National Ass'n of Regulatory Utility Commissioners v. Federal Communications Commission

533 F.2d 601, 174 U.S. App. D.C. 374

Opinions

Opinion for the Court filed by Circuit Judge WILKEY.

Concurring Opinion filed by Circuit Judge LUMBARD.

Dissenting Opinion filed by Circuit Judge WRIGHT.

WILKEY, Circuit Judge:

This action is before the court on petition for review of one aspect of FCC policy pertaining to cable television, as enunciated and clarified in recent Commission reports. Petitioner’s sole objection is to the Commission’s pre-emption of state common carrier regulation over the use of cable system leased access channels for two-way, point-to-point, non-video communications.¹ This court has jurisdiction to review the Orders under 47 U.S.C. § 402 (1970) and 28 U.S.C. § 2342 (1970).

The challenged pre-emption is part of a comprehensive plan for the regulation of cable television systems, which the Commission has been developing and refining since asserting jurisdiction over cable operations in 1966.² In particular, the pre-emption grows out of the Commission’s decision in 1972 requiring that cable operators provide four categories of access channels, in addition to any broadcast or cablecast³ programming which they chose to transmit.⁴

Under regulations promulgated at that time,⁵ cable operators in major television markets⁶ were required to set aside public, education, local government and leased access channels, to be made available for programming free from content control by the cable operator.⁷ The regulations provide for mandatory expansion of access channel-ling when certain usage levels for existing channels are achieved,⁸ and require that the education, local government, and at least one public access channel be made available without cost to the users.⁹

The leased access requirement involves no discrete allocation of space for one particular purpose, as is involved in the other access channel requirements. The regulations require that “portions” of bandwidth be set aside for the use of paying customers, with the proviso that such commercial operations are subject to displacement if the special purpose access channels experience greater demand than they can satisfy.¹⁰ The regulations also require that stations which must provide access channelling also must develop a two-way communication capability,¹¹ so that among the many uses to which leased access bandwidth may be put is two-way communications in a partly or wholly non-video mode. With regard to the leased access bandwidth, cable operators are required to “establish rules requiring first-come, nondiscriminatory access,” to prohibit certain uses of the facilities (gambling, obscenity), to establish a rate schedule, and to keep a public record of all requests for time.¹² “On at least one of the leased channels, priority shall be given to part-time users. . . . ” ¹³

The 1972 Order initially established the general policy of leaving the access channels, including the leased access bandwidth, free of state or local regulation.¹⁴ It was not until 1974 that the Commission made reference to the pre-emption of all regulation of the leased access bandwidth, and, more particularly, of regulation of any two-way, intrastate, non-video communications which might be carried via the cable system.¹⁵

In support of this pre-emption policy, the Commission rested primarily upon its overall statutory mandate “. . .to make available, so far as possible, to all the people of the United States a rapid, efficient, nation-wide, and world-wide wire and radio communications service. . . . ”¹⁶ The Commission reasoned that this language called for the development of “a nationwide broadband communications grid” in which cable systems should play an important part. It argued that the optimum development of cable would only be possible where that technology is treated as an “organic whole” under the sort of comprehensive plan which the Commission had adopted.¹⁷ The Commission thus sought to bring the pre-emption of two-way intrastate, non-video communications within the 47 U.S.C. § 152(a)¹⁸ grant of jurisdiction over activities “ancillary to broadcasting,” which had been recognized in United States v. Southwestern Cable Company,19 and United States v. Midwest Video Corporation.20

The issue before this court involves the construction of that “ancillary to broadcasting” standard, and its application to a set of facts which differs .in some respects from those in Southwestern or Midwest. In determining whether there is Commission jurisdiction over activities on the basis of their relationship to broadcasting (which is subject to regulation under Title III of the Act²¹), it is necessary to weigh the statutory purposes served by allowing such jurisdiction, against those which would thereby be impaired. Thus at the outset it is appropriate to inquire, as did the Supreme Court in Southwestern,22 whether any statutory commandments are directly contravened by the asserted pre-emption of state power over these two-way, non-video communications by cable.

I. Impact of 47 U.S.C. § 152(b)²³ .

Section 152(b) of Title 47²⁴ explicitly denies Commission jurisdiction over intra state common carrier operations, except as section 301 pertaining to radio may dictate to the contrary.²⁵ This section of the opinion will deal with the common carrier and intrastate prerequisites of the jurisdictional exclusion. The proviso for Commission powers otherwise granted under § 301 will be considered briefly here and in Section II, dealing with the asserted statutory support for the Commission’s pre-emption action.

A. Has the Commission attempted to pre-empt state and local regulation of common carrier activities?

The Commission argues' that the two-way, non-video communications via cable, over which it has pre-empted state and local regulation, are not common carrier communications because they are carried on by entities (cable operators) previously adjudged to be non-common carriers.²⁶ However, it has long been held that “a common carrier is such by virtue of his occupation,” that is by the actual activities he carries on.²⁷ Since it is clearly possible for a given entity to carry on many types of activities, it is at least logical to conclude that one can be a common carrier with regard to some activities but not others. Deferring to the next section any final ruling on the Commission’s holistic view of cable operations,²⁸ we will proceed at this point to examine the particular activities over which the preemption is asserted, to determine if they fall within the common carrier concept as used in the statute.

In a recent case of the same name as that now before the court, we set forth our understanding of the common carrier concept as invoked by the Communications Act.²⁹ We concluded that the circularity and uncertainty of the common carrier definitions set forth in the statute³⁰ and regulations ³¹ invite recourse to the common law of carriers. An examination of the common law reveals that the primary sine qua non of common carrier status is a quasi-public character, which arises out of the undertaking “to carry for all people indifferently. . ”³² This does not mean that the particular services offered must practically be available to the entire public; a specialized carrier whose service is of possible use to only a fraction of the population may nonetheless be a common carrier if he holds himself out to serve indifferently all potential users. Nor is it essential that there be a statutory or other legal commandment to serve indiscriminately; it is the practice of such indifferent service that confers common carrier status.³³ That is to say, a carrier will not be a common carrier where its practice is to make individualized decisions in particular cases whether and on what terms to serve.³⁴

A second prerequisite to common carrier status was mentioned but not discussed in the previous N.A.R.U.C. opinion.³⁵ It is the requirement formulated by the FCC and with peculiar applicability to the communications field, that the system be such that customers “transmit intelligence of their own design and choosing.”³⁶

Applying these two tests to the two-way, point-to-point, non-video communications over which the Commission here asserts its pre-emptive power, we conclude that a common carrier activity is involved. We are able to reach this conclusion, even though there is no evidence before us arising from any actual operations in the two-way, non-video mode, by examining the nature of the projected activity and the regulatory framework in which it is expected to operate.

As to the first prerequisite of common carrier status, the regulations as originally promulgated by the 1972 Order establish a policy of “first-come, nondiscriminatory access.”³⁷ Although a binding requirement of such indifferent service is not necessary to confer common carrier status, it is an adequate substitute for evidence of actual operations, for we know what those operations will be if the FCC regulations are followed.

It is true that this general commandment of indifferent service is modified by the Commission’s acceptance, or even requirement, of certain types of priority treatment. The regulations themselves state that “[o]n at least one of the leased channels, priority shall be given part-time users. . . . ”³⁸ As the Commission explained, however, this measure was necessitated to prevent monopolization of the leased access bandwidth by entrepreneurs leasing bandwidth for extended periods.³⁹ The requirement is thus designed to assure open access to all users, and it does not detract from the common carrier status of those subject to it.

