United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 96-2037

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Guidry Cablevision/Simul Vision *

Cable System, *

*

Plaintiff - Appellant, *

* Appeal from the United States

v. * District Court for the

* Eastern District of Missouri.

City of Ballwin, *

*

Defendant - Appellee. *

___________

 Submitted: January 13, 1997

 Filed: July 8, 1997

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Before LOKEN, BRIGHT, and MORRIS SHEPPARD ARNOLD, Circuit Judges.

___________

LOKEN, Circuit Judge.

The Cable Communications Policy Act of 1984, 47 U.S.C. §§ 521 et seq.

(the “Cable Act”), stabilized federal regulation of the cable television

industry by addressing issues that had vexed the Federal Communications

Commission for many years. One such issue is whether state and local

governments may franchise federally regulated cable operators. Congress

answered with a qualified yes, allowing local governments to franchise

“cable systems,” but placing limits on permissible franchise terms and also

defining cable systems to exclude so-called private cable systems. The

Commission in turn has invoked federal preemption to preclude local

governments from requiring that an exempt private cable operator obtain a

local franchise. 
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This case involves one type of private cable system, the satellite

master antenna television system, commonly referred to as “SMATV.” SMATV

systems use antennae or receivers to capture over-the-air broadcast signals

and satellite-transmitted signals. SMATV operators then retransmit these

signals by wire to television subscribers within a single building or

complex of buildings. The statutory exemption does not apply to a private

cable system that “uses any public right-of-way.” 47 U.S.C. § 522(7)(B).

 The issue before us is whether an SMATV system “uses” a public right-ofway when its cables cross under a public street. We look for guidance to

the Supreme Court’s recent analysis of the word “use” in a different

statutory context in Bailey v. United States, 116 S. Ct. 501, 505 (1995).

Although some have assumed that simply crossing a public street is use, we

reach a contrary conclusion and hold that the City of Ballwin, Missouri,

is preempted from requiring Guidry Cablevision/Simul Vision Cable System

(“Guidry Cable”) to obtain a cable franchise. Accordingly, the district

court’s judgment awarding the City unpaid franchise fees must be reversed.

I.

Seven Trails West is an apartment complex in Ballwin consisting of

several commonly owned, multiple unit buildings. The complex includes

Seven Trails Drive, which was dedicated as a public street in 1977. Seven

Trails West owns the land under Seven Trails Drive, but the City maintains

the street as a public right-of-way. In 1984, Seven Trails West contracted

with Guidry Cable to build and operate an SMATV system. Because the SMATV

transmission lines must cross Seven Trails Drive to serve all apartments

in the complex, Guidry Cable obtained an excavation permit from the City

and placed its lines some seventeen to twenty inches under Seven Trails

Drive. All of the other SMATV equipment is located on 
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property owned by Seven Trails West. No part of the system passes over or

touches the surface of Seven Trails Drive. 

In June 1984, before passage of the Cable Act, the City granted

Guidry Cable a cable television franchise for its SMATV system at Seven

Trails West. Guidry Cable initially accepted the franchise but quit paying

franchise fees in July 1986. After five years of inaction, the City

revoked Guidry Cable’s franchise and threatened to remove its SMATV

equipment. Guidry Cable commenced this action seeking declaratory relief,

and the City counterclaimed for unpaid franchise fees. After the parties

submitted the case on stipulated facts, the district court entered judgment

dismissing Guidry Cable’s claims and awarding the City $65,214.32 on its

counterclaim. Guidry Cable appeals. The parties have briefed and argued

many issues, but the Cable Act preemption question is dispositive. 

II.

For many years, the F.C.C. did not regulate cable television systems.

See generally Midwest Video Corp. v. FCC, 571 F.2d 1025, 1029-35 (8th Cir.

1978), aff’d, 440 U.S. 689 (1979). In the early 1970's, the Commission

adopted a regime of “deliberately structured dualism,” requiring cable

operators to obtain federal certificates of compliance while permitting

local governments (including States) to franchise cable operators

consistent with minimum federal standards. Local franchising was

appropriate, the Commission explained, “because cable makes use of streets

and ways” and because local authorities are better able “to parcel large

urban areas into cable districts” and “to follow up on service complaints.”

Cable Television Report & Order, 36 F.C.C.2d 143, at ¶¶ 177-78 (1972).
See also In re Orth-O-Vision, Inc., 69 F.C.C.2d 657 (1978),

2

recon. denied, 82 F.C.C.2d 178 (1980) (preempting franchising of

MATV systems), aff’d sub nom. New York State Comm’n on Cable

Television v. FCC, 669 F.2d 58 (2d Cir. 1982).

