Amicus Curiae Brief — United States v. Midwest Video Corp.

Supreme Court brief1972

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‘Question presented’..............000 000. hag<as eeu °

_ Statute and Regulations Involvec .

ore ee ee eee ewe wee wee

Amplification of Statement ©... ne heed wees seheeaee

Sumniary of Argument .....:....... DA tawewese rece: -

Argument -

i. The FCC. Regulations with respect ‘to local

IV.

origination cablecasting conflict with rules gov-

erning local cablecast services that have been

and are being meveneped by States such as IIli-

State. rather than federal regulation of local

cablecast ‘services accords. with the traditional

altocation of competence over wired communi-

cations as between State. and national govern- .

MentsS .........5-.ssseceees eieegese estan ee"

Nothing in the Federal Communications Act or

the decisions of this Court purports to alter

this traditional division of authority as regards

intrastate cablecast communications Saveceas

The FCC has made no findings and assigned no

reasons that would bring intrastate cablecast

communications. within its Congressionally au-

thorized sphere. of authority ,.:...<:.........

Any friction or inconvenience that may arise as

between State regulation of local. cablecast

services and federal regulation of interstate _

broadcast-delivery cable services is a matter |

for resolution by the Congress ......... ee

Page

ONGIIAION sc oxo oa ek ce ee oa eee es 42

Pe. ss eee os nent heen one eeeer ances Al

os x

CITATIONS -

Cases: | .

Buckeye Cablevision, Inc. v. Federal. Communica-

| tions Commission, 387 F. 2d 220 (C.A.D.C. 1967) 24

Federal Power Commission v. Florida Power & Light” |

Co. —U.S.—, 40 U.S. Law Week 4141 (1972) .. .20, 34

Federal Power Commission v. Transcontinental Gas

_ Pape Line Corp., 365 U.S. 1 (1961).............. 29

Fortmghtly Corp. v. United Artists, 392 U. S. 390

(19GB) 26... cece esc e cece cece cece eet ence eens . 18

. Frost & Frost Trucking Co. v. Ratlroad Commission e

of Caltforma, 271 U.S. 583. (1926) Mee saeeka de kees 9, 28 .

National. Broadcasting Co. v. United States,319 U.S.

190 (1943) ..... Goatees ended neneeenneeaetees . .14, 39

New State Ice Co. v.. Liebmann, 385 U.S. 262 (1913).. 41 -

Philadelphia Television Broadcasting Co. v. Federal

-. Communications . Commission, _ 359 F. 2d 282

HOBO TGC 05s cs erwin se sccnens by wenakee . a0

Sherbért v. Verner, 374 U.S. 398 (1963) .: scheneas ...9, 28

Smith v. Illinois Beil | Telephone Co., 282 U.S. 133

(CLE 1) A anor oe 8, 21, 32

The Minnesota Rate cases, 230 U.S. 352° - a

(W913) tones 2s: OT ee renee ..10, 21, 34, 40

T.V. Piz, Inc. v. Taylor, 396 U.S. 556

| A910) nk cales dee oda etn wnsse ce 8, 15, 17, 18, 20

United States v. Southwestern Cable Co., .

392 U.S. 157 (1968) .....3, 16, 18, 22, 23, 24, 28, 35, 36

Page .

“‘Biatites and regulations: : .

Communications Aet of 1934, 48 Stat. 1064, as deicnaed .

Section 1, 47 U.S.C. §151..... ee eee ree oe ot

Section 2(a), 4108.0. S$ 192(8) i. via tea yen ody 20, 27 :

Section 2(b), 47 U.S.C. See _

c5 Cy] 0) a re Seemed oho, 20,05, 30,40:

Section 3(h), 47 U.S.C. §153(h) chee e eR aneen 7, 23, 24

Section 221(b), 47-U.S.C. §221(b)............ 7, 27, 39 —

Section 301(d), 47 U.S.C. §301(d)......... 7, 10, 23, 39

Mann- Elkins Act of J une 18, 1910, ch. 309, 36 Stat.

Od: Rovere eax Sete cry aeniswucedecas ee ee 8, 21.

47 OF.R. §§76.201-221. eee a atte

Illinois Public Utilities Act, Ill. Rev. Stats., Ch. 111%,

Section 1 ef s¢q.....06.0000seeeevet baa See 14, 18, 20

‘Mlinois Commerce Commission Notice of Proposed

Rule Making, Jan. 5, 1972............ . 11, 15, 37, 41

Llinois Commerce Commission Interim Opinion and °

Order, 91 P.U.R. 3d 37 (1971).......... coe 2, 9, 16, 18

Federal Communications Commission Proceedings :

Federal-State Advisory Committee ae 37 Fed.

Reg. 3204 (1972) 2... ssc ccc cc cccccwecseccccec’ 38

Cable Television Service, 37 Fed. Reg. 3252

6.) Pee .2, 12, 13, 15, 16, 26, 29; 30, 31, 35, 38-

First Report and Order, 20 F.C.C. 2d 201 (1969). .3, 4, 35°

Clarification of: First mepers and Order, 20 F.C.G. 2d

GEL. CUO) one eiet evs ovens os Bice de ce vasere 1. 4, 12

Notice of: Proposed Rulemaking and Inquiry, 15

F.C.C. 2d 417 (1968)...... Geet aae nana eee ees 16, 24

Second Report and Order, 2 F.C.C. 2d 725 (1966)... 16

Common Carrier Tariffs er. CATV a 4F. oe 0. |

iced catia oeeee Tene eee tenes 7, 34

iv / |

| Page

CATV and TV Repeater Services, 26 F.C.C. 403 ~

MADD) eae ee hee Dosa en ee te ee ens teense 35

Miscellaneous :

Hearings ore the Senaté Commerce Subcommittée

on Communications, Feb. 8, 1972 (transcript in

preparation). . ee ee ere er ee 38

Letter from the Director, White House Office of Tele- |

‘communications: Policy, to the Chairman, Senate

ier Subcommittee on Communications, No-

| ae Ly A en nn Ameen | pieeeredeee, 16, 25°

* S. 792, 92nd Cong,, 1st Sess, (1971). ewes wepeeteies 25

H: Rep. No. 1635, 89th Cong., 2nd Sess. (1966) gia: (oe

H. Rep. No. 109, 67th Cong., Ist Sess. (1921)........ 20

Arthur D. Little, Inc. News Release (Jai. 1972). toe. 14:

Gabel, Development of Separations Principles i in the .

_ . Telephone Industry (1967)........... » + +20, 21, 32, 40:

‘Note, Unconstitutional Conditions, 73 Harv. L. Rev.

1596 (TOGO) «.. 0-00 oesececcee senses Sake eueaee .9, 28

Sloan Commission on Cable Communications, On the

Cable: The Television of Abundance (1971)."... 13

: i . a

October Term, 1971

__ Supreme Court of the United States

No. 71-506

‘UNITED STATES OF AMERICA AND

FEDERAL COMMUNICATIONS COMMISSION,

Petitioners,

- ys es.

MIDWEST VIDEO CORPORATION,

Respondent.

a ON WRIT OF: CERTIORARI TO

‘THE UNITED STATES COURT OF APPEALS

FOR THE IGHTH. CIRCUIT :

BRIEF FOR THE STATE OF ILLINOIS

. AS AMICUS OURIAE = |

| 2

QUESTION PRESENTED

- Whether the Federal Communications Act .establishes

federal jurisdiction over. intrastate wired communications,

-such as the locally originated cable signals covered by the - -

Federal Communications Commission’ s regulations held

a invalid by the court below.

STATUTE AND REGULATIONS INVOLVED |

Sections 2(a), 2(b), 3(a), 3(b), 3(h), 3(t),. 221(b),. 301(d)

of the Communications Act of 1934, 48 Stat. 1064, as

‘amended, 47 U.S.C. 152(a), 152(b), 153(a), 153(b), 153(h),

153(t), 221(b), 301(d), are set forth in the. Appendix to °

this brief (fra, pp. Al-A3). Also set forth in the Appen-

dix for this Court’s information, are the ‘Summary and

Order’’ section of the Interim. Opinion and Order adopted

September 9, 1971 by the. Illinois Commerce Commission

in its Docket 56191 (Investigation of Cable Television and

‘other forms of Broddband\Cable Communications in ithe

State of Illinois) (infra, pp.\A16-A21) ; and Section B4 of

‘the Notice of Proposed oe adopted January 5,

“ 1972 by the Illinois Commerve Commission in the same |

Rroceading (infra, pp. A22-A3\1).*°

AMPLIFICATION OF ‘STATEMEN T

An agreed. glossary of terms may be helpful at the out-

set to the Cour't’s understanding of this case. A- good start- .

ing point is the ‘‘Definitions’’ section, § 76. d, of the .com-

: _, prehensive regulations. recently adopted by the Federal

~ Communications Commission. Cable Television Service,

: 37 Fed. Reg. 3252.2 This section divides the signals that

are. carried over cable systems into four classes: (I) tele-

vision broadcast signals, (II) non-broadcast signals, (III)

scrambled non-broadcast signals, and (IV) return-path, or .

‘ subseriber- originated, non-broadcast signals. All three va-

‘ rieties of non-broadcast signals ( Classes IT, III,.and IV)

- 1. Copies of the full texts of both these documents have been

lodged with the Clerk of this Court.

2. Copies of this report and order have also been lodged by the .

Solicitor General with the Clerk of this Court.

net awe ave eet 7

3. :

. are collectively defined as “‘cablecasting”’ i in ‘subsestion (v)

of the regulations. Subsection (w) in turn defines the term.

‘origination cablecasting’”’ to mean: ae

‘‘Programming (exclusive of broadcast signals) eattind

on .a cable television system over.one or more chan-

nels and subject. to the exclusive control of the cable

operator. ’* ey

This.case concerns. s.“‘origination cablecasting”’ and it is

‘the first case to reach the Court that involves any form

of ‘‘cablecasting’’ at all. Signals carried by means of

“‘cablecasting’’ originate and terminate in a coaxial cable,

and. thus — unlike the Class I signals passed upon by ‘this

Court in United States vy. Southweste rit-Cable. Co. ” 392 U.S. i

157 (1968) — they make no use of the radio spectr um at all. 5

The ‘FCC regulations at issue in this case (Pet: App. C, —

p. 53)* purport to require cable systems having 3,500 or

more subscribers to engage in origination’ cablecasting as a

* “local outlet’’ for ‘‘local production and presentation of

programs.’’ There is’ nothing in these regulations, or in .

the findings and conclusions adopted by the FCC in its -

First’ Report and Order, 20 F.C.C. 2d. 201 (1969) (Pet.

“App. C, pp. 31-53), which requires or anticipates that

such cablecasting will cross state lines. | .

Cable systems ‘subject to the regulations are “authorized

to solicit commercial sponsorship and are adjured to be-

have inevery respect as if they were broadcasters: -sub-

jectto the equal-time, fairness-doctrine, and other restric- ;

tions developed by the FCC to deal with’ the spectrum lim: -

--itations of over-the-air broadcasting. The FCC found and :

determined that allowing a cablecasting’’ would.

"3. These regulations were- at first suspended pending - ‘review by

this Court,but have now been reinstituted to take effect March 31,

1972, witl some alterations in warding. Cable Television Service,

¢ op. cit supra, §§ 76. 201-76. 221. See P. 12, infra, and the Appendix to

this brief, pn. Aé4. ee |

’ he

a not be unfairly competitive with the | operations of its”

\ television broadcast licensees, because} ‘both broadcasters

“and eable operators would ‘*stand.on the same footing’ in

na acquiring: the program material with which they com-

“aba ”? First Report and Order, 3upra, para. 5 (Pet. App.

C, p. 33). The FCC did not find that requiring ‘‘origina-

tion cableeasting’’ by cable. operators was necessary to -

- protect the operations of broadcast licensees, °

At the very close of its First: Report and Order (Pet.

App. C,, p.-53), the FCC stated without elaboration of rea-

sons that it was preempting State-and local ie arene ‘‘in-

_consistent with these Federal re latory policies.¥ And

in its Clarification of First Report and Order issued sKortly -

:thereafter, 20 F-O, C.24_741 (1969), the FCC ruled that this ©

os preeniption covered - ‘otal ordinances forbidding : systems

with fewer than 3,500: sabscribers to engage in cablecast

oO origination or to carry advertising— because ‘such ‘ordi- -

naneés, even though not in direct conflict with the FCC

7 regulations, were ‘“ineonsistent with Federal regulatory |

- policies.”” >

. In its opinion setting aside these regulations as ; beyond

the. Commission’ s statutory authority, the Court of Ap-

“peals for the Eighth. Circuit observed that cable operators

obtain their. licenses or franchises from state regulatory

- ? boards/.or municipalities ; that Congress has made no at-

: tempt by legislation .to preempt such authority; and that :

' {problems arise with aie to encroachment: on state

~ and municipal ae ".?. (Pet. mls A P. sith

, | SUMMARY OF ARGUMENT’

Basic to ‘the FCO's ‘‘cablecasting” regulations is its ~

- determination, that cable.communications is a- unitary e en- nN |

—o which is ‘to be regulated in its oe by. the

' FCC as an appendage to broadcasting. As applied to-‘Class ° |

I’’ cable services of the sort involved in the cases pre-

viously * brought before this Court — that is, the simple

reception and delivery of off-the-air broadeast signals—

there may be nothing exceptionable about this determina- °—

_ tion. As applied to the far more ‘important and burgeon-

_ ing origination and two-way: services ‘of which cable is

capable, however, this determination may be disastrously _

_ In error and could preclude ‘the realization of social values _

“of the highest importance. | 4 |

At stake in this issue ‘are fundamental values of com-

petition and free speech, -s -well-as the genius and tradi-

_ tions of our federal system. We repeat here what we tes. -

‘tified to the FCC; namely, that cable communications »

present the first opportunity. in a lifetime to ‘get away

from the system of paternalism that has heretofore: char-

acterized mass communiéations in this country.; and -fur-

ther, that there is neither need nor occasion to: risk a

single and pervasive federal errox in addressing this oppor- '

_ tunity. a ar, a a

Illinois’ own hearings and investigations over the past .

year and more have strengthened this opinion. The coaxial

eable grid that ‘is-laid down for cable television is-eapable, .

with the incorporation of suitable switching and terminal

equipment well within the range of engineering feasibil-

ity, of ‘affording -oppértunities both: to receive and to:.

- transmit a whole new range and diversity of video, audio, |

and data-grade message services over the cable. Méssage

_ origination and two-way, interactive communication op-

portunities can be opened up for elements in our society

that are now excluded as a practical matter’ from partici-

pation in the marketplace of ideas. This ‘is far too im-

| . portant a development to entrust to a single federal agency,

’

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at least without the moat eareful and searching review. -and

authorization by the Congress.

Tgeating cable operations for all purposes as an ad-:

junct to broadcasting, susceptible to pervasive federal ju-

- . risdiction, would leave the important growth segment of

* those operations to struggle fo\wuncertain acceptance within |

-. the existing broadcasting indubtry, rather than through a —

-newly separate. and competitive communications structure.

This in itself would place an intimidating. chill on the i inno-

vative development of advanced cable communication serv-

iees. More particularly, treating local cable origination as

itself. a broadcasting operation would clamp onto that orig-

“ination all the paternalistic devices — the fairness doctrine,

equal time, ete.—that have been forced onto over-the-air

. broadeasting by the spectrum limitations of -that ‘wholly

different medium: Furthermore, it would subject the cable

.operator to advertiser ¢ohtrol and reward, giving him an

economic interest in the audience development of his own

channel at war with: his incentive to develop to the full:

other’ channels and -services for community - enrichment.

There is an “tntirely other way to appr oach the prom-

ise and potential of cable origination and two-way services.

That is to treat the cable operator for these purposes as

simply a carrier, separating if. yqu will the medium from

the message. Historically this has -been the consistent

approach taken at both State and federal levels to wired |

telecommunications in this country, through regulatory pol-

ieies that leave no control over message content with the -

’ .earrier.Control in this s¢heme of things is left solely to

. the senders and receivers \of messages, ‘subject only to the

non-prior-restraints of th criminal law. This is common

carriage, and it is essentially ‘the system of regulation for

. oe 7

non-broadcast pabie. : services selected after searching | in-

quiry by the State of Illinois. |

For presént purposes this Court need not decide whether

that selection is necessary or incumbent for the FCC within

its Congressionally delegated domain of authority over in- .

_ terstate and radio communications. That is a matter for-

further consideration by the FCC itself, and the Congress.

