McCain: Satellite Bill Excludes Cable

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Washington -- Proposed Senate legislation would exclude new
cable regulation in its attempt to settle the ongoing dispute between local TV stations
and satellite carriers over the sale of distant-network signals to ineligible dish-owners.

An aide to Senate Commerce Committee chairman John McCain
(R-Ariz.) said last week that the panel had no interest in fusing cable-regulation
provisions to a bill designed to promote satellite competition against cable.

However, the McCain aide said the bill was in draft form
only, and it could change in substance before being introduced sometime after Jan. 19.

"It's not even a bill," the aide added.

Under the draft legislation, direct-broadcast satellite
carriers that offer just one local TV signal in a market would have to carry all signals
beginning Jan. 1, 2002.

The cable industry put out word last year that it could
live with legislation that imposed must-carry burdens on DBS carriers over several years,
rather than immediately.

But industry lobbyists said they would pull their support
if the bill proposed to continue cable-rate regulation, expand program-access rules or
require cable carriage of digital-TV signals.

"We have seen some of the drafts circulating. While in
general, we would prefer a satellite bill with immediate full must-carry, we would agree
to legislation that included a date certain for full must- carry," National Cable
Television Association spokesman Scott Broyles said.

A cable-industry source last week repeated the
industry's promise to oppose a bill that had "anything with rate
regulation."

Theoretically, DBS provision of local-network signals would
reduce demand for distant-network signals.

Yet authorization for DBS carriers to distribute local TV
signals in their home markets cannot be included in McCain's bill -- such a step
requires a change in copyright law, which is the purview of the Senate Judiciary
Committee.

Broadcasters have the upper hand over the DBS industry in
negotiations on the bill. By April 30, an estimated 2.2 million dish-owners will lose
their Fox and CBS distant signals, as ordered by a federal judge who found that satellite
distributor PrimeTime 24 sold imported feeds to ineligible customers.

Broadcasters "have an enforceable court order,"
the McCain aide said.

In addition, DBS' federal license to provide
distant-network signals is legally set to expire Dec. 31, unless Congress acts beforehand
to renew it.

Yet, the DBS side is not defenseless -- especially if 2.2
million angry dish-owners flood Congress and the Federal Communications Commission with a
barrage of complaints.

An FCC source said the agency has received about 2,000
letters and e-mails from satellite-dish owners who could not buy distant-signal packages
when they first purchased their dishes, or who have heard about the Feb. 28 and April 30
cutoffs.

McCain is attempting to resolve the dispute between local
TV stations and DBS carriers. The stations said they are losing audience to imported
network signals, and the DBS carriers said their subscribers buy their network fare
because they can't get clear local reception.

The McCain draft would order the FCC to conduct a
rulemaking to determine how many current dish-owners who face cutoff could continue to
receive their distant-network signals without "significantly or materially"
hurting the local stations.

Four of the five FCC commissioners would have to agree that
no harm to broadcasters would result by grandfathering ineligible dish-owners, the McCain
aide said.

While the FCC rulemaking was in progress, the McCain aide
said it would be desirable if broadcasters agreed to postpone the distant-signal-cutoff
date until Aug. 30.

National Association of Broadcasters spokesman Dennis
Wharton said it was premature to comment on the McCain draft.

McCain's hope is that satellite provision of local TV
signals -- local-into-local, as it is called -- would ultimately defuse the
distant-network controversy.

In the draft bill, distant-network signals would be banned
in markets served by DBS carriers offering all local TV signals.

McCain's people are not optimistic that a pending FCC
rulemaking will help many of the 2.2 million households that are facing a cutoff.

"It doesn't appear that the FCC is going to be
able to bring relief to an appreciable number," the McCain aide said.

An FCC source said the agency's authority to postpone
a distant-signal cutoff is limited by the terms of the Satellite Home Viewer Act.

"There is only so much that we can do," the FCC
source said. "We cannot help most of the PrimeTime 24 subscribers."

The FCC, in its rulemaking, is trying to more accurately
identify those consumers who are unserved by their local TV stations.

The SHVA says a household is served if it receives
what's called a grade-B signal with a conventional rooftop antenna. To the dismay of
the DBS industry, a household that receives a grade-B signal, but not a clear picture on
its TV screen, is still considered "served." That feature of the law limits the
FCC's ability to come to the rescue of dish-owners who are about to lose their
distant CBS and Fox signals.

"Their hands are tied by the statute," a McCain
aide said.

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