```

[Senate Hearing 111-506]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 111-506
 
                         REAUTHORIZATION OF THE
                    SATELLITE HOME VIEWER EXTENSION
                    AND REAUTHORIZATION ACT OF 2004

=======================================================================

                                HEARING

                               before the

      SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY, AND THE INTERNET

                                 of the

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 7, 2009

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation

                  U.S. GOVERNMENT PRINTING OFFICE
54-499                    WASHINGTON : 2010
-----------------------------------------------------------------------
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512�091800  
Fax: (202) 512�092104 Mail: Stop IDCC, Washington, DC 20402�090001

       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

            JOHN D. ROCKEFELLER IV, West Virginia, Chairman
DANIEL K. INOUYE, Hawaii             KAY BAILEY HUTCHISON, Texas, 
JOHN F. KERRY, Massachusetts             Ranking
BYRON L. DORGAN, North Dakota        OLYMPIA J. SNOWE, Maine
BARBARA BOXER, California            JOHN ENSIGN, Nevada
BILL NELSON, Florida                 JIM DeMINT, South Carolina
MARIA CANTWELL, Washington           JOHN THUNE, South Dakota
FRANK R. LAUTENBERG, New Jersey      ROGER F. WICKER, Mississippi
MARK PRYOR, Arkansas                 GEORGE S. LeMIEUX, Florida
CLAIRE McCASKILL, Missouri           JOHNNY ISAKSON, Georgia
AMY KLOBUCHAR, Minnesota             DAVID VITTER, Louisiana
TOM UDALL, New Mexico                SAM BROWNBACK, Kansas
MARK WARNER, Virginia                MIKE JOHANNS, Nebraska
MARK BEGICH, Alaska
                    Ellen L. Doneski, Staff Director
                   James Reid, Deputy Staff Director
                   Bruce H. Andrews, General Counsel
             Ann Begeman, Acting Republican Staff Director
              Brian M. Hendricks, Republican Chief Counsel
                                 ------                                

      SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY, AND THE INTERNET

JOHN F. KERRY, Massachusetts,        JOHN ENSIGN, Nevada, Ranking
    Chairman                         OLYMPIA J. SNOWE, Maine
DANIEL K. INOUYE, Hawaii             JIM DeMINT, South Carolina
BYRON L. DORGAN, North Dakota        JOHN THUNE, South Dakota
BILL NELSON, Florida                 ROGER F. WICKER, Mississippi
MARIA CANTWELL, Washington           GEORGE S. LeMIEUX, Florida
FRANK R. LAUTENBERG, New Jersey      JOHNNY ISAKSON, Georgia
MARK PRYOR, Arkansas                 DAVID VITTER, Louisiana
CLAIRE McCASKILL, Missouri           SAM BROWNBACK, Kansas
AMY KLOBUCHAR, Minnesota             MIKE JOHANNS, Nebraska
TOM UDALL, New Mexico
MARK WARNER, Virginia
MARK BEGICH, Alaska

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on October 7, 2009..................................     1
Statement of Senator Kerry.......................................     1
Statement of Senator Ensign......................................    30
Statement of Senator Klobuchar...................................    32
Statement of Senator Pryor.......................................    35
Statement of Senator Udall.......................................    37
Statement of Senator McCaskill...................................    39
Statement of Senator Thune.......................................    42
Statement of Senator LeMieux.....................................    43
Statement of Senator Begich......................................    45

                               Witnesses

Robert M. Gabrielli, Senior Vice President, Program Operations, 
  DIRECTV, Inc...................................................     3
    Prepared statement...........................................     5
R. Stanton Dodge, Executive Vice President and General Counsel, 
  DISH Network L.L.C.............................................    13
    Prepared statement...........................................    14
Paul A. Karpowicz, President, Meredith Broadcasting Group on 
  behalf of the Television Board of the National Association of 
  Broadcasters...................................................    16
    Prepared statement...........................................    18
Lonna Thompson, Acting COO, Senior Vice President and General 
  Counsel, Association of Public Television Stations.............    22
    Prepared statement...........................................    24

                                Appendix

Hon. John D. Rockefeller IV, U.S. Senator from West Virginia, 
  prepared statement.............................................    51
Response to written questions submitted to Robert M. Gabrielli 
  by:
    Hon. John D. Rockefeller IV..................................    51
    Hon. Maria Cantwell..........................................    52
Response to written questions submitted to R. Stanton Dodge by:
    Hon. John D. Rockefeller IV..................................    53
    Hon. Mark Pryor..............................................    55
    Hon. Maria Cantwell..........................................    56
    Hon. Tom Udall...............................................    59
Response to written questions submitted to Paul A. Karpowicz by:.
    Hon. John D. Rockefeller IV..................................    60
    Hon. Tom Udall...............................................    61
Response to written question submitted by Hon. John D. 
  Rockefeller IV to Lonna Thompson...............................    64

                         REAUTHORIZATION OF THE
                    SATELLITE HOME VIEWER EXTENSION
                    AND REAUTHORIZATION ACT OF 2004

                              ----------                              

                       WEDNESDAY, OCTOBER 7, 2009

                               U.S. Senate,
Subcommittee on Communications, Technology, and the 
                                          Internet,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:04 a.m. in 
room SR-253, Russell Senate Office Building, Hon. John F. 
Kerry, Chairman of the Subcommittee, presiding.

           OPENING STATEMENT OF HON. JOHN F. KERRY, 
                U.S. SENATOR FROM MASSACHUSETTS

    The Chairman. The hearing will come to order. Thank you 
all. I apologize for being a few moments late.
    The Satellite Home Viewer Extension Reauthorization Act has 
one of those fancy Washington acronyms, SHVERA, and it is 
definitely not the best-known piece of communications 
legislation. It is also probably not the most appreciated or 
understood. But, in living rooms all across our country, there 
is no question that consumers benefit from the basics of this 
law every single time that they turn on a television set.
    And to understand that, or put it in its proper context, 
you got to go back about, you know, 15 years or so. At that 
time, a consumer seeking a premium pay television service had 
only one place to go; he went to the cable company. Today, that 
same consumer has options, and that's because SHVERA and its 
legal predecessors ushered in a world where consumers could 
choose between the cable company, satellite providers, like 
DIRECTV and the DISH Network. And as everybody--you know, we 
hear it all the time around here; people talk about, you know, 
choice being competition and the importance of competition, but 
the fact is, this is living proof of that. It also means more 
programming innovation, it means more viewing packages to 
choose from, and it means greater incentives for companies to 
be able to develop new digital technology for program viewing.
    I might add an important personal note, obviously, in terms 
of competition, pricing, innovation, and viewing, we in Red Sox 
Nation really appreciate it.
    [Laughter.]
    The Chairman. To keep these benefits going, in this hearing 
we are now talking about the reauthorization of SHVERA. And our 
focus is fairly simple, it's pretty straightforward. We want to 
look at what aspects of the law need updating, what needs 
tweaking, adjustment, to ensure that consumers across the 
country benefit fully from the viewing choices that it makes 
possible.
    I think, in some respects, this task is fairly simple. The 
law needs to be updated to reflect the transition in digital 
television. I suspect all of our witnesses today would agree 
that the Digital Revolution requires some updating. But, in 
other aspects, the task is also--got its complexities. Today, 
there are more than 20 Nielsen markets across the country, 
where satellite does not provide local broadcast channels. 
Instead of hearing information about local news, weather, 
sports, consumers get information from places that are far from 
home and, frankly, far from directly relevant to the lives that 
they lead. This situation, I believe, does demand our 
attention. Although in past Congresses, we have not required 
satellite services to offer local channels to every market in 
the country, I do think we need to talk about how to remedy 
this situation.
    I believe, too, that public television plays a very, very 
special role in our media landscape. So, our SHVERA work ought 
to ensure that public broadcasters get fair treatment from our 
satellite providers when it comes to the carriage of public 
television programming. The Association of Public Television 
Stations does not believe that that is currently the case, all 
the time at least.
    And finally, I believe that we are perhaps midcourse, and 
maybe somebody would peg it somewhere else in the transition, 
but we're somewhere around midcourse in a very dramatic change 
in consumer viewing habits. There's a migration underway from 
television to computer screen to mobile phones and so forth, 
and consumers are time-shifting and place-shifting their 
viewing. Similarly, broadcasters are, appropriately, exploring 
new mediums through which to deliver their content.
    This is not the place to tackle all of these changes, but I 
think it's very important for us as we make the--you know, as 
we think about what adjustments to make in current law, we do 
have to keep in mind the impact of the technology changing and 
that impact on our viewing behavior. And, clearly, in time our 
laws will need to adjust to, and reflect, these new realities. 
And I say that with some experience, because when we did the 
1996 Telecom Act here, we spent all our time on telephony, 
when, within months, the entire ballgame was data information 
transferral. And frankly, the bill was almost out of date, you 
know, at signing.
    So, with that said, we want to look ahead a little bit, and 
I want to thank our witnesses for being here. I look forward to 
your testimony and appreciate your thoughts about the 
reauthorization of this important program.
    So, without further ado, let me call on each of you. We're 
delighted to welcome Robert Gabrielli, the Senior Vice 
President for Programming and Distribution, DIRECTV, from El 
Segundo, California; Mr. Stanton Dodge, Executive Vice 
President, Secretary, and General Counsel, DISH Network, from 
Colorado; Mr. Paul Karpowicz, the President at Meredith 
Corporation, from Rocky Hill, Connecticut; and Lonna Thompson, 
who is standing in for our--for Bill Acker, who's not able to 
be here--and she's Acting COO and General Counsel from the 
Association of Public Television Stations.
    So, thank you, each of you, for being here. I don't know if 
there's--why don't you go first, Mr. Gabrielli, and we'll just 
run down the line. Thanks.

               STATEMENT OF ROBERT M. GABRIELLI,

             SENIOR VICE PRESIDENT FOR PROGRAMMING

                AND DISTRIBUTION, DIRECTV, INC.

    Mr. Gabrielli. OK. Thank you.
    Chairman Kerry, thank you for inviting DIRECTV to discuss 
the reauthorization of SHVERA.
    I sit before you today on behalf of more than 18 million of 
your constituents who subscribe to DIRECTV. Many live in rural 
areas that broadcasters and cable operators do not reach. They 
are some of our best customers. Since the day we opened our 
doors, we have offered rural Americans the same national 
programming we provide to our subscribers in big cities. These 
rural customers had virtually no TV options before us; now they 
can get the best television experience in America.
    But, the innovative technology that allows us to deliver 
all of our national programming to rural Americans cannot 
easily deliver thousands of duplicate local broadcasts stations 
throughout the country. We have spent billions of dollars to 
address this issue. We now offer local channels to 95 percent 
of Americans and are adding new markets every year.
    Recognizing these challenges, Congress has always sought to 
balance the goals of localism and access to network 
programming. We respectfully offer the following three 
consumer-friendly principles, which we believe will help the 
Committee strike this balance:
    The first principle: Consumers should always be able to get 
programming from at least the Big Four networks by satellite. 
Most consumers prefer local service, and the law reflects this. 
But, just like cable operators, satellite does not yet deliver 
local channels to every American. Where our subscribers cannot 
receive local service, the law should allow distant signals 
instead. Broadcasters will tell you that those ineligible for 
distance signals can always get local signals over the air; we 
all know this is not true. In fact, our review of the 
broadcasters' own DTV transition website shows that as many as 
45 percent of those predicted by SHVERA to get local signals 
over the air, actually cannot.
    Why is this? SHVERA's predictive model assumes many things 
that are almost never true. It assumes consumers have a giant 
rotating antenna, two stories in the air; it assumes the 
antenna is pointing directly at the specific broadcasting tower 
in question; and it assumes the world contains few trees and 
buildings. In contrast, NAB's own Website apparently assumes 
things that are true: actual antennas people really use, for 
example. Congress should fix this.
    Second principle: Congress should not take away consumers' 
programming. Congress has changed the requirements for distance 
signals before, and will do so again here, because of the 
digital transition. In the past, it has always grandfathered in 
subscribers so they would not lose their programming. It should 
do so again here.
    Preserving the status quo is especially important with 
respect to multicast programming. Every broadcaster has one 
primary video stream, and in so-called ``short markets'' 
lacking national networks, some broadcasters have begun to 
offer one or more missing affiliates as a second, third, or 
even fourth digital multicast stream. But, these multicast 
streams are not really new local channels. Rather, a station 
will buy the rights to out-of-town network and syndicated 
programming, and, at most, repeat the local news already 
carried on their primary video stream. We have reviewed the 
listings of network-affiliated multicast streams throughout the 
country and could not find one that offers any new local 
content.
    Existing law treats multicast streams very differently than 
primary video streams. Multicast streams have no must-carry 
rights, and they do not count for purposes of determining 
eligibility for distance signals under the Copyright Act. We 
think this is the right policy.
    From DIRECTV's perspective, multicast streams simply are 
not new local channels and shouldn't be treated as such. More 
importantly, we frequently lack room in our crowded spot-beam 
satellites to carry them.
    The specific issues raised in this reauthorization is that 
the National Association of Broadcasters (NAB) wants 
subscribers on January 1st, the renewal, to be ineligible for 
distance signals if they are predicted to get multicast signals 
over the air. If this happens, tens of thousands who lawfully 
receive signals--distance signals today, would immediately lose 
them. And in the future, we'd be forced to shut off distance 
signals whenever a new multicast channel appeared. We 
respectfully ask the Committee to protect these consumers as 
Congress has always done in the past.
    And the third principle: Satellite customers should not be 
ineligible to receive broadcast stations offered by cable. 
Cable operators have long been permitted to offer neighboring 
significantly viewed stations. In an attempt to level the 
playing field with cable, Congress gave satellite carriers 
similar rights in 2004. In doing so, however, Congress required 
satellite operators, unlike cable operators, to offer local 
stations the equivalent bandwidth offered to significantly 
viewed stations. The FCC has interpreted this to mean that 
DIRECTV must carry local stations in the same format as 
significantly viewed stations every moment of the day. This is 
infeasible. DIRECTV cannot monitor the format of hundreds of 
station pairs around the clock. Nor can DIRECTV black out 
signals when, for example, a high definition ballgame runs late 
on one station, while the other offers standard definition 
hourly fare. We ask the Senate Commerce Committee to address 
this issue so that we can offer the same stations as our cable 
competitors.
    I would respectfully ask the Committee to keep these three 
principles in mind as it crafts SHVERA reauthorization.
    Thank you, and I'll look forward to your questions.
    [The prepared statement of Mr. Gabrielli follows:]

   Prepared Statement of Robert M. Gabrielli, Senior Vice President, 
                   Program Operations, DIRECTV, Inc.

    Thank you for inviting DIRECTV to discuss the reauthorization of 
the Satellite Home Viewer Extension and Reauthorization Act (SHVERA). I 
sit before you today on behalf of more than eighteen million of your 
constituents who subscribe to DIRECTV. Many live in rural areas that 
broadcasters and cable operators do not reach. These are some of our 
best customers, and they have no better friend than DIRECTV. Since the 
day we opened our doors, we have offered rural Americans the same 
national programming we provide our subscribers in big cities. Those 
who for years had no television options at all, can now get the best 
television experience in America.
    But the innovative technology that allows us to deliver all our 
national programming to rural Americans cannot easily deliver thousands 
of local broadcast stations--containing largely duplicative 
programming--throughout the country. We have spent billions of dollars 
to address this issue. We now offer local channels to 95 percent of 
Americans and are adding new markets every year. In doing so, we try to 
balance our desire to carry local broadcasters wherever possible with 
the need to protect our subscribers where local carriage is not yet 
possible.
    Congress seeks to achieve this same balance with each SHVERA 
reauthorization. We respectfully offer the following four consumer-
oriented principles to guide the Committee in this endeavor.
    First, customers should always be able to get programming from at 
least the ``big four'' networks by satellite. Consumers prefer local 
service and the law rightly reflects this. But we cannot yet deliver 
all of the thousands of local broadcast stations in every market. Where 
our subscribers cannot receive local service, the law should let us 
give them distant signals instead. What the law should not do is 
require subscribers to rely on expensive rotating rooftop antennas to 
get intermittent over-the-air reception. Broadcasters will tell you 
that subscribers ineligible for distant signals can always get local 
signals over the air, but we all know this is not true. In fact, the 
broadcasters' own website designed to help consumers choose ``the 
proper outdoor antenna to receive [their] local television broadcast 
channels'' shows that as many as 45 percent of those now ineligible for 
distant signals cannot really get local signals over the air.\1\
---------------------------------------------------------------------------
    \1\ For more details, please see Appendix I.
---------------------------------------------------------------------------
    Second, Congress should not take away customers' programming. 
Congress from time to time has changed the eligibility criteria for 
distant signals, and will do so again here in light of the digital 
transition. In the past, however, it has always ``grandfathered'' then-
existing subscribers so that they would not lose their programming.
    Third, satellite customers should not be ineligible to receive 
broadcast stations offered by cable. The law should no longer allow 
incumbent cable operators to offer more local and significantly viewed 
channels than their satellite competitors.
    Fourth, prices for broadcast programming should be reasonable. We 
pay broadcasters and content providers fair compensation for their 
programming, and hope they, in turn, recognize the value of our 
distribution network. But neither market power nor government fiat 
should give those entities the ability to raise prices excessively, 
particularly in economic times like these.
    These four principles inform DIRECTV's perspective on all SHVERA-
related issues. In the balance of my testimony, I'd like to discuss 
four important issues before the Committee: changes to the 
``significantly viewed'' rules, questions concerning multicast signals, 
proposals to mandate carriage in all 210 markets; and a ``market 
trigger'' proposal championed by copyright holders.

I. Fixing the ``Significantly Viewed'' Rules Will Rescue Congress's 
        Good Idea From the FCC's Implementation Mistakes
    First, we ask the Committee to fix the rules governing carriage of 
neighboring ``significantly viewed'' stations. Cable operators have 
long been permitted to offer such stations. (For example, certain New 
York stations are ``significantly viewed'' in New Haven, Connecticut.) 
In an explicit attempt to level the playing field with cable, Congress 
gave satellite carriers similar rights in 2004. Congress also, however, 
included a provision to protect local broadcasters that does not apply 
to cable. The FCC subsequently interpreted this rule so onerously that 
it effectively undid Congress's efforts.
    Satellite operators (unlike cable operators) must offer local 
stations the ``equivalent bandwidth'' offered to significantly viewed 
stations. The FCC has interpreted this to mean that DIRECTV must carry 
local stations in the same format as significantly viewed stations 
every moment of the day. This is infeasible. DIRECTV cannot monitor the 
format of hundreds of station pairs around the clock. Nor can DIRECTV 
black out signals when, for example, a high-definition ballgame runs 
late on one station while the other offers standard definition hourly 
fare.
    The House Commerce Committee has addressed this issue, and we ask 
the Senate Commerce Committee to do the same.

II. Preserving the Status Quo With Respect to Multicast Signals Will 
        Ensure That All Subscribers Receive Network Service
    Second, we ask the Committee to preserve the status quo with 
respect to ``multicast'' broadcast video streams. Every broadcaster has 
one ``primary'' video stream. Digital television allows some 
broadcasters to also offer second, third, or fourth multicast streams. 
In so-called ``short'' markets lacking one or more of the big national 
networks, some broadcasters have begun to offer the ``missing 
affiliate(s)'' as multicast streams.
    But these multicast streams are not really ``new'' local channels. 
Rather a station will buy the rights to out-of-town network and 
syndicated programming, and (at most) repeat the local news already 
carried on its primary video stream. We have reviewed the programming 
of network-affiliated multicast streams throughout the country, and 
could not find a single one anywhere that offers any new local content.
    The FCC has twice decided that multicast streams do not have ``must 
carry'' rights, in part because of the obvious constitutional problems 
this would raise. Moreover, multicast channels do not now ``count'' for 
purposes of determining eligibility for distant signals under the 
Copyright Act. On both questions, existing law treats multicast streams 
differently than primary video streams.
    The law gets both questions exactly right. From DIRECTV's 
perspective, one problem with treating multicast streams like primary 
streams is that they simply aren't new local channels. Another, more 
important problem is that we frequently lack room on our crowded spot 
beam satellites to carry them. When we have room, we typically carry 
network-affiliated multicast streams. But where we lack room, we simply 
cannot accommodate them.
    The broadcasters want all multicast signals everywhere to ``count'' 
for purposes of distant signal eligibility, starting on the date of 
enactment. If this proposal were to become law, thousands of our 
subscribers who have lawfully received distant signals for years would 
lose them. Moreover, we would have to immediately shut off distant 
signals whenever a new network-affiliated multicast stream appeared. 
And if we lacked room to carry the multicast stream, many subscribers 
would get no network programming from us--even if they have had it via 
legal distant signals for years. We know this will be unacceptable to 
our customers. It should be to the Committee as well.

III. Unfunded Carriage Mandates Would Unfairly Burden Satellite 
        Subscribers
    Third, we ask the Committee not to adopt huge unfunded carriage 
mandates. SHVERA ultimately represents a compromise among satellite 
carriers, copyright holders, and broadcasters. DIRECTV is concerned, 
however, that some might seek to alter the very essence of this 
compromise with a mandate to immediately serve every local market. Such 
a mandate would be technically infeasible, hugely expensive, unfair to 
satellite subscribers, and unconstitutional.
    DIRECTV today offers local television stations by satellite in 152 
of the 210 local markets in the United States, serving 95 percent of 
American households. (Along with DISH Network, we offer local service 
to 98 percent of American households.) DIRECTV also offers HD local 
service in 133 markets, serving more than 91 percent of American 
households. By the FCC's calculations, over 80 percent of DIRECTV's 
satellite capacity is now devoted to local service--nearly triple the 
amount cable operators can be required by law to carry.\2\ We have 
devoted several billions of dollars to this effort. And we are working 
every day to serve more markets.
---------------------------------------------------------------------------
    \2\ Carriage of Digital Television Broadcast Signals: Amendment to 
Part 76 of the Commission's Rules; Implementation of the Satellite Home 
Viewer Improvement Act of 1999: Local Broadcast Signal Carriage Issues 
and Retransmission Consent Issues, 23 FCC Rcd. 5351,  11 n.48 (2008) 
(``Satellite HD Carriage Order'') (using hypothetical local and 
national programming carriage figures to estimate that a satellite 
operator would dedicate 91 percent of its capacity to local 
programming). With DIRECTV's actual figures, this number is closer to 
80 percent.
---------------------------------------------------------------------------
    Some, however, would require satellite carriers to serve all 
remaining local markets by satellite--perhaps as soon as within a year. 
Very respectfully, while expanding the reach of broadcast service might 
be a worthy goal, this the wrong approach.
    Such an approach would upset the delicate balance that has guided 
Congressional policy in this area for decades. In enacting SHVIA's 
statutory copyright license for local broadcast signal carriage, 
Congress specifically recognized that the capacity limitations faced by 
satellite operators were greater than those faced by cable 
operators.\3\ In light of those limitations, Congress adopted a 
``carry-one, carry-all'' regime in which satellite operators can choose 
whether to enter a market, and only then must carry the primary video 
of qualifying stations in that market.\4\ This regime was carefully 
crafted to balance the interests of broadcasters and satellite carriers 
alike. Indeed, both Congress and the courts concluded that the carry-
one, carry-all regime was constitutional largely because it gave 
satellite carriers the choice of whether not to serve a particular 
market.\5\ (We have attached as Appendix B to this testimony a White 
Paper by Joshua Rosenkranz, a noted constitutional law expert, 
discussing the grave constitutional difficulties with such a mandate.)
---------------------------------------------------------------------------
    \3\ 145 Cong. Rec. H11,769 (1999) (joint explanatory statement), 
145 Cong Rec H 11769, at *H11792 (LEXIS) (``To that end, it is 
important that the satellite industry be afforded a statutory scheme 
for licensing television broadcast programming similar to that of the 
cable industry. At the same time, the practical differences between the 
two industries must be recognized and accounted for.'') (``Conference 
Report'').
    \4\ 47 U.S.C.  338(a)(1).
    \5\ See Conference Report at *H11795 (``Rather than requiring 
carriage of stations in the manner of cable's mandated duty, this Act 
allows a satellite carrier to choose whether to incur the must-carry 
obligation in a particular market in exchange for the benefits of the 
local statutory license.''); SBCA v. FCC, 275 F.3d 337, 354 (4th Cir. 
2001) (holding that the carry-one, carry-all rule was content-neutral 
because ``the burdens of the rule do not depend on a satellite 
carrier's choice of content, but on its decision to transmit that 
content by using one set of economic arrangements [e.g., the statutory 
license] rather than another'').
---------------------------------------------------------------------------
    By imposing heavy burdens on us and our subscribers, an unfunded 
carriage mandate would unintentionally create real inequality. 
Broadcasters already make their signals available in every market over 
the air, for free. More people could surely receive those signals if 
offered over satellite. But more people could also receive those 
signals if broadcasters themselves invested in the infrastructure to 
increase their own footprint so everyone in the market could receive a 
free over the air signal. We suggest that it is inequitable, especially 
in this economy, to place the financial burden of expanding broadcast 
coverage on satellite subscribers alone.

IV. Imposing a ``Market Trigger'' for Elimination of the Statutory 
        Licenses Would Lead to Higher Prices and an Inferior Product
    Fourth, we ask the Committee to examine any ``market trigger'' 
proposal in the context of the Communications Act's carriage rules. By 
combining a ``private market'' copyright approach with the more 
regulatory approach found in the Communications Act, this proposal 
would lead to marketplace confusion and, ultimately, higher prices and 
an inferior product for our subscribers.
    Some of the largest copyright holders contend that the statutory 
licenses upon which millions of satellite and cable subscribers now 
depend are things of the past. They argue that there could be other 
ways for multichannel video programming distributors to provide 
broadcast programming to their customers--hypothesizing ``market 
mechanisms,'' ``voluntary licensing arrangements,'' ``sublicensing'' 
and the like. Nobody really thinks such alternatives will actually 
work, particularly for distant signals. But copyright holders now 
suggest that, if a private copyright licensing mechanism could be 
developed, the statutory licenses should then sunset.
    Whatever the merits of this suggestion under the Copyright Act, it 
completely ignores the must-carry and retransmission consent rules 
found in the Communications Act. Disney, for example, has argued that 
its ABC broadcast programming should be sold just like its ESPN cable 
programming. But the ``market trigger'' proposal wouldn't do that at 
all. The government doesn't force us to carry ESPN Classic but, under 
the market trigger proposal, it would still force us to carry even the 
lowest-rated broadcast stations. By the same token, the government 
doesn't require us to obtain non-copyright ``consent'' to carry ESPN 
but, under the market trigger proposal, we would have to separately 
acquire both copyright and retransmission consent from broadcast 
stations.
