Amicus Curiae Brief — Preferred Communications, Inc. v. City of Los Angeles

—_ *

4 | Gugrams Cou US

No. 93-1570 FiuULO

IN THE MAY 18 1994

Supreme Court of the Gnited Pitated: oc

October Term, 1993 oT

PREFERRED COMMUNICATIONS, INC.,

Petitioner,

v.

CITY OF LOS ANGELES and DEPARTMENT

OF WATER & POWER,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

BRIEF OF UNITED STATES TELEPHONE

ASSOCIATION AND BELL ATLANTIC

CORPORATION AS AMICI CURIAE IN SUPPORT

OF THE PETITION FOR WRIT OF CERTIORARI

MARY MCDERMOTT LAURENCE H. TRIBE

900 19th Street, N.W., Ste. 800 Counsel of Record

Washington, D.C. 20006 JONATHAN S. MASSEY

(202) 326-7247 1575 Massachusetts Avenue

Counsel for United States Cambridge, MA 02138

Telephone Association (617) 495-4621

JAMES R. YOUNG

JOHN THORNE

MICHAEL E. GLOVER

1710 H Street, N.W.

Washington, D.C. 20006

(202) 392-0895

Counsel for Bell Atlantic Corp.

May 18, 1994

BATEMAN & SLADE, INC. BOSTON, MASSACHUSETTS

TABLE OF CONTENTS

pe ii

INTRODUCTION AND SUMMARY OF ARGUMENT .. 1

REASONS FOR GRANTING THE WRIT .......... 5

I. THIS CASE OFFERS A VALUABLE

OPPORTUNITY TO CLARIFY THE FIRST

AMENDMENT PRINCIPLES APPLICABLE TO

ADMINISTRATIVE SCHEMES THAT LICENSE

THE DEPLOYMENT OF FACILITIES NECESSARY

FOR ELECTRONIC SPEECH .............. 5

Il. THIS CASE ALSO PROVIDES A VALUABLE

OPPORTUNITY TO DECIDE WHETHER THE

FIRST AMENDMENT PERMITS MUNICIPALITIES

TO SILENCE SPEECH AND REDUCE

COMPETITION BY GRANTING EXCLUSIVE

CABLE PRANCHISES ...........cccceee 12

IS, Tia al co pia ate an se ca 9 ps 19

TABLE OF AUTHORITIES

Cases Pages

Buckley v. Valeo, 424 U.S. 1 (1976) (per curiam) ........ 17

Chesapeake & Potomac Telephone Co. of Virginia v.

United States, 830 F. Supp. 909 (E.D. Va. 1993) ...... |

Chicago Cable Communications v. Chicago Cable Comm'n,

678 F. Supp. 734 (N.D. Ill. 1988),

GG, Sie me Bore CF CH, TOU) cg ce cece eeees 10

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

Se EE SUR abcd pe bes ence nees 5,7

City of Ladue v. Gilleo, No. 92-1856 ................ 4

City of Lakewood v. Plain Dealer Pub. Co.,

ee 4. Pe ee ee 5-8

City of Los Angeles v. Preferred Communications, Inc..,

ae ne I a oa odo 0k a wh ace 44-0 1-2

Communications Co. v. City of Boulder,

660 F.2d 1370 (10th Cir. 1981), cert. dismissed,

a ee es ae os bce 0 os 14

Community Television of Utah, Inc. v. Wilkinson,

611 F. Supp. 1099 (D. Utah 1985), aff'd, 800 F.2d 989

(10th Cir. 1986) (per curiam), aff'd, 480 U.S. 926 (1987) . 14

Consolidated Edison Co. v. Public Service Comm'n,

OOF re he es re A ia Ss 17

Cox Cable Communications, Inc. v. United States,

774 F. Supp. 633 (M.D. Ga. 1991), remanded on

other grounds, 992 F.2d 1178 (1ith Cir. 1993) ........ 13

pa eK re 8

Edenfield v. Fane, 113 S. Ct. 1792 (1993) ............ 16

Erie Telecommunications, Inc. v. Erie,

kt OD Sr 9

FCC v. Florida Power Corp., 480 U.S. 245 (1987) ....... 17

Forsyth Cty. v. Nationalist Movement, 112 S.Ct. 2395 (1992) 3, 6

Freedman v. Maryland, 380 U.S. 51 (1965)............ 7

FW/PBS, Inc. v. City of Dallas, 493 U.S. 215 (1990) .... 6,7

Group W Cable, Inc. v. City of Santa Cruz,

669 F. Supp. 954 (N.D. Cal. 1987) ............... 13

Jones Intercable of San Diego, Inc. v. City of Lake Elsinore,

No. SACV 90-636-GLT (C.D. Cal. Apr. 4, 1991) ...... 13

Kovacs v. Cooper, 356 U.3. T7 (IGG) 0 wc ccc cree 5

Kunz v. New York, 340 U.S. 290 (1951) .............. 6

Leathers v. Medlock, 499 U.S. 439 (1991) ........... 1,9

TABLE OF AUTHORITIES (cont.)

