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95–309 PDF 2004

S. HRG. 108–571

THE SATELLITE HOME VIEWER EXTENSION ACT

HEARING

BEFORE THE

COMMITTEE ON THE JUDICIARY 

UNITED STATES SENATE

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

MAY 12, 2004

Serial No. J–108–75

Printed for the use of the Committee on the Judiciary

(

(II)

COMMITTEE ON THE JUDICIARY 

ORRIN G. HATCH, Utah, Chairman 

CHARLES E. GRASSLEY, Iowa 

ARLEN SPECTER, Pennsylvania 

JON KYL, Arizona 

MIKE DEWINE, Ohio 

JEFF SESSIONS, Alabama 

LINDSEY O. GRAHAM, South Carolina 

LARRY E. CRAIG, Idaho 

SAXBY CHAMBLISS, Georgia 

JOHN CORNYN, Texas 

PATRICK J. LEAHY, Vermont 

EDWARD M. KENNEDY, Massachusetts 

JOSEPH R. BIDEN, JR., Delaware 

HERBERT KOHL, Wisconsin 

DIANNE FEINSTEIN, California 

RUSSELL D. FEINGOLD, Wisconsin 

CHARLES E. SCHUMER, New York 

RICHARD J. DURBIN, Illinois 

JOHN EDWARDS, North Carolina 

BRUCE ARTIM, Chief Counsel and Staff Director 

BRUCE A. COHEN, Democratic Chief Counsel and Staff Director 

(III)

C O N T E N T S 

STATEMENTS OF COMMITTEE MEMBERS

Page

DeWine, Hon. Mike, a U.S. Senator from the State of Ohio, prepared statement ...................................................................................................................... 70

Feingold, Hon. Russell D., a U.S. Senator from the State of Wisconsin, prepared statement ................................................................................................... 91

Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah ............................ 1

prepared statement .......................................................................................... 104

Kohl, Hon. Herbert, a U.S. Senator from the State of Wisconsin ....................... 4

Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont .................... 3

prepared statement .......................................................................................... 110

WITNESSES

Attaway, Fritz, Executive Vice President and Washington General Counsel, 

Motion Picture Association of America, Washington, D.C. ............................... 13

Carson, David O., General Counsel, Library of Congress Copyright Office, 

Washington, D.C. ................................................................................................. 6

Ergen Charles W., Chairman and Chief Executive Officer, EchoStar Communications Corporation, Littlewood, Colorado ...................................................... 7

Hartenstein, Eddy, Vice Chairman, The DirecTV Group, Inc., El Segundo, 

California .............................................................................................................. 11

King, John, President and Chief Executive Officer, Vermont Public Television, 

Colchester, Vermont ............................................................................................. 15

Reese, Bruce, President and Chief Executive Officer, Bonneville International 

Corporation on behalf of the National Association of Broadcasters, Salt 

Lake City, Utah .................................................................................................... 9

QUESTIONS AND ANSWERS

Responses of Fritz Attaway to questions submitted by Senators Durbin, Kohl, 

and Leahy ............................................................................................................. 23

Responses of David Carson to questions submitted by Senators Leahy, Kohl, 

and Durbin ............................................................................................................ 27

Responses of Charles Ergen to questions submitted by Senators Durbin, Kohl, 

and Leahy ............................................................................................................. 29

Responses of Eddy Hartenstein to questions submitted by Senators Durbin, 

Kohl, and Leahy ................................................................................................... 35

Responses of John King to questions submitted by Senators Kohl and Leahy .. 41

SUBMISSIONS FOR THE RECORD

American Society of Composers, Authors and Publishers and Broadcast 

Music, Inc., Marilyn Bergman and Frances W. Preston, letter ....................... 44

Attaway, Fritz, Executive Vice President and Washington General Counsel, 

Motion Picture Association of America, Washington, D.C., prepared statement ...................................................................................................................... 47

Carson, David O., General Counsel, Library of Congress Copyright Office, 

Washington, D.C., prepared statement .............................................................. 58

Ergen Charles W., Chairman and Chief Executive Officer, EchoStar Communications Corporation, Littlewood, Colorado, prepared statement ................... 72

Gottsch, Patrick, President on behalf of RFD-TV, prepared statement .............. 93

Page

IV

Hartenstein, Eddy, Vice Chairman, The DirecTV Group, Inc., El Segundo, 

California, prepared statement ........................................................................... 98

King, John, President and Chief Executive Officer, Vermont Public Television, 

Colchester, Vermont, prepared statement and letter ........................................ 106

Orlando, John, Executive Vice President, Government Relations, National 

Association of Broadcasters, Washington, D.C. ................................................. 112

(1)

THE SATELLITE HOME VIEWER EXTENSION 

ACT 

WEDNESDAY, MAY 12, 2004 

UNITED STATES SENATE, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Committee met, pursuant to notice, at 2:35 p.m., in room 

SD–226, Dirksen Senate Office Building, Hon. Orrin G. Hatch, 

Chairman of the Committee, presiding. 

Present: Senators Hatch, Leahy, and Kohl. 

OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. 

SENATOR FROM THE STATE OF UTAH 

Chairman HATCH. We apologize for being here late. 

Good afternoon and welcome to today’s hearing on the Satellite 

Home Viewer Extension Act. Today, we will be discussing some 

very important issues relating to the reauthorization of Section 119 

of the Copyright Act which provides a statutory license for the retransmission of distant network signals. 

The extension of Section 119 has far-reaching implications for 

the satellite and broadcast television industries, as well as for 

those who create video content, and I am sure that this tremendous 

panel of witnesses that we have here today will do their best to 

make this somewhat difficult subject matter accessible to all of us, 

while also providing us with some insight into the economics of 

providing direct broadcast satellite, or DBS, service. 

Television has come a long way since it was invented by a Utah 

native, Philo T. Farnsworth, in 1927. The first television image was 

nothing more than a straight line that rotated 90 degrees from a 

vertical to a horizontal position on the screen. I think that most 

people would agree that television programming has, at the very 

least, become more interesting than Philo’s rotating line, although 

based on all the letters I have received about the last Super Bowl 

halftime show, I am not sure that all of my constituents think that 

the taste in programming has improved all that much. 

I would like the transcript to reflect that I used that same joke 

about television programming at the last hearing on the Satellite 

Home Viewer Act 5 years ago, and I am pretty sure I got a bigger 

laugh last time. 

Senator LEAHY. Ha ha. 

Chairman HATCH. That is typical. That is just typical, isn’t it? 

[Laughter.] 

2

Chairman HATCH. Luckily for all of you, if Congress passes the 

Satellite Home Viewer Extension Act, I will have another 5 years 

to perfect my delivery before you hear it again. 

I will keep my remarks brief today and submit a longer statement for the record, but I do want to take some time to describe 

in a general way the approach that I believe Congress needs to 

take on this legislation. And before I do that, I want to emphasize 

that I have been impressed by the degree of bipartisan and bicameral cooperation that has been apparent thus far in our work 

on this legislation. 

I want to thank Senators Leahy, Kohl and DeWine for their efforts on this bill, and I hope that we will continue to work together 

to pass legislation that appropriately balances the interests of the 

affected parties and industries, while advancing sound public policy 

and consumer choice. 

With that in mind, I will outline some of the larger policy objectives that I believe should be important in guiding us to a resolution of a number of issues that have been raised in connection with 

this particular piece of legislation. 

First, we need to bear in mind that compulsory licenses are 

strongly disfavored due to the market distortions they create and 

then perpetuate. Although I support extending the statutory license in Section 119 for another 5 years, Congress needs to think 

carefully about how to begin minimizing the overall distorting effect of this compulsory license on the market, while retaining its 

central purpose of providing broadcast network signals via satellite 

to households that cannot receive them over the air. 

