which he broadcasts. Violation of section 325, or any other section of the Communications Act, is punishable by a maximum fine of $10,000 or imprisonment for a term of 1 year, or both.

Congress has made piracy of broadcast material by another broadcasting station a crime. The strange irony of the present situation is that a broadcaster may not steal from another broadcaster, but a nonbroadcaster may steal from a broadcaster then with impunity.

What is a crime for a broadcasting station should not be freebooty to others. Congress and the FCC should not grant "letters of marque" to cable operators.

The one fundamental issue involved here is a moral one. Let me suggest that the first duty of Congress in this situation is to legislate morality.

Congress should continue its historic role of providing a sound market and fair competition in interstate commerce. It is imperative that Congress prohibit trafficking in pirated goods. Section 325 of the Communications Act should be extended to cover cable operators. Congress should make it unlawful for anyone to transmit by cable any broadcast material which the operator does not have clear title or performance rights therein.

Establish the same morality for the cable operator which Congress has established for the broadcaster. If it is wrong for the broadcaster to pirate the goods of another, it should be unlawful for the nonbroadcaster to pirate such goods.

The extension of section 325 would not cure all of the problems, but it would go a long way toward amelioration of the present chaotic situation.

It is noteworthy that CBS is writing into new affiliation agreements a proviso that no affiliate may give permission for network material to be broadcast by CATV without the express permission of the network. This and other performance controls within the industry will do much to curb the unfair and ruinous competition of CATV systems.

Because of the intangible factors involved, the crass nature of CATV conversion of the broadcast product is not always realized. For a parallel, imagine, if you will, two adjacent drive-in movie theaters. The operator of what we will call the Paramount Drive-In runs an expensive movie.

The operator of the neighboring Buccaneer Drive-In mounts a mirror high enough to view a picture from the Paramount screen, amplifies and reflects this feature to one of the screens of his theater.

Is this piracy or is it just giving the public a greater freedom of choice? Should such an act be outlawed, or should it be excused on the ground that the Buccaneer is serving the public interest? Let us turn the CATV situation around:

Would you say that a broadcaster has the right to tap the cable of a CATV system and rebroadcast therefrom? Would you say that it is right and legal for anyone to tap the cable of a CATV and feed another CATV system therefrom? Would it be right and legal for someone to pick up the signals from a CATV microwave and retransmit them for a profit? In other words, is it all right to hijack the pirate?

Obviously, such acts would be wrong and should be outlawed. It cannot be ethically right for anyone to take the property of another

and convert it to his own use for profit. Legitimate CATV operators should be protected as well as broadcasters. No one should be permitted to move goods in interstate commerce without a clear title thereto.

For a broadcaster to be deprived of exclusivity is for him to be robbed of a most valuable possession. Aside from questions of copyright ownership, the CATV system deprives the local broadcaster of exclusivity in service and programs. The entire system of free broadcasting is based upon exclusivity in allocations, program rights, and services.

Yet the FCC proposes to destroy exclusivity in brodacast by the 1-day rule. Certainly the 15-day rule was far from adequate to protect all of the residual values in broadcasting. The 1-day rule is not even adequate to protect exclusivity in news. An entertainment program remains timely much longer than 15 days. A fiction magazine retains full currency until the next issue is published.

Heretofore, the Commission has shown concern and even alarm over what it regards as too much power in the hands of the networks. It has been anxious for affiliates to have freedom of control from the networks. Now it has handled the networks a club with which they can enforce nearly 100 percent clearance of programs in live time.

Congress has wisely recognized the value of created works of science, art, and literature. The products of inventive and creative minds are protected for 17 years by patent and 56 years by copyright. A created product or service does not have a 1-day value.

In dramatic and musical productions first performance rights are especially valuable. Congress and the FCC should protect the broadcaster in his exclusive enjoyment of first performance rights.

One of the clever sophistries of the cable operators is that they provide the public with freedom of choice. Freedom of choice at whose expense? Freedom of choice to how many? Is it available to the poor man, the farmer, and the rancher? Is it made available in the thousands of small hamlets and tiny crossroad communities which dot the country?

