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

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385013_0606%3A19

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1995
- **Citation:** 515 U.S. 1157

## Text

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TABLE OF CONTENTS

TABLE OF AUTHORITIES ........0ccecevvvees ii
INTEREST OF AMICI CURIAE ..........000s0005 l
INTRODUCTION AND SUMMARY OF ARGUMENT .. 2
ES Ss oe ree 3
I. SECTION 533(b) VIOLATES FREE SPEECH RIGHTS

BY BARRING WILLING SPEAKERS FROM

COMMUNICATING WITH WILLING LISTENERS . . 3
Il. FEDERAL TELECOMMUNICATIONS AGENCIES

HAVE DETERMINED THAT SECTION 533(b) IS

ANTICOMPETITIVE AND HARMS CONSUMERS .. 5
Ii]. THE ANTICOMPETITIVE EFFECTS OF

SECTION 533(b) ARE FELT BY MILLIONS

OF POTENTIAL VIEWERS ........ 2c ccevees 14

ST <4 0 nab 6 bWiak 6 065 00.0 0.066000 0% 18

TABLE OF AUTHORITIES

Cases: Pages
Board of Trustees of State University of New York v. Fox,

GB GB. Gp 0 ba hceeeeanensesustan 6
Edenfield v. Fane, 113 S. Ct. 1792 (1993) ......... 5,6
FCC v. National Citizens Committee for Broadcasting,

GO Ga FOP: cosvcveciisésecd testes 4
First National Bank of Boston v. Bellotti,

Ge Ga. TEE. onc 0n.bns bbba8 Bees bee 4
Kleindienst v. Mandel, 408 U.S. 753 (1972) .......... 3
Lamont v. Postmaster General, 381 U.S. 301 (1965) .... 3
Martin v. Struthers, 319 U.S. 141 (1943) ............ 4
Miami Herald Publishing Co. v. Tornillo,

a Rr ee err 6
Mississippi Power & Light Co. v. Mississippi ex rel.

BGsase, Gt Gi. ee Ge 6 cad tbe eeureersdne 7

Rubin v. Coors Brewing Co., 115 S. Ct. 1585 (1995) .... 6
Sable Communications of California, Inc. v. FCC,

GOB UB. UES CURED ccc cccevecvcccesscseeve 6
Schneider v. State, 308 U.S. 147 (1939) .........45. 15
Stanley v. Georgia, 394 U.S. 557 (1969) .........545. 4

Telecommunications Research & Action Center v. FCC,
801 F.2d 501 (D.C. Cir. 1986), cert. denied,

GB UG, SIP GR) cov ctatackusciaeweneus 15
Thomas v. Collins, 323 U.S. 516 (1945) ............ 3-4
Turner Broadcasting Sys., Inc. v. FCC,

Pt: Re 5,6

Virginia State Bd. of Pharmacy v. Virginia
Citizens Consumer Council, Inc. ,

GS UB. FEPGOPED eis cconscécvecssenesun 3
Ward v. Rock Against Racism, Inc.,

Gi U.S. FEE GREP. cnc ceccveccccnnsceswunn 5
Watt v. Alaska, 451 U.S. 259 (1981) 2... 1 ee ees 7
Zauderer v. Office of Disciplinary Counsel,

G71 U.S. GRR GREED cc cccccavctbecsectbuswal 3

Legislative Materials: Pages

Cable Television Consumer Protection and Competition
Act of 1992, 106 Seat. 1460 0. wees 11
H.R. Rep. No. 628, 102d Cong., 2nd Sess. (1992)..... 17

Administrative Decisions and Materials:

Cable Services Bureau, FCC Cable Regulation Impact
Survey, Changes in Cable Television Rates Between
Apr. 5, 1993-Sept. 1, 1993 (Feb. 22,1994) ....... 11
Implementation of Sections of the Cable Television
Consumer Protection and Competition Act
of 1992: Rate Regulation, Second Order on Recon.,

cc cccbeeesccccecccc. 11
Letter from James H. Quello, FCC Chairman
to Hon. Edward J. Markey (Mar. 1, 1993) ........ 10

Letter from James F. Rill, Assistant Attorney General,
Antitrust Division and Robert A. Mosbacher,
Secretary of Commerce to Hon. John C. Danforth
CCR ce gadeestesecccce. 12

Reply Comments of the United States Department of Justice
before the Federal Communications Commission, Telephone
Company-Cable Television Cross-Ownership Rules,