Cases Pages

Lee v. International Soc’y for Krishna Consciousness, Inc.,

R52 BS. Ch. Bee Cee) OF GUM ave ec cc cece vces 4

McCullough v. Maryland, 4 Wheat. 316 (1819) ......... 9

Miami Herald Pub. Co. v. Tornillo, 418 U.S. 241 (1974) 11, 14

Minneapolis Star & Tribune Co. v. Minnesota

Comm '’r of Revenue, 460 U.S. 575 (1983) ........... 5

Nat’! Bank of Boston v. Bellotti, 435 U.S. 765 (1978) ..... 17

Niemotko v. Maryland, 340 U.S. 268 (1951) ........... 3

Nollan v. California Coastal Comm’n, 483 U.S. 825 (1987)... 8

Omega Satellite Products v. City of Indianapolis,

IE, EE wo cco desc ce reer veces 14

Pacific Gas & Elec. Co. v. Public Utilities Comm'n,

En ee 16

Paragould Cablevision, Inc. v. City of Paragould,

930 F.2d 1310 (8th Cir. 1990), cert. denied,

EE ee eee 18

Police Dept. of Chicago v. Mosley, 408 U.S. 92 (1972) .... 17

Preferred Communications, Inc. v. City of Los Angeles,

754 F.2d 1396 (9th Cir. 1985), aff'd on narrower

grounds, 476 U.S. 488 (1986) ...............2006- 13

Quincy Cable TV, Inc. v. FCC, 768 F.2d 1434 (D.C. Cir.

1985), cert. denied, 476 U.S. 1169 (1986) ........... 14

Red Lion Broadcasting Co. v. FCC, 395 U.S. 367 (1969) ... 14

Riley v. National Federation of the Blind, Inc..,

a ES GE EE 8

Saia v. New York, 334 U.S. 558 (1948) .............. 5

Schneider v. State, 308 U.S. 147 (1939) ............. 4,5

Secretary of State of Maryland v. Joseph H. Munson Co.,

Se A eee wees ees ee eee 6

Shuttlesworth v. City of Birmingham, 394 U.S. 147 (1969) .. 6

Southwestern Bell Tel. Co. v. FCC, Nos. 91-1416, et al.

I ee ee 17

Telecommunications Research & Action Center v. FCC,

801 F.2d 501 (D.C. Cir. 1986), cert. denied,

ee ola an to a nes 6908 15

Turner Broadcasting System, Inc. v. FCC, Nos. 93-44/93-45 . 2

United States v. O’Brien, 391 U.S. 367 (1968) ....... 10, 16

iia ia ait ai

iv

TABLE OF AUTHORITIES (cont.)

Cases Pages

Vance v. Universal Amusement Co., 445 U.S. 308 (1980) ... 8

Ward v. Rock Against Racism, 491 U.S. 781 (1989) .... 6, 16

Warner Cable Communications, Inc. v. City of Niceville,

tee | of fk |) ee eo a ree 18

Statutes, Rules and Constitutional Provisions Pages

U.S. Constitution, First Amendment ............. passim

ED da 66 & 60-66 0 Bak OES 65 os seas ouen 12 |

Ee ee ee ee eee re ae 17 |

if Re ea ere a ses ee ae 12 |

LS, kod wn back 0-0 ade eee 12 |

Sr Raia '« 0 5 5 6 a'6.0 «0.40.6 Rew Ae 9 |

ga as go Su of aa are ae 8, 9, 18 |

er GEE 6a bso 0b Wd ea awed ee eee en 9

rs as 6 5.0 4.0.0. d. 0:0 aca. Heme oueeen 9

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

Miscellaneous Pages |

Bureau of the Census, U.S. Dept. of Commerce, Statistical |

Abstract of the United States 1992, (112th ed. 1992) ..... 14 |

J. Emord, Freedom, Technology, and the |

PR Seva cic sce eccccseces 11

Office of Plans and Policies, Federal Communications Comm'n,

Broadcast Television In a Multichannel Marketplace,

OPP Working Paper No. 26 (June 1990) ............ 14

Lee, Cable Franchising and the First Amendment,

pe EE 10

L. Levy, Emergence of a Free Press (1985)............ 11

Newspaper Ass’n of America, Facts About

Settee ewe 14

Report of the Federal Communications Commission

Regarding the President’s Regulatory Reform

Pe i Ss a ky 0 0 0 15-16

Saylor, Municipal Ripoff: The Unconstitutionality

of Cable Television Franchise Fees and Access

Support Payments, 35 Catholic L. Rev. 671 (1986) ...... 11

F. Siebert, Freedom of the Press in England: 1476-1776 (1965) 11

’

Pes

INTEREST OF AMICI CURIAE”

Amici curiae Bell Atlantic Corporation and the United

States Telephone Association submit this brief in support of

both the petition for certiorari filed by Preferred

Communications, Inc. and the cross-petition filed by the City

of Los Angeles.

Bell Atlantic provides telecommunications services and

products to the general public, including the carriage of voice,

data, and video services over its local telephone network

subject to regulation as a common carrier under state laws and

the federal Communications Act of 1934. In addition, Bell

Atlantic recently prevailed in a constitutional challenge to 47

U.S.C. § 533(b), which prohibits telephone companies from

providing “video programming” directly to subscribers within

their telephone service areas. Chesapeake & Potomac

Telephone Co. of Virginia v. United States, 830 F. Supp. 909

(E.D. Va. 1993), appeal pending, Nos. 93-2340, 93-2341 (4th

Cir.) (filed Oct. 15, 1993). Therefore, Bell Atlantic is an

electronic speaker in its own right, as well as a transporter of

the voice, video, data, and graphics messages of others.

The United States Telephone Association is a

membership corporation of over eleven hundred domestic local

exchange telephone companies. The association’s members

provide over 98% of the local telephone access lines in the

United States. Bell Atlantic, for example, is a member of the

United States Telephone Association.

