EchoStar’s HD Plan Under Attack

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Charlie Ergen has a bold idea: Let satellite providers beam high-definition network feeds from New York and Los Angeles to customers who can’t obtain the same digital programming locally.

That, Ergen maintains, would satisfy consumer demand for dazzling pictures, spur the sale of DTV sets and force local stations to build out their facilities to cover every household in their markets with HDTV signals.

Ergen’s lawyer made that proposal in a March 4 letter to Federal Communications Commission chairman Michael Powell, saying direct-broadcast satellite deserved a chance to meet the needs of the digitally unserved.

'GRAVE’ IMPACT

Last week, broadcasters responded, telling the FCC that Ergen’s plan was nakedly self-serving and ought to be rejected.

“The consequences of this radical proposal, if adopted, would be likely to be grave,” the National Association of Broadcasters said in an 11-page letter signed by executive vice president Marsha MacBride, Powell’s former chief of staff.

NAB’s letter outlined a number of concerns. As a threshold matter, it rejected the idea that TV stations were behind schedule, claiming that at least one DTV station was up and running in 203 markets that included 99.42% of the U.S. population.

Moreover, NAB related that nearly 74% of TV households had access to at least six off-air DTV signals.

“That the broadcast-television industry has not been diligent in pushing the digital transition is palpable nonsense,” the NAB letter said.

Ergen’s plan would depart from current law, which bans satellite subscribers from receiving out-of-town network signals if they can can get the same programming from a local affiliate using a conventional rooftop antenna.

PAST LEGAL ACTION

NAB members have sued EchoStar for allegedly abusing that law by selling distant network signals to thousands ineligible customers. The dispute, which represents a threat to local stations’ advertising revenue, is the subject of pending litigation in federal court.

Broadcasters believe Ergen’s proposal is another attempt to get around the distant signal prohibition and “hook” consumers on out-of-town network feeds who would bitterly resist having to drop that service after being told they had to purchase the local version.

“The simple greed behind EchoStar’s proposal is clear, and the tactic familiar,” NAB said, adding that EchoStar purpose was to put the onus on TV stations to confront “thousands of angry local viewers with the need to change their reception setup.”

DATES TO ’01

Ergen originally floated the idea in the fall of 2001 but it got lost at the FCC in the aftermath of the Sept. 11 terrorist attacks.

The issue might not play out at the FCC. Congress is planning to reauthorize the Satellite Home Viewer Improvement Act, which might include a provision banning the importation of distant network signals in any market where EchoStar offers a local signal package.

EchoStar today offers locals in about 100 markets. It unclear to what extent Congress would require EchoStar customers in those markets to drop their distant network package.

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