# Appendix — American Telephone & Telegraph Co. v. Litton System, Inc. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385010_1223%3A04 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1984 - **Citation:** 464 U.S. 1073 ## Text Office - Sune, ie C t Chi /Ourt, U ‘ FILE D . | | No. 82-2128 | de ga 1933 IN THE | Saat ot “= AX Supreme Court of the United Statew OCTOBER TERM, 1982 AMERICAN TELEPHONE AND TELEGRAPH COMPANY, WEST- ERN ELECTRIC COMPANY, INC., BELL TELEPHONE LAB- ORATORIES, INC., NEW YORK TELEPHONE COMPANY, INC., NEW JERSEY BELL TELEPHONE COMPANY, SOUTH- ERN BELL TELEPHONE AND TELEGRAPH COMPANY, THE OHIO BELL TELEPHONE COMPANY, SOUTHWESTERN BELL TELEPHONE COMPANY, THE PACIFIC TELEPHONE AND TELEGRAPH COMPANY, and PACIFIC NORTHWEST BELL TELEPHONE COMPANY, .. Petitioners, LITTON SYSTEMS, INC., LITTON BUSINESS TELEPHONE SyYs- TEMS, INC., LITTON BUSINESS SYSTEMS, INC., and LIT- TON INDUSTRIES CREDIT CORPORATION, Respondents. On Petition for a Writ of Certiorari to the United States Court of Appeals for the Second Circuit APPENDIX TO BRIEF FOR THE RESPONDENTS IN OPPOSITION WILLIAM SIMON (Counsel of Record) JOHN BODNER, JR. RALPH GORDON ALBERT O. CORNELISON, JR. KEVIN P. MCENERY Lewis M. BARR Howrey & SIMON 1730 Pennsylvania Avenue, N.W. Washington, D.C. 20006 (202) 783-0800 Of Counsel Perer E. FLEMING, JR. THEODORE F. CRAVER CurRTIs, MALLET-PREVOsT, COLT & Larry L. YSTTER MOSLE Lrrron Inpustaigs, INC. 101 Park Avenue 860 North Crescent Drive New York, New York 10005 Beverly Hills, CA 90210 Counsel for Respondents ie . : ° . B.C. 20001 TABLE OF CONTENTS Page Appendix A—Brief for the United States As Amicus Curiae in Union Electric Company v. City of Kirkwood, 103 S.Ct. 814 (1983).. la Appendix B—Questions to be Answered by the Jury I TD PI inc scieceesccceneseaceceedicdaien ie 19a Appendix C—Hush-A-Phone Corp. v. AT&T, 22 F.C.C. I RE es En 9 Ee 25a Appendix D—Jn re Carterfone Device, 13 F.C.C. 2d 420 (1968) (Appendix A and Appendix B, 13 F.C.C.2d 427-29, omitted) ........... 3la Appendix E—IJn re Carterfone Device, 14 F.C.C. 2d 571 (1968) (on reconsideration)........ 4la Appendix F—First Report and Order in Docket 19528, 56 F.C.C. 2d 593 (1975) (New Part 68 of the Commission’s Rules and Regula- tions, 56 F.C.C. 2d 614-22, omitted) ... 49a Appendix G—Second Report and Order in Docket 19528, 58 F.C.C. 2d 736 (1976) ............ 77a Appendix H—IJn re Primary Instrument Concept, 68 F.C.C. 2d 1157 (1978) (Appendix, 68 F.C.C. 2a 1178-91, omitted) 000000. 95a la APPENDIX A Brief for the United States as Amicus Curiae in Union Electric Company v. City of Kirkwood, 103 S.Ct. 814 (1983) 8a No, 81-2278 In the Supreme Court of the United States OCTOBER TERM, 1982 UNION ELECTRIC COMPANY, PETITIONER Vv. City OF KIRKWOOD, MISSOURI ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT BRIEF FOR THE UNITED STATES AS AMICUS CURIAE REx E. LEE Solicitor General WILLIAM F.. BAXTER Assistant Attorney General LAWRENCE G. WALLACE Deputy Solicitor General JERROLD J. GANZFRIED Assistant to the Solicitor General BARRY GROSSMAN NANcyY C. GARRISON Attorneys Department of Justice Washington, D.C. 20530 (202) 633-2217 4a QUESTIONS PRESENTED 1. Whether a utility that charges wholesale and retail rates at levels that unfairly prevent its com- petitor-customers from competing with it (“price squeeze” conduct) is immune from the antitrust laws under the Noerr-Pennington doctrine solely because the rates were filed with state and federal regulatory agencies that did not order any changes creating or increasing the alleged anticompetitive effect. 2. Whether such an alleged “price squeeze” is im- mune from the federal antitrust laws by implication from the Federal Power Act, which creates no ex- press antitrust exemption for wholesale electric rates subject to regulation by the Federal Energy Regula- tory Commission and which confers no authority on FERC to regulate retail rates. 3. Whether such an alleged “price squeeze” is im- mune from the federal antitrust laws under the “state action” doctrine, where the conduct at issue is the result of essentially private decisions not compelled by the state, the state has articulated no policy in favor of the conduct at issue, and the state has no authority to regulate wholesale rates. 4. Whether electricity is a “commodity” within the meaning of the Robinson-Patman Act. 5a Iu the Supreme Court of the United States OCTOBER TERM, 1982 No. 81-2278 UNION ELECTRIC COMPANY, PETITIONER Vv. Crry OF KIRKWOOD, MISSOURI ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT BRIEF FOR THE UNITED STATES AS AMICUS CURIAE This brief is filed in response to the Court’s invita- tion to the Solicitor General to express the views of the United States. STATEMENT 1. Petitioner Union Electric Company (UE) is an electric utility that produces, transmits, and delivers electric power to wholesale and retail customers in Missouri, Iowa, and Illinois (Pet. App. A-3). Re- spondent (Kirkwood), a municipal corporation, sells electric power at retail to customers in approxi- mately two-thirds of its geographic area (ibid.). 6a Kirkwood does not produce electricity, but buys it at wholesale from UE. Customers in the area of Kirk- wood not served by the municipal distribution system. buy power at retail from UE (ibid.). UE’s wholesale rates are regulated by the Federal Energy Regulatory Commission (FERC)* under the Federal Power Act, 16 U.S.C. (& Supp. V) 824 et seq. UE’s retail rates are regulated by the Missouri Public Service Commission under Mo. Ann. Stat. ch. 393 (Vernon 1952 & Cum. Supp. 1982). The Federal Power Act requires that all rates sub- ject to FERC’s jurisdiction be just and reasonable, and not unduly discriminatory or preferential. 16 U.S.C. 824d(a) and (b). Public utilities, such as UE, must file with FERC “schedules showing all [whole- sale] rates and * * * all contracts which in any man- ner affect or relate to such rates.” 16 U.S.C. 824d(c). Before making any modification of such rates, the utility must give 60 days notice to FERC and the public. 16 U.S.C. (Supp. V) 824d(d). On complaint or on its own initiative, FERC may order a hearing into the lawfulness of a filed rate change and may suspend the proposed change for up to seven months. 16 U.S.C. (Supp. V) 824d(d) and 16 U.S.C. 824d(e).* If FERC does not order a hearing on a proposed rate change, the new rate takes effect at the end of the 60-day notice period. 1 Prior to October 1, 1977, the Federal Power Commission (FPC) had essentially the same statutory authority insofar as is here relevant. References to FERC in this brief should be interpreted, where appropriate, as referring to the FPC. 2 If a hearing is not completed before the expiration of the suspension period, the proposed rate schedule takes effect, but FERC may require the utility to refund with interest any portion of the increase subsequently found “not justified.” 7a In addition, on its own motion or on complaint, FERC may order a hearing to determine whether any previously established rate or contract is “unjust, un- reasonable, unduly discriminatory or preferential”; if it finds that it iss FERC may establish a just and reasonable rate or contract that the utility must ob- serve. 16 U.S.C. 824e(a). Missouri state law requires that utilities file their retail electric rates with the Missouri Public Service Commission (PSC). A retail rate cannot go into ef- fect until the PSC approves it, but the PSC must act within 11 months after a rate proposal is filed. Mo. Ann. Stat. § 393.150 (Vernon Cum. Supp. 1982). The standard applied by the PSC in deciding whether to approve a rate is whether it is unjust, unreason- able, unjustly discriminatory, or unduly preferential. Mo. Ann, Stat. § 393.140(5) (Vernon Cum. 1982). 2. On September 1, 1977, Kirkwood filed a com- plaint alleging that UE had violated the Sherman Act, 15 U.S.C. 1 et seqg., and the Robinson-Patman Act, 15 U.S.C. 13 et seg. It sought damages and injunctive relief. The complaint alleged that UE had monopolized and attempted to monopolize the re- tail distribution and sale of electric power by impos- ing an anticompetitive “price squeeze” * on Kirkwood 8A “price squeeze” may arise in a situation in which a firm competes with its supplier. In the present case, Kirk- wood is a retailer that competes with its wholesale supplier, UE, for retail business. Thus, if UE raises its wholesale prices to Kirkwood, but maintains its retail prices at a level that would not allow Kirkwood to make a profit based on its, increased wholesale costs, then Kirkwood is subjected to a. “price squeeze.” Whether a “price squeeze” is anticompeti- tive depends on a number of factors, including the relative efficiency of the competing firms and whether the price rela- tion complained of is attribuiable to the supplier’s conduct, rather than forced on the supplier by.a public authority. 8a by manipulating the relationship between its whole- sale rate to Kirkwood and its retail rates. In 1975, UE was alleged to have increased its wholesale rate for electric power by more than 33% while taking no action to increase its retail rates. Pet. App. A-30. As a result, Kirkwood alleged, it “paid approximately 35 percent more than Union was selling comparable power at retail to its large industrial primary service customers.” Jbid. This practice, Kirkwood alleged, was similar to previous UE rate practices. Although UE subsequently increased its retail rates and re- duced its wholesale rates somewhat (as a result of settlement of FPC proceedings), it was Kirkwood’s contention that the price squeeze continued. Jd. at A-31. According to Kirkwood, the price squeeze caused antitrust injury by precluding Kirkwood from com- peting with UE for retail sales.* The complaint also alleged that the disparity between UE’s wholesale and retail rates had substantially lessened competi- tion between UE and Kirkwood, thus violating the Robinson-Patman Act, 15 U.S.C. 13(a). 3. The district court granted summary judgment for UE. Pet. App. A-19 to A-24.° The court held that ‘ Kirkwood alleged that it was precluded from “selling power to its customers at retail at the same rates charged by [UE] at retail without impairing the traditional benefits derived by [Kirkwood] from its municipally owned system” (Pet. App. A-30 to A-31), and that this “result[ed] in a loss of revenues and/or pressure on the citizens and officials of [Kirkwood] to discontinue operating the utility and to offer to sell or lease it to [UE]” (ibid.). 5 The district court had previously dismissed the Robinson- Patman Act claim on the grounds that electricity is not a “commodity” within the meaning of the Act and that the 9a Kirkwood’s exclusive remedy for the alleged price squeeze was with the state and federal regulatory agencies. UE’s rates, the court also held, were exempt from antitrust challenge because they were subject to federal regulation under the Federal Power Act and state regulation by the Missouri PSC. Finally, the court held that UE’s filing of tariffs with FERC and the state commissions, and its collection of rates pur- suant to those tariffs were immune from antitrust liability under the First Amendment and the Noerr- Pennington doctrine.® 4, The court of appeals reversed. It held that FERC and PSC did not have exclusive jurisdiction over the price squeeze claim. Pet. App. A-6 to A-11. Rather, the court held, under this Court’s decisions in Cantor v. Detroit Edison Co., 428 U.S. 579 (1976), and Otter Tail Power Co. v. United States, 410 US. 366 (1973) (Otter Tail), the antitrust laws are ap- plicable to regulated utilities and an award of anti- trust damages would not infringe on FERC’s regula- tory jurisdiction. The court of appeals further held that the price sq.«eze claims were not immunized by the state action doctrine because there was no legisla- tive policy favoring the conduct at issue and because the interrelation of the wholesale and retail rates was not controlled by regulatory authorities. Finally, the court held that there was no immunity under Noerr- Pennington because: “It is not for expression of complaint did not sufficiently allege sales in interstate com- merce. Kirkwood moved for reconsideration of that order, but the district court granted summary judgment in favor of UE without specifically ruling on that motion. * Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961) (Noerr); United Mine ” Workers V. Pennington, $81 U.S. 657 (1965) (Pennington). 10a opinion that Kirkwood seeks to compel UE to respond in damages, but rather for UE’s conduct in the mar- ket place.” Pet. App. A-14 to A-15.’ DISCUSSION The decision of the court of appeals is correct and does not conflict with any decision of this Court or any other court of appeals.* Review by this Court is therefore unwarranted. 1. Petitioner argues first that the alleged price squeeze ° is immunized from antitrust scrutiny by the Noerr-Pennington doctrine. This argument was prop- erly rejected by the court of appeals. The Noerr- Pennington doctrine reflects this.Court’s conclusion that “no violation of the [Sherman] Act can be predi- cated upon mere attempts to influence the passage or enforcement of laws.” Noerr, supra, 365 U.S. at 135. 7 The court of appeals also held that electricity is a “com- modity” for purposes of Kirkwood’s Robinson-Patman Act claim. ®The court of appeals did not address the merits of re- spondent’s antitrust claims. The fact that petitioner’s conduct is not exempt from the antitrust laws does not, of course, establish an antitrust violation. See Group Life & Health Insurance Co. Vv. Royal Drug Co., 440 U.S. 205, 210 n.5 (1979) ; Union Labor Life Insurance Co. Vv. Pireno, No. 81-.. 