DIRECTV and Dish Network won a major victory last week when the FCC allowed them to downconvert the high-definition signals of broadcast stations, in an effort to save bandwidth..
The satellite operators, with a combined 30 million subscribers, persuaded FCC officials that they lacked the channel capacity to provide every eligible station in high-definition immediately. They insisted that they needed several years to prepare for a full HD carriage requirement.
Under the new ruling, the “carry one, carry all in HD” principle kicks in when a satellite company starts carrying local signals in high-definition. The satellite operators have until 2013 to carry all stations in HD within any market where they have elected to carry any station’s signal in the high-definition format.
The satellite deal is far better than the one offered to cable operators by the FCC. The commission did not announce the vote or release the text of the rules, though an FCC official said it was a unanimous vote.
FCC chairman Kevin Martin started off negotiations by requiring the satellite operators to offer full HD carriage next February, coupled with a market-by-market waiver process. However, he scrapped his original plan after DIRECTV and the Dish Network complained his proposed rule would damage their ability to compete with cable.
As part of the new deal, the FCC demanded that DIRECTV and Dish comply with its benchmarks. For example, by Feb. 17, 2010, the operators need to provide full HD carriage in 15 percent of their HD markets. Dish Network has 35 HD markets today. If a 15 percent quota were in place today, EchoStar would have a “carry one, carry all in HD” obligation in five markets.
The benchmark jumps to 30 percent in the second year, 60 percent in the third and 100 percent in the fourth. Because the FCC didn’t specify the markets that had to be served, DIRECTV and Dish Network are free to pursue a large-market strategy, which could keep rural consumers waiting a long time for their local TV signals in HD via satellite.
Cable, for now, gets a much poorer deal. The commission requires cable carriage of TV signals in digital and analog formats for three years for any station that demands cable carriage after Feb. 17, 2009. In some cases, this leads to triple carriage. In February, C-SPAN, Discovery Communications and The Weather Channel sued the FCC in a federal appeals court over the digital TV station carriage mandates.