of legislation, the CATV system would lose connections and the present stability of his CATV operation would be jeopardized. This just does not make selise. This luxury service is not the type of business which lends itself to PUC regulation. The owners of broadcast stations, boosters, satellites, and translators caLnot be compelled to serve areas where there is poor television reception and where their operators do not choose to serve. The Communications Act of 1934 did not differentiate between the methods of television reception. It left the whole field of television within the realm of private business enterprise. Only true common carriers could be subjected to public utility type regulation under the Communications Act and this act did not rest in the State governments or legislatures the right to impose the burdens of public utility status upon an interstate business in the television field. Otherwise, the State legislatures could impose likewise upon commercial television broadcast stations the status and obligations of a public utility and common carrier and thus place them under title II of the Communications Act. The mere proposition is preposterous, as it is equally with respect to CATV systems. Mr. Thompson, in his address to the NARUC convention "was especially interested to note that a representative of the CATV industry (at a hearing before the North Dakota Public Service Commission) vigorously opposed State regulation for the reason he concluded that soon the Federal Government would act in the field and that for the time being, it would be preferable to allow the industry in North Dakota to deal with the cities rather than the State." Is it any wonder that the CATV industry prefers local municipal regulation of the free enterprise kind when the alternative is public utility type regulation under a State PUC? NARUC members must have been confused by Mr. Thompson's statement that his PSC had been informed no firm and reliable action has been taken on the Federal level and Commissioner Cox's unequivocal assurance that the FCC had finalized its rules and order with respect to microwave-served CATV systems and that it intended to apply the same stringent regulations to all CATV systems in the near future because his Commission had found it had authority to do so under the Communications Act. In view of those conflicting statements about CATV, the wild and uncorroborated charges; the misinformation; the total lack of firm information; the complete absence of people who were truly knowledgeable about CATV operations: the misleading reassurances of the chairman of the Connecticut PUC that his State had solved the problem of CATV regulation by the enactment of a PUC bill (when the truth of the matter was that CATV development in Connectient had been set back for years vesting jurisdiction over it in the PUC); is it any wonder that NARUC members listened to the calm and reassuring voice of the young chairman of the Vermont Public Service Board, who sounded off as an expert and spoke as though authoritatively about all phases of CATV, all the while dispensing the greatest store of misinformation that the foes of CATV had ever dreamed up, is it surprising then that NARUC members welcomed the chance to vote for any resolution and end the nightmarish and bewildering discussion, when he oversimplified the whole issue and concluded: "The problem then simply stated is one of directing all efforts to bringing CATV under proper regulation as soon as it can be accomplished." CONCLUSION The consideration given the resolution by NARUC members was inadequate, as were the discussions which led to its adoption. The decision to formulate legislation for the various States to regulate CATV systems as public utilities was not based upon sufficient information. A thorough study of the CATV industry and of its current practices should have preceded consideration of such a far-reaching decision affecting not only the CATV systems immediately concerned, but potentially all other free enterprise types of business in the future. Otherwise, NARUC's action will appear to be a power grab to extend PUC jurisdiction over the traditional private and free enterprise types of business. NARUC can only lose respect and adversely affect its prestige if it creates such an impression. The Connecticut experience has proven already that a PUC is not suited by training or experience to regulate a private, free enterprise type of business like CATV and that it can only produce undue delays and stymie the growth of CATV systems. The CATV industry is convinced that any thorough, impartial study conducted by NARUC or any other responsible organization will prove, as Dr. Martin Seiden, the FCC's hired CATV expert, has advised the FCC, that the local municipalities are better suited than a central governmental agency to regulate properly the operations of a CATV system which are of a local nature. The municipalities for the 15 years of CATV existence have done an excellent job of insuring that CATV systems serve the public efficiently and satisfactorily. No good reason has been advanced for ousting them from jurisdiction. That is why there are so few corroborated complaints by CATV subscribers, city officials, or anyone else about CATV. That, also, is the reason why some 1,900 additional applicants for permits have been filed with city councils to satisfy the public's ever-increasing clamor for this wonderful, superior television reception service. Mr. CONROY. I strongly urge this committee to make it clear both in such legislation as it may report out and in the committee report, that regulatory jurisdiction over community antennas is to be exercised exclusively by the Federal Communications Commission and that