Document ID: A:\CP1.TXT THE CHESAPEAKE AND POTOMAC TELEPHONE COMPANY OF VIRGINIA, et al., Plaintiffs, v. UNITED STATES OF AMERICA, et al., Defendants. NATIONAL CABLE TELEVISION ASSOCIATION, INC., Intervenor-Defendant. Civil No. 92-1751-A UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA, ALEXANDRIA DIVISION 830 F. Supp. 909; 1993 U.S. Dist. LEXIS 11822; 1993-2 Trade Cas. (CCH) P70,339 August 24, 1993, Decided COUNSEL: [**1] FOR PLAINTIFFS: Wiley R. Wright, Jr., Hazel & Thomas, P.C., 510 King St tts Avenue, Cambridge, MA 02138. Robert A. Levetown, 1310 N. Court House Road, 11th floor, andau, Kirkland & Ellis, 655 Fifteenth Street, N.W., Suite 1200, Washington, DC 20005. FOR DEFENDANTS: Theodore C. Hirt, James J. Gilligan, Sarah L. Wilson, U. S. Department of FOR INTERVENOR-DEFENDANT: Bruce D. Sokler, Peter Kimm, Jr., Mintz, Levin, Cohn, Ferris, Gl JUDGES: Ellis, III OPINIONBY: T. S. ELLIS, III OPINION: [*910] MEMORANDUM OPINION I. A. Plaintiffs in this case, Chesapeake and Potomac Telephone Company of Virginia ("C & [ First Amendment of certain provisions of the Cable Communications Policy Act of 1984 (the ephone companies, and their affiliates, from providing video programming to subscribers wi - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n1 Sec (1) It shall be unlawful for any common carrier, subject in whole or in part to subchapter operated by, controlled by, or under common control with the common carrier. (2) It shall be unlawful for any common carrier, subject in whole or in part to subchapter ned by, operated by, controlled by, or under common control with such common carrier, if s the common carrier. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [**3] C & P provides local wireline telephone exchange and exchange access service in portion o @ 533(b). BVS is an affiliate of C & P, incorporated in Virginia on September 24, 1992, to have the capability to carry video programming. See Affidavit of Richard A. Alston, C P's telephone subscribers. Id. at 2. C & P would make these facilities available to its a ing telephone service and transmitting video programming on an integrated basis directly t In 1992, C & P contacted the City [**4] of Alexandria government about the possibili light of @ 533(b), the city would not "be in a position to grant any such franchise." Lett ity would be in a position to process a franchise application from C & P were the video pr , absent @ 533(b), C & P's application for a cable television franchise would receive the Plaintiffs filed the complaint in the instant action on December 17, 1992, challenging in the City of Alexandria. Because this is a constitutional challenge to a federal statu apacity as Attorney General of the United States n2 (collectively, the "government"). On m ed in virtually every phase of the litigation, including submission of briefs, preparation submission of briefs. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n2 By a sua sponte Order of the Court, Janet Reno has been substituted for William Bar n3 The amici curiae are: National Association of Broadcasters; Association of Independ Association; Ameritech; BellSouth Corporation; Contel of Virginia, Inc. d/b/a/ GTE Virgini tion of America; Virginia Citizens Consumer Council; Newspaper Association of America; Vir rginia Association for the Deaf; Northern Virginia Resource Center for Deaf and Hard of He bile Community Action, Inc.; Self Help Action of Chicago; American Council of Consumer Awa - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [**6] After pursuing some formal discovery, the parties, at the Court's invitation, explored repare a joint stipulation of facts. The effort bore fruit. The matter is now before the C exhibits, and briefs. Indeed, it is difficult to imagine a more complete record, and it is B. Although @ 533(b) was enacted as part of the 1984 Cable Act, telephone companies have b n imposed by the Commission in 1970. At that time, the cable television industry was in it s and other places unable to receive clear television signals over the air, and stringing ain certification pursuant to @ 214 of the Communications Act, 47 U.S.C. @ 214, prior to c ng degrees of ownership affiliation between telephone companies and cable television opera de cable television service to the public. n5 As a result of this proceeding, the Commissi telephone service areas. n6 [*913] The Commission based its ruling on a finding that o telephone poles for attachment of the CATV cables. n7 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n4 See General Telephone Co. of California, 13 F.C.C.2d 448 (1968), aff'd sub nom. Gen Section 214 provides in relevant part: No carrier shall undertake the construction of a new line or of an extension of any line, ere shall first have been obtained from the Commission a certificate that the present or f . . 