Speaking of the disruptive effect of the 15-day nonduplication rule upon both long-existing and new CATV systems, the Commission has stated:

"First, even in the case of the new system, there is disruptive effect to the extent that the CATV subscriber may not be able to view programs from distant stations at the times specified in his TV guide (and may be unable to view them at the later date presented by the local station for any number of reasons). It is our understanding that it is essentially for that reason that some broadcasters, although previously entitled under our microwave rules to 15-day before and after nonduplication protection, have requested only simultaneous nonduplication" (FCC Second Report and Order, p. 31, par. 54).

With respect to the nonduplication of nonnetwork programs, delayed nonduplication accomplishes very little, if anything in the way of protection of the broadcaster, but it would effectively cripple the activities of the average CATV system. Every little cartoon, for instance, has to be afforded delayed nonduplication, and it would be virtually impossible to make use of automatic timeclocks to avoid duplication. Expensive additional personnel would have to be retained by the CATV operator to do manual switching. The problem is almost as great for the broadcaster to comply in advance with the properly required 8-day notification to the CATV operator in the case of nonnetwork programs.

The Commission has frankly recognized this problem. It has stated: "We also considered the question of retaining the 15-day before and after nonduplication provision for nonnetwork programing. But, as we have previously recognized, and indeed stress in this report (pars. 123, 131 infra), 15 days before and after nonduplication affords, at best, only minimal protection with respect to the presentation by local stations of syndicated and film programing. Such programing is not presented on a nationwide simultaneous or even nearly simultaneous basis. Retention of the 15-day provision for nonnetwork programs alone would serve little effective purpose. Stated differently, the adoption of a uniform 'same day' rule will not, in our judgment, significantly affect the protection afforded as to nonnetwork or independent programing. Rather, we have determined that we must look elsewhere if we are to achieve effective relief in this respect" (FCC Second Report and Order, p. 31, par. 55).

In view of the fact that the Commission admits "the adoption of a uniform 'same day' rule will not, in our judgment, significantly affect the protection afforded as to nonnetwork or independent programing," it is surprising that the 24hour nonduplication with respect to non-network programs is being retained in the rules. The 24-hour nonduplication should be abolished and a simultaneous only nonduplication requirement should be the only requirement imposed upon CATV operators with respect to nonnetwork programs. As the Commission states, even the 15-day delayed nonduplication did not afford what the Commission considered as "effective relief" (FCC Second Report and Order, p. 31, par. 55), so the 24-hour relief is presumably still less effective and, therefore, useless.

The Commission has made the finding that the amount of delayed network broadcasting in the median one-station market is about 51⁄2 hours per week, and in the median two-station market it is about 11 hours per week (FCC First Report and Order, par. 108; FCC Second Report and Order, p. 32, footnote 35). Accordingly, it is doubtful that this small amount of protection afforded by delayed nonduplication can really make a difference in the amount of advertising which the local station can attract. The type of simultaneous nonduplication which we have recommended would give a local TV station the bulk of the protection it wants. VIII. A response to the suggestion of Chairman E. William Henry that CATV is a public utility

On March 22, 1966, Chairman E. William Henry departed from his statement of the Commission's views before this committee to add his own personal views on whether CATV is a public utility.

Mr. Henry stated that he agrees with the Commission's view that a CATV system is not a common carrier. However, he proceeded to quote from a book entitled “Basic Principles of Public Utility Rates," written by Prof. James C. Bonbright, of Columbia University.

Mr. Henry indicated that a CATV system is a public utility:

1. Because it is one of "those enterprises which supply, directly or indirectly, continuous or repeated services through more or less permanent physical connections between the plant of the supplier and the premises of the consumer";

2. Because, like the utilities, it possesses "technical characteristics leading almost inevitably to monopoly, or at least, to ineffective forms of competition."

3. "Any rate regulation that may be necessary is generally for the protection of the customers rather than for the producers of the service, or the tax payers in general.' The CATV subscriber has no bargaining power. 4. "CATV does provide what generally might be considered in this context as a necessary service."

Mr. Henry attempted to prove the necessity of this service by referring to the mail that Members of Congress and the Commission "received when the public thought that its television service might be lost."

Mr. Henry said that because a CATV system is an integral part of interstate commerce, it is within the power of Congress and altogether appropriate for it to determine as a matter of policy whether CATV is a public utility.

