[Senate Hearing 116-615]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 116-615

                     THE REAUTHORIZATION OF STELAR

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

                                HEARING

                               BEFORE THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 23, 2019

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation
                             
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                Available online: http://www.govinfo.gov
                
                              __________

                                
                    U.S. GOVERNMENT PUBLISHING OFFICE                    
52-764 PDF                 WASHINGTON : 2023                    
          
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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                  ROGER WICKER, Mississippi, Chairman
JOHN THUNE, South Dakota             MARIA CANTWELL, Washington, 
ROY BLUNT, Missouri                      Ranking
TED CRUZ, Texas                      AMY KLOBUCHAR, Minnesota
DEB FISCHER, Nebraska                RICHARD BLUMENTHAL, Connecticut
JERRY MORAN, Kansas                  BRIAN SCHATZ, Hawaii
DAN SULLIVAN, Alaska                 EDWARD MARKEY, Massachusetts
CORY GARDNER, Colorado               TOM UDALL, New Mexico
MARSHA BLACKBURN, Tennessee          GARY PETERS, Michigan
SHELLEY MOORE CAPITO, West Virginia  TAMMY BALDWIN, Wisconsin
MIKE LEE, Utah                       TAMMY DUCKWORTH, Illinois
RON JOHNSON, Wisconsin               JON TESTER, Montana
TODD YOUNG, Indiana                  KYRSTEN SINEMA, Arizona
RICK SCOTT, Florida                  JACKY ROSEN, Nevada
                       John Keast, Staff Director
                  Crystal Tully, Deputy Staff Director
                      Steven Wall, General Counsel
                 Kim Lipsky, Democratic Staff Director
              Chris Day, Democratic Deputy Staff Director
                      Renae Black, Senior Counsel
                           
                           
                           C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on October 23, 2019.................................     1
Statement of Senator Wicker......................................     1
Statement of Senator Cantwell....................................     3
Statement of Senator Tester......................................    34
Statement of Senator Thune.......................................    37
Statement of Senator Blunt.......................................    40
    Prepared statement entitled, ``Renewing STELAR Will Help 
      Rural Americans'' by Patricia Jo Boyers, Chairman, ACA 
      Connects--America's Communications Association.............    40
Statement of Senator Schatz......................................    43
Statement of Senator Fischer.....................................    45
Statement of Senator Baldwin.....................................    47
Statement of Senator Markey......................................    49
Statement of Senator Blumenthal..................................    51

                               Witnesses

Emily Barr, President and CEO, Graham Media Group; and Television 
  Board Chair, National Association of Broadcasters..............     4
    Prepared statement...........................................     6
Denny Law, Chief Executive Officer and General Manager, Golden 
  West Telecommunications........................................     9
    Prepared statement...........................................    10
Robert Thun, Senior Vice President--Content and Programming, AT&T    19
    Prepared statement...........................................    21
J.C. Watts, Chairman and Co-Founder, Black News Channel..........    24
    Prepared statement...........................................    26
Jonathan Schwantes, Senior Policy Counsel, Consumer Reports......    27
    Prepared statement...........................................    29

                                Appendix

Letter dated September 23, 2019 to Hon. Roger Wicker, Hon. 
  Lindsey Graham, Hon. Frank Pallone, Jr., Hon. Jerrold Nadler 
  from Betsy E. Huer, President, National Grange.................    59
Letter dated October 1, 2019 to Committee Member, Committee on 
  Commerce, Science, and Transportation from Thomas A. Schatz, 
  President, Council for Citizens Against Government Waste; Jeff 
  Mazzella, President, Center for Individual Freedom; Andrew 
  Langer, President, Institute for Liberty; Bartlett Cleland, 
  Executive Director, Innovation Economy Institute; Daniel 
  Schneider, Executive Director, American Conservative Union; 
  David Williams, President, Taxpayers Protection Alliance; and 
  Phil Kerpen, President, American Commitment....................    60
Letter dated October 11, 2019 to Hon. Jerrold Nadler from 
  Alejandro Roark, Executive Director, Hispanic Technology & 
  Telecommunications Partnership.................................    60
Letter dated October 15, 2019 to Hon. Roger Wicker, Hon. Maria 
  Cantwell, Hon. Lindsey Graham, Hon. Dianne Feinstein, Hon. 
  Frank Pallone, Jr., Hon. Greg Walden, Hon. Jerrold Nadler and 
  Hon. Doug Collins from Common Cause, Consumer Action, Consumer 
  Federation of America, Consumer Reports, Open Technology 
  Institute at New America and Public Knowledge..................    61
Letter dated October 16, 2019 to Hon. Roger Wicker, Hon. Maria 
  Cantwell, Hon. Lindsey Graham and Hon. Dianne Feinstein from 
  Shane Larson, Senior Director of Government Affairs and Policy, 
  Communications Workers of America (CWA)........................    63
Letter dated October 22, 2019 to Hon. Roger Wicker and Hon. Maria 
  Cantwell from Mike Chappell, Chairman, American Television 
  Alliance.......................................................    64
Letter dated October 23, 2019 to Hon. Roger Wicker and Hon. Maria 
  Cantwell from Jay Landers, Vice President, Government Affairs, 
  RV Industry Association; Phil Ingrassia, President, RV Dealers 
  Association; Paul Bambei, President and CEO, National 
  Association of RV Parks and Campgrounds (ARVC); Jon Walker, 
  National President, FMCA; and Shawn Loring, CEO and Attorney, 
  Escapees RV Club...............................................    65
Response to written question submitted to Emily Barr by:
    Hon. Rick Scott..............................................    66
    Hon. Amy Klobuchar...........................................    66
Response to written questions submitted by Hon. Rick Scott to:
    Robert Thun..................................................    67
Response to written questions submitted by Hon. Jacky Rosen to:
    J.C. Watts...................................................    67
Response to written question submitted by Hon. Amy Klobuchar to:
    Jonathan Schwantes...........................................    68

 
                     THE REAUTHORIZATION OF STELAR

                              ----------                              


                      WEDNESDAY, OCTOBER 23, 2019

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:01 a.m., in 
room SH-216, Hart Senate Office Building, Hon. Roger Wicker, 
Chairman of the Committee, presiding.
    Present: Senators Wicker [presiding], Thune, Blunt, 
Fischer, Moran, Gardner, Blackburn, Lee, Johnson, Young, Scott, 
Cantwell, Blumenthal, Schatz, Markey, Peters, Baldwin, Tester, 
Sinema, and Rosen.

            OPENING STATEMENT OF HON. ROGER WICKER, 
                 U.S. SENATOR FROM MISSISSIPPI

    The Chairman. Good morning. If members could take their 
seats and guests and our distinguished panel, we will begin in 
a moment or two. Thank you all and good morning. Today the 
Committee convenes to discuss the reauthorization of STELAR, 
the Satellite Television Extension and Localism Act.
    I am glad to convene this hearing with my colleague, 
Ranking Member Cantwell. I welcome this distinguished panel and 
thank them for appearing. We will hear from Ms. Emily Barr, 
President and Chief Executive Officer of the Graham Media Group 
and Chair of the Television Board at the National Association 
of Broadcasters.
    Mr. Denny Law, Chief Executive Officer and General Manager 
of Golden West Telecommunications; Mr. Robert Thun, Senior Vice 
President of Content and Programming at AT&T Mr. J.C. Watts, 
my former colleague, Chairman and Co-Founder of the Black News 
Channel; and Mr. Jonathan Schwantes, Senior Policy Counsel for 
Consumer Reports. Did I pronounce your name correctly, sir?
    Mr. Schwantes. Yes, sir, you did.
    The Chairman. Thank you. I got it right. In June, this 
Committee held a hearing on the state of the television and 
video marketplace. At that time, we heard from witnesses about 
how consumers are living in this great age of television. 
Today, Americans have more choices and access to video content 
and programming than ever before. Through expanded Internet 
connectivity and technological advancements, millions of 
households now subscribe to video-on-demand and over-the-top 
services.
    Americans also consume more and more hours of mobile 
streaming and digital programming. Yet, despite these 
developments and the maturation of the digital video 
marketplace, hundreds of thousands of Americans still cannot 
receive traditional over-the-air broadcast television in their 
homes. For the past 30 years, STELAR and previous iterations of 
the law have provided a means for Americans living beyond the 
reach of a broadcast signal to receive local programming.
    Families in rural parts of the country, in addition to 
those traveling or living in recreational vehicles, long-haul 
truckers, and tailgaters, have been particularly reliant on 
STELAR to access broadcast television. STELAR's distant signal 
license has provided communities that lack a major network 
affiliate, such as ABC, CBS, NBC or Fox, to receive broadcast 
programming from another market through their satellite video 
provider. This ensures that consumers can, at a minimum, access 
national news as well as other programming that is relevant to 
the public interest.
    At the end of this year, absent congressional action, 
STELAR will expire, and many Americans could immediately lose 
access to broadcast television stations. STELAR's other 
significant requirement that broadcasters and cable operators 
negotiate retransmission consent agreements in good faith would 
also expire--absent action by the Congress. Although I 
recognize that some believe STELAR has largely outlived its 
original purpose and usefulness, it is my view that it remains 
a critical law for preserving access to video services for 
those that typically find themselves on the wrong side of the 
digital divide.
    As the Committee prepares to reauthorize STELAR and work 
with our colleagues in the Judiciary committee to extend the 
Section 119 distant signal license, I hope witnesses will 
discuss the appropriate length of time for the law's renewal. 
In doing so, witnesses may want to address the unique needs of 
consumers in RVs and short markets as well as long-haul 
truckers and tailgaters.
    In addition, I ask today's witnesses to discuss how to 
ensure that those individuals can maintain permanent access to 
broadcast programming. The Congress needs to know whether 
consumers will immediately lose access to certain television 
channels if STELAR expires. Witnesses should also address 
whether the expiration of STELAR would increase prices for 
consumers to access broadcast programming, and how ending the 
law would impact the bottom line for broadcasters, both local 
affiliates and networks, as well as satellite and cable 
television providers.
    Today is also an opportunity for witnesses to discuss the 
effectiveness of the good faith requirement. I hope witnesses 
will address whether Congress should consider modifications to 
this requirement to further achieve its intended purpose in 
establishing fairness in retransmission consent negotiations. 
For example, earlier this year C Spire's video service in 
Mississippi was granted a market modification by the Federal 
Communications Commission. Under this market modification, C 
Spire is authorized to provide local programming to the City of 
Diamondhead in Hancock County, Mississippi. Diamondhead is a 
part of the New Orleans designated market area.
    Since the market modification petition was granted, 
however, C Spire has filed a good faith complaint against a 
local broadcast affiliate in Mississippi for refusing to 
provide its signal to Diamondhead residents unless C Spire also 
carries the New Orleans local affiliate station. I understand 
this situation involves contracts between a broadcast network 
and affiliates, but I question whether requiring a video 
provider to carry two of the same affiliate stations following 
the approval of a market modification from the FCC embodies the 
spirit of the good faith requirement.
    In addition to these issues, I look forward to hearing from 
witnesses about other targeted reforms this Committee might 
consider in reauthorizing STELAR to ensure that the next 
iteration of the law promotes competition, innovation, and 
consumer choice in the video marketplace. Thank you again to 
our witnesses and I thank my dear friend and Ranking Member, 
Senator Cantwell, and recognize her for whatever she might want 
to say in way of an opening statement.

               STATEMENT OF HON. MARIA CANTWELL, 
                  U.S. SENATOR FROM WASHINGTON

    Senator Cantwell. Thank you, Mr. Chairman, and thank you 
for holding this hearing. The laws at the heart of STELAR were 
first developed 30 years ago with the distant signal laws in 
the eighties when the marketplace was far different than it is 
today, and most consumers watched over-the-air broadcasting. 
And those who wanted an alternative to broadcasting later in 
the nineties were not held with the same amount of competition 
that they got from cable, and we made changes to the law to 
bring in more competition.
    So, it is no wonder that when the original STELAR law was 
necessary in order to inject essential competition for 
services, the idea was to help get these competitors off the 
ground and facilitate driving down costs to consumers. The 
STELAR law allowed those companies to provide consumers with 
distant broadcast TV stations with the expectation that these 
would help in providing competition to the marketplace. Thirty 
years later, consumers have a multitude of video options, that 
is for sure, but the two satellite television providers are 
mature competitors in a marketplace with millions of customers.
    Whether Congress ends the distant signal STELAR laws now or 
in the future, we must be sure that consumers are not left in 
the lurch. Certainly, consumers will find a way to access 
content that they deserve, but the obligation should be on 
those who most strongly advocating for the end of STELAR to 
prove that they do have plans for what happens afterwards. 
These issues are so important, Mr. Chairman. I hope that we 
will ask important questions today about what are the changes 
of the video marketplace for the future that are really going 
to add value to the American consumer.
    We know that Americans have many more choices, but in some 
instances more choices than they want or want to pay for. We 
want to make sure that there is true competition among these 
platforms and not just capturing consumers and charging them 
higher fees. A recent report suggested that big cable is 
engaging in questionable billing practices that add hundreds of 
dollars to consumers' bills each month. Consumers are rapidly 
losing the diversity and localism that often drives our 
interest in video.
    The larger media conglomerates are buying up the 
competition, leaving little room in the market for new entrants 
with unique perspectives. And it is an open question whether 
these massive media conglomerates have the same commitment to 
the public interest on television that we had enjoyed before 
from our local broadcasters. So, these are important issues. I 
see with the FCC, they are perfectly happy to continue policies 
that I believe undercut national policies that support local 
broadcasters. Stations no longer have to maintain a local 
studio. But for the agency's resounding defeat in the Third 
Circuit, the FCC was perfectly happy to facilitate nearly 
unfettered consolidation among broadcast stations.
    These structural changes that are happening in a very 
disruptive environment raise. I think, important questions that 
I hope our committee would deal with, which is what is the 
future of local journalism? I have had the pleasure of sitting 
down with dozens of Washington State broadcasters last August 
to talk to them about how they are charting this path forward. 
These stations are trying to chart a path through these various 
changes in technology while continuing delivering award-winning 
quality journalism, but they raised some important issues with 
me.
    Ad sales at the stations are dropping due to competition 
with online platforms. Viewers are migrating away from 
traditional cable and satellite, preferring online options that 
do not always carry the broadcaster stations, and the shift is 
starting to drive down the revenue stations gain from their 
distributing partners. They are facing contentious carriage 
negotiations with ever-larger cable companies, and negotiations 
often result, as the Chairman just mentioned, in blackouts that 
can last for months.
    Stations are having to pay license fees back to their 
network partners that then erode their gross revenue. And now 
broadcast networks are investing in their own direct-to-
consumer online video platforms that may draw must-have content 
away from the local stations. I think all of this is important, 
Mr. Chairman, because I want to see continuation of local 
broadcasters. They are about our public interest, the 
journalism, the public service provided by these truly local 
broadcasters, and their commitments to our communities are 
important to the health of our democracy.
    So, I hope as we look at today's hearing and hear from all 
those participating, we will be able to chart a path forward. 
We do want consumers to have more choice. We are glad that 
there is more content, but we here have to keep our eyes on 
these important issues of protecting the consumers and 
protecting local journalism. I thank you, and I look forward to 
hearing from the witnesses.
    The Chairman. Thank you Senator Cantwell for your excellent 
statement. We will now begin with five minute summaries of your 
testimony. Witnesses are advised that your entire testimony 
will be submitted in full and made a part of the record. And we 
ask each of you to summarize your comments in five minutes. And 
we will begin with Ms. Emily Barr. Ma'am, you are recognized.

          STATEMENT OF EMILY BARR, PRESIDENT AND CEO,

        GRAHAM MEDIA GROUP; AND TELEVISION BOARD CHAIR,

              NATIONAL ASSOCIATION OF BROADCASTERS

    Ms. Barr. Thank you very much. Good morning, Chairman 
Wicker, Ranking Member Cantwell, and members of the Committee. 
My name is Emily Barr and I am the President and CEO of Graham 
Media Group. As the television Board Chair of the National 
Association of Broadcasters, I am testifying today on behalf of 
the free and local broadcast television stations serving our 
hometowns.
    Local broadcasters continue to believe that STELAR should 
expire at the end of this year as Congress intended. Not only 
have its provisions become unnecessary and ineffective, but 
today STELAR affirmatively harms viewers who are being denied 
access to their local television stations as the result of its 
continued reauthorization. Your constituents turn to our local 
broadcast stations for crucial weather information, to learn 
how to help neighbors in need, and to watch trusted news 
anchors and reporters deliver unbiased accounts of what is 
happening in our hometowns.
    Local broadcasting is the critical electronic glue that 
binds every community together, keeping them informed and safe. 
This is our industry's North Star. Unfortunately, STELAR denies 
some viewers these benefits. When enacted 30 years ago, 
STELAR's distant signal license successfully enabled the 
nascent satellite companies to better compete with cable's 
monopoly by giving them a temporary crutch, the ability to 
serve viewers with out-of-market network programming at a below 
market rate and without having to negotiate for it. At the 
time, the technology did not exist for those providers to 
otherwise serve viewers with their local broadcast stations. 
Today these satellite companies that Congress subsidized are 
now among the largest paid TV platforms and no technological 
impediment exists.
    Any reauthorization of STELAR will further incentivize 
AT&T, Direct TV to continue to neglect rural markets and is 
simply not justified. Practically speaking, a STELAR renewal 
will mean that Direct TV subscribers in 12 rural markets, 
including Alpena, Helena, Glendive, Grand Junction, San Angelo, 
Victoria, Kirksville, Scottsbluff, and North Platte will 
continue to see news from New York City and Los Angeles rather 
than life-saving tornado coverage or wildfire updates.
    This is a business decision that Direct TV is making as a 
result of this law, a choice that puts their profits ahead of 
service to rural consumers and the safety of our communities. 
Broadcasters and viewers thank the U.S. Copyright Office and 
Members of Congress who have highlighted this consumer harm and 
called for STELAR to end. Some have suggested that STELAR's 
expiration would somehow harm viewers in these rural markets 
because of the time it would take Direct TV to offer them local 
service. They ignore the fact that in 2010 it took Dish only 
one week from passage of this law to launch all of its 
remaining markets. Others have suggested that renewal of 
STELAR's expiring good faith requirement is itself a reason for 
reauthorization.
    While well-intended, the expiring good faith requirement 
has provided no quantifiable benefit, in large part because 
both parties have every incentive to reach a deal without a 
Government backstop. As a broadcaster who is frequently 
outmatched in size and revenue by the pay TV companies with 
whom I negotiate, I can state with certainty that STELAR's 
expiration will have no impact on my ability to complete a 
retransmission consent deal. Most significantly, some pay TV 
companies seem to be manufacturing a blackout crisis, 
withholding broadcast signals from viewers to justify self-
serving changes to the retransmission consent laws. This has no 
place in the STELAR debate.
    Over the past five months alone as Congress has ramped up 
its consideration of STELAR, Direct TV has orchestrated 10 
retransmission consent impasses with broadcast groups across 
the country, impacting more than 179 stations. By comparison 
during the same period last year, Direct TV was involved in 
only one impasse. Congress should reject these harmful tactics 
and end the STELAR cycle of perpetual five-year 
reauthorizations.
    In conclusion, I have worked in all aspects of local 
broadcast television over nearly four decades, including as a 
news editor, a general manager, and now a CEO. I understand the 
business and financial costs of running a newsroom, investing 
in state-of-the-art equipment, and producing award-winning 
investigative journalism that makes broadcasters unique and 
indispensable to the communities we serve.
    Broadcasters urge you to consider these enduring benefits 
when you are asked by pay TV companies to either limit your 
constituents' access to local broadcast stations or undermine 
broadcasters' ability to receive fair compensation for our 
programming.
    Thank you again for the opportunity to testify today, and I 
look forward to your questions.
    [The prepared statement of Ms. Barr follows:]

   Prepared Statement of Emily Barr, President and CEO, Graham Media 
Group; and Television Board Chair, National Association of Broadcasters
Introduction
    Good morning Chairman Wicker, Ranking Member Cantwell and members 
of the committee. My name is Emily Barr and I am the President and CEO 
of Graham Media Group, owner of seven local television stations across 
the United States--KPRC-Houston (NBC), WDIV-Detroit (NBC), WSLS-Roanoke 
(NBC), KSAT-San Antonio (ABC), WKMG-Orlando (CBS), WJXT-Jacksonville 
(fully local) and WCWJ-Jacksonville (CW). I appreciate the opportunity 
to testify on behalf of the National Association of Broadcasters, where 
I serve as the Television Board chair, and its more than 1,300 full-
power, free and local broadcast television stations that provide 
uniquely valuable service to our hometowns.
    Local broadcasters continue to believe that the Satellite 
Television Extension and Localism Act Reauthorization (STELAR) should 
be allowed to expire at the end of 2019--the date that Congress 
intentionally chose for this temporary law to sunset. Not only have its 
provisions become unnecessary and ineffective, but today STELAR 
affirmatively harms viewers who are being denied access to their local 
television stations as the result of its continued reauthorization.
Broadcasters: The Authentic, Local Voice Passionately Informing and 
        Celebrating Our Communities
    In today's hyper-competitive media landscape, broadcasters are the 
authentic, local voice passionately informing and celebrating our 
communities. Local broadcast television remains the most-watched source 
of news, entertainment programming, sports, emergency information and 
investigative journalism in communities across America. Your 
constituents turn to our local stations to get the weather report, 
learn how to help neighbors in need and watch trusted local news 
anchors and reporters deliver unbiased accounts of what is happening in 
their hometowns. Local broadcasting is the critical electronic glue 
that binds every community together, keeping them informed and safe. 
This is our industry's North Star.
    At Graham Media Group, we are deeply committed to informing and 
improving our communities in a multitude of ways. Just this year, two 
of our local stations--KPRC 2 News in Houston and WDIV Local 4 in 
Detroit--were each recognized with Edward R. Murrow awards for 
exemplary public service and outstanding journalism. KPRC received this 
prestigious award for its team coverage of the May 2018 school 
shootings in Santa Fe, Texas. The KPRC news team worked to provide 
complete and compassionate coverage to its community in the immediate 
wake of these horrific events. WDIV received the award for its 
excellence in the use of sound in storytelling. I am enormously proud 
of our local broadcasters, who always go the extra mile to inform their 
communities.
    In Florida, WKMG-TV in Orlando has received national accolades for 
its journalism, which has recently led to significant changes in state 
law. These include multi-year reporting efforts to update Florida law 
making texting and driving a primary offense and allowing workers' 
compensation for first-responders diagnosed with post-traumatic stress 
disorder (PTSD). We were particularly honored that then-Governor Rick 
Scott, now a member of this committee, recognized WKMG-TV's reporting 
on the Pulse Nightclub shooting and the resulting first-responders' 
struggles with PTSD when he signed the Workers' Compensation Benefits 
for First Responders Act into law. WKMG-TV's News 6 anchor Matt Austin 
who led the charge for additional safety--and is himself a victim of a 
serious texting and driving automobile accident--summarized 
broadcasters' unique role in their local communities: ``You see a 
problem, and together with your neighbors, you work to solve it. When 
you can ultimately change laws that can save lives, well, that is what 
good journalism is all about. That is what being of service to your 
community is all about.''
    While local television broadcasters make significant investments 
and sacrifices to cover emergency situations of all kinds, it is our 
continuous coverage in the aftermath of these crises that connects us 
to the community. For example, beyond WJXT's recent wall-to-wall 
coverage of Hurricane Dorian which kept our viewers safe and out of 
harm's way, the station separately produced an hour-long documentary 
providing a raw, real and graphic look at the destruction in our 
neighboring Bahamas caused by this record storm. The WJXT team spent 
four days on the ground and in the air covering the disaster from the 
hardest-hit areas. The eye-opening film, ``96 Hours of Anguish,'' aired 
on WJXT and features Bahamians who are struggling to survive as well as 
Florida-based volunteer operations delivering life-sustaining supplies 
into the hard-to-access islands. It is this focused investment on the 
unique issues of importance to our local communities that distinguishes 
broadcasting from other mediums.
    I have worked in all aspects of local broadcast television for 
nearly four decades. I have held the position of news editor, creative 
services director, operations manager, general manager and am now a 
CEO. As a result, I am proud of the unique services broadcasters 
provide their local communities, but I also understand the business and 
financial costs of running a newsroom, investing in state-of-the-art 
equipment, producing award-winning investigative journalism and 
enabling our stations to go above-and-beyond when our neighbors need it 
most. To fulfill our unique and indispensable role in the communities 
we serve, broadcast television must have the ability to reach our local 
viewers on every platform and earn fair compensation for our 
programming. Broadcasters urge you to consider these enduring benefits 
when you are asked by pay-TV companies to support proposals that would 
either limit your constituents' access to their local broadcast signals 
or undermine broadcasters' ability to receive fair compensation for our 
programming during retransmission consent negotiations.
STELAR's Distant Signal License Harms Viewers by Denying Them Local 
        Stations
    When enacted 30 years ago, STELAR's distant signal license allowed 
nascent satellite television companies to better compete with big cable 
monopolies when the technology did not otherwise exist for those 
providers to carry local broadcast stations. On a temporary basis, 
Congress allowed the satellite companies to serve their subscribers 
with a broadcast station operating outside of the local community at a 
discounted rate in order to ensure that those households could receive 
their favorite network programming.
    That law was wildly successful, yet the market and media landscape 
have fundamentally changed over the past three decades. Today, there is 
no technological impediment to delivering local station signals to all 
markets, and those satellite companies are now media behemoths who do 
not need a subsidy: AT&T-DIRECTV is a $280 billion company, and DISH is 
a $17 billion company. DISH is providing this local service in all 210 
local markets today and has been for nearly a decade, yet AT&T-DIRECTV 
continues to offer only out-of-town signals to viewers in 12 markets 
simply because it is more profitable for the company.
    As pointed out by the U.S. Copyright Office in calling for STELAR's 
distant signal expiration, the number of households being denied their 
local network channels is shrinking. Although only AT&T-DIRECTV and 
DISH have access to a detailed breakdown of the precise numbers--which 
they have refused to give to members of this committee, among others--
NAB estimates that only 500,000 households were still served under 
STELAR's distant signal license in 2017. For those households, the 
impact is still significant, as they were denied access to their local 
ABC, CBS, FOX or NBC broadcast stations and instead received an 
imported signal from another market, primarily from New York City or 
Los Angeles.
    The reason for this continued misuse of STELAR's distant signal 
license by these billion-dollar satellite companies is simple. 
Royalties under this outdated license are discounted substantially 
below the carriage fees for these stations negotiated in the market by 
other pay-TV providers. This below-market subsidy incentivizes the 
satellite companies to deny viewers local news, weather and lifesaving 
emergency information, while still charging their subscribers hefty 
fees each month for an out-of-market station.
    Viewers will benefit from eliminating this outdated law, ensuring 
they receive the local content most relevant to them. In rare instances 
where a local broadcast channel is not available, private business 
arrangements between satellite TV providers and broadcasters can 
resolve these issues. Broadcasters applaud those members of Congress, 
many on this committee, who have stood up and raised concerns over 
their constituents' limited access to local broadcasting which this law 
incentivizes.
Pay-TV Companies Use the Recurring STELAR Reauthorization Process to 
        Turn Viewers into Pawns
    In an earlier reauthorization of STELAR, Congress added a 
requirement that broadcasters and pay-TV providers negotiate in good 
faith for carriage of local TV stations. While well intended, the 
expiring good faith requirements have provided no quantifiable benefit 
to broadcasters, pay-TV providers or American consumers. This is in 
large part because both parties have every incentive to reach a deal 
and serve consumers on their own accord. The countless agreements 
successfully completed outside this broadcast-only framework reveal 
that this well-intentioned provision simply does not justify STELAR's 
reauthorization.
    Most significantly, however, this cycle of repeated 
reauthorizations now affirmatively causes great harm to consumers. 
During a time when broadcasters' trusted information is increasingly 
critical to local communities, some pay-TV companies seem to be 
manufacturing a ``blackout'' crisis, withholding broadcast signals from 
viewers simply to justify their proposed changes to the retransmission 
consent laws that aim to tilt the negotiating scales in their favor at 
the expense of local viewers. Over the past five months alone as 
Congress has debated STELAR, AT&T-DIRECTV has been involved in 10 
retransmission consent impasses with broadcast groups across the 
country impacting more than 179 stations. (By comparison, during this 
same period last year, AT&T-DIRECTV was involved in only one impasse 
and it affected only a single station.) These anti-consumer negotiating 
tactics are encouraged every five years by STELAR's renewal.
    The fact is, the good faith provisions have only been enforced once 
in their 20-year history--against a pay-TV provider that was found to 
have violated them. Broadcasters have every incentive to efficiently 
negotiate in good faith to allow the retransmission of their content to 
as many viewers as possible, while reinvesting those revenues in local 
news, journalism and entertainment programming. The harm posed to 
viewers by STELAR's cyclical five-year reauthorization simply does not 
justify the claimed consumer benefit.
Conclusion
    Congress should allow STELAR to expire as it originally intended. 
There is no policy justification or technological reason to renew this 
outdated law, and any temporary reauthorization harms viewers.
    Thank you again for the opportunity to discuss this issue critical 
to America's broadcasters and the communities we serve. I look forward 
to your questions.