All that this Court need decide is that the choice made by

. Illinois and other States is permissible, withii their do-

main of authority over intrastate, non-tadio (wir ed) -conh-

| munications. Because local cable origination in its pres-

ent state -of development is an intrastate form of wired

communications (as the FCC itself has recognized, Com-

mon “Carrier Tariffs for CATV Systems, 4 F.C. QO 2a 257,

‘260 (1966)), that conclusion will ne to inv aL Gano of

the rule at issue in this case.

Section 2(b) of the Federal Communications Act of 1934, ©

in eénjunction with section 301 of that Act, withholds from -

the FCC ‘‘jurisdiction with respect to (1) charges, clas-

tifications, _practices, services , facilities, or tegulations for

or in connection - with initrastate communication services

by wire ... of any carrier... .’? The term “‘earrier’’ is —

defined in Section 3(h) so as to exclude broadcasters but ~

include carriers by wire, which are subdivided into (1)

> those engaged ‘‘in interstate or foreign communication”’,

and (2) all others, ‘‘where reference is made to common

carriers not subject to this chapter.’’ ‘Section 221(b) illus- -

trates the operation of this distinction as, mpplied to tele- :

phone exchange services, none of whose practices, serv-:

ices, ete. fall within the FCC’s jurisdiction “even, though

a‘portion of such. exchange services consists of interstate

_ or foreign communication, in. any case where such matters

are subject to regulation by a State commission or by

local governmental authority.’’ This statutory scheme is

the outgrowth of a long-established tradition leaving” to

State and local governments the authority to regulate —

intrastate wired communications services, notwithstanding

that the physical plant used to provide .such services is

— also employed in the furnishing of interstate services over

which the federal government has assumed jurisdiction.

See, e.g., the Mann-Elkins Act of June 18, 1910, ch. 309, |

- 36. Stat. 539, 545; Smith v. Minois Bell Tel. Co., 282 US.

133, 150-51 (1930).

N othing in any previous decisions of this Court author-

izes a departure from that tradition as regards services

provided by broadband cable systems. The Congress has

consistently déclined to confer plenary jurisdi¢tion over

-such systems on the FCC. And the White House Office of -

-Telecommunications Policy, speaking for the Adniinistra-

tion, has formally informed the Congress that. the FCC’s

- regulations dealing with local cable services and the divi-

sion of federal-State authority’, over such services, ‘‘are

predicated on —— authority and address issués of ma-.

jor national concern’ » which. will require ‘‘thorough Con-_ -

gressional rev! iew’’ on ihe basis.of legislative proposals to. .

be made by a ‘Cabinet Committee created by the President.

(See Appendix, pp. A12-A15.) |

Numerous States have now adopted or are in the proc-

sess of considering ‘legislation ‘and regulations treating

“broadband cable communications as a public utility. Their

authority to do so was upheld by this Court in TV Piz, Inc.

v. Taylor, 396 U.S. 556 (1970), affirming 304 F. Supp. 459

(Dz Nev. 1968), to the extent not -validly preempted by

authorized regulations of the FCC. As was held: by the ~

thrée-judge District Court in that case (304 F. Supp., at

463), in the regulation. of -cable systems “ national uni-

formity is probably not a ee let alone an accept- :

“9

able ideal.’? The Illinois Commerce Commission, for ex-

ample, has concluded on the basis of detailed findings from

an evidentiary record covering more than four months of

hearings, that cable services are functionally equivalent to

telephone Services for the purpose of State regulation ;

and it is proposing to require that message origination and >

reception services, be made broadly. available for public

use without. content control of. those messages by the cable

operator. (See Appendix, pp. A16-A21.)

The FCC has madé no findings and assigned no rea-

sons that would justify its intrusion upon, or interfer-

ence with, this sort of State regulation. Its attempt to link

local cablecast operations, over which it has no authority,

with carriage of television broadcast signals, over which ~

it does have authority, is a form of ‘‘unstatutory condi-

tion’’ exactly akin to the ‘“‘unconstitutional conditions’’.

consistently struck down by this Court. See Frost & Frost

‘Trucking Co. v. R.R. Commission of California, 271 U.S.

583, 593 (1926); Sherbert v. Verner; 374 U.S. 398, 404-406

& n.6 (1963) ; Note, Unconstitutional Conditions, 73 Harv.

L, Rev. 1595, 1609: (1960). To be valid, the purported

condition must itself fall within the scope of the FCC’s

- Congressionally delegated authority, which it does not do.

Further, even assumirg that the FCC could. regulate in-

trastate wired communications. upon a finding of adverse

effect upon interstate or radio communications subject to

the Commission’s supervision, the FCC has made no such

findings to support its ‘origination eablecasting’’ regula-

tion. Quite the contrary, it has found that cablecasting

should be permitted despite its competitive effect on tele-

vision broadcastifig. Permission and requirement are, of

course, two very different matters.

If any confusion or inconvenience should arise as a

result of disparate State and federal regulation of the

intrastate and interstate operations of cable. systems,

‘‘these considerations are for the practical judgment of -

oe in determining the extent of regulation rieces-

sary . ... to conserve: and ‘promote the interests of inter-

state commerce.’’. The Minnesota Rate Cases, 230 US.

352, .432 (1913). What must be stressed in this case is

that due recognition of State regulatory ‘competence will

not produce or permit the chaotic interference of over-—

the-air radio broadcast. signals that led the Congress to

‘eonfer: centralized jurisdiction in the FCC over radio com-

munications. Compare § 301(d) of the Federal Commu-

nications Act, vesting exclusive federal authority over in-

trastate radio communications ‘‘ when interference is‘caused

by such use or oper ationZAwith the transmission or recep-

tion of interstate radio communications. The Congress has

sanctioned no such unified federal authority over intra-

‘state wired communications, and the FCC should not be

-permitted to disturb: that judgment until ane unless the

Congress directs it to do so. ,

ARGUMENT |

THE FCC REGULATIONS WITH RESPECT TO LO-

CAL ORIGINATION CABLECASTING CONFLICT

' WITH RULES GOVERNING LOCAL CABLECAST

_ SERVICES. THAT HAVE BEEN AND ARE BEING ©

. DEVELOPED BY STATES SUCH AS ILLINOIS. -

In, its Notice of Proposed ‘Rule Making adopted Janu- *

ary 0, 1972, the Illinois Commerce Commission addressed

. itself among other things td the non-broadcast services .

to: be provided over cable systems. In pertinent part, the »

Notice proposed (Appendix, p. 22-423) :

’ “First, either ,séparately or in conjunction with local

program origination, one channel should offer. passive

display services on a continuing 24-hour basis: time

and weather and the day’s program log on all chan- -

nels, both broadcast. and nonbroadeast, at a minimum.

‘These passive displays may also carry advertising. .

on the top or bottom half. of the screen. Second, the.

cable operator may offer its own local programming,

over the same or one- different channel, but only on a

_ non-profit: basis; that is, the sum ‘total of. any adver-. .—

tising revenues it earns in connection with such. pro-|

gramming must recover no more than its direct costs.

The Commission’s concern here-is to avoid giving the

cable operator a proprietary interest in its own pro- -

gramming that could conflict with the public interest

in promoting widely diverse programming opportu-

hities on the other cable. channels. It should be noted’

that the FCC’s local origination requirement has been

suspended pending the outcome of the Midwest Video

litigation previously referred to; and in any case its

definition of ‘cablecasting’, namely programming ‘orig-_

inated by the CATV operator or by another entity’,

2. : ‘

: o: dl

ET Te nee

can be satisfied by ensuring adequate: local access to

free or leased channels as descrtbed below. This Com- ©

‘mission does not believe that either the ‘equal time’

- or ‘fairness’ provisions of FCC regulations are prop- -

erly applicable to cablecast programming; so long as

ample channel capacity is provided over public-access

and leased channels to accommodate all points of |

view.’

‘There are several respects in which these proposed rules

_ may be found to conflict with the origination cablecasting

regulations adopted by. the FCC. First, the Illinois Com~ -

‘mission is proposing that operators ‘‘may”’ engage in

their own programming; not “‘must’’; this. would appear

~ to run afoul of the FCC’s ewn view of its preemption pow--’

ers, as indicated in its Clarification of First Report and ~

Order, 20 F.C.C. 24.741 |(1969):Second, the Tllinois Com- -

mission’s suggestion. that local cablecasting can be car-

ried out by entities other than the operator would circurh-

seribe the choice that the FCC indicated must be left te

the operator ; in any: event, the FCC definition has sjnce

been changed so as to specify that ‘‘origination cablecast- -

ing’’ must be ‘‘subject to the exclusive control of the cable

operator.’ Cablé Télevision Service, 37 Fed. Reg. 3252,

§ 76.5(w). Third, the limits proposed by the Illinois Com-

__ mission on advertising revenue find no counterpart in the

FCC. regulations — which, despite their confinement ‘of

advertising to ‘‘natural breaks’’ in the cablecast, are still

clearly designed to give the cable operator a revenue

‘ncentive to engage in its own programming. Finally, of ~

course, the Illinois Commission proposal ¢hat neither the -

‘*sequal time’’ or ‘<fairness’”’ provisions of FCC broad-

east regulations is ‘properly applicable to cablecasting

_ over a diversity of channels ‘squarely conflicts with the. .

* FCC regulations imposing these and othef’ broadcast-type .

/ “

Pa .

oo 13

restrictions on ‘ ‘origination cablecasting’’ . (Pet. App. C,

pp. 53-55; Cable Television Service, a7 Fed. Reg. 3292,

-8§ 76.205-76.221).

The Illincis Commission did not ‘adopt its uirowoeals

out of a spirit of contrariness; rather, it fashioned these

proposals out of a searching investigation of the nature

and potential of this new medium of communications, éall-~

ing in the process on the assistance of the best-qualified |

experts it could find thr oughout the country. It is now a.

‘ commonplacé that: cablecasting provides ° an ecohomy of

abundance in contrast to the economy of scarcity dictated

by the spectrum limitations of over-the-air broadcasting.

See, .e.g.,.On .the Cable: The Television of Abundance

_ (Report éf the Sloan Commission on Cable Communica: ’

- tions, 1971), pp. 42-46. Given adequately abyndant and re-

liable channel capacity on the cable, thé incremental costs”

of prov iding origination opportunities. are very low in-

_ deed as compared with broadcasting. This opens up a new ~

mediuni of communications for minority interests of vari- ’

_ous sorts — ethnic, cultural, economic, and political — here-

tofore excluded as a practical matter from access to the

.advertised-supported mass medium. All points of viegy can

_ be presented without antificial attempts at balancigg of

presentations on a sing] ‘channel. The costs of reaching

electoral constituencies jon cable . channels— without also.

reaching, and paying for, non- constituents as-is now the

- ease on broadcast television—can also be rought within —

the grasp of any candidate.‘ |

4, - Cablecasting, in other wiotds, sails an unperalidied oppor-

tunity to escape from the practical limitations on freedom of speech

that Gis Court has ne recognized to be mpoceted with broadcast-

ing:

_ “Freedom of utterance is abridged to many who wish to .

- use the limited facilities of radio. Unlike other modes of —

expression, radio inherently is not available to all. That is

- ©

14 ee

Against this background the Illitois Commerce ‘Com;

mission could reasonably propose, as it has, that cable

operatgrs should. not be confroged with a confkict of in-

terest Between the origination opportunities they can thus

. make available as carriers, and: the revenues they might

themselves gain as programmers. A great deal of market

testing remains to be carried out before the full panoply

of commercially feasible ecablecast services can be deter-

mined, and this will: require innovative service experimen-:

tation on the part of program ; and service suppliers of all.

: sorts, as well as hospitality. to such experimentation by

—_ operators. See ‘‘New Cable Services — A Step Near- |

er’’, January, 1972 release by Arthur D. Little, Inc. (Ap-. .

pendix, pp: A35- 37). The Illinois Commission could rea-

sonably judge that the removal of disincentives to market

development of new cable services would be in the public.

interest. Con Seas,

The. Illinois Chaaiicnie Commiasion’ S proposals in this

respect must be viewed in the context of established objec-

- tives of State public utility regulation, The Illinois. Public

Utilities ’ Act, for = example (Ill, Rev. Stats., Ch. 111%),

vests the Illinois Commission with _general supervisory.

jurisdiction over public’ utilities (Sec. 8); ‘prohibits pref-_

erences or unreasonable differences -in ‘‘charges, ‘facili--

ties, services, or in any other respeet’’ (Sec. 38) ; entrusts ‘,

the Illinois Commission to fix upon-adequate, just, and rea- _

-. sonable practices, equipment, facilities’ and services (Sec.

49); authorizes the-Commission to order improvenients, —

additions or changes in plant and facilities in order ‘‘to

secure adequate service or facilities’? (Sec. 50) ; ; and em,

powers the Commnenian, to establish standards for the

its unique characteristic, and that is why, unlike cae modes

of expression, it is subject to governmental regulation. Be-. |

cause it cannot be used by. all, some who wish to use it must |

be denied.””- -

. c National Broadcasting Co. v. United States, 319 U. S. 190, 226 (1943).

en 5 :

, as Ya

1 ; %\ ~

quantity and quality.of services (Sec: 54). In pursuit “gf an

_ these legislative guidelines, the: Illinois ‘Commission has* _

_ proposed -a variety of rules for the regulation of local | mG

cablecast services—as to the ‘number and configuration ee,

and expansion of cable channels and .associated equip-

‘ment, the provision of tWo-way capacity, and. the furnish-

- ing of particular cable services ‘such as channels for local-: *»

d _government and school-system use — which overlap.and to "

some extent very probably conflict with the ‘Federal reg- :

.. ulatory ‘policies’’ on these matters adopted hy: the FCC.

Compare Illinois Commerce ‘Commission Notice .of Pro-

posed Rule Making (Appendix, pp. A22-A31), with Cable -

Television Service, 37 Fed. Reg. 3252. ° . ° :

Such regulatory challenges to federal intrusion are in- |

herent in State public utility regulation, which concerns

itself with the non-discriminatory offering of adequate lo- —

eal services for public use. The challenge is posed ‘hot’

just by Illinois but by the seven othe States which, like |

Nevada. (whose statute was sustain@® by this Court in

TV Pix, Inc. v. Taylor, 396 U.S. 556 (1970)); have adopted

or construed public-utility legislation to apply to cable.

television ;° by the four States which, like New York, have

+ imposed or obtained consent to a moratorium on cable act

tivity pending adoption of state ide laws;* and- by at

least the twenty-one additional: Stat@s which were actively

considering legislation by the closqyof 1971.’ This grow-

ing array of States concerning themB8elves with public util-

ity regulation’ of cable systems marks a significant change’

in the situation as described to this Court in United Stas :

5. Conn. Gen: Stats., ch. 289, secs. 16-330.through 16-333; Mass.

Laws, ch. 1103 (1971); Nevada Rev. Stats., sec. 711.010 et seq.; R. I.:

Gen. Laws, sec. 39-19-1 through 39-19-8; Vt. Stats. Ann., tit. 30, ch. 13: .

Opinion of Hawaii Attorney General, Dec. 1, 1969, [1969]-State Util.

L. Rep. § 21,206. The Alaska Public Service Commission has also -

advised the General Counsel of the National Association of Regula-

tory Utility Commissioners that it has adopted statewide regulation

of cable television. Seas te

en only two States, N evad& and Connecticut, were said

= ee . . ad

&g . to be regulating cable systems, . =

-. band eable services, ‘‘will shape the economic structure, :.

- and indeed the character, of the new: medium:’’#(Letter to

_ the Chairman. of the Senate, Commerce Subcommittee on

Communications, November 15,4971; Appendix, p. Ald.) |

To the extent that the States are permitted through public-

utility regulation to foster the developmént of local com- —

, al

“the broadcasting industry. Even the most cursory review

of the record of {CO proceedings with respect to cable

. ting Has been the oppositign of broadcasters to each small

‘not be oversta

The~pabiic policy importance ‘of this development can-

of: Telecommunications Policy, the nature of regulations

_ adopted with respect to Gablecasting, -ineluding in: partic-

ular the division bf. federal-State authority ovér_broad-

munications services over cable systems, the way ‘can be

opened to realization of the promise of a brand new and

diversified communications medium. If, on the other hand,

‘ the whole of cable communications is subjected to perva-

Sive FCC jurisdiction, as. somehow ‘‘ancillary’’ to its re=

sponsibilities for the promotion of mass-audience broad- -

- casting, the local-service growth segment of cablé commu- .

nications may bes placed permanently at the sufferarice of

television over the past decade will reveal how unremit-

* - advance in the latitude afforded cable systems. See, . e.9.,

a e

, Second. Report and. Order, 2 F.C.C. 2d 725 (1966); Notice

of Proposed Rule Making and Inquiry, 15 F.C.C. 24 417 -

{1968)>; Cable, Television Service, Appendix .B; -37 Fed. |

— Reg: 3252, 3341 (1972) (industry: ‘consensus agreement’?

