[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]



   THE SATELLITE HOME VIEWER IMPROVEMENT REAUTHORIZATION ACT OF 2004

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

                                HEARING

                               before the

          SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET

                                 of the

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 1, 2004

                               __________

                           Serial No. 108-78

                               __________

       Printed for the use of the Committee on Energy and Commerce


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house


                               __________

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                            WASHINGTON : 2003
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                    COMMITTEE ON ENERGY AND COMMERCE

                      JOE BARTON, Texas, Chairman

W.J. ``BILLY'' TAUZIN, Louisiana     JOHN D. DINGELL, Michigan
RALPH M. HALL, Texas                   Ranking Member
MICHAEL BILIRAKIS, Florida           HENRY A. WAXMAN, California
FRED UPTON, Michigan                 EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida               RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio                EDOLPHUS TOWNS, New York
JAMES C. GREENWOOD, Pennsylvania     FRANK PALLONE, Jr., New Jersey
CHRISTOPHER COX, California          SHERROD BROWN, Ohio
NATHAN DEAL, Georgia                 BART GORDON, Tennessee
RICHARD BURR, North Carolina         PETER DEUTSCH, Florida
ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
CHARLIE NORWOOD, Georgia             ANNA G. ESHOO, California
BARBARA CUBIN, Wyoming               BART STUPAK, Michigan
JOHN SHIMKUS, Illinois               ELIOT L. ENGEL, New York
HEATHER WILSON, New Mexico           ALBERT R. WYNN, Maryland
JOHN B. SHADEGG, Arizona             GENE GREEN, Texas
CHARLES W. ``CHIP'' PICKERING,       KAREN McCARTHY, Missouri
Mississippi, Vice Chairman           TED STRICKLAND, Ohio
VITO FOSSELLA, New York              DIANA DeGETTE, Colorado
STEVE BUYER, Indiana                 LOIS CAPPS, California
GEORGE RADANOVICH, California        MICHAEL F. DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire       CHRISTOPHER JOHN, Louisiana
JOSEPH R. PITTS, Pennsylvania        TOM ALLEN, Maine
MARY BONO, California                JIM DAVIS, Florida
GREG WALDEN, Oregon                  JANICE D. SCHAKOWSKY, Illinois
LEE TERRY, Nebraska                  HILDA L. SOLIS, California
MIKE FERGUSON, New Jersey            CHARLES A. GONZALEZ, Texas
MIKE ROGERS, Michigan
DARRELL E. ISSA, California
C.L. ``BUTCH'' OTTER, Idaho
JOHN SULLIVAN, Oklahoma

                      Bud Albright, Staff Director

                   James D. Barnette, General Counsel

      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                 ______

          Subcommittee on Telecommunications and the Internet

                     FRED UPTON, Michigan, Chairman

MICHAEL BILIRAKIS, Florida           EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida                 Ranking Member
  Vice Chairman                      ALBERT R. WYNN, Maryland
PAUL E. GILLMOR, Ohio                KAREN McCARTHY, Missouri
CHRISTOPHER COX, California          MICHAEL F. DOYLE, Pennsylvania
NATHAN DEAL, Georgia                 JIM DAVIS, Florida
ED WHITFIELD, Kentucky               CHARLES A. GONZALEZ, Texas
BARBARA CUBIN, Wyoming               RICK BOUCHER, Virginia
JOHN SHIMKUS, Illinois               EDOLPHUS TOWNS, New York
HEATHER WILSON, New Mexico           BART GORDON, Tennessee
CHARLES W. ``CHIP'' PICKERING,       PETER DEUTSCH, Florida
Mississippi                          BOBBY L. RUSH, Illinois
VITO FOSSELLA, New York              ANNA G. ESHOO, California
STEVE BUYER, Indiana                 BART STUPAK, Michigan
CHARLES F. BASS, New Hampshire       ELIOT L. ENGEL, New York
MARY BONO, California                JOHN D. DINGELL, Michigan,
GREG WALDEN, Oregon                    (Ex Officio)
LEE TERRY, Nebraska
JOE BARTON, Texas,
  (Ex Officio)

                                  (ii)




                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Gore, Eloise, Assistant Division Chief, Media Bureau, Policy 
      Division, Federal Communications Commission................    10
    Hartenstein, Eddy W., Vice Chairman, The DIRECTV Group, Inc..    21
    Lee, Robert G., President and General Manager, WDBJ-tv2807, 
      on behalf of the National Association of Broadcasters......    25
    Moskowitz, David K., Senior Vice President and General 
      Counsel, Echostar Communications Corporation...............    14
    Wright, Frank, National Religious Broadcasters...............    32
Additional material submitted for the record:
    DIRECTV, response for the record.............................    69
    Gore, Eloise, Assistant Division Chief, Media Bureau, Policy 
      Division, Federal Communications Commission, letter dated 
      April 19, 2004, enclosing response for the record..........    67

                                 (iii)

  

 
   THE SATELLITE HOME VIEWER IMPROVEMENT REAUTHORIZATION ACT OF 2004

                              ----------                              


                        THURSDAY, APRIL 1, 2004

              House of Representatives,    
              Committee on Energy and Commerce,    
                     Subcommittee on Telecommunications    
                                          and the Internet,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2 p.m., in 
room 2123, Rayburn House Office Building, Hon. Fred Upton 
(chairman) presiding.
    Members present: Representatives Upton, Stearns, Whitfield, 
Shimkus, Buyer, Bass, Walden, Terry, Barton (ex officio), 
Markey, McCarthy, Doyle, Gonzalez, Boucher, Rush, and Dingell 
(ex officio).
    Staff present: Howard Waltzman, majority counsel; Neil 
Fried, majority counsel; Will Nordwind, majority counsel and 
policy coordinator; Jaylyn Jensen, majority professional staff; 
Will Carty, legislative clerk; Gregg Rothschild, minority 
counsel; and Peter Filon, minority counsel.
    Mr. Upton. Good afternoon. Today we are holding a 
legislative hearing on a staff discussion draft concerning the 
reauthorization of the Satellite Home Viewer Improvement Act, 
SHVIA. The staff discussion draft is entitled ``The Satellite 
Home Viewer Improvement Reauthorization Act,'' or SHVIRA. Is 
that right? SHVIRA.
    I want to thank the staff on both sides of the aisle for 
the many hours that they have toiled producing this draft for 
our review today. I commend the staff for attempting to 
carefully balance the equities or inequities on all sides. For 
sure, this draft serves as a very useful tool for us to 
continue soliciting input as we work together on a final 
product for introduction and markup in the not-too-distant 
future.
    This legislative hearing follows on the heels of the SHVIA 
oversight hearing, which the subcommittee held on March 10. At 
that hearing we reaffirmed the great success of Congress' past 
legislative efforts in helping to make DBS such a big hit with 
the American consumer. Of course, everyone recognizes the 
intermodal competition which DBS has spurred in the MVPD 
marketplace, which, if the many different TV commercials are 
any indication, is hot and heavy.
    As we know, portions of SHVIA are set to expire on December 
31 of this year, so we must act this year. Time is of the 
essence, and there is no time like the present to examine all 
aspects of SHVIA and to consider modifications which may be 
warranted.
    The staff discussion draft addresses a number of issues. 
With respect to the two-dish issue, the draft would require all 
local stations to be included on a single dish, although that 
single dish could be the second dish. A DBS provider would have 
180 days from enactment to comply, and it could receive one FCC 
waiver per market for an additional 180 days, if it can 
demonstrate that capacity constraints prevent it from moving 
all of the stations onto one dish, and that it would, 
therefore, be forced to stop providing local service in the 
market.
    With respect to the waiver and testing process for 
addressing whether a consumer is eligible to receive a distant 
network signal, we are told that shortcomings in the FCC's 
predictive model lead it to predict that some consumers can 
receive an analog signal over the air even though they can't.
    The FCC tells us that revising the model to account for the 
signal interference will help. The draft would require the FCC 
to revise its model within 6 months to account for interference 
and would allow it to improve other aspects of both the model 
and the waiver process.
    With respect to good faith negotiations and the exclusivity 
provisions of SHVIA, the draft would extend until December 1, 
2009, the broadcasters' obligation to negotiate retransmission 
in good faith, as well as the prohibition on exclusive deals. 
The draft would also apply the good faith obligation to both 
cable and satellite providers.
    With respect to distant digital signals, the draft would 
require the FCC to provide a report to Congress by December 31, 
2005, that proposes a model for determining who would be 
unserved by an over-the-air digital signal as of December 31, 
2006--a year later.
    With respect to the distant signal license and 
retransmission consent exemption, the draft would extend both 
provisions in SHVIA to December 31, 2009. And with respect to 
significantly viewed and market modification issues, the draft 
would allow satellite to carry the same out-of-market stations 
that cable can carry based on the FCC significantly viewed and 
market modification rules.
    And with respect to grandfathered subscribers and 
termination of distant signal service, the draft would require 
new subscribers to stop taking distant signal service once 
their provider began offering local-into-local service.
    Current subscribers who only have distant signal service, 
however, could continue taking distant signal service, even if 
their provider started offering local-into-local service. Once 
a current subscriber, however, elects to take the local-into-
local service, they would then have to forego their distant 
signal service.
    We are anxious to hear the feedback on this staff 
discussion draft from all of our witnesses today, and work with 
members on both sides of the aisle as we move ahead after 
today's hearing to introduce a bill to markup in the 
subcommittee, hopefully the week after we get back from the 
April district work period.
    I want to thank the staff on both sides of the aisle. I 
also want to thank our colleagues and staff on the Judiciary 
Committee for their work as well. I look forward to hearing 
from today's witnesses, and I yield for an opening statement to 
the ranking member of the subcommittee, my friend from 
Massachusetts, Mr. Markey.
    Mr. Markey. Thank you very much. And I want to commend you 
for calling this hearing on draft legislation addressing issues 
in the video competition marketplace, and in particular matters 
related to the Satellite Home Viewer Improvement Act of 1999.
    As we act to modify that Act, the subcommittee should aim 
to fulfill and enhance the cornerstones of telecommunications 
policy--namely, universal service, diversity, and localism. In 
the past, we have promoted universal service through the 
delivery of distant signals to those who reside in so-called 
white areas, where local over-the-air broadcast signals do not 
adequately reach.
    To enhance localism, back in 1999, I offered the so-called 
local-to-local amendment in the satellite subcommittee markup, 
which for the first time granted to satellite operators the 
right to carry local broadcast stations in local markets. In 
addition to the benefits of localism, another key reason why I 
offered the local-to-local amendment was to enhance competition 
to cable.
    Testimony that we were receiving at the time was that the 
chief reason that consumers were giving retailers for not 
switching from cable to satellite service was the lack of local 
broadcast stations as part of a seamless satellite package.
    The chief consumer who was complaining was my father, who 
said that it would just be a pain if he had to keep switching 
the A/B switch over to the local broadcasters. And it was just 
a pain, and he said, ``Eddie, is there any way you could change 
it so that on the satellite dish I could get channels 4, 5, 7, 
56, 38, and watch the Red Sox and Bruins.''
    So I said, ``Yes, I can, Pop.'' And so that was where my 
amendment came from.
    My amendment came from my father's desire to keep it all in 
one package, and that is now coming up to 5 years ago, which 
seems like ancient history given how much that one amendment 
has helped to dramatically increase the penetration of the 
satellite industry across our country.
    And I am proud of that dramatic rise in satellite 
consumers, due to the advent of local to local. It has helped 
satellite providers offer a more comparable service to cable 
operators and more effectively compete in the marketplace to a 
point where EchoStar and DirecTV combine now to garner 
approximately a 20 percent market share.
    Today we have a staff discussion draft, proposed revisions, 
and additions to the Act. I believe that, once again, we should 
approach these draft provisions and ascertain whether they 
fulfill long-standing policy objectives as well as explore 
other ideas for promoting universal service, diversity, and 
localism.
    Consumer interest should be paramount as we seek to resolve 
these issues in a timely fashion in the coming weeks.
    We have an all-star list of witnesses, Mr. Chairman. I 
commend you on that, and I yield back the balance of my time.
    Mr. Upton. Thank you.
    Mr. Walden.
    Mr. Walden. Well, thank you very much, Mr. Chairman. I will 
keep my remarks brief.
    There are probably at least three issues that I look 
forward to hearing more about and making sure that are 
addressed appropriately in this legislation. The first, 
obviously, is the two-dish issue, and I look forward to hearing 
more about whether it should be programmed on the first dish or 
the second dish, and the implications of same.
    Also, the issue of how we build out local into local, 
because I think that is essential. It is a service people want, 
and it is one that I want to see build out fully across the 
country.
    And the third is with respect to affiliate agreements in 
DMAs. I think it is an important principle that we need to look 
at closely, because it is a little hard for us to have the 
local stations remain viable, frankly, if all their network 
programming is available an hour earlier or an hour later, or 
whatever, from a network affiliate outside of the market.
    And so I think these are principles that we need to look at 
carefully. And I know your legislation begins to address these, 
and I look forward to hearing more about them.
    Thank you, Mr. Chairman.
    Mr. Upton. Mr. Boucher.
    Mr. Boucher. Well, thank you very much, Mr. Chairman. I 
will focus my remarks this afternoon on two matters. First, I 
am concerned by the provision in the draft bill that would 
require that all local-into-local service reside on a single 
satellite dish on the premises of the subscriber.
    Passage of that provision will cause wide disruption of 
existing services, force a retreat from dozens of markets in 
the offering of local-into-local service, and delay the 
provision of local-into-local service into new markets around 
the country. And for this high cost, there will be no 
appreciable new benefits conferred.
    EchoStar presently offers the second dish for free, and 
offers free installation in the 42 markets where a second dish 
is needed. Therefore, there is absolutely no disadvantage to 
the customer who resides in any of these 42 markets. If the 
provision requiring one dish is removed from the bill, EchoStar 
will expand local TV services to a total of 150 markets by the 
end of the year; 110 markets are served today.
    The addition of 40 new markets this year will be broadly 
welcomed by the residents of the medium-sized cities and the 
rural areas who are awaiting the arrival of local television 
service in order to improve their television viewing. If a one-
dish requirement is adopted, these markets will not get local 
service this year.
    I hope that the committee will not frustrate the 
expectations of EchoStar viewers that local service will arrive 
soon by approving a one-dish requirement that produces little 
obvious gain.
    Second, I see an obvious way to promote good public policy 
by accepting together one key recommendation of the broadcast 
industry and one key recommendation of the DBS industry.
    Here is the suggested arrangement. When local TV signals 
are provided by satellite in a given market, viewers in that 
market who want network programming would have to subscribe to 
the local stations. They would lose their right to subscribe to 
a distant network signal. The availability of the analog local 
station signals would be judged on a subscriber-by-subscriber 
basis for purposes of applying this provision. The TV industry 
has advanced this sensible proposal.
    On the digital side, high definition signals could be 
delivered by satellite to viewers who cannot get an HD signal 
delivered over the air from the local broadcast station. As the 
local station powers up to serve a larger share of its market 
with high definition, the importation of distant, high 
definition signals would be removed--again, judged on a 
subscriber-by-subscriber basis.
    The DBS industry has suggested an approach that is similar 
to this arrangement. Adopting both parts of this arrangement 
would well serve TV viewers and would stimulate the digital 
television transition. Both the TV and the DBS industries would 
achieve one of their key policy goals, and I hope our witnesses 
today will comment on the merits of a proposal that I think 
represents balance and would represent good public policy.
    Thank you, Mr. Chairman. I yield back.
    Mr. Upton. Mr. Buyer.
    [No response.]
    Mr. Terry.
    Mr. Terry. I will pass.
    Mr. Upton. Ms. McCarthy.
    Ms. McCarthy. I pass.
    Mr. Upton. Mr. Gonzalez.
    Mr. Gonzalez. Thank you very much, Mr. Chairman, and I also 
will be brief. I extend my thanks to you and, of course, 
ranking member Markey for getting this legislation down the 
road so quickly and efficiently, in such a bipartisan fashion.
    Also, my thanks to Chairman Barton and ranking member 
Dingell for their assistance when it comes to Section 101.
    When I came on this committee, I was told that many of 
these issues wouldn't be really Democratic and Republican in 
nature; they would be regional. And I assumed that would be 
mostly on the Energy side. And, of course, after hearing Rick 
right now I realize that it also extends even to dish TV.
    And what I am getting at is simply the Hispanic Caucus has 
really grappled with this particular problem for some time, 
which has never been adequately addressed. For the first time 
having this mandate basically that all local stations be 
carried on a single dish does prove to be incredibly beneficial 
to the Spanish-speaking audiences out there, and Spanish-
language television.
    And I will give you an example of what is occurring in 
Texas. On local-to-local offerings in the San Antonio, Dallas/
Fort Worth, and Houston markets--the three largest media 
markets in all of Texas--of the 11 stations bumped to a second 
dish in those markets nine were Spanish-language. This is long 
in coming.
    And like I said, I don't think we ever--by agreement were 
able to do a whole lot, and I understand whenever we come up 
with a remedy someone else may be inconvenienced. But in the 
whole, this is a positive development and one that is welcomed. 
And, again, I extend my thanks to those individuals that were 
so helpful in making sure that this problem was addressed at 
this time in this piece of legislation.
    And I yield back.
    Mr. Upton. Mr. Bass.
    Mr. Bass. Thank you, Mr. Chairman, and I want to especially 
thank the staff of this committee for working with us to 
address a satellite issue that is unique to my home State of 
New Hampshire.
    I also want to stress the importance that we all agree on 
the need to protect and maintain a viable and free over-the-air 
broadcast industry. And, last, that we keep in mind that 
digital transmission be a goal as we go forward with this--one 
of our goals as we go forward with this legislation.
    And I appreciate the witnesses that we have today and look 
forward to their testimony.
    Mr. Upton. Mr. Dingell is recognized for an opening 
statement.
    Mr. Dingell. Mr. Chairman, I thank you for your courtesy, 
and I commend you for holding the hearing that we are holding 
today to reauthorize the Satellite Home Viewer Improvement Act 
of 1999.
    The draft legislation before us attempts to further two 
important policy goals and to address several consumer concerns 
that have arisen since the Congress last authorized this 
statute in 1999. First, the draft seeks to strengthen the 
ability of the satellite companies to compete with cable 
providers in the video marketplace by providing satellite 
companies with increased regulatory parity.
    Second, it attempts to foster localism by continuing to 
ensure that consumers receive all local broadcast signals when 
such signals are made available. There is a dearth of 
competition in the multi-channel video marketplace, and 
consumers are paying the price in the form of higher cable 
rates.
    As the satellite companies work harder to roll out a 
competitive service, which includes local broadcast signals in 
a growing number of markets, these companies must be permitted 
to provide consumers with the same programming as does cable. 
Accordingly, the staff draft affords the satellite competitors 
the same ability as cable to compete provided consumers with 
broadcast network signals that are significantly viewed in 
markets served by the satellite company.
    Local broadcasters, whether they are local affiliates of a 
major character, public broadcasters, independent, foreign 
language, or religious, play an important role in providing 
programming geared to their local communities. This is a 
concept of localism which benefits communities by ensuring that 
they will receive their own news, weather, sports, and other 
content matters that are most important to them.
    Programming that is important, for example, to a person in 
Denver may not necessarily be the same programming that is 
important to a Detroiter. I think these matters are important 
in order to foster this very important goal of localism.
    When the Congress last authorized this statute it required 
a satellite competitor to offer all local broadcast signals in 
each market where it offers local into local, and to offer such 
signals in a non-discriminatory manner.
    In my view, this provision called ``Carry One, Carry All'' 
was the cornerstone of the 1999 reauthorization, and it was a 
matter which I pushed very strongly. Since that time, however, 
Congress and the FCC, or the Federal Communications Commission, 
have heard from consumers and broadcasters alike that one of 
the satellite competitors has engaged in a pattern and practice 
of not providing its consumers with all local broadcast signals 
in a given market, and on occasion has affirmatively told 
consumers that such signals are unavailable or are available 
only at additional cost.
    In my view, this is not constant with the law, with the 
intention of the committee, or the Congress, and it is 
certainly probably illegal. The Congress cannot condone such 
behavior, and I will try and see to it that this legislation 
reflects that concern.
    Accordingly, the staff draft requires that all local 
broadcast stations be received by consumers through a single 
satellite dish. I would note, however, that the draft provides 
substantial flexibility with regard to the deadline for 
compliance with this requirement in order to minimize the 
disruptions to current subscribers of the service.
    I would also note that the draft does not specify that a 
satellite provider is required to offer all programming on only 
one dish. Such communities as this situation occurs in may find 
that the companies will use any number of dishes, so long as 
the local broadcast stations are all received on the same dish. 
That raises some questions.
    The draft will also promote localism by prohibiting the 
provision of distant signals in a market once a satellite 
provider begins offering local-into-local service in that 
market. Importantly, the provision allows consumers who are 
currently receiving distant signals to continue to receive such 
signals unless they choose to begin receiving the local-into-
local service.
    As you are aware, the draft we are discussing today is 
simply that: a draft. And I am interested in the testimony of 
our witnesses today.
    Localism and the health of the local broadcast industry is 
of paramount importance to me, and I believe also to the 
country, and it should direct how we continue our efforts to 
shape a bill. We can also work to strengthen the ability of the 
satellite companies to compete fairly and aggressively in the 
marketplace.
    In conclusion, I want to commend you, Mr. Chairman, and 
thank you for the fine cooperation which you have extended to 
us in this matter so far. We will look forward to working with 
you in trying to accomplish some of the purposes that I set 
forth in my opening statement.
    I yield back the balance of my time.
    Mr. Upton. Thank you, Mr. Dingell.
    Mr. Doyle.
    Mr. Doyle. Thank you, Mr. Chairman, for convening this 
hearing today, so that we can, again, examine some of the 
important issues surrounding reauthorization of this 
legislation. I also want to thank the witnesses who are here 
today to testify to help us gain a greater understanding of the 
many concerns involved in this reauthorization and how we 
should proceed.
    I believe this committee has an inherent responsibility to 
put the needs and desires of consumers at the forefront of our 
thoughts. I have consistently supported efforts to increase 
competition in all aspects of the media and telecommunications 
industries, because true competition leads to greater value and 
choice for consumers.
    The growth of the satellite industry since 1999 has given 
consumers more options and, in turn, yielded greater 
competition between the cable and satellite industries. As we 
proceed in reauthorizing the Satellite Home Viewer Improvement 
Act, I have no doubt that we can again strike a proper balance 
between the cable, satellite, and broadcast interests, which 
will produce positive outcomes for our constituents.
    I know we have a draft before us today that aims to find 
this balance, and I look forward to hearing from the witnesses 
as to whether they believe we have been successful in this 
regard.
    We are here today because some vital portions of the SHVIA 
of 1999 will expire unless Congress reauthorizes them by 
December 31. The compulsory license authorizing satellite 
carriers to retransmit distant network stations, PBS stations, 
and superstations to satellite subscribers, the current royalty 
rates, the exemption for RVs and commercial trucks, and the 
grandfather for satellite subscribers in the Grade B contour 
who received distant broadcast signals prior to October 31, 
1999, are just some of the major issues this committee must 
address.
    I look forward to hearing from witnesses to hear their 
thoughts on the merits of extending or making permanent these 
expiring provisions. I understand that the draft before us 
today extends the compulsory license authorizing satellite 
carriers to retransmit distant network signals for another 5 
years, thereby enabling Congress to revisit the issue as 
digital television transition progresses and the satellite 
service continues to evolve.
    However, I believe that in order to truly establish a level 
playing field between the cable and satellite industries we 
should act to make this license permanent. Furthermore, the 
technological advances in the broadcast industry require us to 
take a wider look at this law beyond those expiring provisions 
to ensure that the law maintains a proper balance and fosters 
competition.
    So I welcome this hearing today, look forward to working 
with the other members of this committee as we move forward. I 
understand that the Judiciary Committee is also working on some 
of the vital issues facing satellite, cable, and broadcast 
industries. And I hope that as we fulfill our legislative 
responsibilities we remain diligent in protecting our 
jurisdiction.
    This is an issue of major importance to the American 
people, and it will shape the future of the television industry 
and this country for many years to come. I have no doubt that 
we can, again, find a proper balance that will allow competing 
industries and interests to continue to innovate and remain 
competitive, which in turn, Mr. Chairman, will ultimately 
benefit the consumers that we serve.
    Thank you very much.
    Mr. Upton. Thank you, Mr. Doyle.
    [Additional statement submitted for the record follows:]

 Prepared Statement of Hon. Joe Barton, Chairman, Committee on Energy 
                              and Commerce

    Thank you, Mr. Chairman, for holding this hearing on staff's 
discussion draft of legislation to reauthorize SHVIA, the Satellite 
Home Viewer Improvement Act of 1999. I stress that this is only a 
discussion draft. A bill has not yet been introduced, and discussions 
on this legislation will continue.
    One of the provisions of Title I would allow satellite operators to 
continue using multiple dishes to offer service, but only so long as 
they provide all local broadcast stations on a single dish. Currently, 
EchoStar, unlike DirecTV, splits local broadcasters between two dishes 
in some markets. EchoStar argues it must do so because of capacity 
constraints. Broadcasters argue that this practice is discriminatory. 
The discussion draft would put an end to this practice. I hope the 
witnesses will address this issue in their testimony today.
    Another provision in Title I would require the FCC to propose to 
Congress by December 31, 2005, a model for determining who would be 
unserved by over-the-air digital signals as of Dec. 31, 2006, the 
target date for the completion of the DTV transition and for turning 
off analog broadcasts. This is just a report, and Congress need not act 
if doing so would still be premature in light of the status of the 
transition at that time.
    One provision of Title II seeks to replicate for satellite the 
``significantly viewed'' and ``market modification'' rules that apply 
to cable. These provisions would afford satellite operators similar 
flexibility as cable enjoys to provide a consumer with in-state 
broadcasts even though Nielsen considers that consumer to be in another 
state's market. In considering this provision, we must be careful to 
examine what impact it would have on satellite operators' incentives to 
roll out additional local-into-local service.
    Title II would also require satellite operators to stop offering 
distant signals in a market once the satellite operators provide local-
into-local service in that market. Congress authorized distant-signal 
service so that consumers who could not receive local signals over the 
air could at least receive national network feeds from other markets. 
Once the consumer can receive their local broadcast network over 
satellite, however, there is much less reason to offer such service. To 
minimize disruption, the staff draft would grandfather some consumers 
who currently receive only distant-signal service, allowing them to 
continue doing so until they decided to opt for local signals.
    I thank the witnesses for their participation, and look forward to 
a constructive discussion today.
    I yield back.

    Mr. Upton. That concludes the opening statements from the 
members. I would note--make a motion for the record that all 
members not here that wish to put their opening remarks into 
the record can do so under unanimous consent.
    At this point, we are ready for our panel. We are joined by 
a very distinguished panel, Ms. Eloise Gore, Assistant Division 
Chief from the Media Bureau Policy Division from the FCC; Mr. 
David Moskowitz, welcome back, Senior VP and General Counsel of 
EchoStar Communications System; Mr. Eddy Hartenstein, welcome 
back again, Vice Chair of DirecTV; Mr. Robert Lee, President 
and General Manager of WDBJ-TV in Roanoke, on behalf of the 
National Association of Broadcasters, welcome you back; and Dr. 
Frank Wright, President of the National Religious Broadcasters 
from Manassas, Virginia.
    We appreciate your testimony arriving in advance of the 
hearing today. We will try to limit your remarks to no more 
than 5 minutes. Your testimony will be made part of the record 
in its entirety.
    Ms. Gore, we will start with you. Welcome.