    The Chairman. Four, three, two, one. Very good.
    [Laughter.]
    The Chairman. You did much better than I did. That is 
right, these broadcasters know how to get in within the time.
    [Laughter.]
    The Chairman. Mr. Law on behalf of Golden West 
Telecommunications. You are recognized.

  STATEMENT OF DENNY LAW, CHIEF EXECUTIVE OFFICER AND GENERAL 
            MANAGER, GOLDEN WEST TELECOMMUNICATIONS

    Mr. Law. Thank you, Chairman Wicker, Ranking Member 
Cantwell, and members of the Committee. Thank you for this 
opportunity to testify regarding STELAR Act reauthorization. I 
am Denny Law. I am the CEO of Golden West Telecommunications 
Cooperative Inc. based in Wall, South Dakota. Golden West has 
operated in rural South Dakota for nearly a century. We began 
in the video distribution industry nearly 40 years ago and 
today we serve almost 10,000 video customers.
    Our furthest systems are over 360 miles apart and our 
largest community has only 3,500 residents. Sixty-five percent 
of Golden West video subscribers cannot receive at least one of 
the four major broadcast networks via our offered signal and 
one-third of our customers cannot receive any of the four major 
networks off-air.
    The significant advancement of broadband has driven changes 
in viewer consumption, no longer a simple choice between cable 
company and satellite TV for distribution. With streaming video 
and virtual distributors, consumers have more choices than ever 
before, and these are all good things to be sure but current 
law is holding back even greater innovation and consumer choice 
in the video marketplace.
    This warrants more attention as Congress considers STELAR 
reauthorization. Specifically, the retransmission consent 
system in the 1992 Cable Act requires certain distributors to 
pay their broadcasters increasing sums for carrying local TV 
signals. This is a relic of a bygone era when distribution 
choices were limited, and many consumers could receive over-
the-air signals. The one clear effect of the 1992 law today is 
that it makes consumers who want to access programming in a 
certain way through a local distributor like Golden West pay 
more to do so. If we want to let the marketplace work when it 
comes to video options, this regime is a clear barrier.
    The staggering escalation in retransmission consent fees in 
recent years highlights how drastically the marketplace has 
changed to the detriment of consumers that have to pay that 
price. These fees are projected to grow to over $16 billion in 
2024. And while the retransmission amounts collected by 
broadcasters nationally are staggering, the impact on local 
consumers is concerning. Since 2009, the local broadcast TV 
rates paid by Golden West customers have increased by more than 
2,000 percent or by more than 30 percent compound annual growth 
rates. To provide perspective, that same growth rate would 
results in a 2009 cup of coffee costing $45.
    In just the past five years since STELAR was renewed, the 
local broadcast TV rates for Golden West customers have 
increased by more than 350 percent. Meanwhile newer entrances 
into the video distribution marketplace are not bound by this 
legacy 1992 Act obligations. This outdated law therefore places 
an affirmative thumb on the scale by attaching ever escalating 
costs to only certain kinds of distributors like Golden West. 
The 1992 Act is not promoting an effective marketplace.
    To the contrary, it is hindering the workings of such a 
marketplace. My filed testimony describes how this is a far cry 
from the rosy picture painted by broadcasters in the early 
1990s. In addition, rather than these revenues being used to 
promote local broadcast content, they are being funneled 
instead to distant corporate ownership or national network 
partners. So, what should be done to make this marketplace 
work? In the absence of comprehensive reform, I would suggest 
five steps.
    One, prohibit price discrimination within each designated 
market area. Each local broadcast affiliate is the only source 
of network programming in each DMA. That content is the same 
throughout the DMA for each distributor, and there is no 
rational basis for price discrimination.
    Two, prohibit mandatory bundling or tying of non-network 
channels.
    Despite retransmission consent being focused on local 
signals, broadcasters require distributors like Golden West to 
carry affiliated multicast or other channels. This increases 
the prices consumers must pay for content they do not want. 
Three, eliminate requirements that compel distributors to carry 
broadcast signals on their basic tiers and then mandates 
customers to purchase basic tiers. These provisions deny 
consumers' choice and hinder distributors from tailoring 
packages that consumers want. It is worth noting that newer 
distributors are not bound by such provisions.
    Four, prohibit charging for broadcast channels that cannot 
be received over the air. Rural viewers should not have to pay 
for a broadcaster's failure to provide a signal throughout its 
licensed area, and distributors should not have to pay for the 
right to carry a broadcast signal that would not otherwise 
reach viewers. And five, strengthen the good faith requirement 
in the current law, Congress should expand on the types of 
conduct and negotiation practices that constitute per se bad 
faith practices rather than forcing small video distributors to 
pursue burdensome, case-by-case adjudication.
    In closing, Congress should move promptly to reauthorize 
STELAR but in doing so it should tackle the retransmission 
consent regime that stands out as anti-competitive and an anti-
consumer anachronism. Thank you for this opportunity to testify 
today, and I look forward to your questions.
    [The prepared statement of Mr. Law follows:]

 Prepared Statement of Denny Law, Chief Executive Officer, Golden West 
                  Telecommunications Cooperative, Inc.
    Chairman Wicker, Ranking Member Cantwell, and members of the 
Committee, thank you for the opportunity to testify regarding 
reauthorization of the STELA Reauthorization (STELAR) Act of 2014. I am 
Denny Law, Chief Executive Officer of Golden West Telecommunications 
Cooperative, Inc., in Wall, South Dakota.
Background on Golden West
    For more than a century, Golden West Telecommunications and its 
subsidiaries have provided communications services to rural South 
Dakota, starting initially with stringing telephone lines along fence 
posts. Today, we have over 30,000 accounts, including more than 25,000 
broadband subscribers and nearly 10,000 cable television customers.
    Golden West began in the video distribution industry nearly 40 
years ago. We built our first cable television systems in 1981 starting 
with a few small western South Dakota communities. Golden West has 
since built or purchased dozens of cable television operations, and we 
now operate 40 video distribution systems in rural South Dakota 
communities. Our video subscribers are spread across two Designated 
Market Areas (DMAs). The two furthest systems are over 360 miles 
apart--and our largest community has only 3,500 residents.
    Golden West's initial objective in providing video service was to 
ensure that customers in rural and remote communities had access to 
news and entertainment options similar to customers in urban areas, 
even though in many cases our customers were located too far from the 
urban centers to receive over-the-air broadcast signals. Our systems 
helped the television broadcasters connect with viewers where their 
signals did not reach, and this continues to be the case. Today, 65 
percent of Golden West's cable television subscribers are unable to 
receive at least one of the four major broadcast networks via an over-
the-air signal, and one-third of our video customers are unable to 
receive any of the four major broadcast networks due to the 
broadcasters' failure to provide signals throughout their licensed 
areas.
Astounding Changes in the Video Marketplace--Except for the Decades-Old 
        Retransmission Consent Regime
    To provide context for what should come next as Congress considers 
reauthorizing the STELAR Act, it is important to understand where we 
are, how we got here, and how current law fails to reflect the current 
lay of the land in the video marketplace.
    To say that it has been a ``wild ride'' in the video business over 
the past 40 years seems like an understatement. We have witnessed 
countless technology changes and upgrades. In 1981, our initial lineup 
had 14 channels, but today we offer over two hundred channels--nearly 
all of them in high definition (HD) format. Competition in the video 
distribution business began in the mid-1990s with the introduction of 
satellite-delivered consumer video service from DirecTV and soon after 
Dish Network.
    From my perspective, however, the changes in the video distribution 
business from 1981 through 2010 pale in comparison to the changes we 
have seen over the last nine years and what we will likely witness in 
the next few years.
    Certainly, the significant adoption of broadband connections by 
consumers and the availability of mobile data services have provided 
new options and driven changes in viewer consumption habits and 
consumer video preferences. As a result, the distribution of video 
services has changed dramatically as well. The days of consumers 
choosing solely between either cable or satellite Multichannel Video 
Programming Distributors (MVPD) for viewing of video content are over. 
The advent of broadband deployment now allows consumers to purchase 
similar video services from virtual Multichannel Video Programming 
Distributors (vMVPD) or Subscription Video on Demand (SVOD) service 
such as YouTube TV, Hulu, fuboTV, Sony PlayStation Vue, Philo, Sling TV 
and AT&T TV Now.
    In addition to the vMVPD services that include live video content, 
consumers can also choose from a significant number of streaming 
services that provide large libraries of video content including 
Netflix and Amazon Prime Video, CBS All Access and HBO Now. According 
to public announcements, there will soon be more entrants including 
Disney+, Apple TV and Peacock.\1\ Indeed, the availability and 
awareness of online pay-TV services is growing, and it is estimated 
that 70 percent of U.S. Broadband households subscribe to at least one 
SVOD service.\2\ More than half of all U.S. households subscribe to two 
or more SVOD services.\3\
---------------------------------------------------------------------------
    \1\ ``New Streaming Video Services are Ready to Launch'', Consumer 
Reports, September 19, 2019. (available at: https://
www.consumerreports.org/streaming-media-devices/new-streaming-video-
services-to-check-out/
#targetText=The%20new%20options%20will%20join,you%20cut%20the
%20cable%20cord.)
    \2\ ``Market Snapshot: The Changing World of Pay TV,'' Parks 
Associates, August 2019. (available at: http://
newsroom.parksassociates.com/whitepapers/snapshot-paytv)
    \3\ Leichtman Research Group, August 27, 2019. (available at: 
https://www.leichtmanresearch
.com/wp-content/uploads/2019/08/LRG-Press-Release-08-27-19.pdf)
---------------------------------------------------------------------------
    In short, consumers now have more video distribution choices than 
ever before, much of which is tailored to their viewing preferences 
through the development of ``skinny bundles'' or subsets of programming 
genres. These are all good things, to be sure--but there is one area 
where current law is holding back even greater innovation and consumer 
choice in the video marketplace because it is premised upon a decades-
ago snapshot of what this marketplace once was.
    Specifically, the current ``retransmission consent'' system 
regarding local broadcast stations is hindering the ability of MVPDs to 
compete in this otherwise dynamic marketplace and thereby harming 
consumers who would benefit from even greater choice but for this law 
from a bygone era. The notion of retransmission consent arises out of 
the Cable Television Consumer Protection and Competition Act of 1992 
(the 1992 Act). Retransmission consent was adopted in response to the 
``must carry'' rules that required cable operators to carry all 
significantly viewed local stations. Stations could either keep their 
must carry status, as many smaller independent stations did at first, 
or negotiate with cable operators. When this law was enacted and 
retransmission consent was first created, there were few options for 
video distribution and thus, there was relatively equal bargaining 
power between broadcasters and cable operators. Moreover, local 
broadcast channels were generally available over the air for free so 
that consumers could affordably access local news, weather, and sports. 
In that context, the law aimed to promote agreements on mutually 
beneficial terms between parties negotiating from relatively equal 
positions of strength.
    As described earlier, however, the video marketplace of 1992 no 
longer exists. Retransmission consent negotiations transpire in a very 
different environment today. Changes in broadcast distribution shrunk 
the contours in which broadcast channels could be received over the air 
for free. And today, the pay-television distribution industry is 
competitive, including cable operators, satellite distributors, 
telephone companies and the long list of vMVPD and SVOD providers I 
listed earlier--with more undoubtedly to come.
    Broadcasters will claim that the current marketplace is exactly 
what the 1992 Act envisioned, so the law is serving its purpose and 
should not be disturbed as Congress looks now at video marketplace 
issues in the context of STELAR Act reauthorization. But this is a 
false correlation. The dynamic changes in the video marketplace noted 
above have nothing to do with retransmission consent--they are driven 
by technology, not by a compensation structure dictated by a 1992 law. 
To the contrary, the one clear effect of the 1992 law today is to 
undermine consumer choice by making consumers who want to or must 
access local programming in a certain way--through an MVPD--pay 
increasingly more for that specific option. If you want to ``let the 
marketplace work'' when it comes to video options, a key step is to 
revisit a decades-old law that has no tether to what the marketplace 
actually is today.
    In fact, the imbalance that has arisen in the video marketplace 
between broadcasters and MVPDs since 1992 could not be clearer. Even as 
MVPDs compete with all of various distribution options discussed 
earlier, broadcasters still retain government-granted local monopolies 
as well as other carriage benefits that impact negotiations, allowing 
broadcasters to pit competing distributors against each other and to 
use ``retransmission consent'' to foist increasing costs on certain 
distributors under the cover of a nearly 30-year-old law. When 
consumers are asked for the main reason they are cutting the proverbial 
cord from traditional MVPDs, rising rates are cited as the primary 
reason.\4\ For Golden West video customers, the cost of retransmission 
consent is the primary and overwhelming driver of any such rate 
increases. Ultimately, consumers are the ones paying the price--both in 
terms of spiraling fee increases and disrupted local programming.
---------------------------------------------------------------------------
    \4\ ``Cord Cutting Continues, Fueled by High Cable Pricing, 
Consumer Reports' Survey Finds,'' September 17, 2019. (available at: 
https://www.consumerreports.org/telecom-services/cord-cutting-
continues-high-cable-pricing/)
---------------------------------------------------------------------------
    Before returning in more detail to those increases in consumer fees 
and related issues, it is important to discuss first the state of 
broadcast television today and why the broadcasters hold the market 
power they do.
    As an initial matter, consolidation in the broadcast industry has 
been significant. Just last month, the Federal Communications 
Commission (FCC) approved the merger of Nexstar and Tribune, a 
combination that apparently ``owns, operates, programs or provides 
sales and other services to 197 television stations (including partner 
stations) in 115 markets or approximately 63 percent of all U.S. 
television households.'' \5\ Other groups, like Sinclair and Gray, 
similarly have significant national presences. In addition, even beyond 
corporate consolidation, control of stations is increasingly 
concentrated. The American Television Alliance, for example, has 
highlighted that there are more than 100 identified instances of groups 
using multicast and low-power ``loopholes'' to control multiple network 
stations in the same local market.\6\
---------------------------------------------------------------------------
    \5\ See https://www.nexstar.tv/stations/ (emphasis added). It is 
unclear if this reflects the final count following the transaction and 
anticipated divestitures.
    \6\ See https://www.americantelevisionalliance.org/wp-content/
uploads/2019/04/2019-04-29-ATVA-Quadrennial-Comments-FINAL.pdf
---------------------------------------------------------------------------
    On the other hand, local MVPDs have not seen the same kind of 
consolidation and concentration. Moreover, as discussed above, we do 
not hold a monopoly in our markets any longer, as vMVPDs and SVODs 
provide consumers with multiple means of accessing much of the same 
content that we provide over our cable systems. In the end, this means 
that, in my case and many others, you have a local small business that 
serves very rural communities negotiating with nationwide groups that 
hold a monopoly on certain content and may even control multiple 
stations within the same market. In short, this is not the cable TV 
market of 1992.
A Closer Look at Where We Are Now--The Implications of a 1992 Law in a 
        2019 ``Marketplace''
    The staggering escalation in retransmission consent fees in recent 
years highlights how drastically this ``marketplace'' has changed in 
recent years--to the detriment of consumers that ultimately pay the 
price. These fees are estimated to be nearly $12 billion in 2019 and 
are projected to grow to over $16 billion in 2024.\7\
---------------------------------------------------------------------------
    \7\ ``Retrans Projections Update: Sub Rates Continue to Rise,'' S&P 
Global Market Intelligence, July 25, 2019. (available at: https://
www.spglobal.com/marketintelligence/en/news-insights/research/retrans-
projections-update-sub-rates-continue-to-rise)


    And, to underscore the level of consolidation and concentration 
driving this dynamic, of the estimated $10.5 billion of retransmission 
consent revenues in 2018, only ten television station owner groups 
accounted for nearly 70 percent of that amount.\8\
---------------------------------------------------------------------------
    \8\ ``Nexstar Is The Star of TV Station Groups,'' TVNewsCheck, May 
29, 2019. (available at: https://tvnewscheck.com/article/235386/
nexstar-is-the-star-of-tv-station-groups/)
---------------------------------------------------------------------------
    While the retransmission amounts collected by broadcasters at a 
national level are staggering, the local impact on individual consumers 
is even more concerning. The broadcasters in the two DMAs in which 
Golden West operates first began requesting retransmission consent 
payments in 2009, and our monthly local broadcast TV rates just ten 
years ago were well below a dollar per subscriber per month in both the 
Rapid City and Sioux Falls DMAs.
    Fast forward to present day, and Golden West customers now pay 
nearly $16 per month per subscriber in the Rapid City DMA and almost 
$17 in the Sioux Falls DMA for local broadcast TV. In both cases, this 
represents an increase of more than 2,000 percent in ten years, or more 
than 30 percent compound annual growth rates. To put these increases in 
perspective, the same growth rate would result in a 2009 cup of coffee 
now costing $44.40, a 2009 gallon of milk would cost $62.20, and a 2009 
gallon of gas would be $47.00. Even if using a slightly shorter period, 
from just 2014 when Congress last renewed STELAR, the combined local 
broadcast TV rates for Golden West customers have increased by more 
than 450 percent in the Rapid City DMA and over 350 percent in the 
Sioux Falls DMA.
    I do not believe these high fees or the growth in them to be an 
anomaly. My understanding is that other rural operators' local 
broadcast TV rates as reflected in customers' bills are in a similar 
range, if not higher--as one example, a 2018 industry survey reported 
that small and medium-sized cable operators were paying $11 on average 
per subscriber per month in 2017 for retransmission consent, with those 
rates projected to increase to $19 on average by next year.\9\ 
Meanwhile published reports indicate that the local broadcast TV rates 
for two of the largest MVPDs in the country are considerably lower--but 
still relatively expensive--at $11.99 and $9.99 per month, 
respectively.\10\
---------------------------------------------------------------------------
    \9\ See https://acaconnects.org/corporate-broadcasters-force-
exorbitant-rate-increases-on-cable-customers/
    \10\ ``Cable Firms Shrug Off Video Losses by Playing the Broadband 
Card,'' Investor's Business Daily, August 22, 2019. (available at: 
https://www.investors.com/news/technology/comcast-stock-shrugs-off-
video-losses-as-cable-firms-play-broadband-card/)
---------------------------------------------------------------------------
    Such figures are a far cry indeed from the rosy picture that the 
broadcasters painted when retransmission consent was first being 
considered. Back then, the president of the National Association of 
Broadcasters (NAB) claimed, ``There is no reason to believe that cable 
consumers would see any increase in their monthly cable bills because 
of retransmission consent.'' \11\ There may be no better depiction of 
how far we are from the marketplace surrounding the 1992 law than to 
consider this perspective in light of what we see today.
---------------------------------------------------------------------------
    \11\ See https://prodnet.www.neca.org/publicationsdocs/wwpdf/
53111mediacom.pdf at p. 43.
---------------------------------------------------------------------------
    And, these developments are all the more galling when one considers 
that, for many rural consumers, the broadcasters' signal would not 
reach the consumers without the help of MVPDs like Golden West. As 
noted earlier, roughly two-thirds of Golden West's cable television 
subscribers cannot receive at least one of the four major broadcast 
networks via an over-the-air signal, and one-third of our video 
customers are unable to receive any of the four major broadcast 
networks. In other words, in addition to all of the network investments 
we need to make to carry those signals, Golden West and its customers 
are paying more and more simply for the ``privilege'' of delivering the 
broadcasters' content to consumers it would otherwise not reach--giving 
broadcasters more viewers in turn to sell to advertisers.
    In response to such concerns, broadcasters tend to justify the 
current state of the marketplace and the fees they charge for 
retransmission consent by citing their role as the ``most-watched'' 
source of programming.\12\ But this is a red herring, as the phrase 
``most-watched'' does not mean what it once did. Viewership of 
broadcast television in primetime has fallen dramatically.\13\ In fact, 
in comments filed with the U.S. Department of Justice to advocate for 
loosening current restrictions on the number of television stations 
broadcasters can own in a single market, the broadcasters' own words 
demonstrate that ``most-watched'' is not what it once was:
---------------------------------------------------------------------------
    \12\ Testimony of Gordon H. Smith, June 5, 2019. (available at: 
https://www.commerce.senate
.gov/services/files/21F22C87-FF31-4CB1-AE67-BAC7A2FA337E)
    \13\ ``Ratings Bombshell: In Two Years, Network TV Demos plummeted 
27 percent,'' Ad Age, January 28, 2019. (available at: https://
adage.com/article/media/c3/316390)

        ``Broadcast television's share of prime time viewing (counting 
        cable, broadcast and DBS) among the audience most coveted by 
        advertisers fell from 46 percent in 2003 to just 31 percent in 
        2018. These figures overstate TV stations' share of all video 
        viewing, because they do not take account of streaming or 
        subscription video on demand (SVOD); if SVOD and streaming were 
        included in total viewing, then broadcast's share would be 
        smaller still.'' \14\
---------------------------------------------------------------------------
    \14\ Letter from Rick Kaplan, General Counsel and Executive Vice 
President, NAB, June 17, 2019, at p. 3. (available at: https://
www.nab.org/documents/filings/CommentsOnPublicWork
shopOnCompetitionInTelevisionandDigitalAdvertising(6-17-19).pdf)

    ``The ratings of the most popular broadcast TV programs declined by 
over 67 percent from the 1985-1986 TV season to the 2017-2018 season.'' 
\15\
---------------------------------------------------------------------------
    \15\ Id., at p. 4
---------------------------------------------------------------------------
    ``The average 24-hour commercial rating + 3-day DVR viewing or `C3' 
rating of broadcast TV programs for audiences aged 18-49 has declined 
24 percent in the past two years. Only three general-entertainment 
programs on broadcast networks are averaging a C3 rating of 2.0 or 
better, and one of them aired its final episode in May 2019. Four years 
ago, 32 entertainment programs were averaging a C3 rating of 2.0 or 
better.'' \16\
---------------------------------------------------------------------------
    \16\ Id., at p. 4
---------------------------------------------------------------------------
    ``That is, among the average 30.5 million people ages 18-49 using 
TV during any given minute of prime time in 2018, an estimated 9.56 
million were viewing broadcast stations--and these 9.56 million people 
represent just 7.4 percent of the estimated total 128.9 million people 
ages 18-49 in U.S. TV households. Similarly, the average 31.79 million 
people ages two and older who viewed broadcast TV during any given 
minute of prime time in 2018 represent only 10.4 percent of the 
estimated total 304.5 million people ages two and older in U.S. TV 
households.'' \17\
---------------------------------------------------------------------------
    \17\ Id., at p. 64.
---------------------------------------------------------------------------
    The decline in broadcast television viewership is not limited only 
to primetime shows; viewership for local broadcast network affiliate 
news has declined as well across all time periods from 10 to 20 percent 
in just the last three years.\18\
---------------------------------------------------------------------------
    \18\ Local TV News Fact Sheet, Pew Research Center, June 25, 2019. 
(available at: https://www.journalism.org/fact-sheet/local-tv-news/)
---------------------------------------------------------------------------
    Even the marquee events traditionally broadcast on local stations 
have seen viewing decreases. The Super Bowl has seen declining 
viewership in each of the last five years,\19\ along with similar 
decreases in viewing the Academy Awards \20\ and the Emmy Awards \21\ 
as examples. All of these data points together therefore undercut the 
assertion that retransmission consent increases are justified based 
upon demands for the programming.
---------------------------------------------------------------------------
    \19\ See https://www.tvb.org/Portals/0/media/file/tracts/
Super_Bowl.pdf
    \20\ See https://www.tvb.org/Portals/0/media/file/tracts/
Academy_Awards.pdf
    \21\ See https://www.tvb.org/Portals/0/media/file/tracts/
Emmy_Awards.pdf
---------------------------------------------------------------------------
    If the increases in retransmission consent cannot be justified 
based upon viewing numbers, another defense of retransmission consent 
has been and still is that these fees promote localism--that these fees 
sustain local stations and promote local content. Again, back in 1991, 
NAB asserted this framework was all about localism: ``Retransmission is 
a right granted to local stations in their local areas. Networks are 
not involved in any negotiations.'' \22\
---------------------------------------------------------------------------
    \22\ See https://prodnet.www.neca.org/publicationsdocs/wwpdf/
53111mediacom.pdf at p. 44.
---------------------------------------------------------------------------
    Of course, NAB's early 1990s claims that networks would not be 
involved with retransmission consent has proven false--again, the 
marketplace has moved. Instead, through what is known as ``reverse 
comp,'' local broadcasters now split the retransmission consent fees 
they collect from distributors and video subscribers with their network 
partners. Reports indicated that the networks received over $3.8 
billion in reverse comp in 2018 from their local broadcast 
affiliates,\23\ and Wall Street analysts estimate that local affiliates 
split between 50 percent and 75 percent of their retransmission consent 
revenues with their network partners.\24\
---------------------------------------------------------------------------
    \23\ ``Retrans Projections Update: Sub Rates Continue to Rise,'' 
S&P Global Market Intelligence, July 25, 2019. (available at; https://
www.spglobal.com/marketintelligence/en/news-insights/research/retrans-
projections-update-sub-rates-continue-to-rise)
    \24\ ``Panel, Retrans Pie Will Grow,'' Multichannel News, September 
27, 2018 (available at: https://www.multichannel.com/news/panel-
retrans-pie-will-grow)
---------------------------------------------------------------------------
    And the networks are not done extracting fees from local 
affiliates, which will in turn increase the rates video consumers pay. 
In 2018, CBS received an estimated $1.7 billion in retransmission 
consent payments and reverse comp,\25\ and in a recent earnings call 
with investors, CBS forecasted that amount to rise to $2.5 billion in 
2020 \26\--a nearly 50 percent increase in just two years.
---------------------------------------------------------------------------
    \25\ ``ViacomCBS Remarriage Fails to Impress Investors,'' 
Multichannel News, August 19, 2019. (available at: https://
www.multichannel.com/news/viacomcbs-remarriage-fails-to-impress-
investors)
    \26\ Statement of Chris Spade, CBS Chief Financial Officer, August 
8, 2019. (available at: https://seekingalpha.com/article/4283652-cbs-
corporation-cbs-ceo-joe-ianniello-q2-2019-results-earnings-call-
transcript?part=single)
---------------------------------------------------------------------------
    This is not an isolated instance involving one network. In an 
investor presentation in June, FOX network's Chief Financial Officer 
stated plans to increase the national network's draw of retransmission 
consent fees by 60 percent in the next three years:

        ``We've made it clear that sort of on a run rate rolling 12-
        month basis we're at about $1.650 billion in retrans revenue 
        going into September just gone. We expect that to grow by 
        another $1 billion by calendar year 2022.'' \27\
---------------------------------------------------------------------------
    \27\ Statement of Steve Tomsic, Credit Suisse 21st Annual 
Communications Conference, June 4, 2019, at p, 2. (available at: 
https://investor.foxcorporation.com/static-files/a9861572-4693-44d0-
a1d5-9bd9728cf806)

    In a recent call with Wall Street analysts, the CEO of the Nation's 
largest broadcast group confirmed that networks are demanding more from 
local affiliates and that in turn, local affiliates are going to 
---------------------------------------------------------------------------
increase the costs to MVPDs and their consumers.

