Under the Federal Communications Act of 1934, the Commission
authorized a radiotelegraph company, which was then serving 39
overseas points, to open two new circuits, to Portugal and The
Netherlands. The authorization was opposed by another company which
provided similar service by means of 65 circuits, including
circuits to each of those countries. The Commission concluded that
duplicate facilities should be authorized because of the "national
policy in favor of competition." From this policy, the Commission
said, it follows that, where competition is "reasonably feasible,"
it is in the public interest.
Held:
1. On the record in this case, the Commission's authorization
cannot be sustained. Pp.
346 U. S.
87-97.
(a) In reviewing such a decision of the Commission, Congress has
charged the courts with the responsibility of determining whether
the Commission has fairly exercised its discretion within the
bounds expressed by the standard of "public interest" and whether
the Commission has been guided by proper considerations in bringing
its experience and expert judgment to bear on applications for
licenses in the public interest. Pp.
346 U. S.
90-91.
(b) Encouragement of competition, as such, is not the single or
controlling reliance for safeguarding the public interest in the
field of radiotelegraph communication, and this consideration,
standing alone, is not sufficient to justify an authorization to
duplicate existing services whenever competition is reasonably
feasible. Pp.
346 U. S.
89-95.
(c) In granting the authorization in this case, the Commission
did not properly discharge its responsibility, because its action
was not based on its own judgment as to what was in the public
interest, but on its unjustified assumption that Congress thought
authorizations for the sole purpose of encouraging competition were
desirable. Pp.
346 U. S.
95-96.
Page 346 U. S. 87
(d) If the Commission, in the exercise of its own judgment,
reaches a conclusion that duplicating authorizations are in the
public interest wherever competition is reasonably feasible, it
need not make specific findings of tangible benefit, but there must
be ground for reasonable expectation that competition may have some
beneficial effect. Pp.
346 U. S.
96-97.
2. The Commission's authorization in this case does not violate
§ 314 of the Communications Act by reason of the corporate
affiliation of the radiotelegraph company with the cable company in
question -- the Commission having determined, upon adequate
findings, that the grant of such authorization would not decrease
competition. Pp.
346 U. S.
97-98.
91 U.S.App.D.C. 289, 201 F.2d 694, vacated and remanded.
On review by the Court of Appeals, an order of the Federal
Communications Commission was reversed. 91 U.S.App.D.C. 289, 201
F.2d 694. This Court granted certiorari. 345 U.S. 902.
Judgment
vacated and case remanded, p.
346 U. S.
98.
MR. JUSTICE FRANKFURTER delivered the opinion of the Court.
The Mackay Radio and Telegraph Co. (Mackay) provides
radiotelegraph service between the United States and a number of
foreign countries. Over the opposition of RCA Communications, Inc.
(RCAC), which provides
Page 346 U. S. 88
similar service by means of a total of 65 circuits, including
ones to Portugal and The Netherlands, the Federal Communications
Commission authorized Mackay at that time authorized to communicate
with 39 overseas points, to open two new circuits, to Portugal and
The Netherlands. RCAC claims that duplicate circuits, already
authorized for RCAC and Mackay to 11 other points, are not here "in
the public interest," in that Mackay has been unable to show any
tangible benefit to the public, such as better, cheaper, or more
comprehensive service, to be derived from the authorization of
Mackay's circuits. RCAC also urges, as a second objection to the
authorizations, that, because of Mackay's corporate affiliation
with The Commercial Cable Co. (Commercial), which conducts cable
service to these points in competition with another cable carrier,
Western Union, as well as with radiotelegraph service,
authorization of Mackay would lessen competition between radio and
cable service and would weaken the competitive efficiency of
Commercial, in violation of § 314 of the Communications Act.