6. N.Y. Laws, ch, 419 (1971); N. J. Laws, ch. 221 (1971). Wisconsin

and the District of dolumbia have adopted voluntary moratoria.

, 7: Tabulation compiled by the office ofGeneral Counsel, National -

. Cable Television Association, on_ the basis of a countrywide daily —

news clipping service. Three more States have been added to the

ee list thus far in 1972, leaving only 14 States that are not currently

concerning themselves with the issue.

phrased by the White ‘House Office _

v. Southwestern Cable Co,, 392 U.S. 157,163 n. 15,4968),

; imposing program-exclasivity restrictions « onthe distant--

signal importation ‘rights proposed by the FCC). In such

a regulatory environment, the incentives:to local service |

; ianovation over cable systems could -be severely curtailed. |

II. pepe Bet acta

. Pd

7 srae i RATHER THAN FEDERAL REGULATION

‘OF LOCAL CABLECAST SERVICES ACCORDS.

_ WITH THE TRADITIONAL ALLOCATION, OF COM*

PETENCE OVER WIRED “nimovat fo AS

- BETWEEN STATE AND NATIONAL

MENTS. )

OWERN-

In TV Piz; Ine. v. Tayior, 304 _F. Supp: 359 (D. Nev.

1968) (three-judge court), aff’d mem., 396 U.S. 556 (1970),

State -public- utNity - ‘regulation of sable television 1,systems —

was upheld against assaults based on the Commeree Clause.

and. the Due Process Clause of the Fourteenth Amend-

' ment, as: well as alleged Congressional preemption of the

- field. The court held that cable television is a local busi- - -

‘hess involving services to local residents through cables .

strung: over local streets and ways. Although a -eable

‘system may “be. engaged in the interstate — of

_broadcast television signals, | MG ;

‘‘...inits impact on interstate commerce, [it] is analo-

gous to a local express or parcel delivery service or

a ‘local pilotage or, lighter. service organized to facil- .

itate.the final interstate.delivery of goods to the named ©

marily local facilities or services in interstate. com-

* consignee. al hellties state regulation of. such pri-

merce, in the’ absence of federal legislative interven-

tion, is not proscribed by the Commerce. Clause of the .

' , Constitution. » oeeye v. Board of Wardens, 1851, 12

How. 299... .’? (304 F. Supp., at 463.)

The court further held that public-utility. regulation of

‘eable rates and services was not a matter requiring na-—

. ° .

. e . ™ .

‘ . ©, .

. $F. & .

— * Ne ote ae os eT Re Si ee eR

5 A '

: : .

tional, uniformity : : ‘National . an is probably not ra

_a possibility, let alone’an acceptable-ideal:”’ (J bid.) Against |

this background it held that State. regulation even of pat

ters having to, do with interstate: transmission was not

preempted by thie -Federal Communications ‘Act, although

the FCC might by valid regulation supersede a state reg- -

ulation ‘sin actual conflict’? with it. — oy

The TV Pix case dealt only with interstate delivery of .

television. broadcast’ signals. It: thus had no occasion fo.-

consider whether the FCC, had or could preempt regula--,, .

tory authority over intrastate cablecasting. The same is a

_trye of United. States v. Sauthwestern Cable Co., in which

this Court observed that the cable system there before ‘it

‘did. not engage in cablecast programming, 392 U.S, at :

162 & n. 9; and ‘also of. Fortmightly Cogp. v. United Art- ~~ .«

* Sets, 392 U.S. 390. (1968), which did ‘‘not deal with pro-. :

- . gram origination’’ over cable systems (at 392 n. 6). The *

question. presented in this case is thus one of first “im-

pression. as regards cable television—though by no means

a-novel question in the history of wired communications.

To-appreciate the tradition” and appropriateness of State

- concern with. intrastate ‘wired communications, it may be -

eelptul briefly to recite the Illinois Commerce Commission’s

own involvement in this subject. Ever since 1913, that Com-

‘mission or its predecessor has been eitrusted with public-

utility supervision over ‘‘the transmission of telegraph or ~

telephone messages within this State.’’ (Ill. Rev. Stats.,

_____ ch. 111%, §10-3(b),) In its proceedings culminating in //

the Interim Opinion and. Order of September 9, 1971 (ex- .

’ eerpted in Appendix, p. AT6), the Illinois. Commeree Com- -

mission conducted. a searching. inquiry into the similari-

ties and differences between telephone and broadband-

cable messages. Over the course of four months of hear-

- .-: ct . so , . 4

’

nT ee ra a

wee

ee ee

“

————respect to State, .tegulatory gjurisdiction as were recently

it could find in the fields of law, and engineering, and fi-

testified to the Commission at length rather than in the

ther found that broadband cable systems are functionally ,

equipped to provide at least the same. range and diver- - ~

' sity of services ; that. they will have to compete with tele-* 7

phone companies for long-range financitig in the same fi- . Pa

nancial markets and that the téchnical method. of opera-

tion of the two indlnatyies ts closely parallel. As a result,

‘it determined that both, industries should be regarded as \,

_ expert and consultant to the Sloan Commission among others; half

a day; Ralph Gabriel, chairman of Rediffusion, Ltd., London, which

. has developed dial-access cable systems, half a- ‘day; and leading.

or-ten-minute presentations.

a 19° ee

ings, it sou it out and uneaaned the best-<tflitied experts.

nance, and ‘marketing. These experts..;came from all over |

the ‘country, from Canada, and. from England, and they

snatches of time made available by the FCC.* On the ba-

sis of the extensive record thus compiled, and its own xeg-

ulatory © experience, ‘the Illinois Commission found that -

‘*telephone . 4 messages’’ subject’ to its jurisdiction haa

expanded in. practice to cover woice, data, telemetry, pic-

ture phone, arid television transmissions — or what it calléd -

‘‘total telecommunications’’ services. The ‘Commision fur- -

subject to the same general scheme of State public-utility

regulation. The Commission, in other words, developed ex-

actly; the same kind of expert findings and conclusions with.

ii Abas by this Court in. Federal Power Commission Vv.

8. Giainbins are; Péter Goldmark, then CBS Lehoratdries presi-

dent and inventor of.color television and the ‘video cassette, half a

day; Paul Kagan, publisher of seen eading cable industry financial

newsletters ‘‘Cablecast’’ and ‘“‘Datatast’’, a full day; Robert Brooks,.

cable engineering consultant with 18 years’ experience in the busi-

ness, three and a half days; Stephen Barnett, communications law

engineers, economists, and lawyers from the fields of -proadcasting

and telephony as well as cable television. The first three named wit-

nesses were not invited to testify before the FCC’s March 1971 com-

prehensive hearings:at all, while = others — restricted to five-

: . “ .

- . 2 .

. . . . °

7 ; : ; aoe

. al t - 6s

- ws. ® - =, :

Florida Power & ‘Light Co., —-U.S.—, 40 U.S. Law, i

__ Week 4141 (Jan. 14, 1972) with respect to federal regula-

| . + tory jurisdiction.” | ; . -

° ; _; What remains is accommodation of the-reach of stite* an

a on and.federal -jurisdiction, when, as here, they are asserte =

to conflict. Section 90 of the Illinois Public Utilities Act

(ill. Rev. Stats., ch: 111%, § 94) provides for such accom- . °

3. modation by declaring its inapplicability to interstate and *

foreign commerce ‘‘except to the extent permitted under —

.-the provisiong .of the Constitution of the .United States -

and Acts of Congress, and the applicable decisions of the -

‘Supreme. Courf*of the United States.’” We already know *

that the Commerce @lause of the Constitution does not of _

its own force prohibit State regulation of intrastate wired,

communications, eveh when such communications are an

_” integral extension of interstate commerce. TV Pix, Inc.'v.

Taylor, 396 U.S. 556 (1970). It therefore becomes neces-

_ sary to inquire what Congress and this Court have tradi-

tionally recognized to be the appropriate’ division of au-.—

thority over wired ‘communications. And there is no more

pertinent history for this purpose than the history of tele-

phone regulation. : a wn ae,

-* es

- State regulation of telephone services long preceded fed- .

. eral regulation. State regulatory commissions were exer-

_, ising jurisdiction over intrastate. message services, which ©

was then and still is the lion’s share of the- business, for

"more than a quarter of a century before Congress vested |

. |_| - effective ‘regulatory authority in thé FCC. See Gabel, =

__9 + Development ,of Separations Prin ipies’in the Telephone

ev!

‘Industry 16-26 (1967).* And when it did so, it took care

\ | a: By,3917 all but three of the States had vested regulatory power

gins ’ in their public utilities commissions over rates and practices of tele-

Py phone-systems. H: Rep. No. 109, 67th Cong., 1st Sess., P. 3 (1921).

: : - ° = , o . be _

ae AF ae

to preserve State authority over the. intrastate aspects of :

. the business.

There ‘is in fact a long tradition of Congressional defer-

“ence to State regulation of intrastate seryices,- including

telecommunications services, in the various Interstate Com-

merce Acts that preceded the Féderal Communications Act:

of 1934. See The Minnesota Rate Cases, 230 U.S. 352, 417-

19 (1913). ‘Typical is the proviso in the Mann- Elkins Act

_ of June 18, 1910, ch. 309, 36 Stat. 539, 545: “‘ Provided, how-

_ever, .That the provisions of this Act shall not app}y t

the ... transmission of messages by telephoné, telegrap

or cable wholly within one State and- not transmitted to

or from a foreign ‘country from or to any State or Terri-

tory as aforesaid.’’ This negation of federal -authority was —

-_ earried forward and°continued in section 2(b) of the Fed-

‘ eral Communications Act of 1934, as amended, 47 USC.

§ 152(b), which provides that “‘nothing i in this ehapter gar &

pe construed to apply or to give the Commigsion juris-

* diction with spect to (1) charges, _ classifications, ‘/prac-

tices, services;. faeilities; 6 or regulations for or in connec-

tion with intrastate commiunication services by wire or

radio of any. carrier, ~..7? *

. To. be sure, this. separation of authority has caused and .

6 is causing practical difficulties with respect to sorting out:

the interblending of operations in the conduct of interstate |

‘and local business by interstate carriers. See Smith v. Illi-

nois Bell Tel. -Co., 582 US. 133, 150-51. (1930) ; Gabel, op.

cit. supra, passim. But this is the price of preserving a

healthy federal system. As statéd by Justice Hughes in

‘The Minnesota Rate Cases, supra, 0OU.S., at 431: “*. 2. our

-system of government is aspractica adjustment bw which ©

the national authority as conferred by the Constitution is

| maintained in its full scope without unnecessary oi of

- local efficiency. ™

The same division of authority is fully applicable. to -

-, .broadband telecommunications, employing video as wellas ~

andio and nt signals. Apart from ‘thé carriage of earn

&:; N\

‘| YOTHING IN THE FEDERAL -COMMUNICATIONS

Ao» © ,@p OR THE DECISIONS OF THIS COURT PUR

a true of meter-reading, of community program origination, .

wed casting. Each has focused

ee . .

broadeast signals, which are interstate and incidental to

radio. communications — hence within the authority of the

FCC as held by this Court in Southwestern Cable the

. message services to be performed. by cable systems are 7

’ predominantly local and intrastate in character. This ‘is

of librarfpinformation retrieval, of one-way atid two-way

instructional services, of cable conferencing between —

’ branches of/a businessor a university, of tele-shopping, in-

deed of virtually all the services that are anticipated. Even-

regulation either

—_

a by a fresh grant of statutdry-authority or through & find-

ing by the FCG-—eomparable to the finding’ by the Illinois:

‘form of interstate common carrier service. We have had

no such federal finding or legislation to date.

in © | Oran

PORTS TO. ALTER THIS “TRADITIONAL DIVI-

-. gIoN OF AUTHORITY AS REGARDS INTRA.

ae CABLECAST ‘COMMUNICATIONS.

Sis previously indicated, none’ of the ‘cable televiston ;

. eases previously decided by this Court has involved table- "bs

instead exclusively on the car-_

riage by cable systems of off-the-air broadcasting. The

‘dicta in this Court’s opinion in the Southwestern Cable

ease, referring to the ‘unified jurisdiction’’ and ‘broad

| authority” of the- FCC, must be read in this ‘context; for -

” the Court first found and determined that the carriage of

proadcast signals was a form of .‘‘interstate and foreign

__—- Commerce Commission — that broadband eablecasting isa

~ Oe

—

——

, tually ihterstate Jinks may be developed for cablecasting, ~ = i

- and these will be appropriate for federal .

e - = : 7. a | os 7

communication by: wire” within the meaning of Sectior i ;

2(a) ‘of the Communications Act. The present case of ¢ course fa

involves not interstate broadcast signa Is3-but intrastate _

_cablecast signals thaf fall within the~ Scope of Section 2(b) _

of the Act disclaiming. federal” ‘jurisdiction.

The FCC was s given an. exceptional giant of ‘‘broad’”’ |

~ and ‘uni a? jurisdiction: over radio (and television}, -

__ broadcast signals in Section 301(d) of the. Act, which is -~ -

the only provision in the statute conferring authority over |

wholly intrastate communications. This - was done to avoid |

the problems of signal interference. peculiar to over-the- ,

, _ alr, broadcasting. Radio - -broadéasting is also singled: out

* for exceptional. treatment in Section 3(h), which. provides

that “a person engaged in radio broadcasting shall not, _

| insofar as ‘such person is so engaged, be deemed a com- -

_ ~ mon carrier.’’ Neither of these special provisions 1 ismade — +

4 . applicable to wire communications. |

_—

' It was to protect the exercise of the FCC’s exceptional

’ authority over radio broadcasting that this Court, in,South-~

vA -- western: Cable upheld that Commission’s jurisdiction over

cable television: ‘systems, insofar-as they engage in ‘inter-

state sreception and delivery of such broadcasting. The ; ie

brief. presented for the United States stipulated that the —

FCC was. asserting authority only over the carriage of-

broadcast signals by cable systems.”® This Court’s. hojding - |

was correspondingly confined to a ‘recognition of FCC au- ©

‘thority under Section 2(a) of the Act; and even this author-

“to the effective performance of the Commission’ S variou

ee | responsibilities for the regulation of television broadcast.’

' 10; Briet for the United States. ain ‘the Federal Cébtmunications

Commission in United States v. Southwestern Cable Co., No. 363,

- O-T. 1967, p.. 42s

APO NER ED DLL POLI IIA LR PED

ing.’ > 399 U. S., at 178. The Court. intimated no view. as to .

the authority, if any, of the FCC to regulate cable systems

. under any other circumstances or for any other p purposes.” -

In NS subsequent Notice of Proposed Rulemaking and

Notice of Inquiry. -proposing the cablecast figination:: rules

"at issue in the present case, the FCC. made clear that it

. did not consider its authority to adopt such rules-had been -

settled by Southwestern Cable. It stated that’ in proposing, . 3

these rules, **the Commission is clearly concerned with new

and important questions of policy and law i in the commu-

nications. field, and would welcome congressional guidance

" as to policy and legislation. conferring direct general.au- |

thority over CATV.” 15-F.C.C. 2d 417, 421 (Dee. 12, 1968)

os . (emphasis added). = “ ;

“As this Court knows and indeed observed i in. Southwest- — ~

‘ ern. Cable, the. Congress has never adopted - legislatign

_ giving the FCC. plenary ‘authority over cable systems.

(See 392 U.S., at 164-65 & nn. 19-22, and at 170-71 &

nn. 30-31): The FCC tried to. ‘obtain ‘such authority -_.

1959 and again-in 1966; in both cases legislation was 're-. - ,

_ ported out of conaiittne but: failed to gain floor approval. ee

‘The 1966 legislation, significantly, “would have amended

Section 3(h) of the Communications Act to provide: that:

“(a person engaged in radio broadcasting or im operating

a community antenna ‘system shall not, insofar as the per--

' gon is so erigaged, be deemed a commion. carrier.’’~H. Rep.

- No. 1635, 89th Cong. 2d Sess. (1966) (amendment in -ital-

‘ies). That did not: pass; and neither has the latest. Com-.

-. mission legislative proposal, whith would add a new Sec-

. tion 331 to the Act. giving the Commission rulemaking au-

11. The ‘aah decision of the court of ‘adigiane in Suckers Saas

vision, Inc.’v. Federal Communications Commission, 387 F. 2d ‘220,

_ 224-25 ” A.D. C. 1967), was similarly. limited in scope and effect. ~

‘a

~~ ig also acting ashairman of a Cabinet*Committ

\ thority. over “qnultiple reception, origination end eiiied *

services.’ performed by cable systems. S. 792, 92nd Pong:

‘Ast’ Sess. byte , (emphasis supplied). See. Appendix,

P -A33.) . .

