[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
                          SATELLITE VIDEO 101

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

                                HEARING

                               BEFORE THE

             SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 13, 2013

                               __________

                            Serial No. 113-4


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov


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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman
RALPH M. HALL, Texas                 HENRY A. WAXMAN, California
JOE BARTON, Texas                      Ranking Member
  Chairman Emeritus                  JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky                 Chairman Emeritus
JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania        FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska                  ANNA G. ESHOO, California
MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
TIM MURPHY, Pennsylvania             GENE GREEN, Texas
MICHAEL C. BURGESS, Texas            DIANA DeGETTE, Colorado
MARSHA BLACKBURN, Tennessee          LOIS CAPPS, California
  Vice Chairman                      MICHAEL F. DOYLE, Pennsylvania
PHIL GINGREY, Georgia                JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana             JIM MATHESON, Utah
ROBERT E. LATTA, Ohio                G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington   JOHN BARROW, Georgia
GREGG HARPER, Mississippi            DORIS O. MATSUI, California
LEONARD LANCE, New Jersey            DONNA M. CHRISTENSEN, Virgin 
BILL CASSIDY, Louisiana                  Islands
BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
PETE OLSON, Texas                    JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia     JERRY McNERNEY, California
CORY GARDNER, Colorado               BRUCE L. BRALEY, Iowa
MIKE POMPEO, Kansas                  PETER WELCH, Vermont
ADAM KINZINGER, Illinois             BEN RAY LUJAN, New Mexico
H. MORGAN GRIFFITH, Virginia         PAUL TONKO, New York
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Missouri
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina
             Subcommittee on Communications and Technology

                          GREG WALDEN, Oregon
                                 Chairman
ROBERT E. LATTA, Ohio                ANNA G. ESHOO, California
  Vice Chairman                        Ranking Member
JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
LEE TERRY, Nebraska                  MICHAEL F. DOYLE, Pennsylvania
MIKE ROGERS, Michigan                DORIS O. MATSUI, California
MARSHA BLACKBURN, Tennessee          BRUCE L. BRALEY, Iowa
STEVE SCALISE, Louisiana             PETER WELCH, Vermont
LEONARD LANCE, New Jersey            BEN RAY LUJAN, New Mexico
BRETT GUTHRIE, Kentucky              JOHN D. DINGELL, Michigan
CORY GARDNER, Colorado               FRANK PALLONE, Jr., New Jersey
MIKE POMPEO, Kansas                  BOBBY L. RUSH, Illinois
ADAM KINZINGER, Illinois             DIANA DeGETTE, Colorado
BILLY LONG, Missouri                 JIM MATHESON, Utah
RENEE L. ELLMERS, North Carolina     G.K. BUTTERFIELD, North Carolina
JOE BARTON, Texas                    HENRY A. WAXMAN, California, ex 
FRED UPTON, Michigan,ex officio          officio
  


                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, opening statement......................................     1
    Prepared statement...........................................     3
Hon. Anna G. Eshoo, a Representative in Congress from the State 
  of California, opening statement...............................     4
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................     5
    Prepared statement...........................................     5
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................     7

                               Witnesses

Eloise Gore, Associate Bureau Chief, Enforcement Bureau, Federal 
  Communications Commission......................................     8
    Prepared statement...........................................    11
R. Stanton Dodge, Executive Vice President and General Counsel, 
  DISH...........................................................    18
    Prepared statement...........................................    20
    Answers to submitted questions...............................    77
Jane Mago, Executive Vice President and General Counsel, Legal 
  and Regulatory Affairs, National Association of Broadcasters...    28
    Prepared statement...........................................    30
    Answers to submitted questions...............................    78
Jennifer Kieley, Director, Government Relations, Association of 
  Public Television Stations, on behalf of Lonna Thompson, 
  Executive Vice President, Chief Operating Officer and General 
  Counsel, Association of Public Television Stations.............    41
    Prepared statement...........................................    43
Michael O'Leary, Senior Executive Vice President, Global Policy 
  and External Affairs, Motion Picture Association of America....    48
    Prepared statement...........................................    50
    Answers to submitted questions...............................    81


                          SATELLITE VIDEO 101

                              ----------                              


                      WEDNESDAY, FEBRUARY 13, 2013

                  House of Representatives,
     Subcommittee on Communications and Technology,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:32 a.m., in 
room 2322 of the Rayburn House Office Building, Hon. Greg 
Walden (chairman of the subcommittee) presiding.
    Members present: Representatives Walden, Latta, Shimkus, 
Terry, Scalise, Lance, Gardner, Pompeo, Kinzinger, Long, 
Ellmers, Barton, Upton (ex officio), Eshoo, Welch, Lujan, 
Pallone, and Matheson.
    Staff present: Gary Andres, Staff Director; Ray Baum, 
Senior Policy Advisor/Director of Coalitions; Sean Bonyun, 
Communications Director; Andy Duberstein, Deputy Press 
Secretary; Neil Fried, Chief Counsel, C&T Debbee Hancock, 
Press Secretary; Nick Magallanes, Policy Coordinator, CMT; 
David Redl, Counsel, Telcom; Charlotte Savercool, Executive 
Assistant, Legislative Clerk; Lyn Walker, Coordinator, Admin/
Human Resources; Roger Sherman, Democratic Chief Counsel; 
Margaret McCarthy, Democratic Staff; Patrick Donovan, FCC 
Detailee; and Kara Van Stralen, Democratic Special Assistant.

  OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF OREGON

    Mr. Walden. OK, we will call to order the Subcommittee on 
Communications and Technology for our hearing on Satellite 
Video 101. I know we had to move this hearing up from an 
earlier scheduled time because of some shifts in our 
scheduling, so we appreciate your response to this hearing on 
such a short time notice. And again, this is meant to be an 
educational hearing, meant to be Satellite Video 101. There 
will be other hearings where I am sure there will be a lot of 
vibrant discussion about what we should do going forward. But I 
thought it was important for the subcommittee to be able to 
understand the issues and intent with this legislation, and 
what we should or should not do going forward. So we welcome 
certainly all of our witnesses today and appreciate your 
willingness to come on short notice.
    SHVA, SHVIA, SHVERA, and STELA. This law has been known by 
a lot of different names, and many of those acronyms, I am 
told, strike fear into the hearts of some, and some, I am sure, 
wish they could turn back to Punxsutawney Phil after seeing his 
shadow. I prefer to see, as Phil did this year, signs of an 
early spring.
    We have an opportunity with our partners in the Judiciary 
Committee to examine whether the satellite law is still serving 
its purpose in a video market that, frankly, would be 
unrecognizable to those who worked on the original legislation 
back in 1988. I won't ask for a show of hands of those who did 
that, but I know at least somebody at the FCC has been involved 
in all of these. Broadcasting has gone digital. Satellite 
television is no longer a nascent industry. Phone companies, 
wired and wireless, are in the video business. Consumers can 
stream and download their favorite shows over the Internet. 
Viewers have more choices, and more expectations, than ever 
before. Companies are trying to keep up: launching new 
services; embarking on spin-offs, mergers, and partnerships. We 
have read in the last day or so, Comcast, NBC Universal, all 
coming together. Intel proposing a new service of video, and 
experimenting with new business models to meet consumer demand 
in a new and competitive reality. Our laws are also trying to 
keep up in a world where traditional classifications and 
regulations that emanate from them seem increasingly strained.
    The goal, of course, is to provide consumers more of what 
they want while ensuring companies have the investment 
resources to get it to them. Can we better ensure television 
viewers have access to the broadcast programming of their 
choice while respecting the rights of stations that transmit it 
over the air and the networks that create it? Would finally 
letting the law expire help that cause? Is it better to 
reauthorize it as is, or are revisions called for, either 
narrow or sweeping? Is there something we can do to address the 
ongoing frustration viewers have who find themselves assigned 
to ``local markets'' that are outside their states or who live 
in places that don't have a full complement of network 
affiliates?
    Today we are going to set the table for this discussion by 
examining the current state of satellite television law. This 
is perhaps the most arcane and complicated area of law we 
confront in this subcommittee, other than Universal Service 
Fund reform, of course. That is why I thought it wise to start 
early, giving us ample time to hear from all parties in advance 
of the December 31, 2014, sunset that applies to some of the 
existing provisions. Rest assured, we will have several more 
hearings, providing additional opportunity to consider not only 
the satellite issues directly before us, but also affording 
time to those who would ask us to take this opportunity to 
revisit other areas of communications law.
    I look forward to hearing from our witnesses today. I am 
particularly pleased to welcome Eloise Gore, associate bureau 
chief of the FCC's Enforcement Bureau. And as I said, my 
understanding is this could be your fourth reauthorization 
while at the Commission, if we do in fact reauthorize the law. 
I want to thank you for you willingness to share your 
expertise. It is most helpful. I also want to set some ground 
rules. Ms. Gore is in a position to share her considerable 
knowledge on how the law operates and perhaps even on what may 
be working and may not. She will not, however, be making policy 
recommendations on how the law should change, so please don't 
ask her to do that. That is a pleasure reserved for us on this 
dais and in the Congress, in consultation with our constituents 
back home and those in the television business who can help us 
create an environment that entertains, informs, and creates 
jobs.
    [The prepared statement of Mr. Walden follows:]

                 Prepared statement of Hon. Greg Walden

    In a tradition we've been observing every 5 years or so for 
a quarter century, today we begin discussing the law 
authorizing satellite video providers to distribute broadcast 
television signals. It is important we do these period look-
backs.
    SHVA. SHVIA. SHVERA. STELA. These are acronyms that strike 
fear into the hearts of many. Some, I'm sure, wish they could 
turn back like Punxsutawney Phil after seeing his shadow. I 
prefer to see, as Phil did this year, signs of an early spring.
    We have an opportunity with our partners in the Judiciary 
Committee to examine whether the satellite law is still serving 
its purpose in a video market that would be unrecognizable to 
those who worked on the original legislation in 1988. 
Broadcasting has gone digital. Satellite television is no 
longer a nascent industry. Phone companies, wired and wireless, 
are in the video business. Consumers can stream and download 
their favorite shows over the Internet. Viewers have more 
choices-and more expectations- than ever before. Companies are 
trying to keep up: launching new services; embarking on spin-
offs, mergers, and partnerships; and experimenting with new 
business models to meet consumer demand in a new competitive 
reality. Our laws are also trying to keep up in a world where 
traditional classifications and the regulations that emanate 
from them seem increasingly strained.
    The goal, of course, is to provide consumers more of what 
they want while ensuring companies have the investment 
resources to get it to them. Can we better ensure television 
viewers have access to the broadcast programming of their 
choice while respecting the rights of stations that transmit it 
over the air and the networks that create it? Would finally 
letting the law expire help that cause? Is it better to 
reauthorize it as is? Or are revisions called for, either 
narrow or sweeping? Is there something we can do to address the 
ongoing frustration viewers have who find themselves assigned 
to ``local markets'' outside their states or who live in places 
that don't have a full complement of network affiliates?
    Today we are going to set the table for this discussion by 
examining the current state of satellite television law. This 
is perhaps the most arcane and complicated area of law we 
confront in this subcommittee. That is why I thought it wise to 
start early, giving us ample time to hear from all parties in 
advance of the December 31, 2014, sunset that applies to some 
of the existing provisions. Rest assured, we will have several 
more hearings, providing additional opportunity to consider not 
only the satellite issues directly before us, but also 
affording time to those who would ask us to take this 
opportunity to revisit other areas of communications law.
    I look forward to hearing from our witnesses. I am 
particularly pleased to welcome Eloise Gore, associate bureau 
chief of the FCC's Enforcement Bureau. My understanding is this 
will be her fourth reauthorization while at the Commission, if 
we do in fact reauthorize the law. I want to thank her for her 
willingness to share her expertise. I also want to set some 
ground rules. Ms. Gore is in a position to share her 
considerable knowledge on how the law operates and perhaps even 
on what may be working and what may not be. She will not, 
however, be making policy recommendations on how the law should 
change. That is a pleasure reserved for us on this dais and in 
the Congress, in consultation with our constituents back home 
and those in the television business who can help us create an 
environment that entertains, informs, and creates jobs.