        ``I mean long-term listen the networks negotiating and asking 
        for more from us and we in turn are asking for more from the 
        MVPDs and the revenue line is greater than the expense line. So 
        if they move in tandem we actually increase our margins.'' \28\
---------------------------------------------------------------------------
    \28\ Statement of Perry Sook, CEO, Nexstar Media Group, August 7, 
2019. (available at: https://seekingalpha.com/article/4282813-nexstar-
media-group-inc-nxst-ceo-perry-sook-q2-2019-results-earnings-call-
transcript?part=single)

    In fact, broadcasters have taken to using retransmission consent 
revenues in ways that would be difficult to imagine for the authors of 
the 1992 Act. In one of the largest broadcast television acquisitions, 
Nexstar's recent acquisition of Tribune Media Company, Nexstar 
highlighted three ``Year 1 Synergies'' that benefited shareholders in 
this transaction. In addition to reductions in corporate overhead and 
other expenses as part of the transaction, the single largest 
``synergy'' identified by Nexstar was an $85 million increase in the 
retransmission consent rates of the acquired Tribune Media Company 
viewers. In other words, MVPDs' and consumers' bills increased $85 
million in year one and every year thereafter simply because Nexstar 
was apparently able to increase Tribune Media retransmission consent 
rates to the higher Nexstar rates.\29\
---------------------------------------------------------------------------
    \29\ Completed Acquisition of Tribune Media Company, Nexstar 
Investor Presentation, September 20, 2019, at p 9. (available at: 
https://www.nexstar.tv/wp-content/uploads/2019/09/Nexstar-Tribune-
Investor-Closing-Deck-FINAL-9-20-19.pdf)
---------------------------------------------------------------------------
    The practice of increasing retransmission consent rates as part of 
an acquisition is hardly new. In Gray Television's 2018 acquisition of 
Raycom, Gray identified four ``synergies'' as part of the Raycom 
transaction. The first item on the ``synergy'' list was a $15 million 
increase in net retransmission consent revenue comprised of a 
contracted step-up of Raycom subscribers to Gray's higher 
retransmission consent rates.\30\
---------------------------------------------------------------------------
    \30\ Gray to Combine with Raycom to Become the Third Largest TV 
Broadcast Group, Gray Television, Inc. Investor Presentation, June 25, 
2018, at p. 7. (available at: https://gray.tv/uploads/documents/
presentations/GrayTelevisionInvestorPresentationJune.pdf)
---------------------------------------------------------------------------
    It is clear that retransmission consent has gone far afield of its 
initial intent and purpose. In extolling the benefits of retransmission 
consent to their shareholders, broadcasters are quick to point out the 
positive impact that ``profitable, predictable subscription revenues'' 
have to their bottom line, and that broadcasters' retransmission 
consent revenues are ``immune from secular or economic trends.'' \31\ 
So confident are the broadcasters in their ability to control 
retransmission consent revenues, the Nation's second largest local 
broadcast group, Tegna, literally likens retransmission consent to an 
annuity:
---------------------------------------------------------------------------
    \31\ TEGNA Investor Presentation, September 2019, at p. 8. 
(available at: http://investors.tegna.com/static-files/2a4d41af-d245-
4758-bea0-df54a27513cd)
---------------------------------------------------------------------------
    ``As we've discussed before, these sticky and high-margin subs 
produced annuity-like cash flows, which allows us strong forecasting 
ability.'' \32\
---------------------------------------------------------------------------
    \32\ Q4 2018 TEGNA Inc Earnings Call, March 1, 2019, Statement of 
Victoria Dux Harker, Executive VP and CFO, at p 5. (available at: 
http://investors.tegna.com/static-files/f3183827-4740-4eba-a521-
7d1178b27458)
---------------------------------------------------------------------------
    The broadcasters who assert localism as a defense of and 
justification for retransmission consent cannot hide that these 
revenues are flowing away from local markets--and that retransmission 
consent fees will increase to keep feeding the revenues upward.
    Despite adding billions of dollars a year to their own (and the 
networks') coffers via retransmission consent, there is no evidence 
that broadcasters have invested these gains in enhancing or adding to 
their local news operations. From 2010 to 2018, total employment in 
local broadcast television newrooms was static, from 28,640 in 2010 to 
28,670 in 2018--a change of less than 1/10th of 1 percent over eight 
years \33\ despite collecting over $48 billion in retransmission 
consent fees during the same period.\34\ Moreover, even while 
collecting ever more retransmission consent fees, the number of local 
television stations originating local television news since 2013 has 
actually declined.\35\ So even if localism may have been the intended 
purpose in 1992, the reality in 2019 is that those funds are not going 
back into local news operations.
---------------------------------------------------------------------------
    \33\ Local TV News Fact Sheet, Pew Research Center, June 25, 2019. 
(available at: https://www.journalism.org/fact-sheet/local-tv-news/)
    \34\ ``Retrans Projections Update: Sub Rates Continue to Rise,'' 
S&P Global Market Intelligence, July 25, 2019. (available at: https://
www.spglobal.com/marketintelligence/en/news-insights/research/retrans-
projections-update-sub-rates-continue-to-rise)
    \35\ 2018 Local News Research, Radio Television Digital News 
Association. (available at: https://www.rtdna.org/uploads/files/
2018%20Local%20News%20Research.pdf)
---------------------------------------------------------------------------
    Finally, demonstrating how anachronistic retransmission consent 
fees are in 2019, one must consider the inequitable and technologically 
discriminatory way in which they apply. Although ``traditional'' MVPDs 
must pay these amounts--even where the broadcast signal would actually 
not reach the consumer without the MVPD--new entrants into the video 
distribution business that offer live television content such as 
YouTube TV, Hulu, Sling TV and AT&T TV Now are not bound by the same 
legacy 1992 Act obligations. Thus, the 1992 Act is actually ``putting a 
thumb on the scale'' and interfering in what is an otherwise dynamic 
marketplace, punishing only some distributors with inflated costs due 
to a decades-old law that has no tether to where things stand today.
What Can Be Done Now in the Context of STELAR Reauthorization?
    To address all of these concerns, I would advocate first and 
foremost for a fundamental overhaul of the retransmission consent 
regime contemplated by the 1992 Act. The Modern Television Act of 2019 
(H.R. 3994) introduced by Representatives Eshoo and Scalise could 
provide a helpful starting point for such discussions. This being said, 
to the extent that STELAR reauthorization might not offer a platform 
itself for such comprehensive change, there are narrower, targeted 
changes that should be considered and made as part of STELAR renewal 
for the benefit of consumers. Specifically:

    1.) Prohibit price discrimination within each DMA. Broadcasters are 
provided with government-sanctioned monopolies in 210 Designated Market 
Areas. While there now are multiple MVPDs and vMVPDs serving all or 
most DMAs, the local broadcast affiliate is the only source of network 
programming for each DMA. Broadcasters should not be able to 
discriminate in price among video distributors. This is particularly 
important for video distributors that are smaller or serve rural 
communities. Indeed, a report released late last year by the FCC 
indicates that small system operators, such as Golden West, pay 30 
percent more in retransmission consent fees than larger systems.\36\ 
There is no basis whatsoever for such pricing discrimination within a 
DMA since the broadcaster's content is the same throughout the DMA and 
as provided to each distributor.
---------------------------------------------------------------------------
    \36\ FCC Communications Marketplace Report, December 26, 2018, 
Appendix B, at p. 20 (available at: https://www.fcc.gov/document/fcc-
adopts-first-consolidated-communications-marketplace-report-0)
---------------------------------------------------------------------------
    2.) Prohibit broadcaster-imposed mandatory bundling or tying of 
additional non-network channels. The origins of retransmission consent 
were limited to the carriage of the major network (i.e., ABC, CBS, FOX, 
NBC) channels. Yet, in connection with retransmission consent for the 
major network channels, broadcasters now require MVPDs to carry (and 
thus force subscribers to pay for) a whole litany of multicast or 
separate channels entirely unrelated to the major network. These 
additional channels are not requested by MVPD subscribers and 
needlessly force consumer rates higher. Examples of these channels 
include MeTV, Grit, Escape, Laff, Bounce, ThisTV, Charge!, Stadium, 
Comet, GetTV, Justice Network, MyTV, AntennaTV, Cozi, Movies!, Heros & 
Icons, BuzzR, Quest, TBDTV, StartTV, Decades, Retro and Circle. This 
list of typical ``bundled'' or ``tied'' channels is not all inclusive 
and it seems to grow nearly daily. Broadcasters should also be 
prohibited from including negotiations or contractual ties for Regional 
Sports Networks or any other non-broadcast content as part of the 
retransmission consent process.
    3.) Eliminate the 1992 Act requirements that compel: (a) cable 
operators/MVPDs to carry broadcast signals on their lowest service 
levels/basic tiers; and (b) cable customers to purchase these lowest 
service levels/basic tiers before they can purchase any other level of 
service.\37\ These requirements unnecessarily compel all subscribers to 
purchase broadcast channels, regardless of what any given consumer 
actually wants. New entrants in the video marketplace, such as vMVPDs, 
are not bound by such an anti-consumer, anti-choice provision.
---------------------------------------------------------------------------
    \37\ 47 U.S.C. Sec. 543(b)(7)
---------------------------------------------------------------------------
    4.) Prohibit charging for broadcast channels that are unable to be 
received over the air. Many rural areas, and likely some urban areas as 
well, are unable to receive over-the-air broadcasts of one or more 
broadcast channels. Rural viewers should not have to pay for a 
broadcaster's failure to provide a signal throughout its licensed area, 
and MVPDs should not have to pay for the ``right'' to carry a broadcast 
signal that would not otherwise reach viewers.
    Below is a graphic showing the coverage area of one of the ``Big 
Four'' broadcasters in the Rapid City DMA. The coverage by the 
broadcaster below represents only 14 percent of the geographic area 
within the DMA. Yet every video consumer outside of that small coverage 
is forced to pay for receipt of the broadcaster's signal over a MVPD 
system, despite having no option to receive that signal otherwise for 
``free'' over the air.


    A similar situation arises in the Sioux Falls DMA, with the graphic 
below showing the coverage area of a different ``Big Four'' 
broadcaster. Even with the addition of several low power signals, this 
broadcaster only covers an estimated 38 percent of the DMA's geographic 
area.
---------------------------------------------------------------------------
    \38\ See https://www.fcc.gov/media/television/tv-query, Nexstar 
Broadcasting, Inc. KCLO-TV
    \39\ See https://www.fcc.gov/media/television/tv-query Independent 
Communications, Inc., KTTW/KTTM


    5.) Make the ``Good Faith'' requirement in current law more 
meaningful. Section 325 of the Communications Act grants broad 
authority to the FCC to implement a framework for promoting ``good 
faith'' dealing in retransmission consent negotiations. The FCC has 
implemented the ``good faith'' provision by adopting a two-part 
framework that includes a list of negotiating tactics that are 
considered per se violations of the obligation, as well as a ``totality 
of the circumstances'' standard that can be used to prove the absence 
of a sincere desire to reach a mutually acceptable agreement.\40\
---------------------------------------------------------------------------
    \40\ See, e.g., Implementation of the Satellite Home Viewer 
Improvement Act of 1999, Retransmission Consent Issues: Good Faith 
Negotiations and Exclusivity, First Report and Order, 15 FCC Rcd 5457, 
 44 (2000); Amendment of the Commission's Rules Related to 
Retransmission Consent, Report and Order and Further Notice of Proposed 
Rulemaking, MB Docket No. 10-71,  9 and 31 (2014).
---------------------------------------------------------------------------
    Nothing in the STELAR Act limited this authority, and the only 
STELAR-related congressional committee report that addressed Section 
325 called for the agency to address ``whether certain substantive 
terms offered by a party may increase the likelihood of the 
negotiations breaking down'' and to provide ``additional specific 
guidance as to actions that, taken as a whole, evidence bad faith based 
on the totality of the circumstances.'' \41\ Moreover, when passing 
STELAR, Congress was well aware of the FCC's efforts to implement 
Section 325, and legislatively affirmed a revised per se standard.\42\ 
In considering reauthorization of STELAR now, I would encourage 
Congress to expand on the types of conduct and negotiation practices 
that constitute per se bad faith practices--such as several of those 
outlined above--rather than forcing smaller MVPDs in particular to 
pursue case-by-case adjudication that consumes substantial resources 
and leaves most MVPDs with no practical remedy to ensure continued 
carriage of content.
---------------------------------------------------------------------------
    \41\ See S. Rep. No 113-322 at 13 (2014).
    \42\ See STELAR Act Sec. 103(a).
---------------------------------------------------------------------------
Conclusion
    Congress should move promptly to reauthorize STELAR, but in doing 
so, should tackle the retransmission consent regime that stands out 
uniquely as an anti-competitive, anti-consumer anachronism in an 
otherwise dynamic marketplace. To the extent that STELAR may not 
provide an opportunity for comprehensive reform, I have identified 
several targeted changes that would help at least to improve conditions 
for consumers in rural areas served by smaller distributors. Golden 
West is committed to delivering the best possible services for its 
consumers in some of the most rural terrain to be found in the United 
States, and we look forward to working with members of this committee 
and others in Congress to ensure that this vision can be realized 
through laws that reflect and allow today's marketplace to operate 
effectively.

    The Chairman. Thank you very much, Mr. Law. And now we turn 
to Mr. Robert Thun of AT&T.

 STATEMENT OF ROBERT THUN, SENIOR VICE PRESIDENT--CONTENT AND 
                       PROGRAMMING, AT&T

    Mr. Thun. Thank you, Chairman Wicker, Ranking Member 
Cantwell, and members of the Committee. My name is Robert Thun, 
Senior Vice President of Content and Programming for AT&T. In 
my current role, I am responsible for securing content rights 
for both the major networks and the local broadcast station 
groups for AT&T's television platforms. I am testifying to urge 
renewal of STELAR because without STELAR's distant signal 
license, 870,000 subscribers, your constituents, will lose 
access to the network television program they have relied on 
for years. These include hundreds of thousands of your 
constituents, mainly in rural areas, that cannot obtain free 
over-the-air signals from a local network broadcaster.
    That point is worth repeating. We are able to offer distant 
signals to hundreds of thousands of your constituents only 
because the broadcasters have failed to provide these 
constituents with a local signal over the air. Put simply, 
local broadcasters want Congress to pull distant signal from 
viewers that they have chosen not to serve. Of course, nothing 
prevents the local broadcasters from using their ever-
increasing revenues they get from the broken retransmission 
consent regime to invest in their local communities and provide 
these consumers free over the air signals.
    Instead of so doing, the local broadcasters have asked 
Congress to let STELAR expire and impose a permanent blackout 
on these consumers, denying them network TV, both over the air 
or through a distant signal. Congress avoided this consumer 
double whammy when it adopted the satellite and cable distant 
signal license decades ago and its logic in so doing remains 
just as sound today. STELAR also allows us to provide distant 
signals to recreational vehicles and commercial trucks, 
allowing long-haul truckers, RV and camping enthusiast, and 
tailgating sports fans access to network TV.
    These are a unique set of subscribers with no other 
alternative to obtain network programming that Congress chose 
to protect. There is no reason for Congress to abandon them 
now. Recognizing the consumers will lose access to network 
programming without STELAR, consumer industry groups are lining 
up in favor of STELAR's renewal. These groups include the Free 
Press, Public Knowledge, Common Cause, Cal Innovates, CWA, 
IBEW, Consumer Action, Consumer Federation of America, Consumer 
Reports, Open Technology at New America, The Grange, The 
Hispanic Technology and Telecommunications Partnership, and a 
number of RV associations, including the RV Industry 
Association, National Association of RV Parks and Campgrounds, 
Escapees RV Club, RV Dealers Association, and The Family Motor 
Coach Association.
    Congress should take this opportunity to make the satellite 
distant signal license permanent as it has done for cable, our 
largest competitor. AT&T also strongly supports the provisions 
in STELAR that require broadcasters and MVPDs to negotiate in 
good faith. This requirement serves as an important backstop 
that places guideposts around our negotiations. While we still 
have issues with stations refusing to negotiate or respond to 
offers, the good faith provision helps move our negotiations 
along. Without the good faith rules, there would certainly be 
even greater price increases and blackouts.
    While the good faith rules continue to be necessary to help 
bring broadcasters to the negotiation table, the retransmission 
consent regime is in dire need of reform. We urge Congress to 
use STELAR's renewal as an opportunity to help fix this broken 
regime. Retransmission consent was first put in place last 
century when cable was the only pay TV offering in most areas. 
Under these rules if a local broadcaster withholds its 
programming, MVPDs cannot offer the subscribers with 
alternative network programming even on a temporary basis.
    Now with consumers having a multitude of content options, 
these statutory protections are no longer necessary. And 
looking more deeply at this problem is important to look at the 
numbers. Since 2006, retrans fees have gone up from $250 
million to $11.7 billion in 2019, an increase of over 5,300 
percent. This is quantifiable evidence that local broadcasters 
shielded by their special statutory protections have a 
disproportionate bargaining position. To give more perspective, 
if the price of gas rose at the same rate during this period, a 
gallon of gas would cost $162 today.
    And despite the staggering increases, broadcasters still 
respond to otherwise reasonable offers with blackouts. In just 
the first 10 months of 2019 they have set a record for the most 
TV blackouts in a single calendar year, taking down signals 
from cable and satellite customers 276 times. That is why AT&T 
has long supported legislative efforts to end the 
retransmission consent regime.
    We applaud the efforts of Representatives Eshoo and Scalise 
to reform the system and end local broadcaster blackouts 
through the bipartisan Modern Television Act of 2019. AT&T 
thanks the Committee for holding this important hearing. We 
look forward to engaging with members on both sides of the 
aisle to renew STELAR and reform the badly broken retrans 
regime to benefit customers.
    [The prepared statement of Mr. Thun follows:]

 Prepared Statement of Robert Thun, Senior Vice President--Content and 
                           Programming, AT&T
    Thank you, Chairman Wicker, Ranking Member Cantwell, and Members of 
the Committee.
    I am Rob Thun, Senior Vice President of Content and Programming for 
AT&T. In my current role, I am responsible for securing content rights 
from the major networks and local broadcast station groups for AT&T. 
AT&T has invested $130 billion \1\ in the United States over the last 
five years, more than any other public company. We employ 200,000 
Americans, representing all 50 states. Without doubt, we are deeply 
invested in our country, our communities, our employees and our 
customers.
---------------------------------------------------------------------------
    \1\ Includes capital investment and acquisitions of spectrum and 
wireless operations.
---------------------------------------------------------------------------
The Need to Renew the Satellite Television Extension and Localism 
        Reauthorization Act (STELAR)
    I am testifying in this hearing to protect our customers, your 
constituents, and join a growing list of consumer and industry groups 
supporting renewal of STELAR. These groups include Free Press, Public 
Knowledge, Common Cause, CWA, Consumer Action, Consumer Federation of 
America, Consumer Reports, Open Technology Institute at New America, 
the Hispanic Technology and Telecommunications Partnership, and a 
number of RV associations, among others.
    These groups support STELAR because they know that it protects 
consumers. In particular, without STELAR's distant-signal-license, 
870,000 satellite subscribers, your constituents, would lose access to 
the network television programming they have relied on for years.
    In all cases, failure to renew STELAR would remove channels from 
people who legally receive them today--many of whom have done so for 
years--and who would not understand why those channels were taken away. 
While the number of customers receiving service through the distant 
signal license has declined over time, that does not mean that those 
870,000 subscribers that continue to receive high-quality satellite 
network programming because of the license should now be left behind. 
For the same reasons it has for decades, Congress should continue to 
protect those subscribers' access to network programming.
    These include hundreds of thousands of your constituents, mainly in 
rural areas, that cannot obtain a free over-the-air signal from a local 
network broadcaster. That point bears repeating: we are able to offer 
distant signals to hundreds of thousands of your constituents because 
the broadcasters have failed to provide these constituents with their 
local signal over-the-air.
    Nothing prevents local broadcasters from investing in their local 
communities, extending the reach of their signals, and providing these 
customers free, over-the-air-signals. Indeed, the government provided 
local broadcasters access to free spectrum with the hope that they 
would do just that. Instead of doing so, local broadcasters choose to 
blame Congress, and take the easier (and certainly cheaper) path of 
opposing renewal of STELAR, thereby putting satellite subscribers at 
risk.
    Local broadcasters cannot have it both ways. They cannot, on the 
one hand, fail to provide consumers access to free, over-the-air local 
network programming, while at the same time asking Congress to deny 
these same consumers access to network programming via the distant-
signal-license. Congress rightly avoided this consumer ``double 
whammy'' when it adopted the satellite and cable distant signal license 
decades ago and its logic in doing so remains just as sound today.
    STELAR also allows us to provide distant signals to mobile/
recreational vehicles or commercial trucks, allowing long-haul trucks, 
RV and camping enthusiasts, and tailgating sports fans access to 
satellite network TV. These are a unique set of subscribers that 
Congress chose to protect, and there is no reason for Congress to 
abandon them now. A host of RV trade associations have come out in 
favor of renewing STELAR, including the RV Industry Association, 
National Association of RV Parks and Campgrounds, Escapees RV Club, RV 
Dealers Association, and the Family Motor Coach Association.
    Renewal of STELAR is also important to keep satellite providers on 
equal competitive footing with their cable competitors. Cable 
providers, our competitors, have a permanent distant-signal-license. It 
makes no sense for Congress to provide cable operators a such a 
statutory competitive advantage over satellite providers. Congress 
should take this opportunity to make the satellite distant-signal-
license permanent, as it is for cable.
    AT&T also strongly supports the provisions in STELAR that require 
broadcasters and MVPDs to negotiate with one another in ``good faith.'' 
This requirement serves as an important backstop that places guideposts 
around negotiations. We still have issues with stations refusing to 
negotiate or respond to an offer, and the good faith provision helps 
move those negotiations along. Without the protections the ``good 
faith'' rules offer, there would likely be even greater increases in 
prices and blackouts. As with the satellite distant-signal-license, 
Congress should make this provision permanent in STELAR.
The Need For Retransmission Consent Reform
    While the good faith rules continue to be necessary to help bring 
broadcasters to the table, the retransmission consent regime is in dire 
need of reform. In every prior reauthorization, Congress has also 
enacted substantive reform apart from the expiring provisions. It 
should do the same here to fix the broken retransmission consent 
regime.
    That regime was first put in place last century, to help small 
local broadcasters obtain carriage on cable platforms that were then 
the only pay-TV offering in most areas. Now, with consumers having a 
multitude of options to watch their content, those statutory 
protections are no longer necessary and only serve to harm consumers 
and competition. Since 2006, retrans fees have gone from about $215 
million to $11.7 billion in 2019, an increase of 5,359 percent.\2\ 
Local broadcasters, shielded by their special statutory protections, 
have a disproportionate bargaining position and reflexively respond to 
reasonable offers with blackouts. Indeed, these antiquated laws have 
unfairly penalized the nearly 90 million customers \3\ that have chosen 
to keep their traditional pay-TV service.
---------------------------------------------------------------------------
    \2\ ``Broadcasters Try to Kill STELAR and Victimize 870,000 Viewers 
with Deceptive Political Ads,'' American Television Alliance, October 
2019, https://www.americantelevisionalliance.org/broadcasters-try-to-
kill-stelar-and-victimize-870000-viewers-with-deceptive-political-ads/
    \3\ ``Major Pay-TV Providers Lost About 1,530,000 Subscribers in 2Q 
2019,'' Leichtman Research Group, Inc., August 2019, https://
www.leichtmanresearch.com/major-pay-tv-providers-lost-about-1530000-
subscribers-in-2q-2019/
---------------------------------------------------------------------------
    That is why AT&T has long supported legislative efforts to end the 
retransmission consent regime, and we applaud the efforts of 
Representatives Anna Eshoo and Steve Scalise to reform the system and 
end local broadcaster blackouts and consumer harm through the 
bipartisan Modern Television Act of 2019.\4\
---------------------------------------------------------------------------
    \4\ Modern Television Act of 2019, H.R. 3994, 116th Congress 
(2019).
---------------------------------------------------------------------------
    We are all aware of the enormous changes in the video marketplace 
since the last STELAR renewal, in 2014. Consumers are choosing to leave 
traditional pay TV services to obtain their programming through the 
growing number of direct-to-consumer options, including both 
subscription services (Netflix, Hulu, Amazon) and free services, like 
YouTube. There are now more than 180 million over-the-top 
subscriptions,\5\ with Netflix having more subscribers \6\ than DIRECTV 
and Comcast combined.\7\ Major pay-TV providers lost more than 1.5 
million subscribers in 2Q 2019--more than in any previous quarter.\8\
---------------------------------------------------------------------------
    \5\ ``Hulu and Amazon Prime Video Are Gaining on Netflix in the 
Streaming Wars,'' AdWeek, August 2019, https://www.adweek.com/tv-video/
hulu-and-amazon-prime-video-are-gaining-on-netflix-in-the-streaming-
wars/
    \6\ Netflix 3Q 2019 Earnings, https://s22.q4cdn.com/959853165/
files/doc_financials/quarterly_reports/2019/q3/FINAL-Q3-19-Shareholder-
Letter.pdf
    \7\ ``Major Pay-TV Providers Lost About 1,530,000 Subscribers in 2Q 
2019,'' Leichtman Research Group, Inc., August 2019, https://
www.leichtmanresearch.com/major-pay-tv-providers-lost-about-1530000-
subscribers-in-2q-2019/
    \8\ ``Major Pay-TV Providers Lost About 1,530,000 Subscribers in 2Q 
2019,'' Leichtman Research Group, Inc., August 2019, https://
www.leichtmanresearch.com/major-pay-tv-providers-lost-about-1530000-
subscribers-in-2q-2019/
---------------------------------------------------------------------------
    AT&T has embraced these trends, providing consumers the innovative 
and mobile video alternatives they desire. In 2016, we launched our 
live-streaming service AT&T TV NOW, providing consumers customized 
packages--allowing them to watch TV wherever they want on different 
devices. And, of course, AT&T continues to provide high-quality premium 
video service to over 20 million customers.
    No doubt, consumers have unparalleled choice and competition for 
video content. Yet the laws that govern the video marketplace were 
first written in 1934, and the present legal framework dates back to 
1992. Under these current laws, broadcasters can choose either: (1) 
retransmission consent, where cable (and later all MVPDs) must pay to 
carry broadcast programming (which broadcasters otherwise make free 
over-the-air), or (2) must-carry, where cable (and later all MVPDs) are 
required to devote capacity to carry the station. If a local 
broadcaster withholds its programming, MVPDs generally cannot offer 
their subscribers alternative, out-of-market network affiliate 
programming, even temporarily. These laws were written to protect local 
broadcasters at time when there was only one distributor, so cable and 
broadcasters were mutually dependent on each other, and customers had 
few options besides cable. Now, these laws stubbornly protect local 
broadcasters from the inexorable changes occurring in the video 
marketplace, and thus distort and stymie innovation and consumer 
choice.
    As competition first came from satellite, and now from over-the-top 
providers, local broadcasters have relied on their special statutory 
protection to more effectively use the threat of blackouts to 
dramatically increase retransmission fees for stations also available 
for free, over-the-air. As a result, these broadcasters have 
dramatically raised retransmission fees, as detailed above. And, when 
MVPDs balk at local broadcasters' rate hikes, they have responded with 
blackouts. Local broadcasters shattered the record for the most TV 
blackouts in a single calendar year already in 2019, intentionally 
taking down signals from cable and satellite customers 276 times.\9\ 
Because of existing law, consumers are harmed by these unwarranted and 
unnecessary blackouts.
---------------------------------------------------------------------------
    \9\ ``Broadcasters Try to Kill STELAR and Victimize 870,000 Viewers 
with Deceptive Political Ads,'' American Television Alliance, October 
2019, https://www.americantelevisionalliance.org/broadcasters-try-to-
kill-stelar-and-victimize-870000-viewers-with-deceptive-political-ads/
---------------------------------------------------------------------------
    We understand the desire to preserve local programming.\10\ 
However, local content will always have value and no longer needs to be 
given special protections in the law. Scores of cable networks, 
including those operated by our WarnerMedia group, respond to 
competitive and economic forces by delivering--to consumers and 
distributors--high quality products and programming. An approach in 
which the overall effect would be ``market-based'' should be the model 
for modern local broadcasting, too. Continuing favoritism for some 
content over others is outdated and ultimately harmful to consumers. It 
is time for the law to catch up to the marketplace.
---------------------------------------------------------------------------
    \10\ In fact, the law preventing ownership of multiple stations in 
a market was in part intended to prevent one entity from having too 
large an editorial voice in a community.
---------------------------------------------------------------------------
AT&T/DIRECTV Service in all 210 DMAs
    I would like to take this opportunity to clear up some confusion 
over DIRECTV's service in all 210 DMAs. Today, DIRECTV serves 198 
markets through our satellites and in 12 markets we offer local 
broadcast signals through an antenna. We then integrate that signal 
with our other offerings so that it looks exactly the same to the 
customer; the channel appears in the programming guide like all other 
channels, can be recorded with a DVR, and can be managed with our 
parental controls. And in the 12 markets where we harness the 
broadcaster's free, over-the-air signal, we offer consumers a $3 
discount off of all DIRECTV packages. In addition to a lower price, 
consumers in those markets have never endured a local broadcaster 
blackout because local broadcasters cannot withhold their over the air 
signal. So in those markets--and this is the key point--if the local 
broadcast signal reaches you, you can get it on DIRECTV already. And if 
you cannot, it is due to the broadcaster's failure to provide that 
signal.
    Moreover, the local broadcasters in these 12 DMAs have successfully 
evaded the FCC's ``top four prohibition,'' which prohibits a single 
entity from controlling more than one ``top four rated station'' in a 
given DMA. In fact, in these DMAs, local broadcasters own two or three 
affiliates in eleven of them. A single broadcaster owns at least two 
network affiliates in six of these markets and three in the other five. 
They have accomplished this by using loopholes, such as carrying one of 
the network affiliates on a multicast stream or on low-power television 
stations, or both, to control multiple network feeds in a single DMA. 
These tactics only serve to exacerbate the problems with the 
retransmission consent regime. Giving broadcasters a pass on local 
ownership limits would all but guarantee more blackouts and higher 
prices for consumers in those DMAs. Given the competitive state of the 
market, and the plethora of consumer choices for video content, it is 
simply not a viable option for us to ask consumers in these markets to 
absorb these mounting prices and increased blackouts.
    Finally, I want to stress that providing local satellite service in 
these 12 markets would not protect the 870,000 subscribers who are at 
risk of losing their network signals if STELAR were allowed to expire. 
We can provide distant signals to those consumers that cannot receive a 
local station's over-the-air signal. Where broadcasters in these 12 
markets are providing their signal with the free spectrum they have 
received from the government, we are offering our customers a distant 
signal. Simply put, contrary to the deliberate confusion that 
broadcasters are trying to create, satellite local service is not a 
replacement for a distant signal. And, in fact, it actually puts these 
consumers at more risk of losing their signal through a broadcaster 
blackout. Put simply, broadcasters want Congress to pull distant-
network signals from viewers that its member companies have chosen not 
to serve.
                                  ****
    AT&T thanks the Committee for holding this important hearing we 
look forward to engaging with Members on both sides of the aisle to 
renew STELAR and reform the badly broken retransmission consent regime 
to benefit consumers and competition.

