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Mr. ROGERS. What, Mr. Commissioner, are the primary or major benefits of height of the tower?
Mr. LEE. It is a matter of coverage. In most cases it is of benefit to rural areas. The higher you go the further out your signal goes. Mr. ROGERS. Is that the only benefit, area coverage, as far as height is concerned?
Mr. LEE. That is right.
Mr. ROGERS. I just wanted the record to show it.
Thank you, sir.
Mr. HARRIS. Does that complete your statement, Commissioner Lee? Mr. LEE. Yes, Mr. Chairman. I am very glad to have been here. I would like to say that I was very pleased at the attitude of this subcommittee where we had the aviation interest and the radio and broadcast interests, who have gotten together and are spending a lot of time, and I think both sides recognize the other fellow's problem.
Mr. HARRIS. We hope the interest manifested will be effective because there are a lot of people in certain areas quite concerned about a television station in an adjoining area not being able to serve them because of certain limitations such as height of tower and so forth.
On the other hand, there are people in aviation quite concerned about these towers constantly increasing in height, not only a thousand feet but you had them go to 1,200 and you have gotten 1,600, and I think you have application now for 1 for 2,200.
Mr. LEE. 2,000.
Mr. HARRIS. Whatever it is, these towers constantly keep going higher. Not only is commercial aviation affected, but the private flyers, and all aviation is affected and the number of planes flying around the country is increasing.
Mr. HINSHAW. The commercial aviation is affected of course but also the safety interests of the passengers in the plane.
Mr. HARRIS. Of course, that is a fact. It will be the purpose of this committee to pursue this question further in order to be as effective as we can one way or the other.
Thank you very much, Mr. Lee, and thanks to you, Commissioner Webster and the members of your staff. We appreciate having you here.
Mr. LEE. Thank you, gentlemen.
Mr. HARRIS. Mr. Bradford Ross, of the United States Independent Telephone Association, is here in the interests of H. R. 4939 and advises me that it will take him only a few minutes.
Would you give your address for the record, please?
STATEMENT OF BRADFORD ROSS, COUNSEL, UNITED STATES INDEPENDENT TELEPHONE ASSOCIATION, WASHINGTON, D. C.
Mr. Ross. My address is 725 15th Street NW., Washington, D. C. I am counsel for the United States Independent Telephone Association.
My statement relates to the proposed amendments to section 221 (a) of the Communications Act as is proposed in H. R. 4939 before the committee.
I appear on behalf of the United States Independent Telephone Association, a trade organization representing the independent tele
phone industry, an industry in which there are over 5,000 companies over the Nation independent of the Bell System.
These independents operate over 82 million telephones in approximately 11,000 cities, towns and communities serving approximately two-thirds of the geographical area of the country.
These companies are located principally in suburban communities and rural areas, and obviously are for the most part small-business enterprises. In the aggregate they constitute a small portion of the telephone industry as compared to the Bell System. I want to emphasize that the Bell System, as we all know, is dominant in the telephone industry.
Mr. HARRIS. I think that is a foregone conclusion which needs little emphasis.
Mr. Ross. The independent telephone industry owns about one-sixth of over 50 million telephones in service in the United States and from 10 to 11 percent of approximately $16 billion plant investment in telephones. The remainder of the telephones and plant investment is, of course, operated and owned by Bell System.
Thus it may be seen that the American Telephone & Telegraph Co. owns and controls a very large proportion of the telephone business in the United States. Its control of the long-distance telephone wires in the United States is even greater than its control over the number of telephones in service.
A. T. & T. also controls a correspondingly high percentage of the telephone equipment sold in the United States.
Despite the dominant position of the Bell System, the independent telephone business in the aggregate is a substantial and vital component of the telephone industry in this country. It generally is increasing in importance and success, as the rural and other subscribers become more and more dependent upon modern day communication. Particularly is the independent industry growing and improving economically in areas where expanding urban development brings growing numbers of new subscribers into independent exchange areas.
