UNITED STATES v. MIDWEST VIDEO CORP.

MR. JUSTICE BRENNAN announced the judgment of the Court and an opinion in which MR. JUSTICE WHITE, MR. JUSTICE MARSHALL, and MR. JUSTICE BLACKMUN join.

Community antenna television (CATV) was developed long after the enactment of the Communications Act of 1934, 48 Stat. 1064, as amended, 47 U. S. C. § 151 et seq., as an auxiliary to broadcasting through the retransmission by wire of intercepted television signals to viewers otherwise unable to receive them because of distance or local terrain.1 In United States v. Southwestern Cable Co., 392 U.S. 157 (1968), where we sustained the jurisdiction of the Federal Communications Commission to regulate the new industry, at least to the extent "reasonably ancillary to the effective performance of the Commission's various responsibilities for the regulation of television broadcasting," id., at 178, we observed that the growth of CATV since the establishment of the first commercial system in 1950 has been nothing less than " `explosive.' " Id., at 163.2 The potential of the new industry to augment communication services now available is equally phenomenal.3 As we said in Southwestern, id., at 164, CATV "[promises] for the future to provide a national communications system, in which signals from selected broadcasting centers would be transmitted to metropolitan areas throughout the country." Moreover, as the Commission has noted, "the expanding multichannel capacity of cable systems could be utilized to provide a variety of new communications services to homes and businesses within a community," such as facsimile reproduction of documents, electronic mail delivery, and information retrieval. Notice of Proposed Rulemaking and Notice of Inquiry, 15 F. C. C. 2d 417, 419-420 (1968). Perhaps more important, CATV systems can themselves originate programs, or "cablecast"—which means, the Commission has found, that CATV can "[increase] the number of local outlets for community self-expression and [augment] the public's choice of programs and types of service, without use of broadcast spectrum . . . ." Id., at 421.

Recognizing this potential, the Commission, shortly after our decision in Southwestern, initiated a general inquiry "to explore the broad question of how best to obtain, consistent with the public interest standard of the Communications Act, the full benefits of developing communications technology for the public, with particular immediate reference to CATV technology . . . ." Id., at 417. In particular, the Commission tentatively concluded, as part of a more expansive program for the regulation of CATV,4 "that, for now and in general, CATV program origination is in the public interest," id., at 421, and sought comments on a proposal "to condition the carriage of television broadcast signals (local or distant) upon a requirement that the CATV system also operate to a significant extent as a local outlet by originating." Id., at 422. As for its authority to impose such a requirement, the Commission stated that its "concern with CATV carriage of broadcast signals is not just a matter of avoidance of adverse effects, but extends also to requiring CATV affirmatively to further statutory policies." Ibid.

On the basis of comments received, the Commission on October 24, 1969, adopted a rule providing that "no CATV system having 3,500 or more subscribers shall carry the signal of any television broadcast station unless the system also operates to a significant extent5 as a local outlet by cablecasting6 and has available facilities for local production and presentation of programs other than automated services." 47 CFR § 74.1111 (a).7 In a report accompanying this regulation, the Commission stated that the tentative conclusions of its earlier notice of proposed rulemaking

The Commission further stated, id., at 208-209:

Upon the challenge of respondent Midwest Video Corp., an operator of CATV systems subject to the new cablecasting requirement, the United States Court of Appeals for the Eighth Circuit set aside the regulation on the ground that the Commission "is without authority to impose" it. 441 F.2d 1322, 1328 (1971).14 "The Commission's power [over CATV] . . . ," the court explained, "must be based on the Commission's right to adopt rules that are reasonably ancillary to its responsibilities in the broadcasting field," id., at 1326—a standard that the court thought the Commission's regulation "goes far beyond." Id., at 1327.15 The court's opinion may also be understood to hold the regulation invalid as not supported by substantial evidence that it would serve the public interest. "The Commission report itself shows," the court said, "that upon the basis of the record made, it is highly speculative whether there is sufficient expertise or information available to support a finding that the origination rule will further the public interest." Id., at 1328. "Entering into the program origination field involves very substantial expenditures," id., at 1327, and "[a] high probability exists that cablecasting will not be self-supporting," that there will be a "substantial increase" in CATV subscription fees, and that "in some instances" CATV operators will be driven out of business. Ibid.16 We granted certiorari. 404 U.S. 1014 (1972). We reverse.