CC Dkt 87-266 (Mar. 13, 1992)............5.. 11

Reply of the National Telecommunications and Information
Administration, In Re Teleport Communications —

New York, File No. 13135-CF-TC(3)-92

DMCS ph deeesceeececosccec. 12, 17
Report of the Federal Communications Commission

Regarding the President's Regulatory Reform

Program (Apr. 28, 1991) ..... 6.62 6c cece eens 9
Telephone Company-Cable Television Cross-Ownership

Rules, 3 FCC Red 5849 (1988) ............055.. 8

Telephone Company-Cable Television Cross-Ownership
Rules, 7 FCC Red 5781 (1992) ..... 2... 00 ceee 8

Miscellaneous: Pages

Hong, Cable Rates Drop in Alexandria, Washington Post,
SS F reer eee 11
Donna N. Lampert, Cable Television: Does Leased Access
Mean Least Access?, 44 FED. COMM. L.J. 245

Ss MD oo ob O ee bs oe Ve CSU CO CEOS 17
NTIA, TELECOMMUNICATIONS IN THE AGE OF
DEED So wees oo te ee eedic 12-13, 16

INTEREST OF AMICI CURIAE

With the consent of the parties, amici curiae METS Fans
United/Virginia Consumers for Cable Choice, ef al., hereby
submit this brief in support of respondents. Amici are a coalition
of consumer groups which support elimination of § 533(b) to
promote diversity in media voices, competition in the cable
television market, and access to video programming for people
with disabilities. Amici represent a wide range of organizations
and consumer interests:

METS Fans United/Virginia Consumers for Cable Choice is
an association of cable television consumers who believe that
lifting § 533(b) and permitting Bell Atlantic to provide video
programming in the Alexandria market will open up competition
with the incumbent cable operator and provide viewers with access
to alternative programming sources.

The Alexandria Federation of Civic Associations, Inc. is a not-
for-profit organization whose membership includes 75 civic,
condominium and apartment associations in the City of
Alexandria. The Federation believes that eliminating § 533(b) will
promote cable competition in the City of Alexandria and increase
the public’s access to alternative programming sources and
government and public access channels.

Television Viewers of America is a grassroots consumer
organization actively pursuing legal and regulatory initiatives to
bring nationwide competition to multi-channel video programming
and lower rates and better service to consumers.

Virginia Association of the Deaf, Inc., is a non-profit
association whose goals are io serve the deaf and promote their
unique needs in legislation, education, communication, health
care, research, rehabilitation and individual family counseling.
The Association believes that a favorable decision in this case will
provide greater access to telecommunications and programming
services that meet the needs of the deaf.

Northern Virginia Resource Center for Deaf and Hard of

Hearing Persons is a not-for-profit social service agency serving

' Letters reflecting wnitien consent of the parties to the submission of this bnef
have been filed with the Clerk of the Court

deaf persons and those with hearing difficulties, their families,
friends and other professionals. The Center believes that the
increased competition offered by local telephone companies can
increase access to video programming for deaf and hard of hearing
persons.

United Homeowners Association is a non-profit association
whose goal is to inform and represent homeowners across the
country. UHA believes that the competition from telephone
companies in the provision of cable television programming

Virginia Public Interest Coalition is an informal group of
and telecommunications in Virginia. The coalition works to
ensure that a consumer voice representing the interest of
is heard during the public debate on telecommunications issues.
The Coalition believes that lifting § 533(b) will result in increased
competition in the provision of cable television services, lower
prices and greater access to programming services.

INTRODUCTION AND SUMMARY OF ARGUMENT

This Court has frequently stressed that the First Amendment
protects not simply the right of a speaker to speak, but also the
right of the audience and the public to hear. Yet § 533(b), by
listeners, runs roughshod over this fundamental principle of free
speech.

The First Amendment issue presented here is not some
academic nicety. It is the very real question of whether millions
of potential viewers will be prevented from fully participating in
the most important medium of communication today. During both
the Bush and Clinton Administrations, every federal agency with
responsibility for fashioning telecommunications policy has
recommended that § 533(b) be eliminated. In particular, the
allowing competition by telephone companies in video

2

programming would expand subscribership by 11.2 million
households nationwide and produce annual consumer benefits of
some $5.36 billion.

