[Senate Hearing 106-143]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 106-143


 
                 SATELLITE HOME VIEWER IMPROVEMENTS ACT

=======================================================================

                                HEARING

                               before the

                       COMMITTEE ON THE JUDICIARY
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                                   on

                                 S. 247

 A BILL TO AMEND TITLE 17, UNITED STATES CODE, TO REFORM THE COPYRIGHT 
LAW WITH RESPECT TO SATELLITE RETRANSMISSIONS OF BROADCAST SIGNALS, AND 
                           FOR OTHER PURPOSES

                               __________

                            JANUARY 28, 1999

                               __________

                           Serial No. J-106-2

                               __________

         Printed for the use of the Committee on the Judiciary



                                


                      U.S. GOVERNMENT PRINTING OFFICE
 58-884 CC                   WASHINGTON : 1999



                       COMMITTEE ON THE JUDICIARY

                     ORRIN G. HATCH, Utah, Chairman

STROM THURMOND, South Carolina       PATRICK J. LEAHY, Vermont
CHARLES E. GRASSLEY, Iowa            EDWARD M. KENNEDY, Massachusetts
ARLEN SPECTER, Pennsylvania          JOSEPH R. BIDEN, Jr., Delaware
JON KYL, Arizona                     HERBERT KOHL, Wisconsin
MIKE DeWINE, Ohio                    DIANNE FEINSTEIN, California
JOHN ASHCROFT, Missouri              RUSSELL D. FEINGOLD, Wisconsin
SPENCER ABRAHAM, Michigan            ROBERT G. TORRICELLI, New Jersey
JEFF SESSIONS, Alabama               CHARLES E. SCHUMER, New York
BOB SMITH, New Hampshire

             Manus Cooney, Chief Counsel and Staff Director
                 Bruce A. Cohen, Minority Chief Counsel

                                  (ii)


                            C O N T E N T S

                              ----------                              

                    STATEMENTS OF COMMITTEE MEMBERS

                                                                   Page

Hatch, Hon. Orrin G., U.S. Senator from the State of Utah........     1
Leahy, Hon. Patrick J., U.S. Senator from the State of Vermont...     2
Kohl, Hon. Herbert, U.S. Senator from the State of Wisconsin.....     3

                    CHRONOLOGICAL LIST OF WITNESSES

Panel consisting of Bruce T. Reese, president and chief executive 
  officer, Bonneville International Corporation, Salt Lake City, 
  UT; Charles E. Meinkey, owner, Satellite TV Warehouse, St. 
  George, UT; Michael Peterson, executive director, Utah Rural 
  Electric Association, Richfield, UT; and Peter R. Martin, 
  executive vice president and general manager, WCAX-TV, 
  Burlington, VT.................................................     6

               ALPHABETICAL LIST AND MATERIALS SUBMITTED

Martin, Peter R.:
    Testimony....................................................    16
    Prepared statement...........................................    18
Meinkey, Charles E.:
    Testimony....................................................     9
    Prepared statement...........................................    11
Peterson, Michael:
    Testimony....................................................    14
    Prepared statement...........................................    15
Reese, Bruce T.:
    Testimony....................................................     6
    Prepared statement...........................................     8

                                APPENDIX
                          Proposed Legislation

S. 247, a bill to amend title 17, United States Code, to reform 
  the copyright law with respect to satellite retransmissions of 
  broadcast signals, and for other purposes......................    23

                  Additional Submission for the Record

Letter to Hon. Mike DeWine from James B. Hedlund, president, 
  Association of Local Television Stations, dated Feb. 2, 1999...    36



                 SATELLITE HOME VIEWER IMPROVEMENTS ACT

                              ----------                              


                       THURSDAY, JANUARY 28, 1999

                                       U.S. Senate,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:34 a.m., in 
room SD-226, Dirksen Senate Office Building, Hon. Orrin G. 
Hatch (chairman of the committee) presiding.
    Also present: Senator Leahy.

 OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM 
                       THE STATE OF UTAH

    The Chairman. Let's begin this morning. We only have a very 
limited time this morning because we have caucuses meeting. 
This is a very important hearing and we are going to make a 
record here today and we are going to try and push this as hard 
as we can.
    We are here today to discuss the Satellite Home Viewer 
Improvements Act, a bill designed to bring greater consumer 
choice and competition in subscription television services to 
people in my own home State of Utah and in Senator Leahy's home 
State of Vermont and across the Nation.
    We have come a long way since television began some 70 
years ago in the small home workshop of inventor and Utah 
native Philo T. Farnsworth, who, together with his wife and 
colleagues, viewed the first television transmission. We are 
very proud of that in Utah. It was a single black line that 
rotated from vertical to horizontal. While not everyone might 
agree, I think the programming has greatly improved since 
Farnsworth's rotating black line.
    Since that day in the Farnsworth's workshop, television 
viewers have benefitted from steady advances in technology, 
bringing increased access to an evermore diversified range of 
programming choices. The television industry has progressed 
from one or two over-the-air broadcast stations to a full range 
of broadcast networks delivering local and syndicated national 
programming, to cable television delivering both broadcast and 
made-for-cable programming.
    In the last decade, satellite broadcasters have emerged as 
the newest competitors in the television delivery system and 
industry. With hundreds of channels of programming, they are 
pushing the envelope of consumer options and stand poised to 
serve as full-fledged, full-service competitors to cable in the 
multi-channel video delivery marketplace.
    The Satellite Home Viewer Act, however, is simply not 
designed for this sort of competition in its current form. It 
was enacted in 1988 only to provide lifeline access to 
television for those scattered households that were unable to 
get television in any other way, such as over-the-air or by 
cable.
    The bill we will discuss today is designed to allow 
satellite broadcasters to compete fully in the market. Most 
importantly, it authorizes satellite broadcasters to provide 
local subscribers with their local television signals. Now, 
this means that every television viewer in Utah and Vermont can 
have access to Utah and Vermont news, weather, sports, and 
other locally relevant programming, as well as national network 
programming. Emerging technology now makes this possible, and 
our bill would make it legal. The bill also reduces the 
copyright fees that are passed along to subscribers. As a 
result, television viewers from St. George, to Salt Lake, to 
Logan, and in Senator Leahy's State in comparable ways, will 
have a full range of television options at more competitive 
prices.
    Now, much progress has been made since this committee first 
began working toward reauthorization and reform of the 
Satellite Home Viewer Act some 3 years ago. This committee 
unanimously passed a version of this bill late last year and we 
expect it to move through the Congress quickly this year.
    I want to recognize the efforts of my colleagues, 
particularly the distinguished ranking member on this 
committee, Senator Leahy, with whom I enjoy working especially 
on these types of issues.
    I would also like to recognize Senators DeWine and Kohl, 
who are also cosponsors of this legislation, and to thank them 
for their contributions to this legislation's success. I also 
want to recognize the efforts of the chairman of the Commerce 
Committee, Senator McCain, who is also a cosponsor and who is 
working to address related communications issues in the 
Commerce Committee. And I want to thank the Majority Leader, 
Senator Lott, who has also played an important role in this 
process and who also is a cosponsor of this legislation.
    Finally, I want to thank each of our witnesses who are with 
us today and recognize the support of their industry groups and 
how important it is to getting us to where we are today, and I 
look forward to their testimony, which we hope will be very 
short because we have to get to these meetings. But we will put 
all written statements in the record as though fully delivered, 
and any additional statements that you care to make that will 
help us with this record.
    With that, let me now yield to my friend and distinguished 
ranking member, Senator Leahy.

  STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR FROM THE 
                        STATE OF VERMONT

    Senator Leahy. Mr. Chairman, thank you very much, and 
having this hearing on the Hatch-Leahy, et al, legislation, I 
think, is a very positive step. And I agree with you that you 
and I have joined together in a lot of high-tech legislation 
and intellectual property. The joke is when Senators see a 
number of these Hatch-Leahy or Leahy-Hatch bills come to the 
floor, they figure either it is a very good bill or one of us 
didn't read it.
    But the fact of the matter is these are issues that are not 
partisan. They are important to the growth of our country and 
to the things that we consider as important American advances. 
I am pleased in that regard, Mr. Chairman, that Peter Martin, 
of Vermont, is here this morning. He is a leader of the Vermont 
broadcasting industry and he and his father have probably seen 
every single change there has been in that industry almost from 
the time of the early programming that you described before.
    I think when you and I worked together on this satellite 
bill last year, we almost got it done. If the Congress had not 
ended with other problems not related to this committee, we 
would have. We developed a good policy that properly balances 
the interests of those involved. It protects the local TV 
affiliate system and it promotes competition with cable, which 
I think is important. It does this by allowing the satellite 
carriers to offer local television network stations instead of 
distant network signals from the same network.
    And I agree with you. Senator DeWine and Senator Kohl 
deserve a great deal of credit for the work they have done in 
this committee, and I would ask that a statement of Senator 
Kohl be included in the record, and any other statements on 
either side be included.
    The Chairman. Without objection, we will do that.
    [The prepared statement of Senator Kohl follows:]

