The Future of Municipal Regulation of Cable Television: Plugged in Or Tuned Out?, 15 Loy
Total Page:16
File Type:pdf, Size:1020Kb
Loyola University Chicago Law Journal Volume 15 Article 3 Issue 1 Fall 1983 1983 The uturF e of Municipal Regulation of Cable Television: Plugged In or Tuned Out? Fredric D. Tannenbaum Assistant Attorney General of Illinois, Civil Appeals Division Follow this and additional works at: http://lawecommons.luc.edu/luclj Part of the Communications Law Commons Recommended Citation Fredric D. Tannenbaum, The Future of Municipal Regulation of Cable Television: Plugged In or Tuned Out?, 15 Loy. U. Chi. L. J. 33 (1983). Available at: http://lawecommons.luc.edu/luclj/vol15/iss1/3 This Article is brought to you for free and open access by LAW eCommons. It has been accepted for inclusion in Loyola University Chicago Law Journal by an authorized administrator of LAW eCommons. For more information, please contact [email protected]. The Future of Municipal Regulation of Cable Television: Plugged In or Tuned Out? FredricD. Tannenbaum* INTRODUCTION The cable television' industry is subject to a maze of concur- rent federal, state and local regulation. 2 The federal government, through the Federal Communications Commission ("FCC"),:' ac- tively regulates the cable television industry and establishes guidelines for the regulation of cable television by state and local authorities. The State of Illinois, through the Illinois Commerce Commission ("ICC"), initially asserted direct jurisdiction over cable television franchises. 4 A decision of the Illinois Supreme Court,5 however, has relegated the ICC to indirect regulation. Illinois municipalities have statutory authority to license, fran- chise and tax cable television companies. 6 However, two recent *Assistant Attorney General of Illinois, Civil Appeals Division, formerly in the Public Utilities Division; B.A. 1978, Ohio Wesleyan University; J.D. 1981, University of Wiscon- sin. The opinions of the author do not necessarily represent the opinions of the Attorney General of the State of Illinois. 1. The FCC defines a cable system as: A non-broadcast facility consisting of a set of transmission paths and asso- ciated signal generation, reception, and control equipment, under common ownership and control, that distributes or is designed to distribute to subscrib- ers the signals of one or more television broadcast stations, but such term shall not include (1) any such facility that serves fewer than 50 subscribers, or (2) any such facility that serves or will serve only subscribers in one or more multiple unit dwellings under common ownership, control or management. 47 C.F.R. § 76.5(a) (1982). 2. See 47 C.F.R. § 76.30-.31 (1982); TV Pix, Inc. v. Taylor, 304 F. Supp. 459, 464 (D. Nev. 1968), aff'd, 396 U.S. 556 (1970). 3. The FCC was created for the purpose of regulating communication by wire and radio in interstate and foreign commerce. 47 U.S.C. §§ 151-155 (1976). 4. See infra notes 54-64 and accompanying text. 5. Illinois-Indiana Cable Television Ass'n v. Illinois Commerce Comm'n, 55 Ill. 2d 205, 302 N.E.2d 334 (1973). 6. ILL. REFv. STAT. ch. 24, § 1142-11 (1981). Loyola University Law Journal [Vol. 15 decisions of the United States Supreme Court 7 have raised serious questions concerning the continued viability of municipal regu- lation of cable television because of municipalities' potential vulnerability to antitrust challenges. This article will trace the history of the regulation of the cable television industry by the FCC. It will then discuss and analyze the Illinois Supreme Court decision which held that the ICC does not have the authority to regulate cable television directly. Next, this article will examine the municipalities' role in regulating cable television. In particular, it will discuss the City of Chica- go's regulatory ordinance and analyze whether it exceeds the FCC's mandatory franchise fee limitations. Finally, this article will analyze the vulnerability of Illinois municipalities to anti- trust liability. FEDERAL REGULATION OF CABLE TELEVISION In the late 1950's, cable television or community antenna tele- vision ("CATV") systems were built to strengthen the delivery of broadcast television signals to homes in predominantly rural and mountainous areas which were not serviced by network or local broadcasters. Essentially, the large antennas that CATV systems provided made reception clearer by enhancing the broad- casters' signals. As the public demand for imported signals grew, CATV systems increased the number of available channels., Additionally, some system operators began to originate pro- gramming. Broadcasters, both local and network, began to view cable tele- vision as an economic threat. Consequently, they turned to the FCC for protection. 9 The Commission, however, determined that 7. City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389 (1978); Community Communications Co. v. City of Boulder, 455 U.S. 40 (1982). 