Cybertelecom
Cybertelecom
Federal Internet Law & Policy
An Educational Project
Telegraph Policy Dont be a FOOL; The Law is Not DIY

Common Carriage

As the value of telegraph as a communications service was realized, discrimination became more problematic. The opportunity and incentive of communication networks to mess with the service, favoring some and harming others, drove a policy response. The network provider could discriminate in favor some end users over others; the network service provider could use its service to create barriers to market entry for certain end users; and the provider could act anticompetitively with regard to rival networks.

Telegraph service is engaged in interstate commercial intercourse, which is interstate commercie under the power of Congress. [Pensacola Telegraph, 96 US at 9 ("commercial intercourse is an element of commerce which comes within the regulating power of Congress." "Both commerce and the postal service are placed within the power of Congress, because, being national in their operation, they should be under the protecting care of the national government.")]

Telegraph service derives its authority from the state. [Call Publishing Co., 181 U.S. at 100]

Telegraph service perform a public service. [Call Publishing Co., 181 U.S. at 99]

  • Telegraph service is common carriage, the same as railroad service and postal service [Leloup, 127 U.S. at 645 "we have decided that communication by telegraph is commerce, as well as in the nature of postal service"] [Ratterman, 127 U.S. at 425 ("a company occupies the same relation to commerce, as a carrier of messages, that a railroad company does as a carrier of goods.")] [Texas, 105 U.S. at 464 ("A telegraph company occupies the same relation to commerce as a carrier of messages, that a railroad company does as a carrier of goods... They do their transportation in different ways, and their liabilities are in some respects different, but they are both indispensable to those engaged to any considerable extent in commercial pursuits.")]
  • was built as an overlay network on top of two other common carriers: the postal roads of the Postal Service and railroads. Unlike railroads, telegraph service was not delivering goods or passengers, but like the Postal Service, it was "interstate transmission of intelligence." Like the Postal Service, and similar to railroad service, telegraph service was offering a delivery service, to the public, where the public selected the thing to be delivered as well as two whom it would be delivered. The thing carried was separate and distinct from the carrier of the thing. As a matter of policy, it would be concluded that this is a good thing, valuable to the country and the economy, and that this service should be provided in a non discriminatory manner.

    The application of common carriage to the new service was an evolution. First, the value of the nascent technology had to be proved and adopted. Second, traditional policy had to evolve to apply to the opportunities and concerns of the new technology. The new technology promised both to amplify the benefits as well as intensify the concerns of communications services. If the US Government was not going to act as operator to ensure a communications service that followed the common carrier characteristics of the postal service, than it would act as regulator - a new role for the US Government. A role for which the US Government will take decades to find its footing.

    The traditional marketplace of novel policy is the States. The States moved first, developing a theory of common carriage for electronic communications. Then the Federal government followed, extending common carriage obligations from railroads to railroad telegraph service. For telegraph service to expand, it needed conduit; it would be an overbuild network, built on top of Postal Service conduit, Postal Roads. Congress offered a bargain to telegraph service that they could have access to Postal Roads in exchange for agreeing to common carrier principles.

    The States :: The Incubation Lab of Policy

    Derived From William JonesThe Common Carrier Concept as Applied to Telecom: A Historical Perspective (~1980). See also [Noam, Beyond Liberalization]

    Principles of telecom regulation were first expressed in state statutes passed in response to invention of the telegraph. The structure and timing of the early statutes leave little doubt that they were premised on the franchise theory of regulation articulated by Lord Hale.

    To function effectively, telegraph companies needed legislative authorization to use public thoroughfares. In many instances the right to traverse private property also was important. Finally, the power to proceed as a corporation was of value to facilitating the aggregation of necessary capital. The early state legislation granted one or more of these privileges and, in recognition of the favored position conferred, exacted obligations in return. Even when the statutes were silent on the responsibilities of telegraph companies, the courts often implied obligations on the basis of the special privileges conferred. State legislation also was influenced by the patent monopoly granted to Morse. The most general pattern was the grant of special privileges (use of public roads, eminent domain, incorporation) joined with the requirement that the company serve all customers, including other telegraph lines, without discrimination -- a mode of regulation appropriate to guard against monopoly abuse.

