In the Matter of AMERICAN TELEPHONE & TELEGRAPH
CO. AND THE ASSOCIATED BELL SYSTEM COMPANIES Charges for Interstate and Foreign
Communication Service; In the Matter of AMERICAN TELEPHONE & TELEGRAPH CO.
Charges, Practices, Classifications, and Regulations
for and in Connection With Teletypewriter Exchange
Service
Docket
No. 16258; Docket No. 15011
FEDERAL
COMMUNICATIONS COMMISSION
10
F.C.C.2d 705 (1967)
RELEASE-NUMBER:
FCC 67-1310
November
30, 1967 Adopted
BY THE COMMISSION: COMMISSIONER BARTLEY DISSENTING;
COMMISSIONERS COX AND JOHNSON DISSENTING AND ISSUING
A STATEMENT.
[*705]
1. The Commission has under
consideration its interim decision and order, its memorandum opinion and order
on reconsideration, the report of the Technical Experts Group on Jurisdictional
Separations, a petition for extension of stay and reopening of record, filed by
the Bell System respondents on November 15, 1967, and various oppositions
thereto.
2. The
memorandum opinion and order on reconsideration stayed the effect of our
interim decision as regards jurisdictional separations until December 1, 1967,
for the purpose of considering recommendations to be contained in the report of
the Technical Experts Group. It appears
that, because of the procedural requirements of our rules, as well as the
voluminous and technical nature of the material involved, the Commission will
not be able to act upon the report and the pleadings prior to December 1, 1967.
3.
Accordingly, It is ordered, That the stay of the effect of our interim
decision and order with respect to jurisdictional separations Is extended to
February 1, 1968.
FEDERAL COMMUNICATIONS COMMISSION, BEN F. WAPLE,
Secretary.
DISSENTING
OPINION OF COMMISSIONERS KENNETH COX AND NICHOLAS JOHNSON
After 71 days of telephone rate hearings, producing
10,094 pages of hearing transcript and 3,485 pages of exhibits, the FCC issued
a 342-paragraph opinion on July 5, 1967.
It dealt with many items, including
[*706] "separations"
-- the allocation of "rate base" (capital investment) between
interstate and intrastate telephone service, for purposes of computing
companies' rate of return and subscribers' telephone rates.
The details of separations are dealt with in that
opinion, and we will not repeat them here.
We note, however, that the opinion indicated the Commission's open mind
on these matters and willingness to consider new schemes in the future.
"Because telephone
technology and operations of respondents (Bell) are not static, but undergo
changes with time, telephone separations procedures must be reevaluated and,
when necessary, revised in light of such changes. * * * We will require any
party who may advocate a revision in these prescribed procedures to make a
clear and convincing showing that the charge advocated is reasonably required
by new or changed circumstances." (Par. 322.)
Moreover, this Commission opinion, as any other,
was open to reconsideration or hearing. In fact, such a reconsideration was
requested. And on September 13, 1967,
the Commission issued a 24-page, single-spaced order carefully considering the
comments of the parties regarding the July 5 opinion. Bell had questioned the Commission's proposed separations
procedures at that time. The Commission
wrote:
"We are firmly convinced
that the separations plan prescribed in our interim decision and order (of July
5, 1967) is reasonable on the basis of the record before us. Indeed, the petitions for reconsideration
advance nothing of substance in the way of criticism thereof." (Par. 55.)
Nevertheless, in spite of the Commission's firm
conviction, and the absence of substantive criticism, the Commission
reconstituted an industry-staffed Technical Experts Group "for the purpose
of affording that group, in concert with our staff (in, of course, closed-door,
off-the-record sessions), an opportunity to examine the prescribed separations
plan with the view of ascertaining any improvements or refinements therein
which they may deem to be warranted." (Par. 57.)
What "improvements or refinements" have
been suggested by the "technical experts"? On November 15 the group
submitted its report. The group had
considered a number of alternatives to the FCC's plan, but itself questioned
"whether they fall within the framework of 'improvements and refinements'
as contemplated by the FCC's September 13 order." It is not clear whether
the group even considered any changes fairly characterized as
"improvements and refinements." What is clear is that, to quote its
report, "no one plan is acceptable to all members of the Technical Experts
Group."
In short, the Commission is left -- or ought to be
-- where it was September 13: "Firmly convinced" of the
reasonableness of the separations decision arrived at in its July 5 opinion,
and without any substantial criticism of the details of that plan. The Technical Experts Group has failed to
come forward with anything whatsoever to warrant a further postponement of the
Commission's new separations formula (already stayed from July 5 to December
1).
And yet the time is now to be extended once again
-- to February 1, 1968. What is the
result? The old separations formula
stays in effect, [*707] although all parties are agreed that the
last adjustment made -- the so-called "Denver Plan" -- is
unsound. The potential immediate impact
upon States and citizens alike of these multi-million-dollar decisions are
further lost, for this extended period, never to be regained. And we are confronted with a Bell proposal
for a new system which is, already, opposed by the independent telephone
companies and several States.
We are now well into phase IB of this rate
proceeding. The limited FCC staff is
fully engaged in that hearing. Today's
decision will simply further postpone ultimate resolution and impose an
additional drain upon staff resources to replow ground already harrowed over
the past 2 years.
We contemplated such new proposals in our original
July 5 order. We provided, in addition
to the language quoted at the outset of this statement,
"Any changes in such rules and regulations
will * * * be considered on a public record, in accordance with the rulemaking
provisions of the Administrative Procedure Act." (Par. 322.)
We believe that judgment is as sound today as it
was nearly 5 months ago. Indeed, the majority has apparently overlooked the
fact that even Bell acknowledged in its filing with the Technical Experts Group
that such a procedure might be more appropriate, when it concluded:
Respondents respectfully suggest
that the Commission consider adoption of respondents' proposal by either of two
methods: (1) Reopening the pecord * * *; (2) incorporation of this report in a
separate rulemaking proceeding.
One of the anticipated benefits of our whole rate
proceeding was that it would replace the unsatisfactory system of negotiated
separations with a prescribed system based on logically stated conclusions
drawn from a hearing record. We
indicated, as noted above, that anyone proposing further change would have the
burden of justifying his modification in terms of new or changed
circumstances. Yet at the first suggestion
that some of the poarties would prefer another approach -- though they have not
complied with the terms of our September 13 order -- we extend the present
unsatisfactory arrangement for a further period. Perhaps the following story, often told by one of our colleagues
of the majority, is in point.
A Russian Orthodox priest was exiled to
Siberia. After 40 years of
imprisonment, he was released because of his age and deteriorating health. On his return to his old village he was welcomed
by a younger man, the son of one of his friends. The latter asked about his exile, and in particular how he had
passed the time. The priest replied
that he had devoted a great deal of time to contemplation and the formulation
of a personal philosophy. His friend
immediately expressed great interest in his conclusions after all this deep
thought. The priest said: Well, I would
sit and look out the high window in my cell.
I would note the change from day to night, the changing weather, the
changing seasons. I thought about how
the rain falls and runs into little streams, then great rivers, and finally
into the ocean. I thought of the cycle [*708]
of birth and life and death. And
I concluded, my son, that life is like a fountain." His friend was
entranced and exclaimed, "Father, why is life like a fountain?" The
old priest thought a moment, shrugged, and said, "Well, may be it
isn't."
In short, although we are on record as encouraging
more original and imaginative approaches to telephone regulation, we believe
that the judgment of this Commission -- shared by Bell -- was correct that we
ought to put our July 5, 1967, order into effect, get on with phase IB, and
consider any new suggestions as to separations in further rulemaking
proceedings.