Opinion ID: 610796
Heading Depth: 2
Heading Rank: 2

Heading: FCC's Interpretation

Text: 25 The Commission's decision opened by recognizing that the language of Section 224 is not necessarily dispositive of the central issue presented by TCI's complaint. It therefore turned to the statute's legislative history to determine whether its interpretation conflicted with the goals Congress sought to accomplish by enacting the PAA. See Continental Air Lines v. Dept. of Transportation, 843 F.2d 1444, 1452 (D.C.Cir.1988) (agency's construction must not be patently inconsistent with the statutory scheme) (internal quotations omitted). A principal congressional purpose was to protect cable television companies from the anticompetitive practice by utilities of charging excessive pole attachment rates. Indeed, the Senate Report explains that [o]wing to a variety of factors, including environmental or zoning restrictions and the costs of erecting separate CATV poles or entrenching CATV cables underground, there is often no practical alternative to a CATV system operator except to utilize available space on existing [utility] poles. S.REP. NO. 580 at 13, 1978 U.S.C.C.A.N. at 121. The report then describes in considerable detail the concerns of the cable television industry that some utilities have abused their superior bargaining position by demanding exorbitant rental fees and other unfair terms in return for the right to lease pole space. Id. Similarly, the Supreme Court has observed that the PAA was enacted [i]n response to arguments by cable operators that utility companies were exploiting their monopoly position by engaging in widespread overcharging. FCC v. Florida Power Corp., 480 U.S. 245, 247, 107 S.Ct. 1107, 1109, 94 L.Ed.2d 282 (1987); see also Texas Power & Light Co. v. FCC, 784 F.2d 1265, 1267 (5th Cir.1986); Alabama Power Co. v. FCC, 773 F.2d 362, 364 (D.C.Cir.1985). Therefore, the Commission concluded that its interpretation of the PAA, allowing it to regulate the $95 per pole rate charged by TU, did not do violence to the congressional goal of eliminating monopolistic profits extracted by utilities from cable operators. 4 26 [302 U.S.App.D.C. 243] Next, the Commission agreed with TU that a principal goal of Congress in enacting Section 224 was to facilitate the development of traditional cable television services, but rejected TU's deduction that therefore only cable attachments for distributing conventional video programming should be regulated. Rather, as discussed above, the Commission reasoned that Congress was also aware of the potential for broadband cable services, including data transmission, and the possibility that utilities might in the future compete with cable operators in the nonvideo communications market and use pole attachment rates for an unfair advantage. S.REP. NO. 580 at 13, 1978 U.S.C.C.A.N. at 121. Further, the Commission found evidence that, rather than the type of service to be transmitted over the pole attachments, Congress was interested primarily in the needs of the cable operators themselves. For example, as mentioned previously, Congress' substitution of the phrase cable television system for wire communication was prompted by a letter from the Commission urging that regulation be limited to cable television system operators and not extended to all users of wire communications. H.R.REP. NO. 1630 at 30-31. Moreover, the Senate Report explains that the PAA was designed to allow the FCC to exercise regulatory oversight over the arrangements between utilities and CATV systems in any case where the parties themselves are unable to reach a mutually satisfactory arrangement. S.REP. NO. 580 at 15, 1978 U.S.C.C.A.N. at 123. Thus, the Commission's jurisdictional reach extends only to those entities which participate in the provision of communications space on utility poles. Id. In light of this evidence, and the fact that the statute and legislative history nowhere suggest that attachments for nonvideo communications should go unregulated, the Commission concluded that it could regulate, consistent with the PAA, any attachment by a cable operator so long as it was part of its cable television system and within its cable television franchise. 27 On the other hand, the Commission certainly was not able to come up with any hard evidence that Congress wanted or expected the FCC to regulate pole attachments transmitting nonvideo communications. That, however, was not the Commission's burden. Rather, given the ambiguity in the statutory phrase any attachment by a cable television system, the Commission needed only to offer this court a reasonable interpretation of the PAA. See Chevron, 467 U.S. at 843-44, 104 S.Ct. at 2781-82. In short, the Commission found, based upon the legislative history, that Congress was troubled by allegations that utilities were earning monopolistic profits at the expense of cable companies, and sought broadly to protect cable television system operators rather than merely the provision of conventional cable television service. Therefore, the Commission reasoned that it would be an unreasonable construction of the statute to allow TU to charge TCI the regulated $5 per pole for cables carrying traditional video programming as well as an additional unregulated $90 per pole where some strands within the cables also relayed nonvideo communications. Instead, the Commission held that a utility may only charge a cable television system operator a single, regulated rate regardless of the fact that part of the cable may transmit nonvideo communications. We have no trouble finding this interpretation reasonable, that is, rational and consistent with the statute. NLRB v. United Food & Commercial Workers Union, 484 U.S. 112, 123, 108 S.Ct. 413, 416, 98 L.Ed.2d 429 (1987). 28 TU, however, disputes this conclusion. First, TU argues that it is illogical for the FCC to regulate pole attachment rates for equipment used to carry nonvideo communications when it does not have jurisdiction to regulate the nonvideo communications themselves. We see nothing anomalous in this result. TU is unable to cite any doctrine that requires the Commission to regulate either both the attachment and the communications carried over the attachment or neither, and we see no good reason why it must. After all, the PAA is aimed at the rates charged for pole attachments, not the content [302 U.S.App.D.C. 244] of the transmissions carried over the attachments. 