The Commission has also stated its tolerance, for the time being at least, of preferential rate structures whereby leased access channelling is made available to noncommercial users at reduced cost.⁴⁰ While such sanctioned price discrimination is difficult to square with the common law notion of indifferent service to all willing customers, we hold that it is fundamentally consistent with the essence of the common carrier concept. As we stated in our previous N.A.R.U.C. opinion, the common denominator of common carriers is their quasi-public character.⁴¹ We stated at that time that an undertaking to carry for all indifferently “appears to be essential” to the quasi-public character.⁴² However, price discrimination in favor of non-commercial public, education, and governmental users presents no obstacle to the conclusion that a common, carrier activity is involved. To the contrary, such action, at least if not carried to the point of excluding all commercial users, appears to enhance rather than detract from the enterprise’s dedica tion to public purposes and affectation with the public interest.

With regard to the second common carrier prerequisite, the user’s design and choosing of the intelligence to be transmitted, we have no difficulty determining from the very nature of the technology that in many if not most instances this requirement will be satisfied. Although the regulations require only a non-voice return capability,⁴³ which would perhaps make possible transmissions of only a rudimentary sort,⁴⁴ the content of the transmission (which may arise solely from the determination to transmit or not⁴⁵) may nonetheless be under the customer’s control. We therefore hold that any two-way use of cable in which the customer explicitly or implicitly⁴⁶ determines the transmission or content of the return message, satisfies this second prerequisite to common carrier status.

We therefore conclude that most, if not all, of the uses to which the two-way, non-video cable capability is likely to be put fall within the term “carrier” as used in 47 U.S.C. § 152(b).

B. Has the Commission attempted to pre-empt state and local regulation of intrastate activities?

It is uncontroverted that the two way communications at issue will be intrastate insofar as they are carried bn by a cable network entirely encompassed within a single state.⁴⁷ Properly, we think, no contention has been made that all communications within a given cable network take on an interstate character, due to the interstate, broadcast source of many transmissions.⁴⁸ The relationship between return transmissions over an entirely intrastate cable network, and receipt of interstate broadcast signals at the headend of the cable network is too remote to justify such a conclusion. In many instances the only relationship will be that both activities are carried on by a single operator.

We therefore conclude that, for purposes of determining § 152(b) applicability, the intrastate requirement demands nothing more than a single determination of which cable networks are entirely within a single state’s boundaries. We leave that to be resolved by the Commission and appropriate state authorities, by their respective assertions of jurisdiction.

C. Does 47 U.S.C. § SOI provide any basis for Commission jurisdiction over two-way, non-video cable transmissions?

The § 152(b) jurisdictional bar contains an exception proviso for any powers granted the Commission under § 301. No allegation has been made that this proviso is applicable to this case, and we find nothing in § 301 to cast doubt on the apparent consensus of counsel.⁴⁹

D. Conclusion

It appears to us that the substantial bulk of the two-way, non-video communications expected to be carried over leased access bandwidth will be both intrastate and common carrier in nature. The plain meaning of § 152(b) therefore seems to bar the Commission’s assertion of a general preemptive power over all uses of access bandwidth. Whether the context of the Communications Act taken as a whole calls for a different result will be considered in the next section.

II. Alleged Statutory Justification for the Commission’s Pre-emption Action.

The Commission seeks to justify its preemptive action as within a general grant of jurisdiction over cable TV, which, it states,⁵⁰ has been twice recognized by the Supreme Court.⁵¹ It argues that “the services of cable are indivisible,” and thus that the two Supreme Court affirmances of FCC powers over cable must be seen as establishing a jurisdiction over all activities of cable operators.⁵² As a fall back position, the Commission seems to argue that even if the Supreme Court has not declared a blanket FCC jurisdiction over all cable activities, the pre-emption presently asserted fits within a reasonable reading of one or both of the earlier cases.⁵³ In order to evaluate these two lines of argument, it is necessary to examine in some detail the Supreme Court’s treatment of the cable television problem.

Commission jurisdiction over cable television was first reviewed by the Supreme Court in 1968 in United States v. Southwestern Cable Company.54 The action was a challenge to a Commission order restricting the area in which a cable company might operate.⁵⁵ The Court first examined the activities of cable operators and their interaction with broadcast stations.⁵⁶ The Justices were led to agree with the Commission’s findings that cable operations were expanding rapidly and that this “explosive growth”⁵⁷ might jeopardize Commission progress in its statutorily justified pursuit of a wider development of television broadcasting. Especially threatened was the growth of educational television and public broadcasting over UHF channels.⁵⁸

On this basis the Court upheld the Commission’s order, not directly under either the common carrier title⁵⁹ or the title pertaining to radio broadcasting,⁶⁰ but under a residual delegation found in § 152(a).⁶¹ The Court determined that the language of this introductory section stating that the Act pertains to “all interstate . . communications by wire or radio” was sufficient basis for the Commission actions at issue. The authority recognized under § 152(a) was carefully “restricted to that reasonably ancillary to the effective performance of the Commission’s various responsibilities for the regulation of television broadcasting.” ⁶²

In 1972 the Southwestern reasoning was invoked again to affirm a Commission or der, but this time one whose ultimate justification in the Commission’s statutory powers over broadcasting was less immediately apparent. In United States v. Midwest Video Corporation,⁶³ a sharply divided Court upheld an order requiring cable operators with 3500 or more subscribers to facilitate and transmit locally originated productions. Four members of the Court concluded that the origination requirement was within the range of Commission powers reasonably ancillary to broadcasting, because its effect was “to assure that in the retransmission of broadcast signals viewers are provided suitably diversified programing . .”⁶⁴ They arrived at this result by reasoning that Southwestern sustained an “authority to regulate CATV with a view not merely to protect but to promote the objectives for which the Commission had been assigned jurisdiction over broadcasting.” ⁶⁵

The deciding vote in Midwest was cast by Chief Justice Burger, who relied primarily on the pervasive and open-ended jurisdiction that Congress had conferred upon the FCC. The courts, he said, had consistently construed the Act as granting broad enough powers “to meet the expansion and development of broadcasting. . . . CATV is dependent totally on broadcast signals and is a significant link in the [broadcast] system as a whole and therefore must be seen as within the jurisdiction of the Act.”⁶⁶ He noted, however, that “the Commission’s position strains the outer limits of even the open-ended and pervasive jurisdiction that has evolved by decisions of the Commission and the courts.”⁶⁷

A. Does the Communications Act as construed by the Supreme Court establish a blanket jurisdiction over all operations of cable systems?

We are not persuaded that either the statute on its face or the construction which it has been given in Southwestern and Midwest supports the Commission’s argument that it has a blanket jurisdiction over all activities which cable systems may carry on. The language of § 152(a) is quite general and is not unambiguously jurisdictional in character.⁶⁸ There is nothing in the words themselves compelling a conclusion that any or all operations of a cable system are within the ambit of Commission power.

Moreover, the Court’s reasoning in both Southwestern and Midwest compels the conclusion that the cable jurisdiction, which they have located primarily in § 152(a), is really incidental to, and contingent upon, specifically delegated powers under the Act. The statute’s introductory section is made a locus for powers which must of necessity be recognized if the purposes set out in the broadcasting sections are to receive their fullest realization. The Court thus was not recognizing any sweeping authority over the entity as a whole, but was commanding that each and every assertion of jurisdiction over cable television must be independently justified as reasonably ancillary to the Commission’s power over broadcasting.

