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79–666 2014

SATELLITE VIDEO 101 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMUNICATIONS AND 

TECHNOLOGY 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

FEBRUARY 13, 2013 

Serial No. 113–4 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

(II) 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

RALPH M. HALL, Texas 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Missouri 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

BEN RAY LUJAN, New Mexico 

PAUL TONKO, New York 

(III) 

SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY

GREG WALDEN, Oregon 

Chairman 

ROBERT E. LATTA, Ohio 

Vice Chairman 

JOHN SHIMKUS, Illinois 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

MARSHA BLACKBURN, Tennessee 

STEVE SCALISE, Louisiana 

LEONARD LANCE, New Jersey 

BRETT GUTHRIE, Kentucky 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

JOE BARTON, Texas 

FRED UPTON, Michigan,ex officio 

ANNA G. ESHOO, California 

Ranking Member 

EDWARD J. MARKEY, Massachusetts 

MICHAEL F. DOYLE, Pennsylvania 

DORIS O. MATSUI, California 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

BEN RAY LUJAN, New Mexico 

JOHN D. DINGELL, Michigan 

FRANK PALLONE, JR., NEW JERSEY

BOBBY L. RUSH, Illinois 

DIANA DEGETTE, Colorado 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

HENRY A. WAXMAN, California, ex officio 

(V) 

C O N T E N T S 

Page 

Hon. Greg Walden, a Representative in Congress from the State of Oregon, 

opening statement ................................................................................................ 1 

Prepared statement .......................................................................................... 3 

Hon. Anna G. Eshoo, a Representative in Congress from the State of California, opening statement .................................................................................... 4 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

opening statement ................................................................................................ 5 

Prepared statement .......................................................................................... 5 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 7 

WITNESSES

Eloise Gore, Associate Bureau Chief, Enforcement Bureau, Federal Communications Commission .......................................................................................... 8 

Prepared statement .......................................................................................... 11 

R. Stanton Dodge, Executive Vice President and General Counsel, DISH ......... 18 

Prepared statement .......................................................................................... 20 

Answers to submitted questions ...................................................................... 77 

Jane Mago, Executive Vice President and General Counsel, Legal and Regulatory Affairs, National Association of Broadcasters ........................................ 28 

Prepared statement .......................................................................................... 30 

Answers to submitted questions ...................................................................... 78 

Jennifer Kieley, Director, Government Relations, Association of Public Television Stations, on behalf of Lonna Thompson, Executive Vice President, 

Chief Operating Officer and General Counsel, Association of Public Television Stations ...................................................................................................... 41 

Prepared statement .......................................................................................... 43 

Michael O’Leary, Senior Executive Vice President, Global Policy and External 

Affairs, Motion Picture Association of America ................................................. 48 

Prepared statement .......................................................................................... 50 

Answers to submitted questions ...................................................................... 81 

(1) 

SATELLITE VIDEO 101 

WEDNESDAY, FEBRUARY 13, 2013 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. 

The subcommittee met, pursuant to call, at 10:32 a.m., in room 

2322 of the Rayburn House Office Building, Hon. Greg Walden 

(chairman of the subcommittee) presiding. 

Members present: Representatives Walden, Latta, Shimkus, 

Terry, Scalise, Lance, Gardner, Pompeo, Kinzinger, Long, Ellmers, 

Barton, Upton (ex officio), Eshoo, Welch, Luja ́n, Pallone, and 

Matheson. 

Staff present: Gary Andres, Staff Director; Ray Baum, Senior 

Policy Advisor/Director of Coalitions; Sean Bonyun, Communications Director; Andy Duberstein, Deputy Press Secretary; Neil 

Fried, Chief Counsel, C&T; Debbee Hancock, Press Secretary; Nick 

Magallanes, Policy Coordinator, CMT; David Redl, Counsel, 

Telcom; Charlotte Savercool, Executive Assistant, Legislative 

Clerk; Lyn Walker, Coordinator, Admin/Human Resources; Roger 

Sherman, Democratic Chief Counsel; Margaret McCarthy, Democratic Staff; Patrick Donovan, FCC Detailee; and Kara Van Stralen, 

Democratic Special Assistant. 

OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON 

Mr. WALDEN. OK, we will call to order the Subcommittee on 

Communications and Technology for our hearing on Satellite Video 

101. I know we had to move this hearing up from an earlier scheduled time because of some shifts in our scheduling, so we appreciate your response to this hearing on such a short time notice. And 

again, this is meant to be an educational hearing, meant to be Satellite Video 101. There will be other hearings where I am sure 

there will be a lot of vibrant discussion about what we should do 

going forward. But I thought it was important for the subcommittee to be able to understand the issues and intent with this 

legislation, and what we should or should not do going forward. So 

we welcome certainly all of our witnesses today and appreciate 

your willingness to come on short notice. 

SHVA, SHVIA, SHVERA, and STELA. This law has been known 

by a lot of different names, and many of those acronyms, I am told, 

strike fear into the hearts of some, and some, I am sure, wish they 

could turn back to Punxsutawney Phil after seeing his shadow. I 

prefer to see, as Phil did this year, signs of an early spring. 

2 

We have an opportunity with our partners in the Judiciary Committee to examine whether the satellite law is still serving its purpose in a video market that, frankly, would be unrecognizable to 

those who worked on the original legislation back in 1988. I won’t 

ask for a show of hands of those who did that, but I know at least 

somebody at the FCC has been involved in all of these. Broadcasting has gone digital. Satellite television is no longer a nascent 

industry. Phone companies, wired and wireless, are in the video 

business. Consumers can stream and download their favorite shows 

over the Internet. Viewers have more choices, and more expectations, than ever before. Companies are trying to keep up: launching 

new services; embarking on spin-offs, mergers, and partnerships. 

We have read in the last day or so, Comcast, NBC Universal, all 

coming together. Intel proposing a new service of video, and experimenting with new business models to meet consumer demand in a 

new and competitive reality. Our laws are also trying to keep up 

in a world where traditional classifications and regulations that 

emanate from them seem increasingly strained. 

The goal, of course, is to provide consumers more of what they 

want while ensuring companies have the investment resources to 

get it to them. Can we better ensure television viewers have access 

to the broadcast programming of their choice while respecting the 

rights of stations that transmit it over the air and the networks 

that create it? Would finally letting the law expire help that cause? 

Is it better to reauthorize it as is, or are revisions called for, either 

narrow or sweeping? Is there something we can do to address the 

ongoing frustration viewers have who find themselves assigned to 

‘‘local markets’’ that are outside their states or who live in places 

that don’t have a full complement of network affiliates? 

Today we are going to set the table for this discussion by examining the current state of satellite television law. This is perhaps 

the most arcane and complicated area of law we confront in this 

subcommittee, other than Universal Service Fund reform, of 

course. That is why I thought it wise to start early, giving us ample 

time to hear from all parties in advance of the December 31, 2014, 

sunset that applies to some of the existing provisions. Rest assured, 

we will have several more hearings, providing additional opportunity to consider not only the satellite issues directly before us, 

but also affording time to those who would ask us to take this opportunity to revisit other areas of communications law. 

I look forward to hearing from our witnesses today. I am particularly pleased to welcome Eloise Gore, associate bureau chief of the 

FCC’s Enforcement Bureau. And as I said, my understanding is 

this could be your fourth reauthorization while at the Commission, 

if we do in fact reauthorize the law. I want to thank you for you 

willingness to share your expertise. It is most helpful. I also want 

to set some ground rules. Ms. Gore is in a position to share her 

considerable knowledge on how the law operates and perhaps even 

on what may be working and may not. She will not, however, be 

making policy recommendations on how the law should change, so 

please don’t ask her to do that. That is a pleasure reserved for us 

on this dais and in the Congress, in consultation with our constituents back home and those in the television business who can help 

3 

us create an environment that entertains, informs, and creates 

jobs. 

[The prepared statement of Mr. Walden follows:] 

PREPARED STATEMENT OF HON. GREG WALDEN

In a tradition we’ve been observing every 5 years or so for a quarter century, 

today we begin discussing the law authorizing satellite video providers to distribute 

broadcast television signals. It is important we do these period look-backs. 

