US West, Inc. v. US

• Citation: 855 F. Supp. 1184
• Decision Date: 15 June 1994
• Docket Number: No. C93-1523R.,C93-1523R.
• Parties: US WEST, INC.; US West Communications, Inc.; US West Multimedia Communications, Inc.; Washington Independent Telephone Association; and Pacific Telecom, Inc., Plaintiffs, v. UNITED STATES of America; Federal Communications Commission; and Janet Reno, in her official capacity as Attorney General of the United States of America, Defendants.
• Court: U.S. District Court — Western District of Washington

855 F. Supp. 1184

US WEST, INC.; US West Communications, Inc.; US West Multimedia Communications, Inc.; Washington Independent Telephone Association; and Pacific Telecom, Inc., Plaintiffs, v. UNITED STATES of America; Federal Communications Commission; and Janet Reno, in her official capacity as Attorney General of the United States of America, Defendants.

No. C93-1523R.

United States District Court, W.D. Washington, at Seattle.

June 15, 1994.

David J. Burman, Perkins Coie, Peter D. Byrnes, Byrnes & Keller, Seattle, WA, Louis R. Cohen, Steven M. Dunne, Ken Ferree, Wilmer, Cutler & Pickering, Washington, DC, for US West, plaintiff.

Robert Maxwell Taylor, U.S. Attorney's Office, Seattle, WA, Theodore Hirt, U.S. Dept. of Justice, Tax Div., Washington, DC, John R. Tyler, U.S. Dept. of Justice, Civil Div., Washington, DC, for defendants.

Keith Allen Kemper, Ellis, Li & McKinstry, Seattle, WA, Michael W. McConnell, H. Thomas Byron, III, Mayer, Brown & Platt, Washington, DC, for amicus, Telephone Association.

Richard A. Finnigan, Vandeberg, Johnson & Gandara, Tacoma, WA, for Washington Independent Telephone Ass'n, intervenor-plaintiff.

Deborah Johnson Harwood, Vancouver, WA, for Pacific Telecom, Inc., intervenor-plaintiff.

ORDER GRANTING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

ROTHSTEIN, Chief Judge.

THIS MATTER comes before the court on cross-motions for summary judgment. Having considered the documents filed in support and in opposition, and having heard argument from counsel, the court finds and rules as follows:

I. BACKGROUND

A. The Parties

Plaintiff US WEST, Inc. ("US WEST"), a Colorado corporation, is the parent company of plaintiff US WEST Multimedia Communications, Inc. as well as plaintiff US WEST Communications, Inc., a common carrier providing local exchange telephone service in fourteen states, including Washington. These three entities wish to provide cable television service to the area served by US WEST Communications. Plaintiff Washington Independent Telephone Association ("WITA") is a non-profit trade association consisting of common carrier local telephone companies who provide service within Washington State. WITA includes many small and medium size companies, with service area ranges from as few as 75 access lines to as many as 600,000 access lines. Plaintiff Pacific Telecom, Inc. is a publicly-traded company with common carrier subsidiaries who provide local exchange telephone service in eleven states, including Washington.¹ Plaintiffs wish to provide cable television programming within their respective service areas and are precluded from doing so by the current prohibition contained in 47 U.S.C. § 533(b).

Plaintiffs have named as defendants the Federal Communications Commission ("FCC") and the United States Attorney General, Janet Reno. Since plaintiffs challenge the constitutionality of a federal statute, the United States is also a defendant.

B. The Challenged Statute

Plaintiffs challenge, on First Amendment grounds, the constitutionality of 47 U.S.C. § 533(b), which was enacted as part of 47 U.S.C. § 521 et seq., the Cable Communications Policy Act of 1984 ("1984 Cable Act"). This section reads as follows:

553(b)(1) It shall be unlawful for any common carrier, subject in whole or in part to subchapter II of this chapter, to provide video programming directly to subscribers in its telephone service area, either directly or indirectly through an affiliate owned by, operated by, controlled by, or under common control with the common carrier.

(2) It shall be unlawful for any common carrier, subject in whole or in part to subchapter II of this chapter, to provide channels of communication or pole line conduit space, or other rental arrangements, to any entity which is directly or indirectly owned by, operated by, controlled by, or under common control with such common carrier, if such facilities or arrangements are to be used for, or in connection with, the provision of video programming directly to subscribers in the telephone service area of the common carrier.

47 U.S.C. Secs. 533(b)(1), (2).

"Video programming" is defined in the 1984 Cable Act as "programming provided by, or generally considered comparable to programming provided by, a television broadcast station." 47 U.S.C. § 522(19) (formerly § 602(16) of the 1984 Cable Act). The FCC has interpreted the language of the 1984 Cable Act "to prohibit only telephone company provision of programming comparable to that provided by broadcast television stations in 1984." Second Report and Order, Recommendation to Congress, and Second Further Notice of Proposed Rulemaking, ("FCC Video Dialtone Order"), 7 FCC Red. 5781, 5820 (1992).

