Endnotes
1. Fellow, The Annenberg Washington Program in Communications Policy
Studies of Northwestern University; Attorney, Action for Children's Television;
Professor of Practice, Duke University.
2. While at one time there were over 15 bills concerning cable television
regulation pending in the 101st Congress, the compromise bills which emerged
were S. 1880, "Cable Television Consumer Protection Act of 1990," 101st Cong.,
1st Sess., Nov. 1989, in the Senate, and H.R. 5267, 101st Cong., 2d Sess., in
the House. Ultimately, neither bill had sufficient support to become law.
3. Competition, Rates Regulation, and the Commission's Policies Relating to
the Provision of Cable Television Service, FCC No. 90-276, released July
31, 1990 [herein "1990 Cable Report"]. The FCC was required to make this report
to Congress by the Cable Communications Policy Act of 1984, P. L. 98-549,98
Stat. 2780, Oct. 30, 1984 (codified at 47 U.S.C. Sec. 521-559)(The "Cable
Act"0. The Cable Act established the first comprehensive national scheme of
regulation for cable television, substantially derefulating cable reates and
other aspects of the industry, and defining the respective jurisdictions of the
FCC, the states, and the local franchise authorities over cable operators. The
FCC's 1990 Cable Report represented the first formal governmental review of the
success of the Cable Act from a regulatory perspective. Ironically, by the time
it was issued by the FCC, Congress had already extensively debated many of the
issues that were the subject of the FCC's recommendations.
4. See "Why Viewers Would Like to Zap Their Cable Firms," Wall Street
Journal, Mar. 19, 1990 at B1; "Rival From the Sky Hovers Over Cable,"
id.
5. See, e.g., "Communications Competitiveness and Infrastructure
Modernization Act of 1990," S. 2800, 101st Cong., 2d Sess., June 1990,. Some of
the telephone companies argue that, if permitted into the video programming
business, they would construct broadband fiber optic cable networks to all
homes and businesses (and other end users) in the sUnited States. A "broadband"
fiber network would, in theory, carry telephone and data (computer) lines as
well as video into the home or business through a single wire. Many believe
such a system would multiply the capacity of today's cable television systems
exponentially, enabling virtually any interested party to have access to a
video channel. However, even the most optimistic forecasts do not predict a
fiber cable into the home until at least the early part of the next century.
6. See, e.g., S. 1880, 101st Cong., 1st Sess., supra.
7. See, e.g., id.
8. See, e.g., Report & Order, 1 FCC Rcd. 864 (1986).
9. According to the most recent penetration figures, cable service now posses
(or can be subscribed to by) 90 percent of all American television households,
and is subscribed to by 59 percent of all U.S. television households.
See A.C. Neilson Co., Media Research News, July 1990.
10. The carriage of over-the-air broadcast signals was determined in the past
by the so-called "must-carry" rules promulgated bu the FCC. Those rules,
however, were twice struck down by the United States Court of Appelas as
arbitrary and in violation of the First Amendment. See Century
Communications v. FCC, 835 F.2d 292 (D.C. Cir. 1987), clarified, 837
F.2d 517 (D.C. Cir. 1987), cert. Denied, 108 S.Ct. 2014 (1988). Cable
operators may also be required to make available public, educational, and
governmental access (PEG) channels which are outside of the editorial
discretion of the cable operator. See Section 611 of the Cable Act, 47
U.S.C. Sec 531. Such channels are not universally required. Sec. 611(a).
11. In Associated Press v. U.S., the Supreme Court stated that the goal
of the First Amendment is to foster "the widest possible dissemination of
information from diverse and antagonistic sources." 326 U.S. 1,20 (1945)
affirming 52 F. Supp. 362,272 (S.D.N.Y., 1943)(the interest in diverse
sources of information is "akin to, if indeed not the same as, the interest
protected by the First Amendment; it presupposes that right conclusions are
more likely to be gathered out of a multitude of tongues, than any kind of
authoritative selection. To many this is, and always will be, folly; but we
have staked upon it our all.").
12. 47 U.S.C. Sec. 532(b).
13. 47 U.S.C. Sec. 531.
14. 20 FCC 2d 201 (1969). "CATV" (Community Antenna Television) was the name
intially given to the technology now more commonly known as cable television.
15. Id. At 209.
16. Id. At 205.
17. These rules were an attempt by the Commission to ensure that cable evolved
into something more than a medium used to retransmit broadcast signals. In
addition to the leased access requirements discussed here, the rules imposed
requirements regarding minimum channel capacity, program origination, two-way
capacity, and public, educational, and governmental (PEG) access channels. 47
C.F.R. Sec. 76.251 et seq. (1972).