SHVA. SHVIA. SHVERA. STELA. These are acronyms that strike fear into the 

hearts of many. Some, I’m sure, wish they could turn back like Punxsutawney Phil 

after seeing his shadow. I prefer to see, as Phil did this year, signs of an early 

spring. 

We have an opportunity with our partners in the Judiciary Committee to examine 

whether the satellite law is still serving its purpose in a video market that would 

be unrecognizable to those who worked on the original legislation in 1988. Broadcasting has gone digital. Satellite television is no longer a nascent industry. Phone 

companies, wired and wireless, are in the video business. Consumers can stream 

and download their favorite shows over the Internet. Viewers have more choices-and 

more expectations- than ever before. Companies are trying to keep up: launching 

new services; embarking on spin-offs, mergers, and partnerships; and experimenting 

with new business models to meet consumer demand in a new competitive reality. 

Our laws are also trying to keep up in a world where traditional classifications and 

the regulations that emanate from them seem increasingly strained. 

The goal, of course, is to provide consumers more of what they want while ensuring companies have the investment resources to get it to them. Can we better ensure television viewers have access to the broadcast programming of their choice 

while respecting the rights of stations that transmit it over the air and the networks 

that create it? Would finally letting the law expire help that cause? Is it better to 

reauthorize it as is? Or are revisions called for, either narrow or sweeping? Is there 

something we can do to address the ongoing frustration viewers have who find 

themselves assigned to ‘‘local markets’’ outside their states or who live in places that 

don’t have a full complement of network affiliates? 

Today we are going to set the table for this discussion by examining the current 

state of satellite television law. This is perhaps the most arcane and complicated 

area of law we confront in this subcommittee. That is why I thought it wise to start 

early, giving us ample time to hear from all parties in advance of the December 31, 

2014, sunset that applies to some of the existing provisions. Rest assured, we will 

have several more hearings, providing additional opportunity to consider not only 

the satellite issues directly before us, but also affording time to those who would 

ask us to take this opportunity to revisit other areas of communications law. 

I look forward to hearing from our witnesses. I am particularly pleased to welcome Eloise Gore, associate bureau chief of the FCC’s Enforcement Bureau. My understanding is this will be her fourth reauthorization while at the Commission, if 

we do in fact reauthorize the law. I want to thank her for her willingness to share 

her expertise. I also want to set some ground rules. Ms. Gore is in a position to 

share her considerable knowledge on how the law operates and perhaps even on 

what may be working and what may not be. She will not, however, be making policy 

recommendations on how the law should change. That is a pleasure reserved for us 

on this dais and in the Congress, in consultation with our constituents back home 

and those in the television business who can help us create an environment that 

entertains, informs, and creates jobs. 

# # # 

Mr. WALDEN. I would turn now to the vice chairman of the committee, Mr. Latta, for the remaining amount of my time. 

Mr. LATTA. I appreciate the chairman for yielding, and I also 

thank our distinguished panel for being here today. 

I believe that today will be the beginning of a thoughtful and 

productive policy process. We have important issues in the satellite 

TV industry, as the chairman said, before us, which we all know 

need to be addressed by the end of next year when the Satellite 

4 

Television Extension Localism Act of 2010, STELA, expires. I also 

look forward to a thorough discussion among our subcommittee 

members, stakeholders, and consumers as we grapple with the 

issues in STELA and others stemming from our decades of communication and cable laws. 

Mr. Chairman, I look forward to the hearing today and hearing 

from our witnesses on this subject, and I yield back the remainder 

of my time. 

Mr. WALDEN. I thank the gentleman. 

I now turn to the distinguished ranking member of the subcommittee, Ms. Eshoo, for 5 minutes in an opening statement. 

OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Ms. ESHOO. Thank you, Mr. Chairman. Good morning to you, to 

all the members of the subcommittee, and most importantly, our 

witnesses. I might note that in my memory, I think this is the first 

time I am looking at a panel where the majority of those that are 

testifying are women. So congratulations, and welcome. 

Mr. Chairman, less than 3 years ago, Congress passed and the 

President signed into law the Satellite Television Extension and 

Localism Act of 2010, STELA. Ms. Gore, maybe that is your—we 

should rename you, give you that as your first name. I am pleased, 

as the chairman is, and other members, that we are starting this 

discussion of reauthorization early, and only to ensure that we 

have adequate time to work through all the relevant issues, the 

new ideas that come forward, but also for the benefit of the several 

new members of our subcommittee, and that is very important so 

that the level of understanding is brought up, so that we are all 

up to speed on this. 

The estimate of one analyst today is that because of STELA, between one and one-and-a-half million satellite subscribers who live 

in areas where a signal from the local network affiliate is not possible now have access to broadcast programming. These satellite 

subscribers also enjoy the benefits of public television stations, 

multi-digital signals, as well as their HD transmission, ensuring 

that consumers from all states have the opportunity to view publically funded programming, one of my all-time favorites, so I am— 

I think that it is important to underscore that. 

While my preference is to pursue a clean reauthorization of 

STELA, there will no doubt be other video-related topics raised 

over the course of this Congress, and chief amongst my concerns 

are the programming disruptions that consumers experience when 

retransmission disputes break down. Simply put, consumers should 

not be held hostage when negotiators fail to come to an agreement. 

These high profile disputes have impacted millions of Americans, 

often prior to or during highly watched programming, such as the 

2010 World Series. That simply is not acceptable. I mean, where 

are the adults in the room kind of thing. Our constituents all pay 

the price for it. 

I am fascinated by the emergence of new video services, such as 

Skitter and Sky Angel. These companies challenge existing business models, which is disruptive but very important, and they proVerDate Nov 24 2008 15:06 Feb 24, 2014 Jkt 037690 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-4 CHRIS
5 

vide a new means of delivering traditional broadcast or cable content into the homes of consumers. I think these services can contribute to the establishment of a vibrant video marketplace that 

promotes both consumer choice and competition. 

So today’s panel of witnesses offer, and will offer, a wealth of 

knowledge to us, spanning from the FCC to a cross section of impacted industries, including broadcast, satellite, and content. I 

thank each witness in advance of their testimony, and for working 

with us to reauthorize STELA. 

I yield back the balance of my time, and thank you, Mr. Chairman. 

Mr. WALDEN. Thank you. I now recognize the distinguished 

chairman of the full committee, the gentleman from Michigan, Mr. 

Upton. 

OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. UPTON. Well thank you, Mr. Chairman. It is hard to believe 

that the time has already come to revisit the satellite TV legislation. For members on this committee, it has almost become a right 

of passage. 

Americans now have an endless amount of content available to 

them and the technology at their fingertips to watch it at almost 

any time, anywhere, and on any device. Our job is to create an atmosphere where they can do so in a way that respects the investments of the companies that create and distribute that content, as 

well as the underlying economics necessary to make those businesses work. We need to do our very best to make sure that our 

laws don’t prevent willing producers of programming to strike arrangements with willing distributors to reach interested viewers. 

Issues surrounding this particular law are by no means easy to 

grapple with, but it is important that we do so. The competitive 

landscape has evolved significantly in the video marketplace, and 

we must ensure our laws are having their intended effect. If they 

are no longer needed, they need to be eliminated. If they are missing the mark, they should be revised. If they are working well, we 

should leave them alone. But periodic oversight is essential to 

make that determination. It is particularly true of all laws in the 

communications sector. Technology is changing this industry at an 

astonishing rate, and we must work to ensure that our laws keep 

pace, fostering continued growth, particularly in the innovation 

area. Indeed, while it certainly makes for more work, we should 

consider using the sunset provisions perhaps a little bit more often. 

I look forward to the testimony and the interaction, and yield 

and offer my time to Mr. Scalise. 

[The prepared statement of Mr. Upton follows:] 

PREPARED STATEMENT OF HON. FRED UPTON

It’s hard to believe the time has already come to revisit the satellite television 

legislation. For the members on this committee, it has almost become a rite of passage. 