                                #  #  #

    Mr. Walden. I would turn now to the vice chairman of the 
committee, Mr. Latta, for the remaining amount of my time.
    Mr. Latta. I appreciate the chairman for yielding, and I 
also thank our distinguished panel for being here today.
    I believe that today will be the beginning of a thoughtful 
and productive policy process. We have important issues in the 
satellite TV industry, as the chairman said, before us, which 
we all know need to be addressed by the end of next year when 
the Satellite Television Extension Localism Act of 2010, STELA, 
expires. I also look forward to a thorough discussion among our 
subcommittee members, stakeholders, and consumers as we grapple 
with the issues in STELA and others stemming from our decades 
of communication and cable laws.
    Mr. Chairman, I look forward to the hearing today and 
hearing from our witnesses on this subject, and I yield back 
the remainder of my time.
    Mr. Walden. I thank the gentleman.
    I now turn to the distinguished ranking member of the 
subcommittee, Ms. Eshoo, for 5 minutes in an opening statement.

 OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Eshoo. Thank you, Mr. Chairman. Good morning to you, to 
all the members of the subcommittee, and most importantly, our 
witnesses. I might note that in my memory, I think this is the 
first time I am looking at a panel where the majority of those 
that are testifying are women. So congratulations, and welcome.
    Mr. Chairman, less than 3 years ago, Congress passed and 
the President signed into law the Satellite Television 
Extension and Localism Act of 2010, STELA. Ms. Gore, maybe that 
is your--we should rename you, give you that as your first 
name. I am pleased, as the chairman is, and other members, that 
we are starting this discussion of reauthorization early, and 
only to ensure that we have adequate time to work through all 
the relevant issues, the new ideas that come forward, but also 
for the benefit of the several new members of our subcommittee, 
and that is very important so that the level of understanding 
is brought up, so that we are all up to speed on this.
    The estimate of one analyst today is that because of STELA, 
between one and one-and-a-half million satellite subscribers 
who live in areas where a signal from the local network 
affiliate is not possible now have access to broadcast 
programming. These satellite subscribers also enjoy the 
benefits of public television stations, multi-digital signals, 
as well as their HD transmission, ensuring that consumers from 
all states have the opportunity to view publically funded 
programming, one of my all-time favorites, so I am--I think 
that it is important to underscore that.
    While my preference is to pursue a clean reauthorization of 
STELA, there will no doubt be other video-related topics raised 
over the course of this Congress, and chief amongst my concerns 
are the programming disruptions that consumers experience when 
retransmission disputes break down. Simply put, consumers 
should not be held hostage when negotiators fail to come to an 
agreement. These high profile disputes have impacted millions 
of Americans, often prior to or during highly watched 
programming, such as the 2010 World Series. That simply is not 
acceptable. I mean, where are the adults in the room kind of 
thing. Our constituents all pay the price for it.
    I am fascinated by the emergence of new video services, 
such as Skitter and Sky Angel. These companies challenge 
existing business models, which is disruptive but very 
important, and they provide a new means of delivering 
traditional broadcast or cable content into the homes of 
consumers. I think these services can contribute to the 
establishment of a vibrant video marketplace that promotes both 
consumer choice and competition.
    So today's panel of witnesses offer, and will offer, a 
wealth of knowledge to us, spanning from the FCC to a cross 
section of impacted industries, including broadcast, satellite, 
and content. I thank each witness in advance of their 
testimony, and for working with us to reauthorize STELA.
    I yield back the balance of my time, and thank you, Mr. 
Chairman.
    Mr. Walden. Thank you. I now recognize the distinguished 
chairman of the full committee, the gentleman from Michigan, 
Mr. Upton.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton. Well thank you, Mr. Chairman. It is hard to 
believe that the time has already come to revisit the satellite 
TV legislation. For members on this committee, it has almost 
become a right of passage.
    Americans now have an endless amount of content available 
to them and the technology at their fingertips to watch it at 
almost any time, anywhere, and on any device. Our job is to 
create an atmosphere where they can do so in a way that 
respects the investments of the companies that create and 
distribute that content, as well as the underlying economics 
necessary to make those businesses work. We need to do our very 
best to make sure that our laws don't prevent willing producers 
of programming to strike arrangements with willing distributors 
to reach interested viewers.
    Issues surrounding this particular law are by no means easy 
to grapple with, but it is important that we do so. The 
competitive landscape has evolved significantly in the video 
marketplace, and we must ensure our laws are having their 
intended effect. If they are no longer needed, they need to be 
eliminated. If they are missing the mark, they should be 
revised. If they are working well, we should leave them alone. 
But periodic oversight is essential to make that determination. 
It is particularly true of all laws in the communications 
sector. Technology is changing this industry at an astonishing 
rate, and we must work to ensure that our laws keep pace, 
fostering continued growth, particularly in the innovation 
area. Indeed, while it certainly makes for more work, we should 
consider using the sunset provisions perhaps a little bit more 
often.
    I look forward to the testimony and the interaction, and 
yield and offer my time to Mr. Scalise.
    [The prepared statement of Mr. Upton follows:]

                 Prepared statement of Hon. Fred Upton

    It's hard to believe the time has already come to revisit 
the satellite television legislation. For the members on this 
committee, it has almost become a rite of passage.
    Americans now have an endless amount of content available 
to them and the technology at their fingertips to watch it 
almost at any time, anywhere, and on any device. Our job is to 
create an atmosphere where they can do so in a way that 
respects the investments of the companies that create and 
distribute that content as well as the underlying economics 
necessary to make those businesses work. We should do our best 
to make sure our laws do not prevent willing producers of 
programming to strike arrangements with willing distributers to 
reach interested viewers.
    The issues surrounding this particular law are by no means 
easy to grapple, but it is important we do so. The competitive 
landscape has evolved significantly in the video marketplace, 
and we must ensure our laws are having their intended effect. 
If they are no longer needed, they should be eliminated. If 
they are missing the mark, they should be revised. If they are 
working well, we should leave them alone. But periodic 
oversight is essential to making that determination.
    This is particularly true of all the laws in the 
communications sector. Technology is changing this industry at 
an astonishing rate, and we must work to ensure our laws keep 
pace, fostering continued growth in the innovation era. Indeed, 
while it certainly makes for more work, we should consider 
using sunset provisions more often.
    But these are larger questions to discuss along the way. 
The focus of today's hearing is what the law requires now. I 
look forward to the testimony.

                                #  #  #

    Mr. Scalise. Thank you, Mr. Chairman, for yielding, and I 
will just make a couple of observations at the outset of the 
hearing.
    It is clear that based on some of today's written testimony 
that as much as there is somewhat a focus only on the expiring 
narrow satellite provisions, there is also an interest in 
raising other interconnected issues, like additional compulsory 
licenses, retransmission consent rules, and regulations that 
govern negotiations between broadcasters and pay TV providers. 
If stakeholders want to describe the various compulsory 
copyright licenses of 1976 and 1988 as relics or anachronistic, 
which I will be the first to agree with, then I am sure they 
would also agree that the same is true of the 1992 Cable Act. 
The truth is that there is a litany of regulations still 
burdening the video marketplace that have been piled one on top 
of the other over the years. So much has changed in the video 
distribution since the days before the commercialization of the 
Internet, and it is time that we recognize this fact.
    So I welcome this expanded conversation, appreciate our 
panelists for coming, and look forward to the hearing. I yield 
back.
    Mr. Walden. You said Mr. Barton wanted some time?
    Mr. Barton. Well, I have been here long enough to remember 
before we had the Satellite Home Viewer Act. I just purchased a 
new home down in Texas. It was--if it was a car dealer, it 
would be a pre-owned home. And back in the back yard is one of 
these huge satellite dishes that could get the signal from the 
satellite directly, not through Dish or anything like that. I 
have no idea what it is worth. I have tried to figure out a way 
to salvage it and perhaps sell it for scrap. But I bet when 
that satellite dish was purchased, they probably paid $5,000 to 
$10,000 for it.
    Well today we don't need it, and we are here for the second 
or third reauthorization of the Satellite Home Viewers Act. It 
is good we are doing this ahead of time. I want to commend the 
subcommittee chairman and the full committee chairman for 
moving to reauthorize something before it is expired. That is a 
good thing. It appears we are going to have a bipartisan 
hearing and a bipartisan reauthorization. I supported the 
original legislation. I have supported all the 
reauthorizations, and I look forward to a similar situation in 
this committee in the near future.
    With that, Mr. Chairman, I yield back.
    Mr. Walden. Gentleman yields back. Anyone else on 
Republican side seeking time? If not, we will move on then to 
our witnesses.
    Before we do that, Mr. Waxman is not able to be with us at 
this hearing this morning. I do have his opening statement 
which I would ask unanimous consent to be allowed to be put 
into the record. Without objection, so done.
    [The prepared statement of Mr. Waxman follows:]

               Prepared statement of Hon. Henry A. Waxman

    Today's hearing marks the beginning of the Energy and 
Commerce Committee's consideration of reauthorization and 
updates to the Satellite Television Extension and Localism Act 
of 2010 or STELA.
    STELA is the most recent in a series of laws that permit 
satellite providers to offer broadcast programming to their 
subscribers. Americans across the country have benefited from 
these actions taken by Congress.
    We have fostered the development of satellite as a viable 
competitor in the video market, preserved and expanded access 
to local broadcast content, and ensured compensation for the 
creators whose work compels consumers to seek out these video 
services in the first place.
    Many of our members are new to this Committee since our 
last consideration of these issues during the 111th Congress. 
Under the leadership of former subcommittee Chairman Rick 
Boucher, our committee's consideration of STELA was a 
bipartisan legislative effort from start to finish.
    Although STELA was the work product of two committees, I 
was especially proud of the fact that the provisions within 
Energy and Commerce jurisdiction were completed on time and 
without controversy. Chairman Walden, it is my hope that our 
work this Congress will proceed in the same bipartisan manner.
    We began our efforts in the 111th Congress with the 
expectation that Congress would pursue a clean reauthorization 
of the expiring provisions of the law. Even with that limited 
scope, however, the reauthorization was not completed in a 
timely manner.
    Some stakeholders have suggested that Congress examine 
broader issues in the video marketplace as part of the 
reauthorization. I am open to those conversations, but I urge 
my colleagues to recognize what a complicated task we have 
ahead of us and to be wary of getting sidetracked by disputes 
about other topics.
    Thank you to our panel of witnesses for appearing today. We 
look forward to your testimony and your continued engagement as 
we move forward with our consideration of this reauthorization.

    Mr. Walden. Now we will turn to our witnesses. Again, we 
want to thank you for putting together your testimony and being 
able to be here on short notice. We are going to start with Ms. 
Eloise Gore, the Associate Bureau Chief of the Enforcement 
Bureau, Federal Communications Commission. Ms. Gore, thank you 
very much for being here. Slide that microphone close and turn 
it on, and the show is yours for the next 5 minutes.