The Commission found that competition, that is, duplication of
radiotelegraph facilities, would not impair the ability of the
existing radio carrier, RCAC, and cable carriers to render adequate
service. More facilities are at present authorized than are
necessary to handle the present and expected volume of telegraph
traffic under normal operating conditions, but Mackay's proposed
service would be adequate, and would not require substantial new
investment. For such reasons, the Commission concluded that
competition was "reasonably feasible." In addition, although it
did
"not appear that Mackay's proposed service to each of the points
at issue will result in lower rates or speedier service, or will
otherwise be superior to or more comprehensive than the service now
available via RCAC,"
the proposed service would be superior to that now provided by
Mackay itself and its affiliated
Page 346 U. S. 89
cable company, Commercial. Finding that "over-all competition
for telegraph traffic generally" would be increased and more
effective radiotelegraph competition introduced, the Commission
concluded that duplicate facilities should be authorized because of
the "national policy in favor of competition." From this policy,
the Commission said, it follows that "competition" is in the public
interest where competition is "reasonably feasible." The
Commission, with two members dissenting, thereupon authorized
Mackay's proposed service to Portugal and The Netherlands. ___
F.C.C. __. RCAC sought review, and was successful in the Court of
Appeals on its claim that an applicant must demonstrate, as the
Commission found that Mackay had failed to do here, that tangible
benefit to the public would be derived from the authorization. 91
U.S.App.D.C. 289, 201 F.2d 694, Prettyman, J., dissenting.
We granted certiorari because this case, the first in which the
grant of duplicate radiotelegraph circuits has been challenged in
the courts, presents an issue of primary importance in
authorization, under the Federal Communications Act of 1934, of
international radiotelegraph circuits. 345 U.S. 902.
With the chaotic scramble for domestic air space that developed
soon after the First World War, Congress recognized the need for a
more orderly development of the air waves than had been achieved
under prior legislation. [
Footnote
1] Although the Radio Act of 1912 had forbidden the operation
of radio apparatus without a license from the Secretary of Commerce
and Labor, judicial
Page 346 U. S. 90
decision left him powerless to prevent licensees from using
unassigned frequencies, to restrict their transmitting hours and
power, or to deny a license on the ground that a proposed station
would necessarily interfere with existing stations. [
Footnote 2]
See National Broadcasting Co.
v. United States, 319 U. S. 190,
319 U. S. 212.
Congress thereupon, in the Radio Act of 1927, created the Federal
Radio Commission, with wide licensing and regulatory powers over
interstate and foreign commerce.
Congress did not purport to transfer its legislative power to
the unbounded discretion of the regulatory body. In choosing among
applicants, the Commission was to be guided by the "public
interest, convenience, or necessity," a criterion we held not to be
too indefinite for fair enforcement.
New York Central
Securities Corp. v. United States, 287 U. S.
12. The statutory standard no doubt leaves wide
discretion, and calls for imaginative interpretation. Not a
standard that lends itself to application with exactitude, it
expresses a policy, born of years of unhappy trial and error, that
is "as concrete as the complicated factors for judgment in such a
field of delegated authority permit."
Federal Communications
Comm'n v. Pottsville Broadcasting Co., 309 U.
S. 134,
309 U. S.
138.
Congress might have made administrative decision to license not
reviewable. Although it is not suggested -- or implied by the grant
of power to review -- that Congress could not have reserved to
itself or to the Commission final designation of those who would be
permitted to utilize the air waves, precious as they have become
with technological advance, it has not done so. On the other hand,
the scope of this Court's duty to review administrative
determinations under the Federal Communications Act of 1934, 48
Stat. 1064, as amended, 47 U.S.C. § 151
et seq.,
Page 346 U. S. 91
has been carefully defined. Ours is not the duty of reviewing
determinations of "fact," in the narrow, colloquial scope of that
concept. Congress has charged the courts with the responsibility of
saying whether the Commission has fairly exercised its discretion
within the vaguish, penumbral bounds expressed by the standard of
"public interest." It is our responsibility to say whether the
Commission has been guided by proper considerations in bringing the
deposit of its experience, the disciplined feel of the expert, to
bear on applications for licenses in the public interest.