- While Discpwestaal inaction may lack. dispositive. sig-_

# sifleancetin’ relation to FCC regulation of interstate co

munications,” whieh are already dovered by Section’ 2(a of

the Act, it surely, must be treated ‘as’ “Significant in rela-

. tion to intrastate communications which historically have

always’ been exempt from federal: regulation under Sec-

tion 2(b) of the Act and. predecessor statutes. The plain

fact is that-without new legislative authority the FCC sim- :

Ply does not have power. to regulate such communications.

This much has been recognized by the ‘eommunications-

policy spokésman of* the Executive branch, albeit lin dip-

- lomatic language..On November .15, 1971, the. Director of

the White House, fice of ‘Telecommunications ite ‘who

estab-

lished by the President to formulate. poliéy with' respect ;

ee broadband cable’ communications, responded as: follows

to’ a request from. the Chairman of the. Senate ‘Commerce

Subcommittee on, Comminications. for —— on® the °

— 8 cablecasting regulations: **

oa i

Tarking how to: tions: aspects. of the pibposnls which i

go beyond the conditions of cdble=retransmission of .

over-the-air signals, relating. to broadband cable as»

., & cofnmynications medium in ‘its.own right: - These

aspects of the proposed rules (together with existing’

rules and further contemplated rulemakings) involve ©.

oa such matters as Federal preemption of state and local

ke)

| 12. See United States v. ealtiirentien Cable. Co., supra.

_ 13. The full text of the letter appears in the Appendix, St u

_ ow ?

. control, the. extent of FCC supervision of program>

‘ming, limitations on numbers of. cliarfiels, flexibility: \

- ‘with respect to-new services, and prescribed channel

. usage. These and other matters of like importance will

shape the economic structure, and indeed the charac-

ter, of the new medium. .Fhey are the subject of the .

.+ Cabinet Committee’s work and will ultimately require »-

. careful Congressional consideration. The Commission ~

- g itself has noted that the recent Midwest Video case

e casts doukt upon the legality of this type of-regulation, —

and it has requested Congressional clarification.” Sim- +

‘ilarly, we believe the 1934 Communications Act pro- ’

. Vides inadequate guidance for the regulation of broad-

band cable communications. Therefore, while we favor ©

_ igamediate implementation of the proposed rules in

order to permit the growth of. cable television, our —

_ recommendation is based upon the hope and expecta-

--tion that Congres will address these fundamental as-

. pects “of broadband cable policy at an:.appropriate-- ~—

time, before the economics fg cram Mere the

eharacter of the medium have become,irreversibly set

‘in the mold contemplated by the Commission. ”

This Coyst can give the Congress an unfettered opportu-

nity to consider«appropriate broadbarid cable policy for

the future, by making clear the division of authority over

. interstate and intrastate cable communications -under the

existing Federat Communications Act."

‘ ° » % - . . : . : > . :

14. We may dispose in footnote of two suggestions advanced by the

FCC. One is that the enactment of copyright legislation as proposed

by the FCC would ratify that Commission’s jurisdiction to adopt all

of its presently pending rules, including those relating to cablecast-

ing. Cable Television Service, 37 Fed. Reg. 3252, para. 65(iii). Of, ;

course, the copyright compromise between industry groups, to which.

this refers, was worked out in the context of regulations dealing with

permissible bggpdvant-zignal importation‘ and ‘has nothing whatever

to do with cabl€casting or federal-State relations, id. para. 62.‘ Fur-

thermore, copyright legislation will issue if at all from a wholly sep-

arate committee than the one that exercises legislative oversight

- over FCC. activities, see id. Appendix E. Similagly defective is the -

So a” 4’ 9 . 7 9 so .

: a .

a 2

THE FCC HAS MADE NO FINDINGS AND ASSIGNED

-.NO REASONS THAT WOULD BRING INTRASTATE

CABLECAST COMMUNICATIONS WITHIN: ITS

C@NGRESSIONALLY AUTHORIZED Sita co OF

: AUTHORITY.

- Fey

~The Seeaian’ of the Gemuiiniitatsons Act?’, much ré

ferred to ‘by the petitioners, do not extend to intrastate

wired ‘communicatfons. According to Section 1 of the Act;

47 UBC. § 191, the overall objective was: one of. “‘regu-

lating interstate and foreign commerce’’; and the goal of 7

extending wit¢ and radio communication service broadly

to all the pene of the United States was to be achieved

“by cen authority heretofore granted by law to

~ several agencies and by granting additional authority =?

“with respect to interstate and a Toren commerce in-wire

and radio communication. . he “

The Act centraljzed authority as among federal agencies

but did not authorize i invasion of the authority exercised ,

‘by State agencies over intrastate wired communications.

One may .agree, -as the. Illinois Commerce Commiasion _

_. has agreed, that cablecasting i is in the public interest: and’ :

‘should be promoted. But the purposes of the Cominunica--

tions Act do not in operational terms carry this ‘far, and .

__ do not eonfer federal authority to require or regulate suchs

communications. Phat is a matter for the States. See Sec-

* ations’ 2(b).-3(h), 3(t), and 221(b) of: the Act, 47 a

federal jurisdiction, over broadband cable é>mmunications. =

§§ 152(b), 153(h), 153(t), 221{b).

suggestion in ‘the petitioners’ brief (Pet, Brief, P. ,18 n.10) that en--

actment of a campaign expenditure law — again igsuing from a va-

riety of committees and governing expenditures for all media includ-

ing newspapers and billboards — somehow -translates into plenary

The conditional form in: which the FOC’s ‘cablecasting

regulations are couched does not save them from inva-

lidity. The FCC of couf%e has: authority to grant or den

distant broadeast-signal importation by cable systemis,

United States v. Southwestern Cable Co., supra. But to

- grant importation rights on conditions. relating to mat-

ters beyond the agency’s authority is the exercise of a

- greater ‘power- rather than a lesser. See Note, Unconstitu-

tional Conditions, 73 Harv. L. Rév. 1595, 1609 (1960) :.

: impt ditions-is a_lesser_part of

the. greater power to withhold, but instead. is a distinct

- @xercise of power which ‘must find its own justification.

In the area of regulation, withholding and licensing with

conditions are. alternative instruments for -the regulation

- of conduct. .«.’’ This is indeed the teaching of this Court’s

own decisions, which have consistently recognized that

- conditional regulation involves not a single power but two.

‘separate powers ‘eath of which must stand on its own foot-

ing. In form, the conditional regulation appears to offer a

choice. ‘‘In‘ reality, the carrier*is: given no choice, except

a choice between the rock and the whirlpool. . . .”? Frost d

Frost Trucking Co. v R. R. Commission of California, 274

U.8.-583, 593 (1926) ; accord, ¢.g., Sherbert v. Verner, 374 .

US. 398, 40406 & n..6 (1963). An ultra’ vires condition |

is no le’s invalid for being a condition.”

15. Suppose the FCC were to consider ‘‘seminar”’ conference calls

among members of community interest groups & desirable use of

wired communications, and. accordingly conditioned an interstate .

. telephone rate increase by the Bell_System upon simultaneous re-

duction in local exchange rates for such services. Would anyone con- .

tend that this‘was authorized? The fact is that the FCC has never

presumed to dictate the intrastate disposition of earnings or savings, ©

on interstate yey ene business created by its rulings. See Gabel,

é parations Principles in the Telephone Industry

(1967). e % @ .. °

a2. .

‘

ne SOOO OO

29.

Nor is the FCO’s position aided by the ‘‘end use’’ the-

ory it predicates on Federal Power Commission v. Trans-

continental Gas Pipe Line Corp., 365 U.S. 1 (4361). In

that case the question. was whether the Power Commis-

ston‘could decline to certificate interstate transportation of

natural gas because of inferior uses to. which it would-be

put by the end consumer. The Commission’s order was one ~

over which it had clear statutory authority, the only ques-

tion being » whether it could act on the basis.of reasons fall-

ing outside its jurisdiction. At most, the. Transcontinental .

decision would authorize the FCC in the present *casefo

consider whether and to what extent distant-signal author-,

ization will he put to socially useful purposes. by cable |

operators. The FCC in fact has considered that question,

and has determined that the distant-signal. authorization

tive for the development of those nonbroadcast services

'. that represent the long term promise of cable television

and are critical to. the public interest judgment we have

made.” Cable Television Service, 37 Feé Reg. 3258, 3260,

(para. 60) ‘(emphasi8. supplied). This is the furthest the .

FCC can carry Transcontinental ; and, of coursé, incentives

-. are very different from requirements¢:

Transcontinental is distinguishable from the present case

in. yet another important way. The ‘‘broader principle’’

on which the Court rested’ ‘its judgment was the practical

one of preventing a regulatory. ‘‘no man’s land’’: |

“That is to say, in a borderline cane e where congressional

authority.is.not-explicit we must &4sk whether state au-

‘thority can practicably regulate a given area and, if

we find that it-cannot, then we are impelled to decide

that federal authority governs. ? (365.U.8., at 19-20.)

The Court decidéd that ‘consuming States could ‘not be

expected to deny themselves the use.of natural gas that

we a a \

- scheme it has developed ‘‘should serve to create an imcen-—

would deplete the resources of producing. States, and there-

fore upheld’ federal power. In our case, however: (1) we

do not really have a borderline question; (2) the with-

holding of Congressional authority is quite explicit; (3) ey

aa cablecasting i is not an interstate transmission of resources

originating in other, States, but a purely local communi-

_éation of messages: originating and terminating within the -.

same State ; and: (4) the interest and ability of. State au-

thority to create and administer a’ proper regulatory con-

text for cablecasting actually exceeds that of the FCC.

At latest count there are in this country more than 2,500 - _

cable systems in operation, a like number that ‘are fran-

chised but not yet in. operation, ‘and a somewhat greater

number with franchise applications: pending.” The notion, . °

that.a single federal agency, no matter how. well intentioned,

can supervise the local service adequacy. of each of these -

systems, let alone- adjudicate {‘fairness’’ and ‘‘equyal time’’

complaints arising out of each, has about it something of

the bizarre. The FCC seca lniioul are likely to be observed

mainly in the breach, if State and local governments are

| required to stand aside. There is_ no“need. for-this-te hap- ,

en. State regulatory ¢ issions and their staffs are _

quite accustomed and capable of assuring the adequacy of.

facilities and practices for local services ‘such as message

origination ; and an increasing ‘number of them are seek-

ing to do just ‘that.’ This Court should not sanction an

illusory federal preemption that would leave local service

needs inadequately attended.” a :

16. Pet. ‘Brief, p. 19. l

17. See p. 15, supra.

18. In its resolution of the issue of ieieviaiee broadcast signal

carriage by cable systems, the FCC. observed that its distant-signal

program ‘‘melds techniques with which we have had experience —

exclusivity ‘and a limitation on:the number of distant signals to be.

mania ” Cable Television Service, ‘37 Fed. Reg. 332, $260 (para.

8 8h

Other Resa ddvanced, by the FCC after the fact, to ~

justify its displacement of State and local authority over —

' eablecasting, are no more persuasive. These are set forth —

‘in paragraph 130 of the opinion accompanying the FCC’s » .

a ¢ just-adopted: comprehensive cable rules (37 Fed. Reg. 3202,

8270): - . | ag ¢

Tt is by no means clear thatthe viewing public will .

be able to distinguish between a broadcast program - -

and an access [i:e., Gablecast] program; rather, the —

RD, RRM TIT

_ subscriber will simply turn the dial from broadcast to

_access’ programming, much as he now ‘selects’ televi-

~ gion fare. Moreover, leased channels will undoubtedly -

‘carry, interconnected programming via satellite or in- .

terstate terrestrial facilities, matters that are clearly

within the Commission’s jufisdiction. Finally, itis this, ~

Commission that must make the decisions as to condi- _

P * ‘tions to be imposed on the operation of pay cable

chamels, and we have already-taken steps im’ that

. direction. (See § 76.225). Federal regulation is thus

~~ clearly called for.’ © Ha a,

| For these’ reasons, and-because™ “¢-dual form of regula-

tion would be confusing and impracticable’’ (para. 131),

State and, logal regulation of cablecast channels is to be ©

_ precluded.

We may consider each of these purported reasons in-

turn.

- -. a

—~

Genera lly speaking, it is true that both broadcast and |

cablecast programming will be received by the subscriber

59). The FCC has, of,course, had no: experience with regulation of: .

local service cablecasting. This is not‘to suggest that the FCC may

never experiment with new regulatory ventures in fields over which

it hag authority; it is just that the balance of experience, insofar as

that is a pertinent consideration, favors State regulatory commis-

sions rather than the RCC. ..

. ~ =

___—— .

—

on the same cathode ‘ray tube; for regulatory purposes, 7

_ however, this is irrelevant. Provisiorf of telephone services:

also involves the use of a single physical plant interchange-

_ ably for. both local and interstate services. This is most

obvious in the case of the telephone handset itself. The

subscriber has no idea when ke picks up tlte telephone

whether the message will be local: or interstate. (By con-

trast, the cable subscriber can choose for himself whether -

to select a channel. carrying a*broadcast signal or to dial

‘for a locally-originated program . or other service.) But

the telephone’ plant is even more extensively interchange- ©

able —land and buildings, circuit equipment, local dial and‘

other switching equipnient, station equipment, outside plant,

and general equiprhept are all used for both logal and in- ©

terstate services. Yet they are subject to dual regulation. / —

: .by federal and State governments on the basis of inter /

“state ‘vs. intrastate use. Gabel, op. cit. supra, at 140-1

‘The same is’ ‘again applicable to cable systems. Thé an-

tennas mounted on the system’s tower to capture broad-

cast signals are not employed in local cablecast services.

But.the control office and: coaxial cable grid — comprising

cables, amplifiers, drop wires, and the home terminal it-

self—are all used or useful in both local and interstate .

services. In the field of wired communications, this“ Court *

. has long recognized the necessity to preserve separate

Stgte and federal regulatory authority notwithstanding the .

intermingling of property for these two uses. Smith v. Tlii-

~ nois Bell Tell: Co., 282 US. 133, 150-51. (1980) ioe,

: rh Ta

19. Home orale iedvcaaad designed exclusively for cablecast-

ing — such as two-way monitoring and control devices, unscrambling

controls, and program-ordering dials or keyboards — are now being

engineered and in some cases produced. None of these has any fore- :

seeable application to broadcast programming.

)

™-.

asia athe BAS aes nad

Fa gen 20

PAC ageing Bi

As to interstate connections for éiabissoat otoptainning

. via satellite, ’ microwave, or interstate cable, if and when

-such instrumentalities are developed it is true that fed-

eral régulatery authority will attach to them..But that

_ authority. would still. not extend to local cablecast services.

per se. In any event, nothing in the regulations at issue.

- in this case turns. on the: ‘presence or. absence of interstate

—

-connections. ~ Bens ——

. . The FCC's pay ¢ régulations are not at issue in’ ;

Race ough it may be noted that the Commission

has authorized pay cable operations. Even here there is a -

° _ serious question about the Commission’s authority over a

wholly local .pa} cable offering, Such-as a local perform-

ance of a play or sporting event carried over the cable.

See Section 2(b) of the Federal Communications Act. But

assuming that the Commission could grant or deny local ©

pay cable offerings that it found would: hurt its broad-

‘cast licensees, that would not confer authority to require

or regulate local cablecast services in the absence ‘of any —

finding that such operations are needed to protect broad- |

| cast stations. é . 7 c ?

Here we come-to a eeitinal second point it in. 1 the. ‘verall _

v argument. It is the basic position of thei State-

that the FCC lacks authority under the Federal .Commu-

‘nications Act to regulate intrastate wired eoinmunications

for any purpose. Even if this were wrong,. amd the FCC ’

| could ‘concern itself with intrastate wired communica- . sé

tions when they have’ an impact on ‘its ‘delegated respon- ~~

sibilities under the Federal Communications Act —itself a.

highly dubious proposition, unsupported by anything, in

the Act or decisions of this, Court construing it—the FCC

lias made no findings that would raise that issue: for deci-

« sion. It-has not performed, in other words, the kind of —

the FCC acknowledged that, in addition to the carriage of

| detailed jurisdictional fact-finding. operation carried out

for purposés of State law by tlie Illinois Commerce Commis-*

sion and approved for purposes ‘of. federal law by. this.

