNICATIONS COMMISSION and United States of

America, Respondents,

and

TRT Telecommunications Corporation and The Western Union

Telegraph Company, Intervenors.

Nos. 864, 865 and 1279, Dockets 79-4220, 80-4003 and 80-4016.

United States Court of Appeals, Second Circuit.

Argued June 11, 1980.

Decided Aug. 25, 1980.

Grant S. Lewis, New York City (John S. Kinzey, Jr., Karen Hutson, Diane K. Newman, LeBoeuf, Lamb, Leiby & MacRae, Joseph J. Jacobs, Theodore J. Fischkin, Susan I. Littman, New York City, of counsel), for petitioner ITT World Communications Inc.

H. Richard Schumacher, New York City (P. Kevin Castel, John C. Koutsos, Daniel A. Fried, Cahill, Gordon & Reindel, Francis J. DeRosa, Rodger M. Sanders, RCA Global Communications, Inc., New York City, of counsel), for petitioner RCA Global Communications, Inc.

John E. Ingle, Asst. Gen. Counsel, F. C. C., Washington, D. C. (Robert R. Bruce, Gen. Counsel, David J. Saylor, Deputy Gen. Counsel, Daniel M. Armstrong, Associate Gen. Counsel, F. C. C., Washington, D. C., of counsel), for respondent F. C. C.

Joel Yohalem, Washington, D. C. (H. Richard Juhnke, Washington, D. C., R. C. Hostetler, Upper Saddle River, N. J., of counsel), for intervenor The Western Union Tel. Co.

Robert E. Conn, New York City, for petitioner Western Union Intern., Inc.

E. Edward Bruce, Washington, D. C. (William P. Mayer, Covington & Burling, Roderick A. Mette, Vice President and Counsel, Washington, D. C., of counsel), for intervenor TRT Telecommunications Corp.

Before LUMBARD and MANSFIELD, Circuit Judges. ^*

MANSFIELD, Circuit Judge:

Once again we are faced with a major question with respect to the provision of international telecommunications service in the United States, which we thought we had firmly settled in Western Union International, Inc. v. FCC, 544 F.2d 87 (2d Cir. 1976), cert. denied, 434 U.S. 903, 98 S.Ct. 299, 54 L.Ed.2d 189 (1977) ("Mailgram" herein). Three "international telegraph carriers" ¹ (as defined in § 222(a)(3) of the Communications Act of 1934 (the Act), 47 U.S.C. §§ 151-609)-ITT World Communications, Inc. (ITT), RCA Global Communications, Inc. (RCA)-Western Union International, Inc. (WUI) seek review of an order adopted by the Federal Communications Commission (FCC) on December 12, 1979, and released on January 3, 1980, ² allowing The FCC rejected the international carriers' contention that the new WU service violated provisions of § 222 of the Act which preclude WU, a merged carrier, from engaging in "international telegraph operations" and obligate it to distribute among international telegraph carriers communications destined to overseas points outside the continental United States. ⁵ Petitioners' The principal issue raised by this petition is whether WU may offer the new overseas service under the Act. The FCC held that WU's role in the WUITS service consists of "domestic telegraph operations" as defined in § 222(a)(5) of the Act, which WU is authorized to provide. It further decided in the alternative that if the service amounts to "international telegraph operations" within the meaning of the Act WU may, notwithstanding our contrary decision in Western Union International, Inc. v. FCC, 544 F.2d 87 (2d Cir. 1976), cert. denied, 434 U.S. 903, 98 S.Ct. 299, 54 L.Ed.2d 189 (1977), be authorized by the FCC to engage in such activities. We hold that WU's new overseas service violates the Act since it constitutes both "international telegraph operations," which § 222(c)(2) of the Act prohibits WU from pursuing, and the handling of overseas traffic which § 222(e)(1) of the Act obligates WU to distribute among "international telegraph carriers" as defined in the Act rather than among "foreign telegraph carriers" such as CNCP and Telecomex. Accordingly, we set aside the Commission's order and direct the Commission immediately to order WU to cease offering or continuing to provide WUITS service or to conduct any international telegraphic operations.

Western Union Telegraph Company (WU), ³ a "domestic telegraph carrier" (as defined in § 222(a)(2) ⁴ to offer a new overseas service under the style of "Western Union International Teletype Service" (WUITS). For this operation WU uses the services of a Canadian carrier, CNCP Telecommunications (CNCP) and a Mexican carrier, Direccion General de Telecommunicaciones (Telecomex), to transmit and receive communications between the continental United States and most foreign countries of the world contentions that WU was providing a new service without authorization required by § 214 of the Act, 47 U.S.C. § 214, ⁶ and had violated § 203 of the Act, 47 U.S.C. § 203, by providing a service for which no tariff had been filed with the FCC, were also rejected except that the Commission order requires WU to file a tariff under the Act but permits it to continue to provide the new service pending a determination of the tariff's lawfulness.