18. 47 C.F.R. See 76.251(a)(7)(1972), reprinted in Cable Television Report
and Order, 36 FCC 2d 141, 241 (1972).
19. Id.
20. Interestingly, however, the cable operator was required to prhibit obscene
or indecent matter and lottery information and to require sponsorship
identification. 47 C.F.R. Sec. 76.251 (a)(11)(iii)(1972). It was not clear
whether the cable operator was permitted to refuse carriage on this basis or
whether it was the task of the franchising authority, which is now the entity
responsible for this kind of content regulation under Section 612(h) of the
Cable Act of 1984, to "prescreen" or otherwise intervene. See discussion at
note 157 infra. The FCC did state that since the cable operator lacked
control over the channels, it would not be liable for the content (whether
criminal or civil, such as libel). See Farmers Educational and Cooperative
Union v. WDAY, 360 U.S. 525 (1959).
21. Cable Television Report and Order, supra 36 FCC 2d at 197, citing
First Report and Order in Docket 18397, 20 FCC 2d 201, supra, at
par. 3.
22. United States v. Midwest Video Corp., 406 U.S. 649 (1972).
23. On the Cable, Report of the Sloan Commission on Cable
Communications, McGraw-Hill, 1971 at 142-144.
24. Ibid.
25. See Besen & Johnson, An Economic Analysis of Mandatory Leased
Channel Access for Cable Television, Rand Corp., R-2989-MF, 1982 at 11.
26. Cabinet Committee on Cable Communications, Report to the President, 1974.
27. Id. At 29 [footnotes omitted].
28. Id. At 30. The Report did acknowledge that rates could vary
depending on time of day, long-term or volume leasing, whether the lessee was
commercial or noncommercial, whether the service was advertiser-based, and
whether the lessee used the channel for a nonvideo programming use such as home
banking. Id. At 44.
29. Under pressure, the Committee did eventually recommend that the cable
operator be allowed to control "one or two additional channels." Id. at 65.
30. Id. At 30.
31. Report & Order in Docket 20508, 59 FCC 2d 294 (1976).
32. Id. At 296.
33. Id. At 316. The 1976 rules, like their 1972 counterparts, also set
forth obligations regarding PEG access channels, their manner of use, provision
of origination facilities, etc. 47 C.F.R. Sec. 76.251 - 76.256 (1976).
34. FCC v. Midwest Video Corp., 440 U.S. 689 (1979). Although the Court
did not reach the cable operators' First Amendment claims, it noted in a
footnote that the lower court's First Amendment discussion (finding the FCC
rules violative of the First Amendment) was not "frivolous."
35. 47 U.S.C. Sec 153(h).
36. Midwest Video, supra, 440 U.S. at 700-701.
37. Petition of Henry Geller and Ira Barron to Issue Notice of Proposed Rule
Making, filed October 9, 1981.
38. E.g., Comments of the National League of Cities, filed December 4,
1981.
39. See Cable Television Communications Act of 1982, Report of the
Senate Committee on Commerce, Science and Transportation S. 2172, 97th Cong.,
2d Sess., Rep. No. 97-518, August 10, 1982.
40. The National League of Cities (NLC) and the U.S. Conference of Mayors
negotiated for the cities and the National Cable Television Association (NCTA)
participated for the cable industry. See Hearings on S. 66 Before the
Subcommittee on communications of the committee on Commerce, Science and
Transportation, 98th Cong., 1st Sess., Feb. 16 and 17, 1983, Rep. No. 98-26, at
123 (Statement of Senator Goldwater) [herein "Senate Hearings"] and Hearings on
H.R. 4103, H.R. 4229, and H.R. 4299 Before the house Subcommittee on
Telecommunications, Consumer Protection and Finance of the Committee on Energy
and Commerce, 98th Cong., 1st Session, May 25, June 22, Nov. 3, 1983, "Options
for Cable Television," 9 (Statement of Rep. Wirth) [herein "House Hearings"].
It was House bill H.R. 4103 that ultimately was passed as the Cable
Communications Policy Act of 1984 (the "Cable Act").
41. For example, the American Public Power Association stated that cable could
be used for utility load control, energy management, meter reading, and
automation of transmission and distribution functions. Without the ability to
lease two-way cable capacity, these services would be limited or foreclosed.
See House Hearings, supra, at 623-624. See also Statement
of Citibank, id. At 222.
42. See Owen & Greenhalgh, Competitive Policy Considerations in
Cable Television Franchising (1983), cited in House Hearings,
supra, at 70.