47 U.S.C. @ 214(a). n5 See Applications of Telephone Common Carriers for Section 214 Certificates for Chan n6 See Applications of Telephone Common Carriers for Section 214 Certificates for Chan F.C.C.2d 746 (1970), aff'd sub nom. General Telephone Co. of the Southwest v. United State n7 See 1970 Order, 21 F.C.C.2d at 324. ("The monopoly position of the telephone compan one company is in an effective position to preempt the market for this service . . . ."). - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - In 1978, Congress passed the Pole Attachment Act, which authorized the Commission to "r iminatory pricing for pole attachments, the legislation is, by its terms, applicable only 1107 (1987). Thus, the Pole Attachment Act only partially allayed the Commission's concer In 1980, the Commission directed its staff to conduct a study of the Commission's cable icy on Cable Ownership, A Staff Report (the "OPP Report"). The OPP Report considered alter ned for the time being." OPP Report at 143. The report, while acknowledging that "the prob sion when it had originally implemented the ban, continued to militate against removing th cable costs in their telephone rate bases. Such cross-subsidization "allows a telephone c lated cable division." Id. at 153. Unchecked, this practice would lead to higher telephone , forcing them out of business, thereby enabling the telephone companies to leverage their rt either to approve or reject the report. The Commission's restriction on telephone compa In 1984, Congress passed the 1984 Cable Act, which includes the provisions at issue in ibited telephone company provision of "CATV service," the new law prohibited provision of 522(19). Congress also included, as had the Commission's regulations, a rural exemption a Legislative materials relating to @ 533(b) are sparse. No legislative findings of fact h indicates that the intent of the provision was "to codify current FCC rules concerning t ndicates that @ 533 as a whole, which also includes a prohibition on cross-ownership betwe version of the statute, a provision preventing cross-ownership between daily newspapers a unications outlets." Id. at 55. In August 1986, less than two years after Congress enacted @ 533(b), the Commission dir 1 FCC Rcd. 864, 897 (1986). A formal Notice of Inquiry was issued a year later, In re Tele *14] Proposed Rulemaking released in September 1988. In re Telephone Company--Cable Tele ely concluded that it should recommend to Congress that @ 533(b) be eliminated. In August 1992, after soliciting a further round of comments, the Commission finally ac directly to subscribers in their telephone service areas, subject to appropriate safeguard aking) (the "Video Dialtone Order"), 7 FCC Rcd. 5781, 5847 (1992). The Commission conclude e enormous growth of the cable industry," with the [**15] result that "any remaining ri consequence, the Commission found that elimination of @ 533(b) would "promote our overarc ing the diversity of services available to the public." Id. at 5847. n8 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n8 Ironically, despite the fact that the Department of Justice is the principal litiga States Department of Justice, In re Telephone Company--Cable Television Cross-Ownership R nother federal agency, the National Telecommunications and Information Administration ("NT No. 87-266, pp. 2-3. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [**16] Throughout the period the Commission was considering the issue of telephone company ent al hearings, n9 and proposals to eliminate the [*915] statute have appeared in six separ e Cable Television Consumer Protection and Competition Act of 1992 (the "1992 Cable Act"), ef that the @ 533(b) ban "enhanced competition." See S. Rep. No. 92, 102d Cong., 1st Sess. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n9 See Cable Instructional TV and S. 1200 Communications Competitiveness and Infrastru bruary 28, 1992); Cable TV Consumer Protection Act of 1991: Hearings Before the Subcomm. o e Subcomm. on Telecommunications and Finance of the House Comm. on Energy and Commerce, 10 cations of the Senate Comm. on Commerce, Science, and Transportation, 101st Cong., 2d Sess ion, 101st Cong., 2d Sess. (March 29 and April 4, 1990); Cable Television Regulation: Hear May 9, 1990); Oversight of Cable TV: Hearings Before the Subcomm. on Communications of the re the Subcomm. on Antitrust, Monopolies and Business Rights of the Senate Comm. on the Ju n10 See H.R. 1504, 103rd Cong., 1st Sess. (1993); S. 1200, 102d Cong., 1st Sess. (1991 - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - C. Cable television has changed dramatically since the Commission originally banned teleph ty systems in remote communities. See Video Dialtone Order, 7 FCC Rcd at 5848 ; Joint Stip Cable systems carry both the programming of broadcast television stations and programmi national cable networks, up from only four in 1976. Joint Stipulation [**18] of Facts P gramming exceeds the available channel capacity of almost all cable systems." Id. at P 19. Companies operating cable television systems have grown rapidly, commensurate with the try topped $ 21 billion. Id. Many cable systems serving individual communities are owned b 29. The largest MSO, Tele-Communications, Inc., served 9.6 million cable subscribers in 1 Despite Congressional efforts to promote competition in the cable industry, the provisi in less than 1% of the localities served by cable. Id. at P 28. In Alexandria, the sole provider of cable television service is Jones Intercable, the c be. Id. at P 18. The system deployed in Alexandria has a capacity of 51 channels, and, as Arundel County, Maryland, where Jones Intercable faces competition from another