Court in Federal-Power Commission v. Florida Power € |

Light Co., ——U:S.—, 40 US. Law Week 4141 (Jan. 14, -

1972). This is a vital failing; for, as was held in The Min-

nesota: Rate. Cases, 230 U.S. 352, 419-20 (1913), when it.

is sought to extend federal authority or displace State au-

thority in a particular regulatory area because of ‘an .

asserted impact on established ‘Congressional - objectives,

the federal ‘administrative agency must make findings

not done. .

First, it is crystal cleay_ that the FCC has not found -

local origination cablecasting to be a form of interstate |

communications. Quite the contrary: In Common Carrier.

Tarif's for CATV Systems, 4 F.C.C. 9d 257, 260 (1966),”°

television broadcast signals, channels leased by cable op-

_ erators from the telephone system also carry lecally orig-

inated signals: ° . aes a _ |

«This means only that, as with most of the Bell Sys-

-tem’s communications facilities, the samefacilities may

: "be used jointly for both initerstate and intrastate com-—

‘munications. This fact has no bearing on the inter- ~~

‘state nature of the service in questien except perhaps

to. emphasize the distinction between the two types of

> service and 'to strengthen the Commissioni’s conclusion

that the further transmission of the TV signals is inter-

state service.’’ (Emphasis supplied.) | ao,”

20. This was part of an overall FCC proceeding, ultimately af-

firmed by the court of appeals in General Telephone Co. of California

vy. Federal Communications Commission, 413 F. 2d 390 (C.A.D.C.

1969) (per Burger, J.), cert. denied, 396 U.S. 888 (1969).

Ot 7 en r~ |

__ keyed to the federal statute in question. This the FCC has, ©

| .

. 7 . e .

. - 4 a

7 “Of c course, the fact that the same cable may ¢ carry botir j in-

terstate . and intrastate communications servicés does not,

" - under the clear language of Section 2(b) of- the Federal _

‘Communications, Act, confer federal authority over. the

“intrastate communication service.’?- > te

Second, it is equally clear that: ‘the FCC. has not fait

cablecasting to be a form of radio’ ‘broadcasting. Again,

_ quite the contrary is tha case. The FCC has consistently |

. found and determined that cable systems are not.engaged.

in ‘““broadcasting’” within ‘the meaning of the Act, because’

their transmissions are carried by wire rather than by

radio. CATV and TV Repeater Services, 26 F.C.C. 403, ° .

428- 29 (1959) ; Cable Television Service, 87 Fed. Reg. 3252,

3277 (para. 191). It i is worth noting that this Mletermination

_is a matter of engineering fact, not susceptible to changing

policy influence or choice.

- Third, the FCC has not found that Aeoad origination cable-

casting is required to protect the competitive operations

of its broadcast licensees — the kind of determination up- i

held by this Court, vis- a-vis. interstate cable operations, in -

Southwestern Cable. Quite the contrary, it has found that

"- eablecasting should be permitted ‘despite its competitive

. effect on television broadcasting? First Report and Order,

20 F.C.C. 2d 201, para. 5 (1969)., Permission and require-

ment are, onee again, very differént. matters.

{ Finally, it “is ‘true that. the FCC has consistently held |

that cable operations do not constitute common carriage.

But this-is not so much a: finding of fact as it is a pol-

- iey conelusion for whi¢it the FCC. must. find statutory

authorization, The FCC has held that cable systems are

not common carriers because it is the cable system that

~ decides what broadcast signals it will carry. CATV.and TV

Repeater Services, supra, 26 F.C.C., at 427-28. We may note

even here ‘thet the satiate of this conclusion’ ‘may

have been strongly affected by subsequent’ FCC actions, in

‘that thé television broadcast signals that. cable: systems .

may and. must carry are now regulated entirely by the FCC |

and not left te the operator’ s choiee. iCable Television

Service, 37 Fed. Reg. 3252, 3262-67 (paras. 74-106). The~ —

impact. of this development on. its earlier conclusion has.

‘to date not -been corisidered* by the FCC or by the courts. -

which upheld the varlier: conclusion. See,.e:9., Philadelphia

Television Broadcasting Co. v. Federat Commumications |-

Commission, 359 F. 2d 282 (C.AD.C. 1966).

_. But the. important point is ‘that the FCO’s policy con-

élusions with respect to common carrier regulation, and the .

court’ decisions sustaining those conclusions, have rested

~ golely on Class I cable: services —the receipt and delivery

of television broadeast signals. As this Court observed in

; Southwestern Cable, which coneerned systems carrying only

Class 1 signals, ‘‘the Commission and the respondents are ©

agreed, we think properly, that these-CATV systems are

niot common carriers within the meaning of The Act.’’

(392 U.S., at 169 n. 29) (emphasis supplied). We need not

_ now consider whether the march of events has altered the

carriage.. What ‘is clear is that to impose a. like policy

. détevinination on local cablecasting— ‘whose programming

- control as between the cable opergtor and its subscribers i is

not inherently ordained by anything in the nature of the

enterprise— requires grant of statutory authority over ~

intrastate wired: communications: which the FOC mee. _

does not possess. & |

The thesis, advanced by the State of: Tlinois; in kee me

words, is ‘that to require a cable system to exercise exclu. .

+ sive programming control over ‘‘origination eablecasting”’, -

and to ‘encumber that, ae with broadens typ6 Rane

2 .

° . . 7 . Py . 4 .st

: aa . ; ’ f rm - : d

propriety of even that conclusion as to broadcast signal m1

. { F i a . : .

. ‘

i a i cia ae taeda ee

. sion, is s to exercise a policy -chaice that ii: not been en-

ms * Copiok of both of these sscuaaiia have, as previously ‘iat

. ‘ e

nd ‘J

37 “9 ¥ ; eX ‘ ”

. ‘ st,

trusted to the FCC. The State of Illinois, in company with

other States, has opted for a different scheme of regulation

which largely divorces carriage from programming and

_ opens up local services to subscriber and user chofcerand

“control. The States’ jurisdiction so to-decide shonld be

recognized and pene ™ this Court... mg he

ha ¢ neh pi

bd = ; : Bley ae 3

= ; iis Vv a :

aay PRICTION OR INCONVENIENCE THAT MAY. =

ARISE AS BETWEEN STATE REGULATION. OF. .

PP ede OABLECAST SERVICES AND FEDERAL —

| EREGULATION OF INTERSTATE BROADCAST..

- DELIVERY CABLE:SERVICES IS A MATTER FOR

“RESOLUTION, BY THE CONGRESS: ee

The FCC has complained ‘of, and the petitioners’. brief

refers to, ‘‘overlapping and incompatible tegulations’’ by. -

: State and local authority. (Pet. Brief, p. 21.) In the main,

_ this io anak to refer to ‘haphazard local franchising prac-

tices, Which both the’ Illinois Commerce Commisgion and

the PCC hage moved to correct.#Notice of Proposed’ Rule .

Making, Section A8; Cable’ Television Service, part V |

(in which.the quoted phrase is féund).” In this area the —

FCC has recognized, and is prepared, to deal with the ex- .

istence of dual regulatory jurisdiction, with the FCO pre-

scribing minimum, procedural guidelines and the States

and localities filling: in the details and issuing the licenses.

_ his ‘has laid. the groundwork for a, cooperative approach ae

_ to “pug of cable systems, which the State of. Mlinois pee:

tioned, been — with the Clerk of this Court.

‘ o, 8 5 *

an ; a

rig tk *- e

RED Ap “APNE

gspects- will provide a workable framework.” The ,point

for present purposes is that no issues relating to the li- |

censing process are involved. in the Geereon presented by

- this case. |

If there is. any further friction or inconvenience arising -

from dual regulatory jurisdiction with respect to cable

- services, the FOC bas failed to specify its nature. This

is not surprising, since the FCC proceedings have been

concerned mainly with broadcaster-cable disputes and not

with the division of federal-State regulatory authority:

-Asithe FCC itself put it in, presenting its comprehensive .

cable regulations : ~ “The carriage of distant television

broadcast signals by cable television. systems -has been _

: center stage in the continuing controversy between. the

Commission, the Congress, and the Courts.”’ Cable Tele- -

’ vision Service, 37 Fed. Reg. 3252, 3259 (para: 57). Cer-

_ tainly the: States. heretofore have had barely a wing of

_ that stage, insofar as the Courts and the Congréss are

concerned. See, e.g., Hearings before the Senate. Com-

_merce Subcommittee on Communications, Feb. 8, 1972 (in

‘which the entire colloquy during an 85-minute discussion

of the FCC’s just-released comprehensive cable television .

'. regulations concerned the impact of distant- signal impor-

tation on broadeast. stations, and not one question was

explored ‘about the regulations relating to cablecast serv-

ices). With the exception | of TV Pra, Inc. v. Taylor, 396

U.S. -556 (1970), in. which this Court upheld State regu-

latory authority, no State has been heard by the Congress

or this Court before the present case.

22: The Chairman of the Illinois Commercé Comanielion has been

proposed for membership on a Federal-State Advisory Committee

being created by the FCC to address practical accommodations of .

authority in the licensing area. 37 Fed. _ 3277 (para. 188); 37 Fed.

Reg. 3204.

Oe 2 39 eo . el

The petitionérs nevertheless maintain that ‘‘the alter-

native to- [Federal Commupisations] Commission regu-

lation is the kind of fragmente gulatory pattern and

chaotic development which haracterized- broadcasting in-

its early years aid which led to the enactment of the Com-

_ munications Act of 1934.’’ (Pet. Brief, p. 20). This is de-

-monstrably in error.. ‘‘Chaos’’ occurred becau8e of the /-

physical properties of electro-magneti¢ radiation in thé

“+ open atmosphere, creating interference between radio waves

— having similar frequency characteristics. It was this and

this alone that caused the Congress to vest centralized.

Jurisdiction in the FCC over radio broadeasting, extend-

ing even to intFastate radio communications because of

‘their capacity t&-imterfere’ with intefstate broadcasting. —

Federal Communications Act, Section 301(d); National’

Broadcasting Co: v. United States, 319 U.S. 190, 910-14

" (1943). No such problem exists with transmissions confined’

- within a coaxial cable, and Congress has accordingly never

- conferred regulatory jurisdiction on the FCC to deal with

intrastate communications by wire. Federal Communica- .

"tions Act, Sections 2(b), 221(b). —

It may be that the plan of the Act, assigning federal-

State regulatory jurisdiction over wired communications

depending on the interstate or intrastate character of the

signals that are carried, could some day cause practical

. difficulties in- “application to cable television. But this has -

been true for more than 50 years with’ telephone commu- -

_ nications and other comparable forms of carriage in which |

_ the physical plant is devoted te both interstate and intra-_

state operations ; and _the federal aye has managed

° 40 - an

tolerably well. The whole question was extensively con-

_sidered and resolved in Justice Hughes? landmark opinion

- y in The Minnesota: Rate Cases, 230 U.S. 352; 432 (1913).

_.. That involved railroad carriers whose rights of way, ter-

minals, rails, bridges,-and stations were. all used inter- >

changeably for intrastate and interstate operations. It

was argued that this extensive interblending of operations

made dual regulatory jurisdiction confusing and imprac- |

ticable. To which. Justice Hughes responded:

‘« . these considerations are for the practical judg-

ment of Congress in determining theXextent of regu-

on necessary . to.conserve and promote the inter-

a ests of interstate congnerce.’ :

The sae answer applies to the penponer contentions

in this case. so

A- final, after-the- fact reason’ for the FCC's effort to,

displace State regulatory authority can be found in its

assertion that this is the proper way of fostering service

experimentation by cable systems. See Cable Television

Service, 37 Fed. Reg. 3270-71 (paras. 131, 132). There are

. three answers to this. First, if the FCC obtains jurisdic-.

tion over all cable operatioh$ as somehgw ‘‘ancillary’’ to

broadcasting, this will allow the broadceMsting industry to

claim competitive injury whenever it wishes to stifle a new

~ eablecast service — which scarcely seems conducive to cable

innovation. Second, State régulatory commissions are much

closer than the FCC to the varying service needs and in-

terests of their . and can be expected to do a

- 23. See Gabel, op. cit. supra, passim. The principal scactical diffi-

culties have related: to the allecation of plant for the purposes of

rate-base regulation. Neither the Illinois Commerce Commission nor

the FCC is préposing such rate regulation of cable. systems for the

foreseeable future. Notice of Proposed Rule Making, Section A2;

‘. Cable Television Service, 37 Fed. Reg. 3276 (para. 183)..

» °

41 | 4 eS

more effective job of promoting their realization.** Third, .

the most important area of experimentation that the FCC

would foreclose is regulatory experimentation. What suits

Illinois when it comes to local cablecast regulation may not

exactly suit New York or Massachusetts or Minnesota. The

federal system. ‘should tolerate and even welcome a ‘degree

of regulatory diversity on matters closely touching the kind

- and quality of local service in a dynaqnic field of evolving

' technology. For as Justice Brandeis pointed. out in a re-

ated context, it is still

as of the happy incidents of the federal system

oan a.single courageous State may, if its. citizens

choose, serydé—es a laboratory; and try novel. social

“and- economic experiments without~risk . to the rest

of the comithy. ad

The converse of this is. thatit would be gravel ihjurious

to our healthy federal system for a single fedfral agency

to arrogate to itself all decision-making, with respect t to the

evolution of local services over a new communications

wiffiout at least the most searching Congres- |

and’ authorization. -

sional revie

24. The IHinois Commerce Corrmission, for example, is is propos

that Illinois cable systems conduct a triennial survey of business an

community needs for new cablecast services, designed to ascertai

and implement desires for inauguration of new services and installa

tion of more sophisticated equipment. Notice of Proposed Rule Mak-

_ing, Section B4(d) ; Appendix, infra, p. A3l. 1‘

25. New State Ice Co. v. Liebmann, 285 US. 262, 311 (1932)

(Brandeis, J., dissenting).

te .—

a '

CONCLUSION

For the reasons ‘stated, the judgment “of the. court of

ss should be affirmed.

_ Respectfully su mitted, 7

WILLIAM J. SCOTT,

Attorney General

| ‘PETER A. FASSEAS,

Special Assistant Attorney General |

ROLAND ‘S. HOMET, JR.

Special Counsel — .

Counsel for the State of [inois

‘as Amicus Curiae

March, 1972

Al -

APPENDIX A Ae

- COMMUNICATIONS ACT OF 1934,

47 U. S. C. Section 151ff ee . -_

$152. Application’ of: chapter

(a) The provisions df this chapter shall | apply to all

interstate and foreign communication _by_—wire or radio

and all interstate’ and foreign transmission of energy by

* radio, which originates and/or is received within the’

United States, and to all persons engaged within the

United States in such communication or such tra is-

sion of-energy by radio, and to the licensing and regulat-

ing of all radio stations as hereinafter~provided; but it

shall not apply to persons @&mgaged in wire of radio

“communication or transmission in the Canal Zone, or to

wire or radio gommunication or ee wholly

within the Canal Zone. a oo

- (b) “Subject to the provi of section 301 of this title,

_ nothing in. this chapter shall be construed to apply or to —

- give the ,Commission jurisdiction. with respect to (1); —

charges,’ classifications, practices, services, facilities, or

regulations for or in connection with intrastate commu-

_ nication service by wire or radio of any carrier. _—

§ 153. Definitions:

For the purposes of this chapter, unless the context { other.

wise requires — ~

(a) ‘‘Wire communication” or ‘‘communication by

wire’’ means the transmission of writing, signs, signals, -

pictures, and sounds of all kinds by aid of wire, cable,

- or other like” connection between the points or origin

‘and reception of ‘such transmission, including all in-

strumentalities, -facilities, apparatus, and services

yt. . .

(arffiong other things, .the receipt, forwarding, and de- |

livery of communications) incidental to such transmis-

sion. 3.

(b) “Radio communication” ‘or ‘ somimunication by

_radio’’ means the . transmission by radio of writing, signs,

signals,’ pictures, and sounds. of all i kinds; Tnéloding~aH-

~ °

instrumentalities, facilities, "apparatus, and _ services

"(among - other things, the receipt, forwarding, and de-

livery of communications) incidental to such transmis-

. sion.

(i) ‘‘Common saceer”? or ‘‘earrier’’ means any per-

son engaged as'a common carrier for hire, in interstate

or foreign communication by wire or radio or in inter-

. state or foreign radio transmission of energy, except

where: reference is made to common carriers not sub-

" ject to this chapter; but a person engaged in radio broad-

casting. shall not, insofar as. such person is so engaged,

be deemed a common. carrier.

(t) ‘‘State commission’’ means the commission, board

or official (by whatever name designated) which under ~

the laws of any State has regulatory qyeieaietion with

respect to intrastate operations pof carriers.

