House Committee Approves Loan Plan

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Washington -- The House Agriculture Committee last week
overwhelmingly supported a bill that sponsors hope will spur satellite competition to
cable in rural markets that do not currently receive local TV signals via satellite.

The panel passed the bill by a 41-0 vote just two days
after House Speaker J. Dennis Hastert (R-Ill.) tossed his support behind the measure,
which now needs approval from the House Commerce and Judiciary committees before advancing
to the House floor.

Hastert and other House leaders agreed last fall to vote on
the bill (H.R. 3615) before April 1 in an effort to expand competitive choices introduced
last year with the Satellite Home Viewer Improvement Act, which allowed satellite carriers
to provide dish owners with local TV signals.

The new legislation will provide $1.25 billion in loan
guarantees to satellite carriers willing to serve rural America with those signals.

The program is necessary, proponents said, because EchoStar
Communications Corp. and DirecTV Inc. are not planning to serve more than 50 percent to 60
percent of households with local TV.

The law is written so that multiple providers, including
cable-system operators, can seek loan guarantees. But bill sponsors Rep. Bob Goodlatte
(R-Va.) and Rep. Rick Boucher (D-Va.) said they want the bulk of the money to go to
satellite carriers.

"It is technology-neutral. [But] everyone knows this
is really about satellites," Boucher said.

Hastert, meanwhile, got a round of applause when he told a
National Association of Broadcasters group that he favored the rural loan-guarantee
program. The NAB backs the legislation in order to promote satellite carriage of its
small-market members.

"I support the efforts under way that will bring your
stations to viewers in every market by providing the incentive to developers of that
service," Hastert said.

EchoStar and DirecTV have said that they could expand their
local-TV-signal plans if they were not required to carry all TV signals in a served market
beginning in 2002. But the NAB opposes relaxing those carriage requirements.

Siding with the NAB, Hastert said he was unwilling to budge
on direct-broadcast satellite must-carry requirements contained in last year's SHVIA
in order to help pass rural satellite legislation this year. "I oppose any attempt to
reopen the Satellite Home Viewers Act itself," he added.

Goodlatte and Boucher, whose bill has 120 co-sponsors, said
they would not be surprised to see a consortium of local TV stations bid for the loans.
Boucher said some fixed-terrestrial-wireless services could get some backing, too.

Small cable operators also want loans to drive deeper into
rural markets and offer consumers more video channels and high-speed Internet access. But
Boucher all but ruled out cable operators as loan-guarantee recipients. "I can't
imagine how that would work practically," he said.

American Cable Association president Matt Polka said he was
aware that Goodlatte and Boucher had a "DBS bias all along," and he declined to
testify before the Agriculture Committee.

Polka -- who represents 300 small cable operators with 3.2
million subscribers -- said he plans to work with Senate Banking Committee chairman Phil
Gramm (R-Texas) to make the bill "truly technology-neutral."

The Congressional Budget Office released a report two weeks
ago indicating that the Goodlatte-Boucher bill would cost taxpayers $350 million in loan
defaults.

The CBO analysis -- which called the plan "financially
and technically risky" -- assumed that only 3 percent of TV households would benefit
from satellite-delivered TV signals because cable and broadcast penetration is about 95
percent.

"The market is far, far greater than that,"
Goodlatte protested.

Goodlatte said the CBO understated the potential market
size by ignoring the fact that cable subscribers would drop their service in favor of a
DBS service that had just added local TV signals.

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