43. Testimony of Frank Greif, Mayor's Office of Cable Communicatins, Seattle,
Washington, Senate Hearings, supra, at 135.
44. Testimony of Trygve Myhe\ren, House Hearings, supra, at 253-255.
See also Statement of John Saeman, CEO of Daniels Associates (which owns
and operates 22 cable systems), id. at 267.
45. Testimony of Thomas Wheeler, id. at 62. Of course, the operative
consideration is diversity of sources, not diversity of programming. See
note 11, supra.
46. House Hearings, supra, at 286.
47. 47 U.S.C. Sec. 532.
48. See Letter of Consumer Federation of America, et al., dated
October 1, 1984, 130 Cong. Rec. 10447, 98th Cong., 2d Sess., Oct. 1, 1984.
49. 47 U.S.C. Sec 542.
50. Under 47 U.S.C. Sec 543, the FCC defines when "effective competition"
exists. The definition is again under consideration at the FCC. Further
Notice of Proposed Rule Making, MM Docket # 90-4, FCC #90-412, Dec. 13,
1990.
51. As the House Report mentioned, "cities do not have the political incentives
to push for leased access...." Report of the Committee on Energy and Commerce,
H.R. 4103. 98th Cong., 2d Sess., Rep. No. 98-934, at 30 [hereinafter "House
Report"].
52. House Report, supra, at 31.
53. House Report, supra, at 31-32, citing, Red Lion Broadcasting v.
FCC, U.S. 367, 390 (1969).
54. House Report, supra, at 48.
55. Interview with Henry Geller, Communications Policy Fellow, Markle
Foundation, Oct. 1, 1990.
56. 47 U.S.C. Sec 532(a).
57. 47 U.S.C. Sec 532(b). When calculating percentages for systems of 36-100
channels, channels required by federal law (such as federally imposed
aeronautical channels or the former "must-carry" channels) are not included.
"Activated channels" are defined as channels engineered at the cable system
headend for service and generally available, regaradless of whether service is
actually being provided. 47 U.S.C. Sec 532(b)(4)(a).
58. 47 U.S.C. Sec 532(b)(2).
59. This is defined as "programming provided by, or generally considered
comparable to programming provided by, a television braodcast station." 47
U.S.C. Sec 522 (16).
60. 47 U.S.C. Sec. 532(b)(5)(B).
61. 47 U.S.C. Sec. 532(c)(1).
62. House Report, supra, at 50.
63. Id. at 50.
64. 47 U.S.C. Sec. 532(f).
65. The franchising authority, however, is permitted to exercise its judgment
as to whether a potential service is obscene or indecent. 47 U.S.C. Sec
532(h).
66. 47 U.S.C. Sec 532(c)(2).
67. House Report, supra, at 51.
68. Id.
69. Id.
70. Id.
71. 47 U.S.C. Sec. 532(d).
72. House Report, supra, at 52.
73. 47 U.S.C. Sec 532(d).
74. 47 U.S.C. Sec 532(f).
75. 47 U.S.C. Sec 532(d).
76. 47 U.S.C. Sec. 532(e).
77. 47 U.S.C. Sec 532(g).
78. 1990 Cable Report, supra, at par. 3 citing Paul Kagan Assoc.,
Inc., Marketing New Media, at 5 (June 18, 1990). See also note 9,
supra.
79. Cable Television Advertising Bureau, Cable TV Facts '90 (1990) at
5.
80. See note 9, supra, and accompanying text.
81. 1990 Television and Cable Factbook (cabel and service volume)(Warren
Pub.) at C-35.
82. This is even more true with the elimination of the must-carry rules, note
10, supra, because despite the FCC's education campaign on the use of
A/B switches, they are still not a practical measure for most people. Not only
do cable operators encourage subscribers to dismantle their antennas, Report
and Order, 1 FCC Rcd 864, 880, (1986), some television sets do not even
provide a separate UHF antenna input anymore. See Comments of INTV in MM
Docket 89-600, March 1, 1990 at 35.
83. See section II, supra.
84. Besen Johnson, An Economic Analysis of Mandatory Leased Access for
Cable Television, supra, at 19-20.
85. Ithiel de Sola Pool, technologies of Freedom, Harvard University
Press, 1983 at 172.
86. The proper measure of cable's market power is open to some dispute (whether
by Tobin's Q ration, regression analyses, or other means), although the
government agencies which have addressed the question do generally agree that
cable does have such power to varying degrees. See Report of the Senate
Committee on Commerce, Science and Transportation on S. 1880, Cable Television
and Consumer Portection Act of 1990, Rep. No. 101-381, 101st Cong., 2d Sess.,
July 19, 1990, at 9-12 [herein "Senate Report"]; Comments of the Department of
Justice in MM Docket No. 89-600, March 1, 1990; 1990 Cable Report,
supra, at par. 127, App. F.