In this case, the Court of Appeals has ruled that the Commission
was guided by a misinterpretation of national policy, in that it
thought that the maintenance of competition is, in itself, a
sufficient goal of federal communications policy so as to make it
in the public interest to authorize a license merely because
competition,
i.e., duplication of existing facilities, was
"reasonably feasible." RCAC relies on the holding of the Court of
Appeals that the Commission must decide, in the circumstances of
the application, that competition is not merely feasible, but
beneficial.
The Commission has not in this case clearly indicated even that
its own experience, entirely apart from the tangible demonstration
of benefit for which RCAC contends, leads it to conclude that
competition is here desirable. It seems to have relied almost
entirely on its interpretation of national policy. Since the
Commission professed to dispose of the case merely upon its view of
a principle which it derived from the statute, and did not base its
conclusion on matters within its own special competence, it is for
us to determine what the governing principle is.
Cf. Federal
Radio Comm'n v. Nelson Bros. Bond & Mortgage Co.,
289 U. S. 266,
289 U. S.
276.
That there is a national policy favoring competition cannot be
maintained today without careful qualification.
Page 346 U. S. 92
It is only in a blunt, undiscriminating sense that we speak of
competition as an ultimate good. Certainly, even in those areas of
economic activity where the play of private forces has been
subjected only to the negative prohibitions of the Sherman Law,
this Court has not held that competition is an absolute.
See
Chicago Board of Trade v. United States, 246 U.
S. 231;
cf. Mason, Monopoly in Law and
Economics, 47 Yale L.J. 34.
Prohibitory legislation like the Sherman Law, defining the area
within which "competition" may have full play, of course loses its
effectiveness as the practical limitations increase; as such
considerations severely limit the number of separate enterprises
that can efficiently, or conveniently, exist, the need for careful
qualification of the scope of competition becomes manifest. Surely
it cannot be said in these situations that competition is, of
itself, a national policy. To do so would disregard not only those
areas of economic activity so long committed to government monopoly
as no longer to be thought open to competition, such as the post
office,
cf., e.g., 17 Stat. 292 (criminal offense to
establish unauthorized post office; provision since superseded),
and those areas, loosely spoken of as natural monopolies or -- more
broadly -- public utilities, in which active regulation has been
found necessary to compensate for the inability of competition to
provide adequate regulation. It would most strikingly disregard
areas where policy has shifted from one of prohibiting restraints
on competition to one of providing relief from the rigors of
competition, as has been true of railroads.
Compare, e.g.,
United States v. Trans-Missouri Freight Assn., 166 U.
S. 290, and
United States v. Joint-Traffic
Assn., 171 U. S. 505,
with the Transportation Act of 1920, 41 Stat. 456, 480;
Consolidation of Railroads, 63 I.C.C. 455.
Federal legislation affecting railroads is a familiar but far
from unique example of those many areas of economic
Page 346 U. S. 93
activity in which serious inroads have been made on an original
policy favoring competition. Indeed, as to the industry before us
in this case, there has been serious qualification of competition
as the regulating mechanism. The very fact that Congress has seen
fit to enter into the comprehensive regulation of communications
embodied in the Federal Communications Act of 1934 contradicts the
notion that national policy unqualifiedly favors competition in
communications. The Act, by its terms, prohibits competition by
those whose entry does not satisfy the "public interest" standard.
