Rca Communications, Inc. v. Federal Communications Commission

EDGERTON, PRETTYMAN,, Before BAZELON, Judges. Circuit 695 RCAC, proceed- Appellant party EDGERTON, Judge. Circuit wholly- ing is a before the order decision and appeal from a This subsidiary Corporation of owned of Radio Commis- Federal Communications of the 2 operates licensed radiotele- America. It dissenting, which sion, two Commissioners foreign points. graph 65 circuits to about inter- of the granted applications operates radiotelegraph direct circuits Telegraph Com- venor, Radio and Mackay between the United States and the public-service Inc., pany, (Mackay), and lands also between the United States carrier, modification radiotelegraph Portugal. At the time of the Commis- operate, as to authorize it its license so hearing no other carrier did sion so. appellant Com- RCA with Both Commercial and Western Union radio- munications, Inc., direct (RCAC), Company Union) Telegraph (Western United telegraph circuits between United furnish cable service between the Netherlands and between and the States European points.3 Commercial de- States and Portugal. Since we United States owns cables between New York and Eire. pend- order stay clined to the Commission’s relayed Its Netherlands traffic is proposed opera- appeal Mackay’s ing this London and retransmitted to Rot- may probably have Eire to arrangements tions and leased facilities. Traffic to terdam over into However come actual effect. points Portuguese routed via Commercial is be, be- “proposed” shall call them over owned leased cables to the sent discuss the situation that we have to cause Azores, relayed to over where it is Lisbon existed when the entered foreign cables. Western Union has cables order. England, whence is forwarded to traffic Mackay wholly-owned subsidiary through connecting Amsterdam cables and Corporation and Radio American Cable messages Union des- land-lines. Western which also owns The Commercial (AC&R), Portugal are transmitted in ba- tined Company (Commercial) All Cable sically way the same as Commercial’s. Radio, Inc., (All Cables America radiotelegraph circuit between RCAC’s Telephone International America). operated in York and Amsterdam is New Corporation majority Telegraph owns a with Admin- conjunction the Netherlands capital AC&R. stock of the time of At Posts, and Tele- Telephones, istration Mackay hearing operated the Commission’s Mackay’s proposed contract graph. radiotelegraph circuits to about 40 licensed correspondent provides same very It handled points. Por- foreign little will turn Administration over Netherlands only indirectly, by and this traffic tuguese proportion Mackay a westbound equal All through an America radio sta- to the United States to Mac- relay proportion kay’s total eastbound It handled almost no Nether- Peru. traffic sent to the Netherlands traffic.1 lands record, year traffic of all sorts between latest covered follows: in this involved case was distributed Portugal The Netherlands West- Bast- West- Bast- bound bound bound bound (cable) 2.5% 6.5% 22.7% 47.4%, 17.3% Commercial Western (cable)' 13.9% 80.7% 29.8% 36.3% Union direct) (radio; 51.4% 29.8% 52.8% ItCAO indirect) Mackay (radio; 2.9% 5.8% 0.1% 0.1% %, % % % participated Corn- Union opinion, Western Throughout statements hearing usually but did not intervene mission refer to tense fact hearing. here. the Commission’s time C96 carriers. as a radiotelegraph' whole should not be substantial.” technically, least guarantee financially that at legal- 50% ly qualified adequate of AC&R-controlled traffic to and able to render radiotelegraph. (9) present