87. Indeed, the Fcc has found that the Cable Act of 1984 fostered such vertical
integration. 1990 Cable Report, supra, at par. 79. This increase in
equity participation by the cable MSOs can be interpreted at further evidence
of the leverage possessed by cable operators over program suppliers.
88. Of the 9600 cable systems operating in the United States, only 40 to 49
fact competing cable systems. 1990 Cable Report, supra, at par. 98.
89. 1990 Cable Report, supra, at par. 56. See also Competitive Issues
in the Cable Television Industry, Subcommittee on Antitrust, Monopolies
& Business Rights, Committee on the Judiciary, March 17, 1988 at 113-116;
152-157.
90. ESPN, the 24-hour all-sports service, is the exception. Independently
owned, it nevertheless has leverage of its own due to the desirability of the
service to cable audiences. I is significant, however, that its profitable
relationship with the cable industry has led to situations where it has refused
to deal with competing cable or multichannel delivery systems. See "Overbuilder
Joins Dispute Over Ordinances," Multichannel News, Oct. 15, 1990 at 27
(involving refusal of ESPN to deal with second cable operator in Montgomery,
Alabama, where there was an established relationship with the first
franchisee).
91. Testimony of Ben Bagdikian, "Media Ownership: Diversity and Concentration,"
Hearings Before the Subcommittee on Communications of the Senate Committee on
Commerce, Science and Transportation, rep. No. 101-357 101st Cong., 1st Sess.,
June 14, 21, and 22, 1989 at 88 [herein "Diversity Hearings"], reprinted in
Senate Report, supra, at 22 (citation omitted).
92. Business Week, Oct. 26, 1987 at 88.
93. Senator Gore stated it as follows: "The simple point is the one made long
ago by Lord Acton. Power corrupts and absolute power corrupts absolutely....The
temptation comes out in many forms. There is a temptation to shake down
programmers who want access and say cough up some of your ownership or else we
will not let you on cable." Hearings on the Cable TV Consumer Protection Act of
1989, Subcommittee on Communications, Committee on commerce, Science and
Transportation, United States Senate, 101st Cong., 2d Sess., March 29 and April
4, 1990 at 145.
94. "NBC Ponders Plan for Cable News Service," Broadcasting, Aug. 26,
1985 at 33-34.
95. Id.
96. Id. at 34.
97. Id.; "NBC Gives Outline," Broadcasting, Nov. 4, 1985 at 10.
98. "Glimmering Hopes," Broadcasting, Dec. 16, 1985 at 7.
99. "Malone to Join Board of Turner Broadcasting," Braodcasting, April
14, 1986 at 10.
100. See 1990 Cable Report, supra, at par. 120; Testimony of
Robert Wright, Diversity Hearings, supra, at 609-610; Hearings on the
Cable TV Consumer Portection Act of 1989, Subcommittee on Communications,
Committee of Commerce, Science and Transportation, United States Senate, 101st
Cong., 2d Sess., March 29 and April 4, 1990 at 142-143 [herein "Consumer
Protection Hearings"].
101. 1990 Cable Report, supra, at par. 120.
102. Statement of Senator Albert Gore (Tenn.), Consumer Protection Hearings,
supra, at 143.
103. See 1990 Cable Report, supra, at par. 123.
104. New York Citizens Committee v. Manhattan Cable, 651 F. Supp. 802
(S.D.N.Y. 1986). The plaintiff, a citizens group, alleged antitrust violations
(Sherman Act), contractual breach of the franchise agreement, and
violation of Section 612, the commercial leased access provision of the Cable
Act, 47 U.S.C. Sec 532. The group argued that it was an "aggrieved party"
within the meaning of Section 612(d( because "its members have been denied the
diversity of pay television sources that was the underlying goal of the leased
access requirements...." 651 F. Supp. at 813. While the court agreed that such
a citizens groups was clearly one of the intended beneficiaries of the
provision, it lacked standing under Section 612, which was in fact a remedy for
cable programmers. Id. at 814. The court did find antitrust standing,
however. Significantly, the case was eventually settled and the cable company
agreed to carry an unaffiliated program service. Telephone interview with
Robert T. perry, counsel for plaintiff New York Citizens Committee, Nov. 29,
1990.
105. USA Network v. Jones Intercable, 729 F. Supp. 304 (S.D.N.Y.
1990).
