ithin the range of 75 to 90 miles, wouldn't that be a substantial serve to the viewer? Mr. MERRILL. In some areas it will be a beneficial service if that is I they can receive and that would be one narrow function that CATV ould provide under this pattern. But its is capable of providing much broader type of reception service. We have seen no compelling arugment to restrict its activities to ist this. It certainly would accomplish the purpose of stifling the rowth of the industry. Mr. KORNEGAY. I have gotten the impression through some of the stimony here that some of the biggest fields, the major fields of roadcasters is bringing in distant signals. It was testified yesterday response to a question asked by one of the members of the committee at if nothing was done in any way to control CATV, that ultimately e would end up with only a few stations in the metropolitan areas of e country and everybody would be looking at them. I don't know whether that is right or not. I am just trying to get our views on what you think would happen. I think we would all gree that that would not be good, that it would not be in the public terest. Mr. MERRILL. There would be no argument on that point at all, sir. he point I would like to make and that I tried to make in my testiony is that this case has not been proven. In Yuma, Ariz., where operate a small TV station, we bring into that area and provide by ception service to about 50 percent of the total TV homes in the rea, all of the independent signals broadcast by the Los Angeles ations, the independent signals broadcast by the Phoenix stations, d the Mexican language stations from Mexicali, Mexico, plus two lucation stations, one from each State, and we do not find that there as been any significant dilution in our revenue-producing capability. We find that we lose some audience certainly but not enough to gnificantly affect the revenue of the station. After all, you will find in the city of Los Angeles, which I think as probably more television available off the air than any other city the United States, that during prime time hours, the combined aximum penetration of all of the nonnetwork stations into the arket is 16 percent. Certainly in a CATV area the penetration is going to be subantially less than that if every city had the same type of exposure. o I don't see where the case has been made for the type of developent that has been thrown up here as the horrible that is going to appen if CATV is allowed to continue on uncontrolled growth. We have had regulations all the time. We have always had to ace city councils, assemblies, and county officials in the areas in which e operate, convince them that what we are doing is in the public terest, is not going to damage anyone. They are as interested in cal television as anyone else. In the past 10 years we have used exnsively microwave common carriers service and the use of that rvice has been directly controlled by the FCC and since the Carter ountain case, had to accept any conditions they wanted to impose on e use of that facility. Mr. KORNEGAY. Once you get your franchise you are pretty much your own then. Mr. MERRILL. Not necessarily. The franchise in most areas is subject to review and cancellation for cause or for abuse. Mr. KORNEGAY. How long have you operated your CATV system in Yuma? Mr. MERRILL. Five years. Mr. KORNEGAY. Of course, when you got your franchise from the city of Yuma it was for what length of period! Mr. MERRILL. Ten years. It is nonexclusive, too, I might add. Mr. KORNEGAY. Have you had any significant lowering of your revenues of your station at Yuma? Mr. MERRILL. Actually our revenues are higher than they were 3 years ago. There has been some growth in the area. I don't think there has been any measurable change in our revenue-producing capability. Mr. KORNEGAY. I think that is all, Mr. Chairman. The CHAIRMAN. Mr. Van Deerlin. Mr. VAN DEERLIN. Mr. Merrill, without revealing any trade secrets, could you tell the committee whether the orders that the Commission has thus far issued have been-have had any effect on your planning! Mr. MERRILL. I don't mind telling this committee that in my principal business, Ameco, Inc., where I am responsible to 3.000 stockholders and about 1,500 employees, that since the publication of the second report and order, we have had stopped or canceled over $3 million worth of work and have had to lay off more than a hundred people. I think this is just a harbinger of the things to come, and the main reason for this occurring has been the cancellation of the capital requirements and the credit requirements for the people who contemplated these facilities because of the cloud which has been cast over the future of their operations. Mr. VAN DEERLIN. It has discouraged investors in this line of activity? Mr. MERRILL. Certainly it has. Most everyone who has had any exposure