389 (June 28, 1982), slip op. 5. * A firm that has monopoly power is said to have engaged in a “price squeeze” and has violated Section 2 of the Sher- man Act, 15 U.S.C. 2, if it discriminates against customers who are its competitors in another market (i.e., charges them higher prices not justified by differences in costs), if that dis- crimination unduly impedes competition, and if the monopo- list’s pricing is intended to have that effect. See United States v. Aluminum Co. of America, 148 F.2d 416, 486-488 (2d Cir. 1945). lla In other words, Congress did not intend the antitrust laws to apply to attempts by private parties to obtain government action that would restrain competition— even where the result is subsequent government ac- tion that in fact imposes such a restraint. Noerr-Pennington is inapplicable here, however, be- cause Kirkwood did not base its complaint on the results of restrictive governmental action sought by UE or on UE’s efforts to obtain such governmental action. Kirkwood does not challenge the legality of either the wholesale rate approved by FERC or the retail rate approved by the Missouri PSC. Rather, Kirkwood has alleged that it was injured by the re- lationship between those rates, decided upon and put into effect by a private party, UE, for the purpose of eliminating Kirkwood as a competitor. Since no reg- ulatory body imposed, or had jurisdiction to impose, the combination of rates whose competitive effect is* challenged, petitioner’s Noerr-Pennington arguments were properly rejected by the court of appeals.” Petitioner’= argument that such private conduct is immunized merely because UE obtained governmental acquiescence or approval constitutes an unwarranted attempt to expand the Noerr doctrine, and is directly contrary to this Court’s holding in Cantor v. Detroit Edison Co., 428 U.S. 579, 601-602 (1976), that anti- competitive conduct pursuant to a tariff filed with a regulatory body is not immune from antitrust scru- tiny.” See also California v. FPC, 369 U.S. 482, 488- 10 A similar Noerr-Pennington defense to a price squeeze claim was rejected by the Seventh Circuit in City of Misha- waka Vv. American Electric Power Co., 616 F.2d 976, 981-983 (1980), cert. denied, 449 U.S. 1096 (1981). " Petitioner contends (Pet. 7) that the court of appeals’ reliance on Cantor was unjustified because the Court’s refer- 12a 489 (1962); United States v. RCA, 358 U.S. 334, 350-352 (1959). Indeed, in Georgia v. Pennsylvania R.R., 324 U.S. 489 (1945), this Court held that pri- vate actions designed to influence rates that are subject to regulation are not immune from the antitrust laws because of subsequent regulatory adop- tion of the rates—a holding that has not been over- ruled by Noerr or any other decision. 2. Petitioner also contends (Pet. 9-12) that this Court’s decision in Gordon v. New York Stock Ex- change, Inc., 422 U.S. 659 (1975), requires a holding that the Federal Power Act creates an implied™ antitrust exemption for the price squeeze at issue in this case.* The court of appeals correctly rejected this argument. The strict standards that govern judicial determi- nation of implied antitrust immunity based on subse- ence to Noerr appears in a portion of Justice Stevens’ opinion not concurred in by a majority of the Court (428 U.S. at 601- 602) and because the Cantor decision did not turn on Noerr- Pennington. We believe relience on Cantor was appropriate. No member of the Court expressed the view that the conduct at issue in Cantor was immunized by Noerr. Moreover, if a majority in Cantor.had concluded that Noerr conferred im- munity, there would have been no need to remand the case. 12 The Federal Power Act contains no express antitrust exemption applicable to the conduct at issue in this case. In contrast, the Interstate Commerce Act, for example, provides an express and limited antitrust exemption for collective ratemaking agreements approved by the ICC. 49 U.S.C. (Supp. IV) 10706(a) (2) (A). “ Petitioner concedes (Pet. 9) that federal and state regu- lation of electric utilities has been held by this Court not to create any general exemption or immunity from antitrust laws. Otter Tail Power Co. v. United States, 410 U.S. 366 (1973) ; Cantor v. Detroit Edison Co., 428 U.S. 579 (1976). 13a quent regulatory statutes have been articulated by this Court in a long line of cases and “are well estab- lished.” National Gerimedical Hospital and Gerontol- ogy Center v. Blue Cross, 452 U.S. 378, 388 (1981) (National Gerimedical). Exemptions from the anti- trust laws are not favored; such exemptions “ ‘can be justified only by a convincing showing of clear repug- nancy between the antitrust laws and the regulatory system.’” National Gerimedical, supra, 452 U.S. at 388, quoting United States v. National Association of Securities Dealers, Inc., 422 U.S. 694, 719-720 (1975); see also Gordon v. New York Stock Ex- change, Inc., supra, 422 U.S. at 682; United States v. Philadelphia National Bank, 374 U.S. 321, 350-351 (1963); Otter Tail Power Co. v. United States, 410 U.S. 366, 372 (1973). Even then, repeal of the anti- trust laws is implied narrowly, only to the minimum extent necessary to make the regulatory scheme work —so as to effectuate the fundamental principles of the antitrust laws to the maximum extent consistent with the regulatory scheme. National Gerimedical, supra; Silver v. New York Stock Exchange, 373 U.S. 341, 357-359 (1963). It follows that no implied exemption should be found in this case because, contrary to petitioner’s contention, there is no “clear repugnancy” between the Federat Power Act and the application of the Sherman Act to the conduct at issue. There is no indication in the language or legislative history of the Federal Power Act that it was intended to authorize a price squeeze. Nor is there any inherent inconsist- ency between the requirement of the Federal Power Act that rates be “just and reasonable” and the ap- plication of Section 2 of the Sherman Act to price l4a squeezes.* Thus, as in Otter Tail,* the conduct at issue here remains subject to the Sherman Act. The situation is entirely different from that which led this Court to find implied immunity in Gordon. There, the implied exemption for the conduct at is- sue—the fixing of rates for brokerage commissions— was based on actual conflict between the antitrust laws and the applicable regulatory statute. The Court found that the securities laws were intended to authorize, subject to regulatory supervision, the fixing of brokerage commission rates, which other- wise would have constituted price fixing—a per se violation of the Sherman Act. It was Congress’ au- thorization of the conduct at issue,” and not the mere 44 The possibility that conflict might arise in the future (if, for example, a price squeeze were proved and if the district court then ordered UE to remedy the price squeeze by lowering its wholesale rates to a level dcemed unreason- ably low by FERC) does not warrant a grant of immunity in the absence of any actual conflict. Otter Tail, supra, 410 U.S. at 376. 18 Petitioner seeks to distinguish this case from Otter Tail and Cantor (a case that involved the state action exemption, see pages 12-13, infra) on the ground that (Pet. 9-10) “Tt)he alleged violations of the antitrust laws in those cases involved various activities other than the filed electric rates” while in this case “the alleged violation is based solely on the economic effect of [UE’s] rates * * *”” (emphasis in original). This distinction, however, does not affect the basic principle applicable to this case: antitrust immunity will not be implied in the absence of actuai conflict with a federal regulatory statute. 1¢ Congress, of course, may authorize private conduct that otherwise would violate the antitrust laws. Under the Su- premacy Clause (Article 6, Clause 2), however, states cannot override federal antitrust law. Therefore, the implied repeal doctrine does not apply to state legislation. This is to be dis- tinguished from the state action doctrine, which recognizes 15a existence of federal regulatory authority to review conduct under a standard different from that of the Sherman Act, that led to a determination that the restraints at issue were immune from antitrust lia- bility.” Petitioner also is incorrect in contending (Pet. 13- 14) that FPC v. Conway Corp., 426 U.S. 721 (1976), precludes application of the Sherman Act to the al- leged price squeeze. This Court held in Conway that the FPC has jurisdiction to consider the relationship between jurisdictional (wholesale) and nonjurisdic- tional (retail) rates in determining whether jurisdic- tional rates are just, reasonable and nondiscrimina- tory. Conway did not hold that the FPC’s jurisdic- tion to consider price squeeze allegations was exclu- sive, and there is no indication that Congress intended to give FERC sole jurisdiction to consider and remedy that Congress did not intend the Sherman Act to prohibit re- straints that are fairly attributable to state decisions to re- place competition with state supervision and control rather than private conduct. Parker v. Brown, 317 U.S. 341, 350-351 (1943). Where conduct is fairly attributable to private par- ties it is subject to the Sherman Act even if approved by a state. California Retail Liquor Dealers Association v. Midcal Aluminum, Inc., 445 U.S. 97, 106 (1980) ; City of Lafayette v. Louisiana Power & Light Co., 485 U.S. 389, 415 n.45 (1978) ; Cantor Vv. Detroit Edison Co., supra; Parker v. Brown, supra, 317 U.S.-at 351. 1? Thus, the fact that an agency must consider the competi- tive effects of action subject to its jurisdiction before approv- ing it as consistent with the public interest as defined by the regulatory statute does not justify an implied antitrust im- munity. See, e.g., United States v. RCA, 358 U.S. 384 (1959) (FCC approval of exchange of broadcast licenses does not confer antitrust immunity) ; California v. FPC, 369 U.S. 482 (1962) (FPC approval of acquisition does not confer anti- trust immunity). l6a alleged price squeezes."* Application of the antitrust laws to alleged price squeezes would not frustrate FERC’s regulation of wholesale rates. On the con- trary, the availability of antitrust relief provides a necessary complement to FERC’s limited power to remedy a price squeeze. All that FERC can do pro- spectively is to adjust the wholesale rate within the zone of reasonableness.” See FPC v. Conway Corp., supra, 426 U.S. at 278. If this is inadequate to rem- edy a price squeeze, FERC cannot compel a utility to file higher retail rates.” 3. Petitioner’s final argument for antitrust im- munity is that the conduct at issue falls within the state action exemption of Parker v. Brown, 317 U.S. 341 (1943). The conduct alleged to violate the anti- trust laws in this case, however, does not constitute “state action” as that doctrine has been articulated by this Court. Rather, what is at issue is an essen- tially private restraint that is fully subject to the antitrust laws. 18 Nor can FERC award damages for the effects of unrea- sonable or discriminatory rates. City of Mishawaka Vy. Indiana & Michigan Electric Co., 560 F.2d 1314, 1825 (7th Cir. 1977), cert. denied, 436 U.S. 922 (1978); see also CF Indus- tries, Inc. V. Transcontinental Gas Pipe Line Corp., 614 F.2d 33, 35-36 (4th Cir. 1980); State of Louisiana v. FPC, 503 F.2d 844, 867-868 (Sth Cir. 1974). 1” With respect to past harm, FERC can award refunds only in cases where it has suspended the rate; it cannot other- wise provide retroactive relief. City of Batavia v. FERC, 672 F.2d 64, 89 (D.C. Cir. 1982). * Under the doctrine of primary jurisdiction the antitrust court may refer to FERC any issues calling for the agency’s expertise. Far Hast Cvuference v. United States, 342 U.S. 570, 574-575 (1952) ; City of Mishawaka v. Indiana & Michi- gan Electric Co., supra, 560 F.2d at 1822. 17a This Court held in Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975), that “anticompetitive activities must be compelled by direction of the State acting as a sovereign” in order for private defendants to claim state action immunity for their conduct. 421 U.S. at 791 (emphasis added). This holding was reaffirmed in Cantor v. Detroit Edison Co., supra, 428 U.S. at 592-598.% Nothing in the Court’s subsequent state action decisions involving state agencies and instru- mentalities * has altered this compulsion standard for assessing private conduct. Neither the price squeeze at issue in this case nor UE’s retail rates themselves are compelled by the state of Missouri. Therefore, under this Court’s prior holdings, the state action defense is not available to UE. In addition, even if the state action criteria ap- plicable to governmentally imposed restraints (rather than the compulsion test) were applied to UE’s al- leged price squeeze, it still would be subject to the antitrust laws under the standard of California Re- tail Liquor Dealers Association v. Midcal Aluminum, Inc., swpra, 445 U.S. at 105. As the court of appeals correctly found (Pet. App. A-13), there is no clearly articulated state policy in favor of the alleged price squeeze, and the relationship between UE’s wholesale and retail rates cannot be “actively supervised” by the state of Missouri since it has no authority over UE’s wholesale rates. *1 See also 428 US. at 600 (plurality opinion) ; 428 U.S. at 604 (Burger, C.J., concurring) ; 428 U.S. at 609 (Black- mun, J., concurring) ; 428 U.S. at 623-626 (Stewart, J., dis- senting) (all indicating approval of Goldfarb compulsion test) . 2 City of Lafayette v. Louisiana Power & Light Co.. supra; California Retail Liquor Dealers Association v. Midcal Alumi- num, Inc., supra; Community Communications Co. Vv. City of Boulder, 455 US. 40 (1982). 18a CONCLUSION The petition for a writ of certiorari should be denied.” Respectfully submitted. REx E. LEE Solicitor General WILLIAM F.. BAXTER Assistant Attorney General LAWRENCE G. WALLACE Deputy Solicitor General JERROLD J. GANZFRIED Assistant to the Solicitor General BARRY GROSSMAN NANCY C. GARRISON Attorneys DECEMBER 1982 23 The other issue presented in the petition—whether elec- tricity is a “commodity” within the meaning of the Robinson- Patman Act—does not warrant review by this Court at this stage of the litigation. Petitioner has failed to show that the Eighth Circuit’s holding on this issue is in conflict with that of any other court of appeals. At most, it has-shown 2 con- flict with two district court decisions (Pet. 16-17). Nor is the issue of sufficiently great importance to require decision by this Court in the absence of conflict; it has amsen only rarely in reported decisions of the lower courts. See Pet. 16-17; Br. in Opp. 17-19. Moreover, the question whether electricity is a “commodity” may not dispose of petitioner’s Robinson-Patman Act claim. The district court also held that claim defective for failure to allege that the challenged sales took place in interstate commerce. As the court of appeals noted (Pet. App. A-15): “Kirkwood asked for leave to amend its complaint to correct the supposed deficiency, but the District Court never ruled on the request.” Thus, any review of this issue should await final determination of the Robinson-Patman Act claim by the lower courts. 19a APPENDIX B Questions to be Answered by the Jury and its Answers (Pet. App. 156a-160a) 2la Questions To Be Answered By The Jury Claim 1—Monopolization 1. Did defendants possess monopoly power in a relevant market? If so, did defendants wilfully maintain such monopoly power by predatory or anti-com- petitive conduct? If so, was such wilful maintenance of mo- nopoly power a proximate cause of injury to plaintiffs? Claim 2—Attempted monopolization 4. Did defendants have a specific intent to ob- tain monopoly power in a relevant market? If so, did defendants attempt to obtain such monopoly power by anti-competitive or predatory conduct? If so, was there a dangerous probability that defendants would succeed in obtain- ing such monopoly power? If so, was such attempt a proximate cause of injury to plaintiffs? Claim 83—Conspiracy to monopolize 10. Did AT&T and one or more of the Bell com- panies, acting as separate entities, conspire or agree to monopolize a relevant market? If so, did these companies have the specific intent to maintain monopoly power in the relevant market? If so, did any of the conspirators commit any overt acts in furtherance of the con- spiracy? Yes (Yes or No) Yes (Yes or No) Yes (Yes or No) Yes (Yes or No) Yes (Yes or No) Yes (Yes or No) Yes (Yes or No) No (Yes or No) No (Yes or No) No (Yes or No) 22a 11. If so, was the conspiracy a proximate cause of injury to plaintiffs? Claim 4—Conspiracy in restraint of trade 12. Did AT&T and one or more of the Bell companies, acting as separate entities, con- spire or agree to engage in conduct which unreasonably restrained trade? 