Mr. WATSON. Really, you don't anticipate a 15-day nonduplication delay or a 1-day nonduplication delay to make any material difference in seeing a 1936 movie run? [Laughter.]

Mr. HENRY. That is right. Excuse me, except insofar as those movies are shown on the networks. If they are shown on networks, then the nonduplication protection might well have some bearing. Mr. VAN DEERLIN. A technical question that has been touched on only tangentially: the matter of inferior signals. Now quite apart from going and turning a switch on the back of the set to get on or off your antenna, isn't it true that CATV's can't deliver as good a local picture yet as it can on recorded signals, because of the impact of strong local signals coming in over the wire, and creating distortion? Mr. HENRY. Well, that is if they carry them on the same channel, there is some difficulty in there. I am not sure of the extent to which they have been able to work out this problem. I believe I am right in saying that many of the local stations are carried on channel.

Mr. VAN DEERLIN. Yes, but if there is a choice between network on a local station that has an inferior picture on the wire, or on the imported signal which is pure, would this point be an added factor in discouraging local viewing?

Mr. HENRY. Well, there is an inherent problem here, yes. That is, that the local station's signal on the CATV may not be as good as some of the others.

Mr. VAN DEERLIN. In some cases, as a convenience to the local stations, their wire systems have been transferring the channels with outside channels, so that in San Diego, Los Angeles, channel 4 could come in on channel 10 in San Diego, and channel 10 would be switched to channel 4, or channel 10 would be carried on both 10 and 4. This would create havoc, would it not, if it became a substantial practice, great havoc in a program audience rating system which at best is spotty?

Mr. HENRY. Well, it would be an added difficulty, there is no question about that.

Mr. VAN DEERLIN. And therefore, perhaps of

Mr. HENRY. An adverse effect on the local station.

Mr. VAN DEERLIN. Well, and also on programing policy, and advertising policy, because these sales are made on the basis of share of audience.

Mr. HENRY. Yes, it could. That is, as I say, an inherent difficulty, and I am not sure there is any rule or any policy that we can adopt to take care of it. It is just one of the factors that is there. We expect the industry to do the best they can to eliminate, but that is about all we can do.

Mr. VAN DEERLIN. Thank you, Mr. Chairman.
The CHAIRMAN. Mr. Broyhill.

Mr. BROYHILL. Mr. Chairman, you indicated in answer to a question of Mr. Kornegay that the Commission does not presently have any authority to regulate the construction of a CATV system. Now as I interpret the bill which is before us, H.R. 13286, you would have this authority if this is passed. Is that correct? To prescribe regulations as to how the wires would be strung from the antenna to the homes?

Mr. HENRY. Well, we don't know. We haven't decided every jurisdictional question down to the last detail. We think we have jurisdiction to regulate CATV systems, so as to promote our main tasks under the Communications Act. We don't know how far down this goes. We won't know until facts develop, and circumstances develop, but we do know that we do not intend to regulate that aspect of it, and we do know, though, that one of the effects of our regulation might be to halt construction in the top hundred markets.

Mr. BROYHILL. Well, how would you interpret the word "operation" in lines 11 and 12 on page 2 of the bill, "To issue orders to make rules and regulations to prescribe conditions and how to operate the systems"?

I mean, is this what you would actually be also telling the CATV systems how much they could charge for their service?

Mr. HENRY. No, the "operation" there generally is to distinguish operation from construction and technical characteristics, and it would include the areas that we have been discussing so far, that is, the nonduplication protection, the carriage of the local station, and matters of that kind.

Mr. BROYHILL. Mr. Younger indicated there would be a number of amendments. Would you object, then, to an amendment to clear up this language to conform with what you have just stated?

Mr. HENRY. No. We have no objection to that. We think it can be clarified in the legislative history, but any clarifying language in the bill iteself would not be objectionable to us.

Mr. BROYHILL. One other question on another subject. I think I asked you this before, but just for the record, if a CATV system is presently operating in a small town, let's say, outside of Charlotte, N.C., and this small town was considered in the Charlotte market area that is in the 100 top markets, let's say, now does this CATV system have to come to the FCC in order to get that one more customer in that town, or is it only when they expand to another city, or to another location?

Mr. HENRY. Generally, it is when they expand to another geographic area that the franchise doesn't cover.

