[Senate Hearing 111-506]
[From the U.S. Government Publishing Office]
S. Hrg. 111-506
REAUTHORIZATION OF THE
SATELLITE HOME VIEWER EXTENSION
AND REAUTHORIZATION ACT OF 2004
=======================================================================
HEARING
before the
SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY, AND THE INTERNET
of the
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
OCTOBER 7, 2009
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
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54-499 WASHINGTON : 2010
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
JOHN D. ROCKEFELLER IV, West Virginia, Chairman
DANIEL K. INOUYE, Hawaii KAY BAILEY HUTCHISON, Texas,
JOHN F. KERRY, Massachusetts Ranking
BYRON L. DORGAN, North Dakota OLYMPIA J. SNOWE, Maine
BARBARA BOXER, California JOHN ENSIGN, Nevada
BILL NELSON, Florida JIM DeMINT, South Carolina
MARIA CANTWELL, Washington JOHN THUNE, South Dakota
FRANK R. LAUTENBERG, New Jersey ROGER F. WICKER, Mississippi
MARK PRYOR, Arkansas GEORGE S. LeMIEUX, Florida
CLAIRE McCASKILL, Missouri JOHNNY ISAKSON, Georgia
AMY KLOBUCHAR, Minnesota DAVID VITTER, Louisiana
TOM UDALL, New Mexico SAM BROWNBACK, Kansas
MARK WARNER, Virginia MIKE JOHANNS, Nebraska
MARK BEGICH, Alaska
Ellen L. Doneski, Staff Director
James Reid, Deputy Staff Director
Bruce H. Andrews, General Counsel
Ann Begeman, Acting Republican Staff Director
Brian M. Hendricks, Republican Chief Counsel
------
SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY, AND THE INTERNET
JOHN F. KERRY, Massachusetts, JOHN ENSIGN, Nevada, Ranking
Chairman OLYMPIA J. SNOWE, Maine
DANIEL K. INOUYE, Hawaii JIM DeMINT, South Carolina
BYRON L. DORGAN, North Dakota JOHN THUNE, South Dakota
BILL NELSON, Florida ROGER F. WICKER, Mississippi
MARIA CANTWELL, Washington GEORGE S. LeMIEUX, Florida
FRANK R. LAUTENBERG, New Jersey JOHNNY ISAKSON, Georgia
MARK PRYOR, Arkansas DAVID VITTER, Louisiana
CLAIRE McCASKILL, Missouri SAM BROWNBACK, Kansas
AMY KLOBUCHAR, Minnesota MIKE JOHANNS, Nebraska
TOM UDALL, New Mexico
MARK WARNER, Virginia
MARK BEGICH, Alaska
C O N T E N T S
----------
Page
Hearing held on October 7, 2009.................................. 1
Statement of Senator Kerry....................................... 1
Statement of Senator Ensign...................................... 30
Statement of Senator Klobuchar................................... 32
Statement of Senator Pryor....................................... 35
Statement of Senator Udall....................................... 37
Statement of Senator McCaskill................................... 39
Statement of Senator Thune....................................... 42
Statement of Senator LeMieux..................................... 43
Statement of Senator Begich...................................... 45
Witnesses
Robert M. Gabrielli, Senior Vice President, Program Operations,
DIRECTV, Inc................................................... 3
Prepared statement........................................... 5
R. Stanton Dodge, Executive Vice President and General Counsel,
DISH Network L.L.C............................................. 13
Prepared statement........................................... 14
Paul A. Karpowicz, President, Meredith Broadcasting Group on
behalf of the Television Board of the National Association of
Broadcasters................................................... 16
Prepared statement........................................... 18
Lonna Thompson, Acting COO, Senior Vice President and General
Counsel, Association of Public Television Stations............. 22
Prepared statement........................................... 24
Appendix
Hon. John D. Rockefeller IV, U.S. Senator from West Virginia,
prepared statement............................................. 51
Response to written questions submitted to Robert M. Gabrielli
by:
Hon. John D. Rockefeller IV.................................. 51
Hon. Maria Cantwell.......................................... 52
Response to written questions submitted to R. Stanton Dodge by:
Hon. John D. Rockefeller IV.................................. 53
Hon. Mark Pryor.............................................. 55
Hon. Maria Cantwell.......................................... 56
Hon. Tom Udall............................................... 59
Response to written questions submitted to Paul A. Karpowicz by:.
Hon. John D. Rockefeller IV.................................. 60
Hon. Tom Udall............................................... 61
Response to written question submitted by Hon. John D.
Rockefeller IV to Lonna Thompson............................... 64
REAUTHORIZATION OF THE
SATELLITE HOME VIEWER EXTENSION
AND REAUTHORIZATION ACT OF 2004
----------
WEDNESDAY, OCTOBER 7, 2009
U.S. Senate,
Subcommittee on Communications, Technology, and the
Internet,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:04 a.m. in
room SR-253, Russell Senate Office Building, Hon. John F.
Kerry, Chairman of the Subcommittee, presiding.
OPENING STATEMENT OF HON. JOHN F. KERRY,
U.S. SENATOR FROM MASSACHUSETTS
The Chairman. The hearing will come to order. Thank you
all. I apologize for being a few moments late.
The Satellite Home Viewer Extension Reauthorization Act has
one of those fancy Washington acronyms, SHVERA, and it is
definitely not the best-known piece of communications
legislation. It is also probably not the most appreciated or
understood. But, in living rooms all across our country, there
is no question that consumers benefit from the basics of this
law every single time that they turn on a television set.
And to understand that, or put it in its proper context,
you got to go back about, you know, 15 years or so. At that
time, a consumer seeking a premium pay television service had
only one place to go; he went to the cable company. Today, that
same consumer has options, and that's because SHVERA and its
legal predecessors ushered in a world where consumers could
choose between the cable company, satellite providers, like
DIRECTV and the DISH Network. And as everybody--you know, we
hear it all the time around here; people talk about, you know,
choice being competition and the importance of competition, but
the fact is, this is living proof of that. It also means more
programming innovation, it means more viewing packages to
choose from, and it means greater incentives for companies to
be able to develop new digital technology for program viewing.
I might add an important personal note, obviously, in terms
of competition, pricing, innovation, and viewing, we in Red Sox
Nation really appreciate it.
[Laughter.]
The Chairman. To keep these benefits going, in this hearing
we are now talking about the reauthorization of SHVERA. And our
focus is fairly simple, it's pretty straightforward. We want to
look at what aspects of the law need updating, what needs
tweaking, adjustment, to ensure that consumers across the
country benefit fully from the viewing choices that it makes
possible.
I think, in some respects, this task is fairly simple. The
law needs to be updated to reflect the transition in digital
television. I suspect all of our witnesses today would agree
that the Digital Revolution requires some updating. But, in
other aspects, the task is also--got its complexities. Today,
there are more than 20 Nielsen markets across the country,
where satellite does not provide local broadcast channels.
Instead of hearing information about local news, weather,
sports, consumers get information from places that are far from
home and, frankly, far from directly relevant to the lives that
they lead. This situation, I believe, does demand our
attention. Although in past Congresses, we have not required
satellite services to offer local channels to every market in
the country, I do think we need to talk about how to remedy
this situation.
I believe, too, that public television plays a very, very
special role in our media landscape. So, our SHVERA work ought
to ensure that public broadcasters get fair treatment from our
satellite providers when it comes to the carriage of public
television programming. The Association of Public Television
Stations does not believe that that is currently the case, all
the time at least.
And finally, I believe that we are perhaps midcourse, and
maybe somebody would peg it somewhere else in the transition,
but we're somewhere around midcourse in a very dramatic change
in consumer viewing habits. There's a migration underway from
television to computer screen to mobile phones and so forth,
and consumers are time-shifting and place-shifting their
viewing. Similarly, broadcasters are, appropriately, exploring
new mediums through which to deliver their content.
This is not the place to tackle all of these changes, but I
think it's very important for us as we make the--you know, as
we think about what adjustments to make in current law, we do
have to keep in mind the impact of the technology changing and
that impact on our viewing behavior. And, clearly, in time our
laws will need to adjust to, and reflect, these new realities.
And I say that with some experience, because when we did the
1996 Telecom Act here, we spent all our time on telephony,
when, within months, the entire ballgame was data information
transferral. And frankly, the bill was almost out of date, you
know, at signing.
So, with that said, we want to look ahead a little bit, and
I want to thank our witnesses for being here. I look forward to
your testimony and appreciate your thoughts about the
reauthorization of this important program.
So, without further ado, let me call on each of you. We're
delighted to welcome Robert Gabrielli, the Senior Vice
President for Programming and Distribution, DIRECTV, from El
Segundo, California; Mr. Stanton Dodge, Executive Vice
President, Secretary, and General Counsel, DISH Network, from
Colorado; Mr. Paul Karpowicz, the President at Meredith
Corporation, from Rocky Hill, Connecticut; and Lonna Thompson,
who is standing in for our--for Bill Acker, who's not able to
be here--and she's Acting COO and General Counsel from the
Association of Public Television Stations.
So, thank you, each of you, for being here. I don't know if
there's--why don't you go first, Mr. Gabrielli, and we'll just
run down the line. Thanks.
STATEMENT OF ROBERT M. GABRIELLI,
SENIOR VICE PRESIDENT FOR PROGRAMMING
AND DISTRIBUTION, DIRECTV, INC.
Mr. Gabrielli. OK. Thank you.
Chairman Kerry, thank you for inviting DIRECTV to discuss
the reauthorization of SHVERA.
I sit before you today on behalf of more than 18 million of
your constituents who subscribe to DIRECTV. Many live in rural
areas that broadcasters and cable operators do not reach. They
are some of our best customers. Since the day we opened our
doors, we have offered rural Americans the same national
programming we provide to our subscribers in big cities. These
rural customers had virtually no TV options before us; now they
can get the best television experience in America.
But, the innovative technology that allows us to deliver
all of our national programming to rural Americans cannot
easily deliver thousands of duplicate local broadcasts stations
throughout the country. We have spent billions of dollars to
address this issue. We now offer local channels to 95 percent
of Americans and are adding new markets every year.
Recognizing these challenges, Congress has always sought to
balance the goals of localism and access to network
programming. We respectfully offer the following three
consumer-friendly principles, which we believe will help the
Committee strike this balance:
The first principle: Consumers should always be able to get
programming from at least the Big Four networks by satellite.
Most consumers prefer local service, and the law reflects this.
But, just like cable operators, satellite does not yet deliver
local channels to every American. Where our subscribers cannot
receive local service, the law should allow distant signals
instead. Broadcasters will tell you that those ineligible for
distance signals can always get local signals over the air; we
all know this is not true. In fact, our review of the
broadcasters' own DTV transition website shows that as many as
45 percent of those predicted by SHVERA to get local signals
over the air, actually cannot.
Why is this? SHVERA's predictive model assumes many things
that are almost never true. It assumes consumers have a giant
rotating antenna, two stories in the air; it assumes the
antenna is pointing directly at the specific broadcasting tower
in question; and it assumes the world contains few trees and
buildings. In contrast, NAB's own Website apparently assumes
things that are true: actual antennas people really use, for
example. Congress should fix this.
Second principle: Congress should not take away consumers'
programming. Congress has changed the requirements for distance
signals before, and will do so again here, because of the
digital transition. In the past, it has always grandfathered in
subscribers so they would not lose their programming. It should
do so again here.
Preserving the status quo is especially important with
respect to multicast programming. Every broadcaster has one
primary video stream, and in so-called ``short markets''
lacking national networks, some broadcasters have begun to
offer one or more missing affiliates as a second, third, or
even fourth digital multicast stream. But, these multicast
streams are not really new local channels. Rather, a station
will buy the rights to out-of-town network and syndicated
programming, and, at most, repeat the local news already
carried on their primary video stream. We have reviewed the
listings of network-affiliated multicast streams throughout the
country and could not find one that offers any new local
content.
Existing law treats multicast streams very differently than
primary video streams. Multicast streams have no must-carry
rights, and they do not count for purposes of determining
eligibility for distance signals under the Copyright Act. We
think this is the right policy.
From DIRECTV's perspective, multicast streams simply are
not new local channels and shouldn't be treated as such. More
importantly, we frequently lack room in our crowded spot-beam
satellites to carry them.
The specific issues raised in this reauthorization is that
the National Association of Broadcasters (NAB) wants
subscribers on January 1st, the renewal, to be ineligible for
distance signals if they are predicted to get multicast signals
over the air. If this happens, tens of thousands who lawfully
receive signals--distance signals today, would immediately lose
them. And in the future, we'd be forced to shut off distance
signals whenever a new multicast channel appeared. We
respectfully ask the Committee to protect these consumers as
Congress has always done in the past.
And the third principle: Satellite customers should not be
ineligible to receive broadcast stations offered by cable.
Cable operators have long been permitted to offer neighboring
significantly viewed stations. In an attempt to level the
playing field with cable, Congress gave satellite carriers
similar rights in 2004. In doing so, however, Congress required
satellite operators, unlike cable operators, to offer local
stations the equivalent bandwidth offered to significantly
viewed stations. The FCC has interpreted this to mean that
DIRECTV must carry local stations in the same format as
significantly viewed stations every moment of the day. This is
infeasible. DIRECTV cannot monitor the format of hundreds of
station pairs around the clock. Nor can DIRECTV black out
signals when, for example, a high definition ballgame runs late
on one station, while the other offers standard definition
hourly fare. We ask the Senate Commerce Committee to address
this issue so that we can offer the same stations as our cable
competitors.
I would respectfully ask the Committee to keep these three
principles in mind as it crafts SHVERA reauthorization.
Thank you, and I'll look forward to your questions.
[The prepared statement of Mr. Gabrielli follows:]
Prepared Statement of Robert M. Gabrielli, Senior Vice President,
Program Operations, DIRECTV, Inc.
Thank you for inviting DIRECTV to discuss the reauthorization of
the Satellite Home Viewer Extension and Reauthorization Act (SHVERA). I
sit before you today on behalf of more than eighteen million of your
constituents who subscribe to DIRECTV. Many live in rural areas that
broadcasters and cable operators do not reach. These are some of our
best customers, and they have no better friend than DIRECTV. Since the
day we opened our doors, we have offered rural Americans the same
national programming we provide our subscribers in big cities. Those
who for years had no television options at all, can now get the best
television experience in America.
But the innovative technology that allows us to deliver all our
national programming to rural Americans cannot easily deliver thousands
of local broadcast stations--containing largely duplicative
programming--throughout the country. We have spent billions of dollars
to address this issue. We now offer local channels to 95 percent of
Americans and are adding new markets every year. In doing so, we try to
balance our desire to carry local broadcasters wherever possible with
the need to protect our subscribers where local carriage is not yet
possible.
Congress seeks to achieve this same balance with each SHVERA
reauthorization. We respectfully offer the following four consumer-
oriented principles to guide the Committee in this endeavor.
First, customers should always be able to get programming from at
least the ``big four'' networks by satellite. Consumers prefer local
service and the law rightly reflects this. But we cannot yet deliver
all of the thousands of local broadcast stations in every market. Where
our subscribers cannot receive local service, the law should let us
give them distant signals instead. What the law should not do is
require subscribers to rely on expensive rotating rooftop antennas to
get intermittent over-the-air reception. Broadcasters will tell you
that subscribers ineligible for distant signals can always get local
signals over the air, but we all know this is not true. In fact, the
broadcasters' own website designed to help consumers choose ``the
proper outdoor antenna to receive [their] local television broadcast
channels'' shows that as many as 45 percent of those now ineligible for
distant signals cannot really get local signals over the air.\1\
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\1\ For more details, please see Appendix I.
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Second, Congress should not take away customers' programming.
Congress from time to time has changed the eligibility criteria for
distant signals, and will do so again here in light of the digital
transition. In the past, however, it has always ``grandfathered'' then-
existing subscribers so that they would not lose their programming.
Third, satellite customers should not be ineligible to receive
broadcast stations offered by cable. The law should no longer allow
incumbent cable operators to offer more local and significantly viewed
channels than their satellite competitors.
Fourth, prices for broadcast programming should be reasonable. We
pay broadcasters and content providers fair compensation for their
programming, and hope they, in turn, recognize the value of our
distribution network. But neither market power nor government fiat
should give those entities the ability to raise prices excessively,
particularly in economic times like these.
These four principles inform DIRECTV's perspective on all SHVERA-
related issues. In the balance of my testimony, I'd like to discuss
four important issues before the Committee: changes to the
``significantly viewed'' rules, questions concerning multicast signals,
proposals to mandate carriage in all 210 markets; and a ``market
trigger'' proposal championed by copyright holders.
I. Fixing the ``Significantly Viewed'' Rules Will Rescue Congress's
Good Idea From the FCC's Implementation Mistakes
First, we ask the Committee to fix the rules governing carriage of
neighboring ``significantly viewed'' stations. Cable operators have
long been permitted to offer such stations. (For example, certain New
York stations are ``significantly viewed'' in New Haven, Connecticut.)
In an explicit attempt to level the playing field with cable, Congress
gave satellite carriers similar rights in 2004. Congress also, however,
included a provision to protect local broadcasters that does not apply
to cable. The FCC subsequently interpreted this rule so onerously that
it effectively undid Congress's efforts.
Satellite operators (unlike cable operators) must offer local
stations the ``equivalent bandwidth'' offered to significantly viewed
stations. The FCC has interpreted this to mean that DIRECTV must carry
local stations in the same format as significantly viewed stations
every moment of the day. This is infeasible. DIRECTV cannot monitor the
format of hundreds of station pairs around the clock. Nor can DIRECTV
black out signals when, for example, a high-definition ballgame runs
late on one station while the other offers standard definition hourly
fare.
The House Commerce Committee has addressed this issue, and we ask
the Senate Commerce Committee to do the same.
II. Preserving the Status Quo With Respect to Multicast Signals Will
Ensure That All Subscribers Receive Network Service
Second, we ask the Committee to preserve the status quo with
respect to ``multicast'' broadcast video streams. Every broadcaster has
one ``primary'' video stream. Digital television allows some
broadcasters to also offer second, third, or fourth multicast streams.
In so-called ``short'' markets lacking one or more of the big national
networks, some broadcasters have begun to offer the ``missing
affiliate(s)'' as multicast streams.
But these multicast streams are not really ``new'' local channels.
Rather a station will buy the rights to out-of-town network and
syndicated programming, and (at most) repeat the local news already
carried on its primary video stream. We have reviewed the programming
of network-affiliated multicast streams throughout the country, and
could not find a single one anywhere that offers any new local content.
The FCC has twice decided that multicast streams do not have ``must
carry'' rights, in part because of the obvious constitutional problems
this would raise. Moreover, multicast channels do not now ``count'' for
purposes of determining eligibility for distant signals under the
Copyright Act. On both questions, existing law treats multicast streams
differently than primary video streams.
The law gets both questions exactly right. From DIRECTV's
perspective, one problem with treating multicast streams like primary
streams is that they simply aren't new local channels. Another, more
important problem is that we frequently lack room on our crowded spot
beam satellites to carry them. When we have room, we typically carry
network-affiliated multicast streams. But where we lack room, we simply
cannot accommodate them.
The broadcasters want all multicast signals everywhere to ``count''
for purposes of distant signal eligibility, starting on the date of
enactment. If this proposal were to become law, thousands of our
subscribers who have lawfully received distant signals for years would
lose them. Moreover, we would have to immediately shut off distant
signals whenever a new network-affiliated multicast stream appeared.
And if we lacked room to carry the multicast stream, many subscribers
would get no network programming from us--even if they have had it via
legal distant signals for years. We know this will be unacceptable to
our customers. It should be to the Committee as well.
III. Unfunded Carriage Mandates Would Unfairly Burden Satellite
Subscribers
Third, we ask the Committee not to adopt huge unfunded carriage
mandates. SHVERA ultimately represents a compromise among satellite
carriers, copyright holders, and broadcasters. DIRECTV is concerned,
however, that some might seek to alter the very essence of this
compromise with a mandate to immediately serve every local market. Such
a mandate would be technically infeasible, hugely expensive, unfair to
satellite subscribers, and unconstitutional.
DIRECTV today offers local television stations by satellite in 152
of the 210 local markets in the United States, serving 95 percent of
American households. (Along with DISH Network, we offer local service
to 98 percent of American households.) DIRECTV also offers HD local
service in 133 markets, serving more than 91 percent of American
households. By the FCC's calculations, over 80 percent of DIRECTV's
satellite capacity is now devoted to local service--nearly triple the
amount cable operators can be required by law to carry.\2\ We have
devoted several billions of dollars to this effort. And we are working
every day to serve more markets.
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\2\ Carriage of Digital Television Broadcast Signals: Amendment to
Part 76 of the Commission's Rules; Implementation of the Satellite Home
Viewer Improvement Act of 1999: Local Broadcast Signal Carriage Issues
and Retransmission Consent Issues, 23 FCC Rcd. 5351, 11 n.48 (2008)
(``Satellite HD Carriage Order'') (using hypothetical local and
national programming carriage figures to estimate that a satellite
operator would dedicate 91 percent of its capacity to local
programming). With DIRECTV's actual figures, this number is closer to
80 percent.
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Some, however, would require satellite carriers to serve all
remaining local markets by satellite--perhaps as soon as within a year.
Very respectfully, while expanding the reach of broadcast service might
be a worthy goal, this the wrong approach.
Such an approach would upset the delicate balance that has guided
Congressional policy in this area for decades. In enacting SHVIA's
statutory copyright license for local broadcast signal carriage,
Congress specifically recognized that the capacity limitations faced by
satellite operators were greater than those faced by cable
operators.\3\ In light of those limitations, Congress adopted a
``carry-one, carry-all'' regime in which satellite operators can choose
whether to enter a market, and only then must carry the primary video
of qualifying stations in that market.\4\ This regime was carefully
crafted to balance the interests of broadcasters and satellite carriers
alike. Indeed, both Congress and the courts concluded that the carry-
one, carry-all regime was constitutional largely because it gave
satellite carriers the choice of whether not to serve a particular
market.\5\ (We have attached as Appendix B to this testimony a White
Paper by Joshua Rosenkranz, a noted constitutional law expert,
discussing the grave constitutional difficulties with such a mandate.)
---------------------------------------------------------------------------
\3\ 145 Cong. Rec. H11,769 (1999) (joint explanatory statement),
145 Cong Rec H 11769, at *H11792 (LEXIS) (``To that end, it is
important that the satellite industry be afforded a statutory scheme
for licensing television broadcast programming similar to that of the
cable industry. At the same time, the practical differences between the
two industries must be recognized and accounted for.'') (``Conference
Report'').
\4\ 47 U.S.C. 338(a)(1).
\5\ See Conference Report at *H11795 (``Rather than requiring
carriage of stations in the manner of cable's mandated duty, this Act
allows a satellite carrier to choose whether to incur the must-carry
obligation in a particular market in exchange for the benefits of the
local statutory license.''); SBCA v. FCC, 275 F.3d 337, 354 (4th Cir.
2001) (holding that the carry-one, carry-all rule was content-neutral
because ``the burdens of the rule do not depend on a satellite
carrier's choice of content, but on its decision to transmit that
content by using one set of economic arrangements [e.g., the statutory
license] rather than another'').
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By imposing heavy burdens on us and our subscribers, an unfunded
carriage mandate would unintentionally create real inequality.
Broadcasters already make their signals available in every market over
the air, for free. More people could surely receive those signals if
offered over satellite. But more people could also receive those
signals if broadcasters themselves invested in the infrastructure to
increase their own footprint so everyone in the market could receive a
free over the air signal. We suggest that it is inequitable, especially
in this economy, to place the financial burden of expanding broadcast
coverage on satellite subscribers alone.
IV. Imposing a ``Market Trigger'' for Elimination of the Statutory
Licenses Would Lead to Higher Prices and an Inferior Product
Fourth, we ask the Committee to examine any ``market trigger''
proposal in the context of the Communications Act's carriage rules. By
combining a ``private market'' copyright approach with the more
regulatory approach found in the Communications Act, this proposal
would lead to marketplace confusion and, ultimately, higher prices and
an inferior product for our subscribers.
Some of the largest copyright holders contend that the statutory
licenses upon which millions of satellite and cable subscribers now
depend are things of the past. They argue that there could be other
ways for multichannel video programming distributors to provide
broadcast programming to their customers--hypothesizing ``market
mechanisms,'' ``voluntary licensing arrangements,'' ``sublicensing''
and the like. Nobody really thinks such alternatives will actually
work, particularly for distant signals. But copyright holders now
suggest that, if a private copyright licensing mechanism could be
developed, the statutory licenses should then sunset.
Whatever the merits of this suggestion under the Copyright Act, it
completely ignores the must-carry and retransmission consent rules
found in the Communications Act. Disney, for example, has argued that
its ABC broadcast programming should be sold just like its ESPN cable
programming. But the ``market trigger'' proposal wouldn't do that at
all. The government doesn't force us to carry ESPN Classic but, under
the market trigger proposal, it would still force us to carry even the
lowest-rated broadcast stations. By the same token, the government
doesn't require us to obtain non-copyright ``consent'' to carry ESPN
but, under the market trigger proposal, we would have to separately
acquire both copyright and retransmission consent from broadcast
stations.
From where we sit, copyright holders don't really propose a ``free
market'' for broadcast programming. Rather, they propose those parts of
the ``free market'' that benefit them as copyright holders, while
preserving those aspects of the existing regulatory structure that
benefit their broadcast subsidiaries. The natural result would be
marketplace chaos. The government would force us to negotiate twice,
not once, for broadcast programming that our subscribers want. And it
would force us to carry programming that our subscribers don't want.