With local stations now available from DBS providers in over 110 

markets, which I am told encompass roughly 85 percent of U.S. television households, one obvious approach is to create appropriate 

incentives that will further encourage a transition from the Section 

119 distant signal license to the Section 122 local-into-local license. 

Second, I believe that we need to have a reasonable adjustment 

of the copyright royalty rates that are paid under the Section 119 

license. Once we depart from rates that are set at or near fair market value under a compulsory license, not only do we introduce substantial and potentially increasing market distortions, but Congress eventually finds itself without any clear guiding principle to 

apply in determining the proper rate. 

For this reason, unless the affected parties can move toward 

some resolution on the rate issue, the Senate should consider an 

approach similar to the approach taken in the House Judiciary 

Committee in which a Copyright Arbitration Royalty Panel would 

determine the rate and it would then be subject to Congressionallymandated discounts. 

Third, Congress should carefully consider ways to increase parity 

between cable and DBS to ensure that consumers continue to benefit from competition and have increased programming choices. For 

example, I believe satellite providers should be allowed to provide 

significantly viewed stations to their subscribers in the same way 

that cable companies do. 

Finally, I want to mention the two-dish issue. I believe that the 

Senate should prohibit the discriminatory placement of certain stations on a second satellite requiring subscribers to obtain a second 

3

dish to receive them. I am particularly concerned that Spanish language, religious and public broadcast stations have been singled 

out for this treatment. 

Now, with that, I am going to turn to Senator Leahy for his 

opening statement. 

[The prepared statement of Chairman Hatch appears as a submission for the record.] 

STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR 

FROM THE STATE OF VERMONT 

Senator LEAHY. Well, thank you very much. 

My friend, Senator Hatch, and I have worked very closely together on satellite television issues for many years. Many of you 

have been here for some of these hearings and you know that in 

November of 1997 we joined together to find a way to avoid cutoffs 

of satellite TV service to millions of homes and to protect the local 

affiliate broadcast system. 

In early 1998, working with members of this Committee, especially Senator Kohl and Senator DeWine, we forged a bipartisan alliance behind a strong satellite bill to permit local stations to be 

offered to viewers by satellite, increasing competition between cable 

and satellite providers. 

We worked with the Public Broadcasting System so that they 

could offer a national feed as they transitioned to having their local 

programming beamed up to satellites and then beamed back down 

to much larger, new audiences. I am pleased that my friend, John 

King, of Vermont Public Television, will testify today about how 

local-into-local television benefits Vermonters, as well as residents 

of other States. He will talk about how VPT is now available in 

Bennington and Windham Counties through the EchoStar Dish 

Network. 

I want all other Vermont broadcast stations to be available in 

those two counties. Those are the two southernmost counties, one 

on the eastern side of our State and one on the western side of our 

State. They haven’t been able to receive television news about what 

is happening in Vermont. If you live in Vermont, if you hear about 

a school fire or a traffic jam or a flood in Framingham, Massachusetts, it is not the same if you hear about the same school fire, traffic jam or flood in Rutland, Vermont. 

We have worked together in this Committee and we have made 

it possible for millions of viewers to receive all their local network 

broadcast stations over satellite. Millions of consumers now have a 

choice between cable service or satellite service, which is important 

because consumers then have competition. 

We started working on this in 1997. Millions of viewers across 

America couldn’t even receive signals from the four broadcast networks over the air. In my own State, a small State with a whole 

lot of mountains, we have many towns in the saddles of these 

mountains and they get no signals at all. 

In that regard, Mr. Chairman, I want to thank Charlie Ergen, 

who is here. His Dish Network has been offering local-into-local 

service in Vermont since 2002. Vermont is also looking forward to 

DirecTV satellite service in the near future. 

4

This Committee worked with other committees in the Senate and 

the House during the past 7 years on this. It is interesting in working with them that you find so many members of both parties who 

have common interests in this because they are the interests of 

their constituents. We have helped to create vast viewing options 

and alternatives for consumers, but we have also helped to expand 

a tremendous new industry. 

I will work with Chairman Hatch and all members of this Committee to go the next step forward as we reauthorize the Satellite 

Home Viewer Act, our original legislation, which I think both the 

Chairman and I would agree was a homerun. Now, I want to build 

on that. 

Mr. Chairman, I am happy to see that our bill, S. 2013, that we 

introduced with Senators Kohl and DeWine is on the agenda for tomorrow’s markup. I understand, as we often do with something 

that significant, we will put it over until the next meeting, which 

I totally agree with. It will help us draft a necessary consensus 

substitute bill, but it also forces everybody on the Committee to 

step up to the plate and decide just what we want. 

So I just wanted to mention that and thank you for setting up 

that procedure. 

[The prepared statement of Senator Leahy appears as a submission for the record.] 

Chairman HATCH. Well, thank you, Senator. 

We will turn to Senator Kohl, and if Senator DeWine comes, we 

will be glad to hear his statement because both of them have 

worked extensively in this area as well. 

STATEMENT OF HON. HERB KOHL, A U.S. SENATOR FROM THE 

STATE OF WISCONSIN 

Senator KOHL. Thank you, Mr. Chairman. 

Today, we revisit the Satellite Home Viewer Improvement Act, a 

law we passed just a little less than 5 years ago. Having participated in that conference, we appreciate how complicated this issue 

can be. 

The simple goal of this law was to level the playing field between 

satellite and cable companies to give consumers greater choice and 

better value. We must bear that principle in mind when working 

on the reauthorization of the legislation this year. 

Most importantly, by permitting local-into-local service, we made 

satellite an even better competitor to cable. A 2002 GAO study requested by Senator DeWine and myself concludes that satellite 

subscribership was 32 percent higher in markets where satellite 

companies offered local broadcast signals. Moreover, satellite subscribers have more than doubled since the passage of the Satellite 

Home Viewer Improvement Act. 

It is therefore essential that we reauthorize the parts of the law 

that are set to expire at the end of this year, and where necessary 

we should tweak the law to further spur competition between cable 

and satellite. One section that will soon expire involves distant network signals. Until local-into-local service is introduced in all 210 

media markets, we should continue to permit distant signals for 

those consumers who are legally entitled to them, and consider extending this privilege to those who were grandfathered in 1999. 

5

We hope that as local-into-local rolls into more markets, this 

issue will become obsolete. After all, local-into-local has been very 

successful in Wisconsin, with local channels being offered in Milwaukee, Green Bay, Madison, and with other markets on the way. 

To further level the playing field for cable and satellite competition and to bring more benefits to consumers, we should let satellite companies retransmit significantly viewed stations into local 

markets on a royalty-free basis. Cable companies have enjoyed this 

privilege for years and it is time to extend this right to the satellite 

industry. By doing so, satellite companies will be able to craft a 

local channel lineup more similar to what cable currently offers. 

We must pass this legislation this year. Indeed, it would benefit 

consumers and satellite companies alike if we acted quickly to reauthorize and improve the Satellite Home Viewer Improvement 

Act. It has worked well, and only a minor tune-up is needed at this 

time. We look forward to working hard to get this bill passed before 

we adjourn. 

I thank you, Mr. Chairman. 

Chairman HATCH. Thank you, Senator. 

We are first going to hear testimony from David Carson, general 

counsel of the Copyright Office. We look forward to hearing your 

perspective as an authority on copyright policy matters. 

Next, we will listen to Charlie Ergen. We welcome you, Mr. 

Ergen, again, founder and CEO of EchoStar Communications Corporation, one of the pioneering forces in satellite-delivered television, a person we have a great deal of respect for. 

Third, we will hear from Bruce Reese, president and CEO of 

Bonneville International Corporation. Mr. Reese is from my home 

State of Utah, the same State that Philo T. Farnsworth came from, 

and we expect you to be just as important as Philo T. Farnsworth 

has been to all of us. 