cable serv II. As a preliminary matter, the government disputes plaintiffs' standing to bring a challe er "traceable" to @ 533(b) [**20] nor "likely to be redressed" by a decision invalidat In order to establish standing, at an "irreducible constitutional minimum," plaintiffs First, the plaintiff must have suffered an "injury in fact" -- an invasion of a legally-pr ausal connection between the injury and the conduct complained of--the injury has to be "f ird, it must be "likely," as opposed to merely "speculative, that the injury will be "redr Lujan v. Defenders of Wildlife, 119 L. Ed. 2d 351, 112 S. Ct. 2130, 2136 (1992) (intern 's contention, the injury is also "traceable" to the @ 533(b) ban and would be redressed At the heart of the government's standing argument is the observation that if @ 533(b) oval from the Virginia State Corporation Commission nor a franchise from the City of Alexa invalidation of @ 533(b) would not necessarily redress the purported injury that plaintif The fallacy of this argument is that it is not an essential precondition of plaintiffs' er" to plaintiffs' efforts to operate a cable television service is sufficient, by itself, ed by a favorable decision," [**22] simply because invalidation of the statute would a 438 U.S. 265, 281 n.14, 57 L. Ed. 2d 750, 98 S. Ct. 2733 (1978) (standing exists for plai have received the benefit). - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n11 See Arlington Heights v. Metropolitan Housing Development Corp., 429 U.S. 252, 261 statute would not "guarantee" achievement of that goal); see also Nyquist v. Mauclet, 432 e statute making him ineligible for the loan, "in light of the certainty of [the loan's] d - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [**23] It would be both formalistic and wasteful of governmental and societal resources to req ure, [*917] even in the face of a federal statute that expressly forbids them from eng in light of @ 533(b), to consider C & P's preliminary efforts to obtain a municipal franch In essence, it is the government's position that C & P, a local telephone company, does st the thrust of the Supreme Court's decisions on standing, n12 and is therefore rejected. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n12 See, e.g., Lujan, 112 S. Ct. at 2137 ("When the suit is one challenging the legali stablish standing depends considerably upon whether the plaintiff is himself an object of ing or requiring the action will redress it."). - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [**24] III. A. The fundamental constitutional question that must be addressed in relation to plaintiff tected under the First Amendment are subjected to one of two levels of scrutiny. First, th from proscribing speech, or even expressive conduct, because of disapproval of the ideas e esumptively invalid." Id. A content-based regulation can survive only if the government "' k State Crime Victims Board, 116 L. Ed. 2d 476, 112 S. Ct. 501, 509 (1991) (quoting Arkans Regulations that are not content-based, but which still infringe upon protected speech h" without triggering strict scrutiny, provided, inter alia, that such restrictions are co such conduct has an expressive element, provided that it does not "proscribe particular co ype of content-neutral regulation will survive scrutiny under the First Amendment if the p cisions, namely, that the provisions "'are justified without reference to the content of t communication of the information." Ward, 109 S. Ct. at 2753 (quoting Clark v. Community f t the constitutional test for the validity of time, place, or manner restrictions is "in t [*918] Defendants in this matter forcefully contend that the provisions in question s le of "structural" economic regulation, only tangentially related to the First Amendment a timate government objective. At most, defendants argue, the provision places only an incid Plaintiffs reject this view and argue instead that @ 533(b) is a direct infringement on ed restriction on speech and therefore, under Supreme Court precedent, is subject to stric statute under the O'Brien test. Plaintiffs' argument is correct in an important respect; the provision in question must and significant, mode of communication--video programming. Video programming, as offered b Ed. 2d 494, 111 S. Ct. 1438, 1442 (1991) ("Cable television . . [**28] . is engaged in riginal programming or by exercising editorial discretion over which stations or programs statute that directly abridges the right to engage in this form of speech must be evaluat ct of a statute directed at non-speech activity, such as "structural" economic regulation, 92 L. Ed. 2d 568, 106 S. Ct. 3172 (1986). Defendants' authorities in support of rationality review are all distinguishable. With dcasting, 436 U.S. 775, 56 L. Ed. 2d 697, 98 S. Ct. 2096 (1978); [**29] United States v (1943). In each of these cases, the Supreme Court explicitly premised its ruling on the f U.S. at 226 ("Unlike other modes of expression, radio inherently is not available to all. . v. FCC, 395 U.S. 367, 23 L. Ed. 2d 371, 89 S. Ct. 1794 (1969). In light of the physical of communication media, to ensure that the "public interest" is served. See, e.g., Nation - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n13 Associated Press