Let us look into the source of this so-called freedom of choice. Who makes this service possible and available in the first place? Is it the cable operator who buys in honest and above-board fashion the product he sells?

Who makes available the tremendously expensive network programs? Who supplies the payrolls for the army of men and women who man the great system of American broadcasting?

Who pays the taxes on these great investments? Is it the heroic cable operator? Is it the cable operator who is so full of unction about how he is serving the public interest?

You know the answer. Broadcasting provides this freedom of choice-freely. It provides a free service which a few clever promoters convert and sell to an affluent few, to the ultimate disadvantage of the many.

If these eager promoters are so anxious to serve the public interest and nobly provide the public with a freedom of choice, why haven't they availed themselves of the opportunity to serve the public with UHF stations and translators? There are UHF frequencies going begging in nearly all of the congressional districts of the Nation.

Congress and the FCC have made it possible for these people to enter the broadcasting business through the front door. Why aren't they trying to serve all of your constituents? Both rural as well as urbanboth the poor as well as the affluent ?

Regulation of CATV is a matter of simple justice. Broadcasting is regulated down to the last electron. If broadcasting is to be regulated, it seems elementary that any extension thereof, by whatever means, should be regulated in the same manner and degree. The broadcaster should not be forced to compete with an unregulated, or half regulated competitor. The ideal of equal justice under the law should require equal regulation.

CATV systems should be licensed just as broadcast stations are. Why require a 3-year license for a broadcast station and permit a CATV system to operate without a license? Why license the source of broadcasting and not license the extension thereof?

If the operation of a broadcast station requires periodic review. why should not a cable operation be subject to the same review?

Through the licensing process, the FCC holds power of life and death over the licensee. Thus the accountability of the broadcaster is maintained and operation in the public interest is assured. Justice demands that the cable operator be subject to the same licensing power to the same requirements and strictures as is the broad

caster.

Commissioner Kenneth Cox has wisely suggested that a moratorium be imposed upon CATV for a 5-year period, providing enough time for the problems involved to be solved. The FCC has not hesitated to impose moratoriums or freezes on the broadcasting industry. These seem to have served a useful purpose.

Congress should authorize and specifically direct a moratorium period. This would provide time for property rights to be adjudicated and new copyright legislation to be enacted. Time enough to assess the full impact of CATV upon broadcasting. Time enough to let municipalities establish some uniformity in local franchises. Time enough to let UHF and educational stations get established.

Let me recommend appropriate amendments to H.R. 13286 by Chairman Staggers, which would accomplish the following:

1. Prohibit any originations whatever by cable antenna systems. 2. Extend the provisions of section 325 to cover community antenna systems and direct the Commission to enforce these provisions with appropriate measures.

3. Provide that no community antenna shall transmit over its system any program or other material to which it does not have clear title or performance rights therein.

4. Provide for the licensing of community antenna systems and regulate them to the same extent and degree that broadcasting is regulated.

5. Require the FCC to restore the 15-day delay rule.

6. Direct the Commission to apply the same protections to all markets alike.

7. Direct the Commission to place a moratorium, or freeze, on any new community antenna systems for a period of 5 years. Mr. Chairman and gentlemen of the committe, your courtesy in allowing me to appear and express my views is very much appreciated.

Thank you.

The CHAIRMAN. Thank you, Mr. Kennedy.

I believe you have left no doubt where you stand on this issue. I elieve we got the message all right. Mr. Rogers, a fellow Texan, night want to ask you some questions.

Mr. ROGERS of Texas. Mr. Chairman, I would be most happy to ask Mr. Kennedy some questions, as an old friend of mine and as a wonerful fellow.

I would want to defer questions in an effort to accommodate Mr. Kornegay, who I understand has a man he wants to introduce, who is eing called away. If Mr. Kennedy will be available later and I am ure he will be, I will have one or two questions.

The CHAIRMAN. Mr. Springer.

Mr. SPRINGER. No questions.

The CHAIRMAN. Mr. Kornegay.

Mr. KORNEGAY. No questions, sir.

Mr. YOUNGER. I have just one question of importance. In the first place I judge from your paper that CATV is immoral? Mr. KENNEDY. Its use can be immoral.

immoral, it is unmoral.