-4-

As the market for cable television grew and new technologies emerged,

the F.C.C. exempted private cable systems such as SMATV from its cable

rules, usually over the vehement protest of regulated cable operators.

Along with this federal exemption, the Commission preempted local

governments from franchising private cable systems. In the case of SMATV,

the Commission concluded that preemption was necessary because SMATV

systems are the customers of interstate satellite transmissions, and local

licensing that restricts the growth of SMATV receivers would be

inconsistent with the federal policy of fostering “open entry in the

satellite field for the purpose of creating a more diverse and competitive

telecommunications environment.” In re Earth Satellite Commun., Inc., 95

F.C.C.2d 1223, 1231 (1983), aff’d sub nom. New York State Comm’n on Cable

Television v. FCC, 749 F.2d 804 (D.C. Cir. 1984).1

The Cable Act retained this dual regulatory framework. Local

governments may franchise “cable systems” consistent with federal standards

regarding issues such as franchise fees, renewal procedures, and ownership

restrictions. See 47 U.S.C. §§ 541-547; H.R. Rep. No. 98-934, 98th Cong.,

2d Sess. 44 (1984), reprinted in 1984 U.S.C.C.A.N. 4655, 4656-64. Congress

enacted a private cable exemption in § 522(7)(B), commenting that this

exemption is directed at SMATV systems, and left the F.C.C.’s franchising

preemption decisions in place in § 541(e). See H.R. Rep. No. 98-934, 1984

U.S.C.C.A.N. at 4681, 4700. The Supreme Court rejected a due process

challenge to § 522(7)(B) in FCC v. Beach Commun., Inc., 508 U.S. 307

(1993). 
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III.

Guidry Cable argues that its SMATV system is exempt from Cable Act

regulation, and therefore the City may not require a cable franchise.

Section 522(7)(B) defines an exempt private system as:

a facility that serves only subscribers in 1 or more multiple

unit dwellings under common ownership, control, or management,

unless such a facility or facilities uses any public right-ofway. 

Because Seven Trails West is admittedly a commonly owned group of multiple

unit dwellings, the issue is whether Guidry Cable “uses a public right-ofway" because its transmission lines cross underneath Seven Trails Drive,

a public street. The Cable Act does not define the term “use,” and the

published committee report simply repeats the statutory language. See 1984

U.S.C.C.A.N. at 4681. In Bailey, the Supreme Court explained that “the

word ‘use’ poses some interpretational difficulties because of the

different meanings attributable to it.” The word “draws meaning from its

context,” and a court must consider “not only the bare meaning of the word

but also its placement and purpose in the statutory scheme.” 116 S. Ct.

at 505-06. Therefore, “use” in § 522(7)(B) must be construed in the

context of the Cable Act and the F.C.C.’s prior regulation of the cable

television industry.

Traditional cable systems deliver programming throughout a

municipality by means of cables laid under city streets or along utility

lines. They thereby make extensive use of public rights-of-way, avoiding

the need to negotiate easements with countless private property owners.

This is “use” consistent with the word’s ordinary meaning -- “to employ,

to avail oneself of, and to carry out a purpose or action by means of.”

Bailey, 116 S. Ct. at 506 (quotations omitted); see 43A WORDS AND PHRASES,

Use; Used at 252 
It also seems significant that Seven Trails West, not the

2

City, owns the land underlying Seven Trails Drive. However, we

doubt whether the extent of federal regulatory preemption should

depend upon who owns the land beneath a public right-of-way. If

federal telecommunications law preempts the City from requiring a

cable franchise, that does not affect its authority to otherwise

regulate use of land beneath a public street. In general, nondisruptive uses by abutting property owners are permitted. See

McQuillin, MUNICIPAL CORPORATIONS § 30.85 (3d ed. 1990).

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(West 1969). This active interaction between cable operators and local

governments is also the reason for the F.C.C.’s long-standing tolerance of

local cable franchising. “The dual federal-local jurisdictional approach

to regulating cable systems is largely premised on the fact that cable

systems necessarily involve extensive physical facilities and substantial

construction upon and use of public rights-of-way in the communities they

serve.” In re Definition of a Cable Television System, 5 F.C.C.R. 7638,

7639 (1990).