  Prepared Statement of Senator Herbert Kohl, a U.S. Senator From the 
                           State of Wisconsin

    Mr. Chairman, let me thank you and Senator Leahy for picking up 
where we left off at the end of the 105th Congress: Working to enact 
legislation that helps create true competition between satellite and 
cable television. Our bipartisan effort--involving you and Senators 
McCain, Hollings, DeWine, and Lott--has moved us one step closer to 
providing customers with real choices among video providers.
    The current law regulating satellite programming is simply 
inadequate. Most consumers cannot receive their local television 
stations via satellite, even if they live in a remote area where the 
broadcast signal is unclear. We need ``local-to-local'' programming for 
satellite--and if we have ``must-carry'' obligations for cable, we 
should have them for satellite, too.
    That's why it is essential that we make enacting meaningful, pro-
competitive legislation a top priority. Our proposals extend the 
Satellite Home Viewer Act, give satellite carriers the ability to 
provide local television broadcast signals--while appropriately 
phasing-in must carry--reduce the royalty fees for these signals, and 
ask the FCC to take a much-needed second look at the definition of 
``unserved households.''
    It's a fair and comprehensive solution for satellite, cable, and 
local stations alike. If we continue to work together, consumers will 
be able to enjoy real choice as well as the availability and 
affordability that results from competition. So let's not delay this 
much-needed bill any longer--instead, let's pass this bipartisan 
legislation this year, if not this month. Thank you.

    Senator Leahy. You know, it is not logical that Vermonters 
have to watch stations from Georgia and Texas or Florida 
instead of watching Vermont news or Vermont weather or Vermont 
emergency broadcasts. Cable television offers a full range of 
local programming, as well as programming regarding sports and 
politics and national weather, and so on. But these cable rates 
continue to increase and increase.
    The Judiciary Antitrust Subcommittee heard testimony 
yesterday that cable rates have increased approximately 21 
percent since passage of the 1996 Telecommunications Act, which 
was supposed to control cable rates. That increase is three to 
four times the rate of inflation. And why? Because cable has no 
competition. It is not because they have better signals.
    In the residence I use when I am in Washington, I know that 
the signal I get on the cable system is often inferior to what 
you would get with just an ordinary antenna, and that has to be 
a concern to those people who want to have good quality. We 
heard testimony yesterday that the major reason consumers do 
not sign up for satellite service is they cannot receive local 
programming.
    In my State, stations like WCAX or WPTZ or others should be 
carried by satellite. I believe satellite carriers should be 
able to offer a full range of local programming, and also you 
would have the ability to shop around where you would get the 
best picture. Local broadcasting stations contribute to our 
sense of community, and I strongly believe that when the full 
local-into-local satellite system is in place it will enhance 
the local affiliate system.
    On a more personal note, as I have stated before, I live on 
the side of a mountain in Vermont. It is beautiful. I look down 
a valley, 35 miles down a valley with mountains on either side. 
I literally cannot see another person from my front porch, but 
I also can't see the local television station. It is 25, 30 
miles away. I get a very, very fuzzy signal, at best. On 
another one, I get a halfway decent station signal and they are 
25, 30 miles away, and there are a lot of Vermonters in the 
same boat that I am.
    We want the problem fixed. We should be encouraging 
competition through local-into-local service. Instead, the 
current policy fosters confusion-into-more-confusion. It is not 
local-into-local, it is confusion-into-confusion and an awful 
lot of litigation. So we should be prescribing fairness for 
satellite dish owners. We should have a lot more competition in 
the television market and we should get through this 
bewildering policy maze that so confuses consumers.
    So I thank you, Mr. Chairman, for doing this. I will put my 
full statement in the record in the interest of time, but I 
hope we can move forward rapidly and I will work very closely 
with you on this issue.
    [The prepared statement of Senator Leahy follows:]

              Prepared Statement of Senator Patrick Leahy

    I am very pleased that Peter Martin could be here this morning. He 
is a leader of the Vermont broadcasting industry, and I appreciate his 
efforts and look forward to hearing from him.
    For quite some time, I have been concerned about this local 
television issue. I was pleased that this committee held a hearing on 
this important issue in late 1997. Senator Hatch, you and I agreed at 
that hearing to work together to try to solve this matter before it 
became such an issue. And we did work together and almost got the job 
done last Congress.
    Last year, this committee developed a good policy that properly 
balances the interests of those involved, protects the local television 
affiliate system, AND promotes competition with cable television. Our 
bill does all this by allowing satellite carriers to offer local 
television stations instead of distant signals. I also appreciate the 
hard work of the chairman of the Antitrust Subcommittee, Senator 
DeWine, and the ranking member, Senator Kohl, who have worked with us 
to solve this problem.
    It defies logic that Vermonters have to watch stations from 
Georgia, Texas or Florida instead of watching Vermont news, Vermont 
weather or Vermont emergency broadcasts. Cable television now offers a 
full range of local programming as well as programming regarding 
sports, politics, national weather, education, and a range of movies. 
Yet cable rates continue to increase, increase and increase some more.
    The Judiciary Antitrust Subcommittee heard testimony yesterday that 
cable rates have increased approximately 21 percent since passage of 
the 1996 Telecommunications Act. Cable television rates continue to 
climb at a rate of three to four times faster than the rate of 
inflation. Why? Because there is little competition.
    Indeed, we heard testimony yesterday that the major reason 
consumers do not sign up for satellite service is that they cannot 
receive local programming, such as WCAX-TV, or the other local 
channels. I believe satellite carriers should be able to offer a full 
range of local programming.
    Local broadcast stations contribute to our sense of community. The 
diversion of local network viewing threatens this system. I strongly 
believe that when the full ``local-into-local'' satellite system is in 
place, it will enhance the local affiliate television system.
    On a more personal note. I live on the side of a mountain in 
Vermont. It is beautiful there and I can look for miles at hills and 
open country. However, I cannot receive cable service because it is not 
offered. Yet, I only receive one over-the-air station clearly and one 
other channel whose reception is so poor, I often wonder what I am 
watching. There are thousands of Vermonters who are in the same boat as 
me.
    We all want this problem fixed. We should be encouraging 
competition through ``local-into-local'' service. Instead, the current 
policy fosters confusion-into-more-confusion and produces reams of 
litigation. It discourages competition and encourages a bewildering 
policy maze that angers consumers and seems to serve little purpose. We 
should be prescribing fairness for satellite dish owners and injecting 
some much-needed competition into the television market.
    I think our bill--the ``Satellite Home Viewer Improvements Act''--
leads the way out of the blurry snowstorm that clouds my television 
reception. I look forward to hearing what all of you have to say about 
this legislation as well as the importance of ``local-into-local'' 
service. Thank you.

    The Chairman. Well, thank you, Senator Leahy.
    Now, we are pleased to have an outstanding panel of 
witnesses with us today. We will first hear from Mr. Bruce 
Reese of Bonneville International Corporation based in Salt 
Lake City, UT. Bonneville International operates two television 
stations in Utah, the local NBC affiliate, KSL-TV in Salt Lake 
City, and the PAX TV affiliate, KCSG, in Cedar City. Mr. Reese 
has been with Bonneville since 1984, where he has served as 
general counsel, executive vice president, and since 1996 as 
president and CEO.
    Mr. Reese will be followed by Mr. Charles Meinkey, who owns 
the Satellite TV Warehouse in St. George, UT. Mr. Meinkey has 
been in the satellite business for close to 2 decades. His 
business currently includes retailing of satellite television 
programming and equipment for all of southern Utah. We will 
look forward to hearing your perspective, Charles, both as 
someone with a great deal of experience in the industry and 
someone who has his finger on the pulse of the viewing 
consumers in your area.
    Now, after Mr. Meinkey, we will be pleased to hear from Mr. 
Michael Peterson, the Executive Director of the Utah Rural 
Electric Association. Mr. Peterson is a Utah native who has 
worked with electric cooperatives in our State since 1981. At 
the Utah Rural Electric Association, he is currently working in 
cooperation with the National Rural Telecommunications 
Cooperative to bring television to the homes of rural Utahns 
and to increase their programming options.
    Finally, we are going to hear from Mr. Peter Martin, who is 
Vice President and General Manager of WCAX television, the CBS 
affiliate located in Burlington, VT.
    I feel sorry that we don't have somebody representing the 
ABC affiliate and Fox affiliate and CNN affiliate, and we can 
go right on down the line. But I think we have a very 
representative group of people here today who are experts in 
these fields and from whom we can get a great deal of wisdom.
    Senator Leahy. I think it would be safe to say, would it 
not, Mr. Chairman, that if some of these others wish to 
correspond with the committee, obviously you and I would look 
at that?
    The Chairman. We will certainly keep the record open for 
any affiliated group who wants to correspond with us. I can't 
promise we will put everything in the record if we get 
voluminous things.
    Senator Leahy. We will look at it.
    The Chairman. But we will certainly look at it and see what 
we can do. We want to be fair here and we want to do this 
right.
    Now, I would like to limit you each to 5 minutes. As I see 
it, I think your statements are all around that, and if you can 
keep at that, maybe we can have a few questions before we have 
to get to our respective caucus meetings.
    Mr. Reese, we will turn to you first.