13. If so, was any such conduct a proximate cause of injury to plaintiffs? 14. What amount of money will fairly and rea- sonably compensate plaintiffs for the in- juries they sustained to their telephone ter- minal equipment business as a proximate result of the violation or violations which you have found? 15. If you have found under any one or more of the four claims that the interface device requirement was a violation of the antitrust laws, what amount of money will fairly and reasonably compensate plaintiffs for the in- juries they sustained by having to pay for the installation and monthly rentals of de- fendants’ interface devices, as a proximate result of such violation? Explanation of Answers to Questions 2 and/or 5 (Not required if you answered “No” to both questions) 16. If your answer to either Question 2 or Ques- tion 5 is “Yes,” on which of the following alleged practices of defendants have you based your finding of predatory or anticom- petitive conduct: a. Filing of the interface device tariff in bad faith? No (Yes or No) No (Yes or No) No (Yes or No) $91,900,000 $ 268,243 Yes (Yes or No) 23a . Intentional delay in providing and in- stalling interface devices? . Opposing certification in bad faith? . Intentionally providing unduly expen- sive, inefficient or unreliable interface devices? Intentional pricing of PBX and key telephone services below incremental costs? Discriminating against purchasers of competitive terminal equipment in the price of network service? . Misuse of information obtained through supplying of the interface devices to at- tempt to cause customers who have in- dicated their intention to purchase com- petitive equipment to lease Bell equip- ment instead ? . Bad faith refusal to sell inside wiring at all or on a reasonable basis? Bad faith delay in making cutovers? Yes (Yes or No) Yes (Yes or No) No (Yes or No) No (Yes or No) No (Yes or No) No (Yes or No) Yes (Yes or No) Yes (Yes or No) 25a APPENDIX C Hush-A-Phone Corp. v. AT&T, 22 F.C.C. 112 (1957) 27a 112 Federal Communications Commission Reports BEFORE THE FEDERAL COMMUNICATIONS COMMISSION Wasuinoton 25, D. C. In the Matter of Hosn-A-Pxrone Corp. and Harry C. Torrie, COMPLAINANTS v. Docket No. 9189 Asrertcan TeLeruone & TeLecrarn Co., ET AL., DEFENDANTS APPEARANCES Louis G. Caldwell, Kelley E. Griffith, Max E. Wildman, and Wa- liam I. Symmes, Jr, on behalf of the complainants; Prank A. Frita, 7’. Brook Price, and Edmund S. Hawley, on behalf of the defendants; Walter 2. McDonald, and Austin L. Roberts, Jr., on behalf of the National Association of Railroad and Utilities Commissioners; Vor- man S. Case, on behalf of the United States oy ape Telephone Association; and Bernard Strassburg, William G@. Butts, and Willis §. Ryza, on behalf of the Federal Communications Commission, Decision AND Orper on RemMAND (Adopted: February 6, 1957) By rue Cosmission : Cosatisstoner Dorrrer abstaining from voting. 1. On November 8, 1956, the United States Court of Appeals for the District of Columbia Circuit issued its decision in Hush-A-Phone Corp. v. U. S., 238 F. 2d 266, in which it set aside the Commission’s decision and order of December 21, 1955, herein, dismissing the com- plaint of Hush-A-Phone Corp. against defendants American Tele- hone & pes Co. and the associated Bell System companies. he court remanded the case to the Commission for further proceed- ings not inconsistent with its decision. 2. The complaint of the Hush-A-Phone Corp., among other things, attacked the justness and reasonableness and, therefore, the lawful- ness, under section 201 (b) of the Communications Act.of 1934, as amended, of defendants’ so-called “foreign attachment” tariff regu=— lations * insofar as they barred the use by defendants’ subscribers of : 2 One form of such tariff lation, filed by two of the defendants, the Bell Telephone Company of Pennsylvania and the Diamond State Telephone Co., 8 - as follows: o pautpenent. apparatus and lines furnished by the Telephone ny shall be ca used and no equipment, apparatus or lines not furnished by the Te t sed i th unless authorized mg ee A cubseclber one aed in connection equipment, apparatus or lines furnished by the Telephone Company, 22 F.0.C. 28a Hush-A-Phone Corp. et al. v. A. T. & T. Co. et al. 113 the Hush-A-Phone device in connection with interstate and foreign telephone service. In dismissing the complaint, the Commission found, among other things, that the use of the Hush-A-Phone device affords some measure of privacy as well as a more quiet telephone wire by reason of exclusion of surrounding noise; that no physical damage of any consequence results to defendants’ facilities when the Hush-A-Phone is used; but that the use of the Hush-A-Phone for the primary any Sa for which it was designed, to wit, privacy, is accompanied by an impairment in the quality of telephone transmis- sion; and that the unrestricted use of the Hush-A-Phone could result in a general deterioration of the quality of interstate and foreign service. Accordingly, the Commission concluded that it was not an unjust and unreasonable practice upon the part of the defendants to prohibit the use of the Hush-A-Phone device in connection with their telephone service. 3. In setting aside the Commission’s order dismissing the complaint of Hush-A-Phone and remanding the case to the Commission, the Court of Appeals held that defendants’ tariffs, under the Commis- sion’s decision are in unwarranted interference with the telephone subscriber’s right reasonably to use his telephone in ways which are privately beneficial without being publicly detrimental. The court points out that the Commission’s conclusions of systemic or public injury resulting from the use of a Hush-A-Phone are not warranted where the only effect of such use is a diminution of volume and clarity of the Hush-A-Phone user’s voice as heard by the party to whom he is speaking. It further points out that the user may obtain privacy of conversation by cupping his hand around the transmitter with similar diminution of volume and clarity. 4. In addition to invalidating the defendants’ foreign attachment tariff regulations insofar as they bar the use of the Hush-A-Phone de- vice, an inescapable consequence of the Court’s opinion is to render such tariff regulations unjust and unreasonable insofar as they may be construed or applied to bar a customer from using other devices which serve the customer’s convenience in his use of the facilities fur- nished by the defendants and which do not injure the telephone com- panies’ employees or facilities, or the public in the use of defendants’ services, or impair the operation of the telephone system. As we con- strue the Court’s opinion, a tariff regulation which amounts to a blan- ket prohibition upon the customer's use of any and all devices without discriminating between the harmful and harmless encroaches upon the right of the user to make reasonable use of the facilities furnished by the defendants. Such a regulation goes beyond what is reasonably the equipment. apparatus and lines furnished by the customer or subscriber must be con- nected solely with the Telephone Company's system. Any equipment furnished by the Telephone Company shall remain the property of the Telephone Company and upon ter- mination of service for any cause whatsoever be returned to it, in condition, reason- able wear and tear thereof excepted.” Another form of tariff regulation, filed by the remaining defendants (other than the American Toenene & Telegraph Ce. ), pravides : ¢ teratiel te te Séuchene © a ratus, circuit or device not furn e ne Com shall be attached to or connected with the facilities furnished the Telephone Compans, whether physically, by induction or otherwise, except as provi in this tariff. In case er nsatporines ettachepent or cenneetion is mate, the =yiephene ay shall v righ remove disconnect same; or service ering continuance of attachment or connection ; or to terminate service.” 29a 114 Federal Communications Commission Reports required in the interest of protecting the defendants’ employees, fa- cilities, the telephone system and the public from adverse effects. Ac- cordingly, we conclude that the tariif regulation is unjust and un- reasonable and, therefore. unlawful to the extent we have indicated. ». Lt ix ordered, That defendants herein shall file tariff schedules, effective no later than April 1, 1957, on not less than 30 days notice to the Commission and the public, rescinding and canceling any tariff regulations to the extent that they prohibit a customer from using, in connection with interstate or foreign telephone service, the Hush-A- Phone device or any other device which does not injure defendants? employees, facilities, the public in its use of defendants’ services, or unpair the operation of the telephone system. se F-C.C. dukes 3la APPENDIX D In re Carterfone Device, 13 F.C.C. 2d 420 (1968) (Appendix A and Appendix B, 13 F.C.C. 2d 427-29, omitted) 38a 420 Federal Communications Commni‘ssion. Reports FCC 68-661 BEFORE THE FEDERAL COMMUNICATIONS COMMISSION Wasuincton, D.C. 20554 In the Matter of Use or THE Canterroxe Device 1x Messace| Docket No. 16942 Toit TELEPHONE SERVICE In the Matter of Tuomas F. Carrer snp Carter ELectrronics Corr.. Datias, Tex. (COMPLAINANTS), e Docket No. 17075 American TELEPHONE AND TELEGRAPH Co.., Assocritep Bett System Companres, Soctuwestrrs Bett Terernone Co., ano Gexerat TeterHoxr Co. oF THE SovUTH- WEST (DEFENDANTS) } APPEARANCES Messrs. Bill Brice and Ray G. Besing (Geary, Brice & Lewis) on behalf of Thomas F. Carter and Carter Electronics Corp.: Messrs. Reed Miller and David H. Lloyd (Arnold & Porter), and Mr. Hubert M. Preston on behalf_of General Telephone Co. of the Southwest: Messrs: Titodore F. Brophy. Dona) F. McCarthy, Reed Miller and David H. Lloyd on behalf of G.T. & E. Service Corp.: Mr. W. H. Borghesani. Jr. (Keller and Heckman) on behalf of National Retail Merchants Association: Messrs. Joseph E. Heller and W. H. Borqhe- sani, Jr. (Keller and Heckman) on behalf of Central Committee on Communication Facilities of the American Petroleum Institute; Messrs. Wayne E. Babler, Melvin R. Quinlan, Harold J. Cohen and Raymond F. Scully on behalf of Bell System Respondents; Mr. Warren E. Baker (Chadbourne, Parke, Whiteside & Wolff) on behalf of United States Independent Telephone Association: and Messrs. John 4M. Lothschuetz and Paul W. Hammack on behalf.of Chief, Common Car- rier-Bureau, Federal Communications Commission. DEcIsION. (Adopted June 26, 1968) By Comsissionrr JOHNSON FOR THE Com™MIssION: CoMMISSIONER LoEVINGER DID NOT PARTICIPATE IN THE DECISION IN THIS CASE. This proceeding involves the application of American Telephone and Telegraph Co. tariffs to the use by telephone subscribers of the Carterfone. ave The Carterfone is designed to be connected to a two-way radio at the base station serving a mobile radio system. When callers on the radio and on the telephone are both in contact with the base station 13 F.C.C, 24 34a Carter fone 421 operator, the handset of the operator’s telephone is placed on a cradle in the Carterfone device. A voice control circuit in the Carterfone automatically switches on the radio transmitter when the telephone caller is speaking; when he stops speaking, the radio returns to a receiving condition. A separate speaker is attached to the Carterfone to allow the base station operator to monitor the conversation, adjust the voice volume, and hang up his telephone when the conversation has ended. The Carterfone device, invented by Thomas F. Carter, has been produced and marketed by the Carter Electronics Corp., of which \{r. Carter is president, since 1959. From 1959 through 1966 approxi- mately 4.500 Carterfones were produced and 3,500 sold to dealers and distributors throughout the United States and in foreign countries. . The defendant telephone companies, acting in accordance with their interpretation of tariff FCC No. 132, filed April 16, 1957,* by Ameri- can Telephone and Telegraph Co., advised their subscribers that the Carterfone, when used in conjunction with the subscriber’s telephone, is a prohibited interconnecting device, the use of which would subject = user to the penalties provided in the tariff. The tariff provides that: No equipment, apparatus, circuit or derice not furnished by the telephone company shall be attached to or connected with the facilities furnished by the telephone company, whether physically, by induction or otherwise. * * * (A fuller text is provided in appendix A.) A private antitrust action was brought by Carter against American Telephone and Telegraph Co. and General Telephone Co. of the Southwest, The District court held that because of its “special com- petence and ‘expertise’” in the technical and complex matter of telephone communication, the Federal Cormmunications Commission, under the doctrine of primary jurisdiction, is vested with the right to determine the “justness, reasonableness, validity, application, and effect of the tariff and practices here involved.” Carter v. AT&T, 250 F. Supp. 188, 192 (N.D. Texas, 1966). The court reserved juris- diction to pass ultimately upon the antitrust issues after proceedings before the Commission should be concluded. The United States Court of Appeals for the Fifth Circuit affirmed the District court’s decision on August 17, 1966. Carter v. American Telephone and Telegraph Co. 365 F. 2d 486 (5th Cir., 1966). On October 20, 1966, the Commission on its own motion ordered that a public hearing be held to resolve “the question of the justness, reasonableness, validity, and effect of the tariff rezulations and practices complained of,” assigning docket No. 16942. The following five specific issues were designated for 1. The nature and extent of the public need and demand for the use of the Carterfone device in connection with interstate or foreign message toll telephone service ; 2 The effect of the use of the Carterfone device upon the operation of the telephone system used to provide interstate and foreign telephone mes- sage toll telephone services to the public or upon the employees