STATEMENTS OF ELOISE GORE, ASSOCIATE BUREAU CHIEF, ENFORCEMENT 
 BUREAU, FEDERAL COMMUNICATIONS COMMISSION; R. STANTON DODGE, 
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL, DISH; JANE MAGO, 
    EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL, LEGAL AND 
   REGULATORY AFFAIRS, NATIONAL ASSOCIATION OF BROADCASTERS; 
JENNIFER KIELEY, DIRECTOR, GOVERNMENT RELATIONS, ASSOCIATION OF 
   PUBLIC TELEVISION STATIONS, ON BEHALF OF LONNA THOMPSON, 
 EXECUTIVE VICE PRESIDENT, CHIEF OPERATING OFFICER AND GENERAL 
COUNSEL, ASSOCIATION OF PUBLIC TELEVISION STATIONS; AND MICHAEL 
  O'LEARY, SENIOR EXECUTIVE VICE PRESIDENT, GLOBAL POLICY AND 
    EXTERNAL AFFAIRS, MOTION PICTURE ASSOCIATION OF AMERICA

                    STATEMENT OF ELOISE GORE

    Ms. Gore. There we go.
    Mr. Walden. There we go.
    Ms. Gore. Very good. Chairman Walden, Ranking Member Eshoo, 
and members of the subcommittee, thank you for the opportunity 
to appear before you today. I am currently the Associate Bureau 
Chief for the Enforcement Bureau at the FCC, but for most of my 
FCC career, I was in the Media Bureau, where my 
responsibilities included the Satellite Home Viewer Act, SHVA, 
and its progeny, SHVIA, SHVERA, and STELA. I was pleased to 
provide technical assistance to Congress on these 
reauthorization bills, as well as spearheading the 
implementation of the enacted laws. I appreciate the chance to 
participate with the subcommittee and my fellow panelists this 
morning in Satellite Video 101 to refamiliarize ourselves with 
the legislative and regulatory structure we have in place.
    My written statement provides a board overview of the 
statutory changes made by the previous reauthorization and the 
expiring provisions. I would like to spend my brief time this 
morning outlining how the current rules apply to consumers.
    As noted in my written statement, my views are my own, and 
I am very happy to provide technical assistance, but will 
respectfully decline to provide any opinions on suggested 
modifications.
    STELA and its predecessors govern satellite delivery of 
broadcast television to satellite subscribers and treat local 
and distant broadcast stations in different ways. Local 
channels are the stations that are assigned to the designated 
market area, DMA, in which the subscriber resides, based on 
designations by the Nielson Media Company. My outstanding 
colleague, Laurie Robier, will hold up the map, which is a 
precious commodity, I must tell you. Thank you, Laurie. Nicely 
done.
    Distant signals are those stations that are assigned to a 
different DMA from the one in which the subscriber resides. 
SHVIA created local into local service in 1999. Initially, the 
two satellite providers offered the local stations in fewer 
than 40 out of the 210 DMAs. Now they have increased their 
local market offerings so that nearly all subscribers in the 
210 designated market areas have access to the local station 
package from one or both satellite carriers. DISH provides 
service to all 210; DirecTV, I believe, provides service to 196 
of the markets.
    The local stations available to satellite subscribers are 
essentially limited to the stations designated for the DMA, 
although there are some additional options in certain 
circumstances, such as significantly viewed stations or distant 
stations that can be used to fill in what we call a short 
market, where there are not four of the top four networks 
available over the air. There are certain areas in the country 
in which Congress provided a special exception to allow 
carriage of additional signals in the local market.
    Distant signals are generally available only to satellite 
subscribers who are unserved by an over-the-air signal and for 
whom the local into local stations are not available. We call 
this no distant where local. This being 101, I will try to 
describe some of the little terminology that you will hear us 
use. Local into local, no distant where local, DMA. Unserved 
means that the subscriber's household cannot receive the over-
the-air signal of a local network station with sufficient 
signal strength. Notwithstanding the principle of no distant 
where local, some subscribers have been statutorily 
grandfathered as the eligibility rules have changed in 
successive reauthorizations. Some of the grandfathered 
subscribers may keep the distant signals, others may, at some 
point, be required to relinquish the distant signals, and some 
subscribes who are outside the satellite's spot beam, and 
therefore unable to receive the local package, may also be 
eligible for distant signals. Distant signal subscribers are 
limited to no more than two network affiliated signals from 
each broadcast network, and time shifting may be limited based 
on the subscriber's local time zone. The subscriber cannot 
specify which distant signals he or she wishes to receive. 
Further, the satellite carrier is only permitted to provide 
distant signals if it complies with the requirement to provide 
the networks with lists of the subscribers who are receiving 
distant signals.
    If the local stations are not available to a subscriber via 
satellite, the subscriber may request distant signals through 
his or her satellite carrier. The carrier determines whether 
the subscriber is considered served or unserved by using a 
computer model that predicts the signal strength at the 
subscriber's household. Satellite carriers use a computer model 
designed by the Commission. It is called the ILLR computer 
model, but the Commission is not involved in making individual 
predictions. If the model determines the household is unserved, 
that is, the signal strength is too low from the broadcast 
station, the satellite carrier is permitted to provide distant 
network signals to the household. If the model predicts that 
the household is served by a particular local network station 
over the air, the household is not eligible for distant signals 
for that network. The subscriber may request waivers from each 
of the local stations that are predicted to serve the household 
in order to be eligible for distant signals. Waivers are 
requested through the satellite carrier and the local broadcast 
station must accept or reject a waiver request within 30 days. 
If a local station denies the waiver request, the subscriber 
can request a signal test to measure the actual signal strength 
of the over-the-air signal.
    Finally, the law allows satellite carriers to provide 
distant signals to subscribers in some other situations, such 
as recreational vehicles, commercial trucks, or C-band 
satellite receivers. Mr. Barton, your C-band may be useful yet.
    Thank you for inviting me to participate in today's 
hearing. I look forward to assisting the committee as it begins 
this reauthorization process, and would be happy to take your 
questions. Thank you so much.
    [The prepared statement of Ms. Gore follows:]

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    Mr. Walden. That is the best news Joe has gotten all day.
    We now turn to our next witness, Mr. R. Stanton Dodge, who 
is the Executive Vice President and General Counsel of DISH. 
Mr. Dodge, thanks for joining us this morning. We look forward 
to your testimony.

                 STATEMENT OF R. STANTON DODGE

    Mr. Dodge. Chairman Walden and Ranking Member Eshoo, 
Chairman Upton, and members of the subcommittee, I very much 
appreciate the opportunity to testify today. My name is Stanton 
Dodge, and I am the Executive Vice President and General 
Counsel of DISH Network, the Nation's third largest pay TV 
provider with over 14 million customers and 25,000 employees 
nationwide.
    This morning, I would like to highlight the benefits that 
STELA and its predecessors have conferred upon consumers.
    STELA provided two big wins for consumers, giving them 
access to more programming than ever before. First, it 
challenged DISH to offer local stations in all of the Nation's 
210 television markets. We embraced that challenge, and today 
we are the only pay TV provider to offer local channels in 
every market. Plus, we are the largest distributor of PBS 
nationwide. Second, STELA allowed us to give consumers in short 
markets access to all the big four networks. And for those of 
you who don't know, short markets are markets that lack one or 
more of the big four stations, and they tend to be small, rural 
communities. Thanks to STELA, consumers in 21 short markets 
across 19 States can watch the valued network programming that 
the rest of the country has long enjoyed.
    So how did we get here? Well, let us start with the basics. 
We all know that broadcast stations are important to consumers. 
They are freely available over the air, but even after the 
digital transition, many households cannot get a signal, 
especially in large western markets. Over-the-air reception 
often just cannot match the coverage and consistency of 
satellite and cable television.
    The first incarnation of STELA, the Satellite Home Viewer 
Act of 1988, created a statutory copyright license that enabled 
satellite carriers to provide consumers with broadcast signals 
originating outside of their home markets. This copyright 
license came with an important restriction. It only allowed 
network transmissions to ``unserved households,'' households 
that cannot receive a strong local signal using an off-air 
antenna. In exchange for the license, satellite carriers paid a 
monthly per-subscriber fee to the copyright office. That fee 
was set either by private negotiations, or by an administrative 
proceeding, and the revenues were then distributed to the 
mosaic of copyright holders. This copyright fee structure 
remains in place today.
    Congressional legislation evolved further in 1994, 1999, 
and 2004, and throughout this time, technological advances 
prompted significant updates to the law. For example, with the 
advent of spot beam technology, satellites can target signals 
into individual local markets, rather than the whole country at 
once. This led Congress to add the so-called local into local 
license, which allowed for satellite retransmission of local 
broadcast signals back into their local markets. Satellite 
carriers seized that new opportunity. They built and launched 
spot beam satellites and they started providing local stations 
almost immediately. As a result, satellite providers emerged as 
a key competitive force in the pay TV market.
    I am going to ask you to please refer to my written remarks 
for a more comprehensive summary of the various satellite 
television bills over the years.
    As many of you are aware, DISH was barred from providing 
distant network signals to subscribers in 2006, after a decade-
long court proceeding. Among other things, the injunction 
prevented us from filling up short markets, because we needed a 
distant signal license to import the out-of-market stations to 
replace the missing local affiliates. Through STELA, Congress 
presented an incentive for DISH to receive a waiver of that 
injunction if we offered local stations in all of the Nation's 
210 markets, then they would allow us to win back our distant 
signal license. Working cooperatively with the NAB, we followed 
the path precisely as Congress envisioned. The result, on June 
3, 2010, we initiated service to all local TV markets, becoming 
the first, and to date, the only pay TV provider to offer local 
service in all 210 DMAs.
    And so, STELA stands as an example of how targeted 
legislative solutions can work to everybody's benefit. It 
should be reauthorized before December 31, 2014, but there is 
much more that Congress can do through STELA to expand 
consumer's access to local programming. In an era of fast-
changing technology and the explosion of video on the Internet, 
we believe that Congress should take this opportunity to look 
at ways that the current statute can be updated to better 
reflect consumer expectations and desires.
    We look forward to a dialogue addressing those options in 
the months ahead, and I thank you again for the opportunity to 
testify here today, and look forward to answering any questions 
you might have.
    [The prepared statement of Mr. Dodge follows:]

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    Mr. Walden. Thank you, Mr. Dodge. We appreciate your being 
here, and your testimony.
    We will now go to the Executive Vice President and General 
Counsel for Legal and Regulatory Affairs, the National 
Association of Broadcasters, Jane Mago. We are delighted to 
have you here this morning, and look forward to your comments.

                     STATEMENT OF JANE MAGO

    Ms. Mago. Thank you, Chairman Walden----
    Mr. Walden. Go ahead and turn that on.
    Ms. Mago. Turn on the microphone. Thank you, Chairman 
Walden, and thanks to Ranking Member Eshoo and Chairman Upton, 
and all the members of the subcommittee for having me here to 
speak with you today. As Chairman Walden just said, I am the 
Executive Vice President and General Counsel of the National 
Association of Broadcasters.
    Now over the next 2 years, this subcommittee, as well as 
your colleagues on the Judiciary Committee, will consider 
whether certain provisions of the legislation that is 
affectionately known to all of us as STELA should be allowed to 
sunset. The narrow issue that is before you is whether the 
legal framework that permits the country's two satellite 
providers to retransmit our stations continues to be in the 
public interest. As the committee begins this dialogue, your 
broadcast constituents ask you to be mindful of two principles 
that are at the core of STELA and all its predecessors that we 
have heard about today.
    First, free over-the-air local television should remain 
widely available to American households, and second, the 
government should not interfere with the contractual 
relationships that promote broadcasting's local focus. 
Adherence to these principles will help ensure that the public 
benefits from free over-the-air broadcasting.
    Now, the bedrock principle of the American broadcast system 
continues to be this localism. Whether it is local news, 
emergency alerts, weather information, election coverage, or 
sports, local television broadcasters provide these services 
and programming for free to communities across the country. 
Broadcasters support charities, civic organizations, and 
community events, and our locally tailored advertising provides 
the opportunity for your hometown businesses to promote their 
goods and services. Simply put, free local service is our 
focus. It is what differentiates American broadcast television 
from others around the world, and from every other medium.
    Broadcasters have invested billions of dollars in recent 
years to improve the quality and reach of our service. The 
digital television transition allowed us to proliferate high 
definition programming, launch mobile D-TV service, and offer 
multiple program streams. These innovations enable our viewers, 
who are also your constituents, to receive higher quality and 
more diverse programming on many platforms.
    Now as you have heard, in the beginning the satellite acts 
were crafted to help the satellite companies become competitive 
with cable services, and ensure that satellite subscribers 
could access network programming. It was always a concern, 
however, that the service should not undermine local broadcast 
stations. And so specifically, Congress prohibited a satellite 
provider from importing a network signal from a distant market 
to households that could receive that network's programming 
from a local station. These provisions were and remain 
essential to prevent diversion of local station viewers and 
reduction in the advertising revenue that is needed to provide 
vital local services. Now even as it created this distant 
signal license, Congress foresaw that one-day technological 
advances might make that license unnecessary, so it included a 
5-year sunset provision. That premonition was really correct. 
Technology has evolved so that satellite companies could 
provide each market with the market's own local signals. As 
Stanton just told us, today DISH provides its local service 
into all 210 television markets, and DirecTV is in either 195 
or 196, that is not somewhat clear, but thus the need to import 
distant network signals has dramatically diminished. Only a 
small percentage of the 34 million satellite subscribers 
receive network programming via this distant signal. Indeed, 
over 98 percent of all U.S. television viewers have the option 
of viewing their local networks. So accordingly, this 
subcommittee may want to consider whether the public interest 
would be best served by allowing the distant signal and related 
communications act provisions to sunset, as Congress originally 
intended.
    Because local viewers are best served when they receive 
local service, every satellite and cable subscriber should 
receive this local into local service.
    Now alternatively, if STELA is reauthorized, broadcasters 
urge a clean, minimalist approach targeted to the problem to be 
solved. Efforts to graft unrelated and unnecessary issues onto 
this narrow legislation would be inappropriate and unwise.
    I thank you for all your efforts to promote vibrant local 
broadcast industry, now and into the future, and I am happy to 
answer any questions that you may have.
    [The prepared statement of Ms. Mago follows:]