    PANEL CONSISTING OF BRUCE T. REESE, PRESIDENT AND CHIEF 
 EXECUTIVE OFFICER, BONNEVILLE INTERNATIONAL CORPORATION, SALT 
    LAKE CITY, UT; CHARLES E. MEINKEY, OWNER, SATELLITE TV 
    WAREHOUSE, ST. GEORGE, UT; MICHAEL PETERSON, EXECUTIVE 
 DIRECTOR, UTAH RURAL ELECTRIC ASSOCIATION, RICHFIELD, UT; AND 
PETER R. MARTIN, EXECUTIVE VICE PRESIDENT AND GENERAL MANAGER, 
                    WCAX-TV, BURLINGTON, VT

                  STATEMENT OF BRUCE T. REESE

    Mr. Reese. Thank you, Mr. Chairman. As you indicated, I am 
the president and CEO of Bonneville International which 
operates KSL television in Salt Lake City, which will on June 
1st of this year celebrate its 50th anniversary of providing 
local television service to the residents of Salt Lake and the 
State of Utah. And, Mr. Chairman, you will get your invitation 
to our birthday party at Little America on the 1st.
    The Chairman. OK.
    Mr. Reese. KSL-TV is currently an NBC affiliate and 
previously was affiliated with the CBS television network. As 
is the case with many other television stations, KSL's ability 
to serve its audience will be affected significantly by the 
proposed legislation at issue here today. We appreciate your 
leadership in pushing this legislation forward early in the new 
Congress and we are grateful for the opportunity to make our 
views known on this extremely important matter.
    Mr. Chairman, Bonneville supports the ongoing efforts of 
you and Senator Leahy to pass the legislation that would 
resolve many issues concerning satellite delivery of local 
television signals into local markets. Your bill, S. 247, 
provides the necessary copyright authority for local stations 
to be delivered via satellite. Bonneville also endorses your 
efforts to work with Senator McCain on S. 303 to address all 
the difficult issues that exist in this area.
    As this committee is aware, the satellite industry's 
practice of delivering distant network stations into local 
markets has been a source of great frustration to both local 
television stations and consumers alike. Bonneville believes 
that the local-into-local concept advanced by these legislative 
efforts represents the fairest and most effective solution to 
this problem. It will give all satellite customers full and 
fair access to their local television stations without 
disrupting the integrity of our Nation's broadcasting system, 
which has been and continues to be based on localism.
    It cannot be overemphasized that service to local 
communities is the touchstone of television broadcasting in the 
United States, and Congress recognized this in the passage of 
the 1992 Cable Act. There can be no doubt that the viewing 
public in Salt Lake City and throughout Utah has a substantial 
interest in local programming. They rely on local stations to 
provide local news, weather, political information, charitable 
activities, and advertising for local businesses. Our station, 
KSL-TV, and the other local broadcasting stations in Salt Lake 
City play a vital role in meeting these needs and interests.
    In addition, because Utah is the largest designated market 
area, or DMA, in the country with Salt Lake City as its only 
large metropolitan area, the Salt Lake City-based stations, 
including KSL, provide news and other important local 
programming to citizens throughout the State of Utah through an 
extensive TV translator network.
    The ability of KSL and other local TV broadcasters to 
provide this programming is compromised by satellite 
importation of distant signals into the market we serve. Local-
into-local, however, will preserve unique community-based 
programming by enabling satellite companies to deliver local 
station signals. This will eliminate the need for importation 
of distant network signals and avoid the related consumer 
confusion about eligibility.
    Under the bill being considered today, every resident of 
the State of Utah, which is our DMA, the whole State, should be 
eligible to receive all Utah stations over satellite. By 
providing a copyright framework for local-into-local as 
proposed in your bill, Congress will assure that local stations 
continue to reach their audiences without putting a satellite 
customer's ability to receive network programming at risk.
    By the same token, a consumer who wishes to subscribe to 
satellite services will not have to sacrifice access to local 
stations and thus will enjoy the same programming choices that 
have long been available over the air and over cable. Local-
into-local, in other words, creates an opportunity for Congress 
to create a classic win-win scenario. It also will create 
additional competition to cable by enabling consumers to 
receive programming normally carried by cable and local 
television signals.
    There are a number of issues that need to be addressed in 
this legislation and particularly in S. 303. These issues deal 
with network non-duplication, retransmission consent, 
syndicated exclusivity, ``must carry,'' and the continued 
prohibitions against importation of distant signals. We are 
confident that in this bill and in your work with Senator 
McCain on S. 303, those issues can be addressed. And this 
legislation will provide important relief for consumers and 
will provide certainty for consumers, and we therefore support 
it and applaud your efforts.
    The Chairman. Thank you, Mr. Reese. We appreciate your 
statement.
    [The prepared statement of Mr. Reese follows:]

                  Prepared Statement of Bruce T. Reese

    Good morning. My name is Bruce Reese, and I am President and Chief 
Executive Officer of Bonneville International Corporation. Bonneville 
is the operator of station KSL-TV, which as of June 1, 1999 will have 
provided local television service to the residents of Salt Lake City 
and the State of Utah for 50 years. KSL-TV is currently an NBC 
affiliate, and previously had been affiliated with the CBS network. As 
is the case with many other television stations, Bonneville's ability 
to serve its audience will be affected significantly by the proposed 
legislation at issue here today. We appreciate your leadership in 
pushing this legislation forward early in the new Congress, and are 
grateful for the opportunity to make our views known on this extremely 
important matter.
    Mr. Chairman, Bonneville supports the ongoing efforts of you and 
Senator Leahy to pass legislation that would resolve many issues 
concerning satellite delivery of local television signals into local 
markets. Your bill, S. 247, provides the necessary copyright authority 
for local stations to be delivered via satellite. Bonneville also 
endorses your efforts to work with Senator McCain on S. 303 to address 
difficult issues that exist in this area. As this Committee is aware, 
the satellite industry's practice of delivering distant network 
stations into local markets has been a source of great frustration to 
both local television stations and consumers alike. Bonneville believes 
that the ``local into local'' concept advanced by these legislative 
efforts represents the fairest and most effective solution to this 
problem. It will give all satellite customers full and fair access to 
their local television stations without disrupting the integrity of our 
nation's broadcasting system, which since passage of the Communications 
Act of 1934 has been based on localism.
    It cannot be overemphasized that service to local communities is 
the touchstone of television broadcasting in the United States. In 
passing the 1992 Cable Act, Congress itself recognized that ``a primary 
objective and benefit of our nation's system of regulation of 
television broadcasting is the local origination of programming,'' and 
that ``broadcast television stations continue to be an important source 
of local news and public affairs programming and other local broadcast 
services critical to an informed electorate.'' There can be no doubt 
that the viewing public in Salt Lake City has a substantial interest in 
local programming. They rely upon local stations to provide local news, 
weather, political information, charitable activities and advertising. 
Our station, KSL-TV, and the other local broadcasting stations in Salt 
Lake City play a vital role in meeting these needs and interests. 
Indeed, because Utah is the largest Designated Market Area in the 
country, with Salt Lake City as its only large metropolitan area, 
Bonneville, through KSL-TV and an extensive television translator 
network, provides news and other important local programming to 
citizens throughout the State.
    The ability of KSL-TV and others to provide this programming is 
compromised by satellite importation of distant signals into the areas 
of the Salt Lake market that we serve. ``Local into local,'' however, 
will preserve unique community-based programming by enabling satellite 
companies to deliver local stations' signals, thus alleviating the need 
for the importation of distant network signals and avoiding the related 
consumer confusion about eligibility. Indeed, under the bill being 
considered today, every resident of the State of Utah should be 
eligible to receive Salt Lake or Utah stations over satellite. By 
providing a copyright framework for ``local into local'' as proposed in 
your bill, Congress will assure that local stations continue to reach 
their audience, without putting a satellite customer's ability to 
receive network programming at risk. By the same token, a consumer who 
wishes to subscribe to satellite service will not have to sacrifice 
access to local stations, and thus will enjoy the same programming 
choices that have long been available over the air and over cable. 
``Local into local,'' in other words, creates an opportunity for 
Congress to create a classic ``win-win'' scenario for satellite 
carriers, local broadcast stations and their viewers.
    Furthermore, ``local into local'' will have the additional benefit 
of creating more competition to cable. Though DBS has made enormous 
strides over the past few years, the fact remains that satellite 
companies cannot fully compete with the cable industry unless they are 
given the authorization to carry local stations. The marketplace 
reality is that a multichannel video provider cannot expect to be fully 
competitive with cable if it cannot offer local stations to its 
customers. By creating greater regulatory certainty on the ``local into 
local'' issue, Congress will greatly enhance the competitive position 
of DBS, and thus will very likely achieve the improved service and 
lower prices that have remained elusive since passage of the 1992 Cable 
Act.
    In addition, Bonneville respectfully submits that a carefully 
crafted ``local into local'' bill will be far better than the law we 
have now. The Satellite Home Viewer Act in its present form and in its 
implementation has produced costly litigation that has polarized the 
broadcast and satellite industries. As a result of that litigation, 
consumers are threatened with the loss of network signals, which are 
being delivered by satellite in violation of law. Though the courts 
have appropriately intervened, a legislative solution is needed. Your 
bill represents significant progress toward providing that solution.
    Bonneville urges that this Committee move forward on S. 247. It 
also recognizes the need for coordination with Senator McCain's 
proposals. As the process moves forward, Bonneville requests the 
Committee members' assistance to help ensure that the communications 
law package that will be added to this bill be fair, and that it 
respect long relied on relationships, arrangements and principles with 
respect to issues such as must carry, retransmission consent, network 
nonduplication protection and syndicated exclusivity, and continued 
protection from the importation of distant signals to ineligible 
subscribers.
    In sum, Bonneville believes that the legislative proposals now 
before Congress represent an essential first step toward providing 
broadcasters, satellite providers and, most importantly, consumers with 
relief in this area. We believe that the legislation you have 
introduced is a vital part of any final solution to the problems in 
this area. ``Local into local'' will promote Congress's long-standing 
goals of preserving the vitality of local broadcasting and fostering a 
fully competitive marketplace that maximizes consumer choice. 
Bonneville thus urges that this Committee pursue its work on S. 247 
with all due speed, and encourage adoption of ``local into local'' 
legislation by the full Congress. Thank you.

