that competition would be fostered by the statute's repeal, and that concerns about cross-subsidization and network discrimination could be addressed by federal regulations. FCC Video Dialtone Order, 7 FCC Rcd. at 5829, 5848-49; DOJ Cross-Ownership Rules Reply at 44-46. In this litigation, the Government states that "the defendant agencies stand by their assessment." Defendants' Memorandum at 30. Nonetheless, the Government contends that despite the firm foothold the cable television industry has developed in the past ten years, Congress can and did reach the reasonable conclusion -- when it declined to repeal § 533(b) in 1992 -- that § 533(b) remains the most effective means of preventing telephone companies from monopolizing cable television through cross-subsidization, predatory pricing and network discrimination. If that is so, according to the Government, it does not matter that the Government itself has recently disagreed. The Government further argues that because this particular field of regulation is highly complex and fact-bound, the court should defer to Congress.
However, the court does not accept that Congress made any clear determination as to whether § 533(b) continues to serve the ends for which it was enacted. Although it is true that Congress, prior to enacting the 1992 Cable Act, did hear voluminous testimony from proponents and opponents of § 533(b)'s repeal, the Supreme Court teaches that "failed legislative proposals are 'a particularly dangerous ground on which to rest an interpretation of a prior statute.'" Central Bank of Denver, N.A. v. First Interstate Bank of Denver. N.A., 176 U.S. 683, 20 S. Ct. 1439, 1453, 44 L. Ed. 638 (1994) (quoting Pension Benefit Guar. Corp. v. LTV Corp., 496 U.S. 633, 650, 110 L. Ed. 2d 579, 110 S. Ct. 2668 (1990)). Congress made no findings of fact at the time it enacted § 533(b), and the fact that Congress did not repeal § 533(b) in 1992 or in 1994 does not translate into a finding that the statute continues to promote competition and diversity in cable television, whatever statements may have appeared in the legislative history of the 1992 Cable Act or of predecessor bills that did not become law. See BellSouth, slip copy at 14 n.13. Moreover, even if there were such legislative findings of fact, they would not relieve the court of its duty to decide independently whether § 533(b) violates the Constitution by burdening more speech than is necessary to achieve the statute's goals. See Sable Communications of California, Inc. v. FCC, 492 U.S. 115, 129, 106 L. Ed. 2d 93, 109 S. Ct. 2829 (1989).
The Government also cites two reports of the General Accounting Office and several judicial opinions for the proposition that anticompetitive behavior by the telephone companies remains a significant concern. See Defendants' Memorandum at 31. For example, the Ninth Circuit observed that because enhanced competitiveness in the information service markets into which the telephone companies ("BOCs") wished to enter "does nothing" to decrease their monopoly power in the local telephone market, "we fail to see how it can diminish the BOCs' ability to shift costs to their regulated services without detection in ratemaking proceedings." California v. FCC, 905 F.2d 1217, 1234 (9th Cir. 1990); see also United States v. Western Elec. Co., 673 F. Supp. 525, 567-79 (D.D.C. 1987) (refusing initially to lift portion of AT&T consent decree concerning ban on telephone company provision of information services, and finding that federal regulatory scheme would not prevent cross-subsidization and network discrimination), aff'd in part and rev'd in part, 283 U.S. App. D.C. 299, 900 F.2d 283, 309 (D.C. Cir.) (remanding with instructions to consider whether lifting the ban would be anticompetitive under then-present market conditions), cert. denied, 498 U.S. 911 (1990), on remand, 767 F. Supp. 308, 327 (D.D.C. 1990) (lifting the ban "with considerable reluctance" but in deference to DOJ's view that doing so would not be anticompetitive), aff'd, 301 U.S. App. D.C. 268, 993 F.2d 1572 (D.C. Cir.), cert. denied, U.S. , 114 S. Ct. 487 (1993). Conceding arguendo that the telephone companies may retain the incentive and ability to cross-subsidize and discriminate on their networks,
, the key issue in this litigation is whether § 533(b), in attempting to address those concerns, places a greater than necessary burden on protected speech. In other words, to sustain the statute, the Government must show that less restrictive measures