I

In 1966 the Commission promulgated regulations that, in general, required CATV systems (1) to carry, upon request and in a specified order of priority within the limits of their channel capacity, the signals of broadcast stations into whose service area they brought competing signals; (2) to avoid, upon request, the duplication on the same day of local station programing; and (3) to refrain from bringing new distant signals into the 100 largest television markets except upon a prior showing that service would be consistent with the public interest. See Second Report and Order, 2 F. C. C. 2d 725 (1966). In assessing the Commission's jurisdiction over CATV against the backdrop of these regulations,17 we focused in Southwestern chiefly on § 2 (a) of the Communications Act, 48 Stat. 1064, as amended, 47 U. S. C. § 152 (a), which provides in pertinent part: "The provisions of this [Act] shall apply to all interstate and foreign communication by wire or radio . . . , which originates and/or is received within the United States, and to all persons engaged within the United States in such communication . . . ." In view of the Act's definitions of "communication by wire" and "communication by radio,"18 the interstate character of CATV services,19 and the evidence of congressional intent that "[t]he Commission was expected to serve as the `single Government agency' with `unified jurisdiction' and `regulatory power over all forms of electrical communication, whether by telephone, telegraph, cable, or radio,' " 392 U. S., at 167-168 (footnotes omitted), we held that § 2 (a) amply covers CATV systems and operations. We also held that § 2 (a) is itself a grant of regulatory power and not merely a prescription of the forms of communication to which the Act's other provisions governing common carriers and broadcasters apply:

This conclusion, however, did not end the analysis, for § 2 (a) does not in and of itself prescribe any objectives for which the Commission's regulatory power over CATV might properly be exercised. We accordingly went on to evaluate the reasons for which the Commission had asserted jurisdiction and found that "the Commission has reasonably concluded that regulatory authority over CATV is imperative if it is to perform with appropriate effectiveness certain of its other responsibilities." Id., at 173. In particular, we found that the Commission had reasonably determined that " `the unregulated explosive growth of CATV,' " especially through "its importation of distant signals into the service areas of local stations" and the resulting division of audiences and revenues, threatened to "deprive the public of the various benefits of [the] system of local broadcasting stations" that the Commission was charged with developing and overseeing under § 307 (b) of the Act.20 Id., at 175. We therefore concluded, without expressing any view "as to the Commission's authority, if any, to regulate CATV under any other circumstances or for any other purposes," that the Commission does have jurisdiction over CATV "reasonably ancillary to the effective performance of [its] various responsibilities for the regulation of television broadcasting . . . [and] may, for these purposes, issue `such rules and regulations and prescribe such restrictions and conditions, not inconsistent with law,' as `public convenience, interest, or necessity requires.' " Id., at 178 (quoting § 303 (r) of the Act, 50 Stat. 191, 47 U. S. C. § 303 (r)).

The parties now before us do not dispute that in light of Southwestern CATV transmissions are subject to the Commission's jurisdiction as "interstate . . . communication by wire or radio" within the meaning of § 2 (a) even insofar as they are local cablecasts.21 The controversy, instead, centers on whether the Commission's program-origination rule is "reasonably ancillary to the effective performance of [its] various responsibilities for the regulation of television broadcasting."22 We hold that it is.

At the outset we must note that the Commission's legitimate concern in the regulation of CATV is not limited to controlling the competitive impact CATV may have on broadcast services. Southwestern refers to the Commission's "various responsibilities for the regulation of television broadcasting." These are considerably more numerous than simply assuring that broadcast stations operating in the public interest do not go out of business. Moreover, we must agree with the Commission that its "concern with CATV carriage of broadcast signals is not just a matter of avoidance of adverse effects, but extends also to requiring CATV affirmatively to further statutory policies." Supra, at 653. Since the avoidance of adverse effects is itself the furtherance of statutory policies, no sensible distinction even in theory can be drawn along those lines. More important, CATV systems, no less than broadcast stations, see, e. g., Federal Radio Comm'n v. Nelson Bros. Co., 289 U.S. 266 (1933) (deletion of a station), may enhance as well as impair the appropriate provision of broadcast services. Consequently, to define the Commission's power in terms of the protection, as opposed to the advancement, of broadcasting objectives would artificially constrict the Commission in the achievement of its statutory purposes and be inconsistent with our recognition in Southwestern "that it was precisely because Congress wished `to maintain, through appropriate administrative control, a grip on the dynamic aspects of radio transmission,' . . . that it conferred upon the Commission a `unified jurisdiction' and `broad authority.' " Supra, at 660-661.23

The very regulations that formed the backdrop for our decision in Southwestern demonstrate this point. Those regulations were, of course, avowedly designed to guard broadcast services from being undermined by unregulated CATV growth. At the same time, the Commission recognized that "CATV systems . . . have arisen in response to public need and demand for improved television service and perform valuable public services in this respect." Second Report and Order, 2 F. C. C. 2d 725, 745 (1966).24 Accordingly, the Commission's express purpose was not

