RCA COMMUNICATIONS v. FEDERAL COMMUNICATIONS COM'N

• Decision Date: 06 November 1952
• Docket Number: No. 10951.,10951.
• Citation: 201 F.2d 694,91 US App. DC 289
• Parties: RCA COMMUNICATIONS, Inc. v. FEDERAL COMMUNICATIONS COMMISSION et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

91 US App. DC 289, 201 F.2d 694 (1952)

RCA COMMUNICATIONS, Inc. v. FEDERAL COMMUNICATIONS COMMISSION et al.

No. 10951.

United States Court of Appeals District of Columbia Circuit.

Argued May 20, 1952.

Decided November 6, 1952.

Writ of Certiorari Granted March 9, 1953.

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

Stanley S. Neustadt, Counsel, Federal Communications Commission, New York City, of the Bar of the Supreme Court of New York, pro hac vice, by special leave of Court, with whom Benedict P. Cottone, General Counsel, Federal Communications Commission, and Richard A. Solomon, Acting Assistant General Counsel, Federal Communications Commission, Washington, D. C., were on the brief, for appellee. Max Goldman, Assistant General Counsel, Federal Communications Commission, Washington, D. C., also entered an appearance for appellee.

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

Before EDGERTON, PRETTYMAN, and BAZELON, Circuit Judges.

Writ of Certiorari Granted March 9, 1953. See 73 S.Ct. 650.

EDGERTON, Circuit Judge.

This appeal is from a decision and order of the Federal Communications Commission, two Commissioners dissenting, which granted applications of the present intervenor, Mackay Radio and Telegraph Company, Inc., (Mackay), a public-service radiotelegraph carrier, for modification of its license so as to authorize it to operate, in competition with appellant RCA Communications, Inc., (RCAC), direct radiotelegraph circuits between the United States and the Netherlands and between the United States and Portugal. Since we declined to stay the Commission's order pending this appeal Mackay's proposed operations and arrangements may probably have come into actual effect. However that may be, we shall call them "proposed" because we have to discuss the situation that existed when the Commission entered its order.

Mackay is a wholly-owned subsidiary of American Cable and Radio Corporation (AC&R), which also owns The Commercial Cable Company (Commercial) and All America Cables and Radio, Inc., (All America). International Telephone and Telegraph Corporation owns a majority of the capital stock of AC&R. At the time of the Commission's hearing Mackay operated licensed radiotelegraph circuits to about 40 foreign points. It handled very little Portuguese traffic and this only indirectly, by relay through an All America radio station in Peru. It handled almost no Netherlands traffic.¹

Appellant RCAC, a party to the proceeding before the Commission, is a wholly-owned subsidiary of Radio Corporation of America. It operates² licensed radiotelegraph circuits to about 65 foreign points. It operates direct radiotelegraph circuits between the United States and the Netherlands and also between the United States and Portugal. At the time of the Commission hearing no other carrier did so.

Both Commercial and Western Union Telegraph Company (Western Union) furnish cable service between the United States and European points.³ Commercial owns cables between New York and Eire. Its Netherlands traffic is relayed from Eire to London and retransmitted to Rotterdam over leased facilities. Traffic to Portuguese points routed via Commercial is sent over owned and leased cables to the Azores, where it is relayed to Lisbon over foreign cables. Western Union has cables to England, whence traffic is forwarded to Amsterdam through connecting cables and land-lines. Western Union messages destined for Portugal are transmitted in basically the same way as Commercial's.

RCAC's radiotelegraph circuit between New York and Amsterdam is operated in conjunction with the Netherlands Administration of Posts, Telephones, and Telegraph. Mackay's proposed contract with the same correspondent provides that the Netherlands Administration will turn over to Mackay a proportion of its westbound traffic to the United States equal to Mackay's proportion of the total eastbound radio traffic sent to the Netherlands by all United States radiotelegraph carriers. Mackay will guarantee that at least 50% of AC&R-controlled traffic to the Netherlands will be transmitted by radiotelegraph. In order to meet this commitment AC&R will divert from Commercial to Mackay all unrouted non-Rotterdam Netherlands traffic. The Commission estimates that as a result of the agreement approximately 50% of Commercial's eastbound traffic will be diverted to Mackay.