    From where we sit, copyright holders don't really propose a ``free 
market'' for broadcast programming. Rather, they propose those parts of 
the ``free market'' that benefit them as copyright holders, while 
preserving those aspects of the existing regulatory structure that 
benefit their broadcast subsidiaries. The natural result would be 
marketplace chaos. The government would force us to negotiate twice, 
not once, for broadcast programming that our subscribers want. And it 
would force us to carry programming that our subscribers don't want. 
Our subscribers would pay higher prices and receive lower quality 
programming in exchange. This strikes us as patently unfair.
    Thank you once again for allowing me to testify. I would be happy 
to take any of your questions.
                                 ______
                                 
                              Appendix I 
                   Over-the-Air Carriage Methodology

    DIRECTV is in the process of moving the local channels in several 
markets from a ``wing'' satellite located at 72.5+ W.L. to one of its 
more centrally located satellites. Subscribers in those markets will no 
longer require a second satellite dish to receive local signals. The 
spot beams on our central satellite, however, cover slightly different 
areas than do those on the wing satellite. Accordingly, several 
thousand subscribers who had been able to receive local channels from 
the wing satellite will not be able to do so from the central 
satellite.
    Naturally, we are looking for alternative ways to provide network 
programming to those subscribers. To determine what options these 
customers might have, we contracted with TitanTV to evaluate each 
address.
    TitanTV evaluated each address in two ways. It first evaluated each 
address for SHVERA distant signal eligibility using its standard 
digital predictive model. It next evaluated those same addresses using 
a different model--that used by the antennaweb.org mapping program, 
which describes itself as being ``provided by the Consumer Electronics 
Association (CEA) and the National Association of Broadcasters (NAB),'' 
and designed to ``locate[ ] the proper outdoor antenna to receive your 
local television broadcast channels.''
    When we received the results, we noticed that fully 45 percent of 
the addresses predicted to get an off-air signal by the SHVERA model 
were predicted not to get an off-air signal by the antennaweb.com 
model. Surprised by these results, we then took a wider set of 
addresses and manually entered each of them into both models. We 
obtained similar results.
    In other words, according to NAB itself, nearly half of subscribers 
who cannot get a viewable signal over the air are nonetheless 
ineligible for distant signals under the existing SHVERA methodology.

                              Appendix II 
                        Constitutional Analysis
                               Memorandum

To DIRECTV and DISH Network
From E. Joshua Rosenkranz
Date July 23, 2009
RE Analysis of the Constitutionality of H.R. 927
H.R. 927's Must-carry Obligations Are Unconstitutional
    H.R. 927 would require satellite TV providers, like DIRECTV and 
DISH, to carry every single full power local broadcast station in all 
210 Designated Market Areas (``DMAs''). A burden of this magnitude is 
unwise, unjustified--and unconstitutional.
Because the Must-Carry Rule Infringes on Satellite TV Providers' First 
        Amendment Freedoms, It Must Satisfy Rigorous Judicial Review
    A statute triggers First Amendment concerns any time it directs a 
speaker what to say and what not to say--or otherwise burdens the 
speaker's editorial decisions. Likewise, a law triggers First Amendment 
concerns any time it dictates to a broadcaster what programs to carry, 
and any time it burdens the broadcaster's programming choices.
    That is what H.R. 927 would do to satellite TV providers--in the 
most extreme possible way. For starters, H.R. 927 would force satellite 
TV providers to carry hundreds of local broadcast stations against 
their will, many of which have virtually no local audience. Because 
satellite TV service has limited channel capacity, that would mean that 
DISH and DIRECTV would have to drop programming that subscribers want 
to watch in order to broadcast channels that no one watches.
    True, not every infringement on First Amendment freedoms or 
programming discretion is unconstitutional. More specifically, not 
every must-carry rule necessarily violates the First Amendment. The 
Supreme Court upheld the must-carry obligations that Congress imposed 
on cable, for example--but only by a razor-thin margin, after two trips 
to the Court, and after concluding that the rule would not prevent 
cable from carrying the programs it wanted to carry. See Turner Broad. 
System, Inc. v. FCC, 512 U.S. 622, 641 (1994) (``Turner I''); Turner 
Broad. Sys., Inc. v. FCC, 520 U.S. 180, 224-25 (``Turner II''). And the 
Fourth Circuit has upheld the so-called ``carry-one, carry-all'' rule 
that Congress imposed on satellite TV providers--a voluntary rule that 
is far less onerous than the crushing must-carry requirement embodied 
in H.R. 927. See Satellite Broad. & Commc'ns Ass'n v. FCC, 275 F.3d 337 
(4th Cir. 2001) (``SBCA'').
    The important lesson to draw from those cases is that the courts 
will strike H.R. 927's must-carry obligation unless the government 
persuades them, based on solid evidence, that the justifications 
outweigh the burdens and that the infringement is sufficiently tailored 
to minimize the burdens on speech. This legal standard is called 
``heightened scrutiny.''
    Exactly how intense the heightened scrutiny will be is a matter of 
debate. There is a strong argument that the courts should apply the 
very highest level of scrutiny, called ``strict scrutiny''--a standard 
that is almost always fatal to any law that raises First Amendment 
concerns. But at a bare minimum, the courts would have to apply 
``intermediate scrutiny'' (as the Supreme Court did in the cable must-
carry context). See Turner I, 512 U.S. at 641. That would require the 
government to bear two burdens. First, the government will have to 
justify the infringement on First Amendment freedom by demonstrating 
that the infringement is necessary to advance an ``important'' 
governmental interest. United States v. O'Brien, 391 U.S. 367, 377 
(1968). This is no easy feat. The government may not just posit a 
reason for imposing the requirement; ``it must demonstrate that the 
recited harms are real, not merely conjectural, and that the regulation 
will in fact alleviate these harms in a direct and material way.'' 
Turner I, 512 U.S. at 664. It must also demonstrate that Congress ``has 
drawn reasonable inferences based on substantial evidence,'' in 
concluding that the regulation will in fact alleviate the harms in a 
direct and material way. Id. at 666. Beyond that, the government would 
have to demonstrate that any ``incidental restrictions on alleged First 
Amendment freedoms'' are ``no greater than is essential to the 
furtherance of that interest.'' Id. at 662. (emphasis added).
    For purposes of the discussion that follows, we make the 
conservative assumption that the courts will apply the very demanding 
intermediate scrutiny, rather than the almost insurmountable strict 
scrutiny standard. So, at a minimum, the courts will study the specific 
terms of H.R. 927 and will conduct a full examination of the television 
market--and satellite TV's role within that market. If anything is 
clear from past precedent, it is that no court would accept the facile 
conclusion that just because a cable must-carry rule survived, and just 
because a far less onerous carry-one, carry-all rule has been upheld, 
the imposition of a very different must-carry obligation--on a very 
different market player with an entirely different technology--would 
also survive.
    In sum, an assessment of whether H.R. 927 is likely to survive 
judicial scrutiny must start with an understanding of why the Supreme 
Court upheld cable's must-carry rules, and proceed with a point-by-
point comparison of the justification, burdens, and tailoring of the 
cable must-carry rule as compared to H.R. 927. Each point is addressed, 
in turn, below.

The Justification for the Satellite Must-Carry Requirement Is 
        Constitutionally Inadequate
The Compelling And Well Documented Justification For The Cable Must-
        Carry Rule
    The cable must-carry rule that the Court upheld in the Turner cases 
basically required cable providers to set aside a maximum of one-third 
of their channel capacity to carry local commercial television 
stations, and to carry local public broadcast television stations. 
Superficially, that requirement sounds similar to the satellite must-
carry rule embodied in H.R. 927. But the justification for imposing 
such a requirement on satellite TV pales in comparison to the 
justification that the Court narrowly upheld in Turner II.
    The Court observed that ``Congress' overriding objective in 
enacting the [cable] must carry rules was . . . to preserve access to 
free television programming for the 40 percent of Americans without 
cable.'' Id. at 646. The Court found that there was a real prospect 
that broadcast stations--particularly less popular independent 
stations--would die, in the absence of must-carry rules. The point of 
the law was to ensure that viewers who do not subscribe to cable, would 
still have a menu of programming options to watch when they put up 
their rabbit-ear antennas. Specifically, the fear was that if cable did 
not carry local broadcast stations, the local stations would lose their 
audiences, causing their advertising revenues to evaporate. Id. This, 
in turn, would mean broadcast stations would go out of business, and 
viewers who opt not to pay for cable would have fewer channels to 
watch. Id.
    The Court considered this objective important. But it did not 
uphold the justification on the first trip to the Supreme Court. It 
sent the case back to put the government through its paces of actually 
proving, with concrete evidence, that the fears that motivated Congress 
were real. Turner I, 512 U.S. at 667 (``Without a more substantial 
elaboration in the District Court of the predictive or historical 
evidence upon which Congress relied, or the introduction of some 
additional evidence to establish that the dropped or repositioned 
broadcasters would be at serious risk of financial difficulty, we 
cannot determine whether the threat to broadcast television is real 
enough to overcome the challenge to the provisions made by these 
appellants.'') Three years later, when the case came back to the Court 
with a much more extensive factual record, a bare majority of the Court 
was satisfied that the evidence did support Congress's conclusion that 
the structure of the cable industry gives cable operators ``an 
incentive to drop local broadcasters and to favor affiliated 
programmers.'' Turner II, 520 U.S. at 198 200. The reason is simple: 
Cable companies compete with local broadcasters for audience and 
advertising dollars--giving them strong incentive to drop local 
broadcast stations in favor of their own affiliates. This incentive 
gave rise to an enormous problem that was national in scope: a threat 
to the survival of a diverse network of free, over-the-air broadcast 
stations. Specifically, the Court found the evidence compelling on the 
following points:
    Cable Had the Market Power To Harm Local Broadcasters:

   ``Cable operators possess a local monopoly over cable 
        households. Only 1 percent of communities are served by more 
        than one cable system.'' Id. at 197.

   That meant that if they could eliminate broadcast 
        competition, their monopoly would be complete--and they did not 
        need to fear that some other competitor would gain market share 
        by picking up local broadcasts. Id.

   Cable served ``at least 60 percent of American households in 
        1992.'' Id.

    Cable Had The Ability To Deprive Local Broadcasters of their Local 
Audiences:

   Cable operators exercised ``control over most (if not all) 
        of the television programming that is channeled into the 
        subscriber's home'' and ``can thus silence the voice of 
        competing speakers with a mere flick of the switch.'' Id.

    Evidence Demonstrated Cable Was Harming Local Broadcasters:

   ``A television station's audience size directly translates 
        into revenue.'' Id. at 208.

   Some broadcast stations have ``fallen into bankruptcy, 
        curtailed their business operations, and suffered serious 
        reductions in operating revenues'' after cable systems stopped 
        carrying the stations. Id. at 209.

   Stations without cable carriage ``encountered severe 
        difficulties obtaining financing for operations.'' Id.

    In sum, the Court, by a very narrow margin, found that there was an 
important justification for the cable must-carry rule: cable's abuse of 
its market power posed a real threat to the survival of local broadcast 
stations.

The Weak And Unprovable Justification For A Satellite Must-Carry Rule
    Nowhere in the text of H.R. 927 is there any statement of 
congressional purposes or explanation of what evils this must-carry 
provision is aimed at curing. Nor does the bill offer any factual 
findings to justify the infringement on speech. We can surmise that the 
government will try to justify the satellite must-carry rule on the 
same basis on which it defended the cable version. But the government 
will not be able to carry its burden of proving that satellite TV could 
kill local broadcasting.
    First, satellite TV providers advertise nationally. They simply do 
not compete with local broadcasters for local advertising dollars. So 
satellite TV providers do not have the incentive cable companies have 
to drop local broadcast stations.
    Second, for that reason, satellite TV providers already carry local 
stations in an overwhelming majority of markets. The objection here is 
to the burden of having to carry all of them, regardless of whether the 
cost of doing so is at all justified by the demand of viewers.
    Third, satellite TV providers are nowhere near the dominant force 
that cable was when the Court decided Turner II:

   In contrast to cable operators, which ``possessed a local 
        monopoly over cable households,'' each satellite TV provider--
        DISH and DIRECTV--competes vehemently against the other, and 
        faces competition from cable and telephone companies now 
        offering TV service. Id. at 197.

   In contrast to cable, which served ``at least 60 percent of 
        American households in 1992,'' id., in 2007 DISH and DIRECTV 
        combined served only about 26 percent of American households. 
        Motion Picture Association of America, Inc., Entertainment 
        Industry Market Statistics (2007), at pp. 19-20, http://
        www.mpaa.
        org/USEntertainmentIndustryMarketStats.pdf.

    Fourth, unlike cable companies, satellite TV providers do not 
exercise ``control over most . . . of the television programming that 
is channeled into the subscriber's home'' and cannot ``silence the 
voice of competing speakers with a mere flick of the switch.'' Id. In 
the few markets where satellite TV providers are unable to provide 
local service, satellite TV subscribers can seamlessly receive both 
over the air broadcast signals and satellite programming with the 
consumer set top box used to receive satellite signals and an antenna 
that integrates into satellite programming with the flick of switch. 
The difference is that the customer has control over the switch. 
Indeed, in enacting the 1999 carry-one,carry-all rules, Congress 
recognized that ``subscribers who receive no broadcast signals at all 
from their satellite service may install antennas or subscribe to cable 
service in addition to satellite service . . .'' (Appellate Brief for 
Respondents, the Federal Communications Commission and the United 
States of America in Satellite Broadcasting and Communications Ass'n v. 
FCC, 275 F.3d 337 (4th Cir. 2001), 2001 WL 34386914 (C.A.4) (citing 
H.R. Conf. Rep. No. 106-464, at 102.).
    In short, satellite TV providers have no incentive to block local 
broadcasters from their local audiences, do not do so as a practical 
matter, and would not threaten the survival of local broadcasters, even 
if they did. So local broadcasters simply do not need a satellite must-
carry rule to stay alive. Thus, any infringement on satellite TV 
providers' First Amendment rights is unjustifiable.

The Burdens of the Satellite Must-Carry Requirement Are 
        Unconstitutionally Heavy
    Perhaps the most important distinction between the cable must-carry 
rule and H.R. 927 is that cable's carriage obligation for commercial 
broadcast stations is capped at one-third of channel capacity. H.R. 927 
imposes an unlimited carriage obligation on satellite TV providers. 
This greatly alters the relative burdens of the two rules.

The Very Light Burden Of The Cable Must-Carry Rule
     Critical to the Supreme Court's decision to uphold cable's must-
carry requirement was the conclusion that the ``actual effects'' of the 
must carry rule were ``modest.'' Turner II, 520 U.S. at 214. 
``[S]ignificant evidence indicates that the vast majority of cable 
operators have not been affected in a significant manner by must-
carry.'' Id. (emphasis added).

   Compliance with must-carry obligations did not force cable 
        operators to drop a significant amount of programming. ``Cable 
        operators ha[d] been able to satisfy their must carry 
        obligations 87 percent of the time using previously unused 
        channel capacity.'' Id. This minor burden, the Court accurately 
        predicted, would diminish as cable channel capacity expanded. 
        Id.

   ``94.5 percent of the 11,628 cable systems nationwide have 
        not had to drop any programming in order to fulfill their must 
        carry obligations,'' and ``the remaining 5.5 percent had to 
        drop an average of only 1.22 services from their programming.'' 
        Id.

   Nationwide, cable operators ``carry 99.8 percent of the 
        programming they carried before enactment of must carry.'' Id.

   ``Only 1.18 percent of the approximately 500,000 cable 
        channels nationwide is devoted to channels added because of 
        must carry'' obligations. Id.

The Onerous Burden Of H.R. 927
    In contrast to the ``modest'' burdens on cable, there is no way the 
government will ever be able to prove satellite carriers will not have 
``been affected in a significant manner by must-carry'' obligations. 
Id. Congress opted to enact the less restrictive carry-one, carry all 
rules in 1999 in recognition of the capacity constraints faced by 
cable. See SBCA, 275 F.3d at 350 (summarizing testimony to Congress 
regarding the capacity limits faced by satellite and explaining that 
carry-one, carry-all rules reflected ``the technological 
dissimilarities between cable and satellite.''). Despite innovations in 
satellite technology, there are only so many channels that can be 
carried on a satellite spot-beam, and satellite spectrum is limited.. 
Even where spectrum is available, developing, constructing and 
launching additional satellites is not only expensive, it takes many 
years of planning and preparation. Satellite HD Carriage Order, FCC 08-
86, CS Docket 00-96,  11 (recognizing that ``satellite construction 
and launch is a lengthy process, generally taking approximately 4 
years.''). As the FCC recognized in 2008, ``satellite carriers face 
unique capacity, uplink, and ground facility construction issues'' in 
connection with offering local service. Carriage of Digital Television 
Broadcast Signals: Amendment to Part 76 of the Commission's Rules and 
Implementation of the Satellite Home Viewer Improvement Act of 1999: 
Local Broadcast Signal Carriage Issues and Retransmission Consent 
Issues, Second Report and Order, Memorandum Opinion and Order, and 
Second Further Notice of Proposed Rulemaking Order, FCC 08-86, CS 
Docket 00-96,  7 (March 27, 2008) (``Satellite HD Carriage Order''). 
As the FCC concluded, Cable just does not face the same capacity 
constraints. Id.,  9.
    Satellite carriers' must carry obligations are also far broader 
than the ones the Court previously upheld. Unlike the cable rule which 
capped the must-carry requirement for commercial stations at one-third 
of a cable company's channels, H.R. 927 has no limit on the number of 
channels satellite TV providers must devote to carrying local broadcast 
stations. Indeed, satellite providers already devote much more than 
one-third of their channel capacity to local broadcast stations under 
the existing carry-one, carry-all rules. This is due in part to the 
national scope of satellite providers business. Because cable companies 
serve a limited geographic area, they can easily satisfy their limited 
obligation to carry the local broadcast stations in that area--
typically five to ten stations. On that same platform, cable companies 
offer hundreds of national channels and provide data and voice 
services. Satellite providers in contrast operate a single, national 
system on which they already carry over 1,000 local broadcast stations. 
In other words, satellite providers already devote more channel 
capacity to local broadcast stations than cable does under its must-
carry rules. See Satellite HD Carriage Order, FCC 08-86, CS Docket 00-
96,  11.
    Even without the onerous requirements of H.R. 927, satellite TV 
providers' carriage obligations will continue to grow because the 
current carry-one, carry-all rules require satellite providers to carry 
all high-definition signals of broadcast stations electing must carry 
by 2013 in markets where they provide high definition signals (``HD''). 
HD requires much more channel capacity, and in some markets, satellite 
carriers' technology requires them to carry both standard and high-
definition channels, thus doubling the carriage requirements for each 
station. As the FCC explained, ``satellite carriers realize a net loss 
in the total number of program streams they may carry in a given 
bandwidth as they transition from standard definition to high 
definition signals.'' Satellite HD Carriage Order, FCC 08-86, CS Docket 
00-96,  8. H.R. 927 saddles satellite providers with added burden of 
carrying every local broadcast station in the country at the same time 
the industry struggles to comply with the phased-in HD must-carry 
rules.
    Simply put, to satisfy H.R. 927's requirements, satellite carriers 
would likely have to drop programming altogether and forego adding 
additional non-broadcast programming, such as international and 
foreign-language programming that is a critical source of news and 
information for many communities. See Satellite HD Carriage Order, FCC 
08-86, CS Docket 00-96,  8 (adopting four-year phase in for HD 
carriage rules due to ``serious technical difficulties'' faced by 
satellite and finding that immediate implementation would harm 
subscribers if satellite carriers were forced to drop other programming 
to free capacity). Moreover, compliance would cost satellite providers 
hundreds of millions of dollars to connect local broadcast stations 
across the country to regional satellite uplink facilities, and to 
develop, build and launch additional satellites to increase channel 
capacity.

The Fourth Circuit's Decision Upholding The More Limited Carry-One, 
        Carry-All Obligations Does Not Support H.R. 927
    In SBCA, the Fourth Circuit applied the principles of the Turner 
cases to satellite TV `s carry-one, carry-all rule, which was enacted 
as part of the 1999 Satellite Home Viewer Improvement Act (``SHVIA''). 
The carry-one, carry-all rule provides that satellite carriers that use 
their statutory copyright license to retransmit a single broadcast 
station within a DMA must carry only those qualifying full-power local 
broadcast stations that are in that DMA. 47 U.S.C.  338(a)(1). The 
rule does not apply if the satellite carrier does not use the statutory 
copyright license to secure the right to retransmit the broadcast 
station, but instead negotiates a license directly with the station.
    The Fourth Circuit upheld this far more modest rule. We disagree 
with aspects of that ruling, which is not, in any event, binding 
outside the Fourth Circuit. But for present purposes suffice it to say 
that an opinion upholding the much more limited carry-one, carry-all 
requirement does not come close to supporting a sweeping extension of 
the principle to every local station in every DMA. In this regard, one 
aspect of the Fourth Circuit's logic is especially relevant. One 
critical reason that the Fourth Circuit upheld the rule was that the 
rule did not impose an excessive burden on satellite carriers. The 
court held that the carry-one, carry-all rule ``leaves them with the 
choice of when and where they will become subject to the carry one, 
carry all rule.'' 275 F.3d at 365. The same cannot be said of H.R. 927, 
which imposes what might be called a ``carry-one, carry-the-universe 
requirement.'' Obviously, there is a big difference between a rule 
prohibiting discrimination among local broadcasters, and a rule that 
for all intents and purposes requires a satellite TV provider to carry 
every single local broadcast station in the country.
Conclusion
    Under controlling Supreme Court precedent, H.R. 927 is 
unconstitutional. It should not become law. But if it does, the courts 
are sure to strike it. The cable must-carry rule's ``modest'' burdens 
came within a hair's breadth of being struck. See Turner II, 520 U.S. 
at 214. In the intervening years, the Court has grown even more 
protective of First Amendment rights in the business context and less 
tolerant of burdensome regulations. Given these realities, H.R. 927 
will be practically dead on arrival.

    The Chairman. Thank you.

  STATEMENT OF R. STANTON DODGE, EXECUTIVE VICE PRESIDENT AND 
              GENERAL COUNSEL, DISH NETWORK L.L.C.

    Mr. Dodge. Chairman Kerry, Ranking Member Ensign, and 
Members of the Subcommittee, I appreciate the opportunity to 
testify. My name is Stanton Dodge and I'm the Executive Vice 
President and General Counsel of DISH Network, the Nation's 
third largest pay-TV provider.
    Providing consumers with local, over-the-air broadcast 
stations by satellite in all 210 markets has been a longtime 
goal of the Senate Commerce Committee. This year's review of 
the Satellite Home Viewer Act provides an opportunity to reach 
that goal.
    Today, DISH provides local-into-local service in 181 
markets, covering approximately 98 percent of households 
nationwide. This considerable achievement over the last decade 
would not have been possible without the forward-looking 
actions of Congress. The job, however, is not complete until 
all consumers have the opportunity to view their local 
channels.
    Today, I will review--I will detail some of the key hurdles 
to serving the remaining 29 markets and discuss what this--step 
this Subcommittee could take to make service in all 210 markets 
a reality.
    The up-front and recurring costs of providing local-into-
local service in every market are daunting. In each market 
where we provide local service, DISH must establish a physical 
presence. Our ability to recoup this substantial investment is 
constrained by the small size of the remaining markets. For 
example, there are fewer than 4,000 households in the Glendive, 
Montana, local market. This means there are only a few 
subscribers to help defray those costs. The costs to provide 
local-into-local service are largely fixed, so the economics of 
launching Houston are easy, while the economics of launching 
Presque Isle, Maine, and similar smaller markets, are not.
    DISH has finite satellite spectrum available to provide a 
national service that competes with cable and telephone 
companies. Let me explain. The decision to provide a local NBC 
affiliate to a few thousand subscribers precludes DISH from 
offering 13 million subscribers a new national service, a high-
definition channel, or an international or Spanish-language 
offering. This has clear competitive implications. Our 
investment in cutting-edge spot-beam technology and satellites, 
each an approximately $350-million investment, offers a more 
efficient means to provide local channels. Nonetheless, the 
decision to include a local dedicated spot-beam instead of a 
national beam on our next satellite has real consequences for a 
long-term competitive viability. Launching 29 additional 
markets would require us to find or create capacity for 
approximately 100 additional channels on a system that is near 
full capacity today.
    The last key hurdle is one of consumer expectations. If any 
customer subscribes to a locals package, they expect to receive 
at least NBC, CBS, ABC, and FOX. However, in 26 of the 29 
markets we have yet to launch, one or more of those networks is 
not available as the primary video feed. In some instances, 
only a single national network affiliate is present in these 
markets. Without action by Congress, we will be unable to 
provide a commercially viable offering by filling in these, 
quote, ``short markets.''
    Today, we're not seeking a subsidy for the launch of these 
markets or the resources to construct more satellites, but we 
do want to give this Subcommittee an appreciation for the 
challenges faced by any provider seeking to launch all 210 
markets. There are concrete steps the Subcommittee can take to 
improve the economics of serving these smaller markets.
    To that end, the bill voted out of the Senate Judiciary 
Committee 2 weeks ago is a good first step, but it could have 
unintended consequences. Other pay-TV providers pay either a 
retransmission fee or a copyright royalty payment. Any 
requirement to pay double compensation to carry the same 
station as the Judiciary bill requires would create an 
unintended financial disincentive to provide those additional 
signals. Simply put, layering on additional costs to serve 
these economically challenging markets would undercut the goal 
of serving every market. Indeed, to ensure that incentives are 
properly aligned and that all consumers in the U.S. receive 
comparable services, DISH would need to be on an equal footing 
with its competitors.
    In addition, the bill, as written, would allow broadcasters 
to withhold retransmission consent, perhaps stopping the launch 
of new markets.
    Finally, I want to comment on the Judiciary Committee's 
provision to study phasing out the Compulsory License Regime. 
We welcome such a study, but believe it needs to be coupled 
with an FCC study, as well. That study should examine the 
current compensation regime and whether it's truly market-based 
and serves consumers.
    In sum, we are hopeful that the reauthorization process 
this year will modernize an outdated statute, as well as 
provide the incentive to achieve a national policy goal, making 
local TV service available to consumers in all 210 markets. We 
look forward to working with members and staff to accomplish 
both of those goals.
    Thank you for the opportunity to testify, and I look 
forward to answering any of your questions.
    [The prepared statement of Mr. Dodge follows:]

 Prepared Statement of R. Stanton Dodge, Executive Vice President and 
                  General Counsel, DISH Network L.L.C.

    Chairman Kerry, Ranking Member Ensign, and Members of the 
Subcommittee, I appreciate the opportunity to testify today. My name is 
Stanton Dodge, and I am the Executive Vice President and General 
Counsel of DISH Network L.L.C. (``DISH Network''), the Nation's third 
largest pay-TV provider.
