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Congress to Resume Local-DBS Debate

Washington -- With the return of Congress this week,
congressional leaders hope to resume their push to authorize direct-broadcast satellite
carriers to offer local-TV signals in their home markets.

Reaching their goal isn't going to be easy: In the
last few weeks, two key lawmakers -- Senate Commerce Committee chairman John McCain
(R-Ariz.) and House Telecommunications Subcommittee chairman Billy Tauzin (R-La.) -- have
staked out positions contrary to the demands of broadcasters and cable operators.

Two weeks ago, McCain announced that he opposed forcing
full must-carry obligations upon DBS carriers that offer local signals. Tauzin made the
same declaration the week before.

"[McCain] supports local-into-local. He thinks
that's crucial to create a competitor to cable, and he will continue to fight for
that," said McCain aide Mark Buse.

McCain and Tauzin have competition of their own. House
Courts and Intellectual Property Subcommittee chairman Howard Coble (R-N.C.) has a bill
(H.R. 3210) that would make a number of copyright changes, in addition to authorizing DBS
retransmission of local-TV signals.

Senate Judiciary Committee chairman Orrin Hatch (R-Utah)
has introduced nearly identical legislation (S. 1720), but he has held no hearings.

Although the Coble bill was voted out of subcommittee March
18, it has not surfaced again, despite assurances by Coble that he wanted to take the bill
to the full Judiciary Committee promptly.

The Coble bill hit trouble after the satellite industry
angered Hollywood studios and other copyright owners by attaching an amendment that killed
the new 27-cent-per-month, per-subscriber fee for distant-network signals and

"It's not dead, but it's on life
support," a Coble aide said.

So the focus has shifted to the Commerce Committees, where
Tauzin and McCain are likely to clash with the powerful cable and broadcasting lobbies.

The cable industry and the broadcasters support full
must-carry immediately, and they have shown no signs of backing away from that position.

"We think that there should be full must-carry for all
local-broadcast stations, along with retransmission consent," said National
Association of Broadcasters spokesman Dennis Wharton.

The must-carry debate is of less concern to the TV networks
and their affiliates than it is to the independent stations.

The networks have retransmission consent to force carriage
upon a local DBS carrier like EchoStar Communications Corp. But the independents, which
have relied on must-carry to secure cable carriage, are more vulnerable.

"Our basic argument is that our people are going to be
left out, and they are going to be at a competitive disadvantage in their markets against
more established affiliates and against cable networks," said Jim Popham, vice
president and general counsel of the Association of Local Television Stations (ALTV),
which represents about 250 independent TV stations.

The cable industry is advocating full must-carry to promote
regulatory parity and to lessen a DBS carrier's ability to package satellite
programming with only the most popular local-broadcast outlets.

EchoStar's position is clear: No must-carry until a
DBS carrier achieves respectable market penetration -- say, 15 percent. The largest DBS
carrier, DirecTv Inc., holds only about 3 percent of the TV market.

Tauzin is searching for a compromise.

"We think that it is absolutely critical to resolve
the problem, but, at the same time, to provide some safeguards for local
broadcasters," said Tauzin aide Ken Johnson.

Tauzin's is leaning toward a phase-in of must-carry
with a deadline that would call for full must-carry compliance.

"If you don't have a drop-dead certain date by
which time the satellite industry must fully comply with must-carry, it never will,"
Johnson said.

Popham said a phase-in was unworkable.

"Our concern is that a phase-in would never end,"
Popham said. "We would get two years down the road, and the satellite people would be
saying, 'Give us another year,' and this would go on interminably."

Although neither Tauzin nor McCain has introduced a bill
that would authorize a DBS carrier to retransmit local signals in their markets of origin,
both are expected to do so shortly.

"We are working with the broadcasters and others and
the DBS people and trying to get something done. To be honest, we had hoped to have it
done earlier, but [McCain's] been a little busy with tobacco [legislation],"
Buse said.

"Billy is prepared to press forward with legislation
this year," Johnson said.

Even if legislation were to stall this year due to cable
and broadcast opposition, the issue is unlikely to disappear, as the copyright law that
allows DBS carriers to sell network signals to unserved households -- the Satellite Home
Viewer Act -- is set to sunset Dec. 31, 1999.

"Congress is going to have to do something to extend
that license," Popham said.

Away from Capitol Hill, the U.S. Copyright Office is
considering a proposal by EchoStar that could influence the debate in Congress.

The Copyright Office is expected to announced in June or
July whether current law prevents a DBS carrier from proving local-TV signals to a local

A favorable ruling from the Copyright Office would allow
EchoStar to expand beyond so-called unserved households and to invade local markets with
local-TV signals under no must-carry or retransmission-consent obligations. To the extent
that EchoStar provides a local signal to a household located within a grade-B contour, it
is not required to pay the 27-cent-per-month, per-subscriber copyright fee.

If the Copyright Office backs EchoStar, "I think that
there would be a long line at the courthouse," Popham said.

Buse said he would have to review the Copyright
Office's decision before knowing how Congress would react. But he added that it was
possible that McCain might opt against advancing his own bill if the Copyright Office
gives EchoStar permission to offer local signals.

"If [the Copyright Office] solves the problem,
we're not going to waste extra capital to move something like this," Buse said.

Also pending on Capitol Hill are:

A bill (H.R. 3258) sponsored by Rep. Edward Markey
(D-Mass.) that would continue federal regulation of upper-tier cable rates beyond the
March 31, 1999, sunset.

A bill (H.R. 2757) sponsored by Rep. Peter DeFazio
(D-Ore.) that would freeze cable rates.

A bill (H.R. 3559) sponsored by House Judiciary
Committee chairman Henry Hyde (R-Ill.) that would effective bar exclusive contracts
between cable programmers and cable operators with market power.

No hearings have been scheduled on any of these bills.