lands will be transmitted service. There “at active is competition commitment AC&R only In order to meet this not between cable carriers Mackay will divert from and Commercial to and radiotelegraph car- serving points issue, unrouted non-Rotterdam Netherlands traf- riers but also fic. The as a re- telegraph provided Commissionestimates that between such approximately agreement sult of the these and carriers the airmail and the 50% services;” di- radiotelephone will Commercial’s eastbound traffic be Granting Mac- Mackay. kay’s application verted to (10) endanger will “not ability of RCAC and Western Union to- Mac- Similarly, Portugal, cáse' provide competitive continue to service ei- kay proposes Mar- Portuguese to deal with points or, ther generally, at issue correspondent. coni, which is the RCAC the field of international telegraph com- the same Portuguese Marconi will follow n munications”; (11) resulting in “while formula Administration as Netherlands some decrease in cable wilt determining of westbound amount competition increase over-all given Mackay, the AC&R traffic to be * * generally will (12) by Mackay Mar- system will transmit competition “introduce ra- between direct The traffic. coni its unrouted eastbound diotelegraph consequently circuits” of Com- that Commission estimates 25% effective “more between radio- thus diverted traffic will be mercial’s telegraph carriers”. car- “ability of a Mackay. provide rier to direct serv- communication The Commission found among other important ice is an factor appealing things:4 (1) Existing telegraph facilities * * * patronage customer .” (cable plus radio) excess those opinion The Commission “of required expected handle only those instances where there is (2) Mackay’s traffic. proposed operations direct radiotelegraph point, to a redistribute traffic rather than should a sec- [the authorize Commission] generate any appreciable amount of new competing radiotelegraph ond circuit where (3) appear traffic. “It does not that Mac- applicant demonstrates that kay’s proposed service to each of the petition reasonably is Finding feasible”. it issue will result in lower rates or here, feasible granted speedier service, or will be su- otherwise Mackay’s applications. perior comprehensive to or more than the service now via (4) supports available RCAC.” The record the Com There is possibility some will mission’s basic findings that frequencies, need additional for Nether- (1) numbered to (12) possible with the traffic, provide lands exception continuous service of the statement in (11) about throughout eleven-year sunspot cycle. competition”, “over-all and we as shall Mackay’s (5) Both supports revenue and its finding sume ex- also. It penses increased, will be but the net result follow as the thought, financially beneficial proposed reasonably is feasible. system AC&R oí part. which it question. But that is not Com (6) The revenue of other carriers will be munications Act the Commis authorizes reduced, expenses but their grant will not. sion to licenses if it “shall deter “When over-all effect of a interest, convenience, of the mine that applications considered, appears necessity granting served might the added costs which result an thereof 47 U.S.C.A. industry-wide basis relatively will be small Commission did so determine here. impact that the so the rate structure agree But we dissenting Com- numbering sequence

4. The are ours. convenience, find- interest, not Commission’s basic serve missioners necessity. support affirming that ings not this determination. decision we do observed the Communications Act does “The be Commission said show “a congressional not belief that two duplicate radio herein fore us radiotelegraph necessarily circuits are bet be authorized telegraph circuits should ter than one. a belief as Such would be similar, same, very if that which as strange telephone sys belief that two in connection before tems, railroads, necessarily or two are bet agree. this In the Oslo We case.” * ** Though ter than one. the Com question before Oslo case case as munications Act licensing forbids the duplication whether a the Commission was laws, which violate the concerns anti-trust 5 do little harm and that would apply radiotelegraph does to the [it] good,6 but and no feasible would create policy competition,7 of free statutory met the standard * ** contrary but policy. a for [It] necessity”. interest, convenience, “public or competition by prove bids who cannot de in the case Commission But Oslo entry ‘pubic that their serve in way other and cided this ” terest, necessity.’ App. or 68 convenience Mackay & Radio affirmed its decision. 338, page at page D.C. 97 F.2d 643. at Telegraph Co. v. Federal Communications Supreme Congress Neither nor Court 336, Commission, App.D.C. F.2d 641. 68 97 case, limited has the effect of the Oslo car that appeared that case In Congress though promptly do to asked and eastbound ried about 88% 60% April 11, so. decided We the case 1938. plus (radio traffic telegraph westbound 1938, Beginning 2,May a subcommittee and Nor United States cable) the Senate Committee on Interstate Com- car way. Western Union Commercial hearings, held merce in which the Oslo ried, cable, And by practically all the rest. discussed, bill, 3875, decision was on a S. service, “only wheth direct there was proposed to 313 amend. of the Com- § radio, cable or between the United er Act, 313, by munications 47 U.S.C.A. * * * Norway; radio “ adding: hereby ‘It is declared to be the operated end at the American circuit policy Congress pre- intention of the to RCAC, and the Nor intervener at monopoly encourage competi- vent and to Department Norwegian wegian end foreign telegraph tion in direct radio 337, Telegraphs.” App.D.C. page 68 and, munication; purposes for the of this to applied page F.2d at 642. act, considering applications licenses a operate a license the Commission for to engage to direct foreign radio Norway. radiotelegraph direct to communications, applications or for modifi- among found But Commission licenses, or cations renewals “adequate things that Federal Communications shall Commission facilities, competition, and keen serv competition consider in such communication complaint. with which there no ice ”8 in the interest.’ be It was new proposed new circuit would not offer out at brought hearing the Com- improved service, rates, reduce create or reported Congress had mission on Feb- The total revenue *. to the 5, “Competition 1935: ruary has worst * * * companies American owned foreign field of effects communica- expense redttced and additional foreign tion. Communications most incurred.” the Matter of Radio monopoly. countries handled a Inc., 592, Telegraph Company, & 2 F.C.C. monopoly competing Where has two Accordingly 600. Commission decided companies offering American to establish Mackay’s application circuits, it can drive harder progressively Findings applied competition policy 5. and 10 above. of “free” has case. It has not. Findings 1, 2, above. Hearings 3875, Cong., 75th S. 3d imply Sess., p. do not 7. We tbe Commission regulated public- in- American