Mr. BROYHILL. In other words, if they want to continue their expansion in that one town in which they have the franchise. Mr. HENRY. They may do so.

Mr. BROYHILL. They may do so without coming to the FCC? Mr. HENRY. Yes, I don't know the facts in the particular area you are talking about, but I can say as a general proposition, they can. Mr. BROYHILL. I don't know of any one particular one.

just asking.

Mr. HENRY. Yes, as a general proposition, they can.
Mr. BROYHILL. Thank you very much.

The CHAIRMAN. Mr. Rooney?

I was

Mr. ROONEY. Mr. Chairman, I would like to compliment you yesterday for your excellent presentation of the charts and graphs over there. I think it gave the members of this committee a better understanding of microwave and off-the-air television. It certainly has given me better understanding.

I come from Pennsylvania, a State that has been well served by the CATV industry for many years, and the CATV industry in the

Commonwealth of Pennsylvania has thousands of employees that rely on the CATV industry for the support of their families.

I am also very much concerned as the FCC should be about local stations, because we have to preserve local stations. But the CATV industry has seemed to be put on the side of the villian with respect to its problem with the FCC..

I would like to ask you whether or not the CATV industry nationally was not trying to come up with a bill that would have been in accordance with the rules, your thinking, and also a bill that would also would not have any adverse effect on the CATV industry.

Mr. HENRY. Well, I think they were trying to come up with something along these lines, yes.

Mr. ROONEY. Right. And last year, I believe, in this same committee, we were discussing the Federal Trade Commission's bill about labeling cigarettes, and the cigarette industry made a valiant effort to come up with legislation that would satisfy them and also satisfy the FTC and at that time, the FTC saw that the cigarette industry was trying to do something about the problem, and gave them a stay before they promulgated any rule.

Now why can't the FCC do the same thing in this respect? Why did it have to come about so quickly?

Mr. HENRY. Well, this matter has been pending at the FCC now for, I think, at least 3 years. We have been studying it.

Mr. ROONEY. And that is how long the Federal Trade Commission was studying the cigarette labeling, also?

Mr. HENRY. Well, I am not as familiar with that as I am with CATV, but I think we have given the CATV industry and the broadcasting industry and everybody else concerned full opportunity to present all of their views to us, and the problem, Mr. Rooney, is that inaction here is really, as we see it, a rather fast-moving and potentially radical change in the situation. It isn't just preserving the status If it were simply preserving the status quo, I believe your approach may well have been the one we would have taken, but we just didn't see it that way.

quo.

Mr. ROONEY. How can your staff-you claim that there are 1,200 off-the-air CATV companies in effect now, there are 400 microwave, 1,200 franchises have been granted at the local level, and there are 2,250 applications pending.

Do you have the staff to hear all of these applications, and don't you think it will be years, 5 years or 6 years before you have the opportunity to hear all of these companies?

Mr. HENRY. Well, I don't think that we will get that many petitions at the FCC. I hope not. We will get a great many of them, though, and I do recognize that we are liable to incur some delays in handling those petitions. We are trying to gear up for it as best we can, and we now have under study the question of just what staff adjustments we have to make.

I am hopeful that when we hear or when we have handled a number of these matters, we will be able to proceed more expeditiously, either through the changing of the procedure to do away with hearings and to develop general rules, or in eliminating some of the fact issues that would be involved in separate hearings, and thus handle them more expeditiously.

I would agree with you that we are going to experience some delay. I am confident that it is not going to be 5 or 6 years, however. Mr. ROONEY. Yes, sir; you talked about station WNEP-TV in Scranton.

Mr. HENRY. Yes.

Mr. ROONEY. And incidentally, I arranged for the owner of that station and the owner of the Wilkes-Barre station to come here and visit the members of the Pennsylvania delegation. You showed the A and B contour, and said that there were x number of sets that were not served, not carrying the local television station, and I think that is wrong, and I believe that the CATV industry thinks that it is wrong, and they have already corrected their wrongful doings, are now carrying the local stations, but is it not possible that despite the fact that somebody can live in the contour A, or contour of B, he still will not be able to get the reception of the local station unless he has a CATV hookup, because of the terrain?

Mr. HENRY. Yes, that is perfectly true, either the CATV or a highly expensive outside antenna.