Senator LEAHY. But with a better picture. 

Chairman HATCH. Yes, a better picture. 

Bruce, we are happy to have you here. We know it is a long trip 

for you, but we also know that this testimony you are about to give 

is important. 

Next, we have Eddy Hartenstein, vice Chairman and board member of the DirecTV Group, from El Segundo, California, the State 

where Philo T. Farnsworth lived when he invented television. So 

we have got to give you credit, Eddy, too. We are glad to have you 

here and appreciate the expertise that you bring to this Committee 

year after year. 

After Mr. Hartenstein, we have Fritz Attaway, executive vice 

president and Washington general counsel of the Motion Picture 

Association of America. I was at Jack’s reception last night, which 

was really good, and appreciate all you folks do down there. 

Fritz now lives in D.C., but he is actually from the State of Idaho 

which, according to some historians, is the State in which Philo T. 

Farnsworth first came up with the idea of inventing television 

while working in a potato field, of all places. 

Senator LEAHY. I have heard you really stretch for some of these, 

Orrin, but my God. 

[Laughter.] 

6

Chairman HATCH. Look, it isn’t just Vermont that is permitted 

to stretch. 

Last but not least, we have John King, president and CEO of 

Vermont Public Television. Now, as far as I can tell, Vermont has 

no connection to Philo T. Farnsworth, although my staff did try to 

come up with one. But we know that Vermont has a beauty all its 

own that doesn’t need television. At least that is what Senator 

Leahy tells me anyway. 

With that, we will go to our first witness, Mr. Carson. 

STATEMENT OF DAVID O. CARSON, GENERAL COUNSEL, U.S. 

LIBRARY OF CONGRESS COPYRIGHT OFFICE, WASHINGTON, 

D.C. 

Mr. CARSON. Thank you, Mr. Chairman, Senator Leahy, Senator 

Kohl. I am pleased to appear before you to present the views of the 

Copyright Office on the extension of the satellite carrier Section 

119 statutory license. 

Statutory licenses represent a complex, detailed area of the law. 

In my written testimony, I have laid out the history and operation 

of the Section 122 and Section 119 statutory licenses covering the 

retransmission of local and distant over-the-air broadcast signals 

by satellite carriers, as well as the Section 111 statutory license 

dealing with retransmission of broadcast signals by cable operators. 

In a nutshell, Mr. Chairman, our message is that if there is one 

piece of copyright legislation that must be enacted this year, this 

is it. Section 119 of the copyright law will expire at the end of this 

year unless it is extended. Failure to extend it would mean that 

millions of subscribers to satellite TV services will lose their access 

to broadcasts of network stations and superstations. While there 

are many differences of opinion as to what the terms and conditions of the statutory license should be, virtually everyone agrees 

that the license should continue. 

Congress and the Copyright Office have had to face the issue of 

extension of this license on two previous occasions in 1994 and 

again in 1999. Our position remains the same. In principle, the 

Copyright Office disfavors statutory licenses. A statutory license 

should be a last resort. The Office strongly favors marketplace solutions. 

On the other hand, the cable compulsory license has been a part 

of the law since 1978 and is permanent. Believing in parity among 

providers, the Office supports reauthorization of the Section 119 license for satellite carriers. While we believe that, in principle, the 

satellite license should continue for as long as the cable license is 

in place, we also believe that we are in a period of transition. 

Issues such as the transition from analog to digital broadcasts 

and the projected expansion of local-into-local service to virtually 

all households mean that only a few years from now it may be necessary to reexamine the terms and conditions of the satellite license again. Therefore, at this point we favor a 5-year extension of 

the Section 119 license. 

During those 5 years, consideration should be given to whether 

the two statutory licensing regimes for cable and satellite should 

continue in existence, and if so, whether they should be harmonized as much as possible, as recommended in the 1997 report 

7

of the Register of Copyrights that at your request, Mr. Chairman, 

reviewed the copyright licensing regimes covering retransmission of 

broadcast signals. 

Although the legislation that you have introduced, Mr. Chairman, is a simple 5-year extension that amends Section 119 only by 

extending its sunset date, we understand that it is likely that the 

legislation that is ultimately enacted will amend Section 119 in a 

number of respects, and we agree that several amendments are advisable. 

We note that the House Subcommittee on Courts, the Internet 

and Intellectual Property has marked up a bill that contains several such amendments, and we anticipate that this Committee will 

consider such amendments as well. Therefore, I would like to spend 

a moment addressing some of these amendments. 

First, we agree that the royalty rates paid by satellite carriers 

need to be adjusted. At a minimum, the royalty fees, which have 

not changed since 1999, should be increased to take into account 

the rise in the cost of living over the past 5 years and should continue to receive an annual cost of living adjustment. It is hard to 

argue against this provision. 

We note, however, that the current royalty fees represent a significant discount—30 percent for superstations and 45 percent for 

network stations—from the marketplace rates determined by a 

Copyright Arbitration Royalty Panel in 1997. Because we strongly 

believe that royalties for the statutory licenses should reflect marketplace rates, we recommend that the royalties be brought back 

to fair market value either by reinstating the CARP determination 

with a cost of living increase or by conducting a new rate-setting 

proceeding based on fair market value. 

There has also been discussion about harmonizing the satellite license with the cable license by permitting a satellite carrier to 

transmit a television station’s signal outside the station’s local 

market and into a locality in which the signal is significantly 

viewed over the air, typically in certain adjacent localities. The 

FCC maintains a list of significantly viewed stations for each locality. 

The amendment proposed in the House would permit transmission of a significantly viewed signal only to households that also 

receive the signal of the local network affiliate under Section 122’s 

local-into-local license. We think this is a reasonable proposal. 

As always, Mr. Chairman, the Copyright Office stands ready to 

assist you in any way as you craft legislation that will reauthorize 

the satellite license. 

Thank you. 

[The prepared statement of Mr. Carson appears as a submission 

for the record.] 

Chairman HATCH. Well, thank you. 

Charlie Ergen, we will turn to you at this point. 

STATEMENT OF CHARLES W. ERGEN, CHAIRMAN AND CHIEF 

EXECUTIVE OFFICER, ECHOSTAR COMMUNICATIONS CORPORATION, LITTLEWOOD, COLORADO 

Mr. ERGEN. Thank you, Chairman Hatch, Senator Leahy, Senator Kohl. On behalf of EchoStar Communications, I want to thank 

8

you for inviting me to testify on the Satellite Home Viewer Improvement Act. 

The reauthorization of SHVIA offers Congress an excellent opportunity to preserve and extend the pro-competitive measures in the 

current Act, as well as to improve the regulatory parity between 

cable and satellite TV providers. While SHVIA has been a good 

first step in addressing the huge disparities between DBS and dominant cable operators, it has not gone far enough. Congress should 

take steps to eliminate those differences and ensure that satellite 

carriers can better compete with cable. 

At the same time, it is important that you not impose new requirements on satellite carriers that might further disadvantage 

our industry relative to the dominant cable providers. I would like 

to suggest a few ways to improve the law. 

The lack of parity in royalty rates and the mechanism for establishing those rates between satellite and cable is a major problem 

for our industry and our customers. First, cable enjoys a permanent compulsory license that includes a permanent copyright structure, but the royalty rates that satellite pays are subject to review 

by Congress every few years, along with the temporary licenses 

that Congress has been enacting since 1988. The lack of permanence fosters great uncertainty. 

Second, the royalty rates under the cable compulsory license are 

calculated according to a statutory formula and may be adjusted 

for inflation only once every 5 years. Satellite carriers, on the other 

hand, have been subject to a process of rate adjustments by Copyright Arbitration Royalty Panel, or CARP. In 1997, this process led 

to excessively high rates that Congress had to step in and reduce. 