In order to understand the full nature of the problems of statutory construction raised by the petition and to determine the meaning and applicability of the pertinent sections of the Act, an outline of the origin and history of § 222 is essential. Common carriers of telegraphic and radio communications are as public utilities limited in their operations by the terms of the Act and by regulations which the FCC is obligated to promulgate thereunder. American Tel. & Tel. Co. v. FCC, 572 F.2d 17, 25 (2d Cir.), cert. denied, 439 U.S. 875, 99 S.Ct. 213, 58 L.Ed.2d 190 (1978). Regulation by the FCC takes the form principally of exercising the power to grant or withhold certification of new lines in the interest of controlling a carrier's investment, 47 U.S.C. § 214(a), and of reviewing a carrier's rates, services and practices, which may be disapproved, 47 U.S.C. §§ 201-205.

Prior to Congress' enactment of § 222 of the Act in 1943, WU, which was formed in 1844, was the dominant entity in common carriage of telecommunications, i. e., non-voice record messages, within the United States and between the United States and other parts of the world. It controlled a vast network of cables, offices, lines and agencies through which it transmitted messages domestically and to many parts of the world. Its principal domestic competitor was Postal Telegraph. In addition, ITT's predecessors laid and operated cable lines to other parts of the world, establishing "gateways" in principal coastal cities through which they transmitted and received overseas non-voice messages that originated or terminated on the extensive domestic lines that had been created by Postal Telegraph and WU. See Western Union Divestment, 30 F.C.C. 323, 325, 346 (1961); Press Wireless, Inc., 21 F.C.C. 511, 513, 517 (1956).

The principal offering of the domestic and international carriers has been "Telex," a teleprinter exchange circuit service under which a message may be sent from a teletypewriter at an originating point to a teletypewriter During the Depression in the 1930's both WU and Postal Telegraph suffered a serious decline in business, threatening termination of the latter's operations, which led to a proposal for the merger of the two. Based on a study made by the Senate Committee on Interstate Commerce in late 1941, S.Rep.No.769, 77th Cong., 1st Sess. (1941), legislation was introduced into Congress, S. 2445, for the addition of a § 222 to the Act, which would have required each of the participating domestic carriers to divest itself of its overseas operations and then allow for separate mergers of their domestic and overseas operations. After extensive hearings the Committee drafted a new bill, S. 2598, which was to become S. 158 in the 1943 session of Congress, authorizing a domestic merger provided the merged carrier divested itself of overseas operations and facilities and instead distributed its outbound overseas traffic essentially among the "international telegraph carriers," such as ITT, RCA, and WUI, now popularly known as the "international records carriers" or "IRCs." S.Rep.No. 13, 78th Cong., 1st Sess. (1943). While recognizing that a merger was advisable to prevent a collapse of domestic service, Congress also realized that WU, as the surviving merged enterprise, would dominate domestic traffic and could, if permitted to retain its overseas operations and network, favor its own system to the detriment of the IRCs, who transmitted overseas messages only to and from five "gateway" cities (New York, San Francisco, Miami, Washington and New Orleans), see International Record Carriers' Scope of Operations, 54 F.C.C.2d 909 (1975), and 58 F.C.C.2d 250, 251 n.1 (1976), and who depended on WU and Postal Telegraph for completion of the domestic landline service within the United States. See Mailgram, supra, 544 F.2d at 89; Telegraph Service with Hawaii, 28 F.C.C. 599, 602, affd. on reconsideration, 29 F.C.C. 714 (1960); Western Union Telegraph Co., 25 F.C.C. 35, 74 (1958); S.Rep.No. 769, 77th Cong., 1st Sess. 20 (1941); Hearings on S. 2445 Before a Subcommittee of the Senate Committee on Interstate Commerce (Consolidations and Mergers of Telegraph Operations), 77th Cong., 2d Sess. at 253, 258 (1942); Hearings Pursuant to S. 2598 Before a Subcommittee of the House Committee on Interstate & Foreign Commerce (Consolidations and Mergers of Telegraph Operations), 77th Cong., 2d Sess. at 16, 180 (1942); S.Rep.No. 1490, 77th Cong., 2d Sess. 9 (1942); S.Rep.No. 13, 78th Cong., 1st Sess. 8 (1943); Statement of Sen. McFarland of Arizona before Senate on February 18, 1943, 89 Cong.Rec. 1092 (1943). ⁷

at the destination. In addition, beginning in 1930 the American Telephone & Telegraph Company (AT&T) initiated "TWX," a teletypewriter exchange service functionally similar to Telex, which permits a subscriber to dial another subscriber on the public message telephone system...