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Cable Television
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1515779
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Cable Television
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James M. Cannon Files (Ford Administration)
James Cannon's Issues Files
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Cable television
Regulatory reform
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The original documents are located in Box 7, folder "Cable Television" of the James M.
Cannon Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 7 of the James M. Cannon Files at the Gerald R. Ford Presidential Library
OFFICE OF TELECOMMUNICATIONS POLICY
EXECUTIVE OFFICE OF THE PRESIDENT
WASHINGTON, D.C. 20504
March 9, 1976
GENERAL COUNSEL
MEMORANDUM FOR F. LYNN MAY
FROM:
THOMAS J. KELLER TKeller
SUBJECT:
Cable Legislation
This is in response to your request for OTP's views
on the DCRG option paper from Messrs. Cannon, Schmults
and MacAvoy concerning cable te evision. Our position
is set forth in the attached memorandum which would go
forward when the option paper is submitted as you
suggested.
Summarized briefly, our view is that the options
recommended by the DCRG are inadequate. On the one
hand, the DCRG legislative option is untimely not only
in the sense that it is highly controversial, but
also in that it is dependent upon enactment of new
copyright legislation. On the other hand, the other
recommendations, i.e., issuing a White Paper or testifying
at cable hearings, would abdicate Administration leader-
ship on the cable deregulation issue.
We recommend a middle course which will put the
Administration out front with legislation addressing
the jurisdictional balance between Federal and non-Federal
regulatory authority. This is a critical issue facing
the cable industry, but one which would avoid, for the
reasons set forth in the attached memorandum, the most
controversial aspects of the cable problem.
Attachment
CC: Jim Cannon
Ed Schmults
FORD LIBRARY
Paul MacAvoy
OFFICE OF TELECOMMUNICATIONS POLICY
EXECUTIVE OFFICE OF THE PRESIDENT
WASHINGTON, D.C. 20504
DEPUTY DIRECTOR
MEMORANDUM FOR THE PRESIDENT
FROM:
JOHN EGER
SUBJECT:
Cable Television Legislation
A memorandum has been submitted for your consideration by
the Domestic Council Review Group (DCRG) recommending
various options regarding the Administration's position
on cable television. Those options are:
(1) submit legislation that would deregulate
cable carriage of distant signals and
pay programming;
(2) issue a White Paper discussing cable
regulation and competition;
(3) combine options 1 and 2;
FORD
is
(4) do nothing except testify generally in
favor of cable deregulation at
GERALD
LIBRARY
congressional hearings.
Summarized briefly, my view is that the options
recommended by the DCRG are inadequate. On the one
hand, their particular legislative approach is untimely
not only in the sense that it is highly controversial,
but also in that it is dependent upon enactment of new
copyright legislation. On the other hand, their other
recommendations, i.e., issuing a White Paper or testifying
at cable hearings, would abdicate Administration leadership
on the cable deregulation issue.
I recommend a middle course which will put the Administration
out front with legislation addressing the jurisdictional
balance between Federal and non-Federal regulatory authority.
This is a critical issue facing the cable industry, but
one which would avoid, for the reasons set forth below,
the most controversial aspects of the cable problem.
- 2 -
The DCRG legislative approach should be rejected.
There are two principal issues involved in the cable
regulatory milieu:
(1) economic restrictions on pay programming
and distant signal retransmission; and
(2) allocation of jurisdictional responsibilities
between Federal and non-Federal regulatory
entities.
The legislative approach recommended by the DCRG would
address only the pay cable and distant signal questions,
which are the most controversial and will evoke heated
reactions from the copyright and broadcast industries.
The elimination of distant signal restrictions is
inextricably related to the question of cable's copyright
liability, and, as the DCRG acknowledges, is therefore
contingent on enactment of copyright legislation for cable.
Copyright legislation has been before the Congress for
some time, but the issue of cable liability is far from
settled. In my view, therefore, it is both premature and
inappropriate to attempt a legislative solution of the
distant signal problem at this time.