Third, while it is difficult to compare the rates that cable and 

satellite carriers pay because of complexities in the cable formula, 

the net effect has been that satellite carriers pay much more than 

cable systems in the majority of cases. There is a simple way to resolve this problem. Whatever rates you decide to impose on satellite carriers, impose the same rates on cable systems as well. A 

regime of uniform rates and a uniform method for adjusting them 

would automatically achieve parity between satellite and cable. 

I strongly urge you not to relegate rate-setting to the new CARP 

process. CARP proceedings are cumbersome and protracted. The 

outcome is uncertain. They hamper business decisions and planning. In addition, the last CARP implemented the statutory standards in a misguided way. It derived excessive rates mainly by looking at the rates paid by cable systems not for the same distant 

broadcast networks, but rather from the most popular cable networks such as CNN and ESPN. 

Among other factors, cable networks give distributors valuable 

ad avails and free time in exchange for the fees they receive. By 

contrast, in the case of distant broadcast networks, satellite carriers are prohibited by the terms of Section 119 licenses from deleting any content. By relegating the rate-setting function to the 

CARP process, you could be paving the path for another unreasonable result where you might have to step in again and try to rectify 

it, as you did in 1999. I urge you not to go down this path. 

As you look forward to renewing SHVIA, I would like the opportunity to talk about a fundamental part of the law that has not 

9

worked well—retransmission consent. The law directed the FCC to 

establish good-faith obligations for retransmission consent bargaining arrangements, but it has not been enough to adequately 

police the unreasonable behavior of several powerful media conglomerates. 

Companies with multiple video programming properties now control many local broadcast stations. In our experience, the retransmission consent negotiations provide those companies with the opportunity every three or 4 years as a condition for retransmission 

to force us to pay for channels that we do not want and our customers do not want to pay for. The good-faith requirement has not 

been effective in preventing such practices and it should be 

strengthened. We do believe that it has some influence on bargaining behavior and, at a minimum, should be preserved. 

Looking to the future, we believe that reauthorization of SHVIA 

offers Congress a unique opportunity to speed up the stalled transition to digital television. Today, 2 years before the transition deadline, we still have a Satellite Home Viewer Act that addresses only 

analog unserved households. Consumers who cannot receive an 

over-the-air HD signal either because a local broadcaster has only 

built a low-power facility or because he has not built any facility 

should be allowed to receive HD via satellite. 

We are now more than 2 years past the May 1, 2002, deadline 

Congress established for local TV broadcasters to convert digital 

signals, and still more than half of the 1,600 broadcasters are not 

providing full-power digital signals. But Congress can stimulate 

local broadcasters to speed up digital transmission by allowing TV 

providers to offer digital high-definition programming to households that are not served with a local over-the-air signal. 

In conclusion, while SHVIA has helped create a more level playing field between cable and satellite, there are many significant differences in the regulatory treatment that affect DBS’ value to consumers. In reauthorizing and revising SHVIA, Congress should 

eliminate those differences so that satellite can compete more vigorously, and impose no new requirements that would further disadvantage us relative to cable competitors. 

We believe you have a unique opportunity with SHVIA to further 

the transition to digital. We hope you will seize it in order to 

achieve the transition policies you have already enacted to benefit 

consumers who are being ill-served by the currently digital delay. 

Thank you. 

[The prepared statement of Mr. Ergen appears as a submission 

for the record.] 

Chairman HATCH. Thank you. 

Mr. Reese, we will turn to you now. 

STATEMENT OF BRUCE REESE, PRESIDENT AND CHIEF EXECUTIVE OFFICER, BONNEVILLE INTERNATIONAL CORPORATION, SALT LAKE CITY, UTAH, ON BEHALF OF THE NATIONAL ASSOCIATION OF BROADCASTERS 

Mr. REESE. Thank you, Mr. Chairman. 

As the legislation process on SHVIA reauthorization has begun, 

in keeping the interests of consumers foremost NAB has attempted 

to work with all affected parties to find reasonable compromises on 

10

a number of thorny issues. In that vein, we endorse the common 

ground we have found to date with DirecTV. We will continue seeking accord as the Senate approaches SHVIA reauthorization. 

As you know, SHVIA contains two compulsory licenses. The first, 

the local-to-local license, allows satellite to deliver local stations to 

local viewers. It has been a tremendous success, allowing many of 

your constituents to receive local news, weather and sports via satellite. DirecTV should be commended for its pledge to provide localto-local in all 210 markets no later than 2008. 

While DirecTV’s aggressive expansion has forced EchoStar to 

move forward with local-to-local carriage, unfortunately in many 

markets EchoStar requires consumers to obtain a second satellite 

dish in order to receive some stations, most often Spanish-language, religious and public stations. We hope Congress ends this 

discriminatory two-dish practice. 

The second license, the distant signal license, has been a recipe 

for abuse. For decades, satellite ignored the rules governing eligibility for distant signals, signing up anyone and everyone willing 

to say they were unhappy with their over-the-air reception. Even 

after broadcasters filed a series of lawsuit—and won, I would add—

EchoStar continues providing illegal service to hundreds of thousands of subscribers. 

A Federal judge recently found EchoStar broke a sworn promise 

to the court by failing to disconnect those illegal subscribers. With 

this sordid record, EchoStar now asks that you expand the distant 

signal license by creating a digital white area. The Committee 

must reject this proposal. 

Let’s dispel some myths being spread about the status of the 

DTV transition. According to the FCC, 1,411 television stations are 

on air in digital today in 203 markets that serve over 99 percent 

of U.S. households. Broadcasters are close to replicating their analog coverage areas, already reaching 92 percent of the populations 

they will be required to serve. 

EchoStar’s assertion that the 771 stations operating at special 

temporary authority power levels are not serving their full market 

area in digital is false and misleading. Many of these digital stations are not only serving their market area, but exceeding their 

analog coverage areas, even at lower authorized power levels. 

While digital white areas would do nothing to stimulate the DTV 

transition, it would have a severe consequence in the few remaining markets where broadcasters are struggling with bureaucratic 

and technical obstacles. 

A couple of examples. Our market, Salt Lake City, covers not 

only the entire State of Utah, but also counties in Wyoming, Nevada and Idaho. To serve viewers in this enormous DMA, Salt 

Lake City stations use 622 translators, more than 90 percent of 

which are licensed to local governments and civic organizations, not 

to the stations. 

Moreover, the FCC has not yet authorized upgrading the translators to digital. Salt Lake City stations have been on the forefront 

of the DTV transition. Our station, KSL, went digital in 1999, 

broadcasting, I would add, Senator Hatch, from Farnsworth Peak, 

continuing your theme, and has been a leader in local digital widescreen news. Utah stations have been active in working with the 

11

industry and the FCC to find a solution to the translator issue. 

Under a digital white area regime, EchoStar would steal our viewers, your constituents, by bringing Los Angeles stations to San 

Juan, Kane and other rural Utah counties. 

The five Vermont television stations spent 7 years working with 

State authorities and other parties to place their DTV facilities at 

a common site atop Mount Mansfield. The stations have also negotiated a new lease with the site owner. These preparations, now 

close to completion, have been further complicated by the difficulties of obtaining the necessary Canadian clearances. If digital 

white area becomes law, EchoStar will siphon off these stations’ 

viewers as well. 

And make no mistake, EchoStar has no intention of returning 

these viewers to their Salt Lake, Burlington, or any other local 

broadcast service. EchoStar’s digital white area scheme would do 

nothing to accelerate the transition. If EchoStar really wishes to be 

a partner in the DTV transition, it should bring local HD signals 

to local television markets. 