   STATEMENTS OF ELOISE GORE, ASSISTANT DIVISION CHIEF, MEDIA 
  BUREAU, POLICY DIVISION, FEDERAL COMMUNICATIONS COMMISSION; 
DAVID K. MOSKOWITZ, SENIOR VICE PRESIDENT AND GENERAL COUNSEL, 
ECHOSTAR COMMUNICATIONS CORPORATION; EDDY W. HARTENSTEIN, VICE 
CHAIRMAN, THE DIRECTV GROUP, INC.; ROBERT G. LEE, PRESIDENT AND 
    GENERAL MANAGER, WDBJ-TV2807, ON BEHALF OF THE NATIONAL 
    ASSOCIATION OF BROADCASTERS; AND FRANK WRIGHT, NATIONAL 
                     RELIGIOUS BROADCASTERS

    Ms. Gore. Thank you very much. Good afternoon, Chairman 
Upton, ranking member Markey, and members of the subcommittee. 
I am Eloise Gore, Assistant Chief of the Policy Division of the 
Federal Communication Commission's Media Bureau.
    I am very pleased to appear before you today to provide 
technical assistance as you consider potential modifications to 
the Satellite Home Viewer Improvement Act. I should note from 
the outset that the views expressed today are mine and those of 
my colleagues in the Media Bureau, and do not represent the 
views of the FCC Chairman or any FCC Commissioner.
    By way of background, very briefly, I came to the 
Commission over 7 years ago and started working on these issues 
when it was just SHVA. I gathered further experience through 
the SHVIA years with the Commission's implementation of that 
law, beginning in 1999, and with 13 or so proceedings in the 
year 2000. Now I am delighted to continue as Congress takes up 
the issues in the SHVIRA.
    In a nutshell, satellite-related issues are one of the 
primary functions of my job. I have firsthand knowledge in how 
the law currently works, because I often deal with consumers, 
the broadcasting industry, the satellite industry, when these 
issues arise. And I frequently have been--have had the pleasure 
to provide assistance to the congressional offices and 
committee staff with regard to this area of the law.
    I have submitted a written statement for the record that 
provides more detail concerning the FCC rules, and I will be 
very happy to take any questions you have.
    Thank you.
    [The prepared statement of Eloise Gore follows:]

  Prepared Statement of Eloise Gore, Assistant Division Chief, Policy 
       Division, Media Bureau, Federal Communications Commission

    Good Afternoon, Chairman Upton, Ranking Member Markey, and members 
of the Subcommittee. As Assistant Division Chief of the Policy Division 
of the Federal Communications Commission's Media Bureau, I am pleased 
to appear before you today to provide technical assistance as the 
Subcommittee considers potential modifications to the Satellite Home 
Viewer Improvement Act (``SHVIA''). The views expressed in my written 
statement are mine and those of the FCC Media Bureau staff, and not 
those of the Federal Communications Commission.

                               BACKGROUND

    The SHVIA law, among other things, authorizes satellite television 
carriers to provide more television broadcast programming to 
subscribers by allowing the transmission of local broadcast signals 
into local markets (i.e. ``local-into-local''). The law also extended 
the authority for satellite carriers to provide distant or national 
broadcast programming to subscribers.
    The Federal Communications Commission (``FCC'') was required to 
implement several provisions of SHVIA within one year of enactment. In 
addition, the Commission provided a Report to Congress in November 
2000, 1 outlining its evaluation of the distant network 
signal eligibility standard and whether it should be modified or 
replaced. In that Report, the Commission recommended to Congress that 
the Grade B signal intensity standard and most of the planning factors 
used in the model be retained as the basis for predicting whether a 
household is eligible to receive retransmitted distant TV network 
signals under SHVIA.2
---------------------------------------------------------------------------
    \1\ In the Matter of Technical Standards for Determining 
eligibility for Satellite-Delivered Network Signals Pursuant to the 
Satellite Home Viewer Improvement Act, Report, ET Docket No. 00-90, 15 
FCC Rcd 24,321 (November 29, 2000).
    \2\ The one recommended modification was to the planning factor 
related to ``time fading.'' The Commission suggested replacing the 
existing fixed values with location-dependent values determined for the 
actual receiving locations using the Individual Location Longley-Rice 
prediction model. Id. at 2.
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                         REAUTHORIZATION ISSUES

    There are several provisions in the SHVIA that will expire in the 
near term absent Congressional action:

 The statutory copyright license to satellite operators that allows 
        the satellite operators to provide signals of distant network 
        affiliates to ``unserved'' customers;3
---------------------------------------------------------------------------
    \3\ 17 U.S.C.  119.
---------------------------------------------------------------------------
 The retransmission consent exemption that allows satellite operators 
        to retransmit distant network signals to an ``unserved'' 
        household without first obtaining the consent of the 
        station;4
---------------------------------------------------------------------------
    \4\ 47 U.S.C.  325(b)(2)(C).
---------------------------------------------------------------------------
 The grandfathering provision for certain distant signal 
        subscribers;5 and
---------------------------------------------------------------------------
    \5\ 17 U.S.C.  119(e).
---------------------------------------------------------------------------
 The prohibition on broadcasters engaging in exclusive carriage 
        contracts or failing to negotiate in good faith.6
---------------------------------------------------------------------------
    \6\ 47 U.S.C.  325(b)(2)(C).
---------------------------------------------------------------------------
    The distant statutory copyright license fee, retransmission consent 
exemption, and grandfathering provisions will expire on December 31, 
2004. The good faith and non-exclusivity requirements will expire on 
December 31, 2005.

                   ADDITIONAL POTENTIAL MODIFICATIONS

    The following information is provided as additional background for 
Congress to take into consideration as it considers the issues related 
to the reauthorization of the SHVIA provisions. The issues raised below 
are areas that have come up most often with Bureau staff as we deal 
with inquiries from the industries and consumers with regard to the 
SHVIA statute and our rules. As Congress considers changes to the 
SHVIA, it is recommended that you conduct your review keeping the basic 
tenets of the Act in mind: (1) Fostering fair competition in the 
Multichannel Video Programming Distributor (``MVPD'') marketplace; and 
(2) Promoting consumer choice.
(1) FCC Rules for Distant Network Signal Eligibility
    Prior to the passage of the SHVIA, the FCC's Office of Engineering 
and Technology established, and the FCC adopted, a computer model based 
on the Individual Location Longley-Rice (ILLR) to predict whether 
households are served or unserved by local television signals over-the-
air.7 Congress codified the ILLR model in the SHVIA, and 
subsequent to enactment, the FCC took steps to improve the prediction 
technique.8 In addition, the FCC's proceeding allows for 
continued refinement by the use of additional data as they become 
available.9
---------------------------------------------------------------------------
    \7\ In the Matter of Satellite Delivery of Network Signals to 
Unserved Households for Purposes of the Satellite Home Viewer Act; Part 
73 Definition and Measurement of Signals of Grade B Intensity, CS 
Docket No. 98-201, 14 FCC Rcd 2654 (February 2, 1999).
    \8\ 15 FCC Rcd 12,118 (2000).
    \9\ Id. at 12,129.
---------------------------------------------------------------------------
    Under the SHVIA, if a subscriber disagrees with the ILLR prediction 
(e.g. the model predicts they are ``served'' when the subscriber does 
not believe they receive an adequate over-the-air signal), they must 
follow a specific waiver and testing procedure.10 First, 
subscribers that are predicted to be ``served'' may request a waiver 
through the satellite television provider and the waiver must be 
granted by the local broadcast stations that are predicted to transmit 
a Grade B signal to the subscriber's home. If local stations deny the 
waiver, the subscriber may request a signal strength test from their 
satellite provider. The procedure is completed when the satellite 
provider and broadcaster identify a party to conduct the test, and the 
test takes place at the subscriber's residence. If the station and the 
satellite provider are unable to agree upon someone to conduct a test, 
a tester is to be designated by an independent and neutral entity 
identified by the Commission. The FCC designated the American Radio 
Relay League (``ARRL'') to participate in these circumstances. Unless 
the parties agree otherwise, the costs of the test are to be borne by 
the losing party.
---------------------------------------------------------------------------
    \10\ 47 U.S.C.  339(c)(4).
---------------------------------------------------------------------------
    It is a fair statement to say that the on-site testing procedure 
established in the SHVIA has not worked as effectively as anticipated. 
For example, there are issues with finding qualified testers, 
particularly in rural areas. If a qualified person can be identified, 
the cost of the transportation to the household requesting the test may 
exceed the cost of the test itself. Further, the cost of identifying a 
tester, conducting the test, and possibly paying for the test 
(depending on the outcome), has resulted in some satellite providers 
limiting their offer of distant signals only to subscribers that are 
predicted ``unserved'' under the ILLR model or who are granted waivers.
    With regard to distant digital signals, the FCC has not adopted a 
distant network signal eligibility standard for digital television 
(``DTV'').11 At the time of the Report to Congress in 2000, 
the Commission determined that it would be premature to construct such 
an eligibility standard, and deferred consideration until more 
substantial DTV penetration is achieved and more experience is gained 
with DTV reception and operation.12 The Commission 
understands that this issue will need to be addressed as the DTV 
transition moves forward.
---------------------------------------------------------------------------
    \11\ Report to Congress, supra n. 1, at  2.
    \12\ Id.
---------------------------------------------------------------------------
(2) Satellite Carriage of Local Signals
    In the SHVIA, the Congress established a new statutory license for 
local-into-local carriage and charged the Commission with implementing 
carriage requirements. Overall, local-into-local has been a benefit to 
consumers, the broadcast stations, and the satellite carriers, and 
thereby has improved the competitive offerings in the markets in which 
local-into-local is available--now over 100 markets. The local-into-
local provisions do not expire, but one related issue has been raised 
for consideration. The existing SHVIA provides that with respect to 
channel positioning for satellite carriage of local signals, a carrier 
is required to carry the local signals on contiguous channels and 
provide access to the signals at a ``nondiscriminatory price and in a 
nondiscriminatory manner on any navigational device, on-screen program 
guide, or menu.'' 13
---------------------------------------------------------------------------
    \13\ 47 U.S.C.  338(d) and 47 C.F.R  76.66 (i).
---------------------------------------------------------------------------
FCC Action Regarding Channel Positioning for Satellite Carriage
    The SHVIA does not expressly address the number of dishes that may 
be needed to receive all the local signals in a market. As part of the 
FCC Report and Order implementing the SHVIA's broadcast signal carriage 
requirements in November 2000,14 the Commission generally 
discussed the anti-discrimination language of Section 338(d) and 
concluded that Section 338(d) ``bars satellite carriers from requiring 
subscribers to purchase additional equipment when television stations 
from one market are segregated and carried on separate satellites.'' 
15 However, the Commission did not prohibit a satellite 
carrier from requiring a subscriber to pay for an additional dish in 
order to receive all television stations from a single market. Thus, 
the corresponding FCC rule states:
---------------------------------------------------------------------------
    \14\ Implementation of the Satellite Home Viewer Improvement Act of 
1999; Broadcast Signal Carriage Issues; Retransmission Consent Issues, 
16 FCC Rcd 1918 (2000).
    \15\ Id. at 1961.
---------------------------------------------------------------------------
        Within a market, no satellite carrier shall provide local-into-
        local service in a manner that requires subscribers to obtain 
        additional equipment at their own expense or for an additional 
        carrier charge in order to obtain one or more local television 
        broadcast signals if such equipment is not required for the 
        receipt of other local television broadcast 
        signals.16
---------------------------------------------------------------------------
    \16\ 47 C.R.F.  76.66(i)(4).
---------------------------------------------------------------------------
    The Commission further clarified the issue in an Order on 
Reconsideration where it stated that Congressional intent was clear 
that satellite carriers could not require subscribers to obtain an 
additional dish to receive some, but not all, local signals, if the 
requirement created discriminatory effects.17
---------------------------------------------------------------------------
    \17\ Implementation of the Satellite Home Viewer Improvement Act of 
1999: Broadcast Signal Carriage Issues, Order on Reconsideration, 16 
FCC Rcd 16544 (2001).
---------------------------------------------------------------------------
    On April 4, 2002, the FCC Media Bureau released a Declaratory 
Ruling and Order in response to a joint Emergency Petition from the 
National Association of Broadcasters (``NAB'') and the Association of 
Local Television Stations (``ALTV'').18 NAB and ALTV 
requested that the Commission address the issue of satellite carriage 
of certain television stations that required subscribers to obtain a 
second satellite dish for some but not all of the stations in the 
market. NAB and ALTV were concerned that EchoStar's ``Two Dish'' plan 
was discriminatory, and did not comply with the requirements of SHVIA 
or FCC rules. The Media Bureau issued a Declaratory Ruling that 
EchoStar's ``Two Dish'' plan, as implemented, violated the Act and 
Commission rules, 19 and required that EchoStar remedy the 
unlawful discriminatory actions.20 The Declaratory Ruling 
noted that it may be possible to offer certain local stations by use of 
a second antenna without engaging in prohibited discriminatory 
conduct.21 The Bureau's Declaratory Ruling currently is 
under review by the full Commission pursuant to several Applications 
for Review.22
---------------------------------------------------------------------------
    \18\ Declaratory Ruling and Order, CSR-5865-Z, DA-02-765 (April 4, 
2002).
    \19\ Id. at 8.
    \20\ Id. at 18.
    \21\ Id. at 8.
    \22\ See Application for Review of the Association of Public 
Television Stations and the Public Broadcasting Service, CSR-5865-Z 
(May 6, 2002).
---------------------------------------------------------------------------
Alternatives for Consideration
    FCC Media Bureau staff has provided technical assistance to 
Committee staff with regard to this issue. (1) Congress could choose to 
clarify how satellite providers can provide all local signals using two 
dishes in a non-discriminatory way, possibly through an ``automatic 
installation'' requirement; or (2) Congress could determine that all 
local signals must be available on the same satellite dish. Under the 
first alternative, Congress could require that, when a subscriber signs 
up for the local station package, if two dish antennas are needed to 
receive all the local stations, the satellite provider must provide and 
install the second dish unless the subscriber expressly waives the 
installation. Under the second alternative, a satellite carrier could 
offer all local stations using one or more dish antennas but all the 
stations must be available on one, or the other, dish antenna. In this 
latter situation, the second antenna need not be offered free of 
charge. Another issue of potential concern, with this second option is 
whether some local-into-local markets would be dropped due to capacity 
constraints, and if potential new local-into-local markets would have 
to be delayed or never served as a result.23
---------------------------------------------------------------------------
    \23\ EchoStar has indicated that if there is a one-dish 
requirement, many local-into-local markets may be dropped due to 
capacity constraints. Mr. David Moskowitz testified in response to a 
question during the March 10, 2004 hearing before the Subcommittee that 
``a lot'' of markets would not be served, and possibly 30-40 local-
into-local markets would likely be dropped if all local signals were 
required to be on one dish.
---------------------------------------------------------------------------
(3) Modifications to Local Market Definitions
    Currently, SHVIA provides that satellite operators may only 
retransmit ``local'' television stations to the subscribers that reside 
within the borders of the Designated Market Area (``DMA'') to which the 
local stations are assigned.24 This provision results in 
some situations in which satellite subscribers are not permitted to 
receive the local signals of the stations that are licensed to their 
state because they may reside in an area that is assigned to an 
adjacent, ``out-of-state'' DMA.25 Additionally, there are 
many DMAs that have fewer than 4 affiliates assigned to them, and would 
be of limited utility to subscribers.26 These issues were 
raised during the Subcommittee's March 10, 2004 hearing.
---------------------------------------------------------------------------
    \24\ 17 U.S.C.  122(j).
    \25\ E.g. Patrick County, VA is the only Virginia county assigned 
to the Greensboro-Winston Salem, NC DMA.
    \26\ E.g. Zanesville, OH DMA is one county and one station (NBC 
affiliate); Jackson, TN DMA is five counties and two stations (ABC and 
UPN affiliates).
---------------------------------------------------------------------------
FCC Rules Regarding Local Market Definitions
    Nielsen Media Research is the private entity that designates the 
borders of each DMA. The FCC does not have the authority under SHVIA to 
modify DMAs to take into account some of these situations discussed 
above. The SHVIA did address one of the situations in which a DMA 
covers more than one state by requiring carriage of both stations 
affiliated with the same network when the stations are in the same DMA 
and licensed in different states.27 However, this provision 
does not resolve all of the different circumstances experienced in this 
area.
---------------------------------------------------------------------------
    \27\ Generally, the SHVIA does not require carriage of more than 
one local commercial station in a market that is affiliated with a 
particular network. See 47 U.S.C.  338(c)(1). SHVIA provides an 
exception to this substantial duplication provision for stations 
affiliated with the same network when they are licensed to communities 
in different states. Id. This provision does not, however, change the 
DMA designation of a station or permit retransmission of a station from 
another DMA.
---------------------------------------------------------------------------
    In the cable context, the Commission can modify markets under 
existing cable rules.28 Further, other cable rules allow 
that if a local television station meets specific requirements and, 
thus is considered ``significantly viewed,'' 29 the station 
is considered ``local'' to the cable system for copyright purposes and 
may be carried on the cable system. Cable systems do not have to pay 
the distant copyright royalty fee for ``significantly viewed'' 
stations.30 The FCC's network non-duplication and syndicated 
exclusivity rules do not apply, 31 and carriage of these 
``significantly viewed'' stations on the cable systems is not subject 
to mandatory carriage.
---------------------------------------------------------------------------
    \28\ 47 C.F.R.  76.59.
    \29\ See 47 C.F.R.  76.54 and  76.5(i),
    \30\ 17 U.S.C.  111.
    \31\ 47 C.F.R.  76.92(f) and  76.106(a).
---------------------------------------------------------------------------
Alternatives for Consideration
    To address some of the issues surrounding local market definitions, 
FCC staff believes there may be several alternatives: (1) Congress 
could decide to amend Section 122 of the Copyright law to provide the 
FCC with authority to modify markets and include some ``distant'' 
signals in limited circumstances, similar to existing cable rules, 
which would require carriage of these out-of-market stations; (2) 
Section 122 could be amended to specify that satellite carriers may 
retransmit network affiliates from an adjacent, but ``distant,'' market 
if there is no affiliate of that network in the ``local'' DMA or if the 
adjacent affiliate is from the same state as a county that is assigned 
to an out-of-state DMA; or (3) Congress could determine that the FCC's 
``significantly viewed'' rules be modified to apply to satellite 
operators to permit, but not require, carriage of out-of-market 
stations with their retransmission consent in some circumstance. These 
options could create some parity between cable and satellite in this 
regard. However, it is not clear that these alternatives will solve all 
of the problems experienced by some satellite subscribers.

                               CONCLUSION

    While not every issue raised in the SHVIA reauthorization process 
must be addressed, Congress has the opportunity to review many issues 
that impact the subscribers and the industries. The Commission will 
implement any statutory changes that Congress decides to make, and the 
staff of the FCC is available to provide technical assistance on 
existing rules.

    Mr. Upton. Thank you.
    Mr. Moskowitz.

                 STATEMENT OF DAVID K. MOSKOWITZ

    Mr. Moskowitz. Good afternoon, Chairman Upton, member--
ranking member Markey, and distinguished members of the 
subcommittee. My name is David Moskowitz, and I am the Senior 
Vice President and General Counsel for EchoStar. Thank you for 
allowing me to testify.
    I also want to thank this committee for including key items 
in the recently circulated SHVIA discussion draft. Among these 
are the provisions allowing satellite to offer significantly 
viewed channels, which will make the same programming available 
to our customers that their neighbors currently watch off air 
or through cable.
    Further, directing the FCC to improve the waiver and signal 
testing procedures and to improve the ILLR model are also 
positive steps. More is, however, necessary. While the 
inclusion of interference in the ILLR model is important to 
accurately predict picture quality, the model should also take 
into account ghosting.
    Consumers simply don't understand why current law says they 
get a good off-air picture when personal experience tells them 
that ghosting makes off-air reception impossible. Moreover, the 
antiquated 1950's Grade B standard is hopelessly out of tune 
with consumer expectations in the 21st century. Congress should 
direct the FCC to overhaul the standard.
    Consumers also rely on the congressionally provided 
grandfather clause to continue receiving the channels they have 
watched for over 5 years, but that provision is missing from 
the current draft. We urge the continued protection of the 
rights of these consumers.
    There are also several provisions included in the draft 
which concern us. To begin, EchoStar's two-dish solution puts 
scarce spectrum to its fullest use and maximizes the number of 
markets where we can offer local channels by satellite.
    During the time period immediately after enactment of Must 
Carry, there were, admittedly, details left to be worked out, 
but EchoStar's two-dish system for the last 2 years does 
everything that could reasonably be expected to balance these 
important public interest goals and provide fairness to 
broadcasters.
    And let us be clear: Dr. Wright's proposed remarks are just 
plain misinformed, and I look forward to helping everyone to 
understand the facts today. Among other things, EchoStar offers 
the second dish and installation absolutely free to the 
customer, and there is no additional monthly charge for the 
wing channels.
    Further, once the second dish is installed, the viewing 
experience is completely transparent to the consumer. The 
channels from both dishes have contiguous numbers in our 
program guide, and with the push of a single button on their 
remote the consumer can equally tune to channels received from 
either dish.
    Elimination of this solution would have wide-ranging 
implications. EchoStar intends to provide local channels to at 
least 40 additional markets during 2004. If the legislation 
does not change, EchoStar would instead have to use the 
capacity earmarked for that purpose to comply with the change 
in law.
    Congress will deny consumers in communities like Cheyenne, 
Wyoming, and other small markets any alternative to high cable 
rates and poor customer service. While that alone would be a 
terrible outcome, it is only the beginning of the harm. 
Millions of consumers currently receiving local channels would 
also need to have a new dish installed, ignoring the stampede 
of consumer anger resulting from the mandated--congressionally 
mandated purchase and installation of new equipment.
    When the transition occurs, hundreds of thousands would 
ultimately lose their local channels. Experience tells us that 
large numbers of customers will not heed the warning of the 
imminent loss of their channels until they actually disappear.
    Alternatively, a congressionally mandated obligation to 
make the two-dish experience transparent to the consumer in the 
manner EchoStar has implemented would protect the policy 
interests of local stations without causing the enormous harm 
that would otherwise result. We urge the committee to reexamine 
this provision.
    The language that would take distant network channels away 
from consumers who receive local channels by satellite is also 
somewhat troubling. If stations would just spend on plant 
upgrades a small portion of their aggregate value of several 
hundreds of billions of dollars, then distant channels would 
not be necessary. But where consumers have to pay to get the 
channels, then consumers should have choice in the programming 
that they purchase.
    If Congress insists on taking this choice away from 
consumers, then it is all the more reason that Congress should 
provide consumers with the opportunity to view high definition 
network programming by satellite today. The committee should 
direct the FCC to establish a digital predictive model this 
year.
    Satellite carriers are uniquely positioned to be a catalyst 
to Congress' digital transition goals. We can make network HD 
programming immediately available to every household in America 
that can't receive the programming off air.
    We urge you not to give a gift of an additional 3 years to 
the broadcasters. When broadcasters provide the HD signal off 
air, consumers would receive that programming instead. With 
digital off-air tuners already included in our HD receivers, 
nothing could be easier. Moreover, in rural markets that don't 
have all local network affiliates, consumers will never watch 
their HD networks missing in their communities unless Congress 
enacts an HD distant license.
    Mr. Chairman, I would like to thank you for allowing me to 
testify this afternoon, and I very much look forward to a give-
and-take and your questions.
    [The prepared statement of David K. Moskowitz follows:]

  Prepared Statement of David K. Moskowitz, Senior Vice President and 
          General Counsel, EchoStar Communications Corporation

    Thank you Chairman Upton, Representative Markey, and distinguished 
members of the Subcommittee, on behalf of EchoStar Communications 
Corporation, I want to thank you for inviting our company again to 
discuss with you the Satellite Home Viewer Improvement Act. My name is 
David Moskowitz, and I am Senior Vice President and General Counsel of 
EchoStar Communications Corporation.
    The reauthorization of the Satellite Home Viewer Improvement Act 
offers Congress the chance to continue many of the established and 
proven provisions of the Act which promote competition in the 
multichannel video programming distributors (``MVPD'') market. There 
are also opportunities to remove regulatory provisions that are not 
imposed upon cable that make satellite a less attractive option for 
potential consumers in certain markets. And looking toward the future, 
Congress can modify the Act to allow DBS to provide more advanced 
services to the American consumer. One of EchoStar's principal 
objectives is to ensure that the satellite industry is able to meet 
consumer demand and compete more effectively with other MVPD providers.
    Upon review of the draft legislation that the Committee released 
earlier this week, we feel that the Committee has taken positive steps 
toward increasing consumer choice and enhancing competition. However, 
we have grave concerns with some of the provisions included in the 
draft that we hope to work with the Committee to address.

The Availability of Local-into-Local and 2-Dish
    EchoStar shares the goal of many members of Congress to make local-
into-local service available in more markets. Echostar has sought to 
satisfy consumer demand for local service by initially lobbying 
Congress for rights to offer the signals in the late 1990s, and then 
investing billions of dollars in satellite technology to launch local 
markets as quickly as possible. Through investment and innovation 
EchoStar Communications today offers more local broadcasters' signals 
nationwide than any other cable or satellite TV provider.
    EchoStar Chairman and CEO Charlie Ergen envisioned that DBS 
industry would provide local-into-local service and compete with cable 
nationwide in the mid-1990s. It was almost seven years ago that Mr. 
Ergen testified before this committee explaining that DBS needed to the 
rights to offer local service. Our company lobbied for this right for 
two years, and were pleased that Congress granted the satellite TV 
industry the rights to offer local-into-local service in the Satellite 
Home Viewer Improvement Act of 1999.
    DISH Network was the first satellite TV provider to offer local 
channels with a roll-out of 13 markets. In less than five years since 
passage of SHVIA, EchoStar's DISH Network has launched local service in 
110 television markets; serving more than 85% of the country. One of 
the greatest hurdles in continuing to offer local-into-local service in 
more markets is the scarcity of spectrum for DBS services. In spite of 
our limited spectrum, our company has invested hundreds of millions of 
dollars to build and launch spot beam satellites which make more 
efficient use of spectrum allowing us to increase the rollout of local 
markets. In addition, EchoStar has instituted a 2-dish solution in 
order to ensure that no spectrum that could be used to launch an 
additional local market, is left unused in one of the spotbeams. The 
use of 2-dishes has allowed us to deliver local-into-local into as many 
markets as possible, consistent with Congressional direction.
    Unlike regular satellites which broadcast satellite TV service 
nationwide, spot beam satellites allow for spectrum to be reused in 
different markets across the country. A spot beam satellite is similar 
to a flash light shined from orbit that covers a particular region of 
the country. The spot beam can only carry a limited number of channels. 
In most cases today, the most popular channels in three television 
markets are provided in a spot beam with the less popular channels 
being offered on a wing satellite. The spot beam cannot offer all three 
local markets on one dish because of spectrum limitations. There just 
is not enough channel capacity. At most two of the three markets could 
be carried. So if only two markets are provided in the spotbeam the 
left over spectrum in the beam would go to waste. And because the wing 
slots are filled to capacity, there is no way to migrate the additional 
market to the wing slot. There just isn't the spectrum available. Thus 
a one-dish solution at this time would require that certain markets are 
taken down. The total number would be substantial.
    Of the 110 markets where local service is available, 42 are 2-dish 
markets. In these markets EchoStar has a customer base of over two 
million subscribers. Under the Committee's proposal, the elimination of 
our two-dish system will force us to take drastic measures that will 
hurt consumers and stifle competition. If the two-dish system is 
eliminated, over 30 markets will be taken off the air because the 
capacity of our satellites will be tapped out once we move all signals 
to one dish--the bandwidth is just not there to ensure that consumers 
receive all the programming that they currently receive under the two-
dish system. Additionally, competition will be curtailed in the 40 
markets that EchoStar had planned to enter over the next year if this 
provision goes into effect because EchoStar will be unable to utilize 
its two-dish system with its maximizing spectrum effect, to provide 
service in these areas. Lastly, the provision will be a logistical 
nightmare and practically impossible to accomplish. Over two million 
EchoStar customers will need to have a new dish installed and the end 
result will be that these consumers will lose programming. Broadcasters 
have said that the viewing experience of consumers should be uniform 
and identical. However, small broadcasters have not invested the 
necessary capital to increase their signal power and make the viewing 
experience identical. EchoStar should not be asked to do more.
    With that being said, our company has made specific efforts to 
ensure that consumers are provided full information of the fact that 
the second dish was available free of any charge. There is a seamless 
appearance for consumers who use two dishes. In addition we go to great 
lengths to notify our consumers of the second dish offer. The following 
are some of the steps we've taken to make our subscribers aware of the 
second-dish:

1) Clarifying on our web site which stations need a free second dish 
        for reception;
2) Writing to all subscribers in existing 2-dish markets to better 
        explain the program and encourage them to call our 800 number 
        to receive a free second dish;
3) Amending our point-of-purchase materials and other items provided 
        local retailers and resellers in 2-dish markets to make clear 
        that a free second dish was required to receive some of the 
        local stations;
4) Upgrading our software to ensure that if a subscriber without a 
        second dish dials into a channel transmitting from the second 
        satellite, s/he is informed that they are not receiving a 
        signal they could be, and directing them to call our 800 number 
        to order a free second dish; and
5) Revise our training for our Customer Service Representatives to 
        ensure that they are providing accurate information to 
        customers concerning the free second dish program.
    We urge Congress not to cause disruptions in millions of consumers' 
service by requiring EchoStar's DISH Network to take down local 
markets. Congress should not penalize consumers as a result of the DBS 
industry's innovation in the face of limited spectrum, by requiring the 
migration of all consumers to one dish.

