and one on FCC fines and forfeitures, are both very complex. I have been given 15 minutes to state our position on these issues, and I do not think that is enough time to go over in detail just one of them-let alone both. So, with your permission, I am going to focus on the question of fines and forfeitures, and we will submit written proposals concerning pole attachments which have previously been submitted to Congressman Van Deerlin.

Senator SCHMITT. That will be made part of the record.

Mr. ATHANAS. Thank you.

[The following information was subsequently received for the record:] BROWN & EFFROS, Washington, D.C., April 12, 1977.

Hon. LIONEL VAN DEERLIN, Chairman, Subcommittee on Communications of the Committee on Interstate and Foreign Commerce, Rayburn House Office Building, Washington, D.C. DEAR MR. CHAIRMAN: This is in response to your letter of March 10, 1977, seeking the Community Antenna Television Association's views on the legislation proposed to amend Title II of the Communications Act of 1934 concerning regulation of pole attachments.

We find it commendable that NCTA and NARUC were able to reach an accommodation that would resolve a long standing need for a forum to regulate the reasonableness of cable television pole attachment arrangements. CATA believes that a legislative solution is required in this area; however, we were obliged to oppose H.R. 15372 in the previous session of Congress because the pole regulation portion of that Bill was tied to forfeiture legislation and it is our view that the FCC should not be given the power to impose forfeitures on cable until Congress, through a rewrite of the Communications Act, establishes standards of regulation for cable television.

CATA believes the paramount concern of the Committee should be a Communications Act rewrite. We are concerned about the impact of any piecemeal legislation on that effort and would oppose consideration of pole attachment legislation should it be tied to or be deemed a precedent for forfeiture legislation outside the context of the Communications Act rewrite.

Understanding the NCTA/NARUC accord to be an agreement on jurisdictional principles, we offer the following suggestions which we believe do not violate those principles and would make the proposal reflective of CATA's views on the pole attachment issue.

Section 224(a) (1) defines 'utility' conjunctively as "any person who provides telephone service or electric energy *** and provides or controls poles * * * for wire communication".

The use of the conjunctive would permit utility companies to foreclose cable television access to utility owned poles that were not also used for other wire communication, e.g., telephone. It should be noted that Section 63.57 of the Rules and Regulations of the Federal Communications Commission requires telephone common carriers subject to FCC authority to provide pole or conduit access rights. We believe that this right should be assured legislatively and propose the following definition:

"The term 'utility' means any person who provides telephone service or electric energy to the public and who owns or controls poles, ducts, conduits, or rights of way capable of being used, in whole or in part, for cable communication. Such term does not include any person owned by the Federal Government." 1

In order to substantively provide for access, a new Section 224 (c) is proposed as follows:

"Any utility must provide, within the limitations of technical feasibility, pole attachment rights (or conduit space) to any cable television system."

In conjunction therewith, a new definitional Section 224 (a) (4) should be added which reads as follows:

1 The word wire communication is changed to cable communication so as not to inadvertently exclude new forms of technology, such as fiber optics which arguably may not fit the definition of "wire communication". Similarly, Section 224 (a) (3) should be amended to read as follows: The term 'pole attachment' means any attachment for cable communication on a. pole, duct, conduit, or other right of way owned or controlled by a utility.

"The term 'cable television system' means any facility distributing by a wire or cable the signal of one or more television broadcast stations licensed by the Federal Communications Commission."

The following changes are suggested for Section 224(b). The first sentence should read:

"Within six months after the enactment of this bill, the Commission shall regulate the rates, terms, and conditions for pole attachments in any case where the same are not regulated by State authority."

The addition of the new clause would require the FCC to commence regulation of pole attachment and conduit rates within a reasonable period of time. Without the suggested language, the FCC could legitimately refrain from regulating pole attachment rates for years by merely stating that the various states have not acted. Under the proposed changes, the FCC would, in effect, be required to issue a notice of proposed rulemaking seeking comments on the appropriate form of rate regulation as soon as the legislation is enacted. Under the proposed legislation, any state could assume rate regulation at any time, i.e., before or after the FCC adopted its rules. The proposed language would ensure that pole attachments were, in effect, regulated at the earliest possible date at some level of government.

The second sentence of Subsection (b) calls for a "just and reasonable rate, whether prescribed by the Commission or State Authority. . . ." The legislation does not provide for a review process with respect to such determinations. CATA suggests that a review process be provided for in the legislation by investing jurisdiction in the Federal Appellate Courts to review not only determinations of the FCC, but also of State Public Utility Commission findings with respect to pole attachment rates.