bargains detriment of to the utility industry public. 3875 was not enacted. benefit terests.”9 S. “Competition said: gen- can Trucking Co. v. McLean We think erally expected provide powerful States, 1944, 67, 64 S.Ct. 321 U.S. incentive for the of better rendition 88 L.Ed. on which seeking patronage lower cost. Those reliance, than rather places confutes some spurred of customers are install the Court theory. supports developments latest in the art in order Interstate of the orders there sustained improve products, their services authorizing con- Commerce expenses order them to enable reduce carriers. large motor of seven solidation thereby prices. lower their rates de- history “The The Court said: derived benefits to be transpor- velopment special national should, therefore, * * lightly * not be discarded.” policy suggests tation argument This favor of Commis- determine policies of the anti-trust laws general theory is not a finding sion’s regulation public in railroad interest’ ‘the specific competition here in issue way. altered And qualified in a produce better lower rates service or achiev- legislation on emphasis in railroad any Any implication other benefit. efficient, adequate, economical ing an that benefit will result is contradicted transportation through close system of (3) above. finding Commission’s operations supervision of business appeal speaks Commission’s brief on this heavy reli- through practices rather than general “long range” in terms of benefits free on enforcement of ance competition. case deciding in of But * * * this motor counterpart in has its long finding no * made recog- Congress policy. carrier range from its benefits would result ‘com- when may be nized there occasions Mackay, findings nothing in basic result may petition between carriers supported have such conclusion. benefit; public, well as in to the harm as enough unqualified finding broad (3) is Its injury inflicts and that [carrier] contradict such a conclusion. Com- rival, upon which may it pointed licensed out has mission ultimately 321 U.S. at bears the loss.’”- duplicating radiotelegraph circuits to for- 83-84, pages pages Leg- 378-379. S.Ct. in a number of instances eign countries history suggests that islative the Com- it did not has renewed such licenses. But apply Act was intended to munications benefits, benefits, any say or that what principles as Interstate Commerce same any resulted instance.11 Act, seq.10 1 et 49 U.S.C.A. § present In its decision devoted, Act, 47 U.S.C.A. as pointed large in interna- to the increase case, "wholly to an effort to the' Oslo said “strong telegraph traffic and the tional circuits competition between radio maintain cable to radio decided since it trend” telegraph and cable the one hand on case in No 1936. doubt the Oslo App.D.C. page other.” lines duplication make of radio cir- changes In the page 97 F.2d at 645. feasible, they do but not show more cuits Sen.Rep.No.781. Sess., Cong., 2d Ibid., p. 10. 73d present decision the Commission In its Commission's A footnote brief danger be some there concedes that “in the field of international states telegraph but out that it “has stat- this sort communications, is com which utory authority, particularly in connec- petitive, during period from rates applications its consideration tion with gone beginning war have last licenses, which would en- renewal nearly up as rates do as much appropriate action in telephone to take the able intrastate mestic persisted are, practical industries, a carrier where cases those which seriously making non-competitive. 3857; purposes, which concessions See R. Union interests of the In the Matter of Western detrimental industry.” Telegraph Co., 11 F.C.C. 263.” States granting stability found or the service case of the carriers now operating; found, Mackay’s applications “not and it hand, result capacity existing reduction of such substantial facilities inis radio, required the creation excess of between cable and to handle the ex- pected traffic, the AC&R volume monopoly, bring so that the new serv- Mackay, system ice companies, would not particularly result in lower rates speedier except the Com- service 314 of that the new serv- into of Section violation superior ice not consider would be We need to the munications Act.”' service, supports and that new opinion the record whether in our would re- sult ill a reduction revenues of RCAC this conclusion. and Western Union but would not reduce Reversed. expenses. their It further found that the PRETTYMAN, Judge (dissent- Circuit go Mackay business which would ing). largely be drawn from the cable mat- my brethren disagree I of Commercial and that ter. would be some diversion from RCAC and simple. comparatively facts are Western Union. cable and radio between The case concerns On the findings, basis the foregoing and The Netherlands and the United problem reduces itself to companies involved. Portugal. Five competitive