    Providing consumers with local over-the-air broadcast stations by 
satellite in all 210 designated market areas has been a goal of the 
Senate Commerce Committee for some time. This year's review of the 
Satellite Home Viewer regime provides an opportunity to improve upon 
the existing regulatory and legal structure to incentivize the launch 
of the remaining unserved markets.
    DISH has launched local-into-local service in 182 markets, 
including Puerto Rico, covering approximately 98 percent of households 
nationwide in less than a decade's time. This is a considerable 
achievement that would not have been possible absent the regulatory and 
legal structure Congress created to encourage and foster such 
investment.
    The job, however, is not complete until all consumers have the 
opportunity to view their local channels. Today, we would like to 
detail some of the key technical and financial hurdles to serving the 
remaining 29 markets to help frame the debate on what steps this 
Subcommittee could take to make service in all 210 markets a reality.
    First, the upfront and recurring costs of providing local-into-
local service in every market are daunting. In each market in which we 
provide local service, DISH must establish a physical presence. This 
local receive facility is needed to collect the local broadcast signals 
and send them back to our satellite uplink centers. To do so, we need 
to acquire adequate fiber facilities to bring the content back to our 
uplink centers as well as establish a secure location to acquire 
broadcast signals in each of these markets. The upfront costs alone to 
establish this infrastructure would be approximately $35 million for 
the remaining unlaunched markets. Importantly, substantial annual 
recurring costs are also necessary to maintain local-into-local 
service. The recurring cost for the remaining local facilities would be 
approximately $15 million annually including the costs of associated 
terrestrial infrastructure and staffing. These figures do not, however, 
include the expense associated with retransmission consent fees and 
other programming-related costs.
    Our ability to recoup this substantial investment is constrained by 
the small size of many of the remaining markets. For instance, there 
are fewer than four thousand households in the Glendive, Montana 
designated market area. This provides very few potential households to 
subscribe to our service to help defray those costs, yet the costs to 
provide a local-into-local service are largely fixed. The economics of 
launching Houston are easy. Presque Isle, Maine and similar smaller 
markets are not.
    The opportunity costs of earmarking capacity for local service are 
also very real. DISH has finite satellite spectrum available to provide 
a national service that competes with bandwidth-rich cable and 
telephone companies. At a very basic level, the decision to provide a 
local NBC affiliate to a few thousand subscribers precludes DISH from 
providing a new national service, a high definition channel, or an 
international or Spanish-language offering to 13 million subscribers. 
This has clear competitive implications. It is certainly true that our 
investment in cutting edge spot-beam technology and satellites--each a 
$350 million investment--has provided a more efficient means to provide 
local channels today. Nonetheless, the decision to include a local-
dedicated spot beam on our next satellite or a national beam has real 
consequences to our long-term competitive viability. Launching 29 
additional markets would require us to find or create capacity for 
approximately 100 additional channels on a system that is effectively 
at, or near, full capacity today.
    The last key hurdle is one of consumer expectations. If any 
customer subscribes to a locals package, they expect to receive at 
least NBC, CBS, ABC, and FOX content. Yet, in 26 of the 29 markets we 
have yet to launch, one or more of those networks is not available as 
the primary video feed of a local broadcast station. In some instances, 
only a single national network affiliate is present in these markets. 
Without action by Congress as part of the reauthorization process, we 
will be unable to provide a commercially viable offering by filling in 
these so-called ``short markets'' with the missing national content 
pursuant to our local-into-local compulsory license.
    We do not ask today for $100 million to subsidize the launch of 
these markets or the resources to construct more satellites, but we did 
want to give this Subcommittee an appreciation for the challenges faced 
by any provider seeking to launch all 210 markets. There are, however, 
concrete steps this Subcommittee can take to improve the economics of 
serving these small markets.
    To that end, the Satellite Television Modernization Act of 2009--
which was voted out of the Senate Judiciary Committee 2 weeks ago--is a 
good first step. This bill would provide for the first time the legal 
authority to retransmit quasi-local signals to consumers under the 
local compulsory license. Among those rights would be the ability to 
fill in short markets with adjacent broadcasters, the ability to bring 
in those stations that are deemed significantly viewed in the local 
market, and low-power stations that may offer valuable content within 
the local market. Each of these proposed changes increases the 
likelihood that consumers in the remaining 29 unlaunched markets would 
receive service that is more comparable to their urban counterparts.
    But restructuring of the compulsory copyright regime as currently 
proposed could create a hurdle that has a significant policy 
consequence. Other pay TV providers pay either a retransmission fee to 
the local broadcast station or a copyright royalty payment for 
carriage. Any requirement to pay double compensation--that is, both a 
retransmission consent fee and a royalty payment--to carry the same 
station would create an unintended financial disincentive to provide 
these signals. Layering on additional costs to the already precarious 
business model to serve these economically challenging markets would 
undercut our mutual goal to serve every market. Indeed, to ensure that 
the incentives are properly aligned and that all consumers in the U.S. 
receive comparable services, DISH would need to be on equal footing 
with its competitors. For example, this would include the ability to 
import signals during emergencies and to serve recreational vehicles 
and commercial trucks, as well as households outside of our local spot 
beams.
    The Satellite Television Modernization Act of 2009 also includes 
provisions for a study by the U.S. Copyright Office of the proper means 
to implement a phase-out of the copyright compulsory license regime 
with respect to the Copyright Act. We welcome such a study to provide a 
roadmap toward a market-based solution to replace a heavily regulated 
system that has too often failed consumers. So much of the current 
rules sit atop a complicated and outdated regulatory structure that 
treats competing pay TV platforms differently and deprives consumers of 
desired content.
    As we move toward that market-based approach, we believe that a 
companion report from the Federal Communications Commission is 
warranted to address corresponding issues and challenges raised by 
provisions within the Communications Act. Among the topics that merit 
expert study are: an economic analysis of the current compensation 
regime, the appropriateness of subsidizing over-the-air viewers in a 
market-based world, and whether a new framework would provide a more 
workable path to providing all consumers with in-state news, weather 
and sports. The current system fails households in 45 states on that 
account. Such a report could provide this Subcommittee with an 
invaluable roadmap as work begins on a true market-based carriage 
mechanism.
    In sum, we are hopeful that the reauthorization process this year 
will modernize an outdated statute as well as provide the incentive to 
achieve a national policy goal: making local TV service available to 
consumers in all 210 markets. We look forward to working with members 
and staff to accomplish both objectives.
    Thank you for the opportunity to testify today, and I'd be happy to 
answer any questions.

    The Chairman. We look forward to that. Thank you, Mr. 
Dodge.
    Mr. Karpowicz?

      STATEMENT OF PAUL A. KARPOWICZ, PRESIDENT, MEREDITH 
  BROADCASTING GROUP ON BEHALF OF THE TELEVISION BOARD OF THE 
              NATIONAL ASSOCIATION OF BROADCASTERS

    Mr. Karpowicz. Thank you. Chairman Kerry, Ranking Member 
Ensign, and Members of the Subcommittee, thank you all very 
much for having me here today.
    My name is Paul Karpowicz, and I'm President of the 
Meredith Broadcast Group, which operates 11 television stations 
in small, medium, and large markets throughout the United 
States. I'm also Chairman of the Television Board of the 
National Association of Broadcasters.
    As you reconsider reauthorization of SHVERA, two 
longstanding congressional policies are paramount: localism and 
private-party contractual agreements.
    Localism has been the bedrock principle of national 
communication's policy. Congress fosters broadcast localism by 
allowing stations to enforce program contracts that provide 
stations with the exclusive right to televise their programming 
in their markets. If a cable or satellite system serving one 
community is permitted to import the same programming from 
distant out-of-market stations, the viewing audience of the 
local station will be fragmented, advertising rates will 
plummet, and the ability of local television stations to 
provide costly local news, weather, emergency information, and 
local public affairs programming will clearly be diminished. 
Local viewers will inevitably have less access to local 
television stations' news, weather, and emergency and public 
affairs programming. Allowing cable and satellite companies to 
enter into exclusive program distribution contracts with their 
program suppliers, but depriving local stations of the same 
ability, will result in sports leagues and national program 
providers migrating their marquee programming to less 
restricted pay television services. Then, only those consumers 
who can afford to pay for this programming would have access to 
it.
    The benefits of digital television will be undermined if 
satellite carriers are allowed to exploit the digital 
transition by retaining, or grandfathering, distance-signal 
subscribers they have recently signed up, when those 
subscribers can easily receive the same programming from a 
local station. Local stations can now provide three or four 
separate channels of free over-the-air television programming, 
and they're using this new technology in creative and exciting 
ways. In short markets, those without a full complement of 
existing networks, multicast channels are being used to provide 
the programming of missing networks, for free, that previously 
was only available to those who could afford cable or 
satellite. We're doing preciously that with a multicast channel 
of our Flint, Michigan station that is now broadcasting a new 
network that previously was unavailable, and I might add, local 
news is being provided on that station. And contrary to 
DIRECTV's testimony, we and other stations are providing local 
news, weather, sports, and local emergency information and 
local public service programming on these multicast channels.
    These new multicast channels are also creating new 
opportunities for network programming aimed at minorities and 
other specialized audiences. The survival of these new and 
emerging networks is as dependent, perhaps more so, on local 
program exclusivity as existing networks. The Senate Judiciary 
Committee bill, introduced by Chairman Leahy and Ranking Member 
Sessions, wisely protects the program exclusivity of digital 
multicast signals, a result we strongly endorse.
    Some Members of Congress have inquired about market 
modification legislation. We recognize congressional concern 
for providing viewers with in-State but out-of-market broadcast 
programming, a concern that can be addressed without a change 
in the law. Cable and satellite systems can now retransmit 
locally produced programming from in-State distant stations. In 
fact, our own station in Atlanta has signed an agreement with a 
cable operator in northwest Georgia to allow it to carry 
nonduplicating locally originated programming to Georgia 
residents in the Chattanooga, Tennessee DMA. Similarly, in-
State carriage arrangements with local television stations 
exists around the country. Now, regrettably, satellite carriers 
have refused to participate in these carriage arrangements.
    NAB strongly supports the extension of local-into-local 
service to all 210 markets. Residents of Jonesboro, Arkansas 
are better served in times of emergency by satellite carriage 
of Jonesboro stations' weather and emergency information than 
by nonlocal programming from distant out-of-market stations. 
Various proposals are under consideration to facilitate 
extension of local-into-local service to all markets, including 
the solution contained in the Senate Judiciary Committee's 
bill, which we endorse.
    Thank you for the opportunity to testify. We look forward 
to working cooperatively with you as the reauthorization bill 
moves forward.
    [The prepared statement of Mr. Karpowicz follows:]

     Prepared Statement of Paul A. Karpowicz, President, Meredith 
 Broadcasting Group on behalf of the Television Board of the National 
                      Association of Broadcasters

    Good morning, Chairman Kerry, Ranking Member Ensign and Members of 
the Subcommittee. My name is Paul Karpowicz. I am President of the 
Meredith Broadcasting Group, which owns and operates 11 television 
stations in small, medium, and large markets throughout the United 
States. I am also Chair of the Television Board of the National 
Association of Broadcasters (NAB), on whose behalf I appear today.
    I appreciate the opportunity to talk with you today about issues of 
profound importance to the local television service we provide to our 
communities. Television broadcasters like Meredith urge you to ensure 
that service to local viewers is not undermined in the reauthorization 
of the Satellite Home Viewer Extension and Reauthorization Act of 2004 
(SHVERA).

I. The Two Overriding Public Policy Objectives
    Two public policy objectives should guide Congress's actions in 
reauthorizing SHVERA--preserving the important local broadcast service 
local stations provide, i.e., ``localism,'' and respecting the private-
party contractual arrangements entered into in a free marketplace for 
the distribution of television programming. Both the Federal 
Communications Commission (FCC) and Congress have found that these 
national policies serve the public interest.
    Localism is a bedrock principle, rooted in the Communications Act 
of 1934 (Act), that has guided both Congress and the FCC in 
implementing communications policy for decades. Localism has also been 
an integral part of satellite carriage policies since they were adopted 
in 1988. These policies promoting localism have benefited all 
Americans, whether they watch television over-the-air or subscribe to 
cable or satellite.
    What does localism mean for the public served by local television 
broadcasters? Localism is coverage of matters of ``local'' importance 
for local communities, such as local news, school closings, high school 
sports, severe weather and emergency alerts, local elections, and 
public affairs. Localism is also support for local charities, civic 
organizations, and community events. Local broadcasters help create a 
sense of community. They address the needs of the public, based on a 
familiarity with and commitment to local communities.
    The second Congressional policy objective is that the government 
should respect contracts freely entered into by private parties for 
distribution of television programming, especially since Congress and 
the FCC have found that honoring those contracts fosters localism, 
diversity, competition, and high quality service to the public. As the 
FCC has pointed out: ``[W]e do not deem it in the public interest to 
interfere with contractual arrangements that broadcasters have entered 
into for the very purpose of securing programming content that meets 
the needs and interests of their communities. Such interference would 
contradict our own requirements of broadcast licensees and would hinder 
our policy goals.'' \1\ The Act and the FCC's rules respect and enforce 
contracts, freely negotiated among the parties, that encourage the 
creation and distribution of a diverse mix of broadcast television 
programming that serve the needs and interests of local viewers 
throughout the country.
---------------------------------------------------------------------------
    \1\ FCC, Retransmission Consent and Exclusivity Rules; Report to 
Congress Pursuant to Section 208 of the Satellite Home Viewer Extension 
and Reauthorization Act of 2004 (Sept. 8, 2005) at  50 (FCC 
Retransmission Report).
---------------------------------------------------------------------------
II. Market Modification Proposals
    The first specific issue I wish to address is our concern about 
market modification proposals that have been a major topic of debate in 
connection with SHVERA. These market modification proposals would allow 
satellite and cable companies to import duplicating content from 
distant in-state stations into counties located in the same state as 
the distant stations. While broadcasters are sensitive to the concerns 
of Members that underlie these proposals, the proposals would not 
advance localism goals, but would in fact undermine sound public policy 
and harm consumers. Moreover, Members' concerns can otherwise be 
addressed without changing the law and without adverse consequences to 
the viewers of local stations.
    My point can be illustrated by WHNS, a station Meredith operates in 
Greenville, South Carolina. Thirty-four percent of the households in 
its Designated Market Area (DMA) are located in North Carolina and 4 
percent in Georgia. WHNS provides locally-attuned service to those 
North Carolina and Georgia communities, just as it does to the South 
Carolina communities within its coverage area. The nearest North 
Carolina City of license to these North Carolina counties is Charlotte, 
which is 95 miles away from Spotsylvania County, NC. Greenville is only 
25 miles away.
    These out-of-state communities within WHNS's market have close 
weather, topography, economic, and cultural ties with Greenville, South 
Carolina. Accordingly, WHNS airs news stories of specific relevance to 
these local out-of-state counties. The market modification proposals 
would undermine the economic base for this localized service. They 
would do so: (1) by overriding contractual relationships entered into 
by Greenville market stations with national networks and national 
syndicators for the distribution of their programming, and (2) by 
interfering with the retransmission consent process.
    Proponents of market modification suggest their proposals are 
necessary to enable viewers to watch local news, weather, and local 
programming originated by stations located in their home states. We 
respectfully disagree. Cable and satellite carriers may import, with 
the consent of the originating stations, the locally originated in-
state news, weather, sports, and public affairs programming from 
distant, in-state stations without any change in the law, and quite a 
number of cable systems do so today. Cable systems in Virginia, South 
Carolina, Georgia, Colorado, Tennessee, Wisconsin, and various other 
states import the local programming of in-state, out-of-market 
stations.
    In fact, Meredith's CBS affiliate in Atlanta, Georgia recently 
signed agreements with Comcast to begin retransmitting non-duplicating 
programming to Georgia residents in the Chattanooga, Tennessee DMA. 
This service, offered for no additional charge to Comcast customers, 
highlights the actuality of these private sector agreements being 
completed in the marketplace. Satellite carriers may also retransmit 
the local programming of in-state, distant station--but, regrettably, 
they have refused to do so.
    Market modification proposals would have a very different effect. 
They would:

   allow the importation of duplicative, national programming 
        into local markets where local stations have bargained for the 
        exclusive right to show that programming in their home markets. 
        That result would harm local service by fractionalizing the 
        viewer and advertiser base that underwrites the localized 
        services provided by broadcasters to their home-market viewers, 
        in-state and out-of-state. This would be the antithesis of 
        localism;

   allow satellite and cable carriers to replace local station 
        signals with the signals of distant stations affiliated with 
        the same network, thereby undermining the retransmission 
        consent rights of local stations; and

   override and strike down the contractual provisions between 
        local broadcasters and their programming providers (e.g., 
        between local affiliates and their networks, syndicators, and 
        sports leagues)--thereby eroding the ability of content 
        providers to negotiate fair compensation for their programs and 
        the ability of local broadcasters to provide the highest 
        quality programming to their local service areas.\2\
---------------------------------------------------------------------------
    \2\ The FCC has found that these contractual arrangements serve the 
public interest. In 1988, it reinstituted rules it had earlier repealed 
that allow local stations to enforce their syndicated program 
exclusivity arrangements. The FCC concluded that broadcasters' 
``inability to enforce exclusive contracts puts them at a competitive 
disadvantage relative to their rivals who can enforce exclusive 
contracts; their advertisers' abilities to reach as wide an audience as 
possible are impaired; and consumers are denied the benefits of full 
and fair competition: higher quality and more diverse programming, 
delivered to them in the most efficient possible way.'' Amendment of 
Parts 73 and 76 of the Commission's Rules Relating to Program 
Exclusivity in the Cable and Broadcast Industries, 3 FCC Rcd 5299 
(1988), at  62. The same considerations apply with equal force to the 
FCC's network nonduplication rules, which would also be overridden by 
the market modification proposals.

    I am sure you are aware of the most recent struggles, caused by 
harsh economic conditions, of local television stations to maintain 
their local news. The market modification proposals would severely 
damage the economic ability to provide local broadcast news--and local 
sports, weather, emergency alerts and public affairs programming.
    To deny local television stations the ability to enforce exclusive 
program contracts with their program suppliers--yet allow satellite and 
cable companies to enforce exclusive program contracts with their 
program suppliers would create an unfair and highly discriminatory 
regulatory scheme and would drive quality programming from free over-
the-air television to pay services.

III. Grandfathering
    The so-called ``grandfathering'' issues relate to subscribers that, 
for various reasons, historically were unable to receive the signal of 
one or more of their local network stations and who have legally been 
receiving distant signals, but who now can receive good reception from 
the local network station signals over the air. The questions, which 
are many and complicated, relate to which of those subscribers should 
be allowed to keep their distant signals even though they can receive 
the very same network programming free, from a local station.
    While each SHVA renewal has raised a unique set of grandfathering 
questions, the issues this time around are particularly complicated 
because of the digital transition. Because there is no current 
definition of an ``unserved'' household with respect to digital 
signals, as a technical matter beginning last year, much of the country 
has been eligible to receive distant digital signals. While the DBS 
industry has committed not to exploit this unintended situation, 
Congress should codify the promise.
    It would be contrary to the core Congressional policies underlying 
the satellite act and harmful to local television broadcast service to 
allow satellite carriers to exploit the digital transition by 
expanding, through grandfathering, the scope of their government-
granted compulsory copyright license.
    In the spirit of compromise, we will not oppose satellite carriers 
retaining their existing lawful distant signal subscribers who were 
unable to receive a Grade B analog signal from a local network 
station--even though those subscribers may now (post digital 
transition) receive a perfectly good digital network signal from that 
same local network station. We also would not oppose allowing satellite 
carriers to deliver a distant network signal to subscribers in non-
localinto-local markets who would qualify under the new digital service 
standard, but who previously did not qualify to receive a distant 
analog signal under the Grade B analog standard. In short, in this 
respect, the satellite carriers will receive the best of both worlds.
    We do not believe, however, it is fair or reasonable to also allow 
satellite carriers to retain subscribers that have been receiving a 
network signal from a local network stand-alone digital station (i.e., 
one that never had a companion analog signal) or from a digital 
multicast channel affiliated with a network. If that subset of distant 
signal households can, on the date of enactment, receive that same 
network from a local digital station (regardless of whether the channel 
is labeled a multicast or primary channel), such households should not 
be permitted to continue to receive a duplicating distant network 
station. That was never the intent of the Act--and to permit it now 
would be to allow the satellite carriers to exploit the digital 
transition for private gain.
    New digital multicast broadcast networks are now being formed 
(ethnic, minority, and other specialized and general audience networks) 
for digital multicast channels and the existing major networks are 
affiliating with these multicast channels in smaller markets that 
previously did not have a full complement of network affiliates. For 
example, the Hearst television stations located in Albuquerque, West 
Palm Beach, Orlando, and Tampa have entered into network affiliation 
agreements on digital multicast channels with a new Hispanic program 
network. Other TV stations have done the same. This new network and its 
specialized Hispanic programming will not survive if Congress allows 
satellite carriers to retransmit the very same programming into these 
local markets. The result will be that viewers who otherwise would have 
access to those networks for free from these local stations will have 
to pay to get them. Congress should not be a party to facilitating that 
result.
    Finally, as I mentioned earlier, every household in America, except 
those households that can receive a Grade B analog signal from a local 
low power or translator station, can now legally receive a duplicating 
network signal by satellite from a distant network station. We urge 
that this legislation prevent that unintended result by enforcing the 
oral promise made by satellite carriers to Congress not to exploit this 
aspect of the digital transition. As noted earlier, Congress should 
codify that promise.
    Cable is not permitted to import duplicating digital multicast 
network signals. The FCC applies its cable network and syndex non-
duplication rules to digital multicast signals the same as it does to 
all other digital and analog signals. There is no reason why satellite 
carriers should be given a competitive advantage over cable in this 
respect.
    Moreover, a prohibition against grandfathering would prevent the 
importation of distant duplicating national programming and, in turn, 
create an economic incentive for DIRECTV and DISH to extend their 
local-into-local satellite service to all 210 markets.

IV. Protecting Exclusivity for Programming Carried on Multicast Signals
    The importance of local market program exclusivity to localism and 
the network affiliate relationship cannot be overstated. By that I mean 
the ability of local stations to secure and enforce the right to be the 
exclusive provider of a network or syndicated program in their local 
market. Local stations, particularly those in small markets, can 
survive only if they can generate advertising revenue based upon local 
viewership. If satellite carriers can override the copyright interests 
of local stations by offering the same programs on stations imported 
from other markets, the viability of local stations, and their ability 
to serve their communities with the highest quality programming, is put 
at risk.
    Local market program exclusivity is no less important to stations' 
multicast signals than it is to their primary signals. One of the major 
advantages of the digital conversion is that it provides stations with 
the ability to provide multiple signals, each with separate, and 
additional, programming. Stations are using this technological advance 
in many new and exciting ways. In ``short markets''--those without a 
full complement of existing major networks--stations are using 
multicast to provide locally the programming of some networks that 
previously were available only from distant signals, or not at all. As 
stated earlier, many stations are using multicast to start new 
programming services aimed at minority and other specialized audiences.
    The survival of these new and emerging networks is just as 
dependent, and perhaps more so, on local program exclusivity as 
existing major networks. That is why it is imperative that the 
satellite rules protecting program exclusivity with respect to a 
station's primary signal apply with equal force to its multicast 
signals.
    The Senate Judiciary Committee's approach to this issue is to 
provide protection to multicast signals immediately. NAB commends 
Senators Leahy, Sessions, and the other members of that Committee for 
recognizing the importance of providing this protection for multicast 
signals immediately. In this regard, I would note that cable has always 
provided program exclusivity protection to multicast signals. Cable, in 
this respect, should not be competitively disadvantaged by a different 
standard for satellite carriers.

V. Local-into-Local
    NAB strongly supports the extension of local-into-local service in 
all 210 markets. Localism is a beacon of Congressional communications 
policy. The satellite legislation of 1999 made it possible for 
satellite carriers to compete effectively with cable operators by 
providing the compulsory copyright privileges needed to retransmit 
local stations' signals. Satellite operators took advantage of these 
new capabilities, and the result, as the FCC has repeatedly reported to 
Congress, was that the satellite operators rapidly became competitive 
with cable carriers, to the benefit of American consumers. Offering 
local service also enhanced satellite operator profitability.
    But the satellite operators do not provide local-into-local service 
in all markets. They avoid many smaller markets, so that, today, 
satellite subscribers in, for example, Columbus, Georgia, cannot 
receive news, weather and sports from their local-market stations via 
satellite.
    Currently, DIRECTV does not serve some 50 smaller markets, and 
EchoStar does not serve some 30 smaller markets. The satellite carriers 
no longer claim, seriously, that providing local-into-local service is 
technically impossible. They say it is expensive. But expense is always 
involved in providing program service to all of the American public.
    The House version of SHVERA renewal provides a mechanism whereby 
DISH's right to again provide distant signals to unserved households 
would be restored in exchange for its commitment to provide local into 
local service in all 210 markets. NAB does not oppose this provision. 
While the Senate Judiciary bill does not contain these provisions, it 
does have a mechanism to facilitate providing local into local in short 
markets by allowing carriers to import a missing affiliate from an 
adjacent market and treating it as local signals for purposes of the 
compulsory copyright license. With the advent of digital, the number of 
``short markets'' is rapidly diminishing because local stations, with a 
primary affiliation with one major network, are using their multicast 
capacity to carry a second major network (typically accompanied by 
local news and informational programming). Thus, KBAK-TV, the CBS 
affiliate in Bakersfield, California, now carries Fox network 
programming on a multicast channel and presents separately originated 
local news and other localized program services on that channel as 
well. With the switch to digital last June, this trend will continue 
and the number of short markets should be substantially and rapidly 
reduced.

VI. Other Issues
    There are other major issues affecting the reauthorization. 
Specifically, we would urge Congress to:

        1. amend the current statute to make clear that ``unserved 
        households'' are to be determined in terms of digital service, 
        not only analog service, and incorporate into the statute a 
        ``noise limited service'' standard which is the FCC's 
        definition of a good quality digital signal;

        2. adopt the digital signal predictive methodology, recommended 
        to Congress by the FCC at the direction of Congress, for 
        determining whether households are unserved;

        3. reject proposals to reduce the area of protected program 
        exclusivity from the interference-free service area to the 
        lesser of that area or the DMA in which the station is located 
        except, perhaps, to facilitate carriage of a missing major 
        affiliate in short markets. To do otherwise would reduce and 
        marginalize the exclusive program service area of local 
        stations; serve no useful public policy objective; and be 
        harmful to viewers who depend upon free local broadcast 
        service; and

        4. assure satellite carriers do not import HD and multicast 
        signals into ``significantly viewed'' areas in a local market 
        from an adjacent market without also carrying the HD and 
        multicast signals of the in-market stations.

