mittee in hearings on H.R. 7715. It urges particularly that the 15 days before and after nonduplication period is unjustified, and has no reasonable relationship to the showing of nonnetwork programing. NCTA's staff has undertaken a study to test the validity of the Commission's sample week network study (first report, pars. 104-109), and has found that the data developed by the Commission supports its conclusion that delayed programing occurs most frequently among affiliates in the mountain time zone, and there in one and two station markets. NCTA claims that its [P. 4544]

study of 33 mountain time zone stations with CATV penetration shows no adverse consequences (NCTA comments, Exhibit A). It points in addition to specific examples of small market stations which have allegedly increased circulation and maintained the same or a higher \network hourly rate since 1960, despite substantial CATV penetration of their service areas (NCTA comments, Exhibits A and B).

23. While the inferences NCTA draws from its studies are sharply criticized in the reply comments of Association of Maximum Service Telecasters (AMST), we do not think it necessary or useful to set forth the contentions of each or to discuss their dispute as to individual situations. The NCTA appendices do not differentiate between microwave and nonmicrowave CATV systems; on their face they constitute an attack on the validity the first report and order in Docket Nos. 14895 and 15233. But the

supplementary material upon which NCTA now relies as indicating a lack of past impact is similar in nature to the showing there considered at length and would not in itself warrant reversal of our conclusions.13 Indeed, NCTA, in relying upon its showing, simply ignores the two most important grounds of our decision, namely, (1) the fair competition ground and (ii) the economic impact ground, based on the CATV trend in recent years. Since this is so, it may be well to restate those grounds briefly, and to take account of current information pertinent to those grounds.

24. In the first report and order in Docket Nos. 14895 and 15233, we concluded that CATV serves the public in

13 We have decided, for the reasons set forth in paragraphs 47-55 below, to delete the provision for nonduplication 15 days before and after the local broadcast and to substitute a requirement for nonduplication only on the same day as the local broadcast. Thus, our resolution of this matter affords NCTA substantially the relief it has requested.

terest when it provides program choices not locally available off-the-air and acts as a supplement rather than a substitute for off-the-air television service, explaining our principal reasons as follows (par. 44):

• Because of the prohibitive cost of extending the cables beyond heavily builtup areas, CATV systems cannot serve many persons reached by television broadcast signals. Persons unable to obtain CATV service, and those who cannot afford it or who are unwilling to pay, are entirely dependent upon local or nearby stations for their television service. The Commission's statutory obligation is to make television service available, so far as possible, to all people of the United States on a fr, efficient, and equitable basis (secs. 1 and 307(b)) of the Communications Act. This obligation is not met by primary reliance on a service which, technically, cannot be made available to many people and which, practically, will not be available to many others. Nor would it be compatible with our responsibilities to permit persons willing and able to pay for additional service to obtain it at the expense of those dependent on the growth of television broadcast facilities for an adequate choice of services.

25. Our determination to adopt the carriage and nonduplication requirements rested on two basic grounds: (1) That failure to carry local stations and duplication of their programs are unfair competitive practices, which are inconsistent with the supplementary role of CATV (pars. 49-57, 76), and (2) that these requirements were necessary to ameliorate the risk that the burgeoning CATV industry would have a future adverse impact on television broadcast service, both existing and potential (pars. 58-75,77).

26. With respect to the first ground, we found that the CATV system which fails to carry the local station on its system has in practical effect cut off the station from access to CATV subscribers (par. 51). We stated (par. 57):

As a competitive practice, the failure or refusal by a CATV system to carry the signal of a local station is plainly inconsistent with our belief that CATV service should supplement, but not replace, off-the-air television service. The cable system that follows such

a practice offers the subscriber the benefits of additional television service at the price of blocking or impeding his access to available off-the-air signals. ***

Because it is inconsistent with the concept of CATV as a supplementary service, because we consider it an unreasonable restriction upon the local station's ability to compete, and because it is patently destructive of the goals we seek in allocating television channels to different areas and communities, we believe that a CATV system's failure to carry the signal of a local station is inherently contrary to the public interest. Only if we were persuaded that the overall impact of

CATV competition upon broadcasting would be entirely negligible would we consider countenancing such a practice.

