Advocacy Group Calls for DBS Set-Aside

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Washington -- The Alliance for Community Media, a
public-access-TV advocate based here, is calling on the Federal Communications Commission
to wrap up a rulemaking that would force direct-broadcast satellite operators to surrender
blocks of channels to public-access programmers.

The FCC launched the rulemaking in early 1997, but the
effort to complete it has been stalled for months, in part because DBS operators and
public-access advocates remain far apart on the key issues.

In a letter to FCC chairman William Kennard last week, the
ACM stressed that it was long past overdue for the commission to finish action on the
rulemaking, which would require DBS firms to set aside between 4 percent and 7 percent of
their channels for programming of an informational or educational nature.

"Now is the time to do this because their market share
is really growing," said Bunnie Riedel, the ACM's executive director, in an
interview.

Cable operators, the satellite industry's biggest
competitors, have to set aside channels for public-access and leased-access programmers,
and DBS operators should shoulder the same obligations, Riedel said.

"DBS should not be treated any differently than
cable," she added.

The DBS industry is growing quickly, with DirecTv Inc.,
EchoStar Communications Corp. and PrimeStar Inc. claiming 7.1 million subscribers as of
June 30, according to the Satellite Broadcasting and Communications Association.

But Margaret Parone, the SBCA's vice president of
communications, disputed Riedel's suggestion that DBS operators can afford to yield
the channel capacity at this point in their existence.

"These companies haven't even made the breakeven
point," Parone said.

The ACM has recommended that the FCC create a nine-member
board -- seven of them presidential appointees -- that would oversee and allocate funding
to eligible programmers, which must be editorially independent of the DBS operators.

In what is turning out to be its most controversial
recommendation, the ACM is calling on the FCC to authorize the board to collect 5 percent
of gross revenue from DBS operators to finance the public programmers.

Riedel said the FCC had the authority to create the board,
but she was unsure whether the law would allow the commission to impose a 5 percent
gross-receipts tax on DBS firms.

Parone said legal questions aside, DBS companies do not
have the cash flow to sustain a 5 percent tax on their gross revenue.

"You are looking at a four-year-old industry that is
turning the corner on profitability," she said. "It's got to meet its
financial obligations before it can look ahead and meet its community obligations."

The rulemaking has its origins in the 1992 Cable Act. But
FCC action stopped in 1993, when a federal judge ruled that the DBS-channel set-aside was
unconstitutional. The 1993 ruling was reversed in August 1996 by the U.S. Court of Appeals
for the District of Columbia Circuit.

In comments filed last year, the cable industry took issue
with recommendations by DirecTv that DBS carriage of cable networks Discovery Channel, The
Learning Channel and Animal Planet should count toward fulfillment of the 4 percent to 7
percent set-aside.

The National Cable Television Association said
DirecTv's proposal was unacceptable because it would allow DBS operators to
"piggyback" on the programming investments of the cable industry.

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