    Finally, the SHVERA reauthorization process should not be used as a 
vehicle for reopening a range of well-established retransmission 
consent issues. The various market modification proposals advanced in 
the context of SHVERA would, in fact, erode local broadcasters' 
retransmission consent rights at the expense of the public's local 
broadcast service.
    There is no need to change the present retransmission consent 
process, which works as Congress intended.\3\ Congress should continue 
to reject the efforts of the satellite and cable industries to persuade 
the government to intervene in free-market retransmission negotiations, 
which the FCC has expressly found benefit cable/satellite operators, 
broadcasters and, ``[m]ost importantly, consumers'' FCC Retransmission 
Report at  44.
---------------------------------------------------------------------------
    \3\ FCC Retransmission Report at  34 (recommending no revisions to 
statutory or regulatory provisions related to retransmission consent). 
See also Empiris LLC, Jeffrey A. Eisenach, Ph.D., The Economics of 
Retransmission Consent (March 2009) at Executive Summary (concluding 
that retransmission consent has achieved Congress' intended purpose in 
enacting it, and has ``benefited consumers by enriching the quantity, 
diversity, and quality of available programming, including local 
broadcast signals'').
---------------------------------------------------------------------------
    Thank you. I look forward to responding to any questions Members of 
the Subcommittee may have.

    The Chairman. Thank you very much, Mr. Karpowicz.
    Ms. Thompson?

STATEMENT OF LONNA THOMPSON, ACTING COO, SENIOR VICE PRESIDENT 
 AND GENERAL COUNSEL, ASSOCIATION OF PUBLIC TELEVISION STATIONS

    Ms. Thompson. Thank you.
    Chairman Kerry, Ranking Member Ensign, and Members of the 
Subcommittee, thank you for inviting us to testify here today. 
I'm Lonna Thompson, Acting COO and General Counsel of the 
Association of Public Television Stations. We appreciate your 
allowing me to testify in lieu of our witness, who was not able 
to arrive today from the station.
    The reauthorization of SHVERA is of great importance to the 
364 public television stations across this country. There are 
three principal areas to which we would like to call this 
Committee's attention as you consider the reauthorization of 
SHVERA: first, carriage of our local stations' HD signals; 
second, carriage of our local multicast offerings; and third, 
our Statewide broadcasters' inability to serve all DBS 
subscribers in their States.
    Public television proudly highlights the private carriage 
agreements that we've been able to negotiate with almost all 
major multichannel video programming distributors. Rather than 
relying Congress to work out these carriage agreements, we 
pioneered our own private agreements with cable, Verizon, and 
DIRECTV that address the carriage of our local HD signals and 
the full array of our digital programming, including our unique 
multicast offerings. We're also working very closely with DISH 
Network to come to a similar agreement on the carriage of our 
digital content from multicast programming to HD because we 
believe that DISH Network's nearly 14 million subscribers 
deserve access to their local public television stations. Both 
sides have worked diligently in recent months, and we commend 
the work that Mr. Dodge and his team have put into these 
negotiations.
    Ultimately, we believe that a private carriage agreement is 
in the best interest of all the parties, including Congress, 
and we remain hopeful that an agreement may be signed before 
this Committee finishes its work on SHVERA. However, we must 
stress that any national carriage agreement must contain an 
accelerated deployment of our local stations' HD, accessibility 
to our local multicast programming, and, ultimately, the 
preservation of localism.
    As for HD carriage, while the FCC has created a time 
schedule for HD rollout in all satellite markets through 2013, 
we've sought to reach private agreements with the DBS providers 
to accelerate this rollout. This accelerated schedule was a 
principal portion of our 2007 agreement with DIRECTV and is 
something that we're actively pursuing with DISH. To date, DISH 
is only carrying the HD signals of local public television 
stations in Alaska and Hawaii. The fact is that, until now, 
DISH has chosen to leave local public television stations in an 
SD world, that offers demonstrably inferior viewing experience. 
This is not sustainable. We certainly hope that such 
discriminatory treatment of our stations will be rectified by 
an agreement; but, if not, we will have to ask the Committee to 
do so legislatively.
    Turning to multicasting, public television stations were 
early adopters of digital technology and have been at the 
forefront of developing content and maximizing digital capacity 
to serve our core missions of localism, education, and 
diversity. Our stations offer multicast streams that allow for 
complete local coverage of the State legislatures, educational, 
health, public service, kids, and unique sports programming. 
Again, this is an issue that's been addressed by our carriage 
agreement with DIRECTV, and we hope to resolve it through our 
negotiations with DISH. However, absent an agreement, this is 
an issue that should be given serious consideration by this 
committee as you look to reauthorize SHVERA.
    Finally, I'd like to address the fact that at least 16 
Statewide public broadcast networks are not able to fully serve 
viewers in their--all their States. Because the SHVERA carriage 
regime is based on the DMA system, many of these networks 
cannot be carried by DBS providers in parts of their States, 
simply because they do have a full-power transmitter in each 
DMA. West Virginia is a glaring example. The State network 
covers the entire State with three full-power transmitters in 
three of the nine DMA's. However, because they don't have 
transmitters in all nine DMA's, nearly 35 percent of the 
State's population is ineligible to receive their Statewide 
service over satellite. West Virginia's not alone in this 
issue. We thank the Judiciary Committees in the House and 
Senate for addressing this issue in their SHVERA bills, and we 
ask that this Committee support those provisions as the bill is 
conferenced.
    Again, thank you for inviting me to participate in today's 
hearing. The reauthorization of SHVERA is critical to all 
public television stations. We look forward to continuing to 
work with you as you examine SHVERA reauthorization and other 
issues of importance to public broadcasters.
    [The prepared statement of Ms. Thompson follows:]

Prepared Statement of Lonna Thompson, Acting COO, Senior Vice President 
     and General Counsel, Association of Public Television Stations

    Chairman Kerry, Ranking Member Ensign, and Members of the 
Subcommittee thank you for inviting me to testify before you today on 
behalf of the Association of Public Television Stations (APTS). The 
reauthorization of the Satellite Home Viewer Extension and 
Reauthorization Act (SHVERA), which governs the transmission of local 
public television signals to millions of direct broadcast satellite 
(DBS) viewers, is of great importance to the 364 public television 
stations across the country. It also will bear directly on the future 
of public broadcasting in the digital era.
    There are three principal areas to which we would like to call this 
Committee's attention as you consider the reauthorization of SHVERA: 
(1) carriage of our stations' local HD signals (2) carriage of public 
television's multicast offerings, and (3) our statewide broadcasters' 
inability to serve all DBS subscribers in our states. Although this 
latter issue is being addressed by the House and Senate Judiciary 
Committees, we wanted to keep the Committee informed on this, and we 
will seek your endorsement of the solution in the final conferenced 
bill.

Public Television's Private Carriage Agreements
    As Congress looks to reauthorize SHVERA, public television proudly 
highlights the private carriage agreements that we have been able to 
negotiate with almost all major Multichannel Video Programming 
Distributors (MVPDs). Rather than rely on Congress to work out these 
carriage agreements, which are admittedly challenging, we pioneered our 
own private agreements with cable, Verizon and DIRECTV that address the 
carriage of High Definition (HD) signals and the full array of our 
digital programming and services, including our unique multicast 
offerings.
    In 2005 APTS, PBS, and the National Cable and Telecommunications 
Association (NCTA) reached a landmark agreement which ensured that the 
Nation's largest cable providers would carry up to four digital 
streams, including HD and multicast, of each public television station 
entitled to carriage on a given system. This was the first carriage 
agreement of its kind and has ensured that cable consumers have access 
to the complete line-up of their local public television station' 
digital offerings. In 2006, APTS and PBS reached a similar national 
agreement with Verizon for carriage of the full digital offerings, 
including local HD and multicast, of local public television stations 
on Verizon's fiber-based telecommunications platform, FiOS. Then in 
2007, APTS and PBS reached a digital carriage agreement with the 
American Cable Association (ACA), which represents 900 smaller cable 
systems that serve more than seven million subscribers in all 50 
states. This deal was similar to the earlier deal with NCTA.
    Also in 2007, APTS, PBS and DIRECTV reached a landmark agreement 
which allows DIRECTV's nearly 17 million subscribers to access a broad 
array of public television's digital services. We realized that our 
agreements with cable and Verizon were unique to those providers and we 
worked with DIRECTV on creative solutions that recognized their 
capacity limitations, ultimately ensuring that subscribers have access 
to the myriad of content and services provided by the local stations 
while accommodating their capacity concerns. The agreement stipulates 
that in each market in which DIRECTV provides high-definition (HD) 
local channels, they will carry either an HD signal or two standard-
definition (SD) streams from each station, at the station's option. In 
addition, DIRECTV will carry two national SD feeds featuring 
educational programming that is differentiated from the station's 
primary streams, with local stations' identification included on the 
Electronic Programming Guide. In the future, DIRECTV will provide 
public television stations the ability to offer additional localized 
programming through dedicated on-demand services to its new MPEG4 
receivers, which are equipped with broadband connections. Finally, in 
markets where DIRECTV is not yet offering local broadcast signals, 
DIRECTV will provide stations with marketing materials regarding an 
offer for an antenna and ATSC tuner so many customers can gain seamless 
access to local signals over-the-air.
    With the tremendous investments that public broadcasting--and by 
extension the American public--has made in digital programming, it was 
absolutely necessary to undertake these carriage agreements to ensure 
that satellite and cable consumers have access to the full array of 
educational and public service programming that their local stations 
are providing.
    We are also working very closely with Dish Network to come to a 
similar agreement on the carriage of public television's digital 
content from multicast programming to HD, because we believe that Dish 
Network's nearly 14 million subscribers deserve access to their local 
public television stations. Both sides have worked diligently in recent 
months to try to come to an agreement and we commend the work that Mr. 
Dodge and his team have put into these recent negotiations. Ultimately 
we believe that a private carriage agreement is in the best interest of 
all parties, including Congress.
    We remain hopeful that an agreement with Dish Network will be 
signed before this Committee finishes its work on SHVERA. We must 
stress, however, that such a national carriage agreement must respect 
localism. Public television stations are some of the last locally owned 
and locally controlled media outlets in this country. We cannot accept 
any deal with Dish Network that undermines our local ability to serve 
our viewers. Local broadcasters' rights to serve their local 
communities with programming and content designed to address local 
needs go directly to the core of SHVERA itself, and to the work of this 
committee over the years. We remain committed to a deal with Dish 
Network that serves our communities with the full complement of local 
programming and services in which the American public has invested, and 
as such, we cannot and will not accept anything that undermines our 
fundamentally local initiatives.
    Between Dish and DIRECTV, more than 32 million consumers depend on 
satellite providers to receive their television signals. We recognize 
that there are challenging technical and economic factors involved in 
trying to reach an agreement, but the core principles of localism and 
access through our HD and multicast services must be addressed. These 
are issues we have been able to address with every other major MVPD, 
including DIRECTV. We cannot afford to overlook the importance of 
ensuring that consumers have nondiscriminatory access to HD 
programming, regardless of the platform or service provider. If we are 
unable to come to a private agreement with Dish Network, it will be 
incumbent upon this committee and Congress to address these critical 
carriage shortfalls.

DBS Carriage of HD Signals
    While the FCC has created a time schedule for HD roll-out in all 
satellite markets through 2013, public television has sought to reach 
private agreements with the DBS providers that accelerate the roll-out 
and greatly enhance the educational offerings available to consumers 
nationwide. This accelerated schedule was a principal portion of our 
2007 agreement with DIRECTV and is something we are actively pursuing 
with Dish Network. There are currently 150 markets where Dish Network 
is offering HD local service. However, to date, Dish is only carrying 
the HD signals of local public television stations in Alaska and Hawaii 
where they are legally obligated to do so. We remain hopeful that this 
issue can be resolved through a private negotiation so that all 
consumers will have access to highest-quality programming being created 
at local public television stations. However, if such private 
negotiations should fail, it is imperative that this committee address 
the inadequacies of HD carriage of public television stations as part 
of the reauthorization of SHVERA.

DBS Carriage of Multicast Services
    Public television stations nationwide were early adopters of 
digital technology and have been at the forefront of developing content 
and maximizing the new digital capacity to serve our core missions of 
localism, education and diversity. Local public television stations are 
utilizing their multicasting capabilities to provide dedicated channels 
for public affairs programming and programming designed to reach 
underserved audiences. In a time of declining news coverage, the 
importance of these services cannot be underestimated.
    For example, West Virginia Public Broadcasting (WV PBS) utilizes 
all three multicast channels to provide a full complement of local 
educational and public service programming. On their main SD channel 
and HD channel, they provide the only daily coverage of the State 
legislative session, available in West Virginia, including the live 
broadcast of the State of the State address. Moreover, WV PBS produces 
and broadcasts weekly programs providing viewers with medical advice, 
legal advice, and daily science and mathematics help for local 
students. The historical documentaries produced by WV PBS and local 
independent producers are legendary and award-winning. Their second SD 
channel is focused on educational programming and secondary sports. 
Ultimately they have plans to differentiate their HD and main SD 
channel. Once that happens, contingent on funding and public support, 
they are considering dedicating one of the SD channels purely to 
education and the other to public service and sports programming.
    WV PBS is not alone in their innovative embrace of multicast 
programming. WFSU in Tallahassee partners with the Florida State 
Legislature to offer the Florida Channel, a public affairs network that 
is carried by several public television stations in the state. The 
Florida Channel features live, gavel-to-gavel coverage of the state 
Senate and House of Representatives, as well as other local electoral 
and public affairs coverage.
    In Arkansas, the Arkansas Educational Television Network (AETN) is 
broadcasting four multicast channels. In addition to its primary 
channel, AETN's Scholar Channel, done in partnership with the Arkansas 
Department of Education, provides 24-hour programming that assists in 
teacher professional development and enhances the classroom experience. 
AETN splits another of its multicasting channels between children's 
programming and programming focused on creative lifestyles. AETN 
utilizes its last multicast channel to provide a reading service for 
the blind in partnership with the Arkansas Department of Health and 
Human Services.
    However, SHVERA does not address DBS carriage of local broadcast 
stations' multicast offerings. Without carriage on all multichannel 
video platforms, this content is lost to millions of taxpayers who have 
invested their hard-earned dollars in public broadcasting. The Federal 
Government, which helped fund the conversion of public stations to 
digital, also has a strong interest in making this content available to 
the American public. Again, this is an issue that has been addressed by 
our carriage agreement with DIRECTV. Recognizing satellite providers' 
legitimate capacity concerns, the deal utilizes creative solutions to 
ensure that all DIRECTV subscribers have access to local station's 
multicast content. Multicast carriage is also a central issue being 
discussed in our negotiations with Dish Network and one that we believe 
all sides should be able to agree upon. Any agreement with Dish Network 
would also recognize its capacity limitations, but would ensure its 
consumers have access to their local stations' multicast programming. 
Again, we strongly prefer a privately negotiated solution to this 
issue. However, absent an agreement, this is an issue that should be 
given serious consideration by this committee as you look to 
reauthorize SHVERA.

Statewide Networks' Ability to Reach DBS Subscribers Throughout State
    A central issue I would like to address is the fact that at least 
16 statewide public broadcast networks throughout the country are not 
able to fully serve all viewers in their states. As you know, SHVERA 
establishes a copyright license that enables DBS providers to 
retransmit, within a Designated Market Area (DMA), the local stations 
located in that DMA. In several states, state governments or community 
foundations operate statewide or regional networks made up of several 
public television stations. These state or regional public television 
networks are charged by their state legislatures to provide statewide 
services including news and information, public affairs, K-12 services 
to schools, higher education, workforce services and emergency response 
information. Statewide public television networks typically receive 
funding from their states to provide these unique programming services 
in return for its pledge to serve all citizens of the state. Public 
television's statewide networks take this mandate very seriously. 
However, because the SHVERA carriage regime is based on the DMA system, 
many of these networks cannot be carried by DBS providers in certain 
portions of their states because they do not have a full-power 
transmitter in each DMA reaching into the state. This is not 
acceptable.
    For example, West Virginia is divided among 9 DMAs including 
Charleston-Huntington, Beckley-Bluefield-Oak Hill, and Clarksburg-
Weston where WV PBS has three primary full-power transmitters. In 
addition, West Virginia DMAs include Wheel ing-Steubanville and 
Parkersburg DMAs, both of which contain WV PBS translators. Six more 
translators are distributed throughout the state to include 2 counties 
assigned to the Pittsburgh DMA, 7 counties assigned to the Washington, 
DMA, one county in the Harrisonburg DMA, and finally one county in the 
Roanoke-Lynchburg DMA.
    As a matter of note, West Virginia also includes a major portion of 
the National Radio Quiet Zone (NRQZ). The NRQZ is 13,000 square miles 
and affects, more or less, 19 counties in the state. This limits their 
ability to broadcast into some of the most rural counties in the state 
and underscores the importance of satellite carriage. Because over the 
air broadcasts are limited in these areas, satellite carriage is the 
only way many of these rural communities can receive WV PBS 
programming.
    Because DBS providers lack a statutory copyright license to 
retransmit West Virginia Public Television in the other 6 DMAs, nearly 
35 percent of West Virginia residents live in places that are not 
eligible to receive their station. The rest of the state receives 
either out-of-state public television stations or--in several of the 
DMAs--no local public television signals at all.
    West Virginia is not alone in this issue. This problem affects 
state or regional public television networks in at least 15 states, 
from Louisiana to Nebraska and from Arkansas to Oregon, and implicates 
counties encompassing more than a million households. In Wyoming, the 
issue is so bad that over 75 percent of the population resides in DMAs 
that are ineligible to receive Wyoming Public Television. In many 
situations, these are rural areas with difficult terrain where DBS is 
the best option for viewers to receive their local television stations. 
Additionally, because of the challenges of digital conversion, many 
small cable systems have since closed down, leaving towns in these 
areas without cable service. This further highlights the necessity of 
ensuring that homes in these areas can receive the signal of their 
local statewide public broadcaster through satellite service.
    Again, we recognize that the changes needed in the Copyright Act to 
address this issue are the jurisdiction of the Judiciary Committees and 
we are pleased that this non-controversial issue has been addressed in 
both the House and Senate Judiciary Committee bills. However, we raise 
this issue today because we are hopeful that this Committee will 
support the Judiciary Committees work to solve this issue for our 
statewide networks when all four committees come together to conference 
the final bill.
    Thank you for inviting me to participate in today's hearing. The 
reauthorization of SHVERA is critical to all public television 
stations. We look forward to continuing to work with you as you examine 
SHVERA reauthorization, and other issues of importance to public 
broadcasters in the exciting new and challenging media world unfolding 
before us.

    The Chairman. Well, thank you very much, Ms. Thompson. Let 
me, sort of, go right to the, sort of, first challenge here, 
Mr. Dodge. Ms. Thompson described a situation that is 
unsustainable, and I'd like you to address the question with 
respect to the DISH carriage issue.
    Mr. Dodge. Sure. And I'd, you know, first like to say, I 
think there's a bit of a misconception about our dedication to, 
and appreciation of, the value of public broadcasting. 
Certainly, as a company, we recognize that, and personally, 
growing up in Boston, watching WGBH as a child and a young 
adult, I appreciate it. And, in fact, today we are the largest 
distributor of PBS programming in the United States, by virtue 
of the fact that we're in 182 local markets today, and we hope 
that, through the--at the end of this process, we'll have an 
incentive that will take us to 210 markets. We'll make PBS 
available to every subscriber in the United States.
    So, with respect to the specific issue of HD programming, 
we are in good-faith negotiations with the folks at APTS to 
accelerate the FCC schedule, and I've personally been involved 
in that, and working on it for the last 2 months nearly 
everyday, and I am optimistic we will reach a private 
commercial agreement.
    The Chairman. What's the hang-up?
    Mr. Dodge. At this point, there are several outstanding 
issues still.
    The Chairman. Do you want to speak to them, Ms. Thompson? I 
mean, is there--do you sense the same optimism, that you'll get 
to the completion happily?
    Ms. Thompson. We are also optimistic, Mr. Chairman. We do 
have a number of key issues that we're still discussing, around 
the local HD accelerated schedule, in particular, but we are--
--
    The Chairman. So, you feel there's a way through the 
private negotiating process to be able to arrive--to resolve 
this question of coverage. Is that correct?
    Ms. Thompson. That's our sincere hope and desire.
    The Chairman. So, you do not see this as something the 
Committee, per se, in the reauthorization, needs to specify or 
dictate, or something?
    Ms. Thompson. Not at this time. We're hopeful we can 
resolve it by private negotiations.
    The Chairman. So are we, obviously. We'd rather have you do 
it that way.
    I think it was you, Mr. Gabrielli, you mentioned the 
issue--you were talking about the predictability with respect 
to the distant-signal piece.
    Mr. Gabrielli. Yes, the SHVERA says that we're the--
supposed to use a model that is fairly old and does not include 
some, I'd say, recent enhancements in technology that could be 
taken advantage of. Part of it is--again, is trees. And if 
you're from an Oregon country, you know, trees are a big issue. 
And we get that with our customers, that, you know, ``We can't 
see a services 'cause of trees.'' So, it's just interesting 
that the SHVERA model, which is what we have to use to figure 
if you're eligible, has a big discrepancy with the model that 
the NAB uses when you would sign up to say, ``What antenna 
should I use?'' And you go to that model, and it says, ``There 
is no antenna to suit you.'' We just need to close that gap 
between the two, so that----
    The Chairman. How do you do that? How do--do we do that?
    Mr. Gabrielli. I think the FCC should look at the models 
they use, and ask the NAB what models they use, and just bring 
those two together.
    The Chairman. Yes, Mr. Karpowicz?
    Mr. Karpowicz. Thank you, Mr. Chairman.
    I would like to say, I think we're comparing apples and 
oranges here. The model that was created by the FCC was the 
model that is being used for SHVERA. What is on the CES and NAB 
website is simply to help people pick out which antenna to use. 
In certain situations, you're going to need a larger antenna 
than other situations. But, it's never to say, ``You can't get 
the signal, there is no antenna, you are without hope.'' It is 
simply to say, ``You may need a larger antenna in this 
situation, versus other situations, where you may be able to 
accomplish the same goal with a smaller antenna.'' So, we're--I 
think we're talking about----
    The Chairman. And your complaint----
    Mr. Karpowicz.--two very different standards.
    The Chairman.--and your complaint is that it's really a 
problem of simply not being able to get the signal, either way? 
I'm not----
    Mr. Karpowicz. No, no, no, I'm actually very comfortable 
with the work that----
    The Chairman. With the antenna choice?
    Mr. Karpowicz. Yes, and the work that the FCC did in 
creating the SHVERA model.
    The Chairman. I see. All right.
    Mr. Karpowicz. So, we're comfortable with that.
    The Chairman. Yes, Mr. Gabrielli?
    Mr. Gabrielli. I guess we'd have a difference of opinion, 
because we actually took our customers who, when we ran through 
the SHVERA models, said, ``You get a grade-B signal.'' We took 
the same address, went to the antenna website, and it didn't 
come up with an answer; there was no antenna that it said, 
``Here's what you should go down and buy.'' So, we just need to 
close that gap, and we're happy to share the--our analysis 
with----
    The Chairman. Well, we'll work with--yes, we should try to 
close that gap, obviously. Let me come to, sort of, the larger 
question, which is: DIRECTV offers local to--you know, local-
into-local service in about 152 of the 210 DMA's?
    Mr. Gabrielli. That's about right, yes.
    The Chairman. And DISH, I gather, about 181?
    Mr. Dodge. Yes, sir.
    The Chairman. So, the question that a lot of people are 
asking themselves is, Are you dedicated to the goal of getting 
the 210?
    Mr. Gabrielli. I guess I'll take that first, is--you know, 
DIRECTV wants to provide local channels in as many markets as 
possible, and the ``as possible'' is a strong word.
    The Chairman. Is there a long-term plan to do so?
    Mr. Gabrielli. There's a plan to continue to add markets 
every year. You know, we've spent billions of dollars, we're in 
95 percent now. We have proposed to the Congress a couple of 
proposals to eliminate some of the barriers. An example would 
be----
    The Chairman. Are the barriers what are preventing you from 
doing it now, or is it an investment decision? Is it cost? I 
mean, what's the----
    Mr. Gabrielli. One of the barriers is the cost. It--as he--
Mr. Dodge says, it's very expensive. It's 2-and-a-half-million 
dollars to go to a new market and to rent out----
    The Chairman. How much does it cost to, say, move into a--
you know, a local-local service in a new territory? Pick a 
territory.
    Mr. Gabrielli. Glendive, Montana. It cost about $2 million, 
because you have to establish a local facility, you have to put 
the infrastructure in there. And what we're finding in a lot of 
the more rural markets is, there's no way of getting the 
signals back to a facility, so we actually have to put the 
fiber in the ground to get the stuff back.
    The Chairman. And is it just a simple business equation, 
bottom-line spreadsheet, that says, ``You don't have enough 
people there,'' in terms of the advertising revenue for that 
market----
    Mr. Gabrielli. Well, they----
    The Chairman.--to be able to support it, or what?
    Mr. Gabrielli.--they certainly--this certainly would not be 
not be--it'd be a loss, I mean, in this model. And part of what 
we--our proposals was a cost-sharing, because on top of us 
spending this cost to bring the local channels, the local 
station also wants to be paid, on top of that, for their 
programming rights. And so, one of our proposals is a cost--
sharing of this cost.
    The Chairman. And you're telling us there's no way for 
existing infrastructure to be able to be used in order to 
broaden the scope of coverage to the 210. You have to use--are 
you saying to us that you necessarily require significant new 
infrastructure investment to make that happen? There's no new--
there's no current technology that could simplify it, 
facilitate it?
    Mr. Gabrielli. I guess--the current technology is, you 
actually need to go to a market and somehow gather all the 
television signals in a market, either by over-the-air or by 
fiber, locally. Then we have to transport those back to one of 
our uplink facilities. So, you have to go to market, find a 
place, rent it, put up antennas on the roof, or bring in fiber. 
And then, I said is--you have to now fiber that all the way 
back to an uplink. That infrastructure, you have to build on a 
market-by-market basis.
    The Chairman. Senator Ensign?

                STATEMENT OF HON. JOHN ENSIGN, 
                    U.S. SENATOR FROM NEVADA

    Senator Ensign. Thank you, Mr. Chairman.
    If I may, before I ask a few questions, just make a few 
comments.
    The Chairman. Yes, sure.
    Senator Ensign. When Congress first passed the Satellite 
Home Viewer Act back in 1988, I think few people could have 
imagined what the satellite industry would look like today. Far 
more people today subscribe to satellite television than watch 
television exclusively via over-the-air antennas. In addition 
to the rapid growth of the satellite industry, the last two 
decades have seen tremendous innovation in the video 
marketplace.
    And never before have consumers been able to get access to 
television content in so many different ways. Consumers can 
watch TV broadcasts over the air for free; they can purchase 
pay-television service from cable companies, satellite 
companies, and even phone companies; they can rent or buy 
entire seasons of TV programs on DVD; and they can stream or 
download TV content over the Internet, either to their computer 
or to the television in their living room.
