SHVA Heading to the White House


Washington -- Congress agreed last week to send
satellite-competition legislation to the White House after deleting two divisive
provisions and folding the bill into a giant $400 billion spending bill that lawmakers had
to pass before going home for the year.

The breakthrough came last Wednesday night, when Senate
Majority Leader Trent Lott (R-Miss.) agreed that a $1.25 billion loan-guarantee program to
promote satellite delivery of local TV signals in rural areas had to come out because of
fierce opposition from Sen. Phil Gramm (R-Texas), chairman of the Banking Committee.

The lawmakers also removed language that barred America
Online Inc. and other Internet-service providers from availing themselves of cable's
compulsory license to retransmit local TV signals.

The cable and movie industries relented on the copyright
change once they were assured that current law was not designed to embrace Internet
distribution of TV broadcasts on a national and global basis in digital format.

The House passed the bill Nov. 18 by a vote of 296-135,
having passed the original bill 411-8 Nov. 9. Unlike the first vote, the second occurred
on a much broader bill that included funding for numerous federal agencies.

Late in the week, Senate action was bogged down by some
senators trying to put the spotlight on parochial concerns, but the chamber was expected
to wrap up business in a few days. Failing that, the Senate is expected to leave early
this week for Thanksgiving, returning Nov. 30 to complete work.

Under the legislation, an overhaul of the Satellite Home
Viewer Act, satellite carriers may offer local TV signals for the first time -- a break
with the past that lawmakers said was designed to promote cable competition.

DirecTV Inc. and EchoStar Communications Corp., the chief
beneficiaries of the new law, won't need retransmission consent from TV stations for
six months, and they won't have to comply with full must-carry for two years.

The bill is loaded with an assortment of penalties,
including stiff fines, for the illegal importing of distant network signals and the
retransmission of local TV signals without proper consent.

Lott's decision on the rural provision was a clear
setback for the National Association of Broadcasters, which was trying to deliver a
victory for hundreds of broadcasters that serve small markets.

The NAB teamed up with the National Rural
Telecommunications Cooperative to insert the rural provision at the last minute, but that
stratagem backfired when Gramm threatened to filibuster the satellite bill and throw off
the Senate's schedule adjournment this week.

"We are very pleased with the action by the Senate. It
was truly the right thing to do," said Matt Polka, president of the American Cable
Association, a small-operator organization that felt especially threatened by
government-funded satellite competition.

The rural-provision advocates didn't come away
empty-handed: House and Senate leaders agreed to put the proposal on the legislative fast
track next year.

"They have guaranteed that by April 1, we will have
addressed this rural loan-guarantee program, so I am not as deeply troubled as I would
have been had we not had that commitment," Senate Minority Leader Tom Daschle
(D-S.D.) said last week.

Although he supports the loan program, Lott said he wants
to make sure it won't turn into political pork for a select few.

"We want to make sure it's a loan guarantee that
will work, that is actually going to do the job, that is not in some way going to
improperly benefit any one individual or group of individuals, for that matter," Lott
said. "I am absolutely determined to get this done."

During House floor debate last Thursday, Majority Leader
Dick Armey (R-Texas), a rural-provision supporter, promised an up or down vote no later
than March 31, with a further commitment to ensure $1.25 billion in funding.

But that vote won't occur until after the legislation
has survived the committee process in both chambers.

Gramm promised to report a bill from his committee early
next year, but he did not commit to supporting it. He indicated that he would ask the
Treasury Department for an analysis of the proposal.

"I think that deserves the scrutiny that Sen. Gramm
wants to give it," Polka said. "We will be happy to be part of that

The deletion of the rural provision was a setback for Sen.
Conrad Burns (R-Mont.), who pushed the satellite bill even though his state is unlikely to
see local-signal service in the near future. Burns said he backed down from challenging
Gramm once they reached a deal to act next year.

"Without their commitments, we would be talking a
different tune," he added.

The other hurdle was the copyright-license ban, also
inserted at the last minute under the guise of a technical correction.

AOL -- aided by Bell Atlantic Corp. and MCI WorldCom Inc.
-- blitzed Capitol Hill during the past 10 days, saying in a Nov. 17 letter to Congress
that the prohibition "would favor the interests of Hollywood and established media
interests over the Internet and consumers."

AOL, based in Dulles, Va., gained the support of House
Commerce Committee chairman Tom Bliley (R-Va.), who pushed for removing the language from
the bill. "Mr. Bliley is very pleased that this provision has been stripped from the
bill," a Commerce Committee spokeswoman said.

The U.S. Copyright Office has the authority to rule on
AOL's request for use of the cable compulsory license. AOL spokeswoman Kathy
McKiernan said she didn't know whether the company would seek the license.

Rep. Billy Tauzin (R-La.), chairman of the House
Telecommunications Subcommittee, said carriage of television signals by AOL and other
companies would likely be an important agenda item next year.