In determining whether § 533(b) could survive intermediate
scrutiny, the Court should pay particular attention to the historical
record compiled by the federal agencies involved in enforcing this

Audiences have a right under the First Amendment to receive
programming by local telephone companies, and this right is
independent of the right of telephone companies to speak. This
Court has frequently recognized that First Amendment rights
belong to recipients — or potential recipients — of speech as well
as to the speakers themselves. In Virginia State Bd. of Pharmacy
v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748
(1976), for example, this Court determined that the First
Amendment rights of the public to receive information provided
an independent legal basis for consumers to challenge government
regulation of speech. This Court observed that it “is clear from
the decided cases” that the First Amendment protects the “right to
‘receive information and ideas.” Jd. at 756-57 (quoting
Kleindienst v. Mandel, 408 U.S. 753, 762-63 (1972)). The Court
has since reiterated that “the extension of First Amendment
protection” may be justified by the value to consumers and the
public “of the information that such speech provides.” Zauderer
v. Office of Disciplinary Counsel, 471 U.S. 626, 651 (1985).’

2 See also Lamont v. Postmaster General, 381 US. 301 (1965) (upholding
First Amendment nghts of citizens to receive political publications from abroad,
from foreign speakers whose ability to invoke the First Amendment was open to
question), Thomas v. Collins, 323 U.S. 516, 534 (1945) (sustaining worker's

3

Even where a would-be speaker, rather than a listener or
viewer, is the actual party challenging a law
the

vindication. The First Amendment, in particular, serves
significant societal interests." First National Bank of Boston v.
Bellotti, 435 U.S. 765, 776 (1978). In First National Bank, this
Court permitted a business corporation to challenge a prohibition
on speech not because of the First Amendment's role “in fostering
individual self-expression,” but rather because of “its role in
affording the public access to discussion, debate, and the
dissemination of information and ideas." /d. at 783. This Court
added that “the First Amendment goes beyond protection of the
press and the self-expression of individuals to prohibit the
government from limiting the stock of information from which
members of the public may draw.” /d.’

“At the heart of the First Amendment lies the principle that
each person should decide for him or herself the ideas and beliefs
deserving of expression, consideration, and adherence. Our
political system and cultural life rest upon this ideal.” Turner
Broadcasting Sys., Inc. v. FCC, 114 S. Ct. 2445, 2458 (1994);

right to meet, discuss, and be informed of impending election for collective
bargaining agent), Martin v. Struthers, 319 U.S. 141, 143 (1943) (“this freedom
embraces the right to distribute literature. . and necessarily protects the nght
to receive it”), Stanley v. Georgia, 394 U.S. 557, 564 (1969) (“This right to
receive information and ideas, regardless of their social worth ___ is fundamental
to our free society.”).

* In this case, the diversity principle does not support the constitutionality of
§ 533(b). In fact, that principle undermines the statute. In the Court of Appeals,
amici addressed the question of whether the principle of diversity in FCC v.
National Citizens Committee for Broadcasting, 436 U.S. 775 (1978)
(“NCCB”), supported § 533(b). See Br. of METS Fans, et al. in Ct. App. 17-
22. Amici noted that the restriction in NCCB prevented broadcasters from
purchasing a newspaper and thus eliminating an additional voice. Section
533(b), by contrast, prohibits a telephone company from adding its voice by
becoming a cable provider. This is not a cross-ownership case.

4

see also Edenfield v. Fane, 113 S. Ct. 1792, 1798 (1993) (“the
general rule is that the speaker and the audience, not the
government, assess the value of the information presented”).

Il. FEDERAL TELECOMMUNICATIONS AGENCIES
HAVE DETERMINED THAT SECTION 533(b) IS
ANTICOMPETITIVE AND HARMS CONSUMERS

The First Amendment right to receive information is
particularly salient here, for every federal telecommunications
agency has urged elimination of § 533(b) on the ground that it is
anticompetitive and harms consumer interests.

The court below evaluated the constitutionality of § 533(b)
under “the intermediate level of scrutiny applicable to content-
neutral restrictions that impose an incidental burden on speech.”
Turner Broadcasting, 114 S. Ct. at 2469. This standard of review
requires the Government to establish that the measure challenged
on free speech grounds: (1) is narrowly tailored to achieve
substantial government interests; and (2) leaves open ample
alternative channels for communication. See, e.g., Ward v. Rock
Against Racism, Inc., 491 U.S. 781, 789, 799 (1989). Both of
these inquiries rest in part on an assessment of the purported
justifications for the challenged measure, and thus can be
advanced by an examination of legitimate, reliable information that
bears upon these independent prongs of the “intermediate scrutiny”
standard.