At least, sir, if it is not

Mr. YOUNGER. Do you own the air in which you broadcast?
Mr. KENNEDY. No, sir, the public owns it.

Mr. YOUNGER. Then there is a vast difference in tapping the air which the public owns and tapping a private wire which someone owns, isn't that true?

Mr. KENNEDY. Mechanically, yes, sir. But in terms of ethics, no, sir, because a property right may be destroyed. Exclusivity may be denied, ruined, appropriated, or converted, immorally or unmorally, as one's viewpoint may be.

Mr. YOUNGER. To come back, you say CATV is immoral.

Mr. KENNEDY. In my view, its present use of appropriating and converting goods and properties of others for private profit is immoral. The CHAIRMAN. Mr. Pickle.

Mr. PICKLE. Mr. Chairman, I won't take but just a moment. If you were to extend section 325, from whom would the cable operator get permission to rebroadcast the signal?

Mr. KENNEDY. Section 325 requires that one broadcasting station have the permission of another broadcasting station to rebroadcast the signal of the latter. Certainly this should be required of the cable operator; to have the permission of the property owner.

You cannot trespass upon somebody else's property, limit or destroy the usefulness of his property without his permission, without thereby depriving him of something. Therefore, any way you look at it, this is a form of piracy.

Mr. PICKLE. Will he get permission from you, the broadcaster, in Corpus Christi, or will he get permission from the broadcaster's network, or from whom will he get permission for rebroadcasting in order that that service be made available?

Mr. KENNEDY. Under 325 he would have to get it from the repeated broadcast stations.

Mr. PICKLE. Your station?
Mr. KENNEDY. Yes, sir.

Mr. PICKLE. Would you give it?

Mr. KENNEDY. I might. Or I might not. In my case, I could not give it because CBS has already specified that its affiliates cannot give permission.

Mr. PICKLE. Generally speaking, there would not be a CATV operation in your city then?

Mr. KENNEDY. Not necessarily. It would depend a great deal on what is involved. This involves many complicated questions of rights. and so forth. But certainly, the broadcaster could be protected in first performance rights, which is rather vital. But basically, aside from 325, if Congress decides that certain properties may not be transported in interstate commerce without a clear title thereto, this would go a long way to solving the problem, the ethics as well as the competitive problem.

Congress has already decided in many cases that certain types of merchandise to which people do not have clear title, cannot be transported in interstate commerce. There is adequate precedent for it.

Mr. PICKLE. Mr. Chairman, I will defer any other questions until such time as it is resumed in order that Mr. Kornegay may introduce his colleague.

The CHAIRMAN. Mr. Nelsen.

Mr. NELSEN. I do have some questions but I want to defer to Mr. Kornegay to accommodate him if the witness will return.

Mr. KENNEDY. I will be happy to be available at any time at the convenience of the committee.

The CHAIRMAN. If the witness will step down for a few minutes.
Mr. KENNEDY. Thank you, sir.

The CHAIRMAN. Our next witness will be introduced by Mr. Kornegay, of North Carolina. I might say to Mr. Essex that Mr. Kornegay is a very valuable member of this committee. He has been very diligent in his duties and been very much interested in the subject. He has specifically requested that he have the privilege of introducing

you.

At this time I will call on Mr. Kornegay to introduce the next witness.

Mr. KORNEGAY. Thank you very much, Mr. Chairman.

First let me thank the members of the committee for deferring to me. I regret very much that I must leave at 11 o'clock. It is a pleasure for me, Mr. Chairman and members of the committee, to introduce to the committee not only a fine North Carolinian but a very good friend.

He is from a neighboring city. He is Mr. Harold Essex, president of the Triangle Broadcasting Corp., which is licensed for WJS-TV of Winston-Salem, N. C.

Mr. Essex has long been associated with and identified with the broadcasting industry of North Carolina. He is a leader in the North Carolina Broadcasting Association as well as in the National Association of Broadcasters.

He is not only a good broadcaster but a very fine citizen. The station's coverage is rated as the 49th top U.S. market and he serves a great market and has a fine station. We welcome you to the committee, Mr. Essex.