FCC to Study Cable-DBS Ban

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Washington -- The Federal Communications Commission,
divided along partisan lines, launched a rulemaking last week that could result in a ban
on cable-operator ownership of direct-broadcast satellite interests.

While the panel voted 5-0 to streamline DBS-service rules,
Republican FCC commissioners Michael Powell and Harold Furchtgott-Roth dissented from the
portions dealing with cable and DBS common-ownership issues.

Powell said he rejected an assertion by FCC commissioner
Susan Ness that the FCC was reviewing the cable-DBS issue 'in a neutral
fashion.'

'I don't believe that the item is all that
neutral,' Powell said. 'I believe that it begins to suggest that one of the
explanations for cable rates is in some way cable and DBS horizontal concentration.'

Furchtgott-Roth said the proposal was
'unnecessary' and, if adopted, that it would 'likely prove burdensome to
consumers and to industry.'

Regina Keeney, chief of the FCC's International
Bureau, said the cable-DBS issue would not delay the agency's review of PrimeStar
Partners L.P.'s acquisition of the last DBS orbital slot with continental U.S.
coverage. She said FCC action was likely in 'the second quarter.'

PrimeStar, the cable-industry-backed medium-power DBS
service, is attempting to partner with Rupert Murdoch's News Corp., but the merger
needs approvals from the FCC and the Department of Justice.

'This [rulemaking] is on a parallel track,'
Keeney said.

The FCC is also going to review whether foreign-ownership
caps should apply to DBS licensees. FCC officials said the agency would consider whether
any common-ownership rule should apply generally, or on a case-by-case basis.

'It's a separate question as to whether that rule
would apply to any particular transactions before us,' Keeney said.

Pia Pialorsi, spokeswoman for Senate Commerce Committee
chairman John McCain (R-Ariz.), said it was appropriate for the FCC to look at specific
mergers.

But, she said, McCain generally thinks that 'the FCC
should look into removing these rules, and not at ways of imposing new ones.'

EchoStar Communications Corp. applauded the FCC's
cable-DBS review, saying that DBS was intended to be a 'technology that would provide
competition to cable, not be co-opted by it.'

The National Cable Television Association said that as a
rule, it opposes line-of-business restrictions that the FCC is apparently contemplating
with a cable-DBS common-ownership ban.

Michael Luftman, vice president of public affairs for Time
Warner Cable, said his company had no objection to the FCC's review. However, he
said, a cross-ownership ban would be unwarranted if based on the view that PrimeStar is
tailoring its marketplace actions to benefit its cable MSO owners.

'The performance of PrimeStar to date prior to its
roll-up proves that it is a very independent operation,' Luftman said.

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