Americans now have an endless amount of content available to them and the technology at their fingertips to watch it almost at any time, anywhere, and on any device. Our job is to create an atmosphere where they can do so in a way that respects 

the investments of the companies that create and distribute that content as well as 

6 

the underlying economics necessary to make those businesses work. We should do 

our best to make sure our laws do not prevent willing producers of programming 

to strike arrangements with willing distributers to reach interested viewers. 

The issues surrounding this particular law are by no means easy to grapple, but 

it is important we do so. The competitive landscape has evolved significantly in the 

video marketplace, and we must ensure our laws are having their intended effect. 

If they are no longer needed, they should be eliminated. If they are missing the 

mark, they should be revised. If they are working well, we should leave them alone. 

But periodic oversight is essential to making that determination. 

This is particularly true of all the laws in the communications sector. Technology 

is changing this industry at an astonishing rate, and we must work to ensure our 

laws keep pace, fostering continued growth in the innovation era. Indeed, while it 

certainly makes for more work, we should consider using sunset provisions more 

often. 

But these are larger questions to discuss along the way. The focus of today’s hearing is what the law requires now. I look forward to the testimony. 

# # # 

Mr. SCALISE. Thank you, Mr. Chairman, for yielding, and I will 

just make a couple of observations at the outset of the hearing. 

It is clear that based on some of today’s written testimony that 

as much as there is somewhat a focus only on the expiring narrow 

satellite provisions, there is also an interest in raising other interconnected issues, like additional compulsory licenses, retransmission consent rules, and regulations that govern negotiations between broadcasters and pay TV providers. If stakeholders want to 

describe the various compulsory copyright licenses of 1976 and 

1988 as relics or anachronistic, which I will be the first to agree 

with, then I am sure they would also agree that the same is true 

of the 1992 Cable Act. The truth is that there is a litany of regulations still burdening the video marketplace that have been piled 

one on top of the other over the years. So much has changed in the 

video distribution since the days before the commercialization of 

the Internet, and it is time that we recognize this fact. 

So I welcome this expanded conversation, appreciate our panelists for coming, and look forward to the hearing. I yield back. 

Mr. WALDEN. You said Mr. Barton wanted some time? 

Mr. BARTON. Well, I have been here long enough to remember 

before we had the Satellite Home Viewer Act. I just purchased a 

new home down in Texas. It was—if it was a car dealer, it would 

be a pre-owned home. And back in the back yard is one of these 

huge satellite dishes that could get the signal from the satellite directly, not through Dish or anything like that. I have no idea what 

it is worth. I have tried to figure out a way to salvage it and perhaps sell it for scrap. But I bet when that satellite dish was purchased, they probably paid $5,000 to $10,000 for it. 

Well today we don’t need it, and we are here for the second or 

third reauthorization of the Satellite Home Viewers Act. It is good 

we are doing this ahead of time. I want to commend the subcommittee chairman and the full committee chairman for moving 

to reauthorize something before it is expired. That is a good thing. 

It appears we are going to have a bipartisan hearing and a bipartisan reauthorization. I supported the original legislation. I have 

supported all the reauthorizations, and I look forward to a similar 

situation in this committee in the near future. 

With that, Mr. Chairman, I yield back. 

7 

Mr. WALDEN. Gentleman yields back. Anyone else on Republican 

side seeking time? If not, we will move on then to our witnesses. 

Before we do that, Mr. Waxman is not able to be with us at this 

hearing this morning. I do have his opening statement which I 

would ask unanimous consent to be allowed to be put into the 

record. Without objection, so done. 

[The prepared statement of Mr. Waxman follows:] 

PREPARED STATEMENT OF HON. HENRY A. WAXMAN

Today’s hearing marks the beginning of the Energy and Commerce Committee’s 

consideration of reauthorization and updates to the Satellite Television Extension 

and Localism Act of 2010 or STELA. 

STELA is the most recent in a series of laws that permit satellite providers to 

offer broadcast programming to their subscribers. Americans across the country 

have benefited from these actions taken by Congress. 

We have fostered the development of satellite as a viable competitor in the video 

market, preserved and expanded access to local broadcast content, and ensured compensation for the creators whose work compels consumers to seek out these video 

services in the first place. 

Many of our members are new to this Committee since our last consideration of 

these issues during the 111th Congress. Under the leadership of former subcommittee Chairman Rick Boucher, our committee’s consideration of STELA was a 

bipartisan legislative effort from start to finish. 

Although STELA was the work product of two committees, I was especially proud 

of the fact that the provisions within Energy and Commerce jurisdiction were completed on time and without controversy. Chairman Walden, it is my hope that our 

work this Congress will proceed in the same bipartisan manner. 

We began our efforts in the 111th Congress with the expectation that Congress 

would pursue a clean reauthorization of the expiring provisions of the law. Even 

with that limited scope, however, the reauthorization was not completed in a timely 

manner. 

Some stakeholders have suggested that Congress examine broader issues in the 

video marketplace as part of the reauthorization. I am open to those conversations, 

but I urge my colleagues to recognize what a complicated task we have ahead of 

us and to be wary of getting sidetracked by disputes about other topics. 

Thank you to our panel of witnesses for appearing today. We look forward to your 

testimony and your continued engagement as we move forward with our consideration of this reauthorization. 

Mr. WALDEN. Now we will turn to our witnesses. Again, we want 

to thank you for putting together your testimony and being able to 

be here on short notice. We are going to start with Ms. Eloise Gore, 

the Associate Bureau Chief of the Enforcement Bureau, Federal 

Communications Commission. Ms. Gore, thank you very much for 

being here. Slide that microphone close and turn it on, and the 

show is yours for the next 5 minutes. 

8 

STATEMENTS OF ELOISE GORE, ASSOCIATE BUREAU CHIEF, 

ENFORCEMENT BUREAU, FEDERAL COMMUNICATIONS COMMISSION; R. STANTON DODGE, EXECUTIVE VICE PRESIDENT 

AND GENERAL COUNSEL, DISH; JANE MAGO, EXECUTIVE 

VICE PRESIDENT AND GENERAL COUNSEL, LEGAL AND REGULATORY AFFAIRS, NATIONAL ASSOCIATION OF BROADCASTERS; JENNIFER KIELEY, DIRECTOR, GOVERNMENT RELATIONS, ASSOCIATION OF PUBLIC TELEVISION STATIONS, 

ON BEHALF OF LONNA THOMPSON, EXECUTIVE VICE PRESIDENT, CHIEF OPERATING OFFICER AND GENERAL COUNSEL, ASSOCIATION OF PUBLIC TELEVISION STATIONS; AND 

MICHAEL O’LEARY, SENIOR EXECUTIVE VICE PRESIDENT, 

GLOBAL POLICY AND EXTERNAL AFFAIRS, MOTION PICTURE 

ASSOCIATION OF AMERICA 

STATEMENT OF ELOISE GORE 

Ms. GORE. There we go. 

Mr. WALDEN. There we go. 

Ms. GORE. Very good. Chairman Walden, Ranking Member 

Eshoo, and members of the subcommittee, thank you for the opportunity to appear before you today. I am currently the Associate Bureau Chief for the Enforcement Bureau at the FCC, but for most 

of my FCC career, I was in the Media Bureau, where my responsibilities included the Satellite Home Viewer Act, SHVA, and its 

progeny, SHVIA, SHVERA, and STELA. I was pleased to provide 

technical assistance to Congress on these reauthorization bills, as 

well as spearheading the implementation of the enacted laws. I appreciate the chance to participate with the subcommittee and my 

fellow panelists this morning in Satellite Video 101 to refamiliarize 

ourselves with the legislative and regulatory structure we have in 

place. 

My written statement provides a board overview of the statutory 

changes made by the previous reauthorization and the expiring 

provisions. I would like to spend my brief time this morning outlining how the current rules apply to consumers. 

As noted in my written statement, my views are my own, and I 

am very happy to provide technical assistance, but will respectfully 

decline to provide any opinions on suggested modifications. 

