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RCA Global Communications Inc. v. United States

decided: April 18, 1978.


Appeal by RCA Global Communications, Inc., from an order of the Federal Communications Commission issued after remand from this Court for further proceedings. Order affirmed.

Moore, Feinberg and Gurfein, Circuit Judges.

Author: Moore


MOORE, Circuit Judge:

Little purpose will be served by repeating the facts and legal conclusions contained in the several opinions of the Federal Communications Commission (FCC) and of this court issued during these protracted (some 13 years) proceedings. Reference is made to our opinion, 559 F.2d 881, reviewing the FCC orders of January 7, 1976, 57 F.C.C.2d 190, and September 27, 1976, 61 F.C.C.2d 183; our opinion, 563 F.2d 1, granting a rehearing and remanding the proceeding to the FCC for a limited review and the opinion and order of the FCC, January 8, 1978, F.C.C.2d, FCC 77-805, now before us for review.

In its original opinion, 559 F.2d 881, this court was disturbed by a direction of the FCC that all parties [international record carriers (IRCs)] "devote their efforts to forcing the public into an all-routed system". Id. at 890. Such a directive on its face, and in the absence of supporting facts, seemed at variance with, or even contrary to, the public interest and was opposed by the IRC parties. On remand, the FCC has expressly abandoned further consideration of prescribing an all-routed formula so that now we need only consider in accordance with our limited remand "whether the promulgation of the 'interim' formula has, in the opinion of the FCC, a factual basis in the record independent of the FCC's tentative preference for an all-routed system". 563 F.2d at 3.

Only the sketchiest reference to ancient history (1943) is required. Because the Western Union (WU)-Postal Telegraph merger in 1943 created a potentially monopolistic situation, the FCC, pursuant to Congressional directive, adopted for international telegram traffic, a so-called international formula in an attempt under conditions as they then existed to achieve a "just, reasonable and equitable formula" for the distribution of messages by WU to the various IRCs of the 1943 era.

Naturally, with the passage of time (1943-1976) conditions changed. These changes have been succinctly summarized by the FCC, 57 F.C.C.2d 190, 201:

"The IRCs expanded their gateway operations, and self-generated traffic (by definition specifically routed) became a more important part of total traffic than it was during the base year. The rapid increase in gate-way-originated traffic upset the delicate balance needed for the formula operation and caused a proportionate decline in the relative amount of unrouted traffic available to redress imbalances . . . ."

These factual changes led the FCC and the intervenors herein to claim that the 1943 formula was no longer "just, reasonable and equitable" under 1976 conditions. After our remand, the interested parties (referred to as WU, WUI, ITT, TRT and RCA) submitted their comments to the FCC together with such factual material as was pertinent. Financial interests in such matters invariably being paramount, RCA and WUI stressed the loss of revenue (actual and potential) to them under the new formula; ITT and TRT pointed out that the long-endured inequities suffered by them would at last be rectified.

The focal point of RCA's attack on the new formula is the provision that the distribution of "unrouted" messages be made "among the carriers in direct proportion to their share of routed traffic" whereas under the old formula RCA was awarded the lion's share to the disadvantage of ITT, TRT and the smaller carriers.

Our function on review is limited. We are not to create and prescribe a formula of our own choosing. We lack the background information and experience to do so. We must look to the agency (the FCC) upon which Congress has devolved this responsibility. Courts have frequently taken a negative approach in expressing this thought, namely, that the agency's decision must be approved unless it is "arbitrary and capricious" or is not supported by substantial evidence. However, in our opinion, wherever possible a more affirmative approach is to be preferred where the facts, as here, warrant it.

We can only reiterate our statement upon the petition for rehearing:

"Although the purpose of the 1943 formula was to freeze the shares of industry participation because of the potentially unique situation created by the merger [of Western Union and Postal], that purpose cannot be stretched to giving RCA a right in perpetuity to a fixed share of the telegraphic market regardless of changing conditions and circumstances. It certainly could not have been the intention of the Congress or the FCC to permit RCA to sit back and do nothing to counteract ...

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