    The Chairman. Mr. Meinkey, we will turn to you.

                STATEMENT OF CHARLES E. MEINKEY

    Mr. Meinkey. Chairman Hatch, Senator Leahy, thank you for 
this opportunity to testify on S. 247, the Satellite Home 
Viewer Improvements Act, legislation you have introduced to 
reform the copyright laws which will be crucial to the success 
of DBS and giving everyone in Utah the opportunity to receive 
broadcast signals from Salt Lake City. I believe this 
legislation will mean growth for my business, and more 
importantly will lead to more satisfied customers in my home 
State of Utah.
    I have been in the satellite business since 1982 and I have 
a retail store there and I have thousands of customers, and I 
travel the State regularly, almost 200 miles a day, just taking 
care of the customers so they can watch local TV and other 
programming.
    I have sold approximately 5,000 dishes, starting with the 
large C-band dishes, at a time when you could only receive 
maybe two off-air channels on a good day. At that time, the 
television broadcast transmitters were much less 
technologically sophisticated than they are now. I remember a 
time when, during Super Bowl Sunday, an hour-and-a-half before 
the game was to be broadcast, the translator went out. So, 
needless to say, I had several phone calls that day.
    I sell both EchoStar and DirecTV, but the majority of my 
business is DISH Network because they do offer the local 
broadcasts and my customers really enjoy being able to catch 
their local news now. Your legislation is crucial to the 
success of DBS. As a competitor to cable, we will especially 
benefit all of Utah who live in rural areas because they will 
be able to receive digital-quality pictures as the broadcasters 
intend them to be seen. Your legislation would make DBS a more 
beneficial product for Utahns.
    The lack of local channels on DBS has been one of the major 
reasons my customers don't choose me over cable. Now, with the 
local networks added to the lineup, my sales have increased 
considerably. It still requires customers to put a second dish 
on, but as time goes on and we acquire more spectrum, we will 
be able to get away with just one satellite dish to pick up 
both the local and the regular programming.
    My customers really want local signals and having them 
means they will no longer feel like second-class citizens. So 
now they can watch all their local news and sports. Eventually, 
we would love to see KJZZ and some of our PBS channels go up on 
satellite, but we know it is limited and eventually, hopefully, 
it might take place as time goes on.
    This legislation takes care of another thorny problem for 
my customers. Up to now, they would have to wait approximately 
90 days if they had cable and they decided to go with the 
satellite. They would have to wait 90 days so they could pick 
up the local-to-local. So, hopefully, with the passage of the 
bill, it will get rid of that issue, also.
    As you know, Mr. Chairman, in our region of the country the 
terrain is mountainous. St. George is surrounded by mountains, 
cinder cones, hills and valleys. And just within a 100-mile 
radius, there are approximately six translators and you just go 
around a corner and you will totally lose the signal. So having 
the local-to-local is a very good product for us.
    The quality has improved a great deal since 1982, but 
sometimes there is still interference and I think DBS carriage 
of local signals is a win for both satellite companies and the 
broadcasters. DBS can help eliminate any remaining problems in 
receiving a crystal-clear picture from the broadcast tower in 
Salt Lake City or its translators.
    Small dealers like me nationwide appreciate you trying to 
create competition to cable and make our companies more 
competitive. This legislation would eliminate the blatantly 
discriminatory provision of the law that does not allow me to 
offer a network signal to customers until they have been 
disconnected from cable. It is like if you would decide to go 
in and buy a car and you pay for it and you can't get it for 90 
days. That is how we feel about being able to get the networks 
for 90 days.
    The provisions of this bill will finally make us much more 
competitive with cable, and I think that will mean that both 
DBS and cable subscribers will benefit. When you bring 
competition into the market, the competitors figure out a way 
to do it a little better, a little cheaper and a little nicer 
so that the customer just has a better deal going on.
    I know that you are working with Senator McCain and the 
Commerce Committee on an overall package and I hope that you 
will exert your influence to ensure that the entire package is 
as fair and consumer-friendly as your bill is. We are 
especially interested in the issue of retransmission consent 
and ``must carry.''
    I appreciate your time and I thank you very much.
    The Chairman. Well, thank you, Mr. Meinkey. We appreciate 
it. I am really impressed that you are all living up to the 
five-minute suggestion. This is pretty impressive to me. 
Usually, we don't see that.
    [The prepared statement of Mr. Meinkey follows:]

                 Prepared Statement of Charles Meinkey

    Chairman Hatch and distinguished members of this Committee, thank 
you for the opportunity to testify before you today on S. 247, the 
Satellite Home Viewer Improvements Act--legislation you have introduced 
to reform the copyright laws which will be critical to the success of 
DBS and to giving everyone in Utah the opportunity to receive broadcast 
signals from Salt Lake City. I believe this legislation will mean 
growth for my business, and, more importantly, will lead to more 
satisfied customers in my home State of Utah.
    My name is Charles Meinkey. I have been a satellite dealer since 
1982. My small business, Satellite TV Warehouse, is located in St. 
George, UT. And I provide service throughout all of Southern Utah.
    Since 1982, I have sold approximately 5,000 dishes, starting with 
the large C-Band dishes, at a time when you couldn't even receive off 
air channels--maybe one or two stations on a good day--because there 
was no cable available in our rural area. At that time, the television 
broadcast translators were much less technologically sophisticated than 
they are now. I remember a time when during Super Bowl Sunday, an hour 
and half before the game, the translator carrying the broadcast went 
out. Thousands of people were without the game.
    I sell both EchoStar (also known as DISH TV) and Direct TV. But the 
majority of my business lately has been in selling DISH Network 
television, since that many of my customers are eligible to receive the 
local stations from Salt Lake City because they cannot receive them 
with an off air antennae.
    Your legislation is crucial to the success of DBS as a competitor 
to cable and will especially benefit all Utahns who live in rural areas 
because they will be able to receive digital quality pictures as the 
broadcasters intended it to be seen. Your legislation would make DBS a 
more beneficial product for Utahns.
    Lack of local channels on DBS, has been the single greatest 
obstacle for customers in deciding against choosing DBS over cable or 
switching from cable to DBS. Now it looks as though the DISH Network 
will soon be able to offer Utahns local-into-local service, on a single 
dish, to between 40 and 50 percent of the country, including the 
citizens of Utah. Currently, EchoStar offers limited local-into-local 
service in thirteen markets including Salt Lake City, but it requires 
customers to put two dishes on the roof and that has been a tough sell. 
EchoStar's plans to acquire more spectrum, and serve our market as one 
of 20 major metropolitan centers receiving local programming on one 
dish, will make the product much more attractive to my customers and, I 
suspect, to customers nationwide.
    Since the Salt Lake City stations have been added to the DISH 
Network lineup, my sales have increased noticeably--by ten to twenty 
percent. I expect to see an even greater increase as the word gets out 
and as the DISH Network is able to market its local-into-local service 
nationally. I believe that can only happen with passage of your bill.
    My customers really want their local signals and having them means 
they no longer feel like second class citizens because they can now 
watch their hometown state's news, weather and sports. For instance, 
they get to see how KSL-TV, KUTV, KSTU-TV and KTVX are covering you and 
Senator Bennett and our other elected representatives. Also, they now 
get the benefit of the local news and weather and knowing how the Utah 
Jazz, BYU and other local teams are performing.
    Eventually, we would love to see KJZZ and our two excellent public 
broadcasting stations KBYU and KUED picked up by the DISH Network, but 
we understand that capacity is limited right now. Even this limited 
local service has been a giant step forward and has great benefits for 
my business, and for the people of Utah.
    This legislation takes care of another very thorny problem for my 
customers. Up to now there has been a great deal of confusion about who 
is eligible to receive distant network signals that DISH Network and 
Direct TV offer. Those are the out of market station packages offered 
by DBS so that people who can't receive an off air signal can get at 
least some access to the network signals. This bill would eliminate 
that confusion because anyone in the Salt Lake City DMA, which covers 
all of Utah, will be eligible to receive the Utah package of local 
signals. Right now, I can only give it to those people who cannot get 
it off air and meet all of the other criteria. We think this will help 
the local broadcaster by expanding their markets considerably.
    As you know Mr. Chairman, in our region of the country the terrain 
is mountainous. St. George is surrounded by mountains and cinder cones, 
hills and valleys. And just within the 50 to 100 mile radius where I 
provide service, there are at least 6 translators that carry between 3 
and 10 broadcast channels. The quality has improved a great deal since 
1982, but sometimes there is still interference. I think DBS carriage 
of local signals is a win for both Satellite companies and 
broadcasters. DBS can help eliminate any remaining problems viewers 
have with receiving a crystal clear picture from the broadcast tower in 
Salt Lake City or its translators.
    Small dealers like me nationwide appreciate what you are trying to 
do to create competition to cable and to make our companies more 
competitive. This legislation would eliminate a blatantly 
discriminatory provision of the law that does not allow me to offer a 
network signal to customers until they have been disconnected from 
cable for 90 days. That rule is much like saying to a customer you can 
buy a new car and pay for it up front, but you won't be allowed to take 
possession of it for 90 days. No one benefits by not allowing customers 
to receive those signals. It just makes people madder at the cable 
companies. Many of those people seeking to switch to DBS have already 
decided that cable isn't serving them well enough.
    In its Fifth Annual Report to Congress, the Federal Communications 
Commission reconfirmed that, despite the efforts of competitors such as 
DBS, cable operators continue to possess bottleneck monopoly power in 
the distribution of multi-channel video programming. The Commission 
said Cable prices soared by 7.3 percent between June 1997 and June 
1998. Compared to an inflation rate of only 1.7 percent.
    The provisions of this bill will finally make us much more 
competitive with cable and I think that will mean that both DBS and 
cable subscribers will benefit. When you bring competition into the 
market, the competitors figure out how to do it a little better, a 
little cheaper, and a little nicer so they can get or keep the 
customers business.
    I know you are working with Senator McCain and the Commerce 
Committee on an overall package and I hope that you would exert your 
influence to ensure that the entire package is as fair and consumer 
friendly as your own bill is. We are especially interested in the 
issues of retransmission consent and must carry.
                                summary
    Thank you and your colleagues again for introducing S. 247, which 
if passed as written, will make a major difference in the lives of 
Utahns. I know I speak for many of my fellow dealers nationwide when I 
say that the work you are doing is important to our business. I 
appreciate the opportunity to testify before you here today. I look 
forward to answering your questions.
[GRAPHIC] [TIFF OMITTED] T8884.001