Similarly, in the case of Portugal, Mackay proposes to deal with Portuguese Marconi, which is the RCAC correspondent. Portuguese Marconi will follow the same formula as the Netherlands Administration in determining the amount of westbound traffic to be given Mackay, and the AC&R system will transmit by Mackay and Marconi its unrouted eastbound traffic. The Commission estimates that 25% of Commercial's traffic will be thus diverted to Mackay.

The Commission found among other things:⁴ (1) Existing telegraph facilities (cable plus radio) are in excess of those required to handle present and expected traffic. (2) Mackay's proposed operations will redistribute present traffic rather than generate any appreciable amount of new traffic. (3) "It does not appear that Mackay's proposed service to each of the points at issue will result in lower rates or speedier service, or will otherwise be superior to or more comprehensive than the service now available via RCAC." (4) There is some possibility that Mackay will need additional frequencies, for Netherlands traffic, to provide continuous service throughout the eleven-year sunspot cycle. (5) Both Mackay's revenue and its expenses will be increased, but the net result will be financially beneficial to Mackay and to the AC&R system of which it is a part. (6) The revenue of other carriers will be reduced, but their expenses will not. (7) "When the over-all effect of a grant of the applications is considered, it appears that the added costs which might result on an industry-wide basis will be relatively small so that the impact on the rate structure as a whole should not be substantial." (8) Mackay is technically, financially and legally qualified and able to render adequate service. (9) There is "at present active competition not only between cable carriers and between cable and radiotelegraph carriers serving the points at issue, but also between such telegraph service provided by these carriers and the airmail and the radiotelephone services." Granting Mackay's application (10) will "not endanger the ability of RCAC and Western Union to continue to provide competitive service either to the points at issue or, generally, in the field of international telegraph communications"; (11) "while resulting in some decrease in cable competition, will increase over-all competition for telegraph traffic generally * * *"; and (12) will "introduce competition between direct radiotelegraph circuits" and consequently "more effective competition between radiotelegraph carriers". The "ability of a carrier to provide direct communication service is an important factor in appealing for customer patronage * * *."

The Commission was "of the opinion that in those instances where there is only one direct radiotelegraph circuit to a point, the Commission should authorize a second competing radiotelegraph circuit where the applicant demonstrates that such competition is reasonably feasible". Finding it feasible here, the Commission granted Mackay's applications.

The record supports the Commission's basic findings that we have numbered (1) to (12) with the possible exception of the statement in (11) about "over-all competition", and we shall assume it supports that finding also. It may follow that, as the Commission thought, the proposed competition is reasonably feasible. But that is not the question. The Communications Act authorizes the Commission to grant licenses only if it "shall determine that public interest, convenience, or necessity would be served by the granting thereof * * *." 47 U.S.C.A. § 309. The Commission did so determine here. But we agree with the dissenting Commissioners that the Commission's basic findings do not support this determination.

The Commission said "The question before us herein of whether duplicate radiotelegraph circuits should be authorized is very similar, if not the same, as that which was before this Commission in connection with the Oslo case." We agree. In this case as in the Oslo case the question before the Commission was whether a duplication that would do the public little harm⁵ and no good,⁶ but was feasible and would create competition, met the statutory standard of "public interest, convenience, or necessity". But in the Oslo case the Commission decided this question the other way and we affirmed its decision. Mackay Radio & Telegraph Co. v. Federal Communications Commission, 68 App.D.C. 336, 97 F.2d 641. In that case it appeared that RCAC carried about 60% of eastbound and 88% of westbound telegraph traffic (radio plus cable) between the United States and Norway. Commercial and Western Union carried, by cable, practically all the rest. And there was "only one direct service, whether by cable or radio, between the United States and Norway; * * * the radio circuit operated at the American end by the intervener RCAC, and at the Norwegian end by the Norwegian Department of Telegraphs." 68 App.D.C. at page 337, 97 F.2d at page 642. Mackay applied to the Commission for a license to operate a direct radiotelegraph circuit to Norway. But the Commission found among other things that there were "adequate radio and cable facilities, keen competition, and service with which there is no complaint. The proposed new circuit would not offer new or improved...