E. Stratford Smith

E. Stratford Smith

Interview Date: Monday March 31, 1986
Interviewer: Ed Parsons
Collection: Penn State Collection
Note: Audio Only

SMITH: My name is E. Stratford Smith. I was born in Brigham City, Utah on December 9, 1916. The “E” is for Edwin; however, I have always used Stratford or “Strat” as a first name. I am a Jr. and my mother did not want my father and me to be known as “Big Ed” and “Little Ed.”

My parents were driving to Grace, Idaho when I was born, where my father was to be the principal of the high school. We lived in Grace for six years and moved to Ogden, Utah where my father became a science teacher in Ogden Senior High School. I attended the local public schools graduating from high school in 1935. I attended what was then Weber Junior College in Ogden for one year on a debating scholarship which I had won while in high school. I then stayed out of school for a year to accumulate some money to attend the University of Utah. During this one year hiatus I worked as a “chemist” for a local flour milling company.

I entered the University of Utah at Salt Lake City in 1938 intending to get a degree in Electrical Engineering. (One published resume of my professional background incorrectly indicates that I have a degree in engineering from the U. of U.) I also gave considerable thought to entering medical school but financing was a problem that seemed insurmountable. At the end of my junior year I entered the University of Utah Law School which I attended for one year.

I married at this time and moved to Washington, D.C.

PARSONS: Before we move on too quickly, I’m going to stop you to elaborate on a few things before we get too far. Do you have any brothers and sisters?

SMITH: Yes, I had two brothers. Dee W. Smith is still living in Ogden. He is a retired police officer. Another brother, Byrne Bowen Smith, died four years ago. He was the younger brother.

PARSONS: You’re the oldest?

SMITH: Yes. Dee is two years younger and Byrne was three.

PARSONS: Was your family Mormon?

SMITH: Yes. I was active in the religion until I was a young adult.

PARSONS: Why did you decide to switch from engineering to law?

SMITH: Well, there was a little more to it than that. My closest friends were going to medical school and that was also my first choice over engineering. However, I had to pay my own expenses since my family did not have the resources to do so. I was concerned that the high cost of medical school, the heavy time demands and the need to work while attending school made medical school impractical and so I decided on law, which had been my second choice.

PARSONS: Any particular attraction to the legal profession, interest in the logic of law, or did it just seem like the thing to do at the time?

SMITH: I mentioned earlier that I had won a one year scholarship in debating. I also had been active in high school in dramatics, and particularly in an extemporaneous speaking program at the school, which I enjoyed very much (having won all of the competitions). It seemed the logical direction to go.

PARSONS: So you graduated from the University of Utah?

SMITH: No. This was the period immediately preceding World War II. Because students were anxious to finish school before induction into the armed services, the law schools, at least some of them, were accepting applicants with three years of undergraduate work rather than requiring an undergraduate degree as a prerequisite to admission. So I entered law school at Utah at the end of my third undergraduate year. I completed my freshman year of law school at Utah and then transferred to George Washington University in Washington, D.C. I completed my LLB (now known as a JD for Juris Doctor) at GW.

To complete the background on my legal education, upon my return from WWII, I returned to GW law school and obtained a masters degree in law–LLM.

PARSONS: Okay. Let’s return to the move to Washington; you married.

SMITH: I married at the end of my first year of law school. I married Ruth Christiansen, who was an Ogden girl, after which we moved to Washington.

PARSONS: Was she attending the University?

SMITH: No. She did attend Weber Junior College. I might interject the rest of the family background at this point. Ruth and I had two daughters. Sharon, who is on the teaching staff at Brigham Young University, and Diane, who is a registered nurse and nurse practitioner in Washington, D.C.

PARSONS: In Utah did you ever have any particularly interesting experiences with the media? Were you particularly interested in radio or television at the time?

SMITH: No, I really wasn’t. I remember having a history teacher who was a part-time announcer on the local radio station. The teacher was friendly and invited me to the station a time or two. I remember once meeting Jack Dempsey at the station when my teacher was interviewing him. That was the only exposure to the broadcast industry while in Utah and that did not create any particular interest in it.

PARSONS: Why the decision to go to George Washington?

SMITH: In part it was a matter of economics. I had an aunt and uncle living there at the time; he was working for the government. GW was a well-regarded law school. In addition, they had a night school which would make it easier for me to work and go to school since I could attend night classes and hold a government job during the daytime. My wife, of course, came to Washington with me. She obtained a job–not with the government–and between our two salaries we were able to start a family and get me through law school.

PARSONS: How did you get a job with the federal government and what was the job?

SMITH: I applied to the Federal Bureau of Investigation for a position as a messenger which was a common practice among students going to Washington to attend law school. I had in mind the prospect of getting a position as a Federal Agent upon graduation. Fortunately, (by hindsight) I got a position at the Library of Congress in the Periodicals Division. Within a few months I transferred to the Law Library Division where after some time I was placed in charge of acquisitions. I remained at the Law Library of Congress until shortly after Pearl Harbor when I was offered a position at the Federal Communications Commission (FCC).

PARSONS: And this was 1945.

SMITH: No. Pearl Harbor was December 7, 1941, so it was a few months later. I was in the Accounting Department at the FCC where my first position was as a Tariff Examiner, a semi-legal type of work. My boss, who was in charge of all the tariff work, was a lawyer who was frustrated that he was not functioning as a lawyer. He refused to hire anyone in his division who was not at least a law student, but preferably, persons with law degrees. I suspect that he was looking to the day when his entire staff would be members of the Bar so that he could attempt to get his division transferred to the Law Department of the FCC. An unwritten, but spoken, commitment of my employment was that I complete law school. He was a fine man. I liked him very much and owe him a great deal.

PARSONS: What was his name?

SMITH: William G. Butts. He would frequently call me into his office to find out how things were going at school. He had taken a liking to me and promoted me to Chief of the Tariff Section which meant I supervised the tariff examiners. He told me that any time I felt the need to do so, after reporting in to work, I was free to go to the law library at GW for extra study. The time was not charged against annual leave, although I was expected to stay on top of the job. Whenever I had to study for exams, and when it came time to study for the Bar exams, this privilege was a great help. Bill Butts did everything he could to ease my way through law school. I would have completed law school in any event; but his help and encouragement speeded the process and I doubt that I would have graduated with honors or have been chosen as an Editor of the Law Review if it were not for the extra study time he made available.

I suppose my interest in communications and communications law began to develop at this time. As a student editor of the Law Review, I was expected to prepare notes for the Law Review on cases or legal issues of current interest. Bill Butts suggested I research the constitutional law implications of regulating rates for international communications services by treaty–a subject of considerable interest at the FCC at the time. The faculty advisor to the Student Board of Editors, a Professor Oppenheimer, who I will mention again, liked the subject and gave a “go ahead.” Bill Butts was pleased and assigned the project to me as a research project for his office at the FCC. So I was able to do a good part of the work on government time. The project turned out to exceed the limitations in a Law Review note and was published in the Review as a lead article.

PARSONS: When did you graduate?

SMITH: June, 1944. Since you seem interested in my law school background, you may be interested in another circumstance relating to the graduation which preceded and related to my entry into military service. I had done considerable maneuvering between leaving Ogden, Utah and moving to Washington to postpone induction into military service until I had graduated from law school. However, the selective service was catching up faster than I could maneuver and I received orders just a very few weeks before graduation to report for induction immediately. I had, however, applied to the Navy for a commission when I arrived in Washington as a hedge against being drafted. I had been approved and passed the physical subject to my getting a college degree, which was a prerequisite to being commissioned directly from civilian status. So my position just a few weeks before graduation was that of being under orders to report for induction within days and the draft board was not listening to my pleas for a postponement.

Incidentally, I had already passed the Bar exams. During wartime, we were permitted to take the Bar in our senior year if one’s grade point average was such as to indicate probable graduation.

I had a law school professor named Oppenheimer who was the faculty advisor to the Student Board of Editors of the Law Review. In fact, it was he who recommended me for appointment to the Student Board of Editors. I had taken at least two of his courses. Consequently, we were quite friendly. I was studying for finals one evening at the school law library, still hoping to avoid induction before graduation, when Professor Oppenheimer stopped by to ask how things were going. So I poured out my tale of woe. Oppenheimer was advisor to the Navy Judge Advocate General’s Office and volunteered to see if he could do anything to help me. How well I remember it. At 10:00 a.m. the next morning I received a telephone call at my office from the Navy recruiting office (just three city blocks away) suggesting I come down and get sworn in. By 12 noon I was a brand new Ensign in the U.S. Navy and had orders to report to naval indoctrination school at Princeton University on a date which was, as I recall, a week or two after graduation.

So that gets me out of law school and into the Navy.

PARSONS: Let’s talk briefly about that.

SMITH: The indoctrination course at Princeton was for three months and included basic instruction in naval tradition, navigation, Morse code, gunnery, drill, physical conditioning, etc. We were given the opportunity to express preferences for future duty assignments. Communications was one of the available options and I put it at the top of my list. On completion of the course I received orders to report to the Navy Communications School at Harvard University. This was a four month course and was very intensive. The course included elementary radio transmitting and receiving technology, training in the use of codes and coding machines including typing, radar theory, sonar theory, ship to ship communications by radio and semaphore and the like; everything but smoke signals.

I did reasonably well and had a 3.8 grade point average on completion. I was among several offered the choice to go to a special naval language training school at the University of Colorado at Boulder. I was to study Russian day and night for two years, seven days a week, or so I remember. I decided not to accept, although it would have assured that I would have been out of the fighting for at least two years and probably would have wound up with a desk job. I did not turn it down because I wanted to fight. I was just sick and tired of studying night and day and taking examinations. Six years of that was enough.

I received orders to report to the 12th (I think) Naval District at San Francisco for six weeks of temporary duty at a number of naval installations where my assignments generally involved naval communications.

My next orders were to report for duty on the Staff of the Commander-in-Chief of the Pacific Fleet and Pacific Ocean Areas, Fleet Admiral Chester W. Nimitz at Pearl Harbor. My assignment was that of a duty officer in the communications room. My specific job was to encode and decode communications using the electronic coding machines.

I remained at Pearl Harbor for about two months when I was assigned to the Advance Headquarters Staff on Guam. Nimitz and his operating staff moved to Guam at this time, which I think was early 1945. At my staff level, we made the trip from Pearl to Guam by surface ship. This was the closest I came to feeling that I was in a war; however, the trip was uneventful. At the advance headquarters I was assigned to the Top Secret coding room. I was in charge on my duty watch, which put me in the position of delivering dispatches personally to Admiral Nimitz at least once on each watch. On occasion I was asked to wait while he had read the dispatches and decided whether to give me any replies for coding. On these occasions, he would sometimes comment on the contents. One occasion stands out in my memory. It was during the invasion of Okinawa. Nimitz in his position as Commander-in-Chief of the Pacific Ocean Areas was also Commander of the 10th Army which, together with several Marine divisions, was the invading force. I had brought the first casualty reports to the Admiral which showed noticeably higher casualties among the Marines than the 10th Army. I do not remember his exact words but they were to the effect that, “What else would you expect?” I had a number of interesting experiences on the staff, none of which are significant other than as personal recollections.

Immediately following the dropping of the atom bombs on Hiroshima and Nagasaki and the Japanese surrender, the advance headquarters was dismantled. I learned through a dispatch that I had decoded that there was an opening on the staff of Fleet Admiral Spruance who commanded the Third Fleet. When Admiral Halsey was in command, it was called the Fifth Fleet. The Third Fleet was to be stationed in Tokyo Bay at Yokosuka. I asked for the assignment and as soon as I could pack I was on an air transport to Okinawa where I boarded the USS New Jersey, Spruance’s flagship, which left the next morning for Japan.

The arrival in Japan was quite an emotional experience because we passed close by and saluted a hospital ship returning the first group of U.S. prisoners of war from Japan. The entire ship’s company lined at attention on the starboard side of the New Jersey facing the outgoing hospital ship as we were entering and it was leaving. On the hospital ship the crew and the returning former prisoners of war lined at attention facing the New Jersey. HIP! HIP! HOORAY!; HIP! HIP! HOORAY!; HIP! HIP! HOORAY! Three times each we exchanged that traditional Navy salute as we passed. It was a very moving experience that still brings tears to my eyes.

PARSONS: So you served out your remaining time in Tokyo?

SMITH: Yes. I am not certain as to the month, but it was late 1946. I received my orders to report to the 12th Naval District in San Francisco for discharge. Originally, I had been scheduled to return on the battleship Missouri on which the Japanese surrender took place. I was looking forward to that; however, at the last minute I was assigned to be a communications officer for the Far Eastern Commission which had been in Tokyo conferring with General MacArthur. The Commission was made up of representatives of the allied nations and was supposed to participate in implementing occupation policies. The Commission was returning, at least as far as Pearl Harbor, on the USS Mt. McKinley, a cargo type vessel which had been converted to a communications ship.

The ship was to be overhauled in San Francisco and was to be the headquarters ship for the forthcoming atom bomb tests on the island of Eniwetok. The ship’s captain, who was a Naval Academy graduate and a very impressive naval officer, and I became acquainted since part of my duties were on the command bridge. He suggested I apply for a regular Navy commission and offered to endorse my application and request my assignment to his staff for the Eniwetok project. I declined.

At Pearl Harbor the new Commander-in-Chief of the Pacific Fleet, Admiral John Towers, came aboard to greet the Far Eastern Commission. Since the ship’s captain did not recognize him and we had no advance notice he almost did not get piped aboard–a gross infraction of Naval etiquette. The ceremonies over, the ship left immediately for San Francisco where upon arrival I was processed out of the service.

PARSONS: Let me ask you a couple more questions about your family background. And this will take us through and beyond the cable history. You had two children, is that right?

SMITH: Yes. Sharon Jean and Diane Ruth Smith.

PARSONS: About how old are they?

SMITH: Sharon was born in 1942 and Diane in 1944.

PARSONS: And they are where now?

SMITH: Diane, the younger, is a registered nurse and nurse practitioner employed by the Air Force in Washington, D.C. She has had quite a distinguished career. Sharon and her husband, Donald Black, are both on the teaching staff of Brigham Young University in Provo, Utah. They both have their master’s degrees and he is working on his doctorate. I have three grandchildren by that daughter: Elisa, who is fourteen, David, who is eight, and Sarah, who is seven.

PARSONS: One final question and we’ll move on. Do you have any hobbies or pastime activities?

SMITH: Reading, certainly. Probably the outside activity to which I devoted the most time was boating. For a fifteen year period, I had a boat on the Chesapeake Bay. The last several years before I left the practice of law I had a home on the Bay not far from Annapolis.

End of Tape 1, Side A

PARSONS: Let’s talk about your first couple of years at the FCC. You came back about 1946.

SMITH: Yes. It would have been in the Fall of that year.

PARSONS: You joined the Common Carrier Division of the Law Bureau?

SMITH: Yes. Bill Butts had retired. Rosel Hyde was General Counsel to the Commission at that time. (Shortly thereafter, he became a commissioner and later Chairman.) I knew Rosel. He was also of Mormon background. I asked him for a position and one was available.

PARSONS: It was several years, I guess, before you were introduced to cable. Maybe you can tell us briefly what you did in the late ’40s, what you were involved with.

SMITH: My job classification was Attorney Advisor which simply meant staff attorney. (Just as a footnote, Max Paglin, who is assisting the Cable Television Center and Museum, was also an attorney in the Common Carrier Bureau in the International Division. One of the first cases on which I worked at the FCC was as assistant to Max in an international rate case which he and I tried in New Orleans.) However, after that my work was principally in telephone regulatory work. The bulk of my work related to AT&T and the Bell System companies. In those days, if you wanted a telephone you could have a black one –and that was it. The telephone companies did not allow the use of any so-called “foreign attachments” with their telephones, not even a support to cradle the phone on your shoulder. A better example was the Hush-A-Phone, a device that fit over the mouthpiece with the intention of confining the sound of the user’s voice to the telephone mouthpiece to minimize being overheard. It was a simple acoustical device with no electrical connection to the telephone. Use of the device was a violation of telephone company regulations on file in the tariffs at the FCC. Just before I returned to the FCC the lawfulness of the foreign attachment regulations as applied to that device had been challenged by the FCC as being unjust and unreasonable. The telephone companies foolishly (because the device was harmless) challenged the FCC in the federal courts, including the Supreme Court, and lost. With that precedent, the FCC Common Carrier Bureau set out to test the regulations as applied to telephone answering equipment and other foreign attachments which might be beneficial without harming the telephone service. I worked on the telephone answering case which also helped break down the regulations and established standards for the connection of non-telephone company equipment to telephone company facilities.

I’m unclear as to the date, but some time in 1948 or 1949, the FCC was reorganized into Bureaus based on function rather than professional classification. Thus the Law, Accounting and Engineering departments were abolished and the Broadcast, Common Carrier, and Safety and Special Services Bureaus replaced them. Each bureau had its own complement of lawyers, accountants, engineers, economists and supporting staff. A separate Office of the General Counsel remained but it had no responsibility for the legal work of the bureaus except for litigation in the courts. In the new organization, I was assigned to the Telephone Services and Facilities Branch as Assistant Chief and Trial Attorney. The Branch Chief was a man named Roy Jarmon, who later became a ranking Vice President of General Telephone Company. He left the FCC a few months after the reorganization and I succeeded him as Branch Chief.

It was in this position that I first got into television. AT&T was pioneering the use of microwave transmission for long distance telephone services, teletype and television, networking, among others. Any and all of AT&T’s common carrier services were within the jurisdiction of the Telephone Division and consequently the intercity television transmission services were the responsibility of the Telephone Services and Facilities Branch, except for rates, which were in the Telephone Rates Branch. Whenever a common carrier wanted to construct facilities for common carrier services, whether wire, coaxial cable or microwave, it was required to apply for and receive a certificate of public convenience and necessity from the FCC, which was a certification that the construction was required in the public interest. This process was the responsibility of my branch. In one such case, AT&T was seeking authorization to build a transcontinental microwave system which would, among other things, include several television common carrier channels for service to the television networks. Since it was a major project we were conducting an investigation and hearing before granting the application. This particular case was probably in progress in late 1948 and 1949. It was fascinating; we were all getting our first education and insight into microwave technology and the emergence of nationwide television broadcast networking.

In one particularly interesting assignment, I served as the FCC’s observer and referee in a dispute among the then four television networks (ABC, CBS, NBC and Dumont) over the allocation of usage of the intercity television channels among the networks. This being in the very early days of television and TV networking, there were not sufficient channels to meet the competitive requirements of the four networks. Dumont, in particular, and ABC thought they were getting the short end of the stick from AT&T (and they were) and so complained to the FCC demanding a greater share of the time. I worked with a representative of each network and AT&T to develop an allocations formula which was eventually accepted.

