SBCA Takes Aim at Copyright Hike

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Washington -- The direct-broadcast satellite industry last
week unveiled an ambitious legislative agenda for 1998 -- one that will hinge on
compromises acceptable to cable operators and copyright owners just as much as it will on
a cooperative spirit among key Capitol Hill lawmakers.

Charles Hewitt, president of the Satellite Broadcasting and
Communications Association, said his group's main objective is to pass a bill that
would block an increase in copyright fees that took effect Jan. 1.

'Our emphasis right now is going to be on trying to
get a legislative stay into 1999,' Hewitt said.

Hewitt can count on opposition from copyright owners. The
Motion Picture Association of America and other stakeholders have already made it clear to
congressional leaders that the increase -- from 6 cents per subscriber, per month to 27
cents for network signals; and from either 14 cents or 17.5 cents to 27 cents for
superstations -- was reasonable and represented fair market value.

The 27-cent rate was established this past fall by the
Copyright Arbitration Royalty Panel and affirmed by Librarian of Congress James
Billington. An appeal is pending in the U.S. Court of Appeals for the District of Columbia
Circuit.

Sen. John McCain (R-Ariz.), who introduced legislation in
November that would impose a one-year freeze on the increase, said last week that passage
of the copyright bill was a priority for him when Congress returns this week.

But McCain, chairman of the Commerce Committee, will need
the cooperation of Sen. Orrin Hatch (R-Utah) because Hatch's Judiciary Committee has
jurisdiction over copyright law. The same dynamic is at work in the House, where Judiciary
Committee chairman Rep. Henry Hyde (R-Ill.) has already sought to control Rep. Billy
Tauzin's (R-La.) bill that would block the copyright-fee increase.

Both McCain and Tauzin are concerned that the 27-cent rate
will make DBS companies less competitive against cable operators, which pay an estimated
2.45 cents per subscriber, per month for distant network signals and 9.8 cents for
superstations.

Hewitt's group also plans to press for renewal of the
Satellite Home Viewer Act, which expires Dec. 31, 1999. The law permits satellite carriers
under a compulsory license to distribute network signals to households that cannot receive
the local affiliate with a conventional rooftop antenna.

The SBCA will fight for removal of the requirement that a
former cable subscriber must wait 90 days to buy a distant network signal from a satellite
carrier. It will also urge Congress to make the license permanent.

'There are one or two easy parts,' Hewitt said.

The hardest SHVA reform to pass, he said, involves the
authority of satellite carriers to beam local TV signals into local markets in an effort
to match the local-national mix offered by cable operators.

'The real issue centers around must-carry,'
Hewitt said.

Two weeks ago, the National Association of
Broadcasters' board of directors announced support for local-into-local as long as
the satellite provider offers all of the stations in a market and complies with
retransmission-consent rules.

Hewitt said the application of cable must-carry rules was
inappropriate for a national service with limited spectrum like DBS.

'I do think that the cable must-carry obligation goes
too far,' Hewitt said. 'When you take a look at having to carry home shopping
networks and other issues like that, it seems that was not necessarily the intent of
Congress.'

As a result, the SBCA is unwilling to throw all of its
lobbying muscle behind local-into-local legislation, he said.

'SBCA has a policy supporting local-into-local. But it
is not a primary issue for our industry. It is a primary issue for two companies --
Capitol Broadcasting and EchoStar [Communications Corp.],' Hewitt said, adding that
'an off-air solution' could be just as viable as satellite for the receipt of
local signals.

Capitol has proposed a Ka-band service to make all 1,700
local stations available via satellite reception by the year 2000. EchoStar wants to
provide local stations to its DBS subscribers in the top markets.

Karen Watson, EchoStar's director of government
relations, said reform of the SHVA 'is a legislative priority,' including a
change that would classify local markets based on designated market areas, rather than on
grade B contours.

EchoStar, she said, also supports legislation that makes it
'unambiguously clear' that DBS companies can offer local TV signals in local
markets. However, Watson reiterated EchoStar's belief that current law already
permits the local-into-local option.

On other topics, Hewitt said the SBCA:

• Will ask Congress to extend cable's
program-access requirements for five years beyond 2002. Current law allows the Federal
Communications Commission to extend the ban on exclusivity by rule. The SBCA will also
push for a ban on the migration of vertically integrated cable programming from satellite
to terrestrial as means of escaping program-access rules.

• Will not take a position on EchoStar's request
that the U.S. Copyright Office rule that DBS companies can provide local signals to
'unserved' households under current law. Hewitt predicted that the Copyright
Office would decline to conduct a rulemaking.

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