    The Chairman. Mr. Peterson.

                 STATEMENT OF MICHAEL PETERSON

    Mr. Peterson. Thank you, Mr. Chairman. I am going to 
summarize----
    The Chairman. Did I put some pressure on you, Mr. Peterson? 
[Laughter.]
    Mr. Peterson. I am going to summarize my written testimony 
as well. My name is Mike Peterson and I am the Executive 
Director for the Utah Rural Electric Association. I grew up in 
northeastern Utah, a part of the State where most of those 
residents, Senator, as they do their genealogy, claim that in 
some way or another they are related to Senator Orrin Hatch.
    The Chairman. I know a number who refuse to claim that.
    Mr. Peterson. Cooperatives provide services of electricity 
and telephone, and now satellite television to many Utahns, 
nearly 200,000 rural Utahns, and we do that through organized 
co-ops or through organizations who were organized originally 
by co-ops.
    Though in Utah the economy as a whole is pretty good, many 
in rural Utah, the economy has not been kind to them, 
particularly when you look back at northeastern Utah. The 
economy there is tied to oil prices, cattle prices, pork 
prices, hay prices, all of which have declined in recent years. 
So this legislation, some may say, is not needed, but I would 
disagree and say that it is needed, and many in rural Utah 
would as well say that it is certainly needed. And I am happy 
to be here with two fellow Utahns who also support your 
legislation.
    Your legislation helps because, by necessity, because of 
the widespread--the map is gone now, but in the mountainous 
area, by necessity, a lot of our members rely on satellite 
technology to be connected to the modern world, to receive 
information, education, training over satellite technology, a 
lot of things that urban Americans take for granted, things 
that I took for granted as we traveled to our mother-in-law's 
house in Haden, UT, this past Christmas and for 2 days listened 
to all the grandkids say, ``Grandma, is that the only station 
we can get around here?''
    It makes a difference in rural America, and especially the 
popular superstation and network programming. So it is 
important that we have access at fair rates and on fair terms 
and conditions. Under the current copyright and communication 
laws, rural consumers that use satellite technology simply 
don't have that opportunity of fair access to programming, 
don't have a fair alternative to cable. They can't even receive 
some of the same distant network and some of the superstation 
signals. We are not even entitled to receive some of the 
distant network signals.
    I just might mention with Mr. Reese, most of the satellite 
subscribers that I know in rural parts of the State may watch 
their satellite TV, but at 10:00 o'clock it is switched over to 
the network channels and principally to watch KSL. As a young 
man, I grew up with Norris Welty and James, and those of you 
from Utah understand what I am saying.
    Another problem: unlike cable TV which has a permanent 
license, the satellite industry has a license and operates 
under kind of a cloud of uncertainty because their license is 
due to expire December 31, 1999. Another problem that Charlie 
mentioned is with the 90-day waiting period. It is hard to 
correlate that we have a 90-day waiting period for you to get 
satellite TV, and yet if you want to buy a gun, the waiting 
period is much less. So I don't understand the danger in the 
90-day waiting period.
    Those are issues, Mr. Chairman, that your legislation 
addresses, and we are happy to be here because those inequities 
and inequalities through the Satellite Home Viewer Improvements 
Act are removed. And while consumers may not recognize these 
are copyright issues, they do realize that they are paying up 
to ten times more in copyright rates. And so they appreciate 
that and appreciate that your legislation will extend the 
satellite copyright license for 5 years and appreciate the fact 
that it will eliminate the 90-day waiting period.
    But more than anything, Senator, I think from rural Utah 
and rural America, we simply appreciate the fact that you 
listened to the concerns that we had. We spoke with members of 
your staff some time ago. And a lot of times we are out there, 
and especially in rural Utah, and you are taking care of the 
work to do and the chores at hand. And we realize what happens 
clear across the country in Washington that, you know, 
sometimes you can feel like you don't make a difference. But 
you listened and we appreciate that.
    And as I return to Utah today and we will have a meeting 
with about 100 of the co-op members, that is certainly the 
message I will take back is that Senator Hatch listened and we 
have made some progress here. So thank you.
    The Chairman. Well, thank you, Mr. Peterson. I appreciate 
your kind remarks. And I am happy to have as my partner a good 
listener, too, on these issues. I think we have got a good shot 
at getting this done right this time.
    [The prepared statement of Mr. Peterson follows:]