    New York

    As an important commercial center, New York exerted a substantial influence on early patters of state legislation. In 1845, New York enacted that

    The proprietors of the pentent rights of Morse's electromangetic telegraph may be and hereby are authorized to construct lines of said telegraph from point to point and across any of the waters within the limits of this state, by the erection of posts, piers or butments for sustaining the wires of the same: Provided that the same shall not in any instance be so constructed as to endanger or injuriously interrupt the navigation of such waters; and provided also, that the private right of individuals shall be in no wise impaired by the provision of this act.[24]

    Three years later, in 1848, New York adopted the first comprehensive telegraph legislation: "An act to provide for the incorporation and regulation of telegraph companies."[25] The first three sections of the act were concerned with the prerequisites for incorporation, requiring among other things a description of the "general routs of the line of telegraph, designating the points to be connected." Section 4 conferred the normal legal powers on the corporation, including the power to "make such prudential rules, regulations and by-laws, as may be necessary in the transaction of their business, not inconsistent with the laws of this state or of the United States."

    Section 5 permitted construction of the telegraph line "along and upon any of the public roads and highways, or across any of the waters within the limits of this state, by the erection of the necessary fixtures . . . provided the same shall not be so constructed as to incommode the public use of said roads or highways, or injuriously interrupt the navigation of said waters..." Section 6 prescribed procedures by which landowners would be compensated for the use of their lands by the telegraph company, implicitly conferring the equivalent of the power of eminent domain.

    The regulatory provisions of the statute were included in sections 11 and 12. They required service to all customers, including other telegraph companies, on a nondiscrimiatory basis:

    s 11. It shall be the duty of the owner or the association owning any telegraph line, doing business within this state, to receive dispatches from and for other telegraph lines and associations, and from and for any individual, and on payment of their usual charges for individuals for transmitting dispatches, as established by the rules and regulations of such telegraph line, to transmit the same with impartiality and good faith, under penalty of one hundred dollars for every neglect or refusal to do so... [26]

    s 12. It shall likewise be the duty of every such owner or association, to transmit all dispatches in the order in which they are received, under the like penalty of one hundred dollars . . . provided, however, that arrangements may be made . . . for the transmission of [newspaper dispatches] out of [their] regular order.

    An 1850 statute added the provision:

    Any person connected with a telegraph company... who shall willfully divulge the contents, or the nature of the contents, of any private communication entrusted to him for transmission or delivery, or who shall willfully refuse or neglect to transmit or deliver the same, [shall be adjudged guilty of a misdemeanor.] [27]

    In 1851, telegraph companies were authorized to extend their lines, to construct branch lines, and to united with other incorporated telegraph companies. [28]

    See also Press Release, Public Service Committion Invites Comments on Proposed Rules Codifying Common Carrier Obligations of Telephone Companies, C89C099 (New York October 11 1989) ("The states' earliest approaches to public utility regulation involved legislative decision making with implementation by specific statutory enactments. In 1849, New York state required telegraph companies to provide non discriminatory service to competing telegraph companies as well as to individuals. State regulatory boards soon replaced legislative regulation notably in Illinois and Massachusetts. The first independent, broadly empowered regulatory Commissions were set up in 1907 in New York and Wisconsin. And as telephone use increased, more states began to regulate it")

    Virginia

    In 1847, Virginia provided that any person, satisfying the board of public works of its right to use the invention, could construct telegraph lines along public roads with the consent of local authorities. A penalty was imposed on any telegraph agent "who may, from corrupt or improper motives, withhold or delay the transmission of messages or intelligence, for which the customary charges have been paid or tendered." [29] An 1849 codification of prior legislation referred to the power of telegraph companies to "make reasonable charges on [telegraph] messages." [30] A more comprehensive statute, similar to that of New York, was enacted in 1852. [31] The reference to reasonable charges was carried forward in subsequent codifications.

    Footnotes

    [24] Act of May 13, 1845 NY Laws, c. 243, p. 264

    [25] Act of April 12, 1848, NY Laws, c. 265, p. 392.

    [26] Section 11 was amended in 1955 to add the following: [undicipherable]

    [27] Act of April 10, 1950, NY Laws, c. 340, p. 739.

