Amicus Curiae Brief — United States v. Chesapeake & Potomac Telephone Co.

Supreme Court brief1995

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On Writs of Certiorari to the

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BRIEF OF U S WEST, INC. AS AMICUS

CURIAE IN SUPPORT OF RESPONDENTS

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LLOYD N. CUTLER

Counsel of Record

Louls R. COHEN

WILLIAM T. LAKE

STEVEN M. DUNNE

LYNN CHARYTAN

~ Wumer, CuTier & PICKERING

2446 M Street, N.W.

Washington, D.C. 20037

(202) 668-6000

Counsel for US WEST, Inc.

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TABLE OF CONTENTS

INTEREST OF THE AMICUS CURIAE ....................

STATEMENT OF THE CASE .......................-:c0ssec-cesseeees

SUMMARY OF ARGUMENT ...........0.0...2.....:..ccccssseeesees

ENTS Ren PDR ono eee

Il.

THE VIDEO PROGRAMMING BAN IS NOT

NARROWLY TAILORED TO MEET ANY

PROFFERED GOVERNMENTAL INTEREST,

AND CONGRESS HAS NEITHER EXPLIC-

ITLY NOR IMPLICITLY FOUND THAT THE

A. There Has Been No Congressional Finding

That a Complete Ban on Telephone Company

Provision of Video Programming Is Neces-

sary To Serve the Interests Proffered by the

B. The FCC’s Third Report and Order on Tele-

phone Company Provision of In-Region

Video Programming Fatally Undercuts the

Argument That Congress Has Determined

That a Blanket Ban Is Necessary ..................

THE FCC’S NEW INTERPRETATION OF

ITS WAIVER AUTHORITY IN THE THIRD

REPORT AND ORDER ONLY EXACER-

BATES THE STATUTE’S UNCONSTITU-

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A. The FCC’s New Construction of the “Good

Cause” Waiver Provision Does Not Alter

Section 533(b)’s Unconstitutional Blanket

Ban on Telephone Company Provision of

In-Region Video Programming ......................

B. The FCC’s Promise of Administrative Char-

ity Does Not Vindicate Telephone Companies’

First Amendment Rights ..................................

TABLE OF CONTENTS—Continued

Page

C. The FCC’s Enlargement of Its Own Admin-

istrative Discretion Only Exacerbates the

D. There Is No Reason Now To Address the

New Regime the FCC Has Proposed To Re-

place the Blanket Ban Enacted by Congress..

CONCLUSION

eee eee eee ee ee eel

iii

TABLE OF AUTHORITIES

CASES AND ADMINISTRATIVE DECISIONS Page

American Scholastic TV Programming Founda-

tion Vv. FCC, 46 F.3d 1173 (D.C. Cir. 1995)........ 10, 11

Applications of Telephone Companies for Section

214 Certificates for Channel Facilities Furnished

to Affiliated Community Antenna Television

Systems, Final Report and Order, 21 F.C.C.2d

307 (1970), aff'd sub nom. General Telephone

Co. Vv. United States, 449 F.2d 846 (5th Cir.

ee 9

Baker v. Carr, 369 U.S. 186 (1962) ................... 16

California v. FCC, 39 F.3d 919 (9th Cir. 1994),

cert. denied, 115 S. Ct. 1427 (1995) —.................. -

Cantwell v. Connecticut, 310 U.S. 296 (1940)....... 24

Central Bank v. First Interstate Bank, 114 S. Ct.

EE a re 11

City of Cincinnati v. Discovery Network, Inc., 113

S. Ct. 1505 (1998) ..... a eae ee 15

City of Lakewood Vv. Plain Dealer Publishing Co. .

I i cetions 23, 24, 25

Cox V. Louisiana, 379 U.S. 536 (1965) —............... 24

Edenfield v. Fane, 113 8. Ct. 1792 (1993) ............... 17

Edward J. DeBartolo Corp. Vv. Florida Gulf Coast

Building & Construction Trades Council, 485

EE ae 20

GTE California Inc. v. FCC, No. 95-70518 (9th

EE 8, 23

Kunz Vv. New York, 340 U.S. 290 (1951) ............... 24

Landmark Communications, Inc. V. Virginia, 435

EEE Sn ee 14

Los Angeles Vv. Preferred Communications, Inc.,

EE a ee 13,14

Lovell v. City of Griffin, 308 U.S. 444 (1988)... =n 21

Mankato Citizens Telephone Co. v. FCC, No. 92-

1404 (D.C. Cir. Sept. 9, 1992) ............................ 8

NCTA V. FCC, 914 F.2d 285 (D.C. Cir. 1990) ........ 16

NLRB Vv. Catholic Bishop of Chicago, 440 U.S. 490

EEE a a oe 18, 19, 20

Nashville, Chattanooga & St. Louis Ry. v. Walters,

i 16

TABLE OF AUTHORITIES—Continued

National Rural Telecom Ass'n Vv. FCC, 988 F.2d

fF YY § RRR SSS: Se See

Niemotko v. Maryland, 340 U.S. 268 Ee

Pension Benefit Guarantee Corp. Vv. LTV Corp.,

ies

Revision of the Processing Policies for Waivers of

the Telephone Company—Cable Television Cross

Ownership Rules, 69 F.C.C.2d 1097 (1978)...

Sable Communications, Inc. v. FCC, 492 U.S. 115

EE A SE es a Lee

Saia Vv. New York, 334 U.S. 558 (1948) —................

Schaumberg Vv. Citizens for a Retter Environment,

FR RO RES oo PE eee

Schneider Vv. State (Town of Irvington), 308 U.S.

FRESE ee ON ee eR

Secretary of State of Maryland Vv. J.H. Munson

Page

Oe ae 20, 21, 23

Southwestern Bell Corp. v. FCC, 896 F.2d 1378

Telephone Company—Cable Television Cross-

Ownership Rules, Sections 6354-6358, Third

Report and Order, 10 FCC Red 7887 (1995),

petition for review filed sub nom. GTE Cali-

fornia Inc. v. FCC, No. 95-70518 (9th Cir. June

ES oe passim

Telephone Company—Cable Television Croes-

Ownership Rules, Sections 63.54-63.58, Fourth

Further Notice of Proposed Rulemaking, 10

. | )6U U6LlCUCZO ye ea

Telephone Company—Cable Television Cross-

Ownership Rules, Sections 63.54-68.58, Second

Report and Order, Recommendation to Con-

gress, and Second Further Notice of Proposed

Rulemaking, 7 FCC Red 5781 (1992), modified

in part on recon., 10 FCC Red 244 (1994), peti-

tion for review filed sub nom. Mankato Citizens

Telephone Co. Vv. FCC, No. 92-1404 (D.C. Cir.

ff ee ae

TABLE OF AUTHORITIES—Continued

Page

Turner Broadcasting System, Inc. v. FCC, 114

S. Ct. 2445 (1904) ............................... 2, 10, 13, 14, 15, 16

U S WEST, Inc. v. United States, 855 F. Supp.