STELA and its predecessors govern satellite delivery of broadcast 

television to satellite subscribers and treat local and distant broadcast stations in different ways. Local channels are the stations that 

are assigned to the designated market area, DMA, in which the 

subscriber resides, based on designations by the Nielson Media 

Company. My outstanding colleague, Laurie Robier, will hold up 

the map, which is a precious commodity, I must tell you. Thank 

you, Laurie. Nicely done. 

Distant signals are those stations that are assigned to a different 

DMA from the one in which the subscriber resides. SHVIA created 

local into local service in 1999. Initially, the two satellite providers 

offered the local stations in fewer than 40 out of the 210 DMAs. 

Now they have increased their local market offerings so that nearly 

all subscribers in the 210 designated market areas have access to 

the local station package from one or both satellite carriers. DISH 

9 

provides service to all 210; DirecTV, I believe, provides service to 

196 of the markets. 

The local stations available to satellite subscribers are essentially 

limited to the stations designated for the DMA, although there are 

some additional options in certain circumstances, such as significantly viewed stations or distant stations that can be used to fill 

in what we call a short market, where there are not four of the top 

four networks available over the air. There are certain areas in the 

country in which Congress provided a special exception to allow 

carriage of additional signals in the local market. 

Distant signals are generally available only to satellite subscribers who are unserved by an over-the-air signal and for whom 

the local into local stations are not available. We call this no distant where local. This being 101, I will try to describe some of the 

little terminology that you will hear us use. Local into local, no distant where local, DMA. Unserved means that the subscriber’s 

household cannot receive the over-the-air signal of a local network 

station with sufficient signal strength. Notwithstanding the principle of no distant where local, some subscribers have been statutorily grandfathered as the eligibility rules have changed in successive reauthorizations. Some of the grandfathered subscribers may 

keep the distant signals, others may, at some point, be required to 

relinquish the distant signals, and some subscribes who are outside 

the satellite’s spot beam, and therefore unable to receive the local 

package, may also be eligible for distant signals. Distant signal 

subscribers are limited to no more than two network affiliated signals from each broadcast network, and time shifting may be limited based on the subscriber’s local time zone. The subscriber cannot specify which distant signals he or she wishes to receive. Further, the satellite carrier is only permitted to provide distant signals if it complies with the requirement to provide the networks 

with lists of the subscribers who are receiving distant signals. 

If the local stations are not available to a subscriber via satellite, 

the subscriber may request distant signals through his or her satellite carrier. The carrier determines whether the subscriber is considered served or unserved by using a computer model that predicts the signal strength at the subscriber’s household. Satellite 

carriers use a computer model designed by the Commission. It is 

called the ILLR computer model, but the Commission is not involved in making individual predictions. If the model determines 

the household is unserved, that is, the signal strength is too low 

from the broadcast station, the satellite carrier is permitted to provide distant network signals to the household. If the model predicts 

that the household is served by a particular local network station 

over the air, the household is not eligible for distant signals for 

that network. The subscriber may request waivers from each of the 

local stations that are predicted to serve the household in order to 

be eligible for distant signals. Waivers are requested through the 

satellite carrier and the local broadcast station must accept or reject a waiver request within 30 days. If a local station denies the 

waiver request, the subscriber can request a signal test to measure 

the actual signal strength of the over-the-air signal. 

Finally, the law allows satellite carriers to provide distant signals to subscribers in some other situations, such as recreational 

10 

vehicles, commercial trucks, or C-band satellite receivers. Mr. Barton, your C-band may be useful yet. 

Thank you for inviting me to participate in today’s hearing. I 

look forward to assisting the committee as it begins this reauthorization process, and would be happy to take your questions. Thank 

you so much. 

[The prepared statement of Ms. Gore follows:] 

11 


79666.001

INTRODUCTION 

Statement of Eloise Gore 

Associate Bureau Chief 

Enforcement Bureau 

Federal Communications Commission 

Before the 

Subcommittee on Communications and Technology 

Committee on Energy and Commerce 

U.S. House of Representatives 

Satellite Video tol Hearing 

February 13, 2013 

Thank you for the opportunity to appear before you today. I am currently the Associate 

Bureau Chief for the Enforcement Bureau at the Commission. but for most of my FCC career I 

was in the Media Bureau where my responsibilities included the Satellite Home Viewer Act 

(SHV A) and its progeny SHVIA. SHVERA. and STELA. I was pleased to provide technical 

assistance to Congress on these reauthorization bills. as well as spearheading the implementation 

of the enacted laws. All of these activities have given me an extensive background on the 

relevant laws and corresponding rules. 

I appreciate the chance to participate with the Subcommittee and my fellow panelists this 

morning in Satellite Video 101 to refamiliarize ourselves with the legislative and regulatory 

structure we have in place. My goal today is to provide you with a broad historical background 

regarding Congressional action since the enactment of SHY A. I will briefly discuss the 

provisions in the most recent reauthorization, the Satellite Television Extension and Localism 

Act of 201 0 (STELA), particularly those that will expire next year. Finally, I will try to provide 

some insight into how the rules currently operate for consumers. The views expressed in my 

statement are mine, and not those of the Federal Communications Commission. Additionally, my 

appearance before the Committee is limited to providing an overview of the current state of the 

law, as well as technical assistance, but not to opine on any possible or proposed policy or 

legislative changes. 

HISTORY OF SATELLITE TV LAW 

It has been nearly 25 years since Congress first established a statutory copyright license 

to allow satellite carriers the ability to provide consumers with broadcast programming via 

satellite. SHVA and subsequent reauthorizations amend provisions in the Communications Act 

and in the copyright statute. Title 17. My comments today focus on the Communications Act 

and rules, but it is important to bear in mind that the statutory provisions are interdependent. 
12 


79666.002

As I recall, at the time of SHY A, satellite carriers had technological limitations in the 

number of broadcast channels they could deliver to their subscribers. SHVA was intended to 

provide a means for offering the broadcast network programming while protecting the role of 

local broadcasters. SHVA thus limited satellite delivery of network broadcast programming to 

subscribers who were "'unserved" by over-the-air signals. It also pennitted carriers to offer 

distant "'superstations" to subscribers. "Unserved" was defined as a household that did not 

receive an over-the-air signal of a particular signal strength from any station affiliated with a 

particular network. SHVA endorsed the Commission's computer mode! that predicts signal 

strength at a specific location, now known as the Individual Location Longley-Rice (or ILLR) 

predictive model. The predictive model was coupled with a process by which a subscriber who 

was predicted to be served could request a waiver from the relevant local stations, and, if the 

waiver was denied, could request an actual signal test. 

The Satellite Home Viewer Improvement Act of 1999 (SHVIA) expanded opportunities 

for consumers by creating a framework for satellite carriers to retransmit local broadcast signals 

directly to subscribers through a ncw local signal copyright license commonly known as 

"Iocal-into-local" service. Beginning with SHVIA and continuing today, "local stations" are 

determined based on the Nielsen Designated Market Areas (DMA) and typically by reference to 

the DMA map. In contrast to the "must carry" requirements that apply nationwide to cable 

service, Congress requires satellite operators to carryall qualified local stations on a market-bymarket basis (using DMAs) only if the satellite carrier opts to carry any local station in the 

market by reliance on the statutory copyright license. This is known as the "carry one, carryall" 

requirement. i The Commission implemented SHVIA by adopting rules for satellite carriers with 

regard to carriage of broadcast signals, retransmission consent, and program exclusivity. These 

rules are comparable to the requirements for cable service. 

In addition to introducing the legislative and regulatory mechanism by which satellite 

carriers can offer "'local" stations (0 subscribers, SHVIA also maintained the mechanism for 

unserved subscribers to receive distant network stations, with a few tweaks to the waiver and 

testing protocol and still with reliance on the Commission's predictive model in the first 

instance. 

In 2004, Congress continued to expand and develop parity between satellite and cable 

services when it enacted the Satellite Home Viewer Extension and Reauthorization Act 

(SHVERA) and provided the framework for satellite carriage of "'significantly viewed" stations. 

