**Statement of Commissioner Kevin J. Martin and Commissioner Michael J.
Copps**

Re: National Association of Broadcasters and Association of Local
Television Stations Request for Modification or Clarification of
Broadcast Carriage Rules for Satellite Carriers, Declaratory Ruling and
Order, CSR-5865-Z (Media Bureau, April 4, 2002)

In 1999, Congress passed the Satellite Home Viewer Improvement Act
("SHVIA"). SHVIA allowed satellite carriers to carry local broadcast
signals, but required that if a provider carries *any* local broadcast
signals, it must carry *all* local broadcast signals. Moreover, Congress
required that satellite carriers provide subscribers with access to
those local broadcast signals at a nondiscriminatory price and in a
nondiscriminatory manner.

The Media Bureau recently determined that EchoStar's "two-dish plan"
failed to provide consumers with access to local broadcast signals at a
nondiscriminatory price or in a nondiscriminatory manner, and failed to
place these signals on contiguous channels.[^1] We wholeheartedly agree
with the *Bureau Order's* conclusion that the two-dish plan therefore
violated the nondiscrimination provision of SHVIA and § 76.66(i) of the
Commission's rules.[^2]

Unfortunately, and puzzlingly, the *Bureau Order* did not stop there.
The *Bureau Order* went on to propose several "options" regarding how
EchoStar could remedy the statutory and rule violations. For instance,
as discussed below, the *Bureau Order* states EchoStar could continue
its two-dish plan merely by providing "\[i\]mmediate and direct
communication" to its subscribers regarding the second dish option.

We find it implausible that EchoStar's two-dish policy would be
permissible, and the above violations remedied, if EchoStar merely
provides consumers with better notice of its discriminatory actions and
the steps the consumer must take to alleviate the differential
treatment. Such a "remedy" does not ensure consumers have access to all
local broadcast stations a nondiscriminatory manner, but rather makes
some stations unavailable to consumers as a practical matter. Indeed,
unless individual consumers take the time to read or listen to the
"communication," actually request the second dish, and then take the
time off work to wait for the dish to arrive and to have it installed,
those consumers certainly will not have access to the broadcast channels
EchoStar chooses to provide only through the second dish.

We do not see how this remedy is consistent with the nondiscrimination
requirement in §338(d), the Commission's implementing rule, or even the
*Bureau Order's* own findings that such steps impose a discriminatory
cost on certain local broadcast channels. Such a "remedy" effectively
eviscerates the finding that EchoStar's current policy is unlawful. We
fear that the *Bureau Order* will allow EchoStar to continue its
two-dish policy -- albeit with better notice -- in a manner that
continues to make some local broadcast signals inaccessible to consumers
as a practical matter.

# ["Carry One, Carry All" Requirement]{.underline}

SHVIA amended the copyright laws to greatly facilitate satellite
carriers' ability to offer their subscribers access to the local
broadcast signals.[^3] In exchange, Congress required that satellite
carriers that carry *any* local broadcast signals must carry *all* local
broadcast signals.[^4] This "carry one, carry all" requirement was
intended to prevent satellite carriers from choosing to carry only the
most popular broadcast stations and "effectively preventing many other
local broadcasters from reaching potential viewers in their service
areas."[^5] Underlying the "carry one, carry all" obligation is SHVIA's
nondiscrimination requirement, incorporated into § 338(d) of the
Communications Act of 1934, as amended. Section 338(d) provides that:

> the satellite carrier shall retransmit the signal of the local
> television broadcast stations to subscribers in the stations' local
> market on contiguous channels and provide access to such station's
> signals at a nondiscriminatory price and in a nondiscriminatory manner
> on any navigational device, on-screen program guide, or menu.[^6]

In November of 2000, the Commission issued a Report and Order
implementing the broadcast signal carriage provisions of SHVIA,
including the above nondiscrimination provision.[^7] Parties had asked
the Commission to interpret this provision as prohibiting satellite
carriers from requiring subscribers to obtain new equipment to access
some, but not all of the local signals in a market. The Commission found
that:

> the language of Section 338(d) covers the additional equipment
> concerns raised by the parties and bars satellite carriers from
> requiring subscribers to purchase additional equipment \[*e.g.*, a
> satellite dish\] when television stations from one market are
> segregated and carried on separate satellites. However, we are not
> prohibiting a satellite carrier from requiring a subscriber to pay for
> an additional dish in order to receive *all* television stations from
> a single market. For example, DirecTV may require an additional dish
> to receive *all* television stations from the Baltimore market, but it
> may not require subscribers to purchase the same to receive *some*
> Baltimore stations where the others are available using existing
> equipment.[^8]

