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IV. THE FORMATION OF POLICY

A. The Congress

The only significant legislative attention to section 214 occurred in 1943 during the passage of section 222. The new legislation was needed to relieve the economic effects brought on by the inadequacy of demand for telegraph service from more than one enterprise. The telegraph industry's financial trouble had its basis mainly in the depression, facilities duplication, and the growing ascendancy of voice telephone service. Section 222 also imposed requirements for a traffic routing formula in an attempt to maintain relatively fixed market shares and thus discourage aggressive competition among the international record carriers.

Section 214(a)-(d) was amended to make "certain technical clarifying changes in the present act to conform with the merger legislation.” 2 A requirement was imposed in section 214(a) that a certificate must be obtained to "discontinue, reduce, or impair service to a community or part of a community.” : It is noteworthy that there is no documentation that indicates specifically why the "abandonments" language was deleted in its conversion to the 1934 act. At any rate, the essential clause was made more definitive and reinstated to anticipate the objection that a consolidated company would not develop and maintain service to the degree that might occur under competitive conditions. The use of the term "service" in the amendment did not evidence a congressional intent to provide a loophole for facilities abandonment, as has sometimes been believed. The language was preferable to the House version of the clause, prohibiting the abandonment without Commission approval, of a “line, plant, office, or other physical facility.” It was felt that this more explicit syntax might allow the abandonment of equipment which, though remote, could be critical to the operation of a line and hence of the maintenance of service. The broad term “service” was meant also to be a standard for evaluating whether the abandonment of a "line” was significant enough to warrant prior approval. It was to prevent an inadvertent requirement that the carriers file "literally thousands of applications for what are, in effect, minor installations or abandon

ments.” 5

1 For a complete explanation of the sec. 222 provisions, refer to the report of the Federal Communications Commission, An Overview of International Telecommunications: Industry Structure and Commission Policies, Mar. 23, 1977. U.S. House, Committee on Interstate and Foreign Commerce, Hearings on International Communications Service, 95th Cong., 1st Sess., pp. 473–75.

2 89 Cong. Rec. 340 (1943). 3 See Appendix B(3).

• It is interesting that during debate on the 1943 amendments, there was discussed a suspicion of an "agreement, possibly collusion, between the telegraph companies and the telephone companies to the effect that the telegraph would abandon offices because they could save clerk hire and increase the telephone business by requiring the person sending the telegram to telephone [to] the point where a telegraph office was maintained.” (89 Cong. Rec. 787). There is no other evidence that this allegation was in mind during drafting and approval of the abandonments amendment. 5 Remarks of Mr. McFarland, 89 Cong.. Rec. 1093 (1943).

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IV. THE FORMATION OF POLICY

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A. The Congress

The only significant legislative attention to section 214 occurred in 1943 during the passage of section 222. The new legislation was needed to relieve the economic effects brought on by the inadequacy of demand for telegraph service from more than one enterprise. The telegraph industry's financial trouble had its basis mainly in the depression, facilities duplication, and the growing ascendancy of voice telephone

service. Section 222 also imposed requirements for a traffic routing ** formula in an attempt to maintain relatively fixed market shares and

thus discourage aggressive competition among the international record carriers. 1

Section 214(a)-(d) was amended to make "certain technical clarihuonen fying changes in the present act to conform with the merger legisla10- tion.” 2 A requirement was imposed in section 214(a) that a certificate I must be obtained to “discontinue, reduce, or impair service to a com

munity or part of a community." It is noteworthy that there is no documentation that indicates specifically why the “abandonments” language was deleted in its conversion to the 1934 act. At any rate, the essential clause was made more definitive and reinstated to anticipate the objection that a consolidated company would not develop and maintain service to the degree that might occur under competitive conditions. The use of the term “service" in the amendment did not evidence a congressional intent to provide a loophole for facilities abandonment, as has sometimes been believed. The language was preferable to the House version of the clause, prohibiting the abandonment without Commission approval, of a "line, plant, office, or other physical facility.” It was felt that this more explicit syntax might allow the abandonment of equipment which, though remote, could be critical to the operation of a line and hence of the maintenance of service. The broad term "service” was meant also to be a standard for evaluating whether the abandonment of a "line” was significant enough to warrant prior approval. It was to prevent an inadvertent requirement that the carriers file "literally thousands of applications for what are, in effect, minor installations or abandon

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ments.” 5

1 For a complete explanation of the sec. 222 provisions, refer to the report of the Federal Communications Commission, An Overview of International Telecommunications: Industry Structure and Commission Policies, Mar. 23, 1977. U.S. House, Committee on Interstate and Foreign Commerce, Hearings on International Communications Service, 95th Cong., 1st Sess., pp. 473–75.

2 89 Cong. Rec. 340 (1943).
3 See Appendix B(3).

