Opinion ID: 676985
Heading Depth: 3
Heading Rank: 2

Heading: Cable Operator

Text: 35 As a separate and sufficient reason for holding that a telephone company providing video dialtone service does not need a cable franchise, the Commission determined that the telephone company is not a cable operator. Recall that the Cable Act provides that a cable operator may not provide cable service without a franchise. The Act goes on to define a cable operator as 36 any person or group of persons (A) who provides cable service over a cable system and directly or through one or more affiliates owns a significant interest in such cable system, or (B) who otherwise controls or is responsible for, through any arrangement, the management and operation of such a cable system. 37 47 U.S.C. Sec. 522(5), and to define a cable system as 38 a facility, consisting of a set of closed transmission paths and associated signal generation, reception, and control equipment that is designed to provide cable service which includes video programming and which is provided to multiple subscribers within a community, but such term does not include ... 39 (c) a facility of a common carrier which is subject, in whole or in part, to the provisions of title II of [the Communications Act], except that such facility shall be considered a cable system ... to the extent such facility is used in the transmission of video programming directly to subscribers.... 40 47 U.S.C. Sec. 522(7) (emphases added). 41 According to the Commission, a telephone company providing a video dialtone service is not a cable operator because a video dialtone facility is not a cable system. Rather, it comes within the exemption in paragraph (c) for a facility of a common carrier subject to regulation under Title II of the Communications Act. Regulation as a cable system would be duplicative because common carrier regulation incorporate[s] the same concerns about public safety and convenience and use of public rights of way that provide a key justification for the cable franchise requirement. Memorandum Opinion and Order on Reconsideration, 7 FCC Rcd. at 5072. The Commission found no reason to believe that the Congress intended to subject a telephone company to such duplicative regulation. Id. 42 The Commission went on to determine that the exception to the exemption in paragraph (c) does not apply to video dialtone service because it does not involve the local telephone company in providing video programming directly to subscribers. The exception, it says, was directed at telephone companies providing a conventional cable service, which they are permitted by the Cable Act to do in rural areas and other communities where no other entity is likely to offer cable service. Id.; see 47 U.S.C. Secs. 533(b)(3), (4). In such a situation, the telephone company is subject to the franchise requirement, presumably because it is exempt from common carrier regulation. See 47 U.S.C. Sec. 541(c). 43 NCTA would have us believe instead that the exception only excludes ... a telephone company facility that stops short of subscribers' homes, but merely transmits signals internally from one cable operator facility to another (e.g. from a distant receiver to a headend). That reading would render the exception meaningless, however; for a facility transmitting signals from one cable operator to another and not to multiple subscribers would not be subject to regulation as a cable system in the first place. See 47 U.S.C. Sec. 522(5). While an exception that excepts nothing may commend itself to NCTA, both the FCC and the court must, if possible, give effect to every phrase of the statute. National Insulation Transportation Comm. v. ICC, 683 F.2d 533, 537 (D.C.Cir.1982). 44 The Commission's interpretation of the exemption to avoid duplicative regulation is self-evidently reasonable. Its reading of the exception to the exemption strikes us as quite reasonable as well. A telephone company providing video dialtone service to programmers is prohibited from providing video programming directly to subscribers, see First Report and Order, 7 FCC Rcd. at 312; therefore the exception does not apply. This is consistent with the Commission's determination (with which we agreed in Part II.A.1, above) that a telephone company providing video dialtone service is not engaged in the transmission of video programming. 45 The Commission also determined that a video dialtone facility does not constitute a cable system because it 46 will not ordinarily include the necessary signal generation, reception and control equipment. As a video dialtone provider, a telephone company generally will not control this headend equipment, which is associated with selection and provision of video programming. 47 Memorandum Opinion and Order on Reconsideration, 7 FCC Rcd. at 5072-73. The petitioners argue that ownership of the component parts of a system is irrelevant to the question whether it is a cable system; they cite as support the channel service arrangement, under which the customer-programmer of the telephone company's facilities is required to obtain a franchise. Because we have already held that the Commission reasonably interpreted the exemption to Sec. 522(7) so as to exclude from the definition of a cable system a telephone company providing video dialtone service, we need not address the agency's other argument to the same effect.