Our subscribers would pay higher prices and receive lower quality
programming in exchange. This strikes us as patently unfair.
Thank you once again for allowing me to testify. I would be happy
to take any of your questions.
______
Appendix I
Over-the-Air Carriage Methodology
DIRECTV is in the process of moving the local channels in several
markets from a ``wing'' satellite located at 72.5+ W.L. to one of its
more centrally located satellites. Subscribers in those markets will no
longer require a second satellite dish to receive local signals. The
spot beams on our central satellite, however, cover slightly different
areas than do those on the wing satellite. Accordingly, several
thousand subscribers who had been able to receive local channels from
the wing satellite will not be able to do so from the central
satellite.
Naturally, we are looking for alternative ways to provide network
programming to those subscribers. To determine what options these
customers might have, we contracted with TitanTV to evaluate each
address.
TitanTV evaluated each address in two ways. It first evaluated each
address for SHVERA distant signal eligibility using its standard
digital predictive model. It next evaluated those same addresses using
a different model--that used by the antennaweb.org mapping program,
which describes itself as being ``provided by the Consumer Electronics
Association (CEA) and the National Association of Broadcasters (NAB),''
and designed to ``locate[ ] the proper outdoor antenna to receive your
local television broadcast channels.''
When we received the results, we noticed that fully 45 percent of
the addresses predicted to get an off-air signal by the SHVERA model
were predicted not to get an off-air signal by the antennaweb.com
model. Surprised by these results, we then took a wider set of
addresses and manually entered each of them into both models. We
obtained similar results.
In other words, according to NAB itself, nearly half of subscribers
who cannot get a viewable signal over the air are nonetheless
ineligible for distant signals under the existing SHVERA methodology.
Appendix II
Constitutional Analysis
Memorandum
To DIRECTV and DISH Network
From E. Joshua Rosenkranz
Date July 23, 2009
RE Analysis of the Constitutionality of H.R. 927
H.R. 927's Must-carry Obligations Are Unconstitutional
H.R. 927 would require satellite TV providers, like DIRECTV and
DISH, to carry every single full power local broadcast station in all
210 Designated Market Areas (``DMAs''). A burden of this magnitude is
unwise, unjustified--and unconstitutional.
Because the Must-Carry Rule Infringes on Satellite TV Providers' First
Amendment Freedoms, It Must Satisfy Rigorous Judicial Review
A statute triggers First Amendment concerns any time it directs a
speaker what to say and what not to say--or otherwise burdens the
speaker's editorial decisions. Likewise, a law triggers First Amendment
concerns any time it dictates to a broadcaster what programs to carry,
and any time it burdens the broadcaster's programming choices.
That is what H.R. 927 would do to satellite TV providers--in the
most extreme possible way. For starters, H.R. 927 would force satellite
TV providers to carry hundreds of local broadcast stations against
their will, many of which have virtually no local audience. Because
satellite TV service has limited channel capacity, that would mean that
DISH and DIRECTV would have to drop programming that subscribers want
to watch in order to broadcast channels that no one watches.
True, not every infringement on First Amendment freedoms or
programming discretion is unconstitutional. More specifically, not
every must-carry rule necessarily violates the First Amendment. The
Supreme Court upheld the must-carry obligations that Congress imposed
on cable, for example--but only by a razor-thin margin, after two trips
to the Court, and after concluding that the rule would not prevent
cable from carrying the programs it wanted to carry. See Turner Broad.
System, Inc. v. FCC, 512 U.S. 622, 641 (1994) (``Turner I''); Turner
Broad. Sys., Inc. v. FCC, 520 U.S. 180, 224-25 (``Turner II''). And the
Fourth Circuit has upheld the so-called ``carry-one, carry-all'' rule
that Congress imposed on satellite TV providers--a voluntary rule that
is far less onerous than the crushing must-carry requirement embodied
in H.R. 927. See Satellite Broad. & Commc'ns Ass'n v. FCC, 275 F.3d 337
(4th Cir. 2001) (``SBCA'').
The important lesson to draw from those cases is that the courts
will strike H.R. 927's must-carry obligation unless the government
persuades them, based on solid evidence, that the justifications
outweigh the burdens and that the infringement is sufficiently tailored
to minimize the burdens on speech. This legal standard is called
``heightened scrutiny.''
Exactly how intense the heightened scrutiny will be is a matter of
debate. There is a strong argument that the courts should apply the
very highest level of scrutiny, called ``strict scrutiny''--a standard
that is almost always fatal to any law that raises First Amendment
concerns. But at a bare minimum, the courts would have to apply
``intermediate scrutiny'' (as the Supreme Court did in the cable must-
carry context). See Turner I, 512 U.S. at 641. That would require the
government to bear two burdens. First, the government will have to
justify the infringement on First Amendment freedom by demonstrating
that the infringement is necessary to advance an ``important''
governmental interest. United States v. O'Brien, 391 U.S. 367, 377
(1968). This is no easy feat. The government may not just posit a
reason for imposing the requirement; ``it must demonstrate that the
recited harms are real, not merely conjectural, and that the regulation
will in fact alleviate these harms in a direct and material way.''
Turner I, 512 U.S. at 664. It must also demonstrate that Congress ``has
drawn reasonable inferences based on substantial evidence,'' in
concluding that the regulation will in fact alleviate the harms in a
direct and material way. Id. at 666. Beyond that, the government would
have to demonstrate that any ``incidental restrictions on alleged First
Amendment freedoms'' are ``no greater than is essential to the
furtherance of that interest.'' Id. at 662. (emphasis added).
For purposes of the discussion that follows, we make the
conservative assumption that the courts will apply the very demanding
intermediate scrutiny, rather than the almost insurmountable strict
scrutiny standard. So, at a minimum, the courts will study the specific
terms of H.R. 927 and will conduct a full examination of the television
market--and satellite TV's role within that market. If anything is
clear from past precedent, it is that no court would accept the facile
conclusion that just because a cable must-carry rule survived, and just
because a far less onerous carry-one, carry-all rule has been upheld,
the imposition of a very different must-carry obligation--on a very
different market player with an entirely different technology--would
also survive.
In sum, an assessment of whether H.R. 927 is likely to survive
judicial scrutiny must start with an understanding of why the Supreme
Court upheld cable's must-carry rules, and proceed with a point-by-
point comparison of the justification, burdens, and tailoring of the
cable must-carry rule as compared to H.R. 927. Each point is addressed,
in turn, below.
The Justification for the Satellite Must-Carry Requirement Is
Constitutionally Inadequate
The Compelling And Well Documented Justification For The Cable Must-
Carry Rule
The cable must-carry rule that the Court upheld in the Turner cases
basically required cable providers to set aside a maximum of one-third
of their channel capacity to carry local commercial television
stations, and to carry local public broadcast television stations.
Superficially, that requirement sounds similar to the satellite must-
carry rule embodied in H.R. 927. But the justification for imposing
such a requirement on satellite TV pales in comparison to the
justification that the Court narrowly upheld in Turner II.
The Court observed that ``Congress' overriding objective in
enacting the [cable] must carry rules was . . . to preserve access to
free television programming for the 40 percent of Americans without
cable.'' Id. at 646. The Court found that there was a real prospect
that broadcast stations--particularly less popular independent
stations--would die, in the absence of must-carry rules. The point of
the law was to ensure that viewers who do not subscribe to cable, would
still have a menu of programming options to watch when they put up
their rabbit-ear antennas. Specifically, the fear was that if cable did
not carry local broadcast stations, the local stations would lose their
audiences, causing their advertising revenues to evaporate. Id. This,
in turn, would mean broadcast stations would go out of business, and
viewers who opt not to pay for cable would have fewer channels to
watch. Id.
The Court considered this objective important. But it did not
uphold the justification on the first trip to the Supreme Court. It
sent the case back to put the government through its paces of actually
proving, with concrete evidence, that the fears that motivated Congress
were real. Turner I, 512 U.S. at 667 (``Without a more substantial
elaboration in the District Court of the predictive or historical
evidence upon which Congress relied, or the introduction of some
additional evidence to establish that the dropped or repositioned
broadcasters would be at serious risk of financial difficulty, we
cannot determine whether the threat to broadcast television is real
enough to overcome the challenge to the provisions made by these
appellants.'') Three years later, when the case came back to the Court
with a much more extensive factual record, a bare majority of the Court
was satisfied that the evidence did support Congress's conclusion that
the structure of the cable industry gives cable operators ``an
incentive to drop local broadcasters and to favor affiliated
programmers.'' Turner II, 520 U.S. at 198 200. The reason is simple:
Cable companies compete with local broadcasters for audience and
advertising dollars--giving them strong incentive to drop local
broadcast stations in favor of their own affiliates. This incentive
gave rise to an enormous problem that was national in scope: a threat
to the survival of a diverse network of free, over-the-air broadcast
stations. Specifically, the Court found the evidence compelling on the
following points:
Cable Had the Market Power To Harm Local Broadcasters:
``Cable operators possess a local monopoly over cable
households. Only 1 percent of communities are served by more
than one cable system.'' Id. at 197.
That meant that if they could eliminate broadcast
competition, their monopoly would be complete--and they did not
need to fear that some other competitor would gain market share
by picking up local broadcasts. Id.
Cable served ``at least 60 percent of American households in
1992.'' Id.
Cable Had The Ability To Deprive Local Broadcasters of their Local
Audiences:
Cable operators exercised ``control over most (if not all)
of the television programming that is channeled into the
subscriber's home'' and ``can thus silence the voice of
competing speakers with a mere flick of the switch.'' Id.
Evidence Demonstrated Cable Was Harming Local Broadcasters:
``A television station's audience size directly translates
into revenue.'' Id. at 208.
Some broadcast stations have ``fallen into bankruptcy,
curtailed their business operations, and suffered serious
reductions in operating revenues'' after cable systems stopped
carrying the stations. Id. at 209.
Stations without cable carriage ``encountered severe
difficulties obtaining financing for operations.'' Id.
In sum, the Court, by a very narrow margin, found that there was an
important justification for the cable must-carry rule: cable's abuse of
its market power posed a real threat to the survival of local broadcast
stations.
The Weak And Unprovable Justification For A Satellite Must-Carry Rule
Nowhere in the text of H.R. 927 is there any statement of
congressional purposes or explanation of what evils this must-carry
provision is aimed at curing. Nor does the bill offer any factual
findings to justify the infringement on speech. We can surmise that the
government will try to justify the satellite must-carry rule on the
same basis on which it defended the cable version. But the government
will not be able to carry its burden of proving that satellite TV could
kill local broadcasting.
First, satellite TV providers advertise nationally. They simply do
not compete with local broadcasters for local advertising dollars. So
satellite TV providers do not have the incentive cable companies have
to drop local broadcast stations.
Second, for that reason, satellite TV providers already carry local
stations in an overwhelming majority of markets. The objection here is
to the burden of having to carry all of them, regardless of whether the
cost of doing so is at all justified by the demand of viewers.
Third, satellite TV providers are nowhere near the dominant force
that cable was when the Court decided Turner II:
In contrast to cable operators, which ``possessed a local
monopoly over cable households,'' each satellite TV provider--
DISH and DIRECTV--competes vehemently against the other, and
faces competition from cable and telephone companies now
offering TV service. Id. at 197.
In contrast to cable, which served ``at least 60 percent of
American households in 1992,'' id., in 2007 DISH and DIRECTV
combined served only about 26 percent of American households.
Motion Picture Association of America, Inc., Entertainment
Industry Market Statistics (2007), at pp. 19-20, http://
www.mpaa.
org/USEntertainmentIndustryMarketStats.pdf.
Fourth, unlike cable companies, satellite TV providers do not
exercise ``control over most . . . of the television programming that
is channeled into the subscriber's home'' and cannot ``silence the
voice of competing speakers with a mere flick of the switch.'' Id. In
the few markets where satellite TV providers are unable to provide
local service, satellite TV subscribers can seamlessly receive both
over the air broadcast signals and satellite programming with the
consumer set top box used to receive satellite signals and an antenna
that integrates into satellite programming with the flick of switch.
The difference is that the customer has control over the switch.
Indeed, in enacting the 1999 carry-one,carry-all rules, Congress
recognized that ``subscribers who receive no broadcast signals at all
from their satellite service may install antennas or subscribe to cable
service in addition to satellite service . . .'' (Appellate Brief for
Respondents, the Federal Communications Commission and the United
States of America in Satellite Broadcasting and Communications Ass'n v.
FCC, 275 F.3d 337 (4th Cir. 2001), 2001 WL 34386914 (C.A.4) (citing
H.R. Conf. Rep. No. 106-464, at 102.).
In short, satellite TV providers have no incentive to block local
broadcasters from their local audiences, do not do so as a practical
matter, and would not threaten the survival of local broadcasters, even
if they did. So local broadcasters simply do not need a satellite must-
carry rule to stay alive. Thus, any infringement on satellite TV
providers' First Amendment rights is unjustifiable.
The Burdens of the Satellite Must-Carry Requirement Are
Unconstitutionally Heavy
Perhaps the most important distinction between the cable must-carry
rule and H.R. 927 is that cable's carriage obligation for commercial
broadcast stations is capped at one-third of channel capacity. H.R. 927
imposes an unlimited carriage obligation on satellite TV providers.
This greatly alters the relative burdens of the two rules.
The Very Light Burden Of The Cable Must-Carry Rule
Critical to the Supreme Court's decision to uphold cable's must-
carry requirement was the conclusion that the ``actual effects'' of the
must carry rule were ``modest.'' Turner II, 520 U.S. at 214.
``[S]ignificant evidence indicates that the vast majority of cable
operators have not been affected in a significant manner by must-
carry.'' Id. (emphasis added).
Compliance with must-carry obligations did not force cable
operators to drop a significant amount of programming. ``Cable
operators ha[d] been able to satisfy their must carry
obligations 87 percent of the time using previously unused
channel capacity.'' Id. This minor burden, the Court accurately
predicted, would diminish as cable channel capacity expanded.
Id.
``94.5 percent of the 11,628 cable systems nationwide have
not had to drop any programming in order to fulfill their must
carry obligations,'' and ``the remaining 5.5 percent had to
drop an average of only 1.22 services from their programming.''
Id.
Nationwide, cable operators ``carry 99.8 percent of the
programming they carried before enactment of must carry.'' Id.
``Only 1.18 percent of the approximately 500,000 cable
channels nationwide is devoted to channels added because of
must carry'' obligations. Id.
The Onerous Burden Of H.R. 927
In contrast to the ``modest'' burdens on cable, there is no way the
government will ever be able to prove satellite carriers will not have
``been affected in a significant manner by must-carry'' obligations.
Id. Congress opted to enact the less restrictive carry-one, carry all
rules in 1999 in recognition of the capacity constraints faced by
cable. See SBCA, 275 F.3d at 350 (summarizing testimony to Congress
regarding the capacity limits faced by satellite and explaining that
carry-one, carry-all rules reflected ``the technological
dissimilarities between cable and satellite.''). Despite innovations in
satellite technology, there are only so many channels that can be
carried on a satellite spot-beam, and satellite spectrum is limited..
Even where spectrum is available, developing, constructing and
launching additional satellites is not only expensive, it takes many
years of planning and preparation. Satellite HD Carriage Order, FCC 08-
86, CS Docket 00-96, 11 (recognizing that ``satellite construction
and launch is a lengthy process, generally taking approximately 4
years.''). As the FCC recognized in 2008, ``satellite carriers face
unique capacity, uplink, and ground facility construction issues'' in
connection with offering local service. Carriage of Digital Television
Broadcast Signals: Amendment to Part 76 of the Commission's Rules and
Implementation of the Satellite Home Viewer Improvement Act of 1999:
Local Broadcast Signal Carriage Issues and Retransmission Consent
Issues, Second Report and Order, Memorandum Opinion and Order, and
Second Further Notice of Proposed Rulemaking Order, FCC 08-86, CS
Docket 00-96, 7 (March 27, 2008) (``Satellite HD Carriage Order'').
As the FCC concluded, Cable just does not face the same capacity
constraints. Id., 9.
Satellite carriers' must carry obligations are also far broader
than the ones the Court previously upheld. Unlike the cable rule which
capped the must-carry requirement for commercial stations at one-third
of a cable company's channels, H.R. 927 has no limit on the number of
channels satellite TV providers must devote to carrying local broadcast
stations. Indeed, satellite providers already devote much more than
one-third of their channel capacity to local broadcast stations under
the existing carry-one, carry-all rules. This is due in part to the
national scope of satellite providers business. Because cable companies
serve a limited geographic area, they can easily satisfy their limited
obligation to carry the local broadcast stations in that area--
typically five to ten stations. On that same platform, cable companies
offer hundreds of national channels and provide data and voice
services. Satellite providers in contrast operate a single, national
system on which they already carry over 1,000 local broadcast stations.
In other words, satellite providers already devote more channel
capacity to local broadcast stations than cable does under its must-
carry rules. See Satellite HD Carriage Order, FCC 08-86, CS Docket 00-
96, 11.
Even without the onerous requirements of H.R. 927, satellite TV
providers' carriage obligations will continue to grow because the
current carry-one, carry-all rules require satellite providers to carry
all high-definition signals of broadcast stations electing must carry
by 2013 in markets where they provide high definition signals (``HD'').
HD requires much more channel capacity, and in some markets, satellite
carriers' technology requires them to carry both standard and high-
definition channels, thus doubling the carriage requirements for each
station. As the FCC explained, ``satellite carriers realize a net loss
in the total number of program streams they may carry in a given
bandwidth as they transition from standard definition to high
definition signals.'' Satellite HD Carriage Order, FCC 08-86, CS Docket
00-96, 8. H.R. 927 saddles satellite providers with added burden of
carrying every local broadcast station in the country at the same time
the industry struggles to comply with the phased-in HD must-carry
rules.
Simply put, to satisfy H.R. 927's requirements, satellite carriers
would likely have to drop programming altogether and forego adding
additional non-broadcast programming, such as international and
foreign-language programming that is a critical source of news and
information for many communities. See Satellite HD Carriage Order, FCC
08-86, CS Docket 00-96, 8 (adopting four-year phase in for HD
carriage rules due to ``serious technical difficulties'' faced by
satellite and finding that immediate implementation would harm
subscribers if satellite carriers were forced to drop other programming
to free capacity). Moreover, compliance would cost satellite providers
hundreds of millions of dollars to connect local broadcast stations
across the country to regional satellite uplink facilities, and to
develop, build and launch additional satellites to increase channel
capacity.
The Fourth Circuit's Decision Upholding The More Limited Carry-One,
Carry-All Obligations Does Not Support H.R. 927
In SBCA, the Fourth Circuit applied the principles of the Turner
cases to satellite TV `s carry-one, carry-all rule, which was enacted
as part of the 1999 Satellite Home Viewer Improvement Act (``SHVIA'').
The carry-one, carry-all rule provides that satellite carriers that use
their statutory copyright license to retransmit a single broadcast
station within a DMA must carry only those qualifying full-power local
broadcast stations that are in that DMA. 47 U.S.C. 338(a)(1). The
rule does not apply if the satellite carrier does not use the statutory
copyright license to secure the right to retransmit the broadcast
station, but instead negotiates a license directly with the station.
The Fourth Circuit upheld this far more modest rule. We disagree
with aspects of that ruling, which is not, in any event, binding
outside the Fourth Circuit. But for present purposes suffice it to say
that an opinion upholding the much more limited carry-one, carry-all
requirement does not come close to supporting a sweeping extension of
the principle to every local station in every DMA. In this regard, one
aspect of the Fourth Circuit's logic is especially relevant. One
critical reason that the Fourth Circuit upheld the rule was that the
rule did not impose an excessive burden on satellite carriers. The
court held that the carry-one, carry-all rule ``leaves them with the
choice of when and where they will become subject to the carry one,
carry all rule.'' 275 F.3d at 365. The same cannot be said of H.R. 927,
which imposes what might be called a ``carry-one, carry-the-universe
requirement.'' Obviously, there is a big difference between a rule
prohibiting discrimination among local broadcasters, and a rule that
for all intents and purposes requires a satellite TV provider to carry
every single local broadcast station in the country.
Conclusion
Under controlling Supreme Court precedent, H.R. 927 is
unconstitutional. It should not become law. But if it does, the courts
are sure to strike it. The cable must-carry rule's ``modest'' burdens
came within a hair's breadth of being struck. See Turner II, 520 U.S.
at 214. In the intervening years, the Court has grown even more
protective of First Amendment rights in the business context and less
tolerant of burdensome regulations. Given these realities, H.R. 927
will be practically dead on arrival.
The Chairman. Thank you.
STATEMENT OF R. STANTON DODGE, EXECUTIVE VICE PRESIDENT AND
GENERAL COUNSEL, DISH NETWORK L.L.C.
Mr. Dodge. Chairman Kerry, Ranking Member Ensign, and
Members of the Subcommittee, I appreciate the opportunity to
testify. My name is Stanton Dodge and I'm the Executive Vice
President and General Counsel of DISH Network, the Nation's
third largest pay-TV provider.
Providing consumers with local, over-the-air broadcast
stations by satellite in all 210 markets has been a longtime
goal of the Senate Commerce Committee. This year's review of
the Satellite Home Viewer Act provides an opportunity to reach
that goal.
Today, DISH provides local-into-local service in 181
markets, covering approximately 98 percent of households
nationwide. This considerable achievement over the last decade
would not have been possible without the forward-looking
actions of Congress. The job, however, is not complete until
all consumers have the opportunity to view their local
channels.
Today, I will review--I will detail some of the key hurdles
to serving the remaining 29 markets and discuss what this--step
this Subcommittee could take to make service in all 210 markets
a reality.
The up-front and recurring costs of providing local-into-
local service in every market are daunting. In each market
where we provide local service, DISH must establish a physical
presence. Our ability to recoup this substantial investment is
constrained by the small size of the remaining markets. For
example, there are fewer than 4,000 households in the Glendive,
Montana, local market. This means there are only a few
subscribers to help defray those costs. The costs to provide
local-into-local service are largely fixed, so the economics of
launching Houston are easy, while the economics of launching
Presque Isle, Maine, and similar smaller markets, are not.
DISH has finite satellite spectrum available to provide a
national service that competes with cable and telephone
companies. Let me explain. The decision to provide a local NBC
affiliate to a few thousand subscribers precludes DISH from
offering 13 million subscribers a new national service, a high-
definition channel, or an international or Spanish-language
offering. This has clear competitive implications. Our
investment in cutting-edge spot-beam technology and satellites,
each an approximately $350-million investment, offers a more
efficient means to provide local channels. Nonetheless, the
decision to include a local dedicated spot-beam instead of a
national beam on our next satellite has real consequences for a
long-term competitive viability. Launching 29 additional
markets would require us to find or create capacity for
approximately 100 additional channels on a system that is near
full capacity today.
The last key hurdle is one of consumer expectations. If any
customer subscribes to a locals package, they expect to receive
at least NBC, CBS, ABC, and FOX. However, in 26 of the 29
markets we have yet to launch, one or more of those networks is
not available as the primary video feed. In some instances,
only a single national network affiliate is present in these
markets. Without action by Congress, we will be unable to
provide a commercially viable offering by filling in these,
quote, ``short markets.''
Today, we're not seeking a subsidy for the launch of these
markets or the resources to construct more satellites, but we
do want to give this Subcommittee an appreciation for the
challenges faced by any provider seeking to launch all 210
markets. There are concrete steps the Subcommittee can take to
improve the economics of serving these smaller markets.
To that end, the bill voted out of the Senate Judiciary
Committee 2 weeks ago is a good first step, but it could have
unintended consequences. Other pay-TV providers pay either a
retransmission fee or a copyright royalty payment. Any
requirement to pay double compensation to carry the same
station as the Judiciary bill requires would create an
unintended financial disincentive to provide those additional
signals. Simply put, layering on additional costs to serve
these economically challenging markets would undercut the goal
of serving every market. Indeed, to ensure that incentives are
properly aligned and that all consumers in the U.S. receive
comparable services, DISH would need to be on an equal footing
with its competitors.
In addition, the bill, as written, would allow broadcasters
to withhold retransmission consent, perhaps stopping the launch
of new markets.
Finally, I want to comment on the Judiciary Committee's
provision to study phasing out the Compulsory License Regime.
We welcome such a study, but believe it needs to be coupled
with an FCC study, as well. That study should examine the
current compensation regime and whether it's truly market-based
and serves consumers.
In sum, we are hopeful that the reauthorization process
this year will modernize an outdated statute, as well as
provide the incentive to achieve a national policy goal, making
local TV service available to consumers in all 210 markets. We
look forward to working with members and staff to accomplish
both of those goals.
Thank you for the opportunity to testify, and I look
forward to answering any of your questions.
[The prepared statement of Mr. Dodge follows:]
Prepared Statement of R. Stanton Dodge, Executive Vice President and
General Counsel, DISH Network L.L.C.
Chairman Kerry, Ranking Member Ensign, and Members of the
Subcommittee, I appreciate the opportunity to testify today. My name is
Stanton Dodge, and I am the Executive Vice President and General
Counsel of DISH Network L.L.C. (``DISH Network''), the Nation's third
largest pay-TV provider.
Providing consumers with local over-the-air broadcast stations by
satellite in all 210 designated market areas has been a goal of the
Senate Commerce Committee for some time. This year's review of the
Satellite Home Viewer regime provides an opportunity to improve upon
the existing regulatory and legal structure to incentivize the launch
of the remaining unserved markets.