1184 (W.D. Wash. 1994), aff'd, 48 F.3d 1092

EA a a a ee 2,10

U S WEST, Inc. v. United States, 48 F.3d 1092

a 2, 3, 8, 9, 10, 11, 17

Ward v. Rock Against Racism, 491 U.S. 781

ESTES AS Tae ae A ae eae 14

FR ES eens passim

Cable Television Consumer Protection and Com-

petition Act of 1992, § 2(a) (2), 106 Stat. 1460. 15

Pole Attachment Act of 1978, 47 U.S.C. 224(b) (1). -

RSENS passim

MISCELLANEOUS

141 Cong. Rec. H8506-07 (daily ed. Aug. 4, 1995)... 12,13

141 Cong. Rec. 88480 (daily ed. June 15,1995) 12

140 Cong. Rec. H5247-48 (daily ed. June 28, 1994) . 12

H.R. 1555, 104th Cong., Ist Sess. (1995) 12,13

H.R. 3636, 108d Cong., 2d Sess. (1994)... 12

H.R. Rep. No. 204, 104th Cong., Ist Sess. (1995) __. 13

H.R. Rep. No. 560, 108d Cong., 2d Sess. (1994) 12

H.R. Rep. No. 934, 98th Cong., 2d Sess. (1984) 10

S. 652, 104th Cong., Ist Sess. (1995) ee 12

S. 1822, 108d Cong., 2d Sess. (1994) 12

S. Rep. No. 367, 103d Cong., 2d Sess. (1994)... 12

FCC Policy on Cable Ownership: A Staff Report

EES ES eS Re ae 7

NTIA, U.S. Dep’t of Commerce, The NTIA In-

frastructure Report: Telecommunications in

the Age of Information (1991) ........ 9

Reply Comments of the U.S. Department of Jus-

tice, Telephone Company—Cable Television

Cross-Ownership Rules (Mar. 13, 1992) ............ 9

Mee Gates Ss a ore

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In THE

Supreme Court of the United States

OcTOBER TERM, 1995

No. 94-1893

UNITED STATES OF AMERICA, et ai.,

7 Petitioners,

CHESAPEAKE AND POTOMAC TELEPHONE COMPANY

OF VIRGINIA, ef ai.,

Respondents.

No. 94-1900

NATIONAL CABLE TELEVISION ASSOCIATION, INC.,

2 Petitioner,

BELL ATLANTIC CORPORATION, ef al.,

Respondents.

On Writs of Certiorari to the

United States Court of Appeals

for the Fourth Circuit

BRIEF OF U S WEST, INC. AS AMICUS

CURIAE IN SUPPORT OF RESPONDENTS

U S WEST, Inc. (“U S WEST”) respectfully submits

this brief as amicus curiae in support of respondents, urg-

ing affirmance of the decision below. Written consents of

all parties to the filing of this brief have been filed with

the Clerk pursuant to Supreme Court Rule 37.3.

INTEREST OF THE AMICUS CURIAE

U S WEST and its subsidiaries and affiliates provide

local telephone service to customers in 14 western states

with a total population of more than 30 million people.

U S WEST wishes to provide cable television service, in

competition with existing cable operators, within this 14-

state regon, but 47 U.S.C. 533(b) (“section 533(b)”),

if valid, would by its terms prohibit U S WEST from

doing so.

U S WEST, joined by other local telephone companies,

brought suit against the federal petitioners in the U.S.

District Court for the Western District of Washington,

seeking to establish its right under the First Amendment

to provide such video programming. The district court

granted summary judgment for the plaintiffs, holding that

section 533(b) unnecessarily “sacrifices” the First Amend-

ment rights of U S WEST and other telephone companies

because it is not narrowly tailored to serve any substantial

governmental interest. 1) S WEST, Inc. v. United States,

855 F. Supp. 1184, 1193 (W.D. Wash. 1994).

The Ninth Circuit affirmed, concluding for similar rea-

sons that section 533(b) violates the First Amendment.

U S WEST, Inc. v. United States, 48 F.3d 1092 (9th

Cir. 1995). Judge Hall, writing for a unanimous panel,

first determined that the video programming ban should

be subjected to intermediate scrutiny in light of this

Court’s decision in Turner Broadcasting System, Inc. Vv.

FCC, 114 S. Ct. 2445 (1994). See 48 F.3d at 1097-

100. She then concluded that there was no evidence to

support two “interests” proffered by the Government as

reasons for sustaining section 533(b): to prevent tele-

phone companies from limiting access to poles and con-

duits, and to promote diversity by preventing telephone

companies from monopolizing the cable television indus-

try. Id. at 1102-03. As for a third argument—that the

video programming ban reduces incentives for telephone

companies to “cross-subsidize” cable operations by shift-

ing costs to regulated telephone operations—the court

found that although there was a question whether the

Statute serves this purpose at all, there was no doubt that

section 533(b) is not narrowly tailored to meet such

a concern. /d. at 1103-06. Citing several examples of

steps the Government could take, short of a sweeping ban

on speech, to prevent anticompetitive behavior such as

cross-subsidization, the court held that section 533(b)

is not narrowly tailored and thus fails First Amendment

scrutiny. /d. at 1104-06. The court also firmly rejected

the Government’s argument that Congress, in not repeal-

ing section 533(b), implicitly made legislative findings to

which the court should defer. /d. at 1100-01, 1106. The

court of appeals refused to accept “congressional inaction

as persuasive evidence . . . of Congress’s having ‘found’

anything.” /d. at 1106.

For similar reasons, in the present case, the Court of

Appeals for the Fourth Circuit held that section 533(b)

violates the First Amendment. Eight other district courts

have also concluded that the video programming ban is

unconstitutional, and no court has held to the contrary.

See Response to Petitions for Writ of Certiorari 4 n.2

(listing cases). U S WEST, like respondents, has an in-

terest in offering video programming in its local tele-

phone service area. U S WEST submits this brief in

support of respondents’ position that prohibiting this

speech activity violates the First Amendment.

STATEMENT OF THE CASE

We adopt respondents’ statement of the case. How-

ever, because this brief focuses in part on the FCC's

Third Report and Order,’ we briefly summarize it here.

The Third Report and Order is reprinted in the Appen-

' Telephone Company—Cable Television Cross-Ownership Rules,

Sections 63.54-63.58, Third Report and Order, 10 FCC Red 7887

(1995), petition for review filed sub nom. GTE California Inc. v.

FCC, No. 95-70518 (9th Cir. June 28, 1995).

dix to the Supplemental Brief of Petitioners in Support

of Petition for a Writ of Certiorari (“Pet. Supp. App.”

la-2la).?