While the purpose of the legislation is to formulate a comprehensive national policy concerning cable's access to pole space (or conduits) and to provide for the just and reasonable regulation of rates therefor, the absence of a Federal review process will result in a patchwork of regulatory findings inconsistent with a national communication structure. While just and reasonable rates are bound to differ from state to state, some assurance must be made at the national level that the determinations are made on a consistent basis in conformance with the intention of the Congress. This would retain the principle of State determination of "just and reasonable" rates where States choose to regulate while, at the same time, ensuring that federally mandated goals are met.

In the same vein, the achievement of the legislative goal of "just and reason-, able" rates would be benefitted by more specificity in the language contained in Subsection (b). Language concerning "additional costs" and "actual capital and operating expenses" are susceptible to widely varying interpretations and will result in costly and time consuming disputes over what these expenses constitute. We could articulate with specificity the components that ought be included; however, our understanding of the jurisdictional principle of the NCTA/NARUC accord is that the various states should have the right, should they elect to regulate in this area, to determine the appropriate components in accordance with local construction practices and local regulatory principles. While we do consider the omission of specific components as a defect in the proposed legislation, we believe that our concern would be ameliorated by the inclusion of a review process as suggested previously.

Attached is a copy of the bill rewritten to include CATA's suggestions.

I hope these comments are useful to the Committee and should there be any questions, please feel free to contact me.

Very truly yours,

COMMUNITY ANTENNA TELEVISION ASSOCIATION,
RICHARD L. BROWN, General Counsel.

"REGULATION OF POLE ATTACHMENTS

SECTION I. Title II of the Communications Act of 1934 is amended by adding at the end thereof the following new section:

"REGULATIONS OF POLE ATTACHMENTS"

"SEC. 224. (a) As used in this section;

"(1) The term 'utility' means any person who provides telephone service or electric energy to the public and who owns or controls poles, ducts, conduits, or

rights-of-way capable of being used, in whole or in part, for [wire] cable communications. Such term does not include any person owned by the Federal Government.

"(2) The term 'Federal Government' means the Government of the United States or any agency or instrumentality thereof.

“(3) The term ‘pole attachment' means any attachment for [wire] cable communication on a pole, duct, conduit, or other right-of-way owned or controlled by a utility.

"(4) The term 'cable television system' means any facility distributing by a wire or cable the signal of one or more television broadcast stations licensed by the Federal Communications Commissions.

"(b) Within six months after the enactment of this bill, the Commission shall regulate the rates, terms, and conditions for pole attachments in any case where the same are not regulated by any State authority. A just and reasonable rate, whether prescribed by the Commission or State authority, shall assure the utility the recovery of not less than the additional costs of providing pole attachments nor more than the actual capital and operating expenses of the utility attributable to that portion of the pole, duct or conduit being used by the pole attachment. Such portion shall be the percentage of the total usable space on a pole (i.e., the space above the minimum grade level that can be used for the attachment of wires and cables), or the total capacity of duct or conduit, that is occupied by the pole attachment.

"(c) Any utility must provide, within the limitations of technical feasibility, pole attachment rights (or conduit space) to any cable television system.

"(d) Appeals may be taken from decisions of state regulatory commissions to the United States Court of Appeals for the circuit in which the state is located by any party to the state regulatory proceeding and the court shall review the decision for substantial consistency with Section 224(b)”.

Mr. ATHANAS. The bill you are considering on FCC fines and forfeitures would give the FCC the power to fine me or any of our members for any violation of the Commission's cable television rules and regulations. It would be the first time the Congress of the United States our elected representatives has given any direct authority to the FCC over cable television. That, CATA respectfully suggests, does not make sense. It is like telling the police department to give out traffic tickets for violating the law, but not telling them first what the laws, according to the lawmakers, are supposed to be.

The Community Antenna Television Association is not against the concept of fines and forfeitures. We are against-very stronglythe idea that Congress refuses to tell the FCC what authority it has over cable television-what it is supposed to regulate, and, more importantly, what it is not supposed to regulate. At the same time, you are considering giving the FCC the right to fine us for violations of rules Congress has not passed on, and which courts continue to strike down, and which the FCC, from time to time, agrees are wrong. Congress should write the laws first-then include penalties for violating them. We would support that-but not the other way around.

I know you have heard some of these examples before, but I think they need repeating. If you provide fine and forfeiture authority for the Commission, it will mean that every small cable operator will be subject to harassment on all sorts of things that, frankly, we do not think the FCC has the authority to regulate us on in the first place. The courts seem to be agreeing with us on that point lately. Several of the Commission's rules have already been overturned by the courts; for example, the annual collection of fees and the pay cable rules.