PARSONS: Do you remember the first time you heard or saw or became aware of cable technology? What was the first contact you had?

SMITH: It was during the period I have been talking about. I saw a report in a trade publication, Television Digest, about the use of an antenna on a mountain top to receive signals from otherwise unreceivable television stations and the delivery of those signals by twin-lead wire to some homes with the use of amplifiers spaced along the line. I can’t be certain but I believe the first such report was the installation at Astoria, Washington, which is generally credited as having been the first. I do recall having seen a report on Astoria in TV Digest. Undoubtedly my involvement with AT&T and the networking problems caused me to focus on this development.

PARSONS: Do you remember the year, the month you read the article?

SMITH: It was 1949.

PARSONS: Early, late?

SMITH: I can’t recall, I really don’t know.

PARSONS: And did you have any reaction other than mild interest?

SMITH: No. There had been a “freeze” on the licensing of television stations for several years while the FCC was developing a city-by-city channel allocation plan so that channels could be assigned and licensed to operate with minimum interference to each other. At the time, there probably was no more than a hundred stations in the entire United States, and no UHF. By itself, the Astoria situation was just an interesting and unique solution for a small group of people 150 miles from the nearest station.

PARSONS: Would this be a couple of months later?

SMITH: That’s about right. It kindled more of an interest because it occurred to me that it might be considered to be a wire communications service for hire and, therefore, possibly a common carrier service subject to the jurisdiction of the FCC. I raised the question with the Bureau Chief.

PARSONS: When did you raise the question?

SMITH: Immediately after reading the new report which had to be in late 1949 or early 1950. I don’t recall whether it was the Bureau Chief’s idea or mine that I go have a look and come back and prepare a report. One of the systems mentioned in the second article was in Franklin, Pennsylvania. So I drove to Franklin and located the operator of the system, who also managed the local airport.

PARSONS: Do you remember his name?

SMITH: No, I do not. He showed me the system. I think it had three channels. Just a simple yagi antenna located on a hilltop not too far from the airport with twin lead wire and amplifiers attached to trees and fence posts, or whatever was handy and didn’t move, running down the mountainside. Each channel had its separate amplifiers originally designed for apartment house distribution systems. I was amazed because even though it looked jerry-built, down at the last subscriber–there might have been twenty-five or thirty–the pictures were surprisingly good. That was the only system I visited on that trip.

PARSONS: What did you think of that system?

SMITH: Oh, I was fascinated by it. It was then that I believe I began to see the possibilities. When I returned to the office and described the installation, the Bureau Chief asked me to prepare a report and an opinion as to whether the operation qualified as a common carrier under the Communications Act.

PARSONS: So, tell us a little bit about the system and the report.

SMITH: The report was later to be the source of amusement on Capitol Hill. I had concluded that if the FCC wished to do so it could classify these systems as being in interstate communications for hire and as such could be argued to be common carriers subject to regulation by the Commission. Later, after I had left the FCC and was in private practice the existence of that report came to light while I was representing the National Community Antenna Association in hearings before the Senate Interstate and Foreign Commerce Committee where I was arguing that community antenna services were not common carriers or any form of public utility. When teased about this apparent turn around by Kenneth Cox who was special counsel to the Senate Committee I told him that when I wrote the report I thought I was right, but that this time I knew I was right.

PARSONS: Well, how could it have been a common carrier?

SMITH: The courts had held that broadcasting was per se interstate commerce and because it occupied radio frequency spectrum that was interstate. The reception and delivery of broadcast signals to subscribers was a furtherance of interstate communications and since in the community antenna system it was done for a monthly charge, it was communications service for hire. Stated another way, the subscriber paid the system owner to receive signals intended for reception and use by the public and to communicate the signals to the subscriber’s television receiver. There were certainly other theories which could be argued but at the time I was a common carrier lawyer.

Can we have a break?

PARSONS: Our tape is rolling again.

Okay. So you wrote your report on the Franklin system. Let me ask you a question about the Franklin system. For information on financial arrangements, how much it charged and how they got the money to put it together. Did you ask questions about that?

SMITH: Yes. Although at this date my memory is not precise so far back, I know there was a monthly charge in the $2.50 to $3.50 range; and there was an initial installation charge to cover the costs of extending the system since, in those very early days, the system rarely extended farther than the point the last subscriber hooked on. The day of wiring the entire town had not arrived. I think that [Ed] Parsons in Astoria was charging $100 to connect and that became a common charge as the business developed.

Returning to my report, the Bureau Chief, after discussing it with me, decided that the matter should be referred to the General Counsel and that it should be a joint presentation with the Broadcast Bureau. This made good sense because the Commission was addressing the problem of establishing its television allocations table and thawing its freeze on licensing new television stations.

To me, the business was simply a master antenna serving an entire community or part of a community analogous to apartment house systems in the cities. The subscribers contributed a share of the money to build the system and a monthly charge to keep it going. I have heard that Al Warren, the publisher of TV Digest, claims to have coined the term community antenna and the acronym CATV. He did not. He may have been the first to use it in a published form. He and I are good friends but he picked up the term in discussions with me.

PARSONS: What had they been calling it before then?

SMITH: They had not been calling it anything by way of a formal name. I am still talking about the very early days. It had yet to be dignified with the term industry. This was still in the twin-lead days although coaxial cable was not long in coming into use.

The joint project with the Broadcast Bureau got under way. A lawyer named John McCoy in that Bureau and I worked on the memorandum to the General Counsel. During this process he left to join Storer Broadcasting Company as an attorney and later became its General Counsel. Storer later became one of the major multiple system cable operators. As I recall, John agreed with the common carrier analogy and the memorandum was completed and sent to the General Counsel by the two bureaus. We took the position that if the Commission wanted to take jurisdiction under the common carrier theory it could do so. We did not make a recommendation one way or the other.

And that was the last the memorandum was heard of for several years, insofar as I was concerned. By hindsight I would say that the Commission was too busy with the establishment of its television allocations plan to be bothered with a tiny business that would disappear as soon as direct reception was available after licensing resumed.

PARSONS: Let’s pause here and see if we can get the chronology in appropriate order. You had seen some articles in the trade press, you visited Franklin, came back and wrote your memo to the bureau chief, got together with the broadcast bureau and wrote a subsequent memo to the General Counsel and this was all in about 19…

SMITH: Still in 1950, I think.

PARSONS: The second memo going up to the General Counsel sometime say in 1950.

SMITH: Yes I would think so, but it is difficult to remember chronology clearly thirty-five years back. I’ll try to tighten it up. If this was 1950 or very early 1951, at Commission level there would have been no interest in community antennas. The freeze on the licensing of television broadcast stations, which was imposed in 1948, had not been lifted and would not be until 1952. The big problem at the FCC at that time was in television broadcasting–thawing the “freeze.” So it was that in the interim, between 1950 and 1952, no interest was shown in community antennas and for some time thereafter. In fact, CATV was not even mentioned in the so-called Sixth Report and Order in the television allocation proceeding. This may be explained in part by the fact that when the freeze was thawed the television assignment plan provided for seventy UHF channels, in addition to the twelve VHF. The majority of the Commission believed UHF was the answer to a nationwide channel assignment plan that had as its first two goals to provide at least one television service to all parts of the United States and at least one television station in each community in the United States. The Commission’s preoccupation with UHF as the panacea to inadequate television coverage and the very small number of CATV systems serving relatively few subscribers accounts for the disinterest. [Since the interview I have looked up the statistics and in 1952 there was estimated to be only seventy community antenna systems serving a total of fourteen thousand subscribers. At the same time there were only one hundred eight television stations in the entire country.]

PARSONS: Let’s go back a little and bring us up to 1952. Maybe a little more slowly. The report you sent to the General Counsel, any reaction from the General Counsel? Anything from the Commission itself?

SMITH: No. I don’t think he spoke to us more than once or twice during the period in which I remained on the Commission staff.

PARSONS: What did he say about it when he died?

SMITH: My only recollection is that he just put it off. He was disinterested. I think that is a fair evaluation.

PARSONS: Why do you think the disinterest?

SMITH: They had other things to do and no problems had been presented. They were so busy working on the television channel assignment plan; they didn’t have any eye or ear for anything else. The common carrier bureau chief did not bother to push it, as far as I know. And I certainly didn’t, since I was planning to leave the Commission to go into private law practice. One commissioner did get briefly involved which should be mentioned because it is of historical interest in the development of the community antenna industry in that it involved Milton J. Shapp and the Jerrold Electronics Corporation.

While still at the Commission I received a call one day–probably in mid or late 1950…

PARSONS: Before or after you had written your report?

SMITH: Probably after. The call was from Commissioner George Sterling who was an engineer. In those days it was the practice to have lawyers, accountants and engineers represented on the Commission. Sterling told me he had a man in his office named Milton Shapp who was inquiring about community antennas, if he used that term, and that he wanted to know if the FCC had anything to do with them. I can only presume that Sterling called the General Counsel and got my name because my memo had not been presented to the Commission. If it had I would have been present at the time. He then sent Shapp over to see me. Milt had one or two people with him who I do not now remember. Shapp was in the business of making amplifiers for apartment house systems in his garage, or so the story goes. To the best of my recollection I told Shapp about our study and theories of possible FCC jurisdiction.

I want to mention one more visit to a cable system prior to the time I left the FCC. I am reminded that Bernie Strassburg, the Chief of the Telephone Division of the Common Carrier Bureau, and the man to whom I reported directly, went to Pottsville, Pennsylvania to meet Marty Malarkey who had started a community antenna there and who had just organized the National Community Television Association, together with a few East Coast system owners. I think this trip took place during the time the memorandum reports were in preparation. I mentioned leaving the FCC to practice law. By hindsight there was an interesting coincidence between this and my later work in CATV. The Commission had started an investigation and hearing into a proposal made by 20th Century Fox to establish a nationwide private microwave network to deliver motion pictures to theaters throughout the country. The proposed service had been dubbed Theater Television. Since by this time I was the Common Carrier Bureau’s resident authority on television microwave transmission, I was assigned to the legal staff conducting the Theater Television hearings as the common carrier bureau’s representative. During the early part of these hearings I met the late Vincent B. Welch who was chief counsel for 20th Century Fox in the case. Welch invited me to join his law firm, which I did. In the meantime the Theater Television hearing recessed and never did resume. The coincidence is that the entire Theater Television network scheme had been conceived and promoted by Irving Kahn who, as of that time, had probably never seen a community antenna system. (20th Century abandoned Theater Television and canceled extensive plans to enter television broadcasting for reasons unknown to me.)

PARSONS: And he was working for the law firm?

SMITH: No. He was working for 20th Century Fox.

End of Tape 1, Side B

PARSONS: OK. Let’s talk about something that appears in the literature now and then. That’s your visit to the Pottsville system. It’s suggested by some people to be your first contact with cable, but apparently that was Franklin. When did you go to Pottsville?

SMITH: It was sometime after Franklin. Apparently, interest was beginning to increase. This was almost certainly in 1951. Bernie Strassburg and I were good friends and he was also my immediate supervisor. At the time, I think he was Chief of the Telephone Division of the Common Carrier Bureau. I think it may have been a report in Television Digest of the formation of the National Community Television Association that prompted the trip. We drove to Pottsville, met with Martin “Marty” Malarkey, who owned the Pottsville system, and was the organizer and president of the association. We had lunch, got a tour of the system, discussed his operation, and were filled in on the association.

We verified that there were sixteen or seventeen systems in the association and became aware that there were several others. I do not recall for certain whether Bernie participated in the report. However, as my immediate superior he may have reviewed it and passed it up the line. I don’t recall that Bernie participated in the reports.

PARSONS: So the visit and the report might have been in late 1950 or early 1951?

SMITH: That’s the way I would date it. Unfortunately, the report is apparently lost. The Senate Interstate & Foreign Commerce Committee wanted it during an investigation and hearing I will discuss later, after I left the Commission. The General Counsel confirmed its existence but could not find it for the committee.

PARSONS: Tell me a little bit about the Malarkey system. How large was it? What were your impressions?

SMITH: It was a large system for that time in the development of the industry. My guess is that it did not have more than eight hundred to a thousand at that time. But it was a good system for its day. At that time RCA was providing the amplifiers for the system and I believe was developing other hardware for what looked like might be a coming industry.

PARSONS: Broadband amplifiers?

SMITH: No. I don’t think it was broadband. That was a later development. I think they were strip amplifiers, probably of the apartment house distribution system variety. I am reminded that because of RCA, Milt Shapp and Marty did not get along with each other too well in those days. Milt suspected that Marty was using his position as NCTA president to further his and RCA’s interests. Milt was the founder and owner of Jerrold Electronics Corporation which was soon to become the biggest and best known CATV equipment manufacturer in the industry and to stay in that position for many years.

For five consecutive years Marty was elected to the presidency. At least in the fifth election his opposition to Malarkey was strong enough that they reached a deal that if Milt would withdraw his opposition, Marty would not run for a sixth term.

PARSONS: How many channels did Malarkey have in the operation?

SMITH: I think it was a three channel system at the time. And that tends to support my recollection that strip amplifiers were used.

PARSONS: One of the things that I read–and this is an interesting aside–in one of the pieces was that you had noticed a television camera in Malarkey’s office in Pottsville and that might have been the first local origination.

SMITH: That’s right. It had slipped my mind but the fact is he did have a small television camera and I believe that he had done some local origination. Maybe interviews or news stories or something like that. I know that it was my first exposure to possible local origination on a CATV system.

PARSONS: So perhaps your impressions from that system were folded into the report.

SMITH: I think probably so. I can’t say for certain whether that system was coaxial cable, but by the time we saw it the transmission quality was quite impressive and I have an idea that RCA would be working with cable. Cable was utilized in the industry quite early. One of Bob Tarlton’s systems, I don’t know whether it was Hazleton or Lansford, is believed to have been the first. Bob’s systems were Jerrold.

PARSONS: You had contact with a couple of different systems then, and you had been reading about it, thinking about it. What were your overall impressions about this new business or whatever it was?

SMITH: My personal impressions were that it was a coming thing and that it was going to be much more important than it was then. I won’t sit here and tell you that in the early 1950s I envisioned the cable television industry as it is today; I did not see that far ahead. But I did see it as a much more important way of getting television service around the country than the FCC did at the time. I can’t say that the FCC had a position. They did not even mention CATV in the Sixth Report and Order, the television allocation report in 1956. Nobody there seemed to see it as meaning anything.

I did because one of the first things I did when I went into private law practice with the Welch Mott and Morgan law firm when I noticed a reference, again in Television Digest, to what I believe was to be NCTA’s Third Annual Convention was to suggest to my partner, Welch, that the law firm fund me to go to the convention because I knew both Malarkey and Shapp. I remember telling Welch of some of the problems that the operators would face. Specifically, of course, whether the CATV service was a common carrier under the Communications Act. Was it a public utility subject to regulation by state and local regulatory commissions? Did they require consent of originating broadcast stations to retransmit the stations signals and whether the CATV system infringed copyrights in programs? The latter two questions had arisen at the first system in Astoria, although I did not know it at the time.

PARSONS: You had met Milton?

SMITH: Oh yes. Remember I told you about FCC Commissioner, George Sterling, sending Shapp to me at the Commission. I think I may have even had other contacts with him. Anyway, Welch saw the possibilities for the law firm. He told me to get up to the Sheraton Park, get a suite, order up some refreshments and circulate. And I did. I renewed my contacts with Malarkey and Shapp. The net result was a few weeks later, I was General Counsel to the association and soon after that Washington Counsel to Jerrold Electronics Corporation.

PARSONS: OK. Let’s back up a little bit before we get into that in more detail. You left the FCC about when?

SMITH: It was sometime in 1951, probably late 1951.

PARSONS: And you joined the law firm of…

SMITH: Welch Mott & Morgan.

PARSONS: As a result of your contact with theater television activities, you joined the firm in Washington?

SMITH: That is correct.

PARSONS: And it hadn’t been more than a year or two that you were there and you then went up to the convention?

SMITH: It was during the first year I was with the law firm.


SMITH: It happened quickly. I had not been there long.

PARSONS: So sometime in 1952 is when this convention was?

SMITH: Yes, I think it was in 1952.

PARSONS: OK. You went up, had the hospitality suite, and met a variety of people from the industry, I assume.

SMITH: Yes, I met quite a number of people.

PARSONS: And what was their reaction at the time? Do you recall how you were received?

SMITH: I was received very well. I’m trying to recall if I was asked to make a speech. If I wasn’t it was the only convention for many years that I did not. But, I know that I met with Marty, who introduced me to quite a number of people. I also met with Milt Shapp.

PARSONS: And what sort of things did you tell them?

SMITH: The same ones I mentioned to you that I had mentioned to my law partner. Some CATV systems had already gotten some calls about copyright and I believe Malarkey at Pottsville was one of them. The question of FCC jurisdiction was definitely one. There were other problems. One was a tax problem. Whether the initial installation charges had to be treated as income or could be shown as capital contributions, a problem with public utility overtones. I am beginning to digress to a very important early industry problem. CATV systems, in those days, obviously could not get bank financing. These systems existed before the television station licensing freeze had been lifted and a lot of people thought that CATV would last until the freeze was lifted and that then, with spread of UHF stations all over the country, there would be no need for CATV.

PARSONS: Let me ask you a question, just as an aside, did you think there was a feeling like that at the FCC?

SMITH: Yes. They were indifferent to CATV. All during the period they were preparing the Sixth Report and Order lifting the freeze they were focusing on a television channel assignment plan that hopefully would provide at least one television service to all inhabited areas of the country and at least one television station in every community in the country. So they concentrated on geographic distribution of television channels and deciding how many channels would be assigned to various cities and towns. I am sure that CATV was not a consideration. As I mentioned in an earlier rambling, CATV was not even mentioned in the Sixth Report and Order.

To return to the problem of financing. This was not a regulatory problem. The only source of money was the subscribers. All of the early systems, probably without exception, were paid for by the subscribers by means of the connection or installation charges of upwards of $100 or more. The system developer accumulated the money as it came in, or perhaps mortgaged his home, to get enough money ahead to build the next several hundred feet of system and install the amplifiers and make the connections.

As the industry developed the pattern began to change. The banks began to play a part but indirectly. Some subscribers with low incomes would borrow the connection charge from the bank with the loan guaranteed by the CATV operator, and pay the loan off over several months. This industry pulled itself up literally by its own bootstraps with such innovative financing schemes. I think much credit is due to a man by the name of Ed Mallon of the William E. Howe accounting firm in Philadelphia, who was retained by several operators as a tax advisor. If I am not mistaken he was the first to suggest that cable operators treat installation charges as contributions in aid of construction and thus not income for tax purposes. Much of the industry jumped on this bandwagon and used what would otherwise have been required for income taxes to finance their systems. As the courts finally confirmed, the theory was weak but it took several years to get a final ruling. In the meantime, the systems got built. One of my law partners, Ed Morgan, who was a tax specialist, doubted that the theory would hold up, but he and the Barcos took it on. When the shoe fell much of the tax liability was offset by the depreciation the operators had claimed. But the operators had the use of the money. By then the industry was out of low gear.