In this field, the reason for such restriction undoubtedly lies
primarily in the limited availability of international
communication facilities, recognized in a series of international
conventions. [
Footnote 3] Other
considerations may also have applied: Congress may have considered
the possible inconvenience to the public of duplicate facilities --
as would more clearly be the case with telephones -- or the
possible inadequacy of the demand for international communications
to make more than one enterprise economically or socially
desirable. Whatever the reasons, they are not for us to weigh; it
is for us to recognize that encouragement of competition as such
has not been considered the single or controlling reliance for
safeguarding the public interest. [
Footnote 4]
Of course, the fact that there is substantial regulation does
not preclude the regulatory agency from drawing on competition for
complementary or auxiliary support. Satisfactory accommodation of
the peculiarities of individual industries to the demands of the
public interest necessarily requires in each case a blend of
private forces
Page 346 U. S. 94
and public intervention. The Commission itself has recognized as
much by its changing policy toward authorization of duplicate
facilities. [
Footnote 5] But
this merely reinforces our conclusion that it is improper for the
Commission to suppose that the standard it has adopted is to be
derived without more from a national policy defined by legislation
and by the courts. Had the Commission clearly indicated that it
relied on its own evaluation of the needs of the industry, rather
than on what it deemed a national policy, its order would have a
different foundation. There can be no doubt that competition is a
relevant factor in weighing the public interest.
Cf. McLean
Trucking Co. v. United States, 321 U. S.
67,
321 U. S. 86-88.
Our difficulty arises from the fact that, while the Commission
recites that competition may have beneficial effects, it does so in
an abstract, sterile way. [
Footnote
6] Its opinion relies in this case
Page 346 U. S. 95
not on its independent conclusion, from the impact upon it of
the trends and needs of this industry, that competition is
desirable, but primarily on its reading of national policy, a
reading too loose and too much calculated to mislead in the
exercise of the discretion entrusted to it.
To say that national policy, without more, suffices for
authorization of a competing carrier wherever competition is
reasonably feasible would authorize the Commission to abdicate what
would seem to us one of the primary duties imposed on it by
Congress. And since we read the opinion of the Commission as saying
precisely that, we think the case must be remanded for its
reconsideration. We therefore do not say that authorization of
Mackay under all the relevant circumstances, including the
significance the Commission may rightly attribute to the facts on
the basis of its experience, may not be in the public interest.
[
Footnote 7]
Page 346 U. S. 96
We think it not inadmissible for the Commission, when it makes
manifest that, in so doing, it is conscientiously exercising the
discretion given it by Congress, to reach a conclusion whereby
authorizations would be granted wherever competition is reasonably
feasible. This is so precisely because the exercise of its
functions gives it accumulating insight not vouchsafed to courts
dealing episodically with the practical problems involved in such
determination. Here, however, the conclusion was not based on the
Commission's own judgment, but rather on the unjustified assumption
that it was Congress' judgment that such authorizations are
desirable.
Cf. Texas & Pac. R. Co. v. Gulf, C. & S.F.
R. Co., 270 U. S. 266,
270 U. S.
277.
In reaching a conclusion that duplicating authorizations are in
the public interest wherever competition is reasonably feasible,
the Commission is not required to make specific findings of
tangible benefit. It is not required to grant authorizations only
if there is a demonstration of facts indicating immediate benefit
to the public. To restrict the Commission's action to cases in
which tangible evidence appropriate for judicial determination is
available would disregard a major reason for the creation of
administrative agencies, better equipped as they are for weighing
intangibles "by specialization, by insight gained through
experience, and by more flexible procedure."
Far East
Conference v. United States, 342 U. S. 570,
342 U. S. 575.
In the nature of things, the possible benefits of competition do
not lend themselves to detailed forecast,
Page 346 U. S. 97
cf. Labor Board v. Seven-Up Bottling Co., 344 U.
S. 344,
344 U. S. 348,
but the Commission must at least warrant, as it were, that
competition would serve some beneficial purpose such as maintaining
good service and improving it. Although we think RCAC's contention
that an applicant must demonstrate tangible benefits is asking too
much, it is not too much to ask that there be ground for reasonable
expectation that competition may have some beneficial effect.
Merely to assume that competition is bound to be of advantage, in
an industry so regulated and so largely closed as is this one, is
not enough.