Regulatory Parity
    Regarding regulatory parity, the Committee's draft language is 
certainly an excellent first step. The inclusion of language that 
directs the FCC to review and take steps to improve the procedures for 
requesting and requiring waivers as well as for signal tests is both 
timely and constructive. Improvements to the ILLR model is also a good 
first step. However, what will immediately benefit consumers and 
enhance competition is the elimination of the antiquated Grade B 
standard and the implementation of an updated predictive model now 
rather than at some time in the future.

Carriage of Broadcast Signals
    The Committee's draft also does a good job addressing carriage 
issues. Similar to competitors, DBS providers' need the ability to 
offer a full complement of broadcast station programming. As DBS 
providers continue to offer more and more local-into-local services in 
the 210 DMAs, there are at least 50 markets that do not have a full 
complement of local affiliates of the major networks. Currently, the 
law does not allow DBS providers to make available to subscribers a 
broadcast station from a neighboring DMA in those circumstances to 
ensure that subscribers get the whole complement of broadcast stations. 
This is because the local-into-local license contained in Section 122 
of the Copyright Act only allows DBS operators to retransmit local 
stations back into the DMA where they are broadcast. Cable, on the 
other hand, can fill in holes in local station affiliate offerings with 
neighboring stations and routinely adds network affiliates and other 
broadcast stations so that its subscribers have the full line-up of 
major network and other popular stations. The inability of DBS 
providers to offer subscribers a full complement of broadcast signals 
leaves them at a serious disadvantage vis-a-vis cable in competing for 
customers and is inconsistent with the FCC's policy objective of 
ensuring that consumers have access to all of the major broadcast 
networks.
    The Committee draft legislation does take a positive step is in its 
extension of the ``significantly viewed'' and market modification 
exceptions to DBS operators. We believe this provision will help level 
the playing field between cable operators and DBS providers if the 
procedures by which new stations are added are even handed manner. It 
is important to ensure that all subscribers with a community eligible 
to receive a significantly viewed signal qualify as unserved households 
under section 119.

Waiver, Signal Strength Testing Process and Predictive Model
    Again, the Committee's draft legislation on these issues is a step 
in the right direction. Certainly, the current waiver and signal 
strength testing process for the receipt of distant network signals by 
those who are predicted to receive a Grade B over-the-air signal, but 
who nonetheless do not receive a clear picture, needs to be revisited. 
While the provisions in the draft legislation are good, we recommend 
narrowing the waiver process to only permit consumers receiving a weak 
Grade B signal to request a signal strength test. We also recommend 
clarifying the law to prohibit broadcasters from revoking waivers once 
given as long as the subscriber receives continuous service from their 
DBS provider. Further, the rules should be clarified to eliminate 
consumer confusion when a subscriber is predicted to receive the same 
network signal from two local affiliates of different DMAs by requiring 
a waiver only from the network station in the subscriber's DMA. This 
will eliminate the need for customers to get multiple waivers from 
affiliates of the same network.
    We also applaud the proposed requirement of taking interference 
into account and making other improvements to the grade B predictive 
model. In addition to those improvements, it is important to change the 
Grade B standard, which was developed in 1950's, to better define what 
consumers today view as a signal of acceptable quality. Any predictive 
model should also take into consideration the problems of ``ghosting.''

Transition to Digital Television
    The reauthorization of SHVIA offers Congress an opportunity to 
broaden the existing ``unserved household'' definition so consumers who 
cannot otherwise receive a digital television (DTV) signal from their 
local broadcaster, will have the ability to receive it from their 
satellite TV provider.
    When Congress passed the Telecommunications Act of 1996 it made a 
pact with the broadcasters that in return for providing them with $70 
billion dollars worth of new spectrum for the broadcast of DTV signals 
beginning in 1998. In the ensuing 1997 Balanced Budget Act, Congress 
set a deadline for the analog spectrum to be returned once the 
transition was complete. By regulation, the commercial broadcasters 
were to be offering digital service in all 210 designated television 
markets (DMA) by May 1, 2002. Non-commercial broadcasters were to be 
transmitting by May of the following year. The broadcasters were then 
required to return the analog spectrum by December 31, 2006.
    Despite the comprehensive transition framework created by Congress 
and the Federal Communication Commission's (FCC) many efforts to 
accelerate the transition, many broadcasters are still failing to 
provide digital service on par with their analog service. Currently 
1,057 TV stations out of 1,688, or nearly two-thirds, are not meeting 
Congress' expectations for available digital service in local markets 
according to the FCC. Of these 1,057 stations, 303 are not broadcasting 
at all and 754 are broadcasting at a low power, serving an area smaller 
than their analog signal.1 On a market-by-market basis, 
consumers in only 17 of 210 markets are able to receive a full 
complement of over-the-air network digital TV service (NBC, ABC, CBS, 
FOX, and PBS) similar to analog service.
---------------------------------------------------------------------------
    \1\ FCC, ``Summary of DTV Applications Filed and DTV Build Out 
Status,'' February 25, 2004.
---------------------------------------------------------------------------
    The broadcasters would like you to believe that their digital TV 
signal is more widely available. In fact, during recent testimony in 
front of the House Judiciary Subcommittee on Courts, the Internet, and 
Intellectual Property, the National Association of Broadcasters claimed 
that broadcasters have built--and are on-air with--digital television 
(``DTV'') facilities in 203 markets that serve 99.42% of all U.S. TV 
households. If we are to believe these statistics, then it is hard to 
understand why broadcasters are so adamant about preventing the 
satellite TV industry from serving the remaining 0.58% of households 
who cannot now receive their service. What is misleading about the 99% 
statistic is that it merely represents that one broadcaster per market 
is offering digital service. The broadcasters would have you believe 
that these broadcasters are offering their service to the entire 
market, but today the majority of broadcasters are offering their 
service at low power reaching only a small fraction of the total 
market. Thus the 99.42% of all U.S. TV households is merely the number 
of households in those 203 markets and not the number of households 
that actually can receive the digital service. Finally consumers expect 
to receive CBS, NBC, ABC, FOX, and PBS in digital and are not satisfied 
that only one broadcaster in the market is providing service in 
digital.
    The Balanced Budget Act of 1997 provided only a limited number of 
rationales for extending the December 31, 2006 deadline for 
broadcasters to return the analog spectrum. The most significant is the 
so-called ``15% rule.'' Under that rule, the FCC may grant an extension 
if at least 15% of households do not have a DTV set or a digital-to-
analog converter enabling them to receive the DTV signals of local 
broadcast stations. Today, less than three years from the 2006 
deadline, there is no evidence that the percentage of American homes 
with compliant sets exceeds even the single digits. The 15% loophole 
will ensure that broadcasters will squat on both the analog and digital 
spectrum for years, if not decades to come. New innovations that rely 
on the redeployment of the analog spectrum will be put on hold and 
taxpayers across the country will be denied the hundreds of billions of 
dollars that the auction of the analog spectrum would bring to the U.S. 
taxpayer.
    There is an immediate and practical solution to help ensure that 
the digital transition does not continue to proceed at today's snail's 
pace. By allowing satellite TV providers to offer DTV programming to 
households that are not served with a local over the air signal, 
Congress would facilitate a demand for digital television sets among 
satellite TV subscribers. Although these households would be receiving 
distant network DTV signals rather than local broadcast signals, these 
consumers would count toward the local broadcaster's 85% take rate 
because the satellite TV industry's HDTV set top box receivers include 
over-the-air digital tuners. The network availability of HD service via 
satellite will also motivate the broadcasters to make their digital 
signal available to more households sooner, which will accelerate the 
time in which 85% of the country can receive DTV. Congress will need to 
direct the FCC to develop a propagation model to predict over-the-air 
digital reception on a household-by-household basis. The Copyright 
Office, in its testimony before the House Judiciary Subcommittee on 
Courts, the Internet, and Intellectual Property on February 24 agreed 
by saying ``Congress will have to reexamine how to determine what is an 
un-served household'' in a digital world. It is vital that Congress 
give the Federal Communications Commission direction in the creation of 
a predictive model for digital television service. The model should 
take into account that consumers today expect to receive digital 
service on par with the service available from satellite or cable TV 
providers and do not expect to pay an unreasonable amount of money to 
receive such a picture.

Reauthorization of Section 119
    Congress allows satellite TV carriers to make distant network 
programming available to millions of families unable to receive the 
over-the-air service from their local network affiliates. These 
``underserved households'' number in the millions and reside in every 
television market across the country. In 1988, Congress passed the 
Satellite Home Viewer Act which granted the satellite TV industry the 
same rights afforded the cable TV industry to offer distant network 
service. The satellite TV industry has since invested billions of 
dollars to build and launch satellites that now provide service to 
these families. We urge Congress to extend the compulsory license on a 
permanent basis to continue to encourage competition in the market and 
not to frustrate consumers who now receive distant network service.
    The broadcasters have argued that consumers should not be eligible 
for distant network service in markets where local-into-local service 
is available. We oppose this modification to the existing license. We 
believe that consumers should have choice in the network programming 
they must purchase. In the same way that a consumer in Kalamazoo, 
Michigan can purchase either the Kalamazoo Gazette or the Los Angeles 
Times, we believe that consumers who do not have adequate access to an 
over-the-air signal and must pay for their television service should 
have the option of watching their local broadcaster or a distant 
broadcaster on their satellite platform. Besides, the modification 
would penalize satellite carriers for investing in local into local 
service. Taking away the satellite carrier's distant network license in 
areas for which they have made such an investment would be an unjust 
penalty. Furthermore, the deletion of distant network signals in 
markets where satellite provides local service would be costly to the 
consumer. Many satellite TV subscribers have legacy dishes and set top 
box receivers that would require upgrading in order to switch from 
distant network service to local service.
    In addition it is largely up to the broadcasters to reduce the 
number of unserved households in their markets by upgrading their 
facilities. The broadcasters could work to make their own local signal 
more widely available within their market. This would effectively 
accomplish their goal of limiting the availability of distant network 
service in their market. However the broadcasters realize that having 
their signal delivered by satellite or cable TV is less costly than 
increasing the power levels of their antennas. Simply put, the 
broadcasters would rather increase the reach of their signal by 
sponging off of the investment of the satellite TV industry and 
limiting the choice of consumers than take proactive steps themselves.
    The broadcasters' proposal would eliminate the incentive for the 
broadcasters to improve the quality or reach of their free over-the-air 
signal. With more than 90% of all households receiving their network 
channels through cable or satellite today, broadcasters acquire less-
and-less revenue from households who receive their service over the 
air. Thus the broadcasters are less responsive to the needs of these 
consumers. However because the broadcasters would not want these 
consumers to be eligible for distant network service, the Sec. 119 
license creates a market-place check against any incentive of the local 
broadcasters to allow further deterioration of their over-the-air 
service. In conclusion, the proposal to limit the availability of 
distant network service to the markets unserved by local channels via 
satellite would not improve the availability of free over-the-air 
service, and could create a disincentive for the broadcasters to 
continue offering free service of acceptable quality in rural areas.
    Section 119 also permits satellite carriers to retransmit non-
network broadcast stations to satellite subscribers. These so-called 
``superstations,'' such as WGN, have been a staple of cable system 
lineups since cable first began making its service available to 
consumers in the 1970s, and helped drive the growth of the satellite 
television industry. They continue to be among the most popular program 
offerings. The statutory license ensures that satellite carriers have 
the same opportunity as cable to make this popular programming 
available to satellite subscribers.
    Section 119 also allows certain eligible households to continue 
receiving distant network signals if they subscribed to these signals 
prior to October 31, 1999. EchoStar strongly supports an extension of 
the distant network ``grandfather'' clause. This group of satisfied, 
long-term customers numbering in several hundreds of thousands has come 
to rely upon this service for at least the last five years, and in some 
cases much longer. It makes no sense from a public policy standpoint to 
disenfranchise consumers by telling them that they can no longer 
receive this programming.
    Finally, the current playing field is not level--as long as the 
cable industry continues to enjoy a permanent, statutorily granted 
license, the satellite industry remains at a competitive disadvantage. 
Therefore, in the interest of parity and Congress' role and oversight 
responsibilities in promoting competition in the MVPD marketplace, we 
urge the Committee to allow satellite carriers to avail themselves of a 
license under the same terms as cable.

Conclusion
    Mr. Chairman, in closing I would like to reiterate that EchoStar 
appreciates the efforts of this subcommittee as well as the Congress to 
ensure that DBS is a true competitor in the MVPD marketplace. With a 
few exceptions, our experience under the SHVIA has been a positive one. 
While the DBS industry is growing, it is nowhere close to the size of 
cable operators. It is therefore essential for Congress to reauthorize 
the extension of the satellite statutory license, allow more regulatory 
parity with cable, which still enjoys preferential treatment under the 
copyright laws, and ensure that the DBS industry is able to compete on 
a level playing field. We at EchoStar look forward to working with 
members of this committee and this entire Congress to modernize SHIVA 
so that we are able to deliver the latest in technology to as many 
consumers, as quickly as possible.

    Mr. Upton. Thank you.
    Mr. Hartenstein.

                STATEMENT OF EDDY W. HARTENSTEIN

    Mr. Hartenstein. Chairman Upton, Mr. Markey, and members of 
the subcommittee, my name is Eddy Hartenstein, and I am the 
Vice Chairman of the DirecTV Group. It is a name we changed 
since our last visit only a few weeks ago. Thank you for 
allowing me to once again testify regarding now SHVIRA.
    As I reported to you 3 weeks ago, SHVIA is truly one of 
this committee's success stories. And indeed I believe it was 
in April 1999, if I may digress, we had a practice of 
management actually answering the phones. And there is an 
elderly gentleman from Massachusetts calling me asking about 
this damn A/B switch, and he said--because I had identified 
myself as a CSR that day, a customer service rep. He said, 
``Eddy, can you do something to fix that?''
    And I said, ``Sir, it will take an act of Congress.''
    He said, ``Let me take care of it.'' Thank you. There you 
go.
    So you understand how appreciative I am of having loyal 
customers. I will note that he was a customer of ours before 
certain other members on this committee.
    But recently the SHVIRA discussion draft was circulated, 
and I think while it makes a good start I would like to use the 
balance of my time to point out the aspects of the draft that 
are especially helpful, and then perhaps a few that I think 
could help.
    As I indicated earlier, several improvements to the current 
law are incorporated. It allows us satellite carriers to 
deliver broadcast signals into all of the markets which cable 
operators deliver them, the significantly viewed areas. That is 
great. It extends the good faith bargaining requirements for 
broadcasters, including the prohibition on exclusive 
retransmission consent arrangements.
    This last provision is particularly important. It prevents, 
for example, channel 7 here in Washington from cutting an 
exclusive deal with Comcast and thereby making its signal 
potentially unavailable to DirecTV, EchoStar, or even 
StarPower.
    It at least begins the process of addressing the needs of 
consumers who will be unable to receive over-the-air high def 
signals, although we think the FCC--and we would like to help 
them--should act more quickly on this issue. And it helps 
resolve some of the legal uncertainty associated with the 
splitting of broadcasters in individual markets between two 
dishes.
    All of this is good news in a distribution market that is 
still, to this day, dominated by cable. There are areas where 
DirecTV feels--and we would suggest--that the committee 
consider still making some changes. Among these issues are the 
permanence of the license.
    My first request is very simple. Cable operators have a 
permanent compulsory license to deliver these broadcast 
signals. Unless we really enjoy getting together like this 
every 5 years, I would think satellite operators should also 
have a permanent license.
    Second, and I would classify this the sort of--the no-
distant-or-local issue. The draft tells our customers who now 
receive distant signals legally that they must drop those 
signals merely because they happen to subscribe to local-into-
local service.
    To begin with, to the extent that this is a problem, it is 
a problem that, in large part, will go away naturally. Our 
customers tend always to prefer local service, and many of them 
turn away from the distant service once they are given the 
opportunity when we can present locals.
    More fundamentally, we have never thought that Congress 
would want to be in the business of shutting down anybody's 
legal service. Your constituents, all of you, would be affected 
by this provision that they--and how they receive distant 
network signals legally. They have come to expect them and 
enjoy them, and they should be able to continue to do so 
without disruption.
    We think the subcommittee should abandon the no-distant-or-
local provision outright. However, if it does move into that 
direction, at an absolute minimum the following changes should 
make--be provided for. It should allow everyone who legally 
receives distant signals now to continue doing so.
    Next, it should allow everyone who in the future will 
legally receive distant signals in markets without local 
service to continue doing so. These changes, we think, would at 
least minimize some of the worst disruptions of the no-distant-
or-local provision as currently drafted.
    Our third area of concern relates to the so-called two-dish 
language in Title I, Section 101. Mr. Chairman, 3 weeks ago I 
told you and this subcommittee that as far as the two-dish 
controversy goes the most important thing to DirecTV is legal 
clarity. There is none now, and there should be. And so, again, 
I am happy to see the committee take the first steps toward 
providing this clarity.
    But I fear that the bill, as currently drafted, may reach 
further than the subcommittee and your staff intended. This is 
because the current language does not distinguish between 
standard definition and high definition signals. In other 
words, it prohibits splitting all signals, standard and high 
definition, in any given market.
    This is a problem, and, if unaddressed, it will threaten 
the transition to digital television and our ability to provide 
local high def signals into markets. And as you know, DBS 
operators face significant capacity constraints, particularly 
as they begin to roll out high def. As a result, we may 
transmit high def signals, at least to some markets, from so-
called other or second locations that would require a second 
dish.
    This type of arrangement is not discriminatory, because in 
any such market we would place all of the standard def 
broadcast signals on one dish, and all of the high definition 
potentially on a second dish. This is why, as I understand it, 
the broadcasters do not object to such an arrangement, and 
certainly the law shouldn't prohibit it.
    Once again, Mr. Chairman, Mr. Markey, members of the 
subcommittee, I would thank you for all that Congress has done 
to nurture our industry as a vibrant competitor to cable. Your 
hard work and the hard work of your staff will allow us to 
continue to do so.
    Thank you.
    [The prepared statement of Eddy Hartenstein follows:]

  Prepared Statement of Eddy Hartenstein, Vice Chairman, The DIRECTV 
                                 Group

    Chairman Upton, Mr. Markey and members of the Subcommittee, my name 
is Eddy Hartenstein and I am the Vice Chairman of The DIRECTV Group. 
Thank you for allowing me to testify once again on behalf of DIRECTV 
regarding the reauthorization of the Satellite Home Viewer Improvement 
Act (``SHVIA'').
    Three weeks ago, I reported on the significant progress that that 
the Direct Broadcast Satellite (``DBS'') industry has made as a 
competitor to cable, and the important role your Subcommittee has had 
in enabling that progress. I will therefore make my remarks today on 
this subject brief.
    SHVIA is truly one of this Subcommittee's success stories. When 
SHVIA was enacted in 1999, the DBS industry had 10 million subscribers. 
In the last five years, that number has more than doubled, reaching 22 
million subscribers, of which DIRECTV serves 12 million. The result is 
that, while cable still has about 66 million subscribers, DBS has 
played at least some small part in limiting cable price increases and 
forcing cable companies to provide better customer service, improved 
content, and digital services. As I testified three weeks ago, none of 
this would have been possible without more robust DBS competition, and 
that DBS competition in turn would not have been possible without 
SHVIA.
    So you will understand how appreciative I am to see that this 
Subcommittee is fully engaged in SHVIA reauthorization. Recently, a 
SHVIA reauthorization ``discussion draft'' was circulated. I think this 
draft makes a good start. And, if I may, I would like to use the 
balance of my time to point out, first, the aspects of the draft that 
we think are especially helpful to consumers and competition in the 
video distribution market; and second, a few aspects of the draft that 
we think could stand further adjustments.

Positive Aspects of the Draft
    SHVIA has been a huge success. So we are very pleased that the 
Subcommittee recognizes the importance of reauthorizing SHVIA in a 
timely fashion. And, as I indicated, this draft makes several 
improvements to current law.

 It allows satellite carriers for the first time to deliver broadcast 
        signals into all of the markets in which cable operators 
        deliver them--including markets where such signals are 
        ``significantly viewed.'' This is a very important provision, 
        which will make DBS more competitive with cable in markets 
        across the country. The provision will also go a long way 
        towards addressing the concerns you have expressed about your 
        constituents' current inability to receive the news and public 
        interest programming most relevant to their lives.
 It extends the good faith bargaining requirements for broadcasters--
        including the prohibition on exclusive retransmission consent 
        arrangements. At the same time, it imposes a similar (and, we 
        think, reasonable) good-faith negotiation requirement for 
        distributors.
 It at least begins the process of addressing the needs of consumers 
        who will be unable to receive over-the-air high-definition 
        signals.
 And it helps to resolve some of the legal uncertainty associated with 
        the ``splitting'' of broadcasters in individual markets between 
        two dishes.
    All of this is good news for DIRECTV. More importantly, it is good 
news for competition in a distribution market that is still dominated 
by cable.

Three Areas Where DIRECTV Seeks Changes
    Again DIRECTV believes this draft has much to speak for it. But 
some other aspects of the draft concern us greatly. If left unchanged, 
a few provisions threaten to undo at least some--and possibly a great 
deal--of the DBS success story. So we hope, Mr. Chairman and Members of 
the Subcommittee, to work with you and your staffs over the coming 
weeks to see if we can't make a good draft even better.

Permanent License
    My first request to you is a very simple one. Our competitors in 
the cable industry have a permanent compulsory license to deliver 
broadcast signals. DIRECTV sees no reason why we, too, shouldn't have a 
permanent compulsory license. We therefore ask that you make the 
satellite statutory license permanent.

No-Distant Where Local
    The second issue we would like the Subcommittee to address concerns 
Title II, Section 203--the ``no-distant-where-local'' provision. The 
draft tells our customers who now receive distant signals legally that 
they will have to drop those signals, merely because they happen to 
subscribe to local-into-local service.
    To begin with, to the extent that this is a ``problem,'' it is a 
problem that in large measure will go away naturally. We have found 
that, as we introduce local-into-local service in particular markets, 
most customers prefer their local stations. Indeed, many customers in 
those markets naturally begin to ``churn'' from distant signal service 
to local service. We expect that trend to continue and accelerate in 
the future.
    More fundamentally, we have never thought that Congress should be 
in the business of shutting down anybody's legal service. Your 
constituents who would be affected by this provision receive their 
distant signals legally. They have come to expect them and enjoy them. 
They should be able to continue to do so without disruption.
    As you can see, we think the entire ``no-distant-where-local'' idea 
is a bad one. And we think the Subcommittee should abandon it outright. 
But if the Subcommittee does move in this direction, it should at an 
absolute minimum make the following changes:

 It should allow everyone who legally receives distant signals now to 
        continue doing so.
 It should allow everyone who, in the future, will legally receive 
        distant signals in markets without local service to continue 
        doing so.
    This, we think, is a simple matter of fairness. I want to be 
clear--we would not support a ``no-distant-where-local'' provision even 
with these changes. But these changes would at least minimize the 
disruption to your constituents of the ``no-distant-where-local'' 
provision.

Two-Dish
    The third area where we think the draft needs adjustment concerns 
the so-called ``two-dish'' language in Title I, Section 101. Mr. 
Chairman, three weeks ago I told you that, as far as the two-dish 
controversy goes, the most important thing to DIRECTV is legal clarity. 
There is none now, and there should be. And so, again, I am happy to 
see that the Subcommittee is taking the first steps towards providing 
this clarity.
    I am concerned, however, that the bill as currently drafted may 
reach further than the Subcommittee intends. This is because the 
current language does not distinguish between standard- and high-
definition signals.
    As I understand it, the Subcommittee seeks to prevent satellite 
operators from, in any single market, putting some standard-definition 
broadcast signals on one dish while putting others on a second dish. 
The draft language accomplishes this.
    But the language does more. It prohibits splitting all signals--
standard and high-definition--in any given market. This is a problem, 
and, if unaddressed, it will threaten the transition to digital 
television.
    As you know, DBS operators face significant capacity constraints, 
particularly as they begin to roll out high-definition signals, which 
require far more bandwidth than do standard-definition signals. As a 
result, DBS operators may transmit high-definition signals (at least to 
some markets) from so-called ``wing-slots.'' In order to receive those 
high-definition signals, customers would need a second dish.
    This type of arrangement is not ``discriminatory,'' because, in any 
such market, we would place all the standard-definition broadcast 
signals on one dish, and all the high-definition signals on the second 
dish. This is why, as I understand it, the broadcasters do not object 
to such an arrangement. Yet the two-dish provision, as written now, 
would prohibit this arrangement. We think this can be easily fixed, and 
would be happy to work with your staff to do so.
    Once again, Mr. Chairman and Members of the Subcommittee, I would 
like to thank you for all that Congress has done to nurture the 
satellite television industry as a vibrant competitor in the MVPD 
market. Your hard work, and the hard work of your staff, will allow us 
to continue to provide the highest quality, best-priced competitive 
service to our customers. I am happy to take your questions.

    Mr. Upton. Mr. Lee. I would just note for the record we 
have a little mute button for you up here today.