In implementation of this approach CATV systems were required to carry local broadcast station signals to encourage diversified programing suitable to the community's needs as well as to prevent a diversion of audiences and advertising revenues.26 The duplication of local station programing was also forbidden for the latter purpose, but only on the same day as the local broadcast so as "to preserve, to the extent practicable, the valuable public contribution of CATV in providing wider access to nationwide programing and a wider selection of programs on any particular day." Id., at 747. Finally, the distant-importation rule was adopted to enable the Commission to reach a public-interest determination weighing the advantages and disadvantages of the proposed service on the facts of each individual case. See id., at 776, 781-782. In short, the regulatory authority asserted by the Commission in 1966 and generally sustained by this Court in Southwestern was authority to regulate CATV with a view not merely to protect but to promote the objectives for which the Commission had been assigned jurisdiction over broadcasting.

In this light the critical question in this case is whether the Commission has reasonably determined that its origination rule will "further the achievement of long-established regulatory goals in the field of television broadcasting by increasing the number of outlets for community self-expression and augmenting the public's choice of programs and types of services . . . ." Supra, at 654. We find that it has.

The goals specified are plainly within the Commission's mandate for the regulation of television broadcasting.27 In National Broadcasting Co. v. United States, 319 U.S. 190 (1943), for example, we sustained Commission regulations governing relations between broadcast stations and network organizations for the purpose of preserving the stations' ability to serve the public interest through their programing. Noting that "[t]he facilities of radio are not large enough to accommodate all who wish to use them," id., at 216, we held that the Communications "Act does not restrict the Commission merely to supervision of [radio] traffic. It puts upon the Commission the burden of determining the composition of that traffic." Id., at 215-216. We then upheld the Commission's judgment that

Equally plainly the broadcasting policies the Commission has specified are served by the program-origination rule under review. To be sure, the cablecasts required may be transmitted without use of the broadcast spectrum. But the regulation is not the less, for that reason, reasonably ancillary to the Commission's jurisdiction over broadcast services. The effect of the regulation, after all, is to assure that in the retransmission of broadcast signals viewers are provided suitably diversified programing —the same objective underlying regulations sustained in National Broadcasting Co. v. United States, supra, as well as the local-carriage rule reviewed in Southwestern and subsequently upheld. See supra, at 666 and nn. 17 and 26, supra. In essence the regulation is no different from Commission rules governing the technological quality of CATV broadcast carriage. In the one case, of course, the concern is with the strength of the picture and voice received by the subscriber, while in the other it is with the content of the programing offered. But in both cases the rules serve the policies of §§ 1 and 303 (g) of the Communications Act on which the cablecasting regulation is specifically premised, see supra, at 654-656,28 and also, in the Commission's words, "facilitate the more effective performance of [its] duty to provide a fair, efficient, and equitable distribution of television service to each of the several States and communities" under § 307 (b). Supra, at 656.29 In sum, the regulation preserves and enhances the integrity of broadcast signals and therefore is "reasonably ancillary to the effective performance of the Commission's various responsibilities for the regulation of television broadcasting."

Respondent, nevertheless, maintains that just as the Commission is powerless to require the provision of television broadcast services where there are no applicants for station licenses no matter how important or desirable those services may be, so, too, it cannot require CATV operators unwillingly to engage in cablecasting. In our view, the analogy respondent thus draws between entry into broadcasting and entry into cablecasting is misconceived. The Commission is not attempting to compel wire service where there has been no commitment to undertake it. CATV operators to whom the cablecasting rule applies have voluntarily engaged themselves in providing that service, and the Commission seeks only to ensure that it satisfactorily meets community needs within the context of their undertaking.

For these reasons we conclude that the program-origination rule is within the Commission's authority recognized in Southwestern.

II

The question remains whether the regulation is supported by substantial evidence that it will promote the public interest. We read the opinion of the Court of Appeals as holding that substantial evidence to that effect is lacking because the regulation creates the risk that the added burden of cablecasting will result in increased subscription rates and even the termination of CATV services. That holding is patently incorrect in light of the record.