In Southwestern, the Court stated explicitly that its holding was limited to such reasonably ancillary activities, and expressly declined to comment on “the Commission’s authority, if any, to regulate CATV under any other circumstances or for any other purposes.”⁶⁹ The plurality opinion in Midwest relied explicitly on the Southwestern reasoning,⁷⁰ and devoted substantial attention to establishing the requisite “ancillariness” between the Commission’s authority over broadcasting and the particular regulation before the Court.⁷¹ The Chief Justice’s concurring opinion, upon which the Midwest outcome turned, stressed that the Commission action strained the outer limits of what could be justified under the statute⁷² thus suggesting that some attempted regulations of cable operations would fall outside the delegated power.

Apart from the language of the Supreme Court, we also find little basis in reason to support the view that cable must be treated as an “organic whole,”⁷³ within the Commission’s jurisdiction. By a logical reading of the statute, the basis for so concluding would most probably involve a determination that the activities of cable operators on the fringe of the broadcast media justify their wholesale assimilation with broadcasters. However, this conclusion has been emphatically rejected in other contexts, both where the cable operations were limited to broadcast retransmission,⁷⁴ and where they involved origination cablecasting as well.⁷⁵

In terms of policy, the Commission argues that indivisible regulation of cable television under its own comprehensive scheme is essential, if the “goal of a nationwide broadband communications grid” is to be achieved.⁷⁶ We are not convinced that this goal of nationwide communications network must, in all cases, take precedence, especially where the Commission jurisdiction is explicitly denied under other provisions of the Act.⁷⁷ But more fundamental ly, we find no substantial support in the record for the Commission’s view that its long term communications goals will be impaired if two-way, non-video communications over leased access channels are subjected to state or local common carrier regulation.

The Commission’s policy based arguments for allowing it to assert complete jurisdiction over cable seem to fall into two categories. First, the Commission argues from a sort of housekeeping perspective, that any other result would be administratively unseemly.⁷⁸ It appears to assert that a scheme of divided regulation, with the FCC governing all except two-way, non-video, point-to-point communications, would be inappropriate and administratively unfeasible.⁷⁹

Yet the Commission offers no reason, save its own bruised sense of symmetry, in support of this conclusion. The allocation of regulatory duties along the lines of inter-versus intrastate activities is a problem with which the Commission and state agencies must frequently deal, and have dealt successfully. Nor can the involvement of cable operators with more than one regulatory body logically be the cause of the alleged unworkability, for the Commission itself has recognized the role of local authorities in granting franchises and rights of way for the cables used.⁸⁰

The Commission raises a second type of argument on behalf of treating cable as an organic whole. It asserts, implicitly at least, that the two-way use of leased access channelling is likely, at some future time, to provide vital revenues for the financing of other, less profitable cable activities.⁸¹ Subjection of these activities to common carrier rate regulation, it is suggested, will put these ostensible seed-profits at the mercy of numerous state and local agencies.

The difficulty with this argument is its highly speculative character. The Commission has itself conceded that “at present there are few, if any, proven, economically viable uses for two-way cable communications.”⁸² The perceived necessity to require installation of a two-way capability⁸³ rather than allowing market forces to bring about such installations, is further evidence of the dubious economic character of two-way communications via cable in the immediate future.⁸⁴ We therefore conclude that this argument must fail for lack of evidentiary support.

Our examination of the statute, the Supreme Court eases, and the Commission’s arguments based on policy thus leads us to the view that the Communications Act does not confer any blanket Commission jurisdiction over cable. We will now proceed to inquire whether the particular jurisdiction asserted here over two-way, non-video communications can be justified as reasonably ancillary to broadcasting.

B. Is the Commission’s assertion of preemption jurisdiction over two-way communications via cable justifiable under the “reasonably ancillary to broadcasting” standard of Southwestern and Midwest?

The Supreme Court has upheld two separate assertions of Commission jurisdiction over cable as reasonably ancillary to the Commission’s powers over broadcasting. Beginning with the Court’s elucidation of that “ancillary to broadcasting” rationale, we will now inquire whether the pre-emption action before us can be upheld as fitting within it. In so doing, it will be necessary to assess and compare the relationship between controverted Commission action and its conceded power over broadcasting, in our case and in the cases decided by the Supreme Court.

At the outset, it seems safe to say that Midwest rather than Southwestern presents the farthest outpost of Commission power, and thus should serve as our standard of comparison. Whereas Southwestern involved a regulation of cable whose direct purpose was the protection of broadcasting operations,⁸⁵ the Midwest origination requirement presents a far less direct and more complicated relationship with the broadcasting media.⁸⁶ Recognizing that the pre-emption before us can not be brought within Southwestern’s sanction of actions protective of broadcasting, we will attempt to place our case along side of Midwest, to determine whether it falls within the concept of ancillariness there enunciated.

Midwest, without question, takes a giant step beyond Southwestern, in relaxing the nature of the ancillariness necessary to support an assertion of Commission power over cable. As we read the case, it turns upon a determination that “ancillary to broadcasting” means not only “for the protection of broadcasting,” but also embodies any regulation of cable which in its own right serves the purposes pursued by broadcast regulation.⁸⁷ Since a prime purpose in the area of broadcast regulation is the assurance of variety in what appears on the home viewer’s screen,⁸⁸ the Court concluded that an origination requirement aimed at providing “suitably diversified programing,” is within the ancillariness standard.⁸⁹

We have great difficulty finding any such broadcast purpose which is served by the Commission’s attempted pre-emption of state and local regulation of two-way cable operations. Unlike the origination requirement of Midwest,, this pre-emption does not directly affect transmission in any medium which is of direct concern under the Commission’s power over broadcasting. Whereas origination cablecasting will increase the mix of available viewing choices and thus serve an important general purpose of broadcast regulation, the private nature of the non-video, return communications involved here means that no general broadcast purpose is directly implicated. It is therefore difficult to see how any action which the Commission might take concerning two-way cable communications could have as its primary impact the furtherance of any broadcast purpose.

Specifically, the Midwest order involved entertainment programs to be originated by the local cable company and transmitted over the same channels on which they transmit the programs of the regular television networks. The service that the FCC was regulating-was ancillary to the service that it had been previously regulating, because locally originated programs are indistinguishable from network programs when they arrive on the television receiving set in the home. In the instant case, however, the point-to-point communications via access cables, which involve one computer talking to another or a citizen calling his city council, have no relationship whatever to entertainment programs by a national network which are now being sent by cable.

It is only slightly less difficult to locate secondary, indirect effects of the regulation which might arguably further a broadcast purpose. The only one of which we are aware involves the possibility, discussed in Part A, supra, that two-way cable communications are destined for great financial success, and that any state regulation might reduce the flow of the resulting profits into the expansion of cable operations. We do not deny that this is a possibility, though, as previously noted, its likelihood is questionable. Even were we to concede it as a certainty, however, the order’s indirect way of serving the broadcast purpose would, by itself, require some extension of Midwest to encompass our case.