to the operations of the FCC knows that a comparative hearing, and that is where any CATV development anywhere can be thrown, with the burden of proof on the CATV operator, will last anywhere from 3 to 5 years. We took one such individual who had had his financial base pulled out from under him over to the Commission yesterday afternoon. We found out that their complete staff set up to date for handling this thing consists of two part-time employees up in the attic. They are going to have 400 or 500 of these requests for waiver and all sorts of hearings that they are going to have to have of one sort or another. It will be a complete logjam. Mr. VAN DEERLIN. So that even if each case were decided favorably to the industry, delays would be such that you would suffer decline both immediately and over the long haul in revenue? Mr. MERRILL. I think so. Mr. VAN DEERLIN. Do you feel that you cannot live with the regulations that have thus far been announced by the FCC? Mr. MERRILL. It is my personal opinion, I was taken to task for this for-but it is still my opinion, that the controlling staff members at the FCC who have promulgated these rules do not have the constructive control of CATV in mind. I have been embittered perhaps by at least 5 years of struggling with them for what growth we have had. With these tools to work against us, in my opinion, it is going to be impossible. Now maybe I am being a prophet of doom, I don't know, but I am merely expressing my own personal opinion. Mr. VAN DEERLIN. My colleague is interested in knowing what the FCC has done for the last 5 years that has impinged upon the development of the CATV industry? Mr. MERRILL. Well, most of the growth in the CATV industry is dependent to a large extent on receiving grants for microwave common carriers to provide relay service. Since the inauguration of the Carter Mountain case which was at least 5 years ago the Commission attitude toward the use of microwave by our industry has been openly hostile. There have been delays of up to 3 years in waiting for grants. Every administrative roadblock that you can conceive of has been thrown in the way of issuing these grants. It has been a very disillusioning experience for many of us in the industry. I realize that some of this may sound extreme but one of the principal things they have done which has done more to stifle the use of microwave by the industry than anything else is the promulgation of the so-called 50-50 rule governing the use of microwave. Through this rule they have precluded the use of microwave common carrier to extend service in the area unless at least 50 percent of the service to be extended was to go to a nonaffiliated customer. This has made it virtually impossible to open up what we would call virgin territory because you don't go into these things except on a speculative basis. Nobody knows whether the market is there except the entrepreneur who is going to go in to make the attempt. If he is the only one going in then it is virtually impossible to meet this 50-50 rule. Now there is no reason in logic or law that I can see for this rule, but it has been imposed. We have had so many court fights to take care of that we simply have not challenged it in court. That is one example. There have been many administrative procedures imposed on us that we feel are necessary. I can see no reason for them from my point of view, I had a hearing, for example, counsel reminds me, where we again were accused of being in violation of the 50-50 concept. We did not meet it, and consequently they had a full hearing which was extremely expensive, it cost in excess of $50,000. After the hearing was concluded it was 2 years before a decision was handed down, which was adverse to us, I might add. Mr. VAN DEERLIN. I yield to Mr. Moss. Mr. Moss. Mr. Merrill, then it sounds to me as though you are trying to convey the impression here of an industry frustrated by regulatory excesses. Isn't it a fact that during this 5-year period you speak of that this is an industry which has had spectacular growth? Mr. MERRILL. This industry has had growth. I think the term explosive, spectacular, all the things that have been used to try to create the connotation that it is a wild, uncontrolled sort of thing are a little bit over 62-610-66- -30 Mr. Moss. Can't you be spectacular without being wild and uncontrolled? Mr. MERRILL. I think so but apparently there are others who don't. Mr. Moss. Why don't we take a more orthodox definition? I was not intending to convey-I could have used the terms wild and uncontrolled but I carefully selected spectacular. It has been significant? Mr. MERRILL. It has been significant. The industry has about doubled in the last 5 years. Mr. Moss. What is the picture of frustration? Mr. MERRILL. Well, when you double from a 2-percent saturation of your market to a 4-percent saturation