USIIA Backs EchoStar-DirecTV Merger

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EchoStar Communications Corp.'s proposed merger with DirecTV Inc. has won
strong support from a national trade group representing a cross-section of the
Internet industry.

While the deal has been described as anti-competitive by many, the U.S.
Internet Industry Association filed comments with the Federal Communication
Commission insisting that the deal would promote competition to cable and the
deployment of broadband, especially in rural areas.

If the companies are not allowed to combine, the USIIA said, neither one
would be strong enough to battle the cable industry in the pay TV market or
multiple competitors in the broadband market.

'The issue is not whether the merged EchoStar would stifle competition in the
markets for satellite distribution of television and Internet content. Rather,
the question is whether any of the existing satellite companies in and of their
own right will have the resources and capacity to offer consumers a choice in
areas that can not be otherwise well or economically served by the cable or
telephone industries,' the USIIA said.

The USIIA, based in Washington, D.C., described itself in the undated FCC
comments as a 300-member national trade organization engaged in Internet
commerce, content and connectivity.

The group's comments stood in sharp contrast to the views expressed by
opponents, which claim that the deal can't survive antitrust review because it
would create a direct-broadcast satellite monopoly with 90 percent share of the
DBS-subscriber market and a lock on millions of homes not served by cable.

The USIIA claimed that EchoStar and DirecTV operate in broader markets in
which they have small market shares.

'The issue is capacity, not competition. The new merged EchoStar . would
participate in the multichannel-television industry and the broadband Internet
industry, but would hold substantial market share in neither,' the association
added.

The USIIA said a merged EchoStar-DirecTV would create a third broadband
platform that might lead to carriage for thousands of Internet-service providers
that have been denied access by cable operators and have been frustrated by the
slow pace and technology glitches in the digital-subscriber-line market
controlled by local phone companies.

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