                   STATEMENT OF ROBERT G. LEE

    Mr. Lee. Thank you, Chairman Upton, ranking member Markey, 
and members of the subcommittee. I am pleased to represent NAB 
and America's local television stations here today.
    The aim of the current revision of SHVIA, in our 
estimation, should be, first, to promote the rapid rollout of 
DBS local-to-local service, which if done properly enhances 
America's unique system of free, over-the-air community 
television broadcasting; and, second, to ensure that the 
distant signal compulsory license, which by its nature 
threatens localism, is used solely as a last resort.
    And, sadly, a third requisite for the SHVIA revision is a 
set of exceptionally stringent monitoring and enforcement 
provisions, because as this committee knows from painful 
experience EchoStar has often ignored and circumvented the 
existing statute. A Federal judge found just 5 days ago that 
EchoStar's wilful infringement of network programming enabled 
it to reap many millions of dollars of unlawful gains.
    I commend the staff for the recent draft, which is an 
important starting point in reaching your goals. In some areas, 
we, too, think improvements should be made to ensure that DBS 
is provided--is not provided new opportunities for abuse.
    First, we commend the effort to end EchoStar's two-dish 
scheme. You heard today that putting all local stations on the 
same dish would require EchoStar to end local to local in some 
markets. Well, let me say just two things on that issue. If 
DirecTV, with fewer transponders, can deliver local to local in 
a non-discriminatory market and all 210 markets, so, too, can 
EchoStar and its technicians.
    Second, competitive pressures from DirecTV and the cable 
industry will compel EchoStar to find a way to continue 
providing local into local in markets it now serves.
    With regards to Section 102, broadcasters have concerns 
about how the draft would have the FCC modify the testing and 
waiver process and the Longley-Rice criteria. DirecTV will 
offer local to local to 92 percent of U.S. households by year 
end. Hence, by the time this bill becomes law, this issue will 
be irrelevant, in the case of DirecTV at least, for 92 percent 
of its subscribers.
    When local to local has reached all 210 markets, it is a 
moot issue. Additionally, broadcasters already bear the burden 
of granting a waiver for any request we do not answer within 30 
days. In multiple cases, EchoStar has deluged stations with 
thousands of paper waiver requests at one time in an attempt to 
exploit this provision of the law.
    Moreover, local stations have been responsive to viewers' 
needs, despite what you hear. Over 7 million waivers have been 
issued in this country today. In regards to Longley-Rice, as 
recently as 2000, the FCC technical staff examined and 
reexamined the system and found it to be an accurate predictor 
of signal intensity. And, specifically, the FCC has 
contemplated and rejected the notion of including station-to-
station interference in that model.
    If Congress now reintroduced interference in the ILLR 
model, EchoStar would seek to exploit that change by urging the 
Federal court in Miami to extend its nearly decade-long 
violation of copyright law. On digital white areas, 
broadcasters commend the committee for rejecting this ill-
advised proposal.
    We do have concerns about the draft's instructions to the 
FCC to recommend how to define unserved digital households. 
There are many pieces to the digital television puzzle that 
still need to fall into place, and we think it would be 
premature to define unserved digital households as early as 
2005. By the time this bill becomes law, that date will only be 
18 months away.
    And, finally, such a study should also take a hard look at 
the ability of DBS to offer digital broadcast systems on a 
local-to-local basis--an idea Mr. Hartenstein has alluded to--
which would make the whole issue irrelevant.
    In the area of significantly viewed, broadcasters do not 
oppose properly crafted legislation to permit DBS to carry 
stations in areas in which stations are significantly viewed. 
During the last hearing, we heard you, and our industry has 
sought to work with the staff to find ways to remedy some of 
these viewing anomalies.
    We have since worked with the staff to address those 
concerns, and we think--we hope the staff will continue to hear 
from us as we go forward. In its current form, the 
significantly viewed provision of the draft, however, engenders 
unintended but severe consequences.
    The DBS industry, we think, should only be allowed to 
deliver a significantly viewed distant signal after its 
providing local to local in a market. It shouldn't be able to 
dump Denver stations into Cheyenne without offering Cheyenne 
locals.
    As rural DMAs are likely to be the last to receive local-
into-local carriage, the current provision threatens the health 
and viability of small market stations. And allowing 
significantly viewed stations before local to local removes 
incentive for the satellite carriers to bring local carriage to 
a market.
    Any significantly viewed language must contain stringent 
monitoring and enforcement mechanisms to prevent satellite from 
breaking the law and signing up ineligible subscribers, and the 
draft, as we read it, contains no such provisions. Remember, 
one of these companies sits here today still illegally selling 
signals to hundreds of thousands of ineligible subscribers. And 
if you let this company decide for itself how to comply with 
the law, the fox will truly be guarding the hen house.
    Last, the draft must ensure that once a subscriber receives 
local stations via satellite, there is no distant signal 
importation.
    In sum, I urge you to support a SHVIA that advances the 
committee's and the industry's shared goal of fostering 
broadcast localism.
    Thank you.
    [The prepared statement of Robert G. Lee follows:]

Prepared Statement of Robert G. Lee, President and GM, WBDJ Television, 
         on Behalf of the National Association of Broadcasters

    The National Association of Broadcasters welcomes the opportunity 
to comment on the March 29, 2004 staff draft of the ``Satellite Home 
Viewer Improvement Reauthorization Act.''
    As NAB has stressed in its prior testimony, the goals established 
by Congress for the Satellite Home Viewer Act and its progeny are to 
ensure both that free, over-the-air network broadcast television 
programming will be widely available to American television households, 
and that satellite retransmission of television broadcast stations will 
not jeopardize the strong public interest in maintaining free, over-
the-air local television broadcasting. Towards these ends, the aim of 
the current revision of SHVIA should be (1) to promote the rapid 
rollout of DBS local-to-local service, which--if done properly--
enhances America's unique system of free, over-the-air, local 
television broadcasting, and (2) to ensure that the distant-signal 
compulsory license, which by its nature threatens localism, is used 
solely as a last resort. Sadly, a third requisite for the SHVIA 
revision is a set of exceptionally stringent monitoring and enforcement 
provisions, because--as the Committee knows from painful experience--
one of the two DBS companies, EchoStar, has a penchant for ignoring and 
circumventing statutory provisions relating to the carriage of 
broadcast signals. (In connection with SHVIA in particular, a federal 
judge found just five days ago that EchoStar's ``willful infringement'' 
of network programming enabled it to ``reap many millions of dollars'' 
of unlawful gains.)
    For the Committee's convenience, this testimony addresses the 
sections of the March 29 staff draft in the order in which they appear 
in the draft.

1. Stopping EchoStar's Discriminatory Two-Dish Scheme
    As the Committee is aware, EchoStar has made a mockery of the 
``carry one, carry all'' principle by carrying Spanish-language, 
religious, public, and other stations in many markets in a way that 
renders them invisible to almost all of EchoStar's customers. Section 
101 of the draft bill commendably seeks to put an end to this grossly 
improper practice. While NAB appreciates the need expressed in the 
Committee's draft for a period of transition for the benefit of 
consumers, EchoStar is on notice today that it needs to stop this 
egregious form of discrimination. Therefore, allowing EchoStar as much 
as a year after enactment (and as much as 21 months from now) to 
continue this discrimination is unnecessary and inappropriate.
    In addition, to ensure that EchoStar does not benefit from the time 
needed for the FCC to consider an application by EchoStar for an 
extension of the deadline, the Committee should set a short deadline 
(say, 60 days) for the FCC to decide whether to grant an extension, and 
should provide that the time period during which the FCC considers such 
a request should be counted as part of the 180-day extension period. 
Finally, to create marketplace incentives to push EchoStar to stop this 
abuse at the earliest possible moment, the FCC should be permitted to 
grant an extension only if no other satellite carrier offers local-to-
local on a one-dish basis in the local market.

2. Changes to the ILLR, Waiver, and Testing Procedures
    NAB is gravely concerned that Section 102 of the Act would do 
tremendous damage to the goals the Act was designed to promote.
    First, draft Section 339(c)(6)(A)(iii) would direct the FCC to 
modify its regulations concerning the grant of waivers by 
broadcasters--and, strikingly, would do so without giving any direction 
to the FCC about the purpose of these modifications. Enacting this 
provision would be a grave mistake. At the outset, to the extent this 
provision is directed to unfounded allegations that stations 
unnecessarily withhold waivers, it should be noted that nationally, 
stations have granted over seven million waivers. Moreover, many waiver 
denials are in response to abusive EchoStar practices.
    With the rapid rollout of local-to-local, there will be no need 
whatsoever for the distant-signal compulsory license at all for the 
overwhelming majority of U.S. television households--much less for 
cumbersome new regulation of the waiver process. By the time this new 
Act goes into effect, for example, DirecTV will offer local-to-local to 
at least 130 DMAs covering 92% of all U.S. television households. By as 
early as 2006 and no later than 2008, DirecTV will offer local service 
in all 210 DMAs. And for its part, EchoStar already offers local-to-
local to 85% of American TV households, and will be driven by 
competition with DirecTV and cable to expand that percentage still 
further by adding still more markets. The relevance of the distant-
signal license at all, therefore, is only to a small--and quickly 
shrinking--percentage of television households.
    Any effort to further regulate the waiver process even in non-
local-to-local markets would be ill-advised. In the SHVIA, Congress 
already put enormous pressure on broadcasters by subjecting them to the 
type of ``negative option'' regime that Congress normally condemns: if 
a station does not respond to a waiver request within 30 days, the 
waiver is deemed granted. In addition, the waiver process is now 
carried out very efficiently through an electronic system developed and 
managed by Decisionmark Corporation, in which both broadcasters and 
satellite carriers participate.
    The procedure for processing waivers is therefore in no need of 
improvement. And any substantive regulation of the waiver process--for 
example, telling stations that they must grant waivers under certain 
circumstances--would simply be a backdoor method of changing the 
standard for which households are considered ``unserved.'' Both 
Congress and the FCC have long ago determined--and reaffirmed after 
repeated reevaluations--that the objective Grade B intensity standard 
is the right test. Any effort to impose a subjective standard would be 
a nightmare, as all of us know from the years when the satellite 
industry unlawfully employed just such a standard.
    Second, draft Section 339(c)(6)(A)(iii) would also direct the FCC--
again, without any guiding standards--to modify its regulations 
concerning testing. The draft amendments do not take into account that 
it makes no sense for any tests to be done for any subscriber who can 
receive local-to-local service from his or her carrier--and nearly all 
subscribers will be able to by the time this law goes into effect. And 
even in the dwindling number of non-local-to-local markets, the draft 
amendments do not take into account that it is a tremendous waste of 
scarce resources to perform signal intensity tests for subscribers who 
obviously receive a strong signal from their local stations.
    NAB respectfully suggests that to the extent that consumers 
complain about the existing standards for receiving distant signals, 
the overwhelming majority of problems arise because their satellite 
carriers have not ensured that the consumers have a properly 
functioning rooftop antenna. If one resides 50 miles from a TV tower, 
for example, neither a set of rabbit ears nor a creaky old rooftop 
antenna last used in the 1970's is likely to generate a high-quality 
picture on one's television set. But in many cases, satellite companies 
have done nothing more to help their subscribers receive local, over-
the-air signals.
    Third, sections 339(c)(6)(i) and (ii) would direct the FCC to make 
further modifications to the ILLR model, including changing the model 
to take into account the effects of interference. This provision is 
extremely puzzling, because the FCC has already exhaustively examined 
the ILLR model on two different occasions.
    When courts began ordering turnoffs of illegal distant subscribers 
in 1998, the FCC commenced a proceeding to address, among other things, 
how to predict which subscribers can get a Grade B signal. Both 
satellite carriers, broadcasters, and other interested parties provided 
the FCC with a mountain of technical materials concerning prediction of 
signal strength at subscriber households. In February 1999, after 
reviewing all of these submissions, the FCC adopted the Individual 
Location Longley-Rice (``ILLR'') model, and said: ``We believe ILLR is 
an accurate, practical, and readily available model for determining 
signal intensity at individual locations.'' In Re Satellite Delivery of 
Network Signals to Unserved Households for Purposes of the Satellite 
Home Viewer Act--Part 73--Definition and Measurement of Signals of 
Grade B Intensity, CS Dkt. No. 98-201 (released Feb. 2, 1999).
    In the SHVIA, enacted in November 1999, Congress directed the FCC 
to examine any possible ways to make the ILLR model even more accurate. 
47 U.S.C.  339(c)(3). In early 2000, the FCC did exactly that, after 
reviewing a second massive set of filings by satellite carriers, 
broadcasters, and others. In May 2000, the Commission announced that, 
based on the detailed technical data submitted by the parties, it was 
amending the ILLR model in certain respects to make it even more 
accurate. In Re Establishment of an Improved Model for Predicting the 
Broadcast Television Field Strength Received at Individual Locations, 
ET Docket No. 00-11 (released May 26, 2000). The Commissioned explained 
that the revised ILLR model ``will provide a reliable and presumptive 
means for determining whether the over-the-air signal of a network 
affiliated television station can be received at an individual 
location.'' Id.,  1.
    In the revised ILLR model it announced in May 2000, the FCC added 
consideration of land use and land cover to the ILLR formula, in those 
cases (namely, for UHF stations) in which doing so would increase the 
accuracy of the model. The Commission also dropped consideration of 
interference from the ILLR model, a decision that made good sense since 
(1) interference is not relevant to whether a viewer receives a Grade B 
intensity signal from the desired station, (2) the effects of 
interference can be minimized or eliminated by using a properly-
oriented rooftop antenna with a high front-to-back ratio, (3) there is 
no practical way to test for the presence of interference, and (4) to 
the extent interference is relevant, broadcasters have voluntarily 
granted many millions of waivers to subscribers in ``borderline'' 
situations.
    True to form, EchoStar knowingly and intentionally broke the law by 
continuing to use interference in its own ILLR runs after the FCC 
eliminated interference from the ILLR model in May 2000. Here is what 
the United States District Court for the Southern District of Florida 
found after a lengthy trial last year:
          ``[T]he Court finds that EchoStar's use of interference after 
        May 2000 was improper. In May 2000, the FCC issued a First 
        Report and Order in which it made certain modifications to the 
        ILLR model and published a detailed `cookbook' prescribing, on 
        a step-by-step basis, how the model is to be employed. FCC 
        First Report & Order, May 2000 at A-2. The FCC's detailed 
        directions explained how to calculate whether an individual 
        household was unserved. Although the FCC had previously 
        indicated that interference was to be included in the ILLR 
        model, the FCC's May 2000 order changed the use of 
        interference. The FCC reaffirmed the point when it later issued 
        OET (Office of Engineering and Technology) Bulletin 72 in July 
        2002, which repeated the same `cookbook' directions, again 
        excluding any consideration of interference.
          Consideration of interference can only help EchoStar by 
        treating a subscriber with a relatively weak (but above Grade 
        B) signal as unserved because of the predicted presence of 
        interfering signals from other stations. The FCC is aware of 
        the issue of interference, since in another `cookbook' about 
        how to use the Longley-Rice model for a different purpose, it 
        provided specific directions on how to take interference into 
        account. See OET Bulletin 69 (`Longley-Rice Methodology for 
        Evaluating TV Coverage and Interference') (July 1997). Had the 
        FCC wished to include interference in the current ILLR model, 
        it would have done so.
          Further, EchoStar was advised by Decisionmark of the FCC's 
        May 2000 ruling that the ILLR model no longer included 
        interference. In fact, Mark Castagneri of EchoStar sent an 
        email dated July 27, 2000 to several other EchoStar employees, 
        attaching a memo prepared by Jane Schlegel of Decisionmark. In 
        that memo, Ms. Schlegel indicated that `[i]nterference 
        calculations were eliminated.' Additionally, in a follow-up 
        email dated July 31, 2000, Mr. Castagneri indicated that 
        `[b]asically, interference is out and LU/LC is in for 
        calculating signal strength.' Mr. Castagneri attached an 
        earlier email from Ken Franken of Decisionmark making the same 
        `cookbook' point discussed above--that the FCC-prescribed 
        recipe for ILLR analysis precludes use of interference. Mr. 
        Franken's email indicated that the FCC official most 
        knowledgeable about the ILLR program, Bob Eckert, agreed that 
        interference was no longer part of the ILLR model after the May 
        2000 Order.
          Accordingly, EchoStar's use of interference at all times 
        after August 2000 (at the latest) was in knowing violation of 
        applicable legal standards.''
CBS Broadcasting, Inc. v. EchoStar Communications Corp., 276 F. Supp. 
2d 1237, 124950 (S.D. Fla. 2003) (emphasis added).
    For Congress to direct the FCC to reverse its long-standing 
position on the role of interference in the ILLR model would thus not 
only be wrong as a matter of policy, but would send precisely the wrong 
message to the satellite industry: that when a DBS company knowingly 
and deliberately breaks the law to increase its own profits, and when a 
federal court properly condemns the company for doing so, Congress will 
come to the company's rescue to declare that the lawbreaking was 
perfectly acceptable. There can be no doubt that, were Congress to 
change the rules late in the fourth quarter (after EchoStar has broken 
them), EchoStar would seek to exploit that change by urging the courts 
to extend--for still more months and years--its nearly decade-long 
violations of the Copyright Act.

3. Good faith requirement for retransmission consent negotiations.
    Although the NAB believes that the duty currently imposed by the 
Act on broadcasters to negotiate in good faith about retransmission 
consent is unnecessary and has led to harassing litigation by EchoStar, 
broadcasters certainly agree with the Committee that if this provision 
is to be extended, it should equally be imposed on cable systems and 
satellite carriers.
    The draft version of Section 103 would also extend the prohibition 
against exclusive grants of retransmission consent. While Congress has 
elsewhere banned exclusivity by vertically integrated companies, most 
local broadcasters are not vertically integrated. Since the very 
purpose of the copyright laws is to grant exclusivity to copyright 
owners, NAB respectfully suggests that it is inappropriate to extend a 
blanket prohibition on exclusivity on all local broadcasters.

4. Standard for over-the-air digital service.
    As draft Section 104 appears to recognize, a ``digital white area'' 
standard will be relevant, if ever, only after the transition to 
digital-only television broadcasting is completed. (NAB has previously 
shown that the DBS industry proposal to allow importation of distant 
digital signals before analog broadcasting ceases would be a recipe for 
mischief, further abuse, and illegal conduct.)
    If the Committee wishes to have the FCC examine whether there will 
someday be a need for a ``digital white area'' standard, and if so what 
that standard might be, it should make absolutely clear that the FCC's 
role is merely to recommend a change in the law, and not to implement a 
change in law itself. Although this appears to be the intent of the 
draft, that point should be made clearer and more explicit in the 
language of the provision. In addition, if the FCC is to study this 
issue, it should also examine the status of the DBS industry's efforts 
to deliver digital broadcasts on a local-to-local basis, and consider 
what can be done to spur those efforts. (NAB believes that, through 
innovative use of existing technological tools, DBS firms can readily 
offer local-to-local digital service in all 210 markets.) To the extent 
that DBS firms offer local-to-local digital service, of course, the 
very concept of a ``digitally unserved household'' becomes an 
anachronism.
    Any FCC study of this topic should also be timed to be most useful 
to Congress. At present, the broadcast industry, and the Commission, 
are still very much in the steep part of the learning curve about the 
propagation characteristics of digital television broadcasts. In 
addition, for reasons beyond the control of broadcasters, the 
transition to digital-only broadcasting is not likely to be complete 
for several years. The Committee should therefore avoid forcing the FCC 
to deliver a premature judgment about a future ``digital white area'' 
standard, particularly when there may be little or no need whatsoever 
for such a standard given the likely rollout of digital local-to-local 
service.

5. Extension of exception to retransmission consent.
    Under the Act as now in force, the ability of broadcasters to 
insist on obtaining retransmission consent is overridden in the case of 
``unserved households.'' That exception, however, expires as of the end 
of 2004. NAB respectfully submits that there is no reason to continue 
to interfere with the free market in this way. There is no doubt that 
satellite carriers can find an ABC station, a CBS station, a Fox 
station, and an NBC station, to consent to being delivered to 
``unserved households'' in other markets. But there is no reason to 
deny all network stations the possibility of obtaining marketplace 
consideration for their consent. Moreover, this exception provides an 
unfair advantage to satellite over cable, which must seek 
retransmission consent for any distant signal.

6. Significantly viewed stations.
    While NAB does not oppose a properly-crafted legislation to permit 
DBS firms to carry broadcast television stations in areas in which the 
FCC has determined that the stations are ``significantly viewed'' under 
the Commission's regulations, draft Section 340 of the Communications 
Act lacks several crucial provisions without which local television 
stations could be severely injured and satellite would enjoy an unfair 
advantage over cable. While a number of adjustments are recommended, 
the following issues are crucial.
     As currently drafted, the provision contains nothing to prevent 
EchoStar from turning a new authority to deliver ``significantly 
viewed'' stations into an excuse to engage in a new wave of national 
lawbreaking. (To put this issue in perspective: right now, in April 
2004, EchoStar is continuing, every day, to violate Congress' 
absolutely clear prohibition against delivering distant signals to 
``served'' households.) It is not difficult to imagine, for example, 
EchoStar claiming that Washington, D.C. stations are ``significantly 
viewed'' in Raleigh, North Carolina--claims no more outrageous than 
many others that EchoStar has made over the years. Any ``significantly-
viewed'' provision therefore needs stringent reporting and enforcement 
provisions that will, to the extent possible, ensure compliance with 
the law.
     Congress enacted just such a reporting and enforcement provision 
in the SHVIA, which imposed severe penalties on any satellite carrier 
that delivered a station on a local-to-local basis without first 
obtaining retransmission consent from the station. See 47 U.S.C.  
325(e). The FCC's implementing regulations are equally potent. NAB 
suggests that the Committee look to Section 325(e) as a model for new 
enforcement provisions applicable to carriage of significantly viewed 
stations.
     The punishment for violations of the new ``significantly-viewed'' 
provision should fit the crime. For example, if EchoStar carries a 
station in an area in which the FCC has not determined that the station 
is significantly viewed, after receiving notice of the violation, it 
should forfeit the privilege of delivering stations in that market to 
``significantly viewed'' areas outside the market.
     If the FCC determines that a station is no longer significantly 
viewed in a defined geographic area, the Section 122 compulsory license 
permitting carriage of that station should expire shortly afterwards.
     Under the staff draft, DBS firms could import significantly 
viewed signals into markets in which they do not offer local-to-local. 
This would be a disaster. First, if a DBS firm could deliver out-of-
market stations into DMAs in which it does not offer local-to-local, 
the carrier's subscribers in the latter markets would see an out-of-
town station on their DBS lineup, but would not see their own local 
stations. Particularly because the DMAs in which local-to-local is not 
yet available are generally small markets, the economic health, and 
even the viability, of free, over-the-air local stations could be 
threatened as out-of-town stations siphoned off their local viewers.
    In addition, allowing importation of signals into non-local-to-
local markets would damage the incentives for the DBS firms to continue 
expanding the number of markets they serve with local-to-local. In some 
small markets, DirecTV and EchoStar could get much of the benefit of 
local-to-local by relying on the ``significantly-viewed'' exception to 
deliver stations from neighboring markets. As a result, the satellite 
carriers would have much less reason to invest in providing true local-
to-local service in currently unserved markets.
     On a technical note, any change to the ``core'' sections of 
Section 119 will necessitate several related changes to other 
provisions to make the revised section work.
     The draft could be read to allow DBS companies to determine for 
themselves which stations are significantly viewed, rather than relying 
on the FCC's determinations about which stations have that status in 
particular communities. Accordingly, NAB recommends that the draft be 
clarifying to provide that only the FCC has that authority.
     NAB questions the necessity for providing for ``market 
modifications'' in the DBS context, and recommends that the provision 
be dropped.
     If Congress allows DBS firms to deliver out-of-market network 
stations to ``significantly viewed'' areas, it should do so only into 
areas in which a local affiliate of the same network is carried on a 
local-to-local basis. (This will provide incentives to establish new 
network affiliates in those markets.) In addition, to prevent DBS from 
gaining an unfair advantage over cable, the draft should direct the FCC 
to allow broadcasters to make elections between retransmission consent 
and mandatory carriage on a community-by-community basis, rather than 
facing an all-or-nothing decision across an entire DMA, as FCC 
regulations currently dictate.

7. If local, no distant.
    NAB commends the Committee for its effort to end the distant-signal 
compulsory license for viewers who can receive their own local stations 
by satellite from their DBS company. While NAB appreciates the 
Committee's desire to minimize consumer disruption, we respectfully 
suggest that there is no need to ``grandfather'' any subscriber's 
ability to receive distant signals once local stations are offered to 
that subscriber. The only reason a subscriber would elect to continue 
receiving distant rather than local ABC, CBS, Fox, and NBC stations 
would be to time-shift (e.g., watching Jay Leno at 8:30 p.m. on the 
West Coast by viewing an East Coast station) or to view out-of-town 
sports (e.g., watching an out-of-town NFL game for which one would 
otherwise need to purchase NFL Sunday Ticket). Since the distant-signal 
license has always been intended to be only a lifeline to get network 
programming to subscribers who otherwise have no access to it, there is 
no principled justification for this new form of grandfathering. And it 
is always unwise to specify a future, rather than a past, date for 
grandfathering, since doing so creates incentives for satellite 
companies such as EchoStar to encourage as many subscribers as possible 
to subscribe to distant stations ``before it is too late.''
    Nor is there likely to be any substantial consumer ruckus over the 
termination of distant signals to subscribers who can receive local-to-
local service. As part of a last-minute ``cleanup campaign'' before 
trial in the CBS Broadcasting case, EchoStar turned off distant signals 
to subscribers in several local-to-local markets in early 2002. 
Broadcasters heard virtually no complaints from the affected consumers 
at the time, and we understand the same to be true of Congress. Because 
the subscribers will at all times have satellite-delivered access to 
programming such as the ``March Madness'' NCAA playoffs, American Idol, 
The Apprentice, and Alias, the circumstances here bear no resemblance 
to the conditions that led Congress to adopt a limited grandfathering 
provision in 1999.
    There are also important drafting issues about this provision, even 
if the Committee were to conclude (incorrectly in NAB's view) that some 
form of grandfathering here is appropriate. For example, read literally 
(as courts generally do), draft Section 339(a)(1)(B)(ii) provides that 
any distant-signal subscriber as of the date of enactment ``may 
continue to receive service under the statutory license of section 
119.'' That broad language would appear to allow EchoStar to continue 
serving ineligible distant-signal subscribers--even after a court 
finding, following a 10-day trial, that EchoStar is continuing 
illegally to serve hundreds of thousands of such ineligible 
subscribers. This problem can be corrected through redrafting.
    There is no reason to delay the effectiveness of this provision 
until six months after the date of enactment. The satellite companies 
are on notice now that this change in law is coming down the track, and 
can start implementing the transition from distant to local signals 
now. In many cases, this will be as simple as flicking a switch.
    Finally, we urge the Committee to consider a more far-reaching 
version of this important reform: to terminate the distant-signal 
license if either satellite carrier offers local-to-local service 
(including an affiliate of the relevant network) in the relevant 
market. This approach would create strong incentives for both DBS firms 
to roll out local-to-local as quickly as possible, lest they lose 
subscribers to their DBS rival. And it would quicken the pace at which 
EchoStar will match DirecTV's commitment to deliver local-to-local in 
all 210 markets, by taking away from EchoStar the crutch of being able 
to offer distant signals to any households in those markets.

                               CONCLUSION

    NAB thanks the Subcommittee for the opportunity to present its 
views on the staff draft, and looks forward to working with the 
Subcommittee to craft the best possible legislation.

    Mr. Upton. Thank you very much.
    Dr. Wright.