DISH has launched local-into-local service in 182 markets,
including Puerto Rico, covering approximately 98 percent of households
nationwide in less than a decade's time. This is a considerable
achievement that would not have been possible absent the regulatory and
legal structure Congress created to encourage and foster such
investment.
The job, however, is not complete until all consumers have the
opportunity to view their local channels. Today, we would like to
detail some of the key technical and financial hurdles to serving the
remaining 29 markets to help frame the debate on what steps this
Subcommittee could take to make service in all 210 markets a reality.
First, the upfront and recurring costs of providing local-into-
local service in every market are daunting. In each market in which we
provide local service, DISH must establish a physical presence. This
local receive facility is needed to collect the local broadcast signals
and send them back to our satellite uplink centers. To do so, we need
to acquire adequate fiber facilities to bring the content back to our
uplink centers as well as establish a secure location to acquire
broadcast signals in each of these markets. The upfront costs alone to
establish this infrastructure would be approximately $35 million for
the remaining unlaunched markets. Importantly, substantial annual
recurring costs are also necessary to maintain local-into-local
service. The recurring cost for the remaining local facilities would be
approximately $15 million annually including the costs of associated
terrestrial infrastructure and staffing. These figures do not, however,
include the expense associated with retransmission consent fees and
other programming-related costs.
Our ability to recoup this substantial investment is constrained by
the small size of many of the remaining markets. For instance, there
are fewer than four thousand households in the Glendive, Montana
designated market area. This provides very few potential households to
subscribe to our service to help defray those costs, yet the costs to
provide a local-into-local service are largely fixed. The economics of
launching Houston are easy. Presque Isle, Maine and similar smaller
markets are not.
The opportunity costs of earmarking capacity for local service are
also very real. DISH has finite satellite spectrum available to provide
a national service that competes with bandwidth-rich cable and
telephone companies. At a very basic level, the decision to provide a
local NBC affiliate to a few thousand subscribers precludes DISH from
providing a new national service, a high definition channel, or an
international or Spanish-language offering to 13 million subscribers.
This has clear competitive implications. It is certainly true that our
investment in cutting edge spot-beam technology and satellites--each a
$350 million investment--has provided a more efficient means to provide
local channels today. Nonetheless, the decision to include a local-
dedicated spot beam on our next satellite or a national beam has real
consequences to our long-term competitive viability. Launching 29
additional markets would require us to find or create capacity for
approximately 100 additional channels on a system that is effectively
at, or near, full capacity today.
The last key hurdle is one of consumer expectations. If any
customer subscribes to a locals package, they expect to receive at
least NBC, CBS, ABC, and FOX content. Yet, in 26 of the 29 markets we
have yet to launch, one or more of those networks is not available as
the primary video feed of a local broadcast station. In some instances,
only a single national network affiliate is present in these markets.
Without action by Congress as part of the reauthorization process, we
will be unable to provide a commercially viable offering by filling in
these so-called ``short markets'' with the missing national content
pursuant to our local-into-local compulsory license.
We do not ask today for $100 million to subsidize the launch of
these markets or the resources to construct more satellites, but we did
want to give this Subcommittee an appreciation for the challenges faced
by any provider seeking to launch all 210 markets. There are, however,
concrete steps this Subcommittee can take to improve the economics of
serving these small markets.
To that end, the Satellite Television Modernization Act of 2009--
which was voted out of the Senate Judiciary Committee 2 weeks ago--is a
good first step. This bill would provide for the first time the legal
authority to retransmit quasi-local signals to consumers under the
local compulsory license. Among those rights would be the ability to
fill in short markets with adjacent broadcasters, the ability to bring
in those stations that are deemed significantly viewed in the local
market, and low-power stations that may offer valuable content within
the local market. Each of these proposed changes increases the
likelihood that consumers in the remaining 29 unlaunched markets would
receive service that is more comparable to their urban counterparts.
But restructuring of the compulsory copyright regime as currently
proposed could create a hurdle that has a significant policy
consequence. Other pay TV providers pay either a retransmission fee to
the local broadcast station or a copyright royalty payment for
carriage. Any requirement to pay double compensation--that is, both a
retransmission consent fee and a royalty payment--to carry the same
station would create an unintended financial disincentive to provide
these signals. Layering on additional costs to the already precarious
business model to serve these economically challenging markets would
undercut our mutual goal to serve every market. Indeed, to ensure that
the incentives are properly aligned and that all consumers in the U.S.
receive comparable services, DISH would need to be on equal footing
with its competitors. For example, this would include the ability to
import signals during emergencies and to serve recreational vehicles
and commercial trucks, as well as households outside of our local spot
beams.
The Satellite Television Modernization Act of 2009 also includes
provisions for a study by the U.S. Copyright Office of the proper means
to implement a phase-out of the copyright compulsory license regime
with respect to the Copyright Act. We welcome such a study to provide a
roadmap toward a market-based solution to replace a heavily regulated
system that has too often failed consumers. So much of the current
rules sit atop a complicated and outdated regulatory structure that
treats competing pay TV platforms differently and deprives consumers of
desired content.
As we move toward that market-based approach, we believe that a
companion report from the Federal Communications Commission is
warranted to address corresponding issues and challenges raised by
provisions within the Communications Act. Among the topics that merit
expert study are: an economic analysis of the current compensation
regime, the appropriateness of subsidizing over-the-air viewers in a
market-based world, and whether a new framework would provide a more
workable path to providing all consumers with in-state news, weather
and sports. The current system fails households in 45 states on that
account. Such a report could provide this Subcommittee with an
invaluable roadmap as work begins on a true market-based carriage
mechanism.
In sum, we are hopeful that the reauthorization process this year
will modernize an outdated statute as well as provide the incentive to
achieve a national policy goal: making local TV service available to
consumers in all 210 markets. We look forward to working with members
and staff to accomplish both objectives.
Thank you for the opportunity to testify today, and I'd be happy to
answer any questions.
The Chairman. We look forward to that. Thank you, Mr.
Dodge.
Mr. Karpowicz?
STATEMENT OF PAUL A. KARPOWICZ, PRESIDENT, MEREDITH
BROADCASTING GROUP ON BEHALF OF THE TELEVISION BOARD OF THE
NATIONAL ASSOCIATION OF BROADCASTERS
Mr. Karpowicz. Thank you. Chairman Kerry, Ranking Member
Ensign, and Members of the Subcommittee, thank you all very
much for having me here today.
My name is Paul Karpowicz, and I'm President of the
Meredith Broadcast Group, which operates 11 television stations
in small, medium, and large markets throughout the United
States. I'm also Chairman of the Television Board of the
National Association of Broadcasters.
As you reconsider reauthorization of SHVERA, two
longstanding congressional policies are paramount: localism and
private-party contractual agreements.
Localism has been the bedrock principle of national
communication's policy. Congress fosters broadcast localism by
allowing stations to enforce program contracts that provide
stations with the exclusive right to televise their programming
in their markets. If a cable or satellite system serving one
community is permitted to import the same programming from
distant out-of-market stations, the viewing audience of the
local station will be fragmented, advertising rates will
plummet, and the ability of local television stations to
provide costly local news, weather, emergency information, and
local public affairs programming will clearly be diminished.
Local viewers will inevitably have less access to local
television stations' news, weather, and emergency and public
affairs programming. Allowing cable and satellite companies to
enter into exclusive program distribution contracts with their
program suppliers, but depriving local stations of the same
ability, will result in sports leagues and national program
providers migrating their marquee programming to less
restricted pay television services. Then, only those consumers
who can afford to pay for this programming would have access to
it.
The benefits of digital television will be undermined if
satellite carriers are allowed to exploit the digital
transition by retaining, or grandfathering, distance-signal
subscribers they have recently signed up, when those
subscribers can easily receive the same programming from a
local station. Local stations can now provide three or four
separate channels of free over-the-air television programming,
and they're using this new technology in creative and exciting
ways. In short markets, those without a full complement of
existing networks, multicast channels are being used to provide
the programming of missing networks, for free, that previously
was only available to those who could afford cable or
satellite. We're doing preciously that with a multicast channel
of our Flint, Michigan station that is now broadcasting a new
network that previously was unavailable, and I might add, local
news is being provided on that station. And contrary to
DIRECTV's testimony, we and other stations are providing local
news, weather, sports, and local emergency information and
local public service programming on these multicast channels.
These new multicast channels are also creating new
opportunities for network programming aimed at minorities and
other specialized audiences. The survival of these new and
emerging networks is as dependent, perhaps more so, on local
program exclusivity as existing networks. The Senate Judiciary
Committee bill, introduced by Chairman Leahy and Ranking Member
Sessions, wisely protects the program exclusivity of digital
multicast signals, a result we strongly endorse.
Some Members of Congress have inquired about market
modification legislation. We recognize congressional concern
for providing viewers with in-State but out-of-market broadcast
programming, a concern that can be addressed without a change
in the law. Cable and satellite systems can now retransmit
locally produced programming from in-State distant stations. In
fact, our own station in Atlanta has signed an agreement with a
cable operator in northwest Georgia to allow it to carry
nonduplicating locally originated programming to Georgia
residents in the Chattanooga, Tennessee DMA. Similarly, in-
State carriage arrangements with local television stations
exists around the country. Now, regrettably, satellite carriers
have refused to participate in these carriage arrangements.
NAB strongly supports the extension of local-into-local
service to all 210 markets. Residents of Jonesboro, Arkansas
are better served in times of emergency by satellite carriage
of Jonesboro stations' weather and emergency information than
by nonlocal programming from distant out-of-market stations.
Various proposals are under consideration to facilitate
extension of local-into-local service to all markets, including
the solution contained in the Senate Judiciary Committee's
bill, which we endorse.
Thank you for the opportunity to testify. We look forward
to working cooperatively with you as the reauthorization bill
moves forward.
[The prepared statement of Mr. Karpowicz follows:]
Prepared Statement of Paul A. Karpowicz, President, Meredith
Broadcasting Group on behalf of the Television Board of the National
Association of Broadcasters
Good morning, Chairman Kerry, Ranking Member Ensign and Members of
the Subcommittee. My name is Paul Karpowicz. I am President of the
Meredith Broadcasting Group, which owns and operates 11 television
stations in small, medium, and large markets throughout the United
States. I am also Chair of the Television Board of the National
Association of Broadcasters (NAB), on whose behalf I appear today.
I appreciate the opportunity to talk with you today about issues of
profound importance to the local television service we provide to our
communities. Television broadcasters like Meredith urge you to ensure
that service to local viewers is not undermined in the reauthorization
of the Satellite Home Viewer Extension and Reauthorization Act of 2004
(SHVERA).
I. The Two Overriding Public Policy Objectives
Two public policy objectives should guide Congress's actions in
reauthorizing SHVERA--preserving the important local broadcast service
local stations provide, i.e., ``localism,'' and respecting the private-
party contractual arrangements entered into in a free marketplace for
the distribution of television programming. Both the Federal
Communications Commission (FCC) and Congress have found that these
national policies serve the public interest.
Localism is a bedrock principle, rooted in the Communications Act
of 1934 (Act), that has guided both Congress and the FCC in
implementing communications policy for decades. Localism has also been
an integral part of satellite carriage policies since they were adopted
in 1988. These policies promoting localism have benefited all
Americans, whether they watch television over-the-air or subscribe to
cable or satellite.
What does localism mean for the public served by local television
broadcasters? Localism is coverage of matters of ``local'' importance
for local communities, such as local news, school closings, high school
sports, severe weather and emergency alerts, local elections, and
public affairs. Localism is also support for local charities, civic
organizations, and community events. Local broadcasters help create a
sense of community. They address the needs of the public, based on a
familiarity with and commitment to local communities.
The second Congressional policy objective is that the government
should respect contracts freely entered into by private parties for
distribution of television programming, especially since Congress and
the FCC have found that honoring those contracts fosters localism,
diversity, competition, and high quality service to the public. As the
FCC has pointed out: ``[W]e do not deem it in the public interest to
interfere with contractual arrangements that broadcasters have entered
into for the very purpose of securing programming content that meets
the needs and interests of their communities. Such interference would
contradict our own requirements of broadcast licensees and would hinder
our policy goals.'' \1\ The Act and the FCC's rules respect and enforce
contracts, freely negotiated among the parties, that encourage the
creation and distribution of a diverse mix of broadcast television
programming that serve the needs and interests of local viewers
throughout the country.
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\1\ FCC, Retransmission Consent and Exclusivity Rules; Report to
Congress Pursuant to Section 208 of the Satellite Home Viewer Extension
and Reauthorization Act of 2004 (Sept. 8, 2005) at 50 (FCC
Retransmission Report).
---------------------------------------------------------------------------
II. Market Modification Proposals
The first specific issue I wish to address is our concern about
market modification proposals that have been a major topic of debate in
connection with SHVERA. These market modification proposals would allow
satellite and cable companies to import duplicating content from
distant in-state stations into counties located in the same state as
the distant stations. While broadcasters are sensitive to the concerns
of Members that underlie these proposals, the proposals would not
advance localism goals, but would in fact undermine sound public policy
and harm consumers. Moreover, Members' concerns can otherwise be
addressed without changing the law and without adverse consequences to
the viewers of local stations.
My point can be illustrated by WHNS, a station Meredith operates in
Greenville, South Carolina. Thirty-four percent of the households in
its Designated Market Area (DMA) are located in North Carolina and 4
percent in Georgia. WHNS provides locally-attuned service to those
North Carolina and Georgia communities, just as it does to the South
Carolina communities within its coverage area. The nearest North
Carolina City of license to these North Carolina counties is Charlotte,
which is 95 miles away from Spotsylvania County, NC. Greenville is only
25 miles away.
These out-of-state communities within WHNS's market have close
weather, topography, economic, and cultural ties with Greenville, South
Carolina. Accordingly, WHNS airs news stories of specific relevance to
these local out-of-state counties. The market modification proposals
would undermine the economic base for this localized service. They
would do so: (1) by overriding contractual relationships entered into
by Greenville market stations with national networks and national
syndicators for the distribution of their programming, and (2) by
interfering with the retransmission consent process.
Proponents of market modification suggest their proposals are
necessary to enable viewers to watch local news, weather, and local
programming originated by stations located in their home states. We
respectfully disagree. Cable and satellite carriers may import, with
the consent of the originating stations, the locally originated in-
state news, weather, sports, and public affairs programming from
distant, in-state stations without any change in the law, and quite a
number of cable systems do so today. Cable systems in Virginia, South
Carolina, Georgia, Colorado, Tennessee, Wisconsin, and various other
states import the local programming of in-state, out-of-market
stations.
In fact, Meredith's CBS affiliate in Atlanta, Georgia recently
signed agreements with Comcast to begin retransmitting non-duplicating
programming to Georgia residents in the Chattanooga, Tennessee DMA.
This service, offered for no additional charge to Comcast customers,
highlights the actuality of these private sector agreements being
completed in the marketplace. Satellite carriers may also retransmit
the local programming of in-state, distant station--but, regrettably,
they have refused to do so.
Market modification proposals would have a very different effect.
They would:
allow the importation of duplicative, national programming
into local markets where local stations have bargained for the
exclusive right to show that programming in their home markets.
That result would harm local service by fractionalizing the
viewer and advertiser base that underwrites the localized
services provided by broadcasters to their home-market viewers,
in-state and out-of-state. This would be the antithesis of
localism;
allow satellite and cable carriers to replace local station
signals with the signals of distant stations affiliated with
the same network, thereby undermining the retransmission
consent rights of local stations; and
override and strike down the contractual provisions between
local broadcasters and their programming providers (e.g.,
between local affiliates and their networks, syndicators, and
sports leagues)--thereby eroding the ability of content
providers to negotiate fair compensation for their programs and
the ability of local broadcasters to provide the highest
quality programming to their local service areas.\2\
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\2\ The FCC has found that these contractual arrangements serve the
public interest. In 1988, it reinstituted rules it had earlier repealed
that allow local stations to enforce their syndicated program
exclusivity arrangements. The FCC concluded that broadcasters'
``inability to enforce exclusive contracts puts them at a competitive
disadvantage relative to their rivals who can enforce exclusive
contracts; their advertisers' abilities to reach as wide an audience as
possible are impaired; and consumers are denied the benefits of full
and fair competition: higher quality and more diverse programming,
delivered to them in the most efficient possible way.'' Amendment of
Parts 73 and 76 of the Commission's Rules Relating to Program
Exclusivity in the Cable and Broadcast Industries, 3 FCC Rcd 5299
(1988), at 62. The same considerations apply with equal force to the
FCC's network nonduplication rules, which would also be overridden by
the market modification proposals.
I am sure you are aware of the most recent struggles, caused by
harsh economic conditions, of local television stations to maintain
their local news. The market modification proposals would severely
damage the economic ability to provide local broadcast news--and local
sports, weather, emergency alerts and public affairs programming.
To deny local television stations the ability to enforce exclusive
program contracts with their program suppliers--yet allow satellite and
cable companies to enforce exclusive program contracts with their
program suppliers would create an unfair and highly discriminatory
regulatory scheme and would drive quality programming from free over-
the-air television to pay services.
III. Grandfathering
The so-called ``grandfathering'' issues relate to subscribers that,
for various reasons, historically were unable to receive the signal of
one or more of their local network stations and who have legally been
receiving distant signals, but who now can receive good reception from
the local network station signals over the air. The questions, which
are many and complicated, relate to which of those subscribers should
be allowed to keep their distant signals even though they can receive
the very same network programming free, from a local station.
While each SHVA renewal has raised a unique set of grandfathering
questions, the issues this time around are particularly complicated
because of the digital transition. Because there is no current
definition of an ``unserved'' household with respect to digital
signals, as a technical matter beginning last year, much of the country
has been eligible to receive distant digital signals. While the DBS
industry has committed not to exploit this unintended situation,
Congress should codify the promise.
It would be contrary to the core Congressional policies underlying
the satellite act and harmful to local television broadcast service to
allow satellite carriers to exploit the digital transition by
expanding, through grandfathering, the scope of their government-
granted compulsory copyright license.
In the spirit of compromise, we will not oppose satellite carriers
retaining their existing lawful distant signal subscribers who were
unable to receive a Grade B analog signal from a local network
station--even though those subscribers may now (post digital
transition) receive a perfectly good digital network signal from that
same local network station. We also would not oppose allowing satellite
carriers to deliver a distant network signal to subscribers in non-
localinto-local markets who would qualify under the new digital service
standard, but who previously did not qualify to receive a distant
analog signal under the Grade B analog standard. In short, in this
respect, the satellite carriers will receive the best of both worlds.
We do not believe, however, it is fair or reasonable to also allow
satellite carriers to retain subscribers that have been receiving a
network signal from a local network stand-alone digital station (i.e.,
one that never had a companion analog signal) or from a digital
multicast channel affiliated with a network. If that subset of distant
signal households can, on the date of enactment, receive that same
network from a local digital station (regardless of whether the channel
is labeled a multicast or primary channel), such households should not
be permitted to continue to receive a duplicating distant network
station. That was never the intent of the Act--and to permit it now
would be to allow the satellite carriers to exploit the digital
transition for private gain.
New digital multicast broadcast networks are now being formed
(ethnic, minority, and other specialized and general audience networks)
for digital multicast channels and the existing major networks are
affiliating with these multicast channels in smaller markets that
previously did not have a full complement of network affiliates. For
example, the Hearst television stations located in Albuquerque, West
Palm Beach, Orlando, and Tampa have entered into network affiliation
agreements on digital multicast channels with a new Hispanic program
network. Other TV stations have done the same. This new network and its
specialized Hispanic programming will not survive if Congress allows
satellite carriers to retransmit the very same programming into these
local markets. The result will be that viewers who otherwise would have
access to those networks for free from these local stations will have
to pay to get them. Congress should not be a party to facilitating that
result.
Finally, as I mentioned earlier, every household in America, except
those households that can receive a Grade B analog signal from a local
low power or translator station, can now legally receive a duplicating
network signal by satellite from a distant network station. We urge
that this legislation prevent that unintended result by enforcing the
oral promise made by satellite carriers to Congress not to exploit this
aspect of the digital transition. As noted earlier, Congress should
codify that promise.
Cable is not permitted to import duplicating digital multicast
network signals. The FCC applies its cable network and syndex non-
duplication rules to digital multicast signals the same as it does to
all other digital and analog signals. There is no reason why satellite
carriers should be given a competitive advantage over cable in this
respect.
Moreover, a prohibition against grandfathering would prevent the
importation of distant duplicating national programming and, in turn,
create an economic incentive for DIRECTV and DISH to extend their
local-into-local satellite service to all 210 markets.
IV. Protecting Exclusivity for Programming Carried on Multicast Signals
The importance of local market program exclusivity to localism and
the network affiliate relationship cannot be overstated. By that I mean
the ability of local stations to secure and enforce the right to be the
exclusive provider of a network or syndicated program in their local
market. Local stations, particularly those in small markets, can
survive only if they can generate advertising revenue based upon local
viewership. If satellite carriers can override the copyright interests
of local stations by offering the same programs on stations imported
from other markets, the viability of local stations, and their ability
to serve their communities with the highest quality programming, is put
at risk.
Local market program exclusivity is no less important to stations'
multicast signals than it is to their primary signals. One of the major
advantages of the digital conversion is that it provides stations with
the ability to provide multiple signals, each with separate, and
additional, programming. Stations are using this technological advance
in many new and exciting ways. In ``short markets''--those without a
full complement of existing major networks--stations are using
multicast to provide locally the programming of some networks that
previously were available only from distant signals, or not at all. As
stated earlier, many stations are using multicast to start new
programming services aimed at minority and other specialized audiences.
The survival of these new and emerging networks is just as
dependent, and perhaps more so, on local program exclusivity as
existing major networks. That is why it is imperative that the
satellite rules protecting program exclusivity with respect to a
station's primary signal apply with equal force to its multicast
signals.
The Senate Judiciary Committee's approach to this issue is to
provide protection to multicast signals immediately. NAB commends
Senators Leahy, Sessions, and the other members of that Committee for
recognizing the importance of providing this protection for multicast
signals immediately. In this regard, I would note that cable has always
provided program exclusivity protection to multicast signals. Cable, in
this respect, should not be competitively disadvantaged by a different
standard for satellite carriers.
V. Local-into-Local
NAB strongly supports the extension of local-into-local service in
all 210 markets. Localism is a beacon of Congressional communications
policy. The satellite legislation of 1999 made it possible for
satellite carriers to compete effectively with cable operators by
providing the compulsory copyright privileges needed to retransmit
local stations' signals. Satellite operators took advantage of these
new capabilities, and the result, as the FCC has repeatedly reported to
Congress, was that the satellite operators rapidly became competitive
with cable carriers, to the benefit of American consumers. Offering
local service also enhanced satellite operator profitability.
But the satellite operators do not provide local-into-local service
in all markets. They avoid many smaller markets, so that, today,
satellite subscribers in, for example, Columbus, Georgia, cannot
receive news, weather and sports from their local-market stations via
satellite.
Currently, DIRECTV does not serve some 50 smaller markets, and
EchoStar does not serve some 30 smaller markets. The satellite carriers
no longer claim, seriously, that providing local-into-local service is
technically impossible. They say it is expensive. But expense is always
involved in providing program service to all of the American public.
The House version of SHVERA renewal provides a mechanism whereby
DISH's right to again provide distant signals to unserved households
would be restored in exchange for its commitment to provide local into
local service in all 210 markets. NAB does not oppose this provision.
While the Senate Judiciary bill does not contain these provisions, it
does have a mechanism to facilitate providing local into local in short
markets by allowing carriers to import a missing affiliate from an
adjacent market and treating it as local signals for purposes of the
compulsory copyright license. With the advent of digital, the number of
``short markets'' is rapidly diminishing because local stations, with a
primary affiliation with one major network, are using their multicast
capacity to carry a second major network (typically accompanied by
local news and informational programming). Thus, KBAK-TV, the CBS
affiliate in Bakersfield, California, now carries Fox network
programming on a multicast channel and presents separately originated
local news and other localized program services on that channel as
well. With the switch to digital last June, this trend will continue
and the number of short markets should be substantially and rapidly
reduced.
VI. Other Issues
There are other major issues affecting the reauthorization.
Specifically, we would urge Congress to:
1. amend the current statute to make clear that ``unserved
households'' are to be determined in terms of digital service,
not only analog service, and incorporate into the statute a
``noise limited service'' standard which is the FCC's
definition of a good quality digital signal;
2. adopt the digital signal predictive methodology, recommended
to Congress by the FCC at the direction of Congress, for
determining whether households are unserved;
3. reject proposals to reduce the area of protected program
exclusivity from the interference-free service area to the
lesser of that area or the DMA in which the station is located
except, perhaps, to facilitate carriage of a missing major
affiliate in short markets. To do otherwise would reduce and
marginalize the exclusive program service area of local
stations; serve no useful public policy objective; and be
harmful to viewers who depend upon free local broadcast
service; and
4. assure satellite carriers do not import HD and multicast
signals into ``significantly viewed'' areas in a local market
from an adjacent market without also carrying the HD and
multicast signals of the in-market stations.
Finally, the SHVERA reauthorization process should not be used as a
vehicle for reopening a range of well-established retransmission
consent issues. The various market modification proposals advanced in
the context of SHVERA would, in fact, erode local broadcasters'
retransmission consent rights at the expense of the public's local
broadcast service.