                  Prepared Statement of Mike Peterson

    Mr. Chairman. My name is Mike Peterson, and I'm the Executive 
Director of the Utah Rural Electric Association. I represent nearly 
200,000 rural Utahns who receive electric, telephone and now satellite 
television service from cooperatives or from businesses first organized 
by co-ops. We provide these services on a non-profit basis and 
primarily in the sparsest, most remote areas of our beautiful State. 
Unfortunately, many in rural Utah are going through tough economic 
times. And while some may say your legislation is not needed, I would 
certainly disagree, rural Utahns would disagree and I'm pleased that 
two other fellow Utahns on this panel are here to join me in supporting 
this important legislation.
    I appreciate very much the opportunity to appear before this 
Committee and to voice rural Utah's support for the Satellite Home 
Viewer Improvements Act. Mr. Chairman, as you well know, Utah is a 
vast, rural State. Most of the members of our rural electric 
cooperative association live in the so-called ``C'' and ``D'' counties, 
far from urban and suburban centers, far from the reach of television 
transmitters, and far from the wires of cable systems. By necessity, 
Mr. Chairman, our members often rely on satellite technology to be 
connected to the modern world * * * to receive information, education 
and entertainment programming that much or urban America takes for 
granted.
    Satellite technology does in fact make a difference for rural 
America. It's important to us. To be a part of the modern Information 
Age, rural Americans need fair access to programming--especially 
popular network and superstation programming. And we need access at 
fair rates and on fair terms and conditions.
    Under current copyright and communications laws, however, rural 
consumers using satellite technology are not provided with fair access 
to programming. We do not have a fair alternative to cable. We pay much 
higher copyright fees than cable for the same distant network and 
superstation signals; we are not even entitled to receive some distant 
network signals; and we cannot receive local signals via satellite 
under any circumstances. Further, unlike cable, which has a permanent 
copyright license, the satellite industry operates under a cloud of 
uncertainty, because our ultimate statutory authority to provide 
distant signals is temporary and fleeting. It is impossible, as a 
practical matter, to develop and implement a business plan for the 
delivery of satellite services to rural America when our statutory 
copyright license is scheduled to expire on December 31, 1999. Last, 
Mr. Chairman, as you know, the satellite industry currently operates 
under the ridiculous requirement that subscribers must wait 90 days--
that means subscribers must go without network signals entirely--before 
they may subscribe to distant network satellite service. That's a 
punishment written into the law for a subscriber who dares change from 
cable to satellite.
    I am extremely pleased to note, on behalf of rural consumers in 
Utah and elsewhere across the country, that these inequities that 
unfairly discriminate against the satellite industry are all addressed 
in the Satellite Home Viewer Improvements Act. Even though rural 
consumers may well not recognize these as ``copyright issues,'' they do 
know there is something wrong when they are paying up to 10 times more 
in copyright rates than cable subscribers pay for the same programming. 
As a practical matter, this unfair copyright rate translates into 
paying for an extra month of satellite service. So while the cable 
customer might spend that extra money to buy a daughter's Christmas 
doll, the satellite subscriber pays the 13th month's TV bill. That's 
not right.
    Mr. Chairman, your bill tackles the copyright rate disparity by 
requiring an immediate reduction of 35 percent in rates for 
superstation signals and an immediate reduction of 45 percent for 
network signals. This is a huge cut, and it will be a practical, 
meaningful and appreciated one in rural Utah.
    In fact, the main reason I came across the country today to testify 
before your Committee, Mr. Chairman, is because I personally wanted to 
thank you and applaud your leadership on the issue of reducing the 
unfair copyright rate for rural satellite subscribers. This is 
legislation that will make a real difference for the pocketbooks of 
rural America, and you are to be commended for stepping up to the plate 
and addressing this issue.
    In a like vein, Mr. Chairman, your bill removes the uncertainty of 
the soon-to-expire satellite copyright license. As I mentioned, the 
satellite industry cannot really plan for the future when its statutory 
copyright license is scheduled to expire at the end of the year. This 
competitive problem is compounded by the fact that the cable industry 
operates without such uncertainty, under a permanent license. So while 
our competitors can spend their time marketing and promoting their 
services, we have to spend ours walking the halls of Congress hoping 
for an extension of our license. Your bill, Mr. Chairman, extends the 
satellite license for five more years. This, again, is a much needed 
and much appreciated amendment to the current copyright laws. The 
satellite industry needs it to survive in a competitive world and to 
continue providing distant network and superstation signals to 
consumers throughout rural America.
    Your bill also works to create a more level playing field by 
removing the ridiculous requirement in current copyright law, that a 
consumer may not receive distant network signals by satellite if that 
consumer has received network signals via cable within the last 90 
days. Off hand, I cannot think of a more blatantly anti-competitive, 
anti-choice, anti-consumer restriction. Imagine that: you can't get 
satellite if you've subscribed to cable. I am pleased to see that your 
bill strikes that obnoxious requirement altogether.
    Mr. Chairman, I understand that as your bill moves forward it is 
expected to be married on the Floor with legislation from the Commerce 
Committee that addresses other similar problems within that Committee's 
purview. We need these types of changes that improve the quality of 
life in rural America.
    I applaud your leadership on these issues. Your efforts will put 
rural Americans on the telecommunications map for the next century. 
They will be well appreciated by the folks we both serve * * * the 
rural families of Utah.

    The Chairman. Mr. Martin, we are honored to have you here 
as well.

                  STATEMENT OF PETER R. MARTIN

    Mr. Martin. Thank you very much, Mr. Chairman. I am 
delighted to be able to testify on S. 247, and thank you for 
that opportunity, and thank you for the work that you have done 
on the bill.
    We strongly support the provisions of S. 247. I believe it 
is an elegant solution to a difficult problem. I note that S. 
303, the companion Act, would have an important impact on how 
local-into-local will work in practice. But S. 303 is not the 
subject of this hearing and those issues we will have to 
postpone for another day and another place.
    For over 40 years, WCAX-TV and Mt. Mansfield Television, 
the licensee, has served Vermont, portions of upstate New York 
and New Hampshire. Throughout this long, long period, we have 
provided continuous, award-winning local news and other 
programming to viewers in those three States.
    It is important to emphasize in the context of this 
proposed legislation that we have been able to do so only 
through the benefit of the network affiliate relationship which 
has provided us with exclusive rights to high-quality 
programming which is attractive to our viewers. This 
relationship, whose preservation has always been a clear 
predicate for any compulsory license extended to satellite 
carriers, has enabled WCAX-TV to offer distinctive and 
attractive national programming and to establish and maintain 
the kind of local service upon which our viewers and upon which 
many of our public officials have come to depend to reach those 
viewers. That service has included not only local news and 
public affairs programs, but also public safety, weather, 
emergency, and a wide range of other program services.
    WCAX-TV strongly supports the basic principle of local-
into-local satellite service embodied in S. 247 because it 
strengthens rather than undermines the network affiliate 
relationship. It promotes multi-channel video competition by 
satellite carriers because it provides these carriers with 
access to attractive local broadcast signals like ours which 
only their cable competitors currently enjoy.
    At the same time, it does so without jeopardizing the 
exclusivity rights of local television stations that enable 
those stations to attract the audiences necessary to sustain 
important local informational programs and to finance the 
enormous new costs which we face in implementing digital 
television service. We commend the committee for this 
constructive approach to the current impasse.
    To strengthen implementation of the local-into-local 
principle, we urge the committee to consider one change to the 
provisions of this bill. S. 247 would add a new compulsory 
license for local-into-local that would, as we understand it, 
stand alongside the existing license for unserved areas or 
unserved viewers under section 119 of the Copyright Act. I 
believe that a viewer receiving a local signal through local-
into-local will in every practical sense be a served viewer, 
and I would hope that S. 247 will be amended as it goes forward 
to reflect this reality.
    In conclusion, WCAX-TV and Mt. Mansfield Television commend 
the committee for this constructive local-into-local principle 
which you have embodied into S. 247. We have some minor 
suggestions for clarifying language which we would be happy to 
discuss with your staff. And, finally, thank you very much for 
the opportunity to testify on this matter which is of vital 
importance to network affiliates like WCAX-TV, and thank you 
for your work on the bill.
    [The prepared statement of Mr. Martin follows:]

                 Prepared Statement of Peter R. Martin

    Thank you, Mr. Chairman, for the opportunity to testify on S. 247, 
the Satellite Home Viewer Improvements Act of 1999, which is designed 
to permit ``local-into-local'' satellite retransmissions of television 
broadcast station signals. Mt. Mansfield strongly supports the 
provisions of this bill, which I believe is an elegant solution to a 
difficult problem. I note that S. 303, the Satellite Television Act of 
1999, would have an important impact on how local-into-local would work 
in practice, but that S. 303 is not being considered by this Committee 
today. I understand that these are issues for another day and another 
place.
    For over 40 years, Mt. Mansfield has served as the licensee of 
WCAX-TV, the CBS affiliate serving most of Vermont, and portions of New 
Hampshire and upstate New York. Throughout this period, WCAX-TV has 
provided continuous, award-winning local news and other programming to 
viewers in these areas. It is important to emphasize, in the context of 
this proposed legislation, that we have been able to do so only through 
the benefit of the network-affiliate relationship, which has provided 
us with exclusive rights to high quality programming attractive to our 
viewers. This relationship, whose preservation has always been a clear 
predicate for any compulsory license extended to satellite carriers, 
has enabled Mt. Mansfield to offer distinctive and attractive national 
programming, and to establish and maintain the kind of local service 
upon which our viewers have come to depend. That service has included 
not only local news and public affairs programs but also public safety, 
weather, emergency, and other developments involving the need for 
immediate and effective communication to our viewers.
    Mt. Mansfield strongly supports the basic principle of ``local-
into-local'' satellite service embodied in S. 247, because it 
strengthens rather than undermines this network-affiliate relationship. 
It promotes multichannel video competition by satellite carriers, 
because it provides these carriers with access to attractive local 
broadcast signals like WCAX-TV, which only their cable competitors now 
enjoy. At the same time, it does so without jeopardizing the 
exclusivity rights of local television stations that enable them to 
attract the audiences necessary to sustain important local 
informational programs, and to finance the enormous new costs they face 
in implementing digital television service. We commend the Committee 
for this constructive approach to the current impasse.
    To strengthen implementation of the local-into-local principle, we 
urge the Committee to make one change to the provisions of the bill. S. 
247 would add a new compulsory license for local-into-local that would, 
as we understand it, stand alongside the existing license for 
``unserved areas'' under section 119 of the Copyright Act. I believe 
that a viewer receiving a local signal through local-into-local will in 
every practical sense be a ``served'' viewer, and I would hope that S. 
247 would be amended as it goes forward to reflect that reality.
    In conclusion, Mt. Mansfield commends the Committee for the 
constructive local-into-local principle that is embodied in S. 247. We 
have some suggestions for clarifying language that we would be happy to 
discuss with your staff. Thank you very much for the opportunity to 
testify on this matter, which is of vital importance to network 
affiliates like WCAX-TV.

