Northpoint Lobs a Shell at DirecTV

The chief executive of a company agitating for DBS bandwidth took aim at an incumbent Wednesday in what was labeled "an open letter to DirecTV CEO Eddy Hartenstein,"

Sophia Collier, chairman of Northpoint Technology, sent the following letter to Hartenstein:

"I am writing to ask you to stop your campaign of distortion against Northpoint Technology's plans to create a low cost competitor to DBS and cable. You say our company should not be licensed in the same manner as international and global satellites because the 'DBS industry must participate in auctions to receive spectrum.' This is totally disingenuous and you know it. Your company Hughes Electronics--the largest DBS operator--has never paid the Treasury one cent in an auction for any of its spectrum licenses and yet it is the largest spectrum holder in the United States.

"You have paid nothing at auction for your DBS or any other spectrum. Zero. You must also know that 88 percent of all DBS spectrum was never auctioned and that the FCC has not held a satellite auction of any kind in almost seven years. Our company is only seeking to share the very same spectrum that your company was already given without auction.

"It is outrageous that you would advocate that we have to pay to share something that you were given free. DirecTV is now seeking regulatory approval to sell one-third of its company for almost $7 billion dollars-This enormous profit is the direct result of the vast spectrum grants you have assembled. As you know, people have questioned the sale of your company because of concerns that you will fail to use your enormous spectrum grants in the public interest. This is understandable because today:
* DirecTV fails to carry over 1,000 television stations.
* DirecTV raised prices by 10 percent on basic service in 2003.
* DirecTV does not carry the Emergency Alert System.
* DirecTV does not offer a viable high-speed Internet service.
"Mr. Hartenstein, I think you should spend less time lobbying to impose unfair burdens on new competitors and more time seeking ways to use your free spectrum to improve service to the public."

When asked if DirecTV had a response, a spokesman replied, "No, but if you really think this merits any attention, here's how we feel about it:

"Northpoint's "open letter" to DirecTV CEO Eddy Hartenstein is the latest lie in a continuing campaign intended to steal $100 million worth of valuable spectrum from our country's taxpayers.

"The truth is that Northpoint is asking Congress to overturn the Federal Communications Commission's decision to auction licenses for the terrestrial use of direct broadcast satellite (DBS) spectrum. Northpoint doesn't want to pay the price that its competitors have paid to enter the video distribution business. Northpoint believes taxpayers
should foot the bill so that a few well-connected individuals can get rich. Tellingly, Northpoint refuses to identify those individuals, who will benefit from the $100 million giveaway.

"DirecTV received its original 28 frequencies at the 101 degree orbital location prior to Congress giving the FCC the authority to auction spectrum. Thus, it could not have paid for its original spectrum. However, it is false to say that DirecTV has not paid to acquire spectrum. DirecTV acquired additional DBS frequencies through two transactions in the secondary market that totaled in excess of $1 billion.

"Evidence of Northpoint's deceptiveness has been duly noted by the Citizens Against Government Waste (CAGW), which just last week found that any action favoring Northpoint would be 'catering to special interest, undermining the spectrum allocation process and giving away $100 million in taxpayer funds.

"Bottom line: The government should not favor Northpoint over its competitors. It should preserve the efficient allocation of spectrum licenses by auction, and thereby prevent windfalls to special interests while protecting Federal revenue and the U.S. taxpayer.

"The Facts:
* DirecTV carries over 800 TV stations.
* DirecTV did not raise prices by 10 percent on basic service last year.
* DirecTV does carry the Emergency Alert System.
* DirecTV (through its sister company Hughes Network Systems) does offer a high-speed internet service--Hughes' Direcway.
DirecTV has also partnered with BellSouth to integrate its video service with telephone and broadband service, offering consumers in Bell South's service area an affordable bundle of services."