                    STATEMENT OF FRANK WRIGHT

    Mr. Wright. Thank you, Mr. Chairman, Mr. Markey, and 
members of the subcommittee. The National Religious 
Broadcasters, or NRB, is an international association of 
Christian communicators involved in radio, television, 
internet, and film. We currently have more than 1,700 member 
organizations representing millions of viewers, listeners, and 
readers.
    Recently published research that was quoted by the 
President when he addressed our convention last year indicate 
that 141 million Americans listen to religious broadcasting at 
least once a month. All that is to say that many of our members 
have a significant stake in the draft legislation under 
consideration today.
    With your permission, Mr. Chairman, I would like to limit 
my remarks today to the good, the bad, and the ugly. First, the 
good. Thanks, in no small part to the wisdom of the Congress, 
the Satellite Home Viewer Improvement Act has been a very 
beneficial piece of legislation. Every member of the witnesses 
testifying today are in agreement on that.
    By allowing DBS providers to retransmit the programming of 
local market broadcast stations, the television viewer 
benefits, and benefits greatly, from the enhanced choices 
available. And by requiring that such offerings are made in a 
non-discriminatory fashion, the interests of local broadcasters 
are protected as well, at least in theory, which leads us to 
the bad.
    The two-dish strategy employed by EchoStar to fulfill its 
carry one, carry all requirements we believe is both 
discriminatory and harmful. This arrangement places the DBS 
provider in the position of making basic programming decisions 
for the viewer, instead of allowing the viewer to exercise his 
or her own choice.
    When EchoStar casts a disfavored broadcast station into the 
outer darkness of one of its wing satellites, it is engaging in 
the very cherrypicking that the Congress expressly prohibited.
    As we turn our attention to the ugly, my metaphor 
unfortunately begins to break down, as they all do. Here I am 
referring to the implementation of the Act by the FCC. Of 
course, I mean no disrespect, but the FCC's unwillingness to 
firmly address the discriminatory nature of EchoStar's two-dish 
strategy leaves us with a decidedly unappealing outcome.
    As the committee knows, the FCC issued a declaratory ruling 
concluding that EchoStar's two-dish plan fails to comply with 
SHVIA, yet nearly 2 years later this matter is still not 
resolved. For these reasons and others, I commend this 
committee for its desire to strengthen SHVIA through the 
reauthorization process.
    Yet with all due respect, Mr. Chairman, when I look at the 
staff discussion draft, I still see a bit of the good, the bad, 
and the ugly. First, the good. The good, of course, is I 
believe a very, very powerful good--the requirement that all 
broadcast stations be carried on a single dish at last fulfills 
the intent of the original legislation, which is to require 
that local-into-local service be provided ``on contiguous 
channels and provide access to such station signals at a non-
discriminatory price and in a non-discriminatory manner.''
    The bad, however, is also noteworthy, and specifically I am 
referring to the temporary market-by-market waiver specified in 
Section 101, subsection C. In my view, this waiver addresses a 
so-called capacity constraint that, in point of fact, does not 
exist and is not relevant.
    The reason the capacity question is not relevant is because 
this legislation does not require that any additional stations 
be added to a satellite lineup in order to fulfill its 
requirements. Not one. The only question is: how will the 
broadcast stations be distributed across the available 
satellites?
    Fulfilling the provisions of this Reauthorization Act has 
nothing do with capacity, because sufficient capacity must 
already be in place before EchoStar can initiate local-into-
local service in a given DMA.
    Capacity, therefore, not being a relevant factor, the 
temporary market waivers detailed in the discussion draft of 
the Reauthorization Act are not necessary. And, in fact, in our 
judgment such waivers can only lead to substantial 
implementation delays when we have already witnessed years of 
implementation delays to this point.
    The NRB is pleased to offer its strong support for the 
draft language with the one qualification that we believe the 
temporary waiver provision is both unnecessary and perhaps even 
counterproductive.
    Thank you for listening to me today.
    [The prepared statement of Frank Wright follows:]

   Prepared Statement of Frank Wright, President, National Religious 
                              Broadcasters

        OVERVIEW OF DISCRIMINATORY SATELLITE CARRIAGE PRACTICES

    On November 29, 1999, Congress enacted the Satellite Home Viewer 
Improvement Act (``SHVIA''), which authorized satellite carriers to 
retransmit the programming of local broadcast television stations to 
viewers in a station's local market. This is referred to as ``local 
into local'' service. In enacting SHVIA, Congress intended that 
satellite carriers provide service to the public ``in a way that is 
convenient and practically accessible for consumers.'' (Joint 
Explanatory Statement of the Committee of Conference, 145 Cong. Rec. 
S14708, 14711 (Nov. 17, 1999)). To that end Congress included a 
requirement that satellite carriers
        retransmit the signal of the local television broadcast 
        stations to subscribers in the stations' local market on 
        contiguous channels and provide access to such station's 
        signals at a non-discriminatory price and in a non-
        discriminatory manner on any navigational device, on-screen 
        program guide, or menu. (47 U.S.C.  338(d) emphasis added).
    Despite this requirement, with which market competitor DirecTV has 
complied, EchoStar Communications Corporation (``EchoStar'') commenced 
local into local service by segregating certain independent, public 
television, Spanish-language, and religious stations from the network-
affiliated stations in a market. To accomplish this, EchoStar placed 
the network-affiliated stations on the same satellites that carry 
EchoStar's other programming (e.g. ESPN, CNN, MTV), while placing the 
``disfavored'' stations on a secondary satellite. In addition to being 
more difficult to receive (because it is lower in the sky relative to 
the horizon), the secondary satellite requires the installation of a 
second satellite dish in order to be received by an EchoStar 
subscriber. Naturally, few subscribers have been willing or able to put 
a second dish on their roof to obtain what is in some markets only one 
additional local station, effectively relegating those disfavored 
stations to a form of satellite solitary confinement. According to a 
report filed by EchoStar with the FCC in September 2002, after nearly 
two years of this two-dish segregation, barely 1.5% of EchoStar 
subscribers had installed a second dish to receive all of the local 
signals to which they are entitled, and for which they paid.
    On April 4, 2002, the FCC determined that EchoStar's two-dish 
scheme, as implemented, violated SHVIA because it discriminated against 
some, but not all, stations on the basis of price, contiguous channel 
placement and electronic program guide treatment. The FCC ordered 
EchoStar to immediately correct this discrimination, presenting it with 
a variety of options for doing so. As part of that proceeding, EchoStar 
argued that a two-dish scheme was necessary in most markets because of 
satellite capacity constraints and customer expectations on non-
interrupted service. It is noteworthy that DirecTV has alleged no such 
capacity constraints as it initiates local into local service in 
various markets.
    Since that time, EchoStar has successfully launched two new 
satellites with additional spot beam capacity, eliminating capacity 
constraints. Yet, as EchoStar has initiated local into local service in 
additional Designated Market Areas , it has continued to employ its 
discriminatory two-dish scheme.
    There are, of course, natural subscriber disincentives associated 
with this two-dish scheme, not the least of which are (a) the 
inconvenience of ordering and accepting installation of a second dish, 
and (b) the placement of a small number of independent stations on the 
second dish satellite, while the major network-affiliated stations are 
available on the main satellite without a second dish.
    Aside from the natural subscriber disincentives imposed by 
EchoStar's decision to relegate disfavored stations to a second 
satellite requiring a second dish, the implementation of the two-dish 
scheme is inherently discriminatory. The two-dish approach violates 
SHVIA by: (a) using a pricing scheme that effectively deters 
subscribers from purchasing some, but not all, local television 
signals; (b) failing to place all local broadcast stations on 
contiguous channels to facilitate ease of acquisition; and (c) failing 
to include the disfavored stations on electronic program guides, giving 
them the same accessibility as other local stations available on the 
main satellite.
    While the FCC Media Bureau found that EchoStar's two-dish scheme 
was in fact inherently discriminatory, it has allowed it continue 
temporarily provided that EchoStar improved its notice to customers 
that the necessary additional equipment would be installed free of 
charge. Shortly thereafter, FCC Commissioners Martin and Copps issued a 
lengthy statement detailing the many ways the Media Bureau decision was 
inconsistent with SHVIA, congressional intent, and the FCC's own rules.
    Despite the fact that multiple parties appealed the Media Bureau 
decision to FCC in May of 2002, the Commission has still not responded. 
In fact, in March 2003, DirecTV filed a request with the FCC asking 
that action on the pending appeals be expedited so that EchoStar is 
either prevented from unfairly competing against DirecTV through its 
abuse of SHVIA, or that the FCC clarify whether DirecTV can also 
commence segregating some local stations to secondary satellites. All 
the while, EchoStar continues to expand its segregation of local 
broadcast stations in additional markets, causing substantial economic 
harm to the disfavored stations while depriving local viewers of the 
ready access to local stations promised when SHVIA was enacted.

Recommendation
    Given the FCC's continued unwillingness to put an end to this 
discriminatory practice, which undercuts the economic viability of 
diverse broadcast voices in local markets, an amendment to SHVIA is 
required to remove ambiguity, to restore equity, and to put an end to 
EchoStar's discriminatory practices. Such an amendment must clarify 
that satellite carriers must provide carriage of all qualified local 
stations in a market on contiguous channels ``received through a single 
reception antenna and associated equipment.'' Since this amendment 
would not prohibit EchoStar from utilizing secondary satellites, but 
would prohibit the splitting of a particular market's local stations 
into satellite ``haves'' and ``have nots,'' it will have zero impact on 
EchoStar's satellite capacity. It would merely ensure that subscribers 
who sign up to receive their local stations would actually receive all 
of their local stations.

