# Amicus Curiae Brief — United States v. Midwest Video Corp. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386414_0025%3A06 ## Record - **Collection:** Supreme Court brief - **Document type:** Amicus Curiae Brief - **Published:** January 1, 1972 - **Citation:** 406 U.S. 649 ## Text ae ae ater ron. | “FEDERAL 1 COMMUNICATIONS. COMMISSI SE EES! Oe EFS Su ee LO ORS AO Ee eS 4 2 * Bt . STATES OF AMERICA AND: a pe o ‘on ee As oe ae ee Fs . oe ? 2 SS Ow WRIT OF CERIIORARE TO , THE ovine STATES on Ge OF. APPEA e : . 3 F e . Ld ‘ ° : . . : . . . e . e . ; . . 7 e- is 2 «2 : ° A . . . . e . , ren P . v ‘ . . vg. a ‘ . . . . ° ° “ . : . . P ° 14 , . . . 7 . * . - . ? . . id . - . . : . =% : . - . re ° ‘ - . a " * ° * e . . . g a . . a - , . ° . ° ; . ° : .. : . : > . e ; " . . $ \ ° . ‘ : . ; . . ; . 7 , ° . . . . ° “ ‘ ° , . ‘ . 4 é . + ’ . ° ‘ . e - . 7 os ° . . ad ‘ . of - . . eo oy : . . 7 . ‘Question presented’..............000 000. hag v 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 5 ' 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, ’ . POO PRP Be ee ee ee oe een Dt beled thet bide RR rey decd ick a He titi e ane f one Tt o? 6 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 8 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 . 10 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. , il 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’, Fe 2. : ‘ : o: dl ET Te nee 12 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 ‘; 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. | e? 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 . ™ . t ‘ . ©, . . $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 // e 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- e- - .-: 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- . F 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 AT 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 F a 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. . ? ‘ aN Ap 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 Q we a a \ - scheme it has developed ‘‘should serve to create an imcen-— he 30 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 — +e 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 a — -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- v 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 34 | 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, © 2 | . . 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 , 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- Q 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 ' 42 CONCLUSION For the reasons ‘stated, the judgment “of the. court of ss should be affirmed. Lg _ 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. . . a (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- ~ ° ee 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 AZ $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.. (c) No cable television system shall carry the signal of | 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 Ad 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. - a ~ (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 e _ 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 4 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 served by ending the cable ‘‘freeze’’ through adoption of © 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 +; Olay © 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. (c) The huge financial needs of the éable television ins —— 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. ‘ ‘¢ ~ .— A -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 4 > 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, ‘unless and except to the extent that the Commission grants © 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, - NOTICE OF PROPOSED RULE MAKING © ee IN DOCKET 56191 «© _* 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- , ao 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 public-access and _ common-carrier channels; other leased, © 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. Initial installation of more than, one cable should thus © 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 “: 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 ©. og _., “*(2) to make general rules exempting from 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 | * United States and Canadian companies for further study © . 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 area where cooperative effort exists among local educa- © _ 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.. | A ” te - and: Canadian firms. Although the findings are corifiden-. ©~ - _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 AJ 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 - desires of citizens, © z Fh! 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 —— --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386414_0025%3A06. Public record. Not legal advice.