In the
Matter of AMERICAN TELEPHONE & TELEGRAPH CO., LONG LINES DEPARTMENT
Revisions of Tariff F.C.C. No. 260 Private Line Services, Series 5000 (TELPAK);
AMERICAN TELEPHONE & TELEGRAPH CO. Revision of American Telephone &
Telegraph Co., Tariff F.C.C. No. 260 Series 6000 and 7000 Channels (Program
Transmission Services)
Docket No. 18128; Docket No. 18684
FEDERAL COMMUNICATIONS COMMISSION
40 F.C.C.2d 901
RELEASE-NUMBER: FCC 73-502
May 15, 1973 Released
Adopted May 9, 1973
JUDGES:
BY THE COMMISSION: CHAIRMAN BURCH
ABSENT; COMMISSIONER JOHNSON CONCURRING IN PART AND ISSUING
A STATEMENT; COMMISSIONER REID CONCURRING IN THE RESULT.
OPINION:
[*901] 1. We have under
consideration Application No. 903 filed by the American Telephone and Telegraph
Company (AT&T) on October 16, 1972, applicable to television program
transmission private line services and the written material submitted by
AT&T in support of its application. Attachment 1. hereof sets forth
the specific changes proposed by AT&T. We also have under
consideration the written comments and pleadings of interested parties in
opposition to and in support of such application.
2. We have given careful
consideration to the contentions and views of all parties in this matter and it
is our opinion that a grant of the application in its entirety as proposed by
AT&T would result in undue delay and disruption in the resolution of the
issues in Docket 18684 of the consolidated proceeding herein. The filing
of all of the tariff revisions as requested by AT&T would raise questions
of lawfulness that are essentially the same as the issues herein in Docket
18684. AT&T's basic justification for the proposed rate changes is
grounded upon facts and conclusions which it has recently asked us to make
herein in its March 12, 1973 "Proposed Findings of Fact and Conclusions of
Bell System Respondents" (Pages 292-354). However, these proposed
findings of fact and conclusions of AT&T are vigorously disputed as being
contrary to the evidence of record by other parties. (See, e.g. Proposed
Findings and Conclusions of Hughes Sports Network, Inc.) Under these
circumstances we conclude that we should not permit the filing of the rates and
rate structure as proposed by AT&T.
3. Although we are unable to
grant AT&T's application in the form submitted by it, we are of the view
that we should not defer action [*902] on the merits of such
proposal for the indefinite period required to reach final resolution of the
complex rate level issues involved in the consolidated proceeding herein in
Docket 18128. We believe that there may be justification for some
internal rate structure adjustments in AT&T's TV program transmission
services pending such rate level decisions. We believe that the principal
issues raised by AT&T application relate to whether and to what extent
there is, or should be, separate, dedicated facilities for occasional and
monthly contract users and what the relationships should be between the charges
for the two sub-classes of service. As to these issues, we believe that
such internal rate structure questions in Docket 18684 can and should be
treated on a priority basis and decided by the Commission in the relatively
near future.
4. Accordingly, we shall
modify the procedures herein insofar as these issues are concerned and, in lieu
of a recommended decision by the Chief, Common Carrier Bureau, we shall
schedule oral argument en banc on these questions and render our decision
thereon. In our later decision in Docket 18128, we will determine the
appropriate overall revenue requirements and rate levels necessary to meet such
requirements for the principal classes of service, including the TV Program
Transmission service.
5. For purposes of the
modified procedures herein we shall, of course, consider all probative,
reliable and substantial evidence of record herein relevant to the rate
structure issues and the Proposed Findings and Conclusions thereon and Replies
thereto. In addition, we shall also take official notice of AT&T's
application No. 903 and all of the written data and information submitted by
AT&T in support thereof, together with all of the written comments thereon
heretofore submitted by all persons opposing or supporting AT&T's
application. It is our intention and expectation to issue our final
decision on these issues within four months from the release date of this
Memorandum Opinion and Order.