In the Third Report and Order, the FCC reinterpreted

section 533(b)’s “good cause” waiver provision, saying

it was doing so in order to avoid the “serious question

as to whether Section [|533](b) unnecessarily burdens sub-

stantially more speech than is necessary to promote com-

petition in the multi-channel video programming market.”

Pet. Supp. App. 6a. The waiver provision states that

“upon [a] showing of good cause, the Commission may,

on petition for waiver, waive the applicability of” the

telephone company in-region video programming bar. 47

U.S.C. 533(b)(4). Before granting a waiver, the FCC

must find that “the issuance of such waiver is justified by

the particular circumstances demonstrated by the peti-

tioner, taking into account the policy of this subsection.”

Id.

Until the Third Report and Order, the agency had

found “good cause” to support a waiver only where the

applicant could “demonstate” that the waiver was needed

and would serve the public interest in that “particular

case[].” Revision of the Processing Policies for Waivers

of the Telephone Company—Cable Television Cross

Ownership Rules, 69 F.C.C.2d 1097, 1111 (1978).

Under the new regime announced in the Third Report and

Order, the FCC has determined that “good cause” now

exists to grant waivers more broadly, because “the cable

industry has grown from a fledgling service to a more

mature industry that now serves a majority of households”

and thus, in the agency’s view, the “relevant circumstances

2“Gov’t Br.” refers to the Brief for the Federal Petitioners.

“NCTA Br.” refers to the Brief for Petitioner National Cable

Television Association, Inc. “Pet. App.” refers to the appendix to

the petition for certiorari in No. 94-1893. “J.A.” refers to the

Joint Appendix.

have changed greatly since” the adoption of the telephone

company video programming ban. Pet. Supp. App. | la.

The agency did not, however, conclude that the statute

required it to grant a waiver automatically to every in-

terested telephone company; nor did it clearly set forth

the circumstances in which waivers will be granted. The

FCC simply determined that it was authorized to use its

discretion to grant waivers, id. at 17a, and it announced

a policy of granting waivers where it finds that a telephone

company has agreed “to abide by the regulations [the

FCC] will establish governing [the] provision of video

programming.” /d. at 19a (emphasis added). The agency

did not state specifically what those future regulations

will be, merely announcing that waivers will be “subject

to . . . any further rules we will enact.” /d. at 20a. Al-

though the FCC indicated that telephone companies might

be allowed to provide video programming over video dial-

tone systems that “include[] a common carriage element,”

id. at 13a, the agency expressly declined to decide, for

example, what regulatory regime will apply, id. at 3a, or

whether a telephone company will be allowed “to build

a traditional cable system in its telephone service area in

competition with an existing cable service.” Jd. at 17a

n.46.

SUMMARY OF ARGUMENT

The court of appeals (and the Ninth Circuit in the

U S WEST case) ruled that section 533(b) cannot sur-

vive intermediate First Amendment scrutiny because its

blanket ban on in-region provision of video programming

is too broad to serve any proffered governmental purpose.

In this Court, petitioners make two arguments for

reversal:

1. The courts should defer to supposed congres-

sional findings that the blanket ban is necessary

to prevent cross-subsidization and that no lesser

regime will suffice.

2. In any event, the FCC has cured the lack of nar-

row tailoring by announcing that it will interpret

the statute's “good cause” waiver provision ex-

pansively so as to allow telephone companies to

provide some in-region video programming (al-

beit under conditions that have not yet been fully

specified ).

Each of these arguments is flawed, and each fatally

undercuts the other. As to the first argument, the legis-

lative record does not support petitioners’ claim that Con-

gress found that a complete ban on video programming

is necessary to prevent cross-subsidization. No such find-

ing is explicit or implicit in the 1984 enactment of the

statute, and no such finding may properly be inferred

from subsequent congressional inaction. Moreover, peti-

tioners ignore the most recent congressional activity con-

cerning the need for a blanket ban: the passage in both

Houses of bills that would repeal section 533(b). Fi-

nally, the FCC’s Third Report and Order, which de-

scribes sweeping changes in circumstances and begins to

construct a new regulatory regime based on broad waivers

to allow telephone companies to provide video program-

ming on “video dialtone” platforms, completely under-

cuts the same agency’s argument to this Court that Con-

gress sees a continuing need for a complete ban.

As to the second argument, the FCC cannot save sec-

tion 533(b) from invalidation by changing its own waiver

policy. Courts and agencies have, in some cases, saved

statutes from First Amendment attack by construing their

substantive provisions to avoid a constitutional issue. Pe-

titioners invoke such cases here, but that is not at all

what the FCC has done in this instance. Under the Third

Report and Order, telephone companies would remain

subject to an unconstitutional blanket statutory ban on

a protected form of speech. The FCC has said only that

it intends, as a matter of administrative grace, to forgive

compliance in some situations. This agency action does

not make the statute itself any more constitutional than

before, and it does not moot the constitutional issue be-

cause the agency forgiveness is at best partial, subject to

conditions not yet fully defined, and subject to change.

Indeed, unbridled FCC discretion to dole out otherwise

prohibited speaking opportunities would only make the

situation worse.

ARGUMENT

I. THE VIDEO PROGRAMMING BAN IS NOT NAR-

ROWLY TAILORED TO MEET ANY PROFFERED

GOVERNMENTAL INTEREST, AND CONGRESS

HAS NEITHER EXPLICITLY NOR IMPLICITLY

FOUND THAT THE BAN IS NECESSARY

A. There Has Been No Congressional Finding That a

Complete Ban on Telephone Company Provision of

Video Programming Is Necessary To Serve the

Interests Proffered by the Government

The Government concedes that section 533(b) “com-

pletely exclud{es] [telephone companies] from cable pro-

gramming in their service areas.” Gov't Br. 25. The Gov-

ernment claims, however, that this complete ban survives

intermediate scrutiny because it is narrowly tailored to

prevent cross-subsidization by telephone companies enter-

ing the cable television market.* To the contrary, every

* The Government also contends that the video programming ban

is necessary to prevent telephone companies from “abusing their

control” over poles and conduits and telephone networks. Gov’t Br.

35-37. But this “pole access” argument fails at the threshold. The

Government relies on the FCC’s statement in 1970 that it was

adopting the rule later codified as section 533(b) out of concern

that telephone companies might use their control over utility poles

and conduits to hinder the development of an independent cable

television industry. /d. at 35. But by 1981, three years before

Congress adopted section 583(b), the FCC’s Office of Plans and

Policy had already concluded that such concerns did not justify

the video programming ban. FCC Policy on Cable Ownership:

A Staff Report 162 (1981) (J.A. 160-61). The FCC strongly re-

expert federal agency that has examined the question,

including both the FCC and the Department of Justice,

has concluded that much more limited—and better tar-

geted—regulatory safeguards than a complete ban on

video programming can meet any risk of cross-subsidy.