There is no need to change the present retransmission consent
process, which works as Congress intended.\3\ Congress should continue
to reject the efforts of the satellite and cable industries to persuade
the government to intervene in free-market retransmission negotiations,
which the FCC has expressly found benefit cable/satellite operators,
broadcasters and, ``[m]ost importantly, consumers'' FCC Retransmission
Report at 44.
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\3\ FCC Retransmission Report at 34 (recommending no revisions to
statutory or regulatory provisions related to retransmission consent).
See also Empiris LLC, Jeffrey A. Eisenach, Ph.D., The Economics of
Retransmission Consent (March 2009) at Executive Summary (concluding
that retransmission consent has achieved Congress' intended purpose in
enacting it, and has ``benefited consumers by enriching the quantity,
diversity, and quality of available programming, including local
broadcast signals'').
---------------------------------------------------------------------------
Thank you. I look forward to responding to any questions Members of
the Subcommittee may have.
The Chairman. Thank you very much, Mr. Karpowicz.
Ms. Thompson?
STATEMENT OF LONNA THOMPSON, ACTING COO, SENIOR VICE PRESIDENT
AND GENERAL COUNSEL, ASSOCIATION OF PUBLIC TELEVISION STATIONS
Ms. Thompson. Thank you.
Chairman Kerry, Ranking Member Ensign, and Members of the
Subcommittee, thank you for inviting us to testify here today.
I'm Lonna Thompson, Acting COO and General Counsel of the
Association of Public Television Stations. We appreciate your
allowing me to testify in lieu of our witness, who was not able
to arrive today from the station.
The reauthorization of SHVERA is of great importance to the
364 public television stations across this country. There are
three principal areas to which we would like to call this
Committee's attention as you consider the reauthorization of
SHVERA: first, carriage of our local stations' HD signals;
second, carriage of our local multicast offerings; and third,
our Statewide broadcasters' inability to serve all DBS
subscribers in their States.
Public television proudly highlights the private carriage
agreements that we've been able to negotiate with almost all
major multichannel video programming distributors. Rather than
relying Congress to work out these carriage agreements, we
pioneered our own private agreements with cable, Verizon, and
DIRECTV that address the carriage of our local HD signals and
the full array of our digital programming, including our unique
multicast offerings. We're also working very closely with DISH
Network to come to a similar agreement on the carriage of our
digital content from multicast programming to HD because we
believe that DISH Network's nearly 14 million subscribers
deserve access to their local public television stations. Both
sides have worked diligently in recent months, and we commend
the work that Mr. Dodge and his team have put into these
negotiations.
Ultimately, we believe that a private carriage agreement is
in the best interest of all the parties, including Congress,
and we remain hopeful that an agreement may be signed before
this Committee finishes its work on SHVERA. However, we must
stress that any national carriage agreement must contain an
accelerated deployment of our local stations' HD, accessibility
to our local multicast programming, and, ultimately, the
preservation of localism.
As for HD carriage, while the FCC has created a time
schedule for HD rollout in all satellite markets through 2013,
we've sought to reach private agreements with the DBS providers
to accelerate this rollout. This accelerated schedule was a
principal portion of our 2007 agreement with DIRECTV and is
something that we're actively pursuing with DISH. To date, DISH
is only carrying the HD signals of local public television
stations in Alaska and Hawaii. The fact is that, until now,
DISH has chosen to leave local public television stations in an
SD world, that offers demonstrably inferior viewing experience.
This is not sustainable. We certainly hope that such
discriminatory treatment of our stations will be rectified by
an agreement; but, if not, we will have to ask the Committee to
do so legislatively.
Turning to multicasting, public television stations were
early adopters of digital technology and have been at the
forefront of developing content and maximizing digital capacity
to serve our core missions of localism, education, and
diversity. Our stations offer multicast streams that allow for
complete local coverage of the State legislatures, educational,
health, public service, kids, and unique sports programming.
Again, this is an issue that's been addressed by our carriage
agreement with DIRECTV, and we hope to resolve it through our
negotiations with DISH. However, absent an agreement, this is
an issue that should be given serious consideration by this
committee as you look to reauthorize SHVERA.
Finally, I'd like to address the fact that at least 16
Statewide public broadcast networks are not able to fully serve
viewers in their--all their States. Because the SHVERA carriage
regime is based on the DMA system, many of these networks
cannot be carried by DBS providers in parts of their States,
simply because they do have a full-power transmitter in each
DMA. West Virginia is a glaring example. The State network
covers the entire State with three full-power transmitters in
three of the nine DMA's. However, because they don't have
transmitters in all nine DMA's, nearly 35 percent of the
State's population is ineligible to receive their Statewide
service over satellite. West Virginia's not alone in this
issue. We thank the Judiciary Committees in the House and
Senate for addressing this issue in their SHVERA bills, and we
ask that this Committee support those provisions as the bill is
conferenced.
Again, thank you for inviting me to participate in today's
hearing. The reauthorization of SHVERA is critical to all
public television stations. We look forward to continuing to
work with you as you examine SHVERA reauthorization and other
issues of importance to public broadcasters.
[The prepared statement of Ms. Thompson follows:]
Prepared Statement of Lonna Thompson, Acting COO, Senior Vice President
and General Counsel, Association of Public Television Stations
Chairman Kerry, Ranking Member Ensign, and Members of the
Subcommittee thank you for inviting me to testify before you today on
behalf of the Association of Public Television Stations (APTS). The
reauthorization of the Satellite Home Viewer Extension and
Reauthorization Act (SHVERA), which governs the transmission of local
public television signals to millions of direct broadcast satellite
(DBS) viewers, is of great importance to the 364 public television
stations across the country. It also will bear directly on the future
of public broadcasting in the digital era.
There are three principal areas to which we would like to call this
Committee's attention as you consider the reauthorization of SHVERA:
(1) carriage of our stations' local HD signals (2) carriage of public
television's multicast offerings, and (3) our statewide broadcasters'
inability to serve all DBS subscribers in our states. Although this
latter issue is being addressed by the House and Senate Judiciary
Committees, we wanted to keep the Committee informed on this, and we
will seek your endorsement of the solution in the final conferenced
bill.
Public Television's Private Carriage Agreements
As Congress looks to reauthorize SHVERA, public television proudly
highlights the private carriage agreements that we have been able to
negotiate with almost all major Multichannel Video Programming
Distributors (MVPDs). Rather than rely on Congress to work out these
carriage agreements, which are admittedly challenging, we pioneered our
own private agreements with cable, Verizon and DIRECTV that address the
carriage of High Definition (HD) signals and the full array of our
digital programming and services, including our unique multicast
offerings.
In 2005 APTS, PBS, and the National Cable and Telecommunications
Association (NCTA) reached a landmark agreement which ensured that the
Nation's largest cable providers would carry up to four digital
streams, including HD and multicast, of each public television station
entitled to carriage on a given system. This was the first carriage
agreement of its kind and has ensured that cable consumers have access
to the complete line-up of their local public television station'
digital offerings. In 2006, APTS and PBS reached a similar national
agreement with Verizon for carriage of the full digital offerings,
including local HD and multicast, of local public television stations
on Verizon's fiber-based telecommunications platform, FiOS. Then in
2007, APTS and PBS reached a digital carriage agreement with the
American Cable Association (ACA), which represents 900 smaller cable
systems that serve more than seven million subscribers in all 50
states. This deal was similar to the earlier deal with NCTA.
Also in 2007, APTS, PBS and DIRECTV reached a landmark agreement
which allows DIRECTV's nearly 17 million subscribers to access a broad
array of public television's digital services. We realized that our
agreements with cable and Verizon were unique to those providers and we
worked with DIRECTV on creative solutions that recognized their
capacity limitations, ultimately ensuring that subscribers have access
to the myriad of content and services provided by the local stations
while accommodating their capacity concerns. The agreement stipulates
that in each market in which DIRECTV provides high-definition (HD)
local channels, they will carry either an HD signal or two standard-
definition (SD) streams from each station, at the station's option. In
addition, DIRECTV will carry two national SD feeds featuring
educational programming that is differentiated from the station's
primary streams, with local stations' identification included on the
Electronic Programming Guide. In the future, DIRECTV will provide
public television stations the ability to offer additional localized
programming through dedicated on-demand services to its new MPEG4
receivers, which are equipped with broadband connections. Finally, in
markets where DIRECTV is not yet offering local broadcast signals,
DIRECTV will provide stations with marketing materials regarding an
offer for an antenna and ATSC tuner so many customers can gain seamless
access to local signals over-the-air.
With the tremendous investments that public broadcasting--and by
extension the American public--has made in digital programming, it was
absolutely necessary to undertake these carriage agreements to ensure
that satellite and cable consumers have access to the full array of
educational and public service programming that their local stations
are providing.
We are also working very closely with Dish Network to come to a
similar agreement on the carriage of public television's digital
content from multicast programming to HD, because we believe that Dish
Network's nearly 14 million subscribers deserve access to their local
public television stations. Both sides have worked diligently in recent
months to try to come to an agreement and we commend the work that Mr.
Dodge and his team have put into these recent negotiations. Ultimately
we believe that a private carriage agreement is in the best interest of
all parties, including Congress.
We remain hopeful that an agreement with Dish Network will be
signed before this Committee finishes its work on SHVERA. We must
stress, however, that such a national carriage agreement must respect
localism. Public television stations are some of the last locally owned
and locally controlled media outlets in this country. We cannot accept
any deal with Dish Network that undermines our local ability to serve
our viewers. Local broadcasters' rights to serve their local
communities with programming and content designed to address local
needs go directly to the core of SHVERA itself, and to the work of this
committee over the years. We remain committed to a deal with Dish
Network that serves our communities with the full complement of local
programming and services in which the American public has invested, and
as such, we cannot and will not accept anything that undermines our
fundamentally local initiatives.
Between Dish and DIRECTV, more than 32 million consumers depend on
satellite providers to receive their television signals. We recognize
that there are challenging technical and economic factors involved in
trying to reach an agreement, but the core principles of localism and
access through our HD and multicast services must be addressed. These
are issues we have been able to address with every other major MVPD,
including DIRECTV. We cannot afford to overlook the importance of
ensuring that consumers have nondiscriminatory access to HD
programming, regardless of the platform or service provider. If we are
unable to come to a private agreement with Dish Network, it will be
incumbent upon this committee and Congress to address these critical
carriage shortfalls.
DBS Carriage of HD Signals
While the FCC has created a time schedule for HD roll-out in all
satellite markets through 2013, public television has sought to reach
private agreements with the DBS providers that accelerate the roll-out
and greatly enhance the educational offerings available to consumers
nationwide. This accelerated schedule was a principal portion of our
2007 agreement with DIRECTV and is something we are actively pursuing
with Dish Network. There are currently 150 markets where Dish Network
is offering HD local service. However, to date, Dish is only carrying
the HD signals of local public television stations in Alaska and Hawaii
where they are legally obligated to do so. We remain hopeful that this
issue can be resolved through a private negotiation so that all
consumers will have access to highest-quality programming being created
at local public television stations. However, if such private
negotiations should fail, it is imperative that this committee address
the inadequacies of HD carriage of public television stations as part
of the reauthorization of SHVERA.
DBS Carriage of Multicast Services
Public television stations nationwide were early adopters of
digital technology and have been at the forefront of developing content
and maximizing the new digital capacity to serve our core missions of
localism, education and diversity. Local public television stations are
utilizing their multicasting capabilities to provide dedicated channels
for public affairs programming and programming designed to reach
underserved audiences. In a time of declining news coverage, the
importance of these services cannot be underestimated.
For example, West Virginia Public Broadcasting (WV PBS) utilizes
all three multicast channels to provide a full complement of local
educational and public service programming. On their main SD channel
and HD channel, they provide the only daily coverage of the State
legislative session, available in West Virginia, including the live
broadcast of the State of the State address. Moreover, WV PBS produces
and broadcasts weekly programs providing viewers with medical advice,
legal advice, and daily science and mathematics help for local
students. The historical documentaries produced by WV PBS and local
independent producers are legendary and award-winning. Their second SD
channel is focused on educational programming and secondary sports.
Ultimately they have plans to differentiate their HD and main SD
channel. Once that happens, contingent on funding and public support,
they are considering dedicating one of the SD channels purely to
education and the other to public service and sports programming.
WV PBS is not alone in their innovative embrace of multicast
programming. WFSU in Tallahassee partners with the Florida State
Legislature to offer the Florida Channel, a public affairs network that
is carried by several public television stations in the state. The
Florida Channel features live, gavel-to-gavel coverage of the state
Senate and House of Representatives, as well as other local electoral
and public affairs coverage.
In Arkansas, the Arkansas Educational Television Network (AETN) is
broadcasting four multicast channels. In addition to its primary
channel, AETN's Scholar Channel, done in partnership with the Arkansas
Department of Education, provides 24-hour programming that assists in
teacher professional development and enhances the classroom experience.
AETN splits another of its multicasting channels between children's
programming and programming focused on creative lifestyles. AETN
utilizes its last multicast channel to provide a reading service for
the blind in partnership with the Arkansas Department of Health and
Human Services.
However, SHVERA does not address DBS carriage of local broadcast
stations' multicast offerings. Without carriage on all multichannel
video platforms, this content is lost to millions of taxpayers who have
invested their hard-earned dollars in public broadcasting. The Federal
Government, which helped fund the conversion of public stations to
digital, also has a strong interest in making this content available to
the American public. Again, this is an issue that has been addressed by
our carriage agreement with DIRECTV. Recognizing satellite providers'
legitimate capacity concerns, the deal utilizes creative solutions to
ensure that all DIRECTV subscribers have access to local station's
multicast content. Multicast carriage is also a central issue being
discussed in our negotiations with Dish Network and one that we believe
all sides should be able to agree upon. Any agreement with Dish Network
would also recognize its capacity limitations, but would ensure its
consumers have access to their local stations' multicast programming.
Again, we strongly prefer a privately negotiated solution to this
issue. However, absent an agreement, this is an issue that should be
given serious consideration by this committee as you look to
reauthorize SHVERA.
Statewide Networks' Ability to Reach DBS Subscribers Throughout State
A central issue I would like to address is the fact that at least
16 statewide public broadcast networks throughout the country are not
able to fully serve all viewers in their states. As you know, SHVERA
establishes a copyright license that enables DBS providers to
retransmit, within a Designated Market Area (DMA), the local stations
located in that DMA. In several states, state governments or community
foundations operate statewide or regional networks made up of several
public television stations. These state or regional public television
networks are charged by their state legislatures to provide statewide
services including news and information, public affairs, K-12 services
to schools, higher education, workforce services and emergency response
information. Statewide public television networks typically receive
funding from their states to provide these unique programming services
in return for its pledge to serve all citizens of the state. Public
television's statewide networks take this mandate very seriously.
However, because the SHVERA carriage regime is based on the DMA system,
many of these networks cannot be carried by DBS providers in certain
portions of their states because they do not have a full-power
transmitter in each DMA reaching into the state. This is not
acceptable.
For example, West Virginia is divided among 9 DMAs including
Charleston-Huntington, Beckley-Bluefield-Oak Hill, and Clarksburg-
Weston where WV PBS has three primary full-power transmitters. In
addition, West Virginia DMAs include Wheel ing-Steubanville and
Parkersburg DMAs, both of which contain WV PBS translators. Six more
translators are distributed throughout the state to include 2 counties
assigned to the Pittsburgh DMA, 7 counties assigned to the Washington,
DMA, one county in the Harrisonburg DMA, and finally one county in the
Roanoke-Lynchburg DMA.
As a matter of note, West Virginia also includes a major portion of
the National Radio Quiet Zone (NRQZ). The NRQZ is 13,000 square miles
and affects, more or less, 19 counties in the state. This limits their
ability to broadcast into some of the most rural counties in the state
and underscores the importance of satellite carriage. Because over the
air broadcasts are limited in these areas, satellite carriage is the
only way many of these rural communities can receive WV PBS
programming.
Because DBS providers lack a statutory copyright license to
retransmit West Virginia Public Television in the other 6 DMAs, nearly
35 percent of West Virginia residents live in places that are not
eligible to receive their station. The rest of the state receives
either out-of-state public television stations or--in several of the
DMAs--no local public television signals at all.
West Virginia is not alone in this issue. This problem affects
state or regional public television networks in at least 15 states,
from Louisiana to Nebraska and from Arkansas to Oregon, and implicates
counties encompassing more than a million households. In Wyoming, the
issue is so bad that over 75 percent of the population resides in DMAs
that are ineligible to receive Wyoming Public Television. In many
situations, these are rural areas with difficult terrain where DBS is
the best option for viewers to receive their local television stations.
Additionally, because of the challenges of digital conversion, many
small cable systems have since closed down, leaving towns in these
areas without cable service. This further highlights the necessity of
ensuring that homes in these areas can receive the signal of their
local statewide public broadcaster through satellite service.
Again, we recognize that the changes needed in the Copyright Act to
address this issue are the jurisdiction of the Judiciary Committees and
we are pleased that this non-controversial issue has been addressed in
both the House and Senate Judiciary Committee bills. However, we raise
this issue today because we are hopeful that this Committee will
support the Judiciary Committees work to solve this issue for our
statewide networks when all four committees come together to conference
the final bill.
Thank you for inviting me to participate in today's hearing. The
reauthorization of SHVERA is critical to all public television
stations. We look forward to continuing to work with you as you examine
SHVERA reauthorization, and other issues of importance to public
broadcasters in the exciting new and challenging media world unfolding
before us.
The Chairman. Well, thank you very much, Ms. Thompson. Let
me, sort of, go right to the, sort of, first challenge here,
Mr. Dodge. Ms. Thompson described a situation that is
unsustainable, and I'd like you to address the question with
respect to the DISH carriage issue.
Mr. Dodge. Sure. And I'd, you know, first like to say, I
think there's a bit of a misconception about our dedication to,
and appreciation of, the value of public broadcasting.
Certainly, as a company, we recognize that, and personally,
growing up in Boston, watching WGBH as a child and a young
adult, I appreciate it. And, in fact, today we are the largest
distributor of PBS programming in the United States, by virtue
of the fact that we're in 182 local markets today, and we hope
that, through the--at the end of this process, we'll have an
incentive that will take us to 210 markets. We'll make PBS
available to every subscriber in the United States.
So, with respect to the specific issue of HD programming,
we are in good-faith negotiations with the folks at APTS to
accelerate the FCC schedule, and I've personally been involved
in that, and working on it for the last 2 months nearly
everyday, and I am optimistic we will reach a private
commercial agreement.
The Chairman. What's the hang-up?
Mr. Dodge. At this point, there are several outstanding
issues still.
The Chairman. Do you want to speak to them, Ms. Thompson? I
mean, is there--do you sense the same optimism, that you'll get
to the completion happily?
Ms. Thompson. We are also optimistic, Mr. Chairman. We do
have a number of key issues that we're still discussing, around
the local HD accelerated schedule, in particular, but we are--
--
The Chairman. So, you feel there's a way through the
private negotiating process to be able to arrive--to resolve
this question of coverage. Is that correct?
Ms. Thompson. That's our sincere hope and desire.
The Chairman. So, you do not see this as something the
Committee, per se, in the reauthorization, needs to specify or
dictate, or something?
Ms. Thompson. Not at this time. We're hopeful we can
resolve it by private negotiations.
The Chairman. So are we, obviously. We'd rather have you do
it that way.
I think it was you, Mr. Gabrielli, you mentioned the
issue--you were talking about the predictability with respect
to the distant-signal piece.
Mr. Gabrielli. Yes, the SHVERA says that we're the--
supposed to use a model that is fairly old and does not include
some, I'd say, recent enhancements in technology that could be
taken advantage of. Part of it is--again, is trees. And if
you're from an Oregon country, you know, trees are a big issue.
And we get that with our customers, that, you know, ``We can't
see a services 'cause of trees.'' So, it's just interesting
that the SHVERA model, which is what we have to use to figure
if you're eligible, has a big discrepancy with the model that
the NAB uses when you would sign up to say, ``What antenna
should I use?'' And you go to that model, and it says, ``There
is no antenna to suit you.'' We just need to close that gap
between the two, so that----
The Chairman. How do you do that? How do--do we do that?
Mr. Gabrielli. I think the FCC should look at the models
they use, and ask the NAB what models they use, and just bring
those two together.
The Chairman. Yes, Mr. Karpowicz?
Mr. Karpowicz. Thank you, Mr. Chairman.
I would like to say, I think we're comparing apples and
oranges here. The model that was created by the FCC was the
model that is being used for SHVERA. What is on the CES and NAB
website is simply to help people pick out which antenna to use.
In certain situations, you're going to need a larger antenna
than other situations. But, it's never to say, ``You can't get
the signal, there is no antenna, you are without hope.'' It is
simply to say, ``You may need a larger antenna in this
situation, versus other situations, where you may be able to
accomplish the same goal with a smaller antenna.'' So, we're--I
think we're talking about----
The Chairman. And your complaint----
Mr. Karpowicz.--two very different standards.
The Chairman.--and your complaint is that it's really a
problem of simply not being able to get the signal, either way?
I'm not----
Mr. Karpowicz. No, no, no, I'm actually very comfortable
with the work that----
The Chairman. With the antenna choice?
Mr. Karpowicz. Yes, and the work that the FCC did in
creating the SHVERA model.
The Chairman. I see. All right.
Mr. Karpowicz. So, we're comfortable with that.
The Chairman. Yes, Mr. Gabrielli?
Mr. Gabrielli. I guess we'd have a difference of opinion,
because we actually took our customers who, when we ran through
the SHVERA models, said, ``You get a grade-B signal.'' We took
the same address, went to the antenna website, and it didn't
come up with an answer; there was no antenna that it said,
``Here's what you should go down and buy.'' So, we just need to
close that gap, and we're happy to share the--our analysis
with----
The Chairman. Well, we'll work with--yes, we should try to
close that gap, obviously. Let me come to, sort of, the larger
question, which is: DIRECTV offers local to--you know, local-
into-local service in about 152 of the 210 DMA's?
Mr. Gabrielli. That's about right, yes.
The Chairman. And DISH, I gather, about 181?
Mr. Dodge. Yes, sir.
The Chairman. So, the question that a lot of people are
asking themselves is, Are you dedicated to the goal of getting
the 210?
Mr. Gabrielli. I guess I'll take that first, is--you know,
DIRECTV wants to provide local channels in as many markets as
possible, and the ``as possible'' is a strong word.
The Chairman. Is there a long-term plan to do so?
Mr. Gabrielli. There's a plan to continue to add markets
every year. You know, we've spent billions of dollars, we're in
95 percent now. We have proposed to the Congress a couple of
proposals to eliminate some of the barriers. An example would
be----
The Chairman. Are the barriers what are preventing you from
doing it now, or is it an investment decision? Is it cost? I
mean, what's the----
Mr. Gabrielli. One of the barriers is the cost. It--as he--
Mr. Dodge says, it's very expensive. It's 2-and-a-half-million
dollars to go to a new market and to rent out----
The Chairman. How much does it cost to, say, move into a--
you know, a local-local service in a new territory? Pick a
territory.
Mr. Gabrielli. Glendive, Montana. It cost about $2 million,
because you have to establish a local facility, you have to put
the infrastructure in there. And what we're finding in a lot of
the more rural markets is, there's no way of getting the
signals back to a facility, so we actually have to put the
fiber in the ground to get the stuff back.
The Chairman. And is it just a simple business equation,
bottom-line spreadsheet, that says, ``You don't have enough
people there,'' in terms of the advertising revenue for that
market----
Mr. Gabrielli. Well, they----
The Chairman.--to be able to support it, or what?
Mr. Gabrielli.--they certainly--this certainly would not be
not be--it'd be a loss, I mean, in this model. And part of what
we--our proposals was a cost-sharing, because on top of us
spending this cost to bring the local channels, the local
station also wants to be paid, on top of that, for their
programming rights. And so, one of our proposals is a cost--
sharing of this cost.
The Chairman. And you're telling us there's no way for
existing infrastructure to be able to be used in order to
broaden the scope of coverage to the 210. You have to use--are
you saying to us that you necessarily require significant new
infrastructure investment to make that happen? There's no new--
there's no current technology that could simplify it,
facilitate it?
Mr. Gabrielli. I guess--the current technology is, you
actually need to go to a market and somehow gather all the
television signals in a market, either by over-the-air or by
fiber, locally. Then we have to transport those back to one of
our uplink facilities. So, you have to go to market, find a
place, rent it, put up antennas on the roof, or bring in fiber.
And then, I said is--you have to now fiber that all the way
back to an uplink. That infrastructure, you have to build on a
market-by-market basis.
The Chairman. Senator Ensign?
STATEMENT OF HON. JOHN ENSIGN,
U.S. SENATOR FROM NEVADA
Senator Ensign. Thank you, Mr. Chairman.
If I may, before I ask a few questions, just make a few
comments.
The Chairman. Yes, sure.
Senator Ensign. When Congress first passed the Satellite
Home Viewer Act back in 1988, I think few people could have
imagined what the satellite industry would look like today. Far
more people today subscribe to satellite television than watch
television exclusively via over-the-air antennas. In addition
to the rapid growth of the satellite industry, the last two
decades have seen tremendous innovation in the video
marketplace.
And never before have consumers been able to get access to
television content in so many different ways. Consumers can
watch TV broadcasts over the air for free; they can purchase
pay-television service from cable companies, satellite
companies, and even phone companies; they can rent or buy
entire seasons of TV programs on DVD; and they can stream or
download TV content over the Internet, either to their computer
or to the television in their living room.