    The Chairman. Well, thank you, Mr. Martin.
    We will limit ourselves to five minutes as well, and let me 
just ask my friends from Utah what are the greatest benefits 
which you see this bill providing for Utahns both in rural and 
urban areas, including those who may not even be satellite 
viewers. And, Mr. Martin, of course, we would love to hear your 
comments as well.
    Let's start with you, Bruce.
    Mr. Reese. I think the principal benefit is it preserves 
the concepts of localism which are the basis upon which our 
methods of over-the-air communications have been built in this 
country for 75 years. It preserves the concept, it preserves 
the reality and makes it possible for us as broadcasters to 
continue to be able to provide more and more local programming 
which is now available to people throughout our State under the 
principles embodied in this bill.
    Mr. Meinkey. Local-to-local means a good picture for all 
Utahns, in general. A lot of them don't get the picture at all. 
Having the local-to-local will benefit KSL and all the 
broadcasters in Utah.
    Mr. Peterson. I think, Mr. Chairman, that particularly with 
rural Utahns, it brings competition. It brings a sharper edge 
to the competition between the industries, and when you look at 
reducing the superstation rates by 35 percent, the network 
signals by 45 percent or so, that puts money in the pockets of 
some of those rural Utahns.
    And you look at around Uintah County, some of those places 
where the average per-capita income is $14,000, 72 percent of 
the State average, and that puts money in the pockets of those 
rural Utahns. And maybe $25 isn't a lot to some people, but to 
them it is a lot.
    The Chairman. Sure, it is.
    Mr. Martin.
    Mr. Martin. Well, there are a few things. First of all, it 
will enable us to reach viewers that we cannot currently reach 
or that we cannot reach in as clear a way as, say, Senator 
Leahy would like to see us.
    Senator Leahy. Well, I want to make very clear I hear you 
when your station comes through. I cannot see you at all but I 
hear you. [Laughter.]
    Mr. Martin. So this is a very important bill, that we be 
able to get pictures to Senator Leahy so we will have added a 
viewer and we will be better able to compete in a multi-channel 
environment.
    The Chairman. Let me ask Mr. Peterson and Mr. Meinkey this. 
The bill provides a substantial discount on the current 
copyright royalty rates for distant signals and a zero rate for 
local signals. Now, can we expect that satellite carriers will 
pass those savings on to consumers as we hope they will?
    We will start with you, Mr. Meinkey.
    Mr. Meinkey. I am sure they will. They have never raised 
their rates in the last 2 years. And EchoStar and DISH Network 
have always been fair on their pricing, so I am sure they will.
    Mr. Peterson. I can't speak for the other companies, but 
NRTC has testified before Congress that those savings would be 
passed on to the consumers and we have mechanisms in place in 
the rate to put those into the pockets of consumers.
    The Chairman. Let me just ask one other question to all 
witnesses. Do you agree that the advent of both local satellite 
service and digital television broadcasting will require us to 
review and substantially reform the distant signal rules in 
just a few years from now?
    We will start with you, Bruce.
    Mr. Reese. I would say, Senator, as we look at S. 247 and 
at S. 303, there don't appear to be gaping holes that would 
suggest we would have to review this. Once you set up a legal 
framework, you would hope it would work. History, however, 
suggests to us that whenever we are dealing with intellectual 
property or technology issues, we still don't do a very good 
job of anticipating where things are going. So I suspect we 
will have to look at these issues again in the future, but I 
believe the framework that is established by S. 247 and S. 303 
looks pretty solid right now.
    The Chairman. Thank you.
    Mr. Meinkey.
    Mr. Meinkey. I didn't get the question.
    The Chairman. Well, basically, we are just asking you if 
the advent of both local satellite service and digital 
television broadcasting is going to require us to review and 
substantially reform the distant signal rules that we have 
today.
    Mr. Meinkey. I really don't understand.
    The Chairman. OK. That is a technical question.
    Mr. Peterson. My response to that question, Senator, is 
that customers will let you know. Your constituents will let 
you know if you need to review it further.
    The Chairman. Do you feel like we might have to in the 
future?
    Mr. Peterson. Right now, you might say no. But, again, I 
think the customers and everybody will let us know how it is 
going.
    The Chairman. We need to stay right on top of it to make 
sure.
    Mr. Peterson. Yes. I think as they see problems develop, 
you will hear.
    The Chairman. OK. Mr. Martin.
    Mr. Martin. I would guess that if this round of legislation 
lays the proper foundation, probably it might be a while, but 
always you have to look at things.
    The Chairman. Sure.
    Senator Leahy. I didn't hear the answer.
    Mr. Martin. I say you always have to be able to look at 
things over time. But will it be absolutely necessary? We won't 
know until we see how this works.
    The Chairman. Thank you.
    Senator Leahy.
    Senator Leahy. Thank you, Mr. Chairman. Mr. Meinkey's 
answer is encouraging on the rates. It really is, and I have 
felt for some time that we got sold a bill of goods on the 
Telecommunications Act. I say that as one of a tiny handful who 
voted against it because I just did not believe the cable 
companies when they said this would help stabilize prices and 
require competition, and so on. It hasn't. The costs just keep 
going up and up and up.
    I asked a cable company why it is so expensive and they 
said, well, look at this; you are getting 100 channels or 90 
channels, or whatever it is. And I said, well, let's take a 
look at what we have in those channels. A lot of those channels 
do not offer much and there is a lot of advertising.
    Some say I can buy 12 pounds of zircon fake jewelry for a 
discounted price or something like that. And I am sure there 
are some people that like to buy 12 pounds of zircons, or other 
items on shopping channels.
    The whole point of the thing--they say, well, you are 
paying for that. Well, we get no choice over, the channels now 
but that is how they justify the price going up.
    And then I go and see some of the signals that come down 
from satellite companies and I see a much clearer signal and it 
is something that will reflect what we probably are going to 
have as we get better and better TV sets, those with more lines 
of resolution, and so on. I also see some of the problems with 
the satellite companies where, you have to watch the same 
program all over the house. There should be different 
technology and that is something that could be developed, I 
think, relatively easily.
    My whole point is if we really work at making competition 
possible, I would think that the Congress also has a duty to 
make sure that competition benefits the consumers, both in a 
competition of quality--Mr. Martin and I have talked before 
about the signal I get in my home. That is fine. I am not 
anticipating to get it there, but if you are getting cable and 
if you are getting satellite, you expect to get the best 
quality and cost.
    And then, of course, we come to the last question, the 
question of programming. Frankly, I want to be able to turn on 
affiliates from the major networks that are Vermont affiliates 
if I am going to watch. It is not because I might necessarily 
agree with the editorial policy of the particular station or 
maybe some of their local programs, but I want that choice. I 
want to see what is being offered.
    And if there is that choice to all Vermonters, then there 
is going to be real competition among the stations. Mr. Martin 
will find competition at this station with other local 
stations. And, frankly, I think, Mr. Martin, you would agree 
with me that that is a good thing to have such competition.
    Mr. Martin. Absolutely.
    Senator Leahy. But you can't have it if everybody is not 
receiving it. Now, I must admit I question Mr. Martin's sense 
of timing. He came here from a conference in New Orleans just 
before Mardi Gras so he could be with these two wild and 
swinging Senators. [Laughter.]
    Let me just ask one question.
    The Chairman. I felt that was fairly sarcastic myself. 
[Laughter.]
    Senator Leahy. No, it wasn't. Listen, what I am kidding 
about is Senator Hatch is an accomplished musician, a very good 
music writer. I actually listen to his CD's and I am not 
required to. He has to put up with me on this committee whether 
I do or not. It is called seniority, but I like it. When I put 
them on shuffle and I go from the Grateful Dead to you, Orrin, 
it takes a moment to----
    The Chairman. That is quite a transition is all I can say. 
[Laughter.]
    Senator Leahy. Well, let me just ask this one question and 
I will put my other questions in the record. Mr. Martin, why 
would you expect satellite carriers to find that carrying the 
local network affiliates like yours to be more attractive to 
them than distant ones? Wouldn't they look at distant ones and 
think they might get more money, and would that not be more 
attractive especially when you are talking about a State as 
small as ours?
    Mr. Martin. Well, there are two levels to that. One would 
presume under most of the copyright schemes that I am aware of 
that a distant signal would cost the satellite carrier more 
money; that is, the copyright fees for a distant signal tend to 
be higher than for a local station, number one.
    Number two, it is a more attractive service. It provides 
most of the viewers in, say, Vermont or in Utah----
    Senator Leahy. What is more attractive, the local?
    Mr. Martin. The local is more attractive because it is the 
local that carries the information that the local viewer needs 
and wants to have. So once it becomes possible for the 
satellite vendors to carry the local signals, I would suspect 
that even in Vermont the logic of their situation is such that 
they would want very much to be able to carry local signals. 
And, certainly, a major competitive selling point for their 
major competition, which is cable, is that cable does offer the 
local signal.
    The Chairman. Fine, and we will put all your statements as 
though fully delivered in the record. We appreciate the 
cooperation and your appearing here today. This is a very 
important hearing because we will next move to a markup on this 
matter. And, of course, Senator McCain, I understand, has filed 
his bill now and we are going to work with him and work closely 
together to try and get these two components of what needs to 
be done here put together. So we will do our very best and we 
want to thank you for your efforts in being here today and for 
your excellent testimony.
    So with that, we will adjourn until further notice.
    [Whereupon, at 10:17 a.m., the committee was adjourned.]
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                  Additional Submission for the Record

