US West, Inc. v. United States

48 F.3d 1092, 1994 WL 760379
CourtCourt of Appeals for the Ninth Circuit
DecidedDecember 30, 1994
DocketNo. 94-35775
StatusPublished
Cited by10 cases

This text of 48 F.3d 1092 (US West, Inc. v. United States) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
US West, Inc. v. United States, 48 F.3d 1092, 1994 WL 760379 (9th Cir. 1994).

Opinion

ORDER

The motion of appellee Washington Independent Telephone Association to correct the opinion in this case is hereby GRANTED.

The opinion filed December 30, 1994, is amended in accordance with the opinion attached hereto.

OPINION

CYNTHIA HOLCOMB HALL, Circuit Judge:

' US West, Inc. and several affiliated companies (hereinafter referred to collectively as “US West”), Pacific Telecom, Inc. and its subsidiaries (“PTI”), and the Washington Independent Telephone Association (“WITA”) challenge the constitutionality of § 613(b) of the Cable Franchise Policy and Communications Act of 1984, Pub.L. No. 98-549, 98 Stat. 2785 (1984) (the “1984 Cable Act”). This provision, codified at 47 U.S.C. § 533(b), provides in pertinent part that:

(1) It shall be unlawful for any common carrier, subject in whole or in part to subchapter II of this chapter, to provide video programming directly to subscribers in its telephone service area, either directly or indirectly through an affiliate owned by, operated by, controlled by, or under common control with the common carrier.
(2) It shall be unlawful for any common carrier, subject in whole or in part to subchapter II of this chapter, to provide channels of communication or pole line conduit space, or other rental arrangements, to any entity which is directly or indirectly owned by, operated by, controlled by, or under common control with such common carrier, if such facilities or arrangements are to be used for, or in connection with, the provision of video programming directly to subscribers in the telephone service area of the common carrier.

47 U.S.C. § 533(b)(3) provides an exception to the ban for telephone companies providing service in rural areas. Furthermore, the Federal Communications Commission [1095]*1095(“FCC”) has the authority to waive the prohibition under certain conditions. 47 U.S.C. § 533(b)(4).

“Video programming” is defined in 47 U.S.C. § 522(16) as “programming provided by, or generally considered comparable to programming provided by, a television broadcast station.” The FCC has interpreted § 522(16) to require a comparison of material to be provided by the telephone company with television broadcast programming in 1984: video services of the type broadcast in 1984 are “video programming” and therefore covered by § 533(b), whereas services or material not broadcast in 1984 are not covered by the cross-ownership prohibition.1

US West is a common carrier which provides local telephone service in 14 western and midwestern states. The company has applied for and been granted permission from the FCC to conduct a limited trial in Omaha, Nebraska, of “video dialtone service,” which consists of constructing and making available transmission facilities for third parties’ provision of video programming on a common carrier basis.2 The FCC has concluded that such video dialtone services do not violate § 533(b) so long as the telephone company does not provide the programming material. See First Video Dial-tone Order, 7 FCCRcd. at 5790. US West, PTI, and WITA, on behalf of numerous other Washington state local telephone companies, allege that they have or could quickly develop video dialtone facilities in numerous markets and would directly enter the video programming market in competition with local cable companies in their telephone service areas if the cross-ownership ban were removed. US West, PTI and WITA brought this constitutional challenge to § 533(b), claiming that the law violates the First Amendment both on its face and as applied, and asking that its enforcement be enjoined.

The district court granted summary judgment in favor of the plaintiffs. US WEST, Inc. v. United States, 855 F.Supp. 1184 (W.D.Wash.1994). The court rejected the government’s contention that § 533(b) is a structural regulation of the telecommunications market that should be subjected only to rational basis review. It also declined to decide whether § 533(b) should be subject to strict scrutiny as a speaker- or content-based restriction. Instead, the district court found that the provision is unconstitutional even under the lower, intermediate scrutiny applied to content-neutral time, place, and manner restrictions and laws of general application which impose an incidental burden on speech. See, e.g., Ward v. Rock Against Racism, 491 U.S. 781, 109 S.Ct. 2746, 105 L.Ed.2d 661 (1989). The district court held specifically that § 533(b) is not sufficiently narrowly tailored to serve a substantial government interest.

Several other courts have recently had occasion to pass on the constitutionality of § 533(b), including one other court of, appeals. All have found it invalid under intermediate First Amendment scrutiny. See Chesapeake & Potomac Tel. Co. v. United States, 42 F.3d 181 (4th Cir.1994) (“C & P”); NYNEX Corporation v. United States, No. 92-323-P-C (D. Maine Dee. 8,1994); Ameritech Corp. v. United States, 867 F.Supp. 721 (N.D.Ill.1994); BellSouth Corp. v. United States, 868 F.Supp. 1335 (N.D.Ala.1994). We join those other courts in finding that § 533(b) unconstitutionally infringes on the plaintiffs’ First Amendment right to free speech.

[1096]*1096REGULATORY AND STATUTORY BACKGROUND

The telephone-cable cross-ownership prohibition began as a rule adopted by the FCC in 1970, prompted by concerns that telephone companies, if permitted to provide cable services in their telephone service areas, would monopolize the field because they would discriminate against independent providers and in favor of their affiliates, in granting access to telephone poles and conduits.3 A 1981 FCC report suggested that the pole access concerns underlying the ban no longer independently supported it, but recommended retaining the cross-ownership restriction due to other concerns, such as potential “cross-subsidization” of the telephone companies’ cable operations from their monopolistic telephone operations.4

Congress adopted § 533(b) in 1984, as part of the comprehensive 1984 Cable Act. The Act contains no legislative findings concerning the cross-ownership ban. The only direct reference to the purpose of § 533(b) in the legislative history is a single sentence in a House report, indicating that the provision was intended “to codify current FCC rules concerning the provision of video programming over cable systems by common carriers.” H.R.Rep. No. 934, 98th Cong., 2d Sess. 56 (1984) (“1981 House Report?’). The report also stated that a number of cross-ownership provisions, all codified in § 533, were intended “to prevent the development of local media monopolies, and to encourage a diversity of ownership of communications outlets.” Id. at 55.

When the FCC’s 1970 Order was adopted, the cable industry was in its infancy. At that time, fewer than ten percent of American households had access to cable television.

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48 F.3d 1092, 1994 WL 760379, Counsel Stack Legal Research, https://law.counselstack.com/opinion/us-west-inc-v-united-states-ca9-1994.