The pay cable question is of concern only to broadcasters,
who fear the "siphoning" of their most popular programming
and loss of audience. Program owners are unaffected
since they receive full copyright payment for cable's
origination of pay programming. While the FCC programming
restrictions are patently arbitrary and the possibility
of program siphoning is exaggerated for most types of
programming, it is unnecessary to address this issue
now, since the FCC's rules are being challenged in the
courts and will most likely be judged illegal.
In addition, the DCRG indicates its proposed reforms would
have a minimal effect in stimulating cable development. Given
the controversial nature of their recommendations, the
marginal utility of pursuing them seems questionable.
Finally, such legislation ignores and forecloses
articulation of a considered Administration policy on
FORD
&
GERALD
LIBRARY
- 3 -
other less controversial, but equally important cable
issues as discussed below. In fact, with its distant
signal proposals delineated by market size, the bill
proposed by the DCRG takes a "regulatory" approach, which
seems inappropriate for a Presidential initiative.
The other DCRG options should also be rejected.
Publishing a White Paper on cable or testifying at
congressional cable hearings would be mere rhetorical
gestures toward a problem that cries out for a legis-
lative solution. Chief Justice Burger in the landmark
Midwest Video case, for example, recognized the inadequacy
of the present statutory foundation for cable regulation,
and called on Congress to fashion a legislative framework
for cable as a medium in its own right. In the last two
years, three major policy reports on cable communications
have been published recommending the enactment of cable
legislation, including the Cabinet Committee Report to
the President on Cable Communications released in
January 1974.
Publication of an additional "White Paper" or testifying
in congressional hearings on cable would add nothing to
the current discussion, would be unlikely to motivate
administrative self-deregulation, would constitute an
abdication of leadership by the Administration, and would
be perceived as a capitulation to interest group pressures.
Recommended Approach.
As stated above, there is no adequate statutory basis for
present cable regulation. The absence of statutory direction
has permitted not only the ad hoc imposition of anti-competitive
restrictions by the FCC for the benefit of cable's competitors,
as recognized by the DCRG, but has allowed the unwarranted
expansion of both Federal and non-Federal regulatory
jurisdiction over cable, and the improper preemption of
non-Federal cable authority by the FCC as well.
Thus, despite distinguishing media characteristics and
the absence of a licensing requirement comparable to
broadcasting, the FCC has preempted regulation of all
"broadcasting" functions performed by cable and has applied
broadcast type regulations respecting mandatory originations,
program content, technical standards, ownership and operations,
for example, that are inappropriate to the cable medium. The
FCC's attempt to preempt similarly other non-video, point-to-
point, and two-way communications functions through various
FORD & LIBRARY G7VN39
- 4 -
leased channel requirements was overturned by the Court
of Appeals only last month.
In addition, the FCC has preempted unnecessarily traditional
non-Federal responsibilities involving, among others, the
qualification of cable operators, the local franchising
process, and the adequacy of construction requirements
and system design.
Despite extensive Federal preemption, non-Federal regulatory
authorities have continued to develop cable regulations,
however. Eleven states have special regulatory commissions
for cable; in some states cable is regulated at both
the municipal and state level. There are great disparities
among the states not only as to the functions properly
subject to regulatory oversight, but also as to the degree
of necessary regulation. In short, cable regulation is
clearly a growth industry.
As a result, the cable industry is faced with excessive,
overlapping and unnecessary regulation at the Federal,
State and local levels. Acknowledged to be a major problem
by the cable industry and by representatives of State and
local governments, it can only be resolved by Congress.
In my view, the only responsible course for the
Administration is to submit cable legislation addressing
the jurisdictional issue discussed above, and avoid
the pay cable and distant signal questions at this time.
This approach would be consistent with the recommendations
of the Cabinet Committee Report on Cable Communications
and with OTP's preliminary work in the cable deregulation
area.
