Skip to main content

House Approves Loan Bill, but Veto Looms

Washington-The House last Thursday passed a bill that would provide $1.25 billion in federal loan guarantees to providers of local TV signals in unserved and underserved areas.

Despite attempts to broaden the pool of eligible loan recipients, chief sponsors of the bill have intended all along for the money to help direct broadcast satellite carriers expand carriage of local signals into markets they had not intended to serve.

One company can obtain the entire $1.25 billion, with the federal government backing 80 percent in case of default. Federal support is designed to reduce interest costs and make loans more affordable.

The Senate was expected Friday to vote on that measure, which was rolled into a $37.5 billion spending bill that President Clinton has said he would veto.

In the House bill, cable operators are barred from receiving loans for upgrades in areas where a franchise agreement "expressly obligates a cable system operator to serve such area" as of the date the bill becomes law.

An aide to Rep. Edward Markey (D-Mass.) said the current bill gutted earlier Markey provisions designed to preclude cable operators from obtaining loans except for the extension of service beyond existing franchise areas.

"It's shame we have a Congress that seems willing to subsidize monopolies to the detriment of new competitive entry," Markey aide Colin Crowell said.

David Beckwith, spokesman for the National Cable Television Association, said the changes sought by the cable industry were intended to hold supporters to their commitment that the money should not be a foregone conclusion for the satellite industry.

"This was never our bill," Beckwith said. "All we asked was that if Congress in its wisdom should desire to provide this subsidy, that it be technology-neutral."

Beckwith said the bulk of the money would go to DirecTV Inc. and EchoStar Communications Corp., the two main DBS companies.

"We don't anticipate that cable will get, even with the current language, a significant amount of this money. Most of it will go to two companies," he said.

The House bill also requires the Federal Communications Commission to conduct tests within 60 days to determine if Northpoint Technology Ltd.'s planned nationwide terrestrial service would cause harmful interference to DBS operators.

Northpoint is seeking FCC approval to provide a nationwide terrestrial service that would include local TV signals, cable networks and broadband Internet access. The company wants to share DBS spectrum, but satellite providers claim Northpoint's signals will jeopardize clear reception for millions of their subscribers.

"This passage should serve as a clear signal to the FCC that Congress is dedicated to improving competition in the marketplace, but not at the expense of consumers," said Chuck Hewitt, president of the Satellite Broadcasting & Communications Association, in a prepared statement.

Northpoint president Sophia Collier said testing would not delay FCC review of the company's application.

"We are highly confident in Northpoint's ability to stand up to any independent test," Collier said in a prepared statement.