27. We further pointed out that CATV, though distributing the programs of the television broadcast service, stands outside its normal program distribution process and fails to recognize the reasonable exclusivity for which the local stations have bargained in the program market when it duplicates local programing via the signals of distant stations (pars. 52-56). We summarized our conclusion that this was unfair and inconsistent with CATV's supplementary role as follows (par. 57):

In light of the unequal footing on which broadcasters and CATV systems now stand with respect to the market for program product, we cannot regard a CATV system's duplication of local programing via the signals of distant stations as a fair method of competition. We do not regard the patterns of exclusivity created in the existing system for the distribution of television programs as sacrosanct. We think it apparent, however, that the creation of a reasonable measure of exclusivity is an entirely appropriate and proper way for program suppliers to protect the value of their product and for stations to protect their investment in programs. We think the basic congressional judgment underlying section 325 (a) limitation on rebroadcasting is the same.

Nor do we consider the duplication of existing off-the-air service to be consistent with CATV's appropriate role as a supplementary service. Whatever the ultimate impact of CATV competition upon the revenues and operation of competing stations, duplication is highly likely to affect the audience for the specific programs involved. And it does so without generally offering the public a substantially different service. We believe that a service such as CATV, which lives on the product of the existing television service, should at a minimum give some measure of recognition to the fundamental distribution practices which have developed in the parent industry's competitive program market to exhibition rights. for which others must bargain and pay but which it has thus far been able to use without any bargaining by itself or by the stations whose signals it carries. Once again, unless we were vinced that the impact of CATV competition upon broadcasting service would be negligible, we would favor some restrictions upon the ability of CATV systems to duplicate the programs of local broadcasting systems, as a partial equalization of the conditions under which CATV and broadcasting service compete. (Footnotes omitted.)

con

28. We stated that the foregoing grounds' were "enough to justify regulatory action" (par. 58). and that "every station affected is entitled to appropriate carriage and nonduplication benefitsirrespective of the specific damage which any individual CATV system may do to the financial health of the individual

station" (par. 76). But, as stated, we also turned to another ground based on the economic impact of CATV upon television broadcast development. We considered at some length the data and arguments before us on the question of impact (pars. 58-75), finding-as in 1959-that it is "impossible, with the data at hand, to isolate reliably the effects of CATV competition from all of the other factors which operate to produce particular financial results in differing settings" (par. 68). However, taking account of nationwide trends affecting the nature of CATV offerings, the character of the markets entered, and the degree of penetration achieved, we also found it plain that CATV could have a substantial negative effect upon station revenues and audiences even though we lack the tools to measure precisely the degree of impact (pars. 65-69). We further found reason to believe that the impact was likely to be "more serious in the future than it has been in the past" (par. 69), and stressed our concern with the effect of explosive CATV growth in a critical period for UHF development (pars. 71-72). In sum, the Commission's judgment on this ground was based very largely, not upon the past, but upon the trends which were already evident and whose dimensions called for action now to assure the public interest in the future.

29. The additional showing made in the appendices to the NCTA comments is not directed to the above crucial considerations concerning the trends in the CATV or UHF fields. Instead, it focuses upon certain situations which, it claims, establish that CATV has no adverse impact upon television broadcasting. But each of its examples is sharply disputed by AMST, which points to significant impact in some cases or sets forth other factors for the improvement in the situation of the television station in the face of CATV competition. For example, AMST notes that several stations whose network hourly rate has not declined since 1960 were already at or near the [P. 4545]

minimum rate for the network involved (AMST reply comments, pp. 27-28, attachment A, pp. 10-14). It attributes whatever success Station WLUC-TV, Marquette, Mich., has enjoyed in recent years to new management beginning in 1960 and states that the station has suffered a decline in average quarterly hour audience while local revenues have remained stagnant (AMST reply comments, pp. 29-30, attachment A, p. 14). AMST also points out that WBOC-TV, · Salisbury, Md., following a change in

The expanding channel capacity is also reflected in the answers submitted to our questionnaire sent to all known CATV systems in connection with the transition period question. (See par. 103-107, within).

