[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.
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\1\ We understand that EchoStar also is providing the signals of
local PBS affiliates in some markets.
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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.
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\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
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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.
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\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.
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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.