    The Chairman. Thank you very much. Representative Watts, 
you are recognized. Thanks for joining us.

 STATEMENT OF J.C. WATTS, CHAIRMAN AND CO-FOUNDER, BLACK NEWS 
                            CHANNEL

    Mr. Watts. Thank you, Chairman Wicker, and Ranking Member 
Cantwell, and members of the Committee. I am J.C. Watts, former 
Member of Congress from Oklahoma. However, I am here today as 
the Chairman and Co-Founder of an exciting new business 
venture, the Black News Channel, or BNC. When BNC launches, it 
will become the Nation's very first 24/7 news network dedicated 
to covering the unique perspective of African American 
communities. It is a new voice that will represent African 
Americans in mainstream media, and help shed light on the 
unique social, economic, and political challenges facing urban 
communities.
    In doing so, it will help close the image gap that exists 
today between the negative African American stereotypes found 
throughout mainstream news and media and our enterprising black 
communities. There are undoubtedly many reasons why it has 
taken so long for the first news channel dedicated to the 
African American community to emerge in this country. It is 
particularly difficult for BNC to obtain carriage from the two 
major satellite operators.
    It is our understanding that satellite has relatively low 
penetration in urban cores due to line-of-sight issues and the 
difficulty of residents in those areas to place satellite 
dishes on multi-tenant dwellings. BNC's target audience, 
however, is more concentrated in urban cores than any other 
ethnic groups.
    A higher percentage of African Americans live within urban 
areas than do other ethnic groups. Satellite providers have 
told us that due to these issues it is more difficult for them 
to justify traditional commercial carriage of a niche network 
like BNC. Over the past several years, we have tried various 
approaches that would make it easier for satellite providers to 
take a chance on a new network like BNC and part of that 
solution requires your help.
    BNC supports the reauthorization of STELAR because we 
believe it is a critical component of preserving satellite as a 
viable competitive alternative to cable for traditional multi-
channel video programming services, as well as new streaming 
services. We also believe Congress should use the opportunity 
of reauthorizing STELAR to make at least one modest change to 
the Communications Act, just as Congress has done in the past 
in deciding to reauthorize this important piece of legislation.
    In the 1992 Cable Act, Congress enacted Section 335 of the 
Communications Act, which requires DBS providers to set aside a 
certain percentage of their channel capacity exclusively for 
non-commercial programming of an educational or informational 
nature. As implemented, however, Section 335, as well as other 
provisions of the Act, have failed to provide sufficient 
opportunities for independent programming of an educational or 
informational nature. And legislation to date has failed to 
create a true diversity of views and media voices as Congress 
intended.
    Congress can address the lack of diverse programming by 
modestly revising Section 335 to allow DBS providers to use 
their set-aside channels not only for non-commercial 
programming but also for independently owned programming of an 
educational or informational nature. Specifically, Congress 
should expand the DBS set aside to include any network that is 
unaffiliated with any MVPD, broadcast network, or movie studio, 
provided such network produces and televises at least 8 hours 
of original educational or informational programming, including 
news programming, per day.
    This modest expansion of the set aside that we propose 
would open the door for other types of educational and 
informational programming to compete for use of this space. 
This would lower the high entry barriers for entrepreneurial 
new networks like BNC, who seek to give an on-air voice and 
platform to an underserved community. It will, in short, 
fulfill the goals that Congress originally had in mind when it 
first adopted Section 335, and that are even more pressing 
today.
    On behalf of BNC, I urge this Committee to adopt our 
suggested language in any proposed legislation for the 
reauthorization of STELAR. And I urge Congress to reauthorize 
STELAR, incorporate, and approve our proposed language, and 
fulfill its mission of achieving a more diverse media 
landscape. Chairman Wicker, Ranking Member Cantwell, thank you 
for this opportunity.
    [The prepared statement of Mr. Watts follows:]

      Prepared Statement of J.C. Watts, Chairman and Co-Founder, 
                           Black News Channel
    Thank you Chairman Wicker, Ranking Member Cantwell, and Members of 
the Committee.
    I am J.C. Watts, former member of Congress from Oklahoma. I am here 
today as the Chairman and Co-Founder of an exciting new business 
venture--the Black News Channel, or BNC. When BNC launches, it will 
become the Nation's very first 24/7 news network dedicated to covering 
the unique perspective of African American communities. It is a new 
voice that will represent African Americans in mainstream media, and 
help shed light on the unique social, economic, and political 
challenges facing urban communities. In doing so, it will help close 
the image gap that exists today between the negative African American 
stereotypes found throughout mainstream news and media, and our 
enterprising black communities.
    There are undoubtedly many reasons why it has taken so long for the 
first news channel dedicated to the African American community to 
emerge in this country. It is very difficult for any new network to get 
off the ground. Traditionally, for a network to become commercially 
viable, it needs to convince cable TV companies and satellite operators 
to carry it. Despite the rapid growth of streaming, a majority of 
American households still obtain news and information from cable TV and 
satellite. That is particularly true with respect to older generations, 
which tend to be the largest consumers of news and informational 
programming.
    It has been particularly difficult for BNC to obtain carriage from 
the two major satellite operators. It is our understanding that 
satellite has relatively low penetration in urban cores due to line-of-
sight issues and the difficulty of residents in those areas to place 
satellite dishes on multi-tenant dwellings. BNC's target audience, 
however, is more concentrated in urban cores than other ethnic groups. 
Approximately a quarter of African Americans still live within urban 
cores, compared to only about 10 percent of whites, 20 percent of 
Asians, and 17 percent of Hispanics. Satellite providers have told us 
that due to these issues, it is more difficult for them to justify 
traditional commercial carriage of a niche network like BNC.
    Over the past several years, we have tried various approaches that 
would make it easier for satellite providers to take a chance on a new 
network like BNC. And part of that solution requires your help.
    BNC supports the reauthorization of STELAR because we believe it is 
a critical component of preserving satellite as a viable competitive 
alternative to cable for traditional multi-channel video programming 
services, as well as to new streaming services.
    We also believe Congress should use the opportunity of 
reauthorizing STELAR to make at least one modest change to the 
Communications Act, just as Congress has done in the past in deciding 
to reauthorize this important piece of legislation.
    In the 1992 Cable Act, Congress enacted Section 335 of the 
Communications Act (47 USC Sec. 335), which requires DBS providers to 
set aside a certain percentage of their channel capacity ``exclusively 
for non-commercial programming of an educational or informational 
nature.'' At the time, Congress found a ``substantial governmental and 
First Amendment interest in promoting a diversity of views provided 
through multiple technology media.'' 1992 Cable Act Sec. 2(a)(6). 
Congress has also expressed the goal of reducing ``market entry 
barriers for entrepreneurs and other small businesses'' in order to 
fulfill a ``national policy'' of ``favoring diversity of media 
voices.'' 47 U.S.C. Sec. 257.
    As implemented, however, Section 335--as well as other provisions 
of the Act--have failed to provide sufficient opportunities for 
independent programming of an educational or informational nature. And 
legislation to date has failed to create a true diversity of views and 
media voices as Congress intended.
    Congress can address the lack of diverse programming by modestly 
revising Section 335 to allow DBS providers to use their set-aside 
channels not only for non-commercial programming, but also for 
independently owned programming of an educational or informational 
nature. Specifically, Congress should expand the DBS set aside to 
include any network that is unaffiliated with any MVPD, broadcast 
network, or movie studio, provided such network produces and televises 
at least eight (8) hours of original educational or informational 
programming (including news programming) per day.
    The modest expansion of the set aside that we propose would open 
the door for other types of educational and informational programming 
to compete for use of this space. This would lower the high entry 
barriers for entrepreneurial new networks like BNC, who seek to give an 
on-air voice and platform to an underserved community. It will, in 
short, fulfill the goals that Congress originally had in mind when it 
first adopted Section 335, and that are even more pressing today.
    On behalf of BNC, I urge this Committee to adopt our suggested 
language in any proposed legislation for the reauthorization of STELAR. 
And I urge Congress to reauthorize STELAR, incorporate and approve our 
proposed language, and fulfill its mission of achieving a more diverse 
media landscape. Thank you.
                                 ______
                                 
      Appendix: BNC's Proposed Modification to 47 U.S.C. Sec. 335
    To promote diverse programming, Congress should modestly revise 
Section 335 to allow DBS providers to use their set-aside channels not 
only for non-commercial programming, but also for independently owned 
programming of an educational or informational nature. Congress should 
add the following underlined language to 47 U.S.C. Sec. 335(b)(1)(A):

        Except as provided in subparagraph (B), the Commission shall 
        require, as a condition of any provision, initial 
        authorization, or authorization renewal for a provider of 
        direct broadcast satellite service providing video programming, 
        that the provider of such service reserve a portion of its 
        channel capacity, equal to not less than 4 percent nor more 
        than 7 percent, exclusively for noncommercial programming of an 
        educational or informational nature, or for any network that is 
        unaffiliated with any MVPD, broadcast network, or movie studio, 
        provided such network produces and televises at least eight (8) 
        hours of original educational or informational programming 
        (including news programming) per day.

    The Chairman. Thank you, Mr. Watts. And Mr. Schwantes, you 
are recognized.

    STATEMENT OF JONATHAN SCHWANTES, SENIOR POLICY COUNSEL, 
                        CONSUMER REPORTS

    Mr. Shwantes. Thank you, Chairman Wicker, Ranking Member 
Cantwell, and the members of the Senate Commerce Committee for 
inviting me to testify today on the reauthorization of STELAR. 
My name is Jonathan Schwantes and I am a Senior Policy Counsel 
at Consumer Reports. Before I begin my substantive remarks, I 
would like to say that it is good to be back in the Senate 
where I began my career as a young attorney on the Judiciary 
committee more than two decades ago.
    Ironically enough, one of the first major pieces of 
legislation I worked on was the Satellite Home Viewer 
Improvements Act of 1999, an earlier version of STELAR. Little 
did I know that I would still be working on these very issues 
20 years later. Consumer Reports endorses the reauthorization 
of STELAR and the extension of the consumer-friendly provisions 
of the law that are set to expire at the end of the year. 
STELAR in all of its earlier forms was and is a pro-consumer 
and pro competition law. Renewing its expiring provisions every 
5 years has also provided Congress a chance to consider 
targeted reforms of the video marketplace. This year is no 
different.
    A golden opportunity exists for lawmakers to enact 
straightforward policy changes that would directly and 
immediately help consumers. A new STELAR bill offers Congress a 
legislative vehicle to address an increasingly expensive 
problem experienced by consumers. And that is the spread of 
hidden company-imposed fees in pay TV bills. First, I would 
like to quickly address the current debate surrounding STELAR's 
reauthorization. Where consumers cannot receive their local 
broadcasters? channels over the air with an antenna, think of 
rural areas, they are considered unserved under the law.
    A satellite operator is permitted to provide those 
relatively few unserved consumers broadcast programming from a 
market other than their local one, it is a distant signal, so 
long as the local channels are not being provided in that 
market by the satellite company. The Section 119 distant signal 
license is what makes this service possible, and the estimated 
number of consumers who receive distant signals today is 
870,000. Should Congress receive some calls to let STELAR 
expire and along with it the Section 119 license, the only 
guaranteed outcome is that almost a million consumers would 
wake up on New Year's Day without the broadcast programming 
they received the day before. Consumers would likely blame 
Congress and not the broadcasters or the satellite companies 
for taking away their broadcast channels.
    Another key STELAR provision scheduled to expire concerns 
the good faith requirements upon broadcasters and pay TV 
operators that apply to retransmission consent negotiations. 
The good faith rules can be improved. I have offered 
suggestions in my written testimony. And they should also be 
made permanent so long as the retransmission consent regime 
remains in place. This process created by the 1992 Cable Act, 
and subsequently applied to satellite companies, governs one 
method for how programming is obtained from broadcasters. Over 
time, this system has resulted in skyrocketing retransmission 
consent fees paid to broadcasters, the amount of which has been 
well documented by the pay TV industry.
    However, what is lost amidst the finger-pointing between 
the broadcasters and the cable and the satellite companies is 
that consumers end up bearing the overwhelming cost of the 
current system because rising retransmission consent fees have 
directly led to the birth of company-imposed fees like the 
broadcast TV fee and others. Consumer Reports recently studied 
this issue in depth and our results were published earlier this 
month in a report that is available online. We discovered that 
in the past decade, cable companies have begun to impose new 
fees for services that were previously included in their 
advertised base rates.
    Our analysis of hundreds of pay TV bills submitted to us by 
consumers shows that company-imposed fees, which to be clear 
these are separate and apart from charges related to 
Government-imposed fees and taxes, now add almost 25 percent of 
the base price to the typical monthly cable bill. On average, 
the cable industry generates close to $450 per year, per 
customer from company-imposed fees. And if we multiply that 
number by the total number of U.S. cable subscribers, cable 
companies might be making an estimated $28 billion a year from 
charging company-imposed fees that are often buried in the fine 
print. That is a staggering amount.
    The good news is that Congress, beginning with the Commerce 
Committee, can begin to solve this problem. A bill introduced 
by Senator Markey earlier this year, The True Fees Act, would 
among other things simply require company-imposed fees to be 
included in the advertised price. A version of this common-
sense fix was applied to the airline industry in 2011 in the 
form of the full fare advertising rule.
    And applying it to the telecom industry would inject real 
transparency to cable billing practices in the same fashion. 
Consumer Reports recommends and supports the attachment of the 
True Fees Act to whatever STELAR reauthorization bill is 
drafted by this Committee. Doing so would immediately bring 
relief to fee-exhausted consumers in the video marketplace and 
would also continue and reinvigorate STELAR's tradition as a 
pro-consumer measure. Thank you.
    [The prepared statement of Mr. Schwantes follows:]

   Prepared Statement of Jonathan Schwantes, Senior Policy Counsel, 
                            Consumer Reports
    Consumer Reports \1\ (CR) thanks Chairman Wicker, Ranking Member 
Cantwell, and the Members of the Senate Commerce Committee for inviting 
me to testify on whether or not to reauthorize the STELAR Act, and to 
suggest other targeted video marketplace reforms Congress should 
consider as part of this work. A golden opportunity exists for 
lawmakers to enact straightforward policy changes that would directly 
and immediately help consumers in a STELAR reauthorization bill passed 
before the end of this year, a reauthorization that CR strongly 
supports.
---------------------------------------------------------------------------
    \1\ Consumer Reports (CR) was founded as the Consumers Union of 
America in 1936 and became known by millions of Americans for our 
award-winning magazine Consumer Reports. In recent years, our overall 
organization transitioned to the name Consumer Reports. Consumer 
Reports is a non-profit organization with more than six million members 
that works for a fair, safe, and transparent marketplace, fueled by our 
trusted research, journalism, advocacy, and insights.
---------------------------------------------------------------------------
    At a time when consumers enjoy more and more choices in the video 
marketplace thanks to the increasing number of online video 
distributors, consumers also, almost paradoxically, find themselves 
with less power as huge tech companies control more and more of the 
choices that impact their everyday lives. As our Nation grows 
increasingly concerned over the out-sized influence of companies like 
Google, Amazon, Facebook and others, we must not lose sight of the 
challenges consumers continue to face in the more traditional video 
marketplace, where nearly 94 million Americans subscribe to pay-TV 
service from an MVPD (multichannel video programming distributor) be it 
a cable, satellite, or telephone operator that includes telecom giants 
like AT&T (which owns DIRECTV), Comcast, Verizon, Charter, and 
others.\2\
---------------------------------------------------------------------------
    \2\ Federal Communications Commission, Consolidated Communications 
Marketplace Report, Report, GN Docket No. 18-231, FCC 18-181 (Dec. 26, 
2017) Available at https://docs.fcc.gov/public/attachments/FCC-18-
181A1.pdf.
---------------------------------------------------------------------------
    Indeed, STELAR in its earliest forms, from the Satellite Home 
Viewer Act (SHVA) to the Satellite Home Viewer Improvements Act (SHVIA) 
and subsequent versions, was a pro-consumer and pro-competition law.\3\ 
By permitting direct broadcast satellite (DBS) companies to offer 
consumers broadcast programming, especially local broadcast networks, 
satellite operators like DIRECTV and Dish Network were better able to 
compete with the incumbent cable companies that otherwise faced little, 
if any, direct competition. Consumers wanted access to their local 
broadcast channels, and with the passage of SHVIA, DBS companies were 
finally able to legally provide them in a cost-effective manner.
---------------------------------------------------------------------------
    \3\ Satellite Home Viewer Act of 1988, Pub. L. No. 100-667; 
Satellite Home Viewer Act of 1994, Pub. L. No. 103-369; and Satellite 
Home Viewer Improvement Act of 1999, Pub L. No. 106-113, App. I.
---------------------------------------------------------------------------
    Though the name changed every five years, from SHVIA to SHVERA to 
STELA, and finally to STELAR in 2014, the reauthorization of key 
provisions scheduled to sunset has permitted Congress to improve the 
law in ways that benefit competition and consumers alike.\4\ Rather 
than revisiting this debate again in the future, expiring provisions in 
STELAR should be made permanent, namely the Section 119 ``distant 
signal'' license \5\--a compulsory copyright license that permits 
satellite companies to import an out-of-market broadcast channel into a 
market where the local channel is unavailable--and the ``good faith'' 
requirements \6\ attached to retransmission consent negotiations which 
permit the Federal Communications Commission to adjudicate programming 
carriage disputes between broadcasters and MVPDs. The reauthorization 
legislation we are discussing today also provides Congress a 
legislative vehicle to address an increasingly expensive harm 
experienced by consumers in the video marketplace: the proliferation of 
company-imposed fees in pay-TV bills.
---------------------------------------------------------------------------
    \4\ Id. See also Satellite Home Viewer Extension and 
Reauthorization Act of 2004, Pub. L. No. 108-447; Satellite Television 
Extension and Localism Act of 2010, Pub L. No. 111-175; and STELA 
Reauthorization Act of 2014, Pub. L. No. 113-200.
    \5\ 17 U.S.C. Sec. 119.
    \6\ 47 C.F.R. Sec. 76.65.
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STELAR Protects Nearly a Million Unserved Americans
    We must first consider the current debate surrounding STELAR's 
reauthorization in 2019. Even though this would lead to a sudden 
disruption of television service to hundreds of thousands of consumers, 
the National Association of Broadcasters (NAB) has urged Congress to 
let STELAR expire at the end of this year.\7\ And despite broadcast 
channels being offered to consumers who are otherwise unable to receive 
them, NAB asserts that the distant signal license has provided 
satellite operators like DIRECTV a disincentive to provide local 
broadcast networks into all 210 local markets. To be sure, satellite 
companies were permitted by the 1999 version of STELAR (SHVIA) to 
provide local broadcast channels into their local markets (also known 
as ``local-into-local'' service) under the Section 122 compulsory 
copyright license.\8\ But presumably in a few cases, it is less 
expensive to import one or two distant broadcast networks into some 
areas versus offering the full complement of local broadcast channels 
given the ``carry one, carry all (local channels)'' mandate placed upon 
DBS operators who offer local networks.
---------------------------------------------------------------------------
    \7\ See Statement of Gordon Smith, National Assn. of Broadcasters, 
STELAR Review: Protecting Consumers in an Evolving Media Marketplace, 
U.S. House of Representatives Energy and Commerce Committee Hearing, 
(June 4, 2019), https://energycommerce.house.gov/sites/
democrats.energycommerce.house.gov/files/documents/Testimony_Smith.pdf.
    \8\ 17 U.S.C. Sec. 122.
---------------------------------------------------------------------------
    There are a dozen local markets where DIRECTV does not provide 
local programming via satellite.\9\ And in those particular markets, 
where consumers cannot receive their local broadcast channels over the 
air, they are considered ``unserved'' under the law. When a household 
is considered unserved in this instance, a DBS operator is permitted to 
provide those consumers that broadcast programming from a market other 
than their local one--a distant signal--if no other local channels are 
being provided by that satellite company. The distant signal license is 
set to expire at the end of this year is what makes this service 
possible--not only for unserved consumers in rural areas, but also for 
recreational vehicle and commercial truck operators, who Congress 
decided years ago could be provided distant signals by their satellite 
company.
---------------------------------------------------------------------------
    \9\ John Eggerton, Senators Press AT&T/DirecTV for Small-Market, 
Remote Area TV Signals, Broadcasting and Cable (Mar. 14, 2019), https:/
/www.broadcastingcable.com/news/senators-press-at-t-directv-for-small-
market-remote-area-tv-signals.
---------------------------------------------------------------------------
    Recent estimates of the number of consumers who receive distant 
signals in this manner number 870,000.\10\ Should Congress heed NAB's 
advice to simply let STELAR and the distant signal license expire, the 
only guaranteed outcome is that almost a million consumers will wake up 
on New Year's Day without the broadcast programming they received the 
day before, and have likely relied on for years. It is important to 
note that if DIRECTV wanted to provide local-into-local service into 
those markets, it could do so right now under current law, just as its 
DBS competitor, Dish Network, does. Nonetheless, what lawmakers and the 
broadcasters cannot guarantee, absent a change in current law, is that 
DIRECTV will fill that gap and choose to provide local networks to 
unserved consumers. Consumers would likely blame Congress--and not the 
NAB or their service providers--for taking away their broadcast 
channels. Consumers should not suffer restricted access to service 
without a guaranteed alternative.
---------------------------------------------------------------------------
    \10\ John Eggerton, SCBA Pushes Permanent STELAR Renewal, 
Broadcasting and Cable (Oct. 17, 2018), https://
www.broadcastingcable.com/news/sbca-pushes-permanent-stelar-renewal.
---------------------------------------------------------------------------
Good Faith Requirements Should Be Stronger and Made Permanent
    Other key provisions in STELAR that are set to expire this year 
concern good faith requirements upon broadcasters and MVPDs that apply 
to retransmission consent negotiations. Consumer Reports supports the 
strengthening of these requirements, starting with clearer guidance on 
what constitutes violative behavior. For example, broadcasters could be 
required to offer a local broadcast channel as a standalone offer, and 
not bundled with other channels, especially other broadcast network 
channels. Furthermore, the rising number of station blackouts--the 
consequence of an expired retransmission consent deal--could be 
mitigated if they were not allowed to occur right before must-see 
programming like the Super Bowl, or prohibited altogether when parties 
who cannot agree to new terms were instead subjected to binding 
arbitration.
    The good faith rules can be improved along these lines and they 
should also be made permanent so long as the retransmission consent 
regime remains in place. This process, created by the 1992 Cable Act 
and subsequently applied to DBS operators, governs one method of how 
pay-TV operators obtain programming from broadcasters.\11\ This system 
has resulted in the skyrocketing of retransmission consent fees paid to 
broadcasters, the amount of which has been well-documented by the 
American Television Alliance (ATVA).\12\
---------------------------------------------------------------------------
    \11\ Cable Television Consumer Protection and Competition Act of 
1992, Pub. L. No. 102-385, 106 Stat. 1460, (1992)
    \12\ Broadcasters Use Old Myths in Attempt to Keep Video 
Marketplace Laws Old and Unfair, American Television Alliance, January 
2019, https://www.americantelevisionalliance.org/broadcasters-use-old-
myths-in-attempt-to-keep-video-marketplace-laws-old-and-unfair/.
---------------------------------------------------------------------------
    However, what is lost in this furious debate and finger-pointing 
between broadcasters and MVPDs is that consumers end up bearing the 
overwhelming cost of the current system, where rising retransmission 
consent fees have directly led to the birth of company-imposed fees 
like the Broadcast TV Fee and others. These fees are the sole creation 
of the pay-TV industry, and cable operators plainly state that these 
fees are meant to help them recoup their rising programming costs. 
Although that explanation is straightforward enough, the application of 
these fees is not, and confused consumers are being made to pay 
increasingly expensive, non-optional fees because of a retransmission 
consent system that is broken.
Hidden Fees Should Be Eliminated
    Consumer Reports recently examined this issue in depth, and the 
results of our work were published earlier this month in a report 
entitled, How Cable Companies Use Hidden Fees to Raise Prices and 
Disguise the True Cost of Service. \13\ Aside from assessing the cost 
of company-imposed fees in the video marketplace, the report also 
provides policy recommendations for Congress to consider for how best 
to mitigate the harm caused by these fees.
---------------------------------------------------------------------------
    \13\ A full copy of the report can be found at https://
advocacy.consumerreports.org/wp-content/uploads/2019/10/CR-Cable-Bill-
Report-2019.pdf. (CR Cable Bill Report)
---------------------------------------------------------------------------
    In the past decade, cable companies have begun to impose new fees 
for services previously included in the base rates that are typically 
quoted in advertisements. Consumer Reports' analysis of hundreds of 
pay-TV bills submitted to CR by consumers reveals that company-imposed 
charges--which, to be clear, are separate and apart from charges 
related to any government-imposed fees and taxes--now add almost 25 
percent of the base price to the typical monthly cable bill. An analogy 
from the report helps illustrate the problem. Imagine your surprise if 
you were to learn in the supermarket check-out line that the box of 
cereal you wanted to buy was going to incur a Cardboard Box Surcharge 
and a Grain Refinery Fee, adding nearly 25 percent to the purchase 
price. It sounds absurd--but actually is not very different from what 
many consumers experience month-in, month-out, when they pay their 
cable bills.
    Unsurprisingly, consumers get frustrated and angry when they 
discover these company-imposed fees on their bills. A recent CR 
nationally representative survey of 2,057 U.S. adults asked about add-
on fees across many industries, and found that nearly seven in 10 (69 
percent) Americans who have used a cable, internet, or phone service 
provider in the past two years reported encountering unexpected or 
hidden fees.\14\ And nearly all--96 percent--of those who reported 
having encountered hidden or unexpected fees in an industry that we 
asked about said they find them annoying. Two-thirds--64 percent--
called them ``extremely'' or ``very'' annoying.
---------------------------------------------------------------------------
    \14\ WTFee?! Survey, 2018 Nationally Representative Multi-Mode 
Survey, Prepared by the Consumer Reports Survey Research Department 
(January 3, 2019) (hereafter CR WTF?! Survey) available at: https://
advocacy.consumerreports.org/research/wtfeesurvey/.
---------------------------------------------------------------------------
    The depth of that frustration reflects the insidious market effect 
of company-imposed fees: they enable cable companies to camouflage 
price increases, confounding consumer efforts to comparison shop and to 
maintain household budgets. This happens in at least two ways. First, 
the fees are often imposed or increased with little notice and are 
often listed among a dizzying array of other charges, including 
government-imposed fees and taxes. Second, by passing along additional 
costs as ``fees'' and not building them into the core package price, 
cable companies are able to continue advertising relatively lower base 
rates. Thus, they can generate more revenue each month with little 
pushback from their customers--including even those who are locked into 
fixed-price promotional offers.
    The combined effect is stretching consumer pocketbooks to the 
breaking point. CR's survey found that the telecom industry was the 
worst budget-buster of the ones we asked about. Nearly six in 10 (59 
percent) Americans who encountered unexpected or hidden fees while 
using telecom services in the past two years say the fees caused them 
to exceed their budgets.
    Make no mistake, the cost of company-imposed fees is not 
insignificant. The report's analysis of nearly 800 cable bills 
collected from consumers across the country shows that:

    Company-imposed fees, from Broadcast TV and Regional Sports 
        Fees to Set-Top Box Rental Fees, add what amounts to a 24 
        percent surcharge on top of the advertised price.

