Satellite Bill Add-Ons Set to Rise Again

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Washington -- Before President Clinton had a chance to
return from Europe last week to sign satellite-competition legislation, industry lobbyists
began looking ahead to January to pass a new bill aimed at promoting satellite delivery of
local TV signals in rural markets.

Another legislative matter before Congress next year could
be an effort by America Online Inc. to secure a copyright license to transmit local TV
signals to online subscribers.

Both the $1.25 billion rural satellite-loan program and the
Internet copyright license threatened to kill this year's bill, which permits
direct-broadcast satellite carriers to beam local TV signals for the first time.

But last-minute brokering by Senate Majority Leader Trent
Lott (R-Miss.) averted disaster, with the Senate voting 74-24 Nov. 19 to send the DBS bill
to the White House as part of a $400 billion appropriations bill.

Clinton is expected to sign the bill today (Nov. 29), ahead
of the Dec. 2 expiration date of a temporary spending bill that helped to keep the federal
government running after Oct. 1, White House representatives said.

Soon after the bill cleared Congress, DirecTV Inc. and
EchoStar Communications Corp. announced that they would launch local TV service
immediately after the signing.

"The bottom line is that it's going to be great for
satellite because it takes away the legs of the cable argument, which has always been that
you can't get your local channels on your satellite system," said Jimmy Schaeffler, a
DBS analyst with The Carmel Group.

Schaeffler added that the new law would boost DBS' monthly
sales 10 percent over his most aggressive growth projections, but the results won't show
up immediately.

"The problem is that they have lost the critical
holiday buying season," he said. "The first time you'll be able to see any real
enhancement in DBS' numbers will be in the first quarter of 2000."

The cable industry, especially small operators, figures to
play a prominent role in next year's rural satellite debate, which key House and Senate
lawmakers have agreed to conduct early next year, concluding with new legislation by April
1.

Congress makes promises like that routinely, but deadlines
have a tendency to slide as various industries attempt to attach pet projects to a bill
that looks headed for the White House. The more complicated a bill becomes, the longer it
take Congress to act.

But Matt Polka, president of the American Cable
Association, a small-cable-operator group that fought the satellite-loan program, said he
does not expect the legislative process to bog down.

"We are not counting on things dying on the vine. We
certainly would like to be part of the process," Polka said.

Sen. Max Baucus (D-Mont.) introduced a rural satellite bill
just before the Senate adjourned two weeks ago providing the same government-backed loans
to entities -- mostly likely satellite carriers -- that will provide local TV signals in
rural markets.

The Baucus bill has momentum because DirecTV and EchoStar
are not planning to offer local TV signals outside of the top 30 markets anytime soon.
That leaves about 46 million households unserved by the companies.

"For an awful lot of people, it doesn't do a whole lot
outside of the top 30 markets," a cable-industry lawyer said. "There will be
some heat generated by that, and members [of Congress] will want to cut that heat off
sooner or later."

The National Rural Telecommunications Cooperative, which
invested more than $100 million in DirecTV, is planning to renew its drive for
legislation. And the National Association of Broadcasters, which has hundreds of
small-market members that would stand to gain under the legislation, is ready to help out,
too.

"We will vigorously lobby and support an early
resolution of this next year. And we are firmly convinced that there will be an improved
loan guarantee in place by April 1," NAB spokesman Dennis Wharton said.

Passing a law might turn out to be the easy part, as some
sources said the Federal Communications Commission might have a tough time finding
available spectrum. "In some ways, the real question is whether there is spectrum,
not where there is money," a cable-industry lawyer said.

Lawmakers are also promising to look at the copyright
issues associated with Internet distribution of local TV signals. AOL succeeded in
removing from this year's bill a provision that banned Internet-service providers from
using the cable or satellite compulsory license. The language came out when lawmakers
obtained assurances that AOL was ineligible under current law.

In a Nov. 15 letter to key House and Senate members,
Harvard Law School professor and copyright expert Arthur Miller said: "No reasonable
person -- or court -- could interpret these statutory licenses to embrace [Internet]
services."

AOL spokeswoman Kathy McKiernan said the company's goal was
to remove the provision from this year's bill, not to seek new legislation next year.
"We don't have any plans to raise the issue at this time. If they do, we would
certainly be interested in participating in the debate," she said.

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