v. United States, 326 U.S. 1, 89 L. Ed. 2013, 65 S. Ct. 1416 (194 - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [**30] [*919] Of course, viewing only the end product, cable television is largely indisting nt of cable television under the First Amendment. See, e.g., Southeastern Promotions Ltd. ited to it, for each may present its own problems."). As the parties have stipulated, "The um." Joint Stipulations of Fact, P 37. Moreover, while there may, at some point, exist an of cable operators that could simultaneously service a household is so large as to be infi - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n14 See Joint Stipulation of Fact, P 40 ("In general, multiple lines of coaxial cable ide-by-side without such interference."). - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [**31] The only scarcity argument that defendants could legitimately advance to make the broad arcity in the market for cable television analogous to the scarcity imposed on broadcastin Co. v. Tornillo, 418 U.S. 241, 41 L. Ed. 2d 730, 94 S. Ct. 2831 (1974). There, the Supreme paper. The statute in question was similar, in its requirement of mandated access, to the the statute despite accepting the assumption that there had evolved a "monopoly of the mea our large cities.'" Tornillo, 418 U.S. at 249-50 & n.13. The clear implication of Tornillo ely economic forces. As a result, an assertion that the cable television industry is a nat - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n15 For a more extensive discussion of the inapplicability of the scarcity doctrine to , 98 S. Ct. 111 (1977). - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - While defendants cannot argue scarcity, they make a related argument, namely that, as b ued status as a monopoly subjected to certain conditions imposed by the government. It is their service areas. Defendants argue that, in effect, plaintiffs have a choice: in any gi ideo programming--if they wish to do so, they simply must abandon their local wireline exc It is unnecessary, in the context of this litigation, to reach the thorny legal questio 533(b) is simply not part of a quid pro quo exchange in which the telephone companies wer ompanies] have monopolies [**34] over local telephone exchange service in their respecti s, the state government has taken actions to preserve the local exchange monopoly of the B - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n16 Compare, e.g., Buckley v. Valeo, 424 U.S. 1, 57 & n.65, 46 L. Ed. 2d 659, 96 S. Ct ition the candidate's acceptance of public financing on an agreement to abide by such spen ntal benefit and even though the government may deny him the benefit for any number of rea nterests--especially, his interest in freedom of speech."). See also Rust v. Sullivan, 114 ns: Charting Spheres of Neutrality in Government Funded Speech, 67 N.Y.U. L. Rev. 675 (199 n17 See Virginia Code @ 56-265.4:4(A) ("No certificate shall be granted to an applican Commission that the service rendered by such certificate holder in such territory is inad older in such territory is in any respect inadequate to the requirements of the public nec applicant proposing to operate in that territory."). - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - First, the sovereign which purportedly provided the benefit to the plaintiffs is not th exchange monopoly. In no way can defendants [**36] persuasively argue that the federal g s of the local exchange monopoly. n18 Having provided no benefit to plaintiffs, the federa First National Bank of Boston v. Bellotti, 435 U.S. 765, 778-79 n.14, 55 L. Ed. 2d 707, 9 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n18 In this regard, plaintiffs point to recent technological advances, encouraged by t e the establishment of Competitive Access Providers employing fiber-optic or microwave tec ring personal communication services. See Joint Stipulation of Facts, PP 47, 53, 55. Even rtment of Justice, which resulted in the divestiture by AT&T of the BOCs. Contrary to the .C. 1982), aff'd sub nom. Maryland v. United States, 460 U.S. 1001, 75 L. Ed. 2d 472, 103 the local exchange monopoly (which, prior to the litigation, was AT&T) from leveraging its ication services. Id. at 188. Judge Greene explicitly recognized, and approved of, the fac - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [**37] Nor was @ 533(b) a condition of plaintiffs accepting the local exchange monopoly. The s a quid pro quo relationship between @ 533(b) and the local exchange monopoly. Besides, the Supreme Court has given no indication that any government's grant of monop s & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557, 568, 65 L. Ed. . Public Service Commission of New York, 447 U.S. 530, 534 n.1, 65 L. Ed. 2d 319, 100 S. C ts logical extreme, defendants' argument would mean that because state governments have ch conditions placed on its right to free speech. This proposition has flatly been rejected b exchange of monopoly benefits in return for acceptance of First Amendment restrictions an The last case defendants cite in support of rationality review is Associated Press v. U e Associated Press from a concerted refusal to deal with non-members of the organization. st statutes, despite the fast that the decision compelled