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    Mr. Walden. Ms. Mago, thank you very much for your 
testimony.
    We will now go to Jennifer Kieley, and before we do, I 
should point out that she is a fill-in witness this morning. 
Lonna Thompson was supposed to testify but fell ill last night, 
and so be kind to Jennifer. She is the Director of Government 
Relations, Association of Public Television Stations, and Lonna 
is the Executive Vice President, Chief Operating Officer, and 
General Counsel for Association of Public Television Stations, 
so today we have the Director of Government Relations, Jennifer 
Kieley. Jennifer, thank you for joining us, and we look forward 
to the testimony of the public television stations.

                  STATEMENT OF JENNIFER KIELEY

    Ms. Kieley. Thank you, Chairman Walden and Ranking Member 
Eshoo, members of the subcommittee. I greatly appreciate the 
opportunity to substitute in Lonna's place today on this very 
important issue to the Association of Public Television 
Stations.
    This issue is of great importance to our 368 local public 
television stations throughout this country. It has a 
tremendous influence on the services that are available to your 
constituents, our viewers, nationwide, but particularly those 
living in rural America that are often limited to their paid 
television programming options and disproportionately depend on 
satellite services.
    First and foremost, we would like to thank this committee 
and the Congress as a whole for the passage of STELA which 
recognized the critical services that local public broadcasting 
stations provide their communities nationwide. Because of that 
legislation, viewers in even the most remote corners of this 
country that receive local satellite HD service, have access to 
the best that public television has to offer in the full 
splendor of HD. We are also appreciative of the language that 
was included in STELA which allows satellite carriers to carry 
local public television statewide licensees' signals throughout 
the entire state where DBS providers have the bandwidth to do 
so. This provision removed statutory roadblocks that restricted 
the ability of residents and tax payers in states to receive 
the full benefits of their state's public television statewide 
network.
    Public broadcasting is charged by the Public Broadcasting 
Act with providing universal service to every corner of this 
country, and STELA has enabled us to help meet this mission and 
provide the highest quality of services to our satellite 
viewers.
    As Congress looks to reauthorize STELA, public television 
proudly highlights the private carriage agreements that we have 
been able to negotiate with almost all major MVPDs. Rather than 
rely on Congress to work out these carriage agreements, which 
can admittedly be challenging, we pioneered our own private 
agreements with cable, Verizon and DirecTV.
    Before the passage of STELA, we were still hopeful that we 
would be able to negotiate a similar carriage agreement with 
DISH. Unfortunately, after years of unsuccessful negotiations, 
we were never able to close a deal with DISH that would have 
guaranteed carriage of all of our stations' HD signals. As a 
result, before STELA was signed into law, DISH was not carrying 
a single HD signal of any local public television station, but 
STELA mandated the carriage of local public television 
stations' HD signals by any carrier that had not entered into 
private carriage negotiations with public television. And now, 
DISH is required by law to carry the local HD signals of public 
television stations in all markets where they offer local HD 
service.
    This provision was included in STELA because Congress 
recognized the unique educational mission of local public 
television stations and the void that was felt by citizens that 
were previously denied access to these critical services. We 
were also pleased that when DISH challenged us all in the 
courts, the courts upheld STELA.
    As a result of STELA, viewers in Oregon are able to watch 
Oregon Field Guide, a valuable source of information about 
outdoor recreational issues, ecological issues, natural 
resources and travel destinations in the full detail of HD. In 
the San Francisco Bay area, subscribers to satellite have 
access to the HD version of Quest, KQED's award-winning 
multimedia science and environment series. And in Michigan, 
Ohio, Illinois, Pennsylvania, Nebraska, and communities 
nationwide, Americans can travel the galaxies with NOVA, tune 
in for a live performance at the Met, celebrate the 4th of July 
with a front row seat at the Nation's Capital, catch up on the 
latest drama of Downton Abbey, all this and so much more, in 
the sunny display of high-definition television. This is public 
television as it is meant to be seen and appreciated.
    Public television is in the business of providing local 
public service. We treat our viewers as citizens, not 
consumers. Our stations provide over 98 percent of Americans 
with the highest-quality, free, educational media available. 
And in addition to all the great broadcast services that local 
public television stations offer, our stations are also 
providing cutting edge public services to communities beyond 
the broadcast, from educational services to public safety, to 
veterans job retraining, these services and so much more are 
part of the vibrant public service media that this country has 
invested in and we are proud to deliver to your constituents. 
Because an investment in public media is truly an investment in 
the unique needs of local communities nationwide.
    Again, we would like to thank this committee, and 
particularly Representative Eshoo, who authored the amendment 
which guaranteed our HD carriage, for all your work in crafting 
legislation that recognized the incredible value and critical 
services that are provided by local public television stations.
    Thank you for inviting us to participate in today's 
hearing. We look forward to continuing to work closely with you 
as prepare to reauthorize this legislation.
    [The prepared statement of Ms. Kieley follows:]

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    Mr. Walden. Thank you, Ms. Kieley, and I can assure you, we 
are not going to get between your viewers and Downton Abbey.
    Ms. Kieley. Good plan.
    Mr. Walden. That would not be good.
    Let us go now to Mr. Michael O'Leary, Senior Executive Vice 
President of Global Policy and External Affairs, the Motion 
Picture Association of America. Mr. O'Leary, thanks for joining 
us this morning and rounding out our panel. We look forward to 
your testimony, sir.

                  STATEMENT OF MICHAEL O'LEARY

    Mr. O'Leary. Thank you, Chairman Walden, Chairman Upton, 
Ranking Member Eshoo, and members of the subcommittee. Thank 
you for inviting me to testify this morning on behalf of the 
Motion Picture Association of America. I also want to 
acknowledge my fellow panelists. It is an honor to be on the 
panel with the folks today, and to provide our perspective on 
the potential reauthorization that this subcommittee is 
undertaking.
    My message on behalf of the industry that creates much of 
what you see on television is very simple and very 
straightforward. The satellite and the cable compulsory 
licenses are historically anachronistic that are no longer 
justified in today's television programming marketplace. If 
those licenses were to be retained, however, they should not be 
expanded in our view. Program owners should be more fairly 
compensated, and a direct marketplace should be encouraged.
    I want to be clear at the outset that we share the goal 
that was articulated by the chairman in his opening remarks, 
and I believe by everyone on this committee, and that is to 
provide consumers with the highest quality entertainment and 
informational experience possible, and to expand choices 
available in television in new and innovative ways. At the same 
time, it is imperative that the hardworking men and women who 
invest their talent and capital to create the programming 
receive fair market compensation, and that the law promote 
marketplace innovation.
    Mr. Chairman, there is no better time to be a consumer of 
content than today, and we are confident that the future will 
bring even more high quality entertainment to viewers around 
the Nation, and frankly, to those around the world. The studios 
I represent create much of the programming that we all enjoy 
today. We have an incentive to get those programs in front of 
as many viewers as possible, and we believe that the 
marketplace can have a big role in making that happen.
    Just as the television landscape will continue to evolve in 
the months and years ahead, it has changed dramatically since 
the enactment of the compulsory licenses being discussed here 
and in the coming months. The market conditions that led 
Congress to create the cable and the satellite compulsory 
licenses have long since disappeared. Congress decided, as you 
know, in 1976 and again in 1988 to introduce compulsory 
licenses to help what were then fledgling cable and satellite 
industries acquire retransmission rights in television 
programming. Government intervention in the marketplace was 
deemed necessary at those times to ensure the viability of what 
were then new services. Today, the overwhelming majority of 
programming being offered by cable and satellite is licensed 
through marketplace transactions. There is simply no 
justification in today's market for a satellite compulsory or 
cable compulsory licenses. There is certainly no justification 
for retaining a license that imposed below market rates for the 
acquisition of that programming.
    As my written testimony notes, the royalty rate paid by 
satellite carriers under Section 119 today is roughly the 
equivalent of the market rate paid for programming in 1999, 
almost 15 years ago. At the same time, in that same period of 
years, the cost of producing programming has continued to 
increase. Today, the cable and satellite industries are, to 
their credit, very successful. They have over 90 million 
subscribers and report a combined revenue in excess of $80 
billion. The compulsory license royalty fees paid, however, 
equal less than one half of one percent of their combined 
revenues. One can not help but ask how government intervention 
in licensing of retransmitted programming by these industries 
can be justified in today's marketplace, and we believe this 
should be a threshold consideration for the committee as you 
move forward over the next 2 years.
    Should Congress, however, as a result of these proceedings 
determine that compulsory licenses should be prolonged, we 
would strongly urge the committee not to expand either license 
to new market entrants. Congress should not further impede the 
ability of program owners to obtain the true economic value of 
their work, and instead should encourage development of 
marketplace regimes.
    On behalf of our members, Mr. Chairman, I again want to 
express our sincere gratitude to you and this committee for 
holding this hearing, for getting, as you indicated, an early 
start. This is a complicated issue. It is a difficult issue, 
and we are confident that this will be the first of many 
conversations over the next few months, and we welcome and look 
forward to the opportunity to be a part of that. Thank you.
    [The prepared statement of Mr. O'Leary follows:]