In providing guidance to the courts about the legitimate sources
that they should consult and consider in undertaking these
evaluations, this Court has begun with an important cautionary
reminder: any court exercising the power of judicial review of the
constitutionality of a statute has an “obligation to exercise
independent judgment when First Amendment rights are
implicated.” Turner Broadcasting, 114 S. Ct. at 2471. The
exercise of independent judgment is critical in determining
whether the Government has carried its burden of demonstrating
“that the recited harms are real, not merely conjectural, and that
the regulation will in fact alleviate these harms in a direct and
material way.” /d. at 2470.

With this fundamental point established, however, the next step
is to decide what sources provide legitimate material that will aid
in exploring the two basic prongs of intermediate scrutiny. Here,
this Court has stressed the importance of identifying sound
information for the purpose of conducting these twin inquiries,
observing that the Government cannot carry its burden under the
First Amendment by offering “mere speculation and conjecture.”
Rubin v. Coors Brewing Co., 115 S. Ct. 1585, 1592 (1995).
“[R]ather, a governmental body seeking to sustain a restriction”
against a First Amendment challenge “must demonstrate that the
harms it recites are real and that its restriction will in fact alleviate
them to a material degree.” Edenfield, 113 S. Ct. at 1800. Casual
submissions based on “anecdotal evidence and educated guesses”
are insufficient bases on which to restrict free speech rights, and
“litigating positions,” such as those belatedly put forward by the
Government in this case, cannot be used as reliable “proof that the
Government’s regulation is necessary.” Rubin, 115 S. Ct. at
1593.

When the Government agencies charged with enforcing a given
prohibition on speech have all concluded it is not essential to
further any substantial government interest — and, indeed, that it
positively disserves any such interests — it is difficult to imagine
that the law could survive any form of First Amendment scrutiny.
This Court has often attached weight to factual findings by
responsible policymakers that undercut the validity of a restriction
on speech. E.g., Sable Communications of California, Inc. v.
FCC, 492 U.S. 115, 130 (1989); Miami Herald Publishing Co. v.
Tornillo, 418 U.S. 241, 247 n.7 (1974). The situation here is
much starker than anything this Court has encountered before:
every agency participating in the formation of telecommunications
policy that has examined § 533(b) has concluded that it retards
competition and injures consumers. By their own statements, the
relevant Government agencies have already established that they
cannot meet their burden under the First Amendment of justifying
§ 533(b). To take those agencies at their word entails no “second-
guess[ing] [of] the Government's judgment.” Board of Trustees
of State University of New York v. Fox, 492 U.S. 469, 478 (1989).

6

To be sure, purported administrative “findings” would be
suspect if they were unaccompanied by objective indicia of
reliability, such as internal consistency and factual completeness.
Similarly, they would be entitled to little or no weight if they were
made for the purposes of litigation or reflected inconsistencies in
approach or a self-interested concern in extending and protecting
the scope of the agency’s own authority in a particular sphere.
See, e.g., Watt v. Alaska, 451 U.S. 259, 273 (1981) (agency
position inconsistent over time is “entitled to considerably less
deference” than a consistently held agency view); Mississippi
Power & Light Co. v. Mississippi ex rel. Moore, 487 U.S. 354,
386 (1988) (Brennan, J., dissenting) (deference to agency position
must take into account consideration of the agency’s “institutional
interests in expanding its own power”).

But those caveats are not applicable here. Federal
telecommunications policymakers have unanimously condemned
§ 533(b) as anticompetitive and anti-consumer. They have done
so on the basis of a comprehensive historical record that reflects
the modern development and growth of the American
telecommunications industry. This striking conclusion about the
counterproductive consequences of § 533(b) has been consistent
across the different federal agencies involved in this area even
though, from the perspective of the agencies’ narrow self-interest
in expanding their own enforcement authority, invalidation of this
measure likely would restrict that authority. This broad consensus
that § 533(b) is entirely disconnected to any significant
government interest is thus entitled to special weight in this
Court's constitutional examination of whether this statute can
satisfy the two distinct prongs of intermediate scrutiny. And the
following examination clearly shows that § 533(b) is not “narrowly
tailored” to accomplish any legitimate government interest.

