Abernathy: DBS Concentration is an Issue

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EchoStar Communications Corp.'s proposed merger with DirecTV Inc. would cause "significant concentration," but it may not run afoul of antitrust laws, Federal Communications Commission member Kathleen Abernathy said last week.

The Republican commissioner said the merger would indeed consolidate the direct-broadcast satellite market, but competition with cable could determine whether the deal is considered legal.

"That is sort of the big key," Abernathy said. "What's the market? Is it just the market for satellite-to-home television or the multichannel-viewer market, and then your competitors are cable?"

EchoStar and DirecTV filed for FCC approval of the $25.8 billion deal last week. Commission chairman Michael Powell — who also raised concerns about the deal's impact on competition — has organized a team of agency officials to review the transaction.

EchoStar chairman and CEO Charlie Ergen has said the merger is necessary to help DBS compete with the cable industry, which controls about 80 percent of the pay-TV market, compared with DBS's 17 percent.

"Significant concentration doesn't mean it's something that can't happen," Abernathy told reporters in her office. "In this instance, you have both of the parties who are providing satellite-to-home TV merging. Now whether that is OK or not OK remains to be seen."

Abernathy said the FCC should work to coordinate its merger review with the Justice Department.

FCC review could take as little as three to six months, she said, in keeping with Powell's view that the agency's past merger reviews have taken too long.

On other topics, Abernathy said:

The FCC is moving forward in deciding the regulatory classification of cable-provided Internet access, promising a decision by early next year. She said she has not decided whether high-speed cable data service is a cable service, an information service or a telecommunications service. "I think I am not ready to say yet," she said.

The FCC would launch three rulemakings designed to determine if telephone company-provided broadband services are unregulated information services and to understand the impact that such a classification on funding the program to maintain affordable local phone for all Americans.

She had not reviewed last week's Cable Services Bureau decision to deny KNWS-TV, a TV station in the Houston market, its right to demand access to DirecTV for the next four years because the broadcaster mailed its must-carry election a day late. "I have not read that decision. It's a bureau decision. I would guess we are going to see an application for review," she said.

She wasn't troubled with the prospect of reviewing a large cable merger, even though the FCC is not enforcing cable-ownership limits. "That's awfully hypothetical. I can't be troubled by something that hasn't happened," she said.

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