Under the facts of this case, we are spared from the difficult decision whether a cable regulation indirectly serving a broadcast regulatory purpose should be upheld on the same theory that one directly serving such a purpose was upheld in Midwest. Apart from the factual problem of uncertainty as to the ultimate profitability of two-way cable communications, two factors separate our situation from the ideal test case on the issue of direct versus indirect advancement of broadcast purposes.

First, in Midwest the locally originated programs which were the subject of the regulation were to compete with the offerings of the national networks and local broadcast stations, which were and are being regulated by the FCC. It was logical for the FCC to regulate the new business, i.e., the programming to be originated by cable companies, because that business was directly competitive with services which it already regulated.

In the present case, by contrast, the primary competition from the two-way utilization of cable will come from existing telephone facilities which, on an intrastate level, now operate under the regulation of state and local commissions.⁹⁰ The FCC thus seeks to extend pre-emptive jurisdiction over operations in a competitive market, which it is otherwise powerless to regulate. Unlike the Commission’s action in Midwest, the order before us attempts to divide regulatory power over a single competitive market in an illogical way. The Commission’s pre-emption of regulation over cable operators in a field where state rate and service regulation over non-cable operators is pervasive renders the order objectionable as unfair to the regulated entities and as creating the possibility for abuse by the unregulated cable system. This possibility assumes more significance when we observe that the Commission not only intends to pre-empt state regulation of the two-way activities, but intends to issue no regulations of its own to govern these activities, thus leaving them completely unregulated.

The concern of the FCC over its own wisdom in “establishing reasonable rates for services that are untested, unproven (quoted by Judge Wright at p. 380 of 174 U.S.App.D.C., at p. 607 of 533 F.2d) may be quite justified. State regulatory agencies, engaged for years in regulating the existing competition to the proposed cable channels, are doubtless better fitted to fix those rates — and in our opinion they have the right reserved by statute to do so.

Second, as set out in Section I above, the Commission’s attempted pre-emption appears to run counter to the plain meaning of the 47 U.S.C. § 152(b) limitation on Commission jurisdiction. We do not categorically deny that such an apparent bar might, in some instances, properly yield to a clear, conflicting statutory delegation. But. no such clear, conflicting delegation of power exists in this case. We believe that the pre-emption of regulatory power of two-way, non-video cable communications is not within the “ancillary to broadcasting” standard as developed in Midwest, even absent the apparent applicability of the § 152(b) jurisdictional bar. We therefore find no clear delegation of Commission authority as might conflict with, and possibly override, the commandment of § 152(b).

C. Conclusion

The Commission’s action before us does not come within its powers reasonably ancillary to broadcasting, which received their greatest judicial recognition in United States v. Midwest Video Corporation. We rest this conclusion (1) upon the absence of factual evidence that a broadcast purpose even indirectly will be served, (2) upon the fact that the controverted activities will be carried on in a competitive common carrier market, and (3) upon the § 152(b) bar to Commission jurisdiction over the intrastate common carrier activities. We note, however, that the binding effect of § 152(b) is substantially intertwined with our finding that, apart from that section, there is no unambiguous support, in either the statutory language or the Supreme Court’s opinions, for the action which the Commission has taken.

As to any projected two-way communications not partaking of the common carrier character, we nonetheless hold, based upon the uncertainty and indirectness of the broadcast purpose allegedly served, that they are not within the Commission’s jurisdiction ancillary to broadcasting.

III. Miscellaneous Arguments in Support of the Commission

Two arguments are raised on behalf of the Commission’s position, which are not dealt with in the discussion above.

A. Is the challenged action within the broad discretion traditionally allowed to the FCC, especially in the construction of its own statute and in the area of experimentation?

The Commission relies to a great degree upon the substantial measure of discretion which it has traditionally been accorded under its broadly worded statute.⁹¹ We are aware that the communications industry poses a difficult regulatory problem of rapid technological change, and we recognize that the Act was an attempt to deal with that problem by a grant of “not niggardly but expansive powers.”⁹² Judicial construction of the Act has made that abundantly clear.⁹³

However, the allowance of “wide latitude”⁹⁴ in the exercise of delegated powers is not the equivalent of untrammelled freedom to regulate activities over which the statute fails to confer, or explicitly denies, Commission authority. It has been repeatedly recognized that Commis sion power over the communications industries is not unlimited, either as to the construction of the “public convenience, interest or necessity” standard⁹⁵ as applied to activities clearly within its jurisdiction,⁹⁶ or as to the extension of its jurisdiction to activities affecting communications.⁹⁷ For the discretion argument to be decisive, it must be demonstrated that the action challenged in this case is justified because of the established breadth of particular Commission powers.

In pursuit of this point, the Commission advances two areas of discretion as dispositive of this case. First it asserts that its pre-emption should be affirmed because an agency, and perhaps especially the FCC,⁹⁸ is entitled to great deference in the construction of its own statute.⁹⁹ While we do not quarrel with the general proposition, which has been affirmed several times in the courts,¹⁰⁰ we hasten to add that it is not a license to construe statutory language in any manner whatever, to conjure up powers with no clear antecedents in statute or judicial construction, nor to ignore explicit statutory limitations on Commission authority.

Set out above are our reasons for concluding that the action presently under attack does not fall within Midwest’s farthest outpost of Commission authority over cable, even absent the applicability of 47 U.S.C. § 152(b). However one may view our limited conclusion on that point, though, it appears clear beyond doubt that the plain meaning of § 152(b) takes the case outside of any area of deference to agency interpretation which might properly be recognized.

This court has previously held that the term “common carrier” has a coherent legal meaning which courts can grasp and apply in reviewing the Commission construction of its own Act.¹⁰¹ The clear content of that term as developed at common law and discussed in our previous N.A.R.U.C. opinion¹⁰² indicates that most or all of the two-way, non-video cable operations at issue here do fit within the common carrier concept. Because at least the bulk of those activities are also clearly intrastate, we cannot avoid the conclusion that the § 152(b) jurisdictional bar clearly applies, beyond any margin for deference or discretion. To reach another result, in the absence of conflict with a countervailing grant of Commission power, would be to read § 152(b) out of the Act.

Secondly, tl^e Commission argues that the challenged pre-emption falls within its especially broad discretion to encourage new and innovative technological developments, especially during an interim period.¹⁰³ The Commission stresses the newness of cable technology, its desire to formulate a scheme of regulation which will make possible the most effective development and widest use of cable, and the temporary, experimental nature of its present pre-emption decision. It thus seeks to bring that decision within an asserted statutory mandate for wide-ranging experimentation on an interim basis.

There is precedent for the proposition that the Commission has broad experimental powers.¹⁰⁴ However that authority to experiment arises from statutory language within the Communications Act titles dealing with common carriers ¹⁰⁵ and radio broadcasting¹⁰⁶ We do not conclude from this that there is no statutory tolerance for experimentation unless Commission jurisdiction arises directly by application of one of those two titles. Rather, it seems logical to conclude that the powers over cable which have been recognized under § 152(a), as ancillary to the powers over broadcasting, embody a substantial scope for experimentation.

However, we find no basis whatever for the view that the statutory experimentation power can ever serve as an independent statutory foundation for bringing activities within FCC jurisdiction. The authority to experiment broadens the Commission’s freedom to promulgate innovative and perhaps speculative regulations of activities over which it otherwise exercises regulatory jurisdiction. It does not, however, give the Commission power to regulate activities experimentally, where the statute, as construed broadly, does not confer a power to regulate in a non-experimental way.