of your market you certainly are not frustrated but you certainly are not talking about what I think any substantial Mr. Moss. Have you any idea how many applications are pending before the city councils, other governmental agencies and entities for franchise to expand this business? Mr. MERRILL. No, I have no ideas. Mr. Moss. Yes. Mr. MERRILL. They are in the record. I don't have the figures available immediately. Mr. Moss. A very large number, is it not? Mr. MERRILL. Large numbers. Mr. Moss. Take the city of Sacramento. There is very likely com petition. Mr. MERRILL. I am aware of that. Mr. Moss. There does not seem to be a lack of confidence that once given the franchise by the city that there will be any absence of investment capital or risk capital for the setting up of a system of community antenna television. Mr. YOUNGER. Will the gentleman yield? Mr. Moss. I can't yield because the gentleman from California, Mr. Van Deerlin, has the floor and has kindly yielded to me. But I will stop asking questions in the hope that he will yield to you. The CHAIRMAN. Will the gentleman yield to Mr. Younger? Mr. YOUNGER. I gather from your testimony, Mr. Merrill, that your difficulty arose in the microwave field, not just on the plain antenna field of CATV. Is that really true? Mr. MERRILL. The difficulty in the past has been in that field. Mr. YOUNGER. During the 5 years of your frustration you are talking about arose in those cases where you were using microwave? Mr. MERRILL. I did not use the term frustration, I don't believe. We have had considerable difficulty in obtaining microwave facilities that we have felt we legitimately required in the past 5 years. Mr. YOUNGER. I mean it was in the microwave field, not in the plain antenna field. Mr. MERRILL. That is right. Mr. YOUNGER. That is what I wanted for the record. Mr. Moss. On that matter of microwave, how many applications have been granted in this period of time? How many applications have been filed? These are the things you have to look at if the implication of a deliberate dragging of the feet on the part of the ommission is to be supported. I recall back in the subcommitteee Oversight Subcommittee days here in this committee where we d complaints from broadcasters that they were faced with inordinate lays because of the workload on the Commission. Do you feel that these matters of time in processing applications ould reflect a deliberate foot-dragging on the part of the Commission a heavy load on the Commission? Mr. MERRILL. In our case I feel it is deliberate. Mr. Moss, ordirily common carrier microwave applications were being processed a period of 30 to 90 days before this Mr. Moss. I would ask at this point that the Commission staff be quested to bring in-to supply us with pertinent figures as to the mber of applications, the number granted, the number pending, and e average period of time. I would like to have the same information the processing of television broadcast applications in 1952 and 1953 that we will have some meaningful comparisons as a part of this cord. Mr. MERRILL. We will be glad to prepare that ourselves if you don't nt to burden the Commission with it. Mr. Moss. I would much prefer they do it. I want to see if they ag their feet with me. Mr. MERRILL. I would hate to see that done. The information requested follows:) 1. HARLEY O. STAGGERS, FEDERAL COMMUNICATIONS COMMISSION, Washington, D. C., April 15, 1966. irman, Committee on Interstate and Foreign Commerce, use of Representatives, shington, D.C. EAR MR. CHAIRMAN: During the hearings of your committee on community enna television, Congressman John E. Moss on April 6, 1966 (transcript, vol. 5, 770-771) requested that we furnish your committee pertinent information the processing, during the past 5 years, of applications for microwave facilito serve community antenna television systems. His request is for statistical à on the number of such applications that have been filed, the number granted, number pending, and the average period of processing time. Congressman s also asked for the same information on the processing of television broadapplications in 1952 and 1953 for the purposes of comparison. he request for information arose out of a colloquy which had concerned itself ntially with the granting of applications for construction permit for common ier microwave authorizations to serve CATV systems (transcript of Apr. 6, S hearings, vol. 5, pp. 768-771). As you know, this Commission has granted rowave authorizations to serve CATV systems in two services-in the common ier service and the business radio authorizations in the safety and special o service. We submit information pertinent to both services. he following statistical information relates to individual applications for truction permit for common carrier microwave authorizations to serve CATV ems during the past 5 years: |