community antennas are neither common carriers or any other form of public utility. If television reception is to be regulated in any form, it should be done exclusively by the Federal Communications Commission in the interest of assuring uniform, equitable, and nondiscriminatory regulation on a national basis. Community antennas do not lend themselves to joint regulation, and divided responsibility and control over the industry would be nothing less than chaotic. I would like to comment briefly on another proposal which has been made to this committee. The Federal Communications Commission has asked that Congress consider whether section 325 (a) of the Communication Act should be made applicable to community antenna systems. Section 325 (a) in essence provides that no station shall rebroadcast the signals of another station without permission of the originating station. The Commission has taken the position that it is not now able to state whether such an approach would be fully effective or fully consistent with the public interest. The president of the National Association of Broadcasters has urged that this committee report a bill which would impose the requirements of section 325 (a) upon community antenna systems. NCTA is unalterably opposed to this recommendation. It is extremely difficult for me to understand why the Commission is not prepared to advise the committee that it should not make section 325(a) applicable to community antennas. It should be perfectly obvious to the Commission that if community antennas are required to obtain permission from television stations to receive their signals, community antennas would be completely within the control of the television broadcast stations and the networks. The Commission, under these circumstances, would be almost entirely without authority to promote the orderly development of community antenna services in the public interest. It is no answer for the Commission to say that the television stations could not unreasonably withhold permission for community antenna reception. As the Commission well knows, very little programing is owned or controlled by the television stations. Virtually all national programing, and the very substantial part of that originated at local stations, is controlled by copyright owners and the national television networks. As the Commission recognized in the second report and order, no station could give permission for reception of its signals during any period that it is broadcasting copyrighted programs, or, for that matter, any network-controlled programs, unless 62 610-66- -34 the copyright owners or the networks authorized such reception. The Commission and this committee are aware of the fact that the copyright owners and the networks are actively seeking or are supporting legislation and litigation which would impose copyright liability on community antenna reception. If section 325 (a) were made applicable to community antennas, the outcome of the copyright litigation in the United States District Court for the Southern District of New York would be of little importance, since the copyright owners and the networks could refuse to permit the television stations to authorize reception of the programs. In fact, making section 325 (a) applicable to community antennas would be to give the copyright owners and the networks complete control over community antenna reception with respect to all significant programing. It is inconceivable that the Commission honestly believes that it would have the power to promote the public interest in community antenna reception under such circumstances. One of the basic objectives, if not actually the underlying objective, of the second report and order is to permit the Commission to require reception of socalled local television stations in order that they may be fully accessi ble to CATV subscribers. Is it not impossible to require reception of a station if the copyright owners and the networks who control the programs can refuse to authorize CATV reception except upon their terms? The failure of the Commission to oppose strongly the position of the National Association of Broadcasters suggests that either it does not understand the community antenna industry, the public interest in its services, or the manner in which the broadcast industry operates. or that it is indifferent as to whether the public should have free access to television reception by means of community antennas with due regard to such regulation as may be reasonably required to facilitate the continued operation and development of local television stations. A principal problem with the Commission's approach to regulation of CATV systems is that its rules look to the economic protection of television stations of its choice, as Commissioner Bartley so well brought out in his testimony before this committee. Still, there is not one word in the Commission's first or second report and order pertaining to CATV on the tremendous profitability of television broadcast service. Although the Comimssion has in its files the annual financial returns of all television stations, not once to our knowledge has it tested the claims of television stations to a need for protection by reference to the balance sheets and profit-and-loss statements of television stations as shown on their annual financial returns. Why has not the Commission done this? Is it afraid that its finding will not support its rules? As you know, NCTA and the NAB tried to get together on compromise legislation. A copy of the proposed compromise was inserted at pages 138 to 140 in the printed hearings on H.R. 7715. The NCTA board approved the compromise unanimously, but the NAB television board, according to the trade press, turned down