Cable TV Pioneers Chair in Cable Communications, College of Communication, The Pennsylvania State University
From its earliest days, cable was an industry under siege. Phone companies, suspicious of the new wired medium, refused operators’ requests to attach cables to telephone poles, or charged a small fortune for the right to do so. Broadcasters and Hollywood studios, equally alarmed, loudly called into question the right of community antenna operators to retransmit TV programs. The government, unsure what to make of community antennas, wasn’t sure whether or how it would regulate the new medium, but had definite ideas on how big its taxes would be.
As antenna systems began to proliferate, it became clear operators would need to define their business, and either take the lead in articulating its rights from a legal point of view or be trampled by much bigger, more established players in media, telecommunications and entertainment. Strat Smith played a pivotal role in outlining cable’s legal framework and, as the National Cable Television Association’s first general counsel, helped lead the way in getting them written into law.
“He was the right man at the right place and the right time,” recalls cable TV pioneer and investment banker Bill Daniels.
The right time was 1949 and the place was the Federal Communications Commission, where Edwin Stratford Smith served as a staff attorney for the FCC’s Common Carrier Division. When the agency began getting reports of community antenna systems popping up to deliver clearer TV to rural communities and small towns in Pennsylvania, Oregon, Arkansas and West Virginia, Smith found himself assigned to investigate. He tracked down the operators of some of the systems and decided to go visit one, picking Martin F. Malarkey’s Pottsville, Pa. system because it was closest.
Most experts at the time expected community antennas to wither away over time as UHF television, then in its infancy, took hold. Smith’s visit to Pottsville convinced him otherwise, and by 1952, he’d left the FCC to open a private practice in Washington. Included among his first clients were a number of community antenna operators. Malarkey was by then president of what was then known as the National Community Antenna Council, and sought Smith’s advice on a number of issues.
Smith’s experience at the FCC had given him key insights into the way the government was likely to approach the budding cable industry, and he was able to anticipate a number of challenges in advance. The copyright issue, in particular, posed a thorny problem.
Before long, Malarkey’s association convinced Smith to become its general counsel and executive director. “I was their first employee at $200 a month,” he recalls.
In 1952, there were 70 community antennas serving about 14,000 subscribers in the U.S. It was an industry that could have been shut down in a hurry, if the government had chosen to. Smith’s first order of business was to frame a legal definition that would allow community antenna systems to operate without being throttled by larger industries. Already, the Brooklyn Dodgers and the New York Yankees were complaining that systems illegally retransmitted their games. Broadcast stations, particularly smaller ones in the West, felt their existence threatened by what they called “pirates of the airwaves.”
Smith argued that community antennas relayed “signals” not “programming” to subscribers who couldn’t receive them over the air. Once a broadcast signal went out over the airwaves, it was free to anyone, he maintained, so CATV systems didn’t need a TV station’s permission to carry its signal and weren’t subject to copyright fees.
“In those early organizing days of the NCTA, Strat was absolutely central,” says cable pioneer and attorney Yolanda G. Barco. “He developed the master antenna concept on which we based our national position on regulation and tax matters.”
In 1956 and 1958, small broadcasters from the western states asked the FCC to declare CATV systems common carriers and regulate their rates and service. Twice the requests were denied, partly because the FCC wasn’t yet sure how to deal with cable and partly because it accepted Smith’s argument that CATV systems carried signals, not programs. The master antenna concept was working.
Next, broadcasters took their complaints to the courts, maintaining that community antennas had an unfair advantage because they didn’t have to pay copyright fees. Smith countered that broadcasters had no standing in copyright issues, because they licensed, rather than owned, most of their programs.
Frustrated at the FCC and the courts, TV station owners would turn next to Congress.
By the end of the 1950s, there were 640 CATV systems with more than 650,000 subscribers. Cable was no longer a fledgling, rural phenomenon but a growing industry that looked toward urban expansion. Large metropolitan broadcasters and movie studios saw that as a direct threat to their revenue streams. They unleashed political and legal action that would bring Smith to the most humiliating low, and exhilarating high, of his career.
Under pressure from broadcasters, the Senate Commerce Committee issued a report urging the FCC to begin regulating CATV systems. Following up on this, Senator John Pastore held hearings and began crafting legislation that the NCTA board, at first, supported. Cable operators reasoned that national legislation with FCC oversight was better than the plethora of state and local regulations that had begun to spring up. So they sent Smith to testify on their behalf.
The bill appeared headed for certain passage when, at the last moment, cable operator and equipment supplier Milton J. Shapp led a revolt, convincing many operators to fight federal regulation. At the eleventh hour, Shapp and his supporters convinced the NCTA board to withdraw its support. Pastore’s bill died by a single vote, but not before one of the most rancorous Congressional debates in memory. Pastore bitterly blamed Smith for double crossing him and the cable industry lost much of its credibility in Washington.
“For fifteen years, I didn’t dare go up on Capitol Hill and Congress wouldn’t give the industry the time of day,” Smith recalls. He resigned his post a few months after the incident, but retained the title of special counsel.
As the 1960s unfolded, a more activist FCC began regulating cable more strictly than Pastore’s legislation would have dictated.
By then, Smith’s master antenna concept, which had protected the industry from regulation for years, came under increased assault, both from within the industry and outside it. Cable was changing and visionaries like Daniels and TelePrompTer founder Irving B. Kahn saw an industry more as it is today, with original programming and other services, and chafed under Smith’s definition.
Every time the NCTA board considered changing its name to eliminate the reference to community antennas, Smith would argue against the move.
He was fighting to keep the master antenna concept alive because United Artists Television was suing two CATV systems for picking up broadcast signals that contained UA-produced programming and selling those signals without its permission. The studio won in federal district court in New York City and in 1965, won subsequent cases in the U.S. Court of Appeals without dissent. Most NCTA board members were ready to capitulate on the Fortnightly Case, but Smith, NCTA board member George Barco and NCTA president Fred Ford were adamant: they wanted to take the case to the Supreme Court.
Losing would have been a mortal blow to the industry because producers could then claim treble damages from the first day any CATV system had begun retransmitting a signal. But the NCTA prevailed, winning a nearly unanimous 5-1 vote from the high court.
CATV systems were ruled not liable to pay copyright fees. “This was cable’s greatest legal victory,” recalls long-time communications attorney John Cole, partner in the Washington-based firm of Cole, Raywid Braverman. “It was Strat’s theory and if not for him, the cable industry would have turned out differently.”
Smith has remained a popular figure in the cable industry even past his retirement in 1972. For years after he left the NCTA, he was in frequent demand at state and regional association meetings. In 1988, he accepted an invitation to help develop the National Cable TV Center and Museum at Penn State University. Later, he was named to Penn State’s Cable TV Pioneer Chair in Cable Telecommunications, a position endowed by the Cable Center.
Future historians may well write Smith’s legacy this way: First he saved cable and then he helped preserve its history.