    On average, the cable industry generates close to $450 per 
        year per customer from company-imposed fees.

    Based on the total number of U.S. cable subscribers and our 
        findings, cable companies might be making an estimated $28 
        billion a year from charging company-imposed fees.\15\
---------------------------------------------------------------------------
    \15\ See CR Cable Bill Report at p. 7 and FN 20.

    The problem is growing worse and more expensive because the cost of 
company-imposed fees continues to escalate. For example, in 2015, the 
Nation's largest cable company, Comcast Corporation, charged consumers 
a $1-a-month Regional Sports Fee and $1.50-a-month Broadcast TV Fee, 
for a total of $2.50 per month. Those two fees combined now cost 
Comcast customers $18.25 a month.\16\ That represents a more than 600 
percent fee increase in four years. Similarly, Charter Communications 
raised the price of its Broadcast TV Surcharge three times in just the 
last year, meaning that particular company-imposed fee now costs 
consumers $13.50 a month, a 50 percent increase of what that fee cost a 
year ago--and far more than the $1 it was when first introduced in 
2010.\17\
---------------------------------------------------------------------------
    \16\ Jon Brodkin, Comcast Raises Cable TV Bills Again--Even if 
You're Under Contract, ArsTechnica (Nov. 26, 2018), https://
arstechnica.com/tech-policy/2018/11/comcasts-controversial-tv-and-
sports-fees-rise-again-hit-18-25-a-month/.
    \17\ Luke Bouma, Spectrum is Raising its TV & Internet Pricing (The 
Third Price Hike on Broadcast TV in 12 Months), Cord Cutter News (Sep. 
7, 2019), https://www.cordcuttersnews
.com/spectrum-is-raising-its-tv-internet-pricing-including-the-3rd-
price-hike-on-broadcast-tv-in-12-months/. See also Karl Bode, Charter 
Starts Charging `Broadcast TV Surcharge' So They Can Raise Rates, But 
Leave the Advertised Price the Same, DSLReports (Sep. 13, 2010), http:/
/www.dslreports.com/shownews/Charter-Starts-Charging-Broadcast-TV-
Surcharge-110316.
---------------------------------------------------------------------------
    To make matters worse, new mandatory modem and router fees have 
also begun to saddle consumers with additional company-imposed fees. 
Many consumers have long been able to avoid monthly equipment rental 
fees by purchasing and using their own modems and routers. With rental 
fees costing up to $11 a month, they can often recoup their investment 
in less than a year.\18\ But Frontier Communications recently began 
charging a leasing fee ``for your Frontier router or modem--whether you 
use it or not,'' eliminating this money saving strategy.\19\
---------------------------------------------------------------------------
    \18\ Luke Bouma, Comcast Is Raising Their Modem Rental Fee (The 
Good News Is You Don't Have to Pay It), Cord Cutters News (Nov. 27, 
2018), https://www.cordcuttersnews.com/comcast-is-raising-their-modem-
rental-fee-the-good-news-is-you-dont-have-to-pay-it/.
    \19\ Jon Brodkin, Frontier Customer Bought His Own Router--But Has 
to Pay $10 Rental Fee Anyway, ArsTechnica (July 2, 2019), https://
arstechnica.com/information-technology/2019/07/frontier-customer-
bought-his-own-router-but-has-to-pay-10-rental-fee-anyway/. See also 
https://frontier.com/helpcenter/categories/internet/installation-setup/
compatible-routers-and-modems for Frontier's explanation of its 
mandatory router fee: ``Frontier charges you a monthly lease fee for 
your Frontier router or modem--whether you use it or not.''
---------------------------------------------------------------------------
    Finally, our report also uncovered new company-imposed fees being 
applied separately to Internet access service. Bills issued by Frontier 
during the time period we studied contained a $2 Internet 
Infrastructure Surcharge, and RCN bills included a $2 Network Access 
and Maintenance fee. Both are mandatory. Adding new company-imposed 
fees to the cost of Internet service is a disturbing new trend, and 
predicts a future where even internet-only consumers--including so-
called cord-cutters, who generally look to save money by dropping cable 
TV service and relying only on Internet service for their video 
entertainment--will not be safe from the growing burden of add-on fees.
    Paying for TV and Internet service in the 21st century should not 
be this fraught with frustration. But the problem is hardly confined to 
the cable industry. Airline passengers now routinely pay an extra fee 
to bring luggage on their trip, or to secure an assigned seat; hotel 
``resort fees'' are proliferating, even at properties that offer little 
more than a place to sleep; and buying tickets to a cultural or 
sporting event is nearly always accompanied by a non-optional service 
fee. The common thread of these fees is a nominal attachment to 
services that, not long ago, were commonly included in the base price. 
And as in the pay-TV industry, this practice obscures the true price of 
goods and services, rendering comparison shopping and budgeting a 
challenge, and sometimes impossible.
    The good news is that Congress, beginning with the Commerce 
Committee, can act to solve this problem--in the video marketplace and 
elsewhere. A bill introduced by Senator Markey earlier this year, the 
TRUE Fees Act, would, among other things, simply require company-
imposed fees to be included in the advertised price.\20\ A version of 
this common sense fix was applied to the airline industry in 2011 in 
the form of the Full Fare Advertising Rule, and applying it to the 
telecom industry would inject real transparency to cable billing 
practices in the same fashion.
---------------------------------------------------------------------------
    \20\ Truth-in-Billing, Remedies, and User Empowerment over Fees Act 
of 2019 or the TRUE Fees Act of 2019, S.510, 116th Cong. (2019).
---------------------------------------------------------------------------
    Consumer Reports recommends and supports the attachment of the TRUE 
Fees Act to whatever STELAR reauthorization bill is drafted and 
considered by this committee. Doing so would immediately bring relief 
to fee-exhausted consumers in the video marketplace, and would also 
continue and reinvigorate STELAR's (and its many names) tradition of 
being a pro-consumer measure.

    The Chairman. Well, thank you all and it is clear that this 
is an expert panel and I hope that we can further enlighten 
ourselves and the public with questions. So, let me begin with 
some questions that I outlined in my opening statement. Mr. 
Thun, according to satellite television providers approximately 
870,000 subscribers make use of the Section 119 license. If 
STELAR expired at the end of this year, are there consumers who 
would immediately lose access to broadcast programming?
    Mr. Thun. Absolutely.
    The Chairman. And what is the likelihood that these 
subscribers would have to pay more to access broadcast 
programming at the beginning of 2020? And please explain.
    Mr. Thun. Well, if it relates to the prior question, if it 
went away would they pay more? If it went away, I do not think 
they could get to it. We are providing distant signals that 
customers cannot get through broadcast station signals. 
Certainly, as you think about our technology as it applies to 
long-haul truckers or RVs, we are the only technology that can 
reach those particular customers. So, in the absence of the 
extent of the distant signal, whether they would not pay more 
fees, they would just lose access to networks all together. 
870,000 customers would be left without any access to network 
television that they are used to getting today.
    Mr. Chairman. OK. Mr. Law, if you would like to follow up 
on that, I would appreciate it. But also, on the good faith 
requirement, how is it important to you and how would the 
expiration of STELAR impact the cost of programming, and 
frankly, the bottom line of the various companies?
    Mr. Law. Thank you, Chairman. And as it relates to the good 
faith report requirements today. I do think the good faith 
requirements should be strengthened and at a minimum the good 
faith requirements that are contained in the nine steps 
outlined by the FCC at least provide some very wide, 
alternative white lines on the highway for the code of conduct 
between the two parties negotiating.
    I think there needs to be a significant improvement in that 
language quite frankly because the code of conduct that is 
outlined in these nine steps really just deals with, you know, 
thou shalt return e-mails on a timely fashion and thou shalt 
let the other folks know what you are doing.
    However, even in recent issues from the good-faith issues 
from the FCC in rulings, they make very clear that the good 
faith requirements, this is the FCC, reiterate our long-
standing precedent that absent other factors disagreements over 
rates terms and conditions of retransmission consent is not a 
lack of good faith. They go on to say in there that tying and 
bundling, and other services is found in a competitive market 
and is also not a sign of good faith.
    I do think that that should be addressed. But at least at a 
minimum I think Congress should continue to support the level 
of good faith requirements that are there and I would recommend 
strengthening them.
    The Chairman. You know, five minutes is such a short time 
to get into something like this but Ms. Barr, I bet you have a 
different take and perhaps Mr. Schwantes after you.
    Ms. Barr. Thank you, Mr. Chairman. First of all, I would 
say, with respects to my colleague to my left, that is AT&T's 
choice not to provide local service if this were to expire. 
Dish was able to do it within one week when they did it. And 
so, they are a similar type of company. They provide local into 
local.
    No matter what, I would say that what is imperative here is 
to provide local broadcasters the opportunity to reach their 
local constituents in the markets in which they live. That is 
the bedrock on which we are so based.
    The Chairman. So, with Dish, if a subscriber subscribes to 
Dish, they are able to get the local programming in that 
locality?
    Ms. Barr. That is correct.
    The Chairman. OK. Mr. Schwantes.
    Mr. Schwantes. Well in terms of consumer costs, I guess 
there is a theoretical world where if you get rid of the 
distant signal license, which is a compulsory copyright license 
and so it is an artificially low market rate, if you got rid of 
that and you got rid of the retransmission consent because 
right now distant signals brought to satellite companies do not 
need to obtain retransmission consent to bring those signals 
into market.
    In theory you could still have that way of delivering 
program, but I think it would become much more expensive 
because as we have seen with retransmission consent 
negotiations, those fees paid by satellite and cable operators 
to broadcasters is going up. So, if you could I guess negotiate 
a distant signal coming into a market I would imagine that 
would be cost prohibitive and I cannot speak for AT&T or Dish 
but will make it very expensive to do so.
    The Chairman. Thank you very much. And I understand Senator 
Cantwell wishes to defer to another member?
    Senator Cantwell. Mr. Chairman, if I could defer to my 
colleague from Montana who has I think a very, you know, 
impacted perspective on this that needs to be part of the 
debate. Senator Tester.
    The Chairman. Senator Tester.

                 STATEMENT OF HON. JON TESTER, 
                   U.S. SENATOR FROM MONTANA

    Senator Tester. Thank you, Mr. Chairman, Madam Chair. Thank 
you everybody for testifying today. I appreciate your 
testimony. I want to touch on this to begin with two of the 12 
media markets that cannot get local broadcasts are in Montana. 
They are not RVs. They are not local long-haul truckers. They 
are just regular folks. And the question is Mr. Thun, can you 
commit to providing service to those markets?
    Mr. Thun. I think we do commit to providing service to 
those customers.
    Senator Tester. With local TV?
    Mr. Thun. We do provide local television in all 210 
markets. In the 12 markets that you are referring to, we do not 
deliver a satellite delivered local signal but we provide 
customers who request a receiver, they can get an antenna that 
picks up local air signals and those signals are integrated 
into their experience in a seamless way that allows them the 
ability to DVR their content.
    Senator Tester. So why not do it like you do it in my 
house? And by the way, my house is pretty damn remote, and I 
get my local TV. I live in Montana. Helena has got a lot more 
people. Glendive has got a lot more people. Why cannot you 
commit to doing the same thing for them that you do for me?
    Mr. Thun. I think we do.
    Senator Tester. No, you do not. I mean I get mine right off 
the satellite.
    Mr. Thun. Yes, we deliver an integrated solution. The 
failure to deliver the signals in the state of Montana is borne 
by the broadcasters. They do not deliver a clean signal 
everywhere across the state, and in those areas, that is where 
we need a distant signal. In the center of Helena, you can get 
a clean signal off the air and we provide an antenna that 
allows the customer to experience broadcast television.
    Senator Tester. So how can Dish do this with that same 
signal? They seem to be able to do it and Direct TV cannot.
    Mr. Thun. We offer different solutions in providing that 
content.
    Senator Tester. But you just said the reason you cannot do 
it is because it is crappy signal. Dish deals with that same 
crappy signal.
    Mr. Thun. No, in the remote areas of your State, the 
broadcasters fail to deliver the signal in areas due to the 
topography and they do not invest in their broadcast stations 
in order to deliver a broader signal. And our solution, which 
allows customers to get a clean signal, where the signal is 
available, they can get it, and we provide it to them free of 
charge for the antenna and we give them a discount in fact on 
their bills. So, we believe we do provide the service.
    Senator Tester. I just--there is a difference of opinion 
here and quite frankly Helena by Montana standards is far from 
remote. It is our State capital. And so, I think that there is 
a lack of desire, quite frankly, to provide it. I am not sure 
what the hell we can do about it on this panel, but maybe we 
can do something about it. And I hope we do. This is the World 
Series season. World Series is on TV. I watched it last night 
from where I live here in Washington, D.C.
    I happen to be an old Expos fan and so consequently, I am 
an honest Nats fan. When I go home to my farm, that station is 
blacked out. I doubt we are going to be able to see any World 
Series TV. And by the way, my high-speed Internet is not good 
enough to get it on the iPad. As I referred before, Mr. Thun, I 
actually pay you guys a fair amount of money every month for 
that signal. Can you tell me why it is blacked out?
    Mr. Thun. I am sorry, I am not sure----
    Senator Tester. Can you tell me why it is blacked out? Can 
you tell me why I do not have that signal for, well, I will 
even drop the name for the Fox network that is broadcasting the 
World Series games.
    Mr. Thun. Well, if we are at an impasse with the station, 
it is the station's inability to negotiate a deal with us at a 
fair price.
    Senator Tester. That is good. So, let me ask you something. 
I am a farmer. AT&T isn't exactly small spuds. That equation is 
like me negotiating a price with General Mills, and I guarantee 
we do not negotiate prices with General Mills. It is you take 
this, or you leave it. How many times is that done where you 
walk in and say, here is the money? You guys, you know, a lot 
of these are family owned stations in Montana. They are not 
very big. And you just say here is the money, take it or go.
    Mr. Thun. I differ with what actually happens in these 
negotiations. I am a party to those and what happens is 
actually the converse. The broadcasters come to us with a gun 
to our head telling us you are going to take this price and 
when we say that is too high, it is a ridiculous amount, they 
say, well thank you for your past business. That is actually an 
exact quote from one of the broadcasters. And they threaten to 
pull the signal away. In certain cases, they do.
    Senator Tester. Ms. Barr, would you like to give a 
different opinion?
    Ms. Barr. Certainly. Thank you, Senator. I can tell you 
that from Graham Media's point of view, we have never 
experienced a blackout in any of our negotiations with anyone. 
We have always come to the table willing to get a deal done. It 
is in our best interest and it is in the industry's best 
interest to do a deal because we do not want to lose viewers 
for one hour, one day, or one year. We want to have access to 
our viewers no matter how they receive us, whether satellite or 
cable.
    Senator Tester. I am way out of time, but I got to ask is 
that the way it is with most stations? I mean, it seems my 
station is an exception and they want to be blacked out?
    Ms. Barr. No, I do not think there is any television 
station that willingly wants to be blacked out. I think what we 
have to remember is that television stations are having their 
signals resold, if you will, by cable and satellite and they 
are looking for just a fair price for the programming that they 
produce. It costs money to produce news.
    Senator Tester. Yes, and I would just finish with one thing 
and that is, you are right. I do pay. I think when I first set 
this up, it was five bucks a month, but it has been a while 
since I looked at it for each station and I haven't had the 
station for a month. And so, do I get a refund?
    Mr. Thun. I think it is part of our contract with our 
customers. We explain that sub-channel lineups are subject to 
change. We endure a lot of cost in these retransmission consent 
disputes. We lose customers because of that. And we have to 
provide, in a lot of cases, rebates. So, we do lose money in 
these things. This is not a winning proposition for us at all.
    Senator Tester. It might not be a winning proposition, but 
I am paying for something I am not getting. It kind of chaps my 
butt, OK. Thank you. Thank you, Mr. Chairman.
    The Chairman. We will make note of that.
    [Laughter.]
    The Chairman. Senator Thune.
    Senator Tester. I could have said something else.
    [Laughter.]

                 STATEMENT OF HON. JOHN THUNE, 
                 U.S. SENATOR FROM SOUTH DAKOTA

    Senator Thune. Thank you, Mr. Chairman, for holding today's 
hearing, and thank you to all of our witnesses for being here 
today. And it is great to have Mr. Denny Law, the CEO of Golden 
West Telecommunications in South Dakota before the Committee 
today.
    Golden West was the first company to stretch telephone 
lines across the remote planes of Western South Dakota, and 
today under Denny's leadership Golden West serves some of the 
most remote rural parts of our state, including my hometown of 
Murdo, South Dakota.
    And I appreciate his commitment to bringing affordable and 
reliable broadband services across many parts of South Dakota. 
Mr. Chairman, the investment, new technology, and talent 
required to produce high-quality news, sports, and 
entertainment content continues to increase in order to keep up 
with consumer demands. Broadcasters should have confidence in 
their ability to recoup those investments in the video 
marketplace.
    At the same time, the marketplace is changing at an 
incredibly rapid pace and we need to make sure that as the 
market adapts, consumers are put first. During the last 
reauthorization in 2014 I put forth a proposal called Local 
Choice which sought to give consumers more options in the video 
marketplace while also recognizing the important service that 
local broadcasters provide.
    And while I won't be offering that proposal this year, I do 
hope we can continue to work together and receive input from 
all stakeholders to advance pro-consumer solutions and promote 
local content in the changing video marketplace. I would direct 
this to all panelists, and I will start, Mr. Law, with you. But 
each of you has acknowledged that today's video marketplace has 
rapidly changed since the last reauthorization in 2014.
    With that said, are there reforms to the 1992 Cable Act 
that we as policymakers should consider, as this Committee 
gives the reauthorization of STELAR, additional consideration?
    Mr. Law. Thank you, Senator. I think there are a couple of 
key points to look at with that. In addition to the changes as 
I specifically reflect around how the retransmission consent 
system works. I am not suggesting in my testimony that 
broadcasters should not be paid for their content. Nowhere in 
my testimony do I suggest that their content does not have 
value. It does. However, I would suggest that the scale is so 
tipped in advantage of the broadcasters that these are not 
negotiations in terms of the respect to the price, and quite 
frankly in my testimony I reference the fact that rural 
consumers or consumers that are served by small or rural cable 
systems pay 30 percent more for retransmission consent and off-
air channels than those in urban markets. Yet the product is 
the same.
    There is no additional cost to broadcasters to provide that 
product if they even offer an off-air signal in those areas. So 
why not level the playing field? Prohibit price discrimination 
in markets, prohibit broadcasters from adding additional 
channels, multicast channels as part of the agreements. In our 
agreements with various broadcasters, we are required to carry 
certainly the network content that we sought.
    In addition, we get to carry such fine programming like 
antenna TV, this TV, that TV, cozy TV among others. Every time 
one of those channels is added, consumers pay more, and when 
you take that times four more broadcasters in a market, it adds 
$10 plus a month to their bill yet the consumer turns to me as 
their provider and says, why does my bill keep going up?
    So, I think those are some simple perhaps looks that are 
more narrowly targeted and instead of a comprehensive reform 
that I think is overdue.
    Senator Thune. Yes. Others? Ms. Barr.
    Ms. Barr. Thank you, Senator. I would just go back to the 
harm that is being caused by out of market signals coming into 
local markets. If I am living in Montana or in Presque Isle, 
Maine or wherever, I may not be able to get a local signal. And 
if there is a major event, whether it is a weather-related 
events, a political event, or some kind of event of local 
importance and I am a customer of satellite television, I 
cannot find that information locally on my TV.
    And that can create real danger and harm for local 
constituents. So, I would just continue to emphasize that 
whatever happens with rule changes, the localism needs to be 
front and center.
    Mr. Thune. Does the current regulatory landscape create 
parity between broadcasters and MVPDs with respect to carriage 
negotiations, would you say?
    Ms. Barr. I think we go to the table and we negotiate in 
good faith. I do not think there has ever been a broadcaster 
who has been accused of not doing that. And as I said earlier, 
my company has never had a blackout situation occur because we 
do not want one and we do not believe the people on the other 
side really want one. So, we try to come to the table looking 
for equity on both sides. We are trying to get paid fairly for 
the product that we put out there.
    Senator Thune. Mr. Law, carriage negotiations?
    Mr. Law. That has not been my experience, Senator. Our 
discussions as a small provider based primarily in South 
Dakota, based exclusively in South Dakota. My experience is we 
are presented with a list of demands from the broadcaster. The 
negotiations will likely include perhaps one minor move by that 
broadcaster to satisfy the good-faith requirements and then the 
negotiations are over. When I characterize it to colleagues and 
friends of what these negotiations are like, my comment is 
imagine you are going into a fight. The other side has bazookas 
and you have a plastic fork.
    Senator Thune [presiding]. All right. Senator Cantwell.
    Senator Cantwell. Thank you. Thank you to the witnesses for 
being here today. I know these are challenging issues. But to 
me, I look at again back to the consumer and localism and how 
do we protect those. And so Ms. Barr, I was concerned to hear 
from our broadcasters as I look at some of the statements that 
AT&T has made writ large about satellite or as I see how people 
are migrating to these partnerships, you know, whether that is 
Disney and ESPN or you know, I just see these big conglomerates 
trying to just control access to content, which worries me 
because then I think okay, we are just going to--a bunch of 
people are just going to chop up ways to charge more to the 
consumers.
    But one thing I was concerned about, that broadcasters, 
even in the negotiations with their own networks are having 
challenges keeping their revenue as opposed to the network, 
then using that to compete against them. So, what do we do 
about that because we want the localism. We do not, as Senator 
Tester said, want to see a New York or LA broadcast if you are 
in Montana. You want to see local content.
    So, how do we deal with this issue?
    Ms. Barr. So, first of all, I agree that negotiating with 
networks can sometimes be challenging but I would point to the 
fact that many, many, many network affiliate relationships have 
been going on for decades, so they have come to a way of 
negotiating.
    I won't pretend that it is easy, but I will tell you that 
in my own negotiations, which I do personally with four 
different networks, that our negotiations have been civil. They 
are tough, as they probably will be and should be. They are 
paying for a lot of programming. We are paying for a lot of 
local programming.
    So, there is a give and take but we ultimately have come to 
our agreements. We work very well together. We support each 
other. So, I do not see that the problem exists between the 
networks and the affiliates in this same way.
    Senator Cantwell. Well, I see a problem if you do not have 
local revenue that you can count on and so I just want to make 
sure. I don't know, Mr. Schwantes, if you have a thought on 
this issue, but one of the reasons why I do not think a five-
year reauthorization is a wise idea is because I have no idea 
what is going to happen in the next two years in this space, 
the level of consolidation and change.
    What I want to get right is localism. What I want to get 
right is diversity. What I want to get right is driving down 
the cost to consumers if we can because that I think they 
deserve to have that level of competition. But what about this 
continued consolidation and how it is affecting this debate?
    Mr. Schwantes. And that is a fair point, Senator Cantwell, 
and it is something we are concerned about. I mean one of the 
pillars of our work is consumer choice, which I do think is 
related to localism and diversity, things of those nature. And 
Mr. Law makes an interesting point about bundling. What we hear 
mostly from video customers is we want choices, we want ` la 
carte cable programming, which I know causes the hair to rise 
on people's necks.
    Senator Cantwell. Well, I think that has been in this 
Committee, Senator Thune would attest along, that the Commerce 
Committee has long heard this discussion and maybe it is, you 
know, getting closer to that moment.
    Mr. Schwantes. I am well aware, the Local Choice Act. And I 
think it is a novel approach and it goes back to the 1992 Cable 
Act. There is no need to get into the details but basically the 
long and the short of it is cable companies are obligated to 
carry local broadcast networks, satellite companies are not.
    I mean, they have the obligation of they go into a market 
and they carry one local channel, then they have to carry them 
all. But it is more of an ` la carte offering of the whole 
suite of local channels in the satellite package verse the 
cable package. And then it has the problem, the double effect 
for consumers of well I have to take the local channels because 
Mr. Law has to carry them, but then we have to pay the fees for 
it.
    And you could disrupt that by making those local channels a 
la carte. The problem with that is, and in my experience on 
these very difficult issues, it is like an old sweater. You 
pull the string, the whole thing comes apart. So, it is 
something that I think is well worth the Committee's time to 
look forward to in the future. I agree that we should not be 
doing this every five years. I think more comprehensive reform 
of--everything is on the table, the 1992 Cable Act, all of the 
various versions of STELAR, and let's do it.
    Senator Cantwell. Thank you. And to this--well, I am going 
to say. I feel that one thing that is missing and I get 
proprietary information, but there just should not really be 
this level of ambiguity about whether someone, as Senator 
Tester was referring to, could or could not get content. Like 
we should just be able to answer technically this question, and 
it should be clear to the Committee. So hopefully in our 
further discussions, will be able to get that information. 
Thank you, Chairman.
    Senator Thune. Thank you, Senator Cantwell. Senator Blunt.