Significantly viewed stations are those that technically are distant signals i.e. assigned to 

another DMA but historically had "significant" over-the-air viewing in specific communities or 

counties in a neighboring DMA. The Commission has maintained a "significantly viewed" list 

since the 1970's. In addition, if a station meets the significantly viewed criteria for a particular 

1 Satellite carriers are allowed to exclude from their local-into-local service stations that are duplicative or 

stations that fail to provide a good quality signal to the satellite caITier's local receive facility. Satellite 

subscribers are not generally required to subscribe to the local-into-local package. 

2 
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79666.003

community or county, it can petition the Commission to be added to this list. Carriage of such 

stations is voluntary on the part of the satellite carriers and requires the retransmission consent of 

the significantly viewed station. Only subscribers in the specific community or county who 

subscribe to the local-into-local service are eligible to receive the significantly viewed station 

from out of market. SHVERA also imposed additional restrictions on the carriage of digital 

significantly viewed stations requiring that the local station affiliated with the same network is 

provided in the same format. 2 

In addition to the significantly viewed provisions. Congress also modified the statutory 

language to account for various digital television transition issues, imposed the good-faith 

bargaining requirements for retransmission consent negotiations on multichannel video program 

distributors, and provided for some exceptions to the distant copyright license for certain areas of 

the country. 

STELA is the most recent iteration in the series of statutes that address satellite carriage 

oftelevision broadcast stations, enacted in 20 10. In addition to reauthorizing the expiring 

provisions of law, the major provisions of STELA include changes to the significantly viewed 

provisions enacted in SHVERA to promote use of the statutory provisions and provide additional 

choices for subscribers. 3 Congress also modified the Jaw to account for the terrestrial digital 

television transition that occurred in 2009 by requiring the Commission to establish a digital 

signal predictive model and to revise its measurement procedures for determining eligibility for 

subscribers to receive distant digital signals.4 Congress also specified how multicast signals 

would be treated and introduced the concept of "short" markets, that is DMAs with fewer than 

four of the most widely viewed networks. Additionally. Congress required the Commission to 

provide a report to Congress regarding the availability of in-state programming for those 

counties that are assigned to a DMA that is comprised mostly of stations that are licensed to a 

different state. 

2 There were two exceptions to these restrictions on the carriage of significantly viewed stations - (l) 

satellite carriers could provide a significantly viewed station in areas where there was no local affiliate 

station; and (2) satellite carriers could negotiate a waiver with the local affiliate with regards to carriage 

of a significantly viewed station. 

3 Congress also moved the corresponding copyright provisions for significantly viewed stations from the 

distant signal copyright license to the local signal copyright license. 

4 Congress revised the definition of "unserved household" to eliminate a specific reference to "outdoor" 

antennas. The Commission rulemaking detennined that from an engineering and technical perspective, 

consideration of an outdoor measurement remains preferable. 

3 
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79666.004

EXPIRING PROVISIONS 

Unless reauthorized by Congress, there are two provisions in the Communications Act 

that will expire: 

• Distant Network Signal Retransmission Consent Exemption: Until December 31,2014, 

satellite operators are allowed to retransmit distant network signals to an unserved 

household without first obtaining the consent of the station, 

• Retransmission Consent Non-Exclusivity/Good Faith Negotiation Requirements: Until 

January 1,2015, broadcast stations are prohibited from engaging in exclusive contracts 

for carriage, and both broadcasters and MVPDs are required to negotiate in good faith for 

retransmission consent agreements, 

Although outside the scope of this Committee's jurisdiction, it is important to note the 

other two expiring provisions that are contained in the copyright statutes: 

• Distant Signal Copyright License: The distant signa! copyright license contained in 

Section 119 of Title 17 of the U.S. Code will expire on December 31, 2014. 

• Grandfathered Distant Signal Subscribers: There are certain subscribers that meet specific 

requirements that have been grand fathered and retain their eligibility to receive distant 

signals until December 31, 2014. 

PRACTICAL APPLICATION OF CURRENT LAW AND RULES 

Local-into-Local Service 

Since the inception oflocal-into-Iocal service, the two satellite providers have increased 

their local market offerings to the point where subscribers in most, if not all, of the 210 local 

markets (DMAs) have access to the local package by one or both of the providers. The specifics 

are outlined below: 

DatelTimina DISH DiTElcTV SQurce 

Nov. 2000 34 38 FCC 7 Video Competition Repor! 

Dec. 2004 150 (+PR) 130 FCC 11 to Video Competition Reoor! 

Fall 2007 174 143 FCC 13 Video ComDetition ReDer! 

Fall 2012 210 194 SEC FilinQs 

February 2013 210 196* STELA Section 305 Reeor! 

*Markets currently wIthout Local~mto-loca! service from DlrecTV; Presque Isle ME; lima OH; Alpena Mi; Charlottesville 

VA; Victoria TX; Ottumwa IA·Kirksvilie MO; San Angelo TX; Bowling Green KY; North Platte NE; Cheyenne WY-Scottsbluff 

NE; Helena MT; Casper~Riverton WY; Grand Junction-Montrose CO; Glendive MT 

A consumer can subscribe to satellite service from one of the two providers, and opt for 

different program packages. As part of the available packages, consumers can opt to subscribe to 

the local channel package for an additional charge. The local channels will be those stations that 

are assigned to the DMA in which the consumer resides based on the Nielsen designations. 

4 
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79666.005

Consumers are not allowed to choose the local stations they wish to receive via satellite, and 

satellite providers are limited in the stations they are permitted to include in the local package. 

As noted above, Congress has allowed for additional flexibility in certain circumstal1ces that 

could increase the choices available to subscribers, such as permitting carriage of significantly 

viewed stations in appropriate circumstances. 

As noted above, if a carrier chooses to provide any significantly viewed stations from the 

FCC's list, it can add those stations to the local package offerings after obtaining the 

retransmission consent of the station. Additionally, there are certain areas in the country in which 

Congress provided an exception to the copyTight license to allow carriage of additional signals 

that would otherwise be considered distant signals into specific counties. 

Distant Signals 

Distant signals, generally, are those broadcast stations that are assigned to a different 

DMA than the one in which the consumer resides. In the past, distant signals provided the only 

access to broadcast network programming for many satellite subscribers. Over time, more and 

more subscribers gained access to the local network stations via local-into-Iocal service. Even 

so, much of STELA, like its predecessors, is devoted to the requirements and limitations 

associated with eligibility for distant signals. The following is an overview of the highlights and 

concepts. 

Generally, in order to be eligible to receive distant signals, a subscriber must be deemed 

to be "unserved" by the local signals via an over-the-air antenna. "Unserved" means that the 

subscriber's household cannot receive the over-the-air signal of a local network station with 

sufficient signal strengthS as outlined in the current rules. 6 Additionally, subscribers are limited 

to no more than 2 network-affiliated signals from each broadcast network. If such subscriber is 

also receiving local stations, STELA restricts the time shifting pel1l1issible for the distant signals 

based on the subscriber's local time zone. Generally, the subscriber cannot specify which distant 

signals he or she wishes to receive. In addition to the eligibility criteria associated with the 

subscriber, the satellite carrier is only permitted to provide distant signals if it complies with the 

requirement to provide the networks with lists ofihe subscribers who are receiving distant 

signals. Below are some of the other major provisions regarding distant signals. 

No Distant Where Local 

When new consumers subscribe to satellite TV service, and the local-in to-local package 

is available via satellite, they are not eligible to receive distant signals under current law. We 

refer to this as "no distant where local.'· 

One exception to no-distant-where-Iocal is if the local signals are provided in the DMA 

but the subscriber lives in an area that is technically outside of the spot beam used to provide the 

5 STELA more specifically defines sufficient strength as the intensity defined by the FCC as the value for 

the "noise-limited service contour," which means the value associated with a station's coverage area. 

6 As noted below, new subscribers are not eligible for distant signals if the local-into-Iocal package is 

availabJe to them. 

5 
16 


79666.006

local signals. In those instances, the subscriber will be permitted to receive the distant signals if 

the subscriber is also "unserved" by local stations over-the-air. 