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    Mr. Walden. Thank you very much, Mr. O'Leary. You are 
absolutely right. We will have additional hearings, and I am 
sure a lot of conversations in the months ahead.
    That concludes our panelist's testimony. We appreciate all 
of your words and your comments.
    I will start out with questions this morning. This one is 
for the entire panel. I have read reports that--to the extent 
they are able to answer. I have read reports that between 1 and 
1.5 million subscribers still receive distant signals. Is that 
accurate? Are those households predominantly rural, urban, or 
evenly distributed? And if Congress were to let the 
retransmission consent exemption and the distant signal 
compulsory license expire, would those households lose access 
to all local broadcast service? So first, is the million to 
million and a half number correct, where are those households, 
and what happens if we allow the distant signal compulsory 
license and retransmission consent exemption to expire?
    Ms. Gore, can you tackle any piece of that?
    Ms. Gore. The only piece of that that I can tackle, we do 
not keep figures on how many distant subscribers there are out 
there. I believe my colleagues on the panel here may be able to 
help you out there. I am aware that the distant signal license 
is used, as I think we all touched on, in many different 
circumstances. Sometimes it's someone who doesn't have access 
to any local broadcast stations, and so they are receiving what 
I tend to call a truly distant signal, which would mean perhaps 
from New York or Los Angeles, when they are not at all in that 
area.
    There are other situations where the distant signal 
license, I gather, is used for filling in a short market, which 
we have talked about, and there the signal is coming from 
generally a more nearby area. What would happen if the distant 
signal license were let to expire, I cannot say. I know that 
the copyright office studied this and I know that the GAO 
looked into what the copyright office had reported, so they 
probably can speak for themselves. But it is a complex 
intertwining.
    Mr. Walden. All right. Mr. Dodge?
    Mr. Dodge. I am not exactly sure, I must admit, where the 1 
million to 1.5 million number came from. I know at DISH, we 
actually don't keep track, although we may be able to get you 
that information, so we will take an action item to try to do 
that. But certainly, I believe it is a bigger issue for DirecTV 
today, because with the utility, the license is a little 
different for each of us. Where DirecTV still has some 
grandfathered subscribers, I believe, from years gone by and 
they are not in all 210 markets today, they still use a true 
distant license there for, I believe, providing programming to 
unserved households in the markets where they don't offer local 
programming, but how many customers that might impact, I don't 
know.
    Mr. Walden. OK.
    Mr. Dodge. With respect to DISH, we use a license primarily 
for three purposes, the largest of which is to fill in short 
markets, as Ms. Gore noted, so you know, for example in a 
market where someone doesn't have a FOX station, we import a 
FOX so that they are able to watch American Idol and similar 
programming, just like all other Americans, and without the 
license we would have to shut those people off.
    Similarly, we provide service outside the spot beam to 
certain customers, which allows service to a safer state, like 
Utah, which is largely rectangle, our spot beams are round, and 
so the corners get cut off. And unless those folks are able to 
get local programming via an off-air antenna, we would have to 
shut those folks out as well, and RVs and commercial trucks, 
too.
    Mr. Walden. All right. Ms. Mago?
    Ms. Mago. I think what you have heard here is that there is 
getting to be fewer and fewer of these people that use the 
distant signal license, and I think it is--the exact number 
would be in the hands of the carriers to know that number, and 
I don't know that we have it. But even those instances that Mr. 
Dodge just talked about, they are becoming fewer and fewer as 
well, because as you provide local into local service into all 
210 markets, it is relatively easy to provide that local signal 
to the--to anyone within that spot beam, and that seems to be a 
logical thing to do. Short markets are also disappearing as a 
result of the digital television transition. A lot of stations 
are able to use their multicast capacity to provide a second 
networks signal within the market.
    So I think the key point for us continues to be our focus 
on localism, and making sure that we recognize how much fewer 
there are.
    Mr. Walden. All right, and I am going to go to Ms. Kieley 
and then Mr. O'Leary, but I am running out of time, so sorry.
    Ms. Kieley. My answer will be easy. We unfortunately do not 
track that at the Association of Public Television Stations, 
and defer to our friends in the satellite industry to help us 
get a better handle on that, but I will echo what Ms. Mago has 
said, that localism is a top priority for us in public 
television.
    Mr. Walden. All right. Mr. O'Leary?
    Mr. O'Leary. I will be brief. I know I can't validate that 
number. I have no way to dispute it. It ultimately would lie 
with the carriers. I agree with the comments of Ms. Mago. I 
would also note that even if it is retained, the distant signal 
license is still woefully under market--the rate is still 
woefully under market.
    Mr. Walden. OK. I thank you all for your answers, and now 
turn to the ranking member of the subcommittee, Ms. Eshoo, for 
questions.
    Ms. Eshoo. Thank you, Mr. Chairman, and thank you again to 
the panel for your very helpful testimony. I have a whole list 
of questions and I think that I will submit them in writing, 
but I want to ask you, with the exception of Ms. Gore, since 
she put it right out there that she was not going to recommend 
any kind of policy--no policy recommendations. To the four of 
you, starting with Mr. Dodge, so I have got 5 minutes with four 
people, so about a minute and a half. If you were going to 
choose your top policy preference in the reauthorization of 
STELA, what would it be? So that is to each one of you, 
starting with Mr. Dodge.
    Mr. Dodge. It would be to ensure that consumers are able to 
continue to receive network programming during retransmission 
disputes.
    Ms. Eshoo. Very good, thank you.
    Ms. Mago. As I said in my opening testimony, our top policy 
preference is to preserve localism and allow broadcasters to 
continue to provide the service to their communities.
    Ms. Eshoo. Great. Ms. Kieley?
    Ms. Kieley. We just hope that any reauthorization of STELA 
continues to recognize the unique services of local public 
television stations, and how we are different in the 
marketplace.
    Ms. Eshoo. Well, I am here.
    Ms. Kieley. We do appreciate that.
    Ms. Eshoo. Thank God we got that one worked out. Thank you, 
Mr. Dodge. Thank you for your advocacy.
    Ms. Kieley. And that would be our top priority, as well as 
maintaining vibrant local service for our public television 
stations.
    Ms. Eshoo. Great, thank you. Mr. O'Leary?
    Mr. O'Leary. Sure. I think that our top priority, as I 
outlined, is to get the content that we make in front of as 
many people as possible. That is our business model in simplest 
terms, and I think that we would advocate that the committee do 
that by one of two ways. One would be to step back and look at 
the entire context and see if the current regime continues to 
make sense, and if it ultimately comes to the conclusion that 
there needs to be some type of regime in place, to make sure 
that it is updated to reflect the times in which we live, and 
it is not necessarily bound up in the past.
    Ms. Eshoo. Thank you very much. I think that we need to 
know more from you about--you referred to content, and I think 
there is an old context, an older context to it, and I think 
that there needs to be a new appreciation on the part of 
members of what you mean exactly by content and the Motion 
Picture Industry Association and in the 21st century. I think 
there are so many exciting things, but I would just make that 
as a recommendation.
    Mr. O'Leary. Absolutely, and we would be happy to provide 
that to the committee.
    Ms. Eshoo. That members really be instructed and be brought 
up to snuff on what you are referring to.
    Well, that is great. We have got--I like all of your 
answers. Thank you very much. I yield back.
    Mr. Walden. Gentlelady yields back the balance of her time.
    Chair now recognizes Mr. Barton for 5 minutes.
    Mr. Barton. I am here.
    Mr. Walden. I was looking down my list and others weren't, 
but you were here at the gavel dropping, so----
    Mr. Barton. Thank you, Mr. Chairman.
    Mr. O'Leary, I want to make sure I understand. Your 
testimony is not that these acts should not be reauthorized, it 
is that certain parts of them should be allowed to expire. Is 
that correct?
    Mr. O'Leary. I think there is that is something that should 
be part of the consideration that you undertake over the next 2 
months whether or not it is essential to reauthorize all 
aspects of this, yes.
    Mr. Barton. OK, so I want to make sure I understand before 
I go to Ms. Mago. You--the motion picture industry is not 
advocating allowing them to expire, it is simply saying we 
should think about it? So you are a little bit--you are not a 
hard-hard, you are kind of a medium-soft, am I right? I mean, I 
am not being funny, I am just----
    Mr. O'Leary. No, I understand. I think that we believe 
that, as I said in my testimony, that certain provisions here 
are anachronistic, and that they do not necessarily need to 
be--they could be allowed to expire. Having said that, we are 
also mindful, as has been alluded to in the comments made by 
members of the panel and members of this panel, this is an 
incredibly complex web of pieces that all kind of fit together. 
And so what I am trying to portray to you--I am not trying to 
be soft and squishy and in the middle, but the truth of the 
matter is, I am trying to be realistic. We think that some of 
these things are woefully outdated and could be allowed to 
expire. We think that is----
    Mr. Barton. But that is different than supporting the 
expiration. So you are--let me ask you a straight question, yes 
or no.
    Mr. O'Leary. Sure.
    Mr. Barton. If this subcommittee and the full committee 
were to support a clean straight reauthorization, no changes 
except the date, would your industry support that? Yes or no?
    Mr. O'Leary. I am not in a position to say right now what 
they would support. I do think that that would be preferable, 
frankly, Congressman, to expanding the license in any way.
    Mr. Barton. I am going to go to Ms. Mago, since I have 
gotten a pretty squishy answer from Mr. O'Leary.
    Would your trade association support clean reauthorization 
with no changes except the dates?
    Ms. Mago. I am sorry, Mr. Barton, I have to frustrate you 
as well. We are so early in this process that at this point, we 
are still considering where the marketplace is, as I indicated, 
and while we see that there are anachronistic pieces and we 
think that expiration should be on the table, we haven't formed 
a final position.
    Mr. Barton. So if we put your group with Mr. O'Leary's 
group, you all will hug each other and then talk around each 
other for as long as we allow you to.
    Ms. Mago. We would all hug each other on this panel. We are 
like that.
    Mr. Barton. Anyway, I yield back, Mr. Chairman. I would 
definitely vote for a clean reauthorization. If there is a 
meeting of the minds from the stakeholders, I would certainly 
take a look at that. My guess is that the stakeholders have 
different views, and as they should, because of the economic 
consequences, and it is probably not as much peace and love at 
that table as they are portraying this morning.
    Mr. Walden. And we could bring some other folks up and 
there would be real fireworks.
    Mr. Barton. Right. Thank you, Mr. Chairman.
    Mr. Walden. We might do that today.
    I thank the gentleman and now we go to Mr. Lujan from New 
Mexico for questions.
    Mr. Lujan. Mr. Chairman, thank you very much.
    To Ms. Gore, there are some questions that I have for you 
which maybe aren't appropriate for this hearing, but we will be 
working with the FCC to look into the equitable treatment of 
tribal communities as well, as we talk about some of the 
rulings and renderings and many of the very complex world, so I 
will get those to you and submit them into the record.
    But for today's hearing, I am interested with all the 
witnesses, should Congress consider the changes in the 
competitive landscape for video services as we examine STELA, 
and especially with the question that Ranking Member Eshoo 
asked, content is very much different now. We are getting 
content in many different areas, and how far reaching should 
this be, or what should be included in that? Ms. Gore?
    Ms. Gore. Well, I think I have mentioned that I am not 
going to give too many opinions. I will note one factual point, 
and that is that one of the things that expires is the 
requirement in Section 325 of the Communications Act for good 
faith negotiating, so that is one of the expiring provisions 
that perhaps you might want to consider.
    Mr. Lujan. Thank you. Mr. Dodge?
    Mr. Dodge. I guess what I would say policy-wise is we think 
that the law needs to be improved to address the interest of 
consumers in two key areas, which are, one--I mean, really, in 
the spirit of localism that consumers should be able to get 
network programming during takedowns, and two, folks in orphan 
counties, which are counties that actually are in a state but 
don't receive signals from a DMA in that state, should be given 
the opportunity to get local network channels from their state.
    Mr. Lujan. I would agree with that. Ms. Mago?
    Ms. Mago. First of all, let me say for the record that 
broadcasters are always in favor of good faith. We negotiate in 
good faith all the time and will continue to do that, as 
appropriate, to make sure the consumers are able to receive our 
signals, because that is very important. It is important for us 
to reach every single member of our audiences that we can.
    I think as we look at this legislation, as I indicated 
earlier, you have got to look at localism. Providing that local 