Commission can authorize a compa- independent the other RCAC is service policy as matter of a where one is direct radio has the nies involved actually not needed and whether the Neth- and The New York between circuit contemplated of traffic from the diversion and Portu- New York between erlands and cables of Commercial to the radio of Mack- the independent of Union is gal. Western ay would violate 314 of the statute. cables, owned or companies and has other says, principally, that the common leased, to The New York from concept, applicable railroad, etc., carrier in pick-up) to Portu- British (via lands and regulation, applies here and that the new Company Cable gal. Commercial The service cannot be public authorized unless a wholly-owned subsidiaries Mackay are affirmatively proved. need for it is The Corpora- & Radio Cable the American says Commission that when- ca- has tion, Commercial called AC&R. “reasonably part ever is feasible” is The Nether- York New bles interest, public the convenience and ne- Portugal, to New York lands and cessity. By “reasonably feasible” the Com- or being retransmission via both services mission seems to mean the that new serv- Mackay gets portion pick-up. British endanger ice will not the old. indirectly through Portugal business summary, there- via Lima. a circuit existing I think permits traffic direct radio service fore, carrier, there are one more than one and where the ex- to The Netherlands and two cable services istence of a second carrier would not en- other radio and one indirect Portugal; danger stability to the fhe service of the Portugal. carrier, competitive service to existing may service public well be the interest. If that proposes grant Mack- to The Commission then, so, necessary where the conditions The Netherlands ay direct radio established, question the there whether Portugal.1 and one to should should not be a carrier second hand, 'found, on the one The is decide. ample justify business to an- is that there point brought sharp car- The is into and that another carrier focus other so-called endanger the financial the discussion Oslo case.2 rier would not Mackay Radio & Tel. Co. v. an indirect also includes serv Federal order The Comm., 1938, Tangier, App. but that to Amsterdam via ice figure separately grant argument. 97 F.2d 641. D.C. does not facts, support two efficient enough similar case, In that under somewhat operators operate supply both with reason Mackay applied for a license public profits, may able be that Oslo, Norway. well The Commission denied requires injection element that interest an application. contended competition Given required of the situation. public necessarily into convenience operators, enough some for two affirmed competing This court service. competition competition is well holding increase public public both thus be in the necessarily inevitably in the not standards These been opinion principles we did As I read the interest. interest. public guides hy for certification the Interstate is not hold delay I Commerce Commission. need not interest. I cite case to exhaust authorities. disagree the author I hesitate to point few in the is clear footnote.3 who the author of opinion, is also the Oslo ly the na contained the declaration of court, as to what present opinion transportation tional in the statute.4 policy says He in that the court held case. agreed principles is of Interstate decision the we affirmed a that case apply regulation Commerce to> very question us. way now before regulation of common carrier communi question me But it seems to clear cation under statute.5 question were not here questions. two distinct case, same but supra, question In the Oslo always necessarily whether principle public controlling basic public answer interest. interest, utility con regulation requires, and'necessity. agree I with that answer That a “No”. venience servicq nutshell, question. reasonable efficient here turn, financially That, requires a rates. competition is ever in the interest. time de operator and the same sound answer, me, it seems “Yes”. profits. fol Hence nies him exorbitant it the the matter amount na- nub of that, there be between two lows if prospective ture the available busi- of ,to only one support efficient enough support op- If business will two ness. supply than him with no more operator and regulatory erators, authority has a wide re profits, interest reasonable determining in discretion to serve only operator be licensed. quires supervision drastic of interest dividing suffi operations Two operator install single or to an automa- inevitably in one will result for cient self-regulator competi- in the form tic of a hand, On the other if there poor service. tor.6 States, Trucking Corp. v. United v. Co. 3. McLean Bus Southern United Norfolk 86-88, 67, 1944, 64 States, D.C.E.D.Va.1950, F.Supp. 756, S.Ct. 321 U.S. 96 544, particularly 370, 1950, 802, footnotes affirmed, L.Ed. 88 340 U.S. 71 S.Ct. Ry. Gulf, Etc., 9-24; Transp. v. 590; Lang Corpora Texas Pac. 68, & L.Ed. 95 277, 1926, 266, Ry., D.C.S.D.Cal.1948, U.S. 46 States, 270 S.Ct. tion v. United 578; Chesapeake 263, & F.Supp. L.Ed. Ohio 915; 70 Hall C. E. & Sons v. 75 1931, Ry. States, States, D.C.Mass.1950, 283 F.Supp. v. United U.S. Co. 88 United 35, 42, 337, 824; L.Ed. In Sharfman, 51 S.Ct. 75 also 596. See Interstate’ Parker, v. Comm. pp. Commerce III-A, terstate Part Commerce 60, 1490, 1945, (1935). U.S. 65 S.Ct. 89 326 355-359 2051; Trucking L.Ed. American Ass’n preced- (1940), 899 U.S.C.A. 54 Stat. 49 States, 1945, 77, 326 United U.S. v. ing 1.