Mr. Chairman, since the first Satellite Home Viewer Act was enacted in 1988, Congress has repeatedly affirmed two goals. First, 

the preferred method to provide network programming is through 

local affiliate stations. And, second, importing distant signals 

should only be used as a last resort in extreme circumstances 

where there is no alternative. 

Over the years, EchoStar has repeatedly misused and abused 

this second, last-resort option. I strongly urge the Committee to reauthorize a SHVIA that recognizes the paramount importance of 

localism, takes heed of the mistakes of the analog past, and does 

not repeat those mistakes in the digital future. 

Thank you. 

[The prepared statement of Mr. Reese appears as a submission 

for the record.] 

Chairman HATCH. Thank you so much. 

Mr. HARTENSTEIN. 

STATEMENT OF EDDY HARTENSTEIN, VICE CHAIRMAN, THE 

DIRECTV GROUP, INC., EL SEGUNDO, CALIFORNIA 

Mr. HARTENSTEIN. Chairman Hatch, Senator Leahy, Senator 

Kohl and members of the Committee, my name is Eddy 

Hartenstein. I am the vice Chairman of the DirecTV Group and it 

is my honor to be here today. Thank you for allowing me to testify 

on behalf of DirecTV regarding SHVIA. 

The members of this Committee deserve a great deal of credit for 

their role in creating competition in the subscription television industry. SHVIA, which you helped enacted, extended a compulsory 

copyright license to the retransmission of local television signals 

within each station’s local market, known as local-in-local. This, 

combined with improved technology, has allowed satellite operators 

such as ourselves and EchoStar to offer programming service much 

more comparable to that offered by cable. 

For us, with last week’s launch of our DirecTV 7S spot beam satellite, we will in a matter of days begin the process of providing 

local-into-local service in just over 100 DMAs nationwide. And we 

also have pending in front of the FCC another proposal which will 

12

extend our capacity to reach 130 DMAs as soon as this summer. 

At that point in time, we will be offering local broadcast channels 

in markets serving 92 percent of American television households. 

And in coming years, we plan to continue rolling out the rest of the 

DMAs into the remaining markets. 

In other words, SHVIA has been an extraordinary success and 

we hope Congress will build on its success. But we know SHVIA 

is a complex issue in these complex times, and we realize that with 

today’s world events of last week and going forward, this is a very 

busy legislative session and Congress and this Committee do not 

have a lot of time to act. 

With that realization in mind, and putting things in proper perspective, we have been meeting with representatives of the broadcast industry to see if we could reach some common ground on 

some of the issues associated with SHVIA reauthorization. These 

discussions are still ongoing, but we have been able to agree on 

several basic points. Among them are the following. 

Legislation should extend satellite operators’ ability to import 

distant signals for up to 5 years or longer; permanently would be 

nice, but again we would be willing to settle for 5 years. The legislation should also, subject to some limitations, allow satellite operators to offer the same out-of-market significantly viewed stations 

that cable operators already offer today. 

That same legislation should extend for 5 years the satellite carrier retransmission consent exemption for distant-signal stations, 

and we should extend for the same period of time the provision prohibiting television stations from entering into exclusive retransmission consent agreements. 

The legislation should extend the good-faith negotiating requirement to all distributors and it should provide a mechanism for 

grandfathered distant-signal subscribers to choose between distant 

and local signals. We should also gradually implement a ‘‘no distant where local’’ concept whereby satellite operators can’t offer 

new subscribers distant signals where local-into-local signals are 

available. But in doing so, however, I think we should ensure that 

the legislation allows existing subscribers who have both distant 

and local-into-local to keep them. 

Finally, the legislation should clarify what ‘‘carry one, carry all’’ 

means, and we believe that satellite carriers may not split local 

analog or local digital signals, respectively, in one market between 

two dishes. 

Now, do these principles reflect everything that DirecTV would 

like from a SHVIA reauthorization? Of course not. But all and all, 

we think that these principles represent a reasonable compromise. 

There is, however, another issue to discuss that lies at the heart 

of this Committee’s jurisdiction. 

We are deeply troubled by the prospect of rate increases, particularly if there is no such increase in the rates paid by cable operators. We are also concerned with the prospect of participating in an 

admittedly flawed, distracting, extremely expensive and time-consuming CARP process, and that is a process that cable operators 

are not even subjected to. 

You may hear a lot this afternoon about whether the satellite industry pays more or less in royalty fees than cable. The fact is one 

13

cannot make an apples-to-apples comparison because the two royalty regimes are so very different. So I would take with a grain of 

salt any analysis claiming that cable operators pay more than satellite operators. 

To the extent that copyright-holders are really saying that neither cable nor satellite fees adequately compensate them, I would 

note that Congress must balance the goal of reimbursing copyrightholders with the goal of giving consumers access to programming 

at a reasonable price. 

Most importantly, I would remind the Committee that satellite 

operators control, in aggregate, only about 20 percent of the subscription television market. And in nearly every town in America, 

we compete against a cable operator with at least 70-percent market share. In such a market structure, any effort to raise only satellite royalty rates would be a competitive disaster. If Congress 

truly believes it is time to raise royalty rates, and thus pay TV 

prices, it should do so only in the context of harmonizing the cable 

and satellite royalty rate regimes. 

In conclusion, Mr. Chairman and members of the Committee, I 

would like to thank you for all that Congress has done to nurture 

the satellite industry as a vibrant competitor to subscription television and cable, and with your help we will continue to do this 

and provide the highest quality, best, competitive service to consumers. 

Thank you. 

[The prepared statement of Mr. Hartenstein appears as a submission for the record.] 

Chairman HATCH. Thank you, Eddy. 

Fritz, we will turn to you. 

STATEMENT OF FRITZ ATTAWAY, EXECUTIVE VICE PRESIDENT AND WASHINGTON GENERAL COUNSEL, MOTION PICTURE ASSOCIATION OF AMERICA, WASHINGTON, D.C. 

Mr. ATTAWAY. Thank you, Mr. Chairman, Senator Leahy, Senator Kohl. I appreciate you affording me this opportunity today to 

speak on behalf of content owners, without which, I should point 

out, none of the people at this table would be in business. 

The Satellite Home Viewer Act was enacted in 1988 and extended for 5-year periods in 1994 and 1999. In 1999, in response 

to fierce lobbying by the satellite industry, Congress imposed a substantial discount on market-based compulsory license rates set a 

year earlier by an independent arbitration panel and approved by 

the Copyright Office and the Librarian of Congress. 

These discounts—30 percent for superstation programming and 

45 percent for network and PBS programming—went into effect in 

July of 1999. Since the reduction of royalty rates in 1999, there 

have been no further adjustments of the compulsory license rates. 

In the 5 years since the last extension of the satellite compulsory 

license, the cost of programming that satellite companies license in 

the free market for resale to their subscribers has increased substantially, as have the fees charged by satellite companies to their 

subscribers. The only financial figure that has not increased is the 

compensation provided to owners of retransmitted broadcast programming. 

14

Satellite carriers now pay 18.9 cents per subscriber, per month, 

for all of the programming on a distant independent broadcast station like WGN in Chicago and KTLA in Los Angeles. The satellite 

carriers then sell this programming to their subscribers for many 

times that amount. The royalty rates for the year 2004 should increase to reflect increases that satellite companies have paid in the 

marketplace for comparable programming. 

Some satellite carriers—I say ‘‘some’’ now because Mr. 

Hartenstein was absolutely correct; you cannot compare cable and 

satellite. They are apples and oranges. Any claim that cable systems pay more now than satellite is simply not true. The cable 

compulsory license is so completely different from the satellite compulsory license formula that any attempt at comparison is likely to 

be misleading. As I said, it is comparing apples and oranges. 