the members of the Associated Pr Associated Press stands only for the proposition, confirmed in numerous other decisions der the First Amendment. See, e.g., Oklahoma Press Publishing Co. v, Walling, 327 U.S. 186 (1937) (application of National Labor Relations Act). The Supreme Court has made clear, h s on an entity's First Amendment activity. To the contrary, O'Brien and its progeny have p uch impact is only an incidental effect [**40] of the statute. See, e.g., Minneapolis S icates the First Amendment and is "presumptively unconstitutional"). Section 533(b) is not a generally applicable statute; it applies to a sharply limited n nies' right to participate in a protected form of speech. This is centrally significant, f fic category of speakers from engaging in a protected form of speech. C.f. Arcara, 478 U.S icative activity). In light of O'Brien and its progeny, @ 533(b) must plainly be evaluated B. At first glance, it would appear virtually certain that a statute restricting telephone e, place, and manner restriction on the form of the telephone companies' speech n19 or (2) gage in expressive activity. After all, had Congress chosen to prohibit telephone companie would be subject to strict scrutiny. n20 Yet, analysis cannot end here for @ 533(b), as wr tatutory definition of "video programming." This circumstance substantially complicates th - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n19 Plaintiffs argue that @ 533(b) cannot properly be viewed as a "time, place, or man t. Plaintiffs greatly overstate the blanketing effect of the restriction placed upon them. ce area. Even more significantly, however, plaintiffs may also reach audiences within thei ohibited from producing their own video programming and marketing it to broadcasters or ca entities responsible for the direct provision of video programming. Clearly, then, @ 533(b n20 The Court rejects plaintiffs' contention that @ 533(b) should be subjected to stri not applicable to a statute which targets a particular class of speaker, provided that cla ers is insufficient by itself to raise First Amendment concerns"); Turner Broadcasting Sys are not subject to strict scrutiny unless they are content-based."), appeal pending. To t 1981), can be read to hold that speaker-partiality alone is sufficient to trigger strict s The Court also rejects plaintiffs' argument that, based on the Supreme Court's decision parate, and heightened, standard of review applicable when the government seeks to "elimin are best read, not as inaugurating a conceptually separate, and still viable, standard of t in cases such as Ward, 109 S. Ct. at 2753, and Clark, 468 U.S. at 293, that a "time, pla S. at 146 ("Door to door distribution of circulars is essential to the poorly financed cau free and unhampered distribution of pamphlets strikes at the very heart of the constituti - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [**43] The 1984 Cable Act defines "video programming" as "programming provided by, or generall one companies to transmit visual images such as the face of a clock reflecting the current that was provided by a television broadcast station in 1984. n21 A moment's reflection ma age being tested with the content of 1984 broadcast television programming. Despite defend content of the message being conveyed. n22 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n21 The Commission has ruled that the standard is not an evolving one, dependent on th of the passage of the statute. See Video Dialtone order, 7 FCC Rcd at 5820 . The parties ccordance with the principle set forth in Chevron, U.S.A., Inc. v. Natural Resources Defen n22 Illustrative of this point is the following colloquy between the Court and governm THE COURT: Let's suppose it (the statute) says telephone companies can't send televisio MS. WILSON: No, it would not be constitutional . . . . THE COURT: Well, let me go on. . . . Let's suppose then it says . . . you may not send MS. WILSON: That's right. THE COURT: And I guess you can see I can give you a list of what's on television in 198 muster? . . . What's the difference [between that and the statutory definition of "video Tr. at 45-47. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - The line between permissible visual images and impermissible "video programming" has be pe of the @ 533(b) ban, the Video Dialtone Order. See 7 FCC Rcd at 5781 . In that action, did not violate @ 533(b) because the video services included within the video dialtone pa ng example: We . . . conclude that programming that includes multimedia graphics and information servi n educational multimedia presentation which may contain video images would be permissible program into a permissible multimedia [**46] program. Video Dialtone Order, 7 FCC Rcd at 5822 & n.196. Fortunately, the Court is not called upon e video segments, but will prohibit presentations that are primarily video, and include so retation is inescapably premised on the content of the relevant transmission. n23 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n23 Contrary to defendants' assertions, the present case is clearly distinguishable fr oductions of United States currency to be in black and white and to be smaller than three- the message being imparted in order to enforce the color and