1. For years, the FCC has explained that its position on the
inefficacy of § 533(b) is based on its considered judgment that
“competition provided by telephone companies can be expected to
provide . . . lower costs and greater choices for consumers and
greater responsiveness to consumer demand by service providers.”
Telephone Company-Cable Television Cross-Ownership Rules, 3

7

FCC Red 5849, 5857 (1988) (quoted at J.A. 341). The evidence
compiled by the Commission almost a decade ago demonstrated
“that the prohibition against telephone companies providing cable
television service within their telephone service areas no longer
serves the public interest. . . . The ban directly deprives
consumers of video programming services telephone companies
could provide [and] prevents market incentives and achievement
of efficiencies that could bring additional services to the public.”
Id. at 5866 (quoted in J.A. 341).

As the evidence has accumulated, the FCC has become
increasingly emphatic in stating its position that § 533(b) does not
serve the public interest and does not advance any legitimate
government interest. In 1992, it issued a further report and order,
in which it determined that removing § 533(b) would “increas[e]
competition in the video marketplace, spur[{] the investment
necessary to deploy an advanced infrastructure, and increas[e] the
diversity of services made available to the public.” Telephone
Company-Cable Television Cross-Ownership Rules, 7 FCC Rcd
5781, 5847 (1992) (quoted at J.A. 337). After reviewing the
evidence that had been amassed in the formal administrative
record, the Commission recommended that Congress abolish the
prohibition on telephone companies providing video programming
“directly to subscribers in their telephone service areas.” /d. As
the Commission explained: “permitting local telephone companies
to directly provide video programming will further increase
diversity, as they will add another programming voice to those
which now exist. . . . Most importantly, we find that the public
will benefit greatly from the resulting increased competition in the
video marketplace.” /d. at 5849-50 (quoted at J.A. 338).

In May 1995, in its most recent report and order on the
subject, the FCC formally reiterated its position that “authorizing
telephone companies to provide video programming” would
“promote competition in the multi-channel video programming
market.” Govt. Supp. Br. App. 5a. “Since 1970, . . . the cable
industry has grown from a fledgling service to a more mature
industry that now serves a majority of households and ‘has
replaced over-the-air broadcast teleision the primary provider of

video programming."” /d. at |la. “These developments have . .
. Mitigated to a fair degree the competitive concerns that led the
Commission and Congress to adopt the cross-ownership ban.” /d.
at 12a.

The Commission has even gone so far as to quantify the
tremendous benefits that would be attained by lifting the statutory
ban on video programming by telephone companies. According
to the FCC’s own statistics, eliminating § 533(b) “would result in
significant price savings for consumers and stimulate provision of
a range of new information services,” with rates falling about 20
percent and subscribership increasing by 11.2 million households
nationwide. Report of the Federal Communications Commission
Regarding the President’s Regulatory Reform Program 16 (Apr.
28, 1991) (quoted at J.A. 339-40). The Commission has
predicted that competition would produce annual consumer gains
of $5.36 billion, not counting “the significant gains in innovative
uses of broadband communications in non-entertainment markets,
such as health care, education, and telecommuting, all of which
are very likely to follow from enhanced capacity and
competitiveness in the supply of cable television services.” /d.
(quoted at J.A. 340).

The current Chairman of the FCC, Reed E. Hundt,
summarized the Commission’s official position on the
counterproductive nature of § 533(b) in congressional testimony
delivered on January 27, 1994:

Direct, facilities-based competition between cable and
telephone companies will produce substantial benefits for
the American public. Competition in this market will spur
the deployment of advanced technologies that are capable
of delivering the full range of services that customers
demand. These services include not only entertainment
services, but also the growing number of educational,
health, and social services that are accessible over
broadband technologies.

In addition, competition in this market can be expected
to produce the same positive results for consumers that we

9

have in other markets for telecommunications services that
have undergone the transformation from monopoly to
competition: technological and service innovation, lower
prices, and responsiveness to consumer tastes. Telephone
company entry also will expand the electronic marketplace
of ideas by creating new outlets for video service
providers.

Elimination of the existing cross-ownership restriction
should stimulate new telephone company investment in
facilities that are capable of delivering video and advanced
telecommunications services. Consumers should be the
beneficiaries of the expanded choices that facilities-based
competition in this market will foster.

J.A. 376-77 (emphases added). He thus maintains the same
position as the former Chairman of the FCC, James H. Quello,
who also agreed that the removal of § 533(b) would “bring
consumers lower rates, more responsive customer service, and
greater choice of video programming sources.” Letter from James
H. Quello, FCC Chairman to Hon. Edward J. Markey (Mar. |,
1993) (quoted at J.A. 338-39).