For example, when the FCC formally recommended

the repeal of section 533(b) in its 1992 Video Dialtone

Order, it explicitly concluded that existing regulatory

safeguards, such as detailed cost allocation and account-

ing rules,‘ regulations ensuring equal treatment of non-

regulated services provided over telephone networks,’ and

the development of “price cap” regulation,’ were “suffi-

cient . . . to protect against cross-subsidization.” 7 FCC

Red 5781, 5828-29 (1992). The FCC’s Third Report

and Order, discussed in detail below, dramatically reit-

erates the FCC’s determination that regulatory safeguards

would provide ample protection against any potential for

cross-subsidization. The Antitrust Division of the Justice

Department agrees that concerns about anticompetitive

affirmed this position in its 1992 Video Dialtone Order, finding that

the passage of the Pole Attachment Act of 1978, 47 U.S.C. 224

(b) (1), and the cabling of almost the entire country had long ago

rendered such concerns obsolete. Telephone Company—Cable Tele-

vision Cross-Ownership Rules, Sections 63.54-63.58, Second Report

and Order, Recommendation to Congress, and Second Further No-

tice of Proposed Rulemaking, 7 FCC Red 5781, 5849 (1992), modi-

fied in part on recon., 10 FCC Red 244 (1994), petition for review

filed sub nom. Mankato Citizens Telephone Co. v. FCC, No. 92-1404

(D.C. Cir. Sept. 9, 1992). For these reasons, and because section

533(b) does not prohibit the provision of video transport services,

the Ninth Circuit found no evidence to support this rationale for

the statute. U S WEST, 48 F.3d at 1102-03.

* See Southwestern Bell Corp. v. FCC, 896 F.2d 1878 (D.C. Cir.

1990).

5 See California v. FCC, 39 F.3d 919 (9th Cir. 1994), cert. denied,

115 S. Ct. 1427 (1995).

* See National Rural Telecom Ass'n v. FCC, 988 F.2d 174, 178

(D.C. Cir. 1998).

behavior do not justify retaining section 533(b).’ The

National Telecommunications and Information Adminis-

tration (NTIA) at the Department of Commerce has

similarly concluded that such concerns are “either over-

stated or can be effectively ameliorated by adapting exist-

ing regulatory safeguards to suit the video programming

marketplace.” *

Because the expert agencies have long since concluded

that section 533(b) is not needed to prevent cross-

subsidization, the Government falls back on a deference

argument: “Congress reasonably concluded that the cross-

ownership bar is necessary to prevent cross-subsidization

by [telephone companies] in the cable market effectively.”

Gov't Br. 31 (emphasis added). The Government then

asks the Court to defer to this supposed congressional

“judgment.” Id. at 28-29; see id. at 32 n.21. Similarly,

petitioner NCTA asserts that “there is no adequate

basis for the judiciary to set aside the congressional judg-

ment on the issue here.” NCTA Br. 44 (emphasis

added ).

The lower courts, including the Ninth Circuit in the

U §S WEST case, have firmly rejected this call for defer-

ence because there is simply no reason to believe that

Congress ever made—in formal findings or anywhere else

—any such “judgment.” When Congress passed section

533(b) in 1984, it codified, essentially without comment,

an FCC rule adopted in 1970 for the infant cable indus-

try out of concern that telephone companies might “pre-

empt the market for [cable television] service.” The

7 Reply Comments of the U.S. Department of Justice, Telephone

Company—Cable Television Cross-Ownership Rules 44 (Mar. 13,

1992) (J.A. 341-42).

8 NTIA, U.S. Dep’t of Commerce, The NTIA Infrastructure Re-

port: Telecommunications in the Age of Information 235 (1991)

(J.A. 348).

® Applications of Telephone Companies for Section 214 Certifi-

cates for Channel Facilities Furnished to Affiliated Community

Antenna Television Systems, Final Report and Order, 21 F.C.C.2d

1984 Congress made no relevant findings of fact in the

statute itself, and the single reference to section 533(b)

in the legislative history merely explains that Congress

intended to codify the earlier FCC rule.” (This case is

thus unlike Turner Broadcasting, which involved a statu-

tory provision supported by “unusually detailed statutory

findings.” 114 S. Ct. at 2461; see id. at 2454-55, 2469.)

Moreover, there is no indication that Congress even con-

sidered, and no reason whatever to assume that it reached

any judgment about, the problem of cross-subsidization;

the supposition that cross-subsidization can be effectively

prevented only by a complete ban, and not by less severe

regulatory alternatives, is a litigator’s supposition that

there is no basis whatever for attributing to Congress.

See U S WEST, 48 F.3d at 1100-01, 1106. As the D.C.

Circuit recently concluded after a thorough examination

of section 533(b) and its legislative history, “Congress

itself has never embraced [this] purpose[] as its own.”

American Scholastic TV Programming Foundation v.

FCC, 46 F.3d 1173, 1182 (D.C. Cir. 1995).™

307, 324 (1970), aff'd sub nom. General Telephone Co. v. United

States, 449 F.2d 846 (5th Cir. 1971).

10 H.R. Rep. No. 934, 98th Cong., 2d Sess. 56 (1984). Another

passage describes section 533 as a whole as intended “to prevent

the development of local media monopolies, and to encourage a

diversity of ownership of communications outlets.” Jd. at 55.

Logically, this reference must have pertained to other portions of

section 533, such as a broadcast station/cable cross-ownership ban

and a later-deleted newspaper/cable cross-ownership ban, because a

common carrier telephone service is not a medium or “outlet” for

owner communications. Telephone companies carry third-parties’

messages from one customer to another. See U S WEST, 855 F.

Supp. at 1187. In any event, this statement of the general purposes

behind section 533 does not imply a congressional judgment that

a total ban on video programming is necessary to prevent any

particular phenomenon.

11 The petitioners in American Scholastic, like the Government

here, argued that the purposes of section 533(b) are to prevent

problems with pole access and to prevent cross-subsidization. The

Given the admittedly “sparse” legislative history,

NCTA Br. 32, petitioners are forced to argue that the

failure of Congress since 1984 to repeal section 533(b)

amounts to a congressional “judgment” that nothing short

of a complete ban will suffice. The Government points to

hearings and staff reports on proposals to repeal section

533(b) that never made it out of committee as evidence

that Congress as a whole—sometime after 1984—decided

to reject less restrictive regulatory alternatives to a com-

plete ban. See Gov't Br. 8-11, 31-34; NCTA Br. 16-17,

35 n.28. But this Court has repeatedly rebuffed efforts

to divine legislative judgments from Congress’s failure to

act, explaining that “Congressional inaction lacks persua-

sive significance because several equally tenable infer-

ences may be drawn from such inaction.” Pension Bene-

fit Guarantee Corp. v. LTV Corp., 496 U.S. 633, 650

(1990) (internal quotation marks and citation omitted) ;

see Central Bank vy. First Interstate Bank, 114 S. Ct.