No Local-into-Local Service 

If the consumer resides in a market where their preferred satellite carrier does not offer a 

local-into-Iocal package, they may be able to receive a distant signal package if they are 

"unserved." The subscriber requests distant signals through his or her satellite carrier, and the 

carrier determines whether there is a sufficient signal by using a computer model that predicts 

the signal strength at the subscriber's specific household. Satellite carriers must use the 

computer model designed by the Commission, but the Commission is not involved in making 

individual predictions. 

If the model detennines the household is "unserved" (i.e. the signal strength is too low), 

the satellite carrier can provide distant network signals to the household. If the model predicts 

that the household is served by a particular local network station over-the-air, the household is 

not eligible for distant signals for that network. 7 The subscriber may request waivers from each 

of the local stations that are predicted to serve the household in order to be eligible for distant 

signals. 8 Waivers are requested through the satellite carrier, and the local broadcast station must 

accept or reject a waiver request within 30 days. If the station does not respond to a waiver 

request within the time frame, the station is assumed to have agreed to the waiver. 

If the local station denies the waiver request, the current law provides for a process by 

which the subscriber can request to have a signal test to measure tbe actual strength of the overthe-air signal from each station. Both the satellite and broadcast station must agree on a qualified 

and independent person to conduct the test. The costs of the test will be paid by either the 

satellite carrier or the broadcast station, depending on the outcome of the test. In limited 

circumstances, there are rules to provide for testing to be conducted and paid for by the 

subscriber directly. Others on the panel representing the affected industries can comment on 

whether and how often tests are requested and conducted. The Commission is not involved in 

the process, although we do field consumer questions about the process when requested. 

Other "Unserved" Situations 

The law provides that in situations where a satellite dish is permanently affixed to a 

recreational vehicle or commercial truck, that subscriber is deemed to be "unserved" and eligible 

to receive distant signals. 

7 One of the revisions added by STELA to the existing protocol was to specifY that the local network 

signal might be available via either a so-called primary or multicast stream broadcast by a local station. 

This distinction was added to address the enhanced capacity associated with the digital si1,,'nal which 

allows stations to broadcast mUltiple streams of programming simultaneously. 

8 STELA revised which stations are to be considered in the predictive model so that only stations that are 

"local" to the consumer based on the Nielsen DMA need to be considered. Previously, all network station 

signals were to be considered, including those that were not treated as local for purposes of carriage. 

6 
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79666.007

Other Distant Signal Subscribers 

As Congress has changed the eligibility rules for distant signals in successive 

reauthorizations, it has provided different treatment for subscribers to distant signals at the time 

of the reauthorization, depending on when the subscriber first received the distant signals. These 

different qualifications for "grandfathering" are used to determine whether subscribers mayor 

must take the local-into-Iocal package if and when offered. Some of the grandfathered 

subscribers may keep the distant signals, others may at some point be required to relinquish the 

distant signals. This is a topic that has been addressed in each reauthorization process, taking 

into consideration equitable treatment for distant signal subscribers at the time. 

CONCLUSION 

Thank you for inviting me to participate in today's hearing. I look forward to assisting 

the Committee as it begins this reauthorization process, and would be happy to take your 

questions. 

7 
18 

Mr. WALDEN. That is the best news Joe has gotten all day. 

We now turn to our next witness, Mr. R. Stanton Dodge, who is 

the Executive Vice President and General Counsel of DISH. Mr. 

Dodge, thanks for joining us this morning. We look forward to your 

testimony. 

STATEMENT OF R. STANTON DODGE 

Mr. DODGE. Chairman Walden and Ranking Member Eshoo, 

Chairman Upton, and members of the subcommittee, I very much 

appreciate the opportunity to testify today. My name is Stanton 

Dodge, and I am the Executive Vice President and General Counsel 

of DISH Network, the Nation’s third largest pay TV provider with 

over 14 million customers and 25,000 employees nationwide. 

This morning, I would like to highlight the benefits that STELA 

and its predecessors have conferred upon consumers. 

STELA provided two big wins for consumers, giving them access 

to more programming than ever before. First, it challenged DISH 

to offer local stations in all of the Nation’s 210 television markets. 

We embraced that challenge, and today we are the only pay TV 

provider to offer local channels in every market. Plus, we are the 

largest distributor of PBS nationwide. Second, STELA allowed us 

to give consumers in short markets access to all the big four networks. And for those of you who don’t know, short markets are 

markets that lack one or more of the big four stations, and they 

tend to be small, rural communities. Thanks to STELA, consumers 

in 21 short markets across 19 States can watch the valued network 

programming that the rest of the country has long enjoyed. 

So how did we get here? Well, let us start with the basics. We 

all know that broadcast stations are important to consumers. They 

are freely available over the air, but even after the digital transition, many households cannot get a signal, especially in large western markets. Over-the-air reception often just cannot match the 

coverage and consistency of satellite and cable television. 

The first incarnation of STELA, the Satellite Home Viewer Act 

of 1988, created a statutory copyright license that enabled satellite 

carriers to provide consumers with broadcast signals originating 

outside of their home markets. This copyright license came with an 

important restriction. It only allowed network transmissions to 

‘‘unserved households,’’ households that cannot receive a strong 

local signal using an off-air antenna. In exchange for the license, 

satellite carriers paid a monthly per-subscriber fee to the copyright 

office. That fee was set either by private negotiations, or by an administrative proceeding, and the revenues were then distributed to 

the mosaic of copyright holders. This copyright fee structure remains in place today. 

Congressional legislation evolved further in 1994, 1999, and 

2004, and throughout this time, technological advances prompted 

significant updates to the law. For example, with the advent of spot 

beam technology, satellites can target signals into individual local 

markets, rather than the whole country at once. This led Congress 

to add the so-called local into local license, which allowed for satellite retransmission of local broadcast signals back into their local 

markets. Satellite carriers seized that new opportunity. They built 

and launched spot beam satellites and they started providing local 

19 

stations almost immediately. As a result, satellite providers 

emerged as a key competitive force in the pay TV market. 

I am going to ask you to please refer to my written remarks for 

a more comprehensive summary of the various satellite television 

bills over the years. 

As many of you are aware, DISH was barred from providing distant network signals to subscribers in 2006, after a decade-long 

court proceeding. Among other things, the injunction prevented us 

from filling up short markets, because we needed a distant signal 

license to import the out-of-market stations to replace the missing 

local affiliates. Through STELA, Congress presented an incentive 

for DISH to receive a waiver of that injunction if we offered local 

stations in all of the Nation’s 210 markets, then they would allow 

us to win back our distant signal license. Working cooperatively 

with the NAB, we followed the path precisely as Congress envisioned. The result, on June 3, 2010, we initiated service to all local 

TV markets, becoming the first, and to date, the only pay TV provider to offer local service in all 210 DMAs. 

And so, STELA stands as an example of how targeted legislative 

solutions can work to everybody’s benefit. It should be reauthorized 

before December 31, 2014, but there is much more that Congress 

can do through STELA to expand consumer’s access to local programming. In an era of fast-changing technology and the explosion 

of video on the Internet, we believe that Congress should take this 

opportunity to look at ways that the current statute can be updated 

to better reflect consumer expectations and desires. 

We look forward to a dialogue addressing those options in the 

months ahead, and I thank you again for the opportunity to testify 

here today, and look forward to answering any questions you might 

have. 

[The prepared statement of Mr. Dodge follows:] 

20 


79666.008

Testimony of 

R. Stanton Dodge 

Execntive Vice-President and General Counsel of DISH Network L.L.C. 

On 

"Satellite Video 10 1" 

Before the 

Honse of Representatives 

Committee on Energy and Commerce 

Snbcommittee on Commnnications and Technology 

Febrnary 13,2013 
21 


79666.009

Chainnan Upton, Chainnan Walden, Ranking Member Eshoo, Ranking Member 

Waxman, and Members of the Subcommittee, I appreciate the opportunity to testify today. My 

name is Stanton Dodge, and 1 am the Executive Vice-President and General Counsel of DISH 

Network, the nation's third largest pay-TV provider and the Q!l!y provider of local television 

service in all 210 of this nation's local TV markets. DISH employs over 25,000 people across 

the country. In addition to its satellite television business, DISH is seeking to expand into the 

deployment of broadband services through currently unused spectrum, which has the potential to 

create tens of thousands of additional U.S. jobs. 