Mr. ROONEY. So in effect, the CATV is protecting the local UHF station in that respect, is it not?

Mr. HENRY. Certainly they are, if they carry the local station, yes. Mr. ROONEY. Now you are very much concerned about protecting UHF stations. How many UHF stations in the past year have gone out of business because of being adversely affected by CATV? Mr. HENRY. None, to my knowledge.

Mr. ROONEY. None, to your knowledge. Well, why is all the concern, then? Why this crash program? You promulgate the proposal, and then you come before the Congress and ask us to approve it. Don't you think you are putting the cart before the horse?

Mr. HENRY. Well, again, Mr. Rooney, we have been at it for a good many years. We have continuously taken the position that it was an important matter, and that we welcomed congressional guidance on it, but that we felt in the absence of congressional guidance, we should act.

I don't believe that we should wait for a number of UHF stations to go off the air before taking action.

Mr. ROONEY. But you said none went off the air.

Mr. HENRY. That is right.

Mr. ROONEY. Are you anticipating that this might happen? Mr. HENRY. Well, we don't know. But we think that they might. And again, we don't believe that our action prevents the growth of CATV. Now if we had made a choice, and said, "no CATV," I think the point would be well taken; but we feel that CATV can grow and prosper under our rules.

Mr. ROONEY. I believe that CATV has grown and prospered, and it has helped the local UHF stations to grow and prosper, and I believe that the FCC should have some regulatory power over the CATV; but the manner in which you are doing it, I think, is wrong. How can you justify the immediate imposition of general rules by the means of a press release?

Mr. HENRY. Well, we did not make those rules effective; and as a matter of fact, I should clarify the record. Some are not yet effective.

These will become effective, I think, April the 18th. But they have been promulgated.

The one thing that we made, that we said in the public notice was that CATV systems commencing operation after February 15 would not have grandfather rights. But the rules themselves were then not made effective, and some are not yet effective.

may.

Mr. ROONEY. I have one other question, Mr. Chairman, if I If you protect the broadcasting companies against competition in specific areas, don't you think by doing this you will be removing the broadcasters' incentive to give the people better local programs?

Mr. HENRY. Well, I think we would, if our rules acted too effectively to prohibit the growth of CATV, but my feeling is, under our rules, CATV will come in and compete, and give them some very tough competition, and this will be an incentive for them to produce better programs.

Mr. ROONEY. Well, Mr. Chairman, you are concerned very much about the growth of CATV, and you want to see it grow, but in my opinion, you have stymied the growth of the CATV industry by five years, and you have deprived the American people of multiple choice in selections of television programs.

Mr. HENRY. Well, we have delayed it some, Mr. Rooney. I hope it is not 5 years.

The CHAIRMAN. Mr. Harvey?

Mr. HARVEY. Thank you, Mr. Chairman.

Chairman Henry, I, for one, would like to congratulate you. I think you have done a very fine job, not only in your presentation here the last 2 days, but I think that the FCC has done very well in resolving an extremely difficult problem. I don't mean my remarks to be construed that I am entirely in accord with your regulations, whatsoever; because I am not. There are some things I disagree with, too. But I can tell from the amount of mail that I have received on this problem both from CATV people and from broadcasters as well, that these are not easy questions to resolve, and I think that the FCC, though perhaps a little late, has stepped into this thing and done a very admirable job today, and I would be remiss if I didn't say that to you, and think you have done a very fine job.

Mr. HENRY. Thank you.

Mr. HARVEY. I would just for a moment like to explore what the logic of the Commission was in establishing the grandfather clause, because that very definitely hits right at the pocketbook of people involved in the CATV end of this thing.

Now I notice in your rules that, and I am referring to section 148 there, where you say "we, therefore, shall grandfather all systems. which were in operation upon February 15, 1966."

Now my question is, What of the CATV operator who wasn't yet in operation, but who has spent thousands of dollars, perhaps, upon equipment, who had gone out and entered into contract with Bell systems, and who had gotten very deeply involved in this thing? I am interested in why the Commission used the words "in tion," for example, in contrast to or rather than words such as "substantially constructed," for example, or something along that line? Mr. HENRY. Well, again, you have to take into account a number of things, and this was the way we came out. The industry, both

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