Time Warner Seeks DBS Funds for PBS

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Washington -- In another round of level-playing-field
politics, Time Warner Cable wants direct-broadcast satellite providers to kick in 5
percent of their revenue to fund PBS programmers.

It's only fair, Time Warner said, because cable
operators not only pay 5 percent of their revenue to local governments, but they also
absorb the financial toll exacted by various federal rules, including program access,
leased access and channel-occupancy limits.

"DBS providers cannot be allowed to continue to roam
the competitive landscape unfettered by the types of regulatory burdens that cable
operators must bear," Time Warner said in a March 10 filing with the Federal
Communications Commission.

The Satellite Broadcasting and Communications Association
issued a statement last week denouncing Time Warner, calling its FCC proposal an effort
"to tax the satellite industry -- its sole competitor."

Time Warner filed with the FCC in response to the
agency's November decision to require DBS services to set aside 4 percent of their
channels for noncommercial programming with an educational and informational purpose.

The agency did not impose any revenue-related
public-interest obligations. The FCC established the 4 percent set-aside under provisions
of the 1992 Cable Act.

Stu Kantor, director of corporate communications for PBS,
called Time Warner's proposal "a novel idea, but we don't think that
there's any authority for it under the statute."

Time Warner said its proposal is necessary in part to begin
equalizing public-service requirements between cable and DBS. With 9 million subscribers
and growing rapidly, the DBS industry cannot escape public-interest burdens based on some
"nascent industry rationale," Time Warner said in the filing.

Because cable operators and open-video-system operators
were required to comply with onerous public-interest obligations early on in their
development, Time Warner said, DBS carriers can't legitimately use its youth as a
crutch.

"DBS is no longer a struggling new entrant entitled to
extra protection that was never even afforded to cable and OVS at the time when those
services entered the competitive arena," Time Warner said.

In a prepared statement, SBCA president Charles Hewitt
lambasted Time Warner for trying to get the FCC to "tax" DBS operators. He
dismissed notions that Time Warner's 5 percent revenue proposal and cable-franchise
fees were somehow comparable.

"Franchise fees are a cost of doing business for cable
video monopolies. There is no correlation whatsoever between those fees and this proposed
tax on the satellite industry. It is an anti-competitive move, plain and simple,"
Hewitt said.

In the past, the cable industry has estimated that local
governments collect more than $1 billion in franchise fees. The SBCA did not have an
estimate of what Time Warner's 5 percent proposal would total.

Ken Johnson, spokesman for House Telecommunications
Subcommittee chairman Rep. Billy Tauzin (R-La.), said the Time Warner proposal was
premature.

"We should not be making new demands on DBS operators
until Congress and the FCC level the playing field between the satellite industry and the
cable industry," Johnson said.

Tauzin is planning to introduce a bill that would allow DBS
providers to serve home-dish owners with local TV signals. Similar legislation has already
cleared a House subcommittee and the Senate Judiciary Committee.

In the FCC filing, Time Warner claimed that the disparity
between cable and DBS regulations might violate cable operators' 14th Amendment right
of equal protection of the laws.

"Without a level regulatory playing field, the
extensive regulations imposed upon cable and OVS operators become more constitutionally
suspect," Time Warner argued.

Time Warner also asked the FCC to ensure that DBS
can't exploit a potential loophole in the 4 percent set-aside requirement.

In one recommendation, Time Warner said DBS carriers should
not be allowed to count carriage of C-SPAN toward the 4 percent minimum prior to the
adoption of FCC rules.

"If the channel-capacity set-aside requirement could
be satisfied in such a cavalier fashion, there would be no need for the 4 percent capacity
reservation in the first place," Time Warner said.

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