National Cable Television Ass'n, Inc. v. F.C.C.

• Decision Date: 26 August 1994
• Docket Number: 92-1072,92-1068,92-1071,92-1538 and 91-1577,91-1656,92-1529,Nos. 91-1649,s. 91-1649
• Citation: 308 U.S. App. D.C. 221,33 F.3d 66
• Parties: , 155 P.U.R.4th 207 NATIONAL CABLE TELEVISION ASSOCIATION, INC., et al., Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION and the United States of America, Respondents. GTE Laboratories and GTE Service Corporation, et al., Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 66

33 F.3d 66

308 U.S.App.D.C. 221, 155 P.U.R.4th 207

NATIONAL CABLE TELEVISION ASSOCIATION, INC., et al., Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION and the United States of America, Respondents GTE Laboratories and GTE Service Corporation, et al., Intervenors.

Nos. 91-1649, 91-1656, 92-1068, 92-1071, 92-1072, 92-1529,

92-1538 and 91-1577.

United States Court of Appeals District of Columbia Circuit.

Argued March 11, 1994.

Decided Aug. 26, 1994.

William F. Squadron argued the cause, for petitioners the National Ass'n of Telecommunications Officers and Advisors, the Alliance for Community Media, the City of Lee's Summit, MO, the City of New York, the City of St. Louis, MO, and the Miami Valley Cable Council. On the brief were Joseph Van Eaton, Frederick E. Ellrod, III, Norman M. Sinel, Robert Alan Garrett, and William E. Cook, Jr.

Neal M. Goldberg argued the cause, for petitioners National Cable Television Ass'n, Inc., and Cable Telecommunications Ass'n, Inc. With him on the briefs were Daniel L. Brenner, David L. Nicoll, Diane B. Burstein, Stephen R. Effros, James H. Ewalt, H. Bartow Farr, III, Richard G. Taranto, and Frank W. Lloyd, III. Brenda L. Fox, and Michael S. Schooler entered appearances.

John E. Ingle, Deputy Associate Gen. Counsel, Federal Communications Com'n, argued the cause, for respondents. With him on the brief were Daniel M. Armstrong, Associate Gen. Counsel, Laurel R. Bergold and James M. Carr, Counsel, FCC, Anne K. Bingaman, Asst. Atty. Gen., and Robert B. Nicholson and Robert J. Wiggers, Attys., U.S. Dept. of Justice. Laurence N. Bourne, Counsel, Federal Communications Com'n, and James W. Lowe, Atty., U.S. Dept. of Justice, entered appearances.

Michael K. Kellogg, Bell Companies, argued the cause, for intervenors in support of respondents. With him on the brief were Edward W. O'Neill, Mark Fogelman, People of the State of Cal. and the Public Utilities Commission of the State of Cal., James R. Hobson, Jeffrey O. Moreno, GTE Domestic Telephone Operating Companies, and GTE Service Corp., M. Robert Sutherland, BellSouth, Richard W. Odgers, Margaret deB. Brown, James Tuthill and Lucille Mates, Pacific Telesis Group, James R. Young and Michael E. Glover, Bell Atlantic Corp., Shelley E. Harms, N.Y. Telephone Co. and New England Telephone Co. (NYNEX), James D. Ellis, and Martin E. Grambow, Southwestern Bell Corp.

On the briefs for intervenors in support of petitioner Local Community Coalition were Nicholas P. Miller, Joseph Van Eaton, and Frederick E. Ellrod, III.

William B. Barfield entered an appearance for intervenor BellSouth Corp. Francine J. Berry, Marc E. Manley, and David Condit entered appearances, for intervenor American Telephone & Telegraph Co. Mark Tauber and Nora E. Garrote entered appearances for intervenor Telesat Cablevision, Inc. Robert B. McKenna and Lawrence E. Sargeant entered appearances, for intervenor U.S. West, Inc. Thomas J. Casey and Jay L. Birnbaum entered appearances for intervenor Central Telephone Co. Charles D. Gray and James Bradford Ramsey entered appearances for intervenor National Ass'n of Regulatory Utility Commissioners. Joan M. Griffin entered an appearance, for intervenors GTE, et al. Mary McDermott and Donald W. Boecke entered appearances, for intervenors N.Y. Telephone Co., et al. David Cosson and L. Marie Guillory entered appearances, for intervenor National Telephone Cooperative Ass'n. Alfred W. Whittaker and Floyd S. Keene entered appearances, for intervenor Ameritech Operating Companies. John Thorne and Michael D. Lowe entered appearances, for intervenor Bell Atlantic Telephone Companies. James L. Wurtz entered an appearance, for intervenor Pacific Bell & Nevada Bell. Angela J. Campbell entered an appearance, for intervenor Consumer Federation of America. Terry G. Davis entered an appearance, for intervenor Alabama Public Service Com'n. Michael D. Berg entered an appearance, for intervenor Local Community Coalition. Henry L. Baumann and Terry L. Etter entered appearances, for intervenor National Ass'n of Broadcasters. William T. Lake entered an appearance, for intervenor Intern. Business Machines Corp. Martin T. McCue entered an appearance, for intervenor U.S. Telephone Ass'n.

Before WILLIAMS, GINSBURG, and SENTELLE, Circuit Judges.