With the improvement in the prospects of the independent companies during the last few years, particularly in areas near the larger cities, the number of acquisitions of independent companies by the Bell System is stepping up.
If this trend continues, the independent industry, whose real strength lies in total united effort for improvement of service, may be weakened.
It is the independents' view that a strong independent segment in this industry is in the public interest and that the Nation derives strength from the fact that thousands of independent telephone companies, for the most part small-business enterprises in the real sense, are growing and are contributing their share to the technological and social advances which the telephone industry contributes to the Nation. It is suggested that the continued solicitude of Congress for many years to advance the opportunity and success of small-business enterprises should be applied in matters such as we present here in order that the future of the independent telephone companies may be protected.
The independent telephone companies purchase most of their equipment from manufacturers other than those controlled by the Bell Sys
tem, and the United States Independent Telephone Association, for which I speak, includes among its members manufacturing companies which are independent of the Bell System.
The success and future of these independent manufacturers of telephone equipment is largely dependent upon the continued independence and success of the independent telephone operating companies.
Without reviewing in detail the history of the growth of the Bell and the independent segments of the industry, it is, of course, true that following the institution of antitrust proceedings in the year 1912 against a portion of the Bell System, a settlement was effected which was designed to halt the further expansion of Bell toward complete monopoly.
From that time until the passage of the Willis-Graham Act in 1921 amending the Transportation Act of 1920, the substance of which is now contained in section 221 of the Communications Act, the only acquisitions made by the Bell System of independent companies were those made by exchanges of properties with the independent industry in order to eliminate telephone service by both within the same areas. Such acquisitions were submitted to and approved in advance by the Attorney General.
In order to permit future acquisitions where in the public interest, without risk of antitrust law violations, the duty of policing acquisitions was shifted by the Willis-Graham Act from the Department of Justice to the regulatory commission.
The law provides that an interstate telephone company desiring to acquire another company may apply to the Commission, and, if such acquisition is approved
any Act or Acts of Congress making the proposed transaction unlawful shall not apply.
The acquiring company may thereby obtain protection from any possible antitrust law violation. This protection from the antitrust laws would remain in section 221 (a) of the Federal Communications Act while the requirement for a hearing would be eliminated by H. R. 4939 as now written.
The United States Independent Telephone Association does not oppose any and all acquisitions of independents by the Bell System.
Where the service cannot be rendered for the benefit of the subscribers and in the public interest by an independent company, the independent segment of the industry has not opposed acquisition applications under section 221 (a) before the Federal Communications Commission.
Where, on the other hand, it is believed that the proposed acquisition would be contrary to the public interest and adequate service could and would be rendered by an independent telephone company, the independent segment of the industry has opposed Bell acquisitions.
It is our position that, consistent with past history and consistent with the American philosophy of encouraging industry and discouraging monopoly, the independent segment of the industry should not be weakened through piecemeal acquisitions by the dominant segment of the industry.
The past record of the independent's opposition to acquisitions under section 221 (a) substantiates my statement that the independents
have not opposed acquisitions where they did not believe such opposition would serve the public interest.
In this connection, it should be stated in all fairness that over a period of years the Bell System has not often attempted to acquire independent properties if a member of the independent industry desired and was willing to provide adequate subscriber service. However, the independent industry recently has become disturbed lest this Bell System policy might be undergoing a change.
I would not have the committee left with the impression by anything I say that relations between the independents and Bell are less than cordial. Hundreds of business transactions take place between the two daily and literally millions of messages are interchanged.
The two segments of the industry do and must maintain the finest possible working relations.
Coming now to the provisions of H. R. 4939 and proposed amendments to section 221 (a), it is our firm view that, in light of the historical background which I have briefly referred to, it would be a mistake and contrary to our American concepts for Congress to enact into law the changes proposed by the bill, as now written.
