Technological progress and the Constitution

Technological progress and the Constitution

Cable operators say any FCC accommodation of digital TV on their systems violates their constitutional rights, but operators may have to moderate their stance.


Which is more powerful in American society--the Constitution or technology? If you selected the Constitution, give yourself a pat on the back. You have recognized what is more enduring and respected in this culture; technology always bends to the Constitution, never vice-versa.

This truth is again being demonstrated in the discord over the so-called digital must-carry rulemaking by the Federal Communications Commission (FCC), Docket CS 98-120 (see Lightwave, November 1998, page 20). The television industry is badly split over the issue. Cable-TV operators say they do not have the capacity to deliver the digital television (DTV) broadcasts of local TV stations, but broadcasters say it is do or die for them. Sixty-five percent of all television viewers in the United States receive their programs through cable networks. If they do not carry digital broadcasts, then DTV will be a market failure.

Cable operators are betting that the Constitution protects them from any FCC action that promotes "digital must-carry." They have presented the commission with arguments saying that digital carriage violates the Constitution`s First and Fifth Amendments, which respectively protect free-speech rights and the rights of property owners.

Tele-Communications Inc. (TCI) told the FCC, "two-thirds of all cable subscribers today are served by systems that are `channel locked,`" and, "a new digital broadcast service carries with it the requirement to drop a service currently carried." Thus, "cable programmers` First Amendment rights would be...severely affected." C-Span, which fears it will be forced out of many local TV markets, warned the FCC, "[We] will be the first in line to once again challenge the infringement of our free speech." Time Warner said that "requiring cable operators to transmit the signals of television broadcast stations amounts to the physical invasion of property rights." Home Box Office and Turner Broadcasting chimed in, saying they were being denied the "opportunity to obtain distribution of their [own] digital services because of the broadcasters` priority over scarce channel capacity."

The scarce-capacity argument suggests a need for more fiber optics in cable distribution systems to handle digital broadcasts. The link between DTV transmission and fiber-optic infrastructure was made when CBS used Williams Vyvx Services` fiber-transmission system as one leg in the TV network`s high-definition broadcasts of professional football games in New York and California. DTV promises to deliver crystal-clear pictures to consumers, but the delivery requires bit-rate speeds much faster than the speeds used to deliver the analog television signals we watch today. DTV`s success depends on the growth of high-capacity fiber-based networks. But cable operators may not want more capacity.

Do they prefer scarcity?

Cable operators are already obliged to carry the analog broadcasts of local TV stations. The issue was decided by a 5-to-4 decision of the U.S. Supreme Court in 1996. However, the operators think the difference between the analog and digital situations depends on unused capacity. Bet Holdings suggested the court`s decision rested on the amount of capacity available: "The court recognized that cable operators were able to satisfy their analog must-carry obligations with unused channel capacity 87% of the time. That cannot happen in a digital context," a representative said. Time Warner made a similar point: "The court determined that the burden imposed on cable operators was modest." The Supreme Court`s majority opinion held that "cable operators nationwide carry 99.8% of the programming they carried before the enactment of [analog] must-carry and...94.5% of all cable systems had not had to drop any programming in order to fulfill must-carry obligations."

The Supreme Court`s reasoning invites cable systems to utilize all capacity lest broadcasters grab it. And just in case the FCC might order operators to increase their capacity, Time Warner warned: "The Eighth Circuit Court held that a requirement that cable operators expand their channel capacity to accommodate public-access channels effected a taking" of private property. Even if cable operators had used up all their capacity, they could not be ordered to increase it.

These constitutional arguments may block any FCC action for digital must-carry. But the various suits involving the Telecom Act show that little is certain when it comes to national telecommunications policy and the law.

The broadcasters launched their salvos by appealing to public-interest sentiment. Morgan Murphy Stations and Cosmos Broadcasting gave a typical response: "It is only through the widespread acceptance of DTV that the American people can be assured of the preservation of broadcast television`s unique benefit: free widely accessible programming that serves the public interest." The National Association of Broadcasters (NAB) suggested that digital must-carry would survive judicial scrutiny for the same reason the analog version survived: "Must-carry is narrowly tailored to preserve a multiplicity of broadcast stations for the 40 percent of American households without cable." The NAB also answered the operators` capacity arguments, saying that future capacity would be ample: "Cox [for example] has indicated that with the roll-out of digital services, Cox`s weighted average number of channels per system will increase from 56 to more than 200."

Quantity versus the law

The NAB`s argument about future capacity was anticipated by the cable operators, who pointed to a legal case known as Loretto. A New York City ordinance allowed cable operators unobtrusive, innocuous access to multi-family buildings without requiring prior permission of the building owner. Several years ago, an owner challenged the practice, citing a violation of the Fifth Amendment. The owner won in federal court. Thus the Cable Telecommunications Association told the FCC, "Loretto stands for the proposition that a permanent physical occupation is a per se taking and neither the motive nor the harm done to the property is an issue." Translation: Even if Cox had 500 channels, no one can tell them how to use it. However, if that were true, then the Supreme Court would have never allowed analog must-carry.

The legal ambiguity may be resolved by dealing with another question: Which is more valuable, the communications path or the services carried over the path? Thirty years ago the path was the service. Today, the Internet proves the services are more valuable than the path. This explains why the Bell operating companies, the cable companies, and other owners of communications paths want to offer Internet services. If the telecommunications networks were thought of as a highway system or a common carrier, path ownership would be separated from service ownership. But the communications industry has historically been treated as private property, and the cable business in particular has successfully avoided being a common carrier. This situation may allow the AT&T-TCI combination to build its own Internet service on its own network without granting access to other Internet service providers (ISPs).

For example, AT&T chairman Michael Armstrong spoke at a cable industry association meeting late last year and objected to proposals by America Online and Mindspring that the AT&T-TCI merger be conditioned on granting ISPs access to TCI`s system. "No company will invest billions of dollars to become provider if competitors...can come along and get a free ride on the investments and risks of others," he charged. This reasoning is exactly the same as the cable operators` private-property arguments against must-carry. But if local broadcasters succeed in getting into TCI`s system, despite claims of a capacity shortage and the invocation of private property rights, then the ISPs will get access, too.

Like rivers, roads, and railroads, cable networks are powerful avenues of commerce affecting a host of other markets and the public at large. Regulators and the courts will decide if the networks are treated strictly as private property or as a mixed infrastructure where owners restrain their power to accommodate those public and private interests who depend on the networks. q

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