NCTA believes that the Congress already has made it evident in the Communications Act that the Congress envisioned television transmission (broadcasting) and reception (including a reception service such as a CATV system) as competitive commercial enterprises "largely self-regulating in its nontechnical aspects to be built and operated by free enterprise tempered by voluntarily assumed social responsibility" (see FCC Docket No. 12782, Second Interim Report by the Office of Network Study, Television Network Program Procurement, pt. II, FCC, Washington, D.C., 1965, p. 12-hereinafter referred to as pt. II of network study).

That the Congress has already preempted this field of television transmission and reception in the manner stated is explained fully in a brief prepared by NCTA's general counsel and contained in the committee's printed hearings on H.R. 7715, held in May and June of 1965, beginning at page 277, and specifically discussing this point at pages 281-283. Therefore, these arguments will not be repeated at this time. Mr. Frederick W. Ford, the president of NCTA, told the committee that NCTA does not agree with Chairman Henry and he introduced into the record of the hearings a reprint by TV & Communications Magazine containing a somewhat longer brief by NCTA's general counsel to the effect that a CATV system is not a public utility and should not be made one.

The interesting point is that Mr. Henry's characteristics of a utility were still more applicable to the television broadcast industry than to CATV, although he said that public utility regulation should not be made applicable to the television broadcaster.

Taking up his points one by one:

1. There is no less a "permanent physical connection" between the plant of the broadcast station and the premises of the television viewer, because you can see the cable, but you cannot see the airwaves or the ether. This is well brought out by the Federal Communications Commission's part II of the network study, cited above, which states in a footnote on page 12:

"Despite the adoption of a regulatory pattern based on competition, the analogy to 'public utilities' has continued. In its first comprehensive statement of the element of the 'public interest' the Radio Commission stated that the: ['Correct analogy' was with those public utilities] engaged in purveying commodities to the general public, such as for example, heat, water, light and power companies, whose duties are to consumers [just as is the case with these utilities] a broadcaster uses a franchise from the Federal Government to bring its commodity over the channel through the ether to the home."

Judge Justin Miller, who for many years had been a leader in the field of broadcasting, in an address to the NAB convention in Washington, D.C., in 1961, stated:

"***the broadcaster, being *** vested with a monopoly by virtue of his license, is charged with a higher duty than to program so close to the line as to require excuse or rationalization ***" (Ibid.)

There can be no doubt that a television broadcaster has a monopoly. It can be absolute or relative, but it is, as Judge Justin Miller said, a "monopoly." In some areas, there is only one TV station, as Chairman Henry stated. In fact, in comparatively very few communities are there more than two. Even in threestation television markets, each TV station has an exclusive on the network programs of one of the three networks.

The Commission's network study and its proposals are designed to regulate network program practices because there does not exist the competition which

was to supplant the need for public utility regulation. (See pt. II, FCC's Network Study, pp. 10-20.) (See exhibit A for excerpts from this study.)

In fact, there is much less reason to regulate a CATV system as a public utility than there is to control a television broadcast station as a utility, because it is undeniable that there is a great scarcity of television channels. That was the reason for granting authority to the Commission over radio and television stations in the first place.

Concededly, there is no scarcity of cable and anyone can apply for a license to conduct a CATV operation.

The fact alone that CATV systems generally make use of utility poles is not a reason for converting them into public utilities. Radio and television stations have made use of leased lines on public utility poles for years. The same is true of Muzak, burglar alarm and banking services and many other competitive business enterprises which are not public utilities.

2. Mr. Henry's second point, namely that a CATV system possesses "technical characteristics leading inevitably to monopoly" is based upon a lack of adequate information about CATV systems and industry trends. Mr. Henry stated that there is usually only one CATV system per community. This confirms our complaint that the Commission did not hold an evidentiary hearing and find out all the pertinent facts before its members proceeded to make recommendations for the regulation of CATV systems.

Mr. Henry's statement was made on March 22, 1966. Still, by a quick check of NCTA files, we were able to turn up 38 communities which have 2 or more CATV systems authorized. There may be many more. Communities seldom grant exclusive franchises, except in Connecticut where the PUC is allowed to do so. We know that several CATV systems compete with other such systems for the same subscribers, down along the same streets. Several communities have three or more systems competing with each other. The city of Seattle has eight CATV systems in operation.

In the past, before it was realized that CATV service would be in such great demand, a community was fortunate if it could induce even one company to construct a CATV system and take the financial risks involved. Now, the telephone companies have offered a CATV tariff service to CATV systems in almost all of the States. Much less of a capital investment is required than in the past, if a CATV operator does not construct his own system and rent space on the poles. Many broadcasters and others are obtaining CATV service through a telephone company tariff and are overbuilding existing CATV systems and competing with the one already in existence for 12 or more years. This happened, for instance, in Rumford, Maine, last year. There have been well over 100 communities where agreements have been signed to obtain CATV service under a lease. Therefore, the list of municipalities where two or more CATV systems exist is growing longer. The trend is in that direction.