INTRODUCTION AND SUMMARY OF ARGUMENT

This Court has already made clear that video

programming is constitutionally protected expression. See

Leathers v. Medlock, 499 U.S. 439, ___, 111 S. Ct. 1438,

1442 (1991); City of Los Angeles vv. Preferred

* Letters reflecting written consent of the parties to the submission

of this brief have been filed with the Clerk of the Court.

2

Communications, Inc., 476 U.S. 488, 494 (1986). This case

gives the Court the opportunity to clarify how the First

Amendment applies to speakers who use facilities along public

streets and rights of way to distribute information in electronic

rather than printed form.

In Turner Broadcasting System, Inc. v. FCC, Nos. 93-

44, 93-45, this Court is considering the constitutionality of the

"must-carry" rules contained in 47 U.S.C. §§ 534 and 535,

which require cable operators to transmit the programming of

commercial and noncommercial broadcast stations over their

cable systems. The instant case is a logical successor to

Turner. It provides an opportunity to apply the First

Amendment principles governing electronic speech to a

different array of regulatory activities: rules restricting the

deployment of facilities necessary to communicate information

from speakers to listeners.

There is enormous controversy regarding the power of

municipalities to impose conditions on, and otherwise to

regulate, the deployment of cable facilities. Lower courts are

divided over the proper First Amendment standard for

regulations of cable television and other emerging forms of

electronic communication. The instant case is a microcosm

illustrating the need for this Court’s review: the case began in

1983, has persisted for over a decade, and has already been

the subject of one plenary proceeding in this Court. Yet

Preferred Communications is still seeking the government

permit that will enable it to speak to its chosen audience. The

questions presented here will not go away. The need for this

Court’s guidance will only increase. And the constitutional

issues raised by this case have already been thoroughly aired

in many lower courts and are fully ripe for this Court’s

review.

I. The Court should grant the petition for certiorari

filed by Preferred Communications in order to clarify the

constitutional standards that apply to the distribution of

electronic speech. In particular, the Court should clarify that

three fundamental First Amendment principles developed in

the context of the distribution of print and other types of

speech should govern the distribution of information in

electronic form:

(1) Schemes providing for the administrative regulation

of speech must contain "‘narrowly drawn, reasonable and

definite standards’" to constrain the decisionmaker’s

discretion. Forsyth County v. Nationalist Movement, 112 S.

Ct. 2395, 2402 (1992) (quoting Niemotko v. Maryland, 340

U.S. 268, 271 (1951)).

(2) Such schemes must include reasonable time limits

within which the decisionmaker is required to act.

(3) Any restriction on the deployment of facilities used

for electronic speech must be both narrowly tailored to the

Government’s regulatory objective and possess an essential

nexus to the particular facilities in question.

The importance of articulating these principles is

underscored by the First Amendment abuses that are reflected

in the record of this case and that are a common characteristic

of the procedures by which local governments grant cable

franchises. The franchise process routinely imposes virtually

no limits on the discretion of local government officials and

no meaningful time limits for action. The result is that cable

operators can obtain the permits they need to speak only if |

they accept onerous conditions that are wholly unrelated to

any legitimate governmental interest. Common examples of

these conditions range from providing free services and

facilities for the use of local governments to providing local

officials a special channel over which they can transmit their

own chosen messages to voters — an information-age

equivalent of the franking privilege.

Moreover, this type of standardless administrative control

of protected expression is not limited to cable television. For

example, the FCC has asserted authority to regulate telephone

company facilities used to deliver video speech as required by

eT

4

"public convenience and necessity." Satellite technologies

used to distribute video programming are subject to a similar

standard. The breadth of this problem makes the need for this

Court’s review all the more acute.

II. The Court should also grant the cross-petition filed

by the City of Los Angeles in order to establish, once and for

all, that the First Amendment does not permit municipalities

to grant exclusive franchises to incumbent cable companies.

This Court’s review is necessary because the lower courts are

divided over the question, although the weight of authority

would hold that the First Amendment prevents municipalities

from banning a second speaker. While the 1992 Cable Act

limited the power of local officials to grant exclusive

franchises, it did not solve the problem — as illustrated by

Los Angeles’ refusal to consider another application for a

cable franchise until the intervention of the Ninth Circuit.

Moreover, this Court’s review is essential, because the

speech at issue is video programming — the most pervasive

form of communication in America today and _ the

contemporary equivalent of the handbill, newspaper, and live

entertainment source rolled into one. This Court should make

clear that regulations impairing the practical ability of

speakers and audiences to participate fully in such an

important medium properly trigger the most searching

constitutional scrutiny. See City of Ladue v. Gilleo, No. 92-

1856 (argued Feb. 23, 1994); Lee v. International Soc’y for

Krishna Consciousness, Inc., 112 S. Ct. 2709, 2710 (1992)

(per curiam); Schneider v. State, 308 U.S. 147, 162 (1939).

The justifications proffered by the City of Los Angeies and

other municipalities are woefully inadequate to warrant a ban

on competing speakers.

5

REASONS FOR GRANTING THE WRIT

I. THIS CASE OFFERS A VALUABLE

OPPORTUNITY TO CLARIFY THE FIRST

AMENDMENT PRINCIPLES APPLICABLE TO

ADMINISTRATIVE SCHEMES THAT LICENSE

THE DEPLOYMENT OF FACILITIES NECESSARY

FOR ELECTRONIC SPEECH

This Court has always subjected to full First Amendment

scrutiny laws that deprive speakers of the channels of

communication they need to deliver their messages to their

chosen audiences.’ This Court should do no less with respect

to cable television and other forms of electronic speech. The

wires and cables that carry electronic information are the

arteries of expression, without which speakers could not

communicate with willing listeners.

