Opinion ID: 676985
Heading Depth: 3
Heading Rank: 1

Heading: Cable Service

Text: The Act defines cable service as: 18 (A) the one-way transmission to subscribers of (i) video programming, or (ii) other programming service, and 19 (B) subscriber interaction, if any, which is required for the selection of such video programming or other programming service. 20 47 U.S.C. Sec. 522(6). 21 The Commission determined that a telephone company offering video dialtone service would not be providing cable service as defined by the statute because it would not be engaged in the transmission ... of video programming contemplated by Sec. 522(6)(A)(i). Memorandum Opinion and Order on Reconsideration, 7 FCC Rcd. at 5071. In the Commission's lexicon the term 'transmission' ... requir[es] active participation in the selection and distribution of video programming. Memorandum Opinion and Order on Reconsideration, 7 FCC Rcd. at 5071. The Cable Act does not define the term transmission; hence we uphold the agency's definition of that term if it is reasonable. Sierra Club v. EPA, 719 F.2d 436, 460 (D.C.Cir.1983). 22 NATOA argues that the Commission's definition of transmission is unreasonably narrow; a telephone company providing video dialtone service, they say, is engaged in the 'transmission' of programming because it sends that programming into the subscribers' homes. To transmit, according to NATOA (quoting Webster's New World Dictionary at 1511 (1982)), means to send or cause to go from one person or place to another, esp. across intervening space or distance; transfer, dispatch; convey. 23 As the Commission points out, however, a definition under which any entity that sends programming into the subscribers' homes is engaged in transmission is simply too broad to fit into the regulatory framework; under NATOA's approach, a telephone company providing channel service would require a franchise--which is at odds with all historical practice. At the time the Cable Act was adopted, many telephone companies provided channel service, which entails their building a video distribution facility and leasing it (in whole or in part) to a cable operator. A telephone company that wants to provide channel service must get FCC authorization under Section 214 of the Communications Act before constructing the facilities, 47 U.S.C. Sec. 214, but it need not procure a local franchise. According to the Commission, when the Congress passed the 1984 Act, it was well aware how channel service is regulated and gave no indication that it intended to change the regulatory framework. Memorandum Order and Opinion on Reconsideration, 7 FCC Rcd. at 5071. The Committee on Energy and Commerce report on the Cable Act noted that 24 nothing in section 613(b) is intended to prevent a common carrier from constructing, subject to applicable law, a local distribution system that is capable of delivering video programming and other communications or information services to multiple subscribers within a community. Section 613(b) does not prevent a common carrier from leasing or otherwise making available a part or all of the capacity of such a system to a franchising authority or to a cable operator who has received a franchise from the franchising authority in accordance with the conditions in Title VI.... Section 613(b) prohibits a common carrier from selecting or providing the video programming to be offered over a cable system. 25 H.R.Rep. No. 934, 98th Cong., 2d Sess. 57 (1984), U.S.Code Cong. & Admin.News 1984, p. 4655. 26 Furthermore, the Commission points out, even under the dictionary definition quoted by NATOA, the party that sends programming into the subscriber's home is more logically the customer-programmer, not the telephone company: no programming 'goes from one person or place to another' unless the video programmer transmits it. The telephone company acts merely as a transparent conduit that enables the customer-programmers to  'send or dispatch' video programming directly to subscribers. 27 Common usage supports the same conclusion. One sends a letter, although the post office actually delivers it; thus one says I sent you a letter, not The post office is sending you a letter for me. So, too, when one places a phone call; the signal must go through the telephone company's facilities before reaching the other party, but no one would say that the telephone company was making the call. Likewise, transmitting a video signal implies at least choosing the signal, or originating it, not necessarily conducting it personally to its destination. The telephone company is merely a conduit for those signals that originate with and are chosen by the caller or, in this case, the video programmer. The Congress that enacted the Cable Act was undoubtedly full of members to whom this is just as obvious as it is to us. 28 NCTA rejoins that channel service is not franchised as a cable service not because the telephone company providing it does not transmit video programming within the meaning of Sec. 522(6)(A)(i), but rather because it is not responsible for the subscriber interaction, if any needed to select the programming, as required by Sec. 522(6)(A)(ii). This argument fails because the qualification if any in the statutory definition of cable service clearly implies that the subscriber interaction to which the NCTA refers is not a necessary component of cable service. Hence the channel service provider's failure to offer subscriber interaction cannot be the reason it is exempt from the franchise requirement. 