and facilities “This tariff is now superseded by tariff FCC No. 263, 13 F.C.C. 2d ° 85a 422 Federal Communications Commission Reports of the telephone companies providing such services or upon the public in its use of such telephone srstem; 3. Whether the provisions of tariff FCC No. 132 filed by American Tele- phone and Telegraph Co. may properlr be construed to prohibit any tele- phove user from attaching the Carterfone device to the facilities of the telephone companies for use fm connection with interstate and foreign message toll telephone services ; 4. If the aforesaid tariff provisions may properly be construed to prohibit telephone users from attaching the Carterfone device to the facilities of: the telephone companies for use in connection with interstate or foreign message toll telephone services; (a) Whether such regulations are, or will be, unjust and unreasonable and, therefore, unlawful within the meaning of section 201(b) of the Communications Act of 1934, as amended, or are, or will be unduly dis- criminatory or preferential in violation of section 202(a) of said Act;? (b) Whether, in the light of facts developed in connection with the foregoing issues, the Commission, in accordance with the provisions of section 205 of the Act, should prescribe tariff regulations which will pernit the use of the Carterfone device in connection with interstate and foreign toll telephone service and, if so, the kind of tariff regulations which should be prescribed ; . If the aforesaid tariff reculations of the telephone com) anies may not properly be construed to prohibit telephone users from attaching the Carter- fone device to the facilities of the telephone companies for use in connection with interstate or foreign message toll telephone services, what action, if any, should be taken bs the Commission witb respect thereto. Thomas F. Carter and Carter Electronics Corporation (hereafter Carter), American Yu, ee and Telegraph Co. and 22 associated Bell System companies (A.T, & T.), and General Telephone Co. of the Southwest (General) were named parties respondent. vey ae EG several parties were allowed to intervene. The United States Independ- ent Telephone Association and G.T, & E. Service Corp. intervened on the side of A.T. & T. and General, and the Central Committee on Com- munications Facilities of the American Petroleum Institute, and the Retail] Research Institute of the National Retail Merchants Association intervened on the side of Carter. On December 21, 1966, Carter filed a formal complaint pursuant to section 208 of the Communications Act, 47 U.S.C. § 208, against Gen- eral and certain of the Bell companies, and further proceedings in docket No. 16942 were held in abeyance pending disposition of the complaint (docket No. 17073). By order released March 8, 1967, the complaint was consolidated for hearing with docket No. 16942, and the following issues were added: 1. Whether, with respect to the period from February 6, 1957, to December 21, 1966, the regulations and practices in tariff FCC No. 132 of the American Telephone and Telegraph Co. were properly construed and applied to prohibit any telephone user from attaching the Carterfone device to the facilities of the telephone companies for use in connection with interstate and foreign message toll telephone service ; and if so 2 Sec. 201(b) provides: “All charges, practices, classifications, and regulations for and in connection with such communication service, sball be just and reasonable, and any such charge. practice, classification, or regulation that is unjust or unreasonable is declared to be unlawful: * * *” . 202(n) provides: “It shall be unlawful for any common carrier to make any unjust or unredsonable discrimination in cha practices. classifications, regulations. facilities. or services for or in connection with like communication service, directly or indirectly. by any means or device, or to make or give any undue or unreasonable erence or advantage to any particular person. class of persons, or jocality. or to sub any particular Derson, class persons, or locality to any undue or unreasonable prejudice or disadvantage, 13 F.C.C, 2a 36a Carterfone 423 2. Whether, during the aforesaid period, such regulations’ and practices Were unjust und unreasonable, and therefore unlawful within the meaning of section 201(b) of the Communications Act of 1934, as amended, or were > ged discriminatory or preferential in violation of section 202(a) of said Cc The examiner found that there was a need and demand for a device to connect the telephone landline system with mobile radio systems which could be met in part by the Carterfone. He also found that the Carterfone had no material adverse effect upon use of the telephone system. He construed the tariff to prohibit attachment of the Carter- fone whether or not it harmed the telephone system, and determined that future prohibition of its use would be unjust and unreasonable. He also found that it would be unduly discriminatory under section 202(a) of the Act, since the telephone companies permit the use of their own interconnecting devices. However, he did not find the tariff rohibitions to have been unlawful in the past, largely because the armless nature of the Carterfone was not known to the telephone companies, and he did not find that a general prohibition against non- telephone company supplied interconnecting devices was unjust or unwise, because of the risk he saw of “serious harm to the heart of the nation’s communications network.” We agree with and adopt the examiner's findings that the Carter- fone fills a needs and that it does not adversely atfect the telephone system. They are fully supported by the record. We also agree that the tariff broadly prohibits the use of interconnection devices, in- cluding the Carterfone. Its provisions are clear as to this. Finally, in view of the above findings, we hold, as did the examiner, that appli- cation of the tariff to bar the Carterfone in the future would be un- reasonable and unduly discriminatory. However, for the reasons to be given, we also conclude that the tariff has been unreasonable, dis- criminatory, and unlawful in the past, and that the provisions pro- hibiting the use of customer-provided interconnecting devices should accordingly be striken. We hold that the tariff is unreasonable in that it prohibits the use of interconnecting devices which do not adversely affect the telephone system. See H/ush-A-Phone Corp. v. U.S.,99 U.S. App. D.C. 190, 193, 238 F.2d 266, 269 (D.C. Cir., 1956), holding that a tariff prohibition of a customer supplied “foreign attachment” was “in unwarranted interference with the telephone subscriber's right reasonably to use his telephone in 0 which are privately beneficial without being publicly detrimental.”? The principle of Hush--Phone is directly applicable here, there being no material distinction between a forei attachment such as the Hush-A-Phone and an interconnection device 13 F.C.C, 2d 87a 424 Federal Communications Commission. Reports such as the Carterfone, so far as the present problem is concerned.? Even if not compelled by the Hush-A-Phone decision, our conclusion here is that a customer desiring to use an interconnecting device to wm capl the utility to him of both the telephone system and a private radio system should be able to do so, so long as the interconnection does not adversely affect the telephone company’s operations or the telephone system’s utility for others. A tariff which prevents this is unreasonable; it is also unduly discriminatory when, as here, the telephone company’s own interconnecting equipment is approved for use. The vice of the present tariff, here as in Hush-A-Phone, is that it prohibits the use of harmless as well as harmful devices. A.T. & T. has urged that since the telephone companies have the responsibility to establish, operate and improve the telephone system, they must have absolute control over the quality, installation, and maintenance of all parts of the system in order effectively to carry out that responsibility. Installation of unauthorized equipment, ac- cording to the telephone companies, would have at least two negative results. First, it would divide the responsibility for assuring that each part of the system is able to function effectively and, second, it would retard development of the system since the independent equipment supplier would tend to resist changes which would render his equip- ment obsolete. There has been no adequate showing that nonharmful interconnec- tion must be prohibited in order to permit the telephone company to carry out its _— responsibilities. The risk feared by the examiner has not been demonstrated to be substantial, and no reason presents itself why it should be. No one entity need provide all interconnec- tion equipment for our telephone system any more than a single source is needed to supply the parts for a space probe. We are not holding that the telephone companies may not prevent the use of devices which ac- tually cause harm, or that they may not set up reasonable standards to be met by interconnection devices. These remedies are appro- priate; we believe they are also oe to fully protect the system. Nor can we assume that the telephone companies would be hindered in improving telephone service by any tendency of the manufacturers and users of interconnection devices to resist change. The telephone companies would remain free to make improvements to the telephone system and could reflect any such improvements in reasonable revised standards for nontelephone company provided devices used in con- nection with the system. Manufacturers and sellers of such devices would then have the responsibility of offering for sale or use only such equipment as would be in compliance with such revised standards. An owner or user of a device which failed to meet reasonable revised standards for such devices, would either have to have the device re- built to comply with the revised standards or discontinue its use. Such is the risk inherent in the private ownership of any equipment to be used jn connection with the telephone system. *The Hush-A-Phone was a cup-like device mechanically fastened to the mouthpiece of a Ghephone. bandect. The Carterfone by means of acoustic and inductive coupling effectively ach an “interconnection” between the public toll telephone system and private mobile radio systems, These differences are immaterial, however, insofar as the Hush-A- Phone boiding is concerned. . 13 F.0.0, 2a 38a Caricrfone 425 The present unlawfulness of the tariff also permeates its past. It has heen unreasonable and unreasonably discriminatory since its Incep- tion, for the reasons eiven above. That the telephone companies may not have known prior to the proceedings herein that the Carterfone was in fact harmless is irrelevant. since they barred its use without re- ward to its etlect upon the telephone system. Furthermore, the tari vas the carrier 3 own. It was not prescribed by the Commission. has remained subject to complaint and to a finding that. it had been unlawful since its inception. A Commission-prescribed rate or practice must be followed by the carrier. It becomes the lawful rate or practice. But where the carrier seself witiates the rate or practice Its jaw fulness remains open, not only to 2 prespective inding but. also to a retroactive one. Ayizona Grocery Co. ¥. eLtchixon. T.& SF. Ry. ©- os4 US. 370 (1032). And it is not a bar to such a {inding of past unlawfulness that the turiff has been ermitted to remain in effect and has not, until now been the subject of a determination 25 to its lawfulness.’ See Interstate Commerce Com- mission Vs Inland Waterways Corp. »19 U.S. 671 (1945), finding no agency prescription even where the agency had stated that a rate was ‘shown to be just and yeasonable” Interstate Commerce Commission x. Mechta. da) US. 567, ye ere (1947): Public ltilities Commis sion of Califorma’. United States. 956 F. 2d 236 (9th Cir, 1966). AS was said in Rirminaham Slag Co. ¥. United States, 11 F. Supp. 456; 487 (XD. Ala., 1939) ¢ Our conclusion js that (the Commission] « * * without adjudging their judividual reasonableness, werely authorized the carriers to put in the general jevel of rates, at their risk, if ther were ¢0 advised, and remove certain incidental obstructions to the carriers doivg $0, which were present py section 13:4) of the act (49 USCA § 3(4)), and agreed not tv wake @ suspensory order, in advance of bearing, under eomplaints filed under Sec- an 1s 7°.” We think the rates in controversy were carrier, and net Com- iissien-made putes. Their validity hax not heen declared. nor bas the Com piissien ordered then put in effect. They stand just as if filed by the carrier with the Commission. with no action on the part of the Commission making gheir validity & matter of adjudication against the shippers. and the shippers’ right to a day in court is not impaired, cither as to the ipvalidity of the rate, or the right to reparations. seu wise Alqontl Cowl & Coke Co. N: Lyited Ntales. 11 F. Supp- 487 (ELD. Va. 150). In view of the unlaw fulness of the tariff there would be no pot in merely declaring it invalid as applied to the Carterfone and per- mitting 11 to continue Mm operation as to other interconnecnon devices. This would also put a clearly improper burden upon the manufacturers and users of other devices. The appropriate remedy 15 to strike the tariff and permit the carriers; if they, 5° desire; to propose new tariff provisions gecordance With this opinion. We make no rulings a5 to ~ —_———_— 4On May 16. i957. the Commission isened a publie potice stating that the Conmission bac “elected te permit” the revised tarif subroitted bY the telephone. corapanies to co into effect. ‘The prohibitions a» to interconnection devices were mentioned in the public notice. Thereafter. the Commission on various occasions cited the prohibitions in response TO juquirtes about attachments or interconnecting devices. without quenteen the ralidity of tne gorecdattest bedi Tbhe Examiuer § nding that the tariff prov sions in question were valia prier te the instore hearing appears to hare been pased in part on this history. Jlawerer, Done of this made the wirif one prescribed by the Commission. 