RCAC asks us to uphold the Court of Appeals decision on another
ground -- that the grant of authorization to Mackay would violate §
314 of the Communications Act, which forbids common ownership,
control or operation of radio and cable in international
communication whose purpose or effect may be substantially to
lessen competition, restrain commerce, or unlawfully to create a
monopoly. We cannot agree. There has been in recent years a
considerable shift of international telegraph traffic from cable to
radio, a shift strongly accentuated in some countries, including
Portugal and The Netherlands, where the overseas correspondent of
American companies is a government-controlled monopoly which
strongly advocates radio transmission. RCAC, in the two instances
before us, is the beneficiary of this discrimination against cable
transmission; with negligible exception, it has a monopoly of radio
traffic to these countries. In the light of these circumstances, we
think the Commission was justified in finding that the grant of
Mackay's authorization would increase, rather than decrease,
competition. Although it may be true that the relationship of
Mackay to Commercial is such that there is, and would be, no
competition between them, we think the Commission was entitled to
look at the entire competitive scene, and not confine itself
Page 346 U. S. 98
to one aspect of it. Mackay and its affiliated cable company had
a smaller share of traffic in 1947 than either RCAC or Western
Union, not only with Portugal and The Netherlands, but also with
the entire European area. That this authorization would better
enable the Mackay system to compete with RCAC and Western Union,
and would break up RCAC's monopoly of radio traffic with these
countries, seems to us an adequate basis for the Commission's
findings under § 314.
RCAC's arguments based on comparable language in the Clayton
Act, and on decisions under that Act and under the Sherman Law
cannot, we think, be sustained. What may substantially lessen
competition in those areas where competition is the main reliance
for regulation of the market cannot be automatically transplanted
to areas in which active regulation is entrusted to an
administrative agency; for reasons we have indicated above, what
competition is and should be in such areas must be read in the
light of the special considerations that have influenced Congress
to make specific provision for the particular industry. We
therefore think that the Commission's determination that the grant
of authorization to Mackay would not decrease competition, in the
special sense in which that word is to be used in this context, is
supported by the findings and satisfies the requirements of §
314.
For the reasons we have indicated, the judgment of the Court of
Appeals is vacated, and the case is remanded to that court with
instructions to remand it to the Federal Communications Commission
for such disposition as is open under this opinion.
It is so ordered.
MR. JUSTICE BLACK is of the opinion that the Commission's
findings have substantial evidential support, that the findings
adequately support the Commission's
Page 346 U. S. 99
order, that the judgment of the Court of Appeals should be
reversed, and that the Commission's order should be affirmed.
MR. JUSTICE REED and MR. JUSTICE JACKSON took no part in the
consideration or decision of this case.
* Together with No. 568,
Mackay Radio & Telegraph Co.,
Inc. v. RCA Communications, Inc., also on certiorari to the
same court.
[
Footnote 1]
A brief outline of earlier federal regulation of radio and wire
communication is given in Administrative Procedure in Government
Agencies, Monograph of the Attorney General's Committee on
Administrative Procedure, S.Doc. No. 186, 76th Cong., 3d Sess.,
Part 3, 81-84. Early executive and legislative action regarding the
laying of foreign cables is reviewed in 22 Op.Atty.Gen. 13
(1898).
[
Footnote 2]
See Hoover v. Intercity Radio Co., 52 App.D.C. 339, 286
F. 1003;
United States v. Zenith Radio
Corp., 12 F.2d
614; 35 Op.Atty.Gen. 126.
[
Footnote 3]
See Donovan, The Origin and Development of Radio Law
21-26.
[
Footnote 4]
We need not in this case attempt to suggest with any precision
where the balance is struck. Certainly the presence of §§ 313 and
314 in the Act, prohibiting certain restrictions on competition,
indicates the relevance of some competitive criteria, although it
hardly directs the Commission to rely on "competition."