    The 1988 Act was intended to foster exactly this sort of 
competition and innovation. Indeed, it was never meant to be a 
permanent immutable regulatory framework, however. Believing 
that the satellite carriers would eventually be able to 
negotiate in the open market for copyright licenses, Congress 
intended for a limited interim compulsory license created by 
the 1988 bill to be temporary.
    This temporary license has been extended three times, 
bringing us here to 2009, to consider extending it for a fourth 
time. I urge my colleagues to really think about whether we 
need to continue extending this license and whether our many 
other satellite and cable regulations fit today's marketplace.
    A 2008 Copyright Office report states that, ``The cable and 
satellite industries are no longer nascent entities in need of 
government subsidies through a statutory licensing system,'' 
and recommends eliminating the compulsory licenses. The 
satellite and cable industries are more than capable today of 
negotiating agreements with television networks and 
broadcasters, and the Copyright Office agrees.
    We need to take a holistic look at both our copyright and 
retransmission rules, to see if we can move them toward a free 
market system, where consumer interests, rather than the 
government regulations, drive competition.
    I know that some of this discussion, particularly the 
compulsory copyright license, falls outside the jurisdiction of 
this Committee. I also recognize that we simply do not have the 
time this year to fully debate this issue in earnest. Even so, 
the time must come to revisit our pay-television regulatory 
framework, and I hope that my colleagues will work with me, 
over the next few years, to address this issues in a serious 
way.
    On the issue of local-in-local service, I think everyone 
here agrees that consumers benefit when they can receive their 
local network stations from their satellite company. DISH 
Network and DIRECTV have done a good job of expanding their 
local-in-local offerings over the years, but many communities 
still cannot watch their local stations on these satellite 
systems.
    As the Committee debates how best to bring local content to 
every market in the country, I urge my colleagues to find a 
solution that does not rely on prescriptive government 
mandates. I am concerned that a government requirement for 
satellite companies to provide local-into-local service to all 
210 markets could be unnecessarily burdensome for the satellite 
providers, would be subject to years of litigation, and might 
lead to a number of unintended consequences. Indeed, we should 
consider proposals that incentivize the satellite companies to 
reach all 210 markets without government requirement.
    Such a proposal has been advanced by the House Judiciary 
Committee in their reauthorization bill. I think their idea has 
many merits, and most industry stakeholders seem to be 
comfortable with their approach. Whatever direction this 
Committee takes, I hope it will be one that puts consumers 
first, while also avoiding unnecessary and onerous government 
mandates.
    Mr. Chairman, just a couple of quick questions.
    Mr. Karpowicz, DIRECTV has testified that NAB's own Website 
shows that as many as 45 percent of those now considered 
unserved by SHVERA, and thus ineligible for distant signals, 
cannot, in fact, receive local signals over the air. If this is 
true, it would appear that many households that should be able 
to receive distant signals from satellite operators are blocked 
from receiving such service. Why does the NAB antenna website 
differ so greatly from the digital perspective model that you 
want Congress to rely on?
    Mr. Karpowicz. As I indicated, I think we're actually 
comparing two very different systems, here. The purpose of the 
NAB CES website was simply to help people select the type of 
antenna that they need in their particular circumstance. Now, 
some people, based on their location and their proximity to the 
tower and the location to the station, may not require a very 
sophisticated antenna. There may be other people on the fringes 
of the coverage area that may require a more substantial 
antenna and one with a greater height off of the ground. That's 
very different--that comparison and that website and what 
they're trying to do there--is very different from the model 
that's been developed by the FCC in their SHVERA calculations.
    Senator Ensign. Mr. Gabrielli, in your testimony you say 
that, ``The law should no longer allow incumbent cable 
operators to offer more local and significantly viewed channels 
than their satellite competitors.'' Please elaborate on this. 
And specifically, what rules need to be changed in order to 
achieve parity in this situation?
    Mr. Gabrielli. There are two rules that were incumbent on 
the satellite subscribers that now are on cable. The first one 
is this equivalent bandwidth, where if we bring in a 
significantly viewed station in from an outside market, we have 
to give it the same bandwidth--or we have to give the local 
station exactly the same bandwidth as we give the significantly 
viewed. The problem was, they did it--that on, literally, a 
second-by-second basis, and there's no way for us, if the local 
station goes from an HD signal to an SD, to be able to shut off 
the outside station. You know, it--so, it was matter of the way 
the wording was done. It's--the capacity required for both had 
to be literally equivalent at every moment in time.
    The second issue is that, even though we have the rights 
from--to bring the significantly viewed in, we have to 
negotiate with the outside station, and we have to renegotiate 
with the inside station. So, it really kind of complicates the 
retransmission, where the inside station can say, ``Well, yes, 
where you bring in the outside station, there's a different 
deal going on here.''
    So, we're just asking the parit with the cable, which--
neither of those two requirements are on them.
    Senator Ensign. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Ensign.
    Senator Klobuchar?

               STATEMENT OF HON. AMY KLOBUCHAR, 
                  U.S. SENATOR FROM MINNESOTA

    Senator Klobuchar. Thank you very much, Mr. Chairman. I'm 
sorry, I've been losing my voice over the last two nights of 
Minnesota sports. If you----
    The Chairman. Now, don't----
    Senator Klobuchar. I don't know if you noticed----
    [Laughter.]
    Senator Klobuchar. Maybe.
    The Chairman. We don't have any Michigan Senators.
    [Laughter.]
    Senator Klobuchar. Or Wisconsin ones.
    Actually, speaking----
    The Chairman. Or Wisconsin, right.
    Senator Klobuchar. I'm a member of both this Committee, as 
well as Judiciary, so these are the two committees that are 
considering SHVERA. And, as you know, we did pass a bill out of 
our Committee. I was glad we did that. But, in the context of 
the debate we had in the Judiciary Committee, we actually had 
one amendment that we discussed, and that amendment was an 
amendment by the Wisconsin Senators to provide service to 
Wisconsin counties located in the Minneapolis DMA to retransmit 
the local programming of a Wisconsin station. And, despite the 
obvious Packers/Vikings pull on this issue, and my sympathy to 
these Wisconsin viewers, I ultimately voiced my concern that we 
would harm local broadcasters by splitting the Minneapolis 
DMA's viewer and advertising base. And we have 14 Minnesota 
counties that are considered orphan counties, as well.
    So, I truly have sympathy for this, but I was concerned 
that we would go down a slippery slope, where we would try to 
make similar modification in other DMA's, with the end result 
being confusion for our broadcasters, our advertisers, and our 
viewers.
    So, in the end, our Judiciary Committee marked up a clean 
bill that had the agreement of all parties. I acknowledge, we 
didn't tinker with the media markets, and we didn't create 
winners and losers. I hope that we will be doing the same thing 
here in the Commerce Committee so we can get this very 
important legislation reauthorized.
    My question, first, is just a more general one. As we look 
at the fact that we are reauthorizing SHVERA, what changes have 
taken place since 2004--technological changes that you think 
should make a difference in how we consider this bill?
    Maybe you want to start, Mr. Gabrielli.
    Mr. Gabrielli. Well, I think the first one's been talked to 
about today, is--there's--you know, the old SHVERA used the 
analog world and the models of an analog. And the SHVERA needs 
to take into consideration there is very little analog TV; 
there are some, still, low power and stations like that, that 
still do it, but most of the full powers are now fully digital. 
So, whether it's in the way the waivers are granted for just 
the networks or the way the actual--the SHVERA looks at distant 
signals--I mean, the local channels for the grade B--they both 
just need to be tweaked, if the word----
    Senator Klobuchar. And, you know, it's my understanding 
that the definition of the ``unserved viewers'' is based on 
whether or not a viewer can receive analog signal. Is that 
correct?
    Mr. Gabrielli. That is correct. So, technically, as it's 
well known, is--everyone today is virtually in a white area, 
because these customers no longer receive a analog grade-B 
signal. DIRECTV's obviously chosen not to use that. We consider 
the digital signal the same type, and----
    Senator Klobuchar. Right. So, do you think we need to 
update that definition of ``unserved customer''?
    Mr. Gabrielli. It does need to be updated. I think this 
just--at this--one of those things that everybody just kind of 
knows should happen, but it definitely needs to be in the law.
    Senator Klobuchar. Yes.
    Mr. Dodge?
    Mr. Dodge. So, I would reiterate everything that Mr. 
Gabrielli says. I think the most important thing is that you 
end up with a signal quality test at the end of the day that 
really works for consumers and predicts whether or not they get 
an acceptable over-the-air signal in the digital world.
    Senator Klobuchar. Mr. Karpowicz?
    Mr. Karpowicz. I think the single biggest thing has been 
the digital transition, which clearly has been transformational 
across the country. And it has helped stations deal with this 
short-market issue, where stations are now being able to fill 
in those blanks with secondary networks.
    And again, contrary to the research that Mr. Gabrielli's 
people did, I can tell you that those multicast stations are 
doing local news, they are doing local sports. So, I think it's 
very important that the Committee considers that these 
multicast stations have to have the same rights as the primary 
stations.
    So, I think that's been the primary big change that has 
happened, has been the digital transition and what that has 
enabled stations to provide to markets.
    Senator Klobuchar. So, do you think we need to update the 
definition of the ``unserved customer,'' then, when it's based 
on analog?
    Mr. Karpowicz. Absolutely.
    Senator Klobuchar. Could you talk about--I mentioned the 
issue of dividing up the broadcast area--some of the struggles 
that local broadcasters are having now in this difficult 
economy, and how this would be affected if we made major 
changes to this bill?
    Mr. Karpowicz. The concept of market modification, where we 
would redefine what the DMA is, would be very, very difficult 
for us. As you know, the broadcast industry has had a very 
difficult year. I don't want to go as far as to say that we've 
experienced the same troubles as the newspapers, but it is not 
dissimilar. Our primary revenue source is advertising-based, 
and when advertising fell off dramatically, we were really in a 
tough situation.
    I think you described it perfectly, that if we started to 
fragment these local markets and brought in other stations, it 
would clearly diminish our ability to continue to provide the 
service that we provide. We staff, you know, large newsrooms, 
we employ a lot of people, and if, in fact, there was a service 
that was duplicative, came right in over the top of us, it 
would really diminish our ability to continue to serve our 
market the way we have in the past.
    Senator Klobuchar. OK.
    And then, last, Ms. Thompson, you mentioned in your 
remarks, or at least the prior written testimony, that it's 
better for public broadcasting to negotiate carriage agreements 
with satellite and cable companies privately, in that a private 
carriage agreement is in the best interest of all parties. In 
short, it seems like you're saying that Congress should stay 
out of this. And I would agree with that. Can you tell us more 
about why you think it's in the best interest of all parties to 
negotiate a private carriage agreement?
    Ms. Thompson. Yes, thank you.
    We have found in the past, although it's time consuming and 
a lot of resources, when we--we, APTS, the public television 
representative--has gotten to know the industry, we've taken 
into account the capacity constraints and other issues, 
technological issues, we've gotten to know each other, we've 
been able to work through--after years of negotiation, been 
able to work through agreements. As I said in my earlier 
testimony, we were able to do this with cable, with Verizon 
FiOS, and with DIRECTV; we're very hopeful that we will 
continue our negotiations and--with DISH Network--and it will 
end in the same way. We don't seek legislative assistance 
unless it's absolutely necessary, unless we absolutely feel 
that our industry efforts and our private negotiations have 
reached a standstill.
    Senator Klobuchar. Thank you very much.
    Thank you, to all of you.
    The Chairman. Thank you, Senator Klobuchar. And I want you 
to know that everybody in Massachusetts is pulling for the 
Twins for the next week or so.
    [Laughter.]
    Senator Klobuchar. I just--I could have guessed that. I 
don't know why.
    The Chairman. There you go.
    Senator Pryor?

                 STATEMENT OF HON. MARK PRYOR, 
                   U.S. SENATOR FROM ARKANSAS

    Senator Pryor. Thank you, Mr. Chairman.
    Let me, if I may, ask the--our two satellite providers 
here, and that is something Ms. Thompson mentioned briefly 
there a minute ago, about capacity. I'm curious about your 
capacity now as compared to, say, 5 or 10 years down the road. 
Is that a problem for you all, in terms of your capacity and 
providing the programming?
    I'll start with you, Mr. Dodge.
    Mr. Dodge. It is, in fact. And it's--the interesting things 
about satellites is, it takes about 3 to 4 years to build one, 
and every satellite we order, the day that it's delivered, we 
build it totally differently because the technology advances 
rather quickly. But, at the end of the day, it makes it 
impossible for it to have additional--requirements put on our 
capacity today, we need to plan very--several years in advance. 
And so, even though today there have been great technological 
advances, our system is effectively full. And just to meet the 
FCC milestones, for example, for HD must-carry, we're building 
two--or actually, three additional new satellites today that 
will be required to make that a reality.
    Senator Pryor. Are you in a similar situation?
    Mr. Gabrielli. Very similar.
    The most constraining value, I guess, or thing, on 
satellites is frequencies. You know, we have to use the 
frequencies that were allocated, or get, as licensed from the 
FCC, so to throw on additional burdens when we have no more 
frequencies to use means it's a zero-sum game; something has to 
come off.
    So, that's one of the things that frequently doesn't get 
discussed, is that, you know, there is a limited amount of 
frequencies that we have licenses for. You know, we don't--
there are no additional ones coming up to be used; they're all 
spoken for. So, we have to judiciously use that capacity; and 
part of it is to build satellites that are smarter to do spot 
beams and all that. But, that frequency is an overriding 
constraint.
    Senator Pryor. So, how many channels do you offer right 
now?
    Mr. Gabrielli. Locally, we carry over 2,500 local channels, 
and between all of the satellites, including the international 
and HD and SD, there are about 500.
    Senator Pryor. OK.
    Mr. Gabrielli. So, 500 national and 2,500 local.
    Senator Pryor. And how much of that would be Pay-Per-View-
type channels?
    Mr. Gabrielli. There's about 30 SD Pay-Per-View channels, 
and there are about 30 HD Pay-Per-View channels, but we also 
use those for sports; they're kind of like dual purpose. So, 
like on Sundays there are very few HD Pay-Per-View, because we 
carry a little football.
    Senator Pryor. OK. I understand.
    Ms. Thompson, let me ask you a question. I know that the 
West Virginia person couldn't be here today, but you mentioned 
in your opening statement about, sort of, a West Virginia 
problem. And I'm assuming, if I understood you correctly, what 
you mean is that there are people in West Virginia that, on 
satellite, don't get West Virginia public television. Is that 
what----
    Ms. Thompson. Yes.
    Senator Pryor.--you mean? And how common is that around the 
country, where you have a--sort of a State-oriented public TV 
system, but, on satellite, not everyone in the State has access 
to that system? How common is that?
    Ms. Thompson. It's actually, unfortunately, fairly common, 
Mr. Pryor. We have 16 State networks that range in percentages 
of their in-State citizens that cannot receive the State 
network that their communities have invested in, that their 
States have invested in, and their local businesses. They range 
in amounts from the highest, Wyoming, where 75 percent of the 
in-State citizens that are satellite viewers cannot see Wyoming 
public television programming. Arkansas has over 17 percent. 
Alabama, 7 percent. It goes down to Wisconsin, over a 100,000 
viewers, down to--the lowest percent is still 1 and a half 
percent in Idaho, 22,000 viewers that are satellite viewers 
that cannot see their local State networks.
    Senator Pryor. And if you could do this, what would your 
fix be on that? How do you fix that?
    Ms. Thompson. We have put in place permissive language; 
it's not mandatory, but it's permissive. It's a--would be 
accomplished through a copyright fix, and so, is in the bills 
in front of the Judiciary Committees. But, the fix would allow 
the satellite providers to show the in-State public television 
station in DMA's where the State network does not have a 
transmitter, but which is unserved by public television.
    So, it's permissive. We're hopeful the satellite carriers 
would take advantage of it. We believe the citizens, their 
consumers and viewers, really want to see their State networks. 
And we're hopeful that this can be accomplished and that this 
Committee would support that when the bill is conferenced.
    Senator Pryor. Thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator Pryor.
    Senator Begich?
    Senator Begich. Mr. Chairman, I'm actually going to pass 
for now.
    The Chairman. Senator Udall?

                 STATEMENT OF HON. TOM UDALL, 
                  U.S. SENATOR FROM NEW MEXICO

    Senator Udall. Thank you, Mr. Chairman.
    Most of the State of New Mexico is in a single TV market 
centered in Albuquerque; however, about 13.5 percent of the 
State's TV households receive out-of-State television. 
Unfortunately, this means that some New Mexicans are cutoff 
from important State news and information that directly affects 
them. In fact, the second largest city in New Mexico receives 
its television from another State. This problem is compounded 
by the fact that major newspapers from New Mexico no longer 
deliver to these areas that don't have New Mexico TV channels.
    And I've received numerous complaints from residents 
calling for changes to SHVERA to allow satellite TV customers 
to receive these in-State TV channels. A satellite TV customer 
told me he pays for dozens of channels, but he cannot get a 
single New Mexico channel to keep up with events. A mayor of 
one of the cities in these communities told me, ``Our citizens 
are very disturbed by the unavailability of New Mexican 
television in our area. As New Mexican residents, our 
communities should have access to New Mexico State news and 
events.''
    Several county commissioners wrote me that, ``New Mexico is 
our State, and we're entitled to information as it pertains to 
our citizens' safety and well-being.''
    Our State legislature has weighed in on numerous occasions 
with a resolution urging Congress to require satellite 
television providers to provide New Mexico television to all 
parts of the State.
    So, Mr. Karpowicz, I'd like to ask you, from the 
broadcasters' perspective, and then also the satellite TV 
representatives here, your testimony extols the virtues of 
localism in broadcasting; however, the current TV market uses 
Nielsen company designated market areas to impose on TV viewers 
what their local area should be. Why should my constituents be 
prevented from receiving the New Mexico television they wish to 
watch?
    Mr. Karpowicz. I don't think they should. I think they 
should be able to get their local news from a New Mexico 
station. In fact, I have before me a letter from KOAT, where 
they are granting consent, without charge, to all the cable 
systems and DIRECTV and DISH Networks to retransmit the 
station's locally originated news, weather, and public affairs 
programming to each of the carrier subscribers located within 
the State of Mexico. This is not dissimilar from what we have 
done in moving our newscast from Atlanta up into the northwest 
corner of Georgia, which is actually in the Chattanooga DMA.
    So, the TV stations and the broadcasters in Albuquerque are 
prepared and willing to give the right to move their newscasts, 
the content they control, to the satellite operators and the 
cable systems. That would necessarily include network 
programming, which we don't have the rights to, or sports 
programming, which we don't have the right to, but certainly 
New Mexico news would be available to your constituents 
throughout the State under that scenario.
    Senator Udall. Well, the problem here is that one of my 
constituents asked a broadcasting company, just like you talked 
about, and said they wanted to get the New Mexico media, and 
they were told, ``Your town, while in New Mexico, is not part 
of the Albuquerque/Santa Fe market. Because of that, DISH 
Network and DIRECTV cannot offer our signals where you live. 
Cable may be able to, but it's optional for them.''
    So, why will broadcasters not voluntarily agree to allow 
satellite TV companies to provide a New Mexico channel to State 
residents who want to watch it?
    Mr. Karpowicz. I think the distinction--I think that----
    Senator Udall. I mean, I think there's a real problem here.
    Mr. Karpowicz. Well, I think the distinction is, we can 
only grant consent for the programming that we control, which 
is local news. And if it is local news that is the issue, we 
control the rights to local news that we produce. I think 
moving another--moving the station in its entirety, which would 
include network programming and sports franchises and so forth, 
we can't control that. But, local news, we can make that 
happen. And, as I say, the station in Albuquerque has 
effectively, today, said they're granting the rights to these 
guys. If they would like to take the local news programming 
from Albuquerque and move it across the State, they're happy to 
do that.
    Senator Udall. And so, all somebody has to do in one of 
these areas is make a request and it will happen is what you're 
telling me.
    Mr. Karpowicz. Well, first these guys have to agree to do 
it.
    Senator Udall. Who has to agree?
    Mr. Karpowicz. The satellite----
    Senator Udall. Yes.
    Mr. Karpowicz.--carriers.
    Senator Udall. Well, that's the next question I'm asking--
--
    Mr. Karpowicz. OK.
    Senator Udall.--them. But, the broadcasters have 
apparently--broadcasters have apparently opposed this effort--
--
    Mr. Karpowicz. I----
    Senator Udall.--at the local level.
    Mr. Karpowicz. I think it's--I think the distinction is, 
the broadcasters have opposed moving another--a station in its 
entirety----
    Senator Udall. Right, right. I understand that. I 
understand----
    Mr. Karpowicz. OK.
    Senator Udall.--that. Could I----
    Mr. Chairman, I don't know if I've run over, here, so are 
we going to have a second round?
    The Chairman. It's OK, take a moment.
    Senator Udall. Just----
    The Chairman. Yes, we'll have a second round.
    Let me let the other Senators get their----
    Senator Udall. Yes. I want to make sure--you bet.
    The Chairman. Senator McCaskill?
    And then Senator Thune----

              STATEMENT OF HON. CLAIRE McCASKILL, 
                   U.S. SENATOR FROM MISSOURI

    Senator McCaskill. I'll ask it----
    The Chairman.--and then Senator LeMieux.
    Senator McCaskill. I'll ask it for Senator Udall.
    Here's the bottom line. The bottom line is, we have orphan 
counties. We've got orphan communities in Missouri. And they're 
big cities--I mean, they're not big cities by Kansas City/St. 
Louis standards, but Hannibal, Kirksville, St. Joe--just like 
his situation. Is this about you not wanting to run the news 
that they're willing to give you, because you don't want to 
give up the space for it, or is this about you not wanting to 
pay for the entirety of the channel, because you don't want to 
have pay for the network programming too, because you can get 
it cheaper somewhere else? DISH, DIRECT?
    Mr. Dodge. I--well--I'd like to start off by saying we 
absolutely support giving consumers the right to decide what 
programming is local to them, and providing that programming to 
them. I also agree with Mr. Karpowicz, that they can only give 
us the rights that they have.
    Senator McCaskill. Correct.
    Mr. Dodge. And our answer to that is, hence the need for 
compulsory licenses, which no one agrees are ideal, but that's 
the purpose of them, to clear rights. And even--there are 
multiple problems with this, but when Mr. Karpowicz says, 
``We'll give you the rights for a newscast,'' the broadcasters 
have admitted, or put in writing to Congress early this year, 
that they might not actually have all those rights, because 
they incorporate national bits and pieces, even to their local 
newscast, that they might not have the rights to grant the 
copyrights for----
    Senator McCaskill. Well, let's just assume, for this 
purposes, that they can.
    Mr. Dodge. OK, so assuming that----
    Senator McCaskill. Why aren't you doing--why can't you 
offer Kirksville news to the folks in Kirksville, and why can't 
you offer St. Joe news to the folks in St. Joe, and why can't 
you offer, in Senator Udall's State--why can't--since they're 
offering up their news--why can't you do that, right now?
    Mr. Dodge. The issue is, one, consumers don't--if we did 
that, their screen would be blank about 90 percent of the day, 
and consumers don't want that. You know, two----
    Senator McCaskill. Well, wait a minute, wait a minute. So, 
you're saying that you--the consumers don't want to get the 
news, because they'd have to change the channel to look at the 
national broadcasting on another channel that you might put in 
there?
    Mr. Dodge. I'm not saying that. I'm saying----
    Senator McCaskill. Well, when----
    Mr. Dodge.--you actually----
    Senator McCaskill.--it went blank after the news, wouldn't 
they switch to whatever NBC programming you have on your 
lineup----
    Mr. Dodge. They may----
    Senator McCaskill.--that's not in their DMA, that's not in 
their community?
    Mr. Dodge. They may or may not. But, we've actually reached 
out to our customers, and they don't want a screen that's blank 
90 percent of the day. But--in putting that aside----
    Senator McCaskill. How did you reach out to your customers? 
I'm curious about that. Because I--you know, I would have to 
believe the folks in Hannibal and Kirksville, if you called 
them and said, ``Hey, we're going to include, in your lineup, 
local news,''--and I'll guarantee you people in Missouri are 
smart enough to switch the channel when it goes blank.
    Mr. Dodge. I agree.
    [Laughter.]
    Senator McCaskill. Yes. So, I'm curious as to how you 
reached out to your consumers, because I'm not aware of you 
reaching out to the folks in Missouri that are in orphan 
communities. Have you done that in Missouri? Have you reached 
out to the consumers in those area and asked if they'd like to 
cover--to carry the local news?
    Mr. Dodge. I don't know specifically if we spoke to folks 
in Missouri.
    Mr. Gabrielli. So, this is--it's complex. So, the people in 
New Mexico that are not in the New Mexico market, there would 
be an extra channel in their guide, it would show KOAT, and 
would have all the listings for all the programming that they 
normally carry. And you'd tune to it, and you would get a 
message, ``This programming not available in the area.'' So, 
they have to be recognized that, when local news shows up, that 
it's going to be opened up to them, and when local news is 
gone, it's going to be closed to them.
    One of the things that this fails to do, which is really 
most important, is emergencies. Nobody knows when emergencies 
are. All of a sudden there's a breaking news story and they 
break into it. These customers would still be blacked out of 
that unless we could figure some super-technological way that 
they would inform us, ``Hey, emergency's coming, open it up. 
OK, emergency's over, shut it down.'' So, it doesn't fix the 
emergency messaging part of the--of what it--it really is very 
important to local news.
    Senator McCaskill. I guess this is an economic decision, 
correct? I mean, there's nothing wrong with that. I'm not--you 
don't--you can admit----
    Mr. Gabrielli. I don't think--I mean----
    Senator McCaskill.--that it's an economic decision.
    Mr. Gabrielli. Assuming we use the same capacity that we 
use for KOAT in New Mexico and it actually reaches this other 
part--because one of the parts that both of us, years ago--10-
plus years ago--we designed satellites to reach the DMA's, 
because that's what we told the market was. And when you do a 
spot-beam satellite, you have to make sure this beam is just 
big enough so that you can put one next to it and one next to 
it and next to it. They're not huge beams that overreach stuff, 
because they wouldn't all fit.
    So, assuming we can reach this upper part of New Mexico, it 
would a different--a channel in the guide that would be blank--
it would be--listings would be there; most of the time, you 
wouldn't get it. It could open up for local channels; and then, 
again, it would shut down. Consumers would probably call us a 
little bit, saying, ``Well, what about this show? Well, how 
come I can't see that?'' So, there is a complexity and a part 
of it that's--you know, we'd all have to wrestle with.
