[Congressional Record Volume 140, Number 147 (Tuesday, November 29, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: November 29, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
 LEGISLATION MAKING TECHNICAL CORRECTIONS TO THE SATELLITE HOME VIEWER 
                                  ACT

                                 ______


                         HON. WILLIAM J. HUGHES

                             of new jersey

                    in the house of representatives

                       Tuesday, November 29, 1994

  Mr. HUGHES. Mr. Speaker, today, I introduce a bill to make necessary 
technical corrections to the Satellite Home Viewer Act of 1994, signed 
by the President on October 18, 1994, Public Law No. 103-369. While 
this bill will not be acted on this Congress, I introduce it in order 
to create a public record that may be used next Congress.
  The Satellite Home Viewer Act of 1994 extends the Copyright Act's 
section 119 compulsory license until December 31, 1999. I was pleased 
to have worked with Mr. Brooks, Mr. Moorhead, and Mr. Synar to craft 
the compromise on fair market value that paved the way for passage of 
the legislation. I was also pleased that after opposition to the 
concept of fair market value, the Senate accepted the House approach. 
After a lengthy negotiation, the version signed by the President 
directs the arbitrators to set rates that most clearly represent the 
fair market value of the signals.
  In this connection, I wish to express disagreement with certain 
statements made by in the other body by the gentleman from Arizona 
during passage of the House bill in the Senate on October 4, 1994, 
specifically the following:

       Copyright license parity with cable is the central feature 
     of the fair market standard articulated in this legislation. 
     The inclusion of specific guidance to the arbitration panel 
     to take into consideration the competitive environment in 
     which satellite programming is distributed is essential to 
     ensure that satellite carriers are not required to pay higher 
     royalty fees than cable operators.
       I am confident that the arbitration panel will take steps 
     to ensure that royalty fees paid by satellite carriers are on 
     par with those paid by cable operators.--140 Cong. Rec. 
     S14106 (daily ed. Oct. 4, 1994).

  These views certainly reflect the arguments Senator DeConcini made in 
opposing fair market value, but they do not reflect the bill that 
passed. If Congress had wished to achieve parity between satellite 
rates under section 119 and the cable rates under section 111, or had 
desired satellite carriers to pay rates under section 119 no higher 
than those paid by cable under section 111, it could easily have done 
so. But it did not, either in the Satellite Home Viewer Act of 1988 or 
in the Satellite Home Viewer Act of 1994.
  Currently, satellite carriers are not paying fair market value for 
satellite retransmissions because the initial, 1988 statutory rate was 
deliberately set artificially low and because the subsequent rate set 
by arbitrators was based on the original statutory factors. The 
Satellite Home Viewer Act of 1994 has dramatically changed that 
landscape: Section 119 has been changed from a compulsory license whose 
rational was subsidized rates to a compulsory license whose rationale 
is the desire, temporarily, to keep in place an existing distribution 
system, while requiring the distributors to pay fees based on what a 
willing seller and a willing buyer would negotiate; in other words, 
fair market value.

  This change, clearly reflected in the statutory language, is based on 
evidence presented at the subcommittee's March 17, 1993, hearing 
regarding the nature and size of the satellite industry, which has 
evolved from startup companies to large corporations, a number of whom 
are owned, in part, by the cable industry. Simply put, the satellite 
industry no longer needs subsidies. Accordingly, while preserving the 
compulsory nature of the section 119 statutory license in order to 
ensure that access to television programming will not be diminished, 
section 119 as amended by the Satellite Home Viewer Act of 1994 takes a 
completely different approach to the rates paid for the license from 
that taken by the Satellite Home Viewer Act of 1988: Under the new act 
satellite carriers will be required to pay what they would pay if 
section 119 was not in place; fair market value, what a willing buyer 
would pay to a willing seller.
  The bill signed by the President permits the arbitrators to examine a 
wide universe of information, such as the competitive environment in 
which satellite programming is distributed, under the theory that the 
arbitrators should have available the greatest possible amount of 
information in setting fair market value. The amended statute, as the 
gentleman from Arizona correctly noted, directs the arbitrators to base 
their decision on economic, competitive, and programming information 
presented by the parties, including--(i) the competitive environment in 
which such programming is distributed, the cost for similar signals in 
similar private and compulsory marketplaces, and any special features 
and conditions of the retransmission marketplace.
  There is no hierarchy within the classes of information enumerated: 
The statute does not declare one type of information to be more 
important than any other, nor does it favor the economic condition of 
satellite carriers over that of copyright owners. The information 
enumerated includes both cable and private marketplace arrangements. 
But by listing the rates paid in similar compulsory marketplaces as 
just one possible type of information to be used in establishing fair 
market value, the statute rejects Senator DeConcini's argument that the 
rates satellite carriers are to pay under section 119 should be pegged 
to the rates cable pays under section 111. This argument is contrary to 
the statute's language and structure, which instead is designed to 
permit the arbitrators to consider the greatest possible amount of 
relevant evidence, toward the single goal of setting a fair market rate 
for satellite retransmissions.
  I hope that in the very near future satellite carriers and copyright 
owners will be able to negotiate a free market solution outside the 
compulsory license regime. It is certainly in the best interests of the 
satellite carriers to do so, since they have been put on notice that no 
further extension should be expected.

                          ____________________