    Mr. Upton. Thank you very much. We will now at this point 
have members ask questions for 5 minutes each.
    And, Mr. Hartenstein, in how many of the markets where 
EchoStar is currently using two dishes do you provide service? 
Do you know about what that number will be? And where is that 
number likely to be at the end of the year?
    Mr. Hartenstein. I think all but one. But I would have to 
doublecheck that. I think that is about right.
    Mr. Upton. Do you know which one that is, by the way? We 
have been trying to figure that out. Do you know?
    Mr. Hartenstein. I think it is Grand Junction, the DMA.
    Mr. Upton. Okay. If EchoStar stopped offering local-into-
local service in a market rather than end its two-dish 
practice, would you offer subscribers in that market local-
into-local on your one dish?
    Mr. Hartenstein. Let me make sure I understand the 
question. We are not there today only because we just don't 
have the capacity. I think I would have to answer that in the 
context of the next satellite that we have coming up, which is 
hopefully less than 30 days away from launch.
    I am not sure where it is in our rollout. I hope--I can get 
you that answer before the end of this hearing.
    Mr. Upton. Okay. That will be appreciated.
    Mr. Lee, in your testimony you stated that modifying the 
FCC's predictive model in the waiver of testing procedure is a 
grave mistake. Yet we know that the system doesn't work well, 
and, as a result, some consumers are ineligible to receive 
distant signal service, even though you cannot provide them 
with an over-the-air signal.
    How does the FCC fix the system to end the frustration that 
so many consumers might feel?
    Mr. Lee. Mr. Chairman, I am not certain how that happens. I 
realize you are visited by the executives of both companies and 
their lobbyists on a regular basis, but I do business in both 
these words day to day.
    About 2 years or more ago, in keeping with what the present 
law calls for, I had a letter from DirecTV telling me DirecTV 
had identified a disinterested third-party measurement service, 
and asking if we would agree to the use of that same third-
party measurement service to resolve the question of whether 
the ILLR prediction is correct in certain cases.
    In other words, if I am a new subscriber for satellite, and 
I ask for a waiver from DirecTV to import distant network 
signals, I believe the first place the DirecTV customer service 
representative goes is to a computer screen on which he can 
look at the predicted signal delivery at that subscriber's 
address.
    If there is any ambiguity at all, and the viewer challenges 
what the computer model shows, DirecTV is then asked to conduct 
a measurement. When that occurs and DirecTV orders a 
measurement at that address, if it is found the subscriber 
cannot receive my station, I pay for the cost of that 
measurement.
    If that measurement occurs and the viewer is able to pick 
up my station at the legally prescribed signal level, then Mr. 
Hartenstein's company pays. That is----
    Mr. Upton. Do you know about what the cost is--what the 
cost is on average for that?
    Mr. Lee. I want to say they bill us something like $65. And 
over 2 years we have--it has been necessary for us to pay for 
two measurements in which you couldn't pick up our station. 
Now, despite our best efforts, we have never been able to make 
that kind of deal work with EchoStar. They just don't want to 
be bothered with doing what the law calls for.
    So my suspicion--when you think----
    Mr. Upton. Let me just stop you. First, is that true, Mr. 
Moskowitz? Have you participated in that?
    Mr. Moskowitz. Absolutely not. I could show you dozens of 
letters where we have sent requests to stations to do tasks, 
and the stations haven't responded. It doesn't include Mr. 
Lee's, because to my knowledge the only times we have asked, on 
a couple of occasions, his station has actually granted the 
waiver request without the necessity of a test.
    The problem isn't that with his station. The problems are--
and the heart of the problem isn't really--is only partially 
that. The other piece of the problem is that what that computer 
predicts doesn't necessarily bear a real relationship to 
whether the consumer can get a good signal, even if when you do 
a test it shows that he gets the required signal strength, 
because, you know, a person can get a Grade A quality signal 
and have so much ghosting that the signal is horrendous.
    And yet the law says he can't get it, and the consumers are 
confused by that.
    Mr. Upton. What about an arrangement where the loser would 
pay? Would you be willing to do that?
    Mr. Moskowitz. Well, that is the law today, and while it 
is--it works sometimes, sometimes it doesn't. Sometimes the 
station doesn't respond when you ask for a test, No. 1.
    No. 2, the smartest time to perform a test would be when 
you actually go out and do the installation in the first place, 
but the law doesn't permit that, so it gets very obtrusive for 
the consumer to actually order a test.
    And, No. 3, again, the problem is consumers' expectations. 
You get a lot of consumers who live in a Grade A area and 
clearly do, and we know from the predictive model that they do, 
and we don't want to get a test any more than the station does, 
because we both know that there's no question he is going to 
come out as receiving a Grade A signal.
    The problem for those people is not, can I get a test or 
not. It is helping them--either helping them to understand why 
the law still uses a 1950's standard that doesn't take into 
account interference and ghosting, or changing the standard.
    Mr. Upton. Just a yes or no answer to Dr. Wright, because 
my time has expired. Would you be okay with allowing EchoStar 
to continue splitting broadcasters between dishes, if we 
required EchoStar to install both dishes from the very start? 
Yes or no.
    Mr. Wright. If it is yes or no----
    Mr. Upton. You need to turn your----
    Mr. Wright. If it is yes or no, it is no.
    Mr. Upton. Okay. Mr. Markey.
    Mr. Markey. Thank you very much.
    Mr. Lee, let us take a public interest broadcaster in a 
smaller market, a broadcaster who may be similarly airing local 
news or sports or other items of local interest, but whose 
market is small and which does not yet have either EchoStar or 
DirecTV offering local-to-local service in that area.
    Right now, the way Congress has set up this process since 
1999, in those markets where DirecTV and EchoStar have yet to 
do local-to-local service, they have to carry all stations, 
including home shopping stations, in the larger markets, which 
may be doing no local service, yet filling up their capacity. 
Or they have to carry other stations in other markets which may 
also have zero local service.
    Is that fair, in your view, to the broadcaster in the 
smaller market who is actually doing local service? The two DBS 
companies don't reach that market through enhanced localism, 
because they are forced by Congress to carry other broadcasters 
who aren't actually local.
    In other words, if instead of relying on distant network 
signals, our satellite must carry policy is to be a localism-
based policy, shouldn't we require the DBS companies to carry 
the stations that actually offer localism because if they don't 
have to carry those stations who aren't, they can reach smaller 
markets with local-to-local service and carry stations who 
actually are offering an important local voice.
    Mr. Lee. Thank you, Mr. Markey. Somewhere in there there 
must be somebody with the wisdom of Solomon to decide which 
stations are worthy of carriage and which are not. The DBS 
industry has asked for parity with cable in carriage 
requirements, and I believe the cable operators, if I remember 
correctly, are required to carry all local stations without 
some subjective judgment about which one is worthwhile and 
which isn't.
    Perhaps a mechanism could be found in which in a given 
market the DBS company could make a case for why it believes a 
station is not worthy of carriage.
    Mr. Markey. Okay. Now, Ms. Gore, any relation?
    Ms. Gore. No, Congressman.
    Mr. Markey. No.
    Ms. Gore. Thank you for asking.
    Mr. Markey. He was a member of this subcommittee.
    Let me ask about the Powell plan for deregulation of the 
broadcast marketplace, which will allow duopolies and 
triopolies of television stations, amongst other things, in 
individual markets.
    If a local market does have that develop, do you think it 
is perhaps wise to then allow for importation of more distant 
signals? Instead of just one distant signal, you could import 
more to make up for the fact that a couple of companies might 
now own three different--three TV stations apiece in a local 
market.
    Ms. Gore. Mr. Markey, I have to say that the issues of the 
ownership provisions are a little bit outside of my particular 
expertise. But I can try to address your question with respect 
to bringing in what sometimes people call adjacent markets, 
stations from adjacent markets, if that is----
    Mr. Markey. Unless we add more distant signals. Do you 
understand what I am saying? That because there is such a 
concentration of power now in the hand of perhaps two station 
groups, that they would own three TV stations apiece in one 
market, that we would seek to augment that by having other 
voices come in, other TV stations come in, so that there would 
be more diversity, different points of view, that the local 
viewer would be given access to.
    Ms. Gore. This is certainly a new idea, and----
    Mr. Markey. Well, we are just looking for your personal 
opinion, not the chairman's or anything. You said it would be 
your personal opinion. That is all I am looking for. Do you 
think it might be a good idea?
    Ms. Gore. My personal opinion?
    Mr. Markey. Yes.
    Ms. Gore. Well, speaking for the consumers that I talk to 
on the phone, they are always interested in receiving as many 
options for viewing as they can get.
    Mr. Markey. Okay. Thank you. I hope that is not a career-
endangering answer.
    Ms. Gore. Me, too, Mr. Markey.
    Mr. Markey. And let me ask--let me ask Mr. Hartenstein and 
Mr. Moskowitz, if I could, the cable industry since 1984 has 
had a privacy requirement. That is, they can't reveal to anyone 
which stations people are flicking back and forth on in the 
course of a day, which gives, I think, people a lot of 
confidence that the whole world can't somehow or other buy 
information or get information about what people are watching 
at home.
    Your industry is not covered by that. The TiVo industry is 
not covered by that. So you have had new technologies, in other 
words, introduced since 1984. Is it correct--am I correct in 
assuming that you wouldn't mind being put under the same 
privacy laws as the cable industry in terms of revealing the 
preferences on a daily basis as people are flicking around as 
to which channels they may be watching that information that 
can be gleaned from subscribing to your service?
    Mr. Hartenstein. At DirecTV, we are very concerned as we 
speak to our customers every day as to their privacy. So as to 
what any one consumer is watching at any one time, that is 
certainly business and information that should stay absolutely 
private. We totally agree with that.
    In terms of mass of consumer appeal and what, you know, the 
numbers in aggregate of people that watch one or the other----
    Mr. Markey. No, that would be----
    Mr. Hartenstein. [continuing] is totally different.
    Mr. Markey. So, but the--just the same privacy laws as 
cable. They can, you know, aggregate information, but they 
can't disaggregate the information on individuals.
    Mr. Hartenstein. Correct.
    Mr. Stearns [presiding]. The time of the gentleman----
    Mr. Markey. Could Mr. Moskowitz just give us the answer to 
that as well?
    Mr. Stearns. Okay.
    Mr. Moskowitz. We don't do it now, and we would have no 
problem with being obligated not to do it.
    Mr. Markey. Thank you so much.
    Mr. Stearns. The time of the gentleman has expired.
    The gentleman from Texas, the chairman of the full 
committee.
    Chairman Barton. Thank you, Mr. Chairman. I just have a few 
questions.
    I assume that everybody at the witness table has had a 
chance to review the draft of the pending reauthorization bill. 
Is that correct? In general, is everybody supportive of the 
thrust of what we are looking at doing in this committee and 
the Judiciary Committee? I mean, does anybody have any major 
heartburn with what is in the draft?
    I am going to take that as no, if you don't--okay. The 
gentleman from EchoStar I think wants to make a comment.
    Mr. Moskowitz. Thank you. I think that, you know, there are 
several provisions of the legislation that we think are great 
and very helpful. There are also some that we think are 
problematic for EchoStar. Currently, perhaps the most 
problematic is the obligation to go to one dish, which would 
displace and require millions of consumers to have new dishes 
installed--would make it impossible for us this year to enter 
the 40 new markets that we would otherwise intend to enter and 
have other far-ranging implications.
    Chairman Barton. When you say ``new dishes,'' you are 
saying that if we required a one-dish solution that the 
existing primary dish--that your subscribers couldn't handle 
it, and that they would have to put in a larger dish. Is that 
your----
    Mr. Moskowitz. That is correct. I have a slide that I think 
would help illustrate it, if we could perhaps put up--I think 
it is slide number----
    Chairman Barton. Has the rest of the committee already seen 
it? I don't----
    Mr. Moskowitz. No. No one has seen it.
    Chairman Barton. Oh, okay.
    Mr. Moskowitz. It is just an example----
    Chairman Barton. I don't want to hold up the rest of----
    Mr. Moskowitz. Okay. I will just explain it. It is just an 
example of a market where we use a spot beam to provide all of 
the channels in all four of those markets today, but we have 
some of those on a wing slot. If we are required to put them 
all in that spot beam, we simply can't fit them all in. And so 
Paducah would end up leaving the spot beam.
    To keep Paducah on the air, the only thing we could do is 
move it to a new satellite at a new slot, so every consumer in 
Paducah who gets our service would have to have a new dish 
installed. When you multiply that times every one of our spot 
beams where those issues occur, you are talking about millions 
of consumers who would need a new dish pointed at a new 
satellite at a new location.
    Chairman Barton. Now, if we maintain current regulation, 
the current statute, and didn't require what is called the one-
dish solution, under current law you are required to provide a 
second dish free of charge if it is requested. Isn't that true?
    Mr. Moskowitz. Absolutely.
    Chairman Barton. How widely is that known? To what lengths 
does your company go to publicize this second dish is free? 
Because I did not know that until I was briefed on this hearing 
that that was available. Do you have it in the tiny print, if 
you get a magnifying glass and read it upside down? Or do you 
actually go to some lengths to let some people know that?
    Mr. Moskowitz. Congressman, we did several things. First, 
when the FCC first asked us to do that, we sent a letter to 
every local consumer who--every consumer we had who got local 
channels and told them about it.
    Second, all of our point-of-purchase material includes 
the--that statement. I don't know, because I haven't reviewed 
our literature, whether it is in the mouse type, or whether it 
is in big type.
    Chairman Barton. My guess is it is not prominently 
displayed, and that is just--that is a guess.
    Mr. Moskowitz. I don't want to give it up, but it is 
certainly possible.
    Chairman Barton. Let me ask the gentleman that represents 
DirecTV. You have all of your signals on one dish right now, 
isn't that correct?
    Mr. Hartenstein. That is correct.
    Chairman Barton. And that is possible because of the height 
of the satellite that does the retransmission. Is there a 
technical reason for that?
    Mr. Hartenstein. No. That was a business reason and an 
interpretive reason that we took away from the earlier 
legislation. In any market where we have launched locals, we 
certainly abide by the carry one, carry all. But we have 
chosen, because of, we believe, the intent of the law--even 
though it is not clear, the FCC has not clarified it for almost 
2 years--to stay with the one-dish solution.
    And as I testified about 3 weeks ago to this subcommittee, 
we are only seeking clarity.
    Chairman Barton. Okay. And go back to the gentleman from 
EchoStar, because my time is about to expire. What is the 
capacity right now in your satellite for the one dish? How many 
channels can you put on that?
    Mr. Moskowitz. Right. It is--to simplify it, the fact that 
we do two dish for 40 markets is the reason why we are in 110 
markets today and DirecTV is in, what, 80, Eddy?
    Mr. Hartenstein. We are about 64.
    Mr. Moskowitz. Sixty-four compared to 110. So we are in an 
additional 50 markets providing fully effective competition, 
because we do two dish in 40 of those markets.
    Chairman Barton. My guess is he could be in those same 
markets if he wanted to. Is that correct or incorrect?
    Mr. Hartenstein. It is not quite an apples to apples 
comparison. EchoStar has two spot beam satellites up and 
operating today. We only have our first. As I indicated 
earlier, we are getting or launching our second spot beam 
satellite in about 30 more days, May 2 to be exact. And at that 
time we will be able to, with the addition of just that 
additional satellite, get to just over 100 markets as well--
again, doing it on a one dish per market basis.
    Chairman Barton. Okay. And just to conclude, the gentlelady 
that represents the FCC, do you support the draft language as 
it is--your agency?
    Ms. Gore. We have reviewed--I can't speak for the agency, 
as I said.
    Chairman Barton. Well, you are here to speak for the 
agency. That is the whole purpose of having you here, I 
thought. Is that not correct?
    Ms. Gore. Well, I am doing my best to speak for the Bureau. 
And we have reviewed the legislation. We have been working with 
the staff members, and we would be happy to go on doing that. 
And it is a question of what exactly the committee and the 
Congress would like to----
    Chairman Barton. I am not asking what the Congress--we know 
what the Congress wants to do. I am asking: does the FCC 
support the draft legislation? If it doesn't, what do you want 
changed? Do you need--if you need to go back and ask Chairman 
Powell and the other Commissioners, do so.
    But we are getting ready to move this to markup in 
subcommittee and full committee, and it would be helpful to 
have the administration's position on it.
    Ms. Gore. There are certain language changes that we have 
been talking about with the staff to be clear on exactly what 
the statute would provide. As far as the underlying substance, 
yes, Congressman, I would have to go back to the chairman and 
the other commissioners to give you an agency position.
    Chairman Barton. If you will do that, we would appreciate 
it.
    Thank you, Mr. Chairman.
    Mr. Stearns. I thank the gentleman.
    The gentleman from Virginia, Mr. Boucher.
    Mr. Boucher. Well, thank you very much, Mr. Chairman.
    Mr. Moskowitz, let me begin my questions with you. The 
draft bill asks the Federal Communications Commission to adjust 
the Longley-Rice model that is the current model that is used 
for determining whether or not a particular subscriber can get 
a good over-the-air signal, and it is that test that determines 
whether or not the subscriber can get a distant signal 
imported.
    One of the things that the draft asks the Commission to do 
is take into account interference, which is something that 
existing Longley-Rice does not. Are there any other things that 
we should be asking the Commission to take into consideration?
    Mr. Moskowitz. Yes, Congressman. I think there are two 
primarily. First, the FCC should take into account ghosting, 
which is the single biggest reason why consumers are confused, 
because they get what is classified by the law as a good signal 
when they know they can't see a darn thing.
    And, second, the law should really revise the Grade B 
standard, which was developed in the 1950's consistent with 
consumer expectations at that time, which are completely 
inconsistent with consumer expectations today.
    Mr. Boucher. What do consumers expect today that they did 
not expect in the 1950's?
    Mr. Moskowitz. I think they expect the kind of signal that 
they can get from satellite, that they can get from cable, 
which is a picture that is clear, free of ghosting, and is 
easily viewed.
    Mr. Boucher. Okay. Thank you. Let me ask you for your 
clarification also. There were some comments made earlier to 
the effect that some consumers who are in one of your markets 
that requires a second dish may not be told of the availability 
of the second dish, may perhaps be told that the stations that 
are carried on that second dish are not even available, or may 
perhaps be told that they are available only for an additional 
charge.
    Now, I gather from what you have said that that is not your 
practice. Would you just clarify that for us, please?
    Mr. Moskowitz. Thank you, Congressman. It absolutely is not 
our practice. We never charge for the additional channels. We 
always provide both the hardware and the installation at 
absolutely no cost, and we do indeed include in all of our 
point-of-purchase material information to that effect.
    Our CSRs are supposed to--our customer service 
representatives are supposed to explain that to consumers at 
the time of purchase as well. With 15,000 of them, sometimes 
they manage to do it. I suspect that sometimes they don't, but 
we do try to police that.
    Mr. Boucher. Okay. Finally, in the time that I have, let me 
ask you, Mr. Moskowitz, Mr. Hartenstein, and also Mr. Lee, to 
comment on the proposal that I made in my opening statement, 
which is to achieve a balance and promote good policy, while 
enabling both the DBS industry and the broadcasters to achieve 
some of their key policy objectives.
    Basically, under the structure that I am recommending, no 
distant signals on the analog side--what is currently being 
imported under the license--could come into the market once 
individual consumers have available to them, through the 
company to which they subscribe, a local signal. And so local 
signals would supplant distant signals with regard to analog 
transmission.
    And then, in return, distant high definition signals could 
be brought into the market until such point in time as the 
local broadcaster powers up and makes its own digital signal 
available to that particular household. And eligibility, again, 
would be measured on a household-by-household basis.
    This gives both industries something they have been asking 
for. It asks both industries to concede something that they 
have been opposing. And so my question to you is: does this 
strike the right balance? Would you be willing to support this 
kind of balanced arrangement?
    Let us begin with Mr. Moskowitz.
    Mr. Moskowitz. We would be anxious to sit down with the NAB 
and discuss that as a basis for moving forward. I think it has 
enormous merit. I think it is extremely important to consumers 
to be able to receive HD network programming today when it is 
not offered by the local affiliate, and I think as a general 
matter our customers, when they receive local channels, when 
they actually receive local channels by satellite, you know, 
aren't very interested in receiving their distant analog 
channels as well, provided that they are not disenfranchised 
from channels they already get.
    Mr. Boucher. Mr. Hartenstein.
    Mr. Hartenstein. Thank you, Congressman. We would always be 
interested in sitting down as a satellite industry and 
broadcasters together. The B in DBS and the B in NAB are 
common. I think--I don't want to repeat my statements. I am 
concerned about expectations of consumers and taking away 
something that they have, that they have legally. On the flip 
side, we would--I think in the same way as cable today would 
not know the adjective ``digital'' were it not for us that 
actually started it relative to television--we are big 
promoters of high def and accelerating that quickly.
    Mr. Boucher. So you would be willing to engage in this 
discussion also.
    Mr. Hartenstein. Yes, sir.
    Mr. Boucher. Thank you.
    Mr. Lee, very quickly in the time remaining.
    Mr. Lee. Thank you, Mr. Boucher. I am so grateful you came 
back into the room. With all due respect, I can't think of how 
many times I have sat in your office and you have given me 
great ideas, or you have sat in mine and given me great ideas. 
But the notion you put forward a few minutes ago is one of the 
most wrong-headed things I have ever heard you come up with.
    Now, if you would like, I----
    Mr. Boucher. Well, so much for the spirit of compromise.
    Mr. Lee. If you would like, I will be blunt.
    Mr. Stearns. The gentleman's time has expired, so if you 
will just finish up, and then we will move on.
    Mr. Lee. This notion of creating a new digital white space, 
without knowing exactly where we are going, undercuts the 
hundreds of millions of dollars local stations from Amarillo to 
Augusta have spent to launch digital television.
    And if it is in the public interest to take viewers of your 
constituents out of local viewing and move them into watching 
New York stations, then I know that is what you are going to 
do. But as Mr. Franks from CBS said when we were here last 
month, why on earth would you want to encourage your 
constituents to watch New York and Los Angeles television 
stations? I don't get it.
    Mr. Boucher. Mr. Chairman, let me----
    Mr. Stearns. Sum up.
    Mr. Boucher. [continuing] ask unanimous consent for 15 
seconds, if I may.
    Mr. Lee, let me----
    Mr. Stearns. By unanimous consent, so ordered.
    Mr. Boucher. Let me just be sure that you understood what I 
was proposing. I am recommending that when you serve that 
particular viewer with a digital high def signal that you would 
have the sole right to serve, and any distant signal 
importation would end at that point. I just wanted to be sure 
you understood that was part of the proposal.
    Mr. Lee. Right. And I am sure you understand that the 
broadcast industry has spent millions of dollars and 5 years in 
Federal court trying to get what is legally ours back, and the 
judge finally has these guys in a corner.
    Mr. Boucher. I understand. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Stearns. The gentleman's time has expired.
    The gentleman from Indiana, Mr. Buyer.
    Mr. Buyer. Mr. Moskowitz, the last time you were before 
this committee I had some--an opportunity to look at one of the 
cases. You and I had a discussion. I gave you an opportunity to 
rehabilitate. Since that day, I decided based off your 
testimony that I would do further review. So I am going to 
discuss some of these cases with you and solicit more of your 
comment.
    In February 2004, there was a ruling that EchoStar engaged 
in ``conscious wrongdoing,'' and that you in particular were 
``evasive.'' EchoStar sued an insurance company called Brock 
Bank. The judge in that case issued a ruling in February of 
this year, is that correct?
    Mr. Moskowitz. Yes, that is correct.
    Mr. Buyer. In that order, the judge discussed what EchoStar 
had done during the discovery process, and the judge found that 
EchoStar's action ``rose to the level of conscious 
wrongdoing.'' Is that correct?
    Mr. Moskowitz. No, I don't believe that is correct.
    Mr. Buyer. When is the last time you read the order?
    Mr. Moskowitz. Probably February.
    Mr. Buyer. I welcome your opportunity to go back and read 
the order.
    Mr. Moskowitz. Okay.
    Mr. Buyer. The judge also found that your testimony was 
``evasive.'' Is that correct?
    Mr. Moskowitz. They said I either wasn't fully prepared and 
we should have come back later, or I should have been more 
prepared at the time, yes.
    Mr. Buyer. In your answer, are you then saying that I am 
misquoting the court order when I saw that you were 
``evasive,'' that that was the judge's word?
    Mr. Moskowitz. No. I am just saying that it isn't all that 
was said in that statement.
    Mr. Buyer. Then, let me reask the question to you. Yes or 
no--the judge found that your testimony was ``evasive.'' That 
is the judge's word. Is that correct?
    Mr. Moskowitz. The word is correct but taken out of 
context----
    Mr. Buyer. Thank you very much.
    Mr. Moskowitz. [continuing] and inaccurate.
    Mr. Buyer. The word is correct. The testimony was----
    Mr. Moskowitz. But inaccurate.
    Mr. Buyer. [continuing] ``evasive.''
    Let me turn to another topic. In a copyright case in 
Florida, the judge issued findings after trial. He did, didn't 
he?
    Mr. Moskowitz. Yes.
    Mr. Buyer. And some of your deposition testimony was played 
by videotape at the trial, is that correct?
    Mr. Moskowitz. That is correct.
    Mr. Buyer. The judge found that--this with regard to your 
deposition testimony, ``Further, the court notes that when Mr. 
Moskowitz, an EchoStar executive who worked closely with SHVIA 
compliance, was questioned during his deposition about the 1999 
decision-mark ILLR analysis, he paused for an unusually long 
period of time and then answered the question concerning ILLR 
analysis in a vague manner, unable or unwilling to give any 
details on the results of the analysis or EchoStar's actions 
following the analysis.'' Is that an accurate depiction of the 
judge--what the judge found in that case?
    Mr. Moskowitz. Yes, he found that there was a long pause.
    Mr. Buyer. Thank you. Given the answer for which you just 
gave me, is my quote that I read from the judge accurate?
    Mr. Moskowitz. Yes, it is.
    Mr. Buyer. Thank you. In that same case in Florida, the 
judge discussed a promise that Mr. Ergan had made to the court, 
and the court made this finding, ``EchoStar executives, 
including Mr. Ergan and David Moskowitz, when confronted with 
the prospect of cutting off network programming to hundreds of 
thousands of subscribers, elected to break Mr. Ergan's promise 
to the court.'' Is this a correct assessment of the findings of 
that court?
    Mr. Moskowitz. No, it is absolutely not accurate.
    Mr. Buyer. So the quote from which I just read to you from 
the findings of the court you say is inaccurate.
    Mr. Moskowitz. I say that Mr. Ergan did not break any 
promise to the court, and I resent the fact that you are going 
in this direction, and----
    Mr. Buyer. So you would say----
    Mr. Moskowitz. And I will defend myself.
    Mr. Buyer. So you would say that this quote, then, from the 
judge's findings, you have a right to disagree with the judge's 
findings, but what I have read to you is ``the judge's 
findings.'' SHVIA didn't grandfather Grade A subscribers, did 
it?
    Mr. Moskowitz. No, it did not.
    Mr. Buyer. Did EchoStar turn off all Grade A subscribers 
covered by Mr. Ergan's promise?
    Mr. Moskowitz. Mr. Ergan made a promise to run all of the 
subscribers at a time when--before the 1999 legislation was 
passed. Mr. Ergan's promise was overtaken by events in the 
passage of the 1999 legislation, as specifically noted by the 
Appeals Court.
    Mr. Buyer. The judge found that you didn't turn off any for 
compliance reasons, didn't he?
    Mr. Moskowitz. No, he did not. He said that they could not 
confirm that, and I applaud the NAB, who managed to get a law 
passed through Congress that said the burden of proof is on the 
satellite provider to prove that every one of its customers was 
legal, and we had to do that 5 years after we first signed up 
those customers. And I agree that that was not--a burden we 
could not meet, nor was it a burden that DirecTV nor any other 
satellite carrier was able to meet.
    However, the judge also found that we comply with the law 
today, as did Mr. Lee in his deposition.
    Mr. Buyer. But, again, SHVIA didn't grandfather Grade A 
subscribers.
    Mr. Moskowitz. No, it did not.
    Mr. Buyer. In the Florida case, Mr. Ergan testified at 
trial about ``alleged mass turnoffs of illegal distant network 
programming subscribers.'' Anyway, it appears that the judge, 
for whatever reason, didn't agree with this testimony.
    Mr. Moskowitz. The judge found----
    Mr. Buyer. The judge found, ``No credible evidence was 
presented to the court to support the contention that EchoStar 
turned off distant signals for compliance reasons to any of 
more than 258,000 former prime-time 24 Grade A subscribers that 
Decision Mark told EchoStar about in October 1999.'' That is 
the findings of the court.
    The judge also found that, ``Nor is there any credible 
evidence that EchoStar turned off distant signals for 
compliance reasons to any of more than 630,000 Grade A 
subscribers that Decision Mark told EchoStar about at the 
time.'' No credible evidence. Now, I am a lawyer, too. That is 
very powerful. I have sat as a judge before. If I write ``no 
credible evidence,'' that is a very powerful statement.
    Mr. Moskowitz. The judge's ruling does not say we did not 
turn off Grade A customers. What it says is there is no 
evidence that we did it for that specific reason. It was--it is 
indeed--I will say two things. First of all, there is no 
question that had we to do it again we would do things 
differently. Absolutely.
    Mr. Buyer. Well, yes, I wouldn't be too happy about paying 
$4.7 million attorney's fees. Nobody wants to pay attorney's 
fees to the other side. By the time you finish the case, you 
can't stand the other side.
    Mr. Moskowitz. Statutorily, if they win, they are entitled 
to them.
    Mr. Buyer. I don't care.
    Mr. Moskowitz. But I----
    Mr. Buyer. Statutorily, it may say that. I am just saying 
if I have got a company, I am not too excited about paying----
    Mr. Moskowitz. But certainly, this was----
    Mr. Buyer. [continuing] attorney's fees to the other side.
    Mr. Moskowitz. Certainly, this was--this is something that 
we would do differently in several ways if we had to do it 
again. There is no question.
    Mr. Buyer. So why did we just do this little dance? We did 
this little dance because I thought I was going to have a 
productive conversation with you last time, so now we do a 
little more research, and you see I have to--just myself, I 
can't speak for any other member, we have to make competent 
decisions here.
    And so what I think is very hard here is I have to be able 
to weigh your testimony on behalf of EchoStar when, in fact, it 
just doesn't have a good track record in our court system. So 
now I have to say, have you danced on the law? Have you 
disregarded the law? How does your corporation feel ``about the 
law''?
    EchoStar's actions sort of remind me of the movie Catch Me 
if You Can, and that is very disappointing. And so you, sir, 
are in a very difficult position, because you have a company 
that is playing tough with regard to the rules, and the 
marketplace is a tough place.
    But when you come to us now and you say about this two-dish 
requirement, we have to make some tough judgments here in this 
bill. And I want to continue to engage with you, because we 
want to make a competent decision.
    I yield back to the chairman.
    Mr. Stearns. Mr. Gonzalez.
    Mr. Gonzalez. Thank you very much, Mr. Chairman.
    The question is directed to Mr. Moskowitz. The question 
would be: if you are station owner, which would you prefer to 
be carried on--the first dish or the second dish?
    Mr. Moskowitz. I am not a station owner, so----
    Mr. Gonzalez. No, but you are pretty----
    Mr. Moskowitz. I suspect I would prefer to be carried on 
the first dish.
    Mr. Gonzalez. And why would that be?
    Mr. Moskowitz. Because if I am, then----
    Mr. Gonzalez. Because most people have one dish.
    Mr. Moskowitz. No, that is actually not true. We have 
several million customers who actually have two dishes 
installed.
    Mr. Gonzalez. What would be the percentage? Of all your 
customers, how many have two dishes?
    Mr. Moskowitz. How many have two dishes?
    Mr. Gonzalez. Yes. Out of all your customers, what 
percentage have two dishes?
    Mr. Moskowitz. Approximately 20 percent.
    Mr. Gonzalez. Then, I would want to be on that first dish. 
I mean----
    Mr. Moskowitz. Well, they have second dishes for lots of 
reasons, and our customers--for example, our customers who take 
foreign language programming would certainly prefer to be on a 
first dish. But there is not----
    Mr. Gonzalez. Why would they think----
    Mr. Moskowitz. [continuing] room for all of it on one dish, 
and they are happy to take it on a second dish to be able to 
get it.
    Mr. Gonzalez. But you human nature----
    Mr. Moskowitz. As opposed to not having it available.
    Mr. Gonzalez. And human nature being that it is not going 
to cost you anything--let me get it straight. Maybe I am 
misinterpreting everything. I just got to this committee.
    Mr. Moskowitz. Sure.
    Mr. Gonzalez. It doesn't cost you anything extra to get the 
second dish.
    Mr. Moskowitz. That is correct.
    Mr. Gonzalez. You are going to have more capacity, you are 
going to have more stations, more available in the household, 
and people aren't taking advantage of it. That is just contrary 
to human nature, isn't it?
    Mr. Moskowitz. No, I don't think so. I think what it says 
is that people who don't watch that programming don't bother to 
get the dish. And those who do watch it do bother to get the 
dish.
    Mr. Gonzalez. And you are making the determination as to 
who goes into the second dish, right?
    Mr. Moskowitz. Yes, sir. But the consumer makes the 
determination about whether to get the dish for free or not.
    Mr. Gonzalez. And that is a whole other issue, how we 
arrive at what the consumer would like to be watching, or is 
watching, actually.
    Mr. Moskowitz. Well, and it is not just at the time of 
installation. If any time thereafter the consumer changes his 
mind and says, ``You know what? I really wish I had that 
programming,'' they can call us up and we will still install it 
for free.
    Mr. Gonzalez. Why don't you install two dishes to begin 
with?
    Mr. Moskowitz. Because not every consumer wants two dishes, 
and not everyone wants the programming that is available on 
that second dish. For example, EchoStar today actually has 
satellites that look at five different locations, and 
theoretically a consumer could get five different dishes 
installed. But they don't do it, because they don't want all of 
the programming on every one of those dishes. They get the 
dishes that have the programming they want.
    Mr. Gonzalez. But you would agree that the stations carried 
on the second dish are at a disadvantage in this particular 
market, as established by you, by custom and practice.
    Mr. Moskowitz. No, I do not agree they are at a 
disadvantage. I absolutely do not agree with that. I understand 
that it is a second dish, but beyond a second dish--I think Dr. 
Wright's answer to the question really gets to the heart of the 
matter.
    If just having a second dish is the be all and end all 
measurement, then we have a second dish. But if you go at all 
beyond that and look at, is it provided for free, is the 
installation free, is it seamless to the customer, is it 
transparent, can they get either channels for the programming--
--
    Mr. Gonzalez. But despite all of that, you still only have 
20 percent of the market out there.
    Mr. Moskowitz. Well, sir, that is actually a number which 
is greater than the market share that each of these small 
stations gets in the market combined. But I don't want to 
mislead you. Not all of that 20 percent is for a second dish 
for local purposes. They get it for other programming as well.
    Mr. Gonzalez. Okay. Now, the same problems you are 
encountering--I guess we have got about 1\1/2\ minutes. The 
problems that you are encountering with capacity, and if this 
particular piece of legislation mandates that you have all 
locals on one dish----
    Mr. Moskowitz. Right.
    Mr. Gonzalez. [continuing] you are saying that will result 
in not being able to provide service to many other areas in the 
country.
    Mr. Moskowitz. Yes, that is absolutely true.
    Mr. Gonzalez. And so I would imagine that DirecTV would 
encounter the same technology dilemma.
    Mr. Moskowitz. Well, first of all, they have encountered it 
to some extent. They chose not to provide the additional 
markets until they could get the additional programming up. 
They are also, as Mr. Hartenstein indicated, different than 
EchoStar in that they don't have these wing satellites to even 
offer it today.
    But they are also different in that depending on when you 
build and launch a satellite, the technology on the satellite 
is different. So DirecTV is about to launch a satellite with 
the most advanced----
    Mr. Gonzalez. Well, what if EchoStar had interpreted the 
Act that all local stations should be carried on one dish. 
Would you have taken a different technological tact?
    Mr. Moskowitz. We could not have to date--what would have 
happened, if the law had been that to date, we would be, 
instead of 110 markets today, we would be in about 70 markets. 
So there would be 40 fewer markets served, markets that DirecTV 
doesn't serve either.
    Mr. Gonzalez. I recognize that. I am just saying let us 
just----
    Mr. Moskowitz. We would just not have served them yet, and 
we would build--if that was the law from the start, right, then 
we would spend the--we would make decisions about balancing and 
whether to spend an additional $200 to $250 million to build/
launch an additional satellite that would have the 
technological capability.
    DirecTV hit a sweet spot where they were able to start 
construction at a time when that technology came of age. We 
could build a satellite like that today. It would take 3 years 
to do, but we could do that today.
    Mr. Gonzalez. Okay. My time is up.
    Thank you, Mr. Chairman.
    Mr. Upton. Mr. Walden.
    Mr. Walden. Thank you, Mr. Chairman.
    I want to go back to EchoStar at this point. Mr. Moskowitz, 
does your company have plans to launch another satellite, to 
expand your coverage into other markets?
    Mr. Moskowitz. We do.
    Mr. Walden. And how many markets will you be able to serve 
at that point when--is it one satellite? Two satellites? What 
is your plan?
    Mr. Moskowitz. It gets a little complicated. We have 
several satellites that are being launched for a variety of 
purposes. One of the purposes is to try to provide backup to 
existing local markets, and potentially to increase the number 
of local markets. We don't have a satellite designed to deal 
with a change in the law that would say take the existing 
markets you have and revamp them.
    Mr. Walden. Put them on one dish?
    Mr. Moskowitz. Right.
    Mr. Walden. In terms of your priorities, where does it fall 
to do more local into local? Especially in the smaller markets. 
What priority is that for your company?
    Mr. Moskowitz. Well, that has changed over time. If you had 
asked me that question a couple of years ago, I would have 
said, you know, maybe we will get 50 to 80 markets total 
because----
    Mr. Walden. Right.
    Mr. Moskowitz. [continuing] it doesn't look like we can 
penetrate any deeper and be profitable, or even close to it. 
Now I would say that number is much higher, and as technology 
changes it may get even higher. It is certainly a priority of 
ours, obviously. We were the first people to do distant 
network--to do local channels by satellite. We were the first 
people to hit 50 markets. We were the first people to hit 100 
markets. And we hope to be the first people to hit 150 markets 
if we are not saddled with a one-dish result of this 
legislation.
    Mr. Walden. Okay. Let us say you are not saddled with that. 
When will you hit all of the markets?
    Mr. Moskowitz. We would be in 150 markets by the end of 
this year, and we don't have any firm plans to get to all 210. 
We would continue to expand incrementally as we could find 
capacity, but we don't have a firm plan as to when we will hit 
210. We continue to look for capacity, work with the FCC to get 
additional spectrum, and to look for new technological 
satellites that would enable us to do it economically.
    Mr. Walden. Okay. So, then, you will be able to deliver, 
then, out-of-market affiliate stations into these smaller 
markets, because you don't do local into local.
    Mr. Moskowitz. Yes. Today we can deliver out of market.
    Mr. Walden. Right.
    Mr. Moskowitz. Not where we don't do--it is not tied to 
whether we do local to local. It is tied to whether the local 
affiliate has upgraded his plant to the point where he can 
provide it off air. If he can, we can't. If he can't, we can.
    Mr. Walden. All right. I don't know. I--yes, I got that.
    I guess I want to go back, Mr. Lee, I believe, into your 
testimony about the judge's decision. I apologize, I had a 
group of constituents who flew here from 3,000 miles away, and 
I always try and meet with somebody from 3,000 miles away. And 
so I was out of the room when Mr. Buyer asked some of his 
questions.
    But I am curious, Mr. Lee, if you could follow up on your 
comments about EchoStar's ``wilful infringement'' of network 
programming that enabled it to reap millions of dollars of 
unlawful gains. I know those are quotes from the judge, I 
believe.
    Mr. Lee. Yes.
    Mr. Walden. How do you read this, where, you know, first of 
all, I represent a very, very rural district that has these 
markets that are certainly below 150, and probably on out to 
about 800 I think. And so what is going to happen in markets 
like mine?
    Mr. Lee. Congressman, I am as concerned about that as you 
are. As Chairman of the CBS Affiliate Association, I represent 
the interests of the big city station here in Washington, which 
is not owned by CBS, and small market stations as well. But the 
litigation involving EchoStar I don't think has any application 
in the setting you are talking about.
    The affiliate associations of ABC, CBS, NBC, Fox, and 
originally the networks, although they later dropped out of the 
suit, all sued in Florida to compel EchoStar to comply with 
existing law.
    Mr. Walden. Right.
    Mr. Lee. And when we talk about all of these unqualified 
subscribers, and subscribers who are grandfathered, but they 
can't prove it because they didn't keep any records, that 
focuses on Miami. Obviously, in parts of the country in which 
there is mountainous terrain or hilly terrain, reception issues 
are different from those you find in South Florida.
    But there is a pattern, we believe, of consistent----
    Mr. Walden. Abuse.
    Mr. Lee. [continuing] lawlessness among one of the two 
companies that really concerns us when you then start giving 