          Association of Local Television Stations,
                                          James B. Hedlund,
                                       President, February 2, 1999.
Hon. Mike DeWine,
Chairman, Subcommittee on Antitrust,
Business Rights, and Competition,
Committee on the Judiciary,
U.S. Senate,
Washington, D.C

Re: EchoStar--Acquisition of MCI/News Corp. assets S. 247; S. 303

    Dear Mr. Chairman: We appreciate the opportunity to express our 
concerns regarding EchoStar's ``local-into-local'' plans and pending 
legislation which would allow satellite carriers to retransmit the 
signals of local television stations to subscribers in the stations' 
home markets. The Association of Local Television Stations, Inc. 
(``ALTV ''), represents the interests, of the competitive edge of the 
broadcast television industry--full service local television stations 
affiliated of the now established Fox Network, the emerging UPN and WB 
networks, and the new family-oriented PaxTV network. Our membership 
also includes independent stations, which often provide innovative and 
unique program services like foreign language and religious programming 
to their communities. More than any of the popular cable networks, 
these stations have stimulated competition and enhanced program 
diversity for all viewers in local markets throughout our country.
    As much as we appreciate the need for more competition in a video 
marketplace still dominated by cable television, we must resist efforts 
which attempt to promote competition in one market via means which 
distort competition and impede new competitors in a critical segment of 
that market. From the perspective of most of our member stations, the 
approach embodied in this legislation offers only a vain hope of 
satellite carriage in their local markets. At this point, only one DBS 
carrier, EchoStar's Dish Network, has begun providing local signals to 
viewers in a small, but growing number of markets. So far, EchoStar 
generally has offered only the signals of local television stations 
affiliated with the ABC, CBS, NBC, and Fox networks.\1\ Stations in 
those markets affiliated with the UPN, WB, and PaxTV networks have been 
excluded, as have the independent stations in those markets. Under S. 
303, which on its face defers any must carry rules for as much as three 
years, these local television stations will continue to suffer from 
lack of access to an increasing number of DBS subscribers in their home 
markets. Meanwhile, their direct competitors, affiliates of the three 
entrenched networks and Fox, will gain a competitive advantage in 
satellite homes.
---------------------------------------------------------------------------
    \1\ We understand that EchoStar also is providing the signals of 
local PBS affiliates in some markets.
---------------------------------------------------------------------------
    This would come at a particularly bad time for emerging networks 
like UPN, WB, and PaxTV. Their struggle to compete with more 
established networks, the affiliates of which benefit from local 
satellite carriage, would be hampered. Excluded stations would enjoy 
none of the benefits of digital picture quality, none of the benefits 
of inclusion in the on-screen program guides, and none of the benefits 
of seamless surfing. Furthermore, they likely also would be subject to 
competition from distant affiliates of their networks, which will enjoy 
all the benefits of picture quality and tuning ease on the satellite 
system.\2\ This would undermine the ability of new networks, their 
affiliates, and innovative independent stations to compete toe-to-toe 
with the ever expanding array of nonbroadcast program networks and 
services, as well as with their entrenched big three network 
competitors in their local markets. Thus, any delay in the imposition 
of must carry requirements on satellite carriers (once the compulsory 
license is amended to permit retransmission of local signals) is likely 
to injure competition and compound the difficulties inherent in 
establishing new competitive broadcast networks.
---------------------------------------------------------------------------
    \2\ A passage from the CARP decision, which EchoStar has cited in 
its recent comments to the Copyright Office, states that:

      Local retransmission of broadcast stations benefits the 
      broadcast station * * *. If a local broadcast station is 
      not available on a satellite carrier service, subscribers 
      to that station are less likely to view that station. The 
      viewer may not wish to install an A-B switch/antenna or 
      additionally subscribe to a cable service or may find the 
---------------------------------------------------------------------------
      system too inconvenient for regular use.

    Moreover, we are far from confident that must carry rules ever will 
come to their competitive rescue. Under S. 303, the mandatory carriage 
provisions would apply no later than January 1, 2002. Such deadlines 
can slip and often do. For example, when Congress enacted the original 
satellite Home Viewer Act in 1988, it contemplated termination of the 
satellite compulsory license in 1995. However, once the public began to 
receive broadcast television station signals on their satellite 
systems, Congress essentially forfeited the ability to eliminate the 
compulsory license. It was extended in 1994, and no one seriously 
expects Congress to let it expire at the end of this year. The public 
simply would not stand for being deprived of signals they have received 
for years under the compulsory license.\3\ The same result is 
predictable under S. 303. If (we dare say ``when'') satellite carriers 
protest that compliance with must carry requirements would be 
impossible and threaten to withdraw all broadcast signals from their 
services to sidestep the must carry requirements, Congress will find 
itself in the same untenable position.\4\ Indeed, the testimony of 
EchoStar CEO Charles W. Ergen at the hearing last week confirms that 
EchoStar ``will not have the space'' to carry all local stations in 
each market. In the face of readily predictable public outrage at the 
threatened reduction in their satellite program options, Congress, 
rather than adhere to the deadline, would have no choice, but to extend 
it. Meanwhile, the selective and discriminatory exclusion of many ALTV 
member stations would continue unabated. Such a result mocks 
competition by placing the latest entrants into broadcast network 
television at a distinct disadvantage vis-a-vis their established 
network competitors.
---------------------------------------------------------------------------
    \3\ We distinguish here between the equities in favor of satellite 
subscribers who have long enjoyed superstation and network signals on 
their satellite systems in a manner consistent with the law and those 
that have taken advantage of satellite distributors' willingness to 
blink the restrictions on providing network signals in other than 
unserved areas.
    \4\ Section 337(b) of the bill (page 7, lines 9-10) subjects only 
``satellite carriers retransmitting television broadcast signals'' to 
the must carry requirement. Thus, a satellite carrier could escape the 
must carry rule by carrying no broadcast signals.
---------------------------------------------------------------------------
    We do look forward to supporting legislation which permits 
satellite carriage of local signals, but only if it also requires 
satellite carriers to carry all local signals without delay. ALTV does 
not propose that satellite carriers be forced to carry local signals in 
every market (as is required of cable systems). However, if a satellite 
carrier retransmits the signal of one local television station in a 
market to subscribers in that market, then it should be required to 
carry all local stations in that market or at least provide a satellite 
subscriber with the same local signals a comparably situated cable 
subscriber would have available from its cable system. This would 
maintain parity between competing media by assuring that the satellite 
carrier were subject to no more rigorous obligations than a directly 
competitive cable systems. At the same time, independent stations and 
stations affiliated with new and emerging networks would suffer no 
competitive disadvantage in their home markets.
    Satellite carriers may complain that requiring nondiscriminatory 
carriage of local signals might overtax their capacity and impose 
additional unwanted costs on their operations. ALTV respectfully 
suggests that these concerns are overblown and myopic. The practical 
effect of imposing such a requirement on satellite providers would be 
marginal. Again, like cable systems, satellite carriers would be likely 
to carry some local stations voluntarily. Therefore, such a requirement 
typically might require a satellite carrier to add only a few 
additional local signals, such as those of newer stations or stations 
affiliated with newer networks like UPN, WB, and PaxTV. Thus, the 
practical effect often would be not a ``carry one, so carry seven,'' 
but a ``carry four, so carry six or seven'' rule. At worst, under 
current technological limits on capacity, compliance might require a 
satellite carrier to forego local signal carriage in a few markets in 
order to accommodate all local signals in other markets. ALTV submits 
that this result is preferable to a regime which invited and tolerated 
discrimination among local stations in the same market.
    Therefore, we respectfully urge you to reconsider S. 303 and S. 247 
with respect to the delayed must carry provision. Historically--and 
rightly--the cable and satellite compulsory licenses have carried with 
them the complementary obligation to use broadcast signals in a manner 
consistent with preserving the many benefits of free broadcast 
television service. We ask no more than that. Therefore, ALTV must 
oppose the S. 247/S. 303 package in its present form, but does look 
forward to making a positive contribution to efforts to draft and enact 
sound legislation to permit satellite carriers to carry the signals of 
local television stations in their home markets.
            Very truly yours,
                                          James B. Hedlund.

                                
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