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In the Matter of Alleged Non-Compliance by RCN of NY

186 N.J. 83, 892 A.2d 636 (2006)

TELECOMMUNICATIONS—Even though, when installed, a cable company’s wires ran under what was a private road, once the road was dedicated to the municipality and the road became a public right of way, the cable system became subject to public utilities regulation.

A telecommunications company challenged the determination by the New Jersey Board of Public Utilities (BPU) that its satellite master antenna system constituted a “cable system” under the Federal Cable Act, and was therefore subject to BPU regulation. The company’s system functioned by receiving a microwave signal at a centrally located antenna within a residential complex and re-transmitting that signal to all of the buildings within the complex through wires that ran underneath public roads. When the complex was built, the roads were private roads. They were subsequently dedicated to the municipality. The Federal Cable Act is a dual state-federal regulatory scheme. It provides for the Federal Communications Commission (FCC) to regulate the operational aspects of cable television systems (such as channel regulations), but leaves the non-operational aspects (franchise selection and maintenance of rights of way) to the states. If a company’s satellite system qualifies as a “cable system,” then it is subject to BPU regulations. If a company’s system is not a “cable system” within the meaning of the Federal Cable Act, its actions cannot be regulated by BPU.

Under Sec. 522(7)(B) of the Act, a cable company “using any public right-of-way” is subject to both federal and local regulation. Cable companies that do not “use” public rights of way are not subject to local regulation. BPU determined that because the cable company’s wires ran underneath public roads, it “used” the public right of way and therefore was subject to BPU regulation. The company disagreed and requested a rehearing of BPU’s order. When a rehearing was denied, the company appealed and the Appellate Division reversed, holding that the company was not a “cable system” within the meaning of the Federal Cable Act. The Appellate Division reasoned that the term “use” must be interpreted in light of “congressional intent to encourage to encourage the spread of cable televison by limiting regulation.” It found that it would be contrary to Congressional intent to subject the company to BPU regulations as a result of the dedication of the complex’s roads after the company began operating its satellite television system. Now, the BPU appealed.

The Supreme Court reversed, noting that the determination as to whether or not the Federal Cable Act applied hinged on the interpretation of the word “use” in the context of “using any public right of way.” The Court noted that when a statute is ambiguous or silent, a reviewing court needs to look toward the interpretation of the agency that administers that statute. Thus, the Court looked to the FCC’s interpretation of the Federal Cable Act. The FCC had determined that if telecommunications wires crossed over the right of way on public roads, it constituted “use” of the public right of way and subjected that company to both federal and local regulation. The Court then had to determine whether or not the FCC’s interpretation was reasonable. If the FCC’s interpretation was not arbitrary, capricious or unreasonable, it had to be upheld. Based on its review, the Court found that the regulation of wires that cross over a public right of way is logically related to a local government’s ability to operate and maintain the right of way and therefore was reasonable.

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