The Commission therefore promulgated the following rule prohibiting a
satellite carrier from requiring subscribers to obtain additional
equipment at their own expense in order to access some, but not all,
local television broadcast stations:

> Within a market, no satellite carrier shall provide local-into-local
> service in a manner that requires subscribers to obtain additional
> equipment at their own expense or for an additional carrier charge in
> order to obtain one or more local television broadcast signals if such
> equipment is not required for the receipt of other local television
> broadcast signals.[^9]

DIRECTV petitioned the Commission to reconsider its interpretation of
the nondiscrimination provision.[^10] DIRECTV sought a broader finding
that satellite carriers could provide local broadcast signals from two
different satellite dishes without violating § 338(d). Specifically,
DIRECTV contended that § 338(d) "does not prohibit satellite carriers
from offering local-into-local services from multiple locations, with
multiple dishes if necessary, where it makes business and technical
sense to do so."[^11]

The Commission rejected this argument in the *Order on Reconsideration*
released last September.[^12] Indeed, the Commission determined that:

> a limited prohibition on requiring subscribers to obtain a separate
> dish to receive some local signals when other local signals are
> available without a separate dish is necessary to give full effect to
> local station carriage requirements.[^13]

The Commission continued to explain that:

> Otherwise ... satellite carriers could structure local station
> packages and separate dish requirements to discourage consumers from
> subscribing to certain local stations, including local noncommercial
> stations.[^14]

Indeed, the *Bureau Order* yesterday expressly re-affirmed these
conclusions.[^15]

# [EchoStar's Two-Dish Policy and the *Bureau Order*]{.underline}

When the "carry one, carry all" obligation became effective this past
January, EchoStar implemented a "two-dish plan." It placed some local
broadcast signals on a second dish, but did not charge subscribers an
additional fee for obtaining that second dish.

The *Bureau Order* yesterday determined that, as implemented, EchoStar's
policy violated both the Communications Act and the Commission's
rules.[^16] The *Bureau Order* found that EchoStar committed three
separate violations. First, EchoStar was "providing access to certain
stations at a discriminatory price."[^17] Second, EchoStar was not
"retransmit\[ing\] the signal of local television broadcast stations to
subscribers on contiguous channels."[^18] Third, EchoStar was not
"providing access to local television broadcast station signals in a
nondiscriminatory manner on its on-screen program guide or menu."[^19]

With respect to the finding of price discrimination, the *Bureau Order*
found that EchoStar effectively required subscribers to obtain the
second dish "at their own expense," even if that expense was not in the
form of a price tag on the equipment. As the *Bureau Order* explained:

> From the subscriber's point of view, the costs of obtaining the "free"
> dish under EchoStar's implementation of its two-dish plan include the
> time, trouble, and inconvenience to the subscriber to obtain the
> information concerning the need for the second dish, the procedures
> for arranging to get the second dish (including overcoming any
> misinformation), plus the time spent waiting for the second dish to be
> installed.... As such, EchoStar's two-dish plan results in
> discrimination based on price of the type Congress and the Commission
> intended to prohibit.

In effect, the *Bureau Order* found that, as implemented, EchoStar's
two-dish policy placed a burden on the consumer to arrange to get the
second dish and to wait to have the dish installed. This burden
constituted an increased "cost" to the consumer to access certain local
stations in violation of SHVIA's nondiscriminatory price requirement. We
agree with this conclusion.

Similarly, the *Bureau Order* concluded that "EchoStar's manner of
carriage for certain local stations is discriminatory in terms of access
to such stations on the on-screen program guide and menu."[^20] The
*Bureau Order* found that:

> EchoStar's on-screen electronic program guide unlawfully discriminates
> against "disfavored" local signals because those stations do not
> appear on the program guide unless and until a second dish is obtained
> and installed.... Thus, subscribers attempting to tune to all the
> local stations that they have paid for as part of a package will be
> unable to find certain local stations in some markets.[^21]

Thus, the *Bureau Order* also found that EchoStar was unlawfully
discriminating against "disfavored" local signals because subscribers
could not access all of the local signals until a second dish was
obtained and installed, again violating § 338(d). We agree with this
conclusion, as well.