6. We believe that, pending
our decision after oral argument we should exercise our discretion and permit
AT&T to file and make effective (upon appropriate notice to its customers)
the proposed monthly contract rates set forth in Attachment 1. These
charges will effectuate an estimated reduction in charges of about $18 million
a year to the users and will reduce AT&T's monthly contract rates to a
level that AT&T claims is cost justified while at the same time enabling
AT&T to compete with other carriers offering similar service at rates
generally lower than the contract rates proposed by AT&T. We stress
that, in allowing these contract rates to be filed and to become effective
pending our decision, we are not approving or disapproving such rates and they
will be subject to accounting requirement and possible refunds to the extent
that they may cause any increases in charges to customers vis-a-vis either the
presently effective rates or the pre-October, 1969 rates. n1 With respect, however, to the
proposed revisions in occasional rates, we conclude that we should not allow
the proposed revisions to be filed in these rates pending our decision on the
rate structure issues in Docket 18684. Unlike the monthly contract rates,
the occasional rate proposals involve increases that are substantial, both in
the [*903] aggregate and as to individual customers; if filed,
questions would be raised as to the lawfulness thereof, particularly with
respect to our decision in Hughes Sports Network, Inc.; n2 and, in view of the magnitude of
the increases as to individual customers, it is questionable whether an
accounting order with provision for possible refunds, would be an adequate
safeguard of the rights of occasional users if we should later find the
occasional rates to be unlawfully high. However, in view of the
inequities that may arise from any undue delay in the resolution of this
matter, we are of the opinion that, if we have not issued our decision on the
rate structure issues within 120 days from the release date of this Memorandum
Opinion and Order, we should allow AT&T to file revised tariffs publishing
the occasional rates set forth in Attachment 1., on the usual 60 days' notice
required by our rules.
n1 See
Memorandum Opinion and Order in Docket 18684, FCC 69-1038, released October 6,
1969.
n2 25 FCC
550 (1970); 34 FCC 2d 691 (1972).
7. We find that due and timely
execution of our functions imperatively and unavoidably requires the modified
procedures we are adopting herein.
8. Accordingly, in view of the
foregoing, IT IS ORDERED, pursuant to Sections 4(i), 4(j), 201-208 and 403 of
the Act. That ORAL ARGUMENT SHALL BE HELD before the Commission en banc
at Washington, D.C. commencing at 9:00 a.m. on June 26, 1973 on the questions
of whether and to what extent the program transmission facilities offered under
AT&T's Tariffs are or should be dedicated to "contract" and
"occasional" users; whether and to what extent such facilities are or
should be used interchangeably by "contract" and
"occasional" uses; and, in the light of the findings of facts on
these issues, whether there should be any revisions in the relationships between
the "occasional" and "contract" rates and, if so, what
revisions should be required or permitted by the Commission.
9. IT IS FURTHER ORDERED, That
each person desiring to participate in such argument shall file with the
Commission on or before June 5, 1973, its brief on the issues and a separate
written summary of the oral argument and the amount of time requested for
argument.
10. IT IS FURTHER ORDERED,
That official notice will be taken of AT&T's Application 903 and the
written material submitted by it in support thereof and of all of the written
comments and pleadings of all persons heretofore submitting written comments in
opposition to or in support of such application.
11. IT IS FURTHER ORDERED,
That AT&T is hereby granted permission to file forthwith the monthly contract
charges set forth in Attachment 1. effective on 30 days' notice to the
Commission and the public (including actual notice to all customers where
increases are involved) and such monthly contract charges shall be subject (a)
to accounting and possible refunds insofar as they effectuate increases to any
customer over either the present or the pre-October, 1969 charges and (b) to
such modifications and revisions as we may permit or require in our decision on
the issues herein.
12. IT IS FURTHER ORDERED,
That, if we have not released our decision following oral argument within 120
days from the release date of this Memorandum Opinion and Order, AT&T, upon
the expiration [*904] of such 120-day period, may file, on 60 days'
notice, tariffs publishing the occasional rates set forth in Attachment 1.
hereof.
FEDERAL
COMMUNICATIONS COMMISSION, BEN F. WAPLE, Secretary.