them an opportunity to open new packages to sell. And, frankly, 
if you look at it in its simplest form, if it costs $6 a month 
to subscribe to out-of-market television stations, and you can 
sell a million of those subscriptions, that is $6 million a 
month or $96 million a year in cashflow for somebody like 
EchoStar.
    Mr. Walden. And there is no disincentive to them to do the 
right----
    Mr. Lee. Oh, no. You can pay a lot of lawyer's fees with 
$96 million a year in----
    Mr. Walden. Well, I----
    Mr. Lee. [continuing] cash coming in.
    Mr. Walden. That is my concern, and I am fearful of what 
happens to small market broadcasters in rural markets who can't 
even--you know, are having to fight these folks that have deep 
pockets and are willing to push the envelope out through the 
edge.
    I realize my time has expired, Mr. Chairman. I will follow 
up later.
    Mr. Upton. Thank you.
    Mr. Doyle.
    Mr. Doyle. Thank you, Mr. Chairman.
    I think I will ask Ms. Gore a question while Mr. Moskowitz 
catches his breath.
    Ms. Gore, I understand that in May 2000 that the FCC 
updated the ILLR predictive model to include land use and 
vegetation to make it more accurate, while in that same 
proceeding they rejected including interference for a number of 
reasons. Do you know what those reasons were? And has anything 
changed today that would reverse the FCC's conclusion on 
interference?
    Ms. Gore. I will try to answer that question. The original 
model that we did in 1998 for SHVA included interference. And 
at that time, testing wasn't really done. It had been part of 
the--a temporary part of SHVA, but it wasn't really in place. 
Then, when SHVIA was passed and the testing was included, that 
changed things.
    So the proceeding that we did in May 2000 that you are 
describing was to implement SHVIA, where there was testing. So 
one of the reasons that we didn't continue to include the 
interference in the new model was because there was going to be 
a testing requirement. And it is difficult, for many reasons I 
can go into if you like, to test for the interference.
    So if the idea was to have a predictive model on the one 
hand and then a follow-up test on the other, you would 
obviously want to have a test that could measure actually the 
things that you had predicted. And that would be difficult with 
the interference in there.
    Mr. Doyle. Thank you.
    Mr. Lee, would you like to explain when your station in--
how your station and business gets affected when you lose a 
local viewer to a satellite television company, for whatever 
reason. How does that affect your business?
    Mr. Lee. Oh, sure. At the same time that Congress in the 
1920's and 1930's made this decision to place local stations 
around the country rather than adopt the model of France and 
have one national signal for a network, it decided we wouldn't 
charge subscription fees, and that local stations would support 
themselves by selling advertising time. And so selling 
commercials is the only source of revenue a station has.
    One can demonstrate that in a market with a high 
penetration of DBS viewing the audience level for local 
stations declines, which lowers advertising revenues, which 
lessens the station's ability to serve the public interest with 
emergency information, local news, weather, and so forth.
    When we go to Florida, where the Nielsen diaries end up for 
tabulation, there was this peculiar pattern in the behavior of 
DBS subscribers. These people--and our station, I should say, 
has granted 30,000 waivers over the term of the current SHVA 
regulation. These viewers who have just insisted they can't 
pick us up and need distant network signals, when they fill out 
their Nielsen diaries tend to go to DBS for prime-time 
programming, and then come back to the local station for local 
news.
    So how they watch us when they can't pick us up I am not 
quite sure of. But Mr. Moskowitz made a good point a while ago 
that I am a DBS subscriber myself, and I know it is a great all 
digital picture. And in the analog world that all local 
television stations are now migrating out, there is an issue of 
ghosting from time to time.
    But these efforts seem to be--some of these efforts seem to 
be driven to getting us back into a regime in which the--Mr. 
Moskowitz would simply have somebody say, ``I don't like my 
picture; therefore, I qualify to watch New York or Los Angeles 
instead of local television stations.'' As I said in my 
testimony earlier, last month, each local station spends a 
great deal of money now to be an affiliate of ABC or CBS or NBC 
or Fox, and part of our affiliation agreement with the network 
says we have exclusivity for that programming within our market 
area.
    I am sorry. I probably gave you a longer answer than you 
wanted, Mr. Doyle.
    Mr. Doyle. Thank you, Mr. Lee.
    And, finally, for Mr. Moskowitz and Mr. Hartenstein, can 
you explain how not knowing whether or not in 5 years you are 
going to have a compulsory license authorizing retransmission 
of distant network signals, how does that impact your business, 
and do you believe it puts you at a competitive disadvantage?
    Mr. Hartenstein. I will go first. All, I believe, that 
DirecTV has asked for is parity with our chief competitor, 
which is cable. And all of the comments I have made I think go 
there, as it applies to SHVIRA. We today are able to, and 
provide on a single dish, some 66 markets of local into local.
    Mr. Chairman, you asked me a question early on that I 
didn't quite understand. We are going to 130 markets by the end 
of this year, and we have made a commitment as part of the 
recent merger with--or incorporation of News Corp taking out 
General Motors to go to all 210 markets by no later than 2008, 
and perhaps as early as 2006.
    We know that requires construction of new satellites. We 
are ordering those up as we speak, and we intend to do that.
    The problem with the smaller markets as you go forward is 
it is every bit as expensive infrastructure-wise for us to 
provide service there as it is in a larger market. And having 
some certainty going forward would be of great comfort to me as 
management, and, you know, the rest of our company and our 
shareholders. So it is simply that. We are not asking for 
anything that I think our chief competitors don't have.
    Mr. Moskowitz. I would just concur with Eddy's comments.
    Mr. Doyle. Thank you.
    Mr. Upton. Thank you.
    Mr. Terry is recognized for 8 minutes.
    Mr. Terry. Thank you, Mr. Chairman.
    Mr. Lee, I am going to ask you a few succinct questions, 
and you have been very good today about succinct answers. I 
would appreciate that with my short time here. But I am trying 
to get a better feel for the relationship of the local 
affiliate in all of this.
    Now, do you--does your station send out--or your digital 
signal now, I think most everyone is in compliance, very small 
few that aren't in compliance----
    Mr. Lee. There are still a handful of stations who haven't 
been able to either go to the power they will ultimately use, 
or start at all, some of which are having to do with the 
channel coordination with Canada, people in--stations in the 
northeast, and----
    Mr. Terry. But in Roanoke you are up and running and 
sending out your digital signal and----
    Mr. Lee. Absolutely.
    Mr. Terry. [continuing] whatever--CBS's high def prime-
time----
    Mr. Lee. And multicasting.
    Mr. Terry. Very good. We will get into that in a different 
hearing.
    Mr. Lee. Yes.
    Mr. Terry. I am sure. Now, then, in your--you enter into an 
agreement, I assume, with DirecTV or EchoStar for them to carry 
your signal from your station in Roanoke on their satellite for 
people in the area.
    Mr. Lee. That is correct.
    Mr. Terry. All right. And that is a contractual agreement.
    Mr. Lee. Yes, it is.
    Mr. Terry. Do they pay more for the HD programming or 
signal that you send out?
    Mr. Lee. No. The existing law, as I understand it, 
Congressman, only authorizes--in fact, Mr. Hartenstein's people 
are just meticulously scrupulous in reminding us that when we 
send our signal--well, let me start again. The DirecTV 
collection point at which it picks up all of the stations in 
our area is in our building. They rent space from us on our 
tower to pick up the over-the-air signals, rack space to 
process all the signals, and then fiber it back out to the 
uplink.
    So we have a business relationship in that regard, but it 
is as to our old channel 7 analog signal.
    Mr. Terry. Right.
    Mr. Lee. They don't believe they have authority yet, 
statutory authority--stop me if I get this wrong, Mr. 
Hartenstein--to do digital.
    Mr. Terry. Okay. So I am somewhat confused, then. If a 
DirecTV or EchoStar viewer/consumer--are they getting the HD 
programming from you, or just the analog?
    Mr. Lee. Just the analog.
    Mr. Terry. Okay. They aren't getting--I assume in Roanoke 
there is cable as well.
    Mr. Lee. That is correct.
    Mr. Terry. Is a cable subscriber receiving your station's 
HD signal through their cable system?
    Mr. Lee. Yes. If you think of our area as a doughnut, the 
hole in the doughnut is cable service operated by Cox Cable, 
and the doughnut itself is Adelphia. We have a business 
relationship with Cox for carriage of our analog signal and our 
digital signal, including the high definition piece of it and 
the standard definition multicast part as well.
    Mr. Terry. All right. So, for example, as a Cox Cable 
consumer, they were able to watch in Roanoke the Superbowl in 
high definition.
    Mr. Lee. Yes.
    Mr. Terry. But if you are an EchoStar or Direct, they 
couldn't. It was simply the analog.
    Mr. Lee. No, no, no.
    Mr. Terry. All right.
    Mr. Lee. The viewer who wanted to watch the Superbowl in 
high definition, and who was not a Cox Cable subscriber, still 
had the option of using an outdoor antenna----
    Mr. Terry. An outdoor antenna with a digital tuner.
    Mr. Lee. [continuing] to pick up HD and multicasting as 
well.
    Mr. Terry. All right. And so that is what they would have 
to do, even though they are purchasing the services from 
DirecTV or EchoStar.
    Mr. Lee. No. The HD service is not available from our 
station for either EchoStar or DirecTV.
    Mr. Terry. It is just not available.
    Mr. Lee. That is correct.
    Mr. Terry. Okay. Well, we have the reverse problem in 
Omaha. The CBS affiliate there will not allow the cable company 
to have the HD signal without paying them additional dollars. 
And so, therefore, as an HD consumer, I was not allowed to 
watch the Superbowl or the Final Four in HD, although I 
certainly have the tuner and the equipment.
    And it bothers me that there seems to be this schism in the 
technology, because we are trying to get people to buildup 
their confidence in HD. And so I think part of what we need to 
look at here is: are we building consumers' confidence in high 
definition TV, so we can get to the point where we can take 
back that analog and create even more certainty within the 
market?
    Mr. Lee. I would suggest that you pray with KMTV and with 
the Cox people in Omaha about this situation. They will find a 
solution real quickly. The cable industry initially had 
absolutely----
    Mr. Terry. I have talked to both of them, and they don't 
seem to be interested in a solution. So only the consumer gets 
screwed in Omaha.
    Mr. Lee. Well, I am sorry, but I can't control that. Cox 
didn't have much enthusiasm for HD early on. In fact, the 
entire cable industry didn't. I think it began to see the 
success DBS was having with HD and became much more interested. 
By then, the relationship between KMTV and Cox had become a 
little rocky, I think.
    Mr. Terry. Yes.
    Mr. Lee. And that may be special circumstances, and I am 
sorry you are caught in them.
    Mr. Terry. Yes. I am very frustrated by that, but I am 
still trying to get a feel for the local to local, so let me 
ask the gentleman from EchoStar--in Omaha, it is advertised 
that if you want to get HD you have got to go to dish. Nebraska 
Furniture Mart, others, advertise that. But I don't understand.
    If I am a dish consumer in the Omaha area, am I getting the 
local stations by satellite, or is it still a combination of 
antenna with the satellite?
    Mr. Moskowitz. I understand the reason for your confusion. 
I think I can help clear it up a little.
    Mr. Terry. All right.
    Mr. Moskowitz. If you live in Omaha and you are a dish 
subscriber--and I think actually this applies equally to 
DirecTV--you can get your local analog stations by satellite. 
And we also happen to have an arrangement with CBS corporate 
that allows us to offer CBS high definition specifically in 
those markets that are either owned and operated by CBS or 
where the local station consents to it.
    Mr. Terry. Then, in that type of an arrangement, are we 
getting back into the level of the signal and all of that? I 
just want to make sure consumers have access to HD.
    Mr. Moskowitz. In 90 percent of the markets, the local 
station refuses to agree to that. And so they don't have that 
access. The only way that in the near term consumers around the 
country can have access to HD network channels is if we have a 
distant network HD channel.
    Mr. Terry. All right. Well, I think we have found an area 
we need to work on.
    Thank you.
    Mr. Lee. With all due respect, I disagree. Have you tried 
an antenna?
    Mr. Terry. Not the high def antenna. I will tell you, I 
dropped DirecTV and went to Cox, because I was tired of 
shutting off my satellite box. And I had to put on--I only 
live--I live on the western side of Omaha, and I still had to 
have a company come out, put an antenna on top of my roof, have 
an electrician come out, because we had to power the antenna, 
and it still didn't come in very well.
    So I have an antenna setup that I don't use anymore because 
I went to Cox Cable. So I don't know if that answered your 
question or not, but I have not gotten an antenna, because I 
went to Cox digital specifically to get away from having to 
switch to a different system.
    Mr. Lee. I understand. I never cease to be amazed at the 
people who see some distinction between putting a satellite 
dish up on the roof and putting an antenna on the roof. The 
satellite dish is an antenna to pick up one kind of signal, and 
the traditional conventional antenna to----
    Mr. Terry. Even though----
    Mr. Lee. [continuing] an over-the-air signal.
    Mr. Terry. [continuing] I don't use either, I still have 
them both.
    Maybe I can put them on eBay. Can I do that?
    Mr. Upton. Mr. Bass.
    Mr. Bass. Thank you, Mr. Chairman.
    Well, I have got a couple of questions here, but I would 
like to get our arms around what is going on in my area of the 
world, which is New Hampshire. I don't, unfortunately, have any 
cable service where I live, and I don't have a satellite. So 
all I have is an antenna.
    Now, if I had a dish, could I get local--the local ABC 
affiliate in high definition? One of you satellite guys answer 
that.
    Mr. Hartenstein. Satellite guy No. 1 here.
    Mr. Bass. We can get both satellites there, EchoStar and 
DirecTV.
    Mr. Hartenstein. Sure.
    Mr. Bass. Okay.
    Mr. Hartenstein. We are both national service.
    Mr. Bass. Yes, I thought so.
    Mr. Hartenstein. We--DirecTV--have not yet brought local 
channels to New Hampshire. We hope to soon, as I indicated.
    You can get--right now, without cable, the only way you can 
get it is if you quality under the rules of distant network 
signals, we can import a signal for you. That would give you 
the prime-time network programming. That would not give you 
your local news----
    Mr. Bass. Sure.
    Mr. Hartenstein. [continuing] sports, and weather.
    Mr. Bass. What about EchoStar? Do you know?
    Mr. Moskowitz. Well, we offer--my understanding there isn't 
a New Hampshire DMA in terms of a local station. There are----
    Mr. Bass. Yes. We are going to talk about that later. There 
are three DMAs in New Hampshire.
    Mr. Moskowitz. Right.
    Mr. Bass. Let us take the southern DMA, and that is a 
whole--if you sign up----
    Mr. Moskowitz. And we do offer those----
    Mr. Bass. If you sign up for EchoStar, can you get high 
definition?
    Mr. Moskowitz. No. You can get the analog. You can't get 
the high def, because they won't allow us to carry it. And 
because of the bandwidth constraints, it would be very 
difficult to carry for all of those markets.
    Mr. Bass. Okay.
    Mr. Moskowitz. If your local station doesn't carry it and 
we had a high def bill, you would be able to get it--not your 
local, though, you would get a national.
    Mr. Bass. Thanks.
    Let me ask Ms. Gore a question here. We have had some 
difficulty figuring out how DMAs are made up. In fact, we can't 
figure it out. And I am just curious to know what might be done 
to fix this problem. Do you know how DMAs are made up?
    Ms. Gore. I know that the Nielsen Company makes them based 
on viewing patterns.
    Mr. Bass. And how do we--how do they do that? We can't 
figure out how DMAs are--we can't even get any information on 
how DMAs are made up, so----
    Ms. Gore. The Nielsen Company, which is a private company--
--
    Mr. Bass. Which communities they put in where, why, how, 
and so forth.
    Ms. Gore. Right. Their explanation for it, which they do 
spell out in some detail in their publications--and these are 
publications that they sell--explains how they determine which 
communities or which counties go in which market, and they 
explain that this is based on viewing patterns. And they have 
two different ways of doing the viewing testing.
    They have surveys that people fill out, the old Nielsen 
surveys that some of us remember, and they also have, as I 
understand it, automatic boxes that check on what people are 
watching. It depends on whether--what kind of market you are 
in. But they do sampling, and that is how they determine what 
people are watching. And for every year they put out a new map 
and a new list, and there are between 6 and 12, roughly, 
counties that change every year, but roughly it is the same map 
every year.
    Mr. Bass. Why can't policymakers like us get this 
information?
    Ms. Gore. We at the FCC subscribe to the Nielsen service, 
and we get the information, and we get the maps. And it is a 
private company, and they charge for their service. As I 
understand it, the information is available from other 
publications as well that people can obtain.
    I am happy to work with your staff members if there is any 
question about where your communities are.
    Mr. Bass. But you would recognize that if we are going to--
if we are going to work on DMAs and problems associated which, 
as you may know, we have a unique problem in New Hampshire, 
because we have three DMAs covering a single viewer area of the 
State.
    And we can't even find out why or how or--and so forth, 
because Nielsen is a private company, you guys subscribe, we 
don't, we can't subscribe. Don't you think there should be some 
mechanism whereby before we--that was as policymakers can have 
access to this information?
    I guess, are you saying that you are willing to make it 
available to us?
    Ms. Gore. Well, as a courtesy, I would be very happy, and 
have in the past and would continue to be happy, to share the 
information about what the map says. As a matter of fact, when 
consumers call our call center, the FCC call center, and they 
have this kind of question and they are confused about which 
DMA they are in, our folks on the phone they all have the maps 
and the information, and they provide the information.
    If there is any question at all that you or your staff have 
about which markets are which, I would be happy to try to 
answer those. If you have questions about why it is that 
particular counties are associated with particular DMAs, then 
those questions might be better directed to the Nielsen 
Company.
    Mr. Bass. Okay. Different subject. Can anyone tell us how 
many DMAs would be affected by the significantly viewed change 
in the draft bill that we have before us with and without the 
local-to-local rule?
    Mr. Lee. I would be pleased to help with that, Mr. Bass, if 
I may.
    Mr. Bass. Okay.
    Mr. Lee. And as to Nielsen, Nielsen conducts audience 
surveys in every county in America four times a year--the 
famous sweeps months we hear about--February, May, July, and 
November. And then once a year it looks at that total year's 
viewing and assigns each county in America to a particular 
television DMA based on, as Ms. Gore said, viewing patterns in 
that county.
    So if in Manchester the predominance of viewing is to WMUR, 
which, of course, it is, the problem in New Hampshire is that 
it is the only commercial television station in the State. So 
the plurality of viewing then accrues to other markets in which 
there are multiple stations that help create a cumulative 
number for that.
    I will be pleased to share that data with you. I think we 
have statistics on how many counties change from 1 year to the 
next, and so forth. And then, as to significantly viewed 
status, the FCC has published a document which defines which 
are significantly viewed stations, again, in every county in 
America. So there can be no ambiguity or no doubt about what 
the significantly viewed stations are in any State.
    Mr. Bass. Any other comments on that question? I am out of 
time. Let me ask one more, then. Mr. Moskowitz, you testified 
that if the two-dish law change is put in place, then 30-odd 
markets would not get local to local as fast. Would allowing 
carriage of stations from nearby DMAs under the proposed 
significantly viewed draft also slow local-into-local 
deployment?
    Mr. Moskowitz. No. I can give you further explanation if 
you would like.
    Mr. Bass. That is fine.
    Thank you, Mr. Chairman.
    Thank you, Mr. Moskowitz.
    Mr. Terry [presiding]. Mr. Walden.
    Mr. Walden. Well, Mr. Chairman, I just wanted to follow up 
on a comment from my colleague from New Hampshire, because it 
is relevant not necessarily to this discussion vis-a-vis 
Nielsen, but I think it is a relevant public policy question 
when it comes to the new rules proposed by the Commission when 
it comes to markets for radio and how those are determined, 
because if my memory serves me well, we are going to migrate 
away from a market defined by technical standards and into a 
market defined by Arbitron.
    And Arbitron now is what we will rely upon to determine how 
many stations are in a particular market. And the disconcerting 
thing about that is that Arbitron has been known to shift what 
they consider markets, and in some cases it has done that based 
on market pressure because, again, it is a private company that 
is susceptible--is a subscription-based company.
    And so now we are going to turn over to a private company 
the ability to define markets and may face some of the same 
peculiarities that you are concerned about here with Nielsen. 
Isn't that right?
    Ms. Gore. Congressman, I am not familiar with the radio 
rules, but I would be happy to try to get an answer for that--
on that for you if you would like.
    Mr. Walden. Yes. All right.
    Thank you, Mr. Chairman. That is the only point I wanted to 
make on that topic.
    Mr. Terry. All right. Switch?
    Mr. Upton. Yes. I thank my colleague from Nebraska.
    I have two brief questions that I want to come back to, and 
we are just about ready to have votes on the floor as well.
    Dr. Wright, I know you didn't get to finish--a chance, I 
made you do it yes or no, and it was a no. I just want to go 
back to that and underscore that if EchoStar came and knocked 
on the door to the subscriber and they said, ``We have got the 
service, and it is--you know, it is going to be a two-dish 
package. You don't have an option to take one of them off. It 
is going to be one control. The numbers are going to be in 
sequence going through.'' They mandate that that happens, no 
exceptions. Where are you? Why doesn't that work?
    Mr. Wright. Yes.
    Mr. Upton. Play the devil's advocate.
    Mr. Wright. Sure. The reason I answered----
    Mr. Upton. I mean, we fix it in this bill, but, you know, 
it is--again, this is a discussion draft.
    Mr. Wright. Sure, sure. The reason I answered the question 
no the first time was I think the way you phrased it was if 
Congress mandated that EchoStar----
    Mr. Upton. Oh. You just don't like mandates?
    Mr. Wright. Something like that. There is something called 
personal property rights, and I don't think that you should say 
whether I have to put two dishes, or maybe three in the future, 
or five on the top of my house. What if my house sells and the 
next owner disables some of the equipment?
    So that whole two-dish mandate doesn't really solve the 
question as to whether or not a group of stations are being 
relegated out on the wing or not. It only--it would certainly 
help the penetration of EchoStar in terms of its coverage in 
rolling out the two-dish strategy.
    Mr. Moskowitz said that they had now reached 20 percent 
penetration of the second dish. I really commend them for that. 
In 2002, in September, EchoStar filed a report with the FCC and 
said they had reached 1.5 percent penetration at that time. So 
they have made great progress.
    Mr. Moskowitz. I want to be sure--as I told Congressman 
Gonzalez, those are two different numbers. And I will be happy 
to talk to you, but I don't want to mislead. Those are two 
different numbers.
    Mr. Wright. Okay. Well, the report that I saw indicated 
that 1.5 percent of EchoStar subscribers had signed up for that 
second dish. So if I am a religious broadcaster in one of those 
small markets, and I am out there on one of those wing 
satellites, I am out there all by myself. That is the concern.
    Mr. Upton. But, again, if we say in that small community--
--
    Mr. Wright. Oh, I am sorry. I didn't answer your--the way 
you rephrased the question the second time was different. You 
said if EchoStar knocked on the door and said, ``If you want my 
service, it is two dishes,'' the consumer can make that 
decision whether they want to accept that or not. And I think 
that is a reasonable requirement.
    Mr. Upton. Okay. Mr. Lee, I have a question for you. As you 
look at the--where we are today, the current legislation that 
is on the books, the discussion draft, and I have heard--you 
know, I read your statement last night, and heard it today, and 
then the questions that a good number of the members had as we 
focused on this, it really goes down I think, from the NAB's 
position thus far, is really the discussion on what you do when 
you get local to local with the folks that have the--from 
Michigan, I call them the LAs.
    Mr. Lee. Yes.
    Mr. Upton. The West Coast folks that are currently there. 
What do you do with them? And if I can put words in your mouth 
maybe, but you tell me whether that works or not, the new--the 
legislation--the staff discussion legislation, you are in far 
better shape from your position with this draft than we are 
under the current legislation.
    I don't want to say that it is 90 percent of where you are, 
but it is a good--it is far more than halfway in terms of 
better from where we are today. Would you not agree?
    Mr. Lee. Yes. I would be remiss if I didn't say how much 
the NAB appreciates the opportunity to work with staff and to 
bring the draft bill along as far as it has come. We still 
think there is work to do, and we still think there is an 
opportunity for give and take.
    Mr. Upton. Yes. And I don't--I don't deny that at all, and 
I want to say, too--and I think we might have had this 
discussion at an earlier point perhaps in the year--and that 
is, I am one of those members that actually reads and signs all 
of my legislative mail. I have a pretty good head count in 
terms of what the mail volume is. There is not a letter that 
gets out that doesn't have a Fred on it.
    And I remember well when this issue first came up in the 
mid 1990's, that was my highest mail count issue in terms of 
what our--and, again, my district is I think a microcosm of the 
country being in southwest Michigan, urban and rural blend, a 
lot of different things. And I swear we probably heard from 
every single satellite customer in our district with a very 
strong opinion that wasn't just a mass mailing. I mean, we 
really heard from them.
    And as I directed the staff, and we sat through a number of 
hours getting this discussion draft ready, one of the concerns 
that I have is with those customers that perhaps like--to use 
my friend Ed Markey's dad, who maybe if he moves to Florida is 
going to still want to watch the Boston Red Sox. He is not 
going to want to watch the Florida Marlins or the Tampa Bay 
Devilrays, I don't think, but I will let him speak for himself.
    And I don't necessarily want to take away--that right away 
from him, particularly if he is not willing to take the local 
to local. But once you have a new subscriber that is there, 
that does get the--does want the local service, local to local, 
then they are going to lose, as in my case, Los Angeles. And to 
me, I think that that is a far cry better than where we are 
under the existing legislation, and it is those consumers that 
are going to want a choice----
    Mr. Lee. Sure.
    Mr. Upton. [continuing] that don't necessarily have it 
today. But once they get the local to local, then they, in 
fact, lose that long distance broadcaster--broadcast that comes 
in, knowing that at some point it is going to all be local to 
local, just a little longer transition than otherwise.
    Mr. Lee. I think you are right. At the top of our wish list 
would be that the legislation do all possible to encourage 
local service in all 210 markets. I am----
    Mr. Upton. And I think most of us here on the panel on both 
sides--the panel being the subcommittee--want that to happen.
    Mr. Lee. Yes.
    Mr. Upton. We want the rush to local to local.
    Mr. Lee. I am gratified to hear Mr. Hartenstein say today 
that it is--his company is still committed to doing that by 
2008, and by 2006 if possible. After all, that is just around 
the corner. And I know that EchoStar is a feisty, innovative 
competitor, and it is just--I find it incredible to believe 
that DirecTV could arrive at 206 markets with local into local 
by 2006, and Charlie wouldn't find a way to match it. It is 
just unthinkable.
    And once we get there--I accept Mr. Hartenstein's numbers. 
He has got a better history on this than I have--that there is 
an attrition rate that comes into play, and ultimately those 
subscribers go away. But I think we have to be really careful 
in this legislation.
    We don't open opportunities for EchoStar to go back to the 
district court in Florida after these overwhelming findings by 
the U.S. District Court there and look for loopholes to get 
through, or ways to rig the rules, to continue doing business 
in whatever way it wants.
    Mr. Upton. Well, I appreciate--Mr. Terry, Mr. Bass, do you 
have further questions, either one of you?
    Mr. Terry. Yes. Just some additional education here on the 
two dishes. So if--again, just using my only life experience in 
this, and that is my hometown, if a consumer in Nebraska has 
EchoStar, they get two dishes. And as I understand, in Omaha 
kind of the main affiliates are on disk one--or satellite one, 
channels 3, 6, and 7, and the PBS station.
    Then, even though it is not listed on the sheet that I have 
from the EchoStar website, then we have the Fox channels, WB, 
UPN, or whatever the other one is that is on disk--or the 
second satellite. But as I understand, only a smaller 
percentage of EchoStar clients have the second dish, and I 
don't know what that percentage is. Do you know off hand? And 
in the Omaha metropolitan area?
    Mr. Moskowitz. I don't know. It is----
    Mr. Terry. I have heard----
    Mr. Moskowitz. [continuing] ball park, it is going to be 
somewhere between 5 and 15 percent.
    Mr. Terry. Okay. Someone in Omaha told me it was closer to 
the 5 percent that the consumer has in----
    Mr. Moskowitz. Well, in Omaha, there is only one channel on 
the second dish.
    Mr. Terry. Okay.
    Mr. Moskowitz. So in Omaha there are five channels on the 
main dish, and only one on the second dish.
    Mr. Terry. Okay.
    Mr. Moskowitz. So that is--in fact, that would make sense, 
it would be toward the bottom of that, maybe even lower.
    Mr. Terry. All right. So in Omaha, then, we have the Fox 
station that is not on either satellite, is that--would that be 
accurate, since it is not listed on either satellite one or 
satellite two?
    Mr. Moskowitz. No. My guess is that is old information, and 
that we carry the ABC, NBC, CBS, and Fox, together with one 
other station in Omaha on the primary satellite. That would be 
my strong suspicion.
    Mr. Terry. Okay. I am having difficulty figuring out which 
stations are on one and two, and, of course, then I am 
concerned that a consumer walks into a retail place to buy your 
service, and get out there and find out, okay, I was told that 
everything I want is on the dish--just the first dish, didn't 
want to clutter up my roof with a second dish, then find out 
really there is three other stations that we are not getting.
    Mr. Moskowitz. Well, and the beauty of that is that if, 
indeed, that was--first of all, that is not the way we 
advertise it. But if it did happen, they can come back any time 
and ask for the second dish.
    Mr. Terry. And get the free one.
    Mr. Moskowitz. Free.
    Mr. Terry. Of course, they will have to find out, then. 
Okay.
    Mr. Moskowitz. Well, assuming they go to our channel guide 
and say, ``Gee, where is this other channel''----
    Mr. Terry. Yes. Or----
    Mr. Moskowitz. But Omaha is a very----
    Mr. Terry. And Everybody Loves Raymond at 11.
    Mr. Moskowitz. That is right.
    Mr. Terry. Yes.
    Mr. Moskowitz. Yes.
    Mr. Terry. All right.
    Mr. Moskowitz. But Omaha is a good example. We have a map 
of Omaha, No. 1.
    Mr. Terry. Oh, you came prepared.
    Mr. Moskowitz. Because Omaha is a spot--is in a spot beam 
with one, two, three, four, five other cities. And the reason 
we were able to do--open those markets--and Omaha is a real 
good example--is because we could put some of the less viewed 
channels from those six markets in--on the wing dish.
    If we had not, then either Duluth, Omaha, or Sioux Falls 
wouldn't be on the satellite today, and those consumers 
wouldn't have local channels available.
    Mr. Terry. They wouldn't have KM--the CBS, ABC, CBS----
    Mr. Moskowitz. That is right, because we couldn't do as 
many unless we had a two-dish solution. Eventually, we would 
get to that, but it wouldn't be as soon.
    Mr. Terry. All right. But that is also----
    Mr. Moskowitz. And if we have to change it, then either 
Duluth, Omaha, or Sioux Falls----
    Mr. Terry. All right.
    Mr. Moskowitz. [continuing] every customer we have in that 
market is going to have to get a new dish installed and look at 
a new satellite.
    Mr. Terry. My one concern is with the consumer, and just, 
again, whether it is HD or whatever, just making it seamless 
and easy for the consumer here, so that we don't have to put 
much thought into whether or not disk--or satellite one and 
satellite two has the stations we want for our viewing habits.
    So if--so in regard to that, we either look at, as I see 
the policy choices here, a single satellite or a mandatory two 
disks--two satellites, if that is what your technology 
mandates, so that everything is seamless for the consumer. They 
don't have to decide--make all these type of decisions about, 
well, I do want a second disk on my roof, if I want to watch 
Everybody Loves Raymond at 11, or something.
    So I guess that is what we are faced with thinking through 
this, but I want to ask Dr. Wright, then, if we mandate or 
allow two satellites on the roof, no question that it is 
mandated, if that is what their technology allows--and I am 
going to end with asking you about that technology--but why 
would that be difficult for you? Because then the consumer 
buying that satellite service still gets your religious 
programming.
    Mr. Wright. Right.
    Mr. Terry. And they aren't discriminated against.
    Mr. Wright. Well, that is the issue. If I may, can we go 
back to Omaha for just a second and the illustration Mr. 
Moskowitz made.
    Mr. Terry. Sure.
    Mr. Wright. He said there is one satellite--or one channel 
on the second satellite in Omaha. And I think if you think 
about it carefully, that explains why the penetration of the 
second dish is so low. Are you going to go down to your local 
dealer and sign up for the installer to come out for a second 
dish to put on your roof and stay home for the half a day that 
it takes to make that happen to get only one more station on 
there? And so there is----
    Mr. Moskowitz. But you don't have to, because it can be 
done at the time of the initial install.
    Mr. Terry. I will do the interrupting here. Let us just 
make the assumption the policy is that we mandate the two 
satellites, there is no choice. If you do EchoStar, you get the 
two satellites.
    Mr. Wright. Right.
    Mr. Terry. How is that disruptive to you?
    Mr. Wright. It would not be if you required all of the 
local broadcast stations in that market to be carried on one of 
those two satellites.
    Mr. Terry. But if it is--if I am sitting in my living room 
on my couch, and it is seamless to me, what is the problem?
    Mr. Wright. Right now, my neighbor--and my neighborhood, I 
live outside in the Virginia countryside--has two dish 
satellites on his roof. One of them is pointed pretty much up 
in the southeastern sky. One of them is pointed very low on the 
horizon to reach one of these wing satellites that are out over 
the Pacific or over the Atlantic and difficult to reach. There 
are interference issues and problems.
    So it is not as though there are two satellites that 
receive the exact same quality of transmission.
    Mr. Terry. So the second satellite has other issues with 
the quality of the signal.
    Mr. Wright. Oh, you bet.
    Mr. Terry. All right.
    Mr. Wright. You bet.
    Mr. Terry. Let us let DirecTV get in here.
    Mr. Hartenstein. If I may, we all at DirecTV have our 
monthly sales quotas. It is only the first of the month. And 
since you already have the dish there, if you could wait and 
not tear it down, 60 days from now we will have all six 
channels in Omaha, and they will be on the dish that you 
already have on your home.
    On your high def question, I would add--and I think Mr. 
Moskowitz indicated--we have a high def receiver that enables 
you to receive high def signals from our satellite. In so 
doing, we have put a terrestrial high def tuner in that 
satellite.
    And if the broadcasters in your area have been delivering, 
you know, more than a one watt signal, I dare say, given the 
terrain and topography of Omaha, you should be able to pick it 
up. If you had trouble, I am sorry.
    Mr. Moskowitz. First, let me add that EchoStar does, 
indeed, do the same thing with high def. But the--we really 
need to sit down, Dr. Wright, because the situation you just 
described with the two dishes--guess what? The one that is 
pointed almost straight up is the wing satellite, because in 
Virginia that is the one that is almost overhead. The one that 
is pointed at a low angle, that is the main satellite.
    So you actually are getting a better look angle--the one 
you are complaining about is the main satellite. The one that 
gives the good look angle, that is actually the wing.
    Mr. Wright. I will leave the technology to you. But the 
neighbor complains that the trees and different things 
interfere, and buildings that are not too distant interfere 
with the satellite that is pointed at the low angle. If it is 
the wing or the main, it makes no difference. The quality of 
the transmission of the two satellites is not the same, which 
was what Mr. Terry asked about.
    Mr. Moskowitz. But what I am saying is that the stations 
that are on the wing in Virginia actually have the better look 
angle. It is the ones that are on the main dish that are the 
harder ones to get there, because of the look angle.
    Mr. Upton. I would recognize the vice chairman of the 
subcommittee, Mr. Stearns.
    Mr. Stearns. Thank you, Mr. Chairman. I will be brief here, 
because I think everything has been said that needs to be said.
    Ms. Gore, I just want to reiterate and talk to you a little 
bit what the chairman asked--tried to ask you. Do you have 
staff here with you from the FCC?
    Ms. Gore. I have several colleagues here.
    Mr. Stearns. And what is his name?
    Ms. Gore. I have several colleagues here.
    Mr. Stearns. Okay. Could you raise your hands if you are 
with her? So you have got three people with you, right? Is that 
right? Three people, or four?
    Ms. Gore. Actually, I have four.
    Mr. Stearns. Okay. So you have four people here. Let me ask 
you again what he asked you. You said you could not take a 
position on the bill, because you are just here, and you are a 
technical advisor. I think that is what you said. Is that 
correct?
    Ms. Gore. Yes.
    Mr. Stearns. Yes. But then you went on to say that you will 
recommend changes to the bill, and that you have in mind some 
changes, I thought you said.
    Ms. Gore. No. What I was saying was that I had mentioned--
spoken with the staff. There were some technical wording issues 
that we were----
    Mr. Stearns. Technical wording.
    Ms. Gore. [continuing] going to talk about. There were some 
issues that had to do with exactly what was trying to be 
achieved. It wasn't a substantive evaluation, but rather how 
would it work if this is what the committee decides to do.
    Mr. Stearns. But I think what the chairman was asking you--
do you have an opinion on this bill? Just yes or no. Do you 
think--do you favor the bill as it is, or not? Just yes or no.
    Ms. Gore. Mr. Stearns, we just got the bill a couple of 
days. And we have----
    Mr. Stearns. But, I mean, with all those four people behind 
you, can't they say to you--I mean, the answer I would think 
would be, ``Mr. Stearns, there are some areas we think it could 
be improved.''
    Ms. Gore. Okay. That is a good answer.
    Mr. Stearns. Okay.
    Okay. Now, Ms. Gore, the answers needs to be, what are 
those areas? Tell me.
    Ms. Gore. I think there are certain areas--I really can 
only give you my personal opinion.
    Mr. Stearns. No. But you just told me that it needs to be 
improved, so I am asking----
    Ms. Gore. There are areas that need--that could use some--
--
    Mr. Stearns. I mean, can't your counsel whisper in your ear 
and say----
    Ms. Gore. Well, it is not about that. It is really about 
having a chance to get this approved by the Commission.
    Mr. Stearns. But you are not totally unaware what this bill 
is about. I mean----
    Ms. Gore. No, I am completely aware of what this bill is 
about.
    Mr. Stearns. [continuing] this bill has been around some 
time. So I am just trying to, you know--we are seeking your 
advice, and we are asking you for all of the testimony today. 
You have been here for a couple hours, and you must have formed 
an opinion. Do you think the bill needs changing?
    Ms. Gore. I think that there are some--it depends on what 
the committee wants to accomplish. And what I have heard today 
is that--a range of opinions from the committee on what is 
desired to be accomplished.
    And if the primary goal is to have more markets served, 
then that would perhaps indicate one kind of change. If the 
primary goal is to eliminate the two-dish distinction, then 
that might suggest another kind of change or retaining it the 
way it is.
    Mr. Stearns. Did you hear anything in these 2 hours from 
any of these witnesses that has changed your mind?
    Ms. Gore. No. I was delighted, however, to hear that the 
representatives from the satellite companies and Mr. Lee would 
be happy to sit down and consider--well, at least the 
representatives from the satellite companies would be 
interested in taking up Mr. Boucher's suggestion. That sounded 
like a good idea, to try to work----
    Mr. Stearns. So you think Mr. Boucher's suggestion is good, 
even though Mr. Lee said it was a terrible idea?
    Ms. Gore. I believe Mr. Lee said wrong-headed.
    Mr. Stearns. Wrong-headed, yes.
    So you think it is a good idea to take up what Mr. Boucher 
suggested.
    Ms. Gore. I can say that my opinion--my personal opinion--
--
    Mr. Stearns. That is what I want.
    Ms. Gore. [continuing] having something that has balance in 
it is a very good thing. Having something that provides 
consumers with choice is a good thing. Having legislation where 
it is clear what is intended is a good thing, and it sounds 
like, from what I have heard, everyone is in favor of something 
that would accomplish the significantly viewed expanded local 
market notion.
    I haven't heard anybody have a tremendous objection to 
that. There have been a lot of suggestions for ways to revise 
it around the edges, but the basic concept seems to meet with 
widespread approval. That sounds like a good idea.
    Mr. Stearns. So the basic bill, as you have heard it, is 
acceptable. It is just some peripheral types of changes that 
you see.
    Ms. Gore. Mr. Stearns, I have to be clear. I cannot speak 
for the Commission. I am not authorized to speak for the 
Commission. I can only apologize to you for----
    Mr. Stearns. No, I understand. But it seems like the 
Commission could give us a little bit of guidance here. So that 
is why I am putting you on the spot.
    Ms. Gore. We would be happy to give guidance. We would be 
happy to give technical advice and assistance in understanding 
what the committee wants to accomplish and in trying to make 
sure that the bill does that. An opinion from the Commission--
--
    Mr. Stearns. Okay. Mr. Chairman, I think my point has been 
made, so thank you.
    Mr. Upton. Thank you.
    Mr. Bass.
    Mr. Bass. Mr. Chairman, is this the time for me to ask 
unanimous consent that the discussion draft be considered a 
committee print and be considered for subcommittee markup?
    Mr. Upton. I don't see any objection from the minority 
side. April Fool.
    April Fool.
    I thank the gentleman from New Hampshire.
    This almost concludes our hearing. I want to thank all of 
you for your patience. My colleagues, we are in the midst of a 
series of votes, so we will adjourn the hearing.
    I do want to say one last word. I appreciate the hard work 
on the staff--by the staff on both sides of the aisle. We do 
intend to probably mark this bill up once we return from the 
April--from the Easter break. We will try to do that the first 
week. We will be talking with Chairman Barton with regard to 
that.
    Appreciate your testimony. Look forward to working with all 
parties as we move ahead.
    Thank you.
    [Whereupon, at 4:55 p.m., the subcommittee was adjourned.]
    [Additional material submitted for the record follows:]