FORD
LIBRARY
Cable TV
THE WHITE HOUSE
INFORMATION
WASHINGTON
March 11, 1976
MEMORANDUM FOR THE PRESIDENT
FROM:
JIM CANNON
SUBJECT:
Regulatory Jan Reform: Cable T.V.
For the past several months, the Domestic Council Review
Group has examined Federal regulation of the cable television
industry as part of your regulatory reform program. This
process of analysis included meetings with all the industries
and special interest groups concerned with cable television
and consultation with a panel of economists who are expert
in the field.
The Congress and the Federal Communications Commission have
also been reviewing Federal regulation of Cable T.V. The House
Subcommittee on Communications recently issued a report
calling for extensive de-regulation of cable and has indicated
that it will hold hearings on the subject this Spring. In
addition, several court cases are pending that challenge the
FCC's regulation of cable.
We had planned to present by now options for your decision
on this matter. However, review by the Senior Staff of a
draft decision memorandum indicates that we need to do more
work. I have, therefore, requested the staff members involved
in this study to undertake more extensive analysis of the
problem.
CC: Ed Schmults
FORD is LIBRARY 938870
Some items in this folder were not digitized because it contains copyrighted
materials. Please contact the Gerald R. Ford Presidential Library for access to
these materials.
July
Comms. or
THE WHITE HOUSE
Reg. Reform
INFORMATION
WASHINGTON
March 11, 1976
MEMORANDUM FOR THE PRESIDENT
FROM:
JIM CANNON
SUBJECT:
Regulatory Jain Reform: Cable T.V.
For the past several months, the Domestic Council Review
Group has examined Federal regulation of the cable television
industry as part of your regulatory reform program. This
process of analysis included meetings with all the industries
and special interest groups concerned with cable television
and consultation with a panel of economists who are expert
in the field.
The Congress and the Federal Communications Commission have
also been reviewing Federal regulation of Cable T.V. The House
Subcommittee on Communications recently issued a report
calling for extensive de-regulation of cable and has indicated
that it will hold hearings on the subject this Spring. In
addition, several court cases are pending that challenge the
FCC's regulation of cable.
We had planned to present by now options for your decision
on this matter. However, review by the Senior Staff of a
draft decision memorandum indicates that we need to do more
work. I have, therefore, requested the staff members involved
in this study to undertake more extensive analysis of the
problem.
CC: Ed Schmults
FORD LIBRARY & GERALD
Cannon
CABLE TELEVISION
FYI
Q:
Last Fall, the Domestic Council Review Group on Regulatory
Reform (DCRG) held a series of meetings with interested
industry representatives and public interest groups on
the subject of de-regulating cable television. Why
hasn't this effort produced legislative initiatives
similar to those developed for the transportation
industries? Has the Administration retreated from
involvement in this issue as a result of opposition
from the broadcast industry?
A:
For the past six months a DCRG working group has reviewed
FCC regulation of cable television as part of its
overall reform effort to remove "anti-competitive"
regulation. That effort has produced more questions
than answers about the impact of the de-regulation of
cable. More research is necessary to assess the effect
on consumers of removing FCC restrictions. The Admin-
istration will continue its study of this matter and
hopes that interested public service institution, the
industries involved and the FCC, itself, will help
undertake some of this research.
Background
Proposals to limit FCC regulation of cable television have
circulated for years. President Nixon's Cabinet Committee
on Cable Communications issued a report recommending cable
de-regulation early in 1974.
For the past six months, a DCRG task force has been working
to develop specific reform proposals for cable de-regulation.
The House Subcommittee on Communications recently produced a
report recommending drastic changes in the Federal regulation
of cable and announced plans to hold two week hearings this
Spring. (Chairman Torbert Macdonald's illness apparently
has prevented this.) The Senate Communications Committee
has also expressed an interest in holding hearings on cable.
The FCC has reduced its regulation of cable in recent months,
but several court cases are pending that challenge the
remaining FCC regulation of cable.
