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SHVIA Debate Over Distant DTV Signals Intensifies

Broadcasters and DBS providers debated provisions at the April 1 legislative hearing on the reauthorization of the Satellite Home Viewer Improvement Act (SHVIA) in the House Committee on Energy and Commerce. Representatives from the FCC, the DirecTV Group, EchoStar Corp., National Religious Broadcasters (NRB) and NAB offered testimony.

Eloise Gore, Assistant Division Chief, FCC Media Bureau Policy Division listed four items that will expire soon if Congress doesn't act:

* "The statutory copyright license to satellite operators that allows the satellite operators to provide signals of distant network affiliates to "unserved" customers;
* "The retransmission consent exemption that allows satellite operators to retransmit distant network signals to an "unserved" household without first obtaining the consent of the station;
* "The grandfathering provision for certain distant signal subscribers; and
* "The prohibition on broadcasters engaging in exclusive carriage contracts or failing to negotiate in good faith."

Potential modifications include changing the FCC rules for distant network signals eligibility. "It is a fair statement to say that the on-site testing procedure established in the SHVIA has not worked as effectively as anticipated," Gore said. "For example, there are issues with finding qualified testers, particularly in rural areas. If a qualified person can be identified, the cost of the transportation to the household requesting the test may exceed the cost of the test itself. Further, the cost of identifying a tester, conducting the test, and possibly paying for the test (depending on the outcome), has resulted in some satellite providers limiting their offer of distant signals only to subscribers that are predicted 'unserved' under the ILLR model or who are granted waivers."

Gore also noted that the FCC has not adopted a distant network signal eligibility standard for DTV. With regard to local into local signals, she noted that "the local-into-local provisions do not expire, but one related issue has been raised for consideration. The existing SHVIA provides that with respect to channel positioning for satellite carriage of local signals, a carrier is required to carry the local signals on contiguous channels and provide access to the signals at a 'nondiscriminatory price and in a nondiscriminatory manner on any navigational device, on-screen program guide, or menu.'"

According to Gore, some of the alternatives the FCC could offer for consideration include: "(1) Congress could choose to clarify how satellite providers can provide all local signals using two dishes in a non-discriminatory way, possibly through an 'automatic installation' requirement; or (2) Congress could determine that all local signals must be available on the same satellite dish.

"Under the first alternative," Gore added, "Congress could require that, when a subscriber signs up for the local station package, if two dish antennas are needed to receive all the local stations, the satellite provider must provide and install the second dish unless the subscriber expressly waives the installation. Under the second alternative, a satellite carrier could offer all local stations using one or more dish antennas but all the stations must be available on one, or the other, dish antenna. In this latter situation, the second antenna need not be offered free of charge. Another issue of potential concern, with this second option is whether some local-into-local markets would be dropped due to capacity constraints, and if potential new local-into-local markets would have to be delayed or never served as a result."

Gore told the subcommittee that local market definitions could also be changed by amending Section 122 of the Copyright law to allow the FCC to modify markets and include some 'distant' signals in limited circumstances, similar to existing cable rules, which would require carriage of these out-of-market stations. In addition, Section 122 could be amended to specify that satellite carriers may retransmit network affiliates from an adjacent, but 'distant,' market if there is no affiliate of that network in the 'local' DMA or if the adjacent affiliate is from the same state as a county that is assigned to an out-of-state DMA.

Gore also said that Congress could determine that the FCC's 'significantly viewed' rules be modified to apply to satellite operators to permit, but not require, carriage of out-of-market stations with their retransmission consent in some circumstance.

Eddy W. Hartenstein, Vice Chairman, The DirecTV Group, Inc. testified that, like its cable competitors, satellite broadcasters should have permanent compulsory licenses to deliver broadcast signals and also asked the subcommittee to address Title II, Section 203 of the SHVIA act, regarding the "no-distant-where-local" provision.

"The draft tells our customers who now receive distant signals legally that they will have to drop those signals, merely because they happen to subscribe to local-into-local service," Hartenstein said

He also repeated his request for clarification over the so-called "two-dish" language in Title I, Section 101.

"Three weeks ago I told you that, as far as the two-dish controversy goes, the most important thing to DirecTV is legal clarity. There is none now, and there should be," Hartenstein said, adding that he was concerned that the proposed language prohibits splitting all signals -- standard and high-definition -- in any given market. "This is a problem, and, if unaddressed, it will threaten the transition to digital television," he warned.

David Moskowitz, Senior Vice President and General Counsel for EchoStar defended the use of multiple dishes for delivering local-into-local signals.

"Unlike regular satellites which broadcast satellite TV service nationwide, spot beam satellites allow for spectrum to be re-used in different markets across the country," he told the subcommittee. "A spot beam satellite is similar to a flashlight shined from orbit that covers a particular region of the country. The spot beam can only carry a limited number of channels. In most cases today, the most popular channels in three television markets are provided in a spot beam with the less popular channels being offered on a wing satellite. The spot beam cannot offer all three local markets on one dish because of spectrum limitations. There just is not enough channel capacity. At most, two of the three markets could be carried. So if only two markets are provided in the spot beam the left over spectrum in the beam would go to waste. And because the wing slots are filled to capacity, there is no way to migrate the additional market to the wing slot; there just isn't the spectrum available. Thus a one-dish solution at this time would require that certain markets are taken down. The total number would be substantial."

In 42 markets out of 110 where local service is available, EchoStar has more than two million customers that use two dishes. Moskowitz warned the subcommittee that eliminating EchoStar's two-dish system could hurt those consumers and stifle competition.