The 1988 Act was intended to foster exactly this sort of
competition and innovation. Indeed, it was never meant to be a
permanent immutable regulatory framework, however. Believing
that the satellite carriers would eventually be able to
negotiate in the open market for copyright licenses, Congress
intended for a limited interim compulsory license created by
the 1988 bill to be temporary.
This temporary license has been extended three times,
bringing us here to 2009, to consider extending it for a fourth
time. I urge my colleagues to really think about whether we
need to continue extending this license and whether our many
other satellite and cable regulations fit today's marketplace.
A 2008 Copyright Office report states that, ``The cable and
satellite industries are no longer nascent entities in need of
government subsidies through a statutory licensing system,''
and recommends eliminating the compulsory licenses. The
satellite and cable industries are more than capable today of
negotiating agreements with television networks and
broadcasters, and the Copyright Office agrees.
We need to take a holistic look at both our copyright and
retransmission rules, to see if we can move them toward a free
market system, where consumer interests, rather than the
government regulations, drive competition.
I know that some of this discussion, particularly the
compulsory copyright license, falls outside the jurisdiction of
this Committee. I also recognize that we simply do not have the
time this year to fully debate this issue in earnest. Even so,
the time must come to revisit our pay-television regulatory
framework, and I hope that my colleagues will work with me,
over the next few years, to address this issues in a serious
way.
On the issue of local-in-local service, I think everyone
here agrees that consumers benefit when they can receive their
local network stations from their satellite company. DISH
Network and DIRECTV have done a good job of expanding their
local-in-local offerings over the years, but many communities
still cannot watch their local stations on these satellite
systems.
As the Committee debates how best to bring local content to
every market in the country, I urge my colleagues to find a
solution that does not rely on prescriptive government
mandates. I am concerned that a government requirement for
satellite companies to provide local-into-local service to all
210 markets could be unnecessarily burdensome for the satellite
providers, would be subject to years of litigation, and might
lead to a number of unintended consequences. Indeed, we should
consider proposals that incentivize the satellite companies to
reach all 210 markets without government requirement.
Such a proposal has been advanced by the House Judiciary
Committee in their reauthorization bill. I think their idea has
many merits, and most industry stakeholders seem to be
comfortable with their approach. Whatever direction this
Committee takes, I hope it will be one that puts consumers
first, while also avoiding unnecessary and onerous government
mandates.
Mr. Chairman, just a couple of quick questions.
Mr. Karpowicz, DIRECTV has testified that NAB's own Website
shows that as many as 45 percent of those now considered
unserved by SHVERA, and thus ineligible for distant signals,
cannot, in fact, receive local signals over the air. If this is
true, it would appear that many households that should be able
to receive distant signals from satellite operators are blocked
from receiving such service. Why does the NAB antenna website
differ so greatly from the digital perspective model that you
want Congress to rely on?
Mr. Karpowicz. As I indicated, I think we're actually
comparing two very different systems, here. The purpose of the
NAB CES website was simply to help people select the type of
antenna that they need in their particular circumstance. Now,
some people, based on their location and their proximity to the
tower and the location to the station, may not require a very
sophisticated antenna. There may be other people on the fringes
of the coverage area that may require a more substantial
antenna and one with a greater height off of the ground. That's
very different--that comparison and that website and what
they're trying to do there--is very different from the model
that's been developed by the FCC in their SHVERA calculations.
Senator Ensign. Mr. Gabrielli, in your testimony you say
that, ``The law should no longer allow incumbent cable
operators to offer more local and significantly viewed channels
than their satellite competitors.'' Please elaborate on this.
And specifically, what rules need to be changed in order to
achieve parity in this situation?
Mr. Gabrielli. There are two rules that were incumbent on
the satellite subscribers that now are on cable. The first one
is this equivalent bandwidth, where if we bring in a
significantly viewed station in from an outside market, we have
to give it the same bandwidth--or we have to give the local
station exactly the same bandwidth as we give the significantly
viewed. The problem was, they did it--that on, literally, a
second-by-second basis, and there's no way for us, if the local
station goes from an HD signal to an SD, to be able to shut off
the outside station. You know, it--so, it was matter of the way
the wording was done. It's--the capacity required for both had
to be literally equivalent at every moment in time.
The second issue is that, even though we have the rights
from--to bring the significantly viewed in, we have to
negotiate with the outside station, and we have to renegotiate
with the inside station. So, it really kind of complicates the
retransmission, where the inside station can say, ``Well, yes,
where you bring in the outside station, there's a different
deal going on here.''
So, we're just asking the parit with the cable, which--
neither of those two requirements are on them.
Senator Ensign. Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Ensign.
Senator Klobuchar?
STATEMENT OF HON. AMY KLOBUCHAR,
U.S. SENATOR FROM MINNESOTA
Senator Klobuchar. Thank you very much, Mr. Chairman. I'm
sorry, I've been losing my voice over the last two nights of
Minnesota sports. If you----
The Chairman. Now, don't----
Senator Klobuchar. I don't know if you noticed----
[Laughter.]
Senator Klobuchar. Maybe.
The Chairman. We don't have any Michigan Senators.
[Laughter.]
Senator Klobuchar. Or Wisconsin ones.
Actually, speaking----
The Chairman. Or Wisconsin, right.
Senator Klobuchar. I'm a member of both this Committee, as
well as Judiciary, so these are the two committees that are
considering SHVERA. And, as you know, we did pass a bill out of
our Committee. I was glad we did that. But, in the context of
the debate we had in the Judiciary Committee, we actually had
one amendment that we discussed, and that amendment was an
amendment by the Wisconsin Senators to provide service to
Wisconsin counties located in the Minneapolis DMA to retransmit
the local programming of a Wisconsin station. And, despite the
obvious Packers/Vikings pull on this issue, and my sympathy to
these Wisconsin viewers, I ultimately voiced my concern that we
would harm local broadcasters by splitting the Minneapolis
DMA's viewer and advertising base. And we have 14 Minnesota
counties that are considered orphan counties, as well.
So, I truly have sympathy for this, but I was concerned
that we would go down a slippery slope, where we would try to
make similar modification in other DMA's, with the end result
being confusion for our broadcasters, our advertisers, and our
viewers.
So, in the end, our Judiciary Committee marked up a clean
bill that had the agreement of all parties. I acknowledge, we
didn't tinker with the media markets, and we didn't create
winners and losers. I hope that we will be doing the same thing
here in the Commerce Committee so we can get this very
important legislation reauthorized.
My question, first, is just a more general one. As we look
at the fact that we are reauthorizing SHVERA, what changes have
taken place since 2004--technological changes that you think
should make a difference in how we consider this bill?
Maybe you want to start, Mr. Gabrielli.
Mr. Gabrielli. Well, I think the first one's been talked to
about today, is--there's--you know, the old SHVERA used the
analog world and the models of an analog. And the SHVERA needs
to take into consideration there is very little analog TV;
there are some, still, low power and stations like that, that
still do it, but most of the full powers are now fully digital.
So, whether it's in the way the waivers are granted for just
the networks or the way the actual--the SHVERA looks at distant
signals--I mean, the local channels for the grade B--they both
just need to be tweaked, if the word----
Senator Klobuchar. And, you know, it's my understanding
that the definition of the ``unserved viewers'' is based on
whether or not a viewer can receive analog signal. Is that
correct?
Mr. Gabrielli. That is correct. So, technically, as it's
well known, is--everyone today is virtually in a white area,
because these customers no longer receive a analog grade-B
signal. DIRECTV's obviously chosen not to use that. We consider
the digital signal the same type, and----
Senator Klobuchar. Right. So, do you think we need to
update that definition of ``unserved customer''?
Mr. Gabrielli. It does need to be updated. I think this
just--at this--one of those things that everybody just kind of
knows should happen, but it definitely needs to be in the law.
Senator Klobuchar. Yes.
Mr. Dodge?
Mr. Dodge. So, I would reiterate everything that Mr.
Gabrielli says. I think the most important thing is that you
end up with a signal quality test at the end of the day that
really works for consumers and predicts whether or not they get
an acceptable over-the-air signal in the digital world.
Senator Klobuchar. Mr. Karpowicz?
Mr. Karpowicz. I think the single biggest thing has been
the digital transition, which clearly has been transformational
across the country. And it has helped stations deal with this
short-market issue, where stations are now being able to fill
in those blanks with secondary networks.
And again, contrary to the research that Mr. Gabrielli's
people did, I can tell you that those multicast stations are
doing local news, they are doing local sports. So, I think it's
very important that the Committee considers that these
multicast stations have to have the same rights as the primary
stations.
So, I think that's been the primary big change that has
happened, has been the digital transition and what that has
enabled stations to provide to markets.
Senator Klobuchar. So, do you think we need to update the
definition of the ``unserved customer,'' then, when it's based
on analog?
Mr. Karpowicz. Absolutely.
Senator Klobuchar. Could you talk about--I mentioned the
issue of dividing up the broadcast area--some of the struggles
that local broadcasters are having now in this difficult
economy, and how this would be affected if we made major
changes to this bill?
Mr. Karpowicz. The concept of market modification, where we
would redefine what the DMA is, would be very, very difficult
for us. As you know, the broadcast industry has had a very
difficult year. I don't want to go as far as to say that we've
experienced the same troubles as the newspapers, but it is not
dissimilar. Our primary revenue source is advertising-based,
and when advertising fell off dramatically, we were really in a
tough situation.
I think you described it perfectly, that if we started to
fragment these local markets and brought in other stations, it
would clearly diminish our ability to continue to provide the
service that we provide. We staff, you know, large newsrooms,
we employ a lot of people, and if, in fact, there was a service
that was duplicative, came right in over the top of us, it
would really diminish our ability to continue to serve our
market the way we have in the past.
Senator Klobuchar. OK.
And then, last, Ms. Thompson, you mentioned in your
remarks, or at least the prior written testimony, that it's
better for public broadcasting to negotiate carriage agreements
with satellite and cable companies privately, in that a private
carriage agreement is in the best interest of all parties. In
short, it seems like you're saying that Congress should stay
out of this. And I would agree with that. Can you tell us more
about why you think it's in the best interest of all parties to
negotiate a private carriage agreement?
Ms. Thompson. Yes, thank you.
We have found in the past, although it's time consuming and
a lot of resources, when we--we, APTS, the public television
representative--has gotten to know the industry, we've taken
into account the capacity constraints and other issues,
technological issues, we've gotten to know each other, we've
been able to work through--after years of negotiation, been
able to work through agreements. As I said in my earlier
testimony, we were able to do this with cable, with Verizon
FiOS, and with DIRECTV; we're very hopeful that we will
continue our negotiations and--with DISH Network--and it will
end in the same way. We don't seek legislative assistance
unless it's absolutely necessary, unless we absolutely feel
that our industry efforts and our private negotiations have
reached a standstill.
Senator Klobuchar. Thank you very much.
Thank you, to all of you.
The Chairman. Thank you, Senator Klobuchar. And I want you
to know that everybody in Massachusetts is pulling for the
Twins for the next week or so.
[Laughter.]
Senator Klobuchar. I just--I could have guessed that. I
don't know why.
The Chairman. There you go.
Senator Pryor?
STATEMENT OF HON. MARK PRYOR,
U.S. SENATOR FROM ARKANSAS
Senator Pryor. Thank you, Mr. Chairman.
Let me, if I may, ask the--our two satellite providers
here, and that is something Ms. Thompson mentioned briefly
there a minute ago, about capacity. I'm curious about your
capacity now as compared to, say, 5 or 10 years down the road.
Is that a problem for you all, in terms of your capacity and
providing the programming?
I'll start with you, Mr. Dodge.
Mr. Dodge. It is, in fact. And it's--the interesting things
about satellites is, it takes about 3 to 4 years to build one,
and every satellite we order, the day that it's delivered, we
build it totally differently because the technology advances
rather quickly. But, at the end of the day, it makes it
impossible for it to have additional--requirements put on our
capacity today, we need to plan very--several years in advance.
And so, even though today there have been great technological
advances, our system is effectively full. And just to meet the
FCC milestones, for example, for HD must-carry, we're building
two--or actually, three additional new satellites today that
will be required to make that a reality.
Senator Pryor. Are you in a similar situation?
Mr. Gabrielli. Very similar.
The most constraining value, I guess, or thing, on
satellites is frequencies. You know, we have to use the
frequencies that were allocated, or get, as licensed from the
FCC, so to throw on additional burdens when we have no more
frequencies to use means it's a zero-sum game; something has to
come off.
So, that's one of the things that frequently doesn't get
discussed, is that, you know, there is a limited amount of
frequencies that we have licenses for. You know, we don't--
there are no additional ones coming up to be used; they're all
spoken for. So, we have to judiciously use that capacity; and
part of it is to build satellites that are smarter to do spot
beams and all that. But, that frequency is an overriding
constraint.
Senator Pryor. So, how many channels do you offer right
now?
Mr. Gabrielli. Locally, we carry over 2,500 local channels,
and between all of the satellites, including the international
and HD and SD, there are about 500.
Senator Pryor. OK.
Mr. Gabrielli. So, 500 national and 2,500 local.
Senator Pryor. And how much of that would be Pay-Per-View-
type channels?
Mr. Gabrielli. There's about 30 SD Pay-Per-View channels,
and there are about 30 HD Pay-Per-View channels, but we also
use those for sports; they're kind of like dual purpose. So,
like on Sundays there are very few HD Pay-Per-View, because we
carry a little football.
Senator Pryor. OK. I understand.
Ms. Thompson, let me ask you a question. I know that the
West Virginia person couldn't be here today, but you mentioned
in your opening statement about, sort of, a West Virginia
problem. And I'm assuming, if I understood you correctly, what
you mean is that there are people in West Virginia that, on
satellite, don't get West Virginia public television. Is that
what----
Ms. Thompson. Yes.
Senator Pryor.--you mean? And how common is that around the
country, where you have a--sort of a State-oriented public TV
system, but, on satellite, not everyone in the State has access
to that system? How common is that?
Ms. Thompson. It's actually, unfortunately, fairly common,
Mr. Pryor. We have 16 State networks that range in percentages
of their in-State citizens that cannot receive the State
network that their communities have invested in, that their
States have invested in, and their local businesses. They range
in amounts from the highest, Wyoming, where 75 percent of the
in-State citizens that are satellite viewers cannot see Wyoming
public television programming. Arkansas has over 17 percent.
Alabama, 7 percent. It goes down to Wisconsin, over a 100,000
viewers, down to--the lowest percent is still 1 and a half
percent in Idaho, 22,000 viewers that are satellite viewers
that cannot see their local State networks.
Senator Pryor. And if you could do this, what would your
fix be on that? How do you fix that?
Ms. Thompson. We have put in place permissive language;
it's not mandatory, but it's permissive. It's a--would be
accomplished through a copyright fix, and so, is in the bills
in front of the Judiciary Committees. But, the fix would allow
the satellite providers to show the in-State public television
station in DMA's where the State network does not have a
transmitter, but which is unserved by public television.
So, it's permissive. We're hopeful the satellite carriers
would take advantage of it. We believe the citizens, their
consumers and viewers, really want to see their State networks.
And we're hopeful that this can be accomplished and that this
Committee would support that when the bill is conferenced.
Senator Pryor. Thank you, Mr. Chairman.
The Chairman. Thank you very much, Senator Pryor.
Senator Begich?
Senator Begich. Mr. Chairman, I'm actually going to pass
for now.
The Chairman. Senator Udall?
STATEMENT OF HON. TOM UDALL,
U.S. SENATOR FROM NEW MEXICO
Senator Udall. Thank you, Mr. Chairman.
Most of the State of New Mexico is in a single TV market
centered in Albuquerque; however, about 13.5 percent of the
State's TV households receive out-of-State television.
Unfortunately, this means that some New Mexicans are cutoff
from important State news and information that directly affects
them. In fact, the second largest city in New Mexico receives
its television from another State. This problem is compounded
by the fact that major newspapers from New Mexico no longer
deliver to these areas that don't have New Mexico TV channels.
And I've received numerous complaints from residents
calling for changes to SHVERA to allow satellite TV customers
to receive these in-State TV channels. A satellite TV customer
told me he pays for dozens of channels, but he cannot get a
single New Mexico channel to keep up with events. A mayor of
one of the cities in these communities told me, ``Our citizens
are very disturbed by the unavailability of New Mexican
television in our area. As New Mexican residents, our
communities should have access to New Mexico State news and
events.''
Several county commissioners wrote me that, ``New Mexico is
our State, and we're entitled to information as it pertains to
our citizens' safety and well-being.''
Our State legislature has weighed in on numerous occasions
with a resolution urging Congress to require satellite
television providers to provide New Mexico television to all
parts of the State.
So, Mr. Karpowicz, I'd like to ask you, from the
broadcasters' perspective, and then also the satellite TV
representatives here, your testimony extols the virtues of
localism in broadcasting; however, the current TV market uses
Nielsen company designated market areas to impose on TV viewers
what their local area should be. Why should my constituents be
prevented from receiving the New Mexico television they wish to
watch?
Mr. Karpowicz. I don't think they should. I think they
should be able to get their local news from a New Mexico
station. In fact, I have before me a letter from KOAT, where
they are granting consent, without charge, to all the cable
systems and DIRECTV and DISH Networks to retransmit the
station's locally originated news, weather, and public affairs
programming to each of the carrier subscribers located within
the State of Mexico. This is not dissimilar from what we have
done in moving our newscast from Atlanta up into the northwest
corner of Georgia, which is actually in the Chattanooga DMA.
So, the TV stations and the broadcasters in Albuquerque are
prepared and willing to give the right to move their newscasts,
the content they control, to the satellite operators and the
cable systems. That would necessarily include network
programming, which we don't have the rights to, or sports
programming, which we don't have the right to, but certainly
New Mexico news would be available to your constituents
throughout the State under that scenario.
Senator Udall. Well, the problem here is that one of my
constituents asked a broadcasting company, just like you talked
about, and said they wanted to get the New Mexico media, and
they were told, ``Your town, while in New Mexico, is not part
of the Albuquerque/Santa Fe market. Because of that, DISH
Network and DIRECTV cannot offer our signals where you live.
Cable may be able to, but it's optional for them.''
So, why will broadcasters not voluntarily agree to allow
satellite TV companies to provide a New Mexico channel to State
residents who want to watch it?
Mr. Karpowicz. I think the distinction--I think that----
Senator Udall. I mean, I think there's a real problem here.
Mr. Karpowicz. Well, I think the distinction is, we can
only grant consent for the programming that we control, which
is local news. And if it is local news that is the issue, we
control the rights to local news that we produce. I think
moving another--moving the station in its entirety, which would
include network programming and sports franchises and so forth,
we can't control that. But, local news, we can make that
happen. And, as I say, the station in Albuquerque has
effectively, today, said they're granting the rights to these
guys. If they would like to take the local news programming
from Albuquerque and move it across the State, they're happy to
do that.
Senator Udall. And so, all somebody has to do in one of
these areas is make a request and it will happen is what you're
telling me.
Mr. Karpowicz. Well, first these guys have to agree to do
it.
Senator Udall. Who has to agree?
Mr. Karpowicz. The satellite----
Senator Udall. Yes.
Mr. Karpowicz.--carriers.
Senator Udall. Well, that's the next question I'm asking--
--
Mr. Karpowicz. OK.
Senator Udall.--them. But, the broadcasters have
apparently--broadcasters have apparently opposed this effort--
--
Mr. Karpowicz. I----
Senator Udall.--at the local level.
Mr. Karpowicz. I think it's--I think the distinction is,
the broadcasters have opposed moving another--a station in its
entirety----
Senator Udall. Right, right. I understand that. I
understand----
Mr. Karpowicz. OK.
Senator Udall.--that. Could I----
Mr. Chairman, I don't know if I've run over, here, so are
we going to have a second round?
The Chairman. It's OK, take a moment.
Senator Udall. Just----
The Chairman. Yes, we'll have a second round.
Let me let the other Senators get their----
Senator Udall. Yes. I want to make sure--you bet.
The Chairman. Senator McCaskill?
And then Senator Thune----
STATEMENT OF HON. CLAIRE McCASKILL,
U.S. SENATOR FROM MISSOURI
Senator McCaskill. I'll ask it----
The Chairman.--and then Senator LeMieux.
Senator McCaskill. I'll ask it for Senator Udall.
Here's the bottom line. The bottom line is, we have orphan
counties. We've got orphan communities in Missouri. And they're
big cities--I mean, they're not big cities by Kansas City/St.
Louis standards, but Hannibal, Kirksville, St. Joe--just like
his situation. Is this about you not wanting to run the news
that they're willing to give you, because you don't want to
give up the space for it, or is this about you not wanting to
pay for the entirety of the channel, because you don't want to
have pay for the network programming too, because you can get
it cheaper somewhere else? DISH, DIRECT?
Mr. Dodge. I--well--I'd like to start off by saying we
absolutely support giving consumers the right to decide what
programming is local to them, and providing that programming to
them. I also agree with Mr. Karpowicz, that they can only give
us the rights that they have.
Senator McCaskill. Correct.
Mr. Dodge. And our answer to that is, hence the need for
compulsory licenses, which no one agrees are ideal, but that's
the purpose of them, to clear rights. And even--there are
multiple problems with this, but when Mr. Karpowicz says,
``We'll give you the rights for a newscast,'' the broadcasters
have admitted, or put in writing to Congress early this year,
that they might not actually have all those rights, because
they incorporate national bits and pieces, even to their local
newscast, that they might not have the rights to grant the
copyrights for----
Senator McCaskill. Well, let's just assume, for this
purposes, that they can.
Mr. Dodge. OK, so assuming that----
Senator McCaskill. Why aren't you doing--why can't you
offer Kirksville news to the folks in Kirksville, and why can't
you offer St. Joe news to the folks in St. Joe, and why can't
you offer, in Senator Udall's State--why can't--since they're
offering up their news--why can't you do that, right now?
Mr. Dodge. The issue is, one, consumers don't--if we did
that, their screen would be blank about 90 percent of the day,
and consumers don't want that. You know, two----
Senator McCaskill. Well, wait a minute, wait a minute. So,
you're saying that you--the consumers don't want to get the
news, because they'd have to change the channel to look at the
national broadcasting on another channel that you might put in
there?
Mr. Dodge. I'm not saying that. I'm saying----
Senator McCaskill. Well, when----
Mr. Dodge.--you actually----
Senator McCaskill.--it went blank after the news, wouldn't
they switch to whatever NBC programming you have on your
lineup----
Mr. Dodge. They may----
Senator McCaskill.--that's not in their DMA, that's not in
their community?
Mr. Dodge. They may or may not. But, we've actually reached
out to our customers, and they don't want a screen that's blank
90 percent of the day. But--in putting that aside----
Senator McCaskill. How did you reach out to your customers?
I'm curious about that. Because I--you know, I would have to
believe the folks in Hannibal and Kirksville, if you called
them and said, ``Hey, we're going to include, in your lineup,
local news,''--and I'll guarantee you people in Missouri are
smart enough to switch the channel when it goes blank.
Mr. Dodge. I agree.
[Laughter.]
Senator McCaskill. Yes. So, I'm curious as to how you
reached out to your consumers, because I'm not aware of you
reaching out to the folks in Missouri that are in orphan
communities. Have you done that in Missouri? Have you reached
out to the consumers in those area and asked if they'd like to
cover--to carry the local news?
Mr. Dodge. I don't know specifically if we spoke to folks
in Missouri.
Mr. Gabrielli. So, this is--it's complex. So, the people in
New Mexico that are not in the New Mexico market, there would
be an extra channel in their guide, it would show KOAT, and
would have all the listings for all the programming that they
normally carry. And you'd tune to it, and you would get a
message, ``This programming not available in the area.'' So,
they have to be recognized that, when local news shows up, that
it's going to be opened up to them, and when local news is
gone, it's going to be closed to them.
One of the things that this fails to do, which is really
most important, is emergencies. Nobody knows when emergencies
are. All of a sudden there's a breaking news story and they
break into it. These customers would still be blacked out of
that unless we could figure some super-technological way that
they would inform us, ``Hey, emergency's coming, open it up.
OK, emergency's over, shut it down.'' So, it doesn't fix the
emergency messaging part of the--of what it--it really is very
important to local news.
Senator McCaskill. I guess this is an economic decision,
correct? I mean, there's nothing wrong with that. I'm not--you
don't--you can admit----
Mr. Gabrielli. I don't think--I mean----
Senator McCaskill.--that it's an economic decision.
Mr. Gabrielli. Assuming we use the same capacity that we
use for KOAT in New Mexico and it actually reaches this other
part--because one of the parts that both of us, years ago--10-
plus years ago--we designed satellites to reach the DMA's,
because that's what we told the market was. And when you do a
spot-beam satellite, you have to make sure this beam is just
big enough so that you can put one next to it and one next to
it and next to it. They're not huge beams that overreach stuff,
because they wouldn't all fit.
So, assuming we can reach this upper part of New Mexico, it
would a different--a channel in the guide that would be blank--
it would be--listings would be there; most of the time, you
wouldn't get it. It could open up for local channels; and then,
again, it would shut down. Consumers would probably call us a
little bit, saying, ``Well, what about this show? Well, how
come I can't see that?'' So, there is a complexity and a part
of it that's--you know, we'd all have to wrestle with.