CATA believes that we would have received a favorable court decision on the Commission's right to regulate Mr. Moore's little 100-sub

scriber system in Gridley, Kans., if the Commission had not given in first. We were at the court of appeals when the Commission changed the definition of a cable system from 50 to 100 subscribers. Now they are considering changing that number to 1,000, and you, yourself, Mr. Chairman, suggested just 2 weeks ago that most of the FCC's rules really might be more sensible if they only applied to systems of 3,500 or more subscribers. We agree with you on that point. And we think the Commission will eventually get to that point either by you telling them to, by law, or the courts may do it for you. Maybe the Commission, once it finally does its highly publicized economic studies, will see what we have been saying all along, that it is the Government's rules that have been causing most of the problems in the first place. But, what happens in the meantime? What happens to the operator, serving his neighbors in his own community with television service, until Washington comes to its senses about these regulations? They get fined-that is what.

Two months ago, Mr. Moore was operating an illegal system. Now, the Commission has changed its rule, so he is no longer illegal. What if he had not gone to court? What if he had paid the fine-and it could have been as high as $20,000 if you pass this bill-what then?

. I will tell you what, he would have gone out of business. That does not really serve the public interest, as far as we can see.

Mr. Chairman, members of the committee, let me put it bluntly. The Commission does not know what it is doing regarding cable television. Even Chairman Wiley admits they have never done an economic study to find out what the "cable television industry" really is. Yet, they have all these rules, and let me tell you there are plenty of them. And a lot of the rules just plain do not make sense. They have a whole section of the rules for technical standards-an area that is constantly changing in a new industry. They have never tested those rules on a system strung through the desert, or in the mountains, or by the ocean. But, if we violate any of those rules, we can be fined.

Now, I know the FCC says it has no intention of fining us for every technical violation they find-but that should tell you something right away. What they are saying is that they will not enforce all of their rules because they know those rules do not always make sense. Well, let us straighten out the rules first, then we can talk about fines and forfeitures.

It should be noted, by the way, that no matter what the "reasonable" intentions of the FCC enforcers, if you adopt this bill, anybody else— say, for instance, a broadcaster-could come in to the FCC and try to get me fined. The cost of defending against harassment letters alone would constitute a fine.

One further point on the problem of technical standards and fines. Because the FCC regulates cable as "ancillary to broadcasting," it, and you, think of us and compare us to broadcasters-and you see that the broadcasters have fines for technical violations, so why not cable. Let me assure you there is a big difference between maintaining a radio or television transmitter and maintaining an entire cable system. The cable system, in that way, is much more like the telephone company, and the FCC does not have technical standards for the telephone company.

There is no question in our minds that the problems created by fines and forfeitures on technical standards alone is a strong enough reason to ask you to rethink the advisability of adopting this legislation at this time. But the technical standards problem is not the only one.

This proposed bill can create all sorts of other problems that we do not believe have been focused on as yet. For instance, in his testimony 2 weeks ago before this committee, Chairman Wiley suggested that with the adoption of fine and forfeiture authority for the FCC, he, at least, would urge consideration of the elimination of the present rules that require so-called certificates of compliance. CATV believes those certificates" are, as a legal matter, licenses, and we do not see anything in the current Communications Act that gives the FCC licensing authority over CATV.

But this bill, in section 1(a), suddenly gives legal validity to the concept of "certificates," or licenses. It may be unintended, but certificates of compliance are only granted by the FCC in one area-cableand by including the term in this bill, Congress, without ever looking at the legality, advisability, or value of these "certificates" is approving their use by the Commission.

This is a backdoor approach to giving the Commission jurisdiction or authority to grant certificates without any real analysis, on your part, of whether those certificates are a good idea or not. While you are the experts in the area of lawmaking, from the way we look at it in Oklahoma, granting backdoor authority does not seem like a very effective way of writing the laws of the land.

It has another effect that brings us right back to the chairman's remarks, and I will simply put this as a question to you. Do you really think that the FCC will get rid of the certificate process, like Chairman Wiley said, just after Congress, for the first time, finally gives it jurisdictional authority-and that authority is to grant certificates? We do not think so. An entire bureaucracy has been set up to grant certificates. It is not going to disappear without direct orders from you. And this bill, whether you mean it to or not, seems to point the agency in the opposite direction; that is, you are putting your seal of approval on the certificating process without ever investigating what it is.

Why does the FCC say it needs fines and forfeitures in the first place? They use two different arguments-first, that they have the authority over broadcasters, so they should have it over cable. There is a problem with that logic, though: they have laws and guidelines about what they can and cannot do to broadcasters-written by you. They do not have any such laws or guidelines on cable television yet. I can only repeat here again that the laws, in our view, should be written first. Then you can add the penalties for breaking the laws.

The second argument the Commission uses is that it needs fine and forfeiture power to control the so-called bad apples. There are lots of problems with that theory. The primary one is that the Commission has not really figured out what a "bad apple" is. Kyle Moore was one of the bad guys when he refused to get a certificate for a system of 108 subscribers. Now he is a good guy because the Commission finally agreed that it was silly to require him to get a certificate in the first place.