It follows, thus, that the Commission’s alleged experimental purpose in pre-empting state agency action can not save this regulation, where, as we have held, the Commission lacks general jurisdiction over the two-way cable communications involved. It matters not whether we or the FCC believe that one national laboratory would be better than 50 separate schemes of regulation. Congress has dictated that the particular type of activities at issue are to be regulated as the states see fit.

B. What is the impact of American Civil Liberties Union v. FCC

In American Civil Liberties Union v. FCC,107 the United States Court of Appeals for the Ninth Circuit recently determined that the Commission is not required to regulate cable access channelling under its Title II common carrier provisions,¹⁰⁸ and, in so doing, upheld the Commission’s regulations ¹⁰⁹ of such access channelling. This opinion arguably supports the Commission’s position in two ways. Read most broadly, it is an affirmance of the entire regulatory scheme pertaining to access channelling, and thus implicitly upholds the pre-emption action at issue here. More specifically, the language of the opinion may be read to imply that no access channel operations need be regarded as common carrier activities for any purpose, so that § 152(b) need not be seen as applicable to our case. In order to determine the degree of support the opinion lends on either theory, we must examine the issues involved more closely.

The case presents an attempt by the ACLU to compel affirmative regulation of all access channelling by the FCC under its Title II common carrier provisions. Petitioners saw those provisions as a way of securing protection against discrimination and unreasonable rates and profits, and of guaranteeing access “upon reasonable request therefor.”¹¹⁰ Thus the case logically reduces to the issues of whether all access channel transmissions must be regarded as common carrier activities, and if so, whether the Commission is obligated to apply to them the affirmative regulations set forth in Title II. The Ninth Circuit appears to have dealt with the two issues together, and concluded that no such affirmative obligation exists.

The opinion exhibits no awareness of the peculiar breed of two-way leased access cable communication which is before this court. While it states in general terms that the Commission’s general approach to access channelling is affirmed, there is no indication that the court at any time considered the nature of two-way, non-video leased access communications as distinguished from public, education, and governmental access programming. Nor is there any reason why it should have. Petitioner s concern was with common carrier regulation of conventional transmission access programming which was, and continues to be, the vastly dominant use of access channelling. On this basis, we see no reason to view anything in the opinion as a considered analysis of the type of communications before us.

More fundamentally, even if we regarded the court as embodying within its holding the two-way use of access channelling, its decision would be inapposite to our case. The primary issue there posed was the presence or absence of a statutory duty to implement the affirmative regulations set out in Title II.¹¹¹ Nowhere does the court address itself to the separate issue of the Commission’s pre-emption of any state common carrier or other regulation.¹¹² A holding that the Commission had discretion to refuse t.o exercise its common carrier regulatory powers does not compel the conclusion that it also has discretion to preempt state common carrier regulation.¹¹³ It therefore follows that the Ninth Circuit has not decided, either explicitly or implicitly, the pre-emption issue before us.

IV. Summary

The Commission’s asserted pre-emption of state and local regulation of two-way, intrastate, non-video cable transmissions is set aside. Insofar as most of those activities partake of a common carrier character, the order violates the clear bar to Commission jurisdiction of 47 U.S.C. § 152(b). It thus cannot fall within the § 152(a) delegation of powers reasonably ancillary to broadcasting. Even as to that narrow range of two-way cable communications which may not be non-common carrier in nature, we conclude, on the information before us, that the regulation does not come within the aneillariness standard as set out in Midwest.

So ordered.

Footnotes

1

.This policy was first announced in the Cable Television Report and Order, Docket No. 18397, et al., 36 F.C.C.2d 143, 193, reconsidered in part, 36 F.C.C.2d 326 (1972). It was further elaborated upon in the Clarification of the Cable Television Rules, Docket No. 20018, et al., 46 F.C.C.2d 175, 185-86 (1974) and the Memorandum Opinion and Order, Docket No. 20018, et al., 49 F.C.C.2d 1078, 1081 (1974).

Communications of the type at issue here are characterized by their utilization of cable lines for transmissions traveling in the opposite direction from cable television signals. Such return signals are generated at what is conventionally the receiving end for video cable transmissions, and thus convert the network into a two-way system. By virtue of the system’s layout, the return transmissions run, at least initially, to the cable network’s transmission center, and thus those transmissions may be described as point-to-point. (The possibility of point-to-multi-point transmissions exists, either by relay of the signals by the central CATV transmission station, or by creation of networks with more complex cable interconnections. It seems unlikely that such a development would significantly affect the legal issues before us.) We limit our consideration to non-video return transmissions primarily because video utilization of the return mode does not appear to be economically and/or technologically feasible at this time. Some possible uses for the return, non-video use of a cable television system are set out in the 1972 Order, quoted in note 44, infra.

2

. The Commission asserted jurisdiction over all cable television systems in the Second Report and Order, Docket No. 15971, et al., 2 F.C.C.2d 725 (1966). It had previously rejected a request that it do so. Frontier Broadcasting Co. v. Collier, 24 F.C.C. 251 (1958).

3

. Cablecasting is the transmission of programming other than that which is originated by broadcast stations. 47 C.F.R. § 76.5(v) (1974).

4

. 36 F.C.C.2d at 190-93.

5

. 47 C.F.R. § 76.25 l(a)(3)-(7) (1974).

6

. The “major television markets” are set forth in 47 C.F.R. § 76.51 (1974).

7

. 47 C.F.R. § 75.251(a)(9) (1974).

8

. 47 C.F.R. § 76.251(a)(8) (1974).

9

. 47 C.F.R. § 76.251(a)(10) (1974).

10

. 47 C.F.R. § 76.251(a)(7) (1974).

11

. 47 C.F.R. § 76.251(a)(3) (1974). The regulations require only a “technical” rather than an operational two-way capability. This appears to mean that the cable transmission plant must have a receiving capability, but not that customer receivers be able to transmit. 36 F.C. C.2d at 192-93; 46 F.C.C.2d at 183.

12

. 47 C.F.R. § 76.251 (a)(l l)(iii) (1974).

13

. 47 C.F.R. § 76.251(a)(7) (1974).

14

. 47 C.F.R. § 76.251(a)(ll)(iv) (1974); 36 F.C. C.2d at 193. Of course the government channel is substantially under the control of the local governments which utilize it.

15

. The Clarification, 46 F.C.C.2d at 185-86, generally reaffirmed the pre-emption policy as applied in general to communications over the leased access channels. At that time there was no discussion of the peculiar pre-emption problems raised by use of the leased access bandwidth for two-way communications for hire. These issues were first addressed in the Memorandum Opinion and Order, 49 F.C.C.2d at 1080-84 (1974), where the Commission discussed in some depth the questions now before the Court.

A failure to recognize that the FCC had never even mentioned the two-way, point-to-point services now at issue here before 1974 may be responsible for Judge Wright’s reliance on an extensive quotation from the 1972 Report and Order (pp. 4-5). The language of the Commission, referring to “access programming” and “turn the dial,” shows that the FCC is talking about educational, governmental, public and leased channels carrying programming. None of these uses, all video transmissions, is at issue here. The two-way, point-to-point services were* not mentioned and their nature makes it impossible to infer that the FCC language was dealing with them by implication.

16

. 49 F.C.C.2d at 1084, quoting 47 U.S.C. § 151 (1970).