§ 1499, 86, 2065; L.Ed. N. S.Ct. 89 65 Corp. v. United Y. Central Securities (1934), 47 153 5. 48 1066 U.S.C.A. Stat. 45, 1932, 12, States, 287 U.S. 53 S.Ct. Sen.Rep. 781, (k); Cong., No. 73rd 26 138; States, L.Ed. v. United 77 D.C.D.C.1951, Clarke Sess. F.Supp. 587; 101 Hudson Freight States, v. v. Lines Pierce Auto Transit D.C.S.D. 6. United F.Supp. 1946, 515, 153, Lines, 536, N.Y.1948, 1949, 327 U.S. 66 S.Ct. 82 affirmed 802, 59, 485; 70 S.Ct. L.Ed. 821. 94 L.Ed. 338 U.S. If Sec- other. made from each present case In tlie prohibit lessening sum- tion 314 be to- I have construed which findings, extensive companies in supported of between sister amply They were marized. circumstances, con- regardless support the ulti- of other They in turn the record. specified become competition of Mack- ditions in the section finding that mate superfluous. construed stability meaningless of So imperil the financial ay will not support flatly prohibit com- ample the section would finding is And that RCAC. opera- ownership the mon radio and cable of judgment for exercise Mackay tions, obviously not do. does which presence Commission con- section must at some have been aimed public interest.7 will serve in the field tendency dition or those inherent than proposed argues that also ownership in must common as such. in violation lessening of have been aimed at a 8Act.7 Section in circumstances discernible court, view necessary It is specific situation, bare to- the in addition point. case, to consider it takes ownership. fact of This idea common But, affirm the since I supported although fact described, I question, above on the first Congress known to the committees of point. to consider com- under 'Commercial were provides: part, section, pertinent That ownership mon the Communications “ * * * * * * engaged person no consideration, no Act of 1934 was under * * * transmitting the business prohibition unconditional of continued * * * * * * communications hire appears ownership mon in that Act. * * * * * * acquire shall * ** * * * decision hearing be- After the before the but operate any cable * ** any place case, State be- any tween had * * * any place any foreign country case, Docket fore it in another known as * * * purpose the effect if is and/or operation whether the substantially lessen com- thereof (cable) Mackay (radio) and Commercial * * * commerce petition to restrain ownership common violated Section any unlawfully monopoly line to create ques- proceeding That was devoted to that commerce; also The section our hearing, full to which tion. After a provision prohibiting contains a converse RCAC, party, appellant, was a operators operating owning cable findings, the con- extensive stations, radio etc. applied, the Section cluded while It is shown in the record that these if operation ownership, control of radio- circuits be licensed to some companies system (AC&R) within this did company of the cable business of its sister not violate the section. The Commission will to (Commercial) be diverted it. RCAC referred, multa, to- the fact that alia inter argues competi- lessening this is a of Mackay, part system a of radio-cable a flat tion a restraint commerce 1929, granted increasing -been "an since had violation 314. Section circuits to in Eu- number” radio rope years, prior and 314, noted, during many subse- does not Section must quent passage In this prohibit ownership to- the of the Act. all common of radio that, despite significant prohibits ownership connection it is cable. It when duplicating is, grant Mackay of numerous exist, to certain conditions 1936-1947, purpose substantially years R’CAC ac- lessen circuits in the effect is proportion commerce, tually larger competition, handled a to restrain complete telegraph traffic in 1947 monopoly. Certainly total international create a 1936; per ownership did in cent as com- common removes subsidiaries than it 31.7 Chesapeake Ry. States, (1934), 7. & 8. 48 Stat. 1087 47 U.S.C.A. 314. Ohio v. 337, 1931, 283 51 S.Ct. 75 L.Ed. U.S. 824. them; signifi- of either tion it is the result per cent. It is also between pared 20.6 with requirement. parent’s policy record or customer cant in this connection rates, policy, change parent’s which A international shows is, proposed is not agreement much as a