But, the emergency broadcast--you know, we couldn't open it
up and shut it down quick enough to get the breaking news----
Senator McCaskill. But, what about--couldn't you just send
them a note in their bill? Couldn't you just give them
notification? I mean, I--yes, no, I would think that if the
people, you know, were told, ``You can get local news, but you
won't get anything else on that channel but local news,'' I
think people would pay attention to that and appreciate it, and
especially--you could include in that note in the bill--you
communicate with your customers every month. Trust me, I get a
big whoopin' bill from one of you every month. So, every month
the bill comes, you could communicate in that bill, ``In your
area, you can now get local news. It will not be available to
you any other time. And, by the way, you will not get emergency
break-ins on this channel; you should be aware of that.'' I
mean, that--it seems to me that would be a simple way--you have
a way to communicate to your customers.
Mr. Gabrielli. OK, and then I'd also say there are probably
four major news--four major stations in the New Mexico market.
What happens if only three of them agree to do this and the
fourth doesn't? Then my customer's going, ``Well, I really like
the NBC person. Can't I get the NBC.'' So, it is a very complex
issue that--you know, that we'd have to work out with the
broadcasters very closely. And part of it is, you know, an--
overall, reaching agreement that if we can do one, we can do
all.
Senator McCaskill. Right.
Mr. Gabrielli. Because is it a must-carry situation; if we
carry one, we have to carry all? Do we have to renegotiate?
Three of them will give it to us for free, but the fourth says,
``You know, that's worth an extra, you know, coin in my
pocket.''
Senator McCaskill. I think we want to work with you. I
think you--I think you're getting the sense that you guys are
being victimized by your success. I mean, you now have spread
into enough of the markets in this country, and people are
getting so spoiled with the variety of channels they get. We
are getting constant pressure from people who can't get their
local stations, as to why that can't get fixed. And I realize
there are problems, and it's complex. But, I think the quicker
we all get together and figure out how to fix it, the better
it's going to be, in terms of your competition and the
happiness of your customers.
So, thank you, Mr. Chairman.
The Chairman. Well, thank you. Good line of questioning,
and that's exactly what we're going to do with this
reauthorization; and in pretty short order, I hope.
Senator Thune?
STATEMENT OF HON. JOHN THUNE,
U.S. SENATOR FROM SOUTH DAKOTA
Senator Thune. Thank you, Mr. Chairman, and I want to thank
our panelists for shedding some light on this subject. It is an
important one, and one that Congress does have to deal with
this year. And so, we appreciate your insights and--as we go
through the, kind of, complex process of reauthorizing SHVERA.
I'd like to direct this to Mr. Gabrielli and Mr. Dodge. And
the question has to do with incentives. And, aside from an
outright mandate, what incentives can or should this committee
provide to the satellite TV providers to encourage local
broadcast coverage for all 210 media markets?
Mr. Gabrielli. I guess I'll start.
So, we didn't do a proposal to the Congress for ``removing
the barriers,'' as we like to call them. One of them is some
kind of a cost-sharing. It is--gotten very expensive to go to
these markets, and, as Mr. Dodge pointed out, some of these
markets have so few customers, it's--it will be a loss to the
company. We'll never make--even break even on it. So, we're
hoping to share with the--you know, the broadcasters, some of
this cost. It'd be no different than them putting up a--an
additional tower to do repeating. It's--you know, it's a cost
of getting their broadcast out.
As I was asked, ``You know, how many local channels do we
carry?'' We carry 2,500 local channels, compared to 500
national channels. And, you know, that's more than the one-
third capacity maximum that cable has to carry.
So, some kind of a help, in that, you know, we don't have
to carry channels that are pretty redundant in the programming.
There are a number of local channels who virtually repeat a
national channel, but, because they're being broadcasted also
locally, we carry both versions. You know, something to look at
maybe the--reducing that constraint on us.
We think a lot of the things that are already being
discussed--the grade-B bleeds and stuff like that will help--so
that when we go to a market that's missing some affiliates, we
don't have to try to negotiate with the three or four people
that kind of bleed into it, each one wanting to be the station
of choice; or, worse yet, dividing it up so, you know, half the
market gets an NBC from outside left and half from outside
right.
So, there are a number of proposals which we're, you know,
happy to reiterate, that would help remove these barriers.
Senator Thune. And you think there ought to be any of those
incentives that differ for DISH Network and for DIRECTV?
Mr. Dodge. I would say, today we're hamstrung in that--in
the 29 markets that we're not--where we haven't launched local
service today, we don't have the ability to bring in a distant-
network signal. And they're all short markets, so we can't
offer a full complement of network programming. So, we can't
make a competitive offering vis-a-vis DIRECTV or the cable
folks. So, in the simplest sense, that's an additional
incentive we would need to take that step.
Senator Thune. In light of the economic downturn, what we
hear from--I hear, I know, from a lot of small broadcasters--
and that is that they're struggling with declining advertising
revenue. So, if the reauthorization of SHVERA includes market
modification proposals that would allow for more out-of-market
signals, how would that type of proposal impact broadcasters in
predominately rural markets like the ones that I represent?
And I'd direct that to--maybe--that's a question, maybe,
for Mr. Karpowicz.
Mr. Karpowicz. It would be devastating, Senator. It would
be very, very difficult, because the fragmentation of our local
marketplace is--particularly in small markets--you know, in a
larger market, a top-ten market, they might be able to sustain
that; but in a smaller market, to have a competing duplicative
signal come in over the top and basically split the audience
and to fragment that audience would be very, very difficult.
And it would really hamper that station's economic health, and
then their ability to continue to provide the service and the
news and everything else they do. So, it would be devastating.
Senator Thune. Thank you, Mr. Chairman.
The Chairman. Senator LeMieux?
STATEMENT OF HON. GEORGE S. LeMIEUX,
U.S. SENATOR FROM FLORIDA
Senator LeMieux. Thank you, Mr. Chairman.
First of all, thanks, to the panelists, for being here
today. It's a--obviously a complex issue. But, I wanted to just
go on record for the people of Florida. We have three counties
in the great northwest part of Florida--Escambia, Okaloosa, and
Santa Rosa; this is all the way on the Panhandle, all the way
to the west--that receive their broadcasting from Alabama. And
although this area of Florida is affectionately called
``L.A.,'' meaning Lower Alabama, I know that those folks would
like to get more local programming.
So, I think a lot of the questions that have been asked on
this topic--and the Chairman has said that we're going to work
together to try to find some solutions. But, I wanted to make
sure you were aware of the challenges that we're having in that
part of Florida, that they're not receiving as much local
programming as they would like. And then just get you to
comment, if you have anything additional to add whether, you
know, the--we should be in a mandate situation or a market-
based incentive situation, as Senator Thune just spoke to.
Mr. Gabrielli, if you want to start.
Mr. Gabrielli. I mean, this is a problem that started 50
years ago, when there was only over-the-air broadcasters and
these territories were established. And it is one of the few
pieces of telecommunication that still has limitations on its
area, that broadcasters still have these rights.
You know, we're willing to work with them on modifications
and all that, but the way it's been written and revised in each
of these is, you know, these definite market areas we have to
follow. So, it is a--it's a complex problem, because I do agree
that changing it would change the boundaries of a television
station, which, you know, affects--would affect some stations
not being in business, and the others would grow.
But, it is--you have to recognize, it's, you know,
something that started 50 years ago, when that was--that
territory became defined, because that's the only stations they
got. And maybe we just need to recognize that's just not the
way the world is now, that you can get newspapers from outside,
you can get Internet from the world, you know, and it's just
the television market that's still sticking with this, ``This
is my territory, and I have exclusive rights.'' And it's--it is
complex, because they have to negotiate and, you know, make
sure they don't override each other.
Senator LeMieux. Mr. Dodge, did you have anything to add?
Mr. Dodge. I would just--there are--with respect to just
importing local news, there are also technical limitations we
face, in that if you're going to just broadcast the news at 6
o'clock in the evening, you actually have to set aside all the
bandwidth for that channel all day long. So, if you do just
that, other folks will suffer, and we'll be able to launch less
channels on a particular spot beam.
Additionally, there's a difference between us and cable, in
that they generally have a local presence, and it's easier for
them to blackout, on a moment's notice, as things change during
the day, whereas we have a single team of folks in Cheyenne,
Wyoming, who are responsible for managing our local stations
across the entire network. So, it's very, very unwieldy.
But, we do support, as I said earlier, the concept of
letting subscribers and consumers decide what, for them, is
local, and trying to provide that to them.
Senator LeMieux. Mr. Karpowicz?
Mr. Karpowicz. Well, I guess, as it relates to the
emergency broadcast concern that have--concerns that have been
addressed here, I think we have to remember that, in those
households, they are still going to be getting their local
television station from their primary DMA. So, even if they had
the news from New Mexico or the news from Atlanta, they would
still have their primary newscast available to them from their
DMA, which, quite frankly, is probably closer to them, in terms
of geographic proximity, than getting the news from somewhere
else.
Senator LeMieux. Yes, but when it's from a different
State----
Mr. Karpowicz. Right. But, it's----
Senator LeMieux. There's a lot of--whole host of different
issues that they may be interested in. Maybe--they may want to
know what's going on in State government, for example, down the
street, and they're getting Alabama State government news.
Mr. Karpowicz. Absolutely, and that's why I think, for
regularly scheduled newscasts, that would certainly address
those issues. What I was talking about was emergency coverage,
which would be tornados and things of that nature. The
proximity of the DMA station is such--they're closer to that
household than probably, you know, the secondary station that
is being brought in. So, as it relates to the concern about
bringing in emergency notices, I'm not as--I just don't think
that is as big a concern.
Senator LeMieux. Ms. Thompson?
Ms. Thompson. Our focus has primarily been, as I mentioned
before, on our--on the State network issue. We have really--our
real concern about in-State service has been with our 16 State
networks that have been unable to reach all of the viewers who
are satellite viewers within their States.
I had mentioned earlier that it ranges from 70 percent of
all the citizens down to 1 and a half percent, but, even with 1
and a half percent, we're looking at over 20,000 viewers. So,
we are hopeful that we can work with the satellite companies on
a permissive understanding that they will indeed serve all of
their viewers with the in-State network. And we're hopeful that
the resolution that's put into the bills in the Judiciary
Committee will pass and will have the support of this
Committee.
Senator LeMieux. Thank you, Mr. Chairman.
The Chairman. Thank you, Senator. I appreciate it.
Senator Begich, you passed, at first. Do you want to do a--
--
STATEMENT OF HON. MARK BEGICH,
U.S. SENATOR FROM ALASKA
Senator Begich. Mr. Chairman, just some quick, if I can?
The Chairman. Sure.
Senator Begich. Thank you very much.
The Chairman. And then Senator Udall.
Senator Begich. Mr. Dodge, you had made a comment, and I
just wanted to kind of follow up so I can get a better
understanding. I mean, we--Alaska's somewhat unique. We don't
have this issue on noncovered areas. So, I'm listening to my
colleagues and recognizing their struggles in ensuring that
they get full coverage from their local broadcasters. We don't
have that problem, as rural and as unique as our State is. You
mentioned the 29 markets you cannot get into. Can you just help
me understand that a little bit more? And your ability to be in
those markets may require incentives to do that--can you help
me understand that?
Mr. Dodge. Sure. As it stands today, the--I believe it's
the--in every remaining market we're not in, which are the 29
markets, are ``short markets,'' meaning they're missing----
Senator Begich. Right.
Mr. Dodge.--a local affiliate. And we don't have--we no
longer have our distant license so that we can actually import
a signal. And therefore, from a competitive standpoint, you
know, say, in Glendive, Montana, where I believe there's one
local affiliate--doesn't really make sense for us to launch it,
from a competitive standpoint, because DIRECTV can bring it a
full complement of network stations; the local cable folks can
do the same. So, from a competitive standpoint, putting aside
economics and all that, it just doesn't make sense for us to go
into the remaining markets, because we don't have a viable
product to sell to people.
Senator Begich. Gotcha.
Mr. Dodge. Everybody would go to DIRECTV or the cable
folks.
Senator Begich. Gotcha.
Mr. Dodge. So, from an incentive standpoint, to go into
those remaining markets, at a minimum we need that. And we
think this is a great opportunity as well, after the digital
transition, to put all players back on the same level playing
field with respect to the 119 distant license so the consumers
have choice amongst the providers, it's equal, and we can
compete on customer service and service offerings alone. So,
we'd ask for that, as well.
Senator Begich. Very good.
Mr. Gabrielli, you had started to list a few incentives, I
think it was to Mr. Thune's--Senator Thune's question.
Mr. Gabrielli. Yes.
Senator Begich. Would you be willing--and I don't want you
to elaborate more on that right now--but could you give me kind
of the shopping list, at some point, in written form----
Mr. Gabrielli. Certainly, I----
Senator Begich.--what those--and then I'm going to ask
you--and I'll--and I know there are folks--knowing how this
place operates, I'm sure there are folks from the Broadcast
Association sitting out in this audience--your one idea on cost
sharing, I'd be interest in more elaboration for that.
And even though the broadcasters are probably in the
audience, I'd asked them to send me the same thing on their
view on this. It's my way of getting the question to them
through you, as they're in the audience.
Because I'd be interested in how you see that, and also the
broadcasters see that. But, if you could give me that shopping
list, I'd greatly appreciate that.
And, for both of you, I was listening to Senator
McCaskill's line of questioning, and I just want to make sure--
I'm going to use a different word; instead of ``It's not
profitable,'' ``It doesn't fit into the business model,'' some
of these situations. And I think the example you just gave, Mr.
Dodge, was that; it doesn't fit into the business model,
because you're--the competitive nature doesn't exist for you,
or the opportunity to be competitive and grab clients or share.
Is that a----
Mr. Dodge. Well, with respect to just bringing in local
news to, say, southern Colorado or to----
Senator Begich. Right.
Mr. Dodge.--the Albuquerque DMA, there are--I guess, in the
simplest form, there are practical concerns that we have, but
also licensing concerns.
Senator Begich. OK.
Is that same thing on your end?
Mr. Gabrielli. Same thing. And I was going to say that, you
know, we might have a chance to learn from history, because the
last reauthorization allowed a limited amount of this market
modifications. I mean, you know, New Hampshire and Vermont, two
cases. And I think there was one in Alabama. But, we could
look, you know, where we have actually done this in a limited
amount, what the effect was. So, maybe we can learn from
empirical data rather than just hypothesis of what it will
cost.
Senator Begich. Good comment, there.
Ms. Thompson--and I caught your last comment--or, your
comments throughout the testimony today about--that last resort
is Congress in regards to trying to figure out how to inject
good programming, PBS and so forth. How do you know when you
reach that point? Because--you know, I know negotiations can go
on for a long period of time, but how do you measure that so
you can determine--in other words the way, again, this place
moves, it's very slow. So, when you might get to conclusion, it
may take years for this body to move. Is there a better
approach of simultaneously having that consideration?
Do you follow what I'm saying or----
Ms. Thompson. Yes.
Senator Begich. Because you're negotiating, and you may
finish and say, ``Guess we can't get there.'' But, the way
this--it may be years before we come around and assist you in
that effort. So, can you elaborate?
Ms. Thompson. We have--both APTS and DISH--if I may speak
for a moment for DISH--have both set an expedited time-frame on
resolving our negotiations. The hope was that we would actually
have them resolved prior to this hearing today, but we have hit
some stumbling blocks that we're continuing to work through as
early as today, throughout the week.
Our goal is, most clearly, getting our local stations
carried in HD in local markets where DISH is providing HD
coverage. Thankfully, because of the last SHVERA
reauthorization that takes place in Alaska and Hawaii, the
local public TV's HD stations are being seen by the citizens
there.
Senator Begich. Absolutely.
Ms. Thompson. That's not the case in 150 markets where DISH
is now. So, we want to expedite these negotiations, because
we--it's really--you know, viewers are not seeing public
television as, you know, we've taken the time to go through
this. So, we're really hopeful that we come to a conclusion
quickly, and the viewers will benefit from that.
Senator Begich. Thank you very much.
Thank you, Mr. Chairman.
And you'll keep us informed on the status?
Ms. Thompson. Yes, sir. We will.
Senator Begich. Thank you very much.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Begich.
And I would certainly urge the parties to do that. As I
said earlier, it's preferable to get it resolved on the private
side, but, you know, if we have to tackle it, we will.
Senator Udall?
Senator Udall. Thank you, Mr. Chairman.
The--you made a--Mr. Karpowicz, a statement about KOAT. Was
that in a letter form? Or was that----
Mr. Karpowicz. Yes, sir.
Senator Udall. That they--you have that with you?
Mr. Karpowicz. Yes, I do.
Senator Udall. Could we make that part of the record?
Mr. Karpowicz. Absolutely.
[The information referred to follows:]
KOAT-TV
Albuquerque, NM, October 6, 2009
To Whom It May Concern:
This letter confirms that Station KOAT-TV, the ABC affiliate in
Albuquerque, New Mexico, hereby gives consent, without charge, to each
cable system and to DIRECTV and the DISH Network to retransmit the
Station's locally originated news, weather, and public affairs
programming to all of each carrier's subscribers located within the
State of New Mexico, that are located outside the Albuquerque DMA, and
where the station is significantly viewed.
KOAT is already providing this service to Comcast Cable in Dona Ana
County, so that viewers in Las Cruces, New Mexico, which is part of the
El Paso, Texas DMA, can be informed. This is further evidence that
local news, weather and public affairs programming can be made
available throughout the state.
Sincerely,
Mary Lynn Roper,
President and General Manager.
Senator Udall. Is the--is what they're saying that--
basically, that they're willing to put it out without any--
could you just read us----
Mr. Karpowicz. Yes, sir.
Senator Udall.--the crucial part of the letter there?
Mr. Karpowicz. Yes, sir.
``To whom it may concern, This letter confirms that Station
KOAT, the ABC affiliate in Albuquerque, New Mexico, hereby
gives consent, without charge, to each cable system and to
DIRECTV and DISH Network to retransmit the station's locally
originated news, weather, and public affairs programming to all
of each carrier's subscribers located within the State of New
Mexico. KOAT is already providing this service to Comcast cable
in Donna Anna County so that viewers in Las Cruces, New Mexico,
which is part of the El Paso, Texas DMA, can be informed. This
is further evidence that local news, weather, and public
affairs programming can be made available throughout the
State.''
And it was signed by Mary Lynn Roper, the president and
general manager of KOAT.
Senator Udall. Thank you very much. And that's a very
positive development, I think.
My question to the two gentlemen to your right, there,
would be, Are you willing to run it now?
Mr. Gabrielli. I think the answer is, we'll certainly look
at it. It's a--complex whether that signal actually reaches the
entire part of the rest of New Mexico that needs to be reached.
So--because, again, our spot beams were designed, 10 year ago,
to reach a certain area, and hopefully this is within it.
That's a very big constraint.
We have to make sure that we allow just these people, I am
assuming, that are in New Mexico and not across the State
border, where we're actually in the other DMA, to see it. So,
we have to define a blackout that's very specific to this.
And then, one of the hardest ones is keeping track, with
the stations, of what is it they've--giving us the rights to?
Because if their local programming goes long or if it runs--
what happens if a baseball game is on, but it runs long, and
they're going to delay the local programming. All of a sudden
we open it up--because it--this will be automated, there won't
be people standing there. Now the game's on. You know, are we
going to get in trouble?
So, when you talk about, you know--and I'm sure Congress
knows--the devil in the details, this is going to be one of
those.
Senator Udall. Mr. Dodge?
Mr. Dodge. I guess I'll just reiterate what I've said
earlier, which is, we have reservations about whether they
actually have all the necessary rights to grant us the
copyright to rebroadcast just their local news, weather, et
cetera, be it with their local advertising or national news
clips inserted into their local news. And--huge practical
limitations, in that it's nearly impossible for us to blackout
programming around the country, and you have to set aside
bandwidth for a few hours a day, an entire channel, on a spot
beam. So, from a practical perspective, it's very difficult to
implement the way that the broadcasters have outlined.
Senator Udall. Thank you.
Mr. Karpowicz, in your written testimony you said, in
talking about this issue of modifying TV markets, quote, ``It
would not advance localism goals, but would, in fact, undermine
sound public policy and harm consumers,'' end quote. The last
time SHVERA was reauthorized, a handful of exemptions were made
by States with the same problem as New Mexico. Were consumers
harmed by these limited exemptions that allowed satellite
companies to provide secondary transmissions of in-State TV
signals?
Mr. Karpowicz. I think our economic reality has changed
dramatically since the first authorization of SHVERA, and the
fact that those exceptions took place in isolated pockets. And,
quite frankly, I don't have the historical perspective on what
impact those have.
I can say, though, with--I believe, with certainty--that
today, in today's environment, if we were to implement a full
duplication of signal--if another signal came in, in its
entirety, including network programming, syndicated
programming--came in over the top of a local station, it would
inhibit his ability to perform, and certainly have a great
economic impact, and have an impact on his ability to
subsidizes his news and all the other services that he provides
in his market.
Senator Udall. Thank you.
Chairman Kerry, thank you very much for your courtesies in
allowing this second round.
The Chairman. Oh, absolutely. Important questions. I
appreciate the participation of so many Senators. And I think
it's been very helpful in creating the record for this.
Obviously, you all can sense, from every question, there's
a pretty focused area of concern here, and we're going to need
to address it. You know, this question of why there--Mr. Dodge,
there are 150, you know, areas where public can't be carried in
HD. It can be carried elsewhere. It's just--you know, it's
pretty fundamental. And we want to maximize the ability of
citizens to get local and to get the kind of quality that they
deserve.
So, we're going to work to do that. We will get this done
in the Committee as soon as we can.
I will leave the record open for a week because there are
additional questions that I don't have time to submit right
now, to question you on, because I have an 11:30. But--and
other Senators may have additional questions we want to submit
in writing.
So, I'd ask you to try to respond to those as rapidly as
possible, and the Committee will continue its work behind the
scenes and get ready to do a markup and get this done.
Thank you all very, very much for being here today. We
appreciate it.
Hearing is adjourned.
[Whereupon, at 11:31 a.m., the hearing was adjourned.]
A P P E N D I X
Prepared Statement of Hon. John D. Rockefeller IV,
U.S. Senator from West Virginia
Over the past 15 years, satellite television has grown into a
strong competitor to cable by offering consumers in rural as well as
urban markets a choice in pay television providers. Where residents
once were limited to a single cable operator, satellite providers now
offer most consumers an alternative. This has led to price and service
competition, which is good for subscribers. Congress supported such
competition through the passage of the Satellite Home Viewer Act and
its progeny, including the Satellite Home Viewer Extension and
Reauthorization Act or SHVERA.
Now we are faced once more with the reauthorization of SHVERA. This
entails the extension of certain communications and copyright
provisions, but it also provides us with the opportunity to examine
whether consumers across the country are adequately served by existing
law.
A decade ago, Congress, recognizing that consumers want access to
local news, weather, and community-oriented programming, established a
mechanism by which satellite providers could offer local broadcast
stations to residents in the local market. This means that when a
satellite subscriber in Huntington, West Virginia tunes-in to CBS, PBS,
ABC, FOX or NBC, they hear about events in the state capital and see
the successes and trials of their neighbors--not the weather in
Manhattan.
Recognizing the limits of satellite providers at the time, Congress
did not require the companies to offer local channels to every market
in the country. Over time, this has created a division between haves
and have-nots in which satellite companies are not providing local
channels to residents in the smallest markets.
In West Virginia, DIRECTV recently began providing local service to
the Beckley area, which I applaud, but that still leaves the
Parkersburg and Wheeling markets without local channels. In
reauthorizing SHVERA, I believe that we should examine how all
consumers in even the most rural regions can gain access to local news,
sports, and community programming.
As some broadcast television has become coarser and less
informative, the importance of the mission and programming provided by
public television has grown. Unfortunately, getting carriage of public
television programming to satellite subscribers has not always been
easy.
For example, existing copyright law makes it difficult for state-
wide public television networks, like that in West Virginia and 14
other states, to reach every resident of the states they serve. I am
pleased that the Senate and House Judiciary committees have addressed
this issue in their reauthorization legislation. I also understand that
public television and the satellite providers have been discussing
other carriage issues and look forward to hearing about the progress of
those talks.
The reauthorization of SHVERA provides us with the opportunity to
encourage greater competition and access to quality programming to
consumers throughout the Nation. I thank the witnesses for coming today
and welcome their thoughts on these issues.
______
Response to Written Question Submitted by Hon. John D. Rockefeller IV
to Robert M. Gabrielli
Question. Satellite television has spawned greater competition
among pay television providers, especially in rural areas. This
benefited consumers by giving them more choices and in some areas
lowering prices. A key component to making satellite television
attractive to consumers is the carriage of local channels.
Unfortunately, in approximately 23 markets, neither DIRECTV nor DISH
Network offers local broadcast channels. Two of those markets are in
West Virginia, Parkersburg and Wheeling. Consumers in those communities
want access to their local news, sports, and regional programming.
What can be done to make sure that people throughout the country
can get access to local broadcast stations? If there is no obligation
or incentive to serve all 210 markets would DIRECTV or DISH Network do
so and by what date? What steps can broadcasters take to encourage or
incentivize the extension of local service to unserved markets?
Answer. Perhaps the most important step Congress could take to
incentivize the extension of local service is not to adopt the
broadcasters' proposal with respect to multicast signals.
As we discussed in our testimony, while satellite is the perfect
technology for delivering national programming to even the most rural
customers, it is much less efficient at delivering local channels.
Accordingly, we have spent billions to offer local service to more than
95 percent of Americans.
Yet the economics of serving the very smallest markets are
daunting. Our costs to serve Parkersburg--in terms of satellite
capacity, local receive facilities, and backhaul--are comparable to
those to serve Cleveland. Parkersburg, however, has only a fraction of
Cleveland's population--making it much harder to recoup our costs.