simul aneous only, nonduplication protection by only one vote. These earings might have been completely unnecessary except for that one ote. If the Congress regards a local television station as one within 0 miles of the CATV community entitled to carriage and nondupliation, as suggested by NCTA, then the truly local stations will all e carried and protected through simultaneous nonduplication, the 'ommission will not be burdened with countless evidentiary heargs, and peace will be restored, as we hope, between the broadcaster nd the CATV operator to the great benefit of the public. In conclusion, I would like to emphasize Mr. Ford's statement that e believe the Congress should establish the basic policies which ill govern the public interest in community antenna services, and at the Commission, without congressional authorization, does not ave the authority to promulgate the regulation which it has adopted. I thank you for the privilege of offering my views to this committee nd for the opportunity to participate with you in this great Governent of ours. The CHAIRMAN. Thank you, Mr. Conroy. I believe we will start e questioning and see how far we might get. I might say to each ember of the committee that we will limit the questioning to 5 minutes order to get as far as we can. That won't be long, I am sure. As I have said, we are going to try to limit this to 5 minutes for ich member. Mr. Moss, you may proceed. Mr. Moss. Mr. Conroy, you want to have regulation vested in the ederal Communications Commission. Is that what you seek today? Mr. CONROY. This is correct, sir, as stated in our presentation before is committee. Mr. Moss. I am trying to get your view. Mr. CONROY. Yes, sir. Mr. Moss. You want that to be very specifically spelled out by the ongress as to the limits of Commission jurisdiction? Mr. CONROY. Yes, sir. Mr. Moss. You would limit that to what? Nonduplication? Mr. CONROY. Carriage and nonduplication of local stations, Mr. oss. That is the essential part of it. Mr. Moss. Do you feel that those two things are the only factors at the Commission should be able to consider in carrying on a regutory responsibility over community antenna television? Mr. CONROY. We believe that these are all that are required to sure the continued and proper growth of the broadcast industry. e want to insure that, because we are tied to the broadcast industry. e are not trying to put them out of business. Mr. Moss. Do you know of any other regulatory function assigned Federal regulatory commission on such a narrow basis? Mr. CONROY. I am not so familiar with the whole broad body of law this respect, Mr. Moss, that I really could reply. Mr. Moss. Would you perhaps for good measure toss in a little blic interest consideration in the regulation of CATV? Mr. CONROY. In the bill which has been proposed and which Mr. ackay introduced we pay firm attention to the public interest. Mr. Moss. Well, I am not prepared to deal with it in detail, bat Mr. Mackay, I will be very pleased in mark-up, to discuss with you some things that I regard as serious deficiencies in the legislation. I don't regard this as adequate to protect the public interest if that is the bill you are supporting, Mr. CONROY. I might add in this respect that I have had conversations with any number of broadcasters. Most of them seem to feel-I can name them, if I have to-that this is all the protection that they would want to make sure that their stations carry Mr. Moss. I want to make it clear that I am not the spokesman for the broadcasters and they do not so regard me, and neither have they historically since I have been on the committee. I am a spokesman for the voters of the Third District of California with a strong sense of commitment to what I regard as the public interest. I am not at all concerned with the views of the broadcasters, nor am I of CATV. Mr. CONROY. I am glad to hear that, sir, because this is why we are here. Mr. Moss. I approach this job with proper dedication. Mr. Moss. Now under the little doctrine of preemption, if we only gave the Commission the authority to consider these minimal factors, we would relieve you of a most onerous threat of regulation by a multiplicity of State commissions and municipal bodies, would we not? Mr. CONROY. Yes, sir; that is correct. Mr. Moss. That preemption is an attractive bit of bait and you are willing to make a minimal payment for it; is that correct? Rather a quid pro quo. Mr. CONROY. I have not felt that we were coming up here trading anything, Mr. Moss. Mr. Moss. I recall here last year we had one on advertising of cig arettes. They got a little preemption package that gave them an awful lot of protection and the public damn little. I think that is about the kind of bait we are being offered today. There is little consideration of public interest in this particular complex and challenging situation. Mr. CONROY. We have a great interest in the public interest, particularly that part of the public's right to receive broadcast signals and that public has expressed its interest. Mr. Moss. Are you not going to do everything you can as an association to try to get exclusive franchises in these communities? Mr. CONROY. No, sir; that is not true. Mr. Moss. You are not going to try? Mr. CONROY. No, sir. Mr. Moss. You are not going to go before a city council and oppose a competing application? You are going to invite competition? Mr. CONROY. You mean application on top of an existing system? Mr. Moss. Yes. Mr. CONROY. Of course, we don't solicit competition, but we can meet it in our own way in the market. Mr. Moss. You want this open, say like an automobile dealership in town where all you have to do is go down to city hall and pay a license fee and you are in business? |