PARSONS: When was the tax court decision?

SMITH: Probably the late 1950s but that should be checked with one of the Barcos.

PARSONS: So quite a few years later.

SMITH: Yes, it went on for quite a while. It may have been seven to ten years before those who followed the practice had to give it up. I want to emphasize that it was not a phony legal issue. Contributions in aid of construction had been recognized in the public utility area but CATV did not want to claim that status. However, the idea was innovative and it served its purpose.

PARSONS: My understanding is that the initial impetus for the gathering of those early cable operators for the organization of the association was in fact this tax question. Is that your understanding?

SMITH: I believe it was. Ed Mallon was associated with the association earlier than I was.

I think it very important that this industry be seen in its true historical perspective. It came into being and flourished because there was genuine need for it. It was not a better mousetrap. It was the mousetrap. The public demand for television in rural, undeserved areas was the impetus, and in large part the people who developed the industry were those who had the need. There was no financing and there was no equipment which would do the job adequately. So the originators of the industry were hometown business men in the appliance business, running a music store, an airport or take your choice. RCA got out of the business as fast as they got into it. So the Jerrolds, Entrons, Amecos and others who were born out of this demand developed the hardware. And along the way they all fought the broadcast industry in a bitter battle that continues today; they fought the entertainment industry (copyright) and are still doing so. They received no government encouragement and encountered outright governmental hostility at the time of the greatest demand for its services. Even the subscriber damned the operators because they thought television was supposed to be free. But CATV was the only show in town and they hooked up.

I am not an academic, but I suggest that the birth, growth and development of the cable television industry would be a fruitful case study for any business school.

PARSONS: We were talking about your having joined the law firm after having left the FCC. We discussed the tax problems, the IRS problem, in the early franchising and early financial arrangements. After the convention where you got a lot of people talking to you what happened after that as far as your career goes? You eventually became General Counsel. That was a few months later.

SMITH: Probably a few weeks after the convention in New York City. A few months after I also assumed the responsibilities of Executive Secretary. The title was later changed to Executive Director. At that time the law firm had offices at 714 14th St. in Washington. We had one office with its own entrance, which could have been no more than eight feet by twelve feet, at the head of the stairs on the second floor which was used for storage. We cleaned it out and it became the first official office of the National Community Antenna Association.

We hired a competent lady by the name of Rosemary Kilduff as an administrative assistant to me. For several years, for all practical purposes, she and I ran the association along with Marty Malarkey who moved from Pottsville to Washington.

PARSONS: Let me get some things clear in my own mind. When you became general counsel was that a full time position which means you left the law firm?

SMITH: No. I did not leave the law firm. I continued to practice as a partner in Welch Mott & Morgan for about five years. As time passed I represented a substantial number of individual cable operators. We became active to persuade the FCC to authorize the use of microwave stations of cable operators to relay signals from distant pick up site to the operator’s headend at the community it served. This took several years but I had a number of clients in this area. I also represented several state and regional cable associations, mostly on a case by case basis, and served as an expert witness before state legislative investigating committees and public utility regulatory commissions. My practice developed extensively.

There was rarely any conflict of interest in those days because everyone was on the same side. Conflicts of interest between operators and association policies, and between operators, did not generate until the larger MSOs began to develop and the broadcast and entertainment businesses began to infiltrate CATV.

PARSONS: Were you the first Executive Director?

SMITH: I was the first.

PARSONS: And what were your duties as Executive Director in the first couple of years?

SMITH: Well, there wasn’t a job description. At the beginning the principal thing I did, outside of the legal work, was to prepare a weekly newsletter called the NCTA Bulletin, which was the only source of information on the industry at the time. Because of the rapid growth in the number of systems and the newness of the business industry, all the system owners and would-be owners were hungry for any scraps of information they could get. The Bulletin was enormously successful. Many operators considered it their bible on the industry. It usually ran eight to ten pages single space and was a lot of work.

I also did an enormous amount of traveling everywhere in the country where CATV was developing. I assisted local groups in organizing state and regional associations and was called on continually to address their meetings. If it were not for the fact that the addresses were essentially on legal problems in the industry I would not have done this work. I had no intention of being anything but a lawyer.

I also organized the annual conventions for several years, and the annual Western regional conferences for several years until the California association became such a dynamic organization and took it over. Very quickly the work load mushroomed. We received large numbers of letters and telephone requests for information about the industry. Rosemary Kilduff, who worked pretty much as an administrative assistant, did much of this work. She was very efficient and was well liked by the Board of Directors.

We also tried to help the system owners with advertising and promotion programs. We hired a professional group to prepare programs and sold them at cost. In house we developed a logo character we called Abel Cable stealing the Reddy Kilowatt theme from the power utility industry. Able Cable was a radio tower with a television tube on top with a cartoon style face on the screen. In the early years he was fairly popular with operators and was used in their promotions and publicity. For a few years, I’m not sure how many, we had a Miss Able Cable feature at our conventions. One of Ben Conroy’s daughters and one of Frank Thompson’s daughters were Miss Able Cables. We were struggling to serve the industry on a very limited budget.

To close this matter of duties as Executive Director, the association’s activities grew to the point that the positions of Executive Director and General Counsel could not be handled by one person. The association required a full time Executive Director and Staff. Edward P. Whitney, who worked for Western Airlines in Denver, Colorado, was hired and moved to Washington.

PARSONS: When was that?

SMITH: In 1958. By this time I had left the Welch Mott & Morgan firm and started my own law firm with Vincent A. Pepper. George Barco was instrumental in encouraging me to do this. The firm was known as SMITH: & Pepper. For several months I provided office space to NCTA until they could obtain separate space. The industry was away and running and the day was near at hand that the close knit camaraderie that characterized the early industry would fade away.

PARSONS: When did you set up the firm of SMITH: & Pepper?

SMITH: April 1957.

PARSONS: You first became General Counsel?

SMITH: 1952

PARSONS: How big was the NCTA?

SMITH: About twenty members.

PARSONS: And most of them in Pennsylvania?

SMITH: Most of the members were from Pennsylvania at the beginning but we soon became aware that systems were springing up all over the country and membership grew with about the same speed as the growth of systems. I remember clearly the week that the Kiplinger Newsletter in Washington published a report on this new business of community antennas. Within two weeks we received several hundred letters, by that I mean three to four hundred, asking for information on how to get into the business. When I reported this in the NCTA Bulletin, Jerrold, Entron and the other suppliers were on my back demanding immediate access to the letters or a list of the names and addresses. This was understandable and they should have the lists. But I was not about to hand them over without clearing it through the Board. It was awkward because I represented Jerrold and they were insistent. But there were several other young companies on the scene competing with Jerrold which was the most aggressive and dominant manufacturer in the business. We did make lists available, simultaneously, to all suppliers who had asked. That was possibly the first time I found myself in the middle of a brouhaha in my career with NCTA. We continued to receive letters as a result of that article for several weeks.

My work was predominantly legal. I appeared as an expert witness several times before congressional committees, state legislative committees, public utility commissions, the FCC and where litigation developed on issues that were of national impact, the NCTA would finance the costs and on several occasions I would go out and either assist local counsel or handle the case myself.

Also in the earlier days I coordinated the industry’s lobbying efforts on Capitol Hill and organized the industry’s presentations before congressional committees for several years. I registered as a lobbyist for NCTA. I certainly did not hold myself out as an influential person who could influence the votes of members of the Congress; but I did have to be in and out of several congressional offices. On at least two occasions that I recall we asked operators all over the country, selecting them on the basis of which Senators and Congressmen they knew back home, to come to Washington for Congressional hearings. They all came to my law office where we outlined our presentation, assigned different areas of subject matter to each, and wrote everybody’s testimony so that we would have a coherent presentation before the committees. It was very effective for those days when the industry was small. In fact the ranking staff member of the Senate Interstate and Foreign Commerce Committee working for Senator Warren G. Magnusson, who was Chairman of that Committee, said that the first one we did was one of the best presentations he had ever seen on any subject before the Committee. Just to keep things in perspective I was also at the center of the most disastrous lobbying campaign ever launched by NCTA. (Those events are discussed at more appropriate chronological locations in this Oral History.)

PARSONS: Before we end this side of the tape, tell me about RCA’s involvement in cable in the early days.

SMITH: It was only on the equipment side and it was not very extensive. I have mentioned their work with Malarkey and they may have done a little work with some others, but not enough to become known as a supplier to cable systems. I speculate that their interests were so varied they did not want to undertake development of a full line of equipment. Also they had to be broadcast oriented because of NBC and the radio and television stations they owned. It could well be that they saw CATV as a temporary phenomena as many did. In recent years RCA announced plans for an extensive line of cable equipment but never followed through.

End of Tape 2, Side A

PARSONS: The research that I have done suggests that the Belknap case is about the first case involving a complaint about cable TV or a request for somebody to look into it. Was it the first one?

SMITH: I guess I have never looked on the Belknap case as being a complaint case although it did involve a complaint.

PARSONS: All right.

SMITH: I was counsel for Belknap and they either operated or wanted to operate a CATV system in Poplar Bluff, Missouri. They wanted a signal from Memphis which was too far away for off-the-air reception. I had been proposing the use of microwave by cable systems but we had never filed an application. Belknap came to me and asked me to file.

PARSONS: This was about nineteen fifty, what, one or two?

SMITH: Nineteen fifty-three. I filed for Belknap. Television station WMCT-TV at Memphis, which was one of the stations whose signals would be relayed to Poplar Bluff, complained to the FCC that the cable system would be infringing property rights in programs and asked that Belknap be required to get permission from it as an originating station to use its programs. As I recall, the station did not say not to grant the application but was asserting rights it claimed in the signal and the programs. This alleged right, we claimed did not exist. To address that point briefly, there was, and is, a provision in the Communications Act of 1934 which requires any broadcast station which wishes to rebroadcast the signals of another station to get permission from the originating station. This was the basis for the WMCT request. Of course the Communications Act did not mention CATV systems because they did not exist at the time the Act was adopted. We took the position that we were not broadcasters and that retransmission permission was not required.

PARSONS: Was this the first formal reaction to the issue, or had you discussed it before with the FCC?

SMITH: This issue had risen informally much earlier and several times, but not formally at the FCC. Both retransmission rights and copyright issues came up as early as the Ed Parsons operation at Astoria, Oregon. It also arose in other fashions. We knew from the first day that it was a problem we would have to litigate sooner or later and had formulated our basic legal concept very early.

I remember when I had a visit from the General Counsel or a member of the law firm that represented ZIV Television Productions. ZIV was a television program distributor that had acquired TV syndication rights to a library of second grade programs which it planned to license to the new UHF stations that it was expected would be built all over the country when the freeze was lifted. ZIV warned me that they would not tolerate unauthorized CATV use of their programs, but that in selected locations where there were no stations they would license CATV use for an appropriate license fee.

I then recited what had become a litany–not to be confused with Nittany–that CATV systems were master antenna systems, receiving on behalf of their subscribers, “signals”–we never admitted that we received “programs”–which had been broadcast for and intended for reception by the public, as provided in the Communications Act; and that was it! Of course, they disagreed and returned to New York promising to sue. My memory is vague on the point but I think I may have met with some ZIV officials later in New York City where they told me of their plan to license the new UHF stations and renewed the promise to go to court. In any event, instead of suing they sold their syndication rights to United Artists for twenty million dollars; and that became another and much different story. Incidentally, it later came out in depositions in the United Artists v. Fortnightly copyright litigation that UA acquired the ZIV library with the same objective–license the programs to the new UHF stations.

On another occasion an attorney representing the New York Yankee Baseball Club came to my office in Washington and informed me that the Yankees reserved all rights in their games and that the games could not be used by cable systems without express written permission from the club. I told him the usual story and we never heard from the Yankees again. I was also contacted by the Brooklyn Dodgers, I think by mail, and of course they got the same story.

I have, again, a vague recollection that there were some other near misses; but it was not until 1960 that Louis Nizer and United Artists translated words into action after they bought the ZIV package bringing copyright infringement litigation against Fortnightly Corporation’s systems in Clarksburg and Fairmont, West Virginia. Sandford Randolph, a member of the Board of Directors of the Cable Television Museum and Executive Secretary of the Cable Television Pioneers was General Manager of the Clarksburg system.

[Reading the foregoing response, I appear to be saying that the retransmission and copyright incidents I mentioned all occurred before Belknap. This probably would not be true. Some would have been before and others later.]

PARSONS: What happened to Belknap?

SMITH: His microwave application was granted, but the system was never built. Belknap stands out in my memory as the first instance in which a microwave radio relay station was ever granted to relay distant signals to a CATV system, which accounts for my not viewing it primarily as to a complaint case; however, you are probably correct that it was the first case in which the copyright and retransmissions rights issues were formally presented to the FCC. It was also probably the first FCC formal acknowledgement of CATV as a useful public service and the first instance of governmental encouragement.

PARSONS: In the literature this seems to be one of the earlier cases. I haven’t seen anything before that. Were there other filings?

SMITH: Belknap was the first microwave application case. I prepared and filed the application for him. There were certainly other cases where the FCC was asked to intervene on copyright and retransmissions rights grounds but it was sometime later, I believe, before the FCC was forced to come to grips with the issue.

PARSONS: Back at the beginning. What happened after Belknap? You talked about Frontier, is that really the next step in this process?

SMITH: The next formal complaint at the FCC probably took place in 1954 (August) when a small television station in Fairmont, West Virginia, WJPB-TV (for J. Patrick Beacom) filed a petition with the FCC asking it to define the extent and nature of its jurisdiction over CATV and that it impose the same rules on CATV that were applicable to television stations. You can see that everyone was struggling to find the proper legal niche for CATV. The Commission never took action on this petition which accounts for its not being reported as a case. The Frontier case (Frontier Broadcasting Company et al. v. Laramie County TV Co. et al.) was not filed until 1956 and was not acted on by the FCC until 1958, but it was a landmark case at the time.

PARSONS: This was in 1956.

SMITH: Yes. The case was filed by a broadcaster in Cheyenne, Wyoming against 288 cable systems all over the country, which as of the filing was thought to be all of the systems of record in the country. The broadcaster was William “Bill” Grove, an implacable and tenacious foe of CATV. He was one of the principal organizers of opposition to CATV among western states small market broadcasters. In addition to the TV station in Cheyenne he operated several radio stations mostly, if not all, in Wyoming. In due course he also became a CATV operator.

PARSONS: Tell us about the case.

SMITH: The Cheyenne station was not the only one involved. Several broadcasters in smaller western cities and towns joined together to file a petition with the FCC asking the Commission to declare CATV systems to be common carriers under Title II of the Communications Act applicable to common carriers. This put me in a humorously embarrassing position professionally. Since the issue was a very important one affecting the entire CATV industry, the NCTA undertook to represent the industry at the FCC and, as general counsel, it was my case. In the memorandum report to the Commission, which I have mentioned, I had advised the Commission that it had an arguable claim of jurisdiction over CATV as a common carrier. Now I was expected to persuade the Commission that cable systems were not common carriers. All of my clients and friends in the industry were aware of this because I had mentioned the memo in several speeches I had given and warned that the issue would come up some time. Oddly enough no one suggested getting another lawyer to handle the case.

PARSONS: You lost me. The original memo suggested that the FCC could take jurisdiction of cable as a common carrier?

SMITH: Yes, and now I had to take an opposing position. As I said on the tape yesterday, when anyone asks me about my change of position I would say that when I wrote the memo I thought I was right, but that now I know I am right.

PARSONS: Ah, that’s good. Seriously, was there a change of mind, a change of concept, new information that prompted you to change your position? What accounted for the turn around, do you think?

SMITH: Not to be too facetious, I was representing people who did not want to be common carriers. But it was not necessarily a complete turnaround. I recall that in the memos we had simply pointed out that an argument could be made that CATV was a common carrier service. My job, at that time, was to point out the alternatives under the Communications Act. My job as general counsel to NCTA was to make the best argument I could that CATV was not or should not be regulated as a common carrier. In those early reports to the FCC general counsel we did not recommend that the FCC rule CATV to be common carrier. In retrospect, the FCC probably did not like the common carrier argument because it could have imposed the burden of regulating CATV rates on the Commission, something they would not have wanted to take on; and, in fact, never considered to the best of my knowledge. At that time the FCC was ambivalent about jurisdiction.

PARSONS: Why was that?

SMITH: This was the time of the Frontier case…

PARSONS: Fifty-five or fifty-six?

SMITH: Well, 1958 was when the Commission acted on Frontier. It was an entirely different kettle of fish by this time. UHF broadcasting had not gotten off the ground and the Commission was preoccupied with trying to shore it up before it died an ignominious death. It had utterly failed to meet the Commissions’ expectations.

PARSONS: Do you recall any of the discussions that you might have had with people from the FCC or any of the sentiments of individual commissioners about this? Is it something they spent a great deal of time thinking about or was it an off-handed kind of decision?

SMITH: I don’t recall specific discussions at that time, particularly with commissioners, but I would have had extensive discussions with staff members. But the Report and Order in Frontier was not off-handed. As I said a moment ago the problem in 1956 was a great deal different than in 1952 when the freeze was lifted. The Commissions’ UHF policy was a shambles; stations were going off the air and small market broadcasters were blaming CATV, although the FCC knew better than that. The growth of CATV was rapid and severe problems had been developing with unlicensed television booster stations, primarily in the West. Common carrier regulation of CATV would have been inadequate to deal with the problem. The broadcasters had seized on that to try to get the Commission on CATV’s back. The Commission recognized a problem, however, and a month after the Frontier decision the Commission commenced a formal investigation into the impact of CATV systems and other fringe area services on the orderly development of television broadcasting.

PARSONS: Just a side question. With cable developing in 1951 and 1952 in Pennsylvania, suddenly the court cases, Frontier and cases like that, they’re coming out of the western states. Would it seem more logical that they should be coming out of Pennsylvania?