13 F.C.C. 2d 89a 496 Federal Communications Commission Reports damazes since that relief has not heen requested? As noted above, the carriers may submit new tariffs which will protect the telephone sys- fem against harmful devices, and may specify technical standards if they wish. Accordingly, we find that taritf FCC No. 265, paragraphs 2.6.1 and 2.6.9 are, and have since their inception been, unreasonable, unlawful and unreasonably discriminatory under sections 201(b) and 202 (a) of the Communications Act of 1934, as amended. Other ancillary matters require our attention and disposition. On March 27, 1968, the Chief. Common Carrier Bureau, requested that the Commission take official notice of a new Canadian statute, entitled “An Act Respecting the Bell Telephone Company of Canada,” which became effective on March 7, 1965. The statute has some relevance to this proceeding because it states the national policy with respect to for- cign attachments of a neighboring country whose telephone system is completely interconnected with the telephone system of the United States. Accordingly, the Common Carrier Bureau's request for official notice will be granted. On March 18, 1968, the Commission received a petition to accept an amicus curiae brief. together with the brief, from Prof. Willis Rokes of the Municipal University of Omaha, Omaha. Nebr. In general, Professor Rokes supports the position advanced by Carter and the Common Carrier Bureau. The Commission appreciates obtaining the carefully considered views of interested members of the public in matters of great public concern such as we have here. Accordingly, the petition will be granted and the brief amicus curiae accepted. On May 3, 1968, motions to correct the transcript of oral argument were filed by the Bell System Parties, the United States Independent Telephone Association, the General Telephone Co. of the Southwest, G. T. & E. Service Corporation, the Chief, Common Carrier Bureau, and the United States Department of Justice. No oppositions were filed to any of these requests, and they will be granted. It is ovdered, that the “Request for Official Notice,” filed March 27, 1068, by Chief, Common Carrier Bureau, /s granted; It ix further ordered. that the petition to accept an amicus curiae brief filed on March 18, 1968, by Prof. Willis Rokes Js granted, and that the said brief /s accepted; It is further ordered. that the motions to correct transcript of oral argument filed on May 5, 1968, by the Bell Svstem Parties, the United States Independent Teleplione Association, the General Telephone Co. of the Southwest, G. T, & E. Service Corp., the Chief, Common Car- rier Bureau, and the United States Department of Justice, .Are granted; ft is further ordered, that paragraphs 2.6.1 and 2.69 of tariff F.C.C, No, 26:3 be stricken and not thereafter be published or given any effect ; We «io not intend to determine any issues which may arise in the pending litication. C9... — that the Carterfone mar bare been harmful as manufactured at some time OQ the plas 13 F.C.C, 2d 40a Carterfone 427 It is further ordered, that this proceeding Js terminated; and at is further ordered, that this Order shall be effective July 29, 1968, Fecrrit ComMeUnications Commission, Ben F. War e, Secretary. 4la APPENDIX E In re Carterfone Device, 14 F.C.C. 2d 571 (1968) (on reconsideration) 43a Carterfone 571 FCC 68-922 BEFORE THE FEDERAL COMMUNICATIONS COMMISSION Wasutnoton, D.C. 20554 In the Matter of User or tHe Cartrerronxe Drvicr 1x Messace) Docket No. 16942 Tort Terernone Service In the matter of Tuomas F. Carter anp Carter Exvrcrronics | Docket No, 17073 Corr., Dauuas, Tex., CoMPLAINANTS v. Aosrentcan Terternonr & Trirorarir Co., As- soctateD Betu Systea Co., Socriuwrstern Bewt Terernone Co., ano Generar Treir- PIIONE Co, of THE SOUTHWEST, DEFENDANTS Mexoranptm Oprsion ano Onper (Adopted September 11, 1968) By tue Cosmission: 1, The Commission has before it petitions for reconsideration of our Decision herein released June 27, 1968 (13 FCC 2d 420), filed by American Telephone & Telegraph Co. and Bell ‘Telephone System Associated Cos. (hereafter A.T. & T.) ; General Telephone Co. of the Southwest and G.T. & E. Service Corp. (General) ; U.S. Independent Telephone Association; National Association of Regulatory Utility Commissioners (NARUC); Tennessee Public Service Commission; South Carolina Public Service Commission; Mississippi Public Serv- ice Commission; Georgia Public Service Commission and Arizona oo Commission.* Oppositions to reconsideration have been by the Chief, Common Carrier Bureau; Thomas F. Carter and Carter Electronics Snes (Carter) ; the United States of America; the National Retail Merchants Association (NRMA) (in docket No. 16942) ; and the Central Committee on Communication Facilities of the American Petroleum Institute (API). Several replies to the oppo- sitions have also been filed. 2. It may be helpful to recapitulate briefly our decision of June 27, 1968 before taking up the arguments made upon reconsideration. This *These State regulatory bodies have not been parties to this proceeding, and the National Retail Merchants Association has moved to strike their petitions for failure to show’ good cause for late participation. Petitions for reconsideration were also sub- mitted by the following eg commissions: Colorado Public Utilities Commission, y 31, 1968; Idaho Public Utilities Commission, Aug. 1, 1968: Public Service Commis- sion of Kentucky, Jay 31, 1968; Montana Public Service Commission, Aug. 5, 1968; Publie ice Commission of Wyoming, Aug. 19, 1968. The Western Union Telegraph Co, has also a mn for limited intervention to comment in support of the -on Sept. 3, 1968 telephone companies’ pos! 14 F.0.C. 24 44a 572 Federal Communications Commission Reports is a consolidated proceeding. Docket No, 16942 was instituted upon our own motion to determine the need for the Carterfone, a device use| to interconnect mobile radio systems to the interstate and foreign message toll telephone system; the effect of use of the Carterfone upon telephone service; whether A.T. & T. Tariff FCC No. 132 (now No. 263) prohibited use of the Carterfone as an interconnection device and, if so, whether the tariff regulations are lawful. A further issue was to determine whether the Commission should itself prescribe tariff regulations which would permit the use of the Carterfone. Issues on the past effect and lawfulness of the tariff were added in docket No. 17073 upon the filing of a complaint by Carter. 3. We held that the Carterfone filled a need, that its use did not adversely affect the telephone system, that its use was nevertheless yrecluded by the tariff, and that the tariff was unlawful, and had been in the past, because it prohibited the use of the Carterfone and other interconnecting devices without regard to actual harm caused to the telephone system. We did not prescribe the terms of a new tariff, but left that to the initiative of the telephone companies, pointing out that they were in no wise precluded from adopting reasonable standards to prevent harmful interconnection. Basic to our holding was a rejec- tion of A.T. & T.’s position that because A.T. & T. cannot control the interconnected private system, interconnection is by definition a deg- radation of the message toll telephone system without regard to the quality of the interconnecting device or of the interconnected mobile radio system, i.e., without regard to actual harmful effects. We viewed this position * and the rule embodying it as unreasonable. General has contended that the Commission has “opened the door to customer ownership of telephone handsets.” The facts of this case did not in- volve the furnishing of purely telephone system equipment telephone- to-telephone on the message toll telephone system. Nor, of course, were we concerned with the interconnection of telephone companies. With this recapitulation, we can turn to the contentions presented for reconsideration. 4. The primary contention upon reconsideration is that our decision permits the use of a myriad of customer-provided devices for inter- connection without adequate exploration of the technical and economic problems. This record convinces us that there can be interconnection without harmful technical effects. With respect to possible economic effects from the interconnection of private systems—“the piecing out of common carrier services with unregulated systems”—no substantial effort was made on this record to demonstrate any harm from the 2That this was A.T. & T.'s position is clear, se¢, e.g., Tr. 565-567, 570-571, 577-578, 607-621. We found no substantial factors outweighing the necessity of eliminating the arbitrary tariff. Standards to prevent the introduction of harmful inputs can be devised Tr. 626-627; see also par. 2.6.9 of tarif? No, 263 containing a general probibition against barmful attachments, and tariff No. 260, par. 2.1.4(D)), and enforcing them would be no more difficult than enforcing the present absolute Probidition. Furthermore, notification to the carrier of the installation of a connecting device, which would be a reasonable requirement, would greatly relieve any problems of discovering the source of any harmful interconnection (Tr, 912). The record also showed that terminal devices m be under a standard making actual harm a factor, and the distinction between term!- nal devices and interconnection appears to be solely one of function unrelated to inherent propensity for injurious effects (Tr, 606-696, 1033-1036), 14 F.C.C. 24 45a Carterfone 573 interconnection of private mobile radio systems,’ and we therefore had no occasion to address ourselves to that question. We agree that eco- nomic eifects upon the carriers’ rate structure might well be a public interest question. But it is an issue, if a carrier seeks to raise it, to be decided upon the facts, i.e., will there be a “cream skimming” effect, what will “ the extent of it, and how does it weigh against the benefits of interconnection. As is the case with the question of technical harm,. a tariff is unreasonable if it assumes a priori a conclusion as to such an issue. Thus, aside from the use of the Carterfone to interconnect private mobile systems—as to which we iound no technical harm and any cream skimming (for existing systems certainly) had already: taken place when such systems were authorized—our decision does not have the asserted effect of delineating any particular interconnections as permissible, What it does is to require tariffs reasonably addressed to the asserted problems.* Nothing else new of substance 1s presented on this question. p 5. We also reject the related claim that the decision goes beyond the issues. To say, as some of the parties do, that the hearing related solely to the Carterfone * and not to the validity of the tarif's broad prohibi- tion would make the hearing essentially meaningless. The issues plainly ‘included consideration of the basic validity of the tariff if it was the total prohibitory effect of the tariff which rendered its application to the Carterfone unreasonable. As we pointed out in our June decision such a fault in a tariff can only be remedied by its revision. It should be noted in this connection that it was well understood that this was an “interconnection” case, and A.T. & T, and General both argued on a broad base (eg., A.T. & T. exhibit 1; Tr. 81-85; Brief to Examiner, pp. 36-37; General’s Proposed Findings, p. 86) the need for a general prohibition against all interconnection not arranged by them.® 6. It is also urged that present unlawfulness of the tariff, assuming: such unlawfulness to have been properly determined, does not ar a finding of past unlawfulness. But in this case the basis upon whi the tariff was found to be presently unlawful is fully applicable to the past as well as the present. We recognize that an order for reparations and an order setting future rates are separate matters, and that a new rescription may be made without finding a past rate to have been un- awful, if there is a reason, as where an initially lawful rate has gradu- ally become unreasonable with the passage of time. See Baer Brothers v. Denver & R.G.R.R., 233 U.S. 479; Ashland Coal & Ice Co. v. United > While A.T, & T. adverted to this problem (A.T. & T. exhibit 1, pp. 15-16), it made no effort to demonstrate adverse economic effects, and we cannot go on § tion, Allocation of Microwave Frequencies Above 890 Mc., 27 FCC 359, 411-413 (1959). The issues in- cluded substantiation of any such claimed economic injury. The further contention that the carriers and the public will be adversely affected by a loss of revenue from existing interconnection equipment is unsubstantiated and insubstantial, * We also struck down the prohibition against direct electrical connection. A.T. & T. seema- to regard this ax a special category but is unable to define it consistently as including or excluding inductive couplings, compare Tr. 972-074 with petition for reconsideration, p. 5. If wire-to-wire connections present a special problem, the nature of that problem should be ~~ Fs Ay an explanation accompanying any new tariff. The term should also be ® The exclusion of evidence going beyond the Carterfone concerned the effect of a modifi-. cation of the Carterfone, and the examiner properly ruled that other devices were not in issue. (Tr, 518-529.) This did not menn the tariff was not in issue. *The clear issues and understanding of the posties cannot be changed by a statement in- oral argument to the Commission (Tr, 1217) that general mterconnection was not at issue, 14 BE.C.O, 24. 106-508—68——2 46a 574 Federal Communications Commission Reports States, 61 F. Supp. 708 (E. D. Va., 1945). But such cases have no ap- lication here where the invalidity obtained throughout the period in ssue.’ The decisive element, of course, is the reason why 2 tariff is found to be unlawful. If, as here, the reason applies as well to the past as to the present and future, there is no ground for disparate findings. We similarly adhere to our ruling that the tariff was carrier-initiated, and so remained open to a finding of past unlawfulness.* The Com- mission's decision on remand in //ush-A-Phone, 22 FCC 112 (1957) did not prescribe the terms of tariff revision, but left it to the carrier to formulate new provisions consonant with the Court’s decision. It cannot now be contended by A.T. & T. that it construed the remand de- cision as a prescription by the Commission of a tariff prohibiting inter- connection in view of A.T. & T.’s own statement in submitting a revised tariff that in their decisions “neither the Commission nor the Court dealt with the interconnection problem, which involves considerations different from those involved in the use of attachments.” (A.T. & T. exhibit 3, attachment C, page 9.) Therefore, there was no Commission prescription of the interconnection prohibitions at that time, either in fact or as understood by A.T. & T. Furthermore, the decision to permit the filing of the revised tariff, and subsequent Commission references to it,’ cannot be deemed prescription. The Commission’s acceptance of the tariff for filing was not an adjudication of the tariff’s validity and did not make it a Commission-prescribed tariff, and the tariff of course had to be complied with by telephone customers so long as it was on file, Chicago, M., St. P.& P.R. Co. v. Alouette Peat Products, 253 F. 2d 449 (C.A. 9, 1957). In sum, the Commission did not prescribe the tariff, and until now had made no ruling on its lawfulness.?