Consumers in 83 percent of EchoStar Communications Corp.'s local-TV markets need a second direct-broadcast satellite dish to receive the over-the-air signals, angering broadcasters who suspect deliberate discriminatory treatment.
EchoStar, which asserts that its main satellites lack channel capacity, said it imposed the second-dish solution in 30 markets, in order to comply with federal law and avoid discontinuing service to any of the 36 markets in which it offers local broadcast-TV signals.
The move riled the National Association of Broadcasters, which believes the second-biggest DBS firm is trying to injure some TV stations by exploiting consumer resistance to acquiring new equipment to see just a few channels.
On Jan. 4, the NAB and the Association of Local Television Stations filed an emergency petition with the Federal Communications Commission, seeking a ruling that the second-dish requirement is unlawful.
FCC spokeswoman Michelle Russo said the agency planned to address the NAB-ALTV petition promptly. "We plan, in short order, to issue a public notice and seek comment on the emergency petition so that we can resolve this as quickly as possible," she said.
Last Tuesday, the FCC released a public notice describing the dispute. It sought public comment on Jan. 23 and Feb. 4.
The NAB's filing marked yet another battle in a long war between EchoStar and local broadcasters. Most recently, the trade group urged federal regulators to block EchoStar's bid to acquire No. 1 satellite provider DirecTV Inc. in a $25.8 billion merger announced last October.
In its FCC filing, the NAB called EchoStar's second-dish plan a ploy designed to relegate some local TV stations to an "inaccessible technological ghetto."
EchoStar said it was complying with the Satellite Home Viewer Improvement Act and FCC policies, mainly because it is not charging customers who request a second dish. EchoStar called its second-dish option a necessary interim plan, as the addition of about 260 local TV stations to its main satellites would have exhausted capacity and caused the shutdown of local TV service in a number of markets.
DirecTV is not involved in the dispute because the El Segundo, Calif.-based company opted to provide all local TV signals to 41 markets from a newly launched spot-beam satellite that requires a single dish. EchoStar is offering many local TV signals from satellites positioned on the East and West coasts, which can't be picked up with one dish.
Under the SHVIA, EchoStar and DirecTV were required, effective Jan. 1, to carry all local TV signals in markets where they elected to offer any one station.
Relying on an FCC order released last September, EchoStar claimed the second-dish option is acceptable, provided consumers do not have to pay for the equipment.
"EchoStar's plan complies with the law. By providing any necessary additional equipment free of charge, we meet the statutory and regulatory prohibitions against price discrimination," EchoStar chairman and CEO Charlie Ergen said in Dec. 27 letter to NAB president Edward Fritts.
EchoStar said it could not follow in DirecTV's path because Loral Space & Communications Ltd. and Lockheed Martin Corp. last year failed to deliver new satellites that would have allowed reception of all local TV signals with one dish.
EchoStar said both Loral and Lockheed Martin notified the FCC of the delays, a statement confirmed by an agency source.
In its order on DBS carriage of local TV signals, the FCC made several statements that could be the source of the trouble.
The FCC said it would be acceptable for consumers to purchase a second dish to receive all local TV stations in a market. But if two dishes were needed, a DBS firm could not charge for the second dish, the FCC said.
But the NAB pointed out that the FCC also said DBS firms were prohibited from "requiring subscribers to obtain a separate dish to receive some local signals when other signals are available without the separate dish."
Despite those seemingly clashing positions — highlighted by use of the word "purchase" on the one hand, and "obtain" on the other — the FCC concluded that DBS firms were barred from "requiring subscribers to purchase additional equipment to gain access only to some, but not all of, the local signals in a market."
A free second dish was no solution at all for most consumers because they typically resist the "hassles, inconvenience, and aesthetic costs" associated with the installation of new equipment, the NAB said.