                  Federal Communications Commission
                                           Washington, D.C.
                                                     April 19, 2004
The Honorable Fred Upton, Chairman
Subcommittee on Telecommunications and the Internet
Committee on Energy and Commerce
2125 Rayburn House Office Building
United States House of Representatives
Washington, D.C. 20510
    Dear Chairman Upton:
    This letter transmits my written responses to the post-hearing 
questions posed in connection with my April 1, 2004 appearance before 
the Subcommittee on Telecommunications and the Internet.
    I appreciate the opportinity to respond to the Issues and concerns 
in which you are interested.
            Sincerely,
                                            Eloise Gore    
                               Assistant Chief, Policy Division    
                                                       Media Bureau
Attachment

                 Responses to Questions for the Record

    Question 1. Lafayette, Indiana is within the Grade B contour of its 
CBS affiliate--the one and only broadcaster in the Designated Market 
Area--and therefore subscribers are not eligible to receive a distant 
network signal from other CBS affiliates. In addition, there is no 
local-into-local service being offered at this point by either DBS 
[carrier]. In your testimony, you state that on-site testing procedures 
for a consumer to obtain a Grade B signal waiver ``[have] not worked as 
effectively as anticipated.'' You also state that the problems faced in 
some cases have resulted in satellite providers limiting their offer of 
distant signals only to subscribers that are predicted ``unserved'' 
under the ILLR method (Individual Location Longley-Rice) model.
    (a) How can we best remedy the ineffectiveness of the waiver issue?
    (b) Should there be further guidance from the Commission on testing 
procedures? Or do we look for review and improvement of the waiver and 
testing procedures for the ILLR as the Committee's proposed draft 
legislation does?''
    Answer to Question 1(a): The FCC Media Bureau staff believes that 
the waiver procedures outlined in SHVIA, 47 USC  339, have worked well 
especially after the FCC helped to address problems that surfaced in 
the early stages of applying the new waiver procedures.
    The waiver procedure provides that subscribers that are predicted 
by the ILLR to be ``served'' request a waiver from their satellite 
carrier, which in turn requests the waiver from the network stations 
that are predicted to transmit a Grade B intensity signal to the 
subscriber's home. The current law permits the station to determine 
whether or not to grant the waiver but requires a response within 30 
days. We believe that the waivers are responded to within the required 
timeframe, but approximately 85% or more are denied by the network 
stations. Currently, SHVIA does not require the station to explain its 
decision when it denies waivers. We rarely, if ever, receive or hear of 
complaints concerning the procedure or timing for waivers. When we do 
hear from subscribers, it is when the local broadcast station denies 
the waiver.
    It may be that the subscriber is receiving a Grade B intensity 
signal but does not have a proper outdoor antenna, as required by the 
statute (47 USC  119(d)). Some subscribers do not wish to install an 
outdoor antenna. Due to the fact that there is no check or limit on the 
station's decision to grant or deny the waiver, it may be that some 
stations are denying waivers even when the subscriber is not receiving 
a signal of adequate strength.
    As outlined in the question, the households in Lafayette are within 
the Grade B contour of the local station. Thus, according to the 
statutory copyright provisions in Section 119 of 17 U.S.C., these 
households may not be eligible for the distant signal of that local 
station because they are receiving a Grade B signal from the CBS 
affiliate. Although the local station could grant a waiver, there is no 
legal obligation to do so. The only way for households that are 
receiving Grade B signal intensity to qualify for distant signals would 
be to revise the statutory copyright license in 17 U.S.C.  119.
    Answer to Question 1(b): As I noted in my written statement, the 
testing procedures outlined in SHVIA have not been as effective as 
Congress contemplated, and unfortunately, the Commission likely cannot 
provide much additional guidance to consumers without some changes to 
the procedure. The discussion draft legislation does require the FCC to 
review these issues, and make modifications, if necessary.
    A primary issue, from my experience, is a possible conflict between 
two provisions of SHVIA. The law appears to require testing when 
requested by a subscriber after denial of a waiver. However, the law 
does not require a satellite company to provide a distant signal at 
all. Thus, in some cases, we understand that the offer of a distant 
signal is only made to subscribers who readily qualify as unserved or 
who receive a waiver. Clarification from Congress on this apparent 
conflict would be helpful. Additionally, other statutory modifications 
could be made to modify the testing procedures.
    One approach that might reduce the number of tests, or could 
eliminate the need for testing in many cases, would be to include 
signal interference in the ILLR. Interference had been included in the 
ILLR model that the Commission developed under the Satellite Home 
Viewer Act (SHVA) in 1998, but was removed from the model in 2000 in 
part due to the testing requirement in the SHVIA. If the testing 
provision were removed or limited, then the presence of interference in 
the ILLR model could be effective for some viewers.
    Another approach that could possibly reduce the number of test 
requests would be for Congress to change the statute to allow for a 
presumption of whether or not to test depending on the predicted signal 
intensity. For example, if the ILLR model predicts that a household is 
``served,'' but the signal intensity is just over the threshold for 
service within a specified range, then the statute could provide that a 
station is expected to grant the waiver or arrange for a signal test. 
On the other hand, if a household is predicted to far exceed the 
minimum Grade B strength, then the presumption could be that a waiver 
is not warranted and the satellite carrier would not be expected to 
request a test on behalf of the subscriber. These upper and lower 
marginal parameters could reduce the number of testing situations, and 
reduce the potential expense to all parties. However, the existing 
draft language does not appear to provide for such an alternative. 
Thus, if Congress would like to proceed to modify the testing procedure 
in this manner, a statutory change would be required.
    Question 2. You commented in your testimony that rural areas in 
particular have a harder time finding testers, and that they are more 
expensive. Do you have an estimate of that cost? What is the cost in 
more densely populated areas?
    Answer: The Media Bureau does not have an estimate of specific 
dollar amounts relating to the cost of conducting a signal test. We are 
aware that there are time, resource and opportunity costs in relation 
to identifying a qualified tester, then trying to come to agreement 
between the broadcast station and the satellite carrier, or working 
with the American Radio Relay League (ARRL) to confirm that a proposed 
tester is qualified.
    We have heard that ARRL has charged $100 in some cases for its 
services. The less populated the area, we are told, the harder it is to 
find someone who is qualified to conduct the test and has the necessary 
equipment. In addition, in rural contrasted with urban areas, there is 
greater time and expense of driving to a remote location. We have heard 
that the cost of the test itself is typically $100-150, but the truck 
roll and other expenses can double the cost. Satellite carriers report 
to us that the total expense exceeds the price they charge for 
providing the distant signal, and that is why in some cases they drop 
the distant offer for subscribers who are not predicted ``unserved'' or 
who cannot get a waiver from the local network station.
    Question 3. Considering how difficult the testing regime can be, 
what role can the FCC play in helping to mitigate consumer confusion 
and frustration?
    Answer: The FCC Media Bureau has tried to address consumer 
confusion by explaining the waiver and testing procedures and the law 
to consumers who contact us, as well as through our consumer Fact 
Sheets, and we will continue to help consumers in this regard. 
Additionally, we often explain the copyright complexities to consumers 
so that they can better understand the basis for the law's 
restrictions. There are a variety of situations that we frequently hear 
about. The most common are: (1) Consumers who have tried to receive 
local stations using an outdoor antenna; (2) Consumers who do not wish 
to use an outdoor antenna; or (3) Consumers who wish to receive distant 
stations for purposes of time shifting programming or receiving 
sporting events from former home communities.
    With respect to the first group, we have contacted both the 
relevant satellite carrier and the stations involved. In some cases 
this intervention has succeeded in obtaining a test. Unfortunately in 
some cases, with or without a test, the consumer is receiving a signal 
of Grade B intensity even if the picture is not as clear as satellite-
delivered programming. In such cases, the law provides that the 
consumer is not eligible for satellite delivery of the distant signal 
of that network. Ultimately, the main frustration for consumers is that 
they are not permitted to buy the programming they want to watch, 
because the law does not permit them to do so.

                                 ______
                                 
                    DirecTV Responses for the Record

    Question 1. During our March 10, 2004 hearing on this matter, you 
indicated that it was DirecTV's goal to provide ``Local-into-Local'' 
service in all 210 Designated Market Areas (DMAs) as early as 2006, and 
no later than 2008. Can you comment further by clarifying whether this 
will be wholly via satellite, or will it involve some sort of 
terrestrial solution?
    Response. DIRECTV is exploring every plausible approach for 
providing analog local-into-local service in all 210 DMAs. For example, 
DIRECTV has entered into an agreement with Telesat to provide service 
from a Canadian orbital slot until at least 2008. This agreement, which 
requires regulatory approval from the FCC, will provide significant 
capacity towards fulfilling these commitments.
    Other possibilities include:

 Use of Spaceway's Ka-band satellite capacity
 Reverse-band DBS spectrum;
 Incorporating digital tuners into set-top boxes, mounting a small 
        broadcast antenna at the satellite dish, and seamlessly 
        incorporating signals over-the-air; and
 Other emerging technologies.
    At this time, we have ruled out no possibility.
    Question 2. EchoStar and DIRECTV have taken very different 
approaches to two-dish. Why?
    Response. We take a different approach than EchoStar for the simple 
reason that we believe the law compels our approach. Congress's intent 
in drafting section 338(d), in our view, was to prevent satellite 
companies from ``splitting'' broadcasters in a given market, and 
particularly from exiling less popular and minority broadcasters onto a 
wing-slot satellite. EchoStar has justified its approach with what we 
think is an excessively legalistic interpretation of section 338(d)'s 
anti-discrimination language. We do not believe that there is any way 
to square the statute's non-discrimination requirement with a service 
offering that requires subscribers to affirmatively request 
installation of a second dish in order to receive the full complement 
of stations being retransmitted in a single market.
    Question 3. Please describe any capacity differences between the 
EchoStar and DIRECTV satellite constellations, as they pertain to 
carriage of local broadcast stations in local markets.
    Response. The relevant difference between EchoStar and DIRECTV is 
less about capacity than about engineering. EchoStar actually has 
slightly more transponder capacity at orbital slots with a view of the 
continental United States (``full-CONUS'') than does DIRECTV, and 
significantly greater capacity when its ``wing slots'' are considered. 
EchoStar controls 50 CONUS transponders at 110 W.L. and 119 W.L. and 
43 quasi-CONUS ``wing slot'' transponders at 61.5 W.L. and 148 W.L. 
DIRECTV, by contrast, controls 46 CONUS transponders at 101 W.L., 110 
W.L. and 119 W.L. and has no ``wing slot'' authorizations.
    Yet DIRECTV and EchoStar have designed their satellite systems very 
differently. Both companies use ``spot beam'' satellites to deliver 
local channels. (Spot beam satellites are able to, in effect, re-use 
satellite capacity by transmitting many separate beams to various parts 
of the country, instead of transmitting a single beam covering the 
entire country.) But DIRECTV designed its spot-beam satellites to use 
smaller beams than do EchoStar satellites. In other words, each DIRECTV 
spot beam covers a smaller geographic area than the comparable EchoStar 
spot beam.
    Because each of its beams covers a larger geographic area, EchoStar 
can sometimes cover more DMAs with a single spot beam than can DIRECTV. 
Yet, because any given spot-beam can only carry a specific number of 
channels, EchoStar often cannot fit every local channel in these DMAs 
in a single spot-beam. It thus must ``exile'' some channels to other, 
wing-slot satellites. DIRECTV, by contrast, faces this problem much 
less frequently than does EchoStar, because we re-use satellite 
frequency much more intensely by employing a greater number of smaller 
spot beams.
    Building a satellite with more and smaller spot beams (as DIRECTV 
has done) is more complex than building one with fewer and larger spot 
beams. But DIRECTV's approach allows us to re-use valuable spectrum 
resources more efficiently and intensively--meaning that we have not 
needed to ``exile'' any channel in any DMA. Indeed, once we launch our 
newest satellite (scheduled for less than a month from now), we will be 
able to serve significantly more local markets using essentially the 
same amount of spectrum.
    This, we admit, is a very complex and technical subject, and we are 
happy to bring our engineers in to discuss this in more detail with 
your staff. But the key point here is that EchoStar's ``capacity 
constraints'' with respect to local service are largely the foreseeable 
(and almost certainly foreseen) results of its own engineering 
decisions.
    Question 4. Please describe in detail how you carry all of your 
local broadcast stations today. Specifically, please provide a list, 
organized by satellite (and, where appropriate, by spot beam) of how 
you retransmit each local broadcast station that you currently carry.
    Response. The table below sets forth the satellites on which we 
carry all of our local broadcast stations today. Please note, however, 
that this does not reflect markets that we will add upon launch of our 
newest satellite, scheduled for next month.

                                   Table 1: DIRECTV Local Markets By Satellite
----------------------------------------------------------------------------------------------------------------
                                                 Markets on D1 at                  Markets on D5 at
                                     Launch     101-degrees moving     Launch     119-degrees moving    Launch
  Markets on D4s at  101-degrees      Date        to  D7S at 119-       Date        to  D7S at 119       Date
                                                      degrees                          degrees
----------------------------------------------------------------------------------------------------------------
Los Angeles, CA..................    11/29/99  Richmond, VA........   1/16/2003  Hartford, CT.......    05/15/02
New York, NY.....................    11/29/99  Jackson, MS.........   5/13/2003  Las Vegas, NV......    05/15/02
Denver, CO.......................    12/04/99  Roanoke, VA.........    6/3/2003  Providence, RI.....    07/10/02
San Francisco, CA................    12/04/99  Wilkes Barre, PA....   6/11/2003  Buffalo, NY........    07/31/02
Washington DC....................    12/04/99  Louisville, KY......   6/13/2003  Grand Rapids, MI...    07/31/02
Atlanta, GA......................    12/11/99  Des Moines, IA......   6/13/2003  Oklahoma City, OK..    07/31/02
Detroit, MI......................    12/11/99  Shreveport, LA......   6/18/2003  Norfolk, VA........    08/28/02
Miami, FL........................    12/11/99  Tucson, AZ..........   6/18/2003  Knoxville, TN......    09/18/02
Philadelphia, PA.................    12/11/99                                    New Orleans, LA....    09/26/02
Phoenix, AZ......................    12/11/99                                    Jacksonville, FL...    11/06/02
Chicago, IL......................    12/18/99                                    Green Bay, WI......   5/21/2003
Cleveland, OH....................    12/18/99
Dallas...........................    12/18/99
Houston, TX......................    12/18/99
Raleigh-Durham, NC...............    12/18/99
Boston, MA.......................    12/29/99
Greenville, SC-NC................    12/29/99
Minneapolis, MN0.................    01/15/00
Tampa, FL........................    01/15/00
Orlando, FL......................    02/05/00
Seattle, WA......................    02/05/00
Sacramento, CA...................    03/04/00
St. Louis, MO....................    03/04/00
Salt Lake City, UT...............    06/02/00
Baltimore, MD....................    06/30/00
Pittsburgh, AP...................    06/30/00
San Diego, CA....................    06/30/00
Charlotte, NC....................    07/28/00
Indianapolis, IN.................    07/28/00
Milwaukee, WI....................    07/28/00
Portland, OR.....................    08/25/00
Kansas City, KS..................    09/13/00
Nashville, TN....................    09/13/00
Cincinnati, OH...................    09/20/00
Memphis, TN......................    09/27/00
Birmingham, AL...................    11/01/00
Greensboro, NC...................    11/08/00
San Antonio, TX..................    11/08/00
Austin, TX.......................    11/15/00
Columbus, OH.....................    11/22/00
West Palm Beach, FL..............    11/22/00
Colorado Springs, CO.............    4/9/2003
Columbus, MS.....................    7/2/2003
Columbia, SC.....................   7/15/2003
Huntsville, AL...................   7/31/2003
----------------------------------------------------------------------------------------------------------------

    Question 5. Lafayette, Indiana is DMA 189 out of 210. For satellite 
subscribers in Lafayette, neither EchoStar nor DirecTV offer local-
into-local service.
    Can you offer a time frame as to when this service will be offered 
to Lafayette subscribers?
    Response. DIRECTV has publicly stated that it will provide analog 
local-into-local service in all 210 DMAs--including Lafayette--by 2008 
at the latest, and hopefully by 2006. There are, however, too many 
variables (including the outcome of regulatory proceedings, successful 
satellite launches, etc.) for us to give a more definitive estimate 
with respect to any particular DMA.
    What are the constraints that prevent either company from offering 
this service right now?
    Response. The primary constraint that prevents DIRECTV from 
offering this service right now is capacity. As indicated above, 
DIRECTV is leaving no stone unturned in its efforts to increase its 
capacity, so that we can serve Lafayette and other unserved DMAs as 
soon as possible. In addition, the economics of providing this service 
become more challenging as the DMAs become smaller.
    Question 6. Anecdotal evidence suggests that in order to receive 
local signals using an off-air antenna, some might have to spend 
approximately $1,000. Can you explain if there are distance limitations 
that prevent receiving a clear signal, and the typical antenna size and 
cost--including installation--needed to receive a clear over-the-air 
signal?
    Response. The question may be referring to high-definition 
monitors, which, in some cases, used to be sold without digital tuners. 
In such case, consumers would have to spend significant amounts of 
money (although not, to DIRECTV's knowledge, as much as $1,000) to 
purchase a separate digital tuner. DIRECTV understands, however, that 
most high-definition monitors now include digital tuners. And every one 
of DIRECTV's high-definition set-top boxes comes with a built-in 
digital tuner, with which consumers can seamlessly integrate their 
over-the-air digital signals and their satellite-delivered channels.
    All terrestrial radio services--including television--suffer from 
``distance'' problems. That is, if the receiver is too far away from 
the transmitter, the receiver will not be able to receive a clear 
signal. Moreover, obstacles may prevent a receiver from receiving a 
clear signal (this is also true for satellite receivers). These 
limitations are often (at least partially) a function of transmitter 
power limits--which are the subject of FCC regulations that prevent 
transmitters from interfering with one another and with other radio 
services. That said, future technological advances may allow 
broadcasters to ``extend the reach'' of terrestrial television 
transmitters.
    Question 7. Consumers can get the same national programming whether 
they are viewing their local affiliate or a distant one, and can time 
shift if they buy a VCR or DVR. Thus, the only difference is the local 
content and who gets the advertising. If we allowed you to provide 
distant signals and local signals so long as you blocked out the 
distant national programming, would you?
    Response. Blocking out national programming in 130 separate DMAs 
would be a prohibitively difficult and expensive undertaking. 
Certainly, DIRECTV would not support a Congressional requirement to 
block out distant national programming.

           Additional Questions submitted by Rep. Eliot Engel

                              FOR ECHOSTAR

    Please describe in detail how you carry all of your local broadcast 
stations today. Specifically, please provide a list, organized by 
satellite (and, where appropriate, by spot beam) of how you retransmit 
each local broadcast station that you currently carry.
    Please explain why, if Congress were to require satellite operators 
to provide all broadcast signals in any individual market through one 
dish, EchoStar would, as a technical matter, be ``required'' to drop 
markets in which it currently provides local-into-local service. Also, 
please specify exactly which markets would have to be dropped, and why 
you would have to drop each market.
    Please explain why EchoStar could not, as a technical matter, 
rearrange its programming among its existing satellite constellation to 
provide service to all of the markets it currently services in 
conformance with the requirement described above.
    EchoStar intends to provide local-into-local service in an 
additional 40 markets by the end of the year. Please provide a list, 
organized by satellite (and, where appropriate, by spot beam) 
describing how EchoStar intended to carry each local station in these 
additional 40 markets. Furthermore, please explain why EchoStar could 
not, as a technical matter, rearrange its programming among its 
existing and future satellites to provide service to each of these 
additional 40 markets in conformance with a ``one-dish'' requirements 
as described above.

                              FOR DIRECTV

    Question. EchoStar and DIRECTV have taken very different approaches 
to two-dish. Why?
    Response. Please see our response to Question 2, above.
    Question. Please describe any capacity differences between EchoStar 
and DIRECTV satellite constellations, as they pertain to carriage of 
local broadcast stations in local markets.
    Response. Please see our response to Question 3, above.
    Question. Please describe in detail how you carry all of your local 
broadcast stations today. Specifically, please provide a list, 
organized by satellite (and, where appropriate, by spot beam) of how 
you retransmit each local broadcast station that you currently carry.
    Response. Please see our response to Question 4, above.

                                 
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