would not be effective in restraining the monopolistic tendencies of the telephone companies. The undisputed facts are that the FCC and DOJ, the two federal agencies responsible for formulating executive branch policy on telecommunications and antitrust matters, agree that § 533(b) does not promote competition and diversity in cable television, and that the statute may actually hinder the achievement of those objectives. The Government characterizes these propositions as debatable, and that they may be. But they must be more than debatable to sustain the Government's burden of showing that § 533(b) is narrowly tailored to promote competition and diversity of ownership in cable television. As in U S West, "there is no convincing evidence in the record that other current methods of regulating anticompetitive behavior would be ineffective." U S West, 855 F. Supp. at 1193; see also BellSouth, slip copy at 14 ("the Government has not shown that less restrictive regulations would be ineffective"). For these reasons, this court holds that § 533(b) imposes a greater-than-necessary burden on plaintiffs' speech and therefore is not narrowly tailored to serve the Government's significant interest in preventing anticompetitive behavior and promoting diversity of ownership in the cable television industry. Even when all inferences are drawn in the Government's favor, there is no genuine issue of fact as to whether § 533(b) unconstitutionally burdens substantially more speech than is necessary to serve the Government's interests, see Ward, 491 U.S. at 799, especially given the "widely changed competitive situation" in which the FCC has found that independent cable operators hold "a leading position" in the delivery of video programming and face "little threat" of monopolization by the telephone companies' entry into the market. FCC Video Dialtone Order, 7 FCC Rcd. at 5848-49.
So although § 533(b) is content-neutral, it does not meet the "narrow tailoring" requirement of intermediate scrutiny and cannot be justified as a legitimate time, place, or manner restriction on speech, regardless of whether or not it leaves open ample alternative channels of communication. See Discovery Network, 113 S. Ct. at 1517 (passing over the question of ample alternative channels where statute was neither content-neutral nor narrowly tailored). The fact is, however, that the statute does not leave open ample alternative channels of communication, despite the Government's argument that plaintiffs are free to provide video programming to customers outside their service areas or through independent media outlets. Plaintiffs concede that they could communicate through these channels, at great expense and inconvenience, but the court agrees with plaintiffs that the Government's reasoning here is akin to telling the Chicago Tribune that it may distribute a newspaper everywhere but in Chicago, or that its ability to communicate is not significantly curtailed by its having to publish its news stories in other publications. See Southeastern Promotions, Ltd. v. Conrad, 420 U.S. 546, 556, 95 S. Ct. 1239, 43 L. Ed. 2d 448 (1975) ("'One is not to have the exercise of his liberty of expression in appropriate places abridged on the plea that it may be exercised in some other place.'") (quoting Schneider v. State, 308 U.S. 147, 163, 84 L. Ed. 155, 60 S. Ct. 146 (1939)).
For the foregoing reasons, the court grants the summary judgment motions of plaintiffs and intervenor-plaintiffs and denies the motion of defendants. Judgment will be entered on behalf of plaintiffs Ameritech Corporation, Illinois Bell Telephone Company, Michigan Bell Telephone Company, Consolidated Communications, Inc. and Illinois Consolidated Telephone Company. The court will issue a declaratory judgment to the effect that § 533(b) unconstitutionally infringes upon plaintiffs' First Amendment right of free speech. The court will also permanently enjoin defendants from enforcing § 533(b) against plaintiffs Ameritech Corporation, Illinois Bell Telephone Company, and Michigan Bell Telephone Company, and against the intervenor-plaintiffs Consolidated Communications, Inc. and Illinois Consolidated Telephone Company, in their respective service areas.
DATED: October 27, 1994
John F. Grady, United States District Judge