It would be even more difficult to recoup our costs if we could not
even deliver the full complement of network programming that our cable
rivals offer. This is a very real problem in ``short'' markets like
Parkersburg, which are missing one or more network affiliates.
The broadcasters propose to make this problem even worse. Today, we
cannot deliver distant signals to subscribers who can receive a local
network station's analog, or ``primary,'' signal over the air.
Broadcasters now want to extend that prohibition to subscribers who can
also receive network programming over-the-air on a station's secondary
digital ``multicast'' feed. They argue that, if we want to carry the
``missing'' network programming in short markets, we should carry the
multicast feed rather than a distant signal.
Where we have room to carry multicast feeds, we generally do so
(for example, in Bluefield-Beckley). But, because we designed our
satellite spot beams to maximize the number of markets served, we often
lack room on individual beams to carry multicast signals. In such
situations, we must rely on distant signals to fill out our local
service offering.
The broadcasters' proposal would guarantee that we could not offer
all four networks in many of the smallest markets. We can think of no
greater disincentive to providing local service in these markets.
______
Response to Written Questions Submitted by Hon. Maria Cantwell to
Robert M. Gabrielli
Question 1. What are DIRECTV's publicly announced plans for
launching new satellites in the upcoming years? What is the purpose of
each of these satellites (i.e., add capacity, replacement, etc.)?
Answer. We plan to launch a new, state-of-the-art satellite,
DIRECTV 12, later this year or early next year. D12 will replace spot-
beam capacity used for local service on an older satellite, and will
add capacity to be used for additional high definition national
channels.
Question 2. Has DIRECTV switched over to using the MPEG-4 format
exclusively? Has the use of the MPEG-4 format helped you to better
manage the (bandwidth) capacity of your satellites?
Answer. DIRECTV uses MPEG-4 exclusively on all of its new
satellites. But we use MPEG-2 on our older satellites. We will continue
to do so for the foreseeable future, as many millions of our customers
still use older receivers and antennas incapable of processing MPEG-4
compression. MPEG-4 allows us to deliver programming--especially data-
intensive high-definition programming--far more efficiently without
sacrificing picture quality. This allows DIRECTV to, for lack of a
better term, ``fit'' more channels into a fixed amount of transponder
capacity.
Question 3. Does the DIRECTV currently offer service to consumers
in the five so-called ``orphan counties'' in southwest Washington State
that are in the Portland DMA? Is the spot beam servicing these
communities the same one that covers the Portland DMA? How does DIRECTV
ensure that there is no overlap between the spot beams that serve the
Seattle DMA and the Portland DMA? As a result, are there locations
between the two DMAs where there is no spot beam coverage?
Answer. Yes. Please note, however, that the satellite spot beam
with which we provide service in the Portland local market does not
cover all of Klickitat County. (It does completely cover the other four
counties.) Yes, we use the same spot beam to offer service in these
``orphan counties'' and service in the Portland DMA. The two beams
operate over different frequencies. In fact, they are on different
satellites. Thus, while they do overlap geographically, they do not
interfere with each other. (This is the same principle that allows
thirteen FM radio stations to operate in Washington DC without
interfering with one another.)
Question 4. A number of my constituents living in those five orphan
counties--Clark, Cowlitz, Klickitat, Skamania, and Wahkiakum--have told
me that they would like to receive news and public interest programs
from the Seattle market, which includes coverage from our state capitol
Olympia. As you know, several States have counties which are part of
the DMA of a neighboring state. One thought is to have the news and
public interest programming from the State the orphan counties are
located in be broadcast on a separate satellite channel. I understand
your concern about a channel that remains dark for most of the day and
then is on for a few hours to broadcast news and public interest
programming. What are the technical, operational, and legal barriers
for setting aside one channel in each DMA where you provide local-into-
local service to serve as a PEG-like channel?
Answer. We would have to overcome many hurdles to make such an
offering, but the biggest of these is our lack of capacity. Nearly all
of our spot beams on which we provide local service are now full. (We
needed to fill these spot beams in order to maximize the number of
local markets we could serve.) So we simply could not offer news and
public interest programming in the manner described above. We support
an approach to ``orphan counties'' similar to the last
reauthorization's approach to southern Vermont, southwestern
Mississippi, and northern New Hampshire. Such an approach would permit
us to carry stations in neighboring, in-state markets (including orphan
counties) where our technology permits.
______
Response to Written Questions Submitted by Hon. John D. Rockefeller IV
to R. Stanton Dodge
Question 1. Satellite television has spawned greater competition
among pay television providers, especially in rural areas. This
benefited consumers by giving them more choices and in some areas
lowering prices. A key component to making satellite television
attractive to consumers is the carriage of local channels.
Unfortunately, in approximately 23 markets, neither DIRECTV nor DISH
Network offers local broadcast channels. Two of those markets are in
West Virginia, Parkersburg and Wheeling. Consumers in those communities
want access to their local news, sports, and regional programming.
What can be done to make sure that people throughout the country
can get access to local broadcast stations? If there is no obligation
or incentive to serve all 210 markets would DIRECTV or DISH Network do
so and by what date? What steps can broadcasters take to encourage or
incentivize the extension of local service to unserved markets?
Answer. Satellite-delivered local-into-local service has been a
great driver of consumer choice and innovation in the subscription
television business. DISH Network L.L.C. (``DISH') has been the leader
in providing local-into-local service, launching service in 181 of 210
markets representing approximately 98 percent of households nationwide.
There are a number of challenges--operational, legal, and economic--to
add local-into-local service to the remaining 29 markets. Congress can
take steps this year to help address each of these central challenges
to launching additional markets, including the two unlaunched West
Virginia DMAs.
Operational Challenges
The first is lack of available spot beam capacity, particularly
along the East Coast. Unlike terrestrial providers that have
substantial capacity to provide multiple services over their
pipe, DISH has limited satellite frequencies and satellites to
provide a competitive national video-only service. To launch
the remaining unserved markets, DISH would need to find or
create capacity to add approximately 100 additional channels
(including those in the Wheeling DMA) on our system, which is
effectively at capacity today.
Wheeling is one of those markets that DISH does not have
adequate capacity to serve today. Additional planned satellites
will provide some capacity to expand service into additional
markets like Wheeling. From a commercial perspective, DISH has
to make a difficult decision in planning each new satellite on
how to allocate the finite number of satellite frequencies and
beams between local and national services. Adding more local-
into-local markets--in standard definition or high definition--
makes DISH more competitive in that particular market, but it
reduces the variety of services that DISH can offer nationally
in all 210 markets.
To address this issue, Congress should avoid mandating any
additional carriage obligations on satellite providers--e.g.,
accelerating the FCC's HD must carry mandate for some or all
broadcasters--or providing broadcasters with expanded
exclusivity protections for multicast signals. The focus of
Congress has been to intent satellite providers to launch
additional markets. Adding conflicting capacity demands would
only frustrate our good faith efforts to fulfill Congress's
objective and launch additional local-into-local markets.
Legal Challenges
A second key challenge is one of consumer expectations. Our
subscribers that choose to receive a locals package expect to
receive at least NBC, CBS, ABC, and FOX content. Yet, in 26 of
the 29 markets we have yet to launch, one or more of those
networks is not available as the primary video feed of a
station in that market. In some instances, only a single
national network affiliate is present in these markets.
Parkersburg is one of these ``short markets,'' because there is
no ABC or CBS affiliate in Parkersburg. Today, DISH does not
have the legal right to ``fill'' this short market under its
local-into-local compulsory license.
With respect to short markets, the Judiciary Committee has
provided a potential framework with the Satellite Television
Modernization Act of 2009 (S. 1670). The bill would give DISH
the rights to provide quasi-local services under its local-
into-local license to fill in short markets like Parkersburg
with adjacent broadcast stations. This provision would permit
DISH to import an NBC and FOX affiliate from the Clarksburg DMA
to provide a viable service to Parkersburg residents. However,
importantly, just like any other pay TV provider, DISH should
have the flexibility to provide an in-state or other broadcast
station to fill a short market if the adjacent market's signal
does not adequately cover the short market. This is a modest,
but important, alteration to the Senate Judiciary Committee's
approach.
Additional key quasi-local rights included in that bill are the
ability to import broadcast stations that are deemed
significantly viewed in the local market and to provide in-
market low-power stations. Some similarly complementary rights
should also be included in the local license: the ability to
import out of market signals during emergencies; the right to
serve recreational vehicles and commercial trucks; and the
right to provide network content to households outside of our
local spot beams.
Economic Challenges
The last key challenge is economic. A national satellite
provider has no existing infrastructure in an unlaunched
market. Thus, DISH needs to establish new facilities and new
infrastructure in each new market it elects to serve with local
channels. The upfront and recurring cost to do so can be
considerable, centered on the establishment of a local receive
facility and associated backhaul fiber and equipment. Yet, many
of the remaining markets are very small, limiting significantly
our ability to recoup our upfront and recurring investment in
these markets. Wheeling and Parkersburg are two such smaller
markets, Nielsen market numbers 159 and 193 respectively.
The expense associated with retransmission consent fees and
other programming-related costs can adversely affect the
business case for launching a new market: a market that could
otherwise be economically viable becomes a money loser when
escalating programming costs are factored into the equation.
Congress should ensure that measures intended to incent
additional market launches do not have the opposite effect
because of financial considerations. A case in point, the
importation of adjacent broadcast stations into short markets
should not require double compensation. Typically, subscription
TV providers pay either a retransmission fee to the local
broadcast station or a copyright royalty payment for carriage.
Any requirement to pay double compensation--that is, both a
retransmission consent fee and a royalty payment--to carry the
same station would create an unintended financial disincentive
to provide these signals. DISH should pay a royalty fee for
filling in a short market just as DIRECTV does today.
Similarly, broadcasters should drastically reduce--if not
forego altogether--their retransmission consent fees for these
unlaunched markets to ensure our joint viewers have access to
their free over-the-air content.
Each of these proposed changes increases the likelihood that
consumers in the remaining 29 unlaunched markets would receive service
that is more comparable to their urban counterparts. Indeed, DISH is
prepared to invest in the remaining 29 markets if necessary changes to
copyright and communications law are made to ensure parity of rights
going forward across competing providers. Assuming the final
reauthorization statute reflects a framework that achieves parity of
rights across competing providers, DISH will provide local-into-local
service in all markets no later than 2 years from the date the bill is
signed into law. Importantly, this commitment assumes that there are no
new carriage obligations that would require DISH to redirect bandwidth
to other services, and that there are no major unforeseen
implementation challenges, such as a launch delay or failure, in-orbit
satellite failure, or other similar mitigating event.
Question 2. Far too much of the programming offered to consumers is
designed to entertain on a base level. It does not enlighten, educate,
or elevate the viewer. Instead, I see a coarsening of society with
media in the vanguard. Public television is one of the few resources
for programming that educates and shares the best of our culture.
Programming such as Ken Bums' documentary on the National Parks expose
viewers to the grandeur and history of America. Such programming
however is best viewed in high-definition (HD) format. I am concerned
when satellite providers choose to offer ``Dancing with the Stars'' in
HD format and not ``The War.''
I understand that DISH and the public television stations are in
discussions over the carriage of local HD programming as well as
mechanisms to provide subscribers with access to public television
multicasting channels. What is the status of those negotiations? If no
agreement is reached, what can Congress do to encourage consumer access
to such programming?
Answer. As an independent distributor of video programming, DISH
worked proactively with its programming partners to establish the DISH
Family programming package that offers households an affordable and
kid-safe package of channels. Nonetheless, DISH shares your concerns
about the overall quality of television programming, and offers both
vertically-integrated and independent programmers the opportunity to
bring high-quality and family friendly programming to over 13 million
households today. We welcome your leadership to ensure that the
wholesale programming market provides distributors with the flexibility
to offer consumers high-quality and affordable packages of programming
that appeal to all different types of consumers.
With respect to public broadcasting, DISH currently carries more
PBS affiliates than any other pay TV provider. Further, if the
necessary changes are made to the statute and DISH serves all 210
markets, then all Americans will have access to their local PBS
station--even if they are located outside the reach of a broadcast
tower. For the first time, all residents of mountainous areas of West
Virginia will be able to view the latest Ken Burns documentary.
We are also preparing to roll out PBS affiliates in HD consistent
with the Federal Communications Commission's schedule adopted last
year, starting this February. Given our current capacity constraints,
it is not feasible for DISH to launch every PBS affiliate in HD before
2013.
Nonetheless, we remain willing to work with the Association of
Public Television Stations (``APTS'') and PBS on a deal that delivers
PBS HD content to DISH subscribers on a more accelerated schedule than
the FCC has mandated. To that end, we have negotiated in good faith
with APTS to provide our joint viewers expanded PBS viewing options on
DISH. We have offered numerous constructive proposals to address the
needs articulated by APTS. Those negotiations have not yet resulted in
a national carriage deal, but DISH remains committed to finding a
commercial resolution.
______
Response to Written Questions Submitted by Hon. Mark Pryor to
R. Stanton Dodge
Question 1. What are the constraints to increasing your ability to
offer local-into-local programming for all television markets?
Answer. Please see the response to Question 1 from Chairman
Rockefeller with respect to the legal, economic and operational
challenges faced in launching additional local-into-local markets. DISH
has launched 181 markets to date, and is willing to work constructively
to find means to launch the remaining 29 markets in a reasonable
timeframe. Congress can take important steps this year to provide DISH
with the tools and the incentive to launch local service in every
market as long as it does not impose conflicting capacity demands on a
satellite system that is effectively at full capacity today.
Question 2. Hypothetically, should you be able to expand into all
210 television markets, How soon could you implement the agreement?
Answer. Please see the response to Question 1 from Chairman
Rockefeller with respect to the necessary changes to provide DISH the
legal rights and proper incentives to invest in the remaining 29
markets, as well as the time frame DISH could commit to if final
legislative action provides the legal and economic framework for a
satellite carrier to serve every market.
Question 3. What would DISH Network's stated policy for distant
signal importation be? Would priority be given to adjacent market
signals?
Answer. Given the ``if locals, no distants'' provision in the law
today, DISH would not provide a traditional distant service if it
launched all 210 markets. DISH would, however, still need to import
out-of-market stations to fill in short markets, provide service to
out-of-beam customers, and provide significantly viewed stations to our
subscribers. To the extent DISH can provide an adjacent broadcast
station from the same or an overlapping spot beam, DISH's preference
would be to offer consumers that more local option. DISH would,
however, require some flexibility to provide a regional or national
feed where the adjacent broadcast stations cannot reach all, or some,
of the neighboring DMA just as other pay TV providers do today.
Question 4. There is one short market in my state in Jonesboro. How
would you fill this short market?
Answer. It remains unclear what options DISH will have under the
law to fill short markets like Jonesboro. Our ability to launch this
market is dependent upon a path to offering a ``locals package'' that
includes the missing CBS, NBC, and FOX content in a cost effective and
straightforward manner. Technically, DISH has the ability to bring in
the missing content from a national market or an adjacent market. With
respect to compensation for filling a short market, DISH should pay a
copyright royalty payment just as DIRECTV does today. There is no basis
to layer on an additional payment (I. a, retransmission consent fee),
which could have the perverse result of foreclosing DISH `s ability to
justify the economics of launching more short markets.
Question 5. What is the status of your negotiations with public
television for High-Definition and multicasting programming?
Answer. Please see the response to Question 2 from Chairman
Rockefeller above. As PBS's largest distributor, we are hopeful a long-
term carriage deal can be reached that increases the amount of PBS
content on DISH in a manner that is consistent with the operational
realities of our system.
______
Response to Written Questions Submitted by Hon. Maria Cantwell to
R. Stanton Dodge
Question 1. What are DISH Networks publicly announced plans for
launching new satellites in the upcoming years? What is the purpose of
each of these satellites (i.e., add capacity, replacement, etc.)?
Answer. The upcoming launch schedule for DISH and its sister
company, EchoStar Corporation, is as follows:
1Q-2Q 2010: EchoStar 14 (DISH) will be launched to replace
EchoStar 7 at 119+ W.L. EchoStar 14 will be a hybrid national/
local satellite that will provide some additional capacity and
overall efficiencies, but will not materially change DISH'S
overall satellite capacity.
3Q-4Q 2010: EchoStar 15 (EchoStar) will be launched to
replace EchoStar 3 at 61.5+ W.L. EchoStar 15 will be a national
satellite that will provide some additional capacity and
overall efficiencies that have been lost because of infirmities
to EchoStar 3. Those gains, however, will not materially change
DISH'S overall satellite capacity.
2Q-3Q 2011: Quetzsat 1 (Quetzsat) will be a replacement
satellite for EchoStar 1 and EchoStar 8 at 77+ W.L. This is a
Mexican satellite on which EchoStar has leased capacity to
provide service into both the United States and Mexico. As with
the other replacement satellites, capacity gains will not be
significant.
3Q-4Q 2012 (tentative): EchoStar 16 (EchoStar) is the
intended replacement satellite for EchoStar 12 at 61.5+ W.L.
This satellite will be designed in part--to satisfy the
February 2013 final benchmark for the FCC's HD carry-one,
carry-all mandate.
The key to expanding capacity significantly is new spectrum. The
challenge faced today is that DISH and EchoStar effectively use all of
their allocated direct-to-home satellite spectrum, so launching new
satellites does not necessarily add any substantial capacity gains.
DISH and EchoStar have, however, been able in recent years to add
considerable capacity thanks to commercial arrangements with Canadian
and Mexican companies with satellite spectrum that was not previously
available to DISH subscribers.
DISH will continue to seek out additional non-U.S. spectrum
resources to expand service available to U.S. consumers. One potential
source of additional spectrum domestically is 17/24 GHz BSS (``Reverse
Band''). EchoStar has recently been granted five 17/24 GHz BSS
authorizations for frequencies not used today for direct-to-home
services. The launch milestones for those satellites are not until
2014, and there are a number of technical and international
coordination issues that must be resolved before DISH can achieve any
increased capacity as a result of the Reverse Band frequency grant.
Question 2. Has DISH Network switched over to using the MPEG-4
format exclusively? Has the use of the MPEG-4 format helped you to
better manage the (bandwidth) capacity of your satellites?
Answer. DISH continues to invest aggressively in new satellites and
new technologies, one of which is state-of-the-art MPEG-4 compression.
All of our high definition programming--both national and local
content--has been transitioned to MPEG-4 compression. MPEG-4 has been
critical to DISH's ability to manage its capacity and to compete with
bandwidth-rich terrestrial providers. Without MPEG-4 technology, DISH
would not be a leader in national HD programming--140 HD channels--and
would not be able to provide some local channels in HD in over 150
markets.
There is no current plan to transition all standard definition
programming from MPEG-2 to MPEG-4. Among other issues, the key
challenge to an MPEG-4 transition is our legacy customer base with one
or more MPEG-2 receivers in their home. Our 13 million plus subscriber
base would need to he upgraded with more expensive equipment to view
MPEG-4 programming. Through new customer acquisition, HD upgrades, and
customer churn, the number of households with MPEG-4 equipment will
grow organically in the next few years.
Question 3. Does the DISH Network currently offer service to
consumers in the five so-called ``orphan counties'' in southwest
Washington State that are in the Portland DMA? Is the spot beam
servicing these communities the same one that covers the Portland DMA?
How does DISH Network ensure that there is no overlap between the spot
beams that serve the Seattle DMA and the Portland DMA? As a result, are
there locations between the two DMAs where there is no spot beam
coverage?
Answer. Yes, DISH provides customers in Wahkiakum, Cowlitz, Clark,
Skamania, and Klickitat counties with local-into-local service from the
Portland, Oregon DMA. These counties are ``orphaned'' in that they do
not have the option to receive local channels from in-state Yakima or
Seattle in addition to their assigned locals.
The Portland and Seattle local stations are not on the same DISH
spot beam. DISH provides local-into-local service from a number of
different satellites and orbital locations to minimize the out-of-beam
overlap issue highlighted in the question. In this case, the Portland
DMA is served from EchoStar 10 at 110+ W.L., and Seattle DMA is served
from EchoStar 7 at 119+ W.L. There are no locations between Portland
and Seattle DMAs where there is not spot beam coverage.
As a practical matter, Portland and Seattle could not share the
same satellite spot beam transponder because there are too many
channels in the combined markets. Spot beam transponders typically
carry up to 14 standard definition channels, yet Seattle has 13 local
channels on DISH and Portland has 9 local channels.
Question 4. A number of my constituents living in those five orphan
counties--Clark, Cowlitz, Klickitat, Skamania, and Wahkiakum--have told
me that they would like to receive news and public interest programs
from the Seattle market, which includes coverage from our state capitol
Olympia. As you know, several States have counties which are part of
the DMA of a neighboring state. One thought is to have the news and
public interest programming from the State the orphan counties are
located in be broadcast on a separate satellite channel. I understand
your concern about a channel that remains dark for most of the day and
then is on for a few hours to broadcast news and public interest
programming, What are the technical, operational, and legal barriers
for setting aside one channel in each DMA where you provide local-into-
local service to serve as a PEG-like channel?
Answer. Our customers in Clark, Cowlitz, Klickitat, Skamania, and
Wahkiakum counties and 731 more counties across the Nation tell us the
same thing--the current system based on designated market areas is
broken and too often fails to deliver the local content consumers deem
local to them. These orphaned counties are often too far away from
their ``local- out-of-state broadcasters and their in-state
broadcasters for any in-depth coverage. In-state DMA reform would
create a clear incentive for both in-market and in-state broadcasters
to provide more robust weather and regional news to these communities.
A PEG-like Station Is Technically Infeasible for Satellite
Providers. The objective of in-state DMA reform efforts is to provide
consumers with service they want by capitalizing on the national scale
of satellite provider operations. Solutions that may make sense for
cable companies but are a poor technical and operation fit for
satellite providers will not result in expanding options for consumers.
Unfortunately, a PEG-like channel dedicated to adjacent local news
programming--which may work for a local cable company--is not feasible
for a national satellite provider.
The first challenge for a satellite carrier would be a lack of
available spot beam capacity. A new PEG-like news channel is a new
unique channel requiring the same space on the satellite as NBC or PBS.
A spot beam typically ``sees'' multiple markets (e.g., San Francisco,
Monterey, Sacramento), and that limited capacity is shared amongst
those markets. Our spot beam configurations are designed to maximize
the number of markets that can be served, and are effectively full
today. For example, if DISH sought to add a Sacramento news feed
station, it would need to eliminate another channel from San Francisco,
Sacramento or Monterey (an impossibility under carry-one, carry-all
rules).
The second core challenge is one of implementation. DISH would be
responsible for splicing together real-time programming from multiple
broadcasters in any number of similarly situated markets across the
Nation to create an adjacent market news channel. While a single
channel is far superior for consumers than blacking out content on
individual adjacent market channels, it creates even greater logistical
challenges for DISH. DISH is not aware of any pay TV provider
effectively creating daily programming line-ups in the manner that
would be contemplated here. DISH's national service greatly complicates
the logistical and operational issues with such a proposal. DISH's
engineers manage over 1,400 local broadcasters nationwide without any
local points of presence to make programming adjustments and changes.
In contrast, cable is inherently local, offering more flexibility and
minute-by-minute control than does a satellite's national architecture.
A cable system typically covers a single local market, and the operator
of that cable system only has to navigate a single set of local
broadcasters (4 to 20 in total).
The third challenge is a legal one. Broadcasters have not addressed
lingering questions about their ability to offer a private copyright
license for their news programming that include national newsclips, and
advertisements. Even if the broadcaster has legal rights to a
particular newscast, that grant of rights is a very narrow private
copyright limited to a few hours per day. Broadcasters offer no
copyright protection or indemnification for what happens if NBC Sunday
Night Football runs into the 11 PM news and is provided to DISH
customers without rights or permission. Given the number of last minute
programming changes and programming overruns (i.e., whenever you lose
the last few minutes of a program on your DVR), DISH would have to
manually monitor programming nationwide to ensure a compliant system or
risk copyright and other liability, an impractical--if not impossible--
logistical task.
An Alternative Approach. DISH believes that an alternative solution
that capitalizes on the national scale of our satellite system would
achieve your objective in a more straightforward manner. In many
instances, our spot beams cover areas larger than the DMAs they serve
today and could provide service today to orphaned counties. From a
technical perspective, we can easily offer our subscribers broadcast
signals from a neighboring market if those signals are presently being
delivered using the same spot beam as the broadcast signals for the
subscriber's ``home'' DMA. This type of adjacent market reform would
capitalize on the fact that a nearby broadcast station--already on a
satellite spot beam--could be provided with a flip of a switch to a
consumer seeking in-state or regional coverage more pertinent to their
lives or professions. It would not require dedication of finite spot
capacity and would not require daily monitoring and program alteration.
This approach could be implemented to protect the interest of the
``local'' broadcast stations. First, this adjacent market service could
only be made available in the sliver of counties receiving out-of-state
network affiliates, not the entire DMA. This would ensure that
broadcasters remain the only source of network content for their in-
state residents. Second, the adjacent market service would be
complementary in that it would only be available to consumers
subscribing to their ``local'' broadcasters first. This is, therefore,
a very modest reform proposal that would have clear pro-consumer
results and should enhance broadcasters' statewide and local coverage
of news and events. Importantly, this is similar to what Congress did
for four special test cases in 2004 in SHVERA. Congress established
specific provisions to address a handful of the most glaring instances
of consumers receiving out-of-state non-local networks by allowing the
importation of out-of market yet in-state--broadcasters in New
Hampshire, Vermont, Oregon, and Mississippi. Expanding this successful
concept nationwide is the next logical incremental step to provide
consumers with access to the programming that is local to them.