SMITH: That’s a very good question that I am not sure I can answer definitively. There were some stations in Pennsylvania that were unholy terrors in fighting CATV, particularly the one in Wilkes-Barre. However, by this time systems were springing up throughout the western states about as rapidly as in Pennsylvania. Perhaps the remoteness of the communities in the western states was a factor and the fear that CATV might destroy local broadcasting was more prevalent in the West than in Pennsylvania. It is difficult to say. The western states broadcasters had more political clout on Capitol Hill in the Senate Interstate & Foreign Commerce Committee, which had jurisdiction over the FCC, than the Pennsylvania broadcasters. Burton K. Wheeler, Chairman of that Committee when all of this started, was a personal and close friend of Ed Craney, who owned the one television station in Butte, Montana. Craney was one of the prime forces motivating the western group along with Bill Grove in Cheyenne. Wheeler retired and the Committee chair was taken over by Warren G. Magnusson from the state of Washington. Wheeler, who stayed in Washington as a lobbyist, was very influential with Magnusson. In addition, the Yakima, Washington TV station was a leader among the western group and its owner, whose name escapes me, was well known to Magnusson.

PARSONS: One of the arguments that the broadcasters made in Frontier, and this was the first time I had seen it in writing, was the notion of some kind of economic harm to broadcasters.

SMITH: Oh yes, that was the fundamental basis of the broadcasters’ problem with CATV. The western group, in particular, was constantly and hysterically claiming that CATV was both forcing small market stations to close down and preventing others from being built–a claim that neither the broadcasters, the FCC or congressional investigating committees were ever able to document. That was the beginning of the emotional, lengthy and still existing controversies between the broadcast industry and the cable industry. They thought that if there were a CATV system bringing out of town signals, particularly the networks, into town no one would watch the local stations. Remember in those days there were no networking lines into most of these smaller cities and towns and these stations did not have network affiliations. Conversely, in those early years few if any CATV people would consider building in a community having as few as one station. Both CATV and the broadcasters feared each other’s economic impact. However, not long after Belknap, CATV systems began losing their fear that as soon as a local station came into town they would suffer from “free TV.” By this time a few forward looking cable operators were realizing they could safely build in towns that already had one or even two stations. It was this, together with the advent of microwave for CATV, which scared the hell out of Frontier and other broadcasters in remote communities; and in retrospect it is understandable.

Most of these small market TV broadcasters were also radio broadcasters and they felt they had some exclusive right to broadcasting in their communities. They wanted to protect their monopolies.

PARSONS: So we had the western broadcasters go into the FCC led by Frontier, and they didn’t get any satisfaction there.

SMITH: They didn’t on the surface anyway. They were turned down.

PARSONS: And the FCC’s rationale was that this wasn’t a broadcast operation, so we can’t control it that way, and it isn’t a common carrier. Is that it?

SMITH: Pretty much. Not only did the Commission say that CATV was not broadcasting but it rejected the concept that it could regulate CATV in order to protect television broadcasting.

PARSONS: We’ll talk about that in a minute. And I guess from what you tell me there wasn’t much of a felt need on the part of the FCC to do so; so there really wasn’t a strong impetus to find a way to take control.

SMITH: I don’t think it was that. They really did not think they had jurisdiction. CATV did not fit squarely under either Title I of the Act applicable to broadcasting or Title II applicable to common carriers. Although in 1952 they were indifferent toward CATV, they were now confronted with a different set of problems that had to be addressed, of which CATV was only a part, that neither common carrier or broadcast regulation was going to be a satisfactory solution.

PARSONS: So the broadcasters and Frontier, having gotten no satisfaction from the FCC, decided that was OK and went back and just forgot about the whole thing. Right?

SMITH: No, of course not. You know that.

PARSONS: What happened?

SMITH: Two things…

PARSONS: And they were?

SMITH: I mentioned before that the FCC’s expectations that its UHF channel assignment plan adopted in 1952 would solve the problem of making television service available to every location in the country. It had not. It had failed miserably; and by 1958 UHF stations were failing in large numbers and virtually no new ones were being built. The small market broadcasters blamed this on CATV. The Commission had good reason to know better; however, they could not be certain that it did not have some impact. A month after the Frontier decision the Commission instituted its first formal investigation of CATV. Docket #12443 which was an inquiry into the impact of community antennas, translators, satellite stations (not the orbiting kind which did not exist in those days) and repeaters on the orderly development of television broadcasting.

Also during the two year period that the FCC sat on the Frontier petition the same group of western states broadcasters turned to Congress for help. They retained the law firm of Wheeler & Wheeler (Burton K. and his son) to get the Senate committee to hold the hearings and to represent them before the committee. During the summer of 1958 the Subcommittee on Communications of the Senate Interstate & Foreign Commerce Committee held hearings on possible CATV legislation in response to the broadcaster’s insistence. So the broadcasters did come out of Frontier with something, if not exactly what they asked for.

Of course the broadcasters and CATV systems hotly contested their respective positions before the Subcommittee; and the FCC appeared and said they were studying the problem, as they were, having already started their investigation into the impact of community antennas, repeaters and satellite stations on the orderly development of television broadcasting.

PARSONS: Before you continue, and I think I know where you are going, let me ask you two questions. You said that about a month after Frontier the FCC decided to open its own hearings on this problem. What do you suppose prompted them to open hearings a month after they ostensibly had already made a decision on this?

SMITH: I think they planned to institute the proceeding immediately after rejecting Frontier knowing that the Congressional investigation was coming up and because of the UHF problem. It would have been good strategy. Unquestionably, as was a common practice, members of Congress had been writing and calling the FCC in response to pressure from their broadcaster constituents. The Commission also had a severe problem with illegal repeaters which we have not mentioned; and Congress was on their backs about that.

As I said, the investigation included translators, repeaters or what we called boosters, etc. By now CATV systems were not the only means of getting television to remote areas. At this time there were a lot of illegal boosters operating in the western states. Someone would erect a standard yagi television receiving antenna on a hill, pick up a signal, feed it through a strong amplifier back into another yagi and squirt it down the hill to the houses below. If the signal were retransmitted on the same channel on which it was received it was called a repeater; if on a different channel–in on 4 and out on 6–it was a translator. These were illegal and became an enormous problem.

PARSONS: It was done without a license?

SMITH: Yes. And the CATV systems became as afraid of the illegal boosters as the broadcasters were of CATV. It was just a matter of whose ox was being gored.

PARSONS: And these boosters were not necessarily put up by the station operators?

SMITH: Rarely. Probably never, because the FCC was in a position to slap the broadcasters pretty sharply on the wrists to the extent of revoking licenses. Any licensee knows that unauthorized radio transmission is well nigh unforgivable.

PARSONS: Who put these up?

SMITH: The same guy who might have built a cable system if it were feasible. People who were starved for television and those who wanted to sell television sets. Parsons at Astoria chose CATV as did John Walson in Pennsylvania. These people were not the criminals. They just wanted television and the FCC was unresponsive. So they went out to do it for themselves. Today I have to admire it. In those days I was outraged on behalf of my clients. The illegal boosters went in by the hundreds and so fast that the FCC could not stop them. I knew an FCC field inspector in the state of Washington who would not go near one of them by himself in the mountains of Oregon and Washington; some of those booster people threatened to protect their boosters with guns.

Naturally the community antenna association petitioned the FCC to shut them down with me filing the petition. But the situation was soon out of hand. In fairness to the FCC, neither UHF or CATV could serve many of these communities because of their remoteness and small size, among other things. We know that after the boosters began to proliferate, congressmen were bombarding the Commission with demands that something be done to legalize the boosters or at least provide service to these isolated areas. The same public demand forces that created the CATV systems produced the illegal boosters.

PARSONS: And when did you first start issuing these complaints?

SMITH: When they first started up, probably in 1956 or 1955, maybe earlier. We finally got a hearing which was held in Wenatchee, Washington. I was counsel for the NCTA. The attorney for the FCC was a friend of mine named Pat Valicente who years later became Chief of the Broadcast Bureau. The Commission’s administrative law judge (hearing officer in those days) was a man by the name of J.D. Bond, an infamous name to western states CATV operators, because he ruled that even though technically illegal, the boosters were “baby buggies on the highways of commerce,” and should be permitted to continue to operate. Even the FCC could not swallow that one and overruled him, but set up a legal translator service after a great deal of prodding by western states congressmen. The boosters did not become a big problem in Pennsylvania or other east coast states.

End of Tape 2, Side B

PARSONS: Let’s return to the Senate investigation. When did you first hear about the broadcasters going to the Senate and to Wheeler?

SMITH: Oh, I’m sure very soon after it happened. Both sides kept the trade press informed about what was going on . There was no point in secrecy.

PARSONS: I take it that you were surprised?

SMITH: Oh no, no, no. Not at all. Particularly in view of…are you interested in the personalities involved?

PARSONS: Yes, please.

SMITH: One of the leaders of the Western broadcasters was a man by the name of Ed Craney from Butte, Montana. I think I have mentioned him previously and his relationship with Wheeler. Ed fought cable from the beginning and constantly. He was so aggressive in the trade press, at the FCC and on Capitol Hill that we at the NCTA–meaning Marty Malarkey, Bill Daniels, and I–persuaded him to meet with us in Chicago. We naively thought that we could persuade Ed to turn around and see things a little more rationally–which, of course meant from our point of view, or at least to meet us half way. In fact, I recall that I had gone to Butte while on one of my western travels to meet him. He was a gracious host and showed me through his television station. Back to the point, the Chicago meeting accomplished very little except to get everybody better acquainted. We knew then that the broadcasters were going after CATV wherever they could find someone to listen. We also met at other times with Bill Grove from Cheyenne and others. At one time several of us met with some of the broadcasters in Wheeler’s law office in Washington to try to talk things out, although that could have been after the hearings were announced. We had enough contact with them individually and as a group that we were not surprised.

PARSONS: Tell us about the proceedings. Who appeared and what their positions were, including yours.

SMITH: I should note that the Committee hearings also include UHF and VHF television allocation problems as well as the matter of television service to small communities.

Chairman John C. Doerfer of the FCC was the first witness to testify about CATV and the boosters. Doerfer’s personal attitude was pretty much one of “hands off” as far as CATV was concerned. In fact he asked the Committee to defer any legislation until after the FCC issued a report in Docket No. 12443. After Doerfer the broadcasters presented their positions. During the course of the opening day several Senators from the Western states made what I would call obligatory appearances to show their broadcast constituents that they cared. Most of them made brief statements and offered letters from their constituents to be placed in the record and then went about their business unless they were Committee members.

Otherwise, the National Association of Broadcasters led off the broadcasters presentation with a prepared statement by Vincent T. Wasilewski, its president. He was followed by Ed Craney who I have mentioned and who was not only the lead spokesman but the cleanup man.

Those whose names I have mentioned appeared and several more. Mrs. Mildred Ernst of Thermopolis, Wyoming who, with her husband, operated a small television station out of the basement of their home in Thermopolis, population roughly four thousand, was one of the early witnesses. I mention her because it was the Ernsts who precipitated the Carter Mountain case which was the turning point in the FCC attitude toward CATV. Other broadcaster witnesses included William C. “Bill” Grove of Cheyenne, Wyoming; Tom Bostic of Yakima, Washington and Lewiston, Idaho; Barclay Craighead from Helena, Montana; Arthur J. Mosby of Missoula, Montana; Gordon Glassman of Twin Falls, Idaho; and several others. The hearings then recessed for several weeks after which the CATV operators presented their positions.

All of the broadcasters took essentially the same position, as I recall. The Frontier decision more or less forced them to a common position since, according to the FCC, there was nothing in the Communications Act that the FCC could use to limit CATV entry into the market or otherwise control its development. This forced the broadcasters to turn to copyright and to a theory of unfair competition–more precisely a meld of the two. Many of the broadcasters insisted that CATV was forcing small market stations off the air. They claimed that the stations were at a competitive disadvantage because they had to pay royalties to the copyright owners for the programs they broadcast and CATV did not. This they claimed was unfair competition. None of the broadcasters identified a single station that had been forced off the air by CATV or any potential station that might not have been built because of CATV. Nor was any evidence produced to show loss of revenue by a station because of the presence of CATV. The loss of revenue or financial impact was simply presumed. And years later the FCC presumed it and continued to presume it for several years.

Most of the broadcasters purported to believe that if CATV were required to obtain permission from the originating station to receive its signals this would tend to equalize the competitive situation. It should be noted that there is no federal law–legislative law–of unfair competition and no specific legislation was offered by the broadcasters. There were some federal court decisions, or at least one decision, holding that for one newspaper to make commercial use of the news of another newspaper without permission was unfair competition, but the case was not analogous. The complaining newspaper owned or had created the news whereas the broadcasters did not own the copyrights in the programs.

PARSONS: Tell us about the CATV side.

SMITH: I do not remember all of those who testified. I was the leadoff witness for the CATV side. I can name several people who are illustrative of those who testified. They included Glenn Flinn of Tyler, Texas, a former president of the NCTA; Mrs. Charlotte Brader, who owned and operated both a radio station and a CATV system in Havre, Montana; Paul B. McAdam, who owned and operated both a radio station and CATV system in Livingston, Montana; Archer Taylor, at one time the operator of a CATV system in Missoula, Montana and a consulting radio engineer and long since a senior partner in the Washington cable consulting firm of Malarkey-Taylor; and Milt J. Shapp, president of Jerrold who, among other things, summed up the CATV position. There were several others including Charles Crowell, a lawyer from Casper, Wyoming, representing the Wyoming community television operators and Clifton W. Collins, an attorney from Ephrata, Washington, representing the Pacific Northwest Community Television Association. (As mentioned earlier, he was an area campaign manager for Senator Magnusson and thus provided ready access to that senator’s office.) There were others. They’re all in the record of the hearing.

I mentioned before that we all met in my law offices two or three days before we were scheduled to appear. For some of our witnesses I wrote the testimony, others wrote their own, but all of the presentations were coordinated so that there would be a minimum of duplication and so that there would be no contradictions, and also to assure unanimity on our concept of being community antennas which were receiving signals for their subscribers that had been broadcast and intended for reception by the public as provided in the Communications Act.

Of course we argued that there was no evidence that CATV had ever put a station out of business and no evidence of impairment of a station’s revenues. We claimed that it was improper to charge CATV with unfair competition because it did not pay copyright fees when the law did not require such payment.

PARSONS: You talked about copyright during those hearings.

SMITH: Yes. With the Frontier decision copyright was all the broadcasters had left. As I said, we argued that copyright did not apply to CATV and that the broadcasters did not own the copyrights. We pointed out that the broadcasters could not grant permission to use their signals without permission from the program copyright owners and that there was no chance that the broadcasters could get that permission since the copyright owners were staking out their own position.

It is very important in the context of the Subcommittee investigation to emphasize the part played by Kenneth Cox, special counsel to the Subcommittee. He questioned most of the witnesses at length and authored the Staff Report. A background word or two about Ken. Some time prior to the beginning of the hearings it was announced by the Subcommittee that Cox would serve as special counsel for the investigation. Cox was a young lawyer practicing in Seattle, Washington. When we learned of his appointment, since none of us had ever heard of him, I went out to Washington to talk to him and to some CATV operator’s lawyers who knew him or who might know of him to see what we could learn. Ken and I had, perhaps, an hour’s discussion in his office about the issues and the parties. He was very pleasant but I recall that he had the broadcasters’ arguments pretty well in mind and mostly we discussed the CATV industry’s position. From other lawyers I talked to I learned that he was highly regarded. I recall thinking quite some time later, possibly unfairly, that his position had already been established, or he would not have been acceptable to the broadcasters. I was, and still am, certain that the broadcasters had an unofficial voice in his selection.

PARSONS: He didn’t like cable much.

SMITH: No, he did not. At least that’s the way we saw it. He was, however, a very competent person. It always interested me that the Subcommittee never issued a committee report. It published a Staff Report.

PARSONS: Which was authored by Ken?

SMITH: One hundred percent. If he didn’t write every word, it was nevertheless his report. From the time it was published and thereafter it was always known as the Cox Report. Cox conceded that the broadcasters had not shown that CATV had forced any stations off the air. He said that finding could not be made on the record. But he was of the view that unregulated CATV systems could drive stations off the air in small markets. In recognition of his own belief that the FCC probably did not have effective legislative authority to do the job he thought ought to be done, Cox criticized the FCC for not asking for the necessary legislation to give it jurisdiction.

Then he threw the fear of Government into the CATV industry by suggesting that the FCC should consider in its investigation whether CATV made “unfair use” of programs. He apparently wasn’t prepared to say that he believed that CATV reception was an outright copyright infringement. He also said the Commission should consider whether it needed legislative authority to make CATV systems get permission from TV stations to receive their signals. This suggested that the Commission should consider extrapolating the rebroadcast permission authority in the Communications Act to include CATV systems as well as broadcast stations. That worried me very much at the time because I thought the Commission might be willing to make that jump considering all of the pressures which were being brought to bear. I was also concerned that it might be able to make it stick.

PARSONS: That suggests that the Cox Report was pretty powerful.

SMITH: The Cox Report was pretty powerful. The Commission had to know that if it was not in fact approved by Senator Magnusson, it was nevertheless issued with his approval. It being a Staff Report tended to take the Subcommittee or the full Committee off the hook with their CATV constituents. The real shocker came shortly after the Report had been published when the FCC announced that it had hired Ken Cox to become the new Chief of its Broadcast Bureau. That position was then vacant or about to become so.

PARSONS: And how soon after the release of the Cox Report was this, how quick?

SMITH: Within days as I recall.

PARSONS: So he moved directly from the Commerce Committee to the FCC immediately after he had written the Report.

SMITH: I doubt that he had more than enough time to go home to the state of Washington to get a fresh change of clothes and return.

PARSONS: So no legislation came out of the hearings?

SMITH: No legislation came out of it. There may have been several reasons. One could be that no specific legislation had been proposed and I think Cox was unsure enough that he did not want to recommend legislation to the Subcommittee. He threw that back to the Commission. The Subcommittee may not have wanted to face the problem at that time because the members also had cable constituents who were also making themselves heard. It should be remembered that the CATV presentation was considered to be pretty good and the industry was not without its own influence in Congress.

Unfair competition legislation based on copyright had several infirmities: for one thing copyright was not within the jurisdictional purview of the Commerce Committee, the broadcasters did not own the copyrights on which they based their theory and the courts had yet to rule whether CATV operations infringed those rights. If CATV delivery of signals carrying copyrighted programs were a copyright infringement, any broadcasters who gave permission to receive his signals without first getting permission from the copyright owners would have been a contributory infringer and also liable for penalties. Not only did the broadcasters not own the copyrights, they were not likely to get a copyright owner they licensed programs from to say yes you can license the CATV systems. The copyright owners wanted to do that.

Retransmission consent was another story and that one always worried me. Retransmission consent related to the signal, not the programs. I think Congress could have amended the Communications Act to require CATV systems to obtain permission to retransmit signals of the stations they received. This would have turned control of the industry over to the copyright owners, if not the broadcaster. And, of course, CATV did not trust them anymore than the broadcasters. Also they feared that the economic impact of copyright royalty payments on the fledgling CATV industry would be disastrous.