areas

33. It further appears that CATV activity is accelerating in areas where there is the greatest interest in UHF development. The comments of AMST list all communities or metropolitan where UHF stations were operating, authorized or applied for as of July 8, 1965, and indicate the extent of co-located CATV activity (AMST comments, attachment C, table 2)18 The results are summarized by AMST as follows (comments, p. 59):

There are 237 UHF stations and 93 educational stations either operating or with outstanding construction permits or for which applications are pending in communities or metropolitan areas with a total population of over 112,000,000. The cities and metropolitan areas with CATV systems operating, pending or applied for account for at least 85,000,000 people. At least 145 communities or standard metropolitan areas with UHF stations operating, authorized or applied for also have CATV activity. In 68 such communities or metropolitan areas where there are already operating CATV systems; at least 67 have CATV systems franchised but not operating, and at least 93 have CATV applications proposed.

34. The situation in central Illinois is described by Midwest Television, Inc. (Midwest), licensee of VHF Station WCIA, Champaign, Ill.; UHF Station WMBC-TV, Peoria, Ill.; and applicant for a new UHF station in Springfield, Ill." Midwest states that CATV is in process of growth in virtually all of the major communities served by WCIA, including Champaign and Urbana themselves.20 Franchise applications have been filed or proposed in at least 12 communities within the WCIA Grade B service area, and CATV systems are operating, under construction, or franchised in some 15 more. These 27 communities have a total population of 464,500nearly one-half of the total population within WCIA's Grade B service area. Within the Grade B service areas of WMBD-TV, Peoria and of W71AE, Midwest's La Salle translator, CATV is at

18 According to AMST, table 2 is limited to the central communities or metropolitan areas where there is UHF activity, and does not include CATV activity elsewhere within the service area of a station located in the community or metropolitan area.

19 Midwest is also the licensee of KFMB, San Diego, Calif.

20 Champaign has one VHF and one UHF station, and is also the location of a UHF translator of a Decatur UHF station.

various stages-from franchise proposals to actual operation-in at least five communities, including Peoria itself (which has three operating UHF stations and a vacant UHF commercial assignment). The total urban population of these five communities is 221,294-between onethird and one-half of the total population in the Grade B service areas of WMBD-TV and the La Salle translator. In Springfield (which has one operating UHF station and applications pending for two new UHF stations), applications for CATV franchises are under active consideration in Springfield and another community located in the Grade B contour of both proposed UHF stations. The [P. 4546]

total urban population of these two cities is 92,072-approximately one-half of the total population within the Grade B contour of Midwest's proposed new UHF station. Midwest states that the proposals for CATV in Springfield, Peoria, Champaign, and Urbana have all been announced since April 23, 1965, and that at least eight new CATV operators filed applications for local franchises in central Illinois during the first two weeks of July.

35. A description of CATV growth in the Rio Grande Valley of Texas is given by Mobile Video Tapes, Inc., the licensee of KRVG-TV in Weslaco-Harlingen, Tex. According to Mobile Video Tapes, Weslaco has a 1960 Census population of 15,649 and the population of the Harlingen-San Benito urbanized area is 61,658. It states that J. Walter Thompson Co. (Population and Its Distribution, the United States Markets, 8th ed., 1961), lists the Brownsville-Harlingen-San Benito market (which includes Weslaco) as a Class C market, the 143d market in the United States, with a population of only 151,098. The ARB total net weekly circulation of KRGV, as of March 1964, was only 75,100 homes. CATV franchises have been granted in five towns within its service area and other CATV systems are proposed. The communities with CATV franchises, their populations, and the grade of KRVG coverage are given by Mobile Video Tapes as follows:

84.4 percent of the population shown by J. Walter Thompson for the entire Brownsville-Harlingen-San Benito mar

ket."

