Must-Carry Handling Irks Small Ops

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Washington -- Small cable operators spent the front end of
last week trying to alter popular fast-track legislation that Congress views as the best
hope of installing the direct-broadcast satellite industry as a robust competitor to
cable.

Small cable operators insisted that instead of promoting
competition, Congress is poised to inflict serious harm on them by giving DBS carriers
unjustified regulatory relief.

"We think that these bills will not create
competition," said Matt Polka, president of the American Cable Association (formerly
the Small Cable Business Association), at a press conference here last Monday (April 26).

The House overwhelmingly approved H.R. 1554 last Tuesday.
Senate action is expected in a few weeks. The White House released a statement last week
voicing general support for the House bill, although it raised several points of concern.

Topic A for the ACA is the handling of must-carry, or the
requirement that cable systems provide carriage to local broadcasters.

Under the House bill, a DBS company that elects to serve a
local market with local TV signals won't have to offer all stations in that market
until Jan. 1, 2002. Pending Senate legislation would establish the same deadline for full
must-carry.

Key House and Senate lawmakers agreed that DBS carriers --
especially EchoStar Communications Corp.'s Dish Network -- would be constrained in
the number of markets that they could initially serve if full must-carry were imposed on
the date of enactment.

The January 2002 date, according to an aide to Sen. John
McCain (R-Ariz.), also corresponded with the launch date of new satellite-delivered
local-TV-signal service provided by Capitol Broadcasting Co. Inc. Capitol plans to serve
the top 70 markets, reaching 75 percent of U.S. households.

During their visit to Washington, small operators
emphasized that the DBS industry should comply with full must-carry. They said EchoStar
would be a formidable competitor if the DBS carrier could market just the most popular
off-air signals and package them with dozens of cable networks.

In addition, small operators said they were suspicious that
when the January 2002 deadline arrived, some DBS carriers would protest having to carry
all local TV signals and use the cutoff of existing dish subscribers from their local TV
signals as a lobbying weapon on Capitol Hill.

"Phased-in must-carry is no must-carry at all,"
said Polka, who heads a 280-member organization that serves about 2.3 million subscribers.

As an alternative, the ACA is proposing that Congress
retain the phase-in for the top 20 markets, but protect small cable by requiring immediate
full must-carry in markets 21 through 211.

The ACA's bargaining position on Capitol Hill
wasn't helped by the fact that the National Cable Television Association supports the
legislation in its current form.

The NCTA, which represents large cable operators and
programming networks, endorsed the legislation on the basis that the bill promotes
competition, rather than revisiting cable-system regulation.

Polka admitted that his organization's message was not
resonating with lawmakers.

But David Kinley, president of SunTel Communications LLC
and a past SCBA president, said he remained optimistic because small cable operators
achieved some of their biggest lobbying gains just as Congress was completing work on the
Telecommunications Act of 1996.

"If you learn anything in this town, you learn that it
is never too late," Kinley said.

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