    But, the emergency broadcast--you know, we couldn't open it 
up and shut it down quick enough to get the breaking news----
    Senator McCaskill. But, what about--couldn't you just send 
them a note in their bill? Couldn't you just give them 
notification? I mean, I--yes, no, I would think that if the 
people, you know, were told, ``You can get local news, but you 
won't get anything else on that channel but local news,'' I 
think people would pay attention to that and appreciate it, and 
especially--you could include in that note in the bill--you 
communicate with your customers every month. Trust me, I get a 
big whoopin' bill from one of you every month. So, every month 
the bill comes, you could communicate in that bill, ``In your 
area, you can now get local news. It will not be available to 
you any other time. And, by the way, you will not get emergency 
break-ins on this channel; you should be aware of that.'' I 
mean, that--it seems to me that would be a simple way--you have 
a way to communicate to your customers.
    Mr. Gabrielli. OK, and then I'd also say there are probably 
four major news--four major stations in the New Mexico market. 
What happens if only three of them agree to do this and the 
fourth doesn't? Then my customer's going, ``Well, I really like 
the NBC person. Can't I get the NBC.'' So, it is a very complex 
issue that--you know, that we'd have to work out with the 
broadcasters very closely. And part of it is, you know, an--
overall, reaching agreement that if we can do one, we can do 
all.
    Senator McCaskill. Right.
    Mr. Gabrielli. Because is it a must-carry situation; if we 
carry one, we have to carry all? Do we have to renegotiate? 
Three of them will give it to us for free, but the fourth says, 
``You know, that's worth an extra, you know, coin in my 
pocket.''
    Senator McCaskill. I think we want to work with you. I 
think you--I think you're getting the sense that you guys are 
being victimized by your success. I mean, you now have spread 
into enough of the markets in this country, and people are 
getting so spoiled with the variety of channels they get. We 
are getting constant pressure from people who can't get their 
local stations, as to why that can't get fixed. And I realize 
there are problems, and it's complex. But, I think the quicker 
we all get together and figure out how to fix it, the better 
it's going to be, in terms of your competition and the 
happiness of your customers.
    So, thank you, Mr. Chairman.
    The Chairman. Well, thank you. Good line of questioning, 
and that's exactly what we're going to do with this 
reauthorization; and in pretty short order, I hope.
    Senator Thune?

                 STATEMENT OF HON. JOHN THUNE, 
                 U.S. SENATOR FROM SOUTH DAKOTA

    Senator Thune. Thank you, Mr. Chairman, and I want to thank 
our panelists for shedding some light on this subject. It is an 
important one, and one that Congress does have to deal with 
this year. And so, we appreciate your insights and--as we go 
through the, kind of, complex process of reauthorizing SHVERA.
    I'd like to direct this to Mr. Gabrielli and Mr. Dodge. And 
the question has to do with incentives. And, aside from an 
outright mandate, what incentives can or should this committee 
provide to the satellite TV providers to encourage local 
broadcast coverage for all 210 media markets?
    Mr. Gabrielli. I guess I'll start.
    So, we didn't do a proposal to the Congress for ``removing 
the barriers,'' as we like to call them. One of them is some 
kind of a cost-sharing. It is--gotten very expensive to go to 
these markets, and, as Mr. Dodge pointed out, some of these 
markets have so few customers, it's--it will be a loss to the 
company. We'll never make--even break even on it. So, we're 
hoping to share with the--you know, the broadcasters, some of 
this cost. It'd be no different than them putting up a--an 
additional tower to do repeating. It's--you know, it's a cost 
of getting their broadcast out.
    As I was asked, ``You know, how many local channels do we 
carry?'' We carry 2,500 local channels, compared to 500 
national channels. And, you know, that's more than the one-
third capacity maximum that cable has to carry.
    So, some kind of a help, in that, you know, we don't have 
to carry channels that are pretty redundant in the programming. 
There are a number of local channels who virtually repeat a 
national channel, but, because they're being broadcasted also 
locally, we carry both versions. You know, something to look at 
maybe the--reducing that constraint on us.
    We think a lot of the things that are already being 
discussed--the grade-B bleeds and stuff like that will help--so 
that when we go to a market that's missing some affiliates, we 
don't have to try to negotiate with the three or four people 
that kind of bleed into it, each one wanting to be the station 
of choice; or, worse yet, dividing it up so, you know, half the 
market gets an NBC from outside left and half from outside 
right.
    So, there are a number of proposals which we're, you know, 
happy to reiterate, that would help remove these barriers.
    Senator Thune. And you think there ought to be any of those 
incentives that differ for DISH Network and for DIRECTV?
    Mr. Dodge. I would say, today we're hamstrung in that--in 
the 29 markets that we're not--where we haven't launched local 
service today, we don't have the ability to bring in a distant-
network signal. And they're all short markets, so we can't 
offer a full complement of network programming. So, we can't 
make a competitive offering vis-a-vis DIRECTV or the cable 
folks. So, in the simplest sense, that's an additional 
incentive we would need to take that step.
    Senator Thune. In light of the economic downturn, what we 
hear from--I hear, I know, from a lot of small broadcasters--
and that is that they're struggling with declining advertising 
revenue. So, if the reauthorization of SHVERA includes market 
modification proposals that would allow for more out-of-market 
signals, how would that type of proposal impact broadcasters in 
predominately rural markets like the ones that I represent?
    And I'd direct that to--maybe--that's a question, maybe, 
for Mr. Karpowicz.
    Mr. Karpowicz. It would be devastating, Senator. It would 
be very, very difficult, because the fragmentation of our local 
marketplace is--particularly in small markets--you know, in a 
larger market, a top-ten market, they might be able to sustain 
that; but in a smaller market, to have a competing duplicative 
signal come in over the top and basically split the audience 
and to fragment that audience would be very, very difficult. 
And it would really hamper that station's economic health, and 
then their ability to continue to provide the service and the 
news and everything else they do. So, it would be devastating.
    Senator Thune. Thank you, Mr. Chairman.
    The Chairman. Senator LeMieux?

             STATEMENT OF HON. GEORGE S. LeMIEUX, 
                   U.S. SENATOR FROM FLORIDA

    Senator LeMieux. Thank you, Mr. Chairman.
    First of all, thanks, to the panelists, for being here 
today. It's a--obviously a complex issue. But, I wanted to just 
go on record for the people of Florida. We have three counties 
in the great northwest part of Florida--Escambia, Okaloosa, and 
Santa Rosa; this is all the way on the Panhandle, all the way 
to the west--that receive their broadcasting from Alabama. And 
although this area of Florida is affectionately called 
``L.A.,'' meaning Lower Alabama, I know that those folks would 
like to get more local programming.
    So, I think a lot of the questions that have been asked on 
this topic--and the Chairman has said that we're going to work 
together to try to find some solutions. But, I wanted to make 
sure you were aware of the challenges that we're having in that 
part of Florida, that they're not receiving as much local 
programming as they would like. And then just get you to 
comment, if you have anything additional to add whether, you 
know, the--we should be in a mandate situation or a market-
based incentive situation, as Senator Thune just spoke to.
    Mr. Gabrielli, if you want to start.
    Mr. Gabrielli. I mean, this is a problem that started 50 
years ago, when there was only over-the-air broadcasters and 
these territories were established. And it is one of the few 
pieces of telecommunication that still has limitations on its 
area, that broadcasters still have these rights.
    You know, we're willing to work with them on modifications 
and all that, but the way it's been written and revised in each 
of these is, you know, these definite market areas we have to 
follow. So, it is a--it's a complex problem, because I do agree 
that changing it would change the boundaries of a television 
station, which, you know, affects--would affect some stations 
not being in business, and the others would grow.
    But, it is--you have to recognize, it's, you know, 
something that started 50 years ago, when that was--that 
territory became defined, because that's the only stations they 
got. And maybe we just need to recognize that's just not the 
way the world is now, that you can get newspapers from outside, 
you can get Internet from the world, you know, and it's just 
the television market that's still sticking with this, ``This 
is my territory, and I have exclusive rights.'' And it's--it is 
complex, because they have to negotiate and, you know, make 
sure they don't override each other.
    Senator LeMieux. Mr. Dodge, did you have anything to add?
    Mr. Dodge. I would just--there are--with respect to just 
importing local news, there are also technical limitations we 
face, in that if you're going to just broadcast the news at 6 
o'clock in the evening, you actually have to set aside all the 
bandwidth for that channel all day long. So, if you do just 
that, other folks will suffer, and we'll be able to launch less 
channels on a particular spot beam.
    Additionally, there's a difference between us and cable, in 
that they generally have a local presence, and it's easier for 
them to blackout, on a moment's notice, as things change during 
the day, whereas we have a single team of folks in Cheyenne, 
Wyoming, who are responsible for managing our local stations 
across the entire network. So, it's very, very unwieldy.
    But, we do support, as I said earlier, the concept of 
letting subscribers and consumers decide what, for them, is 
local, and trying to provide that to them.
    Senator LeMieux. Mr. Karpowicz?
    Mr. Karpowicz. Well, I guess, as it relates to the 
emergency broadcast concern that have--concerns that have been 
addressed here, I think we have to remember that, in those 
households, they are still going to be getting their local 
television station from their primary DMA. So, even if they had 
the news from New Mexico or the news from Atlanta, they would 
still have their primary newscast available to them from their 
DMA, which, quite frankly, is probably closer to them, in terms 
of geographic proximity, than getting the news from somewhere 
else.
    Senator LeMieux. Yes, but when it's from a different 
State----
    Mr. Karpowicz. Right. But, it's----
    Senator LeMieux. There's a lot of--whole host of different 
issues that they may be interested in. Maybe--they may want to 
know what's going on in State government, for example, down the 
street, and they're getting Alabama State government news.
    Mr. Karpowicz. Absolutely, and that's why I think, for 
regularly scheduled newscasts, that would certainly address 
those issues. What I was talking about was emergency coverage, 
which would be tornados and things of that nature. The 
proximity of the DMA station is such--they're closer to that 
household than probably, you know, the secondary station that 
is being brought in. So, as it relates to the concern about 
bringing in emergency notices, I'm not as--I just don't think 
that is as big a concern.
    Senator LeMieux. Ms. Thompson?
    Ms. Thompson. Our focus has primarily been, as I mentioned 
before, on our--on the State network issue. We have really--our 
real concern about in-State service has been with our 16 State 
networks that have been unable to reach all of the viewers who 
are satellite viewers within their States.
    I had mentioned earlier that it ranges from 70 percent of 
all the citizens down to 1 and a half percent, but, even with 1 
and a half percent, we're looking at over 20,000 viewers. So, 
we are hopeful that we can work with the satellite companies on 
a permissive understanding that they will indeed serve all of 
their viewers with the in-State network. And we're hopeful that 
the resolution that's put into the bills in the Judiciary 
Committee will pass and will have the support of this 
Committee.
    Senator LeMieux. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator. I appreciate it.
    Senator Begich, you passed, at first. Do you want to do a--
--

                STATEMENT OF HON. MARK BEGICH, 
                    U.S. SENATOR FROM ALASKA

    Senator Begich. Mr. Chairman, just some quick, if I can?
    The Chairman. Sure.
    Senator Begich. Thank you very much.
    The Chairman. And then Senator Udall.
    Senator Begich. Mr. Dodge, you had made a comment, and I 
just wanted to kind of follow up so I can get a better 
understanding. I mean, we--Alaska's somewhat unique. We don't 
have this issue on noncovered areas. So, I'm listening to my 
colleagues and recognizing their struggles in ensuring that 
they get full coverage from their local broadcasters. We don't 
have that problem, as rural and as unique as our State is. You 
mentioned the 29 markets you cannot get into. Can you just help 
me understand that a little bit more? And your ability to be in 
those markets may require incentives to do that--can you help 
me understand that?
    Mr. Dodge. Sure. As it stands today, the--I believe it's 
the--in every remaining market we're not in, which are the 29 
markets, are ``short markets,'' meaning they're missing----
    Senator Begich. Right.
    Mr. Dodge.--a local affiliate. And we don't have--we no 
longer have our distant license so that we can actually import 
a signal. And therefore, from a competitive standpoint, you 
know, say, in Glendive, Montana, where I believe there's one 
local affiliate--doesn't really make sense for us to launch it, 
from a competitive standpoint, because DIRECTV can bring it a 
full complement of network stations; the local cable folks can 
do the same. So, from a competitive standpoint, putting aside 
economics and all that, it just doesn't make sense for us to go 
into the remaining markets, because we don't have a viable 
product to sell to people.
    Senator Begich. Gotcha.
    Mr. Dodge. Everybody would go to DIRECTV or the cable 
folks.
    Senator Begich. Gotcha.
    Mr. Dodge. So, from an incentive standpoint, to go into 
those remaining markets, at a minimum we need that. And we 
think this is a great opportunity as well, after the digital 
transition, to put all players back on the same level playing 
field with respect to the 119 distant license so the consumers 
have choice amongst the providers, it's equal, and we can 
compete on customer service and service offerings alone. So, 
we'd ask for that, as well.
    Senator Begich. Very good.
    Mr. Gabrielli, you had started to list a few incentives, I 
think it was to Mr. Thune's--Senator Thune's question.
    Mr. Gabrielli. Yes.
    Senator Begich. Would you be willing--and I don't want you 
to elaborate more on that right now--but could you give me kind 
of the shopping list, at some point, in written form----
    Mr. Gabrielli. Certainly, I----
    Senator Begich.--what those--and then I'm going to ask 
you--and I'll--and I know there are folks--knowing how this 
place operates, I'm sure there are folks from the Broadcast 
Association sitting out in this audience--your one idea on cost 
sharing, I'd be interest in more elaboration for that.
    And even though the broadcasters are probably in the 
audience, I'd asked them to send me the same thing on their 
view on this. It's my way of getting the question to them 
through you, as they're in the audience.
    Because I'd be interested in how you see that, and also the 
broadcasters see that. But, if you could give me that shopping 
list, I'd greatly appreciate that.
    And, for both of you, I was listening to Senator 
McCaskill's line of questioning, and I just want to make sure--
I'm going to use a different word; instead of ``It's not 
profitable,'' ``It doesn't fit into the business model,'' some 
of these situations. And I think the example you just gave, Mr. 
Dodge, was that; it doesn't fit into the business model, 
because you're--the competitive nature doesn't exist for you, 
or the opportunity to be competitive and grab clients or share. 
Is that a----
    Mr. Dodge. Well, with respect to just bringing in local 
news to, say, southern Colorado or to----
    Senator Begich. Right.
    Mr. Dodge.--the Albuquerque DMA, there are--I guess, in the 
simplest form, there are practical concerns that we have, but 
also licensing concerns.
    Senator Begich. OK.
    Is that same thing on your end?
    Mr. Gabrielli. Same thing. And I was going to say that, you 
know, we might have a chance to learn from history, because the 
last reauthorization allowed a limited amount of this market 
modifications. I mean, you know, New Hampshire and Vermont, two 
cases. And I think there was one in Alabama. But, we could 
look, you know, where we have actually done this in a limited 
amount, what the effect was. So, maybe we can learn from 
empirical data rather than just hypothesis of what it will 
cost.
    Senator Begich. Good comment, there.
    Ms. Thompson--and I caught your last comment--or, your 
comments throughout the testimony today about--that last resort 
is Congress in regards to trying to figure out how to inject 
good programming, PBS and so forth. How do you know when you 
reach that point? Because--you know, I know negotiations can go 
on for a long period of time, but how do you measure that so 
you can determine--in other words the way, again, this place 
moves, it's very slow. So, when you might get to conclusion, it 
may take years for this body to move. Is there a better 
approach of simultaneously having that consideration?
    Do you follow what I'm saying or----
    Ms. Thompson. Yes.
    Senator Begich. Because you're negotiating, and you may 
finish and say, ``Guess we can't get there.'' But, the way 
this--it may be years before we come around and assist you in 
that effort. So, can you elaborate?
    Ms. Thompson. We have--both APTS and DISH--if I may speak 
for a moment for DISH--have both set an expedited time-frame on 
resolving our negotiations. The hope was that we would actually 
have them resolved prior to this hearing today, but we have hit 
some stumbling blocks that we're continuing to work through as 
early as today, throughout the week.
    Our goal is, most clearly, getting our local stations 
carried in HD in local markets where DISH is providing HD 
coverage. Thankfully, because of the last SHVERA 
reauthorization that takes place in Alaska and Hawaii, the 
local public TV's HD stations are being seen by the citizens 
there.
    Senator Begich. Absolutely.
    Ms. Thompson. That's not the case in 150 markets where DISH 
is now. So, we want to expedite these negotiations, because 
we--it's really--you know, viewers are not seeing public 
television as, you know, we've taken the time to go through 
this. So, we're really hopeful that we come to a conclusion 
quickly, and the viewers will benefit from that.
    Senator Begich. Thank you very much.
    Thank you, Mr. Chairman.
    And you'll keep us informed on the status?
    Ms. Thompson. Yes, sir. We will.
    Senator Begich. Thank you very much.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Begich.
    And I would certainly urge the parties to do that. As I 
said earlier, it's preferable to get it resolved on the private 
side, but, you know, if we have to tackle it, we will.
    Senator Udall?
    Senator Udall. Thank you, Mr. Chairman.
    The--you made a--Mr. Karpowicz, a statement about KOAT. Was 
that in a letter form? Or was that----
    Mr. Karpowicz. Yes, sir.
    Senator Udall. That they--you have that with you?
    Mr. Karpowicz. Yes, I do.
    Senator Udall. Could we make that part of the record?
    Mr. Karpowicz. Absolutely.
    [The information referred to follows:]

                                                    KOAT-TV
                                   Albuquerque, NM, October 6, 2009
To Whom It May Concern:

    This letter confirms that Station KOAT-TV, the ABC affiliate in 
Albuquerque, New Mexico, hereby gives consent, without charge, to each 
cable system and to DIRECTV and the DISH Network to retransmit the 
Station's locally originated news, weather, and public affairs 
programming to all of each carrier's subscribers located within the 
State of New Mexico, that are located outside the Albuquerque DMA, and 
where the station is significantly viewed.
    KOAT is already providing this service to Comcast Cable in Dona Ana 
County, so that viewers in Las Cruces, New Mexico, which is part of the 
El Paso, Texas DMA, can be informed. This is further evidence that 
local news, weather and public affairs programming can be made 
available throughout the state.
            Sincerely,
                                           Mary Lynn Roper,
                                     President and General Manager.

    Senator Udall. Is the--is what they're saying that--
basically, that they're willing to put it out without any--
could you just read us----
    Mr. Karpowicz. Yes, sir.
    Senator Udall.--the crucial part of the letter there?
    Mr. Karpowicz. Yes, sir.
    ``To whom it may concern, This letter confirms that Station 
KOAT, the ABC affiliate in Albuquerque, New Mexico, hereby 
gives consent, without charge, to each cable system and to 
DIRECTV and DISH Network to retransmit the station's locally 
originated news, weather, and public affairs programming to all 
of each carrier's subscribers located within the State of New 
Mexico. KOAT is already providing this service to Comcast cable 
in Donna Anna County so that viewers in Las Cruces, New Mexico, 
which is part of the El Paso, Texas DMA, can be informed. This 
is further evidence that local news, weather, and public 
affairs programming can be made available throughout the 
State.''
    And it was signed by Mary Lynn Roper, the president and 
general manager of KOAT.
    Senator Udall. Thank you very much. And that's a very 
positive development, I think.
    My question to the two gentlemen to your right, there, 
would be, Are you willing to run it now?
    Mr. Gabrielli. I think the answer is, we'll certainly look 
at it. It's a--complex whether that signal actually reaches the 
entire part of the rest of New Mexico that needs to be reached. 
So--because, again, our spot beams were designed, 10 year ago, 
to reach a certain area, and hopefully this is within it. 
That's a very big constraint.
    We have to make sure that we allow just these people, I am 
assuming, that are in New Mexico and not across the State 
border, where we're actually in the other DMA, to see it. So, 
we have to define a blackout that's very specific to this.
    And then, one of the hardest ones is keeping track, with 
the stations, of what is it they've--giving us the rights to? 
Because if their local programming goes long or if it runs--
what happens if a baseball game is on, but it runs long, and 
they're going to delay the local programming. All of a sudden 
we open it up--because it--this will be automated, there won't 
be people standing there. Now the game's on. You know, are we 
going to get in trouble?
    So, when you talk about, you know--and I'm sure Congress 
knows--the devil in the details, this is going to be one of 
those.
    Senator Udall. Mr. Dodge?
    Mr. Dodge. I guess I'll just reiterate what I've said 
earlier, which is, we have reservations about whether they 
actually have all the necessary rights to grant us the 
copyright to rebroadcast just their local news, weather, et 
cetera, be it with their local advertising or national news 
clips inserted into their local news. And--huge practical 
limitations, in that it's nearly impossible for us to blackout 
programming around the country, and you have to set aside 
bandwidth for a few hours a day, an entire channel, on a spot 
beam. So, from a practical perspective, it's very difficult to 
implement the way that the broadcasters have outlined.
    Senator Udall. Thank you.
    Mr. Karpowicz, in your written testimony you said, in 
talking about this issue of modifying TV markets, quote, ``It 
would not advance localism goals, but would, in fact, undermine 
sound public policy and harm consumers,'' end quote. The last 
time SHVERA was reauthorized, a handful of exemptions were made 
by States with the same problem as New Mexico. Were consumers 
harmed by these limited exemptions that allowed satellite 
companies to provide secondary transmissions of in-State TV 
signals?
    Mr. Karpowicz. I think our economic reality has changed 
dramatically since the first authorization of SHVERA, and the 
fact that those exceptions took place in isolated pockets. And, 
quite frankly, I don't have the historical perspective on what 
impact those have.
    I can say, though, with--I believe, with certainty--that 
today, in today's environment, if we were to implement a full 
duplication of signal--if another signal came in, in its 
entirety, including network programming, syndicated 
programming--came in over the top of a local station, it would 
inhibit his ability to perform, and certainly have a great 
economic impact, and have an impact on his ability to 
subsidizes his news and all the other services that he provides 
in his market.
    Senator Udall. Thank you.
    Chairman Kerry, thank you very much for your courtesies in 
allowing this second round.
    The Chairman. Oh, absolutely. Important questions. I 
appreciate the participation of so many Senators. And I think 
it's been very helpful in creating the record for this.
    Obviously, you all can sense, from every question, there's 
a pretty focused area of concern here, and we're going to need 
to address it. You know, this question of why there--Mr. Dodge, 
there are 150, you know, areas where public can't be carried in 
HD. It can be carried elsewhere. It's just--you know, it's 
pretty fundamental. And we want to maximize the ability of 
citizens to get local and to get the kind of quality that they 
deserve.
    So, we're going to work to do that. We will get this done 
in the Committee as soon as we can.
    I will leave the record open for a week because there are 
additional questions that I don't have time to submit right 
now, to question you on, because I have an 11:30. But--and 
other Senators may have additional questions we want to submit 
in writing.
    So, I'd ask you to try to respond to those as rapidly as 
possible, and the Committee will continue its work behind the 
scenes and get ready to do a markup and get this done.
    Thank you all very, very much for being here today. We 
appreciate it.
    Hearing is adjourned.
    [Whereupon, at 11:31 a.m., the hearing was adjourned.]

                            A P P E N D I X

          Prepared Statement of Hon. John D. Rockefeller IV, 
                    U.S. Senator from West Virginia

    Over the past 15 years, satellite television has grown into a 
strong competitor to cable by offering consumers in rural as well as 
urban markets a choice in pay television providers. Where residents 
once were limited to a single cable operator, satellite providers now 
offer most consumers an alternative. This has led to price and service 
competition, which is good for subscribers. Congress supported such 
competition through the passage of the Satellite Home Viewer Act and 
its progeny, including the Satellite Home Viewer Extension and 
Reauthorization Act or SHVERA.
    Now we are faced once more with the reauthorization of SHVERA. This 
entails the extension of certain communications and copyright 
provisions, but it also provides us with the opportunity to examine 
whether consumers across the country are adequately served by existing 
law.
    A decade ago, Congress, recognizing that consumers want access to 
local news, weather, and community-oriented programming, established a 
mechanism by which satellite providers could offer local broadcast 
stations to residents in the local market. This means that when a 
satellite subscriber in Huntington, West Virginia tunes-in to CBS, PBS, 
ABC, FOX or NBC, they hear about events in the state capital and see 
the successes and trials of their neighbors--not the weather in 
Manhattan.
    Recognizing the limits of satellite providers at the time, Congress 
did not require the companies to offer local channels to every market 
in the country. Over time, this has created a division between haves 
and have-nots in which satellite companies are not providing local 
channels to residents in the smallest markets.
    In West Virginia, DIRECTV recently began providing local service to 
the Beckley area, which I applaud, but that still leaves the 
Parkersburg and Wheeling markets without local channels. In 
reauthorizing SHVERA, I believe that we should examine how all 
consumers in even the most rural regions can gain access to local news, 
sports, and community programming.
    As some broadcast television has become coarser and less 
informative, the importance of the mission and programming provided by 
public television has grown. Unfortunately, getting carriage of public 
television programming to satellite subscribers has not always been 
easy.
    For example, existing copyright law makes it difficult for state-
wide public television networks, like that in West Virginia and 14 
other states, to reach every resident of the states they serve. I am 
pleased that the Senate and House Judiciary committees have addressed 
this issue in their reauthorization legislation. I also understand that 
public television and the satellite providers have been discussing 
other carriage issues and look forward to hearing about the progress of 
those talks.
    The reauthorization of SHVERA provides us with the opportunity to 
encourage greater competition and access to quality programming to 
consumers throughout the Nation. I thank the witnesses for coming today 
and welcome their thoughts on these issues.
                                 ______
                                 
 Response to Written Question Submitted by Hon. John D. Rockefeller IV 
                         to Robert M. Gabrielli

    Question. Satellite television has spawned greater competition 
among pay television providers, especially in rural areas. This 
benefited consumers by giving them more choices and in some areas 
lowering prices. A key component to making satellite television 
attractive to consumers is the carriage of local channels. 
Unfortunately, in approximately 23 markets, neither DIRECTV nor DISH 
Network offers local broadcast channels. Two of those markets are in 
West Virginia, Parkersburg and Wheeling. Consumers in those communities 
want access to their local news, sports, and regional programming.
    What can be done to make sure that people throughout the country 
can get access to local broadcast stations? If there is no obligation 
or incentive to serve all 210 markets would DIRECTV or DISH Network do 
so and by what date? What steps can broadcasters take to encourage or 
incentivize the extension of local service to unserved markets?
    Answer. Perhaps the most important step Congress could take to 
incentivize the extension of local service is not to adopt the 
broadcasters' proposal with respect to multicast signals.
    As we discussed in our testimony, while satellite is the perfect 
technology for delivering national programming to even the most rural 
customers, it is much less efficient at delivering local channels. 
Accordingly, we have spent billions to offer local service to more than 
95 percent of Americans.
