DBS Earns An HD Pass

Washington— DirecTV and Dish Network have won major concessions from the Federal Communications Commission on the carriage of local TV signals in high-definition following completion of broadcasters’ digital transition early next year, FCC and industry officials said last week.

The satellite companies struck a deal with the FCC that was far better than the HD carriage rules imposed on all cable operators, regardless of size, last September.

The five-member FCC did not announce the vote or release the text of the rules.

An FCC official said the vote was unanimous.

The National Association of Broadcasters, which did not return requests for comment, will likely oppose the ruling because the FCC plans to allow DirecTV and Dish to downconvert broadcasters’ HD signals to a less pristine picture resolution for several years.

The satellite giants — which combined serve about 30 million subscribers — convinced FCC officials that they lacked the channel capacity to provide every eligible station in HD immediately. They insisted that they needed several years to prepare for a full HD carriage requirement.

HD signals stress capacity because they take up much more bandwidth than digital signal transmitted at lower resolution.

The FCC’s HD rules for satellite were far more lenient than the ones originally proposed by commission chairman Kevin Martin. He started off at full HD carriage in February 2009, coupled with a market-by-market waiver process.

Martin scuttled his original plan after DirecTV and Dish complained that it was draconian and damaging to their ability to compete with cable.

Instead, the FCC decided to give the satellite providers until 2013 to carry all stations in HD within any market where they have elected to carry any station’s signal in HD format.

The “carry one, carry all in HD” principle kicks in when a satellite company starts carrying local signals in HD. DirecTV’s decision to carry local TV signals in HD does not force Dish to do likewise in the same market.

All the FCC demanded was that DirecTV and Dish comply with its benchmarks.

For example, by Feb. 17, 2010, the two companies need to provide full HD carriage in 15% of their HD markets. Dish Network has 35 HD markets today. If a 15% quota were in place today, EchoStar would have a “carry one, carry all in HD” obligation in just 5 markets.

The benchmark jumps to 30% in the second year, 60% in the third and 100% in the fourth.

Because the FCC didn’t specify the markets that had to be served, DirecTV and Dish Network are free to pursue a large-market strategy, which could keep rural consumers waiting a long time for their local TV signals in HD via satellite.

With regard to cable, the FCC imposed a much harsher regime on every cable operator without exception. The agency required cable carriage of TV signals in digital and analog formats for three years with respect to any station that demands cable carriage after Feb. 17, 2009.

The FCC also insisted that cable systems pass through HD feeds, potentially leading to triple carriage in some cases.

The FCC did exempt all-digital cable systems; but since so few are actually all-digital, the exemption was almost worthless.