Monday, April 17, 2006

The House of Representatives is perched to vote on an amendment sponsored by Democratic Rep. John Dingell of Michigan that would balkanize video regulation among tens of thousands of local jurisdictions in a bill that would establish national standards for cable competition and new entry, i.e., federalism run amok.

The amendment would turn the Commerce Clause of the Constitution on its head. It was born of protectionist jealousies among the several states that were confounding national economic ambitions. As Justice Benjamin Cardozo lectured in Baldwin v. G.A.F. Seelig, Inc. (1935): “The Constitution was framed under the dominion of a political philosophy less parochial in range. It was framed upon the theory that the people of the several states must sink or swim together, and that in the long run prosperity and salvation are in union and not division.

Yet the Dingell amendment would endow every municipality in the nation with authority to decide public “rights-of-way” and easement disputes with wireline video entrants challenging incumbent cable monopolists. The Federal Communications Commission would be a spectator to the municipal resolution of these disputes that could frustrate national policy favoring a menu of Internet services over the same network.

The folly is nicely illustrated by a comparison with the enforcement of national labor policy. Congress created the National Labor Relations Board to adjudicate unfair labor practice complaints. State tribunals are ousted from jurisdiction to entertain any lawsuit that challenges conduct that is arguably protected or prohibited by national labor law.

The Supreme Court explained in Garner v. Teamsters, etc. Union (1953): “Congress did not merely lay down a substantive rule of [labor] law to be enforced by any tribunal competent to apply law generally to the parties. It went on to confide primary interpretation and application of its rules to a specific and specially constituted [National Labor Relations Board] and prescribed a particular procedure for investigation, complaint and notice, and hearing and decision, including judicial relief pending a final administrative order. Congress evidently considered that centralized administration of specially designed procedures was necessary to obtain uniform application of its substantive rules and to avoid these diversities and conflicts likely to result from a variety of local procedures and attitudes towards labor controversies. … A multiplicity of tribunals and a diversity of procedures are quite as apt to produce incompatible or conflicting adjudications as are different rules of substantive law.” The Court further emphasized in San Diego Building Trades Council v. Garmon (1959) that, “Administration is more than a means of regulation; administration is regulation.”

Congress established the FCC to regulate broadcasting and interstate telecommunications, as it created the NLRB to administer the nation’s labor laws. The FCC regulates broadband transmission of data or voice to the exclusion of state jurisdiction — a recognition that broadband deployment and the Internet are national issues. Indeed, President George W. Bush has announced a national goal of universal and affordable access to broadband by 2007.

The regulation of cable or multi-channel program distributors, however, has remained in the horse-and-buggy era. Municipalities continue to enjoy a hefty share of regulatory jurisdiction, although subject to an expanding panoply of national constraints. The Cable Communications Policy Act of 1984, the Cable Television Consumer Protection and Competition Act of 1992, and the Telecommunications Act of 1996 all fashioned tighter national restrictions on local franchising authorities.

At present, Congress is contemplating legislation that would place the last nail in the coffin for municipalities aiming to manipulate their shrinking regulatory authority to thwart new wireline video entrants eager to challenge local cable monopolies. Experience teaches that municipalities cavalierly subordinate the national interest in broadband deployment and video competition to self-interest.

In Sacramento, Calif., a multi-channel video program distributor was required to plant 20,000 trees to receive a franchise. In Miami, the corresponding demand was an annual $200,000 contribution to the local police department for an anti-drug abuse program.

Municipal maneuvers to frustrate new wireline entrants have been highly successful to date. Less than 5 percent of cable operators confront effective competition, which costs cable subscribers collectively a staggering $6-8 billion annually. According to the latest American Customer Satisfaction Index, cable operators rank last for consumer satisfaction among all measured industries.

Pending legislation seeks to roadblock the last avenues of municipal protectionism that are blunting broadband deployment and bloating cable subscription costs. But the Dingell amendment would indirectly torpedo that national objective. Tens of thousands of municipalities would be permitted to stall new wireline video entrants by contriving rights-of-way disputes or endlessly protracting their resolution. Neither the FCC nor any federal court would be permitted to intercede to safeguard the national policy of competition and consumer welfare.

To reiterate the Supreme Court’s admonition in Garmon, “[A]dministration is regulation.” And to entrust the administration of rights-of-way disputes to tens of thousands of hostile municipal jurisdictions would be to create regulatory warfare between local and federal authorities and paralyzing chaos for new wireline entrants.

Bruce Fein is a constitutional lawyer and international consultant with Bruce Fein & Associates and The Lichfield Group. He is a consultant for AT&T.

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