17

. 49 F.C.C.2d at 1083-84.

18

. 47 U.S.C. § 152 Application of chapter:

(a) The provisions of 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 transmission of energy by radio, and to the licensing and regulating of all radio stations as hereinafter provided; but it shall not apply to persons engaged in wire or radio communication or transmission in the Canal Zone, or to wire or radio communication or transmission wholly within the Canal Zone.

19

. 392 U.S. 157, 178, 88 S.Ct. 1994, 20 L.Ed.2d 1001 (1968).

20

. 406 U.S. 649, 662-63, 92 S.Ct. 1860, 32 L.Ed.2d 390 (1972).

21

. 47 U.S.C. § 301-99 (1970).

22

. 392 U.S. at 169 n. 29, 88 S.Ct. 1994.

23

. Section 221(b) of Title 47 is a provision similar to § 152(b), which denies FCC jurisdiction over “telephone exchange service” in any case where such activities are subject to state or local regulation, except as otherwise provided by § 301. “Telephone exchange” connotes a highly developed, interconnected system operated to provide “service of the character ordinarily furnished by a single [telephone] exchange,” 47 U.S.C. § 153(r) (1970)'. We can not conclude at this time that the two-way, nonvidep communications via cable will become part of a network of such complexity as to be appropriately assimilable with telephone exchanges. In view of our conclusion as to the applicability of § 152(b), we find it unnecessary to consider whether the § 221(b) exclusion of FCC jurisdiction can possibly become applicable should two-way, non-video use of cable facilities achieve a substantial potential for intercommunication.

We are aware of this court’s own opinion in General Telephone Co. v. FCC, 134 U.S.App. D.C. 116, 127-28 n. 19, 413 F.2d 390, 401-02 n. 19, cert. denied, 396 U.S. 888, 90 S.Ct. 173, 24 L.Ed.2d 163 (1969), which held without extended discussion that cable TV, operating in its conventional one-way mode, did not constitute a telephone exchange service. Because that case did not present any question of two-way communications of the sort presently before the court, it is inapposite to these facts and does not foreclose the possibility that cable operators may at some future time offer services which make applicable the § 221(b) jurisdictional bar.

24

. Frequently referred to as § 2(b) of the Communications Act of 1934.

25

. 47 U.S.C. § 152. Application of chapter.

(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 to (1) charges, classifications, practices, services, facilities, or regulations for or in connection with intrastate communication service by wire or radio of any carrier, or (2) any carrier engaged in interstate or foreign communication solely through physical connection with the facilities of another carrier not directly or indirectly controlling or controlled by, or under direct or indirect common control with such . carrier, or (3) any carrier engaged in interstate or foreign communication solely through connection by radio, or by wire and radio, with facilities, located in an adjoining State or in Canada or Mexico (where they adjoin the State in which the carrier is doing business), of another carrier not directly or indirectly controlling or controlled by, or under direct or indirect common control with such carrier, or (4) any carrier to which clause (2) or clause (3) of this subsection would be applicable except for furnishing interstate mobile radio communication service or radio communication service to mobile stations on land vehicles in Canada or Mexico; except that sections 201-205 of this title shall, except as otherwise provided therein, apply to carriers described in clauses (2)-(4) of this subsection.

The statute uses the term “carrier” which, under 47 U.S.C. § 153(h) (1970), is the equivalent of “common carrier.”

26

. 49 F.C.C.2d at 1082.

It has been held several times that cable systems, operating in the characteristic broadcast retransmission mode, are not common carriers. United States v. Southwestern Cable Co., 392 U.S. 157, 169 n.29, 88 S.Ct. 1994, 20 L.Ed.2d 1001 (1968); Philadelphia Television Broadcasting v. FCC, 123 U.S.App.D.C. 298, 300, 359 F.2d 282, 284 (1966); Frontier Broadcasting Co. v. Collier, 24 F.C.C. 251, 254 (1958).

27

. Washington ex rel. Stimson Lumber Co. v. Kuykendall, 275 U.S. 207, 211-12, 48 S.Ct. 41, 42, 72 L.Ed. 241, 245 (1927); United States v. California, 297 U.S. 175, 181, 56 S.Ct. 421, 80 L.Ed. 567 (1936).

The Commission has, itself, in another context, argued successfully that it is the character of the communication rather than the character of the facilities which determines the scope of the exclusion under § 152(b), General Telephone Co. v. FCC, 134 U.S.App.D.C. 116, 127-28 n.19, 413 F.2d 390, 401-02 n.19, cert. denied, 396 U.S. 888, 90 S.Ct. 173, 24 L.Ed.2d 163 (1969).

28

. In support of its decision to treat cable as an “organic whole,” to be left entirely free from common carrier regulation, the Commission advances the argument that such treatment is necessary for the fulfillment of its other duties under the Act. These arguments will be discussed in the next section, considering whether the controverted pre-emption is justified under the statute read as a whole. The conclusion set out in text above only indicates that the Commission's statutory construction does not readily jump to mind from the plain words of § 152(b).

29

. National Ass’n of Reg. Util. Comm’rs v. FCC, 173 U.S.App.D.C. 423, 425, 525 F.2d 640, 642 (5 Jan. 1976).

30

. Under 47 U.S.C. § 153(h) (1970), a common carrier is defined as “any person engaged as a common carrier for hire. . . . ”

31

. Under 47 C.F.R. § 21.1 (1974), a communication common carrier is defined as “[a]ny person engaged in rendering communication service for hire to the public.”

32

. Semon v. Royal Indemnity Co., 279 F.2d 737, 739 (5th Cir. 1960), and cases cited 173 U.S.App.D.C. 413, 424, 525 F.2d 630, 641 n.58 (5 Jan. 1976).

33

.Washington ex rel. Stimson Lumber Co. v. Kuykendall, 275 U.S. 207, 211-12, 48 S.Ct. 41, 72 L.Ed. 241 (1927).

34

. Semon v. Royal Indemnity Co., 279 F.2d 737, 739-40 (5th Cir. 1960).

35

. 173 U.S.App.D.C. at 424, 525 F.2d at 641, n.58 (5 Jan. 1976).

36

. Industrial Radiolocation Service, 5 F.C.C.2d 197, 202 (1966); Frontier Broadcasting Co. v. FCC, 24 F.C.C. 251, 254 (1958) (Holding one-way cable television transmission to be a non-common carrier activity, because the content of transmissions is not under the control of the subscriber).

37

. 47 C.F.R. § 76.251(a)(ll)(iii) (1974). In its 1974 Clarification, the Commission stated that “[a]ll parties must be given access to leased channels at rates not designed to prohibit entry.” 46 F.C.C.2d at 186.

38

. 47 C.F.R. § 76.251(a)(7) (1974).

39

. 36 F.C.C.2d at 356.

40

. 46 F.C.C.2d at 186.

41

. 173 U.S.App.D.C. 423, 424, 525 F.2d 640, 641 (5 Jan. 1976).

42

. Id.

43

. 47 C.F.R. § 76.251(a)(3) (1974).

44

. The Commission has stated that a system limited to such a non-voice return capability “can be useful in a number of ways — for survey, marketing services, burglar alarm devices, educational feedback, to name a few.” 36 F.C. C.2d at 192.

45

. The most primitive uses of such return transmission technology would appear to involve the transmission of a single signal, to convey a pre-determined message. A burglar alarm system, conveying the message of illicit entry, seems to be one of the simplest uses for such technology.