    [28] Act of April 22, 1851, NY Laws c. 98, p. 178. Other amendments were made by Act of June 29, 1853, NY Laws, c. 471, p. 931 (various aspects, including eminent domain); Act of April 22, 1862, NY Laws c. 425, p. 761 (broadening authority to extend lines and acquire other companies); Act of May 9, 1867, NY Laws, c. 871, p. 2186 (concerned with improper access to telegrams); Act of May 2, 1970 (sic?), NY Laws, c. 568, p. 1327 (concerned with transfers of telegraph franchises and properties); Act of May 14, 1875, NY Laws, c. 319 (concerned with changes in routes); Act of May 27, 1879, NY Laws, c. 377, p. 444 (reiterating duty to transmit in terms similar to sec. 11 of the 1848 statute); Act of May 28, 1879, NY Laws, c. 397, p. 460 (concerned with underground construction of telegraph lines).

    [29] Act of Mar. 20, 1847, Va. Laws, 1846, c. 92, p. 79 ss 3, 4. The act authorized telegraph operations by specific companies, specifying "reasonable charges" on messages transmitted. ss 1, 2. Other acts of specific incorporation include Act of Mar. 6, 1847, Va. Laws, 1846, c. 99, p. 85 (no rate standard); Act of Mar. 17, 1849, Va. Laws, 1849, c. 197, p. 138 (specified rate standard); Act of Mar. 12, 1849, Va. Laws, 1848-49, c. 200, p. 142 (referenced to reasonable rates). See Also the Act of Mar. 31, 1848, Va. Laws, 1847-48, c. 123, p. 1677, requiring telegraph companies to make annual reports to the board of public works, giving financial data and "regulations adopted to ensure the faithful discharge of the duties undertaken..."

    [30] Va. code, ch. 65, sec. 1 (1849).

    Indiana

    State of Indiana, §§ 4176, 4178, Rev.Stat. Ind. 1881: [Pendleton, 122 U.S. at 348]

    § 4176, Rev.Stat.Ind. 1881: "Every electric telegraph company, with a line of wires wholly or partly in this state and engaged in telegraphing for the public shall, during the usual office hours, receive dispatches, whether from other telegraphing lines or from individuals, and on payment or tender of the usual charge, according to the regulations of such company, shall transmit the same with impartiality and good faith, and in the order of time in which they are received, under penalty, in case of failure to transmit or if postponed out of such order, of one hundred dollars, to be recovered by the person whose dispatch is neglected or postponed, provided however that arrangements may be made with the publishers of newspapers for the transmission of intelligence of general and public interest out of its order, and that communications for and from officers of justice shall take precedence of all others."

    § 4178, Rev.Stat.Ind. 1881: "Such companies shall deliver all dispatches, by messenger, to the persons to whom the same are addressed or to their agents on the payment of any charges due for the same, provided such persons or agents reside within one mile of the telegraphic station or within the city or town in which such station is."

    Iowa

    "Any person employed in transmitting messages by telegraph must do so without unreasonable delay, and anyone who willfully fails thus to transmit them, or who intentionally transmits a message erroneously, or makes known the contents of any message sent or received to any person except him to whom it is addressed or to his agent or attorney, is guilty of a misdemeanor. The proprietor of a telegraph is liable for all mistakes in transmitting messages made by any person in his employment and for all damages resulting from a failure to perform any other duties required by law." - [Pendleton, 122 U.S. at 350]

    Pennsylvania

  • 1855 Pa. Laws 531 (requiring telegraph operators “to preserve the originals of all [telegraph] messages sent from such office . . . for at least three years . . . .”)

  • References

    States Rights / Federal Supremacy

    See Post Roads Act litigation where the Supreme Court considered the jurisdictional boundary between federal interstate and state intrastate authority, and the pre-emption of state authority by the federal government.

    Federal Policy

    Transcontinental Telegraph Act contained a preliminary non discrimination provision that the telegraph service should be open to "all citizens of the United States."

    Railroad Policy

    Railroads were traditional common carriers. Railroads also had long rights-of-way upon which they built their transportation networks. Railroads were perfect siblings for telegraph service and the first telegraph line in England was built along a telegraph line. In the United States, telegraph service expanded between the cities taking advantage of agreements with railroad companies.

    Both railroads and telegraph offered the service of moving stuff of the customer's choice from origin to destination of the customer's choice. To do this, both required access to conduit and right of way over which to build their networks. Gaining access to rights of way required at times engagement of the government who enacted legislation or engaged in eminent domain. Both networks promised tremendous public welfare, with first communications network, the Postal Service, of such high value to the fledgling democracy that it was written into the Constitution. The economy of the new nation, the Nation's war effort, and the Nation's Westward expansion was being achieved on top of both railroad and telegraph service.

