Federal Communications Commission v. Beach Communications, Inc.

PETITIONER: Federal Communications Commission
RESPONDENT: Beach Communications, Inc.
LOCATION: Jacksonville City Council

DOCKET NO.: 92-603
DECIDED BY: Rehnquist Court (1991-1993)
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit

CITATION: 508 US 307 (1993)
ARGUED: Mar 29, 1993
DECIDED: Jun 01, 1993

Deborah C. Costlow - Argued the cause for the respondents
John F. Manning - Department of Justice, argued the cause for the petitioners

Facts of the case

Section 602(7)(B) of the Cable Communications Policy Act of 1984 provides that cable television systems be franchised by local governmental authorities, but exempts facilities serving "only subscribers in 1 or more multiple unit dwellings under common ownership, control, or management, unless such...facilities use any public right-of-way." When the Federal Communications Commission (FCC) ruled that satellite master antenna television (SMATV) systems, which typically receive a satellite signal through a rooftop dish and then retransmits the signal by wire to units within a building or a building complex, are subject to the franchise requirement if their transmission lines interconnect separately owned and managed buildings or if its lines use or cross any public right-of-way, Beach Communications, Inc. and other SMATV operators petitioned the Court of Appeals for review. Among other things, the appellate court found that section 602(7) violated the equal protection guarantee of the Fifth Amendment's Due Process Clause because there was no rational basis for distinguishing between those facilities exempted by the statute and SMATV systems linking separately owned and managed buildings.


Is there a conceivable rational basis justifying the distinction between cable facilities that serve separately owned and managed buildings and those that serve one or more buildings under common ownership or management for purposes of the Due Process Clause of the Fifth Amendment?

Media for Federal Communications Commission v. Beach Communications, Inc.

Audio Transcription for Oral Argument - March 29, 1993 in Federal Communications Commission v. Beach Communications, Inc.

William H. Rehnquist:

We'll hear argument first Number 92-603, the Federal Communications Commission and the United States v. Beach Communications, Inc.--

Mr. Manning.

John F. Manning:

Thank you, Mr. Chief Justice, and may it please the Court:

A divided panel of the D.C. Circuit took the extraordinary step of invalidating a portion of an act of Congress, the Cable Act of 1984, on rational basis grounds under the Fifth Amendment.

In particular, the court rejected Congress' judgment that there is less reason for imposing a franchise requirement when cable facilities serve only commonly owned, controlled, or managed multiple-unit dwellings.

Instead, the court concluded that the only rational dividing line between franchised and unfranchised facilities in the use of public rights-of-way.

We submit that the court of appeals erred in redrafting the reasonable line drawn by Congress in defining the term, 1984.

The crux of the issue in this case is the proper classification of satellite master antenna television, or SMATV.

Unlike traditional cable systems, which pick up distant signals at a remote antenna and transmit them to the community through wires running under or over the city streets, an SMATV facility typically sets up a rooftop antenna and then transmits programming by wire to units in a building or group of buildings.

In enacting the Cable Act of 1984, Congress had to decide whether and when an SMATV system should be treated like a traditional cable facility and made subject to franchise requirements.

Contrary to the court of appeals' decision, the line drawn by congress was a reasonable one: an SMATV system is exempt from any franchise requirement if the system serves only multiple-unit dwellings under common ownership, control, or management, and uses no public rights of way.

Anthony M. Kennedy:

Are they generally free from FCC regulations, as well?

John F. Manning:

Well, the crux of this case is what a cable system is, and a cable system determines... one's status as a cable system determines whether one is subject to franchise requirements, but there are also other Federal requirements that apply to cable systems as well, such as--

Anthony M. Kennedy:

There are other--

John F. Manning:

--There are--

Anthony M. Kennedy:

--Requirements that these cable operators, that these small cable operators are subject to.

John F. Manning:

--That's right.

There are, for example, technical requirements dealing with signal interference, with the quality of the signal, and there are other requirements pertaining to rate regulation and so forth that apply to cable systems, but the only thing that's at issue here is whether it's constitutional to impose a franchise requirement on an SMATV facility that serves only commonly-owned buildings.

In enacting the so-called private cable exemption with its common-ownership requirement, Congress made the judgment that it did not want to impose franchise requirements on a building owner or condominium association that decides to put a satellite antenna on the building and provide cable television to its residents, perhaps as an amenity.

William H. Rehnquist:

Mr. Mann, when you are talking about a franchise requirement, are you talking about a requirement imposed by Congress, or a requirement that... franchise that allows local governments to impose?

John F. Manning:

Under 47 U.S.C. section 541, Congress has provided that with the exception of facilities that are grandfathered under subsection (b) of that section, a cable operator... that is, a person who operates a cable system... must obtain a franchise before beginning to provide cable service.

William H. Rehnquist:

And a franchise from the Federal Government.

John F. Manning:

Franchise... a franchising authority... it's not clear what they mean by franchise.

The act describes a franchise authority as a Federal, State, or local authority that has power to issue a license, but in practice what it means is a State or local franchise, not a Federal franchise, Your Honor.

William H. Rehnquist:

So although the act may not be clear, that is in practice what happens.

If you're subject to this requirement you must get a franchise from a State or local government.

John F. Manning:

That's correct.

That's correct, it's a State or local... in practice a State or local franchise requirement, and what Congress decided was that if a building owner or a condo association decides to put a satellite dish on the roof of the building and provide cable service to its tenants, then that would not be subject to a local franchise requirement.

Similarly, if the same building owner or condo association ran a couple of buildings, or ran a building complex and put a satellite antenna on the roof to provide cable television to all the residents in the complex, that also would not be subject to a local franchise requirement.

But where a satellite antenna is set up to serve multiple, separately-owned buildings, or if its wires run over or under the city streets, Congress made the determination that the facility looks more like a traditional cable system and should be subject to franchise requirements accordingly.