But with that disclaimer in mind, let me give you some comparisons. EchoStar charges $34.99 for its basic package that includes 

WGN as a distant signal. It pays 18.9 cents in compulsory license 

royalties. Under the cable formula, it would pay 33.5 cents. 

DirecTV charges $39.99 for its Total Choice package, which includes WGN. It pays 18.9 cents under the satellite compulsory license formula. It would pay 38 cents under the cable formula. 

EchoStar sells its add-on Dish Net Superstation Package, which 

includes five distant independent stations, for an additional $5.99 

a month. It pays 94.5 cents for these five stations under the satellite formula. Under the cable formula, for these same five distant 

independent stations, the cable system in Ogden City, Utah, would 

pay $1.57. The cable system in Provo would pay $2.33. The cable 

system in Salt Lake would pay $1.66. The cable operator in St. 

Johnsbury, Vermont, would pay only $.52, actually less than the 

satellite carrier would pay. But the cable operator in Montpelier 

would pay $2.27, and the cable operator in Burlington, Vermont, 

would pay $5.79. 

The cable operators that we have looked at would pay more than 

satellite would pay. However, the truth is we are comparing apples 

and oranges. I think the point to be made here is that in the past 

5 years, satellite carriers have experienced cost increases. I suspect 

the cost of transponders has gone up, as has the cost of parabolic 

dishes. 

Certainly, the cost of programming on the 100-or-so non-broadcast channels carried by satellite operators has gone up. But in 

none of these cases have the satellite carriers come to the Congress 

and asked for a subsidy. Only in the case of retransmitted broadcast programming do these carriers say that they should be insulated from market forces. 

Mr. Chairman, Senator Leahy, Senator Kohl, by any reasonable 

market analysis the cable compulsory license rates should be adjusted upward. I trust that you will help make that happen. 

Thank you very much. 

[The prepared statement of Mr. Attaway appears as a submission 

for the record.] 

Chairman HATCH. Thank you. 

Mr. King, we will take your testimony last here. 

15

STATEMENT OF JOHN KING, PRESIDENT AND CHIEF EXECUTIVE OFFICER, VERMONT PUBLIC TELEVISION, 

COLCHESTER, VERMONT 

Mr. KING. Thank you, Mr. Chairman, and thank you for inviting 

me to appear today to testify on behalf of the Satellite Home Viewer Extension Act. I would like to thank you and the members of 

your Committee for the work that you have done for satellite viewers, and a special thank you to Senator Leahy for all he has done 

especially in Vermont to get satellite signals to our State. It has 

been extremely important to us. 

Today, I would like to speak to the importance of local-to-local 

satellite carriage for educating, informing and connecting viewers, 

especially in rural States like Vermont. And I will ask help from 

this Committee so that Vermont stations will be available by satellite in Vermont’s two southern counties. 

Vermont Public Television is proud to be a PBS station broadcasting national PBS programming, but what really makes us 

Vermont Public Television is the local programming we produce 

about Vermont’s public affairs, culture, nature and history. 

We are more than a TV station. In our programming and community outreach, we are a unifying force helping Vermonters understand one another and fostering participation in civic life. Although Vermont Public Television operates four transmitters, our 

State’s mountainous terrain makes over-the-air reception difficult, 

particularly in the southern area of the State. 

In Vermont, there are many daily and weekly newspapers, but 

no single statewide newspaper. Public broadcasting and the commercial TV stations are the only statewide media, and access by 

satellite is crucial for all Vermonters. When satellite service began, 

Vermonters embraced it. The one drawback was the absence of 

local channels. There was great excitement 2 years ago when 

EchoStar began offering local channels. Satellite subscription 

spiked and now more than 30 percent of the households in the Burlington DMA have satellite. 

I would like to thank you, Mr. Ergen, for that service. 

Viewers were delighted. One woman from a small town in 

Vermont wrote, quote, ‘‘We are happy to say that as of today we 

now have truly local Vermont TV channels through Dish Network. 

We have felt disconnected and alienated from the State of Vermont 

as far as the news is concerned. Once we heard that local Vermont 

TV, including Vermont Public Television, was available in our 

county, we immediately signed up.’’ 

One of the best features of SHVIA is the ‘‘carry one, carry all’’ 

provision. Vermont Public Television is on EchoStar’s main satellite, along with the four commercial affiliates as part of the local 

channel package. Unfortunately, the good news in 2002 about localinto-local did not apply statewide. Because local service is determined by Nielsen DMAs, Vermont’s two southern counties are excluded, as they lie outside the Burlington DMA. 

Windham County, in the southeast corner, is assigned to the 

Boston DMA, and Bennington County, in the southwest corner, to 

the Albany, New York, DMA. Would-be viewers in those counties 

were surprised to find they couldn’t get Vermont channels, only 

Boston and Albany stations. As good as those stations are and as 

16

interesting as the news from New York and Massachusetts may be, 

Vermonters wanted news, weather, emergency information and 

local public affairs programming from Vermont. 

Last month, EchoStar took a positive step toward bringing southern Vermonters into the community of Vermont viewers. Thanks to 

an agreement between EchoStar and Vermont Public Television, 

EchoStar began offering Vermont Public Television as an a la carte 

channel. This is a good first step, but we think viewers would prefer access to Vermont Public Television as part of a local channel 

package. 

Vermont Public Television and the commercial TV stations are a 

unifying force in our rural State, giving Vermonters information to 

help them to be more knowledgeable, active citizens of their State 

and community. We look forward to the day when all Vermont satellite viewers can see our programs about State government. The 

Speaker of the House in Vermont and the Chair of the Vermont 

Senate Judiciary Committee are both from southern Vermont, and 

we think their constituents should have been able to see their recent appearances on our air. 

We would like all Vermonters to be able to participate in the regular call-in shows we do with the Governor or the members of our 

Congressional delegation. In an election year, statewide TV is essential. I would like Vermont Public Television’s candidate debates 

and public affairs programs and the commercial stations’ news and 

information to reach all Vermonters. I urge this Committee to work 

with the satellite companies on giving all Vermonters access to all 

of their State’s television stations. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. King appears as a submission for 

the record.] 

Chairman HATCH. Well, thank you, Mr. King. 

Let me turn to you, Mr. Reese. Can you discuss the long-term effect on advertising revenues in small markets if we were to allow 

the continual retransmission of distant signals by satellite in areas 

already served by local-to-local retransmission? 

Mr. REESE. I find it interesting that the SHVIA Act and SHVIA 

reauthorization are characterized here as a way to balance the 

playing field between satellite and cable, and that the sort of fundamental communication mechanism, the policy decision that was 

made in this country 80 years ago about the need for local, overthe-air, free broadcasting, is sort of a footnote in this conversation. 

What we as broadcasters have to support in our obligations to 

serve the community is the ability to reach our audiences. There 

is an absolute need that we have access to those people. We are 

grateful to have competition to cable via satellite. We are pleased 

with the results from local-to-local. We look forward to the day 

when satellite and cable will be delivering our digital signals within the markets that we serve. 

But it is extremely important that broadcasters have access with 

their signals to all of the viewers within our area, and the retention of these so-called grandfathered homes is simply not justifiable 

either in terms of retaining the viability of commercial television, 

but more importantly in terms of the public policy, the public safeVerDate 0ct 09 2002 14:47 Aug 19, 2004 Jkt 095309 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\95309.TXT SJUD4 PsN: CMORC
17

ty, the localism situations, the localism policies that underlie the 

Telecommunications Act. 

Chairman HATCH. Would you please comment further on Mr. 

Ergen’s digital white area proposal? Tell me how that would work 

in my home State of Utah. And, of course, I would be happy to hear 

from the rest of you witnesses on that as well. 