To be sure, we do not maintain that Government is

completely disabled from regulating the deployment of the

facilities necessary to transmit electronic speech — any more

than the Government is wholly disabled from regulating the

movement of sound trucks on public streets,” the placement

' For example, this Court has applied First Amendment scrutiny to

laws regulating publishers’ ability to distribute their newspapers,

Minneapolis Star & Tribune Co. v. Minnesota Comm’r of Revenue, 460

U.S. 575 (1983) (“use tax” on cost of paper and ink products consumed in

publishing process); City of Cincinnati v. Discovery Network, Inc., 113 S.

Ct. 1505 (1993) (regulation of newsracks); City of Lakewood v. Plain

Dealer Pub. Co. , 486 U.S. 750 (1988) (same); to laws prohibiting the use

of loudspeakers, Saia v. New York, 334 U.S. 558 (1948); and to laws

regulating the physical distribution of handbills. Schneider v. New Jersey,

308 U.S. 147 (1939).

2 See Kovacs v. Cooper, 336 U.S. 77 (1949).

6

newsracks on public sidewalks,’ the operation of sound

equipment in public parks,* or any other activities of special

First Amendment significance. But we do submit, and believe

it to be a fundamental proposition worthy of this Court’s

plenary consideration, that familiar First Amendment

principles should govern administrative schemes that license

the deployment of facilities necessary for electronic speech:

(1) Foremost among these free speech principles is the

precept that administrative discretion must be carefully

limited. The First Amendment forbids government from

"vest[ing] restraining control over the right to speak [in] an

administrative official where there are no appropriate

standards to guide his action." Kunz v. New York, 340 U.S.

290, 295 (1951).° Thus, in City of Lakewood v. Plain Dealer

> See City of Cincinnati v. Discovery Network, Inc., 113 S. Ct. 1505

(1993); City of Lakewood v. Plain Dealer Pub. Co., 486 U.S. 750 (1988).

* See Ward v. Rock Against Racism, 491 U.S. 781 (1989).

* See, e.g., Forsyth County v. Nationalist Movement, 112 S. Ct. 2395,

2402-03 (1992) (striking down assembly and parade ordinance that

permitted a government administrator to vary the fee to reflect the

estimated cost of maintaining public order, on the ground that there were

"no articulated standards either in the ordinance or in the county's

established practice"); FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 225-

226 (1990) ("a scheme that places ‘unbridled discretion in the hands of a

government official or agency constitutes a prior restraint and may result

in censorship’") (quoting City of Lakewood, 486 U.S. at 757); Secretary

of State of Maryland v. Joseph H. Munson Co., 467 U.S. 947, 964 n.12

(1984) (“a statute that requires ... a ‘license’ for the dissemination of ideas

is inherently suspect. By placing discretion in the hands of an official to

grant or deny a license, such a statute creates a threat of censorship that by

its very existence chills free speech."); Shuttlesworth v. City of

Birmingham, 394 U.S. 147, 150-151 (1969) ("in deciding whether or not

to withhold a permit, the members of the Commission were to be guided

only by their own ideas of ‘public welfare, peace, safety, health, decency,

good order, morals, or convenience.’ This ordinance as it was written,

therefore, fell squarely within the ambit of the many decisions of this

7

Publishing Co., 486 U.S. 750 (1988), the Court held invalid

on its face an ordinance that gave a mayor untrammelled

power to grant or deny applications for annual permits to

place newsracks on public property, even though such

newsracks necessarily burden the streets and other public areas

with clutter, litter, and other inconveniences. The Court

explained that, “[w]ithout ... guideposts, post hoc

rationalizations by the licensing official and the use of shifting

or illegitimate criteria are far too easy, making it difficult for

courts to determine in any particular case whether the licensor

is permitting favorable, and suppressing unfavorable,

expression.” Jd. at 758.°

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

Ct. 1505 (1993), this Court invalidated a city regulation of

newsracks on public property that permitted them to be used

for distributing newspapers but not commercial handbills.

Although the Court accepted that the city was "[m]Jotivated by

its interest in the safety and attractive appearance of its streets

and sidewalks," id. at 1507, the Court noted that the city’s

regulatory scheme raised the same concerns as the ordinance

struck down in Lakewood — in particular, that it did not

contain a clear and explicit limit on the scope of the

decisionmaker’s discretion. 113 S. Ct. at 1513 n.19.

(2) The second salient principle is what this Court has

Court over the last 30 years, holding that a law subjecting the exercise of

First Amendment freedoms to the prior restraint of a license, without

narrow, objective, and definite standards to guide the licensing authority,

is unconstitutional.").

* Even the dissenters agreed that “certain licensing laws that ‘[g]iv{e]

a government official ... substantial power to discriminate based on the

content or viewpoint of speech’ are unconstitutional on their face —

without any showing of actual censorship or discrimination, or even

without the potential licensee even making an application for a license.”

486 U.S. at 774 (White, J., joined by Stevens and O’Connor, JJ.,

dissenting) (quoting the majority opinion, 486 U.S. at 759).

described as "[tJhe core policy underlying" Freedman v.