8. See R.C. SMITH, THE WIREi) NATION 3-4 (1972). Local television dealers provided much of the impetus for increasing the number of CATV systems in order to boost their sales of television sets. Dealers would run cables from the community antennas to the homes of cable subscription purchasers. Note, CA TV Franchise Fee: Incentive for Regu- lation, Disincentive for Invention, 30 SYRACUSE L. REv. 741, 744 (1979). The signals typi- cally were strengthened by an amplifier and then fed through a coaxial cable. A modem coaxial cable can carry 40 channels, FM radio, and computerized information. Dual coax- ial cables, found in most large cities, can carry over 100 channels. See generally R. STEINER, VISIONS OF CABLEVISION (2d ed. 1973). 9. See R. STEINER, supra note 8, at 47. In 1976, some protection was given to broadcast- ers through the copyright laws. Congress revised the Copyright Act and imposed an 19831 Cable Television Regulation 35 it had no authority under the Communications Act of 1934 ("Act")10 to regulate cable television" because CATV did not qualify as a common carrier 2 or as a broadcaster.13 Therefore, the Commission determined that there was no basis for FCC jurisdiction over cable television. In 1962, however, the FCC changed its hands-off position regarding regulation of cable television.' 4 To protect a local broadcaster from potential economic harm, the FCC denied an obligation on cable system operators to compensate broadcasters for imported television signals. Act of Oct. 19, 1976, Pub. L. No. 94-553, § 111, 90 Stat. 2541, 2550 (codified at 17 U.S.C. § 11 (1982)). Section 11 l(d) provides for mandatory compensation to broadcast- ers. 17 U.S.C. § 111(d). For a discussion of the protection afforded broadcasters by the 1976 Copyright Act, see M. HAMBURG, ALL ABOUT CABLE 6-11 to 6-18 (rev. ed. 1981). 10. 47 U.S.C. §§ 151-609 (1976). The Act's three relevant subchapters confer wide dis- cretion on the FCC to accept jurisdiction over interstate communications. Subchapter I details the goals of the Act "to make available. .. a rapid, efficient, Nation-wide... wire and radio communications service with adequate facilities." Id. § 151. Subchapter II gives the FCC plenary jurisdiction over common carriers. Id. §§ 201-222. A common car- rier is defined in the Act as: "[A] common carrier for hire, in interstate or foreign com- munication by wire or radio or in interstate or foreign radio transmission of energy ... but a person engaged in radio broadcasting shall not, insofar as such person is so engaged, be deemed a common carrier." Id. § 153(h). If cable television were classified as a "common carrier," the Commission could require cable systems to allow full access to their facilities and to charge set rates for their services. Id. §§ 201, 203, 205. Subchapter III delineates the FCC's authority over radio and broadcasting. Id. §§ 301-330. The FCC may license broadcast stations "if public convenience, interest, or necessity will be served thereby." Id. § 307(a). 11. Report and Order, CATV and TV Repeater Services, 26 F.C.C. 403 (1959) [here- inafter cited as Repeater Services I. The FCC concluded: In essence, the broadcasters' position shakes down the fundamental proposition that they wish us to regulate in a manner favorable toward them vis-a-vis any nonbroadcast competitive enterprise. Thus, for example, we might logically be requested to invoke a prohibition against ...all of the entities which compete with broadcasting for the time and attention of potential viewers and listeners. The logical absurdity of such a position requires no elaboration. Id. at 431-32. 12. Frontier Broadcasting Co., 24 F.C.C. 251 (1958), aff'd sub nom., Philadelphia Tele- vision Broadcasting Co. v. FCC, 359 F.2d 282 (D.C. Cir. 1966). 13. Repeater Services, 26 F.C.C. at 428-29. 14. FCC policies toward regulation of cable television have ranged from hands-off to pervasive to its present policy of regulation which is coexistent with state and local regu- lation. Initially, the FCC determined that the Communications Act of 1934 did not confer jurisdiction on the Commission to regulate cable television. Sixth Report and Order on Rules Governing Television Broadcast Stations, 17 Fed. Reg. 3905 (1952). For a thorough history of the FCC's changing role in the regulation of cable television, see D. LE Duc, CABILE TELEVISION AND THE FCC (1973); R.C. SMITH, supra note 8; Shoenberger, The FCC, Cable TV and Visions of Valhalla: Judicial Scrutiny of Complex Rulemaking and Insti- tutional Competence, 14 U. RICH. L. Rv. 113 (1979); Note, Administrative Law- Com- munications Law - FCC Authority Over Cable Television, 1979 WIS. L. REv. 962. Loyola University Law Journal [Vol. 15 application for permission to construct a microwave radio com- munication system which would receive distant television sig- nals and transmit them to cable television systems. 15 Thus, the FCC asserted indirect jurisdiction over cable television operators. In 1966, the FCC issued its Second Report and Order which further increased its regulatory scope.