Our rationale that CATV should not be required to pay copyright was that the copyright owners had already been paid for their programs through the advertising dollars that were contributed by CATV subscribers when they purchased advertised products along with the rest of the television viewing public. We hung on to that one all the way to the Supreme Court in 1968 where the Court agreed. Perhaps the Subcommittee did not want to be responsible for placing life or death control of CATV in the hands of the broadcasters although Cox seemed to be willing.

As you know Cox went on to become an FCC commissioner. Throughout his career as a commissioner, from the CATV industry point of view, he was strongly pro-broadcast and anti-cable. If the facts were known, I think we would find that he strongly influenced the Commission report in its investigation (Docket No. 12443). He believed in the unfair competition argument, and in my opinion, was the one who ultimately convinced the Commission that it should undertake to regulate CATV, notwithstanding its previous holdings that it had no authority to do so.

PARSONS: Did you guys at the NCTA do any lobbying in the corridors on your own? Did you know committee members?

SMITH: Oh, certainly, certainly. Absolutely. More of our people came to town than just those who were witnesses. Every place we could get a door open, we had somebody go through it. A lawyer in Ephrata, Washington, who became a good friend of mine, Cliff Collins, was Magnusson’s campaign manager in that part of the state, and he came to Washington and was very helpful with Magnusson. There were others, I just don’t recall them at the moment. We were not without our share of influence. We could not stop the hearings; we didn’t try.

We also instituted letter writing campaigns then and after which generated so much mail that senators and congressmen complained about it on the hearing record. It was not difficult to get subscribers to write their senators if you convinced them their television service was threatened, particularly if you wrote the letter for them, which we often did. It was not the specific contents of the letter that counted; it was the number of letters that counted. I am convinced that our testimony before the Subcommittee, our lobbying efforts through personal visits on Capitol Hill and our letter writing campaigns were effective to prevent any legislation from coming out of the Committee. And this was true for years after.

SMITH: This might be a good place to mention the unfair competition litigation that developed the following year. One of the broadcasters who was involved in the Frontier petition and in the Subcommittee investigation was a man named George Hatch who lived in Utah and managed family radio stations in Utah and Idaho as well as television stations in Salt Lake City and Twin Falls, Idaho. There was also a cable system in Twin Falls called Cablevision, Inc., hardly an original name then or now. The cable system was receiving both the Salt Lake City station–I think it was KDYL-TV–and the Twin Falls station, KUTV. George was in the interesting position that he licensed programs from the copyright owners for broadcasting on both stations. That is he paid royalties on the same programs so he could broadcast them in both cities. This meant that the cable system was distributing the programs in Twin Falls broadcast from both stations. And George was saying to himself, “There is something wrong with this; they use my programs from Salt Lake City and I bought those same programs for Twin Falls. Why will anyone watch my station in Twin Falls if the same programs are on the cable system in Twin Falls?” This was a scary situation for CATV. George, who by the way, later was to be a major founder and stockholder in TCI, brought suit in the Federal District Court for the District of Idaho in 1959–which incidentally was the same year the Cox Report was issued–against Cable Vision alleging unfair competition based upon the “use” by the cable system of the programs of both of Hatch’s stations to “compete” against his Twin Falls station.

I am really going to have to divert a moment to tell you about the most stunning coincidence involving this case. We, NCTA, knew in advance that George was planning this case. He made no secret of it and, in fact, had told me personally. However, it was originally conceived of as a copyright case. Not being a copyright specialist, I was not about to take the industry into what could be major litigation and possibly decide the copyright issue, without the services of a copyright specialist. I perceived my job to be that of making certain that CATV’s posture as a community antenna service was maintained. The NCTA board agreed and I went up to New York City to interview a copyright attorney who had been highly recommended. His name was George Schiffer. I met him in the late afternoon after he got out of court at the lounge in the Barclay Hotel. We took a table, ordered drinks and I told him the entire story about Hatch, the expected suit and my theory of copyright as applied to CATV. I was somewhere far into it when a man at the next table stood up, turned toward us and said: “Strat, could you be talking about me?” It was George Hatch.

PARSONS: Amazing.

SMITH: Can you believe it? I made the introduction and then George Hatch left. The suit was filed not too long after, but did not allege copyright infringement directly because, if I recall correctly, Hatch could not get cooperation from the copyright people who were planning their own case. The case was founded on the narrower ground that the cable system was using Hatch’s programs to compete against Hatch and that the cable system had not paid royalties on the programs. The case was finally decided, however, on copyright law, not on a judicial doctrine of “unfair competition.” If the copyright owners had joined Hatch as plaintiffs we could have been in very deep trouble. Hatch’s case was about as good as it could be without owning the copyrights.

PARSONS: This was about when?

SMITH: It was 1962.

PARSONS: Then this was won after a few other things happened. OK?

SMITH: No. I’m wrong. The final decision came down in 1962.

PARSONS: All right.

SMITH: The case started in 1959 in the Federal District Court in Twin Falls, Idaho. It brought the copyright issue in too much sharper focus as a possible tool for use by broadcasters to protect their claimed program exclusivity against, to use the broadcasters’ language, against “importation of their programs” by CATV. It was a good factual environment from the broadcast point of view. We lost the case in the District Court which ruled that Cablevision was, indeed engaged in unfair competition. We appealed to the U.S. Circuit Court of Appeals in San Francisco. The court of appeals reversed on straight out copyright grounds–namely that under the federal constitution the only protectable interests in copyrighted programs are the copyrights themselves. Thus absent an assignment of the copyrights to the broadcaster he had no standing to sue. Hatch did not appeal, although at least on equitable grounds, I thought his position was arguable.

SMITH: If we had lost that case, Ken Cox would have had all he needed to push the Commission into a retransmission consent posture without need for legislation.

PARSONS: Before we get too far ahead of ourselves, I’d like to go back and pick up just one or two things. The FCC started its own hearings in 1958 on TV boosters, cable TV and that sort of thing. This was going on at the same time as the Senate hearings. What was the outcome of that? How did it proceed? What year was involved?

SMITH: Let me check my notes.

PARSONS: Sure, go ahead.

SMITH: That investigation was the Commission’s Docket No. 12443, an infamous number that lasted in our memories for a long time. This was a paper hearing. The FCC did not take evidence under oath subject to cross examination. It was a paper hearing although the Commission did hear oral argument from parties who asked to be heard. The Commission issued its report and order in April of 1959 stating that it based its conclusions on both the testimony heard by the Senate Commerce Subcommittee and its own inquiry record. I considered that a somewhat dubious procedure, although in that type of proceeding I suppose they could say they were taking official notice of the Subcommittee record.

The Commission found that there was a probability of adverse economic impact from CATV on small market stations, but admitted that it could not conclude that CATV had been a material factor in the demise of any station. Significantly it said that it “… found nothing which would justify us in taking action or seeking authority under which we could act to bar CATV’s from coming into or continuing to operate in a particular market.” So far so good. This seemed to say that the Commission was beginning to recognize that CATV had a public interest to serve. The proliferation of the illegal boosters probably drove that home as much as anything else.

PARSONS: What do you think accounted for the Commission’s position here in terms of the individual members of the Commission, in terms of your lobbying and testimony afterwards, what sort of elements were involved in this decision?

SMITH: Well, there were a number of elements involved. But there was more to the decision than I just said. The Commission reaffirmed its position that it lacked jurisdiction over CATV systems; but concluded to recommend to Congress that the Communications Act be amended to require CATV systems to obtain permission from originating broadcasters to receive their signals. So the answer to your question is Ken Cox. He was Chief of the Broadcast Bureau so he not only authored the Cox Report but it is fair to infer that he strongly influenced the Commission in the Docket 14423 Report and Order. There can be no other surmise. I do, however, suspect that those commissioners who may have been doubtful about the wisdom of retransmission consent took the easy way out and sent it back to the Hill to let the two industries fight it out again. They had to realize the broadcasters could not give permission and that none would be granted. Thinking back on it, if I had been a commissioner, I would not have wanted to be responsible for turning the CATV industry over to the copyright holders.

End of Tape 3, Side A

PARSONS: Before we move on, there’s a case that I asked you about before. I haven’t had a chance to look it up, but maybe you can recall. I’ve got a date for it of 1958 which puts it at about the same time as the hearings were going on. Intermountain Cable which may have been one of the first cases involving a complaint about microwave and distant signal, predating even Carter Mountain. Do you recall that case?

SMITH: [In responding to this question, I misidentified the case confusing it with another case handled in our offices involving microwave common carrier service to several small cable systems in Wyoming. The discussion at page 23 of Tape 3 of the original transcript should be ignored. The case PARSONS: was referring to was Intermountain Microwave decided by the FCC on January 30, 1958 (16 RR 733).

Intermountain was a microwave common carrier which had been authorized by the FCC to transmit the signals of stations KFBB-TV, Great Falls, Montana and CJLH-TV, Lethbridge, Canada from a pickup site to CATV systems in Cut Bank, Havre and Shelby, Montana. The authorization had been granted without opposition. This case arose when the Commission granted, without opposition, additional authority to relay KGEZ-TV, Kalispell, Montana and KXLY-TV, Spokane, Washington to the same CATV systems.

A belated protest was filed by operators of a two-station translator system which rebroadcast the signals of KFBB-TV to the community of Havre. The translator alleged possible economic loss or destruction of the translator and possible economic damage to KFBB-TV. The FCC reaffirmed its grant.

The case is of significance in that the Commission simply applied straightforward common carrier law and refused to set aside its earlier grant simply because the customer of the microwave service was a CATV system serving the same community as the translator. Note that the common carrier was not competing with the translator; its customer was competing with the translator. Unfortunately, this case was overruled by the Commission in Carter Mountain.]

PARSONS: In the meantime, and before we get to Carter Mountain and Fortnightly, you tell me if this is a good place to discuss Senate Bill 2653.

SMITH: No place is an appropriate place to discuss Senate Bill 2653 (facetiously). That was in 1960.

PARSONS: Give us a little background if you can.

SMITH: Well, professionally it was very difficult for me. I was General Counsel of the NCTA, at the time, and the entire affair was a debacle. After the Cox Report came down in late December 1958, and he went on the Commission’s staff, followed by the FCC’s Report and Order in Docket 12443 in April 1959 in which the Commission said it would ask Congress for legislation to require CATV to obtain retransmission consent from stations whose signals they carried, many in the industry concluded that “they were going to get us.”

PARSONS: A lot of people in the cable industry?

SMITH: A lot of people in the industry said they were going to get us because the Cox Report favored retransmission consent and now, with Cox as Chief of the Broadcast Bureau, the Commission was buying it.

PARSONS: Oh, “they” being the broadcasters.

SMITH: Yes, “they” being the broadcasters or the FCC. CATV people were saying, “They’re going to get us. Why don’t we draft our own Bill and take it up to Congress, get it introduced and get it passed.” This became industry strategy.

PARSONS: This would be about 1959, 60?

SMITH: 1959.

PARSONS: The FCC issued its report saying it’s going to seek legislation from Congress and you guys decided you were going to beat them to it and put your own Bill up there.

SMITH: Yes, that was essentially it. However, the situation was not that simple. [Note to the reader: Since the interview I have rechecked the chronology and events from public records and documents for accuracy and to verify the context since this was an extraordinary sequence of events in CATV history. The oral history transcript has been heavily edited by me in what follows. Personal opinions excepted, it is factually accurate.]

SMITH: Several bills to regulate CATV had been introduced in both the House and Senate of the 86th Congress by several members of Congress immediately following publication of the Cox Report. NCTA asked me to draft a bill and a committee of operators worked on it. It was approved by the NCTA Board and was introduced as Senate 2303. Hearings were held by the Subcommittee on Communications commencing July 7, 1959. (The transcript indicates S. 1739, S. 1741, S. 1801, S. 1836, S. 1886 and S. 2303 were included in the scope of the hearings.) S. 2303 proposed to confer general licensing authority over CATV in the Commission based upon the public interest standard applicable to broadcasting and would have permitted rule making applicable to CATV. It prohibited protectionist regulation in favor of the broadcaster and it rejected retransmission consent. It was not acceptable to the broadcasters.

The Subcommittee on Communications held hearings on June 30th and several days in July 1959 on those Bills. The hearings were chaired by Senator John O. Pastore of Rhode Island. The investigation was titled: VHF Booster and Community Antenna Legislation. The small market broadcasters turned out in force devoting their attention primarily to the proposed CATV legislation and essentially repeated the positions they took in the earlier hearings but now supporting the FCC’s and Cox’s retransmission consent proposals.

The VHF Booster people also turned out in numbers. By this time the FCC had finally ruled that the boosters were illegal and must be shut down and the Court of Appeals for the D.C. Circuit had upheld the FCC to the extent of agreeing that they could not be operated without a license. The booster groups had organized into state and regional associations and a national association and sought to get their existing boosters legalized.

Of course, the CATV industry was also out in full strength. We sought, as we did in the earlier hearings, to have an operator from every area represented by a broadcaster. I delivered the general testimony for NCTA while the operators gave testimony to refute the broadcasters from their respective areas. The boosters really got the major attention in these hearings. The FCC had earlier established a UHF translator service to replace the boosters, most of which operated on the VHF channels. NCTA had supported the translator service in the FCC rule making proceeding which created the service. The industry knew that some service was necessary since CATV could not reach many of the tiny communities served by the boosters. In the Subcommittee hearings NCTA did not oppose establishing legal boosters in the VHF band but expressed doubt that it could be done without compromising the allocation plan.

SMITH: The Subcommittee recessed and, instead of moving with any of the bills which had been introduced, its staff drafted its own Bill which was introduced with no notice as S.2653. Then Senator Pastore took his show on the road, something almost unprecedented. He convened his subcommittee in Helena, Montana; Idaho Falls, Idaho; Salt Lake City, Utah; Denver, Colorado; and Casper, Wyoming. Many of the witnesses were booster boosters, but broadcast interests and CATV operators were active at every session. The CATV industry’s participation in the field hearings was organized by local CATV associations, operators and their attorneys. Specific provisions of S.2653 received very little attention, principally because copies were not made available soon enough to permit preparation. Most of the CATV witnesses who were asked indicated they would support fair public interest regulation but not legislation designed to put them out of business.

It should be noted, however, that S.2653 did not include retransmission consent. The Bill did specifically include a provision that a broadcaster could petition the FCC to impose restrictions on a CATV system such as will significantly facilitate the continued operation of a television station which is supplying the only available locally originated television broadcast service. The FCC was required to weigh the public service provided by the CATV system against that provided by the broadcaster in terms of the public interest in determining whether to impose the restrictions. Carriage of local stations was required which was probably acceptable to most CATV systems, although not to those with limited channel (3) capacity. A provision CATV did not like authorized the Commission to grant program exclusivity to stations in the same community as the CATV system. Those requirements and restrictions of S.2653 were peanuts compared to what the FCC later adopted without the blessing of any legislation whatsoever.

Back in Washington the order of business was to work with Subcommittee staff members and Nicholas Zapple, in particular, who was staff counsel to the Committee, to obtain modifications to the subcommittee draft to make it acceptable to the CATV industry. We also did a great deal of lobbying bringing system operators from all over the country to visit their Senators and Congressmen. We reached an accommodation which was satisfactory to the NCTA group, or was at least the best we thought we could get. The NCTA Board accepted a compromise and I was authorized to tell Senators Pastore, Chairman of the Subcommittee and Senator Magnusson, who was Chairman of the full Committee, that NCTA would support passage of the Bill as revised, which I did.

We had a deal and the Bill was reported out of Committee and went to the floor of the Senate. However, the day before debate, Milt Shapp had been talking to another lawyer, formerly an assistant general counsel at the FCC who advised him not to support the Bill.

PARSONS: Do you care to name names?

SMITH: His name was Harry Plotkin of the firm of Arent Fox Kintner Plotkin & Kahn. At least that’s the name of the firm today. Plotkin sowed enough seeds of doubt to persuade Shapp and another client of mine, Henry Griffing, of Video Independent Theaters, in Bartlesville, Oklahoma to withdraw support and actively oppose the Bill.

As he always did, Milt went into high gear, organized opposition on the NCTA Board and among the many operators who were in town to lobby. The Board panicked. An emergency meeting was called of all the operators who were in town and I was not even allowed to address the meeting. Support was withdrawn and everybody ran for Capitol Hill.

Senator Kerr from Oklahoma, who was a close friend of Henry Griffing, agreed to lead the opposition. So it was Kerr against Pastore on the floor of the Senate. I sat in the Senate gallery. Believe me, it was no fun. Pastore was livid. At one point in the debate he turned and pointed at me in the Gallery and said in words to the effect that the NCTA’s general counsel assured him personally that the industry was behind the Bill and made a remark which I do not now recall verbatim but it was a reflection on my professional integrity. Later Griffing was able to get the remark stricken from the record.

PARSONS: The vote on the floor was very close, wasn’t it?

SMITH: The debate was bitter and the Bill was defeated by one vote as a result, in part, by a deal where one supposed supporter failed to show for the vote. We could debate forever whether what happened was in the best interest of the CATV industry. I am not going to take this as an opportunity to revise history. None of us can say how it would have worked out. As I said before the regulation which the FCC later imposed on cable went far beyond what they could have done under S.2653. I now think the S.2653 fiasco was nothing more than an incident in the development of cable. Its impact, on the whole, was momentary insofar as the industry was concerned.

Pastore was, as I said, livid. I went to see him and Senator Magnusson the next day with my friend, Cliff Collins, from Ephrata, Washington to attempt to set the record straight as far as my participation was concerned. Pastore could hardly speak to me. He was not gracious. He told me the industry would regret that day; that it would never get any help from his committee as long as he was there. Magnusson, although not as bitter, (Collins was a direct campaign manager for Magnusson) agreed with Pastore.

Pastore was also a big loser in that affair. The rift between him and Senator Kerr was costly for Pastore. Kerr was a very powerful man in the Senate and on the Commerce Committee and I have been told that he blocked Pastore’s efforts to advance himself in the Senate on more than one occasion thereafter.

Insofar as I was concerned the incident was a severe professional embarrassment. I resigned the Jerrold account and advised friends and some clients that I thought I should resign as NCTA’s General Counsel. I was persuaded to remain for the time being; but it was the beginning of the end. My position began to change and I devoted more time to other CATV clients. I don’t even remember when, but in the early sixties, I resigned as General Counsel but retained the title Special Counsel until late 1968. The association then retained a full time staff General Counsel, Robert D. L’Heureux. I worked very closely with Bob for several years on a variety of CATV matters, but principally the United Artists copyright litigation and relationships with the Bell System telephone companies on pole attachment matters. After the United Artists litigation the Special Counsel title was dropped. Thereafter, on one or two occasions, I was retained for pole attachment rights, negotiations, and special rule making cases before the FCC; but my continuing ties to NCTA were over.

PARSONS: Why was that piece of legislation so much more interesting and important than all the other Bills then being formulated?