size limitations." Id. at 656 marcation (i.e. over 50% "video programming" would bring a multimedia presentation within - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [**47] Notwithstanding the fact that application of @ 533(b) depends on the content of the tel lear that "strict scrutiny" is not triggered because application of a speech restriction i long as it is 'justified without reference to the content of the regulated speech.'" Ward, consideration." Ward, 109 S. Ct. at 2754. The import of this distinction was made apparent in Renton v. Playtime Theatres, Inc., adult theaters." The applicability of [**48] the ordinance in that case to any specific nce, holding that the ordinance had been justified as a means of preventing various "secon ed to the suppression of free expression." 106 S. Ct. at 929. Similarly, the government in this case has advanced two justifications for the @ 533(b) ideo programming market. Thus, in this case, as in Renton, a speech restriction that makes mittedly seeks to restrict speech, on the ground that the prevention of these secondary ef us "intermediate" level of scrutiny prescribed by O'Brien. Before proceeding with the anal Renton signals a significant retreat from the traditional content-based/content-neutral than a little troubling. The theoretical underpinning of the content-based/content-neutral creased opportunities to elevate one viewpoint over another. See Geoffrey R. Stone, Conten sed restriction will have the effect of fostering or penalizing a particular viewpoint, or nds on the message's content, has traditionally, and appropriately, been treated with susp 108 S. Ct. 1157 (1988) (Brennan, J. concurring in the judgment) ("The best protection aga rnment act through content-neutral means that restrict expression that government favors a - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n24 See Burson v. Freeman, 119 L. Ed. 2d 5, 112 S. Ct. 1846, 1858-59 (1992) (Kennedy, ication will not be apparent from the face of a regulation which draws distinctions based - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [**51] The Supreme Court's recent reliance, in cases such as Renton, on a legislature's justif content-neutral/content-based distinction, but guts it of its potency. The Renton "seconda aced confidence that either: (a) legislatures will always acknowledge any viewpoint distor approach is not likely to be adequately protective of First Amendment values. See 485 U.S tected. "). Renton remains the only case to date in which a majority of the Supreme Court has found distinction. This lends some force to the plaintiffs' contention that Renton should be vi The problem with this argument is that the Supreme Court, just last term, had an opport was faced with a municipal ordinance that banned newsracks purveying commercial publicatio ed distinction--in that case, between commercial and non-commercial publications. Cincinna own the ordinance, the Supreme Court distinguished Renton by stating, "In contrast to the nati permits to remain on its sidewalks." Discovery Network, 113 S. Ct. at 1517. Another s tify differential treatment of commercial and noncommercial newsracks. We simply hold that ing of differing effects attributable to the commercial newsracks, i.e. that people were m is would have [*926] been applicable and the ordinance might have been upheld. Discove nciple, applicable only to sexually explicit speech. [**54] See also Boos, 485 U.S. at e that @ 533(b) is a content-neutral restriction, despite the fact that the determination rnment in support of @ 533(b), diversity in the ownership of communications outlets and co of the regulated speech." Ward, 491 U.S. 781, 109 S. Ct. 2746, 105 L. Ed. 2d 661 . While plaintiffs argue that the statute achieves its ends only by the suppression of sp f some elements of our society in order to enhance the relative voice of others"), this ar will necessarily achieve its goal of regulating "secondary effects" by means of the suppr statute analyzed under Renton would invariably be struck down. Renton itself proves that i For the foregoing reasons, it follows that, while @ 533(b) must be subjected to heighte eech. The fact that @ 533(b) is "justified" on grounds unrelated to the suppression of the ediate level of scrutiny first articulated in O'Brien and applicable to both "time, place, IV. Ward [**56] teaches that a statute will pass the intermediate level of scrutiny if, unication. See Ward, 109 S. Ct. at 2753. With respect to @ 533(b), there is little doubt t ns other than video programming. Moreover, plaintiffs may directly provide video programmi ucing such programming and marketing it to broadcasters and cable operators. Plaintiffs ar Given this, the Court must determine whether @ 533(b) is "narrowly tailored to serve a orting the statute to evolve [**57] over time. Congress' precise intent in passing @ 53 CC rules"--occurred at a time when the Commission's rationale for its own rules was in a s t necessary to [*927] the present inquiry, however, to parse the record of Commission pr @ 533(b). For purposes of applying the O'Brien test, a reviewing court "must eschew altog advanced to justify the regulation." 