46

. A burglar alarm, involving the purchase of a service whereby the customer intends and expects a message to be sent at the occurrence of a particular event, is an example of implicit customer control.

47

. The Commission appears to concede as much, both in its most recent report, 49 F.C. C.2d at 1082, and in its brief. Respondent’s Brief at 14.

48

. See T. V. Pix, Inc. v. Taylor, 304 F.Supp. 459 (D.Nev.1968) (upholding state regulation of the intrastate incidents of a cable system having an interstate dimension as well).

49

. The broader question of whether the general Title III power over broadcasting contains a penumbra of sufficient breadth to reach the activities in question, is dealt with in Section II, infra.

50

. Respondent’s Brief at 16; 49 F.C.C.2d at 1082-83.

51

. The Supreme Court has twice affirmed specific Commission assertions of jurisdiction over cable TV. United States v. Midwest Video Corp., 406 U.S. 649, 92 S.Ct. 1860, 32 L.Ed.2d 390 (1972); United States v. Southwestern Cable Co., 392 U.S. 157, 88 S.Ct. 1994, 20 L.Ed.2d 1001 (1968).

52

. 49 F.C.C.2d at 1082; Respondent’s Brief at 19.

53

. Respondent’s Brief at 17.

54

. 392 U.S. 157, 88 S.Ct. 1994 (1968) (Harlan, JO-

55

. Id. at 160-61, 88 S.Ct. 1994.

56

. Id. at 161-66, 88 S.Ct. 1994.

57

. Id. at 175, 88 S.Ct. 1994.

58

. Id. at 174-75, 88 S.Ct. 1994.

59

. 47 U.S.C. §§ 201-23 (1970).

60

. 47 U.S.C. §§ 301-99 (1970).

61

. See note 18 supra.

62

. 392 U.S. at 178, 88 S.Ct. at 2005, 20 L.Ed.2d at 1016. The Court noted that it was expressing “no views as to the Commission’s authority, if any, to regulate CATV under any other circumstances or for any other purpose.” Id.

63

. 406 U.S. 649, 92 S.Ct. 1860, 32 L.Ed.2d 390 (1972) (Brennan, J.)

64

. Id. at 669, 92 S.Ct. at 1871, 32 L.Ed.2d at 403.

65

. Id. at 667, 92 S.Ct. at 1870, 32 L.Ed.2d at 402.

66

. Id. at 675, 92 S.Ct. at 1874, 32 L.Ed.2d at 407.

67

. Id. at 676, 92 S.Ct. at 1874, 32 L.Ed.2d at 407.

68

.The section states only that the provisions of the “chapter” (which includes the entire 1934 Act) “shall apply” to all interstate and foreign communication by wire or radio. See note 18 supra. It differs in this respect from some other sections of the Act which, in conferring powers on the Commission, state in terms what the Commission is obligated and empowered to do. See, e. g., 47 U.S.C. § 303 (1970).

69

. 392 U.S. at 178, 88 S.Ct. at 2006, 20 L.Ed.2d at 1016.

This refutes the attempt of Judge Wright (p. 383 of 174 U.S.App.D.C., p. 610 of 533 F.2d) to construe the Court’s language re section 152(a), 392 U.S. at 172, 88 S.Ct. 1994, as validating FCC jurisdiction even if the cable transmission was unrelated to broadcasting. The Court emphasized “. . . respondents thus are ordinarily employed in the simultaneous retransmission of [broadcast] communications that have very often originated in other States. The stream of communication is essentially uninterrupted and properly indivisible.” Id. at 169, 88 S.Ct. at 2001, 20 L.Ed.2d at 1011. Southwestern thus dealt with cable activity unquestionably interstate and definitely partaking of the nature of broadcasting. Neither is true of the two-way, point-to-point services involved here.

70

. 406 U.S. at 662-63, 92 S.Ct. 1860.

71

. Id. at 662-70, 92 S.Ct. 1860. Establishment of such a particular connection would be superfluous if the Court were asserting a general jurisdiction over all cable operations. While there is some language in the opinion which might be read to suggest such a “comprehensive” jurisdiction, id. at 662-63, 92 S.Ct. 1860 n.21, we believe that the substantial effort made to bring the origination requirement itself within the ancillariness standard belies any such intention by the plurality.

72

. Id. at 676, 92 S.Ct. 1860.

73

. 49 F.C.C.2d at 1083.

74

. Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390, 398-99, 88 S.Ct. 2084, 20 L.Ed.2d 1176 (1968) (whereas broadcasters are “exhibitors” and thus subject to liability under the copyright laws, cable operators retransmitting broadcast signals are to be treated as non-liable “viewers”).

We recognize that the Supreme Court’s plurality opinion in Midwest states that Fortnightly “has no bearing on the ‘reasonably ancillary’ question.” 406 U.S. at 663-64, 92 S.Ct. at 1868, 32 L.Ed.2d at 400, n.22. The test of ancillariness looks to the connection between the particular regulation and the broadcast purposes, and thus the dichotomy drawn under the copyright laws is not relevant to it. We believe, however, that Fortnightly is relevant to the broader question of whether the FCC has blanket jurisdiction over all activities of cable operators. Any recognition of such across-the-board power would not rest upon the nature of particular regulations, but would be a generalized assimilation of cable to broadcasting for all purposes. Fortnightly’s refusal to make this assimilation in the area of copyright law is therefore not insignificant.

75

. Teleprompter Corp. v. CBS, 415 U.S. 394, 404-05, 94 S.Ct. 1129, 39 L.Ed.2d 415 (1974) (Holding of Fortnightly affirmed, even where cable operator engaged in some origination cablecasting, thus enhancing parallel between cable and broadcast operations).

76

. 49 F.C.C.2d at 1083.

77

. This longterm goal which the Commission sets out for itself apparently has its roots in the general purpose section of the Act, 47 U.S.C. (1970). While that section does set forth worthy aims toward which the Commission should strive, it has not heretofore been read as a general grant of power to take any action necessary and proper to those ends. Especially in view of our conclusion that § 152(b) seems to bar Commission jurisdiction in this case, see Section I supra, we are extremely dubious about the legal substance of this argument by the Commission, even if the facts were available to support it.

78

. In its brief, Respondent states that acceptance of petitioner’s position “would lead to the absurd and illogical conclusion that the Commission has the authority to require the capacity for access cablecasting, including non-voice return communication, but is without authority to regulate the activity.” Respondent’s Brief at 19.

79

. Respondent’s Brief at 18; 49 F.C.C.2d at 1083.

80

. In reference to the significant local role provided under the Commission’s regulations, see 47 C.F.R. § 76.31 (1974). The Commission has stated its intention to create “a cohesive, cooperative program between federal and local authorities.” 46 F.C.C.2d at 188. See also National Cable Television Ass’n v. United States, 415 U.S. 336, 339, 94 S.Ct. 1129, 39 L.Ed.2d 415 (1974); 46 F.C.C.2d at 188-208.

81

. Respondent's Brief at 18; 49 F.C.C.2d at 1083. The argument is implicit rather than explicit because of the way it is phrased. In the Order, reference is made generally to the financial benefits of “additional services including leased access,” rather than to any profits expected from the particular two-way communications at issue here. The brief quotes from the initial 1972 Report, to the effect that “non-broadcast” activities (including cablecasting) “can be profitable to the cable owner.” Nowhere do we find a specific assertion as to the profitability of the two-way utilization of cable. See also Brief of Intervenor Manhattan Cable TV at 3-4.

