The opinion of the court was delivered by: MORRIS E. LASKER
The Cable Doctor, Inc. and Kenneth Sanders (collectively "Cable Doctor") move to dismiss the complaint of Manhattan Cable Television, Inc. ("MCTV") under Rule 12(b)(6) of the Fed. R. Civ. P. The complaint alleges that Cable Doctor installed an additional outlet for an MCTV subscriber for a fee which allowed that subscriber to receive the cable signal provided by MCTV on a second television set at the subscriber's home. MCTV provides the same service pursuant to a franchise agreement with New York City. MCTV's cable services include the provision of cable programming for one television set, and, for an additional fee, the provision of cable programming for additional televisions at the subscriber's home.
MCTV alleges that Cable Doctor's unauthorized installation of an additional outlet constitutes a violation of § 605(a) of the federal Communications Act of 1934 ("Communications Act") and § 553(a)(1) of the Cable Communications Policy Act of 1984 ("Cable Policy Act"). MCTV also alleges the violation of New York State Executive Law Section 825(6). Cable Doctor contends that its activities fall outside the scope of the federal and state regulations.
The Communications Act of 1934 provided the framework for the regulation of the communications industry at the time of its enactment, which was well before the advent of cable television. By contrast, the Cable Policy Act of 1984 established a national policy to guide the development of cable television. H.R. Rep. 98-934, 98th Cong., 2d Sess. 40, reprinted in 1984 U.S. Code Cong. & Ad. News 4655, 4677. Section 825 of the New York State Executive Law regulates the rates which a cable television company may charge to its subscribers.
A. Section 605(a) of the Communications Act of 1934.
In pertinent part, 47 U.S.C. 605(a) provides:
. . . No person receiving, assisting in receiving, transmitting, or assisting in transmitting any interstate or foreign communication by wire or radio shall divulge or publish the existence, contents, substance, purport, effect, or meaning thereof except through authorized channels of transmission or reception, (1) to any person other than the addressee. . . .
The issue here is whether Cable Doctor is a "person assisting in receiving . . . interstate or foreign communications by wire or radio" and whether Cable Doctor has "divulged or published . . . the contents . . . thereof . . . to any person other than the adressee." Although the Communications Act was enacted well before cable television came into existence, judicial decisions have extended the reach of § 605(a) to this relatively new technology, but they have not extended the scope of § 605(a) to Cable Doctor's conduct.
MCTV argues that "by using MCTV equipment, which they were not authorized to use, to provide the additional outlet in the subscriber's residence, which they were not authorized to install, defendants have violated 47 U.S.C. § 605," (Pl. Mem. Opp. at 6). It contends that because § 605(a) prohibits "person(s) assisting in receiving . . . communications by wire or radio . . . [from] divulging or publishing . . . the contents . . . thereof except through authorized channels of transmission or reception," (emphasis in Pl.'s Mem.) the fact that Cable Doctor lacked authorization amounts to a violation of § 605(a). But the absence of authorization would only be actionable under the statute if the conduct fell within the scope of the statute.
Cable Doctor argues that its conduct does not violate § 605(a) because the additional outlet was provided to one of plaintiff's paying subscribers who was already a member of MCTV's intended audience. Therefore, defendant contends, it did nothing which could be construed as publishing the contents of any communication "to any other person than the addressee," that is, to someone other than the intended recipient.
Most of the decisions interpreting § 605(a) deal only with devices that allow the user to intercept a cable service by descrambling the encoded signal. For, example, in Home Box Office, Inc. v. Advanced Consumer Technology, Movie Antenna, Inc., 549 F. Supp. 14 (S.D.N.Y. 1981), the court held that § 605 (a) of the Communications Act barred the manufacture and sale of a device which permitted purchasers to intercept cable programs and thus avoid the subscription fee charged by plaintiff. See also Telerate Systems, Inc. v. Caro, 689 F. Supp. 221 (S.D.N.Y. 1988); Porter County Cable Company v. Moyer, 624 F. Supp. 1 (N.D. Ind. 1983). These cases do not deal with the present fact pattern. The interception of information, or so-called "tapping," is clearly distinct from the installation of a second outlet for the reception of the signal at a subscriber's home.
Two cases interpreting § 605 have dealt with other types of cable equipment. Both held that the equipment in question did not fall within the scope of the Act. In Shenango Cable TV, Inc. v. Tandy Corporation, 631 F. Supp. 835 (W.D. Penn. 1986), the court ruled that a device which restored the possibility of taping a cable program on one channel while viewing another cable program, and which also restored remote channel control for the subscriber, did not violate either § 605(a) of the Communications Act or § 553(a)(1) of the Cable Policy Act discussed below. The court emphasized that the device sold by the defendant did not allow the user to receive channels he had not paid for or unscramble a cable signal. Shenango Cable TV, Inc., 631 F. Supp. at 839. As the court put it:
the language, legislative history and case law of the Communications Act of 1934 and the Cable Communications [Policy] Act of 1984 unequivocally establish that [there is liability only when there is the intent] that the equipment be used for the interception or pirating of cable signals . . .
Shenango Cable TV, Inc., 631 F. Supp. at 838.
In sum, although § 605(a) has been interpreted to give some protection to the cable industry, it has not been held to apply to the activities of Cable Doctor which plaintiff sues to enjoin. There is no suggestion in § 605 itself or in the decisions construing it that the Act was intended to cover the installation of an additional outlet for the reception of cable programming, and MCTV has offered no authority or rationale as to why § 605 (a) should now be read more broadly. Section 605(a) prohibits "divulging or publishing . . . the contents [of interstate radio or wire communication] . . . to any other person than the addressee." The language of the section quite clearly covers the installation of devices which allow the interception and descrambling of encoded cable programming because they can be used to divulge or publish cable programming to persons other than the intended customer. In contrast, the installation of a second outlet on the premises of a party who is already a customer of a cable operator involves neither publishing nor divulging the content of cable programming. Moreover, as Cable Doctor points out, the customer is the intended addressee of the cable programming. No one else gains access to the content of the transmission through the installation of a second outlet.
The Communications Act of 1934 could not have been intended to regulate the cable television industry at the time of its enactment. The application of the Act to television therefore proceeds in waters uncharted by legislative intent. Since the enactment of the Cable Policy Act of 1984, discussed below, there has been detailed congressional guidance on the regulation of the cable industry. Disputes about the regulation of the cable industry should therefore be primarily resolved by looking to the new Act, and not to the ...