1439, 1453 (1994). Congress’s failure to repeal section

533(b) in the last decade, in the face of dramatic

changes in the cable television market and findings by the

relevant expert agencies that the statute unnecessarily

limits competition and diversity, says nothing about Con-

gress’s attitude toward less draconian alternatives. As

the district court concluded below: “[NJowhere in the

legislative materials is there any indication that Congress

reached a conclusion concerning the effectiveness of less

restrictive regulatory measures.” Pet. App. 100a; accord

U S WEST, 48 F.3d at 1106.

If congressional views, unembodied in enacted legis-

lation, were a proper basis for determining whether par-

ticular legislation is needed to solve an alleged problem,

then the best evidence of Congress’s present views would

be the recent passage, by both Houses, of bills that would

repeal section 533(b). Petitioners’ recitations of the

court found that Congress “has never in law or legislative history

specifically adopted these purposes.” 46 F.3d at 1182.

“subsequent legislative history” of section 533(b) end

prematurely in 1992, see Gov't Br. 8-11; NCTA Br. 15-

17, omitting what is clearly the most important evidence

of Congress’s views. In 1994, the House of Representa-

tives approved by a vote of 423 to 4 a bill (H.R. 3636)

that would have repealed section 533(b), 140 Cong. Rec.

H5247-48 (daily ed. June 28, 1994), and the committee

report accompanying the bill declared that the rationale

for a video programming ban was “no longer valid.” H.R.

Rep. No. 560, 103d Cong., 2d Sess. 47 (1994). Senate

committees also approved several bills in 1994 that would

have repealed section 533(b). See, e.g., S. Rep. No. 367,

103d Cong., 2d Sess. (1994) (reporting S. 1822).

Once again this year, Congress is working on legisla-

tion that would repeal the video programming ban. In

June. the full Senate passed by a vote of 81 to 18 a bill

(S. 652) that would repeal section 533(b) and allow

telephone companies and their affiliates to provide video

programming either through a cable system as a tradi-

tional cable operator or though a video dialtone system.”

141 Cong. Rec. $8480 (daily ed. June 15, 1995). In

August, the House of Representatives passed a similar

bill (H.R. 1555), which would allow telephone com-

panies (through affiliates) to provide video programming

directly to local subscribers through either cable systems

or video dialtone platforms.” 141 Cong. Rec. H8506-07

12 The Government’s description of the Senate bill as allowing

telephone companies “to offer video programming through video

dialtone systems,” Gov't Br. 16 n.12, is misleadingly terse. The bill

would also allow a telephone company to provide in-region video

programming as a traditional cable operator, without creating a

video dialtone system. See S. 652, 104th Cong., Ist Sess. § 202(a).

18 The Government's description of the House bill is also in-

accurate. The Government states that H.R. 1555 would allow tele-

phone companies “to offer video programming to subscribers in

their service areas, through video dialtone platforms operated by

separate affiliates.” Gov't Br. 16 n.12. In fact, as passed by the

House, H.R. 1555 would also allow telephone companies to offer

(daily ed. Aug. 4, 1995) (approved by a vote of 305 to

117). The committee report on the bill declares that

“[t]elephone company competition with the entrenched

cable operators would enable consumers to benefit from

lower rates, better quality service, improved maintenance,

and a larger diversity of new information services.” H.R.

Rep. No. 204, 104th Cong., Ist Sess. 53 (1995). These

recent legislative developments refute the Government's

contention that Congress has failed to repeal section

533(b) because it has a “judgment” that regulatory

alternatives short of a complete video programming ban

would not be adequate to prevent cross-subsidization.

Of course, “Congress is not obligated, when enacting

its statutes, to make a record of the type that an admin-

istrative agency or court does to accommodate judicial

review.” Turner Broadcasting, 114 S. Ct. at 2471 (plur-

ality opinion). But when the Government seeks to defend

a broad statutory ban on speech, deemed unnecessary and

counterproductive by all the expert agencies, by arguing

that all these views are trumped by a congressional judg-

ment that no lesser restriction will suffice, the Govern-

ment must at least show that Congress actually made such

a judgment. The Government's lawyers may not simply

posit a problem and then claim that Congress, by adopt-

ing a sweeping restriction on speech (without explana-

tion) and then failing to repeal it, must have decided that

the infringement on speech is necessary to meet the

problem posited. See id. at 2470 (plurality opinion);

Los Angeles v. Preferred Communications, Inc., 476 U.S.

488, 496 (1986) (“This Court may not simply assume

that the ordinance will always advance the asserted state

interests sufficiently to justify its abridgement of expres-

video programming through separate affiliates acting as traditional

cable operators. H.R. 1555, 104th Cong., Ist Sess. § 201. In addi-

tion, the bill would allow telephone companies, under certain condi-

tions, to obtain a waiver from the requirement of using a separate

video programming affiliate. See id. § 201(b).

sive activity”) (internal quotation marks and citation

omitted ).

Moreover, even if Congress had judged it necessary to

impose a sweeping ban on speech to address the issue of

cross-subsidization, it remains the Court’s responsibility

“in the end to decide whether Congress has violated the

Constitution.” Sable Communications, Inc. v. FCC, 492

U.S. 115 (1989). For that reason, “[dJeference to a

legislative finding cannot limit judicial inquiry when First

Amendment rights are at stake.” Landmark Communica-

tions, Inc. v. Virginia, 435 U.S. 829, 843 (1978). This

principle was dramatized in the Turner Broadcasting

case, where this Court vacated the lower court’s judgment

that the “must-carry” provisions of the 1992 Cable Act

were constitutional despite the presence of extensive find-

ings of fact supporting the must-carry rules in the text of

the Act itself. See 114 S. Ct. at 2454-55; id. at 2470-72

(plurality opinion). As the Government acknowledges,

it carries the burden of proving that “Congress has drawn

reasonable inferences based on substantial evidence.”

Turner Broadcasting, 114 S. Ct. at 2471 (plurality opin-

ion); see Gov't Br. 32 (quoting Turner Broadcasting).

In this case, that burden is insurmountable, because the

Government has neither the substantial evidence nor any

basis for concluding that Congress actually drew the sup-

posed inferences.

B. The FCC’s Third Report and Order on Telephone

Company Provision of In-Region Video Program-

ming Fatally Undercuts the Argument That Con-

gress Has Determined That a Blanket Ban Is

Necessary

To prevail, the Government must prove that section

533(b) does not “burden substantially more speech than

is necessary to further the government's legitimate inter-

ests.” Ward v. Rock Against Racism, 491 U.S. 781, 799

(1989): see Turner Broadcasting, 114 S. Ct. at 2469

(quoting Ward); id. at 2470, 2472 (plurality opinion).