SMITH: It goes back many years and I can only speculate. Remember S.2653 was the Subcommittee’s Bill. Ours was S.2303. The Subcommittee Bill embodied parts of 2303 in that it was a licensing bill based on public interest standards such as those applicable to broadcasting. Probably the reason the committee worked from our Bill was that we conceded that we would go under FCC jurisdiction which was a major concession. The committee needed a Bill we would support. Another thing I think we had the committee convinced that retransmission consent could be destructive of CATV and that unless destruction was what they wanted, it was unworkable to help the broadcasters, but would be a boon to the copyright holders. The broadcaster supported bills were overkill. The broadcasters would not support our Bill.

PARSONS: Your Bill made it to the floor and theirs didn’t, isn’t that it?

SMITH: None of the others made it to the floor. S.2653 is the only one that made it to the floor. It is fair to say that it was derived from our Bill but we did not support it in the form it came out of the Subcommittee.

PARSONS: Why did this Bill make it to the floor and the others didn’t?

SMITH: Probably because CATV was willing to support it, or so they said. We had asked for a bill and had made commitments based on our negotiations with subcommittee staff and promises made to us by subcommittee members, including Pastore. Remember that CATV was able to marshal a considerable show of strength whenever the chips were down. CATV was by far the most effective extender of television to sparsely populated areas of the country including local television broadcast stations. The subcommittee, in my opinion, did not want to risk destruction or severe restriction of cable. Our willingness to support S.2653 was a principal reason why it made it. And the FCC did not oppose it. I think CATV probably had the strength to keep any other bill from being reported because they were unrealistic. Whether we could have kept S.2653 from being reported is another question, but I doubt it. It was Pastore’s baby and he was Chairman of the Subcommittee.

PARSONS: My final question: Did the FCC have a formal position and how did they react to it informally?

SMITH: They did not take a position against it; neither did they press for it. They filed some written comments and I think the then Chairman, John Doerfer, was, at the best, lukewarm. I have mentioned Ed Craney, the broadcaster from Butte, Montana. Ed was designated by the small market broadcasters to submit a written rebuttal of the testimony I delivered in support of S.2303. In his written statement, which was made a part of the hearing record, Ed complained that I was more concerned about the impact of CATV on local broadcasting than Chairman Doerfer was.

PARSONS: Did anything of interest happen after S.2653 fell apart?

SMITH: It was really a period of adjustment for the industry. We were back where we were after the hearings which led to the Cox Report but with drastically damaged congressional relations. With no legislation, relations with Congress in shambles and all of the problems still there, it was obvious that the FCC would have to take over without the benefit of any legislation. And it did under the influence of Ken Cox.

This really brings us to the Carter Mountain case which was where the FCC began to bootstrap a theory of jurisdiction that ultimately resulted in pervasive regulation which really stopped short only of asserting licensing authority. Carter Mountain was a would-be microwave common carrier that wanted to bring signals off Denver TV stations and some others to cable systems in several very small communities in north central Wyoming, specifically Lander, Riverton, Worland and Greybull. My law firm represented Carter Mountain before the FCC and in court in its efforts to get the microwave construction permits and licenses.

PARSONS: Who were the people behind Carter Mountain?

SMITH: The principal person was a man by the name of Roy Bliss. If I recall correctly, Bliss had an interest in all but one of the CATV systems Carter Mountain proposed to serve. Carter Mountain’s applications were opposed by television station KWRB-TV at Thermopolis, Wyoming, population 4,000. This station was owned by a husband and wife team, Mildred and Joseph Ernst. The studio was reportedly located in the basement of the Ernst home. However, the transmitter was located on a 7,500 foot mountain peak and the Ernsts claimed to have 50,000 to 60,000 viewers in the rural areas of northwestern Wyoming. Mrs. Ernst had appeared at the Senate hearings in 1958 and presented a very appealing story about the family efforts to bring television service to the region and of the entry of CATV systems into the four towns they considered to be their service area.

KWRB-TV wanted the FCC to condition the grant of any microwave licenses on Carter Mountain agreeing to carrying its station on the CATV systems and to protect the station against duplication on the systems of any programs which the station was going to broadcast from a point thirty days before to thirty days after the broadcast. Bliss refused and the applications were denied.

We appealed to the United States Court of Appeals for the D.C. Circuit. In one sense this case, in retrospect, could be considered the first Amendment case in CATV since it involved denial of applications for a communications service to an applicant who had a legal right under the Communications Act to have the facilities. The denial was based on the refusal of the applicant to let the FCC tell it what it could communicate and what it could not. An analogy we used was that the FCC could not deny a member of the public access to telephone service because it did not like what that person planned to say on the telephone.

At the Commission level, its Common Carrier Bureau agreed with us and argued to the Commission that it could not deny common carrier service because of the end use of the service unless that use were illegal. This was the same position it had taken in the Intermountain Microwave case mentioned earlier.

PARSONS: Before we get to the Circuit Court decision, the FCC in 1959 and before that had kept away from cable and said that they didn’t have the power to regulate it and that they couldn’t see any economic harm coming about. What was it that seemed to create a reversal on the part of the commissioners? Was it a change of the Commission itself or a change of heart on the Staff, what happened?

SMITH: We are now in the Cox era. The Carter Mountain decision was issued by the FCC in 1962. By this time Cox was probably a commissioner, but if not he was Chief of the Broadcast Bureau and wielded a great deal of influence. Keep in mind that he heard and read the testimony of Mildred Ernst when he was committee counsel in 1958. Remember also that he was very critical of the Commission in the Cox Report for not asserting jurisdiction or for not asking for legislation to give them jurisdiction over CATV. Cox was fair enough to agree in his Report that there was no evidence in his record that would support a finding that CATV had an adverse economic impact on small market stations but said that it could be presumed.

I should also point out that the hearing examiner–they are called Administrative Judges today–who tried the Carter Mountain case said in his Initial Decision that there was no evidence in the record to support a conclusion that KWRB-TV would suffer serious economic injury if the applications were granted. I think, to return directly to your question, the CATV industry was growing rapidly, the problems or alleged problems were not going away, the National Association of Broadcasters had become active in the fight and the prospects for legislation were nil.

PARSONS: All right, do you want to talk about Carter Mountain at the D.C. Court level?

SMITH: Well, there is not much to say except that the Court affirmed the Commission. This was not the case in which it was found that the FCC could regulate CATV as being ancillary to broadcasting but it did hold that the Commission had overall responsibility for broadcasting and let it stand. We petitioned the Supreme Court for a writ of certiorari but were denied.

One of my law partners at the time was Jack Cole and he worked on the Carter Mountain case with me. Jack was the lead counsel in the recent Quincy case where the “must carry” rules were invalidated pretty much on First Amendment grounds. He and I, in discussing his great victory in that case, agreed that Carter Mountain had finally been reversed.

PARSONS: Maybe now is the time to ask you a question I have been dying to ask for some time and that is why the First Amendment argument doesn’t seem to appear in any of the NCTA’s positions before the FCC or in Congress in ’56, ’57, ’58 or 1959 or even in Carter Mountain.

SMITH: Perhaps we did not perceive the issue that clearly. We didn’t really regard ourselves as First Amendment speakers in those days. Our mentalities at that time, for which I get either the credit or the blame, is that we were passive receiving antennas not speakers. My eye was always on the copyright ball. There was some local origination in those days but it was diminished. I suppose that we could not afford to take a public position that we were anything but a receiver. The denial of common carrier service to Carter Mountain on the grounds of disapproval of the end use to be made of the facilities was implicitly a First Amendment issue. I would have to reread the briefs to see how we developed it.

PARSONS: How about the First Report and Order? Is that the next logical step?

SMITH: Well, yes, it is a logical step.

End of Tape 3, Side B

PARSONS: We were discussing Carter Mountain when the tape ran out.

SMITH: Carter Mountain was a major milestone in the development of CATV regulation and a major millstone around the neck of the developing CATV industry. By Carter Mountain the FCC established its first “must carry” policy in refusing to grant authorizations for a microwave system unless the system agreed to carry the local station; it granted its first non-duplication program protection to the local station by conditioning the grant on protection of the local station broadcast for a period thirty days before broadcast of any program to thirty days after; and anticipated its soon to be adopted limitations on the “importation” of distant signals into the service area of a station co-located with the system.

As I have said, Carter Mountain was thought to be vulnerable to reversal in the courts because it conditioned a grant on restricting or controlling the end use of the service, which I contended, and the FCC’s Common Carrier Bureau agreed, was illegal. Probably in anticipation of a possible reversal of Carter Mountain, the Commission undertook to establish a microwave relay service for community antennas in the so-called Business Radio Services classification of its Rules. In the business radio category the FCC undoubtedly felt that it had more latitude than it had in the common carrier service to establish restrictions which had the effect of controlling what channels and programs must be carried and those that could not. If Carter Mountain were overturned the Commission could require CATV systems to use the CARS service if they could not establish that they were bona fide common carriers.

Since the new service would not be common carrier the community antenna system operator would not have to qualify as a bona fide common carrier to be eligible for a microwave authorization. This was a definite plus for the industry. In those days many microwave common carriers serving CATV systems were set up by CATV operators to serve their own CATV systems. This stretched the Commission’s frequency allocation rules and policies since common carrier frequencies were not intended to be used to serve the private communications needs of the owner of the carrier. They were allocated to facilitate establishment of communications services for the general public or defined categories of non-related public users somewhat in analogy to a public utility.

SMITH: Applicants for common carrier frequencies to serve CATV systems under common ownership with the applicant were required to make a showing in their applications that they had reasonable prospects to serve CATA systems other than their own or possibly local area television stations. This was not always easy to do considering the remote locations where the microwave systems were needed; and it was stated Commission policy that if independent customers failed to materialize, the common carrier licenses might not be renewed.

In truth, most CATV system owners did not want to be common carriers but engaged in the subterfuge to establish eligibility. Thus the new service which was called CARS (acronym for Community Antenna Relay Service) would have been warmly welcomed by the CATV industry if the Commission had not put Carter Mountain carriage and program protection requirements in the package. Before the FCC could issue its final CARS Report and Order, the Court of Appeals for the D.C. Circuit upheld the Commission in Carter Mountain. The Commission promptly instituted common carrier rule making similar to that in CARS and consolidated the two proceedings. This occurred in December 1963, almost one year to the day from commencement of the CARS rule making; however, it was not until April 25, 1965 that the Commission issued its First Report and Order (in Docket No. 15233) officially adopting the rules, effective June 1, 1965.

The Commission embraced the “unfair competition” concept in support of its non-duplication or program exclusivity rules and was ready with its next blockbuster–a new rule making started the same day proposing to make the new rules applicable to any and all CATV systems whether or not served by microwave. Moreover it imposed a freeze on the expansion of CATV into major markets until it could get its new rules adopted and implemented. There was no doubt about the final outcome of this rule making. Incidentally, as a practical matter, that freeze continued with very little thawing into the early to mid-1970s. There was minimal expansion of cable during this period. But there is much more to the story which takes us back to some parallel activity.

SMITH: [NOTE: The term “cable system” started coming into use as an alternative to “community antenna” or “CATV system” around 1965, reflecting technological changes in the industry and changes in concepts concerning its operating functions. Up to this point in this oral history, for the most part, I have attempted to adhere to the term CATV simply because it is the language of the period I have been talking about.

Industry pioneers might be interested in the fact that “CATV” may have been given a new lease on life. It now appears in the Random House Dictionary of the English Language, Second Edition, Unabridged (1987) as follows: “CATV, community antenna television; a cable television system that receives television broadcasts by antenna and relays them by cable to paying subscribers in areas where direct reception is either poor or not possible.” So it appears that we can have it both ways. If it’s good enough for Random House, why should I fight it?–CATV is a perfectly good acronym for “cable television.”

Random House also recognizes “cable television,” “cablevision,” “cablecast,” “cablecaster” and “cablecasting” as words worthy of inclusion in its new dictionary–the only unabridged dictionary of the English Language published in the last twenty years. But it grieves this writer that the Random House editors choose to define “cable television” and all of those other good words in terms of broadcasting. Consider: “cable television, a system of ‘broadcasting’ television programming to private subscribers by means of coaxial cable. Also called cable TV, pay cable.” (single quotes and underlining are mine) Similar sins of imprecision are committed with cablecast, -caster and -casting. After all of the indignities suffered by this industry at the instigation of the broadcast industry, is it not entitled to its own lexicon?

Come on Random House! Try this: cable television, a system of transmitting television programming to private subscribers by means of coaxial cable, etc.; and, cablecast, -n. 1. a television program transmitted (or cablecast) to private subscribers by means of coaxial cable, etc. To “broadcast to private subscribers,” at least to most “cablepersons” is an oxymoron as incongruous as “full length bikini.”]

PARSONS: To interrupt and try to get at the reasons behind all of this, is this really a rational decision making process, in your opinion; or are these just commissioners reacting to congressional pressure with Congress reacting to broadcast industry pressure? Is this really all politics or is there some rational decision making going on here?

SMITH: I did not see it as rational. After all, not too earlier the Commission had told Congress and a group of small-market broadcasters (Frontier) that it had no authority to regulate CATV. My opinions are colored, however. As an attorney trying to effectively represent a number of CATV clients, I was involved in all of these proceedings and was taking some beatings. It was difficult since we, meaning the industry, were correct on the facts of economic impact and right on policy and the law, as events in later years proved. If the Commission had been rational, as I saw it then, it would have made its rules applicable only in cases where it had reasonable evidentiary grounds to fear significant economic injury to a broadcaster from the CATV presence and then it could have tailored the relief to the circumstances, which incidentally was the way it was to be under S.2653.

In any event, the Commission claimed the benefit of the doubt and stopped CATV growth in its tracks. If the feared adverse impact of CATV on the development and maintenance of a viable UHF broadcasting service was a plausible argument, it was not a valid argument, as later studies were to show.

PARSONS: How did you and your colleagues in the cable industry react to all of this? When things were starting to come down, what were you thinking, what were you feeling?

SMITH: I know how I felt. We were all very much concerned because we sensed that the industry was being boxed into a highly structured regulatory scheme, by a broadcast-oriented Commission, that would inevitably stunt the growth of the industry, not only by limiting access to new service areas, but because this type of regulation was sure to dry up sources of financing. The industry was so deeply concerned that in the Spring of 1963 when the court affirmed Carter Mountain and the Commission consolidated the CARS and common carrier microwave rule making proceedings, the industry reacted to the inevitability that the rules would be officially adopted when the administrative process was complete by attempting the legislative route again, just three years after defeating S.2653.

The then General Counsel of NCTA, since deceased, Robert D. L’Heureux, and I…

PARSONS: You were special counsel at the time?

SMITH: Yes. Much of my time was then devoted to the United Artists case but I was still quite close to the association’s legal affairs. I think it was Bob who suggested that he and I talk to Henry Geller, the Commission’s General Counsel, about trying to get together on a Bill. Geller was willing, so Bob and I had several meetings with him and James “Jim” Sheridan, who was Chief of the Broadcast Bureau–Cox was by then a commissioner. The meetings were encouraging; so in early 1963, NCTA formed a negotiating committee of system operators which, together with Bob and me–but principally Bob– negotiated with the FCC staff on draft legislation. In early 1964 it appeared that agreement with the staff was possible. My recollection is that Geller saw the prospects for agreement to be such that he wanted the broadcasters brought into the picture. The National Association of Broadcasters (NAB), by this time concerned about reports of progress in the NCTA/FCC efforts, had announced that it was going to seek CATV legislation from the Congress and formed a committee with the marvelously dramatic–and paranoid–name, “Future of TV in America Committee,” to get the job done.

The NAB committee asked to and did meet with the FCC staff to comment on the NCTA/FCC proposals and the FCC promptly suggested that the NAB and NCTA get together, work out a Bill they could agree on and bring it back to the FCC so that all three could go to Congress with the same Bill. The Future of TV Committee appointed a subcommittee which negotiated with the NCTA committee for the rest of the year. Agreement on compromise legislation was reached by the negotiating committees in mid-December but was rejected by the Future of TV full committee. I should mention that by this time in CATV history several broadcasters had entered CATV and some of them were on the NAB subcommittee.

SMITH: The negotiating committees went back to the drafting tables and a revised draft was agreed upon the following month–January 1965–which the NCTA Board approved and the NAB Future of TV Committee approved, but which was rejected by the NAB Board. A further unsuccessful effort to reach agreement was made in February. The break point, according to my records, was NAB insistence on thirty days program non-duplication protection for the local station defined as a period commencing fifteen days before broadcast to fifteen days after, and NCTA’s insistence on no more than same day protection, except in special case by case situations–again as it was in S.2653.

PARSONS: This is right after the issuance of the First Report and Order and before issuance of the Second Report and Order?

SMITH: No. It was before the First Report. And it is important to understand what else was taking place while the negotiations were in progress. The negotiations terminated in early February 1965. On February 23, 1965, NCTA and NAB made a joint appearance before the full FCC to present their respective positions on the compromise legislation. The First Report and order did not come out until April 25, 1965, which was the same day the FCC issued its Notice of Proposed Rule Making in Docket No. 15971, in which it said, in effect, now we have you by the microwaves we’re going to extend the rules to all systems whether or not served by microwave. The so-called Second Report and Order, asserting jurisdiction over all CATV systems, was issued in June of 1966, but again that gets ahead of the story.

By time of the breakdown in negotiations, it was much too late to reach accommodation on legislation among NCTA, NAB and the FCC. Other things were taking place. New players had entered the game–the large, influential, major-market VHF broadcasters; and their motivations were not founded in any concern for the survival of small-market broadcasters, nor, notwithstanding what they said, survival of UHF broadcasting.

PARSONS: Tell us.

SMITH: As we discussed on earlier tapes, the early opposition to CATV was from small-market broadcasters, mostly, but not all, from the far west. They were the ones who got Congressional committees riled up and continually nagged at the FCC to take jurisdiction. However, while the Commission was putting the finishing touches on the First Report and Order which was in response to the prodding of small-market broadcasters and while NCTA was negotiating with the FCC and the NAB, some of the big guns came into the fray.

