A single issue has stalled true competition in themultichannel-television market: copyright clearance for the delivery oflocal-television-broadcast signals via satellite. Consumers, broadcasters,direct-broadcast satellite providers and cable providers all stand to benefit from theenactment of a compulsory-copyright provision, which Congress is considering during thissession. If Congress fails to act on this noncontroversial, pro-consumer issue this year,consumers are less likely to enjoy real competition in the multichannel market any time inthe foreseeable future.
For many years, cable has enjoyed the benefits of acompulsory-copyright license, which allows cable to include local-television stations. TheSatellite Home Viewer Act of 1988 gave DBS providers a limited compulsory license,allowing delivery of network-affiliated stations only into "white areas" --households unable to receive their local stations via antenna. At the time, the ability todeliver local stations via satellite was not an urgent issue, since DBS was not yet viewedas a realistic cable competitor, and no one had the technical ability to deliver all localstations in all local markets.
But a lot has changed in the multichannel universe since1988.
The technology for retransmitting local signals viasatellite is now available. Last year, Local TV on Satellite LLC (LTVS) announced its planto distribute via satellite all over-the-air, full power, commercial and noncommercialtelevision stations within a given station's designated market area, as defined byNielsen Media Research.
LTVS intends to make available to DBS providers theopportunity to market a local-station package to consumers located within thosestations' DMAs. EchoStar Communications Corp. has a plan to deliver a few localstations in the largest television markets, but, while it could deliver all of the localsignals in a limited number of markets, EchoStar lacks the technology to provide allstations in all markets.
LTVS' engineers developed a technical plan that willuse two satellites in the Ka-band with 61 spot beams covering the continental UnitedStates, Alaska and Hawaii, with 159 regional uplink sites. Consumers would be able toreceive all of the current DBS signals, as well as the local-television signals, with one24-inch dish. The LTVS plan is expected to accommodate 1,700 NTSC (National TelevisionSystems Committee) signals, as well as high-definition television primetime andspecial-event network feeds.
Consumers are the big winners when local stationsnationwide become available via satellite. A true choice of video-programming providersmeans more programming options, better service and lower prices.
Cable television has no broad-based, widespreadcompetition. Contrary to the predicted impact of the Telecommunications Act of 1996, cablerates have continued to rise at a pace much higher than that of inflation. The bestsources of meaningful competition are DBS providers, which will only become truealternatives to cable when they are able to transmit local stations in local markets.
Nationwide local-to-local via satellite will give allconsumers -- including residents of rural areas and urban markets -- a true choice ofbroadcast providers for the first time. With local television via satellite, urbanconsumers will have a competitive alternative to their monopoly cable provider. Ruralconsumers will finally have access to multichannel programming that includes localstations. EchoStar's plan will still leave consumers outside of the top marketsstranded. Nationwide local-to-local is crucial for consumers.
For these reasons, consumer groups like the NationalConsumers League support local television via satellite.
Broadcasters, such as those represented by the Associationof Local Television Stations (ALTV) and the National Association of Broadcasters, willonly support a local-television-via-satellite plan that is nationwide and comprehensive,and that delivers all stations in all markets without exception.
According to ALTV president James B. Hedlund,"ALTV's member stations will suffer immediate harm if satellite carriers likeEchoStar are permitted to carry only selected local signals in the markets where theyprovide local signals." Affiliates ignored by satellite carriers "will enjoynone of the benefits of digital picture quality, none of the benefits of inclusion in theDish Network on-screen program guide and none of the benefits of seamless surfing. Theylikely will also be subject to competition from a distant affiliate of their network,which will enjoy all of the benefits of picture quality and tuning ease on the satellitesystem."
The ability to broadcast local-television stations iscrucial for DBS providers to create true competition in the multichannel market. AlthoughDBS is growing, it has struggled to surpass 10 percent of themultichannel-video-programming market. More than 80 percent of all consumers whoinvestigate DBS and do not buy cite the lack of local-television stations as the primaryreason for their nonpurchase decision. Consumers who purchase DBS services are currentlyforced to sacrifice their local news, sports, weather and community programming.
Cable prefers fair competition with DBS to reregulation.Federal Communications Commission chairman William Kennard has warned that when cable-rateregulations sunset in March 1999, "I do not believe ... the consumer will be able torely on a competitive market to ensure reasonable prices and choice."
Earlier this month, Sen. Conrad Burns (R-Mont.), chairmanof the Senate Commerce Committee's Communications Subcommittee, identified thepreferred alternative to reregulation: "Rather than engaging in micromanaging therate structure of cable systems, government should create a level playing field, where newentrants can compete effectively with incumbent providers."
A nationwide local-television-via-satellite plan allows DBSto adhere to the same regulatory restraints placed on cable -- must-carry, retransmissionconsent, nonduplication, syndicated exclusivity and sports-blackout rules.
Only Congress can guarantee all consumers access to localprogramming from all providers, creating meaningful competition in the multichannelmarket.
A number of bills that would permit DBS providers totransmit local stations in local markets are currently before Congress. S. 1720,introduced by Sens. Orrin Hatch (R-Utah), Herbert Kohl (D-Wis.) and Patrick Leahy (D-Vt.);and H.R. 3210, sponsored by Rep. Howard Coble (R-N.C.), would allow local broadcasts viasatellite and place the same regulatory responsibilities on DBS providers as on cableproviders. This legislation will permit any company to enter the local-to-local business,as long as it provides all stations in each market.
But Congress must act soon.
After 18 months of project development and investment, LTVSis prepared to order the custom spot-beam satellites that will make nationwidelocal-to-local possible. The satellites can be launched and operational by 2000 ifCongress acts during this session.
By then, a large portion of the country will have access toHDTV programming. Local television via satellite will facilitate the HDTV rollout and giveconsumers a full range of choice as the multichannel market expands.
Local television via satellite benefits everyone, butespecially consumers, by creating a truly competitive multichannel marketplace. Thefailure of Congress to take the simple, broadly supported legislative step required todeliver concrete benefits to all consumers would be a significant missed opportunity.
Jim Goodmon is president and CEO of Capitol BroadcastingCo. Inc. In 1997, CBC founded Local TV on Satellite LLC to develop and implement anationwide plan to deliver all local television stations via satellite.
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