Guidry Cable’s involvement with the City’s public right-of-way is far

less substantial. Though Guidry Cable’s system must cross Seven Trails

Drive, this public street is an obstacle that must be overcome to serve the

entire, commonly owned Seven Trails complex, not an asset in serving a

myriad of independent subscribers. The City has provided no service or

benefit to Guidry Cable’s system, and Guidry Cable paid for the initial

cost and disruption of crossing under the City’s street when it obtained

an excavation permit. Thus, in the most practical sense, Guidry Cable has

not “used” the City’s public right-of-way.2

Other reasons why the F.C.C. has supported local franchising of

federally regulated cable operators also do not apply to Guidry Cable’s

SMATV system at Seven Trails West. Local governments are better able “to

parcel large urban areas into cable districts,” 36 
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F.C.C.2d at ¶ 177, but districting is not necessary when the boundaries of

a commonly owned apartment complex define the SMATV system. Franchising

regulation also protects individual consumers from the market power a

traditional cable operator may enjoy once its system is installed, whereas

an apartment complex owner has countervailing bargaining power because it

represents numerous potential subscribers. 

In In re Definition of a Cable Television Sys., 5 F.C.C.R. 7638

(1990), the F.C.C. considered whether MATV and SMATV systems “use” a public

right-of-way if they transmit signals over a public street by radio or

infrared transmission. The Commission concluded that this would not

deprive a system of the § 522(7)(B) exemption: 

Congress did not intend to include within the meaning of the

term “use” of a public right-of-way the mere passing over of

such a right-of-way by electromagnetic radiation. . . .

[R]adio waves may cross a public right-of-way but do not use

it. 

5 F.C.C.R. at 7642. Thus, the Commission has expressly recognized that

crossing is distinct from using. Of course, crossing a public street by

burying cables underneath it is a more physical interaction with city

property than crossing over the street with infrared transmissions. That

may be why the Commission’s Report and Order did not address whether

crossing a public right-of-way by buried cable is “use” for purposes of

§ 522(7)(B). We conclude that both forms of crossing are not “use,” either

in the natural meaning of that word, or by applying the contextual analysis

mandated in Bailey. Accordingly, we disagree with the contrary dicta in

two district court decisions. See Liberty Cable Co. v. City of New York,

893 F. Supp. 191, 195 (S.D.N.Y.), aff’d, 60 F.3d 961 (2d Cir. 1995), cert.

denied, 116 S. Ct. 1262 (1996); Channel 
-8-

One Systems, Inc. v. Connecticut Dep't of Pub. Util. Control, 639 F. Supp.

188, 199 (D. Conn. 1986). 

Through its private cable preemption decisions, the F.C.C. has

adopted a policy of allowing competition to regulate the development of

SMATV so as to encourage the development of satellite transmission of

television programming. Congress in the Cable Act endorsed this policy.

In § 522(7)(B), it defined the cable systems entitled to a private system

exemption from federal regulation, and in § 541(e), it left the Commission

free to develop an appropriate preemption policy for exempt facilities.

We are unwilling to thwart this policy by broadly and unrealistically

construing the word “use” in the exception to the statutory exemption,

thereby reducing the competitive role of SMATV and other emerging delivery

systems in these fast-changing telecommunications markets. As Justice

Stevens observed in his concurring opinion in Beach Communications, 508

U.S. at 320, “Regulation is sometimes necessary, but it is always

burdensome. A decision not to regulate the way in which an owner chooses

to enjoy the benefits of an improvement to his own property is adequately

justified by a presumption in favor of freedom.” 

The judgment of the district court is reversed and the case is

remanded for further proceedings consistent with this opinion.

BRIGHT, Circuit Judge, dissenting.

I respectfully dissent. I believe that Guidry Cable used the public

right-of-way by digging under the street to lay its cable. 

When a “statute is silent or ambiguous with respect to the specific

issue, the question for the court is whether the agency’s 
-9-

answer is based on a permissible construction of the statute.” Chevron

U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843

(1984). In applying that standard, the FCC’s interpretation of the Cable

Act and what constitutes “use of a public right-of-way” is entitled to

“considerable weight” and this court’s deference. See id. at 844. 

The FCC interpreted the Cable Act and addressed what constitutes a

cable system under the Act in In re Definition of a Cable Television

System, 5 F.C.C.R. 7638 (1990). The FCC stated that Congress never

intended the Cable Act to include systems that transmit their signals

through radio waves instead of through physical cables or wires. Id. at

7639. The FCC’s discussion relies extensively on the notion that radio

transmissions fall outside the scope and ordinary meaning of “cable.” See

generally id. The FCC described the difference between services using

radio waves and wires or cables as a “sharp contrast.” Id. 

