Court Opinion

ID: 9492550
Source: CourtListenerOpinion
Date Created: 2023-08-05 14:43:52.425322+00
Date Added: 2024-06-11T17:55:21.772868
License: Public Domain

FITZWATER, District Judge,
dissenting:
The majority opinion does not reach several issues of statutory construction that this appeal presents. The resolution of these questions is important to municipal franchising authorities, telecommunications companies, and the cable television industry.1 Instead, it decides the case on *313a narrow basis that even the appellee does not advance, and in so doing misreads 47 U.S.C. § 522(5)(A). I respectfully dissent.
With exceptions not pertinent here, 47 U.S.C. § 541(b)(1) states that “a cable operator may not provide cable service without a franchise.” Section 522(5) defines “cable operator” as
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 a cable system, or (B) who otherwise controls or is responsible for, through any arrangement, the management and operation of such a cable system[.]
Section 522(2) provides that “ ‘affiliate’, when used in relation to any person, means another person who owns or controls, is owned or controlled by, or is under common ownership or control with, such person[.]” The parties stipulated below, and the majority acknowledges, that Southwestern Bell Video Services, Inc. (“SBVS”) and Southwestern Bell Telephone Company (“SWBT”) are both wholly-owned first-tier subsidiaries of SBC Communications, Inc. (“SBC”). SBVS and SWBT are therefore under common ownership or control, and the two entities are affiliates.
The majority accepts arguendo “the City’s argument that the equipment of SBVS and the wire network of SWBT together comprise a ‘cable system’ under the Act.” It holds that SBVS is not a cable operator, however, because it “ ‘owns’ and ‘controls’ only some components of a ‘cable system’ — satellite dishes, a tower and antennae, and ‘headend’ — which collectively do not amount to a ‘significant interest’ therein.” Maj. Op. at 312 (footnote omitted). The majority quotes from the opinion below, in which the district court explained its basis for concluding that, even if SBVS’s and SWBT’s facilities together constitute a cable system, “there is no evidence that [SBVS] has significant ownership or control over the cable system.” The majority and the district court interpret § 522(5)(A) to mean that SBVS itself must have a significant ownership interest in the cable system, measured separately from its affiliate’s ownership interest.2 This conclusion misinterprets § 522(5)(A).
Section 522(5)(A) provides that the ownership of a significant interest in a cable system may be “direct[ ] or through one or more affiliates.” As wholly-owned first-tier subsidiaries of SBC, SBVS and SWBT are under common ownership or control and are therefore “affiliates.” There is no dispute for purposes of today’s decision that the equipment of SBVS and the wire network of SWBT comprise a “cable system.” It follows that because SBVS and SWBT together own all the equipment and network that constitute the cable system, SBVS owns a significant interest in it, at least through its affiliate.3 I respectfully disagree with the majority’s contrary interpretation.
Moreover, one would think that if this case could so easily be resolved based on this simple premise, SBVS would have vig*314orously raised and pressed this argument. But even SBVS does not ask that we affirm the district court on this reasoning.4 Appellant City of Austin (the “City”) asserts in its opening brief that, standing alone or in combination with SWBT, SBVS owns a significant interest in the cable system. It challenges the district court’s contrary reasoning as neither supportable nor fully comprehensible. SBVS does not contest these contentions. It urges affirmance based on two exceptions to the definition of “cable system” found in § 522(7). SBVS argues that it does not use public right-of-way, thus falling within the exception of § 552(7)(B), and that its activities fall within the common carrier exception, § 552(7)(C).5 As the City points out in its reply brief, SBVS “has not contested on appeal the proposition that it has the requisite interest or control in the cable system to bring it otherwise within the reach of both subsections (A) and (B) of 47 U.S.C. § 522(5).” Appellant Rep. Br. at 3.
I respect the views of my able colleagues, but I would decide this case based on the important issues presented rather than upon a misinterpretation of the definition of “cable operator.”

. The appellant requested oral argument on the ground that this appeal presents an issue of apparent first impression. The appellee *313recognized in its statement regarding oral argument that ''[t]his appeal presents important statutory interpretation questions not previously resolved by an appellate court.”

. The district court also cited the Federal Communication Commission's ruling in In re Entertainment Connections, Inc., FCC 98-111 (June 30, 1998). In Entertainment Connections, however, the provider of cable services unquestionably was not an affiliate of the local exchange carrier. See id. at ¶¶ 55-56.

. The majority responds by stating that ”[t]he dissent's analysis implies that separately incorporated entities have ownership interests in each other’s assets merely because they have a common parent.” Maj. Op. at 312 n. 8. I respectfully disagree. I conclude that, directly or through SWBT, SBVS owns a significant interest in the cable system because SBVS and SWBT are affiliates who are under the common ownership or control of SBC, not because SBVS owns an interest in SWBT’s assets. I am merely interpreting § 522(5)(A) as Congress enacted it, not attempting to rewrite corporate law.

. SBVS asserts in its statement of the issue that "[t]he sole issue before this Court is whether, for purposes of the Cable Act, SBVS operated a 'cable system' within the City of Austin and thus was a 'cable operator' who could be required by the City to obtain a municipal franchise and to remit franchise fees to the City.” Appellee Br. at 2.

. In responding to one of the City's arguments concerning the applicability of the common carrier exception, SBVS focuses on the absence of a cable system rather than upon the definition of cable operator. See Appellee Br. at 31 ("[0]nly after the existence of a 'cable system' has been established does the 'cable operator’ definition's reference to affiliates become relevant to any analysis.”).
SBVS also argues that our decision in City of Dallas v. FCC, 165 F.3d 341 (5th Cir.1999), is distinguishable, and counters the policy arguments advanced by the City and amici curiae in the event the relevant statute is deemed to be ambiguous.