The Domestic Council task force held a series of meetings
FORD is LIBRARY FRALD
with all the industries and special interest groups concerned
with cable television in October and November. Subsequently,
a panel of leading economists in the field of communications
was convened by the task force to examine and make recommendations
on this issue.
The DCRG's findings to date are that available data is
insufficient to forecast the effects of cable de-regulation
on (a) the cable industry (b) broadcasters or (c) consumers.
Additional areas of study have been outlined in a memorandum
from Paul MacAvoy to the DCRG
FLM 4/8/76
"The New York Times" Thursday, April 8, 1976
Ford Rejects Easing of Cable-TV Curbs
illegal umbrella against compe-
Mr. Rose, who is with the
By DAVID BURNHAM
tition.
Justice. Department's Antitrust
Special to The New York Times
Mr. MacAvoy, a prime pro-
Division, also denied that the
WASHINGTON, April 7-Af-
ponent of deregulation, said
Administration decision repre-
ter six months of study by the
that the decision not to go
sented a submission to industry.
White House and intense lob-
forward with the cable pro-
Called 'Moving Target'
bying by broadcasters, the
posal was made by the Domes-
"I don't think it did," he
Ford Administration has de-
tic Council Review Group on
replied, at the same time ac-
cided against recommending
knowledging that an election
Regulatory Reform.
legislation aimed at permitting
year never provides "the best
Mr. MacAvoy acknowledged
climate for rational and dispas-
cable television to compete
in an interview that there had
sionate discussion of the is-
against over-the air broad-
been great pressure from the
sues."
casters.
broadcasters aimed at stopping
Mr. Rose said that a major
According to Paul W: Mac-
the Administration from mak-
reason he had decided an Ad-
Avoy, a member of the Council
ministration cable proposal this
ing any legislative proposal.
year would be "premature and
of Economic Advisers, and But he denied that this pres-
unwise" was that the subject
John C. Rose, a Deputy Assist- sure had been decisive in the
presented a "moving target."
ant Attorney General, the de-
ultimate decision.
The official cited the recent
cision was reached by the
industry
screamed
apparent changes in the Fed-
COUNCIL OF ECONOMIC ADVISERS
WASHINGTON
ALAN GREENSPAN, CHAIRMAN
PAUL W. MACAVOY
BURTON G. MALKIEL
April 9, 1976
MEMORANDUM FOR ECONOMIC POLICY BOARD
FROM:
Paul W. MacAvoy Pane may
SUBJECT:
Regulatory Reform in Cable Television
and Television Broadcasting
The Domestic Council Review Group on Regulatory
Reform (DCRG) held a series of meetings in the last
six months with industry representatives and public
interest groups on the subject of deregulating cable
television. The DCRG working group has also conducted
its own analysis of the evidence on the effects of the
FCC controls on this industry.
The efforts have produced more questions than
answers about the impact of the deregulation of cable.
The findings to date are that available data are
insufficient to forecast the effects of cable deregulation
on (a) the cable industry (b) broadcasters and ultimately
on (c) consumers. Areas requiring additional work have
been outlined in a memorandum from me to the DCRG. We
will continue our work and we hope that interested public
service institutions, the industries involved and the FCC,
itself, will undertake some of this reasearch.
ANIERICAN REVOLUTION WENTENNING
FORD & LIBRARY SERALD
1776-1976
T
E
REQUEST
INFORMATION
THE WHITE HOUSE
WASHINGTON
November 15, 1976
MEMORANDUM FOR:
JIM CANNON
FROM:
LYNN MAY
SUBJECT:
Communications Policy
ISSUE
You asked me to re-examine the cable initiative developed by
the Domestic Council Review Group on Regulatory Reform
(DCRG) for possible action by the Ford Administration. Upon
review of the matter, I do not see any value in resuscitating
it as a specific issue at this time. I do, however, recommend
that the President devote a portion of his State of the
Union to address to the larger question of reforming Federal
Communications regulatory policy, analogous to his position
on transportation regulation.