In the case of Chesapeake and Potomac Tel. Co. v. United States ("C & P"), 830 F.Supp. 909, 914 (E.D.Va.1993), a similar challenge to § 533(b), the statute was held unconstitutional by United States District Court Judge Thomas Ellis III and is currently on appeal.

C. The History of the Ban on Telephone Company Provision of Video Programming and Related Legislation/Regulation

1. 1970 FCC Rule

In 1970, the FCC adopted a rule barring "all telephone common carriers from furnishing CATV community antenna television system (i.e. cable video programming) service to the viewing public in their operating territory except when, for good cause shown, a waiver of this policy is granted." Applications of Telephone Companies for Section 214 Certificates for Channel Facilities Furnished to Affiliated Community Antenna Television Systems, Final Report and Order, ("Section 214 Applications Order"), 21 FCC2d 307, 325 (1970).

In its 1970 Section 214 Applications Order, the FCC discussed the reasoning behind its new rule as follows:

The entry by a telephone company, directly or through an affiliate, into the retailing aspects of CATV services in the community within which it furnishes communications services can lead to undesirable consequences. This is because of the monopoly position of the telephone company in the community, as a result of which it has effective control of the pole lines (or conduit space) required for the construction and operation of CATV systems. Hence, the telephone company is in an effective position to preempt the market for this service which, at present, is essentially a monopoly service in most population centers. It can accomplish this by favoring its own or affiliated interest as against nonaffiliated interests in providing access to those pole lines or conduits....

Section 214 Applications Order, 21 FCC2d at 324, para. 46.

2. 1984 Enactment of the Cable Act

In 1984 Congress codified the FCC's 1970 rule in the 1984 Cable Act, found at 47 U.S.C. § 533(b). There is little in the way of legislative history concerning § 533(b). Congress made no findings of fact at the time of its enactment. The single Congressional reference to the section at issue here, at the time of passage of the 1984 Cable Act, is found in the House Committee Report which states that the "intent of section 533(b) is to codify current FCC rules concerning the provision of video programming over cable systems by common carriers, ..." H.R.Rep. No. 934, 98th Cong., 2d Sess. 56 (1984), U.S.Code Cong. & Admin.News 1984, pp. 4655, 4693.

Also in the House Report is a statement concerning the entire Section 533. As written at the time of the House Report, Section 533 contained prohibitions on cross-ownership between television broadcast stations and cable systems, between daily newspapers and cable systems, as well as the prohibition between ownership of telephone companies and cable programming providers. (The cross-ownership prohibitions as to newspapers and cable systems was deleted from the final version of the law.) The report contained a statement that § 533 "establishes clearly-defined cross-ownership rules and standards to prevent the development of local media monopolies and to encourage a diversity of ownership of communications outlets." Id., at 55, U.S.Code Cong. & Admin.News 1984, p. 4692.

Finally, the "Purpose and Summary" of the entire 1984 Cable Act contains a general statement concerning the Act as a whole which states that "the legislation also contains provisions to assure that cable systems provide the widest possible diversity of information services and sources to the public, ..." Id., at 19, U.S.Code Cong. & Admin.News 1984, p. 4656.

3. Recommendations of Repeal of § 533(b)

Since the enactment of § 533(b) in 1984 there have been numerous recommendations by the relevant federal agencies calling for its repeal. In addition, several House and Senate committees have considered bills repealing this section of the statute.

a. FCC Recommendation of Repeal — 1992 Video Dialtone Order

In 1992, the FCC issued its Video Dialtone Order, the culmination of a five-year rule-making process. See 7 FCC Rcd. 5781, 5784-5785 (1992). In this order, the FCC recommended that Congress repeal 47 U.S.C. § 533(b). The FCC recommended:

that Congress amend the Cable Act to permit the local telephone companies to provide video programming directly to subscribers in their telephone service areas, subject to appropriate safeguards. We find that such an amendment would further promote our overarching goals in this proceeding by increasing competition in the video marketplace, spurring the investment necessary to deploy an advanced infrastructure, and increasing the diversity of services made available to the public....

Video Dialtone Order, 7 FCC Rcd at 5847, para. 135.

The FCC noted that when it adopted the cross-ownership ban in 1970

the Commission intended to prevent local telephone companies from using their poles and conduits to disadvantage independent cable operator competitors. Therefore, by precluding telephone companies from providing video programming directly to subscribers, the ban gave cable television operators an opportunity to firmly establish themselves

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