    As telegraph service evolved from nascent novelty to realized value, it was natural to extend traditional commercial common carriage policy from railroad to telegraph service.

    Pacific Railroad Act of 1864 July 2 Act of Congress requires railroads "to operate and use said roads and telegraph for all purposes of communications, travel, and transportation, so far as the public and Government are concerned, as one continuous line, and in such operation and use to afford and secure to each equal advantage and facilities as to rates, times, and transportation, without any discrimination of any kind in favor of the road or business of any or either of said companies, or adverse to the road or business of any or either of the others, and it shall not be lawful for the proprietors of any line of telegraph authorized by this act, or the act amended by this act, to refuse or fail to convey for all persons requiring the transmission of news and messages of like character." [NYT Apr 5 1880]


    Federal Issues

    Jurisdiction

    Classification

    Should the new communications service be classified the same as the legacy communications service? Is a telegraph the same as a "post" and does telegraph fall under the USG's Constitutional authority over post offices and post roads?

    In Europe, telegraph service was offered by national postal services.

    Telegraph presented a number of questions of first impression for the Supreme Court. The Supreme Court is struggling with a dichotomy: either telegraph service is - is not - the federal government (either federal telegraphs carried by telegraph providers is - or is not - within the jurisdiction of state authority). And you can hear the Supreme Court struggle with the question, the answer, and the theory. At one point the Court concludes that federal messages over telegraph service is an agent of the federal government, an agency of the federal government, or is the business of the federal government - similar concepts but not quite the same. The Supreme Court is struggling with these new creatures - large national corporations conducting interstate commerce operating pursuant to federal policies to build the new nation. While telegraph service is not the federal government, federal policy does not want telegraph service left to the slings and arrows of state authority. See also Enhanced Service versus Basic Service Dichotomy

    The Supreme Court slowly pounded out the question. Telegraph service is interstate commerce, falling under federal Constitutional authority under the Commerce Clause. Telegraph service is the interstate transmission of intelligence, and therefore falls under federal constitutional authority over post offices and post roads. When Congress enacted the Post Roads Act, it extended its Constitutional authority over post offices and post roads to telegraph. Telegraphs were equated with posts.

    Western Union incentive was to be free of State taxes and State licensing authorities. Therefore Western Union argued that telegraph service was a federal agency [Williams, 226 U.S. at 405-06 (pursuant to the Post Roads Act, "Western Union Telegraph Company was created an instrumentality of the Federal Government")] [Western Union Telegraph Co. v. Gottlieb, 190 U.S. at 416 (WU arguing "The Western Union Telegraph Company is an agent of the government")]; that telegraph service was postal service [Williams, 226 U.S. at 408-09 ("The telegraph company in the transmission of government messages is in the service of the Government as is a *409 rural mail carrier")]; and therefore telegraph service was outside the jurisdiction of state authority. Western Union did not want to be subject to state's license or taxation authority.

    The Supreme Court did not go as far as Western Union. Telegraph service fell under federal authority over post offices and post roads. Telegraph service, to the extent it was the transmission of federal telegraphs, was a federal agency. [Williams, 226 U.S. at 419 ("business a part of which is that of a governmental agency constituted under a law of the United States and engaged in an essential part of the public business — communication between the officers and departments of the Federal Government")] [Telegraph Co. v. Texas, 105 U.S. 460 ("The Western Union Telegraph Company having accepted the restrictions and obligations of this provision by Congress, occupies in Texas the position of an instrument of foreign and interstate commerce, and of a government agent for the transmission of messages on public business.")] As federal government business, it was out of the reach of State authority. [Williams, 226 U.S. at 419 (state tax of telegraph service, which included taxation of federal telegraphs transmitted by telegraph service, unconstitutional)] [Telegraph Co. v. Texas, 105 U.S. 460 ("As to the government messages, it is a tax by the State on the means employed by the government of the United States to execute its constitutional powers, and therefore, void")] However, non-federal telegraph service was within the reach of State Jurisdiction for purposes of taxes and licensing.