If there are “constitutionally acceptable less restrictive

means of achieving the Government's asserted interests,”

id. at 2472 (plurality opinion) (internal quotation marks

and citation omitted), then the statute is not narrowly

tailored. The Government may not ignore “alternative,

less drastic measures” by which it could protect its as-

serted interests in favor of a broad ban on speech. City

of Cincinnati v. Discovery Network, Inc., 113 §S. Ct.

1505, 1510 n.13 (1993).

Even before the FCC’s Third Report and Order, the

Commission, along with every other expert telecommuni-

cations agency, had concluded that regulatory safeguards

fully addressed the cross-subsidy concerns proffered by

petitioners in their attempt to justify section 533(b).

The FCC has now not only stated that less restrictive

regulatory safeguards can meet these concerns, it has

decided that it will not enforce the blanket ban but in-

stead will rely on such less severe measures. These FOC

actions speak more loudly than its litigators’ words.

According to the FCC, “[t}he relevant circumstances

have changed greatly” since the Commission adopted the

ban in 1970 and Congress codified it in 1984. Pet. Supp.

App. Ila. As Congress found in the 1992 Cable Act,

cable operators enjoy a firmly entrenched monopoly in

most communities;"* telephone companies cannot pre-

vent the development of a viable and independent cable

industry. /d. In addition, “significant advances in tech-

nology” have “made it possible for a multitude of pro-

grammers to reach end user[s]” and have “mitigated” the

concerns about competition that originally led to the

adoption of the video programming ban. /d. at | la-12a.

The dramatic changes noted by the FCC would eliminate

Cable Television Consumer Protection and Competition Act of

1992, Pub. L. No. 102-385, § 2(a) (2), 106 Stat. 1460.

the basis for any congressional judgment about regula-

tory alternatives that might have been made in 1984.”

Contrary to its litigation position in this Court, the

FCC has concluded that under present conditions tele-

phone companies should provide in-region video program-

ming, subject to regulatory safeguards. According to the

FCC, Congress intended when it adopted section 533(b)

“ “to promote competition.’” Pet. Supp. App. 10a (quot-

ing NCTA v. FCC, 914 F.2d 285, 287 (D.C. Cir.

1990)). If excluding one class of speakers ever promoted

competition or a diversity of voices, today there is no

doubt that it “promote[s] competition to allow a tele-

phone company to provide video dialtone service in its

telephone service area in competition with an existing

cable company.” /d. at 17a. The FCC “has developed a

number of safeguards that are designed to prevent cross-

subsidization and discrimination,” id. at 14a n.35, and

these safeguards provide a more narrowly tailored alterna-

tive to the complete ban in section 533(b).

In Turner Broadcasting, this Court vacated and re-

manded the lower court’s decision because, among other

reasons, “the record fail[ed] to provide any judicial find-

ings concerning the availability and efficacy of ‘consti-

tutionally acceptable less restrictive means’ of achieving

the Government’s asserted interests.” 114 S. Ct. at 2472

(plurality opinion) (quoting Sable Communications, 492

U.S. at 129). In th's case, the lower courts have made

the necessary findings about the availability of less restric-

tive, better targeted means of addressing the Government's

concerns. The court of appeals below, for example, found

at least one “obvious, less-burdensome” alternative: Con-

The Government bears the burden of showing that the statute

is constitutional under present circumstances, for even a “ ‘statute

[constitutionally] valid when enacted may become invalid by change

in the conditions to which it is applied.’” Baker v. Carr, 369 U.S.

186, 254 n.6 (1962) (quoting Nashville, Chattanooga & St. Louis

Ry. Vv. Walters, 294 U.S. 405, 415 (1985) ).

gress could limit the telephone companies’ editorial con-

trol over video programming to a fixed percentage of the

channels available. Pet. App. 47a-48a. The Ninth Circuit

in U S WEST also found “substantial evidence tending to

show that the procompetitive goals of § 533(b) can cur-

rently be achieved through a variety of less speech-

restrictive means.” 48 F.3d at 1105. That court noted

many possibilities in the record, including structural sep-

aration requirements short of a complete ban, nonstruc-

tural safeguards such as cost allocation and accounting

rules, requiring telephone companies to carry unaffiliated

video programming (the alternative noted by the Fourth

Circuit), and strictly enforcing general antitrust laws.

Since then, the FCC has essentially agreed with the

lower courts—it has endorsed “obvious, less-burdensome”

alternatives to a complete ban, better tailored to meet any

concerns about cross-subsidization. Pet. Supp. App. 3a-6a.

The FCC’s conclusion reflects the Government's failure

to create any record justifying the need for the broad

ban on speech contained in section 533(b). As Justice

O’Connor remarked in Turner Broadcasting: “If the

Government wants to avoid fraudulent political fund-

raising, it may bar the fraud, but it may not in the

process prohibit legitimate fundraising.” 114 S. Ct. at

2479 (O’Connor, J., concurring in part and dissenting

in part) (citing Schaumberg v. Citizens for a Better En-

vironment, 444 U.S. 620 (1980), and Edenfield v. Fane,

113 S. Ct. 1792 (1993)). So too here—if the Govern-

ment wants to avoid anticompetitive behavior, it may

bar such behavior, but it may not in the process prohibit

legitimate telephone company speech.

Il. THE FCC’s NEW INTERPRETATION OF ITS

WAIVER AUTHORITY IN THE THIRD REPORT

AND ORDER ONLY EXACERBATES THE STAT-

UTE’S UNCONSTITUTIONALITY

A. The FCC’s New Construction of the “Good Cause”

Waiver Provision Does Not Alter Section 533(b)’s

Unconstitutional Blanket Ban on Telephone Com-

pany Provision of In-Region Video Programming

In plain language, section 533(b) bars telephone com-

panies from providing video programming to subscribers

in their telephone service areas. The statute states un-

equivocally that it “shall be unlawful” for a telephone

company “to provide video programming directly to sub-

scribers” or to provide “channels of communications” to

an entity that it controls if those channels are “to be

used for, or in connection with, the provision of video

programming directly to subscribers in the telephone serv-

ice area of the common carrier.” 47 U.S.C. 533(b)(1),

(2). The Government’s own description of section 533(b)

is that it “completely excludes] [telephone companies]

from cable programming in their service area.” Gov't Br.

25. As respondents and supporting amici have amply

demonstrated, and the lower courts have unanimously

concluded, this blanket ban unconstitutionally restricts

speech. a

Petitioners, invoking cases like NLRB v. Catholic

Bishop of Chicago, 440 U.S. 490 (1979), argue that

the FCC has recently found a “saving” construction of

the statute that “eliminates the constitutional objections

to the statutory regime.” Gov't Br. 39; see NCTA Br. 26-

34; Gov't Br. 39-43. But the FCC has done no such

thing. As the Third Report and Order makes clear. the

FCC has not given the substantive provisions of section

533(b) a narrowing construction that eliminates the un-

constitutional restriction on telephone company speech."