Thus, in this instance, consumers in Clark, Cowlitz, Klickitat,
Skamania, and Wahkiakum counties would receive Portland locals. Those
consumers would then have the option to add on a package of Seattle
locals as a complement to their Portland service. To the extent out-of-
state broadcasters in Portland are effectively serving these orphaned
counties today or are better situated geographically to provide news
and emergency coverage in those orphaned counties, consumers are
unlikely to pay a premium for access to additional broadcast stations.
It is important to highlight that any additional limitations that would
require programming to be blacked out or substituted would create
substantial technical hurdles and undercut the viability of this
consumer option.
At a minimum, the Senate Commerce Committee should add study
language similar to the bill that passed the House Energy and Commerce
Committee last month. Specifically, H.R. 2994 included a provision
requiring the FCC to study whether there was a better regulatory
structure to ensuring that consumers receive in-state news, weather,
and sports than the Nielsen Media designated market area system. We
think this study has merit, and would welcome your support to ensure
that consumers receive the local service they need and expect long-
term.
______
Response to Written Questions Submitted by Hon. Tom Udall to
R. Stanton Dodge
Question 1. Broadcasters claim that there is no legal barrier that
prevents satellite TV companies from providing ``non duplicative'' New
Mexican TV programming to those parts of the state outside the
Albuquerque-Santa Fe TV market. A cable TV provider, for example,
broadcasts some of the Albuquerque ABC affiliate's local news to New
Mexican customers in the El Paso DMA. What then keeps satellite TV
companies from providing such in-state television to all parts of the
state?
Answer. DISH agrees that all residents of New Mexico should have
access to broadcasters from New Mexico. Residents of Quay county and
other eastern New Mexico counties want to watch Albuquerque stations
and should be afforded the opportunity to see that station in its
entirety.
As detailed in response to Question 4 from Senator Cantwell, DISH
is prepared to provide the Albuquerque stations to all residents of
eastern New Mexico within our existing spot beams if it is granted the
right to provide the Albuquerque station in its entirety to those
subscribers. DISH has no such legal rights today. To date,
broadcasters, however, have offered only a small portion of their
content, which would be operationally infeasible as detailed above.
Blacking out content is not a viable option. The FCC has concluded that
blacked out stations are bad for consumers, ``recogniz[ing] that if a
[pay TV provider] were required to delete network programming from a
station, and the network programming subject to deletion constitutes a
high percentage of the station's programming, the [pay TV provider]
would likely drop the entire station from carriage.'' Implementation of
the Satellite Home Viewer Improvement Act of 1999: Application of
Network Nonduplication, Syndicated Exclusivity, and Sports Blackout
Rules to Satellite Retransmissions of Broadcast Signals, FCC 00-388,
47 (2000).
Here, 70 to 90 percent of programming on the channel would be dark.
Broadcasters have conceded that DISH does not have the ability to fill
in blacked out programming today. Letter from CBS and NBC Network
Affiliate Associations to Chairman Leahy, Rockefeller et al, April 14,
2009.
We seek your help to persuade broadcasters that the best solution
for New Mexican residents is full access to their New Mexico
broadcasters, just as it was for New Hampshire, Vermont, Mississippi,
and Oregon residents in 2004.
Question 2. Satellite television provides an important service to
rural Americans who cannot always get cable or even broadcast
television. I am concerned about those TV viewers in remote areas who
lost their antenna TV reception due to the digital TV conversion.
Although we do not yet know how many people live in these ``digital
white spaces,'' some TV viewers have lost their free, over-the-air
television reception. Satellite TV is probably available to most of
those affected, but satellite TV is not free. What are your thoughts on
the role satellite TV could play in ``filling in'' the digital white
space gaps for those who once had free analog TV but do not have
digital TV reception. Is there any way to restore these TV households'
free TV?
Answer. DISH shares your concern about over-the-air households.
DISH was actively involved in the digital transition. Among other
things, DISH sold digital-to-analog converter boxes with a recommended
sales price of $40, the cost of the Federal Government's coupon. Both
our satellite and our converter box customers have reported back to us
that digital reception does not always reach areas covered by analog
transmissions as reflected in your question.
DISH offers households adversely affected by the digital transition
a lifeline service of local broadcast stations today in markets in
which DISH provides local-into-local service. DISH also offers
affordable options for households not accustomed to paying for their TV
service, including a $24.99 DISH Family package of programming that
includes local channels where available.
While these options offer consumers affordable and flexible
choices, it does not restore a ``free TV'' option. The cost of DISH
equipment--both the actual receiving dish on the home and the set-top
box receiver(s) in the home--is not inconsiderable, nor are the costs
associated with the installation process. That said, DISH would be
happy to work with your staff on exploring whether there is some
mechanism by which formerly free over-the-air households could receive
a subsidized lifeline satellite service with retransmission consent fee
offsets from local broadcasters whose signals do cover their entire DMA
or some other form of universal service program.
______
Response to Written Question Submitted by Hon. John D. Rockefeller IV
to
Paul A. Karpowicz
Question. Satellite television has spawned greater competition
among pay television providers, especially in rural areas. This
benefited consumers by giving them more choices and in some areas
lowering prices. A key component to making satellite television
attractive to consumers is the carriage of local channels.
Unfortunately, in approximately 23 markets, neither DIRECTV nor DISH
Network offers local broadcast channels. Two of those markets are in
West Virginia, Parkersburg and Wheeling. Consumers in those communities
want access to their local news, sports, and regional programming.
What can be done to make sure that people throughout the country
can get access to local broadcast stations? If there is no obligation
or incentive to serve all 210 markets would DIRECTV or DISH Network do
so and by what date? What steps can broadcasters take to encourage or
incentivize the extension of local service to unserved markets?
Answer. Mr. Chairman, thank you for the question. As I stated
during the hearing, local broadcasters strongly support the extension
of local-into-local service in all 210 markets. Localism is a beacon of
Congressional communications policy. In 1999, Congress allowed
satellite companies to retransmit a local broadcast network signal back
into the same local market from where it originated. This was a ``win-
win'' for all, as local residents received imperative news, weather and
sports programming they desired and DBS providers scored a windfall of
new subscribers effectively leveling the playing field with larger
cable systems. However, when SHVIA was adopted, the law did not require
DBS companies to provide this service, creating a system where smaller
communities are often disenfranchised. As you know, a number of
different legislative proposals have been introduced as we undertake
the reauthorization of SHVERA to remedy this problem. In the House,
both the Energy and Commerce and Judiciary Committee's included
language in their bills that would facilitate local-into-local carriage
in all 210 DMAs. While NAB did not oppose these efforts, numerous
concerns still lie in the details of how this potential solution would
work. Furthermore, the Senate Judiciary bill (S. 1670), allows
satellite carriers, using their local compulsory copyright license, to
import in short markets the missing network from an adjacent market.
Thus, DISH, which lost its distant signal copyright license, can use
this provision to deliver local-into-local service to all 210 markets.
This approach facilitates, without mandating, the extension of local-
into-local service into all markets. Moreover, Congressman Bart Stupak
(MI) introduced legislation (H.R. 927) in the House that would mandate
local-into-local service in all 210 markets.
If there was no obligation or incentive to serve all 210 DMAs with
local programming, I do not believe DIRECTV or DISH Network would make
that investment. DIRECTV and DISH Network have repeatedly claimed that
capacity and economic constraints severely limit their ability to offer
local-into-local service to more than a small number of markets. A few
years back, they said unless Congress allowed the two companies to
merge, ``the most markets that each company would serve with local
channels as a standalone provider, both for technical and economic
reasons, would be about 50 to 70.'' Today, the satellite carriers no
longer claim, seriously, that providing local-into-local service is
technically impossible. They say it is expensive. Under your
leadership, local broadcasters successfully transitioned to digital
broadcasting in June. During the course of this massive transition,
local stations spent billions of dollars upgrading facilities and
informing the general public. While there has been very little economic
return on that investment, those investments were in the public
interest. I believe the satellite industry's investment in providing
local-into-local service to all American's would also be in the public
interest.
Again, local broadcasters have long advocated for local communities
to be served by their local television station. It is not lost on us
that residents of the northern panhandle of West Virginia are better
served by WTRF in Wheeling as opposed to distant signals from Denver or
New York.
______
Response to Written Questions Submitted by Hon. Tom Udall to
Paul A. Karpowicz
Question 1. You claim that there is no legal barrier that prevents
satellite TV companies from providing ``non duplicative'' New Mexican
TV programming to those parts of the state outside the Albuquerque-
Santa Fe TV market. You also note that one Albuquerque station would
potentially allow carriage of its non-duplicative programming by
satellite companies to orphan counties in New Mexico. Are there any
examples where satellite companies provide such in-state, non
duplicative TV programming to viewers in ``orphan counties?'' If so,
why then is this not available to TV viewers in affected areas of New
Mexico? If not, how then is this option a viable way to bring in-state
TV to ``orphan'' counties?
Answer. Senator Udall, thank you for the opportunity to answer your
questions. To my knowledge, satellite companies have not been willing
to provide in-state non-duplicative television programming to viewers
in any so-called ``orphan'' counties. I respectfully submit that the
mere fact that no DBS operator is offering such a service does not mean
that it is not a viable option to do so. Rather, the failure of DBS to
offer such a service stems from an unwillingness to devote the
necessary capacity and financial resources which the carriers, in fact,
have. DIRECTV and DISH are among the largest multichannel video program
providers in the country.
DIRECTV has given three reasons for refusing to provide in-state,
non-duplicative programming from a New Mexico station to New Mexico
residents located in an out-of-state DMA. None is a valid reason for
not providing their service.
First, DIRECTV claims that stations, which have already provided
written consent to carry their local programming throughout the state
for free, nevertheless lack the necessary copyright licenses to
authorize such consent. That assertion is false. My stations, in
various markets in other states and the local television stations in
New Mexico, as well, have secured the necessary copyright licenses to
provide satellite carriers (as well as cable companies) local news,
weather, public service, and political programming on a state-wide
basis. Notwithstanding DIRECTV's assertions, this is not an issue and
is not an impediment to satellite delivery of this programming.
Second, DIRECTV asserts that none of its subscribers have requested
receiving service consisting only of in-state local programming. On one
level, this is not hard to understand since DIRECTV has never offered
such a service. Significantly, such a service is being offered by
Comcast Cable in New Mexico, which presumably would not devote its
resources to doing so if New Mexico subscribers in these counties had
no interest in receiving this purely local, in-state programming
service.
Third, DIRECTV complains that requiring it to strip out duplicative
programs would be ``far more expensive'' than retransmitting a
station's entire signal that includes duplicative programming, and
would require DIRECTV to reconfigure its set top boxes. This, it seems
to me, is the essence of the question you pose. It is simply not the
case that providing only the non-duplicative programming to orphan
counties is not ``viable'' for DBS. Rather, it is a matter of money and
allocation of resources and technology. In this regard, it is
significant to note that on page 4 of the June 22, 2009 edition of
Communications Daily, DISH and DIRECTV announced that each would soon
have the technical capability to insert local commercials for
advertisers in markets where they were providing local to local
service. Surely, if DIRECTV and DISH can insert local commercials, they
can insert local news, weather, political, public service
announcements, local emergency announcements, and public service
programming from in-state stations. Ironically, the satellite industry
strongly opposed an effort by the FCC to require satellite carriers to
provide local public safety and emergency announcements.
Moreover, satellite carriers also offer pay-per-view services
offering sexually explicit and other programming requiring
sophisticated addressable set top boxes. If satellite carriers can
provide addressable boxes and the technology necessary to provide for
sexually explicit content, why can they not provide the same technology
to enable subscribers to receive local, in-state news, public service,
and local emergency programming and announcements broadcast by in-state
stations?
Clearly, DBS can offer non-duplicative in-state programming from a
New Mexico station to orphan counties.
Question 2. The last time SHVERA was reauthorized, a handful of
exemptions were made for states with the same DMA problem as New
Mexico. How were consumers harmed by these limited exemptions allowing
satellite companies to provide secondary transmissions of in-state TV
signals to ``orphan counties''?
Answer. Senator, to answer your first question the ``exemptions''
made in 2004 in SHVERA ostensibly affected four states: New Hampshire,
Vermont, Mississippi, and Oregon. To my knowledge the Oregon provision
has not been utilized. Accordingly, there are, effectively,
``exemptions'' for just three states.
The 2004 Act did not deprive the stations whose signals were
subject to export into an adjacent market of the right to give or
withhold their retransmission consent. Nor did the Act in the three
affected markets apply to cable. In short, the arrangements for
satellite carriage were worked out voluntarily by the parties.
In addition, because the ``exemptions'' were enacted as part of the
distant network signal license in Section 119 of the Copyright Act,
DISH Network was prohibited from utilizing the ``exemptions'' beginning
December 1, 2006, when it was permanently enjoined by a Federal court
from use of the distant network signal compulsory license. Accordingly,
to our knowledge only DIRECTV is utilizing the exceptions and the
service is provided to only a few homes in each local market.
In two of the markets, the out-of-market network station being
imported is owned by the same company that owned the in-market station
affiliated with that network--thus, the company's stations simply
exchanged viewers. The result is that the 2004 act's provisions are
quite limited in scope.
If Congress should allow pay TV companies to retransmit duplicating
national entertainment and sports programming from distant stations in
other markets without obtaining the consent of the copyright holder or
the stations whose signals are being retransmitted, local stations and
local television broadcast service will be harmed in several ways.
First, it will fragment local viewing of the same national
programming--depriving stations of critical local advertising revenue.
Second, it will deprive local stations of the ability to negotiate
compensatory retransmission consent agreements with cable and satellite
companies. Cable and satellite will not pay local stations
retransmission consent fees for programs it can get without paying
retrans fees at a government-subsidized copyright fee. Because the
``exemptions'' would only apply to broadcast programming--not to cable
and satellite network programming such as ESPN, USA, HBO, etc.--they
could result in national broadcast networks, program suppliers, and the
sports leagues withdrawing their best programming from local, free,
over-the-air television stations and placing them on pay services for
more money on an exclusive basis in each local market.
Consumers and viewers would then lose quality free, over-the-air
broadcast programming, as local stations could no longer provide
viewers with local news, weather, sports, and public interest
programming.
Without competition from local stations, cable and satellite
companies would be able to increase and raise their pay TV rates for
the same programs viewers had previously been able to see for free from
their local stations--further harming consumers.
Question 2a. Would further exemptions that apply to small areas
truly destroy the entire broadcast TV business model nationwide?
Answer. Yes, over time. Local stations buy their national
entertainment and sports programming and compete in a fiercely
competitive program market for their programming with cable and
satellite. Why would the government want to give that same programming
to cable and satellite at a government-set, highly subsidized copyright
rate or deprive the creator of the programs of the right to pick its
local distributor? What incentive would broadcast stations have to
develop programming if the government gives it to pay cable and pay
satellite at a subsidized rate to compete head-to-head with the
stations that produced it?
The interest in having the local news programming of in-state
television stations made available for cable and satellite distribution
throughout a state is clearly understandable. We support that
objective. Fortunately, legislation to achieve that objective is not
necessary; it can be done now without any change in the law. In fact,
it is being done now in various states and television markets--
including in New Mexico--and it could be done in other parts of New
Mexico and in every state if DIRECTV and DISH were only willing to do
so.
Existing Federal copyright and regulatory law is not an impediment
to the importation by satellite carriers and cable systems of non-
duplicating local news, information, or sports programming from
stations in distant markets. Local stations own the copyright for their
local news and are in a position to allow--and do allow--cable and
satellite companies to export their local news, weather, sports, public
safety, and informational programming into distant markets. For
example, Comcast imports the local news programming of KOAT-TV,
Albuquerque, New Mexico, into Las Cruces, New Mexico, which is located
in the El Paso, Texas, TV market. And there are numerous other
examples, including: cable systems in Virginia, North Carolina,
Southern Colorado, Tennessee and Palm Springs California that provide
in-state programming to communities located out-of-state DMAs.
DIRECTV and DISH, of course, could easily provide the same service.
Congress should be asking cable and satellite to do more of this--not
give them a free copyright to import duplicating national entertainment
and sports programming already available to viewers for free--from
local stations.
Cable and satellite companies are asking Congress to enlarge the
geographic scope of their existing government granted statutory
compulsory copyright licenses to allow them to import the very same
national, duplicating network, syndicated, and entertainment and sports
programming from distant stations that local television stations are
televising in their markets and for which they have paid large sums of
money, in a competitive open market, for the exclusive right to do so.
The competitive strategy of satellite and cable companies in urging
Congress to enact market modification legislation is anti-competitive.
Cable and satellite companies compete head to head for viewers and
advertising dollars with local television stations. It is simply
impossible for local stations to compete when they must provide their
satellite competitors with a government subsidized copyright license
and free retransmission consent to televise from a distant market
station the most popular entertainment and sports programming which DBS
in turn, can resell to their subscribers.
If the broadcast networks, program studios, and sports leagues are
deprived by Congress of the ability to control the reasonable terms for
territorial and exclusive licensing of their copyrighted works when
televised for free over the air by local television stations, they will
simply withdraw their entertainment and sports programming from the
free, over-the-air television broadcast service and place it, on a less
regulated, less restricted cable or satellite video distribution
platform where they can maintain control over the territorial scope of
the copyright license and the terms of program exclusivity.
Market modification legislation will, in short, relegate the free
television broadcast service to a third- and fourth-run program
service, to the detriment of local viewers and, in particular, those
viewers who cannot afford a paid subscription television service.
Without the ability to contract in a competitive market for program
copyright exclusivity, local television stations will lose local
viewers and, in turn, essential advertising revenue. They will also
lose the ability to negotiate meaningful arrangements with cable and
satellite companies for carriage of their signals. Cable and satellite
companies will be able simply to by-pass local stations if Congress
allows them to offer local viewers the same national network,
syndicated, entertainment, and sports programming from distant stations
that is televised by local stations.
The FCC, under various administrations, has examined the public
interest implications of broadcast program exclusivity for local, over-
the-air television stations and has concluded that the loss of program
exclusivity would place local, free, over-the-air television stations
``at a competitive disadvantage relative to their rivals who can
enforce exclusive contracts'' and deny consumers the ``benefits of full
and fair competition and higher quality and more diverse
programming.''*
---------------------------------------------------------------------------
\*\ Notice of Inquiry and Notice of Proposed Rule Making re Program
Exclusivity FCC Rcd 2393 (1987) at 62.
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No reasonable public interest justification can be made for
importing, on a paid subscription basis from another distant station,
the very same duplicating entertainment and sports programming
available to local viewers free from a local, over-the-air television
station. Obviously, the importation of duplicating programming does not
contribute to program diversity. It would only serve the self-serving
financial and anticompetitive interests of satellite and cable
companies.
Now is not the time to financially undermine the efforts of local
television stations to provide free local news, weather, public
affairs, public service, political, and public safety information
programming.
Question 3. You state in your testimony that offering duplicative
TV signals in even a handful of ``orphan'' counties would harm
consumers since broadcasters would no longer make available their most
desirable TV programs to over-the-air TV viewers. However, broadcasters
already provide duplicative programming to some TV viewers in these
orphan counties via TV station websites and Hulu. If those with
Internet access in orphan counties can already watch in-state TV
programming online, why should they not be allowed to watch this same
programming via satellite television?
Answer. Providing viewers in orphan counties with the opportunity
to view isolated network programs (rather than the entire network
schedule) on Internet websites is substantially different from making
the full network schedule available from a distant network station via
satellite for simultaneous viewing on conventional television sets.
First, in the case of satellite delivery, the duplication would be
simultaneous or, worse, with time zone differences, could precede
broadcast of the programming by local stations. The vast majority of
viewing to significant prime time network programming such as
``Desperate Housewives'' is ``live.'' That is where local stations make
most of their advertising revenue--or would lose it if viewing of
``Desperate Housewives,'' for example, on Sunday night was to a distant
duplicating network station. The amount of viewing of such programming
on Websites is not nearly as significant as when it is being aired over
the network and unlike satellite delivered distant signals which are
live. Because Internet distribution is subsequent to a program being
aired on the local affiliate, the two types of distribution and the
threat they pose to local stations simply is not comparable.
Second, the distribution of network programming via Internet venues
is a function of private marketplace contractual negotiations among the
networks, program suppliers and often the affiliates. Some of the TV
Website distributors involve revenue sharing with local affiliates from
Internet viewing. Under these arrangements, it is the private copyright
holders of these program rights and their licensees who work out the
distribution of the programs. In fact, some of these Internet websites
instantaneously transfer the user to the local, in-market network
station's website, so the viewer is actually watching the program from
the website of the network's local affiliate--along with the local
affiliated station's own commercials. This viewing is accretive to the
local station's over-the-air viewing--not dilutive as would be the case
with the importation of a distant duplicating network station.
On the other hand, program distribution by satellite of a distant
signal is accomplished by means of a government statutory compulsory
copyright license, depriving copyright holders of the ability to
license their creative works. Under the government's compulsory
license, the program creator and its licensees only control and exploit
the program to the extent they are permitted by the government to do
so. If the government interferes with the copyrighted licensing of
programs on broadcast television stations, copyright owners, studios,
and sports leagues will simply divert their marquee programs to less
regulated Pay TV services--which, in turn, will be a disservice not
only to local, free, over-the-air TV stations, but to viewers and
consumers who depend on their local broadcast stations for quality
entertainment, sports, national and local news, and emergency
information.
______
Response to Written Question Submitted by Hon. John D. Rockefeller IV
to
Lonna Thompson
Question. Far too much of the programming offered to consumers is
designed to entertain on a base level. It does not enlighten, educate,
or elevate the viewer. Instead, I see a coarsening of society with
media in the vanguard. Public television is one of the few resources
for programming that educates and shares the best of our culture.
Programming such as Ken Burns' documentary on the National Parks expose
viewers to the grandeur and history of America. Such programming
however is best viewed in high-definition (HD) format. I am concerned
when satellite providers choose to offer ``Dancing with the Stars'' in
HD format and not ``The War.''
I understand that DISH and the public television stations are in
discussions over the carriage of local HD programming as well as
mechanisms to provider subscribers with access to public television
multicasting channels. What is the status of those negotiations? If no
agreement is reached, what can Congress do to encourage consumer access
to such programming?
Answer. Public television has worked for a number of years to reach
a comprehensive carriage deal with Dish Network. In that time, APTS, on
behalf of the Nation's local public television stations, has worked
consistently in good faith to reach a deal that brings the full array
of local stations' programming to Dish's subscribers, while recognizing
the capacity concerns of Dish Network. This is something that we know
can be accomplished, as is evidenced by our prior carriage agreements
with DIRECTV, NCTA, ACA and Verizon. Recognizing that each provider has
separate capacity and technological constraints, each of these past
agreements have been individually crafted to reflect these realities,
while ensuring that viewers have access to the highest quality of
locally produced digital content.
Unfortunately, after years of trying to conclude a similar
agreement with Dish, as of this date, no such agreement has yet been
reached. Dish, by their own record is providing local HD service in
over 150 markets, yet they have refused to carry any local public
television stations except in Alaska and Hawaii, where they are legally
obligated to do so. Absent a private carriage agreement, we call on
Congress to help us end this discriminatory practice.
All efforts to finalize carriage agreements with Dish have ended
with their refusal to accept a deal that does not contain a national HD
feed of public broadcasting programming in exchange a specific
accelerated roll-out of local-into-local HD that exceeds the FCC rules.
A national HD feed threatens the foundation of local public
television stations. This type of feed in markets where there is no
local HD carriage would compete against local stations' programming and
would erode valuable local pledge fundraising--undercutting stations
and ultimately destroying the principle of localism.
Without an agreement with Dish, we are asking Congress to ensure
that all citizens are able to have access to their local public
television stations' HD programming--regardless of how they receive
their television signals.
During the House Energy and Commerce Committee mark-up of its
version of SHVERA reauthorization legislation, Representative Eshoo
offered an amendment that mandated the carriage of local public
television stations' HD signals. The amendment requires Dish to carry
local public television stations' HD signals in 50 percent of their
local HD markets within a year and the remaining 50 percent in 2 years.
Additionally, if Dish goes into new markets in local HD after the bill
is enacted, they have to carry the local public television station on a
prospective basis. If an agreement can be reached before the
legislation is signed into law, the amendment does not take effect.
As the Senate Commerce Committee considers its version of SHVERA
reauthorization, we are asking that the Committee consider adopting
similar language in its bill. Given the fact that we have not been able
to finalize a deal at this point, we feel we have no other option than
to ask that this language be included in the bill. In the meantime,
APTS will continue to try to reach a private agreement with Dish. We
continue to believe that private negotiations are in the best interest
of all parties, including Congress.
Dish Network's nearly 14 million subscribers deserve access to the
highest quality of local programming that local public television
stations are producing. Congress and the American public have invested
in this programming. From major productions like The War, to local
arts, education and public affairs programming, consumers deserve
access to the full breadth of programming and services offered by their
local public television stations.
Public television remains committed to doing everything we can to
bring these services to the American public. We will continue to
negotiate, as we have all along, in good faith with Dish Network.
However, at the end of the day, absent a private agreement, we cannot
miss this opportunity of SHVERA reauthorization to ask Congress for
help in addressing this long standing practice of discrimination that
prevents Dish subscribers from accessing the highest quality
programming being offered by local public television stations
nationwide.