Maryland, 380 U.S. 51, 56-57 (1965) — “that the license for

a First Amendment-protected business must be issued within

a reasonable period of time, because undue delay results in the

unconstitutional suppression of protected speech.” FW/PBS,

Inc. v. City of Dallas, 493 U.S. 215, 227 (1990).’

Thus, administrative schemes that license the deployment

of facilities for video programming and other electronic

speech must ensure that decisions are made within "a

reasonable period of time." There must be time limits within

which the decisionmaker is required to act, and applications

must not be allowed to languish for an indefinite period.

(3) Finally, any restriction on facilities needed for

electronic speech must, at an absolute minimum, be narrowly

tailored to the Government’s regulatory objective and must

possess a close nexus to the particular facilities that are the

object of regulation. See Nollan v. California Coastal

Comm’n, 483 U.S. 825, 837-38 (1987); Dolan v. Tigard, No.

93-518 (argued Mar. 23, 1994).

These three First Amendment principles are settled law

in the context of the distribution of written materials. This

Court should grant certiorari to clarify that the principles

extend as well to administrative schemes licensing the

deployment of facilities necessary for electronic speech.

’ See also Riley v. National Federation of the Blind, Inc., 487 U.S.

781, 802 (1988) (holding that scheme failing to provide for definite

limitations on the time within which administrative agency must act was

constitutionally unsound because the “delay compelled the speaker's

silence"); City of Lakewood, 486 U.S. at 771 ("Nowhere in the ordinance

is either [the mayor or the city council] required to act with reasonable

dispatch. Rather, an application could languish indefinitely before the

Council, with the Newspaper’s only judicial remedy being a petition for

mandamus"); Vance v. Universal Amusement Co., 445 U.S. 308, 316

(1980) (invalidating statute on ground that it restrained speech for an

"indefinite duration”).

eT

9

This case is a good vehicle to review that question.

Federal law provides that "a cable operator may not provide

cable service without a franchise." 47 U.S.C. § 541(b)(1).

Los Angeles acknowledges that its cable franchising process

"is similar in all material respects to the process by which

most municipalities and counties across the nation have

j granted cable franchises." Cross-Petition at 8. Yet, as

Preferred Communications explains, there are no guidelines

for, or limitations on, the exercise of the vast administrative

discretion afforded by the franchise process.

Although the 1992 Cable Act purports to limit the power

of cities and localities to grant exclusive franchises, it

nonetheless permits them to “refuse to award an additional

competitive franchise” unless refusal to do so would be

"unreasonable." 47 U.S.C. § 541(a)(1). In addition, federal

law grants local officials broad authority to require, as a

condition of holding a franchise, that cable operators pay a

special franchise fee, in addition to taxes, fees, and other

assessments of general applicability, id. at § 542(a);* “that

channel capacity be designated for public, educational, or

governmental use, and channel capacity or institutional

networks be designated for educational or governmental use,”

id. at § 531(b); and that cable operators comply with

* The power to tax is of course “the power to destroy,” McCullough

v. Maryland, 4 Wheat. 316, 431 (1819), and this Court has recognized the

First Amendment risk posed by laws that are not generally applicable taxes

but rather are special assessments singling out cable television for unique

| burdens. E.g., Leathers v. Medlock, 499 U.S. 439 (1991). Moreover, the

danger of the authority to levy fees is heightened by decisions such as Erie

Telecommunications, Inc. v. Erie, 659 F. Supp. 580 (W.D. Pa. 1987).

There, the court held that a cable television company was estopped from

arguing that the municipality’s fees exceeded those allowed by law, on the

ground that the company had "accepted" the terms of the agreement. The

court rejected the company’s argument that it faced a Hobson’s choice,

since failing to agree to the municipality's terms would have resulted in the

loss of the ability to use public rights-of-way, at least while litigation was

pending.

10

"requirements for facilities and equipment” for use by local

governments. Jd. at § 544(b)(1). Moreover, cities and

localities "may enforce any requirements contained within the

franchise (A) for facilities and equipment, and (B) for broad

categories of video programming or other services." Jd. at §

544(b)(2).°

The latitude afforded local franchising authorities, and

the absence of any meaningful time limits, has politicized the

process by which local governments determine what speech

their citizens will receive through the nation’s most important

medium of communication — a result that is anathema under

the First Amendment. As one expert has observed, "virtually

all franchising decisions are intensely political. . . . [and]

generally entail[{] subjective judgments that violate the first

amendment." Lee, Cable Franchising and the First

Amendment, 36 Vand. L. Rev. 867, 870-71 (1983).

More’ fundamentally, contemporary franchise

requirements quite plainly do not satisfy the familiar First

Amendment principles for the administrative regulation of

* Lower court decisions illustrate the risk of subtle content

discrimination that may be hard to detect but is real nonetheless and worthy

of First Amendment concern. For example, in Chicago Cable

Communications v. Chicago Cable Comm'n, 678 F. Supp. 734 (N.D. Ill.

1988), the district court held that a local cable television commission did

not violate 47 U.S.C. § 544 by fining a cable operator for failing to

comply with franchise requirements for local origination programming,

which demanded that the operator broadcast a certain number of hours of

programming per week developed specifically for viewers in Chicago. On

appeal, the Seventh Circuit sustained the local origination requirement

against a First Amendment challenge. 879 F.2d 1540 (7th Cir. 1989).