BACKGROUND ON THE DCRG CABLE INITIATIVE
Last year, the DCRG examined the issue of cable de-regulation.
Cable was targeted because the DCRG was seeking to expand its
regulatory reform focus beyond the transportation field and
because considerable research had been carried out in 1973 by
a Cabinet Committee on Cable established by President Nixon
and subsequently by the Office of Telecommunications Policy
(OTP).
The DCRG developed a draft decision memo laying out the options
for reviewing current FCC restrictions on the growth of pay
cable television and the importation of long-distance signals
by cable stations. The memo was subjected to considerable
criticism from senior White House Staff members as being
inimical to television broadcasting interests and thus untenable
in an election year. The President, in a recent pre-election
interview with the National Association of Broadcasters (NAB),
stated that he had not been satisfied with the proposal and has
asked the DCRG to reevaluate it and submit recommendations that
were "more in line with my views."
FORD is LIBRARY
Page 2
In the face of this rebuff, the DCRG scrapped the initiative
and turned off the support engendered by the initiative in
academic and public interest circles by claiming that more
economic evidence was required concerning the impact of
cable analysis. It was assigned to the Office of Telecommunications
Policy and is currently in process.
To resurface the cable initiative at this time without the
economic evidence the DCRG requested would give credence to
charges that the Administration backed down in the face of
broadcaster opposition in an election year. It would also
contradict the President's statement before the NAB. Moreover,
the DCRG subsequently changed its tactics last year, shifting
emphasis from specific initiatives to the development of a
comprehensive regulatory reform plan. In May 1976 the President
submitted legislation -- the Agenda for Government Reform Act --
establishing a four year agenda for the review of Federal
regulation in major industrial categories including communications.
Resuscitation of the cable initiative at this time would only
detract from this omnibus approach which stands as a major Ford
legacy to regulatory reform.
BACKGROUND ON COMMUNICATIONS POLICY
Federal communications regulatory policy will likely be subjected
to a comprehensive review in the next few years, following the
intent if not the timetable of the President's omnibus proposal.
In the early years of radio broadcast and telephone technology,
the Congress relinquished de-facto legislation authority over
communications to the FCC, which in turn permitted the establish-
ment of broadcast and telephone cartels to expand these services
to consumers. New technologies, however, have blurred traditional
boundaries between these industries. In order to fulfill its
mandate of protecting established consumer services, the FCC
has been forced to incrementally allocate markets and revenues
between established, regulated communications industries and
newer services like cable television and data processing
communications. This cartel management has resulted in artificial
price structures and has inhibited the development of new
telecommunications services.
This year, the Subcommittees of both Houses, in reaction to the
pressures by the conflicting industries, are contemplating a
review of the Communications Act of 1974, the charter for the
current regulatory structure, with an eye toward injecting the
maximum of competition and consumer choice in the delivery of
FORD LIBRARY & GERALD
Page 3
communications services. The success of this endeavor will
largely depend upon the willingness of the new Administration
to support an action which is politically risky because of
the enormous power of the broadcasting networks and AT&T to
influence public opinion.
The struggle over the shape of the new communications
regulatory structure will likely take several years. It may
be carried out comprehensively or by piecemeal legislation.
Its outcome will have a profound impact on our economy and
our lifestyle. Specific issues which will be affected by the
legislative review include: the variety and accessibility of
television programming, the variety and cost of new data
processing services, the location of an electronic funds
transfer system (either in the private sector or in the
Federal Government), the development of educational, health,
and other public service forms of telecommunication services,
etc.
RECOMMENDATION
The President could contribute to the resolution of this
issue by focusing on it in the State of the Union Address,
either as part of the regulatory reform section or by
according it a separate chapter. Since the Ford Administra-
tion, unlike the Congress and the new Administration, is
immune to the political retribution from special interest
groups, we could play a valuable role in bringing this issue
to the attention of the American people.
CC: Ed Schmults
Paul MacAvoy
Paul Leach
FORD is LIBRARY GERALD