It is interesting that during debate on the 1943 amendments, there was discussed a
suspicion of an "agreement, possibly collusion, between the telegraph companies and the
telephone companies to the effect that the telegraph would abandon offices because they
could save clerk hire and increase the telephone business by requiring the person sending
the telegram to telephone [to] the point where a telegraph office was maintained.” (89
Cong. Rec. 787). There is no other evidence that this allegation was in mind during
drafting and approval of the abandonments amendment.
5 Remarks of Mr. McFarland, 89 Cong.. Rec. 1093 (1943).

Mr. GIFFORD. No sir.

The CHAIRMAN. Well, you do not hear them all cry like I do.

Mr. GIFFORD. I beg your pardon.

The CHAIRMAN. I say, you do not hear them all cry like
I do.

Mr. GIFFORD. I have heard no complaint.

The CHAIRMAN. I do not mean that all of them cry. I mean that those who do cry, come around here and tell their stories.27 A feeling existed during passage of the Communications Act that section 214 should explicitly prevent construction and extension into existing telephone exchange areas:

In connection with certificates of necessity and convenience, we think the provisions in section 214, for requiring such certificates are in substance wise and salutary provisions. The language of the bill, however, is perhaps broader than is or should be intended. We suggest one change in section 214(a) and one in section 214(e) as follows:

By adding after the *** word 'circuit' * * * the words ‘in the territory or to points or places not already served by such carrier with service of the same class.' ** * And after the word 'any, the word 'such', so that it would then read:

Sec. 214(a) No carrier shall undertake extension of its line or circuit in the territory or to points or places not already served by such carrier with service of the same class, or shall require or operate any such line or circuit or extension thereof, or shall engage in transmission over or by means of such additional or extended line.28

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[S]ection 214 *** after the word “circuit add: 'If the ter-
ritory through which a contemplated extended line or circuit
is already, in part or in whole, occupied by another common
carrier, the right of extension will not be granted without
due notice to the carrier already occupying said territory and
after due hearing by the Commission, and no common carrier
subject to the provisions of this act shall invade or occupy the
territory served by another carrier without due notice and a
due and lawful hearing by the Commission * * * and the
Commission, if the territory is already occupied by another
carrier, shall give due and timely notice to the end that the
carrier already occupying said territory may appear and de-

fend its right, if any, to continue to occupy said territory,' 29 These proposals for protecting carrier territory were apparently not acted upon, since they or any like them were not contained in the section as enacted.30

27 Testimony of Walter Gifford, president. A.T. & T.. U.S. House, Committee on Interstate and Foreign Commerce, hearings on H.R. 8301, Federal Communications Commission, 73d Cong., 2d Sess., pp. 171–72 (1934).

29 Testimony of R. B. White, president, Western Union Telegraph Co., U.S. Senate, op. cit., n. 25. pp. 104-05.

20 Amendments proposed by the American Radio Audience League, U.S. Senate, id., pp. 114-15.

30 Sec. 214 may have intended the Commission to prevent existing exchanges from being affected by certifications of carrier facilities, consistent with the intent of the original ICA clause and State regulation of local exchange telephone service. These market territories would be recognized by sec. 214 protection from incursion.

There were some reservations voiced, as well as some quite strenuous objections, to what was regarded as a direct and indiscriminate transfer of the provision intended for railroad regulation into a law devised for a largely unrelated industry:

Before considering the meaning of the provisions of this section as applied to the telephone business, I wish to make the general comment that there is no presumption in favor of the legislative method that has been followed in drafting this section. There is no reason to suppose that laws which are proper or necessary in connection with railroads are desirable or will work when applied to telephone systems. It has not been supposed heretofore that any sound conception of public policy required restrictions of this kind so far as telephone companies are concerned, and we do not know of any reason whatever why Congress should now, contrary to past experience, come to a different conclusion. Moreover, no one should be surprised if it appears from an examination of these provisions that they become impossible and absurd when the attempt is made to apply them to an entirely different business from that for which they were originally enacted.

Such a process of drafting important legislation is almost certain, it would seem to me, to lead to surprising and unintended results.31

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The CHAIRMAN. This principle for carriers is 14 years old, however. It is not something new. It was put into the Transportation Act of 1920.

Mr. GIFFORD. But it has never been applied to telephone companies.

The CHAIRMAN. Oh, no.

Mr. GIFFORD. And my point is that there is a big difference between a railroad track and a right-of-way, as a matter of fact, and the stringing of a couple of wires, or additional wires on a telephone pole. 32

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[B]ecause the bill is so largely patterned after the Interstate Commerce Act, there should not be the same need for court test of its provisions as is usually true of new legislation. On the other hand, the mere fact that any unnecessary change has been made is apt to lead to a conclusion by the courts that a different construction of the new provision is intended. Mere rearrangement of existing provisions would not, of course, necessarily bring about that result, and generally little attention has been given to the order in which the provisions are set forth in the bill. But where there is any departure from the language of the acts which could open the doors to a different construction, our recommendations have been influenced by the thought that such possibility should not be permitted, unless clearly intended. Detailed consideration follows the arrangement of the bill.

* Testimony of Walter Gifford, U.S. Senate, op. cit., n. 25, p. 88. * Testimony of Walter Gifford, U.S. House, op. cit., n. 27, p. 171.

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