In short, the FCC has built an overwhelming administrative
record that § 533(b)’s direct ban on video programming by
telephone companies within their service areas is entirely
counterproductive and thus does not serve any government
interest.‘

* Experience tends to support the FCC’s conclusions. For example, many
cable operators raised rates, re-ticred channels, or otherwise altered their service
just as congressionally mandated rate regulation took effect, in the form of the
Cable Television Consumer Protection and Competition Act of 1992, 106 Stat.
1460. See Implementation of Sections of the Cable Television Consumer
Protection and Competition Act of 1992: Rate Regulation, Second Order on
Recon., 9 FCC Red 4119, 4166 (1994). Subsequently, the FCC found that about
30 percent of the cable systems had raised regulated rates, even under the 1992
Cable Act. Cable Services Bureau, FCC Cable Regulation Impact Survey,

10

2. The Department of Justice has similarly concluded that
removing § 533(b) “will allow another competitor to enter the
video programming market, . . . increase the [telephone
companies’) willingness to take the financial risk of developing
broadband integrated networks, [and] make them more effective
competitors.”* It has also determined that telephone companies’
“provision of video programming will have procompetitive
benefits that outweigh any anticompetitive risks involved,” and
thus they “should be allowed to own and directly provide video
programming.”

The Department thus has consistently urged Congress to do
away with § 533(b), which is counterproductive of its actual
objectives. In 1991, the Assistant Attorney General for the
Antitrust Division, together with the Secretary of Commerce,
stated their position in these words: “We think that Congress can
best serve television viewers by removing barriers to entry by new
firms into the video services marketplace. The Administration
therefore supports removal of current legislative prohibitions
against telephone company provision of video programming.”
Letter from James F. Rill, Assistant Attorney General, Antitrust
Division and Robert A. Mosbacher, Secretary of Commerce to
Hon. John C. Danforth (Mar. 13, 1991) (quoted at J.A. 343). In
congressional testimony presented on January 27, 1994, Anne K.
Bingaman, Assistant Attorney General for the Antitrust Division
in the new Administration, reaffirmed the Department’s views:

Changes in Cable Television Rates Between Apr. 5, 1993-Sept. 1, 1993, at 3
(Feb. 22, 1994). A notable exception was the City of Alexandria, Virginia, in
which the incumbent cable operator — facing the prospect of head-to-head
competition from Bell Atlantic — actually decreased its rates by more than 10
percent. See Hong, Cable Rates Drop in Alexandria, Washington Post, Sept.
9, 1993, at V-1.

* Reply Comments of the United States Department of Justice before the
Federal Communications Commission, Telephone Company-Cable Television
Cross-Ownership Rules, CC Dkt 87-266 at 44-45 (Mar. 13, 1992) (quoted at
J.A. 342).

* Jd. (quoted at J.A. 342).

“The Administration . . . strongly endorses the provisions of H.R.
3636 that would permit existing cable and telephone companies to
offer both video and telephonic services in the same geographic
areas. . . . It is crucial that public policy promote competition
between methods for delivering telecommunication services.”
J.A. 381.

3. These conclusions have also been independently confirmed
by the National Telecommunications and Information Administra-
tion (NTIA), a unit of the Department of Commerce that is
responsible for telecommunications policy. The NTIA has
determined that:

In general, government restrictions that have the effect of
limiting the uses to which new technology can be put tend
to be inefficient and anticompetitive, and retard investment
in that new technology. In particular, we believe that the
current cable/telco crossownership rules are having such an
effect wth respect to investment in broadband public
network technology.

NTIA, TELECOMMUNICATIONS IN THE AGE OF INFORMATION 235
(1991) (quoted at J.A. 344). The NTIA has also stated that “the
likely benefits of LEC [local exchange carrier] entry into the video
programming business outweigh the potential costs of LEC
provision of video programming,” and that “[t}he opportunity to
provide programming should increase LECs’ incentives to
construct integrated broadband network facilities to carry that
programming to the home. This, in turn, could lead to
introduction of a wide range of innovative voice, data, and video
services for subscribers.” /d.

In 1992, the NTIA reiterated its documented concerns “about
the continuing wisdom of this restriction” on video programming
contained in § 533(b), and noted that “we have repeatedly
advocated its elimination.”’ As the NTIA explained again in more

” Reply of the National Telecommunications and Information Administration,
In Re Teleport Communications — New York, File No. 13135-CF-TC(3)-92,
at 3 (May 27, 1992) (quoted at J.A. 346)

12

detail: “Allowing telephone companies to provide video
programming in their local service areas would significantly
increase competition in the video services market, which would,
in turn, yield lower prices to viewers, better service quality, and
better programming diversity.” /d. In January 1994, this view
was reaffirmed in congressional testimony by Larry Irving,
Assistant Secretary of the Department of Commerce for
Communications and Information. J.A. 382, 383.