~~ ~§921. (b) Subject | to the provisions of section. 301 of |

this title, nothing in this chapter shall be construed to |

apply, or to give the Commission jurisdiction, with respect

charges, classifications, practices, services, facilities, or’

-“yegulations for or in eonnection-with wire, mobile, or point-

to-point radio telephone exchange service, or any combi-.

nation thereof, even though a portion of such. exchange. ©

service ‘eonstitutes interstate or foreign communication, in

. any case ‘where stich matters are subject to regulation by

a State commission or by local governmental authority.

repens FS BE: rineadiinlorin sos

$301. License for radio communication or

transmission of energy.

——

It is the purpose of this chapter, among ‘olhee things, te ~

maintain the control o the United States over all the

channels of interstate and foreign radio transmission; and

to provide for the use of such channels, but not the owner-

ship thereof, by persons for limited periods of time, ae

licenses granted by Federal authority, and no such

cense shall be construed to create any right, beyond the

~ terms, conditions, and periods of the license. No person

shall use or operate any. apparatus for the transmission

of energy or communications or signals by radio. . .

(d) within any State when the effects of such use extend

: beyond the borders of said State, or when interference is -

caused by such use or operation with the transmission: of

such energy, communications, or signals from within said

State to any place beyond its ‘borders, or from. any place

beyond its borders to any place within said State, or with —

- the . transmission or reception of such energy, “@ommunica-

. “tions, or signals from and/or to pines beyond the bor-—

ders of said: State. - p

cad

——

= | Ad

APPENDIX B

R CC CABLECAST REGULATIONS, 47 C. F. R.

- Subpart G— — Cablecasting |

~ §$76.201_ Origination sablcoaatiae’ in conjunction with

carriage of broadcast signals.

(a) No cable television system having 3500 or more osub-

_seribers shall carry the signal of any television broadcast

station unless the system also operates to a significant

extent as a Jocal outiet by origination cablecasting and has

available facilities for local production and presentation’ of

programs other,than automated services. Such ogigination ©

- eablecasting shall be limited to one or more designated

; channels which may be used for no other purpose.

(b) No cable ‘television system located outside of all

‘ ~mnajor television markets shall enter into any contrac

‘ arrangement, or lease for use of its cablecasting facili-

ties which prevents or inhibits the use of such facilities

for a substantial portion of. time (including the time pe-.

riod 6-11 p.m.) for local programming designed to in-

7 form the public on controM@ial issues of public a sl

tance..

any television broadeast station if the system engages in

- origination cablecasting, either voluntarily or pursuant to.

_ paragraph (a) of this section, unless such cablecasting is

conducted in accordance with the provisions of §§ 76.205,

76.209; 76.213, 76.215, 76.217, 76.221, and 76.225.

§76.205. Origination cablecasts by candidates for —

public office.

fs (a) General requirements. ‘If a cable television system —

shall permit any legally qualified candidate’ for public —

> en eee. ae

fe ee ee a ae a en

dé. aad, spastic i

a. NOTE:. . The. fairness doctrine is applicable to these

office, to use its origination thannel(s) and facilities theréo-

for,. it: shall afford equal 5 sa arene to all other such

candidates for that office : Provided, enigeel hee such

\system shall have no power of censorship over the mate-:

| tial cablecast by any such candidate; and Provided, fur-. .

- ther, That an appearance ‘by a _ legally qualified candidate °

on any:. . =

(1) Bona fide newscast,

'(2). Bona fide news interview, |

(3) Bona fide news documentary (if the appearance |

of, the candidate is incidental to the presentation

of the subject or subjects covered by the news

documentary), or ,

(4) On-the-spot voverage of hone, fide news ‘events

(including but not limited to. political conven-

tions and activities incidental thereto),

\nall not. be deemed to be ise of the facilities of the sys- ve:

tem within = meaning of this paragraph.

- exempt categories, See § 76.209.

(b) ‘Rates and practices. (1) The rates, if. any, charged

all such candidates for the same ‘office shall be uniform, —

shall not -be rebated by any megn s direct or indirect, and _

shall not exceed the charges made’ for comparable origi- . *

nation use of such facilities for other™ purposes. -

(2) In making. facilities available to. candidates ‘for

public office no cable television system shall make any

' discriminatiog between candidates in charges, practices,

regulations, facilities; or services for or in connection with

the service rendered, or make or give any preference. to

-any candidate for “public office or. subject any such can-

- didate to any prejudice: or pisaivankases nor shalh any ;

oe PGE OM EES EET oo

cable television system make ay contract or other agree- |

_ ment’ which: shall have ‘the effect of permitting any legally.

qualified candjdate for any public office to cablecast to the

‘exclusion of other. legally analified | cundignies. for the '

j same public office..

(ec) Records, inspections. ‘

; Every’ cable television system . shall keep and cota

* public inspection of .a complete -record of all requests for

| -originatjon- cablecasting time made by or on behalf’ of

candidates for public office, together with: an. appropriate

notatio showing ‘the disposition made by the. system of

such requests, the charges made, if any, and the length

and time-of cablecast, if the request. is granted. Such rec- ©

cords hall-be retained for a. period of two years.,

(a) Time of request. wae ag /,.

A request for equal: opportunities for use of the brigi-

nation channel(s). must be submitted to the cable television ..

system within one. (1) week of the day on which the first

- prior use, giving rise to the right of equal opportunities,

occurred; Provided, however, That where a person was

not a candidate at the time of. such first: prior’ use, he shall

submit: his request within one. (1) :-week of: the first. sub-- -

‘gequent.use after he has become a legally qoliied can-

didate for the office i in qasetion.

~ (e) Burden of proof.

oA candidate requesting such equal opportunities of the

cable television system, or complaining of noncompliance

to the Commission, shall have the burden of proving that .

he and his opponent are legally oo“ candidates for

‘the same public office.

act Sa Ak a aed oie AR ine tines

. tance.

« AT tof : bo an

«876. 209 Fairness doctrine ; personal attacks;

political editorials. ° 4

(a)- A cable television system ngaging in origination —

cablecasting shall afford reasonable opportunity . for .the ©

discussion of conflicting. views on issues of public impor-

NOTE? “See public natin’, Applicabtlity: of. the Roir- ;

; ness Doctrine in the Handling of Controver-

sial Issues. of Public oe 29 F. R.

10415. 7

(b) When, during such origination sbilenioilen: an at-

tack is: made upon the honesty, charaeter, integrity, or like

personal qualities of an identified person or group, the

— eable television system shall, within a reasonable time

and in no event later than one (1) week after the attack,

transmit to the person or group attacked: (1) notification”

of the dafe, time, and identification of the cablecast; (2) a

script or tape (or an accurfate summary if a script or tape

is not available) of the attack; and (3) an offer of a rea-

sonable <ieaeionted to —: over the asm 8 facili-

ties. .

_ not be applicable : (1) “te attacks on foreign groups or

foreign public figures ; (2) to personal attacks which are —

made. by legally qualified candid#tes, their authorized

spokesmén, or -those associated with them in the cam-

paign, on other such candidates, their authorized spokes-

men, or: persons associated with the candidates in the

campaign; and (3) to bona fide newscasts, bona fide news

interviews, and on-the-spot coverage of a bona fide news.

event (including commentary or. analysis contaitied in the |

7 foregoing programs, but the provisions of paragraph (b)

- of this section shall be applicable to editorials of the cable

“television system).

_ any advert

. tery, gift enter ;

pendent in whole o¥sin, part upoa, lot or chance, or any

A8-

(d) Where a cable television system, in an editorial,

(1) endorses or- (2) opposes a legally qualified candidate

or eandidates, the system shall, within 24 hours after. the

editoriak transmit to respectively (i) the ‘other qualified

candidate or candidates for the same office, or (il) the...

candidate opposed i in the editorial, (a) notification of the

‘date, time, and channel of the editorial; (b) a script: or tape

of the editorial; and (c) an offer of a reasonable opportu-

nity for a candidate or a spokesman of the candidate to

‘respond ‘over ‘the system’s facilities: Provided, however,

That where such editorials are cablecast within 72 hours .

prior to the day of the election, the system shall comply

with the provisions of this paragraph sufficiently far in

- advance of the broadeast. to enable the candidate or can-

didates to ‘have. a reasonable opportunity to prepare - a

remus and to present it in a timely fashion.

376. 213 ‘ Lotteries.

(a). No cable. television system when engaged in origi-.

- sat cablecasting shall transmit or permit to be trans-—

| 1 the origination cablecasting channel or channels

ment of or information concerning any lot- .

mitted

ise, or ‘similar schome, offering prizes de-

list of the: prizes drawn or-awarded. by means: of any.such

lottery, gift enterprise, or sch®me, whether said list-con-

-tains ‘any. part or all of sueh prizes.

(b) The determination whether a particular prograrh

comes within the provisions of paragraph (a) of ‘this

‘section depends on the facts of each case. However, the

Commission will in any ‘event consider that a program

, comes within the provisions of paragraph (a) of this seé-

tion if in connection with such program a prize consisting

of money or thing of valité is awarded to any person whose

| selection | is dependent in wholé or in part: “upon” ‘lot. or

~A9

. chanc@if as a condition of winning or competing for such

prize, such winner or winners are required to furhish any: ;

money or. thing of value or are required to have in -their .

possession any product sold, “manufactured, furnished or

distributed. by a sponsor of a program cablecast on the

system in question. . ,

§$76.215 Obscenity. ~~. 7°. ow

No cable television system when engaged in origination

cablecasting shall transmit or permit to:be transmitted on-

the origination cablecasting channel or channels material

that is obscene or ‘indecent.

§ 76.217, Advertising. |

A cable television system e gaged in origifation cable-

cast programming may pr esent a vertising material at the

begiming and conclusion of eachNsuch program and at

natural intermissions or breaks within a cablecast: Pro-

~ vided, however, That the system itself does not interrupt

the presentation of program material in’ order to. inter-

_ sperse advertising ; and Provided, further, ‘That advertis-_

~ ing material is not presented on or in connection with

origination cablecasting in any "other. manner.

NOTE: The term “natural interthissions or “breaks

. within a cablecast’’ means any natural inter-

mission in the program material which is be-

yond the control, of the cable television oper-

~ ator, such as time-out in a sporting event, an

intermission. in a concert or dramatic per- _

formance, " a recess in a city council meeting, . ©

an intermission in a long motion picture which

was present at the time of theatre exhibition,

etc. 7 Lf

bad

| ~ A10

§76.221 Sponsorship identification.

(a) When a cable television system engaged in origi-—

' nation cablecasting presents any matter for whicl“money,

. services, or other valuable consideration is either directly

| or pei cies paid or promised to, or charged or received

' by, su system, the system shall make an announcement

. that such matter is sponsored, paid for, or furnished, ei-

ther in whole or in part, and by whom or on whose behalf |

such consideration was supplied: Provided, however, That

‘‘service or other valuable consideration’’ shall not include

any service or property furnished | without charge or at a

nominal charge for use- on, or in connection with, such.

eablecasting unless it is so furnished as consideration for

an_ identification in a cablecast of any person, product,

service, trademark, or brand name. beyond an identifica--

tion which is reasonably related to the use of such serv-

ice or property ‘on the cablecast. |

(b) Each system engaged in origination cablecasting

shall exercise redsonable diligence to obtain from its em-

ployees,.and from other persons with whom it deals di-

reetly in connection with any, program matter for origi-.

nation cablecasting, ‘information. to enable it. to make the

announcement required by this section. |

gram involving the discussion of public controversial issues

for which any. films, records, transcriptions, talent, script,

or other material or services of any kind are furnished,

either directly or indirectly, to a cable television system as

an inducement to the origination cablegasting of such pro-

gram, ‘an announcement to this effect shall be made at the

beginning and conclusion of such program: Provided, ee

*o.

i AN

ever, That only one such announcement need be made in

the case of any such program of five (5) minutes’ duration

-or less, either at the beginning or conclusion of the pro-

- gram. oo oS

(d) The announcemerits required by this section are

waived with respect to feature. motion picture films pro-

-duced initially and primarily for theatre exhibition.

’ . :

Al2

APPENDIX. c.

OFFICE OF 'TELECOMMUNICATIONS POLICY |

EXECUTIVE OFFICE OF THE PRESIDENT

; ane, D. C. 20504 |

Director

November 15, 1971

" Honorable J ohn O. Pastore

United States Senate

Washington, D.-C. 20515

Dear Senator Pastore:

You have asked me to provide you with ‘the Adminis--

tration’s views on the FCC’s cable television proposals, as

‘well as Administration-recommendations resulting from the

_work of the special Cabinet Committee on broadband cable.

Since the Committee will not address specifically the FCC’s .

“proposed conditions of distant- signal carriage, and since

it will in any event not complete its work for several more

weeks, I am ‘replying separately to your first request. _

The Adininistration’s views on the FCC proposals can .

- summarized as follows:

(1) -It is highly desirable that the ‘‘freeze’’ on cable .

development in the major markets be’ eliminated,

and that the new medium be permitted to pro-

_ ceed with its growth as soon as possible in an

atmosphere conducive to stability and coopera-

tion among the various interests involved in pro-

viding program services to the public. ° |

(2) ~ Those matters pertaining to cable retransmis-

sion of broadcast television signals which the |

FCC has addressed (i.e., permissible distant sig-

_ Als”

+ nals, definition. of local signals: and ‘ ‘anti-leap-

_ frogging’’) involve the type of substanfive deter-

mination which, within broad limits, is best re-

solved by an administrative agency. Those pro-

posals should. be supplemented, however, with

provisions applicable. to radio signals and with

restrictions upén importation of. copyrighted pro-

- gramming.

ict te etopeatle including the divi-

sion of federal-state. authority over broadband

cable services, are predicated on unclear author-

ity and address issues of major national con-

cern which will ultimately determine the form

and structure of the new industry. Iniplementa-

tion of these proposals should not be allowed

‘to preclude thorough Congressional review of the: |

* fundamental policy questions which, the Cabinet

Committee is ‘considering.

The Supreme Court has affirmed the FCC’s ‘authority to

- impose those regulatory requirements on eable television

that are ‘‘reasonably ancillary to the effective perform-

ance of the Commission’s various responsibilities for, the

regulation of television -broadcasting.’’ The FCC’s ‘pro-

posals- dealing with carriage of television broadcast sig-

nals clearly fall within this authority. Accordingly, there

is no question of the FCC’s power to resolve. such issues

as the definition of ‘Jocal’’ signals, the appropriate num-

. ber of distant signals to be carried: by cable systems, and |

restrictions on the points of origin of distant signals (i.e. eS =

‘‘anti-leapfrogging’’). 7

We have no substantive comments on these aspects of

the proposed rules. These provisions are intended to pro-|

Al4

_ ‘vide cable with an opportunity for immediate oath. while

protecting the economic ‘viability of our ‘‘over-the-air”’

television broadcast system. They involve judgmental de-.

terminations of, the type which, within broad limits, Con-

gress must of necessity leave to the discretion. of its reg-

ulatory agencies. What is essential, as far as the broad-

- cast-carriage proposals Are concerned, is that there be

prompt’ adoption of a regulatory approach which will: re-

ceive general acceptance, thereby eens the sound growth

'- of the industry to proceed.

There are, however, several problems which these broads

cast-related proposals leave unresolved: first, there i is the

‘problem of the importation of distant radio signals, and

second, the. problem of exclusivity protection for copy-

ighted television programming.

Tautines of the affected industries have recently reached

an agreement regarding provisions that deal with these

coricerns and also involve minor modifications of some |

- broadcast-related items already included in the Commis-_

sion’s - proposals. If reflected in the Commission’s final

rules, this agreement would fully meet our concerns re- _

garding radio and copyright. Absent this accord on the

final rules, there is serious risk that-an end to the freeze |

will be delayed by challenges in the courts and Congres-

sional hearings on these matters. We. believe. the public

interest would not be served by such developments.

Turning now to those aspects of the ‘proposals which

go beyond the conditions of cable retransmission of over-

the-air signals, relating to broadband cable as a commu-

nications medium in its own right: These aspects of the

‘proposed rules (together -with existing rules and further

-eontemplated rulemakings) involve such matters as Fed-

eral preemption of state. and local control, the extent of

ide aessnicbmtoans, q n

NTE ARO ie BONES DO NIRA NOP ile PD she's: ei tele bee mentale is

‘ .