# [The *Bureau Order*'s Remedy "Options"]{.underline}

Having found that EchoStar's two-dish plan as implemented violated both
Congressional statute and Commission rules, the *Bureau Order* proceeded
to establish remedy options that EchoStar could take in order to prevent
the "unlawful discrimination" that has taken place.[^22] Several options
-- each of which is independent of the other -- would result in
consumers continuing to be unable to access all of their local signals,
in violation of SHVIA, Commission rules, Commission language contained
in the *Report and Order* and the *Order on Reconsideration*, and even
the findings as to what constitutes "discrimination" that the *Bureau
Order* made earlier in very same document.

For example, the *Bureau Order* concludes that "one approach" that
EchoStar could take to come into compliance with SHVIA and Commission
rules and "address the unlawful discriminatory actions" would be to
undertake:

> \[i\]mmediate and direct communication with all affected
> local-into-local subscribers that they are not receiving all the local
> stations for which they are paying unless EchoStar has installed the
> necessary additional equipment, and that EchoStar will provide the
> necessary equipment free of any charge.[^23]

We do not see how better notice of EchoStar's 2-dish plan remedies the
findings of unlawfulness---price discrimination, non-contiguous channel
placement, and lack of access to signals in a nondiscriminatory
manner.[^24]

With respect to price discrimination, the *Bureau Order* found that the
"costs of obtaining the 'free' dish" had included three aspects: (1)
obtaining the information that a second dish was needed, (2) arranging
to receive the second dish, and (3) waiting for the second dish to be
installed. Notice might mitigate the first factor, if subscribers bother
to read or listen to the "communication" EchoStar transmits to them. Yet
it does nothing to rectify the remaining steps, which most subscribers
might consider the more "costly aspects" since they likely require
taking time off from work to wait for the dish to arrive and be
installed. Even more fundamentally, we were not aware that effective
notice of price discrimination would be considered an effective remedy
for that same discrimination which was just found to have violated a
statute. And we see no caveat in the statute that indicates that
satellite carriers must provide access to broadcast station's signals at
a nondiscriminatory price ... unless customers know the prices are
discriminatory. Indeed, if that were the case, EchoStar could charge
additional fees on a per-channel basis so long as adequate notice was
provided. We do not believe that mere notice of any price discrimination
is what Congress intended by a requirement that satellite carriers
"carry one, carry all" local broadcast signals at a nondiscriminatory
price.

Similarly, with respect to the findings that EchoStar's 2-dish plan "as
implemented" also violated the statute's contiguous channel placement
and nondiscriminatory access through the EPG requirements, we fail to
see how notice addresses these violations either.

Finally, we question whether the Bureau had the authority to make such
decisions as to permissible remedies. The Bureau cannot propose
compliance measures that leave in place conduct that violates express
statutory requirements, violates Commission rules, and is inconsistent
with Commission language in the Order on Reconsideration.

As specified in our rules, the Bureau has only that authority delegated
to it. Section 0.283 expressly prohibits the Bureau from deciding
"matters that present novel questions of law, fact or policy that cannot
be resolved under existing precedents and guidelines."[^25] It is clear
to us that several of the Bureau's remedy options are inconsistent with
"existing precedent and guidelines." The Commission stated in the *Order
on Reconsideration* that a "limited prohibition on requiring subscribers
to obtain a separate dish to receive some local signals when other local
signals are available without a separate dish is necessary to give full
effect to local station carriage requirements."[^26] As the Bureau's
proposed remedy appears to violate the statute and expressly contradicts
Commission language, it can not be implemented on delegated authority by
the Bureau.

Indeed, the language in the Commission's order implies that EchoStar's
policy of requiring subscribers to obtain a second dish to obtain some
local signals may *never* be consistent with SHVIA. We do not prejudge
here, however, whether the Commission could permit a "two dish plan" in
the context of the "carry one, carry all" requirements that would be
implemented in a non-discriminatory fashion consistent with the statute
and the Commission's rules. That issue is ambiguous. But even if
ambiguous, it would be a novel issue, and thus the Bureau could not
resolve it on delegated authority.

There is nothing in the Commission's *Order*, the *Order on
Reconsideration*, or the implementing regulations that says satellite
carriers may require subscribers to obtain a second dish to obtain some,
but not all, local broadcast signals without violating § 338(d).
Certainly the Commission has never discussed exactly how such a policy
could be non-discriminatory. The *Bureau Order's* discussion of the
specific circumstances under which such a 2-dish policy would be
permissible, therefore, is without precedent and thus beyond the scope
of the Bureau's authority. And the Commission has issued no "precedent
or guidelines" regarding how notice of discriminatory conduct---no
matter how prominent---could condone that conduct. Again, that is a
novel question of law.