® The cases cited in our June decision are conclusive on this point. 7. A.T. & T. further contends that the tariff cannot be found to be in violation of section 202(a) of the act because that section prohibits discrimination among customers only. General agrees, but the Com- mon Carrier Bureau does not. We find it unnecessary to resolve this question ** and will not rely upon section 202(a). 8. Other arguments made in the various petitions have been con- sidered but do not warrant further discussion. Finally, we must dis- miss the State commission petitions for reconsideration. The NARUC was permitted an amicus participation upon a late intervention, and has presented the views of the State bodies. While some of the parties * Nor is William N. Feinatein & Co. v. United States, 209 F. Supp. 613 (S.D.N.Y., 1962), affirmed 317 F. 24 509 (C.A. 2. 1963), relevant. There, a later decision finding no past unlawfulness was held to be valid even if apparently inconsistent with an earlier decision of the agency. It was pointed out, in addition, that there had been a shift in the burden of proof in the two ———s (in the first case, the burden was on the proponent of certain charges to show their present lawfulness, while in the later case the burden was on the complainant to show past unlawfulness), as well as different evidence, which might have accounted for the apparently inconsistent results, * We do not mean to suggest that if a question of damages were before us, we would award dama where a device was in fact harmful. See footnote 5 of our June Decision. * We note in this connection that Chairman Henry's letter to Mr. Carter, relied upon be- cause of its statement that the Commission was of the opinion that the tariff conformed to its Order (4.T. & T. exhibit 3, attachment L), was not a Commission action and, moreover, {nvited the fling of a complaint. * As the Common Carrier Bureau points out, the Commission in 1962 refused to find the ingergennection prohibitions to be lawful. A.T. € T. (Hailroad Interconnection), 32 FCC . 540, 4. This is so although the record contained evidence that.the carrier in fact discriminated Among customers in the application of the tariff. 14 F.C.C, 24 47a Carlerfone 575 ‘now seeking intervention have filed within 30 days of the release of our decision, we cannot find good cause for such late participation in the contention that it was not known that the issues would “include con- sideration of the validity of tariffs restricting interconnection of cus- tomer-owned devices” (Georgia petition). (See sec. 1.106(b) of our rules, 47 CFR 1.106(b).) In light of what has been said above, this is an inadequate statement. The other State petitions are additionally untimely under section 405 of the Communications Act, 47 U.S.C. 405, not having been filed within 30 days of the release of our decision. The petition of the Western Union Telegraph Co. for leave to inter-" vene on a limited basis to support A.T. & T.’s position will also be denied for failure to show gocd cause or need for such late participation. 9. [tis ordered, That, except as specified above, the petitions for re- ne filed by the parties hereto and by NARUC Ave denied; an 10. /t 7s further ordered, That the stay of our June 27, 1968 decision which was ordered on July 26, 1968 (FCC 68-774) Js dissolved ettec- tive November 1, 1968: and 11. /t és further ordered, That the petitions for reconsideration or intervention filed by the State regulatory bodies referred to in para- graph 1 and footnote 1 above Are dismissed ; and 12. /t is further ordered, That the petition for limited intervention filed by the Western Union Telegraph Co. on September 3, 1968 Js denied. Feperit ComMenNications Comission, Ben F. Wapte, Secretary. 14 F.C.C. 2d 49a APPENDIX F First Report and Order in Docket 19528, 56 F.C.C. 2d 593 (1975) (New Part 68 of the Commission’s Rules and Regulations, 56 F.C.C. 2d 614-22, omitted) 5la Interstate and Foreign Message Toll Telephone, ete. 593 FCC 75-1248 BEFORE THE FEDERAL COMMUNICATIONS COMMISSION Wasurneton, D.C. 20554 In the Matter of a FOR meg —aoeg- caniae oF NTERSTATE AND ForeEIGn sace Tout \Docket Ni TzrzrHone Service (MTS) ann Wmez i Axes TeLerHone Service (WATS) Fmst Report anp OppeR (Adopted October 31, 1975; Released November 7, 1975) Br tae Comsussion: Comsissioner Rem aBsENT; CoMMISSIONERS AND RopINsON CONCURRING AND ISSUING STATEMENTS. PRELIMINARY STATEMENT 1, The Commission has under consideration the Recommended First Report and Order of the Federal-State Joint Board (Joint Board) in this matter, together with its recommendation that we also consider the General Order establishing the California registration program. We also have before us the comments conce these — which we requested interested persons to file in our Memo- randum Opinion and Order released May 27, 1975 Sar FCC 2d 219). 2. Timely comments were filed by Ad Hoc Telecommunications Committee, Adcor Electronics, Inc., American Pstroleum Institute, American Ly oe and Telegraph Company (AT&T), Association of American Railroads, Association of Data Processing Service izations, California Public Utilities Commission, Communica- tion Certification Laboratory, Computer and Business Equipment Manufacturer’s Association, Continental Telephone Corporation, DASA Corporation, Dictaphone Corporation, Electronic Industries Association. Executone Communication Systems, The GTE Com- panies, Independent Data Communications Manufacturers Asso- ciation, International Business Machines, National Telephone Cooperative Association, National Retail Merchant’s Association, North American Telephone Association, North Carolina Utilities Commission, Office of Consumer Affairs by Virginia H. Knauer, Phonetele, Inc., Public Utilities Commission of Ohio, Rochester Tele- hone Company, Rollings Protective Service Company, Scott-Buttner unications, Sentry Technology, Inc., T.A.D. Avanti, Inc. United States Department of Justice, United States eey ee Telephone Association, and Utilities Telecommunications i In addition we have received approximately two hundred letters addressing this subject. 3. We also received Le a Comments filed by Phone Mate, Inc., an Opposition to the Reply Comments of Phone Mate, Inc. filed by BFCO 2 52a 594 Federal Communications Commission Reporte AT&T, a Petition for Leave to File Further Comments and Further Comments filed by the Ohio Public Utilities Commission, Motion for Acceptance of Late Filing and Comments of New York Public Serv- ice Commission, Supplemental Comments filed by the Computer and Business aa ment Manufactnrer’s Association, and Supplemental Comments filed by International Business Machines. While we only provided for the filing of.comments in our Memorandum Opinion and Order, supra, and made no provision for the filing of any fur- ther comments, we believe the subject before us to be of such signifi- cance that we have accepted such late filed comments and further, comments to assist us in determining our course of action. _ 4. GTE Service Corporation has filed a motion requesting that the Commission establish certain additional procedural dates or meetings for the purpose of obtaining comments on AT&T’s Author- ized Protective Connecting Module program, Continental Telephone Corporation filed Comments supporting this motion. AT&T has also filed a motion requesting us to institute further proceedings to explore the option of allowing connection of terminal equipment through discrete protective modules. In view of the action we are | herein, we perceive no necessity for the procedures or meetings G Service Corporation and AT&T have requested, since in accordance with our Memorandum Opinion and Order released November 5, 1974. 49 FCC 2d 580. we have considered AT&T’s Authorized Pro- tective Connecting Module program within the context of Docket No. 19528. In this regard we also believe the record in this matter suffices for our deliberations and that oral argument is neither neces- sary nor helpful in this matter. 5. The Commission also has pending before it (1) a Petition filed December 27, 1973, by the North American Telephone Association For Amendment of Procedures. Issuance of a Notice of Proposed Rule Making and Establishment of Interim Procedures relative to the inter- connection of customer-provided terminal communication —— and systems and (2) a Motion filed September 26, 1974, by the Com- puter and Business Equipment Manufacturers Association for Separa- tion of Issues and for an Order Authorizing a Program of Direct Interconnection of Customer Ovwiied Data Terminal Equipment and Ancillary Telephone Equipment. In view of the action we are herein, we will dismiss these pleadings as moot. BACKGROUND 6. This Commission and the courts have consistently enunciated the subscriber's right to make beneficial use of an interconnected device or communications system without causing harm to a age tens om pany’s operations. On remand in H[ush-4-Phone,* the enunciated the following broad principle of law and policy: In addition to invalidating the defendants foreign attachment tariff regula- tions insofar as they bar the use of the Hush-A-Phor.c 4evice, an consequence of the Court's opinion is to render such tariff regulations unjust and unreasonable insofar aa they may be construcd or applied to bar a customer from using other devicca which scrve the customer's convenience in his usc of the facilitica furnished by the defendants qnd ichich do not injure the telephone 1 Hush-A-Phone Corp. ¥. U.8., 99 U.8, App. D.C, 190, 238, F. 24 266 (D.C. Cir, 1956). 5 F.C.C. 24 58a Interstate and Foreign Message Toll Telephone, etc. 595 companies’ employees or facilities, or the public in the use of defendants serv- ices, or impair the operation of the telephone system. A’ we construe the Court's opinion, a tariff regulation which amounts to a blanket prohibition against the customer's use of any and all devices without discriminating betwecn the harmful and harmless encroachcs upon the right of the user to make reasonable use of the facilities furnished by the defendants. Such a regulation goes beyond what is reasonably required in the interest of protecting the defendants’ employees, facilities, the telephone system and the public from adverse effects. (emphasis supplied) 22 FCC 112, 113-114 (1957) 7. Relying on the holding //ush-A-Phone. supra, we found in Carterfone* that a device used to interconnect inobile radio systems to the interstate and foreign message telecommunications systein filled a need, that its use did not adversely affect the telephone system. and that the AT&T tariff prohibiting its use was unreasonable and unlaw- ful within the meaning of Section 201(b) of the Communications Act of 1934. In making it clear that our Carterfone decision was not lim- ited to the Carterfone clevice per se, but was rather a broad general policy, we stated : In view of the unlawfulness of the tariff there would be no point in merely declaring it invalid as applied to the Carterfone and permitting it to continue in operation as to other interconnection devices. This would also put a clearly im- proper burden upon the manufacturers and users of other devices. The appropri- ate remedy is to strike the tariff and permit the carriers, if they so desire, to propose new tariff provisions in accordance with this opinion. 13 F.C.C. 2d 420, 425 8. We further held that this broad Carterfone policy applied equally to devices which had direct electrical connections.* We noted that AT&T considered this to be a special category but had not clearly demonstrated the basis for this exception * (14 F'.C.C. 2d 571, 573 (ftn. 4)), and went on to comment: The primary contention upon reconsideration is that our decision permits the use of a myriad of customer-provided devices ivr interconnection without ade- quate exploration of the technical and economic problems. This record convinces us that there can be interconnection without harmful technical effects, With re- spect to possible economic effects from the interconnection of private systems— “the piecing out of common carrier services with nnregulated systems”—no sub- stantial effort was made on this record to demonstrate any harm froin the inter- connection of private mobile radio systems, and we therefore had no occasion to address ourselves to that question. We agreed that economic effects upon the car- riers’ rate structure might well be a public interest question. But it is an ixsue, if a carrier seeks to raise it, to be decided upon the facts, Le. will there be a “cream skimming” effect, what will be the extent of it, and how does it weigh against the benefits of interconnection. As is the case with the question of tech- nical harm, a tariff is unreasonable if it assumes a prioria conclusion as to anch an issue. (emphasis supplied) (footnotes omitted). 14 F.C.C. 2d 571, 572-573. 9. We did not prescribe the terms of the tariff revisions required to satisfy the Carterfone policy. but left that to the initiative of the tele- phone company. AT&T filed new and revised tariffs and subsequent amendments on behalf of itself and concerned interstate carriers, which allow the interconnection of customer-provided equipment (1) through the use of carrier-supplied connecting arrangements subject to certain technical requirements, and, if required, network control sig- nalling units; (2) in accordance with a carrier-administered attesta- * Carterfone, 13 FCC 2:1 420 (1968), reconsideration denied, 14 FCC 2a 571 (1968). 3Nee ITT v. General Telephone and Electronica Corp., 518 F. 2d 913, 923 (9 “Nee Phonetele, inc. v. California Public Utilithes Commission, 11 C. 3d 1 . 400 (1974), © ; 56 F.C.C. 2d 54a 596 Federal Communications Commission Reports tion program for headsets and non-powered conferencing devices; and (3) in accordance with a carrier-administered program for conform- ing answering devices. 10. The Carterfone Decision placed the burden of proof squarely upon the carriers—not the users or this Commission—to demonstrate that a particular unit or class of customer-provided equipment would cause either technical or economic harm to the telephone network, note 4, supra; this burden was to be met prior to the filing of a tariff re- stricting the use of such equipment. The information accompanying the tariff revisions filed pursuant to Carterfone did not demonstrate that the direct electrical connection of all customer-provided equip- ment would cause harm unless accomplished through the carrier-su plied connecting arrangements provided for in the tariff. At best, it simply reflected one manner in which to protect the network. It was not even argued that this protection was the minimum protection required or the most cost effective. Nevertheless, the Commission, exer- cising an abundance of caution in protecting the telephone network from any possible harm, allowed the tariffs ry cnt effective without ruling explicitly on their lawfulness.