    There is another question not presented before the Supreme Court. It appears that telegraph service acted... significantly... as a government contractor. And in exchange for those contracts, government messages were given priority and were given a special rate (or were free). The first telegraph service was pursuant to government contract. The transcontinental telegraphs and the undersea telegraphs were pursuant to government contract. During the Civil War, both the Union and the Confederacy seized control of telegraph service, and telegraph service was operated by private companies, under government control, and pursuant to government contracts. The Union would give Western Union thousands of mile of telegraph line after the war. Telegraph would again be nationalized during World War I. Yes, telegraph service was offered by private companies. However those private companies were highly funded by federal - and state - governments.

    In time, telegraph was classified as "common carriage" and telegraph fell under the jurisdiction of the Federal Communications Commission. Telegraph service found itself disrupted by a new comer, telephone service, and by a reinvented legacy service, airmail. Telegraph as pseudo-government contracted service gave way to telephone as government-sanctioned monopoly

    Nationalization / Government Control

    [EHA ("On the federal level, bills were introduced in almost every session of Congress calling for either regulation of or government entry into the industry. Western Union’s lobby was able to block almost any legislation. The few regulations that were passed either helped Western Union maintain its control over the market or were never enforced.")]

    Common Carriage

    Non Discrimination

    Delivered in Order

    Duty of Care :: Tiers of Service :: Liability

    The Southern Telegraph Companies (copy of 1964 telegram):

    "The public are notified that in order to guard against mistakes in the transmission of messages, every message of importance ought to be repeated by being sent back from the station at which it is to be received to the station from which it is originally sent. Half the usual price for transmission will be charged for repeating the message, and while these Companies will as heretofore use every precaution to insure correctness, they will not be responsible for mistakes or delays in the transmission or delivery of repeated messages beyond five hundred times the amount paid for sending the message, nor will they be responsible for mistakes or delays in the transmission of unrepeated messages, from whatever cause they may arise, nor the delays arising from interruptions in the working of their Telegraphs, nor for any mistakes or omissions of any other Company over whose lines a message is to be sent to reach the place of destination. All messages will hereafter be received by these Companies for transmission subject to the above conditions."

    ICA Sec. 1

    Esteve Brother, 256 U.S. at 570:

    570: "Western Union had maintained these two classes of rates for general cable and telegraph service. The usual and basic rate was for service practically at the sender's risk, liability being limited to the amount of the toll collected. Another special rate entitled the sender to have the message repeated back to the point of origin and rendered the company liable in case of mistake or nondelivery up to fifty times the amount of the extra charge. The extra charge for this additional service was for telegrams one-half and for cables one-quarter of the basic rate."

    573: "The limitation of liability attached to the unrepeated cable rate is binding upon all who send messages to or from foreign countries until it is set aside as unreasonable by the Commission."

    Pimrose, 154 U. S. 1., where telegraph company offers different rates, and offers a higher rate for repeated service, and a lower rate for unrepeated service, telegraph company can with the lower rate limit liability to the price of the telegram. [Esteve Brother, 256 U.S. at 570 (summarizing Pimrose, stating "the company's common law liability was held to be in the nature of contract, and this liability, unlike that of a common carrier, was not an insurer's. It was merely for the damage flowing from failure to use due care in transmission.")]

    Telegrams could be sent repeated or unrepeated (repeating was a form of error correction). Liability for transmission of messages could be based on different rates paid or services acquired. [Harris 1914 n. 3]

    Duty of Care, Liability for non delivery or mis delivery of telegrams W. U. Tel. Co. v. Sklar (C. C. A.), 126 Fed. 295; Rowan v. W. U. Tel. Co., 149 Fed. 550; W. U. Tel. Co. v. Burris (C. C. A.) 179 Fed. 92; Kyle v. C. R. I. & P. R. R. Co. (C. C. A.), 182 Fed. 613.

    Priority

    Reasonable Rates

    Rate Regulation

    Rates set or constrained by government regulator

    Government Rates

    • Post Roads Act of 1866
      • Assigned to the Post Office, this responsibility was transferred to the FCC with the Communications Act of 1934 and continued until 1947. Today, contracts for services provided to the government are negotiated by GSA. [FCC First Report 1935 at 15]

    Disclosure

    Generally telegraph companies were required to disclose rates, terms, and terms of their service. See the Interestate Commerce Act.

    Access to Right of Ways

    Authority to Operate

    Interconnection

    Privacy References

    Papers

    Security

    Kill Switch

    International Telegraph Convention, Art. 21

    Record Retention

    Wiretap

    International Telegraph Convention, Art. 23

    Taxation

    Military