                 STATEMENT OF HON. ROY BLUNT, 
                   U.S. SENATOR FROM MISSOURI

    Senator Blunt. Thank you, Chairman Thune. Let me first, I 
have an unanimous consent request just to submit for the record 
some written testimony from Pattie Boyers who is the Chairman 
of America's Communications Association. She and her husband 
Steve, good friends of mine, are small cable providers in 
Southeast, Missouri, and she testified before the House 
committee in June. She couldn't be here for this testimony and 
that is our loss because Pattie Boyers is if nothing else 
passionate about her business and colorful. It does not quite 
come through in this written testimony, but I would like to 
submit it for the record. Senator Thune: Without objection.
    [The information referred to follows:]

               Renewing STELAR Will Help Rural Americans

By Patricia Jo Boyers, Chairman, ACA Connects--America's Communications 
                              Association

    Smaller pay television providers are under assault from the 
excessive demands of local TV stations. Congress needs to step in and 
support legislative reforms that curb the undue price hikes and sudden 
signal blackouts designed to turn consumers against their traditional 
pay-TV providers.
    As a small cable operator from Southeast Missouri, I was invited to 
testify before the House Energy and Commerce Committee in June to talk 
about how fees charged by broadcasters are leading to more and more TV 
blackouts.
    In the four months since I testified, things have gotten much 
worse. Since my appearance on Capitol Hill, there have been 216 
broadcaster blackouts, impacting 138 markets across 44 states. That's 
216 blackouts in the past 134 days alone! Additionally, a new poll 
shows that 1 in 3 television or streaming users has been the victim of 
one of these blackouts.
    This week the Senate Commerce Committee will consider legislation 
that is designed to protect consumers from broadcaster abuses. The 
limited oversight provided to the Federal Communications Commission 
(FCC) known as ``good faith'' rules are included in the Satellite 
Television Extension and Localism Act Reauthorization Act of 2014 
(STELAR), which Congress must reauthorize before the end of the year. 
Failure to do so will leave hundreds of small cable operators and 
millions of consumers without protections that have been in place for 
many years.
    Small video providers who support STELAR's renewal face a big 
obstacle: The National Association of Broadcasters (NAB) and its 
members are lobbying Congress to let the program expire. It's not 
surprising why the NAB would want to pull the government's referee from 
this process. Even with the FCC's oversight in place, broadcasters have 
been able to collect billions of dollars in fees. Since 2006, retrans 
fees have gone from about $215 million to $11.7 billion annually, an 
increase of more than 5,300 percent. Meanwhile, broadcast TV ratings--
the measurement used to determine popularity and thus advertising 
rates--continue their downward trajectory.
    Out-of-control retransmission consent fees disproportionately harm 
smaller cable operators. According to a recent FCC report, small 
systems pay at least one-third more than large systems pay in retrans 
fees. Because cable operators pass these fees along to customers--as 
much as $20 per month - rural cable subscribers pay much more for 
nominally ``free, over-the-air'' broadcast programming than their urban 
counterparts. Small cable operators not only suffer from paying higher 
fees but are also forced into accepting onerous terms and conditions, 
like the forced bundling of various channels and carrying unpopular 
channels that our customers do not want.
    Recent changes in the marketplace are making this situation even 
worse.
    First, individual broadcasters now control multiple ``top-four'' 
network feeds in more than a hundred local markets--and sometimes 
control three or even four such feeds--despite FCC rules that are 
supposed to prevent this kind of anti-consumer consolidation.
    Second, corporate broadcasters have gotten much bigger nationally, 
with behemoths like Sinclair and Nexstar controlling more than one 
hundred stations each across the country.
    Third, broadcasters increasingly bundle other ``marquee'' 
programming networks with their signals--raising consumer prices for 
both. This means that broadcasters have more market power than ever 
before, and certainly more than Congress expected, and cable 
subscribers pay the price.
    Under the current system, small cable operators like mine are 
facing tough choices. Recent headlines indicated that retransmission 
consent fees and other programming fee hikes have prompted some smaller 
cable operators to exit the business. This is especially bad for older 
Americans less likely to turn to streaming services, and especially 
those living in rural areas like those my company serves.
    Congress must not just reauthorize the good faith rules. It's not 
enough. It must revisit its video laws and make meaningful reforms to 
protect consumers. Every five years since 1988 Congress has 
reauthorized STELAR, and each time it has used the opportunity to 
review other video laws along with it. It must do so again this year. 
For instance, I've urged Congress to extend the good faith rules to the 
buying groups of small and medium-sized cable operators in their 
negotiations with large stations groups. But let's be honest: Congress 
needs to update the Communications Act.
    Big broadcasters shouldn't be allowed to bully companies like mine. 
Small cable operators and millions of rural Americans are counting on 
Congress to not only re-authorize STELAR before the end of the year, 
but also strengthen protections for TV viewers during retransmission 
consent negotiations.
    Over the course of time, small cable operators and our customers 
have been able to rely on Congress for small, incremental safeguards in 
STELAR, such as the ``Good Faith'' rules. The sunsetting of these rules 
without any consideration will leave us out in the cold-without any 
protections at all.
    Please don't allow our ``horse'' to die WITHOUT giving us a new 
horse on which to put our saddle!

Mrs. Boyers is Chairman of ACA Connects and President of BOYCOM Vision 
in Poplar Bluff, Mo.

    Senator Blunt. Let me just ask two or three points. Mr. 
Thun, I do not think I quite understand the significance of the 
people who are mobile as part of this discussion, the long-haul 
truckers or others. I mean the whole idea of local coverage, at 
least in my mind, would indicate that you were in one locale--
you were in a place. So that may be an important group that you 
serve but I do not quite see how that relates to the discussion 
very directly of expecting local coverage if you are moving all 
the time as opposed to local coverage if you are in one place. 
Am I missing something there?
    Mr. Thun. No, you are absolutely correct. They are moving 
around and the only way to give them access to the network 
programming is to deliver them a satellite delivered feed of a 
distant signal. We cannot authorize as they go through the 
country each station's DMA's. So, they are authorized to get 
one station or all the stations that they want on a distant 
signal basis, and that allows them----
    Senator Blunt. To keep up with where they want to keep up 
with?
    Mr. Thun. Yes. They would not be authorized otherwise to 
receive the signal as they went through.
    Senator Blunt. All right, that is helpful. Both Mr. Law and 
you, Mr. Thun, both suggested that low-power television 
affiliates have been used as a way to drive up the price for 
local broadcasting. The FCC specifically has never come up with 
any rule that prohibited multiple ownership of low-power 
affiliates. What are you thinking there? Do you have any 
examples of where that is really been a specific problem? And 
then Ms. Barr, I am going to come to you next and ask about the 
importance of the ability to have the low-power affiliates. But 
any specific story you would like to share about why a low-
power affiliate has been used in a way that you thought was 
unfair?
    Mr. Law. Thank you, Senator. I would address it from the 
perspective of, just to clarify my comments in my pre-filed 
testimony dealt more with the fact of a broadcaster controlling 
two network affiliates, two or more network affiliates, within 
a particular DMA, whether it be low power or not and the 
inordinate amount of power that gives that particular 
broadcaster when it comes to negotiating retransmission 
consent. It outstates the load considerably.
    Senator Blunt. As you know, the FCC specifically has looked 
at this and has never prohibited that joint ownership. I am 
going to run out of time but Ms. Barr, do you want to talk a 
little about the importance of having that low-power affiliate?
    Ms. Barr. Sure. Thank you. I want to preface this by saying 
I do not own any low-power television stations. I am not a 
complete expert on this but what I would refer back to is that 
the ability to provide local information, local news, local 
critical information is absolutely paramount for any community. 
And if that is being done in certain markets by low-power 
television stations, and they in fact for economic reasons may 
own, you know, one or more affiliates, I see that as serving 
that local community. I do not see it in any other way.
    Senator Blunt. Thank you. Congressman Watts, good to see 
you here today. We served together, you and Senator Thune, and 
Senator Moran who was here a moment ago and I, and always good 
to have a chance to visit with you. But J.C. you mentioned the 
difficulty of getting the black news channel on satellite. Have 
you had a similar difficulty with cable, and do you want to 
talk about that a little more about the frustration or the 
difficulties you have had to try to make this alternative 
available to people?
    Mr. Watts. Well and thank you, Senator. On the cable side--
we have been at this now for 10 years, and on the cable side, 
we have had success and we have gotten distribution through 
Charter and several other MVPDs. However, on the satellite side 
because of line of sight issues what we have gotten is that 
because of line of sight issues and, you know, the multi-
dwelling units and having to have satellites on those 
facilities, how difficult it is to service the demographic that 
we are wanting to serve. We are before the Committee today 
asking for this modification to 335.
    You know, it has been awfully difficult for an independent. 
The satellites told us that for a niche organization like ours 
it is difficult to carry us because of the issues that they run 
into and because of the demographics that they serve. However, 
if we can get this modification and we can get Section 335 
modified in STELAR, then they will carry us in that DBS space, 
that set aside space.
    And that gives us, you know, coast-to-coast coverage, gives 
us opportunity to support original news, which can be 
expensive, and it gives us advertising sales opportunities. And 
it also gives us access to a rural community of African 
Americans that would be very helpful for us. So, I appreciate 
you engaging me. I have kind of enjoyed the debate here.
    Senator Blunt. Thank you, J.C. Thank you, Chairman.
    Senator Thune. Thank you, Senator Blunt, and Congressman 
Watts, it is nice to have you back.
    Mr. Watts. Thank you.
    Senator Thune. Senator Schatz.

                STATEMENT OF HON. BRIAN SCHATZ, 
                    U.S. SENATOR FROM HAWAII

    Senator Schatz. Thank you all for being here. I'll start 
with Ms. Barr. I want to talk a little bit about the 
relationship between broadcast consolidation and the decrease 
in news gathering, and I'll cite a couple of studies. One study 
from 2009 showed a decrease in local news coverage from 12 to 7 
percent over a nine-year period. Another study showed that in 
four of the six markets studied where there was broadcast 
consolidation, local news coverage decreased. What do we do 
about the specific nexus between broadcast consolidation and 
the reduction of news gathering at the local level, and are 
there other factors impacting the reduction of news gathering 
at the local station level?
    Ms. Barr. Thank you, Senator. So, first of all, we own 
seven television stations in six markets, so I am hardly one of 
these massive consolidators. And what I can tell you from 
personal experiences, we have done nothing but increase the 
amount of news we provide. What practically happens is that 
when stations do consolidate, sometimes they will be the same 
newscast on multiple stations in a market so that----
    Senator Schatz. Sure, and we have a joint operating 
agreement in Hawaii and actually in my judgment, this is not 
deep analysis, but my observation is that the net impact 
locally has been more news gathering, more high-quality 
content.
    That however is the exception to what is happening with 
Sinclair and others where you have got broadcast consolidation. 
It seems to crowd out local content gathering and that is what 
I am referring to.
    Ms. Barr. Well, I can only refer back to what we do at 
Graham Media Group, which is that we are a very committed local 
broadcaster. We have increased by many hours the amount of news 
we provide locally in our markets, and the number of people who 
work for us in our news departments has grown exponentially.
    Senator Schatz. OK. Mr. Schwantes, a couple of questions. 
First just generally speaking, why are the rates rising faster 
than inflation? Is it only because of these fees that they are 
tacking on? Are there other factors here? And then I want you 
to go into some detail about these fees and what we can do 
about it.
    Mr. Schwantes. Sure. Thank you, Senator Schatz. I would say 
definitely a huge driver and to be fair to the cable industry, 
the retransmission consent fees, Mr. Law pointed it out, they 
are just astronomical increases and that goes back to what we 
do with the retransmission consent regime.
    But what is interesting about those fees and so now that 
that has broken out as a separate line item and that number is 
increasing. Charter, for example, has raised their broadcast TV 
fee three times in just the last year. In 2010, that fee was $1 
a month. Now, it is $13.50. So, they are off the charts and 
that is leading to increases that exceed----
    Senator Schatz. And break that down for the public. That 
fee is not a Government fee--that is not a pass-through of some 
transaction. That is just, they are calling it--what are they 
calling it?
    Mr. Schwantes. They are calling it a broadcast TV fee.
    Senator Schatz. But they could call it whatever they want, 
it is just an extra charge.
    Mr. Schwantes. It is kind of glass half-full, half-empty. I 
mean we see it as half empty. I mean, yes, there retrans costs 
are going up but this used to be--and you would think a cable 
operator one of the basic things that they do is provide local 
broadcast channels, clear high-quality signal to their 
consumers. And that used to be part of the base rate. And so 
now Charter can charge for example, $13.50 and point back to 
these retrans negotiations and say this is for the big four. 
Costs are going up. We have got to raise our rates too, and now 
consumers, look, you can see how much it is costing us. But the 
base rates are not going down.
    Senator Schatz. But there is no transparency. Let's say it 
is $13.50. They cannot demonstrate that all that is actually a 
pass-through, can they?
    Mr. Schwantes. They do not currently, and I think if 
something--I do not want to speak for Mr. Law, something we 
would agree with. If cable companies could actually say what 
they are actually paying to broadcasters for these retrans 
fees, that is transparency for consumers, and we are all for 
it. We think the problem is, is most consumers do not see it 
that way.
    I mean if you imagine yourself at a supermarket and you are 
going to go get your favorite box of cereal and it is 
advertised for $5 you think great, maybe on the way to the 
checkout line you look at the fine print like fees might apply. 
But once you get to the checkout line and they said well, 
Senator Schatz, you have a grain refinery charge and this is a 
cardboard box surcharge and now box of cereal is $7, you are 
going to be pretty upset. And that is what consumers are facing 
in the video industry.
    Senator Schatz. Oh you want that milk in a container, that 
will be a dollar. OK. So, what do we? Is this the purview of 
the Congress or would this be micromanaging the market for us 
to get in if we do reauthorize STELAR? Is there an appropriate 
place for us to weigh in to get either some transparency or 
some better fairness because clearly if it adds up to $450 per 
year for the average customer, and most of that is just 
additional profit, it does seem like Congress should get 
involved.
    Mr. Schwantes. I think so. I mean we could kick it over to 
the FCC, but I think Congress is the better place to do it. And 
that is why I like Senator Markey's True Fees Act. We are on 
record supporting it because it does not eliminate these fees. 
You can still itemize your cost and your charges whatever that 
might be for. It gets to the front end of the problem. It puts 
the cart before the horse saying actually your bill is going to 
be $150 a month rather than that great teaser rate that you saw 
online. And I think that for most consumers would be a huge 
win.
    Senator Schatz. Thank you.
    Senator Thune. Thank you, Senator Schatz. Next up is 
Senator Fischer.

                STATEMENT OF HON. DEB FISCHER, 
                   U.S. SENATOR FROM NEBRASKA

    Senator Fischer. Thank you, Senator Thune. Nebraska's 
orphan county situation makes it difficult for an entire region 
of our state to access local and State programming. There are 
16 counties in Western Nebraska that are assigned to out-of-
state markets. And today some of our witnesses have made 
suggestions that would improve their company's competitive 
positions in the marketplace.
    However, I am interested in how we can improve access to 
Nebraska-based programming for everybody in my state. So, if we 
are going to consider reforms to help the bottom line of cable 
providers, satellite providers, broadcasters, news programmers, 
then we should consider ensuring the provision of in-state 
programming in counties that are assigned to out-of-state 
markets.
    And I would ask you, Mr. Schwantes, do you think ensuring 
this access to such in-State programming would improve 
consumers' experience?
    Mr. Schwantes. Senator, that is a great question. It brings 
up the tricky issue of orphan counties. We dealt with it 20 
years ago and----
    Senator Fischer. And we are still facing it today?
    Mr. Schwantes.--we are still facing it today. In my home 
state of Wisconsin, you know, we have got some great counties 
in Western Wisconsin that are in, God forbid, the Minneapolis 
DMA. But beyond them wanting their Packer games on Sunday, and 
it does affect civic engagement, for example. They are 
receiving all the news from St. Paul, but they are going to 
vote in elections either for Senator Johnson or Senator Baldwin 
and they want to know what is going on in Madison, in 
Washington.
    And maybe it is for politics at the local level. Maybe the 
Federal level is not the best analogy, but I do believe orphan 
counties present a real problem. I do not even want to say 
there are anomalies because they are all across the country. 
There you are on the border and instead of being, in my case on 
the Wisconsin DMA, you are in the Minneapolis DMA.
    I think there have been attempts to try to deal with this, 
petitions to the FCC for market modification. It is not 
perfect, but I think one was granted recently in Colorado so 
now that county in Southwestern Colorado can receive news from 
in State in Colorado versus, I think it was New Mexico. So that 
is something we do support and I think it is good for 
consumers. And this kind of goes beyond consumer choice, but 
more toward civic engagement.
    Senator Fischer. I would agree with you. We are talking 
about a fourth to a third of the State of Nebraska, the Western 
part of Nebraska. They are closer to Denver than they are to 
our State capital of Lincoln. We want all Nebraskans to be 
engaged in what is happening in our state. Obviously, property 
tax issues, every other issue affects them, and they need to 
know what is going on.
    Mr. Law, based on your knowledge from providing 
communication services in South Dakota and you were very 
familiar with one of the counties in our State of Nebraska, it 
is an orphan county, Cherry County. What do you think we need 
to do to look at this?
    Mr. Law. Well, I think one of the options, Senator--yes, I 
am familiar with Cherry County. It is a wonderful territory. I 
think one of the options to consider is quite frankly part of a 
more comprehensive video reform discussion. What you do with 
DMAs and have DMAs to some degree necessarily lived out their 
usefulness as it relates to the provisioning of local broadcast 
content. I think I would suggest one thing you could perhaps 
look at is the Modern Television Act of 2019 that was 
introduced in the House by Representatives Scalise and Eshoo 
which would potentially open the markets up to allow consumers 
to access the content that they want as opposed to 
policymakers, and quite frankly cable providers and 
broadcasters and others dictating, here is what you are going 
to get. If you want to purchase and pay for programming from a 
different market, knock yourself out.
    Senator Fischer. OK. Mr. Thun, this brings up another issue 
we have in Nebraska when we look at Scotts Bluff and North 
Platte. They have not received a local broadcast signal on 
Direct TV who you represent. Last year Press Report said that 
Direct TV does not plan to launch any new satellites. Is that 
still the case?
    Mr. Thun. I believe that is still the case.
    Senator Fischer. Is Direct TV unwilling to serve these 
markets with local broadcast content or is there some 
technological issue?
    Mr. Thun. No, I think as I said previously, we believe we 
actually serve these customers. We are in all 210 DMAs. We 
provide customers in those particular areas the opportunity to 
get an antenna and pull over-the-air signals and integrate that 
broadcast signal into their Direct TV experience. So, we 
believe we are serving those customers and we are delivering 
those signals. Not in the way that the NAB perhaps would like 
us to deliver it but that is the way we are delivering it. 
There are other competitive options to go to other places if 
you do not like the way we do it.
    Senator Fischer. It may not be the way Nebraskans that live 
in those areas that are very rural would like you to do that 
either. Ms. Barr, if you could respond to this. As you know in 
the rural panhandle counties here in Nebraska, Nebraskans rely 
on satellite TV services and they are beyond the physical reach 
of an antenna signal and they do not have access to cable 
networks at all. And this is the very point I believe is to why 
launching local channels is so important.
    A free antenna is not going to fix this. You know, we are 
looking at residents in rural areas who should really be able 
to expect to view local channels just as our metropolitan 
constituents do as well. Have the broadcasters chosen not to 
serve our rural constituents?
    Ms. Barr. Absolutely not. We are licensed by the FCC. We 
have a certain amount of power that we are allowed to extend. 
We cannot just arbitrarily decide we are going to increase 
power and extend the signal beyond what we are licensed to do. 
If we could that would be great, but we are not allowed to do 
that and the solution here is really AT&T's choice.
    Senator Fischer. I mean you look at Cherry County, Mr. 
Chairman, my last comment. You look at Cherry County. Mr. Law 
knows where Cherry County is. You look at Cherry County, 6,000 
square miles, less than one person per square mile. There is no 
way that there is going to be a reach of an over-the-air 
antenna that a free antenna is going to be able to be able to 
meet. Thank you.
    The Chairman [presiding]. Thank you, Senator Fischer.
    Senator Baldwin.

               STATEMENT OF HON. TAMMY BALDWIN, 
                  U.S. SENATOR FROM WISCONSIN

    Senator Baldwin. Thank you, Mr. Chairman, and I want to 
thank all of our witnesses today. Mr. Schwantes, this is going 
to sound quite familiar because we both know what is happening 
in terms of Wisconsinites' access to local programming in 
certain counties. So, by my count there are 13 Wisconsin 
counties that are assigned to out-of-state media markets and 
the largest of those is the Minneapolis, St. Paul media market 
affecting about 400,000 people who live in that part of Western 
Wisconsin.
    And they end up getting the weather, local news, and yes 
professional football games from Minneapolis rather than a 
Wisconsin city. I think one of the key differences perhaps 
between Nebraska's issue and Wisconsin's is that we do have a 
professional football team in the state that many like to enjoy 
watching. I have mused before as close to a political crisis as 
you could have in a state is when you hear angry calls from 
people who cannot get their favorite team on paid television.
    Because of that, I have introduced The Go Pack Go Act which 
takes one approach to allowing these constituents from 13 
Wisconsin counties to have the option to receive local 
programming from their cable and satellite providers. I am 
pleased to hear everyone acknowledges the importance of access 
to local programming, but I want a solution. I want to make 
sure that everybody in these orphan counties have the 
opportunity to say we want the networks, but we can have it 
from our state rather than the DMA to which they are assigned.
    So, I hope that we will consider how we fix these issues 
since so many of us have raised this as a concern. But Mr. 
Schwantes, from your perspective representing consumers, how 
important is it to provide the option of more relevant local 
programming? And I am going to follow up with a question about 
consolidation. I want you to have that in the back of your mind 
as you are answering this question.
    Mr. Schwantes. Thank you, Senator Baldwin, it is good to 
see you and the Packers are off to a great start this year, it 
has been a couple of years. But in particular this is a 
complicated issue and it is one, like I said to Senator 
Fischer, we have been wrestling with for years. But to your 
point, and I would like to look at the Go Pack Go Act and see 
if that is something we can support. And if it builds upon what 
we did in 2014's version of STELAR--the market modification 
process is imperfect, and I think sometimes it pits 
broadcasters against one another and I want to make sure that 
we represent consumers. I think it would be great if you are 
sitting there in Western Wisconsin and Hudson, and you can pull 
in, you know, stations from my hometown of Wausau and to watch 
your Packer games. I think that would be great for consumers.
    I think Mr. Law pointed out something to legislation on the 
House side. If we can kind of throw this in more to a copyright 
regime, that would be a big, big change. But as far as we are 
concerned, options that give consumers more choices. We are for 
that and it is something we should definitely consider moving 
forward.
    Senator Baldwin. Thank you. In his testimony, Mr. Thun 
notes that in the markets where his company uses the distant 
signal license there has been significant ownership 
consolidation among the network affiliates in many of those 
markets.
    Regardless of how that informs our discussion about 
reauthorizing those provisions of STELAR, it is part of a trend 
that could impact access to local programming and consumer 
prices. According to Pew Research as of 2016, the five largest 
companies in local television owned, operated, or serviced 443 
broadcast stations or 37 percent of all stations and that is an 
increase from only 179 stations in 2004.
    So, turning again to you, Mr. Schwantes, for the consumer 
perspective. What effect do you see on consumers from 
consolidation in broadcast television? And what about the 
broader video marketplace?
    Mr. Schwantes. That is an excellent question, Senator. I 
think the short answer is this is why we at Consumer Reports 
opposed the Sinclair and Tribune merger in 2017. We feared 
that--we can get into FCC media ownership rules if we want but 
that is a different kind of rabbit hole, but it was something 
that at a real base level would give Sinclair, which would own 
multiple local broadcast stations, and not just ABC but you 
know multiple of the different big four networks, and it gives 
them increased leverage and retransmission consent negotiations 
where they have, you know, hundreds of different stations that 
they are negotiating on behalf of.
    That is why we opposed that merger. We thought it would 
lead to increased retransmission consent rates, which we agree 
with our friends in the cable industry, that they are going up, 
we just do not like that consumers end up paying them. But then 
it was just a question of localism. It was something the 
Commission always considered as part of their media ownership 
rules and kind of took a beating in the courts in the 2000s and 
that is something, we do support. We think is important for 
consumers and we think it is important for local broadcasting, 
local news, weather, and sports.
    Senator Baldwin. Thank you.
    The Chairman. Thank you, Senator Baldwin. Senator Markey, 
while you were out of the room Mr. Schwantes said you got a 
bill he likes.
    [Laughter.]
    Senator Markey. Thank you, Mr. Chairman.
    The Chairman. You are recognized.