DISSENTBY:
JOHNSON (In Part)
DISSENT:
OPINION OF COMMISSIONER NICHOLAS
JOHNSON, CONCURRING IN PART AND DISSENTING IN PART; MOTHER [BELL]'S DAY
This Commission majority seems to
have an incredible knack for giving Ma Bell her presents at all the appropriate
moments. Its initial decision to stop regulating the reasonableness of
the Bell system's own determination of its cost of doing business came just in
time for Christmas in 1971. See "Why Ma Bell Still Believes in Santa
Claus." Saturday Review, March 11, 1972, p. 57. Its decision to
increase AT&T's allowable rate of return to a whopping 9.0% graced her
Thanksgiving table just last November -- and knocked $1.3 billion of stuffing
per year right out of the pocketbook of the consumer. Now, just a few
short hours before Mother's Day, the Commission does it again, and in the
process partially emasculates one of its most important decisions regarding
anticompetitive behavior in the telecommunications industries.
[*905] In the Hughes
Sports Network, Inc. decision, 25 F.C.C. 2d 560 (1968); 34 F.C.C. 2d 691
(1972), this Commission held that the rate structure then in existence for
users of intercity private lines was heavily discriminatory against the small
(or "occasional") user. AT&T's rates were found to be
"both unjust and unreasonable under § 201(b) of the ACT and unduly
discriminatory under § 202(a) of the Act." In particular, the
monthly contract rates, which required users to pay for at least eight hours
per day each month before they could get a break from the high "occasional
user" rate, and the "occasional user" rate itself, were singled
out as totally unreasonable. Bell then came up with the rate structure
currently in use, which reduced the occasional service rate from $1.15 per mile
per hour to $.55 per mile per hour (or $.28 between 1:00 and 7:00 AM) and set
up a sliding scale for the monthly contract user, which allowed the user to
purchase anything from one hour per day to twenty four hours per day at a base
rate of $12.10 per mile per hour per month for the first hour and just $4.40
per mile per hour for each consecutive hour (or $6.60 per mile per hour for
each subsequent non-consecutive hour). Thus, the contract user was
allowed considerably greater flexibility, and the occasional service, while
still somewhat higher, was at least in reasonable proportion to the contract
rates. We decided the new rates looked as though they might at least
partially ameliorate the problem, and we allowed them to go into effect while
we proceeded to develop a record on which we could make some final
determination. See F.C.C. 69-1038, Docket No. 18684, October 9, 1969.
Last Fall, pursuant to our decision
requiring AT&T to receive special permission before filing any new tariff
in this service, Memorandum Opinion and Order in Docket Nos. 18128/18684, 33
F.C.C. 2d 552 (1972), Ma Bell requested permission to revise the 1969 rates, on
which the final decision is still pending. Claiming that increased price
competition from specialized microwave carriers was soon going to be siphoning
off her largest contract users -- primarily the networks -- she insisted that
she should be allowed to "revise" her monthly contract rate to a more
competitive single, 24 hour per day rate of $55.00 mile per month, and at the
same time increase the occasional service rate to $1.00 per mile per hour
(ostensibly to "make the occasional service more self-supporting").
The latter request was simply a
flagrant violation of the letter and spirit of the Hughes case, since it would
have driven occasional rates virtually all the way back up to their
unreasonable pre-1969 rate (of $1.15 per mile per hour). I concur in the
majority's refusal to agree to this aspect of the AT&T request.
The "revision" of the
monthly contract rate, on the other hand, which my colleagues continually but
fallaciously referred to in their oral discussion as a "reduction," has
been allowed for filing, and to that action I must vigorously dissent.
It is true that the $55.00 rate
represents a "reduction" (from a potential 24 hour per day high of
$113.30 per mile) for the major network users -- a reduction with which I have
no problems. (When was the last time Ma Bell asked permission to reduce
the price of anything?) What does disturb me, however, is the fact that these
rates will once again require the monthly contract user to take a minimum
[*906] number of hours per day in order to get the benefits of contract
service -- in flagrant disregard of an important part of the holding in
Hughes. Indeed, the major difference between these new rates and the
pre-1969 rate structure outlawed in Hughes is that under the previous structure
the monthly user was required to pay for at least 8 hours per day (at $39.50
per mile) whether he needed them or not, whereas now he must contract for no
less than 24 hours per day (at a rate of $55.00 per mile) whether he needs them
or not. This seems to me a curious interpretation of the public interest
standard indeed, and one that would have the effect (especially if coupled with
the proposed increase in occasional service charges) of forcing the small user
-- the local network or specialized network or the local station regularly
covering distant events -- to seriously curtail his service to the public.