Als

FCC supervision of programming, limitations on numbers

_ , of channels, flexibility with respect to new services, and

prescribed channel usage. These and other matters. of

- like importance will shape the economic structure, and in-

deed the character, of.the new medium. They are the sub-

~ ject of the Cabinet Committee’s work and will untimately -

require careful Congressional consideration. The Commis-—

Sion itself has. noted that the recent Midwest Video case

casts doubt upon the legality of this type of regulation, and

it has requested Congressional clarification. Similarly, we

‘believe the 1934 Communications Act provides inadequate

guidance for the regulation of broadband cable communi-

cations. Therefore, while we favor immediate implemen-

tation: of the proposed rules in order to permit the growth

of cable television, oir recommendation is based upon the > °

“hope and expectation that Congress will address these fun-

damental aspects of broadband cable policy at an appro-

priate time, before.the economi¢s of the industry and the

character.of the medium. have become irreversibly set in

' the mold contemplated by the Commission.

‘As you have stated, cable television involves many fun-

“damental and complex policy matters of national impor-

tance. Until they ¢an be resolved by due Congressional

deliberation, we believe the public interest will best be

the FCC proposals. This course of agtion will enable the

Congress to give its full attention at a later time to the

major issues involved in the future of broadband commu-..

nications services without further delaying the expansion

of cable television service for the American people. .

3 Sincerely, oe ee

/s/ Clay T. ‘Whitehead

we: AIG

APPENDIX D.-

STATE OF ILLINOIS |

ILLINOIS COMMERCE COMMISSION iy

Illinois Commerce Conimiasion,

on its own motion, - ,

Investigation of Cable Television .. Docket 96191:

*‘and other forms of Broadband a

‘Cable Communications in the

State of. Illinois . 7

INTERIM OPINION AN D ORDER

‘

* * * * * .

Summary and Order /

‘The Commission ‘adopts the following findings of fact

and conclusions of law:.

1. Cable television i is a ‘system of deliv ery of television

signals ov eMa grid of coaxial cables possessing a broad

frequency bandwidth, which system can also deliver a va-

riety of other video, audio, and, data-grade signals. -The -

“system as a whole is properly termed +‘ broadband cable

communications. ’’ >? |

2. While only a small arOperEon ‘of Illinois fesidents

have as yet been offered cable: ‘television service, franchise

proceedings to inaugurate such service are now under-

way in Illinois communities containing a.m maserity of the

State’s residents. : rae .

3. The business of providing cable television aud other

forms of broadband cable communications is an engage-

‘ment ‘‘for public yse’’ in ‘‘the transmission of: telegraph

or telephone messages within this: State’’, within 1 the mean,

aud snc

N a"

AIT

ing of Section 10-3(b) of the Public Utilities Act, ML. Rev.

Stats., Ch. 111%, Sec. 1 et seq. —

(a) Asa matter of practical construction, oilephaee

service within the meaning of the statute has come to mean

a total telecommunications service embracing narrowband

and broadband transmission of a wide variety of video,

audio, and. data-grade messages including television sig- ;

nals.

“(b) There i is at present a significant service overlap be-

tween the offerings of cable television and telephone com-,

panies, restrained from full competitive realization by a

- federal antitrust consent decree entered into by the Bell

' system and by a cease-and-desist regulation of the Federal

Communications Commission affecting independent tele-

phone companies. Neither of these legal restraints is im-

mutable, and present federal policy favors the develop-

ment of regulated competition for the total telecommu-

nications service each industry i is or can become technically

equipped to provide.

——

dustry, if it is to a the objective. of wiring the cities —

and towns of America’ over the coming decade, will re-

quire the adoption of financing techniques similar to, those

| _ employed by the conventional telephone industry; namely,

the floating of high-rated, long-term utility securities.

(d) The metliods of operation-of:the two industries are

closely comparable. Both offer a mix of analogue and dig-

ital communications. Both have evolved and are evolving —

from reliance on one dominant medium of transmission

- to employment of a combination of coaxial cable, wire, and

| microwave. And the trend in both industries has been and

is from the initial offering of party-line service to the

development of switched services.

‘ ‘¢

.—

-4, The Commission therefore has, and hereby asserts,

jurisdiction to. regulate cable. television, and other’ forms

of broadband cable, acmuaanarsaainiar as a statutory. public

utility. x

5. ‘The elaboration of fules aad’ regulations governing

the exercise of that jurisdiction will require careful con-

sideration, after ‘further hearings to be held on a Notice

_ of Inquiry and of Proposed Rule. Making n now being for-

- mulated by the Commission. '

6. Three important issues‘are being expressly left open

for further evidence and comments in those hearings. They .

are:

(a) ‘The axteat to which, and ‘the procedures =

presently operating systems should be ‘‘grand-

fathered’? by. having their operating authority

confirmed, or\ excluded from regulation because of

their limited .\size or operation (e. g., a apartment-

house ‘‘ cr i ’? systems).

(b) The nature and timing of regulations, appropri-

- ate to the present stage.of development of broad-

band: cable communications in the State of Illi-

nois,. addressed to the determination. of “Just”’ .

_ and ‘‘reasonable”’ rates. —

~ (e) The possibility .of developing cooperative certifi-

a cation procedures with Illinois municipalities, SO

‘as to give them a suitable voice in planning for

- and meeting the communications needs of. their.

local residents. ,

7. Pending the elaboration of such ties and ccuiniag.

“the Commission proposes as nearly as possible to main-.

tain the status quo. This means’ that no. ‘construction ‘of

/ authorized but — cable systems may} be’ manecsuience, 7

a ee

. :

SI i Ay la sec ed 8 - we

. ‘

819

nor may any. ee activity be éarvted out that would, un-

der the Public Utilities: Act, require Commission authori-

zation — unless’i in a particular case the Commission waives. ~

the application of one or more provisions of the Act on |

the basis of a showing of severe and demonstrable hard: .

ship. _ - ee e ee

vag BS State regulation by the, Commission. is not only au-

: thorized but necessary to counter the challenge of possible

federal regulatory pre-emption. The undeniable local in-

‘terest in the nature and quality of broadband communi-

cations services can be better served by a combination of ,

Federal arid State ropeaen than by exclusively’ Federal

control.

9. Federal and municipal eauiilans authorities togatlier e

lack the control capacity to prevent,the under-financing and

: -under-engineering of cable tolovinions systems, particularly .

_in the larger markets where gréater technical sophisti- -

cation and capital expenditures will be required. This Com-

mission and its staff are accustomed to meeting such prob-

lenis” with other regulated utilities, and to assuring the”

_ preservation and upgrading of service quality by already

installed systems. A cable television system, being a de

_ facto monopoly, tacks the incentive if not effectively. reg-

ulated to assure the maintenance of top- quality service.

°-10. The overriding public interést in the service po- _

tential of broadband cable communications takes three dis- .

- tinetive forms: | .

(a) ‘channel. choiee”’, or the divensiiention of enter-

_~ tainment ard information services available at

~ hy the option of. television viewers and subject to — ‘

a Mob. their selection, in their homes and places of ,

| business, F ‘ ,

(b) the availability to would- re watecribers of aie

a television service without undue. delay or dis-

_* _erimination,. and without exeessive : signal | ‘de-

gradations or, outages ; and : ; anes \

| “\: ‘(c) the availability to would-be programmers and ..

advertisers — including sources’ of information,

a practical matter’ from the. mass television

. broadcasting medium, of nondiscriminatory and

legally guaranteed access to leased cable chan-.

nels for the purpose of transmitting their mes- Q

” gages. :

- The. Commission will inelude detailed rules ‘for the real-

.IT IS. THEREFORE. ‘ORDERED that:

@) The Commission hereby assumes jurisdiction wide:

See. . 10-3 (b) of the Public Utilities Act, Ill. Rev. Stats.,

“Gh. 111%, See. 10-3(h), over “broadband cable communi-

cations ‘systems’’, defined to mean and include any system

ment used or capable of being used for. the delivery of

control centers, switching and computer facilities, and all

& lines, fixtures, equipment, attachments, and appurtenances

thereto used or useful in the ‘constryetion, maintenance, and _

| ‘operation of such a system.

(2). The hearings. in this pr sbehlins ‘ated hereby COn- |

tinued ‘indefinitely, pending the elaboration | of specific

| =—nbws, opinions, ‘education, entértainment, and:

ee, home and business . services — now excluded as. -

| ization of those opiecaves in its Notice of Proposed Rule,

-. Making. a

-of coaxial cables or: other electrical. eonductors and equip

> television or radio signals, or voice or data, by analogue -

ior digital. transmission, to subscribers in ‘the State of Tlli-

. /mois. for a. service fee, whether such ‘messages were Ob-. .

‘tained off-the-air “or locally originated or both; together

with appurtenant towers| and antennas, origination and.

A21

rules and regulations for the broadband cable communi-

cations industry.

(3) The Commission will issue as soon as they. can con-

véniently be prepared: (a) a summary of the record to —

date, and (b) a Notice of, Inquiry and of Proposed Rule

Making. When these documents have been issued, the hear-

ings will resume on ‘the. issues identified in the latter se

Notice. 7 F a

- (4) Pending the completion : of these proceagings;-and-

the adoption of specific. rules’\and regulations for . the |

broadband cable communications «industry, no new con-

,struetion within the meaning of See. 55-of the Public

Utilities Act may -be undertaken by such. industry in Illi-.

- nois, unless and ‘except to the extent that the Commission

grants a. waiver of this restriction iQ particular . cases on

good -eause shown. Previously planned ‘activities other

than such new construction. may however, be carried out

- daring this period without’ Commission authorization by

‘broad .nd cable communications ‘systems that have, as. of

the date of this or der, alr eady engaged in substantial con-

struction of their systems. No other, system may take any

action duri ing this period that would under the’ provisions

of the Public Utilities Act require Commission approval,

aw aiver of this restr ietion with respect to one or more of

such provisions in. particular cases on good cause shown.

_ By order of the Commission _ Sth any of prerer,

1971. )

‘ps/ DAVID H. ARMSTRONG

Chairman

[SEAL] °

WSC/ Iw .

A22

_ «@

| APPENDIX E.

' ILLINOIS COMMERCE COMMISSION,

_* BROADBAND CABLE COMMUNICATIONS —

ADOPTED JANUARY 5, 1972

* » * * *

4. Initial service capacity and expansions thereto.

(a) Channel number and use. The broadcast signals

that can be carried by. cable systems are regulated -exclu-

sively by the FCC.-This Commission will require only that:

Illinois cable systems carry the maximum nuniber of per- |

‘missible -broadcast signals. In addition, when there are |

spécific criteria to be met (e.g., the determination of ‘‘sig--

nificant viewing’’ of nearby out-of-market signals as de-*.

fined by the FCC), the burden of exercising best efforts to

meet these criteria should be placed on the system operator.

As for. nonbroadcast services, the regulatory proposals

of the FCC stand on far ess certain footing, The State

-of Illinois has joined in litigation (United States v. Mid-"

west Vidgo Corporation, U.S. Supreme Court, No..7 1-506)

- aimed at resolving the authorit¥ of the FCC in this area,

- which the federal Office of Telecommunications Policy: has. .

characterized ‘as ‘‘unclear’’ and requiring Congressional _

review. For present p rposes, this Commission will ac-

cept the FCC proposals as helpful guidelines to minimum

service requirements. There are several nonbroadcast serv-

~ Gees to be considered. . :

_.First, either separately or in conjunction with “local

program origination, one channel should offer passive dis-

“play services..on a continuing 24-hour basis: time and

A23

weather and the day’s program log on all channels, both

‘broadcast and nonbroadcast, at a minimum: “These pas-

sive displays may also carry advertising on the top or

~ bottom half of the screen. Second, the cable operator may -

- offer its’ own local programming, over the same-or one

different channel, but only on a non- profit basis; that is,

the sum total of any advertising revenues it earns in con- -

nection with such programming must recover no more

than its direct costs. The Commission’s concern here is

to avoid giving the cable operator a proprietary inter-

est in its own programming that could confliet with the .

public interest in promoting widely diverse programming |

opportunities on the other cable- channels. It should be

noted that the FCC’s. local origination requirement has

been suspended pending the outcome of the Midwest Video

litigation previously. referred to; and in any case its defi-

nition of ‘‘eablecasting’’, namely uroeranmaihic ‘‘originated

by the CATV operator or by another entity’’, can be sat- -

isfied by ensuring adequate local access to free or leased

- . channels, as described below. This Commission does not

‘ believe that either the ‘‘equal time’’ or ‘‘fairness’’ pro-

visions of FCC regulations are spe applicable to

.eablecast programming, SO Jong as ample channel capac- .

ity is provided over public-access and leased channels to

accommodate all points of view.

The FCC is proposing thaf each cable ayatem set aside .

one dedicated channel each for. public- -access, educational,

‘and governmental use. These channels would be offered

without time charges, but the operator could recover pro-

duction costs (aside, from .those for: live studio’ presen-.

tations not exceeding five minutes in length). The public-

access channel would be non-commercial and ‘available at

all times on a non-discriminatory basis. Dedication of addi- ,

A24

tional channels for these purposes would be precluded un-

less the FCC consents. |

There are problems with this ofopeaal: One. channel

each for the described purposes may be quite inadequate

to the. needs of many communities, yet requiring still fur-

-‘ther.‘‘free time’? from cable operators may. saddle them

. with unmanagable financial’ burdens. This Commission

_therefore proposes to adopt the FCC: proposals provision-

ally, and. to deal with additional access needs through its

own regulation : of leased channel operations.

On this subject the FCC proposals seem ioadanuale,

They include no requirement regarding channel allocation’

beyond the stipulation that at least one leased channel °

‘give priority to part-time users. While there is always an

element of hazard in borrowing concepts uncritically from

other ‘fields, this Commission. believes that’a minimum, of |

one leased channel on each system should be operated on

‘‘ecommon carrier’’ principles. Fhis means that rates would

be uhiform and not’so high as to discourage any member

of the public from applying to use them; that this channel

would: have adequate: studio and: production equipment;

and that the cable system W ould adopt rules and practices

_ designed to prevent preemption of excessive time by any

user or class of users during specified time periods. The:

_ Commission will require that the operator’s proposed rules

and rates for these services be submitted for its approval.

The remainder of the available channels may be dedi- .

cated or contracted for any of the following. purposes, with

the allocation to be made by the operator on the basis of.

‘the survey of community needs: (1) additional educational

and municipal channels, at rates that will at least recover

the operator’s costs; (2) special business and professional

. services, such as‘stock quotations or medical seminars, sent

A25

to limited ‘classes: of subscribers; (3), home service such

as shopping by wire, as well as news and entertainment

. programming acquired commercially by the operator; (4) -

pay cable offerings’ of major sports and entertainment

events, to the extent permitted by the FCC (note that local

_ franchise prohibitions of pay cable are precluded) ; and |

(9) other services as they are developed. The operator’s-

- service proposals for these channels may be made the

basis for municipal selection of a franchisee, subject to

later application by an operator to this Commission for

, changes in the light of operating experience. |

Just as with a telephone company, a cable system shall

exercise no content control over any.pr ogramming (other

than its own, if any), and any liability for i injurious pro-

gramming shall attach to its originator rather than to the’

cable systeni. The cable operator’s rules shall require that

this be made plain to all users, and any user that is judi-

cially found liable for obscenity or. libel ‘or. incitement to

riot or sedition as a result of its programming may be »

barred by-the Commission from further use of ‘all cable.

systems in the State for up to three years. Beyond that,

a large preference in franeliise (or certification) proceed-

ings should be awarded to any cable operator who’ pro-

. poses to provide subscribers with a scrambling device and

-.. locked switch’ to give parents control over the viewability

of nonbroadcast- channels.

" Overall channel capacity will be the critical determinant

of the number and variety ‘of specialized nonbroadcast

_ services made available to communities. The FCC has

proposed a minimam of 20 channels in the top 100 mar- .

kets, while leaving room for .upward deviations, but has

said nothing about the number or configuration of broad-

band cables required to carry this number of signals with-

out loss of>quality. The FCC has also proposed that the .

nonbroadcast band width in all markets be at least as

‘broad as the frequency spectrum utilized for carriage of

broadcast signals. This Commission accepts those minima

_ but believes they ‘require expansion and elaboration.

A very helpful guide in these matters is to be found

in Appendix A to the recent coipprehensive Report of the

Sloan Commission\on Cable ‘Communications,* whose find-

- ings are consistent with the“evidence presented to this

. Commission. Of the various presently available system

configurations for delivering multiple channels, the one

that offers the most flexibility at reasonable cost with

_ built-in expansion capacity and maximum freedom from.

internally generated interference :and distortion problems »

_ appears to be the multiple cable. At the outset, a dual cable

using VHF-only standard broadcast channels can assure

_. quality signals over a nominal capacity of 24 channels,

albeit an actual capacity of only 16-20 channels (or as few

as 10 in major television markets such as Chicago) because

of: interference from: strong local broadcast signals. ‘In

smaller communities, below 50,000 in population, this should .

ordinarily be enough to accommodate all initial demand for

off-the-air signals, local origination, leased and dedicated

channels, and other uses.such as FM radio. ‘Experience in-

dicates that it takes time .and effort to stimulate use of

pay-cable, and specialized programming also will take time .

to develop; and it will be some. time before regional or.

national cable networking makes significant: demands upon

spare channel capacity. . .