Nevertheless, the majority in this case relies on the FCC’s comment

that “‘radio waves may cross a public right-of-way but do not use it,’” to

conclude that the FCC distinguished between “crossing” and “using” for

purposes of laying cable underneath a public street. Maj. Op. at 7

(quoting In re Definition of a Cable Television System, 5 F.C.C.R. at

7642). To the contrary, the FCC stated that if a facility employing

“closed transmission paths,” such as cable instead of radio waves,

“cross[es] a public right-of-way, it will be considered a cable system for

purposes of the Cable Act . . .” and, therefore, subject to local

regulation. In re Definition of a Cable Television System, 5 F.C.C.R. at

7642. The FCC made repeated references to “crossing a public right-of-way”

when explaining which systems fall outside the scope of the Cable Act’s

private cable system exemption. See, e.g., id. at 7641 ("'the exception

is not available unless . . . there is no crossing 
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of a public right-of-way . . . .'" (internal citation omitted)).

Furthermore, parties brought the issue whether “use” and “cross” are

synonymous to the attention of the FCC and it regarded them as

interchangeable: 

We . . . sought comment in the Notice “with respect to the

question of what constitutes a crossing of a public right-ofway, . . . .” As noted by several parties, the specific

statutory language refers to “uses” of a public right-of-way

and our use of the term “crossing” was not meant to imply

anything different.

 

Id. at 7641-42. 

Other court decisions demonstrate that the FCC’s interpretation of

“use” as synonymous with “cross” is a permissible construction of the

statute. Most notably, the Supreme Court described the FCC’s conclusion

that a video system “is subject to the franchise requirement if its

transmission lines . . . use or cross any public right-of-way” as

“[c]onsistent with the plain terms of the statutory exemption.” F.C.C. v.

Beach Communications, Inc., 113 S. Ct. 2096, 2100 (1993) (emphasis added).

Likewise, two district courts stated that crossing a public right-of-way

constitutes use. See Liberty Cable Co. v. City of New York, 893 F. Supp.

191, 195 (S.D.N.Y.), aff’d, 60 F.3d 961 (2d Cir. 1995), cert. denied, 116

S. Ct. 1262 (1996); Channel One Systems, Inc. v. Connecticut Dep’t of Pub.

Util. Control, 639 F. Supp. 188, 199 (D. Conn. 1986) (“a person providing

cable television service using public rights-of-way by cables crossing

under a public road . . . is a cable operator and must obtain a

franchise.”). The majority dismisses the aformentioned authority summarily

despite acknowledging that cable crossing underneath a public street “is

a . . . physical interaction with city property.” Maj. Op. at 7.

Instead, the majority relies on the Supreme Court’s interpretation

of “use” in a criminal statute. See id. (relying on Bailey v. United

States, 116 S. Ct. 501, 505 (1995)). I believe a criminal case stating

that a person is not “using” a gun locked in the trunk of a car, is clearly

distinguishable from a civil case 
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deciding whether a company is “using” a public street by crossing

underneath it with a cable to reach more customers. 

In addition, the majority regards the public street as “an obstacle

that [Guidry Cable] must overcome to serve the entire . . . complex” rather

than “an asset in serving a myriad of independent subscribers.” Maj. Op.

at 6. The majority neglects to consider, however, how Guidry Cable chose

to overcome this “obstacle.” According to the FCC, a “sharp contrast”

exists between facilities employing radio waves and those employing

physical cable. In re Definition of a Cable Television System, 5 F.C.C.R.

at 7639. By exempting facilities utilizing radio waves from local

regulation, Congress provided an incentive to such facilities over

facilities employing physical cables and wires.

Thus, Guidry Cable could have avoided “physical interaction” with

city property, and thereby the franchise fees, by employing radio waves

instead of physical cable to cross the city’s street. Guidry Cable instead

chose to rely on cable, thereby requiring an excavation permit from the

city and subjecting itself to the city’s franchise fees. The majority’s

opinion, however, undermines the Cable Act’s preference for facilities

employing radio waves rather than physical cables, allows Guidry Cable to

escape part of its obligation in return for the excavation permit and

denies the local government the ability to regulate industries which cross

public rights-of-way. 

I believe the FCC provided a reasonable and usual construction of the

term “use.” Accordingly, I would affirm. 

A true copy.

Attest:

 CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.