RCA COMMUNICATIONS v. FEDERAL COMMUNICATIONS COM'N, 13025.

• Decision Date: 11 October 1956
• Docket Number: No. 13025.,13025.
• Parties: RCA COMMUNICATIONS, Inc., Appellant, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee, Mackay Radio and Telegraph Company, Inc., Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

99 US App. DC 163, 238 F.2d 24 (1956)

RCA COMMUNICATIONS, Inc., Appellant, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee, Mackay Radio and Telegraph Company, Inc., Intervenor.

No. 13025.

United States Court of Appeals District of Columbia Circuit.

Argued September 12, 1956.

Decided October 11, 1956.

Mr. John T. Cahill, of the bar of the Court of Appeals of New York, New York City, pro hac vice, by special leave of Court, with whom Messrs. Howard R. Hawkins, New York City, and James E. Greeley, Washington, D. C., were on the brief, for appellant.

Mr. Loftus E. Becker, Washington, D. C., also entered an appearance for appellant.

Mr. Warren E. Baker, Gen. Counsel, Federal Communications Commission, with whom Mr. Richard A. Solomon, Asst. Gen. Counsel, Federal Communications Commission, and Messrs. Daniel R. Ohlbaum and Henry Geller, Counsel, Federal Communications Commission, were on the brief, for appellee.

Mr. James A. Kennedy, New York City, with whom Messrs. John F. Gibbons, New York City, and Burton K. Wheeler, Washington, D. C., were on the brief, for intervenor.

Before EDGERTON, Chief Judge, and PRETTYMAN and BAZELON, Circuit Judges.

PRETTYMAN, Circuit Judge.

This is an appeal from an order of the Federal Communications Commission entered upon remand by this court pursuant to a mandate of the Supreme Court of the United States. The Commission's decision on remand, and its order based thereon, granted the applications of Mackay Radio and Telegraph Company, Inc., for modification of its license to operate additional radiotelegraph circuits with The Netherlands and Portugal and an additional radiotelegraph circuit with The Netherlands via Tangier relay. These additional circuits duplicate existing direct and via Tangier radiotelegraph circuits operated by RCA Communications, Inc. (called in this litigation "RCAC"), as well as direct and indirect cable telegraph circuits, direct radiotelephone service, and air mail service. RCAC appeals. Mackay appears as intervenor.

The original order of the Commission granting the application of Mackay was entered in 1951. RCAC appealed from that order, and this court reversed.¹ The Supreme Court granted certiorari and vacated our judgment,² remanding with directions to remand to the Commission. In so doing the Supreme Court laid down certain standards which the Commission should follow in order to reach a valid order. Mr. Justice Frankfurter, speaking for the Court, explained its rejection of the Commission's order in the following terms:

"The Commission has not in this case clearly indicated even that its own experience, entirely apart from the tangible demonstration of benefit for which RCAC contends, leads it to conclude that competition is here desirable. It seems to have relied almost entirely on its interpretation of national policy. Since the Commission professed to dispose of the case merely upon its view of a principle which it derived from the statute and did not base its conclusion on matters within its own special competence, it is for us to determine what the governing principle is."³

The Court went on to say that it is impossible to state without serious qualification that competition is favored as a national policy, and it denied that encouragement of competition as such is "the single or controlling reliance for safeguarding the public interest."⁴ It further stated that "Had the Commission clearly indicated that it relied on its own evaluation of the needs of the industry rather than on what it deemed a national policy, its order would have a different foundation."⁵ Rounding out its criticism of the Commission's action the Court said:

"To say that national policy without more suffices for authorization of a competing carrier wherever competition is reasonably feasible would authorize the Commission to abdicate what would seem to us one of the primary duties imposed on it by Congress. And since we read the opinion of the Commission as saying precisely that, we think the case must be remanded for its reconsideration. We therefore do not say that authorization of Mackay under all the relevant circumstances, including the significance the Commission may rightly attribute to the facts on the basis of its experience, may not be in the public interest. We think it not inadmissible for the Commission, when it makes manifest that in so doing it is conscientiously exercising the discretion given it by Congress, to reach a conclusion whereby authorizations would be granted wherever competition is reasonably feasible. This is so precisely because the exercise of its functions gives it accumulating insight not vouchsafed to courts dealing episodically with the practical problems involved in such determination. Here, however, the conclusion was not based on the Commission\'s own judgment but rather on the unjustified assumption that it was Congress\' judgment that such authorizations are desirable."⁶

It follows that we must examine the decision on remand with this question in mind: Did the Commission again render a decision based upon an imagined national policy, or did it instead rely upon its own judgment in this matter, educated by experience, and supported by consonant findings?

The decision of the Commission contains (1) a history of this proceeding, (2) an evaluation of the part competition has played in the development of international telegraph communications since 1934, with emphasis on competitive, duplicate, direct circuits operated by competing radiotelegraph carriers, and (3) a detailed discussion of the applicability of the general conclusion that competition is feasible and beneficial to the specific circuits involved here. Thereafter the Commission set out conclusions and framed an order favorable to the applicant.

In discussing the importance of competition in the history of this sector of the communications industry, the Commission first pointed out that radiotelegraph circuits are handling an ever-increasing proportion of international message telegraph traffic. In 1934 there were 65 international radiotelegraph circuits in operation. At that time eleven points were being served by two or more competing direct circuits. RCAC and Mackay operated competing circuits to seven points. In 1954, the Commission said, "The total authorized direct circuits for all United States carriers were 137, of which 133 were actually operated. * * * Of those in operation, a total of 29 points had two or more circuits as follows: 14 points had two; 12 points had three; 2 points had four; and 1 point had five." It would thus appear that 77 of 133 operating circuits were competing duplicate circuits.

The Commission then declared that its experience has indicated that the ability to offer competing direct-circuit service is a major factor in the solicitation of new customers and tends to enhance greatly a carrier's competitive position. It concluded "that competition by direct circuits is probably the most important factor in the general radiotelegraph competitive picture."

During this period of substantial and...