SMITH: In October 1964, the American Broadcasting Company (ABC), filed a lengthy “Petition for Commission Regulation of the Carriage of Television Signals by Community Antenna Television Systems,” to promulgate rules and establish zones to be served by television stations and to limit the use of their signals by CATV systems. In February 1965, the Westinghouse Broadcasting Company, filed its “Petition for Consolidation of Proceedings and Assertion of Jurisdiction over Community Antenna Television Systems” asking–and I’m paraphrasing material from an article I prepared [published in the proceedings of the Institute of Electrical and Electronic Engineers, (IEEE) July 1970]–that the Commission institute rule making confirming that all CATV systems were subject to the Commission’s jurisdiction, consolidate that proceeding with the Commission’s business and common carrier microwave rule making proceedings, and to stay immediately operations by all CATV systems in those areas which then, or in the near future, would be served by three television stations, pending adoption of the new rules. One month later the Association of Maximum Service Telecasters (AMST), a relatively new, well financed and very effective lobbying association whose members was composed in large part, if not entirely, of major-market VHF television broadcasters, filed a Petition calling for immediate regulation of all CATV systems and the adoption of a comprehensive system of restrictive rules. I noted in my article in the IEEE Proceedings that it was clear from the FCC Notice of Rule Making issued the same day as the First Report, that it was the potential of CATV expansion into major markets and importing distant signals into those markets via microwave that was the prime consideration underlying the Commission’s action looking toward the assumption jurisdiction over all CATV systems, notwithstanding its earlier protestations to the Congressional committee and the small-market broadcasters that it had no such jurisdiction.

[{NOTE: While editing this portion of the transcript, I telephoned Max Paglin in Washington to confirm my recollection that AMST was made up essentially of major-market VHF stations. Max, who was Assistant General Counsel in charge of litigation at the FCC at the time I am talking about, not only agreed with my recollection but said that staff at the FCC looked upon the contents of the AMST petition (and the others) as “crocodile tears.” A few days later he called me back and said he had talked to a mutual friend, Harold Cassans, a former Chief of the Broadcast Bureau, who had close contact with AMST. Max reports that Cassans not only agreed with the crocodile tears characterization but said that AMST recognized its own hypocritical position and formally voted to invite UHF stations to become members of the association to improve its image.]

SMITH: The intriguing thing was that each of these petitions was based on the alleged need to protect UHF broadcasting in the major markets against CATV competition. The fact was that the major-market stations preferred the competition of UHF stations–then a decidedly inferior competitive service in relation to VHF broadcasting–to the presence of CATV systems carrying multiple channels. UHF was a badly floundering service in those days and the FCC was readily persuaded to use the whipping boy it had been offered to divert attention from its own inept allocation policies which were the root source of the UHF problem. As I previously mentioned, in fairness to the FCC, it can be argued that the potential destructive economic impact of CATV on UHF might have been a plausible argument to a Commission preoccupied with broadcasting and embarrassed by the apparent failure of its UHF allocation policies; but it was not a valid one, as a much later study showed.

PARSONS: Did the entrance into the game of the big money players change your feelings or strategies about approaching this?

SMITH: Well we certainly had reactions to it but there was little one could do. Congress was out of the question without FCC backing. It was much too close to S. 2653. Legislative negotiation at the FCC and with the NAB had failed. Although looking back one can speculate as to whether NCTA should have accepted the fifteen days before and after non-duplication demands of the NAB instead of holding out for same day protection. Certainly the handwriting was on the wall. Two of the three petitions had been filed with the Commission prior to the joint NCTA/NAB appearance before the FCC. The irony there, however, is that same day protection was about the only thing the industry won when the Second Report and Order came down. I often speculated about the obvious concerted action behind those three petitions and who the choreographer was. To me it seemed obvious that they were not independently conceived. The timing and similarity in content and in the Commission action requested were persuasive of that.

PARSONS: And you think that had an effect on the Commission?

SMITH: It unquestionably had an effect on the Commission. The Notice of Proposed Rule Making recited the essence of the three petitions. At that time, if not today, FCC considered broadcasting to be its prime responsibility; it perceived that it was its statutory duty to promote a nationwide system of television broadcasting. The commissioners were not thinking in terms of a nationwide television service with cable television a significant player. CATV was secondary, if that much, and that was understandable. Many in the CATV industry did not foresee what would happen when the shackles were removed several years later.

But with the big players in the game the Commission had powerful moral support–if it didn’t have the facts. Cable did not have the political strength or the numbers to take the initiative and expect to prevail against that onslaught. I have a vague recollection that I had discussions with someone, possibly Bob L’Heureux, about seeking an investigation by the Department of Justice into a possible conspiracy in restraint of competition contrary to the federal anti-trust laws. Nothing came of the idea and without FCC support justice probably would not have looked at it anyway.

PARSONS: How large was the cable television industry at the time?

SMITH: I am looking at some source files that show that in 1965 there were 1325 CATV systems serving an estimated 1.275 million subscribers. In 1966 the figure had risen to an estimated 1570 systems with 1.5 million subscribers. It should be realized that a single television station in, for example, New York City could have a daily net circulation (an audience measurement derived from the total number of households tuned to a station for a period of fifteen minutes that day) greater than the entire CATV industry. That will give you an idea of the relative strength of the two industries, financially and in terms of numbers and public support.

PARSONS: How large was the typical cable system at this time in terms of numbers of channels? Last time we checked was in the 1950s and they were operating three or four channels. Had it grown since, do you recall?

SMITH: I am certain that it had. This was about ten years later. I could not say about a typical system but the industry would have been entering the 12-channel generation.

PARSONS: That’s quite a bit of competition for big city television.

SMITH: Yes, it could be. Although at the time the wiring of the large cities was much more a matter of speculation than fact, and satellite services were not available.

PARSONS: Before we get to the Second Report and Order let’s clean up a couple of things. You mentioned that the petitions we have been talking about came in before the issuance of the First Report and Order.

SMITH: Yes, and were, therefore, before the Commission prior to the time the Commission issued the notice of rule making that led to the Second Report and Order, which was the same day the First Report was issued. The First Report and the new notice were carefully coordinated.

PARSONS: Another question. Between the death of S. 2653 in 1960 and the First Report and Order in 1965, in that five year period, were there any important structural changes going on in NCTA? Anything going on within the Association as part of industry growth or in reaction to regulatory growth?

SMITH: Very important changes. The Association was moving to structure itself to meet the challenges. It retained a full time general counsel, employed what it hoped would be effective professional leadership in the form of a well-paid President, although this effort faltered for some time. Staff was increased and the NCTA Board took full charge of formulating industry policy. Because in the earlier years the issues were mostly issues of law–what is the posture of CATV before the law–most policy was recommended by the general counsel and it was usually accepted by the Board after extensive discussion at Board meetings which might last as much as three days. But the character of the problems was changing–the FCC was telling system owners how they must run their businesses. Proposed new rules would affect the day to day conduct of a system operator’s business in onerous and burdensome ways–and in ways which were not in the best interest of subscribers. The major problems were now becoming operating problems and quite quickly the operators were telling the lawyers what to say, as they should. You have dated it correctly; although the movement to restructure predated S. 2653, that event put it in high gear.

PARSONS: Who were some of these people who were coming in and taking over?

SMITH: It was not so much taking over as it was taking part. The industry was growing rapidly and there was new talent within the ranks. The influence of multiple system operators on a large scale was to come somewhat later. The five year period you mention was more a restructuring and reorganization than it was taking over. George Barco, Ben Conroy, Bruce Merrill were effective forces. Ben was a strong proponent of the operators taking charge of their own destiny and Bruce Merrill, who was a cable equipment supplier, a growing MSO by standards of those days and a CPA, was also one to keep the lawyers in their place. As an example, large companies such as Cox Broadcasting Company, headed by Leonard Reinch, Lyndon Johnson’s television advisor were entering the business. I prefer not to try to mention names because it is too easy to overlook some who should be mentioned and so many years have gone by that it is difficult to date people, events and places accurately.

PARSONS: One other clean up question before we move on to the Second Report and Order. The mandamus action you had to bring against the FCC involving microwave, what was that about?

SMITH: This predated Carter Mountain; it predated Intermountain Microwave and Belknap & Associates, which was the first microwave grant.

PARSONS: So we’re talking 1955 or ’56.

SMITH: Belknap was 1954 so we may be going back to 1953.

[NOTE: On subsequent reflection and a check in my files, it is clear, and I should have realized, that the mandamus action did not predate Belknap and we are talking 1955-56.] In fact, several applications had been granted when the Commission stopped processing any applications for microwave systems to serve CATV for at least two years. I had applications on file for several clients and so did other lawyers. The FCC would not grant the applications nor would it designate them for hearing. The Communications Act requires the Commission either to grant applications for the use of radio frequencies in established services or to designate the applications for an evidentiary hearing to resolve the issues which concern the Commission. The Commission simply would not process the applications. Finally, I asked the Court of Appeals of the D.C. Circuit for a writ of mandamus to compel the Commission to take action on the applications. As I recall, other attorneys joined the action on behalf of their clients.

The FCC defended on the grounds that it was conducting an investigation of CATV (Docket 12443) and that it wanted to conclude that investigation before acting on the applications. Were this a fact the Commission could have easily told us so but it had not. And in any event, that was no excuse for the length of the delay. Nevertheless, the Court denied the mandamus. However, only a few weeks later the Report in Docket No. 12443 was released (shortly on the heels of the Cox Report) and the Commission resumed microwave processing setting the stage for Carter Mountain.

End of Tape 4, Side A

PARSONS: Maybe now is a good time to go ahead and talk about the Second Report and Order, how you felt about it, how the industry felt about it. First, give us a sense of what it was about.

SMITH: It should be mentioned that the Second Report and Order was issued in March 1966, about one year from the date the Notice was issued. It also marks the point at which the Commission finally got its act together and articulated a statutory basis to support its exercises of jurisdiction over CATV. In part the Commission went back to the rationale that I, and other staff members, used in our early work around 1950, which we discussed in the early part of this oral history, and found that cable was interstate wire communications and as such was subject to the jurisdiction of the Commission. But rather than adopting the common carrier concept, the Commission chose to look upon CATV as a sort of auxiliary broadcast service and asserted the right to take steps to prevent frustration of its television broadcast policy objectives. Thus the Commission sought to define a standard by which its CATV rules were lawful if reasonably necessary to further its statutory duty to promote and protect television broadcast service. This argument was to be challenged in the landmark Southwestern case in which the Commission prevailed. In approving the concept the Supreme Court found the rules to be “reasonably ancillary” to the effective performance of the Commission’s responsibilities to regulate television broadcasting. With the “reasonably ancillary” standard, the Commission was off and running. But once more that is ahead of the story.

The industry had to regard the Second Report and Order as a disaster. Not only did the Commission assume jurisdiction over the entire CATV industry but it adopted a very comprehensive set of restrictive rules. All local stations were required to be carried even if other stations had to be displaced–the “must carry” rules–was required, but limited to the day of the broadcast, which was the only victory for CATV in the Report.

No signal of a television station could be extended beyond its Grade B contour (generally accepted as the reliable service area of a station) in the top-100 major television markets, except on showing in an evidentiary hearing that such extension would not be inconsistent with the development of a healthy UHF broadcast service. These were to be known as the “distant signal” rules. In markets below the top-100, distant signals could be carried if certain notice requirements were met and no objections were filed within thirty days. Existing distant signal carriage–meaning for the most part microwave-fed signals–was grandfathered. It was the severity of the distant signal restrictions which was the serious blow.

As if this were not enough the Commission said it would, and it did, ask Congress for authority to require CATV systems to get retransmission consent from the distant signal stations before they could bring them into the top-100 markets and to clarify its authority to prohibit program origination. [See NOTE below.] As I mentioned earlier, when it issued the Notice, which culminated in the Second Report and Order, the FCC placed an immediate freeze on microwave applications to carry signals into the top-100 markets. So with the new rules, for all practical purposes, the freeze was continued and the growth of the CATV industry in terms of new markets continued in a deep freeze.

[NOTE: The suggestion that the Commission should have the authority to prohibit local origination by CATV systems should have been as shocking then as it is now. But the FCC was conditioned to think of CATV as a broadcast-related service and broadcasting was perceived as having limited First Amendment rights because of the scarcity of radio spectrum for broadcast channels–a scarcity that the FCC and the courts have since agreed does not exist in cable. (See Red Lion Broadcasting Co. v. FCC, 395 U.S. 367 1969 re broadcast First Amendment limitations.) Congress did not act. In an ironic about-face, when the Commission issued its First Report and Order in Docket 18397 in October 1969, it imposed mandatory program origination requirements on all cable systems having over 3500 subscribers; its authority to do so was confirmed by the United States Supreme Court in United States v. Midwest Video Corp., 406 U.S. 649 (1972); but the carousel continued to turn and the FCC repealed the rules in 1974. See Report and Order in Docket No. 19998, 40 F.C.C.2d 2090.

Since CATV’s were permitted by the Second Report to file requests for waiver of the distant signal rules, the Commission was literally inundated with petitions for waiver in a large number of markets, which the Commission had said it would consider in an evidentiary hearing in each case. A few were designated for hearing but few, if any hearings were completed. In an article in the IEEE Proceedings published at the same time as mine that I mentioned earlier, Ken Cox, by then an FCC commissioner, said the Commission granted a significant number of these waivers. In fact the hearing docket completely bogged down and the Commission stopped designating the petitions for hearing. Very few were granted. Thus in practical effect the freeze on processing microwave applications imposed when the notice of rule making was announced continued in effect.

SMITH: As always, the Commission took refuge in new rule making. In 1968 the Commission again froze–to the minuscule extent that it had thawed–distant signal authorizations and instituted new rule making (Docket 18397). The new proposals were intended to prescribe by rule how many and what distant signals could be brought into what sized markets. The idea was to avoid the multiplicity of hearings generated by the 1966 rule making. The proposals, as were the ensuing rules, were cumbersome, contrived and were founded on pure speculation. Even though Congress had not acted to legislate retransmission consent authority, the Commission imposed the requirement as a prerequisite to carrying new distant signals. This alone was enough to preclude any significant microwave processing. To make matters even more frustrating, CATV operators were not permitted to bypass a closer station to bring in the signal of a more desirable distant station–the anti-leapfrogging rule. The 1968 rules were made effective immediately, in effect, without going through the administrative rule making procedures required by law by the simple device of refusing to process any microwave application that was not supported by a showing that the system was in compliance with the proposed rules.

SMITH: The 1968 proceeding and rules is still another story to which we should return since this proceeding also marked the beginning of a slow turn around in the FCC’s approach to the potential of CATV.

Returning to the Second Report, it generated a very important industry case involving the regulatory authority of the FCC that also had an unexpected and important bearing on the Fortnightly copyright case.

PARSONS: Was that the Southwestern case?

SMITH: Yes. Among other things, this case was another link in a chain of events in which the Commission showed what little regard it had on any given day for what it said on an earlier day. Three cable systems were operating in San Diego, California receiving the signals of the Los Angeles stations about 140 miles to the north; however, San Diego was within the Grade B contours of the Los Angeles stations whose transmitters were all on the top of Mount Wilson, which significantly extended the stations’ Grade B contours. The San Diego systems were, therefore, operating in compliance with the new distant signal rules. In fact the Los Angeles stations could be received on rooftop antennas in many parts of San Diego. On complaint of a San Diego UHF television station, the Commission, without an evidentiary hearing, ordered the cable systems to stop carrying the Los Angeles stations notwithstanding their eligibility to do so without a prior hearing under the new rules. The cable systems challenged the FCC’s right to issue the order or even to adopt the rules. The Court of Appeals ruled for Southwestern and the FCC took an appeal to the U.S. Supreme Court where Southwestern met up with Fortnightly which had commenced almost eight years earlier in New York City. The Supreme Court agreed to hear argument in Southwestern.

PARSONS: Before we go on, I’m a little surprised you guys didn’t see the severity of the Second Report and Order coming, that you didn’t have some telltale warning signs.

SMITH: Oh, I think we did. Your comment suggests to me that in criticizing the FCC and the Second Report as strongly as I have that I am leaving the impression that we were caught by surprise. The Second Report had in it just what the Commission forewarned in its Notice of Proposed Rule Making. The distant signal rules were more restrictive than we may have anticipated; however, one aspect of administrative rule making is that the administrative agency is generally accorded wide latitude in adopting rules which depart from the proposals in the Notice. New rules, unless they blatantly depart from any semblance of the proposed rules, will be allowed to stand. Also, it is not always easy to get inside information on what is going on behind the agency doors. Premature leaks can result in a great deal of outside pressure, including congressional pressure, on the agency on behalf of special interest groups.

PARSONS: This may be too much to ask, but as you sat around with your friends at NCTA or wherever you were drinking coffee or beer, and the Second Report and Order was going to be released in a week or two, what did you talk about? What were you thinking about? What was the nature of your conversation?

SMITH: Well, it’s difficult to recall twenty years later specific conversations within a date range of two weeks.

PARSONS: Just the sense.

SMITH: I have sketchy recollections of conversations with Bob L’Heureux when he was general counsel. Bob’s friends would smile if they heard this. Bob was outspoken, and a very feisty and competent general counsel. If something was “egregious,” he said it was “egregious,” which was one of his favorite words and that’s the way he described the Commission’s actions. Incidentally, before becoming NCTA’s general counsel–he succeeded me–Bob was special legal counsel to the then Chairman of the FCC, George McConnaughy. So Bob was not without qualifications to comment. But I do not remember specific conversations within a week or two prior to the release of the Second Report and Order.

PARSONS: Was there a sense of helplessness?

SMITH: Yes, there was that. I think that some operators might tell you that they were losing confidence in the staff. And well they might, particularly those who failed to appreciate the forces that were at work. It was difficult for the lawyers, and I’m speaking for myself, who would tell their clients what they thought law had always been on a given point and then have the Commission say it’s something else: overruling its own staff as well as its own prior rulings (Intermountain), as in Carter Mountain; or reverse itself on jurisdiction, as it did between Frontier and the Second Report; or ignore its own rules immediately after adopting them as it did in the Southwestern case; or basing new rules on the potential adverse impact of CATV on the development of UHF broadcasting at the same time conceding that it had no evidence to support its thesis. I don’t think the situation was one to engender confidence in staff ability to get things done at the Commission.

The Communications Act seemed to be whatever the FCC wanted it to be at any given moment, to deal with the problem at hand. It fabricated the law from rule making to rule making. And whenever rule making was too slow, it put its distant signal policies into effect in advance by imposing licensing freezes on the use of microwave until rule making could run its administrative course. It was not easy to explain to a client how the FCC could lawfully perform such regulatory gymnastics.

Perhaps I’m letting my personal recollections of how I reacted at the time, and still react when I think about it, show too much.

PARSONS: Fine. That’s what we want.

SMITH: While editing the transcript of this tape and expanding my comments, I remembered once venting my frustration in one of these situations by including the following exchange in a footnote to a pleading which I filed with the FCC:

“But ‘glory’ doesn’t mean ‘a nice knockdown argument,” Alice objected.

“When I use a word,” Humpty Dumpty said, in a rather scornful tone, “it means just what I choose it to mean–neither more nor less.”

“The question is,” said Alice, “whether you can make words mean so many things.”

“The question is,” said Humpty Dumpty, “which is to be the master–that’s all.” (final line underlined mine)

And the FCC was the master.