               STATEMENT OF HON. EDWARD MARKEY, 
                U.S. SENATOR FROM MASSACHUSETTS

    Senator Markey. A preview of coming attractions. Thank you 
for this and I think there might be a couple he likes. I will 
just go first to follow up on what Senator Baldwin was just 
raising because I have a very similar concern that she does. 
And that is, out in Berkshire County they have lost access to 
local Massachusetts broadcast television, because their cable 
provider dropped the Springfield NBC station and the Boston ABC 
station from its channel lineup.
    And because the Berkshires are technically part of Albany, 
New York designated market area, Western Massachusetts viewers 
can only access broadcast stations to focus on New York. And 
so, for people in the Berkshires, they get news about what is 
going on in the Albany State House, but they really care about 
the Massachusetts State House. That is their real concern in 
terms of how it will impact their lives.
    And it is not just an annoyance to people who watch 
Massachusetts teams on game day, it is a threat to the informed 
citizenry that a healthy democracy requires. The public should 
know how their elected officials are representing them at the 
State House and that is why I introduced legislation along with 
Representative Neal to force the Berkshire Cable Provider 
Charter to engage in good faith negotiations with WWLP and WCBB 
to bring those stations back on the air in Berkshire County. 
And I am willing to work with any member of this committee.
    I know that Senator Fischer raised a similar issue so that 
we can come together in this legislation to begin to find 
solutions to problems that really do bother people at the local 
level in our country.
    So, I know that you have a concern about that Mr. 
Schwantes, so I will come back and I will ask a question that I 
think Senator Wicker was referring to and that is that 
ultimately the video marketplace must work for consumers. For 
too many Americans that is not the case today. A new study by 
Consumer Reports shows that every month consumers are surprised 
to find that the cable bill is much higher than the advertised 
price they signed up for. And the numbers are clear.
    On average, cable companies generate close to $450 annually 
per customer from fees. The average cable bill includes more 
than a dozen added line item charges and these fees add nearly 
25 percent of the base price to a consumer's monthly bill, not 
the advertised price, but these fees then come in in addition.
    These charges are more than a nuisance, they are 
unanticipated costs that squeeze consumers and that is why I 
introduced the True Fees Act legislation that would put an end 
to cable, internet, and telephone advertising practices that 
only confuse consumers about the true cost. The True Fees Act 
requires providers to include all chargers in the prices they 
advertise for service, allow customers to end a contract 
without early termination fees if providers increase their 
fees, and provide clear and timely notice of price changes.
    So, Mr. Schwantes, in your testimony you voice support for 
the True Fees Act. Can you explain the ways that increased 
transparency in cable billing will benefit consumers?
    Mr. Schwantes. Thank you, Senator. And thank you for your 
leadership on this issue. I think just three things. If you had 
more transparent cable billing and you missed my cereal box 
analogy and I will not torture the panel with that again, but 
basically consumer frustration, if they actually knew what the 
cost they are going to pay each month was right up front, right 
on the advertised price, I think consumer frustration and blood 
pressure levels will go down.
    I mean as part of our work we survey consumers and I want 
to say 96 percent of consumers were annoyed with hidden fees in 
all industries. This is not just unique to the cable industry. 
Almost two-thirds are extremely annoyed. So, I think that level 
of frustration would come down. I think it would also allow 
consumers to comparison shop. I mean, there are lots of I think 
a success story or the number of online streaming services that 
are out there for consumers to choose from. But as you are 
trying to add it up like well, what is my cable bill really 
going to be as I am paying for all these other services, that 
would help comparison shopping.
    And finally, just a real basic, help households keep their 
budgets. I think for some families if an extra $50 to $200 a 
month and add-on fees can blow a hole in the budget. And in our 
survey work, I want to say 6 out of 10 of our consumers that we 
surveyed said yeah, it hurts our budgets.
    Senator Markey. National Association of Broadcasters, how 
do you feel about the True Fees Bill?
    Ms. Barr. We want to see fairness across the board, and we 
want to see local stations carried in their local markets.
    Senator Markey. So, you do not want to see surprise fees?
    Ms. Barr. No. I do not like to look at them either. I do 
agree that there are more options today so you can go to an 
over-the-top service. You can go to other services as well. We 
remain obviously--we are still free and over the air. We always 
will be, and so we want to see fairness on that as well.
    Senator Markey. I agree with the National Association of 
Broadcasters and Consumer Reports. Thank you, Mr. Chairman, 
very much, and thank you for your support for my bill.
    The Chairman. Thank you, Senator Markey.
    Senator Blumenthal.

             STATEMENT OF HON. RICHARD BLUMENTHAL, 
                 U.S. SENATOR FROM CONNECTICUT

    Senator Blumenthal. Thanks, Mr. Chairman. Thank you all for 
being here today. I apologize that I was at a number of other 
hearings as I suspect many of my colleagues were, and I want to 
focus on an area that I think may not have received enough 
attention so far, blackouts. I am a big fan of local 
broadcasting. Connecticut has some of the best in the country. 
I am proud to say. And I appreciate firsthand that local news 
and localism is vital for democracy. I praise our broadcasters 
and our local press generally for providing the information 
that we need for democracy to work, truthful and accurate 
information.
    Blackouts obviously are a plague for consumers. These 
blackouts are always unfair to consumers because they are on 
unable to watch the content for which they have paid. So, I 
have a simple question for all of you, but most especially for 
Ms. Barr, Mr. Thun, and Mr. Schwantes, is the failure to renew 
STELAR likely to lead to more or fewer blackouts of programming 
for satellite television subscribers?
    Ms. Barr. Thank you, Senator. In my opinion, the expiration 
of STELAR will have no effect because it is in our best 
interest, it has always been in our best interest to negotiate 
in good faith. And I know for my company speaking strictly for 
mine, we have never had a blackout. We do not want a blackout. 
We work very, very hard not to. And we are negotiating as a 
relatively small company with AT&T, Dish, Charter, others, and 
we have managed to successfully get those deals done to our 
mutual satisfaction.
    Senator Blumenthal. Others? Mr. Thun?
    Mr. Thun. Yes, I would disagree with that notion. We have 
good faith today and it provides the lowest standard of good 
faith. We currently face a sea of increases that I provided 
earlier. There was a 5,400 percent increase in 2006 to today. 
Those increases are unsustainable. And those increases I think 
demonstrate that while the broadcasters are pretending as if 
they are poor little Mom and Pops against big AT&T, the fact of 
the matter is that when they are at the negotiating table, they 
have supreme leverage, and they utilize it every chance. And 
so, the notion that we would take good faith away I think would 
only exacerbate the problem. It would lead to higher prices and 
more blackouts.
    Senator Blumenthal. Mr. Schwantes?
    Mr. Schwantes. I agree with Mr. Thun on that, but I would 
also say you would have a very massive blackout on New Year's 
Day. I am a political realist. I do not believe that if we let 
STELAR expire that within a week--the Dish Network story is a 
little complicated but I do not think within a week Direct TV 
will suddenly be carrying these distant signals, and one of the 
provisions is a very obscure one, but right now 119 distant 
signal can be brought into a local market without 
retransmission consent. It is not required.
    If that goes away, both the compulsory license, which I am 
more familiar with goes way. But also, the ability not to have 
to engage in these tents retransmission consent negotiations. 
Suddenly, they would be at the bargaining table on January 1 
trying to figure this out without the benefit of a compulsory 
copyright license. So, you would have a very big blackout in 
January of next year.
    Senator Blumenthal. Well, I was an advocate for ending the 
sports blackout rule. When we fought to--and that rule the NFL 
warned that football would disappear over the air if the sports 
blackout went away. So maybe we have a lesson for future 
reform. Were there any negative effects stemming from the FCC 
repealing its sports blackout rule? Question for all of you. I 
see some heads being shaken. The record will then reflect they 
were side to side, not up and down.
    Mr. Watts. Senator, in Oklahoma we think it is communism to 
let football be blacked out.
    Senator Blumenthal. Well so far, the communists have not 
taken over.
    Senator Markey. And J.C. Watts was the quarterback on two 
Oklahoma teams that won the Orange Bowl. So, you helped to make 
it a religion.
    Senator Blumenthal. This is a serious subject especially 
for dedicated football fans and we have many in Connecticut as 
well. But it is more than sports. It is a principle that is 
vital to our democracy. And so, I hope that we will make sure 
that blackouts are a thing of the past. Thank you, Mr. 
Chairman.
    The Chairman. Thank you. Senator Markey, do you have follow 
up questions?
    Senator Markey. No, I am fine.
    The Chairman. OK. Who has thoughts on the five-year renewal 
or a different timeframe? Does anyone wish to talk about that?
    Mr. Thun. I think we would definitely prefer that this was 
permanently enacted. Our cable partner, or our cable 
competitors have a permanent license. We are not sure why we 
would be treated any differently. We think that STELAR provides 
customers access to network television that they would not 
otherwise get and to be taking STELAR away would only harm 
those customers and they would not have another choice to get 
that content.
    The Chairman. So, Ms. Barr, you want zero and Mr. Thune 
wants forever. What are your thoughts on what he said, why is 
he totally wrong?
    Ms. Barr. I just go back to I think the five-year cycle has 
created more harm than anything else and I would say that we do 
not need it for five more minutes, never mind five more years. 
We need to be we need to be focused on what we do locally and 
the best way to do that is allow us to continue to do our local 
jobs, so I would not renew it at all.
    I think the distant signals coming into these markets 
whether it is from New York or LA are not providing any real 
service other than they are giving you a network signal, but 
they are giving you nothing of the local. So again, as I said 
earlier if you have a wildfire going on in your State or you 
have a tornado or whatever and you are watching a station from 
New York, you are not getting any information that could 
literally be lifesaving.
    The Chairman. Mr. Schwantes, is something between five and 
zero appropriate, do you have any thoughts on this?
    Mr. Schwantes. I am always open to ideas. We are on record 
Senator of in favor of a permanent reauthorization for much of 
the same reasons Mr. Thun from AT&T has pointed out. Mostly for 
parity with cable. I think what is good for cable in this 
context should be good for satellite, and I think back when I 
worked on the 1999 version of this law, we were talking about 
millions of distant signal subscribers. Now that number is 
below a million.
    I think it is not the problem that it used to be, but I 
think a five-year cycle gives us an opportunity to consider 
targeted marketplace reforms that can always be a good thing. 
It is the legislation that is moving. But I do think so many of 
the issues we discussed here today beg for a larger bill, a 
larger reform of the video marketplace. We haven't really done 
that mean that apart from these five-year cycles. We have not 
really done that since the 1996 Telecom Act, and I think all of 
us in this room know that the media marketplace is very, very 
different now in the Internet age than it was in the mid-90s.
    The Chairman. Anybody else have thoughts on that?
    Mr. Law. Senator, I would echo Mr. Schwantes' comments in 
terms of years. While I may not have a specific number, I do 
think it is important that STELAR be renewed for a period 
throughout two to five years, at least somewhere in there if 
nothing else to keep the current system, flawed as it is, in 
place, but also as part of a larger video discussion. In my 
career, it seems that as part of a larger video discussion in 
the marketplace, this vehicle seems to be about the only time 
this comes up for discussion.
    Mr. Thun. I think it is worth saying again that if STELAR 
goes away, 870,000 customers are going to lose access to TV 
broadcasting signals.
    The Chairman. Ms. Barr, you say that is flatly incorrect. 
Now, how can two people of good will have such a disparity?
    Ms. Barr. Because it is my understanding, sir, that AT&T is 
making a decision not to serve those markets with the local 
stations. That is a business decision. They are certainly 
entitled to make that decision, but it is not something they 
are incapable of doing. It is just something they choose not to 
do.
    Mr. Thun. Can I clarify that?
    The Chairman. Certainly.
    Mr. Thun. Because I think there is some conflation going on 
here that is confusing people. In the markets where we take an 
over-the-air signal, we are not using the distant signal in the 
middle of Helena, Montana. In the middle of Helena, Montana the 
only vehicle for us to provide broadcast signals is through the 
antenna, which we provide to our customers for free and give a 
discount to our subscribers. It is only in the outskirts of the 
DMAs where the broadcasters fail to deliver a signal is where 
these distant signals come into play or in the case of the 
long-haul truckers and the recreational vehicle users. Those 
also come to play as well which are important constituents.
    But the notion that taking STELAR down is going to then 
close a loophole where we provide broadcast signals in the 
middle of markets is patently untrue.
    The Chairman. Mr. Thun, when you say the broadcasters fail 
to deliver a signal, Ms. Barr responds to that by saying they 
have a certain geographic area where they can broadcast their 
signal and beyond that they cannot do so. And so, what is the 
answer? And I would like both of you talk about that.
    Mr. Thun. Well, I think if they put repeaters in the 
outskirts of the areas, I guess I am not familiar with the 
technology of what megahertz they are allowed to broadcast 
that, but I believe that there is technologies to put repeaters 
on the outskirts of these DMAs in order to afford customers 
access to the signals.
    The Chairman. Is that expensive?
    Mr. Thun. Well, I think they have got a windfall of money 
coming through the retrans fees that we pay, so they have got 
plenty of money to pay for it.
    Ms. Barr. I think the use of the term fail is just--it is 
not correct. We are doing what the law allows us to do. We are 
broadcasting at maximum power and we are reaching as far as we 
can. That is that is what the FCC has licensed us to do and 
that is what we are doing. The fact is that we know that other 
companies, satellite companies, cable companies have 
technologically figured out a way to take our local signals and 
put them on their services.
    And AT&T could do this. We know Dish is doing it. There are 
signals available on over-the-top platforms that they are able 
to receive from our local television stations. So, all of that 
is possible, it is just a question of having the will to do it. 
And I just do not think that AT&T at this moment has the will 
to do that.
    The Chairman. Mr. Schwantes, help us once again understand 
what the expiration of STELAR would do to prices for consumers?
    Mr. Schwantes. If you let it expire and we then we deal 
with this 119 license issue. That is the distance signal 
license. That is what AT&T and some instances Dish Network are 
using to deliver these distant signals into some markets. That 
would go away. The issue is a little more complicated in how 
they bring these in like in. In Helena, Montana, for example, 
we looked at that market--what Direct TV is doing and I would 
defer to Mr. Thun, is they are bringing in not a signal from 
New York or LA, they bring it in from a neighboring market, say 
from Butte, Montana and there are some rules that allow them to 
do that.
    But in terms of how it makes it more expensive, right now 
those distant signals are not subject to retransmission consent 
negotiations. Direct TV or Dish Network, the other satellite 
providers do not need to sit down with the broadcasters and 
negotiate a fee for carriage.
    The Chairman. They pay a fee to the copyright office, 
right?
    Mr. Schwantes. Yes. It is a compulsory license. That is 
correct, Senator. And in general, that is lower than the market 
rate in my experience. But if that 119 license goes away and 
along with it the requirement, the privilege of not having to 
engage in retransmission consent, it throws that market off. I 
think I do agree with Mr. Thun. Some signals will go dark. And 
then AT&T and Dish Network, they also use the 119 license in 
some markets. They would then have to sit down with the 
broadcasters and cut a new deal. And if it is very low now, I 
can only imagine, and this is just a hazarding guess, it will 
be more than what it currently is. And I would hazard a second 
guess that it would be passed onto consumers.
    Mr. Watts. Mr. Chairman.
    The Chairman. OK, please Mr. Watts, yes.
    Mr. Watts. Just one thing I want to add. Over the last hour 
and 46 minutes we have been talking about reauthorization of 
STELAR. For the last 10 years I have been trying to get an 
independent network up and going and the theme of what we have 
heard over the last hour and 45 minutes has been retransmission 
fees being escalated, consumer bills being escalated, 
blackouts. That has kind of been the theme of our conversation.
    And the reason that we think modifying Section 335 is so 
critical, the independents get caught in the mix. In any one of 
those three issues, independence get squeezed or they get 
squeezed out. And so, there is nowhere on the TV dial that the 
African American community can go today to get information or 
education and see a very unique perspective concerning current 
affairs, history, you know, HBCUs, wellness, etc., etc., etc. 
So, I hope in this discussion we have seen why it is critically 
important to modify Section 335 for independent content 
providers like BNC.
    The Chairman. Thank you very much. Well, let us do this. 
Each of you take a minute to summarize what the bottom line is 
and what you would like to say, anything that we have missed, 
and we will start with you, Ms. Barr, and go down and then that 
will be the end.
    Ms. Barr. OK. Thank you very much, Senator. I would just 
like to reiterate that it is our belief that the harm caused to 
local markets by bringing in distant signals is something that 
needs to be addressed, and this is going to continue if STELAR 
is allowed to be reauthorized.
    So, from my point of view and from the point of view of the 
NAB we feel strongly that local news, local television should 
be paramount. It is the bedrock of what we do. It is as I said 
earlier, the news we provide in these local markets is our 
North Star. We do not believe we need a regulation to govern 
good faith bargaining because it is in our best business 
interest to good faith bargain, and we do that now. And in 
large part, in large part, despite the publicized blackouts, we 
are getting these deals done.
    It is interesting to me that with respect to AT&T in the 
last five months we have had a lot of blackouts but in a year 
ago at this time, we only had one so with respect to them, so I 
would just argue that if we allow STELAR to sunset, I think it 
accomplished everything it was supposed to do when it first was 
designed under its former name, but I think at this point we 
have we have moved on.
    The Chairman. Thank you. Mr. Law.
    Mr. Law. Thank you, Mr. Chairman. I would simply state that 
I think that the Congress should take a serious look at how to 
reform certain applications on a targeted basis for video 
subscribers, including the nondiscriminatory practices in terms 
of retransmission consent prices, tying, bundling, and the 
requirement of purchasing a basic tier.
    And in response to some of the questions today regarding 
the receipt of an off air signal, while I respect Ms. Barr's 
comment regarding broadcasting at full power, in South Dakota 
and in rural areas, there are significant areas within their 
licensed DMA and within their license for spectrum that 
broadcasters could distribute their signal and not require 
customers to purchase it from companies like mine, but the 
broadcasters have chosen not to broadcast in those areas.
    The Chairman. The local stations?
    Mr. Law. The local stations. Local stations have chosen not 
to put transmitters in additional locations to cover their DMA. 
And as a matter of fact, one broadcaster in a certain DMA 
covers exactly 14 percent of the geography of the DMA and 
leaves the other 86 percent behind. I happen to live in that 
other 86 percent.
    The Chairman. Thank you. Mr. Thun.
    Mr. Thun. Yes, I would say that we are here to talk about 
the reauthorization of STELAR and we are losing sight of the 
fact that 870,000 customers rely on these distant signals to 
get network programming. All of the talk about we are not 
servicing the local communities is not true. We are servicing 
them through an antenna. And it will not change. The removal of 
STELAR will not change how we deliver the signals in that 
fashion. It has no bearing whatsoever.
    What we are talking about here is the broadcasters' failure 
to deliver in certain markets. And for those customers who 
cannot receive an over-the-air signal, we are trying to give 
them a practical way to receive their network content that they 
are looking for and that they have relied on for years. So that 
notion that we are talking about all these different things, I 
think very straightforwardly we are talking about the renewal 
of STELAR and the customers that are being impacted.
    I think it would be a tremendous disservice to those 
customers to take it down now and remove those things from 
them, as well as just the ancillary impacts of taking away good 
faith, which being on the frontline of these negotiations I can 
tell you good faith is not something that is adhered to at the 
highest levels. It is at the absolute minimum that broadcasters 
adhere to it and we have to remind them in certain cases you 
are not acting in good faith to whip them back into shape in 
certain cases.
    So, to take that piece of STELAR away from us in those 
negotiations would be harmful. It would raise prices and create 
further blackouts. And further, blackouts are not in our 
interest. We do not do this as a vehicle to try to get STELAR 
reauthorized. It is absolutely crazy to think that we would 
lose hundreds of thousands of customers for this. That is not 
the case. I think it would be economically imprudent to do so.
    The Chairman. Thank you. Mr. Watts, I heard you on 
television one time quoting someone else as saying we are all 
entitled to our own opinion just not to our own facts. It seems 
that somehow these people of good faith are entitled to their 
own facts. I am sure you cannot help me there but what would 
you say in a way of 60 seconds?
    Mr. Watts. Mr. Chairman, my closing comments were my 
previous comments. I am here at the table trying to, you know, 
create more opportunity for independent content providers and 
my proposal to amend section 335 is I think a way that we can 
do that. Dish Net and Direct TV both are supportive of that. So 
again----
    The Chairman. This exploration negotiation gives you an 
opportunity for that negotiation to be successful.
    Mr. Watts. Correct.
    The Chairman. Mr. Schwantes, wrap it up in 60 seconds.
    Mr. Schwantes. Will do. Thank you, Senator. I will go back 
to what I said in my earlier remarks, which is STELAR in all 
its earlier forms was a pro-consumer and a pro competition law 
and it has done a lot of great things for consumers and 
competition. I think it is October 23. We immediately need to 
help these hundreds of thousands of consumers who face real 
anti-consumer result of not having their signals come New 
Year's Day.
    So, I think we need to deal with the STELAR 
reauthorization, move past it, and then take on some of these 
bigger issues. And we need to because these bigger issues are 
causing the inflation and the rise of company-imposed fees and 
bills and that is largely because, I do agree with some of the 
panelists, a broken retransmission consent system.
    So, let's take on those bigger issues. In the meantime, let 
us use it as a vehicle to help consumers bring some 
transparency to billing but really engage in the bigger issues 
and figure this out and lower prices and increase consumer 
choice. Thank you.
    The Chairman. Well, I want to thank all of our witnesses. I 
think you have all been excellent and this has taken place in a 
spirit of openness and sort of debate that we welcome here in 
this country, and I really appreciate each and every one of 
you. I need to say that the hearing record will remain open for 
two weeks.
    Senators are asked to submit any questions for the record 
during this time. And to our witnesses, upon receipt, can you 
submit your written responses as soon as possible, but no later 
than November 20, 2019.
    Okay, we thank you and we conclude the hearing once again. 
And we are grateful to each and every one of you for your 
insights and for your participation. This hearing is now 
adjourned.
    [Whereupon, at 11:55 a.m., the hearing was adjourned.]

                            A P P E N D I X

                                            National Grange
                                 Washington, DC, September 23, 2019

Hon. Roger Wicker,
Chairman,
Hon. Maria Cantwell,
Ranking Member,
Committee on Commerce, Science, and Transportation,
United States Senate.

Hon. Lindsey Graham,
Chairman,
Hon. Dianne Feinstein,
Ranking Member,
Committee on the Judiciary,
United States Senate.

Hon. Frank Pallone, Jr.
Chairman,
Hon. Greg Walden,
Ranking Member,
Committee on Energy and Commerce,
United States House of Representatives.
  

Hon. Jerrold Nadler,
Chairman,
Hon. Doug Collins,
Ranking Member,
Committee on the Judiciary,
United States House of Representatives.

Re: Support for STELAR Act reauthorization

Dear Chairmen Wicker, Graham, Pallone, Nadler and Ranking Members 
Cantwell, Feinstein, Walden, Collins:

    When it comes to obtaining access to basic services, rural 
communities are prone to experiencing gaps or interruptions. Television 
content is unfortunately no different. Unless Congress moves quickly to 
reauthorize the of Satellite Television Extension and Localism Act 
Reauthorization (STELAR), over 870,000 satellite TV customers, mostly 
in rural areas, will lose basic protections that afford them access to 
basic broadcast network programming in places where over-the-air 
signals can't reach.
    Rural residents should not be needlessly punished and their access 
to network entertainment should not be curtailed because they live in a 
less convenient area to service. Therefore, the National Grange urges 
your support for prompt STELAR reauthorization before it expires on 
December 31, 2019. This important legislation will help preserve the 
connectivity of hardworking, rural communities by providing them access 
to local news, sports, and other programming of their choice.
    Technical limitations make it difficult for many residents in small 
towns and rural communities to watch broadcasting from one of the ``big 
four'' networks without STELAR reauthorization. STELAR contains a key 
provision that enables satellite and pay-TV providers to import 
broadcast signals to these communities without interruption.
    Our members depend on STELAR not just to access network 
programming, but also to keep their service affordable because STELAR 
encourages good-faith negotiations between broadcasters and satellite 
providers. This law's importance cannot be overstated: its provisions 
serve as the single set of rules that help to protect consumers from 
programming ``blackouts,'' which broadcasters deploy to extract 
retransmission fee increases from rural residents and small businesses.
    Congress must take prompt action to ensure that STELAR's 
protections remain in place. This law's reauthorization has always had 
strong bipartisan support; when STELAR was last considered in 2014 it 
passed Congress unanimously. Reauthorization before the law expires at 
the end of this year will demonstrate that Congress is truly committed 
to preserving rural Americans' access to information and entertainment.
            Sincerely,
                                            Betsy E. Huber,
                                                         President.
                                 ______
                                 
                                                    October 1, 2019
Committee Member,
Committee on Commerce, Science, and Transportation,
U.S. Senate,
512 Dirksen Senate Building,
Washington, DC.

Dear Senator,

    On behalf of the undersigned organizations, we urge Senate 
Commerce, Science, and Transportation Committee to review the existing 
laws governing the video marketplace.
    Since the Cable Act of 1992 was enacted, the way in which consumers 
view video has changed dramatically. Nearly everything can be watched 
anywhere. Movies, television shows, news, and sporting events are 
available through online platforms like Netflix, Pluto TV, Roku, and 
YouTube, through podcasts and direct subscriptions to movie services 
including HBO Now and Starz, as well as broadcast television and cable.
    The laws surrounding video viewing have remained stagnant and are 
in need of review and modernization. We encourage the start of this 
effort and look forward to further engagement with you throughout the 
process.
    Again, thank you for your consideration.
            Sincerely,


Thomas A. Schatz,                         Jeff Mazzella,
President,                                President,
Council for Citizens Against Government   Center for Individual Freedom.
 Waste.
 
Andrew Langer,                            Bartlett Cleland,
President,                                Executive Director,
Institute for Liberty.                    Innovation Economy Institute.
 
Daniel Schneider,                         David Williams,
Executive Director,                       President,
American Conservative Union.              Taxpayers Protection Alliance.
 
Phil Kerpen,
President,
American Commitment.
 

                                 ______
                                 
       Hispanic Technology & Telecommunications Partnership
                                                   October 11, 2019
Hon. Jerrold Nadler,
Rayburn House Office Building,
Washington, DC.

Dear Congressman Nadler,

    We represent a diverse community of Hispanic entrepreneurs, 
creatives, and consumers who deserve to experience the full benefits of 
the revolution in content delivery. Technology and the way in which 
consumers access media has changed dramatically over the last decade. 
When you consider the advent of streaming and growing popularity of 
mobile viewership, it is almost unthinkable that the laws and 
regulations governing the video marketplace in the United States have 
not been updated since the 1990s. That is why we urge you to pass 
legislation to modernize the video marketplace and protect consumers' 
unfettered access to today's innovative digital media market.
    One of the most important things Congress can do immediately is to 
renew the Satellite Television Extension and Localism Act 
Reauthorization (STELAR). This law helps ensure that more than 870,000 
consumers can access network TV programming through the distant signal 
license provision. For rural Hispanic communities, this provision is 
especially important as it is makes it much easier for residents to 
access basic network content.
    STELA Reauthorization ensures that Latino consumers have access to 
important content which is normally free over the air when they are 
within the broadcasters service area. Congress should ensure the rules 
it passes do not disadvantage them and make this programming more 
difficult or costly to view even for consumers outside the broadcasters 
service area.
    If Congress fails to renew the STELAR Act--or permanently codify 
its most important provisions--communities in so-called ``short 
markets,'' where content from one of the ``Big Four'' broadcasters is 
not available, will have no way to access the media they depend on. 
Particularly in rural parts of the country, cutting off network access 
can deprive rural, otherwise hard-to-reach Hispanic communities of 
valuable sources of local news, events, election updates, sporting 
events, and other important information.
    Reauthorization also gives Congress an opportunity to codify a set 
of basic consumer access protections while addressing the outdated 
regulations that currently govern the video marketplace.
    It is past time to protect consumers by updating these rules to 
reflect the realities of today's video content marketplace. Keeping our 
video marketplace laws stuck in the past unfairly disadvantages the 
Hispanic community for embracing new technology and seeking out 
Hispanic media representation and Spanish-language programming.
    Congress must act quickly and thoughtfully to address the range of 
issues that our outdated rules and regulations for video distribution 
have created. We should no longer be relying on laws last updated in 
the early 1990s to govern the ever-evolving marketplace of content 
today.
    Please work with your colleagues in the Senate and House of 
Representatives--and on both sides of the aisle--to help pass 
meaningful legislation that updates our video marketplace laws, while 
also working to renew the STELAR Act to help protect Hispanic consumers 
and all Americans from unfair and abusive practices.
            Sincerely,
                                           Alejandro Roark,
                                                Executive Director,
                                                                  HTTP.
About HTTP
Formed in 1996, Hispanic Technology & Telecommunications Partnership 
(HTTP) is the leading national Latino voice on technology and 
telecommunications policy. HTTP's coalition of nonpartisan national 
Latino civil rights organizations, work to ensure that the full array 
of technological and telecommunications advancements are available to 
all Latinos in the United States. Together and through their missions, 
each promote the social, political, and economic advancement of over 50 
million Americans of Hispanic/Latino descent by facilitating access to 
high quality education, economic opportunity and effective health care 
through the use of technology tools and resources.
                                 ______
                                 
                                           Public Knowledge
                                                   October 15, 2019

Hon. Roger Wicker,
Chairman,
Committee on Commerce, Science, & Transportation,
United States Senate,
Washington, DC.