Finally, the *Bureau Order* includes a discussion of EchoStar's ability
to seek a waiver.[^27] This paragraph is, at best, confusing. First, the
*Bureau Order* states that "EchoStar may seek a short-term waiver rather
than terminate service in a market it is currently serving with
local-into-local service."[^28] A waiver of what? Of the
nondiscriminatory pricing requirement? No, because, as the *Bureau
Order* notes, it "cannot consider or grant a waiver insofar as
EchoStar's actions directly violate the statute."[^29] Of the
nondiscriminatory program guide treatment requirement? No, because,
again, that is in the statute. Of the preceding remedy "options"? No,
because the *Bureau Order* notes that EchoStar could remedy its
violations by choosing "some or all of these approaches."[^30] That
leaves only our one rule on point: § 76.66 (i)(4). Yet how could we
waive this prohibition on "requir\[ing\] subscribers to obtain
additional equipment at their own expense ... in order to obtain one or
more local television broadcast signals" without *also* waiving the
statutory obligation to "provide access to such station's signals at a
nondiscriminatory price"?

# [Conclusion]{.underline}

In passing SHVIA, Congress ensured that a satellite carrier choosing to
offer *any* local broadcaster would be required to carry *all* local
stations in a nondiscriminatory fashion. The *Bureau Order* found that
EchoStar's actions discriminated against some signals, in violation of
the statutory nondiscrimination requirement. Yet the *Bureau Order* also
found that more effective notice of this discrimination would be
sufficient to remedy EchoStar's actions and bring its two-dish plan into
compliance. We believe the nondiscrimination requirements of the
statute, Congressional intent, and Commission rules all demand more. But
perhaps even more importantly, DBS consumers deserve more.

[^1]: *National Association of Broadcasters and Association of Local
    Television Stations Request for Modification or Clarification of
    Broadcast Carriage Rules for Satellite Carriers,* Declaratory Ruling
    and Order, CSR-5865-Z (Media Bureau, April 4, 2002) ("*Bureau
    Order*") at ¶ 2.

[^2]: *See id. See also* 47 U.S.C. § 338(d); 47 C.F.R. § 76.66(i).

[^3]: *See* 17 U.S.C. § 122(a).

[^4]: *See* 47 U.S.C. § 338(a).

[^5]: Joint Explanatory Statement of the Committee of Conference on H.R.
    1554, 106^th^ Cong., H.R. Conf. Rep. No. 106-464, at 101 (1999).

[^6]: 47 U.S.C. §338(d).

[^7]: *See Implementation of the Satellite Home Viewer Improvement Act
    of 1999: Broadcast Signal Carriage Issues*, Report and Order, 16 FCC
    Rcd 1918 (2000) ("*Report and Order*").

[^8]: *Id.* at 16 FCC Rcd 1961 (emphasis added).

[^9]: *See* 47 C.F.R. § 76.66 (i)(4).

[^10]: *See* DIRECTV Petition for Reconsideration at 19-23 (filed Feb.
    22, 2001). DIRECTV's Petition requested reconsideration of other
    aspects of our original *Report and Order*, as well; those arguments
    are not relevant here.

[^11]: \[*Id.* at 23.\]

[^12]: *See Implementation of the Satellite Home Viewer Improvement Act
    of 1999: Broadcast Signal Carriage Issues*, Order on
    Reconsideration, 16 FCC Rcd 16544, 16565-16566 (2001) ("*Order on
    Reconsideration*").

[^13]: *Id.* at 16566.

[^14]: *Id*.

[^15]: *See Bureau Order* at ¶ 5 (quoting the *Order on
    Reconsideration*, 16 FCC Rcd at 16566).

[^16]: *Id*. at ¶ 2 (citing 47 U.S.C. § 338(d) and 47 C.F.R. §
    76.66(i)).

[^17]: *Id.*

[^18]: *Id.*

[^19]: *Id.*

[^20]: *Id.* at ¶ 27.

[^21]: *Id.* at ¶ 28.

[^22]: *Id.* at ¶ 32-33.

[^23]: *Id.* at ¶ 32.

[^24]: *See id.* at ¶ 2.

[^25]: 47 C.F.R. §0.283(c).

[^26]: *Order on Reconsideration,* 16 FCC Rcd at 16566.

[^27]: *See* *Bureau Order* at ¶ 34.

[^28]: *Id.*

[^29]: *Id.*

[^30]: *Id.* at ¶ 31.