PARSONS: You mentioned the Southwestern case and copyright. Do you want to talk about copyright now?

SMITH: It is a good place to get into copyright but we should remember to get back to the distant signal policies and Docket No. 18397 which produced a new First Report and Order of substantial consequence.

PARSONS: All right, let’s take this up to the climax here. Tell us about copyright.

SMITH: We have previously mentioned that copyright was an issue from the very beginning of the industry in 1949. Formal litigation, however, did not commence until June of 1960. At that time United Artists Television, Inc. (UATV) filed an action against the Fortnightly Corporation for copyright infringement by two CATV systems owned by Fortnightly. Fortnightly’s principle business was publishing an opinion magazine named Fortnightly.

The two cable systems were located in Clarksburg and Fairmont, West Virginia. (Sandford Randolph was the General Manager of the Clarksburg system.) Fortunately the systems were classic community antenna systems. Throughout the litigation Sandford fretted because we would not let him add microwave channels to his services.

I think I mentioned earlier that UATV had paid some twenty million dollars to ZIV Television Productions to acquire a library of old motion pictures and syndicated television programs which it was planning to license for use by the new UHF television stations which were supposed to come into being following adoption by the FCC of its nationwide television allocation plan in 1952. UATV purported to blame CATV for the failure of UHF to develop as prognosticated and so set out to get its money back, as well as the anticipated profits, from CATV. One of UATV’s attorneys told me this was one of the motivations behind the suit.

SMITH: It had been a generally accepted assumption that when a copyright action was brought the NCTA would finance the legal costs in exchange for having control over the litigation. The New York and Washington law firm of Cleary Gottlieb Steen and Hamilton, a very prestigious firm, was counsel to Fortnightly. I met with two of their Washington partners, Robert Barnard and Jack Mallory, in my office and we discussed the case at length. They agreed to accept the master antenna theory as the legal rationale for our defense and it was agreed that the two firms, their’s and mine, would jointly handle the case with the Cleary Gottlieb firm being lead counsel.

During the course of the litigation the two systems were sold to Jack Kent Cooke, then and now owner of the Washington Redskins, who was just entering the cable business on a large scale. One of the conditions of the sale was that Cooke accept the potential liabilities if the litigation went against Fortnightly, accept NCTA control of the case and the legal team. He did, and I don’t recall that he once attempted to interfere.

It took eight years to get the case before the United States Supreme Court. There were extensive depositions in New York City for weeks at a time over a period of two years. We subpoenaed innumerable records of UATV pertaining to the programs they claimed had been infringed and deposed a number of their employees, particularly those in sales and management.

PARSONS: What were you looking for?

SMITH: We could not afford to rely exclusively on the master antenna defense because we recognized that it was both arguable and increasingly vulnerable because of changing technology and concepts in the industry. So we were trying to track ownership records relating to the copyrights; we reviewed sales practices and licensing agreements, what rights had been transferred and acquired. We were looking for anything that might impugn or break the chain of title, or possibly place the program in the public domain such as failure to display a valid copyright notice. And we particularly wanted to develop a record of the restrictions the copyright people imposed on broadcasters and the extent to which royalty fees were based on stations’ advertising revenues. We knew what we were looking for but were also on a fishing expedition. However, federal courts are usually quite liberal in the discovery process and give the litigants a good deal of latitude in getting into each other’s files.

UATV asked for a lot of NCTA files including all of the NCTA Bulletins I had written for several years. They wanted to learn all they could as to how the industry actually functioned. It is one thing to claim you are a master antenna if all you have is a receiving antenna, receivers and amplifiers; but perhaps it is something else if you use microwave links spanning a hundred miles or more, or if you also originate programming from a television studio, or if you pick and choose programs from different channels. UATV also wanted to find out everything it could concerning copyright advice I had given the NCTA over the years.

The trial in the United States District Court for the Southern District of New York in New York City took approximately six weeks. UATV was represented by the well known New York City firm of Phillips Nizer Benjamin and Krim. Louis Nizer was, in addition to being a skilled trial lawyer of some renown, the author of a number of books perhaps the best known of which was the best seller, My Life in Court, based on his career as a trial lawyer. To judge from the book he never lost a case.

Louis tried the case but the six years of advance preparation was done by two of his partners, Gerald Phillips and Gerald Myers, both of them very genial gentlemen and competent lawyers. It was interesting to observe Nizer during the trial because he was clearly ill-prepared when the trial started, but with each passing day he improved noticeably. It was clear that he deserved his reputation as a fine trial lawyer.

SMITH: On our side the preparation was done by Bob Barnard, two of his partners, Jack Mallory and Mike Duncan, and by me. Bob was lead counsel. Among other things, I was responsible for developing evidence with respect to the CATV industry and television broadcasting, the economic structure of television advertising and our technical presentation in support of the master antenna concept. We had expert engineering testimony in that area by one of the best known cable and broadcast television consulting engineers in the United States, A. Earl Cullum, Jr. We also undertook to establish that under our commercial system of broadcasting the copyright owners had already been paid by the advertisers for the right to broadcast and that, once broadcast, the programs were intended by law to be received by the public for private viewing; CATV was simply the receiving mechanism–not a performer or seller of programs.

In preparation and brief writing we were meticulous to make certain that not a word, phrase or sentence we wrote in the briefs was inconsistent with our master antenna concept; during our working conversations for eight years, we lawyers corrected any one of us who slipped up on our terminology. In confrontation, it is an absolute of upmanship that you define the terms, refuse to use any others and pressure your opponent to slip into your lexicon.

We spent many hours with our witnesses running them through mock cross-examination, drilling “master antenna,” and you deliver “signals”–not “programs,” into their psyches. A problem with CATV operators in those days is that they fancied themselves as being in show biz–and that included our good friend and secretary, Sandford Randolph, who was one of our principal witnesses. He worried years off our lives because he was more likely than not to phrase his answers to the questions we had prepared for his direct testimony, and in mock cross-examination, as if he were in the business of selling programs to his subscribers.

It was also my non-legal and exasperating responsibility to get the industry to hold the line on the master antenna concept. As the years were going by the industry was changing and many were fretting under the yoke of master antenna and to some of them I was a negative force in the industry. But we could not afford to lose that case because every operator would be liable for treble damages for every infringement going back several years.

PARSONS: Going back twenty years?

SMITH: Back to 1950, at least, theoretically. My memory is hazy on the point but I do not think there was a statute of limitations on the liability. Theoretically, hundreds of millions of dollars were at stake industry-wide in treble damage actions and a loss could have, and probably would have, turned control of CATV over to the entertainment industry, and the CATV systems could have become the electronic equivalent of motion picture theaters but with no way to sell popcorn. At least that’s the way we saw it. In theory, at least, copyright owners could have shut down the operation of a system or even the industry. We rarely, if ever, concerned ourselves with that; probably because it would not have served the interest of the copyright proprietors and public outrage would not have tolerated it.

We lost the case before the District Court. Judge Herlands ruled that CATV reception and distribution of the signals of the TV stations was an unauthorized public performance of the programs for profit and, therefore, an infringement of the copyrights.

PARSONS: Were you surprised by the decision?

SMITH: I do not think we were surprised. We were worried enough not to be surprised, but neither would we have been surprised if we had won. There were, of course, arguments against the master antenna theory. Had the case developed several years earlier before the extensive use of microwave and local program origination, we would have felt more comfortable with the theory. I should mention that our rationalization of the use of microwave systems was that they were merely a technical substitute for wire or cable and had no bearing on the nature of the underlying function; we were not overly confident of winning.

End of Tape 4, Side B

PARSONS: What about the impact upon the industry? It had been holding back trying not to implement some of the changes which new technology would have permitted.

SMITH: Many operators had been holding back; others were not. You really could not expect the industry to hold back entirely. New people were entering the industry daily. Some of them were broadcasters and they were entertainment oriented. The broadcasters had trouble with the major antenna concept. We also had one major operator on the NCTA Board that thought the industry should pay copyright and wanted the case abandoned. Others were bothered by the high cost of the litigation and felt the issue was lost. Later I was told that NCTA had put about $900,000 into the litigation over a period of eight years.

PARSONS: My goodness.

SMITH: That was not all legal fees by any means. It included witness fees, extensive travel and lodging and other out-of-pocket costs.

Of course we appealed to the Court of Appeals for the Third Circuit. Now it was a matter of rewriting the briefs to be responsive to Judge Herlands’ decision. The case was argued before a three-judge panel. Here we lost to a unanimous court. At this point there was a movement by a small number of directors on the NCTA Board to drop the case. Bob Barnard and I argued vociferously for continuing to the Supreme Court. It would have been absurd, even without the benefit of hindsight, to stop at that point. By that time Frederick W. Ford had resigned as Chairman of the FCC to become president of the NCTA; he did believe in the master antenna concept and said on several occasions that he thought we should win. I remember he supported the appeal strongly and so did Bob L’Heureux who was general counsel of NCTA at the time. We got the go-ahead.

We prepared and filed our Petition for a Writ of Certiorari but were frankly most uneasy as to whether the Court would grant us oral argument since we did not have a single judge in our favor in the two lower courts. This is where the Southwestern case came into the copyright picture.

SMITH: As I have repeated too many times, the FCC had based the need for its Second Report and Order rules on the unfair competition theory–CATV was engaged in unfair competition because it did not pay copyright. The Supreme Court granted certiorari to Southwestern meaning that it would hear oral argument on the validity of the rules. Our Petition for Certiorari had already been filed, but when we saw the FCC’s briefs in support of its Petition for Certiorari, we asked for leave to file a supplementary brief in support of our Petition and pointed out to the Court that the copyright issue in our case was at the root of the rules in issue in Southwestern. The Court got the message and granted our petition and designated both cases for argument to be heard on the same day. I have often thought that we rode our way into the Supreme Court on the back of Southwestern. But for the fortuitous timing we may not have made it.

The circumstances were both serendipitous and ironic. The two cases originated years apart in different courts with no legal issues in common, and were in all other respects entirely unrelated; they arrived at the Supreme Court at the same time. Fortnightly had lost its case in the two lower courts whereas Southwestern had prevailed in the Court of Appeals, and Fortnightly won whereas Southwestern lost in the Supreme Court. Both cases were to have a great impact on the future of the industry.

The two cases were argued on the same day; but Southwestern was decided on June 10, 1968 and Fortnightly on June 17th. The Supreme Court did not adopt the FCC’s unfair competition doctrine in Southwestern but instead, after extensively reviewing the Communications Act, found statutory support for the Commission’s position that it had broad authority to impose restrictions on the growth of cable to promote statutory objectives in the broadcast field, and held that the FCC could regulate CATV to the extent that its regulations were “reasonably ancillary” to carrying out its responsibilities for the effective regulation of television broadcasting. This perhaps should have tipped Barnard and me off to the possibility we had a win coming, but it didn’t, at least in my case.

PARSONS: Let me ask you a couple of questions. When you were before the Supreme Court, did you argue the case?

SMITH: No. I answered several questions deferred to me but Bob argued the case.

PARSONS: Had you been before the Supreme Court?

SMITH: This was my first appearance at argument, but I had filed briefs and petitions for Certiorari on several occasions. Carter Mountain is an example.

PARSONS: You must have had a special feeling for a while.

SMITH: Oh, yes. I certainly considered it to be a high point. They are the final judges.

PARSONS: From the questions the justices asked what kind of feeling did you get about the direction the case was taking?

SMITH: With the caveat that the court’s questions are not necessarily reliable indicators of how a case is going, I was encouraged, as was Bob. Justice Stewart, who wrote the decision for the Court, asked some questions which I recall suggested he might be taking the master antenna argument seriously. I recall Nizer almost arrogantly brushing off a question(s) Justice Stewart, or possibly Justice Brennan, asked him about the master antenna argument. Having won all the way up, he seemed pretty certain he had it won. Barnard also picked up on Nizer’s arrogance, if it can fairly be called that, and we discussed both before the opinion was handed down, and after, whether Nizer may have hurt his case; but I doubt that it was really a significant factor. Five justices are unlikely to reverse two lower courts just to be vindictive towards counsel. Bob and I were more encouraged by the Supreme Court argument than at any other time in the case.

After enough time had elapsed that it could be expected that the opinion should be ready for release, Bob and I went up to the Court every Monday morning, which was decision day, and sat through the announcements. You are never told in advance when your decision will be handed down. The week Southwestern was decided we knew it had to be soon, and it was the following week.

SMITH: I recall it well. Fortnightly was the second case handed down that day. Chief Justice, Earl Warren, announced that Mr. Justice Stewart would deliver the opinion of the Court. The long wait was over. Two paragraphs into the opinion we knew we had won by the way the Justice was summarizing the opposing contentions. So did Louis Nizer’s partner, Gerald Myers, who was sitting directly behind Bob and me. He was so startled he involuntarily gasped a very audible: “Oh, my goodness!” It took some doing to maintain our professional dignities until the Justice finished. Bob and I just glanced at each other and hung in. It’s pretty dangerous to sprint on those marble floors of the Supreme Court building, but to say that we hurried to the telephones would be an understatement. We each called our offices and I got Bob L’Heureux, who had resigned as NCTA general counsel and was now one of my law partners. When I said, “Bob, we won, we won!”, he was as excited as I was.

“How? What did the Court say?” (or words to that effect)

SMITH: “Master antenna, all the way.” We discussed it only briefly. I told him it was a five to one decision–three justices not participating. Presumably they felt they had a conflict of interest of some kind, but we never knew.

“I’ll call Fred Ford,” Bob said, and hung up.

Barnard and I got copies of the opinion from the Clerk’s office. A summary of the opinion was already on the news wires and I was getting telephone calls from several people by the time I got back to the office. It was exciting; Bob, (L’Heureux) who was terminally ill at the time–although he may not have realized it–and I took the rest of the day off to celebrate.

Fred Ford got the Board of Directors on a conference call and passed the word.

I felt a special satisfaction in the case that I doubt anyone else felt. I always felt a petulant resentment toward the FCC for adopting copyright as a basis for its unfair competition theory.

Enforcement of copyright was no responsibility of the Commission and copyrights did not exist to protect the broadcasters unless they owned the copyrights. It was the rare situation, excepting perhaps the networks, that a broadcaster owned any copyrights and broadcasters were never going to get the copyright owners to allow them to enforce the copyrights. The owners wanted control of CATV program licensing themselves, and were not going to cede it to the broadcasters.

SMITH: It was, in my opinion, an unholy effort to marry communications law policy with copyright policy. It was a corruption of both fields of law to attempt regulation of CATV with a bastardized theory of unfair competition because CATV did not pay copyright, which one federal appeals court had already rejected as being constitutionally unacceptable. The FCC had to know that the United Artists of the world would be in the driver’s seat if copyrighted programs were to become the linchpin of its regulatory scheme. So many people at the FCC had climbed on that copyright bandwagon over the years that I felt as if we had defeated the FCC. It seemed like a personal vindication that the Supreme Court, confronted with this situation as a result of a Communications Act issue and a copyright issue arriving at the same time, did not embrace “unfair competition”; although it settled, once and for all, with no equivocation in Southwestern that the FCC had broad authority to adopt and enforce its rules where reasonably necessary to effectively carry out its responsibilities to regulate television broadcasting.

[NOTE: The view I expressed above concerning the propriety of melding copyright and communications law policies was also expressed–but without my critical overtones–by FCC Chairman Rosel H. Hyde in a letter dated February 16, 1969, to Senator John L. McClellan, Chairman, Senate Subcommittee on Patents, Trademarks and Copyrights, in commenting on and opposing copyright legislation then before the Subcommittee, which would guarantee that CATV systems within specified zones of television stations operating in the top-100 markets, the right to receive a fixed complement of distant signals, which would be defined in the copyright legislation as “adequate service.” Chairman Hyde was right in his opposition to the legislation as an improper meld of communications and copyright policies; but his Commission was chargeable with the same fault by asking the Congress to authorize it to impose retransmission consent requirements on distant signals because CATV did not pay copyright, and in subsequently imposing the requirement without benefit of congressional approval. Of course, this time it was the Chairman’s ox that was about to be gored since the copyright legislation, if it had been adopted, would have interfered with the exercise by the FCC of its authority to regulate distant signal use by CATV, just recently confirmed by the Supreme Court in Southwestern.]

PARSONS: What about the CBS copyright case?

SMITH: CBS filed a copyright action of its own against TelePrompTer Corporation while Fortnightly was still in litigation. TelePrompTer was controlled by Irving Kahn. CBS apparently had more respect for the master antenna defense than did UATV. TelePrompTer had many systems using microwave and doing advertiser supported local origination on dedicated channels. CBS selected TelePrompTer as its defendant for this reason and because of its size. I had very little to do with this case except in its early stages while Fortnightly was in progress; however, the Cleary Gottlieb firm also handled CBS and again won it in the Supreme Court which, among other things, said that microwave and program origination were not relevant to copyright and held to its Fortnightly rationale.

One anecdote about copyright and master antennas, and I’m through with those subjects. Pressure was building up to broaden the industry concept of itself; master antenna was, to many, an outmoded concept. It was at the NCTA convention in Miami Beach in 1966, at the general meeting of the membership, when Bill Daniels got up and made a motion and brief speech in support, to change the name of the association to The National Cable Television Association. Nothing could have been worse for the case. But I was as sick and tired of delivering my sermons on the subject as people were of listening to them. I was sorely tempted, in fact came very close, to saying nothing at all and just letting it go. I was tired of the reputation I was getting for resisting industry progress. It probably was the specter of having to face Bob Barnard and Mike Duncan when I got back to Washington that got me on my feet. When I did ask for the floor, I did not speak for long. In essence what I said was that from the beginning they had heard me tell them time and again that the only likely defense against copyright liability was that CATV was an antenna service and that this was a pretty silly time to abandon the concept. I recall telling them it could easily lose the case for them and the Supreme Court acceptance of the concept suggests that I may well have been right. No one else spoke a word. Ben Conroy was National Chairman and he was conducting the meeting. Ben reminded me just recently that he asked someone else to take the chair and he moved to table the motion. His motion passed without a single Nay–not even from Daniels.

Finally on Fortnightly, the annals of The National Cable Television Center and Museum should reflect my personal awareness that I have sometimes been given more than my share of the credit by friends and others in the cable industry for the success of the case. This was undoubtedly because I was better known in the CATV industry than the other lawyers and because I was the liaison between the legal team and the NCTA. The industry was very fortunate to have the services of Bob Barnard, who was lead counsel in the case. He was at least the equal of the renowned Louis Nizer in the trial, and his master in the Supreme Court; his argument before that Court was brilliant. His partners Duncan and Mallory were impressive lawyers and I was privileged to be on the team.

PARSONS: But it was your legal concept that the Supreme Court adopted.

SMITH: I can say that, yes.

End of Tape 5

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