    Yet the economics of serving the very smallest markets are 
daunting. Our costs to serve Parkersburg--in terms of satellite 
capacity, local receive facilities, and backhaul--are comparable to 
those to serve Cleveland. Parkersburg, however, has only a fraction of 
Cleveland's population--making it much harder to recoup our costs.
    It would be even more difficult to recoup our costs if we could not 
even deliver the full complement of network programming that our cable 
rivals offer. This is a very real problem in ``short'' markets like 
Parkersburg, which are missing one or more network affiliates.
    The broadcasters propose to make this problem even worse. Today, we 
cannot deliver distant signals to subscribers who can receive a local 
network station's analog, or ``primary,'' signal over the air. 
Broadcasters now want to extend that prohibition to subscribers who can 
also receive network programming over-the-air on a station's secondary 
digital ``multicast'' feed. They argue that, if we want to carry the 
``missing'' network programming in short markets, we should carry the 
multicast feed rather than a distant signal.
    Where we have room to carry multicast feeds, we generally do so 
(for example, in Bluefield-Beckley). But, because we designed our 
satellite spot beams to maximize the number of markets served, we often 
lack room on individual beams to carry multicast signals. In such 
situations, we must rely on distant signals to fill out our local 
service offering.
    The broadcasters' proposal would guarantee that we could not offer 
all four networks in many of the smallest markets. We can think of no 
greater disincentive to providing local service in these markets.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                          Robert M. Gabrielli

    Question 1. What are DIRECTV's publicly announced plans for 
launching new satellites in the upcoming years? What is the purpose of 
each of these satellites (i.e., add capacity, replacement, etc.)?
    Answer. We plan to launch a new, state-of-the-art satellite, 
DIRECTV 12, later this year or early next year. D12 will replace spot-
beam capacity used for local service on an older satellite, and will 
add capacity to be used for additional high definition national 
channels.

    Question 2. Has DIRECTV switched over to using the MPEG-4 format 
exclusively? Has the use of the MPEG-4 format helped you to better 
manage the (bandwidth) capacity of your satellites?
    Answer. DIRECTV uses MPEG-4 exclusively on all of its new 
satellites. But we use MPEG-2 on our older satellites. We will continue 
to do so for the foreseeable future, as many millions of our customers 
still use older receivers and antennas incapable of processing MPEG-4 
compression. MPEG-4 allows us to deliver programming--especially data-
intensive high-definition programming--far more efficiently without 
sacrificing picture quality. This allows DIRECTV to, for lack of a 
better term, ``fit'' more channels into a fixed amount of transponder 
capacity.

    Question 3. Does the DIRECTV currently offer service to consumers 
in the five so-called ``orphan counties'' in southwest Washington State 
that are in the Portland DMA? Is the spot beam servicing these 
communities the same one that covers the Portland DMA? How does DIRECTV 
ensure that there is no overlap between the spot beams that serve the 
Seattle DMA and the Portland DMA? As a result, are there locations 
between the two DMAs where there is no spot beam coverage?
    Answer. Yes. Please note, however, that the satellite spot beam 
with which we provide service in the Portland local market does not 
cover all of Klickitat County. (It does completely cover the other four 
counties.) Yes, we use the same spot beam to offer service in these 
``orphan counties'' and service in the Portland DMA. The two beams 
operate over different frequencies. In fact, they are on different 
satellites. Thus, while they do overlap geographically, they do not 
interfere with each other. (This is the same principle that allows 
thirteen FM radio stations to operate in Washington DC without 
interfering with one another.)

    Question 4. A number of my constituents living in those five orphan 
counties--Clark, Cowlitz, Klickitat, Skamania, and Wahkiakum--have told 
me that they would like to receive news and public interest programs 
from the Seattle market, which includes coverage from our state capitol 
Olympia. As you know, several States have counties which are part of 
the DMA of a neighboring state. One thought is to have the news and 
public interest programming from the State the orphan counties are 
located in be broadcast on a separate satellite channel. I understand 
your concern about a channel that remains dark for most of the day and 
then is on for a few hours to broadcast news and public interest 
programming. What are the technical, operational, and legal barriers 
for setting aside one channel in each DMA where you provide local-into-
local service to serve as a PEG-like channel?
    Answer. We would have to overcome many hurdles to make such an 
offering, but the biggest of these is our lack of capacity. Nearly all 
of our spot beams on which we provide local service are now full. (We 
needed to fill these spot beams in order to maximize the number of 
local markets we could serve.) So we simply could not offer news and 
public interest programming in the manner described above. We support 
an approach to ``orphan counties'' similar to the last 
reauthorization's approach to southern Vermont, southwestern 
Mississippi, and northern New Hampshire. Such an approach would permit 
us to carry stations in neighboring, in-state markets (including orphan 
counties) where our technology permits.
                                 ______
                                 
Response to Written Questions Submitted by Hon. John D. Rockefeller IV 
                          to R. Stanton Dodge

    Question 1. Satellite television has spawned greater competition 
among pay television providers, especially in rural areas. This 
benefited consumers by giving them more choices and in some areas 
lowering prices. A key component to making satellite television 
attractive to consumers is the carriage of local channels. 
Unfortunately, in approximately 23 markets, neither DIRECTV nor DISH 
Network offers local broadcast channels. Two of those markets are in 
West Virginia, Parkersburg and Wheeling. Consumers in those communities 
want access to their local news, sports, and regional programming.
    What can be done to make sure that people throughout the country 
can get access to local broadcast stations? If there is no obligation 
or incentive to serve all 210 markets would DIRECTV or DISH Network do 
so and by what date? What steps can broadcasters take to encourage or 
incentivize the extension of local service to unserved markets?
    Answer. Satellite-delivered local-into-local service has been a 
great driver of consumer choice and innovation in the subscription 
television business. DISH Network L.L.C. (``DISH') has been the leader 
in providing local-into-local service, launching service in 181 of 210 
markets representing approximately 98 percent of households nationwide. 
There are a number of challenges--operational, legal, and economic--to 
add local-into-local service to the remaining 29 markets. Congress can 
take steps this year to help address each of these central challenges 
to launching additional markets, including the two unlaunched West 
Virginia DMAs.

Operational Challenges
        The first is lack of available spot beam capacity, particularly 
        along the East Coast. Unlike terrestrial providers that have 
        substantial capacity to provide multiple services over their 
        pipe, DISH has limited satellite frequencies and satellites to 
        provide a competitive national video-only service. To launch 
        the remaining unserved markets, DISH would need to find or 
        create capacity to add approximately 100 additional channels 
        (including those in the Wheeling DMA) on our system, which is 
        effectively at capacity today.

        Wheeling is one of those markets that DISH does not have 
        adequate capacity to serve today. Additional planned satellites 
        will provide some capacity to expand service into additional 
        markets like Wheeling. From a commercial perspective, DISH has 
        to make a difficult decision in planning each new satellite on 
        how to allocate the finite number of satellite frequencies and 
        beams between local and national services. Adding more local-
        into-local markets--in standard definition or high definition--
        makes DISH more competitive in that particular market, but it 
        reduces the variety of services that DISH can offer nationally 
        in all 210 markets.

        To address this issue, Congress should avoid mandating any 
        additional carriage obligations on satellite providers--e.g., 
        accelerating the FCC's HD must carry mandate for some or all 
        broadcasters--or providing broadcasters with expanded 
        exclusivity protections for multicast signals. The focus of 
        Congress has been to intent satellite providers to launch 
        additional markets. Adding conflicting capacity demands would 
        only frustrate our good faith efforts to fulfill Congress's 
        objective and launch additional local-into-local markets.

Legal Challenges
        A second key challenge is one of consumer expectations. Our 
        subscribers that choose to receive a locals package expect to 
        receive at least NBC, CBS, ABC, and FOX content. Yet, in 26 of 
        the 29 markets we have yet to launch, one or more of those 
        networks is not available as the primary video feed of a 
        station in that market. In some instances, only a single 
        national network affiliate is present in these markets. 
        Parkersburg is one of these ``short markets,'' because there is 
        no ABC or CBS affiliate in Parkersburg. Today, DISH does not 
        have the legal right to ``fill'' this short market under its 
        local-into-local compulsory license.

        With respect to short markets, the Judiciary Committee has 
        provided a potential framework with the Satellite Television 
        Modernization Act of 2009 (S. 1670). The bill would give DISH 
        the rights to provide quasi-local services under its local-
        into-local license to fill in short markets like Parkersburg 
        with adjacent broadcast stations. This provision would permit 
        DISH to import an NBC and FOX affiliate from the Clarksburg DMA 
        to provide a viable service to Parkersburg residents. However, 
        importantly, just like any other pay TV provider, DISH should 
        have the flexibility to provide an in-state or other broadcast 
        station to fill a short market if the adjacent market's signal 
        does not adequately cover the short market. This is a modest, 
        but important, alteration to the Senate Judiciary Committee's 
        approach.

        Additional key quasi-local rights included in that bill are the 
        ability to import broadcast stations that are deemed 
        significantly viewed in the local market and to provide in-
        market low-power stations. Some similarly complementary rights 
        should also be included in the local license: the ability to 
        import out of market signals during emergencies; the right to 
        serve recreational vehicles and commercial trucks; and the 
        right to provide network content to households outside of our 
        local spot beams.

Economic Challenges
        The last key challenge is economic. A national satellite 
        provider has no existing infrastructure in an unlaunched 
        market. Thus, DISH needs to establish new facilities and new 
        infrastructure in each new market it elects to serve with local 
        channels. The upfront and recurring cost to do so can be 
        considerable, centered on the establishment of a local receive 
        facility and associated backhaul fiber and equipment. Yet, many 
        of the remaining markets are very small, limiting significantly 
        our ability to recoup our upfront and recurring investment in 
        these markets. Wheeling and Parkersburg are two such smaller 
        markets, Nielsen market numbers 159 and 193 respectively.

        The expense associated with retransmission consent fees and 
        other programming-related costs can adversely affect the 
        business case for launching a new market: a market that could 
        otherwise be economically viable becomes a money loser when 
        escalating programming costs are factored into the equation. 
        Congress should ensure that measures intended to incent 
        additional market launches do not have the opposite effect 
        because of financial considerations. A case in point, the 
        importation of adjacent broadcast stations into short markets 
        should not require double compensation. Typically, subscription 
        TV providers pay either a retransmission fee to the local 
        broadcast station or a copyright royalty payment for carriage. 
        Any requirement to pay double compensation--that is, both a 
        retransmission consent fee and a royalty payment--to carry the 
        same station would create an unintended financial disincentive 
        to provide these signals. DISH should pay a royalty fee for 
        filling in a short market just as DIRECTV does today. 
        Similarly, broadcasters should drastically reduce--if not 
        forego altogether--their retransmission consent fees for these 
        unlaunched markets to ensure our joint viewers have access to 
        their free over-the-air content.

    Each of these proposed changes increases the likelihood that 
consumers in the remaining 29 unlaunched markets would receive service 
that is more comparable to their urban counterparts. Indeed, DISH is 
prepared to invest in the remaining 29 markets if necessary changes to 
copyright and communications law are made to ensure parity of rights 
going forward across competing providers. Assuming the final 
reauthorization statute reflects a framework that achieves parity of 
rights across competing providers, DISH will provide local-into-local 
service in all markets no later than 2 years from the date the bill is 
signed into law. Importantly, this commitment assumes that there are no 
new carriage obligations that would require DISH to redirect bandwidth 
to other services, and that there are no major unforeseen 
implementation challenges, such as a launch delay or failure, in-orbit 
satellite failure, or other similar mitigating event.

    Question 2. Far too much of the programming offered to consumers is 
designed to entertain on a base level. It does not enlighten, educate, 
or elevate the viewer. Instead, I see a coarsening of society with 
media in the vanguard. Public television is one of the few resources 
for programming that educates and shares the best of our culture. 
Programming such as Ken Bums' documentary on the National Parks expose 
viewers to the grandeur and history of America. Such programming 
however is best viewed in high-definition (HD) format. I am concerned 
when satellite providers choose to offer ``Dancing with the Stars'' in 
HD format and not ``The War.''
    I understand that DISH and the public television stations are in 
discussions over the carriage of local HD programming as well as 
mechanisms to provide subscribers with access to public television 
multicasting channels. What is the status of those negotiations? If no 
agreement is reached, what can Congress do to encourage consumer access 
to such programming?
    Answer. As an independent distributor of video programming, DISH 
worked proactively with its programming partners to establish the DISH 
Family programming package that offers households an affordable and 
kid-safe package of channels. Nonetheless, DISH shares your concerns 
about the overall quality of television programming, and offers both 
vertically-integrated and independent programmers the opportunity to 
bring high-quality and family friendly programming to over 13 million 
households today. We welcome your leadership to ensure that the 
wholesale programming market provides distributors with the flexibility 
to offer consumers high-quality and affordable packages of programming 
that appeal to all different types of consumers.
    With respect to public broadcasting, DISH currently carries more 
PBS affiliates than any other pay TV provider. Further, if the 
necessary changes are made to the statute and DISH serves all 210 
markets, then all Americans will have access to their local PBS 
station--even if they are located outside the reach of a broadcast 
tower. For the first time, all residents of mountainous areas of West 
Virginia will be able to view the latest Ken Burns documentary.
    We are also preparing to roll out PBS affiliates in HD consistent 
with the Federal Communications Commission's schedule adopted last 
year, starting this February. Given our current capacity constraints, 
it is not feasible for DISH to launch every PBS affiliate in HD before 
2013.
    Nonetheless, we remain willing to work with the Association of 
Public Television Stations (``APTS'') and PBS on a deal that delivers 
PBS HD content to DISH subscribers on a more accelerated schedule than 
the FCC has mandated. To that end, we have negotiated in good faith 
with APTS to provide our joint viewers expanded PBS viewing options on 
DISH. We have offered numerous constructive proposals to address the 
needs articulated by APTS. Those negotiations have not yet resulted in 
a national carriage deal, but DISH remains committed to finding a 
commercial resolution.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. Mark Pryor to 
                            R. Stanton Dodge

    Question 1. What are the constraints to increasing your ability to 
offer local-into-local programming for all television markets?
    Answer. Please see the response to Question 1 from Chairman 
Rockefeller with respect to the legal, economic and operational 
challenges faced in launching additional local-into-local markets. DISH 
has launched 181 markets to date, and is willing to work constructively 
to find means to launch the remaining 29 markets in a reasonable 
timeframe. Congress can take important steps this year to provide DISH 
with the tools and the incentive to launch local service in every 
market as long as it does not impose conflicting capacity demands on a 
satellite system that is effectively at full capacity today.

    Question 2. Hypothetically, should you be able to expand into all 
210 television markets, How soon could you implement the agreement?
    Answer. Please see the response to Question 1 from Chairman 
Rockefeller with respect to the necessary changes to provide DISH the 
legal rights and proper incentives to invest in the remaining 29 
markets, as well as the time frame DISH could commit to if final 
legislative action provides the legal and economic framework for a 
satellite carrier to serve every market.

    Question 3. What would DISH Network's stated policy for distant 
signal importation be? Would priority be given to adjacent market 
signals?
    Answer. Given the ``if locals, no distants'' provision in the law 
today, DISH would not provide a traditional distant service if it 
launched all 210 markets. DISH would, however, still need to import 
out-of-market stations to fill in short markets, provide service to 
out-of-beam customers, and provide significantly viewed stations to our 
subscribers. To the extent DISH can provide an adjacent broadcast 
station from the same or an overlapping spot beam, DISH's preference 
would be to offer consumers that more local option. DISH would, 
however, require some flexibility to provide a regional or national 
feed where the adjacent broadcast stations cannot reach all, or some, 
of the neighboring DMA just as other pay TV providers do today.

    Question 4. There is one short market in my state in Jonesboro. How 
would you fill this short market?
    Answer. It remains unclear what options DISH will have under the 
law to fill short markets like Jonesboro. Our ability to launch this 
market is dependent upon a path to offering a ``locals package'' that 
includes the missing CBS, NBC, and FOX content in a cost effective and 
straightforward manner. Technically, DISH has the ability to bring in 
the missing content from a national market or an adjacent market. With 
respect to compensation for filling a short market, DISH should pay a 
copyright royalty payment just as DIRECTV does today. There is no basis 
to layer on an additional payment (I. a, retransmission consent fee), 
which could have the perverse result of foreclosing DISH `s ability to 
justify the economics of launching more short markets.

    Question 5. What is the status of your negotiations with public 
television for High-Definition and multicasting programming?
    Answer. Please see the response to Question 2 from Chairman 
Rockefeller above. As PBS's largest distributor, we are hopeful a long-
term carriage deal can be reached that increases the amount of PBS 
content on DISH in a manner that is consistent with the operational 
realities of our system.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                            R. Stanton Dodge

    Question 1. What are DISH Networks publicly announced plans for 
launching new satellites in the upcoming years? What is the purpose of 
each of these satellites (i.e., add capacity, replacement, etc.)?
    Answer. The upcoming launch schedule for DISH and its sister 
company, EchoStar Corporation, is as follows:

   1Q-2Q 2010: EchoStar 14 (DISH) will be launched to replace 
        EchoStar 7 at 119+ W.L. EchoStar 14 will be a hybrid national/
        local satellite that will provide some additional capacity and 
        overall efficiencies, but will not materially change DISH'S 
        overall satellite capacity.

   3Q-4Q 2010: EchoStar 15 (EchoStar) will be launched to 
        replace EchoStar 3 at 61.5+ W.L. EchoStar 15 will be a national 
        satellite that will provide some additional capacity and 
        overall efficiencies that have been lost because of infirmities 
        to EchoStar 3. Those gains, however, will not materially change 
        DISH'S overall satellite capacity.

   2Q-3Q 2011: Quetzsat 1 (Quetzsat) will be a replacement 
        satellite for EchoStar 1 and EchoStar 8 at 77+ W.L. This is a 
        Mexican satellite on which EchoStar has leased capacity to 
        provide service into both the United States and Mexico. As with 
        the other replacement satellites, capacity gains will not be 
        significant.

   3Q-4Q 2012 (tentative): EchoStar 16 (EchoStar) is the 
        intended replacement satellite for EchoStar 12 at 61.5+ W.L. 
        This satellite will be designed in part--to satisfy the 
        February 2013 final benchmark for the FCC's HD carry-one, 
        carry-all mandate.

    The key to expanding capacity significantly is new spectrum. The 
challenge faced today is that DISH and EchoStar effectively use all of 
their allocated direct-to-home satellite spectrum, so launching new 
satellites does not necessarily add any substantial capacity gains. 
DISH and EchoStar have, however, been able in recent years to add 
considerable capacity thanks to commercial arrangements with Canadian 
and Mexican companies with satellite spectrum that was not previously 
available to DISH subscribers.
    DISH will continue to seek out additional non-U.S. spectrum 
resources to expand service available to U.S. consumers. One potential 
source of additional spectrum domestically is 17/24 GHz BSS (``Reverse 
Band''). EchoStar has recently been granted five 17/24 GHz BSS 
authorizations for frequencies not used today for direct-to-home 
services. The launch milestones for those satellites are not until 
2014, and there are a number of technical and international 
coordination issues that must be resolved before DISH can achieve any 
increased capacity as a result of the Reverse Band frequency grant.

    Question 2. Has DISH Network switched over to using the MPEG-4 
format exclusively? Has the use of the MPEG-4 format helped you to 
better manage the (bandwidth) capacity of your satellites?
    Answer. DISH continues to invest aggressively in new satellites and 
new technologies, one of which is state-of-the-art MPEG-4 compression. 
All of our high definition programming--both national and local 
content--has been transitioned to MPEG-4 compression. MPEG-4 has been 
critical to DISH's ability to manage its capacity and to compete with 
bandwidth-rich terrestrial providers. Without MPEG-4 technology, DISH 
would not be a leader in national HD programming--140 HD channels--and 
would not be able to provide some local channels in HD in over 150 
markets.
    There is no current plan to transition all standard definition 
programming from MPEG-2 to MPEG-4. Among other issues, the key 
challenge to an MPEG-4 transition is our legacy customer base with one 
or more MPEG-2 receivers in their home. Our 13 million plus subscriber 
base would need to he upgraded with more expensive equipment to view 
MPEG-4 programming. Through new customer acquisition, HD upgrades, and 
customer churn, the number of households with MPEG-4 equipment will 
grow organically in the next few years.

    Question 3. Does the DISH Network currently offer service to 
consumers in the five so-called ``orphan counties'' in southwest 
Washington State that are in the Portland DMA? Is the spot beam 
servicing these communities the same one that covers the Portland DMA? 
How does DISH Network ensure that there is no overlap between the spot 
beams that serve the Seattle DMA and the Portland DMA? As a result, are 
there locations between the two DMAs where there is no spot beam 
coverage?
    Answer. Yes, DISH provides customers in Wahkiakum, Cowlitz, Clark, 
Skamania, and Klickitat counties with local-into-local service from the 
Portland, Oregon DMA. These counties are ``orphaned'' in that they do 
not have the option to receive local channels from in-state Yakima or 
Seattle in addition to their assigned locals.
    The Portland and Seattle local stations are not on the same DISH 
spot beam. DISH provides local-into-local service from a number of 
different satellites and orbital locations to minimize the out-of-beam 
overlap issue highlighted in the question. In this case, the Portland 
DMA is served from EchoStar 10 at 110+ W.L., and Seattle DMA is served 
from EchoStar 7 at 119+ W.L. There are no locations between Portland 
and Seattle DMAs where there is not spot beam coverage.
    As a practical matter, Portland and Seattle could not share the 
same satellite spot beam transponder because there are too many 
channels in the combined markets. Spot beam transponders typically 
carry up to 14 standard definition channels, yet Seattle has 13 local 
channels on DISH and Portland has 9 local channels.

    Question 4. A number of my constituents living in those five orphan 
counties--Clark, Cowlitz, Klickitat, Skamania, and Wahkiakum--have told 
me that they would like to receive news and public interest programs 
from the Seattle market, which includes coverage from our state capitol 
Olympia. As you know, several States have counties which are part of 
the DMA of a neighboring state. One thought is to have the news and 
public interest programming from the State the orphan counties are 
located in be broadcast on a separate satellite channel. I understand 
your concern about a channel that remains dark for most of the day and 
then is on for a few hours to broadcast news and public interest 
programming, What are the technical, operational, and legal barriers 
for setting aside one channel in each DMA where you provide local-into-
local service to serve as a PEG-like channel?
    Answer. Our customers in Clark, Cowlitz, Klickitat, Skamania, and 
Wahkiakum counties and 731 more counties across the Nation tell us the 
same thing--the current system based on designated market areas is 
broken and too often fails to deliver the local content consumers deem 
local to them. These orphaned counties are often too far away from 
their ``local- out-of-state broadcasters and their in-state 
broadcasters for any in-depth coverage. In-state DMA reform would 
create a clear incentive for both in-market and in-state broadcasters 
to provide more robust weather and regional news to these communities.
    A PEG-like Station Is Technically Infeasible for Satellite 
Providers. The objective of in-state DMA reform efforts is to provide 
consumers with service they want by capitalizing on the national scale 
of satellite provider operations. Solutions that may make sense for 
cable companies but are a poor technical and operation fit for 
satellite providers will not result in expanding options for consumers. 
Unfortunately, a PEG-like channel dedicated to adjacent local news 
programming--which may work for a local cable company--is not feasible 
for a national satellite provider.
    The first challenge for a satellite carrier would be a lack of 
available spot beam capacity. A new PEG-like news channel is a new 
unique channel requiring the same space on the satellite as NBC or PBS. 
A spot beam typically ``sees'' multiple markets (e.g., San Francisco, 
Monterey, Sacramento), and that limited capacity is shared amongst 
those markets. Our spot beam configurations are designed to maximize 
the number of markets that can be served, and are effectively full 
today. For example, if DISH sought to add a Sacramento news feed 
station, it would need to eliminate another channel from San Francisco, 
Sacramento or Monterey (an impossibility under carry-one, carry-all 
rules).
    The second core challenge is one of implementation. DISH would be 
responsible for splicing together real-time programming from multiple 
broadcasters in any number of similarly situated markets across the 
Nation to create an adjacent market news channel. While a single 
channel is far superior for consumers than blacking out content on 
individual adjacent market channels, it creates even greater logistical 
challenges for DISH. DISH is not aware of any pay TV provider 
effectively creating daily programming line-ups in the manner that 
would be contemplated here. DISH's national service greatly complicates 
the logistical and operational issues with such a proposal. DISH's 
engineers manage over 1,400 local broadcasters nationwide without any 
local points of presence to make programming adjustments and changes. 
In contrast, cable is inherently local, offering more flexibility and 
minute-by-minute control than does a satellite's national architecture. 
A cable system typically covers a single local market, and the operator 
of that cable system only has to navigate a single set of local 
broadcasters (4 to 20 in total).
    The third challenge is a legal one. Broadcasters have not addressed 
lingering questions about their ability to offer a private copyright 
license for their news programming that include national newsclips, and 
advertisements. Even if the broadcaster has legal rights to a 
particular newscast, that grant of rights is a very narrow private 
copyright limited to a few hours per day. Broadcasters offer no 
copyright protection or indemnification for what happens if NBC Sunday 
Night Football runs into the 11 PM news and is provided to DISH 
customers without rights or permission. Given the number of last minute 
programming changes and programming overruns (i.e., whenever you lose 
the last few minutes of a program on your DVR), DISH would have to 
manually monitor programming nationwide to ensure a compliant system or 
risk copyright and other liability, an impractical--if not impossible--
logistical task.
    An Alternative Approach. DISH believes that an alternative solution 
that capitalizes on the national scale of our satellite system would 
achieve your objective in a more straightforward manner. In many 
instances, our spot beams cover areas larger than the DMAs they serve 
today and could provide service today to orphaned counties. From a 
technical perspective, we can easily offer our subscribers broadcast 
signals from a neighboring market if those signals are presently being 
delivered using the same spot beam as the broadcast signals for the 
subscriber's ``home'' DMA. This type of adjacent market reform would 
capitalize on the fact that a nearby broadcast station--already on a 
satellite spot beam--could be provided with a flip of a switch to a 
consumer seeking in-state or regional coverage more pertinent to their 
lives or professions. It would not require dedication of finite spot 
capacity and would not require daily monitoring and program alteration.
    This approach could be implemented to protect the interest of the 
``local'' broadcast stations. First, this adjacent market service could 
only be made available in the sliver of counties receiving out-of-state 
network affiliates, not the entire DMA. This would ensure that 
broadcasters remain the only source of network content for their in-
state residents. Second, the adjacent market service would be 
complementary in that it would only be available to consumers 
subscribing to their ``local'' broadcasters first. This is, therefore, 
a very modest reform proposal that would have clear pro-consumer 
results and should enhance broadcasters' statewide and local coverage 
of news and events. Importantly, this is similar to what Congress did 
for four special test cases in 2004 in SHVERA. Congress established 
specific provisions to address a handful of the most glaring instances 
of consumers receiving out-of-state non-local networks by allowing the 
importation of out-of market yet in-state--broadcasters in New 
Hampshire, Vermont, Oregon, and Mississippi. Expanding this successful 
concept nationwide is the next logical incremental step to provide 
consumers with access to the programming that is local to them.