In first proposing the cablecasting requirement, the Commission noted that "[t]here may . . . be practical limitations [for compliance] stemming from the size of some CATV systems" and accordingly sought comments "as to a reasonable cutoff point [for application of the regulation] in light of the cost of the equipment and personnel minimally necessary for local originations." Notice of Proposed Rulemaking and Notice of Inquiry, 15 F. C. C. 2d 417, 422 (1968). The comments filed in response to this request included detailed data indicating, for example, that a basic monochrome system for cablecasting could be obtained and operated for less than an annual cost of $21,000 and a color system, for less than $56,000. See First Report and Order 210. This information, however, provided only a sampling of the experience of the CATV systems already engaged in program origination. Consequently, the Commission

On this basis the Commission chose to apply the regulation to systems with 3,500 or more subscribers, effective January 1, 1971.

On petitions for reconsideration the Commission observed that it had "been given no data tending to demonstrate that systems with 3,500 subscribers cannot cablecast without impairing their financial stability, raising rates or reducing the quality of service." Memorandum Opinion and Order 826. The Commission repeated that "[t]he rule adopted is minimal in the light of the potentials of cablecasting,"30 but, nonetheless, on its own motion postponed the effective date of the regulation to April 1, 1971, "to afford additional preparation time." Id., at 827.

This was still not the Commission's final effort to tailor the regulation to the financial capacity of CATV operators. In denying respondent's motion for a stay of the effective date of the rule, the Commission reiterated that "there has been no showing made to support the view that compliance . . . would be an unsustainable burden." Memorandum Opinion and Order, 27 F. C. C. 2d 778, 779 (1971). On the other hand, the Commission recognized that new information suggested that CATV systems of 10,000 ultimate subscribers would operate at a loss for at least four years if required to cablecast. That information, however, was based on capital expenditure and annual operating cost figures "appreciably higher" than those first projected by the Commission. Ibid. The Commission concluded:

This history speaks for itself. The cablecasting requirement thus applied is plainly supported by substantial evidence that it will promote the public interest.31 Indeed, respondent does not appear to argue to the contrary. See Tr. of Oral Arg. 43-44. It was, of course, beyond the competence of the Court of Appeals itself to assess the relative risks and benefits of cablecasting. As we said in National Broadcasting Co. v. United States, 319 U. S., at 224:

See also, e. g., United States v. Storer Broadcasting Co., 351 U.S. 192, 203 (1956); General Telephone Co. of Southwest v. United States, 449 F.2d 846, 858-859, 862-863 (CA5 1971).

Reversed.

MR. CHIEF JUSTICE BURGER, concurring in the result.

This case presents questions of extraordinary difficulty and sensitivity in the communications field, as the opinions of the divided Court of Appeals and our own divisions reflect. As MR. JUSTICE BRENNAN has noted, Congress could not anticipate the advent of CATV when it enacted the regulatory scheme nearly 40 years ago. Yet that statutory scheme plainly anticipated the need for comprehensive regulation as pervasive as the reach of the instrumentalities of broadcasting.

In the four decades spanning the life of the Communications Act, the courts have consistently construed the Act as granting pervasive jurisdiction to the Commission to meet the expansion and development of broadcasting. That approach was broad enough to embrace the advent of CATV, as indicated in the plurality opinion. CATV is dependent totally on broadcast signals and is a significant link in the system as a whole and therefore must be seen as within the jurisdiction of the Act.

Concededly, the Communications Act did not explicitly contemplate either CATV or the jurisdiction the Commission has now asserted. However, Congress was well aware in the 1930's that broadcasting was a dynamic instrumentality, that its future could not be predicted, that scientific developments would inevitably enlarge the role and scope of broadcasting, and that, in consequence, regulatory schemes must be flexible and virtually open-ended.

Candor requires acknowledgment, for me at least, that the Commission's position strains the outer limits of even the open-ended and pervasive jurisdiction that has evolved by decisions of the Commission and the courts. The almost explosive development of CATV suggests the need of a comprehensive re-examination of the statutory scheme as it relates to this new development, so that the basic policies are considered by Congress and not left entirely to the Commission and the courts.

I agree with the plurality's rejection of any meaningful analogy between requiring CATV operators to develop programming and the concept of commandeering someone to engage in broadcasting. Those who exploit the existing broadcast signals for private commercial surface transmission by CATV— to which they make no contribution— are not exactly strangers to the stream of broadcasting. The essence of the matter is that when they interrupt the signal and put it to their own use for profit, they take on burdens, one of which is regulation by the Commission.

I am not fully persuaded that the Commission has made the correct decision in this case and the thoughtful opinions in the Court of Appeals and the dissenting opinion here reflect some of my reservations. But the scope of our review is limited and does not permit me to resolve this issue as perhaps I would were I a member of the Federal Communications Commission. That I might take a different position as a member of the Commission gives me no license to do so here. Congress has created its instrumentality to regulate broadcasting, has given it pervasive powers, and the Commission has generations of experience and "feel" for the problem. I therefore conclude that until Congress acts, the Commission should be allowed wide latitude and I therefore concur in the result reached by this Court.