82

. 46 F.C.C.2d at 183.

83

. 47 C.F.R. § 76.251(a)(3) (1974).

84

. See Office of Telecommunications Policy, The Domestic Telecommunications Industry: Economic Behavior, Competition, and Public Policy, at 341-65, especially 347 (NTIS No. PB-238 020 1974) (raising serious doubts that existing cable systems can ever be competitive with telephone lines in provision of data transmission services).

85

. 392 U.S. at 174-75, 88 S.Ct. 1994.

86

. 406 U.S. at 662-70, 92 S.Ct. 1860.

87

. Id. at 664-65, 92 S.Ct. 1860.

88

. See id. at 668-69, 92 S.Ct. 1860, quoting NBC v. United States, 319 U.S. 190, 203, 218, 63 S.Ct. 997, 87 L.Ed. 1344 (1943).

89

. Id. at 669, 92 S.Ct. 1860.

90

. Under 47 U.S.C. § 221(b)(1970). state and local regulatory bodies are given the power to pre-empt Commission jurisdiction over even interstate telephone exchange services, by exercising a regulatory power of their own.

91

. Respondent's Brief at 20-24.

92

. NBC v. United States, 319 U.S. 190, 219, 63 S.Ct. 997, 87 L.Ed. 1344 (1943).

93

. United States v. Midwest Video Corp., 406 U.S. 649, 675-76, 92 S.Ct. 1860, 32 L.Ed.2d 390 (1972) (Burger, C. J., concurring); Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 380, 89 S.Ct. 1794, 23 L.Ed.2d 371 (1969); United States v. Storer Broadcasting Co., 351 U.S. 192, 203, 76 S.Ct. 763, 100 L.Ed. 1081 (1956); NBC v. United States, 319 U.S. 190, 219, 63 S.Ct. 997, 87 L.Ed. 1344 (1943); FCC v. Pottsville Broadcasting Co., 309 U.S. 134, 138, 60 S.Ct. 437, 84 L.Ed. 656 (1940); Federal Radio Comm. v. Nelson Bros. Bond & Mortgage Co., 289 U.S. 266, 285, 53 S.Ct. 627, 77 L.Ed. 1166 (1933).

94

.This is the phrase used by Chief Justice Burger in his decisive concurrence upholding the Commission action in Midwest. 406 U.S. at 676, 92 S.Ct. 1860.

95

. 47 U.S.C. § 303 (1970).

96

. FCC v. RCA Communications, Inc., 346 U.S. 86, 90-91, 73 S.Ct. 998, 97 L.Ed. 1470 (1953); Hawaiian Tel. Co. v. FCC, 162 U.S.App.D.C. 229, 234-35, 498 F.2d 771, 776-77 (1974).

97

. Illinois Citizens Comm. v. FCC, 467 F.2d 1397, 1400 (7th Cir. 1972); Kitchen v. FCC, 150 U.S.App.D.C. 292, 294, 464 F.2d 801, 803 (1972); Sterling Manhattan Cable Television, Inc. v. New York Tel. Co., 38 F.C.C.2d 1149 (1973).

98

. The fast moving nature of communications technology, and the loose language of the statute, provide some basis for believing that Congress intended to allow the FCC a wider latitude than it typically granted to other agencies.

99

. Respondent’s Brief at 20.

100

. Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 381, 89 S.Ct. 1794, 23 L.Ed.2d 371 (1969); National Ass’n of Theatre Owners v. FCC, 136 U.S.App.D.C. 352, 358, 420 F.2d 194, 200 (1969); General Tel. Co. v. FCC, 134 U.S. App.D.C. 116, 127, 413 F.2d 390, 401 (1969); Philadelphia Television Broadcasting Co. v. FCC, 123 U.S.App.D.C. 298, 299-300, 359 F.2d 282, 283-84 (1966).

101

. National Ass’n of Regulatory Util. Comm’rs v. FCC, 173 U.S.App.D.C. 413, 427, 525 F.2d 630, 644 (5 Jan. 1976). But see Philadelphia Television Broadcasting Co. v. FCC, 123 U.S.App.D.C. 298, 300, 359 F.2d 282, 284 (1966).

102

. National Ass’n of Regulatory Util. Comm’rs v. FCC, 173 U.S.App.D.C. 423, 425, 525 F.2d 640, 642 (5 Jan. 1976).

103

.Respondent’s Brief at 21-24; 46 F.C.C.2d at 184-185; 36 F.C.C.2d at 194.

104

. United Telegraph Workers v. FCC, 141 U.S.App.D.C. 190, 193-94, 436 F.2d 920, 923-24 (1970); Connecticut Committee Against Pay TV v. FCC, 112 U.S.App.D.C. 248, 250, 301 F.2d 835, 837, cert. denied, 371 U.S. 816, 83 S.Ct. 28, 9 L.Ed.2d 57 (1962).

105

. Section 218 of Title 47 U.S.C. states that the Commission “shall keep itself informed as to . technical developments and improvements in wire and radio communication and radio transmission of energy to the end that the benefits of new inventions and developments may be made available to the people of the United States.”

106

. Section 303(g) of Title 47, U.S.C., commands the Commission to “[s]tudy new uses for radio, provide for experimental uses of frequencies, and generally encourage the larger and more effective use of radio in the public interest.”

107

. 523 F.2d 1344 (9th Cir. 1975).

108

. Id. at 1350-51.

109

. The Ninth Circuit opinion does not specifically address the pre-emption aspect of the Commission’s regulations. It only goes so far as to note the Commission’s general strategy of allowing “the forces of the market place to function freely.” Id. at 1349. See note 113 infra.

110

. Id. at 1350.

111

. Id. at 1349.

112

. The Ninth Circuit does state its holding as a validation both of the refusal to impose Title II regulation, and of existing regulations as formulated by the Commission. Id. at 1351. This might lead one to conclude that they had in mind the part of the regulations which preempts state and local authorities. 47 C.F.R. §§ 76.251(a)(ll)(iv) (1974). However, the opinion states its affirmance only of “the rules above described,” 523 F.2d at 1351, and the description of the rules at the outset of the discussion of the merits, id. at 1348-49, contains no reference to that section. This, coupled with the court’s failure to discuss preemption at any time, leads us to conclude that there was no intention that the holding extend to that issue.

113

. There are two reasons why this is so. First, there may be arguments for allowing the Commission to decline to exercise its statutory powers, which do not apply to its attempt to pre-empt state regulation. For example, it may be contended and has elsewhere been held, Philadelphia Television Broadcasting Co. v. FCC, 123 U.S.App.D.C. 298, 300, 359 F.2d 282, 284 (1966), that a part of the broad discretion allowed the Commission under the Act involves the power not to exercise particular authority which it has been granted.

Second, there clearly are strong arguments for denying the pre-emption power, which do not militate against the refusal to exercise Title II powers. Whereas all of the activities within the Title II controversy before the Ninth Circuit were unquestionably within the jurisdiction of the Commission, there is substantial reason to believe that the activities over which pre-emption is asserted here are not. There is thus the vital difference between a refusal to use granted power, and an attempt to prevent regulation by others in an area where no ordinary Commission jurisdiction appears to exist.