New York State Com'n on Cable Television v. F.C.C.

• Decision Date: 30 November 1984
• Docket Number: Nos. 83-2160,83-2190 and 83-2196,s. 83-2160
• Citation: 242 U.S.App.D.C. 126,749 F.2d 804
• Parties: NEW YORK STATE COMMISSION ON CABLE TELEVISION, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents, Direct Satellite Communications, Inc., Time, Inc., National Satellite Cable Association, United Satellite Communications, Inc., WWHT Corporation, et al., Society for Private & Commercial Earth Stations, City of New York, Satellite Television Corporation, Board of Public Utilities, State of New Jersey, Suburban Cablevision, Minnesota Cable Communications Board, Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 804

749 F.2d 804

242 U.S.App.D.C. 126

NEW YORK STATE COMMISSION ON CABLE TELEVISION, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents, Direct Satellite Communications, Inc. Time, Inc., National Satellite Cable Association, United Satellite Communications, Inc., WWHT Corporation, et al. Society for Private & Commercial Earth Stations, City of New York, Satellite Television Corporation, Board of Public Utilities, State of New Jersey, Suburban Cablevision Minnesota Cable Communications Board, Intervenors.

Nos. 83-2160, 83-2190 and 83-2196.

United States Court of Appeals District of Columbia Circuit.

Argued Sept. 6, 1984.

Decided Nov. 30, 1984.

John H. Reichman, New York City, with whom Edward P. Kearse and Peter Bienstock, New York City, were on brief, for petitioner.

Robert Alan Garrett, Washington, D.C., with whom Stephanie M. Phillipps, Washington, D.C., was on joint brief, for intervenor City of New York and amicus curiae The Nat. League of Cities, urging reversal. David H. Lloyd, Patrick J. Grant, and Elaine Lubin, New York City, also entered appearances for City of New York.

Gregory M. Christopher, F.C.C., Washington, D.C., with whom Bruce E. Fein, Gen. Counsel, Daniel M. Armstrong, Associate Gen. Counsel, John E. Ingle, and Carl D. Lawson, F.C.C., Washington, D.C., were on brief, for respondents. Barry B. Grossman and Robert B. Nicholson, Dept. of Justice, Washington, D.C., entered appearances for respondent U.S.

Mark J. Tauber, Washington, D.C., with whom Deborah C. Costlow, Richard L. Brown, and Frederick W. Finn, Washington, D.C., were on brief, for intervenors Nat. Satellite Cable Ass'n, et al., in No. 83-2160.

Jack N. Goodman and Robert Trager, Washington, D.C., were on brief for intervenors United Satellite Communications, Inc., in Nos. 83-2190 and 83-2196.

J. Michael Miles, Asst. Atty. Gen., and Martha J. Casserly, Sp. Asst., Minn., St. Paul, Minn., were on brief for intervenor Minn. Cable Communications Bd.

Monica E. Olszewski, Short Hills, N.J., was on brief for intervenor Suburban Cablevision. Clement H. Berne, New York City, also entered an appearance for intervenor Suburban Cablevision.

Phillip L. Spector, Brattleboro, Vt., and Jeffrey H. Olson, Washington, D.C., were on brief for intervenor Direct Satellite Communications, Inc.

Margaret M. Foti, Princeton, was on statement in lieu of brief for intervenor Bd. of Public Utilities, N.J., in Nos. 83-2190 & 83-2196. Carla Vivian Bello, Newark, N.J., also entered an appearance for intervenor Bd. of Public Utilities, N.J.

John S. Hannon, Jr., Keith H. Fagan, Alan B. Sternstein, Richard E. Wiley, Lawrence W. Secrest, III, and Philip V. Permut, Washington, D.C., were on statement in lieu of brief for intervenor Satellite Television Corp.

Robert T. Perry and Donna A. Demac, New York City, were on brief for amici curiae Joseph Ferris, et al., urging reversal.

Ronald A. Siegel and Robert Clifton Burns entered appearances for intervenors WWHT Corp., et al.

Richard L. Brown, Frederick W. Finn, Washington, D.C., and Lauritz S. Helland, New York City, entered appearances for intervenor Society for Private and Commercial Earth Stations in Nos. 83-2190 & 83-2196.

Before TAMM, WILKEY, and EDWARDS, Circuit Judges.

Opinion for the court filed by Circuit Judge TAMM.

TAMM, Circuit Judge.

This is an appeal from a decision of the Federal Communications Commission (the Commission) to preempt state and local entry regulation of satellite master antenna television (SMATV). In a memorandum opinion and order issued November 17, 1983, the Commission held that the "potential for such state regulation to chill the development of SMATV service conflicts with our Congressional mandate, as embodied in the Communications Act, to foster the development of national communications service." Earth Satellite Communications, Inc., 55 Rad.Reg.2d (P & F) 1427, 1434 (1983), recon. denied, FCC 84-206 (May 14, 1984). Petitioner New York State Commission on Cable Television and numerous intervenors (petitioners) contend that by refusing to give local jurisdictions the same regulatory control over SMATV as they have over traditional franchise cable, the Commission has exceeded its statutory authority and acted arbitrarily and capriciously. We find the Commission's decision a " 'reasonable accommodation of the conflicting policies' that are within the agency's domain," Capital Cities Cable, Inc. v. Crisp, --- U.S. ----, 104 S.Ct. 2694, 2701, 81 L.Ed.2d 580 (1984) (quoting United States v. Shimer, 367 U.S. 374, 383, 81 S.Ct. 1554, 1560, 6 L.Ed.2d 908 (1961)), and therefore affirm the order in all respects.