The court of appeals noted that this Court “has yet to determine the

applicable standard of review of a challenge to a municipal regulation of

cable television.” Jd. at 1548. Nonetheless, the court of appeals upheld

the local origination rule under the test of United States v. O'Brien, 391

U.S. 367, 377 (1968), concluding that “it is within the City’s rights,

arguably its responsibilities, to proffer some requirements guaranteeing that

the cable customers are, to the extent possible, accorded a range of

programming from the franchisee.“ 879 F.2d at 1550.

11

speech. For example, a municipality could not permissibly

license bookstores, newspapers, or magazines in the interest

of public convenience and necessity." A city could not

constitutionally mandate, as a condition of a newspaper’s

operation within city limits, that the newspaper turn over a

portion of its front page for use by the city officials, or that

the newspaper deliver each week self-serving bulletins from

the city’s mayor to the newspaper’s readers. See, e.g., Miami

Herald Pub. Co. v. Tornillo, 418 U.S. 241, 256 (1974).

Yet cable companies are routinely required, as a

condition of their franchises, to finance the construction of

municipally controlled television studios, to deliver free

production equipment to city officials and institutions, and to

give city officials absolute programming control over certain

channels.'' In addition, the "franchise fees" that cable

operators are required to pay almost never bear any relation

to the costs they might impose on public streets and rights-of-

way. This sharp departure from settled principles of free

speech reflects an unexplained, and disturbing, leap in First

Amendment logic and merits this Court’s plenary review.

© The history of the licensing of written expression only highlights the

need not to make the same mistake with respect to electronic speech.

Shortly after mechanical printing arrived in England, Henry VIII sought to

suppress it, fearing its persuasive power, and in 1530 established a

licensing system for printers. For the next century, at least, the system of

licensing with its monopoly rents gave the Crown considerable power to

promote the circulation of works favorable to his religious and political

policies and kept the press in England under the control of the monarch.

See J. Emord, Freedom, Technology, and the First Amendment 26 (1991);

F. Siebert, Freedom of the Press in England: 1476 ‘776, at 46 (1965); L.

Levy, Emergence of a Free Press 12-13 (1985).

" See, e.g., Saylor, Municipal Ripoff: The Unconstitutionality of Cable

Television Franchise Fees and Access Support Payments, 35 Catholic L.

Rev. 671, 672 (1986) ("The list of such obligations goes on, reflecting the

remarkable ingenuity of cities and their consultants in devising schemes for

pet ‘public interest’ projects out of cable companies’ and subscribers’

money").

12

The question is all the more important because municipal

cable franchise rules provide only one example of the

administrative schemes that regulate the distribution of

electronic speech. The Federal Communications Commission

(FCC), for instance, asserts authority under the

Communications Act to regulate the deployment of facilities

used to deliver video speech by requiring telephone companies

to obtain certificates of "public convenience and necessity."

47 U.S.C. § 214. The Act delegates to the Commission

sweeping discretion to grant or deny such certificates or to

impose essentially any “terms and conditions as in its

judgment the public convenience and necessity may require.”

Id. at § 214(c).

Similarly, direct broadcast satellite services — which can

transmit hundreds of channels of video speech to viewers —

must obtain government licenses pursuant to 47 U.S.C. § 301.

Yet the only "standard" governing the review of an application

is "whether the public interest, convenience, and necessity will

be served by the granting of such application." Jd. at §

309(a).

The breadth of the administrative control currently

exercised over the means of distributing electronic speech

emphasizes the need to clarify the requirements imposed by

the First Amendment on administrative schemes regulating

such expression.

II. THIS CASE ALSO PROVIDES A VALUABLE

OPPORTUNITY TO DECIDE WHETHER THE FIRST

AMENDMENT PERMITS MUNICIPALITIES TO

SILENCE SPEECH AND REDUCE COMPETITION

BY GRANTING EXCLUSIVE CABLE FRANCHISES

In its cross-petition, the City of Los Angeles asserts that

a municipality may deny would-be speakers the opportunity to

compete with the incumbent cable company by refusing to

grant needed franchises. We respectfully submit that the City

is wrong, but we wholeheartedly agree with Los Angeles that

13

the issue is an important one worthy of this Court’s review.

First, although the more recent and better-reasoned

decisions have concluded that the First Amendment precludes

municipal bans on additional competitive franchises, the lower

courts are nonetheless divided over the matter. We agree with

the City of Los Angeles that this Court’s review is urgently

needed

Several courts have agreed with the Ninth Circuit below

that "‘allowing only the single company selected through the

franchise auction process to erect and operate a cable system

in each region’ exacts too heavy a toll on the First

Amendment interests at stake here. Competition in the

marketplace of ideas — as in every other market — leads to

a far greater diversity of viewpoints (and better service) than

if a single vendor is granted a crown monopoly." A60-61

(quoting Preferred Communications, Inc. v. City of Los

Angeles, 754 F.2d 1396, 1406 (9th Cir. 1985) (Preferred I),

aff'd on narrower grounds, 476 U.S. 488 (1986)).'? Other

'? See Cox Cable Communications, Inc. v. United States, 774 F. Supp.

633, 637 (M.D. Ga. 1991) (invalidating exclusive franchise on First

Amendment grounds; explaining that “cable television is entitled to the

same first amendment protection as newspapers"; and holding that, while

*[c]oncerns about disruptions of the public domain do allow a government

to make reasonable restrictions on the time, place, and manner of the

disruptions,” a second provider could not be excluded automatically),

remanded on other grounds, 992 F.2d 1178 (11th Cir. 1993); Jones

Intercable of San Diego, Inc. v. City of Lake Elsinore, No. SACV 90-636-

GLT (C.D. Cal. Apr. 4, 1991) (ordering city to issue competing cable

company a franchise license, explaining that “[p)laintiff is a First

Amendment ‘speaker,’ entitled to a high degree of constitutional pro-

tection,” and that “[a}lthough the city has suggested that there will be

physical disruption of the public domain, there is insufficient showing to

suggest that plaintiff's franchise should be totally denied for this reason.