There is not only competition for the viewing audience from TV broadcasters who keep obtaining permission from the FCC to raise their towers, and reach larger viewing audiences, and from boosters, satellites and translators, but now each CATV system is facing the possibility of competition from other CATV systems in the same community. Therefore, another reason for public utility regulation, mentioned by Chairman Henry, is nonexistent.

3. Mr. Henry's third point is that "any rate regulation that may be necessary is generally for the protection of the customers rather than for the producers of the service, or the taxpayers in general."

This begs the question of whether any rate regulation is necessary or a need therefore is even indicated. A recent study by NCTA into this matter concludes that CATV subscriber rates have increased by only 4 percent in the 15 years of CATV existence. This compares very favorably with consumer prices which have more than doubled in the same period. Interstate telephone rates, which are under the jurisdiction of the State public utility commissions have risen between 35 and 45 percent in the same period. While CATV rates have not been subject to rate-fixing from the start, neither have consumer prices which have more than doubled.

The reason why CATV subscriber rates cannot be increased substantially is because subscribers can discontinue their subscription at any time and revert to viewing the television stations available via their rooftop or rabbit-ears antennas, or they can group together and build a translator or get a TV station in that area to raise its tower height, or install a booster or satellite, and television can be obtained in any of those various forms.

Accordingly, there is no outcry from CATV subscribers generally about rates. The Congress should not lightly convert these private enterprises, any more than broadcast stations, into public utilities without evidence of widespread abuses which would make this imperative in the public interest.

4. Finally, Mr. Henry considers CATV as providing a necessary service because the public writes a great many letters in protest to the Congress and to the FCC when it is threatened with the loss of television service. All we can say about that is that the Commission does not seem to consider CATV service very necessary when it curtails it as drastically as it proposes to do in its rules and in the proposed legislation. Furthermore, if the Congress considers television a necessity of life like gas, electricity, and telephone, this should apply still more to television stations which reach much larger viewing audiences. Besides, popularity of a service has never been a criterion of whether it should be converted into a public utility service.

There is hardly an area left today where television reception cannot be had without CATV service. A CATV subscriber is not a captive. He is so free and exercises his freedom so readily, that CATV subscriber rates as a result have increased only about 4 percent in the 15 years of CATV existence. As it has been already stated, by comparison, the intrastate telephone rates, although regulated by PUC's, have increased in the same period by about 35 to 45 percent. A telephone subscriber does not have a substitute service for telephone service. He cannot conveniently send a message every time he wants to communicate and he cannot conveniently used a walkie-talkie. This is why a telephone company is regulated as a public utility. A CATV viewer has a large number of services which he can substitute for the CATV service which he now prefers. Just imagine what would happen to CATV service if Mr. Henry's recommendations to this committee were implemented.

(1) The Commission would have full authority to regulate CATV as it pleases under the Commission's bill.

(2) Its subscribers could only receive the programs the Commission would let them view.

(3) The States could regulate CATV systems as public utilities, hold them down to a 6 percent return on their investment despite the fact they are a high risk business, and dry up their venture capital.

(4) If the Congress considered seriously the recommendation to make 325(a) applicable to CATV systems, the broadcaster could cut CATV off from receiving his signal for any or no reason.

It would be simpler for the Congress to write finis to the activities of all CATV systems. Millions of viewers among the public and thousands of CATV operators would suffer.

In closing, let it be observed that a CATV system is in the field of the reception of television channels containing entertainment via the airwaves, which has never been regarded as a necessary or a necessity of life, like public transportation, gas, electricity, telephone service, and the other matters which Professor Bonbright mentioned. No mention was made of CATV service among those necessities of life in Professor Bonbright's book, although examples of all utilities were given The Congress would be establishing a dangerous precedent by declaring an entertainment medium as a public utility. There would be no end to the number of industries which could then be made public utilities with as much color of justification by analogy with the CATV industry, if this novel principle were to be adopted by the Congress. We could soon be faced with a truly regimented economy, rather than with our present, traditional free, competitive enterprise system which has made America the leading industrial nation of the world.

As Chairman Henry has stated, the Congress has the right to declare what type of a business an enterprise in interstate commerce should be. The committees of Congress should redeclare in the committee reports on their lgeislative recommendations to the House and Senate that the Congress still adheres to its intent in the Communications Act that television transmission and reception services should remain competitive commercial enterprises.