® 11. At the same time, the Commission instituted informal proceed- ings to obtain technical and operational data to assist its evaluation of the public interest factors involved in liberalizing the network control signalling unit and connecting arrangement provisions of the revised tariffs. Contracts to study these possible revisions were issued to the National Academy of Sciences and Dittberner Associates, and their subsequent reports together with comments fromm interested parties indicated that consideration should be given to revisions in MTS and WATS offerings under a program that would protect the telephone network from four atc of harm: (a) hazardous voltages; (b) ex- cessive signal power levels; (c) improper network control signalling and (cd) line imbalance. Thereafter, the Commission created two advisory committees, pursuant to Executive Order 11007, to study the possibilities of initiating such a standards program for selected classes of equipment such as (1) customer-provided PBX’s and (2) automatic dialers and recording and answering devices, DOCKET NO. 19528 PROCEEDINGS 12. On June 14, 1972, the Commission instituted this i by Notice of Inquiry and Proposed Rule Making, 35 FCC 2d 539 (1972), to determine whether and under what terms, conditions, or limitations the interstate MTS and WATS tariffs should be revised to allow customers to have the option of furnishing any needed network control signaling units and connecting arrangements (or the functional equivalent thereof), and to determine what rules, if any, the Commis- sion should adopt with respect to the foregoing. In addition, a Federal- State Joint Board was established pursuant to Section 410 of the Com- munications Act of 1934, as amended, to submit its recommendations to the Commission concerning this matter. 13. In our First Supplemental Notice in Docket No. 19528, 40 FCC 2d 315 (1973), we questioned whether, at that time, it was feasible SATAT “Foreign Attachment” Tarif R denied, 18 FCC 24 871 (1969). 7 Revisions, 15 FCC 2d 605 (1968), reconsideration &% F.C.C, 2d 55a Interstate and Foreign Message Toll Telephone, etc. 597 from a technical, engineering, operational and administrative view- point to establish an optional program in lieu of or in addition to the present tariff requirements for carrier-provided network control sig- nalling units and connecting arrangements and requested comments concerning a number of reports and proposals. These reports and pro- posals include: (1) the report roe recommendations of the PBX Standards Advisory Committee; (2) the proposal of the Office of the Chief Engincer of this Commission; and (3) the proposal of the Na- tional Association of Regulatory Utility Commissioners (NARUC) Statf Subcommittee Report on Communication Interconnection. In addition to these specific proposals, we also invited comments concern- ing other alternatives such as: (1) the Rochester Telephone Com- pany’s NPD program; (2) the establishment of standards by the car- riers and the incorporation of such standards in tariffs or technical references with the carriers being responsible for the program’s en- forcement; and (3) leaving the tariffs unchanged but requiring the carriers to improve their services and applying the same practices to both carrier and customer-provided facilities. The Joint Board we convened in this matter has reviewed these comments and issued its Recommended First Report and Order which is presently before us for consideration. 14. The Joint Board has proposed that customer and carrier-pro- vided ancillary and data terminal equipment be directly connected to the telecommiunications network if it is registered with the Commission under a program similar to this Commission's existing type acceptance program for radio transmitting equipment. The proposed plan is to apply to all terminal equipment other than PBXs, key telephone sys- tems, main telephones, extension telephones and coin telephones. Reg- istration is to be based on representations and test data submitted by an applicant to the Commission. If the representations and test data concerning a particular device are found to comply with specific inter- face criteria and other requirements and the Commission determines that it is in the public interest, convenience and necessity, such device would then be registered. The Joint Board proposal would require each device to have affixed to it installation, maintenance and operating instructions. and would allow connection of registered devices to the network to be accomplished through the use of standard plugs, jacks and other simple arrangements as provided in tariffs. 15. The California Public Utilities Commission in its General Order No. 138 has adopted rules permitting the direct attachment to the tele- communications network of customer-provided ancillary and data terminal equipment and of protective couplers where they have been certified by a registered electrical engineer qualified in the field of communications equipment. The program applies only to customer- provided equipment. not to carrier-provided equipment. Certification is based on the registered engineer’s examination of the design and operating characteristics of the device, the manufacturer's quality con- trol procedures, and the servicing. The test standards and enforcement procedures regarding these factors are not specified in the plan, but are left to the discretion of the registered engineer. After rape granted a registration number. the semuutactarer must keep records of his qual- ity control procedures, and these records are to be examined annually 3% F.C.C. 2d 56a 598 Federal Communications Commission Reports by the certifying engineer. Further, manufacturers or vendors must offer a maintenance contract with all certified equipment. 16. We have given careful consideration to American Telephone and Telegraph Company’s (AT&T) connecting arrangement program (AT&T Tariff F.C.C. No. 263, Sections 2.6.4(.4) (1), (2) and (3); 2.64(B) (1); 2.64(D)(1)(a)) AT&T's manufacturer attestation program for cnstomer-provicded headsets and non-powered conferenc- ing equipment (Tariff 263, Section 2.64(E)),® AT&T's conformance prograin (APCM prograin) for answering devices (Tariff 263, Sec- tion 2.6.4(F)).° the Rochester Telephone Company’s NPD program (Tariff 263, Section 2.9), the reports of the National Academy of Sciences and Dittberner Associates, the various reports of the several advisory committees and subcommittees, the recommendations of the Federal-State Joint Board. the California registration program, and all the comments of the many parties who have participated throngh- out the various stages of the proceedings herein. In addition. we have noticed other reports and materials. and where such were used in ar- riving at our findings they are so noted. In the seven years which have elapsed since our Carterfone ruling, the carriers have been afforded ample opportunity to propose effective procedures and/or tariff con- ditions to prevent harm without unduly restricting a customer's basic right to make reasonable use of the facilities and services furnished by the carrier. This the carriers have failed to do (with the possible exception of non-powered conferencing devices. headsets and conform- ing answering devices). The evidence before this Commission amply demonstrates that many “special” entities (e.g., gas. oil. electric, and transportation companies. selected industrial firms, the Department of Defense, the National Aeronautics and Space Administration, an customers in “hazardous or inaccessible locations”) have long been and continue to be allowed to connect their equipment and facilities di- rectly to the telephone network by means less restrictive than carrier- provided connecting arrangements (Tariff 263. Sections 2.7.5, 2.7.6, 2.7.7 and 2.7.8) apparently without causing harm to the network. We also note that there has been no demonstration of network harm re- sulting from the interconnected operation of some 1600 independent Jocal telephone companies and the Bell System (inelnding small rural. municipal, and co-op systems)—many of whom purchase and connect without benefit of carrier-supplied connecting arrangements the iden- tical independently mannfactured terminal equipment for which the individual user must lease carrier-supplied connecting arrangements. -\ccordingly, in view of our findings in this proceeding concerning the mechanisins which can cause technical harm and effective means for preventing such harms. the Commission has now reached three sep- arate and independent conclusions. First, the present tariff provisions requiring the use of carrier-supplied connecting arrangements impose an unnecessarily restrictive limitation on the customer's right to make reasonable use of the services and facilities furnished by the carriers. Second, they. constitute an unjust and unreasonable discrimination both among users (or cla-ses of users) and among suppliers of termi- nal equipment. Third. the standards and procedures prescribed herein for the registration with this Commission of protective circuitry and/ one wim font provisions appear in other sections of Tariff 263 (MTS) as well as Tariff %6 F.C.C. 24 57a Interstate and Foreign Message Toll Telephone, ete. 599 or terminal equipment will provide the necessary minimal protection aguinst network Care which has been specified in various carrier oper- ating procedures and/or the recommendations of the Joint Board, the California PUC, the NAS and Dittberner studies, and the Commis- sion’s interconnect advisory cominittees, and will serve the public interest. Equipment containing the appropriate FCC registered pro- tective circuitry. or FCC registered terminal equipment, may, follow- ing the effective date of this Order. be connected directly with the telephone network pursuant to the procedures set forth in these rules, without benefit of carrier-supplied connecting arrangements, Carriers iia¥ continue to provide such connecting arrangements, if registered, snd may require their use for equipment not registered with the FCC or not tised in conjunction with appropriate FCC registered protective cirenitry. Except as herein provided, carriers may not require the use of such connecting arrangements or other interface devices or arrange- ments for FCC registered equipment or protective circuitry, and may not impose other taritf conclitions contrary to the Carterfone policy without prior approval of the Commission. THE FCC REGISTRATION PROGRAM 17. The programm which we are adopting was designed with the goals of (1) protecting the public switched telephone network from harms which might be caused by connection of terminal equipment to the net- work and (2) keeping the program as simple and easy to administer as is reasonably possible with a minimum of government intervention. Basically the program allows users to connect any terminal equipment to the telephone network if sich equipment is connected through pro- tective circuitry registered with the Commission or if si.ch equipment is itself registered with the Commission. The option of registering only discrete protective circuitry rather than the entire terminal equipment will (1) eliminate unnecessary documentation relating to total system design and performance criteria (Even for complex ter- minal equipment and/or systems, this option will require documenta- tion relating only to the discrete protective circuitry.) ; (2) remove the need for filing proprietary information, thus eliminating the need to establish cumbersome procedures for handling such information; (:3) allow users and manufacturers greater flexibility in satisfying the requirements of our registration program through the separate pur- chase of protective circuitry, if desired: and (4) enable us to ad- wiinister our registration program with an absolute minimum of expense to both the government and private industry—to the benefit of the ultimate users—while at the same time protecting the public switched telephone network from harms which could be caused by the connection of faulty terminal equipment. 18. As noted above, the Federal-State Joint Board recommended that PBXs, key telephone systems, and main station, extension and coin telephones be excluded from the registration program at this time, thus requiring that these devices continue to be interconnected with the network via carrier-provided connecting arrangements. In this respect the Joint Board plan differed from that proposed in 1972 the FCC's Office of the Chief Engineer, although the Joint Boa largely adopted the Chief Engineer's proposal, Many parties have 56 F.CC. 2d 58a 600 Federal Communications Commission Reports urged that some or all of these classes of terminal equipment be in- cluded, and point to the Joint Board's failure to provide any basis for such proposed exclusion. While it did not explicitly so state, we believe the Joint Board’s recommendation to defer inclusion of these devices was based primarily on technical concerns relating to the more com- lex network control signalling functions performed by some of these evices. In view of the clarification of network harms; the delineation of the roles, responsibilities and incentives of the various parties in protecting against these harms: and the registration standards and procedures contained herein, we believe that many if not all the tech- nical concerns reflected in the Joint Board’s exclusion of these equip- ment classes have been mooted. With this clarification. we are tenta- tively of the view that there is no valid distinction as to the potential for harm from any of the excluded classes of devices. However, since all parties may not have considered it necessary fully to address the inclusion of PBX’s. key telephones. and main stations at this time, in view of the Joint Board's recommendation. we shall afford interested parties an opportunity to comment further on the inclusion of these classes of equipment. Accordingly, PBX’s, key telephone systems. main station telephones. coin telephones. and equipment connected to arty lines * will be exluded from the registration program established erein. pending further order of the Commission.® 19. Several of the parties to this proceeding have suggested that it would be inappropriate to adopt new policies concerning interconnec- tion prior to collection and evaluation of the pertinent data filed in Docket No. 20003 concerning the economic effects of such intercon- nection. Recognizing that Docket No. 20003 constitutes a broad fact- finding investigation of the economic implications and interrelation- ships among a number of industry developments, policies, and practices—some instituted pursuant to regulatory policy. others car- rier-initiated—we previously held that “the commencement of the notice of inquiry in Docket No. 20003 does not necessarily preclude further action in Docket No. 19528." * In short. the Docket No. 20003 inquiry is not to become a “dumping ground” for existing docketed proceedings. Consistent with Carterfone. supi. as well as the more recent decision in J/ebane. 