Since I am not in conflict with the
basic intentions of the majority in attempting to allow AT&T to remain
competitive in the intercity private lines service, I would have preferred to
allow the "reduction" of the monthly contact rate to $55.00 to become
a "reduction" in reality and not just in rhetoric, perhaps by one of
two alternative expediencies:
(1) Allow AT&T to file the
$55.00 per mile 24 hour per day tariff, but require a proportional reduction in
rates for monthly users wishing to use fewer hours. Since the present
rate of $133.30 represents $12.10 for the first hour plus $4.40 per hour for
each of the next 23, Bell might be allowed to retain the "base rate"
of $12.10 but required to reduce the additional hourly rate proportionately to
$1.87 per mile;
(2) Although the first alternative
is logical and in keeping with the spirit of the Hughes decision, a
considerably less drastic but still sensible solution would simply require that
Bell retain the current contract rate structure of $12.10 for the first and
$4.40 (or $6.60) for each additional hour up to a cutoff point of $55.00 per
mile, beyond which the same rate applies for up to 24 hours of use.
Since the majority considered
neither alternative in allowing Bell to file its $55.00 rate
"revision" (which, to counteract the majority's reference to
"reduction," I should more appropriately term an
"increase") it has run afoul of our own significant decision in
Hughes -- as well as of the recommendations of our common carrier bureau staff,
who had initially suggested we deny permission to AT&T to file either new
tariff, on the theory that to do otherwise would be "a classic example of the
kind of tariff application that, if granted, would result in undue delay and
disruption in the resolution of the issues in a pending rate case and would
impair the integrity thereof." The bureau's language refers to the fact
that allowing this new filing would allow Bell virtually to regulate itself,
since it would initiate a new rate determination proceeding every bit as
complex as the one we have not yet decided regarding the rates currently in
effect. The result is a disastrous precedent for allowing AT&T to keep
FCC procedures in perpetual motion by merely filing a new rate structure (which
automatically takes effect within 60 days and can only be effectively stayed
for another 90 days) every time the Commission [*907] looks as
though it is getting ready to approve or disapprove the previous one.
These two concerns -- about undermining the integrity of Commission procedures
and partially emasculating the holding of a landmark decision -- cannot be
ignored in light of the majority's decision regarding the $55.00 rate, and
therefore to that aspect I must register a vigorous dissent.
APPENDIX:
TELEVISION SERVICE -- RATE
COMPARISON
|
|
Present rates |
Proposed rates |
|
Monthly |
|
|
|
Inter-exchange
channel -- per mile: |
|
|
|
24 hours |
|
$55.00 |
|
1st hour |
$12.10 |
|
|
Cons.
hrs. -- per hour |
4.40 |
|
|
Non-cons.
hrs. -- per hour |
6.60 |
|
|
Station
connection -- per connection: |
|
|
|
24 hours |
|
1,500.00 |
|
1st hour |
580.00 |
|
|
Cons.
hrs. -- per hour |
147.00 |
|
|
Non-cons.
hrs. -- per hour |
236.00 |
|
|
Local and
studio-to-transmitter channels |
|
|
|
-- per
channel: |
|
|
|
Month |
|
1,000.00 |
|
1st month |
1,225.00 |
|
|
Cons.
months -- per month |
725.00 |
|
|
Occasional |
|
|
|
Interexchange
channel -- per mile: |
|
|
|
Per hour |
|
$1.00 |
|
7AM-1AM |
$.55 |
|
|
1AM-7AM |
.28 |
|
|
Station
connection -- per connection: |
|
|
|
Per hour |
|
80.00 |
|
7AM-1AM |
26.25 |
|
|
1AM-7AM |
13.15 |
|
|
Local
channel -- per channel: |
|
|
|
Per day |
|
500.00 |
|
1st day |
410.00 |
|
|
Cons. day
-- per day |
110.00 |
|
|
30 day
max |
1,225.00 |
1,000.00 |
|
Monitoring: |
|
|
|
30
minutes or less |
8.00 |
8.00 |
|
Exceeding
30 minutes -- per hour |
15.00 |
15.00 |
|
Switches: |
|
|
|
Per
switch |
9.00 |
9.00 |
|
One half
switch |
4.50 |
4.50 |