competitive, not as what increased So, it competition. rates, practical purposes lessening existing for all domestic not ownership Docket case does in this non-competitive. The decision common ap- section, change in busi- May, 1950, a was not violate mere rendered in encompassed appeal non-com- ness as pealed, not allocation here, twins it. not violate peting and is before us. portion of considerations-, principally, me lead 3. embodies a

Three Section 314 by specifically provided by the to the Commis- antitrust policy, conclusion reached point. immediately Be- upon preceding the Section sion competi- application was a to look fore Commission was entitled this judgment picture formulating radio and its tive situation between whole respect this by companies in Thus viewed services the several as interest. certainly Portugal business. a grant to Netherlands and radio- competition. purposes of the statute. three-cornered Western tends to serve radio', be- cable, monopoly in enjoys a radio Union offered RCAC offered now RCAC Mackay, places AC&R offered That here involved. cable. tween substantially changed grant, will not be would introduce commerce, and grant of a radio circuit to AC&R. restraint would reduce monopoly. business. destroy will still seek cable create Western Union instead of con- thought will still AC&R these broader RCAC seek radio business. The Commission I certainly important. pertinent still seek cable business siderations nothing to There is market. think so too. shut Commer- show that down it intends I think the decision assumption cial; is that rather natural should be affirmed. agreement view it will be more acute lands Administration ap- for cable business. It does not

seeker

pear between cable presently the three offered by

radio

panies lessened Upon the basis of circuit AC&R. findings the Commis- exhaustive studies v. SECU et BANK SAV. al. SKOWHEGAN -clearly It is reached that conclusion. sion COM EXCHANGE AND RITIES correct. et MISSION al. appellant does a matter of fact As No. upon of a lessen- case a claim not rest Appeals Court of 'States competition. inter-company rests ing of Columbia Circuit. District of intra-company shifting upon an of business system. AC&R within the Argued Oct. determined, (in If it be has been '2. Dec. Decided 9093), present operation

Docket common and Commercial 314, I ownership does not violate Section business not see how shift of -do other would lessen twin to the is no substantial com- them. There between now; there never—

petition between them hardly between twin subsidi-

o-r ever —is allocation

aries. the result of them

Case Details

Case Name: Rca Communications, Inc. v. Federal Communications Commission

Court Name: Court of Appeals for the D.C. Circuit

Date Published: Mar 9, 1953

Citation: 201 F.2d 694

Docket Number: 10951

Court Abbreviation: D.C. Cir.