53 F.C.C. 2d 473 (1975), we will afford any carrier the opportunity to demonstrate the need to restrict specific instances or classes of interconnection on the grounds of economic harm. and will continue to examine the broad. long-term and inter- related implications of interconnection. jurisdictional separations, and rate structures in Docket No. 20003. The present decision relates only to the requirements which interconnected devices must satisfy in order *Since we do not now hare Interconnection criteria for Partr line service, we will, in the meantime. allow enstomer-provided terminal equipment to he connected throuch seactes-prevshes connecting arrangements as is now done nnder Presently effective tariffs, Coin telephones are excluded because, under present regulatory policies, oniy telephone carriers may provide coin telephone service, * While the rules proposed by the Joint Board listed extension telephones in the equi ment to be excluded from the registration program at this time, we concinde that extension telephones properiy fall within th» catecory of “ancillary” devices tncinded in the Joint oard recommendation. The record supports onr view that there is no ralid technical distinction hetween extension telenhones and other “ancillary” devices. Beenuse the etand+ ards adopted herein are equally anniienble to extension telephones and hecanse inctusion of extension telephones does not represent a significant departure from the Joint Roard’s recommencations. we feel that the public interest ts best served br the prompt inclusion of i Fectantens nh Lon + a our registration procram. -conomic Implications Relating To Customer Interconnection Juriadictional Separe- tone, and Rate Structures, Docket No, 20003, 49 F.C.C, 24 1238, 1240 (1974), 56 F.C.C. 24 59a Interstate and Forcign Message Toll Telephone, ete. 601 to avoid technical harin to the telephone network. In view of our find- ings in paragraph 16 above, we believe that the public interest would be best served by the prompt implementation of our registration program.” ; 20. The carriers have argued that, as they have every incentive as well as the technical and operational means to maintain a high quality service, a registration program for carrier-supplied equipment is un- necessary, and may impose additional expenses on them which must ultimately be borne by the telephone user. We do not question the car- riers’ dedication to high quality service, nor their desire and ability to protect the network from any harms which might be caused by carrier-supplied equipment. However, we note that carrier-supplied terminal equipment possesses the same pofevtial for harm to the net- work as does custonier-supplied equipment—particularly in view of the fact that much carrier-supplied equipment is purchased from independent manufacturers who market identical equipment to the general public. We also expect that the information provided by the carriers in their registration applications will be of considerable aid to the Commission as a benchmark against which other applications may be judged. Furthermore, when one participant in a competitive market is subject to regulatory constraints (e.g. registration of equi ment) while another is not. there exists the possibility of using the registration, notification. and complaint standards and procedures for competitive advantage. In a related proceeding, the Courts have al- ready commented on such a situation; * and the carriers themselves have made the same argument in similar circumstances. These counter- vailing considerations require.a careful weighing to ascertain wherein the overall public interest rests. On balance. and particularly in view of the relatively straightforward and inexpensive registration pro- cram we envision. we believe the public interest will best be served by requiring that carrier-supplied terminal equipment be registered, and consistent with the Joint Board recommendation we shall so order. However. we plan to reexamine the situation within the first year of operation of this registration program to determine whether the public benefits of requiring registration of carrier-provided equip- ment continue to outweigh any costs resulting therefrom, and to rule accordingly. Technical Requirements 21. The National Academy of Sciences. in its 1970 report to the Commission, identified four areas of potential “harm” which might arise as a consequence of permitting uncontrolled direct connection of equipment to the telephone network: (1) hazardous voltages, (2) * Our Carterfone polles has permitted the public to utilize rarions trpes of equipment with the public communications network. It ts our firm bellef that pnbile benefits have resulted from thie policy. Lhe purpose of Docket 19528 {a not to revisit Cartcrfone but rather to review the present limitations imposed on the attachment of equipment to this network. Thies, isenes relating to the potential overall economic impact ot the Carterfone policy are bevond the scope of this proceeding. The potential economic consequences of anw decision in this proceeding are minimal, since they affect only the differential coats and revenues Associated with customer-provided Vis-a-vis carrier-provided protective circuitry and procedures—not with the terminal device per se. In view of this we would expect vond — ern S ee = Ba a seppoens gare. and main station tele r arguments to matters and n basic decision enunciated in Carterfone. » pals tare aon 4 [ushA-Phone v. U.S., 238 F. 2d 206, 268-69 note 9 (D.C, Cir. 1056). 56 F.C.C, 24 60a 602 Federal Communications Commission Reports excessive signal power levels, (3) excessive longitudinal imbalance, and (4) improper network control signaling. The National Academy of Sciences reported that the carrier-provided protective connecting arrangements protected against such “harms” within the boundaries of acceptablencss regardless of the design of particular equipment connected thereto. Our program adopts a similar approach. We have specified the boundaries which may not be exceeded for each of hazardous voltage, signal power and longitudinal imbalance, Without requiring any particular circuit design to be employed, we have re- quired that the design of registered terminal equipment and registered protective circuitry assure that these boundaries are not exceeded, and will continue not to be exceeded, under foreseeable usage and mechanical and electrical stress. Registered protective circuitry is re- quired to provide assurance of conformance to our interface require- ments regardless of the particular equipment connected thereto and regardless of what failure modes such equipment may manifest. Reg- istered terminal equipment is required to provide such assurance un- der all foreseeable failure modes of such registered terminal equipment and of equipment expected to be connected thereto. Such assurance may be provided either by incorporating protective circuitry in the registered terminal equipment. or, alternatively. by virtue of a design which precludes violation of the boundary constraints. 22, With the exception of on-hook impedance, we do not believe it is necessary to impose standards upon network control signaling. We are not persuaded that individual violations of criteria on com- patible network control sigualing will have any significant etfect upon the telephone service of other telephone network users. Improper net- work control signaling will most directly affect the telephone service of the user of eqnipment which generates improper network control signals. A nser thus has no incentive to generate improper network control signals, as he will only decrease the utility of his own tele- phone service by so doing (c.y. fail to receive telephone calls, be unable to generate telephone calls. or reach wrong numbers) ; thus we feel that any problems which may arise will be self-correcting. We would note that the present telephone company-provided connecting arrange- ments do not fully protect against improper network control signal- ing.'* and that since such connecting arrangements were first offered in 1969. the carriers have not increased the level of protection against improper network control signaling provided by their connecting arrangements. From this we conclude that improper network control signaling has not been a significant problem to the carriers, and that the presently-etfective approach of specifying proper network control signals in the tariffs, and in informational materials (“Technical References”) distributed to equipment manufacturers has been effec- tive. and has provided the requisite protection. We encourage the carriers to continue to provide informational materials to equipment mantfacturers and others concerning net work control signaling, and commend the reports of our advisory committees on PBXs, telephone 12 Sre Docket No. 19410 Tr. MORN-S5; ROST-N4: 4928-29: 4544-50; 4552-54; 4561-85; 73. Testimony of I. Hohmann. Tariff F.C.C. No. 263, § 2.8.2. 3 Section US.1L16(a) linposes the requirement that the carriers supply compatibility in- formation upon request; to the extent that such Mformational materials effect com with this rule, no additional action by the carriers will be necessary. 56 F.C.C. 2d 6la Interstate and Foreign Message Toll Telephone, ete. 603 answering devices and telephone dialers to the attention of equipment manufacturers as one source of such information, 23. Should improper network control signaling proliferate on the telephone network, the point could be reached where telephone facili- ties which are shared among many network users (e.g. central oftice equipment, trunks, etc.) would be nonproductively engaged in reach- ing wrong numbers, and incompleted calls, ete., a Bre would degrade the overall service quality. While we are convinced that such a situa- tion will not arise, due to the self-correcting mechanisins previously noted, we would be receptive to amending our rules at any time to include evaluation of network control signaling functions of regis- tered terminal equipment and registered protective circuitry, or to provide for manufacturer attestation of compatibility, should evidence to the contrary become available. 24. The technical requirements pertaining to registered terminal equipment and registered protective circuitry are contained in Sub- part D of Part 68, and are explained in the following paragraphs. The term “reasonable application of eerth ground”, which appears in several of the rules in Subpart D, deserves particular note. Because the connection of earth ground to registered terminal equipment and regis- tered protective circuitry may cause noncompliance with several of the technical requirements, it is important that such registered terminal equipment and registered protective circuitry be properly insulated and isolated from any “reasonable application of earth ground”. In evaluating equipment, the following guidelines should be followed: . a. For protective circuitry, “reasonable application of earth ground” shall include physical contact of all exposed surfaces of the circuitry with a conductor connected with earth ground, and of physical contact of each non-telephone line connection with a conductor connected with earth ground, and with all possible combinations thereof; b. For terminal equipment, “reasonable application of earth ground” shall include all reasonably foreseeable possibilities whereby earth ground may become connected with such equip- ment, including the possibility of physical contact of all exposed surfaces with a conductor connected with earth ground, the possi- bility of connection with earth ground of each power-line connec- tion, and the possibility of connection with earth ground through foreseeable connection with other equipment. 25. Environmental Stress Simulation. Registered terminal equip- ment and registered protective circuitry will be subjected to various environmental conditions during shipment and usage, and accordingly we have required, in Section 68.302, that harm does not arise in re tered equipment either prior to, or after the application of therein- specified stresses. 26, The specitied requirements on vibration, temperature and humid- ity cycling are directly in accord with the requirements on such cycling presently etfective for conferencing devices, and are similar to those employed for Authorized Protective Connecting Modules (APCMs) % Foreseeable additional connection, must {nclude all expected poxsibilities, such as accessory sockets (¢.4, ua earphone jack), % F.C.C, 2d 62a 604 Federal Communications Commission Reports vised with answering devices, both of which equipment classes are pres- ently directly connected with telephone facilities.** : 97. The specification of the metallic voltage surge parameter is derived from two presently-effective programs. The requirement im- posed on conferencing devices is that a 1000 volt peak surge, having a 10 microsecond rise time to erest and a 1000 microsecond decay time to half crest be applied to the tip and ring telephone connections dur- ing the off-hook state.** The requirement applied to APCMs is defined in terms of a test circuit which — similar surges. 28, Various specifications of the longitudinal voltage surge param- eter were suggested to us. The requirement imposed on conferencing devices is that three 2500 volt peak surges of each polarity, having a 1.2 microsecond rise time to crest and a 50 microsecond decay time to half crest be applied between all telephone connections, connected to- gether, and earth ground, under all reasonable conditions of connec- tion of the terminal equipment with earth ground. The Joint Board recommended the use of such a surge only where external power is supplied to terminal equipment.’? Our answering device commitfee recommended that such a specification be applied to power-line con- nections of that type of terminal equipment (and further recommended that testing be conducted in stages—first by pulsing at 500 volts, then 1500 volts and finally at 2500 volts). The similar specification for ‘APCMs is defined in terms of a test circuit which charges a 0.1 micro- farad capacitor to 2500 volts. and which then discharges that capacitor through a 60 microhenry coil (de resistance less than 2.0 ohms) to the tip and ring connections of the terminal equipment, across which is connected a resistance of approximately 132 ohms. Such a circuit applies a l [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385010_1223%3A04. Public record. Not legal advice.