29 Second, TU asserts that the Commission's interpretation cannot be regarded as reasonable because it will have severe anticompetitive effects. According to the parties, there are three potential classes of competitors in the nonvideo communications market: telephone or electric utilities such as TU which own the poles; cable companies like TCI which must lease space on utility poles; and noncable, nonutility communications carriers like Western Union which also must lease pole space from utilities. Under the Commission's approach, TU and TCI would be on substantially equal footing because TU could only charge a just and reasonable rate for pole attachments. Western Union, because it is not a cable television company, would be at a disadvantage since TU could presumably charge a much higher, unregulated rate. Conversely, if TU prevailed, the utilities would have the upper hand, and both TCI and Western Union would be in the equally disadvantageous position of paying unregulated rates for pole attachments. Based on the scant evidence before us, we cannot say which result, even if forecasted accurately, is optimally competitive. The Commission, however, had to make the choice and we are not in a position on this record to second-guess it. It reasonably determined that Congress intended to address the anticompetitive pole attachment practices of utilities, and therefore it should at least, enhance[ ] cable operators' ability to compete against utility companies in the provision of data services, even though it will afford cable television system operators an advantage over other competitors who are not entitled to regulated pole attachment rates under Section 224. 30 Third, and most broadly, TU complains that the Commission's decision must be unreasonable because it allegedly permits any company qualifying as a cable operator to attach any type of cable anywhere and still receive the regulated rate. TU argues that basing eligibility for § 224 protection purely on the type of company involved would lead to results that Congress could not have intended when enacting the PAA. For instance, Western Union could be acquired by TCI and its pole attachment rates would suddenly become regulated; or TCI could establish a subsidiary providing purely data transmission in some other state and claim the § 224 regulated rate; or finally, TCI could enjoy the regulated rate for a massive network of cable transmitting nonvideo communications by attaching cable carrying video programming on a handful of poles. We do not believe such fears are well-founded. Though not entirely crystal clear, the Commission's statutory interpretation does offer some discernable limitations. 31 To begin with, the Commission held that a cable operator may seek Commission-regulated rates for all pole attachments within its system  (emphasis added). In its brief, the Commission reiterates that rates may be regulated only so long as the attachments are part of a 'cable television system,'  FCC Brief at 18 n. 17, which we know is, at a minimum, a system that distributes or is designed to distribute to subscribers the signals of one or more television broadcast stations, 47 C.F.R. § 76.5(a). Here, the Commission observed that TCI is indisputably a cable television system operator within its franchise area. It continued: We reject [TU's] argument that TCI operates both a cable television system and a separate data network. In our view, the record indicates that data and video are commingled over TCI's transmission facilities, rather than offered over distinct networks. On a petition for reconsideration, the Commission emphasized that its decision had been reached within the specific factual context of a system that provides both traditional (i.e., video) and nontraditional (i.e., data) services on a 'commingled' basis over a single network within its cable franchise area. 32 In addition, the Commission interpreted the PAA as conferring jurisdiction over only those pole attachments within a cable operator's franchise service area. It noted that TCI's complaint relates only to areas within the scope of its cable television franchise, and that in any event, pole attachments outside a franchise area are not covered by Section 224. See also Paragon Cable Television, Inc. v. FCC, 822 F.2d 152, 153 (D.C.Cir.1987) (agency's decision that possession [302 U.S.App.D.C. 245] of a cable television franchise is reasonable precondition for pole attachment rights not arbitrary or capricious). 5 Thus, the Commission held that TU may charge TCI a single, regulated rate for pole attachments within TCI's franchise area. 33 Although it is reasonably clear when an attachment carrying nonvideo communications will be within a cable operator's franchise area, it is less certain when such an attachment will be part of a cable television system or be commingled with video services on a single network. Based on the record, however, we have no reason to doubt the Commission's conclusion that the attachments at issue in this case fit within all of these parameters. But TU asserts that the Commission's interpretation may be more difficult to apply in future cases, and as a result, the interpretation is fatally flawed. While we too can devise difficult hypotheticals, we do not agree that this renders the Commission's interpretation unreasonable. It is the hallmark of the case-by-case, adjudicatory process that the Commission will, under different fact patterns, delineate ever more precisely the boundaries of its statutory construction. As the Commission explained at oral argument, at some point the Commission may find a cable operator's pole attachments to no longer be an attachment by a cable television system. For instance, in this case, the Commission found that 1705 of the 1788 poles at issue (95%) carried attachments for both video and nonvideo transmissions, while the remaining 83 poles (5%) had attachments for nonvideo communications only; were those percentages reversed, the Commission would need to seriously reassess whether a single, regulated rate would still be appropriate. See, e.g., INS v. Cardoza-Fonseca, 480 U.S. 421, 448, 107 S.Ct. 1207, 1221, 94 L.Ed.2d 434 (1987) (Ambiguous statutory terms can only be given concrete meaning through a process of case-by-case adjudication. In that process of filling any gap left, implicitly or explicitly, by Congress, the courts must respect the interpretation of the agency to which Congress has delegated the responsibility for administering the statutory program.) (internal quotations omitted). 6 34 Moreover, we are not convinced that TU's interpretation of the statute--that only pole attachments carrying traditional video programming are eligible for the regulated rate--would be any easier to apply in future cases. According to the Commission, under the Dallas cable television franchise agreement, TCI provides data transmission capacity over its coaxial facilities to local schools, fire and police departments and libraries. TU does not impose a surcharge for these services carried over coaxial cable, but only imposes it for nonvideo communications carried over fiber optic cable. TU offers no basis for its disparate treatment of the two types of cable. Also, we are unsure that the distinction relied upon by TU between video and nonvideo cable attachments can withstand current technological innovations. According to one affidavit in the record, the technology exists for a single fiber strand to carry both video and data communications. And even if we found TU's interpretation of the PAA reasonable, that would not disqualify the FCC's at least equally reasonable construction.