Reasonable time, place, and manner restrictions, together with appropriate

bond and insurance requirements, can remedy this potential harm"); Group

W Cable, Inc. v. City of Santa Cruz, 669 F. Supp. 954, 966-67 (N.D. Cal.

1987) (holding that First Amendment did permit city to adopt measures to

minimize disruption to public streets, but that First Amendment precluded

city from adopting regulation providing only for a single cable television

14

courts have disagreed.”

Second, this Court should grant review because of the

importance of the First Amendment rights at issue. For better

or worse, electronic speech, particularly in the form of video

programming, is the principal means by which most

Americans receive news, political opinion, entertainment, and

other forms of information. More households have televisions

than subscribe to newspapers." The average television

household watches television seven hours per day, whereas the

average newspaper receives only 45 minutes of attention.’

operator); see also Quincy Cable TV, Inc. v. FCC, 768 F.2d 1434, 1450

(D.C. Cir. 1985), cert. denied, 476 U.S. 1169 (1986) (noting that “the

Supreme Court has categorically rejected the suggestion that purely

economic constraints on the number of voices available in a given

community justify otherwise unwarranted intrusions into First Amendment

rights” (citing Miami Herald Pub. Co. v. Tornillo, 418 U.S. 241 (1974));

Community Television of Utah, Inc. v. Wilkinson, 611 F. Supp. 1099,

1112-13 (D. Utah 1985) (rejecting application of broadcast precedents like

Red Lion Broadcasting Co. v. FCC, 395 U.S. 367 (1969), to cable

television), aff'd, 800 F.2d 989 (10th Cir. 1986) (per curiam), aff'd, 480

U.S. 926 (1987).

" For example, in Community Communications Co. v. City of Boulder,

660 F.2d 1370, 1378-79 (10th Cir. 1981}, ceri. dismissed, 456 U.S. 1001

(1982), the Tenth Circuit vacated an injunction issued against a city’s

exclusive franchise policy. And in Omega Satellite Products v. City of

Indianapolis, 694 F.2d 119, 128 (7th Cir. 1982), the Seventh Circuit

upheld the denial of a preliminary injunction sought by a competing cable

company against a city’s exclusive franchise policy.

According to the Census Bureau, 92 million households (or 98

percent of all households) have a television, in contrast to a total daily

newspaper circulation of 62 million. Bureau of the Census, U.S. Dept. of

Commerce, Statistical Abstract of the United States 1992, Table 884 (112th

ed. 1992).

'S Office of Plans and Policies, Federal Communications Comm'n,

Broadcast Television In a Multichannel Marketplace, OPP Working Paper

No. 26, at 19, 107 (June 1990); Newspaper Ass’n of America, Facts About

Newspapers "92, at 25 (1992).

15

In addition, 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 y.

FCC, 801 F.2d 501, 508 (D.C. Cir. 1986) (quoting FCC

Report and Order), cert. denied, 482 U.S. 919 (1987).

Thus, the First Amendment question here is not some

academic nicety. It is the very real question of whether a

multitude of willing speakers — and tens of millions of

potential viewers — will be prevented from fully participating

in the most important medium of communication today. In

enacting the 1992 Cable Act, Congress extensively

documented the harms to the system of free expression caused

by restrictive franchising practices and the lack of competition

in cable markets." Congress limited, but did not forbid,

exclusive franchises, see pp. 8-9, supra, and the 1992 Cable

Act did not solve the problem — as illustrated quite concretely

in the instant case by Preferred Communications’ inability to

secure even the opportunity to seek a needed franchise in Los

Angeles without the intervention of the Ninth Circuit. The net

result of restrictive franchising practices, in all their guises, is

that the market for speech is distorted, prices are too high,

and the introduction of new services is discouraged."’

'* Of the more than 10,000 communities served by cable in 1991, only

53 had two cable systems competing head-to-head. In the 1992 Cable Act,

Congress specifically found that cable has become the “dominant national

video medium” and that most cable operators "face{] no local competition, *

resulting in “undue market power for the cable operator as compared to

that of consumers and video programmers.” § 2(a)(2), 106 Stat. 1460. As

a result, according to Congress, cable rates have increased at three times

the rate of inflation since 1986. § 2(a)(1), 106 Stat. 1460.

"’ For example, the FCC has estimated that introducing competition

from telephone companies “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

eal

Third, this Court should grant review because the City’s

justifications for its franchise system plainly cannot pass

muster under the “narrow tailoring” requirement of United

States v. O’Brien, 391 U.S. 367, 377 (1968), and Ward v.

Rock Against Racism, 491 U.S. 781, 800 (1989)." Los

Angeles contends that competing franchises must be denied to

conserve pole and conduit space. But the City conceded

below that the public utility infrastructure in Los Angeles

could accommodate at least one additional cable system. See

A60, Aé2.

Moreover, it is obvious that the District Court, see A90,

and the Ninth Circuit on two occasions, see A25, A27-A28,

A60-A61, A63 n.5, both correctly found that the City’s

franchise requirements are not narrowly tailored to its asserted

interests. Poles and conduit are owned not by cities, but by

telephone companies, electric utilities, and others,’ under

Commission Regarding the President's Regulatory Reform Program 16

(April 28, 1992).