_ * John E. Ward, “Present and Probable CATV/Broadband-Commu-

nication Technology’’, Sloan Report, p. 179 (McGraw-Hill, 1971).

A27

_ As these demand factors develop and electronic technol-

ogy is improved to keep pace, a dual-cable system can read-

ily incorporate improved converters and return-path am-

that the principal cost component in. building a system is.-

plifiers (which need be fitted on only one of the cables),

so as to offer as many as 50 (ultimately, perhaps 70)

’ broadcast-band-width channels with two-way capability at

no observable loss of quality. The en costs of such -

a dual cable/converter ‘system with upstream channel ca-

pacity are -fairly comparable to those

multiplexed gystem, -and the quality and “flexibility of the

former appear considerably superior. It should be noted

not the purchase cost of the cable itself but the construc-

tion cost of stringing the cable through ducts or on poles.

offer long-term savings. ’

The Commission therefore _proposes to’ require that - |

systems in communities below 50,000 in population pro- =

vide a minimum of: two trunk, feeder, and tap-off eables

either in parallel or encased in a multi-tube housing. For }

systems in larger. communities, a minimum requirement |

with 24 or more assured channels at the -

of three cables

outset, expandableé to 75 or more over time — seems neces-

- sary and advisable. :

The population vata ‘elie be applied to communi-

ties rather than franchise areas, even though the Com- -

mission recognizes that larger. communities. aré likely to

franchise two or more cable systems each serving only a

portion of the population. There are physical constraints

on the size of a single cable system; such that — according

to expert engineering testimony presented to the Commis- .

sion — it may prove necessary in a city the size of ‘Chicago

to franchise perhaps. four to six separate systems, But

r a sing] e.

some at least of the messages carried on such systems are

likely to be of immediate interest to residents of other

franchised areas within the larger community; and ¢here

should be adequate channel capacity on each system to

interconnect for this purpose with the others. Indeed when

‘the community as a whole exceeds a certain size there

may be reason for the Commission to specify an even

higher minimum capacity. Tentatively, and with the invi-

tation of comments, the Commission proposes to classify a

‘‘eommunity’’ for population purposes in accordance with - -

the Census. Bureau’s definition of a Standard Metropolim _ |

tan Statistical Area; and to specify a minimum of four

cables in SMSA’s with a population in excess of 250,000.

_ + (b) Other capacity. Two-way capacity will. be neces- .

. __ sary: to ‘realize cable’s service potential in a number of

areas, ‘and amplifiers with return-path capability have

been made commercially available. The major variables | ~

relate to signal grade, switched service, and subscriber

‘terminal equipment. - ar aa oy | ae

-. (he available return bandwidth can he used for either

‘data grade’ ‘or ‘‘video. grade’? signals. The “<video |

grade’? capability can . be used to link fixed or mobile

+ gtudios to the head-end for distribution on the system of:

local programming. This requires no subscriber terminal

equipment, and indeed the costs and limited ‘foreseeable

uses of home video origination are such as to rule out.

the present requirement of any such equipment. So also,

‘ while it is conceptually possible to develop point-to-point

‘switched video services, so that any subscriber could talk

to and see any other subscriber, the costs for such an oper-*

ation appear at present to be wholly out of reach.

This then leaves video-grade two-way usage a matter .,

for the system operator to incorporate in his studio and

v ;

‘number and location

to specify.in the abstract, and the Commission would wel- —.

_ come evidence and comments on this point. As a starting

‘mobile origination désign. The subscriber will be inter-

ested in data-grade equipment, which may be either for

“* simple monitoring”’ or ‘‘more general narrow-band com-

munication and control capabilities’? (the quoted phrases

are. taken from, and more extensively described in, the

Sloan Commission Report at p.' 182). The Commission

proposes to require that one of these two: types of serv-'

lces he: offered by cable systems, and that the choice be

made by municipal officials as part of the: competitive.

franchising process. Local. officials may also decide to

require that cable ‘systems provide a separate ‘cable (in *

addition to those employed for signal delivery) for return

- a -

signals. Some of the.more modern systems, such as at

~'% a- =

Reston, Virginia, have done this.

It will in any event. be’ necessary for cable Hates to -

provide a switch and visible or audible signal on or’in

close proximity to a subscriber’s television receiver, so that

he may know at all times whether a return signal is being

ing from his home. . i | a

. Studio facilities and equipment for live and taped cable-

cast production must also be provided for the dedicated

“governmental, educational, and public-access channels, as

well as for the leased common-carrier and specialized

channels, and technical assistance must be made,available

to users of. these channels. ‘The equipment shoyld be ca-

_ transmitted and may positively control* feed-back originat- °

pable of play-back of all standard sizes and types of film,

videq tape, and. oo recordings and audio tape. The

' of fully-equipped studios is difficult

point, it seems necessary to provide separate studios for

-each of the dedicated channels, and one for all other cable-

casting purposes (bearing in mind that many transmis-

sions will be taped and that usage may develop slowly at |

first)—for a minimum of four, to which local franchising

officials could add. The ‘possibilities of combining equip-

ment and/or studios are not clear, however. ‘The Commis-

sion believes that studio and equipment requirements should.

not exceed those for which there is an immediate use, , -

_ since it is fairly easy to add @pacity of this sort as demand

rMhuires, and because cable operators should be'assured of _

the opportunity to earn a return on the studios and equip-

ment they provide. | .

a One other possibility which is being pursued in some

communities bears mention at this point. That is for the

able operator te satisfy in full his responsibilities for ed-

_ueational and governmental uses of the system by making

one separate cable available free of ‘charge solely for such .

uses, with channel allocation on-that cable decided by a

committee of municipal and school-system officials. Under

such an arrangement, the cable operator would be relieved

of the cost of providing: ‘studios and equipment and’ tech-. .

nical assistance for governmental and educational program-

ming. The Commission ‘proposes to give sympathetic con-

‘sideration to such arrangements, and would weleome com- '

ments on whether they should be established in the ties

‘of a general requirement. :

rules with regard to expandable channel and two-way ca-

pacity have already been described: above. The Commis-

sion will also require that system designs be sufficiently’

flexible to incorporate more sophisticated developments .

when and if commercially proven. These prominently in-

‘elude, based on ‘present knowledge: computer switching |

and program-access cénters; the neighborhood exchanges -

‘and twisted-wire leads associated: with dial-access systems ; ‘S

. and origination points for cable conferencing as: now of-

fered by the British Postal Office. System designs should —

indicate where- and: how such developments ‘equld be added

to the system after.its construction. .

- (d) Timing of future expansions. In order to détermine

. when new services or equipment should be added to”eys-

tems, it is necessary to keep. abreast both of technologica

developments and of market demand. Tlie FCC’s so-called oe.

‘‘N plus 1”’ proposal would deal only with additions to the

number of channels and hot with inauguration of hew serv-

ices or installation of more sophisticated equipment. This

-- Commission proposes’ to deal with those questions. by re-

quiring a triennial survey of business and community néeds,

to be conducted by eaéh cable system. The survey form,

which the Commission proposes to develop and refine pe-

‘Tiodically with the aid of an industry advisory group in-

cluding consumer representatives, would be designed to

“‘grandfathered”’ by the Commi

determine: (1) the commercial availability of new équip-

ment and programming services; (2) the demand for such

innovations. by both present and potential subscribers; and

(3) the extent’ of the subscribers’ willingness to pay for |

_ the costs and appropriate profits: associated. with such =

novations. The record of the cable pperator in responding

to these surveys, as compared ws

similarly situated operators in Illinois and other states,

_ would be a matter for consideration by, the Commission

_ on applications. for rate increases and at the 10-year cer-

tificate renegotiation. ,

(e) Present systems. Illinois cable systems that are

ion would have to bring

themselves into substantial co | .

going requirements when they ‘are (1) transferred to other

. ownership, (2) extensively rebuilt or (3) up for 10-year

certificate renegotiation before the Commission.

liance with. the .. fore-’

~~.

& ~- Ast Session:

4°

. | A32 : ' -

ee nae i. e ? i

8 APPENDIX: F

v :

924 Concrzss - ~*~ a |

1 8. 792 ~

. ° ,. , ee

IN THE SENATE OF THE UNITED SParns:

ers

_Fepavary 77. 4971

Mr. tame (by request) introduced the following bill;

which was read twice and referred ‘to the

Committee on Commerce .

3 To jaa the ‘Communications Act of 1934 to. pr ‘vide for.

the regulation of, community antenna television systems. |

fh ph ht

De ©

. + a 4 : ~

Ono or wth

Be tt enacted by the Senate and House of Repre- —

sentatives of thé U nited States of America in Congress vO

assembled, That (a) section 3 of the Communications

Act of 1934 (47 U.S.C. 153) is amended. by. adding at

the end thereof the following new-subsection :

"«< (ge) ‘Community antenna system’ means any :fa- 7

cility which, in. whole or in part, receives ‘directly or

indiréctly over the air and amplifies or otherwise- mod-

ifies. the signals transmitting programs broadeast by

one or~more broadcast stations and distributes ‘such

_ signals by wire or cable to are Saad members of the

ublic who ay for. such service”’ “e .

pt be y : | ; - _

A BILL 0 Ce

» #

; .

ene, On a Set ae ae aT Pees

1. “(b) Part I of titie TH of the Coimmuanications Act

&2 of 1934°(47 U.S.C. 301 et seq.) is amended by insert-

3 ing.therein, immediately after section 330 thereof, the , ae

4 following new section: |

5 arte Papin OF COMMUNITY ANTENNA

"6 2 | SYSTEMS ye

‘ 7. {Ske 331. “(a) The Commission shall, as the byt

_ 8 interest, convenience, or necessity requires, have au- . *

-.9 thority — _ : ae . a

10 (1) to issue. authorizations and orders, make

>: rules and regulations, and presckibe such condi-_

12. . tions or restrictions with respect tdthe constfuc-_

(13 ~~: ‘tion, technical characteristics, and operation of

14 ‘community antenna. systems, to the extent hee:

16S essary or appropriate to carry out the purposes:

-.16°. of this Act, with due regard tg the arderly ac. -- ,

17 * commodation ofboth the community antenna and) ~

—6«AB broadcasting industries, in order, to secure maxi.”

0 19 | mum.diversity of programming through the main- |

20. tenance and expansion of broadcasting and the .

21. provision.via community antenna systems of mul-

"99 tiple reception, origination, and related services ;.

. +23. and Sh had fee eae Gh ee

25. regulation, in hole or in -part, -certain. commu-

‘ (26° nity antenna s¥stems where ‘it, is determined .that

~ Se ~~ such: regulation is unnecessary. because of the

28 size or nature of the systems so exempted. -

29 ‘The Commission shall, in determining the application

. : ; = ; 2 ¥¢

¢ , 3 e , c : - ;

of any rule-or regulation ‘concerning the. carriage of

broadcast stations by. community antenna systems, give

due regard to the avoidance -of substantial disruption -

of the services to subscribers’ of community antenna

systems. Which were validly in operation on April l, -

1970. ¢ Par a ee ot.

(bh) .The Commission: shall prescribe such rules *’

and regulations and issue such orders as may be tiec-

egsary to require the deletion by community antenna ;

10 ‘systems of signals carrying any professional football, .

11 * baseball, basketball, or hockey contest if, after appli-

-12 cation by the appropriate league, the Commission firids

13 that: the failure to delete such signals ‘would -be: con-:

14- trary to the purposes for which the antitrust laws are.

-- 15 made inapplicable to certain agreements under the Act

16 of September 30, 1961 (75 Stat. 732; 15 U.S.C. 1291

17 et seq.).””. peo ue = -

ie .

o” a

Soares

wCarnaurwnre

“ye : . ,

AB85 S

- APPENDIX @

‘\ ARTHUR D. LITTLE, INC/NEWS

Public Relations Department: - == ae

25 Acorn Park / Cambridge, Mass. 02140 / (617)864-5770 7 A |

INFORMATION CONTACT: °*° | | | _

Patricia K. Finnegan, Ext. 2411.

FOR RELEASE: Immediate,

NEW CABLE SERVICES—A STEP NEARER :

‘-. Cambridge, Massachusetts . . . Arthur D. Little, Ine. ~ «

(ADL) —the international management. consulting firm —

announced today that it has been retained by a group of |

of the economic viability of interactive. cable services.” .

‘This jointly sponsored préject is expected to be a sig-

“nificant step in developing a new technologically oriented

business and a new communication.medium for the United

States and;€anada. It will help qvercome.a major deter-_

. . testing how consumers, business, and local. governtfent _

rent until now to the*development of new cable services

~ anywhere in the world, namely the uncertainty as to“what

combination of new services .would both successfully serve

public needs and also be economical. A key objective of the —

project is to ascertain-the profit pdtential of services in

addition to entertainment TV on a far more factual ba-:

\is than has ever before been attempted. ep

The experimental project is oriented toward

will. use new cable services. Wherever possible the field

_ test will use existing communication facilities, prototype _

terminal-and control equipment, and existing data-storage

equipment. The test site will be logated in a geographic ~*

Ps ‘ .

“ . _ POP EN SIE NYY SRS HE FH NOT EER Ne IT

A ae ‘ ers y

a ae

~@2

_ tors, municipal.agencies, advertisers and communication

systems organizations. The flexibility of the test system

- will allow a large number of tests to he performed | by

many organizations. - (ae

. The'plans to be developed constitute Phase II of a three-

’ phase project. Phase I, a market study, was concluded in

mid-1971. Called ‘““BON”’ (Broadband Communication Net-

works), the ‘projects first phase was sponsored by 36.U.S8.. |

”

te -

_tial to the participating firms, initiation of the Phase II”

market test planning suggests that profitability for new

III wil be the actual field test. “ —— - 4

’ eable services was found to be a definite possibility: Phase |

ADL Project Manager, John P..' Thompson, said, ‘“The

Phase I market study . indicated that people are inter-

ew!

ested in a significant number of new services and types

of public- and private-service ‘programs. Phase IL ef the———

of cable services. Firms already involved in the project

7 include: the Bank of America, Bell Canada, Burlington

Industries, Encyclopedia Britannica, IBM,, Magnavox, .

EWE Se ‘tenlitacadiemiainl 25

- Million Market Newspapers, Southam Press, Westing-

project will design a ‘flexible, sophisticated market test =

_ system to prove in: the field the value of a wide variety

house and Zenith. Participation in the ‘Sproject. is : | oe

- open to companies-end-government agent s who are in-

terested in helping to deyelop a new communication me-

dium for thé’ United States and Canada and in testing

their services: over such a metwork.’’?

* Qable~systems have-the capability of delivering liter- .

ally. dozens of extra TV or video channels to homes and

carry return signals of viewer. opinion for’#hopping at

home, home education and testing, audience participation

cee aiid mt

ic Sipeaasaeiaiat + er

Lan

‘

: a é sh .

Many knowledgeable observers believe that cable tele-

vision has enormous potential in the administration and

_- operation of cities and’ states, and in the reduction of the

' communication gap that exists in many areas. Thus, fed-

eral, state,.and municipal government agencies have been

and are continuing to be invited. to participate in the

project. \ Steg :

~~ ye . i" + - -* : . ' ; m2 . .

Public institutioris are expected to make extensive use of

cable systems. Educational job-training programs for the -

_ disadvantaged or the shut-in, or at least programé to tell

people what -help is available,’ will have the added bene-

fit.of obtaining reactions over a return ‘channel. School’

boards will be able to receive citizen response from ome ..-

viewers during crucial meetings. La

‘cement agencies -'

- programs and surveys, and even local, state, and federal

\_ voting. ore ae

will be able to increase their communication and surveil. ~

~ lance services for business and _ citizens, and-enhance in,

- terpersonal relations with the communities they serve.

Government agencies will be able to gain immediate voter

regpense to \policies, programs, and new ideas, thereby

enabling them to be more responsive to the needs and

ot .

__ The potential impact of new communication services en —

- busi

Ss and consumérs extends into even more areas.

. ’

§, real estate firms, travel agencies, and insurance —

* gompanies, for example, may use the system for improved

— interaction with customers as well’as for internal services. . |

a A

——

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.