    Thus, in this instance, consumers in Clark, Cowlitz, Klickitat, 
Skamania, and Wahkiakum counties would receive Portland locals. Those 
consumers would then have the option to add on a package of Seattle 
locals as a complement to their Portland service. To the extent out-of-
state broadcasters in Portland are effectively serving these orphaned 
counties today or are better situated geographically to provide news 
and emergency coverage in those orphaned counties, consumers are 
unlikely to pay a premium for access to additional broadcast stations. 
It is important to highlight that any additional limitations that would 
require programming to be blacked out or substituted would create 
substantial technical hurdles and undercut the viability of this 
consumer option.
    At a minimum, the Senate Commerce Committee should add study 
language similar to the bill that passed the House Energy and Commerce 
Committee last month. Specifically, H.R. 2994 included a provision 
requiring the FCC to study whether there was a better regulatory 
structure to ensuring that consumers receive in-state news, weather, 
and sports than the Nielsen Media designated market area system. We 
think this study has merit, and would welcome your support to ensure 
that consumers receive the local service they need and expect long-
term.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. Tom Udall to 
                            R. Stanton Dodge

    Question 1. Broadcasters claim that there is no legal barrier that 
prevents satellite TV companies from providing ``non duplicative'' New 
Mexican TV programming to those parts of the state outside the 
Albuquerque-Santa Fe TV market. A cable TV provider, for example, 
broadcasts some of the Albuquerque ABC affiliate's local news to New 
Mexican customers in the El Paso DMA. What then keeps satellite TV 
companies from providing such in-state television to all parts of the 
state?
    Answer. DISH agrees that all residents of New Mexico should have 
access to broadcasters from New Mexico. Residents of Quay county and 
other eastern New Mexico counties want to watch Albuquerque stations 
and should be afforded the opportunity to see that station in its 
entirety.
    As detailed in response to Question 4 from Senator Cantwell, DISH 
is prepared to provide the Albuquerque stations to all residents of 
eastern New Mexico within our existing spot beams if it is granted the 
right to provide the Albuquerque station in its entirety to those 
subscribers. DISH has no such legal rights today. To date, 
broadcasters, however, have offered only a small portion of their 
content, which would be operationally infeasible as detailed above. 
Blacking out content is not a viable option. The FCC has concluded that 
blacked out stations are bad for consumers, ``recogniz[ing] that if a 
[pay TV provider] were required to delete network programming from a 
station, and the network programming subject to deletion constitutes a 
high percentage of the station's programming, the [pay TV provider] 
would likely drop the entire station from carriage.'' Implementation of 
the Satellite Home Viewer Improvement Act of 1999: Application of 
Network Nonduplication, Syndicated Exclusivity, and Sports Blackout 
Rules to Satellite Retransmissions of Broadcast Signals, FCC 00-388,  
47 (2000).
    Here, 70 to 90 percent of programming on the channel would be dark. 
Broadcasters have conceded that DISH does not have the ability to fill 
in blacked out programming today. Letter from CBS and NBC Network 
Affiliate Associations to Chairman Leahy, Rockefeller et al, April 14, 
2009.
    We seek your help to persuade broadcasters that the best solution 
for New Mexican residents is full access to their New Mexico 
broadcasters, just as it was for New Hampshire, Vermont, Mississippi, 
and Oregon residents in 2004.

    Question 2. Satellite television provides an important service to 
rural Americans who cannot always get cable or even broadcast 
television. I am concerned about those TV viewers in remote areas who 
lost their antenna TV reception due to the digital TV conversion. 
Although we do not yet know how many people live in these ``digital 
white spaces,'' some TV viewers have lost their free, over-the-air 
television reception. Satellite TV is probably available to most of 
those affected, but satellite TV is not free. What are your thoughts on 
the role satellite TV could play in ``filling in'' the digital white 
space gaps for those who once had free analog TV but do not have 
digital TV reception. Is there any way to restore these TV households' 
free TV?
    Answer. DISH shares your concern about over-the-air households. 
DISH was actively involved in the digital transition. Among other 
things, DISH sold digital-to-analog converter boxes with a recommended 
sales price of $40, the cost of the Federal Government's coupon. Both 
our satellite and our converter box customers have reported back to us 
that digital reception does not always reach areas covered by analog 
transmissions as reflected in your question.
    DISH offers households adversely affected by the digital transition 
a lifeline service of local broadcast stations today in markets in 
which DISH provides local-into-local service. DISH also offers 
affordable options for households not accustomed to paying for their TV 
service, including a $24.99 DISH Family package of programming that 
includes local channels where available.
    While these options offer consumers affordable and flexible 
choices, it does not restore a ``free TV'' option. The cost of DISH 
equipment--both the actual receiving dish on the home and the set-top 
box receiver(s) in the home--is not inconsiderable, nor are the costs 
associated with the installation process. That said, DISH would be 
happy to work with your staff on exploring whether there is some 
mechanism by which formerly free over-the-air households could receive 
a subsidized lifeline satellite service with retransmission consent fee 
offsets from local broadcasters whose signals do cover their entire DMA 
or some other form of universal service program.
                                 ______
                                 
 Response to Written Question Submitted by Hon. John D. Rockefeller IV 
                                  to 
                           Paul A. Karpowicz

    Question. Satellite television has spawned greater competition 
among pay television providers, especially in rural areas. This 
benefited consumers by giving them more choices and in some areas 
lowering prices. A key component to making satellite television 
attractive to consumers is the carriage of local channels. 
Unfortunately, in approximately 23 markets, neither DIRECTV nor DISH 
Network offers local broadcast channels. Two of those markets are in 
West Virginia, Parkersburg and Wheeling. Consumers in those communities 
want access to their local news, sports, and regional programming.
    What can be done to make sure that people throughout the country 
can get access to local broadcast stations? If there is no obligation 
or incentive to serve all 210 markets would DIRECTV or DISH Network do 
so and by what date? What steps can broadcasters take to encourage or 
incentivize the extension of local service to unserved markets?
    Answer. Mr. Chairman, thank you for the question. As I stated 
during the hearing, local broadcasters strongly support the extension 
of local-into-local service in all 210 markets. Localism is a beacon of 
Congressional communications policy. In 1999, Congress allowed 
satellite companies to retransmit a local broadcast network signal back 
into the same local market from where it originated. This was a ``win-
win'' for all, as local residents received imperative news, weather and 
sports programming they desired and DBS providers scored a windfall of 
new subscribers effectively leveling the playing field with larger 
cable systems. However, when SHVIA was adopted, the law did not require 
DBS companies to provide this service, creating a system where smaller 
communities are often disenfranchised. As you know, a number of 
different legislative proposals have been introduced as we undertake 
the reauthorization of SHVERA to remedy this problem. In the House, 
both the Energy and Commerce and Judiciary Committee's included 
language in their bills that would facilitate local-into-local carriage 
in all 210 DMAs. While NAB did not oppose these efforts, numerous 
concerns still lie in the details of how this potential solution would 
work. Furthermore, the Senate Judiciary bill (S. 1670), allows 
satellite carriers, using their local compulsory copyright license, to 
import in short markets the missing network from an adjacent market. 
Thus, DISH, which lost its distant signal copyright license, can use 
this provision to deliver local-into-local service to all 210 markets. 
This approach facilitates, without mandating, the extension of local-
into-local service into all markets. Moreover, Congressman Bart Stupak 
(MI) introduced legislation (H.R. 927) in the House that would mandate 
local-into-local service in all 210 markets.
    If there was no obligation or incentive to serve all 210 DMAs with 
local programming, I do not believe DIRECTV or DISH Network would make 
that investment. DIRECTV and DISH Network have repeatedly claimed that 
capacity and economic constraints severely limit their ability to offer 
local-into-local service to more than a small number of markets. A few 
years back, they said unless Congress allowed the two companies to 
merge, ``the most markets that each company would serve with local 
channels as a standalone provider, both for technical and economic 
reasons, would be about 50 to 70.'' Today, the satellite carriers no 
longer claim, seriously, that providing local-into-local service is 
technically impossible. They say it is expensive. Under your 
leadership, local broadcasters successfully transitioned to digital 
broadcasting in June. During the course of this massive transition, 
local stations spent billions of dollars upgrading facilities and 
informing the general public. While there has been very little economic 
return on that investment, those investments were in the public 
interest. I believe the satellite industry's investment in providing 
local-into-local service to all American's would also be in the public 
interest.
    Again, local broadcasters have long advocated for local communities 
to be served by their local television station. It is not lost on us 
that residents of the northern panhandle of West Virginia are better 
served by WTRF in Wheeling as opposed to distant signals from Denver or 
New York.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. Tom Udall to 
                           Paul A. Karpowicz

    Question 1. You claim that there is no legal barrier that prevents 
satellite TV companies from providing ``non duplicative'' New Mexican 
TV programming to those parts of the state outside the Albuquerque-
Santa Fe TV market. You also note that one Albuquerque station would 
potentially allow carriage of its non-duplicative programming by 
satellite companies to orphan counties in New Mexico. Are there any 
examples where satellite companies provide such in-state, non 
duplicative TV programming to viewers in ``orphan counties?'' If so, 
why then is this not available to TV viewers in affected areas of New 
Mexico? If not, how then is this option a viable way to bring in-state 
TV to ``orphan'' counties?
    Answer. Senator Udall, thank you for the opportunity to answer your 
questions. To my knowledge, satellite companies have not been willing 
to provide in-state non-duplicative television programming to viewers 
in any so-called ``orphan'' counties. I respectfully submit that the 
mere fact that no DBS operator is offering such a service does not mean 
that it is not a viable option to do so. Rather, the failure of DBS to 
offer such a service stems from an unwillingness to devote the 
necessary capacity and financial resources which the carriers, in fact, 
have. DIRECTV and DISH are among the largest multichannel video program 
providers in the country.
    DIRECTV has given three reasons for refusing to provide in-state, 
non-duplicative programming from a New Mexico station to New Mexico 
residents located in an out-of-state DMA. None is a valid reason for 
not providing their service.
    First, DIRECTV claims that stations, which have already provided 
written consent to carry their local programming throughout the state 
for free, nevertheless lack the necessary copyright licenses to 
authorize such consent. That assertion is false. My stations, in 
various markets in other states and the local television stations in 
New Mexico, as well, have secured the necessary copyright licenses to 
provide satellite carriers (as well as cable companies) local news, 
weather, public service, and political programming on a state-wide 
basis. Notwithstanding DIRECTV's assertions, this is not an issue and 
is not an impediment to satellite delivery of this programming.
    Second, DIRECTV asserts that none of its subscribers have requested 
receiving service consisting only of in-state local programming. On one 
level, this is not hard to understand since DIRECTV has never offered 
such a service. Significantly, such a service is being offered by 
Comcast Cable in New Mexico, which presumably would not devote its 
resources to doing so if New Mexico subscribers in these counties had 
no interest in receiving this purely local, in-state programming 
service.
    Third, DIRECTV complains that requiring it to strip out duplicative 
programs would be ``far more expensive'' than retransmitting a 
station's entire signal that includes duplicative programming, and 
would require DIRECTV to reconfigure its set top boxes. This, it seems 
to me, is the essence of the question you pose. It is simply not the 
case that providing only the non-duplicative programming to orphan 
counties is not ``viable'' for DBS. Rather, it is a matter of money and 
allocation of resources and technology. In this regard, it is 
significant to note that on page 4 of the June 22, 2009 edition of 
Communications Daily, DISH and DIRECTV announced that each would soon 
have the technical capability to insert local commercials for 
advertisers in markets where they were providing local to local 
service. Surely, if DIRECTV and DISH can insert local commercials, they 
can insert local news, weather, political, public service 
announcements, local emergency announcements, and public service 
programming from in-state stations. Ironically, the satellite industry 
strongly opposed an effort by the FCC to require satellite carriers to 
provide local public safety and emergency announcements.
    Moreover, satellite carriers also offer pay-per-view services 
offering sexually explicit and other programming requiring 
sophisticated addressable set top boxes. If satellite carriers can 
provide addressable boxes and the technology necessary to provide for 
sexually explicit content, why can they not provide the same technology 
to enable subscribers to receive local, in-state news, public service, 
and local emergency programming and announcements broadcast by in-state 
stations?
    Clearly, DBS can offer non-duplicative in-state programming from a 
New Mexico station to orphan counties.

    Question 2. The last time SHVERA was reauthorized, a handful of 
exemptions were made for states with the same DMA problem as New 
Mexico. How were consumers harmed by these limited exemptions allowing 
satellite companies to provide secondary transmissions of in-state TV 
signals to ``orphan counties''?
    Answer. Senator, to answer your first question the ``exemptions'' 
made in 2004 in SHVERA ostensibly affected four states: New Hampshire, 
Vermont, Mississippi, and Oregon. To my knowledge the Oregon provision 
has not been utilized. Accordingly, there are, effectively, 
``exemptions'' for just three states.
    The 2004 Act did not deprive the stations whose signals were 
subject to export into an adjacent market of the right to give or 
withhold their retransmission consent. Nor did the Act in the three 
affected markets apply to cable. In short, the arrangements for 
satellite carriage were worked out voluntarily by the parties.
    In addition, because the ``exemptions'' were enacted as part of the 
distant network signal license in Section 119 of the Copyright Act, 
DISH Network was prohibited from utilizing the ``exemptions'' beginning 
December 1, 2006, when it was permanently enjoined by a Federal court 
from use of the distant network signal compulsory license. Accordingly, 
to our knowledge only DIRECTV is utilizing the exceptions and the 
service is provided to only a few homes in each local market.
    In two of the markets, the out-of-market network station being 
imported is owned by the same company that owned the in-market station 
affiliated with that network--thus, the company's stations simply 
exchanged viewers. The result is that the 2004 act's provisions are 
quite limited in scope.
    If Congress should allow pay TV companies to retransmit duplicating 
national entertainment and sports programming from distant stations in 
other markets without obtaining the consent of the copyright holder or 
the stations whose signals are being retransmitted, local stations and 
local television broadcast service will be harmed in several ways. 
First, it will fragment local viewing of the same national 
programming--depriving stations of critical local advertising revenue. 
Second, it will deprive local stations of the ability to negotiate 
compensatory retransmission consent agreements with cable and satellite 
companies. Cable and satellite will not pay local stations 
retransmission consent fees for programs it can get without paying 
retrans fees at a government-subsidized copyright fee. Because the 
``exemptions'' would only apply to broadcast programming--not to cable 
and satellite network programming such as ESPN, USA, HBO, etc.--they 
could result in national broadcast networks, program suppliers, and the 
sports leagues withdrawing their best programming from local, free, 
over-the-air television stations and placing them on pay services for 
more money on an exclusive basis in each local market.
    Consumers and viewers would then lose quality free, over-the-air 
broadcast programming, as local stations could no longer provide 
viewers with local news, weather, sports, and public interest 
programming.
    Without competition from local stations, cable and satellite 
companies would be able to increase and raise their pay TV rates for 
the same programs viewers had previously been able to see for free from 
their local stations--further harming consumers.

    Question 2a. Would further exemptions that apply to small areas 
truly destroy the entire broadcast TV business model nationwide?
    Answer. Yes, over time. Local stations buy their national 
entertainment and sports programming and compete in a fiercely 
competitive program market for their programming with cable and 
satellite. Why would the government want to give that same programming 
to cable and satellite at a government-set, highly subsidized copyright 
rate or deprive the creator of the programs of the right to pick its 
local distributor? What incentive would broadcast stations have to 
develop programming if the government gives it to pay cable and pay 
satellite at a subsidized rate to compete head-to-head with the 
stations that produced it?
    The interest in having the local news programming of in-state 
television stations made available for cable and satellite distribution 
throughout a state is clearly understandable. We support that 
objective. Fortunately, legislation to achieve that objective is not 
necessary; it can be done now without any change in the law. In fact, 
it is being done now in various states and television markets--
including in New Mexico--and it could be done in other parts of New 
Mexico and in every state if DIRECTV and DISH were only willing to do 
so.
    Existing Federal copyright and regulatory law is not an impediment 
to the importation by satellite carriers and cable systems of non-
duplicating local news, information, or sports programming from 
stations in distant markets. Local stations own the copyright for their 
local news and are in a position to allow--and do allow--cable and 
satellite companies to export their local news, weather, sports, public 
safety, and informational programming into distant markets. For 
example, Comcast imports the local news programming of KOAT-TV, 
Albuquerque, New Mexico, into Las Cruces, New Mexico, which is located 
in the El Paso, Texas, TV market. And there are numerous other 
examples, including: cable systems in Virginia, North Carolina, 
Southern Colorado, Tennessee and Palm Springs California that provide 
in-state programming to communities located out-of-state DMAs.
    DIRECTV and DISH, of course, could easily provide the same service. 
Congress should be asking cable and satellite to do more of this--not 
give them a free copyright to import duplicating national entertainment 
and sports programming already available to viewers for free--from 
local stations.
    Cable and satellite companies are asking Congress to enlarge the 
geographic scope of their existing government granted statutory 
compulsory copyright licenses to allow them to import the very same 
national, duplicating network, syndicated, and entertainment and sports 
programming from distant stations that local television stations are 
televising in their markets and for which they have paid large sums of 
money, in a competitive open market, for the exclusive right to do so.
    The competitive strategy of satellite and cable companies in urging 
Congress to enact market modification legislation is anti-competitive. 
Cable and satellite companies compete head to head for viewers and 
advertising dollars with local television stations. It is simply 
impossible for local stations to compete when they must provide their 
satellite competitors with a government subsidized copyright license 
and free retransmission consent to televise from a distant market 
station the most popular entertainment and sports programming which DBS 
in turn, can resell to their subscribers.
    If the broadcast networks, program studios, and sports leagues are 
deprived by Congress of the ability to control the reasonable terms for 
territorial and exclusive licensing of their copyrighted works when 
televised for free over the air by local television stations, they will 
simply withdraw their entertainment and sports programming from the 
free, over-the-air television broadcast service and place it, on a less 
regulated, less restricted cable or satellite video distribution 
platform where they can maintain control over the territorial scope of 
the copyright license and the terms of program exclusivity.
    Market modification legislation will, in short, relegate the free 
television broadcast service to a third- and fourth-run program 
service, to the detriment of local viewers and, in particular, those 
viewers who cannot afford a paid subscription television service.
    Without the ability to contract in a competitive market for program 
copyright exclusivity, local television stations will lose local 
viewers and, in turn, essential advertising revenue. They will also 
lose the ability to negotiate meaningful arrangements with cable and 
satellite companies for carriage of their signals. Cable and satellite 
companies will be able simply to by-pass local stations if Congress 
allows them to offer local viewers the same national network, 
syndicated, entertainment, and sports programming from distant stations 
that is televised by local stations.
    The FCC, under various administrations, has examined the public 
interest implications of broadcast program exclusivity for local, over-
the-air television stations and has concluded that the loss of program 
exclusivity would place local, free, over-the-air television stations 
``at a competitive disadvantage relative to their rivals who can 
enforce exclusive contracts'' and deny consumers the ``benefits of full 
and fair competition and higher quality and more diverse 
programming.''*
---------------------------------------------------------------------------
    \*\ Notice of Inquiry and Notice of Proposed Rule Making re Program 
Exclusivity FCC Rcd 2393 (1987) at  62.
---------------------------------------------------------------------------
    No reasonable public interest justification can be made for 
importing, on a paid subscription basis from another distant station, 
the very same duplicating entertainment and sports programming 
available to local viewers free from a local, over-the-air television 
station. Obviously, the importation of duplicating programming does not 
contribute to program diversity. It would only serve the self-serving 
financial and anticompetitive interests of satellite and cable 
companies.
    Now is not the time to financially undermine the efforts of local 
television stations to provide free local news, weather, public 
affairs, public service, political, and public safety information 
programming.

    Question 3. You state in your testimony that offering duplicative 
TV signals in even a handful of ``orphan'' counties would harm 
consumers since broadcasters would no longer make available their most 
desirable TV programs to over-the-air TV viewers. However, broadcasters 
already provide duplicative programming to some TV viewers in these 
orphan counties via TV station websites and Hulu. If those with 
Internet access in orphan counties can already watch in-state TV 
programming online, why should they not be allowed to watch this same 
programming via satellite television?
    Answer. Providing viewers in orphan counties with the opportunity 
to view isolated network programs (rather than the entire network 
schedule) on Internet websites is substantially different from making 
the full network schedule available from a distant network station via 
satellite for simultaneous viewing on conventional television sets.
    First, in the case of satellite delivery, the duplication would be 
simultaneous or, worse, with time zone differences, could precede 
broadcast of the programming by local stations. The vast majority of 
viewing to significant prime time network programming such as 
``Desperate Housewives'' is ``live.'' That is where local stations make 
most of their advertising revenue--or would lose it if viewing of 
``Desperate Housewives,'' for example, on Sunday night was to a distant 
duplicating network station. The amount of viewing of such programming 
on Websites is not nearly as significant as when it is being aired over 
the network and unlike satellite delivered distant signals which are 
live. Because Internet distribution is subsequent to a program being 
aired on the local affiliate, the two types of distribution and the 
threat they pose to local stations simply is not comparable.
    Second, the distribution of network programming via Internet venues 
is a function of private marketplace contractual negotiations among the 
networks, program suppliers and often the affiliates. Some of the TV 
Website distributors involve revenue sharing with local affiliates from 
Internet viewing. Under these arrangements, it is the private copyright 
holders of these program rights and their licensees who work out the 
distribution of the programs. In fact, some of these Internet websites 
instantaneously transfer the user to the local, in-market network 
station's website, so the viewer is actually watching the program from 
the website of the network's local affiliate--along with the local 
affiliated station's own commercials. This viewing is accretive to the 
local station's over-the-air viewing--not dilutive as would be the case 
with the importation of a distant duplicating network station.
    On the other hand, program distribution by satellite of a distant 
signal is accomplished by means of a government statutory compulsory 
copyright license, depriving copyright holders of the ability to 
license their creative works. Under the government's compulsory 
license, the program creator and its licensees only control and exploit 
the program to the extent they are permitted by the government to do 
so. If the government interferes with the copyrighted licensing of 
programs on broadcast television stations, copyright owners, studios, 
and sports leagues will simply divert their marquee programs to less 
regulated Pay TV services--which, in turn, will be a disservice not 
only to local, free, over-the-air TV stations, but to viewers and 
consumers who depend on their local broadcast stations for quality 
entertainment, sports, national and local news, and emergency 
information.
                                 ______
                                 
 Response to Written Question Submitted by Hon. John D. Rockefeller IV 
                                  to 
                             Lonna Thompson

    Question. Far too much of the programming offered to consumers is 
designed to entertain on a base level. It does not enlighten, educate, 
or elevate the viewer. Instead, I see a coarsening of society with 
media in the vanguard. Public television is one of the few resources 
for programming that educates and shares the best of our culture. 
Programming such as Ken Burns' documentary on the National Parks expose 
viewers to the grandeur and history of America. Such programming 
however is best viewed in high-definition (HD) format. I am concerned 
when satellite providers choose to offer ``Dancing with the Stars'' in 
HD format and not ``The War.''
    I understand that DISH and the public television stations are in 
discussions over the carriage of local HD programming as well as 
mechanisms to provider subscribers with access to public television 
multicasting channels. What is the status of those negotiations? If no 
agreement is reached, what can Congress do to encourage consumer access 
to such programming?
    Answer. Public television has worked for a number of years to reach 
a comprehensive carriage deal with Dish Network. In that time, APTS, on 
behalf of the Nation's local public television stations, has worked 
consistently in good faith to reach a deal that brings the full array 
of local stations' programming to Dish's subscribers, while recognizing 
the capacity concerns of Dish Network. This is something that we know 
can be accomplished, as is evidenced by our prior carriage agreements 
with DIRECTV, NCTA, ACA and Verizon. Recognizing that each provider has 
separate capacity and technological constraints, each of these past 
agreements have been individually crafted to reflect these realities, 
while ensuring that viewers have access to the highest quality of 
locally produced digital content.
    Unfortunately, after years of trying to conclude a similar 
agreement with Dish, as of this date, no such agreement has yet been 
reached. Dish, by their own record is providing local HD service in 
over 150 markets, yet they have refused to carry any local public 
television stations except in Alaska and Hawaii, where they are legally 
obligated to do so. Absent a private carriage agreement, we call on 
Congress to help us end this discriminatory practice.
    All efforts to finalize carriage agreements with Dish have ended 
with their refusal to accept a deal that does not contain a national HD 
feed of public broadcasting programming in exchange a specific 
accelerated roll-out of local-into-local HD that exceeds the FCC rules.
    A national HD feed threatens the foundation of local public 
television stations. This type of feed in markets where there is no 
local HD carriage would compete against local stations' programming and 
would erode valuable local pledge fundraising--undercutting stations 
and ultimately destroying the principle of localism.
    Without an agreement with Dish, we are asking Congress to ensure 
that all citizens are able to have access to their local public 
television stations' HD programming--regardless of how they receive 
their television signals.
    During the House Energy and Commerce Committee mark-up of its 
version of SHVERA reauthorization legislation, Representative Eshoo 
offered an amendment that mandated the carriage of local public 
television stations' HD signals. The amendment requires Dish to carry 
local public television stations' HD signals in 50 percent of their 
local HD markets within a year and the remaining 50 percent in 2 years. 
Additionally, if Dish goes into new markets in local HD after the bill 
is enacted, they have to carry the local public television station on a 
prospective basis. If an agreement can be reached before the 
legislation is signed into law, the amendment does not take effect.
    As the Senate Commerce Committee considers its version of SHVERA 
reauthorization, we are asking that the Committee consider adopting 
similar language in its bill. Given the fact that we have not been able 
to finalize a deal at this point, we feel we have no other option than 
to ask that this language be included in the bill. In the meantime, 
APTS will continue to try to reach a private agreement with Dish. We 
continue to believe that private negotiations are in the best interest 
of all parties, including Congress.
    Dish Network's nearly 14 million subscribers deserve access to the 
highest quality of local programming that local public television 
stations are producing. Congress and the American public have invested 
in this programming. From major productions like The War, to local 
arts, education and public affairs programming, consumers deserve 
access to the full breadth of programming and services offered by their 
local public television stations.
    Public television remains committed to doing everything we can to 
bring these services to the American public. We will continue to 
negotiate, as we have all along, in good faith with Dish Network. 
However, at the end of the day, absent a private agreement, we cannot 
miss this opportunity of SHVERA reauthorization to ask Congress for 
help in addressing this long standing practice of discrimination that 
prevents Dish subscribers from accessing the highest quality 
programming being offered by local public television stations 
nationwide.

                                  

```