4. Finally, in January 1994, the Clinton Administration
released its “White Paper on Communications Act Reforms,”
which outlined the Administration's proposal to remove § 533(b)
on the ground that the statute is merely an undesirable obstruction
to the important goal of securing and promoting competition in the
telecommunications industry. As the White Paper states the
matter: “Although the existing cable-telephone company cross-
ownership restriction of the 1984 Cable Act may have been
appropriate when enacted, today it is an unnecessary and artificial
barrier to competition in the delivery of video programming to
American consumers and to investment in advanced local
infrastructure.” J.A. 370.

Taken together, these statements represent an impressive and
extremely thorough historical record, which establishes that
§ 533(b) does not advance any legitimate government interest.
Instead, the administrative record compiled by these federal
officials establishes that § 533(b) runs counter to the most
important objectives of established governmental policy toward
this industry, even as it imposes direct and substantial restrictions
on free speech. This conclusion, moreover, has been reached by
all of the officials who are charged with exercising responsibility
across the entire spectrum of federal authority to set national
telecommunications policy. The sound expertise reflected in the
historical record compiled by these officials, which plainly shows
that the very statute they are authorized to administer and enforce
is Counterproductive and affirmatively hinders the government’ s
asserted interest, warrants very close examination by this Court in
assessing the validity of § 533(b). On the basis of this record, it

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is simply impossible to conclude that § 533(b) is “narrowly
tailored” to serve that interest.

11. THE ANTICOMPETITIVE EFFECTS OF
SECTION 533(b) ARE FELT BY MILLIONS
OF POTENTIAL VIEWERS

A law that shuts out millions of consumers from the Nation's
most important medium of expression cannot be deemed to leave
adequate alternative channels of communication open to the public.
Section 533(b) relegates a telephone company to three “alternative”
means of expression, which are completely unsatisfactory from the
standpoint of the consumer interests of the public: (1) video
programming outside its telephone service area; (2) non-video
programming forms of speech; and (3) the creation of video
programs distributed in-region by local broadcasters, cable
operators, or video stores, outside the telephone company’s
editorial control.

Whether or not these alternatives are “ample” as to the
telephone company speaker (and we believe that they are not),
they plainly are inadequate from the perspective of the public.
The first option, programming outside the region, is no alternative
at all for consumers who are located within the telephone
company’s service area. Out-of-region programming involves an
entirely different audience. Members of the public are not
fungible, and the protected rights of one audience cannot be denied
on the ground that the speaker can address a different audience
instead. See Schneider v. State, 308 U.S. 147, 163 (1939).

Nor do the in-region “alternatives” offer consumers any
meaningful substitute. To be sure, § 533(b) allows telephone
companies to publish newspapers or distribute handbills, but in the
modern age of telecommunications, video programming has
become the public’s primary source of news and information.
Millions more people have televisions than subscribe to
newspapers, and the average television household watches
television seven hours per day, and the average resident spends
almost ten times as many hours watching television as reading the

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newspaper. See J.A. 196-97 (Stipulated Facts 10-14). Moreover,
the “power to communicate ideas through sound and visual images
- . « iS significantly different from traditional avenues of
communication because of the immediacy of the medium.”
Telecommunications Research & Action Center v. FCC, 801 F.2d
501, 508 (D.C. Cir. 1986) (quoting FCC Report and Order), cert.
denied, 482 U.S. 919 (1987).

Similarly, the in-region distribution of telephone company
speech by cable operators and broadcasters, at the discretion of
these existing owners, is certainly no adequate substitute from the
perspective of consumers. The fact is that there is already far
more video programming than these incumbent cable operators
can possibly carry. Cable operators currently have an average
capacity of about 40 channels. J.A. 198 (Stipulated Fact 20). Yet
there are already available many more sources of ing:
local broadcast stations, more than 75 basic cable networks, 42
regional networks, 7 pay networ .s, 7 pay-per-view networks, and
other text and audio services. j.A. 144-45 (Affidavit of William
E. Lee 4 6(a), 6(b)). Accordingly, the Government has
stipulated in this case that “[cJurrently, the supply of available
video programming exceeds the available channel capacity of
almost all cable systems.” J.A. 198 (Stipulated Fact 19).

