High Court Will Decide if Phone Firms Can Carry TV

With the telecommunications world in a legal flux, the Supreme Court announced Monday it would rule on whether phone companies have a free-speech right to deliver television signals over their wires.

If the answer is “yes,” local telephone companies could become powerful players in the TV business, because they have both lines running to every home and enough money to expand into a new type of service.

For just that reason, Clinton Administration lawyers have opposed allowing phone companies to enter the business of transmitting video programming. Local phone companies could use their “monopoly profits” to subsidize expansion into TV transmission and drive out the local cable companies, U.S. Solicitor General Drew S. Days III told the court.

But lawyers for the phone companies say the increased competition would benefit consumers and drive down rates for receiving TV signals. They note that local cable companies now enjoy a monopoly in their areas.

While the constitutional issue is intriguing and the practical stakes profound, it is unclear whether the high court will finally decide the case. That is because Congress is working on a new law to deregulate nearly all aspects of the telecommunications industry. Both the House and Senate versions of the bill would repeal the law that prohibits a telephone company from providing video programming to its customers. The Senate has approved those changes, while the House bill has been passed by committee and is awaiting floor action.

Despite the pending legislation, the justices apparently believed they had no choice but to hear the government’s appeal in the case of U.S. vs. Chesapeake & Potomac Telephone Co.

The company already has won rulings from a federal judge in Alexandria, Va., and the U.S. 4th Circuit Court of Appeals in Richmond striking down the federal law as unconstitutional and declaring the phone company has a free-speech right to transmit TV signals.

The justices said they will hear arguments in the case during the fall.