'’ The narrow tailoring test requires that a law not “burden

substantially more speech than is necessary” to prevent the harms identified

by the Government. Ward, 491 U.S. at 800. This Court has made clear

that, under the First Amendment, the Government “must demonstrate that

the harms it recites are real and that its restriction will in fact alleviate

them to a material degree." Edenfield v. Fane, 113 S. Ct. 1792, 1800

(1993). This burden is not satisfied by “speculation or conjecture” or even

by weak evidence. /d. The law must serve the interest in a “direct and

effective” way. Ward, 491 U.S. at 800. If the restriction lacks a “close

and substantial relation to the governmental interests asserted,” it cannot

survive intermediate scrutiny. Edenfield, 113 S. Ct. at 1802.

'? Los Angeles claims that permitting a second cable company to lease

poles and conduit would effect “a Fifth Amendment taking of that

property.” Cross-Petition at 15. Los Angeles also argues that the poles

and conduit represent “nonpublic forums." /d. at 17-19. Both of these

arguments assume that the city owns utility poles and conduit. But the

properties are in fact privately owned by telephone companies and utilities.

See Pacific Gas & Elec. Co. v. Public Utilities Comm'n, 475 U.S. 1, 22-

a

17

terms regulated by the Pole Attachment Act of 1978, 47

U.S.C. § 224.”

For example, long distance telephone companies, like

AT&T, MCI, and Sprint, lease large quantities of pole and

conduit space from Bell Atlantic. So do ordinary businesses,

like retail chains that desire dedicated lines from one store to

another. Yet no municipal franchise is required to engage in

these activities. In fact, cable operators are the only potential

lessees of pole and conduit space who must secure a franchise

— a dramatically ill-fitting requirement if the franchise rules

are truly intended to conserve supposedly scarce pole and

conduit space.”!

Indeed, municipal governments are significant lessees of

23 n.1 (1986) (Marshall, J., concurring in the judgment); Consolidated

Edison Co. v. Public Service Comm'n, 447 U.S. 530, 534 n.1 (1980). In

addition, the Ninth Circuit explained below that, under California law,

public forum analysis does not help the City’s argument. A21-A28.

* Preferred Communications’ reference to pole attachment as a

“common carrier service” (Pet. at i) is a misdescription. Although

regulated to some extent by the 1978 Act, pole attachments are provided

pursuant to private contracts and are not “services” as that term is used in

public utility law. See FCC v. Florida Power Corp., 480 U.S. 245, 251-

52 & n.6 (1987); of. Southwestern Bell Tel. Co. v. FCC, Nos. 91-1416,

et al. (D.C. Cir. Apr. 5, 1994) (indicating that provision of “dark fiber”

— 4Le., provision of fiber optic lines without the necessary electronic

equipment to power the fiber — is not a common carrier service but could

be made available on a contractual rather than a common carrier basis).

* The fact that cable operators are singled out for the special burden

of a franchise requirement constitutes a form of speaker-specific

discrimination, which this Court has properly held triggers strict scrutiny

under the First Amendment and equal protection principles. See Buckley

v. Valeo, 424 U.S. 1, 18 (1976) (per curiam) (government may not

“discriminate among speakers or ideas"); Nat’! Bank of Boston v. Bellotti,

435 U.S. 765, 784-85 (1978) (“In the realm of protected speech, the

legislature is constitutionally disqualified from dictating . . . the speakers

who may address a public issue"); see also Police Dept. of Chicago v.

Mosley, 408 U.S. 92, 95 (1972).

18

pole and conduit space, as they increasingly provide cable

service of their own in competition with incumbent cable

companies — a trend that has been both approved by the

courts” and encouraged by Congress in the 1992 Cable Act,

which exempted local governments from having to comply

with their own franchise requirements.” All of this would

be rather curious if cities truly were, as Los Angeles says,

vitally concerned with “conserv[ing]" pole and conduit space

for "future uses,” Cross-Petition at 14, and if franchises were

the means by which municipalities achieved that end.

Therefore, Los Angeles cannot satisfy its burden under

the First Amendment of justifying its franchise restrictions.

But we fully agree with the City’s position that this Court

should accept certiorari and resolve the issue once and for all.

” See Warner Cable Communications, Inc. v. City of Niceville, 911

F.2d 634, 637-40 (11th Cir. 1990); Paragould Cablevision, Inc. v. City of

Paragould, 930 F.2d 1310, 1314-15 (8th Cir. 1990), cert. denied, 112 S.

Ct. 430 (1991).

® See § 7(c) of the 1992 Cable Act, 106 Stat. 1483, codified at 47

U.S.C. § 541(f).

eee

19

CONCLUSION

This Court should grant Preferred Communications’

petition for certiorari as well as the cross-petition filed by the

City of Los Angeles.

Respectfully submitted,

MARY McDERMOTT ' LAURENCE H. TRIBE

900 19th Street, N.W. Counsel of Record

Suite 800 JONATHAN S. MASSEY

Washington, D.C. 20006 1575 Massachusetts Avenue

(202) 326-7247 Cambridge, MA 02138

Counsel for United States (617) 495-4621

Telephone Association

JAMES R. YOUNG

JOHN THORNE

MICHAEL E. GLOVER

1710 H Street, N.W.

Washington, D.C. 20006

(202) 392-0895

Counsel for Bell Atlantic Corp.

May 18, 1994