into local service in all 210 markets is a very important goal.
    Mr. Lujan. I appreciate that.
    Ms. Kieley. I would just say on behalf of public 
television, that we recognize that these are very complex 
issues, many of which are intertwined, and we are very 
appreciative of the chairman and the leadership of this 
committee for taking an early look at this piece of 
legislation. And that we continue to look forward to working 
with Congress as you look at these issues, we too are looking 
at them, or early into the implementation, it feels, from the 
passage of STELA, and we are looking closely--as I mentioned to 
Ms. Eshoo's question, we first and foremost would want to make 
sure that any type of legislation that looks at the overall 
video competition would recognize a unique role that local 
public television stations play in that marketplace and 
preserve some of the unique protections that have been in place 
for our local public television stations.
    Mr. Lujan. I appreciate that. Mr. O'Leary?
    Mr. O'Leary. Congressman, I don't know that I have a whole 
lot to add at this point. I don't disagree with anything I have 
heard.
    Mr. Lujan. That is a good answer.
    Mr. O'Leary. All right, I will stop.
    Mr. Lujan. Ms. Gore, does the FCC have information on how 
many consumers are receiving distant signals, how many of those 
households are receiving distant signals because Congress has 
grandfathered them in during previous satellite authorizations?
    Ms. Gore. No, Mr. Lujan, we do not have that information. 
That is not provided to us. We don't track how many distant 
signal subscribers----
    Mr. Lujan. Does anyone have that information?
    Mr. Dodge. We don't actually have any grandfathered 
subscribers at DISH.
    Mr. Lujan. OK. Anyone? No?
    Ms. Mago. I think it is uniquely in the hands of the 
carriers.
    Mr. Lujan. OK, maybe we can go to the carriers and chat 
with them. Mr. Dodge, do you agree with Mr. O'Leary's statement 
that the current satellite royalty rates under Section 119 are 
only equal to the market rate from 1999?
    Mr. Dodge. Well, I agree with Mr. O'Leary on one key point. 
We certainly are all for fully compensating artists, you know, 
as they well deserve, and we are all for paying the market 
rate, so I guess in our view, the devil is in the detail of 
what a market rate should be. And if the proxy for that are 
retransmission rates today, we would argue that that is not a 
fair market rate, because it is not a fair fight today. In each 
DMA, you have got one broadcaster who effectively has been 
given a monopoly and plays all of the distributors off each 
other, and the rates are just going up 100 percent each year. 
And we would put forth that those are not comparable market 
rates.
    But we also think the system today works where we sit down 
with the interested stakeholders, the MPA, the sports leagues, 
and negotiate what the rate should be after each 
reauthorization. And if we don't reach an agreement, then I 
believe it goes to the FCC or the copyright office to actually 
arbitrate that, and we have been able to reach agreement every 
reauthorization to this point.
    Mr. Lujan. I appreciate that, Mr. Chairman, and as I yield 
back, you know, it has been brought up about the economic 
consequences and whether there is a permit or a reauthorization 
or STELA is not reauthorized, Mr. Chairman, I hope that we are 
able to explore what the economic consequences are one way or 
another, and what those impacted parties will fully realize.
    So thank you, and with that, Mr. Chairman, I yield back.
    Mr. Walden. Gentleman yields back the balance of his time. 
Chair now recognizes the Vice Chairman of the Subcommittee on 
Communications and Technology, Mr. Latta.
    Mr. Latta. Thank you very much, Mr. Chairman, and again, 
thanks very much to our panel for being here. You know, these 
are really important questions. You know, I represent what you 
might consider a suburban, rural-type district, and when we had 
the switchover to digital, I knew it was going to--we got a lot 
of phone calls from people about--because, you know, TV viewing 
is something that is important to a lot of folks out there. I 
can remember one day I was doing courthouse conferences, and I 
think I had five people in a row that came in and sat down and 
asked the exact same question about what was happening to their 
TV viewership, and so I know that these are very important 
questions to folks out there.
    And if I could, Ms. Gore, I would like to start with you 
with this question. Do television viewers--and this could be 
maybe a loaded question. Do television viewers understand how 
the current law works, and following up with that, what kind of 
complaints about satellite law does the FCC receive from 
viewers?
    Ms. Gore. Mr. Latta, we looked into that and I am happy to 
report that the number of complaints that we got over the past 
year, 2012, was about--between 60 and 70 complaints that were 
catalogued as in this category. They have shifted, over my 
experience with this subject area, from a focus on concern 
about distant signals, and now the questions are more about 
local stations. The questions--I can't break them down into 
individual categories, but basically there are some situations 
where a consumer is getting the local package and then for some 
reason, they are suddenly getting a different local package. 
And so they contact us to understand why that was changed, and 
there were different reasons why it was changed. Sometimes it 
is an error on the part of the satellite operator, and 
sometimes it is because that DMA map may have changed, and so 
it is something that is accurate.
    The essence of those complaints actually seems to be that 
consumers would like to choose the local stations that they are 
offered, as opposed to being confined to those within the DMA. 
I am not expressing an opinion, I am reporting what their 
complaints are.
    Mr. Latta. Let me just follow up with that just a little 
bit. When you do get those complaints, how long does it take 
for the turnaround time for the FCC to get back to the consumer 
with those answers?
    Ms. Gore. Well actually, typically we have our wonderful 
call center folks who take a call, and they talk to the person 
on the phone and they explain it to them. If they submit a 
complaint in writing, then someone gets back to them, and 
oftentimes, if it is a complaint that is specifically about a 
particular satellite carrier, they will, I believe they use the 
term ``serve'' that complaint on the satellite carrier in order 
to get a response. So there is a process in place that has a 
certain time frame for the satellite carrier to respond in that 
case. Every once in a while, a consumer finds his or her way to 
me and we get to have a lesson in copyright.
    Mr. Latta. Well following up with that, if we could, on the 
predictive model indicates that if a viewer can get an adequate 
signal over the air, and is ineligible to receive distant 
signal service, the law allows the viewer to challenge that 
finding on a location test. Do the viewers ever request such 
tests, and if so, what happens?
    Ms. Gore. The tests would be requested from the satellite 
carrier, not from us, so I do not have data on that. I do not 
know how often it happens. It used to be an issue before. That 
used to be the topic of some complaints and inquiries. As I 
said, over the past year, we have not heard any of those so--
but I can't speak to that. The satellite carriers would know 
whether they are being requested to arrange for tests.
    Mr. Latta. Well, I guess if I could then turn to DISH then 
to maybe answer that question. Do you get those types of 
questions that come in from the consumers, Mr. Dodge?
    Mr. Dodge. Since today we provide local channels in all 210 
markets, we don't provide traditional distant service, if you 
will, where that would really come into play, but my 
understanding is historically, very few, you know, back when we 
did provide those services.
    Mr. Latta. Thank you very much, Mr. Chairman. I yield back.
    Mr. Walden. Thank you. I thank the vice chairman for his 
work on this and other issues. I now recognize the fill-in 
ranking member from the great State of Vermont, Mr. Welch.
    Mr. Welch. Thank you very much, Mr. Chairman.
    Many of us on this committee represent rural areas, both 
Republicans and Democrats, and many of the challenges that 
folks face in rural areas, both consumers and some of our 
broadcasters, seem to be different than some of the challenges 
that urban areas face for consumers and broadcasters. I really 
would be interested in the view of you who have so much 
experience about how you would describe some of the particular 
challenges that tend to face folks and broadcasters in rural 
areas. Ms. Gore, could I start with you?
    Ms. Gore. As I mentioned, the complaints that we get or the 
inquiries that we get are often about the local package, and 
sometimes, very often, that is a rural area where consumers 
want to be able to get, perhaps, more of the stations that are 
from their own state. I know that that has been an issue in 
Vermont, historically, and in other places as well.
    Mr. Welch. But not just Vermont, right, I mean, that is a 
rural area as a whole?
    Ms. Gore. It is a rural area issue all across the country. 
That was what we were talking about, which we sometimes 
informally call the orphan county issue where the country is in 
one state, but it is part of a DMA that is located 
predominantly in another state, and so there are not a lot of 
or perhaps any in-state stations available to those consumers. 
It is a small problem, but it is a big problem just in the way 
it is reported to me for those areas where that occurs.
    Mr. Welch. Thank you. I would like to really get the 
benefit of each of you telling us your thoughts on the rural 
challenges. Mr. Dodge?
    Mr. Dodge. Sure, and so I would echo everything that Ms. 
Gore said. It is really the short market problem, it is areas 
outside of our spot beams, as you would imagine, you know, 
using Utah as an example. The corners of the state are very 
rural, and then also the orphan county issue is a predominantly 
rural issue, and that occurs in 40 states today.
    Mr. Welch. Do you have any suggestions on addressing that?
    Mr. Dodge. Yes. What we have historically proposed, which I 
think is pretty darn fair, but let us use Colorado as the 
example where we have two counties in the southwestern portion 
of the state that are actually in the Albuquerque DMA. Our 
proposal has always been that we will provide those folks 
Albuquerque locals, but let us also give them one in-state 
signal of their choice, preferably Denver, because our spot 
beam covers down there, and ultimately let them choose which 
they prefer.
    Mr. Welch. Ms. Mago? Thank you, Mr. Dodge.
    Ms. Mago. From the broadcaster's perspective, one of the 
key challenges they face in the rural areas is making sure they 
have enough revenues so they can continue to provide the 
quality programming that they need to. But let me address the 
DMA issue for just a moment, if I could, please, because DMAs 
are not just sort of random boxes that are put around. They are 
designed by the Nielsen Company to reflect where viewers are 
actually listening to the stations, and that is why they shift, 
as Ms. Gore was explaining. They shift when viewer patterns 
change. But for the most part, providing the local into local 
DMA market signal is going to address the needs of the county. 
There are a few places where that becomes a little bit more 
challenging, and one of the things that the carriers can do is 
to provide the in-state programming that is not duplicating 
that network prime time programming, and they can do that, and 
it has been done in several areas to address the issue of 
making sure that those that are in-state are able to receive 
their in-state information.
    Mr. Welch. Thank you. Ms. Kieley?
    Ms. Kieley. Congressman, I would say from public 
television's perspective, serving rural areas is a top agenda 
item for us. We have a universal service mission, as I 
mentioned earlier, and we take that mission very seriously. I 
think part of our challenge, and with any paid television 
provider, is that on a broadcast--from a broadcast perspective, 
we serve over 98, close to 99 percent of this country with a 
free over-the-air signal, and it has been very costly to do 
that, and from a public television perspective, particularly in 
these rural areas. Rural areas, such as Vermont, often--your 
state, you would know quite well, can be mountainous and the 
terrain can be difficult, and for public television to serve 
those areas, we do that with a series of expensive equipment, 
many translators to fill in those coverage areas, and of 
course, in those areas we also have limited populations from 
which we can derive, you know, local support for our stations. 
And so we have a very robust broadcast presence in rural areas, 
from a public television perspective, and we very much 
appreciate the local into local that is part of the satellite 
bill that helps us to mimic that presence in satellite 
legislation.
    I would say, touching a little bit one other special fix 
that public television has that was in the STELA law, we have a 
unique situation where a handful of our states, about 21 of 
them, have statewide licensees that are--the licenses are 
issued from the state to serve the residents of the entire 
state. Many of those rural, not all of them, but many of them 
are rural and so we were appreciative of the language in STELA 
that allows the satellite carriers, should they get the 
capacity, to serve those statewide licensees with the signal 
originating out of their state public television networks.
    Mr. Welch. OK, thank you very much. I yield back.
    Mr. Walden. Just for the record, my district is seven times 
the size of Vermont, plus, so----
    Ms. Kieley. Many translators.
    Mr. Walden. District of many translators. We go now to 
Representative Shimkus from Illinois.
    Mr. Shimkus. Thank you, Mr. Chairman. Of course, a great 
committee, great issues, a lot of fun. I have been on it a long 
time.
    I think every member should be issued a teenager in this 
digital age, because then you are up-to-speed on the new 
technology and how they watch, how they view movies. I was 
talking to my son just before we came out, and he is watching--