Hon. Lindsey Graham,
Chairman,
Committee on the Judiciary,
United States Senate,
Washington DC.

Hon. Frank Pallone, Jr.,
Chairman,
Committee on Energy & Commerce,
United States House of Representatives,
Washington, DC.

Hon. Jerrold Nadler,
Chairman,
Committee on the Judiciary,
United States House of Representatives,
Washington, DC.

Hon. Maria Cantwell,
Ranking Member,
Committee on Commerce, Science, & Transportation
United States Senate,
Washington, DC.

Hon. Dianne Feinstein,
Ranking Member,
Committee on the Judiciary,
United States Senate,
Washington, DC.

Hon. Greg Walden,
Ranking Member
Committee on Energy & Commerce,
United States House of Representatives,
Washington, DC.

Hon. Doug Collins,
Ranking Member,
Committee on the Judiciary,
United States House of Representatives,
Washington, DC.

Dear Chairmen Wicker, Graham, Pallone, and Nadler, Ranking Members 
Cantwell, Feinstein, Walden, and Collins,

    In 2014, Congress unanimously voted in favor of the Satellite 
Television Extension and Localism Act Reauthorization (STELAR). Among 
other things, this law allows satellite TV subscribers who would not 
otherwise be able to access network programming at all to access these 
broadcast stations. Without these critical legal protections in place, 
more than 870,000 satellite television subscribers risk losing their 
ability to access news, sports and programming at a fair and 
competitive price. Many of the residents most likely to be impacted by 
a failure to renew STELAR are disproportionately rural or otherwise 
live in areas that put them at a considerable disadvantage for access 
to information compared to urban and suburban communities--for example, 
they may live in ``short'' markets that lack a national network 
presence or in households that cannot receive stations over the air. 
Therefore, consumers across the country are counting on this Congress 
to reauthorize and reaffirm STELAR and its important consumer 
protections before they expire on December 31, 2019.
    The current situation in which hundreds of thousands of satellite 
television subscribers are held hostage to cyclical and frequent 
regulatory disputes is unsustainable. We believe that consumers deserve 
to be treated better, and that they should be entitled to fair access 
to a full range of national programming. STELAR's key provisions--
including the distance signal license--ensure that satellite television 
companies can continue to provide broadcast stations to all their 
customers. Permanently reauthorizing STELAR will allow viewers living 
in underserved areas to continue receiving content without unnecessary 
disruption and lay the foundation for improved video marketplace 
competition.
    Congress should take this opportunity to build on STELAR's 
foundational provisions and modernize the nearly 30-year-old rules 
governing TV and video transmission. The increasing numbers of ``cord 
cutters'' and ``cord nevers'' show that consumer habits are changing 
and that today's video audience wants to take advantage of their ever-
growing viewing options.
    Unfortunately, many of the rules from the 1992 Cable Act and its 
subsequent iterations are stifling today's modern and innovative video 
market. This outdated law does little to keep bills in check. The 
retransmission fees consumers pay to broadcasters has ballooned from 
about $200 million in 2006 to $11.7 billion this year. Even worse, 
MVPDs unload their increased costs onto consumers in the form non-
optional, company-imposed fees, like the ``broadcast TV fee'' and 
others. Moreover, consumers usually don't have the option of a low-cost 
carrier with limited channel offerings that is less beholden to 
negotiating with broadcasters. The result is that since 2010, there 
have been more than 1,000 blackouts and this trend is only getting 
worse. In 2017, there were more than twice as many blackouts as in 
2016. In 2019 alone, there have already been 230 blackouts.\1\ 
Thousands of cable and satellite subscribers become bargaining chips 
whenever broadcasters and providers fail to reach an agreement.
---------------------------------------------------------------------------
    \1\ American Television Alliance, ``Broadcasters Are to Blame for 
Skyrocketing Retrans Fees and Record Number of TV Blackouts,'' https://
www.americantelevisionalliance.org/broadcasters-are-to-blame-for-
skyrocketing-retrans-fees-and-record-number-of-tv-blackouts-says-atva/ 
(July 24, 2019)
---------------------------------------------------------------------------
    Consumers are being taken advantage of and Congress can put a stop 
to it. In addition to provisions addressing satellite licenses, STELAR 
contains ``good faith'' provisions that, if properly enforced by the 
FCC, could reduce blackouts and lower consumer bills.
    As Reps. Steve Scalise and Anna Eshoo have proposed in the Modern 
Television Act of 2019, Congress could fix things by shifting the video 
marketplace to a system based on privately negotiated copyright. Such a 
system would better fit consumers' ongoing transition to online, multi-
platform viewing. While bold approaches of this are probably needed to 
fundamentally restructure the video marketplace to better fit the needs 
of consumers, allowing STELAR to expire in the interim would represent 
a step backward. Video marketplace reform does not need to come at the 
cost of harming 870,000 satellite subscribers.
    The evidence for a permanent STELAR reauthorization is 
overwhelming. The video marketplace is in dire need of sweeping 
regulatory reform, but the artificial deadlines imposed by STELAR's 
expiration keep that from happening. In the interest of consumers 
across the country, we call on Congress to reauthorize STELAR before it 
expires at the end of this year.
            Sincerely,

Common Cause
Consumer Action
Consumer Federation of America
Consumer Reports
Open Technology Institute at New America
Public Knowledge
                                 ______
                                 
                          Communications Workers of America
                                   Washington, DC, October 16, 2019

Hon. Roger Wicker,
Chairman,
Committee on Commerce, Science, and Transportation,
U.S. Senate,
512 Dirksen Senate Office Building,
Washington, DC.

Hon. Lindsey Graham,
Chairman,
Committee on the Judiciary,
U.S. Senate,
224 Dirksen Senate Office Building,
Washington, DC.

Hon. Maria Cantwell,
Ranking Member,
Committee on Commerce, Science, and Transportation,
U.S. Senate,
512 Dirksen Senate Office Building
Washington, DC.

Hon. Dianne Feinstein,
Ranking Member,
Committee on the Judiciary,
U.S. Senate,
224 Dirksen Senate Office Building,
Washington, DC.

Dear Chairman Wicker, Ranking Member Cantwell, Chairman Graham and 
Ranking Member Feinstein:

    On behalf of the officers and 700,000 members of the Communications 
Workers of America (CWA), I am writing to urge prompt passage of the 
Satellite Television Extension and Localism Act Reauthorization Act 
(STELAR). Failure to reauthorize STELAR means that more than 870,000 
satellite subscribers, most of whom are rural customers, would lose 
access to network TV programming from the loss of the distant signal 
license.
    The Satellite Television and Localism Act ensures that customers 
who live beyond the contours of local TV stations can receive network 
programming via satellite. The Satellite Act requires reauthorization 
every five years and thus sunsets on December 31, 2019 unless Congress 
acts now to reauthorize it.
    Failure to reauthorize STELAR would mean that many rural Americans 
would not have access to broadcast network programming that the rest of 
the country receives and that these rural customers have paid for and 
continuously relied on.
    Since the last time Congress reauthorized the Satellite Act, CWA 
has gained recognition of tens of thousands of DIRECTV employees whose 
union contract provides good wages, benefits, and working conditions. 
STELAR reauthorization will help protect these good jobs in communities 
across the United States.
    Finally, I note a lack of parity in the treatment of out-of-market 
licensing for cable and satellite providers. The cable statutory 
license does not have an expiration date, whereas the satellite license 
must be renewed every five years. Satellite subscribers should not live 
with the possibility that their service could end every five years. 
Ideally, there should be a permanent STELAR reauthorization. But 
barring permanent reauthorization, Congress must once again extend the 
Satellite Act as it has done since 1988.
    Thank you in advance for your consideration.
            Sincerely,
                                              Shane Larson,
                  Senior Director of Government Affairs and Policy,
                               Communications Workers of America (CWA).

Cc: Members of the Committees
                                 ______
                                 
                               American Television Alliance
                                                   October 22, 2019
Hon. Roger Wicker,
Chairman,
Committee on Commerce, Science, and Transportation,
United States Senate,
Washington, DC.

Hon. Maria Cantwell,
Ranking Member,
Committee on Commerce, Science, and Transportation,
United States Senate,
Washington, DC.

Re: Hearing on the Reauthorization of STELAR

Dear Chairman Wicker and Ranking Member Cantwell:

    I write on behalf of the American Television Alliance \1\ to 
provide our perspective in advance of your hearing entitled The 
Reauthorization of STELAR.
---------------------------------------------------------------------------
    \1\ ATVA seeks to be a voice for the American television viewer. 
Our members include cable and broadband operators, satellite carriers, 
phone companies, trade associations, independent programmers, consumer 
groups and others concerned about the state of the video marketplace. 
You can find out more information about us at 
www.americantelevisionalliance.org.
---------------------------------------------------------------------------
    When I wrote to you before your last hearing ``The State of the 
Television and Video Marketplace,'' \2\ I described the growing 
dysfunction in the retransmission consent regime and the need for 
Congress to address these issues in STELAR reauthorization.
---------------------------------------------------------------------------
    \2\ Letter from Mike Chappell to the Hon. Roger Wicker and the Hon. 
Maria Cantwell (June 4, 2018), available at https://
www.americantelevisionalliance.org/wp-content/uploads/2019/10/ATVA-
Letter-Senate-June-4-FINAL111.pdf.
---------------------------------------------------------------------------
    In the four months since then, broadcasters have initiated 216 
blackouts affecting tens of millions of consumers. This brings the 
total number of blackouts to 276 for 2019 and breaks the previous 
annual record of 213. Indeed, broadcasters initiated more blackouts in 
the last four months than they had caused in any prior entire year. And 
broadcasters continue to raise prices by double digits each and every 
year--more than five thousand percent since 2006.\3\
---------------------------------------------------------------------------
    \3\ News Release: ATVA Applauds Senate Hearing on STELAR; Urges 
Committee to Address Retrans Reform (Oct. 16, 2019) (citing numbers 
compiled by ATVA based on publicly available information).
---------------------------------------------------------------------------
    How bad have things gotten? A nonprofit, locally owned electric 
utility (called BELD) in Braintree, Massachusetts recently announced 
that it will ``cut the cord''--that is, exit the video business 
entirely--this December.\4\ It stated that its decision ``was a direct 
result of ever-increasing, out-of-control fees that BELD must pay 
programmers for the privilege of carrying their channels'' and added 
that, ``[a]t this point, the fees have left us no choice but to leave 
the cable [TV] business.'' \5\ It is not the first video provider to 
make this decision,\6\ and it surely will not be the last.
---------------------------------------------------------------------------
    \4\ https://www.lightreading.com/video/video-services/another-
cable-operator-gives-pay-tv-the-heave-ho-/d/d-id/754319.
    \5\ Id.
    \6\ See id. (noting that 3 Rivers Communications in Fairfield, 
Montana made a similar decision earlier this year).
---------------------------------------------------------------------------
    In such circumstances, it should be unthinkable for Congress to 
eliminate the ``good faith'' rules by failing to reauthorize STELAR. 
These rules provide at least some expectation of legitimate 
negotiations and some recourse for those operating in manifest bad 
faith. Without the good faith rules, the harm to consumers we are 
seeing in the marketplace will only accelerate.
    To the contrary, the facts on the ground show that Congress should 
strengthen consumer protections. As I stated in my correspondence on 
June 4, we believe that Congress should address issues such as 
broadcaster consolidation, blackouts, phantom subscribers, and the 
forced bundling of broadcast channels in any STELAR reauthorization. 
Without Congressional action, consumers can expect more blackouts, more 
price increases, less localism, and more video providers exiting the 
business in the coming years (and thus, lets competition).
    We look forward to working with Congress in the coming weeks on 
this very important issue.
            Sincerely,
                                         /s/ Mike Chappell,
                                                          Chairman,
                                          American Television Alliance.
                                 ______
                                 
                                                   October 23, 2019
Hon. Roger Wicker,
Chairman,
Senate Committee on Commerce, Science, and Transportation,
Dirksen Senate Office Building,
Washington, DC.

Hon. Maria Cantwell,
Ranking Member,
Senate Committee on Commerce, Science, and Transportation,
Hart Senate Office Building,
Washington, DC.

Dear Senators Wicker and Cantwell,

    We are writing to you on behalf of a community that spends some 
portion of their lives traveling around the country in recreational 
vehicles. Our associations represent the manufacturers, dealers and 
owners of RVs as well as the campgrounds they visit. It is unusual for 
us to be writing to Congress regarding video issues, but it has come to 
our attention that, absent congressional action, many RV consumers will 
lose their access to network television signals.
    By way of introduction, The RV Industry Association is the national 
trade association representing approximately 400 RV manufacturers and 
component and aftermarket parts suppliers who together fuel an industry 
that has an overall economic impact to the U.S. economy of $114 
billion; supporting nearly 600,000 jobs, contributing more than $32 
billion in wages, and paying over $12 billion in federal, state, and 
local taxes. RVDA--the national RV Dealers Association--is dedicated to 
advancing RV retailers' interests through education and member services 
programs designed to enhance the RV travel experience. The National 
Association of RV Parks and Campgrounds (ARVC) is the only national 
association exclusively representing the interests of private RV parks 
and campgrounds in the U.S. FMCA is the world's largest not-for-profit 
association for recreation vehicle (RV) owners, with more than 150,000 
members. Escapees RV Club is one of the largest recreational vehicle 
owners clubs serving approximately 70,000 RV enthusiasts.
    As you may know, when RV families are on the road for weeks or 
months at a time, many of them receive multi-channel television service 
from satellite providers DIRECTV and Dish Network. Because they move 
from one local television market to another, it is not possible for 
them to receive the same local signals that satellite subscribers 
receive at home. Instead, they receive Distant Network Signals under 
the license granted in Section 119 of the Copyright Act. This allows 
them to access sports and entertainment programming as well as national 
news.
    We are aware that the Section 119 license is set to expire at the 
end of the year unless Congress acts to reauthorize the Satellite 
Television Extension, Localism and Reauthorization (STELAR) Act, 
portions of which are in your committee's jurisdiction. Our 
associations generally would not insert themselves into a fight between 
large satellite television companies and large broadcasters; however, 
the loss of access to network signals would have a significant negative 
impact on the quality of life for many RV families. We would emphasize 
that most RVers have cable or satellite subscriptions at their fixed 
homes, and that they are already paying once for each of the four 
national networks; in accessing distant network signals, they pay an 
additional fee to the networks through the Section 119 license. We are 
simply asking that they continue to be allowed to do so.
    Accordingly, we are writing to urge your committee to adopt 
legislation reauthorizing STELAR, so that the Section 119 license can 
be renewed, and, ideally, made permanent, at least for RV users. We 
look forward to your response, which we will share with our members.
    Thank you for your consideration.
            Sincerely,


Jay Landers,                                Phil Ingrassia,
Vice President, Government Affairs,         President,
RV Industry Association.                    RV Dealers Association.
 
Paul Bambei,                                Jon Walker,
President and CEO,                          National President,
National Association of RV Parks and        FMCA.
 Campgrounds (ARVC).
 
Shawn Loring,
CEO and Attorney,
Escapees RV Club.
 

Cc: Members, Senate Committee on Commerce, Science and Transportation
                                 ______
                                 
     Response to Written Question Submitted by Hon. Rick Scott to 
                               Emily Barr
    Question. Current STELAR language requires multichannel video 
programming distributors and broadcasters to negotiate in ``good 
faith.'' Why do we need a government mandate to ensure industry 
partners negotiate in ``good faith?''
    Answer. While well intended, the expiring good faith requirement 
has provided no quantifiable benefit, in large part because both 
parties have every incentive to reach a deal without a government 
backstop. As a broadcaster who is frequently outmatched in size and 
revenue by the pay-TV companies with whom I negotiate, I can state with 
certainty that STELAR's expiration will have no impact on my ability to 
complete a retransmission consent deal.
                                 ______
                                 
    Response to Written Question Submitted by Hon. Amy Klobuchar to 
                               Emily Barr
    Question. Local broadcasting is an important part of life in 
Minnesota. More than 5 million Minnesotans watch live broadcasts, and 
we rely on local television broadcasters in our state for news, 
weather, entertainment, sports, music, and educational programming.
   Can you speak to the importance of local broadcasting for 
        consumers in rural areas and how we can best ensure that these 
        consumers can continue to access local broadcasts?
    Answer. In many parts of rural America, including Minnesota, local 
broadcasters represent the glue that binds these communities together. 
Particularly during a time when small-town newspapers and other local 
media outlets are disappearing around the country, local broadcasters 
often provide rural viewers and listeners their only link to their 
communities. This link is provided by those who understand and reflect 
the very communities they live in and serve. Local broadcasters around 
the country also serve the critical function of ``first informer,'' 
alerting viewers and listeners of severe weather and other emergencies. 
And as we have seen time and time again in communities around the 
country, when a community has been plagued by crisis or natural 
disaster, local broadcasters are first on the scene and the last to 
leave, helping to ensure the safety of viewers and listeners whose 
access to other forms of communication may be unavailable. Finally, 
many rural areas have been left behind or forgotten by modern media 
outlets, particularly in those communities that have little or no 
access to reliable broadband Internet connections. In these 
communities, local broadcasters provide not only a source of critical 
local information, they also serve as the primary source of quality 
entertainment and live sporting events.
    We can best ensure that viewers and listeners can continue to 
access their local broadcasts by pursuing policies that are mindful of 
the unique challenges facing local broadcasters, which, in turn, often 
threaten their very survival. Particularly in light of the explosion of 
tech companies that are taking an ever-increasing share of overall 
advertising revenue from traditional advertisers such as broadcasters, 
magazines, and newspapers, one important policy choice is to ensure 
that there are no new restrictions on the content or type of 
advertisements that broadcasters can carry, as well as to protect the 
current deductibility of all types of advertising as a normal business 
expense. For local television broadcasters, another important source of 
revenue emanates from the so-called ``retransmission consent'' process, 
under which Federal law dictates that pay TV providers must reimburse 
local broadcasters for content that they repackage and sell to 
consumers for profit. Similarly, policies should be pursued that ensure 
that local broadcasters are fairly compensated when their content and 
stories are distributed over digital platforms.
    In many ways, broadcasters are the last bastion of localism in our 
country, and their value is even more pronounced in rural America. In 
light of the intense competition from newer media sources, particularly 
online services, policymakers should remain vigilant and avoid policies 
that will further threaten broadcasters' ability to compete--and 
survive.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. Rick Scott to 
                              Robert Thun
    Question 1. During my eight years as Governor of Florida, I saw 
firsthand the destruction left behind by multiple devastating 
hurricanes--Michael, Irma, Hermine, Matthew.
    During these times of crisis, it is critical that our emergency 
management leaders and law enforcement have the ability to share life-
saving information with our communities before, during and after the 
storm.
    If STELAR is not reauthorized, how would that impact the 
communication of this information to our communities, especially in our 
rural areas, in emergency situations?
    Answer. Without STELAR, satellite customers will have less access 
to critical network news during times of emergency. For example, STELAR 
allows DIRECTV and DISH to import distant network signals to provide 
network programming, including news to customers in ``short'' markets. 
These are customers, usually in rural areas, left behind by local 
broadcasters and missing one, two or even all four major local 
broadcasters. As a result, the only way that these satellite customers 
can be provided satellite network programming and news during times of 
emergency is through the distant network signal.
    We would also like to take this opportunity to restate AT&T/
DIRECTV's commitment to providing customer's weather and emergency 
information during national disasters. That is why, during recent 
weather events, DIRECTV has added a dedicated Severe Weather Mix 
channel in affected areas. That channel provides national storm 
coverage from local broadcasters in the area, as well national news and 
weather channels (e.g., the Weather Channel, Weather Nation, CNBC, Fox 
News, and CNN). The Severe Weather Mix switches local affiliates as a 
storm moves, to provide viewers with up-to-the-minute coverage.

    Question 2. How can Congress streamline regulations to improve your 
ability to communicate with our communities, especially in times of 
natural disasters?
    Answer. At AT&T, we are in the business of connecting and 
communicating with our communities each and every day. During periods 
of natural disaster, AT&T provides dedicated external-facing websites 
with essential information for affected communities, including current 
network status. Depending on the disaster and the communities affected, 
AT&T communicates with its customers through a variety of vehicles 
including websites, broadcast e-mails, individual e-mails or phone 
calls from AT&T representatives, and Interactive Voice Response 
systems. Methods of communication vary based on the severity and 
proliferation of an event.
    Additionally, AT&T provides a webpage that describes to customers 
how we prepare for hurricanes and offers customer tips about how they 
should prepare for hurricanes, and makes its Business Continuity 
Preparedness Handbook available to its customers at all times. While 
AT&T has not encountered significant regulatory impediments to these 
communication efforts, Congress should consider making it clear that 
wireless carriers may use the location information of customer devices 
in any area affected by a natural disaster to send targeted 
communications to those devices related to the specific emergency.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Jacky Rosen to 
                               J.C. Watts
    MEDIA DIVERSITY: The media marketplace today looks vastly different 
from when STELAR was adopted more than 30 years ago. Today's consumers 
have a variety of ways to access an abundance of news and 
entertainment, from cable to satellite to countless new streaming 
services. Nonetheless, despite this increased consumer choice in 
programming, the companies providing our news and entertainment have 
become increasingly concentrated, with far too little diversity both on 
and off the air. For example, women own just under six-percent of the 
commercial television stations in the United States and fewer than 500 
commercial stations overall. Latinos, who make up more than a quarter 
of the population in my home state of Nevada, own only 42 full-powered 
stations nationwide. And African Americans own just 18 stations. That 
is 18 out of approximately 7,800 television stations across the 
country.
    If we are going to have real diversity--true economic diversity--
then we need to have a media that better reflects us as a nation, a 
media that is more reflective and representative of the world on which 
it reports.
    Congressman Watts, I understand it took you about ten years to get 
the Black News Channel up and running.
    Question 1. Can you talk to the Committee about some of the 
obstacles and challenges you faced when launching the Black News 
Channel?
    Answer. BNC is on the verge of launching to millions of Americans. 
It has taken more than a decade to get to this point. The challenges we 
have faced include some that are common to many start-up networks, such 
as creating a viable business model, demonstrating proof-of-concept, 
raising adequate funds, and obtaining carriage from cable and other 
distributors. Many of these challenges were particularly difficult for 
BNC because, unlike most other national news networks, we are 
independent--that is, we are not affiliated with an MVPD, broadcast 
network, or movie studio.
    BNC has also faced challenges due to its unique mission. There has 
never been a full-time news channel dedicated to the viewpoint of 
African Americans. In making the case for such a channel to investors 
and distributors, BNC demonstrated both the need for such a channel as 
a cultural and social matter, as well as the viability of such a 
channel as an economic matter. This required many years of fact 
gathering, audience testing, and discussions and negotiations with the 
industry.

    Question 2. Can you tell us how the sunset of STELAR's provisions 
can either help or hurt diversity in media ownership and programming?
    Answer. Like every other national news network, BNC seeks the 
widest possible distribution, through a variety of platforms. Satellite 
providers like DISH and AT&T/DIRECTV remain important distribution 
platforms for millions of Americans, and BNC accordingly views these 
providers as important partners in the quest to create the Nation's 
first full-time news channel dedicated to the viewpoints of the African 
American community. Carriage on satellite providers such as DISH and 
AT&T/DIRECTV will further BNC's model of news gathering that is 
culturally specific to the African American community.
    If STELAR was permitted to sunset, it could raise the costs of 
satellite providers, potentially making it more difficult for these 
providers to reach subscribers. That could threaten access to BNC's 
programming for millions of Americans, which would obviously harm 
diversity in media programming. That is why I testified that Congress 
should reauthorize STELAR.
    But I also believe Congress can and should take this opportunity to 
go one step further in the name of diversity. In reauthorizing STELAR, 
Congress should also modestly amend the ``DBS set-aside'' provision of 
the Communications Act (47 U.S.C. Sec. 335 (b)(1)(A)) so that it can be 
used for any network that is unaffiliated with any MVPD, broadcast 
network, or movie studio, where such network produces and televises at 
least eight (8) hours of original educational or informational 
programming (including news programming) per day. DISH and AT&T/DIRECTV 
have told us that this amendment would enable them to distribute BNC to 
an even wider audience, and that they support it.
                                 ______
                                 
    Response to Written Question Submitted by Hon. Amy Klobuchar to 
                           Jonathan Schwantes
    Question. Consumers deserve fair prices for cable packages, but 
despite competition from satellite and online video, cable prices have 
risen steadily at nearly three times the rate of inflation. In 
addition, Consumer Reports recently reviewed hundreds of consumer cable 
bills and found that cable customers pay an average of $450 per year in 
unexpected fees on TV service.
   In your view, why have cable prices continued to rise at 
        this rate?
    Answer. As pointed out in your question, cable prices--and by that 
I am referring to the advertised ``base package'' rate--have increased 
and outpaced the rate of inflation for many years. The introduction of 
company-imposed fees (e.g., the Broadcast TV Fee) less than ten years 
ago by most major cable operators have made the cost of cable service 
even more expensive.
    As highlighted in Consumer Reports white paper on cable fees 
published earlier this year (entitled How Cable Companies Use Hidden 
Fees to Raise Prices and Disguise the True Cost of Service), cable 
companies have increased company-imposed fees at an alarming rate, and 
sometimes several times in a single year.\1\ For example, Charter 
Communications (doing business as Spectrum) raised its Broadcast TV 
Surcharge three times in the last year. What used to be an already 
expensive, non-optional charge a year ago of $8.85 to receive their 
local channels now costs consumers $13.50 a month--a 50 percent 
increase of that fee and far more than the $1 it was when first 
introduced in 2010.\2\ Similarly, Comcast announced a substantial hike 
of its Broadcast TV Fee for 2020, with one media report citing a 57 
percent increase of that fee from $8.70 to $13.65 a month.\3\
---------------------------------------------------------------------------
    \1\ Jonathan Schwantes, How Cable Companies Use Hidden Fees to 
Raise Prices and Disguise the True Cost of Service, Consumer Reports 
(October, 2019), available at https://advocacy.consumerreports.org/wp-
content/uploads/2019/10/CR-Cable-Bill-Report-2019.pdf. (CR Cable Bill 
Report)
    \2\ CR Cable Bill Report at p. 3.
    \3\ Tamara Chuang, Comcast Raising Local TV Fees 57 percent in 
January; Altitude Sports Missing from 2020 Lineup, Colorado Sun 
(December 13, 2019) available at https://coloradosun.com/2019/12/13/
comcast-raising-local-tv-fees-57-in-january-altitude-sports-missing-
from-2020-lineup/.
---------------------------------------------------------------------------
    The cable industry is quick to cite rising retransmission consent 
costs--which, to be clear, are a cost of doing business and used to be 
part of the base package price--as the primary reason for both the 
itemization of the Broadcast TV Fee and its dramatic increase. To be 
fair, we examine rising retransmission consent fees in our report, and 
suggest policy solutions to address this serious problem.\4\
---------------------------------------------------------------------------
    \4\ CR Cable Bill Report at pp. 19-20.
---------------------------------------------------------------------------
    However, what we have not seen is any evidence of a decrease in the 
package price offered by cable companies when these new company-imposed 
fees were first introduced and are now increased. Presumably, if a 
cable operator is breaking out an input cost--in this case, the money 
it spends to acquire broadcast channels via retransmission consent 
fees--we might see an offsetting decrease of the overall package price 
since this cost has been broken out as line-item fee. Yet, this has not 
been the case. Both package prices and company-imposed fees continue to 
increase, and we can only assume this is to maintain the cable 
industry's profit margins, even in the face of well-documented 
subscriber losses.
    We encourage you to ask the cable industry this very question. 
Consumer Reports stands willing to work with you and your staff on this 
issue in order to ensure consumers are paying affordable prices for 
video content.

                                  [all]