** The Commission acknowledges that section 533 (b) “prohibits

a telephone company from operating a cable system where it has

The FCC has merely (i) construed its own “good cause”

waiver authority under section 533(b) (4) broadly and

(ii) expressed an agency policy determination that it will

henceforth exercise that authority generously.” This FCC

action does not free telephone companies from the un-

constitutional statutory ban; it merely promises freedom

to speak, in circumstances not yet specified, as a matter

of agency grace. The FCC says only that “telephone com-

panies may seek a waiver of the statutory restriction in

order to provide programming directly to subscribers over

video dialtone facilities where they have a monopoly on

local exchange telephone service.” Pet. Supp. App. 15a.

As NCTA explains, “the Commission’s construction of

Section 533(b)(4) will leave the presumptive statutory

bar in place for all telephone companies that, though

they may wish otherwise, fail to act in accord with the

behavioral requirements made conditions of the waiver.”

NCTA Br. 32.

Petitioners invoke the general principle that courts en-

gaged in statutory interpretation should attempt, when

choosing among reasonable alternatives, to construe stat-

utes to avoid constitutional problems. See NCTA Br.

26-27; Gov't Br. 40-41. But that canon of Statutory con-

struction has no application here. Petitioners’ so-called

“saving” construction of section 533(b) does not con-

Sstrue the substantive provisions of the statute so as to

eliminate an infringement on First Amendment activity.

This case is not at all like Catholic Bishop, where the

a monopoly on local telephone company service” and “does generally

bar a telephone company from selecting (or ‘exerting editorial

control over’) and providing the video programming carried over

its wires in its local service area.” Pet. Supp. App. 3a (emphasis

in original).

1T “(W]e construe Section [533] (b) (4), the waiver provision, as

authorizing us to permit telephone companies to act as programmers

on video dialtone systems pursuant to certain conditions.” Pet.

Supp. App. 9a.

Court construed the National Labor Relations Act not to

apply to teachers in parochial schools and thereby avoided

serious freedom of religion concerns, 440 U.S. at 507;

nor is it like Edward J. DeBartolo Corp. v. Florida Gulf

Coast Building & Construction Trades Council, where

the Court construed the same statute not to apply to

peaceful handbilling and thereby avoided serious freedom

of speech concerns, 485 U.S. 568, 575-88 (1988). Here,

the FCC has not construed the substantive provisions of

the statute at all: both before and after the FCC’s new

construction, the statute prohibits a large amount of pro-

tected speech without any adequate reason for doing so.

Such a statute is not “saved” by the responsible agency’s

promise not to enforce it in some cases under conditions

the agency unilaterally adopts.

The Government argues that the possibility that a tele-

phone company can obtain a waiver to provid in-region

video programming “removes any objections to the tail-

oring of the congressional regime” by offering a “less

burdensome alternative” to the total ban. Gov't Br. 42.

This Court rejected an indistinguishable argument in Sec-

retary of State of Maryland v. J.H. Munson Co., 467

U.S. 947 (1984). In holding that a percentage restric-

tion on charitable solicitation was not narrowly tailored

to meet any substantial governmental interests and thus

was unconstitutional on its face, id. at 965-66, the Court

noted that the statute’s waiver provision was unavailing:

“The possibility of a waiver may decrease the number of

impermissible applications of the statute, but it does

nothing to remedy the statute’s fundamental defect.” ”

18In the Third Report and Order, the FCC attempts to distin-

guish Munson by arguing that a liberal application of the section

583(b) waiver “furthers rather than hinders First Amendment

interests” by creating additional speaking opportunities. Pet. Supp.

App. 18a-19a. The Court rejected this argument in Munson, noting

that where the statute itself “is so poorly suited to accomplishing

the State’s goal, and where there are alternative means to serve

the same purpose, there is little justification for straining to salvage

Id. at 968; see also Lovell v. City of Griffin, 303 U.S.

444 (1938) (blanket ban on speech ruled facially un-

constitutional notwithstanding license procedure that might

have permitted petitioner to engage in the speech activity).

B. The FCC’s Promise of Administrative Charity Does

Not Vindicate Telephone Companies’ First Amend-

ment Rights

Under the regime contemplated by the Third Report

and Order, the video programming ban would remain in

place, and telephone companies would be dependent on

the FCC for the right to provide video programming to

in-region customers. This is not a satisfactory cure for

the First Amendment problems of the statute, for at least

two reasons.

First, the FCC’s new regime would remain subject to

change in the FCC’s discretion. The FCC based its new

interpretation of the statute’s waiver provision on the

“changed circumstances” that characterize the 1995 cable

market as compared to the 1970 or 1984 cable markets.

These changed circumstances, the agency said, qualify

as the type of “good cause” contemplated by section

533(b)(4). Pet. Supp. App. 9a-13a; see Gov't Br. 40.

But nothing prevents the agency from changing its mind

again, with or without another change of circumstances,

real or perceived. Indeed, the FCC is not bound even by

its pronouncement that “the rules [it] will promulgate in

the immediate future to authorize telephone companies to

provide video programming in their service areas will

constitute ‘particular circumstances . . . taking into ac-

count the policy’ of Section [533](b).” Pet. Supp. App.

13a. The agency is free at any point to require an addi-

tional showing by telephone companies that “particular

circumstances” justify individual waivers, or to change

the statute by invoking the possibility of official dispensation to

engage in protected activity.” 467 U.S. at 964 n.12.

the rules that constitute such circumstances. Because the

underlying video programming ban remains in effect, the

agency is free to modify its policy as it deems necessary,

leaving telephone companies with greater or lesser restric-

tions on their opportunities for speech.

Second, the FCC has not fully set out even the condi-

tions under which it now proposes to dispense its admin-

istrative charity. In the Third Report and Order, the FCC

claims the authority “to permit telephone companies to

act as programmers on video dialtone systems pursuant to

certain conditions.” Pet. Supp. App. 9a (emphasis added).