The reasons why it would be unfair to regulate CATV systems as public utilities were well reexplained by the Harvard Law Review in a note entitled, "The Wire Mire: The FCC and CATV," in its December 1965 issue. At page 373 of that note, we find the following:

"In the past, when State public utility commissions have considered asserting jurisdiction over CATV, it has been concluded that to regulate would be ultra vires. The States have found that CATV's do not fit within the statutes defining

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utilities, or that CATV is a part of interstate broadcasting, a field preempted by Federal legislation.

59

"It would be unfair to regulate CATV systems as public utilities. Such systems, unlike most utilities, cannot rely on a monopoly position; not only might a CATV have to compete against other CATV's, but it will most likely face competition from over-the-air television-an obviously similar productwhich is not within the general range of State regulation. Moreover, CATV is not like normal regulated utilities such as gas, water, and telephone companies which supply a service so essential that the public must be assured of reasonable rates and practices. CATV could enjoy none of the benefits of utility regulation, yet would be saddled with many severe handicaps, the most serious of which would be rate regulation. Since fear of excessive rates seems to be the basis for many State regulatory attempts, it is worth noting that, at least where a CATV system is faced with competition from other services, 61 such competition should be sufficient to bring about rate reductions. In communities where such competition does not exist, the fact that CATV is essentially a luxury will force it to keep prices within reasonable bounds.

60

"Not only does State regulation seem inappropriate for the CATV industry, but most of the field of broadcasting may well be beyond the range of State control because of the Federal Communications Act."

It is noteworthy that although the National Association of Broadcasters has urged very stringent control of ČATV systems, it has not recommended that they be regulated as public utilities. Mr. Albert Hardy, representing the International Brotherhood of Electrical Workers, spoke in favor of the present type of municipal regulation rather than at the State level (committee hearings transcript, pp. 11711172). Even Mr. William Putnam, an outspoken foe of CATV systems for many years, testified that neither the broadcaster nor the CATV operator should be subject to rate regulation (committee hearings transcript, p. 873).

We would urge the committee to reject NARUC's amendment, which would permit the States to regulate CATV systems as public utilities, and also, to reject the Commission's proposals, thus leaving the law as it presently is, and allowing States or municipalities to continue to regulate the local aspects of CATV systems, such as issuing licenses and easements to use city streets, exercising their usual police powers and their usual taxing powers, but permitting both broadcast stations and CATV systems to remain private, competitive enterprises as under the present law.

IX. William Putnam and alleged economic impact

Mr. William Putnam in general terms spoke of having to discontinue originations on his satellite station WRLP because of the presence of CATV systems. Mr. Putnam was much more specific on this matter in his charges before the Federal Communications Commission in docket Nos. 14895 and 15233, but NCTA completely refuted his statements upon the alleged facts. Attached hereto as exhibit B, is the excerpt (pp. 33–59) from NCTA's reply comments in opposition to proposed rulemaking, in the above-mentioned dockets, which disprove his statements completely.

It is easy for Mr. Putnam to make a simple statement to the effect that his failure to provide original programing, as he had promised to the Commission, was due to the presence of CATV systems in his station's area. It is quite another matter to prove the truth of his statement. However, as Mr. Putnam admitted during his statement, this would not be the first occasion upon which he failed to treat fairly CATV operators.

WRLP began operations on June 29, 1957. There were then 10 CATV systems within its contours. WRLP was assigned to Keene, Brattleboro, and Greenfield. There was one CATV system in Keene and one in Brattleboro. These two CATV systems received WRLP's signal and made it available to their sub

E.g., Television Transmission, Inc. v. Public Util. Comm'n, 47 Cal. 2d 82, 301 P. 2d 862 (1956). "E.g., Edwin Francis Bennett, 89 P.U.R. (n.s.) 149 (Wis. Pub. Serv. Comm'n 1951).

The

See, e.g.. RelCokeville Radio & Elec. Co., 6 P.U.R. 3d 129 (Wyo. Pub. Serv. Comm'n 1954). Wyoming Public Service Commission's conclusion that CATV could be regulated was reversed in In the Matter of Community Television Systems, 17 P & F Radio Reg. 2135 (Wyo. Dist. Ct. 1958). See also note, State Regulation of Radio and Television, 73 Harv. L. Rev. 386, 388 (1959).

"61 While the basic range of prices to subscribers ($3 to $6 per month) has remained stable, there are some systems that apparently do not charge for installation, which in the past has generally cost $100 to $175. Compare 1959 report and order, 26 F.C.C. 403, 407, with ABC Report I."

(NCTA NOTE.-The trend today is to simply charge the cost of making the installation varying from $17 to $25, or to make no installation charge at all.)