[
Footnote 5]
See Brief for Commission, p. 6:
"From 1934 until 1939, when radiotelegraph was just emerging
from its infancy, the Commission generally denied applications for
circuits to countries already served by other American
radiotelegraph carriers. From 1939 to 1942, the Commission
generally granted applications for new circuits regardless of
whether the points involved were served by an existing
radiotelegraph circuit. From 1942 to 1943, an affirmative policy of
authorizing duplicating American circuits (a 'duplicate circuit
policy') was followed as a war measure at the behest of the Defense
Communications Board. From 1943 until 1945, also as a war measure,
the reverse course (a 'single circuit policy') was followed at the
behest of the Board of War Communications (the successor of the
Defense Communications Board)."
"From 1945 until the decision in the present case (1951) the
Commission granted a number of duplicating circuits."
(Citations and footnotes omitted.)
[
Footnote 6]
The Commission stated in its opinion:
"Competition can generally be expected to provide a powerful
incentive for the rendition of better service at lower cost. Those
seeking the patronage of customers are spurred on to install the
latest developments in the art in order to improve their services
or products and in order to enable them to reduce expenses, and
thereby lower their rates or prices. The benefits to be derived
from competition should therefore not be lightly discarded."
R.623. Surely one cannot conclude from this bare statement that
the Commission, whatever undisclosed awareness it may have of the
problem, has sufficiently laid bare its mind to enable us to
perform our reviewing function. And it is certainly not for us to
say, at least in the first instance, that authorization would be
desirable in these circumstances.
[
Footnote 7]
We need not stop to consider RCAC's argument that a prior
decision of the Commission, the so-called
Oslo decision,
affirmed by the Court of Appeals for the District of Columbia
Circuit, stands in the way.
Mackay Radio & Telegraph Co. v.
FCC, 68 App.D.C. 336, 97 F.2d 641. Although, in that case, the
facts were similar to those here, the Commission there decided that
duplicate facilities should not be authorized. In affirming, the
Court of Appeals simply affirmed that competition is not
necessarily in the public interest, not that it is never in the
public interest. The Court stated:
"Appellant contends that the Commission committed error of law
in failing to interpret 'public convenience, interest or necessity'
as necessarily requiring the licensing of a competing radio circuit
to Norway so as to end what appellant describes as the monopoly of
RCAC."
68 App.D.C. at 337, 97 F.2d at 642. It concluded,
"In our opinion, the Commission did not err as matter of law in
refusing to treat 'public interest, convenience or necessity' as
requiring, by definition, the licensing of appellant."
68 App.D.C. at 339, 97 F.2d at 644. We think the precise holding
of that case rather supports our conclusion in this case.
See Prettyman, J., dissenting below, 91 U.S.App.D.C. at
294, 201 F.2d at 699, 700.
MR. JUSTICE DOUGLAS, dissenting.
I agree with the Court that it is necessary under the Federal
Communications Act to establish that the licensing of a competitive
service offers a reasonable expectation of some beneficial effect,
measured by the public interest. That was indeed the view of the
Court of Appeals. But, on this record, the facts are that
"-- existing facilities are in excess of those required to
handle present and expected traffic;"
"-- the proposed operations will redistribute present traffic,
rather than generate new traffic;"
"-- the proposed service will not lower rates nor speed up
transmission nor improve the existing service in any respect;"
"-- the proposed service will aid Mackay financially and be
detrimental to RCA;"
"-- this is a field where, without the proposed service, there
is active competition and an excess of facilities to meet present
or expected needs."
I therefore agree with Judge Edgerton's opinion for the Court of
Appeals, 91 U.S.App.D.C. 289, 201 F.2d 694, that, on this showing,
the Commission acted without authority, and that its order should
be set aside. On the record before us, the facts are so unequivocal
that there is no apparent way for the Commission to meet the
standard approved both here and below. There is therefore no
occasion for a remand. I would affirm the judgment below.