This morning, I want to highlight the successes of the Satellite Television Extension and 

Localism Act of20 I 0 ("STELA") and its predecessors, and describe the work that my company 

has done to contribute to these successes. 

STELA presented a trade to DISH: if the company offered local stations in every market, 

our distant network signal statutory copyright license would be restored. We lost our distant 

signal license after a decade-long court proceeding. We enthusiastically accepted the STELA 

challenge. 

We built and launched the satellites and received a number of regulatory and court 

approvals, all as envisioned by STELA. The result: today we are the only multi-channel 

distributor, whether satellite or cable, to offer local broadcast stations to consumers in all of the 

nation's local markets. This makes us the biggest distributor of public and commercial local 

broadcast stations in the United States. 
22 


79666.010

In addition, STELA built on the framework of prior satellite television laws and made it 

possible for DISH to bring network television programming to households in markets that lacked 

one or more of the four networks. Today, there are 21 "short" markets. A short market is one 

that does not have all four major network affiliates, which are ABC, CBS, NBC, and Fox. These 

typically are small, rural communities. Thanks to STELA and its predecessors, American 

consumers now have more access to local, regional, and national programming than ever before. 

From SHY A to SHVIA to SHVERA to STELA 

To appreciate the success of STELA, it is important to look back at how far we have 

come. Broadcast stations are important to consumers. They are freely available over the air, but 

many households throughout the country cannot receive a strong enough signal by relying on 

their broadcast antenna. This is particularly true in large, Western markets where broadcasters' 

signals do not ahvays cover the entire market area. Even after the transition to digital television, 

over-the-air reception cannot match the coverage and consistency of satellite or cable television. 

The ability of multichannel distributors to retransmit broadcast stations first came up in 

the era of community antenna television systems - the precursors to cable television. In two 

decisions, in 1968 and 1974, the Supreme Court heJd that retransmission over cable systems was 

not a public performance and therefore not an infringement of the rights holders' copyrights. In 

1976, Congress overruled those decisions and made retransmission a copyright infringement. At 

the same time, however, Congress knew that the Federal Communications Commission ("FCC") 

had mandated cable carriage of all broadcast signals under the "must carry" rules. Congress also 

recognized the impracticality of asking cable operators to negotiate cop)Tight licenses for all 

content across all broadcast stations. Then, as now, receiving sllch licenses involved knocking 

2 
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79666.011

on too many doors. The programming embedded in broadcast signals belongs to a mosaic of 

producers, writers, composers and otbers wbo typically do not grant sublicensing rights to 

broadcasters. For those reasons, Congress created a statutory copyright license allowing cable 

systems to retransmit broadcast stations, whether local or distant. 

SHVA. Then came satellite technology. In the 19805, satellites came to the scene as a 

new multi-channel entertainment and news option. Backyard dishes capable of receiving video 

programming started appearing around the country, especially in areas without access to cable. 

You couldn't miss those first dishes; they were quite large. The Satellite Home Viewer Act 

("SHV A"), enacted in 1988 and extended in 1994, marked the first time Congress passed a 

statute to facilitate satellite distribution of broadcast signals to consumers' homes. At the time, 

satellite TV's offerings were national in nature, delivering high-quality digital signals from 

satellite orbital locations to households and businesses across thc country. 

That law created a statutory copyright license under which satellite carriers could provide 

consumers with television broadcast signals originating outside of their home market. For these 

broadcast network signals, the license came with an important restriction: it only allowed 

retransmissions to "unserved" households. Unserved households could not receive a local 

network affiliate's signal with sufficient strength using an over-the-air antenna. [n exchange for 

the license, satellite carriers paid then, as they pay now, a per-subscriber fee each month. That 

fee was set by either private negotiations among the industries or by an administrative 

proceeding, and the revenues were then distributed to the mosaic of copyright holders. They still 

are today. 

3 
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79666.012

SHVIA. Recognizing the value of network programming to consumers, Congress has 

since extended and expanded that license without fail. Congress's next move, in 1999, was to 

recognize the possibility of satellite service targeted to specific television markets, rather than 

nationwide-only offerings. By that time, satellite service had progressed from the large backyard 

dishes of the 1980s to the pizza-sized dishes made possible by the digital high-power satellites 

launched in the 1990s by DIRECTV and DISH's predecessor, EchoStar. These dishes appealed 

to urban and suburban users for the first time. But the satellite carriers suffered from a 

significant handicap. Unlike cable systems, they did not, and could not, provide local broadcast 

stations. Changes in satellite technology, however. prompted Congress to update the law. 

The first satellites were equipped with broad beams covering the entire lower 48 states. 

These satellites had to transmit the same programming in New York. Los Angeles, and 

everywhere in between. New York programming had to be blacked out for homes in California 

that could receive their stations over the air. but still took up the scarce bandwidth on the 

satellite. Spot beam technology alleviated this bandwidth crunch. It allowed satellites to 

transmit signals over just one local market, rather than the whole nation at once. Picture a 

honeycomb of beams reusing the same spectrum to provide different programs in New York, Los 

Angeles and throughout the country. 

Recognizing this technological innovation, Congress enacted the Satellite Home Viewer 

Improvement Act ("SHVIA") in 1999. That statute created the so-called "local-into-Iocal" 

statutory license, allowing the satellite retransmission oflocal broadcast signals back into their 

local markets. It also took the rules created for cable in the 1992 Cable Act and applied them to 

satellite companies: a system in which local broadcasters may elect either to negotiate for 

4 
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79666.013

retransmission by the satellite carrier on commercial terms, or choose mandatory carriage-

"must carry"- for a 3 year tern1. Unlike cable, however, satellite was given a choice: either 

don't carry any local broadcast signals in a market or, if you do, carry all of them. 

Spot beams, however, are not cheap. A spot beam satellite costs hundreds of millions of 

dollars to build and launch. The more local markets a satellite carrier serves, the more of these 

satellites it needs. Moreover, the primary use of the technology is precisely to retransmit local 

television stations back into their local markets. But despite the cost, the satellite carriers 

responded enthusiastically to the new opportunity afforded them by the law. They built and 

launched spot beam satellites, and they started providing local stations almost immediately, 

albeit starting with a handful of large markets. Since then, satellite providers have emerged as a 

key competitive force in the pay TV market, requiring cable companies to compete on price, 

programming, quality, and service. 

SHVERA. In 2004, Congress acted again, passing the Satellite Home Viewer Extension 

and Reauthorization Act ("SHVERA"). That law again extended the statutory copyright license 

for distant signals, and made several other changes. First, SHVERA made adjustments to 

accommodate the digital television transition, directing the FCC to redefine the model that 

predicts whether a household is served by a local broadcast signal based on the new digital 

broadcasting format. Second, the law introduced the so-called "if-local-no-distant" rule. 

Generally, that rule says that satellite carriers may not provide a distant signal to a subscriber if 

the carrier also makes available to that subscriber the local station affiliated with the same 

network. Third, the law allowed satellite providers to retransmit "significantly viewed" stations 

in the counties outside their local market where they are broadly viewed, something the cable 

5 
26 


79666.014

industry had long enjoyed. Practical implementation of this provision was difficult. however. 

because it was interpreted to allow local stations to exercise a veto by conditioning their 

retransmission consent on the satellite carrier not importing significantly viewed stations. 

Finally, the law recognized the special status that Recreational Vehicles and commercial trucks 

have and designated these types of subscribers as unserved households eligible to receive distant 

signals so long as certain certification measures are met. 

STELA. As many on the subcommittee are aware, DISH was enjoined from providing 

distant network signals to its subscribers in 2006. As part of STELA, Congress established an 

incentive for DISH to get that injunction waived-first temporarily, then permanently-and to 

once again be able to provide its subscribers with a full complement of the Big 4 network 

stations. Working cooperatively with the NAB, we followed that path precisely as Congress 

envisioned. Again, the trade offered by STELA was that if we launched local broadcast signals 

in all ofthe nation's 210 local markets, we could win back our distant network signal license. 

