House DBS Bill Sets 2002 Must-Carry

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Washington -- With Clinton administration backing, the
House of Representatives voted overwhelmingly last week to authorize direct-broadcast
satellite carriers to serve dish owners with their local TV signals for the first time.

The move is seen as a bold policy shift, intended to
promote cable competition.

The vote was 422-1, with one member voting
"present." Senate action on similar legislation could occur within the next few
weeks.

"This is the most important telecommunications bill
passed by the House since the historic Telecom Act was approved in 1996," Rep. Billy
Tauzin (R-La.), chairman of the House Telecommunications Subcommittee, said in a prepared
statement.

"I can't imagine a bigger moment in this video
revolution than what we are doing here today," Rep. Edward Markey (D-Mass.) said.

Although House members were euphoric about their
achievement, the two DBS companies that Congress is trying to help the most weren't
so giddy. And local broadcasters are withholding support until some holes get plugged.

EchoStar Communications Corp. -- which is poised to launch
local-TV-signal service as part of its Dish Network on the day when the bill becomes law
-- is concerned that cable operators will use their market power to reach
retransmission-consent agreements with local TV stations for better terms than EchoStar
can get.

"DBS and other distributors should be given fair and
nondiscriminatory terms relative to cable companies," EchoStar chairman and CEO
Charlie Ergen said in a prepared statement.

DirecTV Inc., which serves 4.6 million home-dish customers,
believes that the House bill (H.R. 1554) includes a disincentive for it to even offer
local TV signals.

Were DirecTV to offer local TV signals in a market, all
DirecTV subscribers to distant-network signals would immediately lose those signals if
they reside within a 35-mile radius of the network affiliates' transmission towers or
some other designated landmark, such as a post office.

DirecTV subscribers who lost their distant-network signals
would have to obtain their network signals locally. If they signed up for DirecTV's
local-signal service, they would have to buy new dishes and set-top boxes -- an investment
that consumers would likely resist.

"Why would we want to anger our own subscribers?"
a DirecTV source asked.

Satellite-industry sources said it was ironic that Congress
would include in a bill designed to promote cable competition a provision that appeared to
undermine its stated goal.

The provision troubling DirecTV would not apply in markets
where EchoStar had initiated local-signal service but DirecTV had not.

In a statement voicing general support for the House bill,
the White House echoed DirecTV's concerns, saying that the bill appears "to
cause recipients of otherwise legal distant signals to lose the right to continue to
receive these signals."

The bill would not only amend the Satellite Home Viewer
Act, but also the

Communications Act, which required the Judiciary Committee
and Commerce Committee to work together to produce one bill.

Under the bill, DBS carriers have until Jan. 1, 2002,
before they must offer all signals in any market where they elect to provide some local
signals.

In a quirk that may not have much utility, the bill would
allow DBS carriers to escape full must-carry requirements if they can obtain copyright
clearances for the local TV signals that they wish to retransmit to home-dish owners.

The National Association of Broadcasters said it wanted to
see a few provisions tightened up. For example, the NAB wanted the bill to include a
"loser-pays" clause to cover the cost to determine whether a home-dish owner is
legally receiving distant-network signals. The NAB also wants the network-nonduplication
zone extended beyond 35 miles.

"There are several issues that we would like to see
addressed as the process moves forward," NAB spokesman Dennis Wharton said.

The National Cable Television Association applauded the
bill's passage. "The cable industry has consistently agreed with the goal of
encouraging competition, rather than regulation," NCTA spokeswoman Josie Martin said.

In its statement, issued by the Office of Management and
Budget, the White House said it liked the bill "because it will enhance consumer
choice and promote competition."

But the statement said the White House disagreed with a
provision that would require DBS carriers to provide free off-air antennas to dish owners
who had been cut off from distant-network service. It called the plan an "unfunded
mandate on the private sector."

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