29 On the other side of the same coin, NCTA argues that telephone companies that provide video dialtone will provide the subscriber interaction described in Sec. 522(6)(B), and that therefore they are required to obtain a franchise. As the petitioner points out, at the second level of video dialtone service a telephone company may provide 'video gateways,' which will permit subscribers to 'select and receive video programming made available by video programmers,'  as well as offering  'billing and collections services, equipment and installations.'  Quoting Second Report and Order, 7 FCC Rcd. at 5784 and n. 5. 30 This argument fares no better than the first. Preliminarily, we note that it is doubtful whether a telephone company's provision of billing, equipment, and installation services constitutes subscriber interaction ... required for the selection of ... video programming. 47 U.S.C. Sec. 522(6); see H.R.Rep. at 43-44 (The Committee intends that the interaction permitted in a cable service shall be that required for the retrieval of information from a specific number of options or categories, including, for example, video programming, pay-per-view, voter preference polls in the context of a video program video rating services [sic], teletext, one-way transmission of any computer software (including, for example, computer o[r] video games) and one-way videotex[t] services such a[s] news services, stock market information, and on-line airline guides and catalog services that do not allow customer purchases). More fundamentally, even if the video gateway offered by a telephone company qualifies as subscriber interaction, that alone does not render the telephone company a provider of cable service. Section 522(6) is written in the conjunctive--cable service is defined as the transmission of video programming and any subscriber interaction required for the selection of video programming. That a telephone company may provide unregulated enhanced services under its video dialtone authorization does not mean that it will engage in the transmission of video programming as contemplated by the Act; in fact, a telephone company providing video dialtone service is prohibited from providing video programming directly to subscribers. See First Report and Order, 7 FCC Rcd. at 312. 31 We conclude that the Commission reasonably interpreted the Act to require that an entity obtain a cable franchise only when that entity selects or provides the video programming to be offered. Id. at 5072. A local telephone company would act merely, as the Commission put it, as a transparent conduit that enables its [programmer] customers to 'send or dispatch' video programming directly to subscribers, and hence would not be engaged in the transmission of programming under the Act. 32 Nonetheless, NATOA objects that in National Ass'n of Broadcasters v. FCC, 740 F.2d 1190, 1205 (D.C.Cir.1984), we rejected as irrational the very argument that we find reasonable today. Not so. In that case the Commission had determined that neither a customer-programmer nor a separately owned satellite facility that together provided direct broadcast satellite service was engaged in broadcasting within the meaning of Title III, although the agency had earlier determined that subscription television service is indeed broadcasting. This court rejected the Commission's attempt to make integrated ownership the touchstone of broadcasting, id. at 1202, and vacated the rule under review for want of a reasoned explanation for the Commission's changed position. In a later rulemaking the FCC supplied the missing explanation, and we upheld its decision. National Ass'n For Better Broadcasting v. FCC, 849 F.2d 665, 669 (D.C.Cir.1988). Here, as we have seen, the Commission has provided a reasoned explanation for its determination that video dialtone service is not subject to regulation as cable service under the Cable Act. That explanation does not rest merely upon separate ownership of the telephone company and its customer-programmers. 33 It is also noteworthy that in the NAB case no one challenged the Commission's decision that a satellite owner that acts as a common carrier, offering satellite transmission services indiscriminately to the public pursuant to tariff under the provisions of Title II of the Act is not also subject to regulation as a broadcaster under Title III. 740 F.2d at 1200. While that case tells us nothing directly relevant to the FCC's decision here that a telephone company that offers video dialtone service as a common carrier under Title II is not also subject to regulation as though it offered a cable service, it is fully in keeping with the Commission's present interpretation of the term transmission. As we said then, the Commission applies [Title III] directly to the entities responsible for program selection and transmission--the broadcast licensees. Id. at 1202. 34 In sum, we hold that the Commission's definition of the term transmission to require active participation in the selection and distribution of video programming is reasonable.