If this should happen, the Bell System would thereby be permitted to acquire independent companies without giving other independents or the association of independent companies notice and a right and opportunity to a hearing in opposition, while at the same time continuing in the law the exemption of such transaction, if approved, from the provisions of the antitrust laws. I know that such was not the purpose of the bill's sponsor.
The sole purpose of the proposed amendments to section 221 (a) is to eliminate the present requirement for a hearing in every case, whether or not opposed, prior to exempting these acquisitions from the antitrust laws.
As the bill is presently written, this would be accomplished by eliminating the requirement for a hearing and leaving that matter wholly within the discretion of a regulatory commission. Not only would the independent segment of the industry be precluded from the right to a hearing, but also it would lose all the rights and safeguards afforded by sections 5, 7, and 8 of the Administrative Procedure Act, the purpose of which is to assure a fair and reasonable hearing with adequate notice and an appropriate record for a court review of the administrative decision.
These sections of the Administrative Procedure Act are only applicable where a hearing is required by law, as is presently the case in section 221 (a).
While I believe the present Commission would exercise its discretion to afford the independent segment of the telephone industry a hearing where requested in these cases, it must be borne in mind that commission personnel and policies change and we feel strongly that such important matters should not be entrusted solely to the discretion of a regulatory commission.
It might be mentioned at this point that the recent recommendations of the so-called Hoover Commission on such matters are in the direction of affording interested persons further protection in administrative hearings rather than to eliminate the opportunity to obtain a fair hearing.
We are not opposed at all to the Federal Communications Commission's objective to eliminate hearings where they are unnecessary and serve no useful purpose. It is for that reason that we have taken the matter up with the Commission in an effort to obtain agreement on language which will eliminate the requirement for a hearing in every case, but assure a hearing to the independent telephone industry in those cases where requested.
During the last session of Congress, the Senate Interstate and Foreign Commerce Committee held a hearing on S. 1546 which would have amended section 221 (a) in the manner presently proposed by H. R. 4939. We testified at the hearing on that bill.
Prior to that hearing, we conferred with representatives of the Federal Communications Commission, explained our position, and requested the Commission to agree to an amendment which would afford a hearing in any case where requested by independent telephone companies.
The Commission agreed to an amendment which would carry out that purpose.
The Senate committee last week reported S. 1456 favorably with an amendment which was agreed to by the Commission and by our association. That bill is presently on the Senate Calendar.
If similar changes are included in H. R. 4939, we would have no objection to its passage. I attached an amendment to H. R. 4939 which, if adopted, would change section 221 (a) of the Communications Act in the same manner as the amended Senate bill.
We urge the committee to adopt this amendment. It is a very simple amendment, I believe, Mr. Chairman, and we hope that the committee will feel that since the Commission and the association are in agreement, that it will go along with the change suggested.
I have copies of the Senate bill and the report of the Senate committee if this committee would desire to see them.
Mr. HINSHAW. Mr. Chairman ?
Mr. HARRIS. Mr. Hinshaw.
Mr. HINSHAW. Mr. Chairman, it looks to me as though he has just changed this question of a public hearing from no to yes or yes to no, one or the other.
There has been in the bill wording to the effect that public hearings shall be held in all cases unless, so we are going to cut out "in all cases unless" there is a request.
It is changed from negative to positive.
Then you have let in here the possible request by a trade association, which I think is carrying things to extremes, is it not?
Mr. Ross. I would like to say, Congressman Hinshaw, that this language was language that was worked out with the Federal Communications Commission. It was not language that was submitted by us, it was language that was agreeable to us.
Let us look at it this way:
This is a committee of Congress and we do not have any language that has been worked out by anybody unless we choose to adopt it. Mr. Ross. Yes, sir.
Mr. HINSHAW. I just raised the question whether a trade association should be in the position of making a request upon the Commission for a hearing and just willy-nilly be heard, without any interest being