Mr. REESE. Well, in the State of Utah, as you very well know, 

despite being the seventh largest State geographically, we are also 

the seventh most urban State in America because so much of the 

population is concentrated in and around the Salt Lake City area, 

with about 90 percent of the land mass of Utah owned by the Federal Government and fairly sparsely populated. 

Beginning 40 years ago, through the combined efforts of the 

State and two legendary broadcasters in Utah, Arch Madison and 

George Hatch, broadcasters there began building translators 

throughout the State of Utah, not because there was a commercial 

benefit to it, because local Salt Lake advertisers receive no benefit 

from viewership in Monticello, Utah, but because there was a feeling that it was important that those people be part of the State, 

that they have access to the news and public safety information 

that comes out of the State capital. 

Those translators—and there are now 622 of them in Utah that 

we know about. They are not licensed generally to the stations, but 

are licensed to county governments, city governments, the Lion’s 

Club, the Rotary Club, in a community that wanted to see television. 

Until we solve the bureaucratic issues related to the transition 

of those translators, which is an issue that is before the FCC and 

that they are moving on, but until we solve all of the technical 

issues related to the main channel transitions, we really don’t get 

to the translator issues. 

What happens if we do a digital white area is that large portions 

of your State might well be watching Los Angeles television stations. It provides no incentive, then, to try and solve this translator 

problem to be able to deliver local Salt Lake City television stations 

into the State of Utah. 

We have local-into-local satellite. There is no need for those people to be able to—they can see Salt Lake City stations now under 

SHVIA. We hope someday to be able to have digital local-into-local, 

in which case those rural viewers would be able to watch digital 

Salt Lake City stations. There is no policy that is benefitted by getting those people watching Los Angeles digital signals. 

Mr. ERGEN. I think it is a little bit different. Our white area proposal is for high-definition television. Through satellite today, every 

square inch of the United States and every consumer in America 

could get HD signals. They could get the football games, the Master’s golf tournament, the Tonight Show, all the things that are 

being broadcast on HDTV public broadcasting. 

Should you be denied that because you live in rural America? 

Should you be denied that because your local broadcaster hasn’t 

put up the signal, even though they were supposed to 2 years ago? 

In fact, in Salt Lake City a majority of broadcasters now are 

leasing their digital spectrum to a service—I think it is called U.S. 

Digital—which is broadcasting, in competition with satellite and 

18

cable systems, channels like ESPN and CNN news. So they are not 

using the signal for HDTV and we don’t have the right to bring 

HDTV in, and the only people we can get it from, broadcasters in 

Salt Lake City, aren’t using it for HDTV. So I think the translator 

issue that Mr. Reese mentioned is a valid issue, but it is a smokescreen in terms of Salt Lake City because they are not doing highdefinition television. 

Having said that, I think that there should be some common 

ground here. You now, we are problem-solvers. We don’t have all 

the solutions and we certainly are willing to enter into dialogue. It 

seems to me that we should have some kind of transition period to 

bring HDTV to the State of Utah until the translator issue can be 

resolved. 

At some point, we need to get spectrum from the FCC, and so 

forth, so that we can do local-to-local HD, and it seems to me that 

we shouldn’t deprive people today. We should speed the digital revolution for HD. We should get the analog spectrum back so it can 

be used by other people to increase productivity in the United 

States. 

It seems to me that we want to open the dialogue. We don’t have 

all the answers and I think there are good points on every side. 

But we do know that consumers aren’t calling us about two dishes. 

Consumers are calling us about why can’t they get HDTV. Consumers are calling us about why they can’t get a network signal 

when it is snowy with an off-air antenna. They are calling about 

a waiver process they don’t understand. Those are things we hope 

this legislation will address. 

Chairman HATCH. Thank you. 

Does anybody else care to comment? 

Mr. REESE. If I could just add, Senator, some stations in Salt 

Lake are cooperating with U.S. DTV. Those stations can, however, 

still broadcast a digital signal. There is the flexibility in the spectrum to do that and to be able to provide this further competition 

to cable and to satellite with Steve Lindsley and U.S. DTV. 

Mr. ERGEN. We are talking about two different things. I am talking about high-definition television and Mr. Reese is talking about 

a digital signal. The digital signal is very similar to the analog signal. It doesn’t go on a wide screen. It doesn’t go on the 16-by-9 with 

all the 1080(i) lines. So that takes the full spectrum. 

I believe, based on everything I have seen, that what we have 

proposed is high-definition television using the full spectrum 

through the 1080(i) that was mandated by Congress. 

Mr. REESE. Which, as I understand it, is what we are still able 

to do while working with Steve Lindsley and U.S. DTV. 

Chairman HATCH. Thank you. My time is up. 

Senator Leahy. 

Senator LEAHY. Thank you, Mr. Chairman. You know, as I was 

listening to some of the openings on this, we are expecting a grandchild in July. We don’t know whether it is going to be a boy or a 

girl, but whatever it is, I think I will name it Farnsworth. It is the 

only way I am going to get into this plan, with apologies to the 

child when the child hears that. 

Chairman HATCH. Well, I want the name ‘‘Philo,’’ as well, you 

know. 

19

[Laughter.] 

Senator LEAHY. Don’t push it. That will be the next one; that will 

be the next grandchild. 

Chairman HATCH. Can you imagine, Philo Leahy? That sounds 

pretty good. It has a ring to it. 

Senator LEAHY. I am not sure it will in Vermont, but that is 

okay. 

Chairman HATCH. I think I am going to start calling you Philo. 

Senator LEAHY. The President has nicknames for all of us, and 

we were out to dinner and somebody asked my wife what his nickname was for me and she said, well, we don’t use that in polite 

company. 

[Laughter.] 

Senator LEAHY. No. Actually, it was very nice. 

Getting back to the subject, Mr. Carson, first off, I just want to 

thank you and the Copyright Office. You come over here so often, 

all of you, and you are so helpful. The hearings are the tip of the 

iceberg. I know the staffs on both sides of the aisle are calling all 

the time, and I have never known a time when the Copyright Office wasn’t ready and able to come right back with answers for us. 

I think in the satellite TV industry, you don’t have to be a genius 

to know that one of the reasons for the growth of it is partly due 

to the availability of local-into-local television, and a lot of that 

came from the work done in this Committee and the House Judiciary Committee. You might have two satellite companies and a 

cable company in an area, and it is great because you get some 

competition and go from there. 

If we do this reauthorization, assuming like most reauthorizations it is not just simply a one-line ‘‘it is hereby reauthorized for 

‘x’ amount of time’’ and we start adding some things, what can we 

do to increase competition in the areas where it now exists? 

Mr. CARSON. Well, Senator Leahy, there are a number of things 

you can think about doing. Actually, in 1997 we made quite a few 

suggestions, including, for example, trying to harmonize the rate 

structures which are very different in the two industries. 

But if your question is, as I understand it, what can you do this 

year in the context of a reauthorization, I think you have to set 

your sights considerably lower. First of all, while we recommend 

that you take a look at the cable regime—and when we are talking 

about harmonization and convergence, we are talking about looking 

at both licenses, not just changing one to look more like the other—

I don’t think anyone is talking about changing the cable regime 

this year. 

What can you do this year? Well, one thing that I mentioned in 

my testimony that you could do would be to deal with the issue of 

the significantly viewed signal. As I mentioned, cable has the ability right now to transmit a signal from an adjacent area when it 

is significantly viewed over the air in a particular locality. 

Most people, I think, who have been discussing reauthorization 

of the satellite license this year have agreed that that is not a bad 

idea with respect to satellite. It helps in terms of convergence. It 

helps in terms of giving satellite the ability to deliver something 

that many customers will want and that they can get from cable. 

20

That may be all you can do this year, really, in that respect, given 

the very limited nature and limited time of the process this year. 