I. BACKGROUND

The rapidly expanding cable industry has spawned a variety of methods by which cable viewing can be distributed to the public. "Traditional" or "franchise" cable systems use large remote antennas to capture television signals. The signals are distributed from the large antennas to viewers through coaxial cable laid under city streets or along telephone lines. Within the past decade, marketing innovations and advances in satellite and microwave technology have eliminated the need for the use of public rights-of-way to distribute "cable" viewing to some subscribers. Large apartment buildings and hotels can install a master antenna television (MATV) system which captures a television broadcast signal off the air and delivers it to tenants through coaxial cables that run through the buildings. In addition to improving normal television reception, MATV enables tenants to take advantage of the cable system involved in this litigation, satellite master antenna television (SMATV). SMATV transmits television signals from satellites directly to satellite receiving stations ("receive-only earth stations") atop multi-unit dwellings. The signal is converted to a usable frequency and distributed to subscribing tenants through the existing MATV system. A similar system, multipoint distribution service (MDS), beams microwave signals terrestrially to special antennas atop the buildings, and, like SMATV, uses the MATV system to distribute the signals to individual tenants. In the near future, satellite signals will be available to those who do not reside in large apartment dwellings. Direct broadcast satellite (DBS), potentially the most significant of the recent technological innovations, will provide direct satellite communication to individual homes, taking advantage of high-powered satellites and small, efficient earth receiving stations. See National Association of Broadcasters v. FCC, 740 F.2d 1190 (D.C.Cir.1984).

The Commission has allowed state and local governments some regulatory control over the franchising of "traditional cable"--cable systems that use public rights-of-way and telephone lines to distribute programming. State commissions, such as petitioner New York State Commission on Cable Television, have promulgated regulations governing the entry of cable television systems into the marketplace. In recent years, state and local regulators have endeavored to impose entry regulations upon cable systems, such as SMATV and MDS, that do not use the public rights-of-way. In 1977, however, the Commission preempted state entry regulation of MDS in Orth-O-Vision, Inc., 69 F.C.C.2d 657 (1978), recon., 82 F.C.C.2d 178 (1980), aff'd sub nom. New York State Commission on Cable Television v. FCC, 669 F.2d 58 (2d Cir.1982). The Commission refused, however, to extend its preemption ruling to other systems, such as SMATV, which also do not use public rights-of-way. 69 F.C.C.2d at 665.

Earth Satellite Communications, Inc. (ESCOM) builds and operates SMATV systems around the country. The programming ESCOM provides to its subscribers includes signals from television stations in Chicago and Atlanta and additional premium programs, such as the Movie Channel and ESPN. Joint Appendix (J.A.) 1. In 1983, ESCOM began installing a SMATV system in a 250-unit apartment building in East Orange, New Jersey, when Suburban Cablevision, a franchise cable television operator, sued in state court to enjoin the installation. Suburban Cablevision alleged that ESCOM violated the New Jersey Cable Television Act by installing its system without first obtaining a license from the New Jersey Board of Public Utilities. ESCOM contended that the New Jersey regulations did not apply to SMATV, and, even if they did apply, had been preempted by the Commission's 1977 Orth-O-Vision decision. J.A. 13-34. The court rejected ESCOM's arguments and entered an injunction prohibiting ESCOM from operating the SMATV system until it received a state certificate of approval. Suburban Cablevision v. Earth Satellite Communications, Inc., No. C-1554-83E (N.J.Super.Ct.Ch.Div. May 20, 1983), J.A. 261-62.

ESCOM filed a petition with the Federal Communications Commission, urging it to extend the Orth-O-Vision decision to preempt state and local entry regulation of SMATV. J.A. 1. The Commission gave public notice of ESCOM's petition and received comments from over 25 interested parties. In a decision released November 17, 1983, the Commission declared that state and local regulation of SMATV that has "the effect of interfering with, delaying, or terminating interstate and federally controlled communications services" is preempted. Earth Satellite Communications, Inc., 55 Rad.Reg.2d (P & F) at 1435. ¹ After the Commission denied its request for a hearing, FCC 84-206 (May 14, 1984), the New York State Commission on Cable Television petitioned this court for review.

II. DISCUSSION

A. Introduction

Because the Commission has expressed its unambiguous intention to preempt state regulation of SMATV, our review on appeal is limited to determining whether the Commission had the authority to preempt state regulation and whether the preemption was a reasonable exercise of that authority. As the Supreme Court stated in Capital Cities Cable, Inc. v. Crisp, --- U.S. ----, 104...