I have never seen it--``The Walking Dead'' and he can get the 
first 2 years, I guess, he watches on the Internet, and then, 
of course, the third year, he can't. He has got to wait for the 
broadcast or whatever. And it just reiterates the difference of 
how people are viewing content and how they go about it, and so 
there is one benefit of a teenager. There are some 
disadvantages. I can talk about those later.
    So it is very exciting, and again, we want to support all 
of the work you do, and--but we are talking locally, too, and I 
was trying to--using my new technology and all this stuff, 
figure out my DMAs. I think I've got five, Springfield, 
Champagne, Decatur--that is the only one that is in Illinois--
St. Louis, Cape Gerardo, Paducah, and Terre Haute. So I border 
three states, so we have this issue of the DMA and bleed over 
and the like, and we have just got to be careful, because in a 
congressional district that has any size, sometimes the folks 
will not want an Illinois signal. They will want the St. Louis 
DMA and they want to be there, where there may be others who 
will say well, can't we get Illinois news, because we are in a 
part of the state where they are receiving an Indiana station. 
So there is not a hard and fast rule of when you, you know, you 
want to default to one or the other, based upon the citizens of 
that area, so it is very tricky. I am just laying that out. We 
have experienced that.
    Let me ask a question on--does anyone know how many 
actually short markets there are?
    Mr. Dodge. There are 21.
    Mr. Shimkus. And are there any in my--no, I mean, because--
and so since there are 21, what is a way that we can kind of 
fix that problem, and is that--is this an avenue in 
reauthorization to try to do that?
    Ms. Mago. To some extent, the market is fixing itself. As I 
noted earlier, the--with digital technology, stations are able 
to have multiple streams that they can put out over their 
signal and they are, in fact, carrying----
    Mr. Shimkus. Let me ask again, because I like that, the 
digital answer, so I don't know the answer now, but the digital 
cliff that we had initially, the analog signal went a long 
ways, and then we have digital TV and we have the digital 
cliff. Has technology pushed that digital signal back further 
out to meet the analog broadcast, or do we still struggle with 
that?
    Ms. Mago. The Commission did a lot of work in terms of 
trying to raise power levels to make sure that you were, in 
fact, duplicating those coverage areas that had been there 
before, and we are about to face it again as we look at the 
repacking that may happen as a result of the incentive auctions 
and reclamation of some of the broadcast----
    Mr. Shimkus. Voluntary incentive auctions.
    Ms. Mago. Voluntary incentive auctions that will be part of 
that. The repacking part has never been voluntary. They hate it 
when I say that, but the repacking is not--has never been 
voluntary, and that is going to cause some issues, but I think 
for purposes today, the spot beams that are provided on the 
satellite can help to bring in some of that service as well.
    Mr. Shimkus. OK, let me finish up. I have got 1 minute 
left, and I agree with a lot of folks who are talking up here. 
Everyone views that there is some anachronism in the law, so 
that could be dealt with, so going--starting with Mr. Dodge, 
what would be an anachronism that you would like to get solved 
in a reauthorization or a rewrite in the law? Anything?
    Mr. Dodge. I would----
    Mr. Shimkus. This is trying to smoke you out to say, OK, 
what is your problem? What do you want fixed? I am using a big 
word. I usually don't use them that much.
    Mr. Dodge. Sure. I would say the anachronism writ large in 
all these laws is the fact that it is an unfair fight in 
retransmission consent negotiations today, and the people that 
suffer are the consumers, because there are more and more 
takedowns occurring. I think in 2010, there were roughly 10, 
2011, there were 50, last year there were 100, and it is the 
consumer that is paying the price. So I think that needs to be 
fixed. Consumers need to keep getting the signal during the--
you know, while we work it out with the broadcasters, so to 
speak. And I would also say the orphan county issue is an 
anachronism of the whole system that needs to be worked out, 
and I think you raised a very good point. I mean, it may very 
well be that folks in southwestern Colorado prefer watching 
Albuquerque stations because they buy their Chevys in 
Albuquerque and they want to see those advertisements. But I 
think we should give them the opportunity to make that decision 
for themselves.
    Mr. Shimkus. OK. I am going way over my time. If I can get, 
Mr. Chairman--so why don't we just go down the line? Thanks.
    Ms. Mago. First of all, you may have seen me kick Mr. Dodge 
under the table. We think that the retransmission consent 
negotiations are going forward. There have been a few----
    Mr. Shimkus. This is what we want. I have been trained by 
Billy Tozan to get the fight going, so----
    Mr. Walden. Maybe this was the education--you missed the 
previous.
    Ms. Mago. DISH Network has been involved in a number of 
those disputes, but we all try to work them out together and 
will continue to do that. I will note also, Mr. Shimkus, that I 
determined that there are no short markets in your district----
    Mr. Shimkus. Thank you.
    Ms. Mago [continuing]. So that is an issue that you don't 
need to worry about.
    Ms. Kieley. I would just echo my earlier comments and say 
we think this is a very complicated process and we appreciate 
being included from the very beginning, and we will be looking 
for those anachronisms in the law along with you.
    Mr. O'Leary. The only thing I would say, it goes back to 
what I said at the outset which I think that as a threshold, 
the committee, the subcommittee should look at whether or not 
the role of government, as it was originally constituted, you 
know, 20 years ago, 30 years ago, what have you, is still 
applicable in the current state that we are in right now. I 
think that is the single biggest issue that needs to be 
addressed.
    Mr. Shimkus. Thank you.
    Mr. Walden. OK. We now turn to the former vice chair of the 
committee, Mr. Terry, for 5 minutes if you have questions.
    Mr. Terry. Sure, why not. It has been asked several times 
before, but I haven't asked it. I am slightly confused on the 
local into local, and here I will just lay out the scenario. In 
the Sand Hills area in the middle of Nebraska where very few 
reside, the only option is satellite. In an area that is right 
outside of--in Nebraska, pretty good size town that has their 
own TV stations, in North Platte, Nebraska, but yet the 
satellite for that area, even just barely outside of the signal 
range from those stations, they get Denver. And the networks 
that cover--if you are cable or in the signal, get the Husker 
games and the Husker news, and people around Plattsmouth that 
get their satellite get Denver Broncos news, they don't like 
that. They like the Broncos, but they want the Huskers. So what 
is the technology issue here? What is forbidding the satellite 
companies from being able to put in the local TV that is an 
hour drive, hour and a half drive from these areas? Mr. Dodge, 
since you are a satellite guy, I will let you try and answer 
that.
    Mr. Dodge. I am indeed. Well, with all due respect to what 
Ms. Mago said about the DMA system, I think it is largely a DMA 
system issue. We view it largely as a system that was set up in 
the 1950s based on what people were watching back then, and 
although theoretically DMAs shift over time based on actual 
viewership, there really is no way to change that viewership if 
you can only provide the local signal authorized for each DMA 
into that DMA. If, for example, we were allowed to do what I 
proposed for southwestern Colorado, which is give people the 
choice between Albuquerque and Denver, then over time, it may 
switch to Denver, but to Congressman Shimkus's point, it may 
not because those people may actually be interested in 
Albuquerque. Our view is let them decide and then maybe the 
maps shift.
    Mr. Terry. How about if the people in the area have 
actually received a letter from the FCC saying that they should 
be getting the North Platte TV stations? Is there a technical 
reason why the satellites couldn't do that area?
    Mr. Dodge. I think what you are referring to is a case of 
significantly viewed, perhaps?
    Mr. Terry. Yes.
    Mr. Dodge. I am not sure what their specific reason is in 
that particular area, but generally speaking, the problems we 
have had with significantly viewed are technology-wise, the 
signal that is significantly viewed may or may not be on the 
same spot beam as the local channel, which makes it very 
difficult to provide, and then there are also contractual 
issues sometimes where the station is being invaded, so to 
speak, might condition their retransmission consent unless not 
importing a signal, but similarly, we have to get the consent 
of the station we want to import to actually do the 
importation, and they may not grant us that consent.
    Mr. Terry. OK. I don't know if that is the issue. I would 
think that would be odd that they don't want somebody 100 miles 
away from their station not to see their station. But the 
answer is the technology changes would be too costly, and I 
just didn't understand what that entailed, the technology 
changes.
    Mr. Dodge. Yes, typically the issue is that the station 
that folks desire to import or that is significantly viewed is 
not on the same spot beam as the local market.
    Mr. Terry. How much generally does that cost a satellite 
company?
    Mr. Dodge. It depends. Satellites cost typically these days 
about $350 million a piece, so----
    Mr. Terry. OK, so you would have send up a whole new 
satellite to bring that----
    Mr. Dodge. In certain cases, yes.
    Mr. Terry. OK, interesting. Well, my time is almost up, but 
I am not done yet.
    Mr. Dodge. We would be happy to get the specifics of that 
particular issue for you.
    Mr. Terry. You have them. You may not, personally, but your 
company does.
    Mr. Walden. Gentleman yields back the balance of his time. 
Chair now recognizes the gentleman from Louisiana, Mr. Scalise, 
for 5 minutes.
    Mr. Scalise. Thank you, Mr. Chairman, for the 101 hearing 
we are having to start getting into this. Of course, the reason 
we are here is because STELA expires. The laws that we are 
discussing today have sunset provisions and that is why we get 
to these various iterations, and it forces Congress to come 
back and look and work with industry and say what works, what 
doesn't work, and you know, hopefully when we are going into 
the next iteration before the expiration of STELA at the end of 
next year, we address the problems and the changes in the 
marketplace. It is a very dynamic marketplace. A lot of you 
have done some wonderful things to allow and bring high 
definition and great programming to more people, and so that 
sunset provision allows that to happen.
    Now, you know, as we look at the broader marketplace of 
video regulations, most of them do not have sunsets, and I 
would be curious to take--it is more a policy question, so Ms. 
Gore, I will hold you harmless on this one, but I would be 
curious to see what the rest of the panel, what your thoughts 
are and not just looking at Section 119, but having sunset 
provisions on all of these laws that we would then force 
Congress to go back and say what is working, and what isn't, 
not just in the satellite arena, but in the others?
    I will start with you, Mr. Dodge.
    Mr. Dodge. And I think since 119 is the actual statute that 
is expiring at the end of 2014, people tend to look at just 
that and say I like this or I don't like that. It should 
sunset, it shouldn't. And our view of the world is if you are 
going to consider letting that sunset, it is a much broader 
discussion. We do think there are problems with 119. I have 
mentioned a bunch of those today. But if you are going to let 
that sunset, then I think you have to look at the entire 
mosaic, if you will, or quilt of all the statutory copyright 
licenses, 122, the cable licenses, because in my view and as 
long as I have been involved in this, they are all 
interrelated, and you can't just throw out 119 and not look at 
things like must carry, retrans, et cetera, et cetera. And I 
think it is a discussion that is worthy of having.
    Mr. Scalise. Maybe another day we will have that 
discussion. Ms. Mago?
    Ms. Mago. Well, if you let me go outside of the realm of 
the specific hearing that we have here, I mentioned the 
broadcast ownership regulations are ones that we have advocated 
for some time need to have someone relook at them.
    Mr. Scalise. I agree with you there. Thank you. Ms. Kieley?
    Ms. Kieley. Thank you. I would echo, it is very complicated 
and very intertwined. Many of these pieces are very intertwined 
and we do just hope, you know--public television are must-carry 
stations and doing things like doing away with the compulsory 
license could actually--even though we aren't involved in 
retransmission consent, could impact public television stations 
and so we are just appreciative that the committee is taking an 
early look at this and hope that they will continue to look at 
how intertwined these issues are, and what the unique needs of 
local public television stations are.
    Mr. O'Leary. Congressman, I would agree with what you said. 
I think it is never a bad idea to have Congress go back and see 
what is working and what is not working. I think implicit in 
your question is the simple fact that these thing are 
intertwined and that if you look at them collectively, you are 
more likely to have a better view of what works for the 
consumer in the long run and so I would agree with what you are 
saying.
    Mr. Scalise. Thank you, and I think you had talked in your 
testimony about, you know, what is it that consumers really 
want? Consumers, you know, they want content. They want the 
entertainment. They are not--they don't necessarily want to 
have--they don't want to buy a satellite dish, they want to 
have the content and the entertainment that comes with it. They 
don't want cable or fiber optic, that is not why they are 
paying the monthly bill. It is because of what comes in, and so 