Furthermore, if independent video programmers are to reach
their audiences and expand the diversity of information available
to the public, they need the very editorial support and coordination
that § 533(b) forbids telephone companies from providing. Thus,
it was undisputed in the courts below that, as a prominent
independent video producer explained, “[iJndependent video
producers and media artists are producing much more video
programming than is currently being distributed on existing
systems. As long as show producers and distributors stand as
‘gatekeepers’ for the viewing audience, voices that do not conform
to the video carriers’ needs will not be heard." J.A. 324
(Affidavit of Robin Smith q 6). Telephone companies’ “ability to
package, market, and distribute video programming for access on
media artists to reach a much larger audience." /d. (at { 7).

1S

Lifting § 533(b) would thus permit a wide range of new voices to
be heard:

A new genre of programming will emerge, utilizing the
new interactive technologies in ways that are more
responsive to the needs of individuals. . . . With more
distribution outlets, small independent and non-profit
producers will gain a precious commodity — a platform for
diverse voices and visions that can be shared with the

Id. (at { 8) (emphasis added).

This effect of removing § 533(b) is also borne out by the
historical record compiled by the federal agencies, as described in
more detail above. The NTIA, for example, has urged that “the
availability of broadband facilities will likely spawn new
applications — video and non-video alike — as entrepreneurs and
carriers devise new service offerings that will benefit the
American public.” NTIA, TELECOMMUNICATIONS IN THE AGE OF
INFORMATION 234 (1991) (quoted at J.A. 344-45). “This, in turn,
could lead to introductions of a wide range of innovative voice,
data, and video services for subscribers.” Jd. at 235 (quoted at
J.A. 344). The White Paper similarly notes that the removal of
§ 533(b) “will allow telephone companies and cable operators to
compete in providing a full range of video, voice, and data
services to the public. Such competition can promote investment
that expands consumer choices and services.” J.A. 370.

The key element in achieving these benefits for the public is
the ability of the telephone companies to exercise editorial control
as they would undertake to compete in providing such
programming, which is nonetheless banned by § 533(b):

16

[MJere provision of transmission facilities is not
sufficient. [Telephone companies} would still be forbidden
to perform the kind of packaging, marketing and publicity
functions that are crucial to the success of smaller
producers. ... [H]aving such services available to all
producers can make the differeace between a film that
passes unnoticed and a professional production that serves
to challenge people by adding to the diversity of opinion in
the public forum.

J.A. 326 (at { 12) (emphases added).

Providing consumers and independent video producers with
“leased access” cable channels in no way compensates for their lost
Opportunity to access the extensive programming package that
telephone companies could offer in the absence of § 533(b). The
FCC's “leased access” requirements make available only one or
two channels (at most) of a cable operator's capacity. J.A. 284-85
(Affidavit of Jean Pool ¢ 4). Accordingly, Congress has
concluded that “leased access has not been an effective mechanism
for securing access for programmers to the cable infrastructure or
cable subscribers.” H.R. Rep. No. 628, 102d Cong., 2nd Sess.
39 (1992).* Even if one or two cable channels were made
available to the telephone company or to another video
programmer, the bottom line would be that viewers would end up
with one (limited) voice simply replacing another, whereas what
consumers want — and what they are constitutionally entitled to
receive — are additional programming voices.

For all of these reasons, § 533(b) leaves consumers with no
adequate alternative means of communication. It is vital that
telephone companies be permitted to provide video programming
directly to their in-region subscribers. By directly prohibiting this
important means of providing “lower prices to viewers, better

* See also Donna N. Lampert, Cable Television: Does Leased Access Mean
Least Access?, 44 Fep. Comm. LJ. 245, 248 (Mar. 1992) (“the access
provisions of the Cable Act have wholly failed to serve their intended purpose
of reducing the bottleneck control of cable operators”).

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service quality, and better programming diversity,” § 533(b)
deprives “all users, residential and business alike,” of these
important benefits. NTIA Reply at 3 (quoted in J.A. 346). It
therefore cannot pass muster under the “intermediate scrutiny”
standard of constitutional review.

CONCLUSION
The judgment of the Court of Appeals should be affirmed.

Respectfully submitted,

SAMUEL A. SIMON
901 15th Street, N.W.
Suite 230

Washington, D.C. 20005
(202) 408-1400

Counsel for Amici Curiae

October 18, 1995

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385013_0606%3A19. Public record. Not legal advice.