Opinion for the Court filed by Circuit Judge GINSBURG.

GINSBURG, Circuit Judge:

Various cable industry associations and local franchising authorities petition for review of the Federal Communications Commission's determination that neither a telephone company providing "video dialtone" service, nor a video programmer that uses the service to reach subscribers, is subject to the franchise requirement of Sec. 621(b)(1) of the Cable Communications Policy Act of 1984, 47 U.S.C. Sec. 521 et seq. The petitioners contend that: (1) both the plain meaning of, and the congressional intent behind, the statute require that a telephone company offering video dialtone service be regulated as a "cable operator" providing "cable service," and therefore must have a cable franchise; and (2) the Commission erred in determining that in no circumstance is a customer-programmer of a video dialtone service a "cable operator" subject to the franchise requirement. For the reasons set forth below, we deny the petitions for review.

I. Background

The Congress created the FCC to regulate common carriage service "by wire and radio so as to make available ... to all the people of the United States a rapid, efficient, Nation-wide and world-wide wire and radio communication service." 47 U.S.C. Sec. 151 (1982). Title II of the Communications Act of 1934, 47 U.S.C. Secs. 151-226, requires that telephone companies provide communication service "upon reasonable request" and at "just and reasonable" rates. 47 U.S.C. Sec. 201. Title III establishes the federal regulatory scheme for broadcasting. The Act, however, "fences off from FCC reach or regulation intrastate matters," Louisiana Public Service Comm'n v. FCC, 476 U.S. 355, 370, 106 S.Ct. 1890, 1899, 90 L.Ed.2d 369 (1986), including "charges, classifications, practices, services, facilities, or regulations for or in connection with intrastate communication service." 47 U.S.C. Sec. 152(b). These are the purview of state governments.

When cable television (or community antenna television, as it was then called) arrived on the scene in the 1950s, the Commission initially determined that it did not have jurisdiction to regulate the new service under the Communications Act, see Frontier Broadcasting Co. v. Collier, 24 F.C.C. 251 (1958), reconsideration denied in Report and Order in Docket No. 12443, 26 F.C.C. 403, 428 (1959); United States v. Southwestern Cable Co., 392 U.S. 157, 164, 88 S.Ct. 1994, 1998, 20 L.Ed.2d 1001 (1968) (according to the FCC, cable systems are "neither common carriers nor broadcasters, and therefore are within neither of the principal regulatory categories created by the Communications Act"). In 1966, the Commission reconsidered and began to regulate the cable industry after all. See Malrite T.V. of New York v. FCC, 652 F.2d 1140, 1143-44 (2d Cir.1981). The Supreme Court approved, to the extent that the Commission's regulations are "reasonably ancillary to the effective performance of the Commission's various responsibilities for the regulation of television broadcasting." Southwestern Cable Co., 392 U.S. at 164.

As the Commission later explained, In the Matter of Telephone Company-Cable Television Cross-Ownership Rules, Sections 63.54-63.58, 2 FCC Rcd. 5092 (August 18, 1987), in order to "prevent telephone company abuse of control over local network facilities, and to preserve a competitive environment for the development and use of broadband cable facilities and services," the Commission soon adopted regulations prohibiting telephone companies from directly providing cable television service to subscribers. See Applications of Telephone Common Carriers for Section 214 Certificates for Channel Facilities Furnished to Affiliated Community Antenna Television Systems, 21 FCC 2d 307 recons. in part, 22 FCC 2d 746 (1970); 47 C.F.R. Secs. 63.54-63.58. In 1972 the Commission created a comprehensive dual regulatory regime whereby the state or local government issued franchises while the FCC exercised "exclusive authority over all operational aspects of cable communication, including technical standards and signal carriage." New York State Comm'n on Cable Television v. FCC, 749 F.2d 804, 809 (D.C.Cir.1984).

The Congress finally enacted legislation expressly designed to (de)regulate cable television in 1984. The Cable Communications Policy Act of 1984 provides that a cable operator shall be exempt from common-carrier regulation insofar as it provides "cable service," 47 U.S.C. Sec. 541(c), preserves the local franchising system, id. at Sec. 541(a)(2), and codifies the telephone-cable cross-ownership restrictions. Id. at Sec. 533(b)(1)-(b)(4).

In 1987, however, the FCC began to reexamine the telephone-cable cross-ownership restriction. Notice of Inquiry, In the Matter of Telephone Company-Cable Television Cross-Ownership Rules, Sections 63.65-63.58, FCC 87-243, 2 FCC Rcd. 5092 (Aug. 18, 1987). The Commission sought comment upon whether, in light of the growth and success of the cable television industry and the changing technology of telecommunications, the cross-ownership restriction should be modified in order to promote competition and development. Id. In the course of those proceedings the Commission tentatively concluded that telephone companies should indeed be allowed to enter the cable market ("subject to safeguards"), and that it should recommend to the Congress that the newly codified cross-ownership bar be lifted. Further Notice of Inquiry and Notice of Proposed Rule Making, In the Matter of Telephone Company-Cable Television Cross-Ownership Rules, Sections 63.54-63.58, 88-249, 3 FCC Rcd. 5849, 5865 (1988); see Second Report and Order,...