when you look at what they are really interested in, is it the 
broadcast signal that they are interested in or is it the 
content that comes with that broadcast signal?
    Mr. O'Leary. Well, I think quite honestly it is a little 
bit of both. I think that there is--you know, people want local 
broadcasters for news and things like that. I think they want 
content. I think the short answer, Congressman, is consumers 
want everything right now, and the good news is that they are 
living in an era where you have got a better chance of getting 
everything than you did before. You look at the television as 
it existed when we were children and you look at the television 
that our children are growing up with, those are vastly 
different platforms, frankly, and in the future, it is going to 
be even more. I think the real question and the question which 
is underlying the entire discussion today is what is the proper 
role of the government in terms of facilitating that happening? 
And my focus, frankly, is on the compulsory licenses because we 
think they unnecessarily dampen the development of that market. 
But to your question, it bears looking at all of the different 
issues that are before us.
    Mr. Scalise. OK, last question before I run out of time. 
Ms. Mago, when you look at what has happened with--of course, 
DISH is here, DirecTV, the ability to negotiate with cable 
companies for their copyright content, we have seen in a real 
dramatic expansion of cable companies, you have got the Food 
Network, Nickelodeon, a lot of these other pay TV companies 
that have seen real expansion in their viewership because of 
their ability to negotiate in a more open marketplace. Would 
you say that the same kind of marketplace should exist with the 
retransmission consent, with compulsory, with----
    Ms. Mago. For local stations, the signal that they put 
together is the amalgamation of all of the programming, and 
there are many, many different kinds of authorizations, 
licenses, that one needs to get in that area. Our members 
continue to be concerned that trying to put that together on a 
local station basis is one that is a difficult process.
    Mr. Scalise. Thank you. We can continue that conversation 
and look forward to it, but I appreciate all of your input 
today for being here. I yield back.
    Mr. Walden. Thank the gentleman. Chair now recognizes the 
gentleman from Colorado, Mr. Gardner, for 5 minutes.
    Mr. Gardner. Thank you, Mr. Chairman. Thank you for holding 
the hearing today. I just wish my colleague from Nebraska was 
still here so we could give him a hard time for wanting to 
watch Nebraska football.
    Mr. Walden. He may be watching on a distant signal 
somewhere in an orphan area.
    Mr. Gardner. I don't have much room to talk, though, 
according to some of the performance we have seen the past 
couple years out of some Colorado teams, so I will just stop 
with that.
    But I wanted to particularly welcome Mr. Dodge to the 
committee today. As a result of redistricting, DISH is a 
constituent company and I am glad that you could be here today, 
and all the witnesses, thank you for your time.
    I wanted to just talk briefly about some of the issues that 
most of you have touched on already at various times throughout 
the testimony and so to Mr. Dodge, can you just give me a quick 
explanation--the committee a quick explanation, what would 
happen if STELA were to expire and what would that effect be on 
consumers across the country?
    Mr. Dodge. Yes, with respect to DISH particularly, it would 
mean that the short markets I described, those folks would no 
longer be at level playing field with folks in other markets 
around the country, because they would lose whatever affiliates 
are not represented in their particular DMAs. They would lose 
the ability to access that programming. Similarly, folks who 
are outside of our spot beams would lose their local channels. 
RVs and commercial trucks would no longer be able to get 
network programming via satellite. And with respect to DirecTV, 
who doesn't provide local service in all markets, they would 
lose the ability to provide network programming to folks who 
are unserved by their local broadcast stations, and presumably, 
they would lose subscribers who have been grandfathered from 
prior Satellite Home Viewer Act reauthorizations.
    Mr. Gardner. Ms. Gore, would you add anything to that, or 
want to add anything to that, if you can?
    Ms. Gore. No, I think that covered the list that I am aware 
of.
    Mr. Gardner. Ms. Mago?
    Ms. Mago. Only to note that I think, again, as I said in my 
testimony, that that is a diminishing number as we go through 
the various fixes that are happening, including addressing the 
issues in short markets through the stations, channels, and 
such things.
    Mr. Gardner. OK, and then I wanted to take another 
opportunity at Mr. Dodge to perhaps have you respond to 
something that was in Ms. Mago's testimony, and I believe it 
was stated on page seven, ``That today over 98 percent of all 
U.S. television viewers have the option of viewing their local 
network affiliates by satellite'', and then goes on to say 
``With few exceptions, there are no unserved viewers in areas 
in which local into local satellite transmissions are 
available, and that accordingly, no public policy justifies 
treating satellite subscribers in local into local markets as 
unserved and therefore eligible to receive distant network 
signals.'' It talks a little bit about viewing that language as 
perhaps a loophole, but I was wondering if you could respond to 
that assertion and whether or not you view that as a loophole, 
and what would happen to your customers if that were to change?
    Mr. Dodge. Yes, we don't view that as a loophole. We view 
that as exactly what the law says, which is if there is a 
retransmission dispute, then we are no longer offering a local 
affiliate related to that network, and we are allowed to import 
a distant signal to folks who are unserved in the traditional 
sense, meaning they don't get an off-air signal of decent 
quality.
    Mr. Gardner. OK, and then to both you and Ms. Mago as well, 
conditions in the law sometimes prevent viewers from getting 
access to the programming they really want. We have talked 
about that here. Broadcasters can waive some of these 
conditions on a case-by-case basis, and do they ever, and if 
not, why not? I guess Ms. Mago, I will start with you.
    Ms. Mago. I think Mr. Dodge said a little while ago that 
that doesn't really happen on the DISH Network, as I understood 
it. If I misunderstood your question, I am sorry, but in terms 
of the broadcasters, what broadcasters are looking for is to 
make sure that they are able to serve their audiences and 
continue to be able to do that by having local viewers. We are 
able to do that, maximize the amount of the revenues that we 
can then plow back into the better service, and that is why we 
look at those markets and make sure that the local into local 
service is there. It helps the viewers themselves because they 
are able to get whatever local weather information and other 
things that are important to them, and that is why we continue.
    Mr. Gardner. Do broadcasters ever do the waiver, talking 
to----
    Ms. Mago. There are a few that I know of that have done 
that. I think it is becoming less now because one of the 
concerns that was waivable for a while was that the high 
definition programming wasn't available through the satellite, 
and we are now getting to the point where that is always going 
to be available for the local stations as well. I am aware of a 
marketplace in Wilmington, North Carolina, and the local 
station there, in fact, had granted a waiver to allow the 
distant signal to come in because it was more--it was high 
definition when the local signal was not. I am hoping that has 
been corrected.
    Mr. Gardner. And the good news for Mr. Terry is that in a 
couple of years, the Cornhuskers and the Buffalos will be 
playing again, so he will be able to at least watch that game, 
even if it comes from Colorado.
    Ms. Mago. That sounds like many----
    Mr. Gardner. To that point, the discussion that we have 
had, we have talked about the markets and I guess for the 
entire panel as I run out of time here, do we know how many 
viewers are assigned to a designated market area that is not 
within their state? So I know we have identified the number of 
areas, but do we actually know or have an idea of how many 
viewers are there?
    Ms. Mago. I am sorry, I don't.
    Mr. Dodge. I do know in Colorado I believe it is 10,000 
folks or TV households----
    Mr. Gardner. The southwestern part?
    Mr. Dodge. Yes, in those two counties, but nationwide, I 
don't have the number off the top of my head.
    Mr. Gardner. OK.
    Ms. Kieley. From a public television perspective, I know we 
had about 21 of our statewide licensees that were impacted by 
that, with some states it being a much bigger problem. For 
instance, in Wyoming, I believe that--I think it was close to 
about 75 percent of viewers in that state resided outside of--
from a public television perspective, the DMA where our public 
television station had all three of its transmitters located, 
so it varies from state to state, but for public television, 
some of those areas out West and in smaller parts of the East 
were problematic.
    Mr. Gardner. Thank you, Mr. Chairman, for your leniency 
with the time.
    Mr. Walden. No problem. We are going to move now to the 
gentlelady from North Carolina, a new member of our 
subcommittee. We are delighted to have Renee Ellmers with us, 
and we look forward to your questions as we wrap up this 
hearing.
    Mrs. Ellmers. Great, thank you, Mr. Chairman. I am happy to 
be here. I apologize for being late. I had dueling 
subcommittees going on, so thank you to our panel for being 
here as well.
    Ms. Gore, I have a question for you. Are there instances 
where the local broadcaster is not actually carrying news, 
alerts, closings, sports, civic affairs, and other content in 
the viewer's state?
    Ms. Gore. Yes, I believe there are those situations. That 
plays into what we have been talking about as the orphan county 
situation, so that technically on paper it may appear that 
there is an in-state station in the DMA, but it may be a 
station that its programming does not include news or weather 
or traffic or public affairs of that sort. I am sure they are 
meeting their public interest requirements that Ms. Mago would 
know about.
    Ms. Mago. Yes, they are.
    Ms. Gore. But they don't necessarily have the kind of 
newsroom, staff, or situation to cover breaking weather events 
or something of that sort.
    Mrs. Ellmers. Thank you, and I have question, and I would 
like for each one of the panel to give a quick, brief response. 
Because this is kind of our introductory hearing on this issue, 
we are not yet debating on how to change the law, but we do 
need to know what the main problems are. So if every panelist 
could--without giving us a solution, touch on the problems to 
make us aware of what your main issue is with the law and what 
we can be looking towards in the future. I will start with Ms. 
Gore.
    Ms. Gore. Well, as I mentioned, I am not here to talk about 
any problems we have with the law. I will only say that there 
seem to be some circumstances where perhaps the hope was that 
the availability of significantly viewed stations might help to 
alleviate of the concerns that some consumers have had, and I 
am not sure if the significantly viewed option is being taken 
advantage of as often as it might be. My colleagues would know 
more about that, and also would know more about why that might 
be.
    Mrs. Ellmers. OK. Mr. Dodge?
    Mr. Dodge. I would say the biggest thing we would like to 
see remedied is having the retransmission consent process be 
put on a more level playing field between the broadcasters and 
the distributors, and fixed in such a manner that consumers 
don't inevitably lose access to network programming during 
disputes.
    Mrs. Ellmers. Perfect.
    Ms. Mago. And I, of course, disagree with what Mr. Dodge 
just said, but I would also say that our biggest issue is that 
we want to encourage local into local service.
    Mrs. Ellmers. OK.
    Ms. Kieley. And I would say we are taking an early look at 
the law and its implementation, and looking for any problem 
areas that are there, but I will reiterate that we were quite 
pleased with the process. We trust the process. It worked quite 
well last time, and we are very appreciative that our unique 
needs were addressed the last go around with STELA, and we hope 
that if we come upon any of those issues again, that we can 
again work with this leadership of this committee and Congress.
    Mrs. Ellmers. Excellent.
    Mr. O'Leary. From our perspective, it is very simply that 
the committee step back and take a look at the law and 
determine, you know, we believe there are pieces of it that are 
trying to solve a problem which no longer exists, and so we 
would ask them to look at those, and then at a minimum, to not 
expand those areas where we believe that the government 
intervention has, you know, reduced our ability to be 
compensated fairly for the work that we create.
    Mrs. Ellmers. Well thank you. Thank you very much for your 
responses, and thank you, Mr. Chairman, for allowing me to wrap 
up this hearing. I yield back.
    Mr. Walden. Thank the gentlelady from North Carolina for 
her participation.
    And I think we should have an online contest to name this 
one ELOISE, but I have been struggling trying to figure out how 
we would do that, so we will welcome your suggestions.
    Ms. Mago. Please just don't name it Stanton.
    Ms. Gore. I actually worked on that the last time, so I 
will get that back to you.
    Mr. Walden. You would get that to me. I know it is not 
weighing in on any policy, but the name is important, and given 
four reauthorizations you have lived through.
    We want to thank our panelists for testifying today. We 
appreciate your input as we begin down this path. We will have, 
obviously, additional hearings going forward, and I am sure all 
of us will have lots of individual meetings going forward to 
have these discussions. And so thank you all for your 
participation, and with that, the committee stands adjourned.
    [Whereupon, at 12:10 p.m., the Subcommittee was adjourned.]
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