21

36. It appears, moreover, that there is significant CATV activity in the vicinity of fairly large cities with multiple channel assignments. The AMST comments (attachment C, tables I A, B, and C) " tabulate the CATV systems in operation, franchised or applied for within the Grade A and B contours of existing or potential VHF and UHF stations in 11 areas "believed to be centers of considerable CATV 'activity'": Bakersfield and Sacramento, Calif.; Orlando and St. Petersburg, Fla; Rockford, Ill.; Evansville and Indianapolis, Ind.; Rochester and Utica, N.Y.; and Columbus and Dayton, Ohio. The extent of CATV penetration is detailed in Tables I A, B, and C. All three give separate figures for Grade A and Grade B contours, for VHF and UHF respectively. Table IA shows the penetration in terms of number of places in which CATV franchises have been granted or applied for. Table IB gives the equivalent data in terms of potential CATV households " compared with the total number of households within broadcast contours. Table IC converts the data in IB to percentages of total number of households within the broadcast contours.

37. The analysis shows that in these eleven areas there are approximately 230 places in which a CATV system was operating, franchised or proposed (as of July 8, 1965) within the Grade B contours of existing or potential VHF and UHF stations located in the central community of each of the eleven markets. These 230 places contain nearly 1,900,000 households. In Bakersfield, Calif., an all UHF market, almost two-thirds of the potential UHF audience is already franchised to CATV systems. In Utica, N.Y., the figure is 44 percent. If already submitted or proposed applications result in franchises, a UHF station in Columbus, Ohio, would have CATV's potentially competing for 60 percent of its market and a VHF station for more than half. Existing and pending CATV's in the Indianapolis area involve half the VHF market and about three-fifths of the UHF market. In Sacramento, the CATV potential comes to over 40 percent of the UHF market and nearly half the VHF.

" Corrections to these tables were supplied in an "Addendum" to the AMST comments submitted on August 12, 1965.

22 The tables use potential, rather than actual audience; 1.e., the total number of households within the broadcast contour, and the total number of households in the community of the CATV.

38. There is also widespread CATV activity within major cities. Our attention has been called to the asserted intent of CATV interests to wire up "almost all American cities-small and large" and 85 percent of all television sets-40 million homes.23 The December 1965 issue of Television Magazine (vol. 22, No. 12) states that franchise applications have been filed in San Francisco, Seattle, Pittsburgh, Baltimore, Fresno, Colum--. bus, Tucson, Birmingham, Providence, and Sacramento. Two of the commenting parties in this proceeding are applicants for CATV franchises in Philadelphia. The comments of Columbia Broadcasting System (CBS) refer to applications for CATV franchises in Albany and Syracuse, N.Y.; Galveston, Tex.; and the grant of a CATV franchise in Wilmington, Del. D. H. Overmyer, permittee of new UHF Station WDHO-TV in Toledo, Ohio, comments that local authorities have granted a CATV franchise for that city since the issuance of the joint notice herein. Toledo has two VHF stations, a UHF educational station, and-according to Storer Broadcasting Co., receives the signals of four DetroitWindsor VHF stations, off-the-air and without reception difficulty. Telerama, Inc., an applicant for a CATV franchise in Cleveland, has filed comments describing its proposed cable operation for that city which has three VHF stations, a UHF educational station, and applications pending for two new UHF facilities." Taft Broadcasting Co., in a June 1965 petition to deny a microwave application (File No. 6226-C1-P65) to bring the three New York independent stations to CATV systems in the Wilkes-Barre-Scranton area of Pennsylvania, states that in the last 6 months 90 franchise applications have been filed in 54 communities in Lackawanna and Luzerne Counties. The Scranton-WilkesBarre area is served by three UHF sta

23 Address by Milton J. Schapp, "CATVPast, Present, Future," Dec. 8, 1964, reprinted in Television Digest Special Supplement, vol. 4, No. 50, Dec. 14, 1964, p. 1.

24 Telerama plans to carry all local stations and two Canadian stations on a full-time basis and to carry on a part-time basis on the remaining channels the signals of network affiliated stations in Detroit, Toledo, Erie (Pa.), and Youngstown and Akron, Ohio. While it does not propose to acquire microwave facilities to bring in Chicago and New York independent stations, Telerama states that if these signals are made available to the Cleveland area by common carrier facilities, "then Telerama may avail itself of the accessibility to such signals." Since Telerama submitted its comments, Cleveland has granted a franchise to Tele

rama.