"If the two-dish system is eliminated, over 30 markets will be taken off the air because the capacity of our satellites will be tapped out once we move all signals to one dish. The bandwidth is just not there to ensure that consumers receive all the programming that they currently receive under the two-dish system," Moskowitz said. "Additionally, competition will be curtailed in the 40 markets that EchoStar had planned to enter over the next year if this provision goes into effect because EchoStar will be unable to utilize its two-dish system with its maximizing spectrum effect, to provide service in these areas."

Calling the provision to eliminate multiple dish schemes a "logistical nightmare" that would be nearly impossible to accomplish, Moskowitz told the subcommittee that more than two million EchoStar customers would have to install new dishes, and as a result, lose programming.

"Broadcasters have said that the viewing experience of consumers should be uniform and identical. However, small broadcasters have not invested the necessary capital to increase their signal power and make the viewing experience identical. EchoStar should not be asked to do more," he said.

Moskowitz said that EchoStar has taken steps to make subscribers aware of the availability of a second dish, including upgrading software so that if a subscriber without a second dish attempts to tune to a channel transmitting from the second satellite, they are informed they are not receiving a signal they otherwise could and are directed to an 800 number to call to order a free second dish.

With regards to distant network signal requirements, he said, "We also applaud the proposed requirement of taking interference into account and making other improvements to the Grade B predictive model. In addition to those improvements, it is important to change the Grade B standard, which was developed in the 1950's, to better define what consumers today view as a signal of acceptable quality. Any predictive model should also take into consideration the problems of 'ghosting.'"

Mr. Moskowitz had strong words about broadcasters and proposed DTV distant signal rules (see last week's RF Report).

"The broadcasters would like you to believe that their digital TV signal is more widely available. In fact, during recent testimony in front of the House Judiciary Subcommittee on Courts, the Internet, and Intellectual Property, the National Association of Broadcasters claimed that broadcasters have built -- and are on-air with -- digital television ("DTV") facilities in 203 markets that serve 99.42% of all U.S. TV households.

"If we are to believe these statistics, then it is hard to understand why broadcasters are so adamant about preventing the satellite TV industry from serving the remaining 0.58% of households who cannot now receive their service," Moskowitz continued. "What is misleading about the 99% statistic is that it merely represents that one broadcaster per market is offering digital service. The broadcasters would have you believe that these broadcasters are offering their service to the entire market, but today the majority of broadcasters are offering their service at low power reaching only a small fraction of the total market. Thus the 99.42% of all U.S. TV households is merely the number of households in those 203 markets and not the number of households that actually can receive the digital service. Finally consumers expect to receive CBS, NBC, ABC, FOX, and PBS in digital and are not satisfied that only one broadcaster in the market is providing service in digital."

Moskowitz admitted that the satellite industry could speed the DTV transition. "There is an immediate and practical solution to help ensure that the digital transition does not continue to proceed at today's snail's pace," he told the subcommittee. "By allowing satellite TV providers to offer DTV programming to households that are not served with a local over the air signal, Congress would facilitate a demand for digital television sets among satellite TV subscribers. Although these households would be receiving distant network DTV signals rather than local broadcast signals, these consumers would count toward the local broadcaster's 85% take rate because the satellite TV industry's HDTV set top box receivers include over-the-air digital tuners. The network availability of HD service via satellite will also motivate the broadcasters to make their digital signal available to more households sooner, which will accelerate the time in which 85% of the country can receive DTV. Congress will need to direct the FCC to develop a propagation model to predict over-the-air digital reception on a household-by-household basis."

Representing NAB, Robert G. Lee, President and GM of WDBJ-TV in Roanoke, VA, told the subcommittee that EchoStar has made a mockery of the "carry one, carry all" principle by carrying Spanish-language, religious, public, and other stations in many markets in a way that renders them invisible to almost all of EchoStar's customers.

"EchoStar is on notice today that it needs to stop this egregious form of discrimination," Lee said.

Lee also said EchoStar is not doing enough to assist its customers in receiving local over the air signals. "To the extent that consumers complain about the existing standards for receiving distant signals, the overwhelming majority of problems arise because their satellite carriers have not ensured that the consumers have a properly functioning rooftop antenna," Lee said. "If one resides 50 miles from a TV tower, for example, neither a set of rabbit ears nor a creaky old rooftop antenna last used in the 1970's is likely to generate a high-quality picture on one's television set. But in many cases, satellite companies have done nothing more to help their subscribers receive local, over-the-air signals."

Lee also reminded the subcommittee that the DBS industry's proposal to allow importation of distant digital signals before analog broadcasting ceases would be "a recipe for mischief, further abuse, and illegal conduct."

"At present, the broadcast industry and the commission, are still very much in the steep part of the learning curve about the propagation characteristics of digital television broadcasts," Lee said. "In addition, for reasons beyond the control of broadcasters, the transition to digital-only broadcasting is not likely to be complete for several years. The committee should therefore avoid forcing the FCC to deliver a premature judgment about a future 'digital white area' standard, particularly when there may be little or no need whatsoever for such a standard given the likely rollout of digital local-to-local service."

Lee also commended the committee for its effort to end the distant-signal compulsory license for viewers who can receive their own local stations by DBS. "While NAB appreciates the committee's desire to minimize consumer disruption, we respectfully suggest that there is no need to 'grandfather' any subscriber's ability to receive distant signals once local stations are offered to that subscriber. The only reason a subscriber would elect to continue receiving distant rather than local ABC, CBS, Fox, and NBC stations would be to time-shift or to view out-of-town sports. Since the distant-signal license has always been intended to be only a lifeline to get network programming to subscribers who otherwise have no access to it, there is no principled justification for this new form of grandfathering."

For the full text of the testimony described here and for the testimony of Dr. Frank Wright, President of National Religious Broadcasters, see the website for the legislative hearing on the reauthorization of the Satellite Home Viewer Improvement Act (SHVIA).