11126 Baltimore Blvd. v. Prince George's County, 886 979), cert. denied, 447 U.S. 929, 65 L. Ed. 2d 1124, 100 S. Ct. 3028 (1980). As such, @ 53 oday, the government can assert a justification for the statute such that the statute is " The government contends that @ 533(b) serves two separate, but related, interests: prom seen to collapse into a single interest. Section 533(b) simply does not, in a direct fashi s a monopoly service. See Joint Stipulation of Facts P 28 ("Of the approximately 10,000 co entry into the market for video transport service by the one class of potential competito eo programming by limiting the number of outlets through which such programming can be dis ing. It is only by concentrating on the government's other asserted justification, protectin telephone companies would be too successful if they were allowed to compete in the cable t le incentives to undertake anti-competitive actions to drive the cable operators [**60] ving two monopolists--one providing cable television and related services and one providin cation services. In addition to its desire to preserve the economic benefit of competition aving a single entity in control of all electronic communication sources entering an indiv able television industry. n25 [*928] Without question, the preservation of diversity o of promoting the public interest in diversified mass communications"); National Associatio e an important objective of federal communications regulatory policy."). Thus, the sole re - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n25 Th 533(b) ban: (1) discrimination in the provision of access to telephone poles and (2) cros ne service ratepayers and misallocation of telephone company resources, regardless of whet not limited to the end result of the telephone companies' predicted anti-competitive prac - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [**62] As the Ward decision makes clear, in the context of intermediate review under O'Brien, nt of narrow tailoring is satisfied 'so long as the . . . regulation promotes a substantia 2d 536, 105 S. Ct. 2897 (1985)). The regulation in question may not, however, "burden subs A regulation need not be "absolutely the least severe that will achieve the desired end," t" between ends and means is reasonable. 113 S. Ct. at 1510 n.13 (quoting Board of Trustees of State University of New York v. Fox, - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n26 While the language in Discovery Network is addressed to the "reasonable fit" requi ce of these two formulations. See Fox, 109 S. Ct. at 3032-35. There is no reason to doubt ty, 983 F.2d 587, 594 (4th Cir. 1993) (existence of less restrictive means is relevant con arding less restrictive means], I am at a loss to understand how a court can ascertain whe - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [**64] There is no more draconian approach to solving the problem of potential anti-competitiv e of less restrictive alternatives that Congress and the Commission could have chosen to p r power to drive other cable operators out of the industry. If a number of such alternativ e exists a range of regulatory strategies that would effectively eliminate the threat of a er the government's legitimate interests," and would therefore violate the First Amendment It is important to note that, in inquiring into the existence of feasible less restrict 99 [*929] (reversing Court of Appeals for disagreeing with Park Service over existence le access and cross-subsidization problems would be entitled to substantial deference from the legislative materials is there any indication that Congress reached a conclusion conce sion market. Committee findings are limited to expressions of opinion on the effectiveness wnership of [**66] communications outlets" (H.R. Rep. 934, 98th Cong., 2d Sess. 56 (1984 ional finding has ever been made concerning whether these goals could be accomplished by m - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n27 Although, obviously, "whatever deference is due legislative findings would not for 15, 109 S. Ct. 2829, 2838, 106 L. Ed. 2d 93 (1989). - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Defendants contend, in light of the extensive Congressional attention devoted to this i t be law that, whenever Congress passes a statute infringing on the right to free expressi on would reduce the "narrowly tailored" prong of the O'Brien test to a nullity. Rather, th accomplish Congress' purposes. See San Francisco Arts & Athletics, Inc. v. United States - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n28 See n.9 & n.10, and accompanying text, supra. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - In assessing whether @ 533(b) is indeed necessary, it is essential to carefully examine ificantly, the statute has not been interpreted to prohibit a local telephone company from ions on that cable to unaffiliated entities, such as cable operators. See Joint Stipulatio on over the programming transported over its facilities. The fact that telephone companies are not precluded under existing law from competing i n of diversity in the ownership of media outlets, is premised on the fear that telephone c irrelevant to the telephone companies' ability to undertake such practices. Put another w - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n29 Defendants have advanced the cross-subsidy argument with greater vigor than the po s-subsidization, but there is no doubt that, to the extent that the existing Pole Attachme iminatory pole access were the sole concern of Congress in enacting a prophylactic ban on ts. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [**69] [*930] Defendants attempt to finesse the mismatch between the effect of @ 533(b) and In his affidavit, Owen concedes that the telephone companies are already in a position to telephone companies' incentive to engage in that cross-subsidization is greatly enhanced i 533(b) would make a video transmission monopoly more valuable to a telephone company. Reply Affidavit of Bruce M. Owen at 2-3. n30 As is apparent from Owen's affidavit, it is t tification for @ 533(b). Yet all the evidence adduced regarding the difficulty of regulati contention that the telephone companies possess any inherent advantage that would allow t telephone companies succeed in driving out all competition for the provision of video tran he video transport market, the existing cable operators. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n30 See also FNOI, 3 FCC Rcd. at 5864 ("Barring carriers from providing video programm enerally depends surely reduces carrier incentive and ability to engage in anticompetitive n31 See, e.g., Owen Affidavit at 15 ("Local telephone companies have a substantial opp ith common costs. . . . Common costs mean that cross-subsidization is virtually impossible ); OPP Report at 157 ("One of the most difficult aspects of telephone regulation is the as the basis of actual cost causation will be difficult or impossible.") (footnotes omitted) n32 See Reply Affidavit of Alfred E. Kahn, Professor Emeritus of Political Economy, Co the one side, and the creation and packaging of video programming on the other. . . . Ther - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - In fact, the potential for telephone companies to act anti-competitively in the video p ting legislative and regulatory framework may be viewed as ineffective in curbing anti-com , the Commission's current recommendation to Congress for repeal of @ 533 (b) includes a r ompany's video [*931] transport facilities. Video Dialtone Order, 7 FCC Rcd at 5850 . Th ltiple video programmers. Id. Such restrictions would eliminate any possibility that a tel tricting the aggregate quantity of video programming, thereby inflating the market share o , 1st Sess., @ 653 (1991) (proposing repeal of @ 533(b) and 25% capacity limit upon local - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n33 The variety of conceivable measures that would effectively eliminate the potential 33(b) "that might be less burdensome on speech," but rather an entire range of effective a - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [**73] In sum, this Court need not determine whether the Commission is correct in its assertio ts, arguendo, the proposition that cross-subsidization is uncontrollable by means of regul for them to reap supra-competitive profits in that market through cross-subsidization, the behavior is to contend that the prospect of additional supra-competitive profits from the is neither evidence in the record nor any convincing argument to suggest that standard me ies enter the video programming market, unlike the video transport market, with no inheren ti-competitive behavior in the video programming market, just as in any other industry. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n34 A considerable portion of the voluminous record in this case is devoted to the iss rice cap" rate regulation of the telephone companies and the Commission's increasing exper hange Company Safeguards, 7 FCC Rcd. 7571 (1991), indicate that the regulatory environment ot, on this record, confidently conclude that changes in the methods of regulation have ab red impossible, but rather that "any remaining risk of anticompetitive conduct by the loca tunately, in the final analysis the Court need not reach the issue of the potential effect of any anticompetitive conduct in the video transport market. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [**75] In light of the fact that effective alternatives exist that would allow telephone compa ignificant governmental interest," but instead, that the statute "burdens substantially mo ited States v. O'Brien. n35 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n35 Obviously, if the Court's analysis regarding the appropriate standard of review is t 2758 n.6. Section 533(b) would also fail strict scrutiny for the independent reason that striction on speech. C.f. Burson, 112 S. Ct. at 1857-58 (state's interest in preserving th w survives strict scrutiny"). - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [**76] V. For the foregoing reasons, @ 533(b) is facially unconstitutional as a violation of plai - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n36 There is no materially significant fact specific to the provision of cable televis 533(b) "could never be applied in a valid manner," and thus that plaintiffs have properly S. Ct. 2118 (1984). Obviously, plaintiffs' "as applied" challenge succeeds for the identic - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - T. S. Ellis, III, United States District Judge Alexandria, Virginia August 24, 1993