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Debate Over DBS Network Signals Continues

7/19/1998 8:00 PM Eastern

Direct-broadcast satellite officials are asking current and
potential subscribers to lobby Washington for better legislation regarding local- and
distant-network-signal delivery over satellite.

Much of the action comes in the wake of an injunction by a
U.S. District Court in Miami against PrimeTime 24 earlier this month. The order requires
PT24 customers such as DirecTv Inc. and EchoStar Communications Corp. to disconnect
distant-network service within 90 days to any ineligible customers signed up since March
11, 1997, when the suit against PT24 was filed in Miami.

PT24 has a toll-free consumer hot line urging
disenfranchised customers to contact their congressmen.

Even before the injunction was delivered against PT24, the
National Rural Telecommunications Cooperative, which markets DirecTv programming to rural
households, filed an emergency petition for rulemaking with the Federal Communications
Commission.

In its July 8 filing, the NRTC bemoaned "the confusion
plaguing the satellite industry over the definition of unserved households, which has
slowed the pace of competition ... and resulted in consumer disillusionment with
satellite."

The NRTC also argued that the FCC should not allow the U.S.
District Court to establish national communications policy.

Until further word comes down from Washington, however,
that's just what has happened.

In response to the Miami court's injunction, DirecTv
has stopped offering PT 24 service altogether, according to DirecTv spokesman Bob
Marsocci. The company will resume selling the service once it determines from reading the
recent order how to do so while remaining in compliance.

In the meantime, DirecTv has to requalify any subscribers
signed up after last March 11. DirecTv has not yet determined how soon within the given 90
days customers would be disconnected or how those customers would be notified.

One problem with the court's order -- and an
underlying problem of determining eligible versus ineligible distant-network subscribers
-- is that the new propagation maps don't address households within the grade B
signal-intensity boundaries that still can't receive a good picture because of
terrestrial interference.

If companies only use maps or ZIP codes to determine
eligibility, said Mickey Alpert, president of Washington, D.C.-based Alpert &
Associates, "some people get screwed."

"This really heightens the need for Congressional
action," Marsocci said.

And it's not just white-area issues that Washington
will need to address: Congress is also looking at bills to roll back copyright-fee
increases on distant-network signals and superstations delivered by satellite.

And EchoStar hopes that Washington will give it the
go-ahead to deliver local-to-local channels to any household within a given DMA. Relief
could come from Congress, the FCC or the U.S. Copyright Office. Last week, a spokesman for
the Copyright Office said it would defer its ruling pending a decision from the FCC on the
NRTC petition.

EchoStar has a page on its Web site devoted to encouraging
DBS fans to fight to change laws related to local-signal delivery over satellite.

"Congressmen are always responsive to their
constituents," said Karen Watson, director of government relations for EchoStar.

Watson called local-into-local and distant-network feeds
"two pieces of a puzzle that aren't necessarily in conflict." Even if
legislation addresses EchoStar's local-into-local plans, she said, the industry would
still need to address white-area issues.

"Even EchoStar will not be able to reach every single
market with local," she said. "Consumers will still need some distant-network
signals."

DBS-industry executives and analysts are still debating the
best approach to local-signal access, and even the relative importance of local-channel
availability in the overall scheme of things.

According to Bruce Leichtman, DBS analyst with The Yankee
Group, only about 10 percent of customers surveyed cited lack of local channels as a
reason for not choosing DBS.

Leichtman also said nearly 50 percent of new DBS
subscribers opted to keep cable for their local channels. He added that he doubted that
most people would choose to receive local channels over satellite if it meant having to
put up a second dish.

Barbara Sullivan, president of B.G. Marketing Inc., said it
almost doesn't matter whether consumers actually choose EchoStar's
local-to-local service, as long as they know that the option is there.

"At the very least, EchoStar's local-into-local
positions them as being technologically savvy, and people love that," she said.

Sullivan also said it's not necessary for the DBS
industry to back a single local-channel solution just to combat consumer confusion.
"American consumers are option-driven," she said.

The option that U.S. Satellite Broadcasting is backing
heavily is off-air antennas. In conjunction with the Consumer Electronics Manufacturers
Association, USSB has set up a program to deliver maps to dealers that would tell
consumers the best type of off-air antenna to suit their needs, as determined by where
they live.

Initial maps have already been drawn up for Washington,
D.C.; Minneapolis; Indianapolis; Philadelphia; and Nashville, Tenn.

Ted Hearn contributed to this story.

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