106. The lower court dismissed the lawsuit. Bello v. Cablevision Systems
Corp., New York State Supreme Court, Suffolk Cunty, Index No. 19148-88,
New York Law Journal, July 17, 1990, p. 30, Col. 1, appeal
pending, App. Div. 2d Dep.
107. See Testimony of James Hedlund, Association of Independent
Television Stations, Consumer Protection hearings, supra, at 12;
Statement of CATA President Steven Effros that expanding channel capacity may
be reaching the point of diminishing returns. Cmmunications Daily, Oct.
26, 1990 at 2. According to Paul Kagan Associates, 36 channels appears to
provide the optimum capacity for cable operators. Marketing New Media,
January 18, 1990.
108. See Pool, Technologies of Freedom, supra, at 168.
109. Some of the smaller cable systems have attempted to secure similar
discounts through the formation of the National Cble Television Cooperative,
founded in 1984. They have encountered enormous resistance, however, from many
of the largest networks (such as HBO, Cinemax, ESPN, CNN, and USA), which
refuse to deal with them. See Letter of Michael Pandzick to Senator
Ernest F. Hollings dated March 27, 1990.
110. See Shooshan & Jackson, Economic Analysis of Concentrated
Ownership of Cable Systems, July 18, 1986, at 1.
111. 1990 Cable Report, supra, at par. 71.
112. The FCC stated that in terms of national (horizontal) concentration, cable
was relatively unconcentrated by traditional antitrust measures such as the
Herfindahl-Hirschman Index (HHI). 1990 Cable Report, supra, at par. 75.
But the FCC also stated that local concentration may be of more concern insofar
as cable's ability to act anticompetitively. Id. at par. 76.
113. See Consumer Protection Hearings, supra, at 137-138.
114. Indeed, the benefits of horizontal concentration and vertical integration
have been well documented. 1990 Cable Report, supra, at pars. 82-86;
NCTA Comments in FCC MM Dkt. 89-600, March 1, 1990, at 55-56; Testimony of
James Mooney, Oversight of Cable TV, Hearings before the Subcommittee on
Communications of the Committee on Commerce, Science and Tansportation, No.
101-464, Nov. 16-17, 1989, at 178-179 [herein "Oversight Hearings"]; NTIA
Report, Video Program Distribution and Cable Television, No. 88-233
(June 1988) at 90-93.
115. 1990 Cable Report, supra, at par. 127. See also Senate
Report, supra, at 23-25.
116. See note 2, supra, Senate Report, supra, at 27.
117. Senate Report, supra, at 27.
118. See, e.g., 1990 Cable Report, supra, at par. 177; Report on
the cable Television Consumer Protection and Competition Act of 1990, H.R.
5267, Rep. No. 101-682, 101st Cong., 2d Sess. at 34 [herein "1990 House
Report"]; Oversight Hearings, supra, at 103, 395; Comments of NCTA in
FCC MM Docket 89-600, March 1, 1990 at 92; Comments of NTIA in FCC MM Docket
89-600, March 1, 1990 at 28; Comments of Motion Picture Association of America
(MPAA) in FCC MM Docket 89-600, March 1, 1990 at 19; Comments of the City of
New York and the National League of Cities et al. (NY/NLC) in FCC MM
Docket 89-600, March 1, 1990 at 70.
119. While Continental Cablevision did assert in its comments to the FCC that
leased access users have offered programming "competitive with" basic services,
the examples cited were all local services such as classified advertising,
entertainment listings, and real estate information. Comments of Continental
Cablevision in FCC MM Docket 89-600, March 1, 1990 at 104-105. Indeed, this
type of channel leasing (with noncompetitive services) benefits cable operators
for, if there is idle capacity, the system can earn additional revenue.
See Pool, supra, at 181.
120. See text accompanying notes 88-102, supra.
121. Comments of NCTA in FCC MM Docket 89-600, supra, at 92. See
also, Senate Report, supra, at 27 (answers to questions submitted to
John Malone, TCI).
122. Id. at 93.
123. See, e.g., 1990 House Report, supra, at 34; Comments of MPAA
in FCC MM Docket 89-600, supra, at 19; Comments of NYNLC in FCC MM
Docket 89-600, supra, at 70; comments of NTIA in FCC MM Docket 89-600,
supra, at 28.
124. Comments of MPAA, supra, at 19.
125. Comments of NY/NLC, supra, at 71. As NY/NLC points out, the need
for such a policy is questionable given the fact that cable operators are
immune from damages which result from leased access programming. See 47
U.S.C. Sec. 558.