Senator LEAHY. Mr. King, thank you for coming down from 

Vermont this morning to be here. I will probably see you on the 

streets or in the grocery store in Vermont this weekend when I am 

back up there. 

The House Judiciary Committee passed out a bill that addresses 

a problem regarding two northern counties in New Hampshire 

which seem to have very similar situations to the two southernmost counties that you talked about, Windham and Bennington 

counties. The counties in northern New Hampshire are Grafton 

and Sullivan and they are actually in the Burlington designated 

market area, even though our whole State is between there. They 

receive Vermont stations through local-into-local satellite service. 

Under the House bill, a major network station in Manchester, 

New Hampshire, would be able to have its signals offered through 

local-into-local service to those northern New Hampshire counties 

even though they are in the Burlington, Vermont, market. That 

means some New Hampshire residents would be offered both 

WMUR, the Manchester station, and a competing Vermont network 

station. We have to assume that probably they are watching the 

New Hampshire one more. 

Do the same reasons you gave in your testimony about providing 

Vermont station signals to our southern counties apply with equal 

force to permitting a New Hampshire station to serve two northern 

counties in New Hampshire with local-into-local? That is a long 

way around to ask a simple question. 

Mr. KING. I don’t know whether to call you Senator Farnsworth 

or not, but in response to your question, absolutely the logic applies 

equally in my mind to WMUR in New Hampshire in the northern 

counties of Vermont as it does to the southern counties of Vermont 

in terms of Vermont stations. 

People who live in New Hampshire may receive Vermont stations, but clearly our indication from our viewer responses and letters and phone calls and e-mails would indicate that nothing is 

more important to them than local news. And if WMUR serves a 

statewide population, which in most cases I believe it does, then 

the logic would apply and they should be on the dish as well. 

Senator LEAHY. Speaking of calling me Senator Farnsworth, I actually ran into somebody once who called me Senator Tuttle. That 

is a local joke, for those of you who don’t know Vermont. 

I also had somebody come up to me in the Capitol here recently 

who said I looked familiar. I told him I was Pat Leahy, a Senator 

from Vermont, and he looked at me carefully and said, no, no, you 

are not. And I said, well, I will accept that, but why aren’t I? He 

said, well, I have seen him on television; he is about five-two and 

you are about six-four. I said, what if I was a foot shorter? He said, 

oh, you could pass for him easy. 

Mr. Attaway, sometimes we look different wherever we are. 

Mr. Ergen, there has been some question here, and I know you 

have heard this criticism about two satellite dishes to offer the full 

complement of stations. Am I correct that this allowed local-intolocal faster than it would have been otherwise? 

21

Mr. ERGEN. First of all, as you recall, in 1999 all of us were involved, as were you, in legislation for SHVIA. The ‘‘must carry’’ 

passed, which is ‘‘carry one, carry all,’’ and as part of that legislation the compromise was that a two-dish solution was allowed. The 

broadcasters’ lawyers and teams of lobbyists were certainly well 

aware of that; it has been black and white in the law. So we have 

followed the law. 

Every Congressman and every Senator that I have seen since 

1999 has begged us to bring local-to-local to their communities, and 

we have done that. We have done almost twice as many as our 

competitor, DirecTV. In other words, we are the good guys here. 

The only channels that we put predominantly on the wing satellites are channels that do not have local content. In other words, 

they don’t have local news, weather, sports. If it is a religious station, it is exactly the same as a national religious channel. We 

carry Trinity Broadcasting and we carry them on a national basis. 

If there is not capacity available, they have gone on a wing satellite. Only 11 percent of our channels are on wing satellites. Only 

30 percent of our markets require two dishes. So that allows us in 

your case to do Vermont some three or 4 years before maybe 

DirecTV is going to do that. 

So the balance for us had to be do we bring more competition 

with local channels and more local markets? And we are now in 49 

States, Senator, 88 percent of the population. Or do we go to a single-dish solution and do half that number? 

Because it was the law, because it was agreed to by all parties 

in 1999, and because we were encouraged by Congress, we did that. 

It seems to me very punitive to now pass a law that says, 

EchoStar, you did a great job, but now we are going to penalize you 

and you have to retroactively go out and take those customers who 

are on one dish and put them on two-dish markets, or in some 

cases take down local markets. 

I think the solution is to give us a period of time, going forward, 

to be able to implement that. That may require spectrum. It may 

require a new satellite. As you know, it takes probably 3 years to 

build and launch a new satellite and some $250 million. 

We don’t want to be in a two-dish solution. We don’t want any 

broadcaster to be on a second dish, even in local content, but we 

need time to do that. DirecTV, of course, is now against two dishes 

because they are not really a satellite company, solely. They are obviously a broadcaster owned by news corporations. So we are the 

only independent company left. And they don’t have spectrum for 

two dishes. Everything they have ever done has been on a single 

dish because that is the only spectrum they have. 

So we are kind of fighting this. While you may see agreement to 

the left-hand side of me on two-dish, it is rare that Congress would 

pass legislation that is solely directed anti-competitively at one 

company, particularly a company that has done more for local-tolocal than any other company. 

Senator LEAHY. My time is up. I will have some questions for the 

record. The question was raised on HDTV. Are any of you suggesting that you would not be planning to carry HDTV on every 

channel that might have it? I don’t think anybody is suggested 

that, are they? 

22

The reason I ask this is I know I hear some talk about, gee, this 

is great if we give the broadcasters more spectrum so that we can 

have HDTV. And they say, well, if we just send a regular signal, 

of course, we can use that extra bandwidth to use any number of 

commercial things on it. 

Let me ask this question. Is anybody suggesting in their business, assuming they are in the business, that they are not going 

to carry HDTV everywhere it is available? 

Mr. REESE. Mr. Leahy, we are certainly not suggesting that, but 

we need help from the Congress and from the regulatory perspective to make sure that a group not here today, the cable industry, 

and the satellite people carry our digital signals, our HD signals 

when we as broadcasters put them on the air. 

Senator LEAHY. You know, this is a whole new consumer area 

once it becomes available. Senator Hatch and I are old enough to 

remember when the first TV sets started showing up in our homes, 

and then the wonder of color, even though I think RCA carried 

about—it could only be seen by a handful of people, but they started broadcasting more and more programs in color, and then everybody did. And today the rare set is the black-and-white set. 

Thank you, Mr. Chairman. I have some thing I will submit, but 

I just want to compliment you again for holding this hearing. 

Chairman HATCH. Well, thank you, Senator Leahy. We are going 

to keep the record open for questions, and I have a number of questions I am going to submit in writing. 

We are appreciative of all of you being here and for the respective points of view. Mr. Carson, we will particularly pay attention 

to what you suggest to us. You have been terrific through the 

years, and so has the Office. So we just want to compliment you 

on that. 

In closing, I would like to thank all of you witnesses for your testimony today. I think we have had a good, small hearing here, and 

I will look forward to working with interested parties to go ahead 

with legislation this year. I want to mention that I would anticipate fairly quick action on this in our Committee. We have put S. 

2013 on the agenda for the markup tomorrow, and I hope that we 

will be able to move that through Committee within the next couple of weeks. So we need all your suggestions. 

We certainly don’t want to hurt anybody. We want to get this so 

that it works in the best way for everybody. As you know, I take 

particular interest in the Satellite Home Viewer Act. I remember 

when we had to fight that through and it was a very, very difficult 

thing to do. Hopefully, we will have a little easier time this time 

and hopefully we can resolve some of these conflicts that we have. 

If not, we will do the best we can. 

So with that, we will adjourn until further notice. 

[Whereupon, at 3:43 p.m., the Committee was adjourned.] 

[Questions and answers and submissions for the record follow.] 

[Additional material is being retained in the Committee files.]

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