MR. JUSTICE DOUGLAS, with whom MR. JUSTICE STEWART, MR. JUSTICE POWELL, and MR. JUSTICE REHNQUIST concur, dissenting.

The policies reflected in the plurality opinion may be wise ones. But whether CATV systems should be required to originate programs is a decision that we certainly are not competent to make and in my judgment the Commission is not authorized to make. Congress is the agency to make the decision and Congress has not acted.

CATV captures TV and radio signals, converts the signals, and carries them by microwave relay transmission or by coaxial cables into communities unable to receive the signals directly. In United States v. Southwestern Cable Co., 392 U.S. 157, we upheld the power of the Commission to regulate the transmission of signals. As we said in that case:

CATV evolved after the Communications Act of 1934, 48 Stat. 1064, was passed. But we held that the reach of the Act, which extends "to all interstate and foreign communication by wire or radio," 47 U. S. C. § 152 (a), was not limited to the precise methods of communication then known. 392 U. S., at 173.

Compulsory origination of programs is, however, a far cry from the regulation of communications approved in Southwestern Cable. Origination requires new investment and new and different equipment, and an entirely different cast of personnel.1 See 20 F. C. C. 2d 201, 210-211. We marked the difference between communication and origination in Fortnightly Corp. v. United Artists Television, 392 U.S. 390, and made clear how foreign the origination of programs is to CATV's traditional transmission of signals. In that case, CATV was sought to be held liable for infringement of copyrights of movies licensed to broadcasters and carried by CATV. We held CATV not liable, saying:

The Act forbids any person from operating a broadcast station without first obtaining a license from the Commission. 47 U. S. C. § 301. Only qualified persons may obtain licenses and they must operate in the public interest. 47 U. S. C. §§ 308-309. But nowhere in the Act is there the slightest suggestion that a person may be compelled to enter the broadcasting or cablecasting field. Rather, the Act extends "to all interstate and foreign communication by wire or radio . . . which originates and/or is received within the United States." 47 U. S. C. § 152 (a) (emphasis added). When the Commission jurisdiction is so limited, it strains logic to hold that this jurisdiction may be expanded by requiring someone to "originate" or "receive."

The Act, when dealing with broadcasters, speaks of "applicants," "applications for licenses," see 47 U. S. C. §§ 307-308, and "whether the public interest, convenience, and necessity will be served by the granting of such application." 47 U. S. C. § 309 (a). The emphasis in the Committee Reports was on "original applications" and "application for the renewal of a license." H.R. Rep. No. 1918, 73d Cong., 2d Sess., 48; S. Rep. No. 781, 73d Cong., 2d Sess., 7, 9. The idea that a carrier or any other person can be drafted against his will to become a broadcaster is completely foreign to the history of the Act, as I read it.

CATV is simply a carrier having no more control over the message content than does a telephone company. A carrier may, of course, seek a broadcaster's license; but there is not the slightest suggestion in the Act or in its history that a carrier can be bludgeoned into becoming a broadcaster while all other broadcasters live under more lenient rules. There is not the slightest clue in the Act that CATV carriers can be compulsorily converted into broadcasters.

The plurality opinion performs the legerdemain by saying that the requirement of CATV origination is "reasonably ancillary" to the Commission's power to regulate television broadcasting.2 That requires a brand-new amendment to the broadcasting provisions of the Act, which only the Congress can effect. The Commission is not given carte blanche to initiate broadcasting stations; it cannot force people into the business. It cannot say to one who applies for a broadcast outlet in city A that the need is greater in city B and he will be licensed there. The fact that the Commission has authority to regulate origination of programs if CATV decides to enter the field does not mean that it can compel CATV to originate programs. The fact that the Act directs the Commission to encourage the larger and more effective use of radio in the public interest, 47 U. S. C. § 303 (g), relates to the objectives of the Act and does not grant power to compel people to become broadcasters any more than it grants the power to compel broadcasters to become CATV operators.

The upshot of today's decision is to make the Commission's authority over activities "ancillary" to its responsibilities greater than its authority over any broadcast licensee. Of course, the Commission can regulate a CATV that transmits broadcast signals. But to entrust the Commission with the power to force some, a few, or all CATV operators into the broadcast business is to give it a forbidding authority. Congress may decide to do so. But the step is a legislative measure so extreme that we should not find it interstitially authorized in the vague language of the Act.

I would affirm the Court of Appeals.