The agency admits, however, that it has not yet deter-

mined what those “conditions” are, leaving open such

major issues as “whether telephone companies may pro-

vide video programming over video dialtone networks

rather than as traditional cable operators” and whether

they will be regulated under Title II or Title VI of the

Communications Act. /d. at 3a; see id. at 14a n.36. The

FCC promises to “address the terms and conditions under

which telephone companies should be permitted to pro-

vide video programming directly to subscribers in their

local service areas in a subsequent order,” id. at 6a n.!!.

but it provides no timeframe for doing so.” Any decisions

1% The FCC generally suggests that telephone company in-region

video programming ventures would be subject to video dialtone

platform rules and could not utilize an anchor programmer Pet

Supp. App. 13a. Yet even those issues are explicitly left open is

the Commission's Fourth Notice of Proposed Rulemaking. on which

the Commission has yet to act. See Telephone Compony—ad<

Television Cross-Ownership Rules, Sections 6254-6254, Fourts

Further Notice of Proposed Rulemaking, 10 FCC Red 4617 1995

(Pet. App. 113a). Petitioner NCTA suggests « host of additions

“conduct-specific” conditions that the agency might apply & we

phone companies seeking waivers, including opersting stand-s.on«

cable systems, complying with Title VI of the Communications Act

and requirements relating to corporate structure. sceounting meth

ods, audits, and nondiscriminatory practices NCTA Br @ 7

date, the agency has not adopted or rejected ‘hese propessie or an

other specific rules

the FCC does reach in the future will likely face lengthy

administrative and judicial challenges.” This remarkable

uncertainty regarding the terms of possible administra-

tive waivers of section 533(b) underscores the immediate

practical difference between a judicial decision striking

down the statute and ongoing administrative proceedings

that dole out speaking opportunities on a schedule the

agency has yet to determine.

C. The FCC's Enlargement of Its Own Administrative

Discretion Only Exacerbates the Problem

The FCC's broad waiver policy also creates its own,

additional First Amendment concerns by creating a “li-

censing™ process in which telephone companies may exer-

cise their First Amendment rights only if the FCC, in

its discretion, approves. The “good cause” waiver policy

is not a blanket authorization for all telephone companies

to provide in-region video programming. It merely au-

thorizes the FCC to dispense speaking opportunities to

telephone companies that file specific waiver requests

See Pet. Supp. App. 1Sa, NCTA Br. 31-32. The grant

of such a waiver by the FCC will rest “upon compliance

with regulations to be published that will be designed to

prevent anticompetitive conduct” Govt Br 4]. The

waiver policy therefore vests unimpeded discretion in the

agency to determine whether telephone companies seck

ng to offer im-regoon video programming should be per

mutted to do so

lt s fundamental io Firsts Amendment junsprudence

‘hat &@ Statute requiring 4 “ycense” for the dissemination

ideas and placing discrenon in the hands of governmen:

censorstup that Dy ms very existence chills free speech ”

Munson. 467 -S af 964 5!) As this Court observed

n City of Latewoud » Plain Dealer Publishing Co the

m~ = oe etter ‘or ceree= of “herd Beet ant Ofte

ee eT

Government “may not condition . . . speech on obtaining

a license or permit from a government official in that

official’s boundless discretion.” 486 U.S. 750, 764 (1988)

(emphasis omitted). “[I}n the absence of narrowly drawn,

reasonable and definite standards for the officials to fol-

low,” license requirements create the possibility for abuse

and censorship of First Amendment rights. Niemotko Vv.

Maryland, 340 U.S. 268, 271-72 (1951); see Cox V.

Louisiana, 379 U.S. 536, 555-557 (1965); Kunz v. New

York, 340 U.S. 290, 294 (1951); Saia v. New York,

334 U.S. 558 (1948); Cantwell v. Connecticut, 310 US.

296, 305 (1940); Schneider v. State ( Town of Irvington),

308 U.S. 147, 163-64 (1939).

The Government suggests that the FCC’s proposed

“good cause” waiver “does not raise any of the constitu-

tional concerns that have been associated with waiver

provisions in other First Amendment contexts,” Gov't Br.

41, because the FCC will “ ‘routinely’ grant waivers of the

cross-ownership bar . . . to [telephone companies] that

agree to abide by [the agency's] safeguards in their video

dialtone systems,” id. at 39-40. Those “safeguards,” how-

ever, have not been specified and will be decided by the

FCC based on its judgment concerning the circumstances

under which telephone companies should be permitted to

exercise their First Amendment rights. The Court is thus

asked to hold that section 533(b) is constitutional based

on nothing more than a promise by the FCC that the

agency will restrict itself from exercising its discretion in

an unconstitutional manner.

Such circular arguments and unsubstantiated promises

cannot sidestep the statute’s plain, unconstitutional lan-

guage. In City of Lakewood, this Court rejected the invi-

tation to presume that “the mayor will deny a permit

application only for reasons related to the health, safety,

or welfare of Lakewood citizens, and that additional terms

and conditions will be imposed only for similar reasons,”

reasoning that this “is the very presumption that the doc-

trine forbidding unbridled discretion disallows.” 486 U.S.

at 770. As the Court ruled, “{t]o allow these iliusory

‘constraints’ to constitute the standards necessary to bound

a licensor’s discretion renders the guarantee against cen-

sorship little more than a high-sounding ideal.” Id. at

769-70.

D. There Is No Reason Now To Address the New

Regime the FCC Has Proposed To Replace the

Blanket Ban Enacted by Congress

In the court of appeals below, in the Ninth Circuit, and

in district courts across the country, the Government ar-

gued that the courts should not substitute their own views,

or the views of the FCC, for the policy views that the

Government's litigators attributed to Congress. In the

first part of its brief in this Court, the Government con-

tinues to argue that “the courts owe substantial defer-

ence” to Congress’s supposed “predictive judgment” that

a blanket ban on telephone company provision of cable

television service is necessary. Gov't Br. 32 n.21.

The Government's final argument, by contrast, takes

Congress out of the picture. The Government argues that

since the FCC has concluded that circumstances have

changed substantially and has substituted a dramatically

different regulatory regime based on video dialtone plat-

forms and waivers, the Court should ignore the consti-

tutional defects in what Congress has done and sanction

the agency’s unilateral rewrite. Respondents and sup-

porting amici have shown that the statute as Congress

wrote it is unconstitutional and cannot be saved in this

manner. There is, however, a further and final point

the FCC rewrite is premised on the very decisions the

Government now asks this Court to reverse, is still in-

complete, and has not been subjected to any review in

the lower courts. There is therefore no reason for the

Court to address the new regime now. The Court should

affirm the decision of the Fourth Circuit and leave it to

Congress and the FCC to decide, subject to appropriate

judicial review, what to do next.

CONCLUSION

For the foregoing reasons, the judgment below should

be affirmed.

Respectfully submitted,

LLOYD N. CUTLER

Counsel of Record

CHARLES P. Russ II! Louis R. COHEN

STUART S. GUNCKEL WILLIAM T. LAKE

DAVID S. SATHER STEVEN M. DUNNE

NORTON CUTLER LYNN CHARYTAN

1801 California Street WILMER, CUTLER & PICKERING

Denver, Colorado 80202 2445 M Street, N.W.

Washington, D.C. 200387

(202) 663-6000

‘nner is | Gor Counael for T’ S WEST, Inc.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.