We accepted the trade. 

STELA was passed on May 27, 20 I O. DISH applied for the temporary waiver the next 

4ID: on May 28, 2010, and the court granted the waiver on June 2, 2010. Under this temporary 

waiver, we were permitted to provide distant network signals to subscribers residing in "short" 

markets as a reminder, those are the TV markets in which one of the Big 4 networks is missing, 

We offered these distant network signals alongside the local broadcast channels to provide DISH 

subscribers with the full complement of Big 4 network stations. Thanks in part to the temporary 

waiver, D ISH Network was able to initiate service to 29 additional TV markets on June 3, 2010, 

becoming the first (and to date, the only) TV provider to offer local service in all 21 0 markets. 

6 
27 


79666.015

This had a tremendous impact in rural communities. Until we launched the service. they had 

never received from any video provider-broadcast. cable, or satellite--the same service that 

people living in larger markets had enjoyed. 

Following certification by the FCC and the federal district court, DISH has been able to 

take full advantage of STELA's distant network signal license, subject only to continued 

provision of local programming packages in all 210 markets. This means two things: since 

2010, DISH has been offering local stations in all of the nation's TV markets, becoming the only 

multi-channel provider in the country, whether cable or satellite, to achieve that milestone. 

Second, DISH has been able to supply distant stations to qualified customers. To stress again: 

the process set forth in STELA worked precisely as envisioned, and it stands as an example of 

how a targeted legislative solution can work to everyone's benefit. 

But there is much more that Congress can do to expand consumers' access to local 

programming, and we look forward to future hearings addressing such topics. [n an era of 

greater MVPD competition and the explosion of vide 0 on the Internet, both at home and on 

wireless devices, Congress should take this opportunity to look at ways the current statute could 

be updated to better reflect consumer expectations and desires. 

DISH looks forward to starting a dialogue with all Members and their staff in the months 

to come. Again, thank you for the opportunity to testify today. [look forward to any questions 

you may have. 

7 
28 

Mr. WALDEN. Thank you, Mr. Dodge. We appreciate your being 

here, and your testimony. 

We will now go to the Executive Vice President and General 

Counsel for Legal and Regulatory Affairs, the National Association 

of Broadcasters, Jane Mago. We are delighted to have you here this 

morning, and look forward to your comments. 

STATEMENT OF JANE MAGO 

Ms. MAGO. Thank you, Chairman Walden—— 

Mr. WALDEN. Go ahead and turn that on. 

Ms. MAGO. Turn on the microphone. Thank you, Chairman Walden, and thanks to Ranking Member Eshoo and Chairman Upton, 

and all the members of the subcommittee for having me here to 

speak with you today. As Chairman Walden just said, I am the Executive Vice President and General Counsel of the National Association of Broadcasters. 

Now over the next 2 years, this subcommittee, as well as your 

colleagues on the Judiciary Committee, will consider whether certain provisions of the legislation that is affectionately known to all 

of us as STELA should be allowed to sunset. The narrow issue that 

is before you is whether the legal framework that permits the country’s two satellite providers to retransmit our stations continues to 

be in the public interest. As the committee begins this dialogue, 

your broadcast constituents ask you to be mindful of two principles 

that are at the core of STELA and all its predecessors that we have 

heard about today. 

First, free over-the-air local television should remain widely 

available to American households, and second, the government 

should not interfere with the contractual relationships that promote broadcasting’s local focus. Adherence to these principles will 

help ensure that the public benefits from free over-the-air broadcasting. 

Now, the bedrock principle of the American broadcast system 

continues to be this localism. Whether it is local news, emergency 

alerts, weather information, election coverage, or sports, local television broadcasters provide these services and programming for 

free to communities across the country. Broadcasters support charities, civic organizations, and community events, and our locally 

tailored advertising provides the opportunity for your hometown 

businesses to promote their goods and services. Simply put, free 

local service is our focus. It is what differentiates American broadcast television from others around the world, and from every other 

medium. 

Broadcasters have invested billions of dollars in recent years to 

improve the quality and reach of our service. The digital television 

transition allowed us to proliferate high definition programming, 

launch mobile D-TV service, and offer multiple program streams. 

These innovations enable our viewers, who are also your constituents, to receive higher quality and more diverse programming on 

many platforms. 

Now as you have heard, in the beginning the satellite acts were 

crafted to help the satellite companies become competitive with 

cable services, and ensure that satellite subscribers could access 

network programming. It was always a concern, however, that the 

29 

service should not undermine local broadcast stations. And so specifically, Congress prohibited a satellite provider from importing a 

network signal from a distant market to households that could receive that network’s programming from a local station. These provisions were and remain essential to prevent diversion of local station viewers and reduction in the advertising revenue that is needed to provide vital local services. Now even as it created this distant signal license, Congress foresaw that one-day technological advances might make that license unnecessary, so it included a 5- 

year sunset provision. That premonition was really correct. Technology has evolved so that satellite companies could provide each 

market with the market’s own local signals. As Stanton just told 

us, today DISH provides its local service into all 210 television 

markets, and DirecTV is in either 195 or 196, that is not somewhat 

clear, but thus the need to import distant network signals has dramatically diminished. Only a small percentage of the 34 million 

satellite subscribers receive network programming via this distant 

signal. Indeed, over 98 percent of all U.S. television viewers have 

the option of viewing their local networks. So accordingly, this subcommittee may want to consider whether the public interest would 

be best served by allowing the distant signal and related communications act provisions to sunset, as Congress originally intended. 

Because local viewers are best served when they receive local 

service, every satellite and cable subscriber should receive this 

local into local service. 

Now alternatively, if STELA is reauthorized, broadcasters urge 

a clean, minimalist approach targeted to the problem to be solved. 

Efforts to graft unrelated and unnecessary issues onto this narrow 

legislation would be inappropriate and unwise. 

I thank you for all your efforts to promote vibrant local broadcast 

industry, now and into the future, and I am happy to answer any 

questions that you may have. 

[The prepared statement of Ms. Mago follows:] 

30 


79666.016

NAB 

Hearing on 

"Satellite Video 101" 

United States House of Representatives 

Committee on Energy and Commerce 

Subcommittee on Communications 

and Technology 

February 13, 2013 

Statement of Jane E. Mago 

On behalf of the 

National Association of Broadcasters 
31 


79666.017

INTRODUCTION AND SUMMARY 

Good morning, Chairman Walden, Ranking Member Eshoo, and members of the 

Subcommittee. My name is Jane Mago. I am Executive Vice President and General 

Counsel of the National Association of Broadcasters (NAB) on whose behalf I appear 

today. 

Thank you for the opportunity to talk with you about the reauthorization of the 

Satellite Television Extension and Localism Act of 201 0 (STELA), which is set to expire 

at the end of 2014. In my testimony today, I will discuss the principles behind STELA, 

whether its reauthorization is needed in the current satellite television marketplace, and 

some issues that may arise as you consider reauthorization. 

NAB looks forward to working with this Subcommittee as we again consider how 

the public interest can best be served through satellite carriage of local television 

signals. As I explain below, NAB is continuing to evaluate the current television market 

and taking a hard look at whether reauthorization of distant signal licenses for satellite 

carriers should be done at all. At most, Congress should limit any action to those narrow 

issues raised directly by STELA reauthorization. It should rebuff any efforts to address 

unrelated issues that would only prolong and complicate this reauthorization discussion. 

I. Public Interest Principles 

The starting point for considering this legislation must be localism - the bedrock 

principle rooted in the Communications Act of 1934 that has guided communications 

and related copyright policy for decades. Localism has been an integral part of policies 

governing satellite carriage of broadcast signals from the outset. Thus, it was not 
32 


79666.018

surprising that Congress chose to include "localism" in the very title of the 2010 

reauthorization. Localism is an equally important public policy today. 

What does localism mean for the public served by local television broadcasters? 

Localism is coverage of matters of importance for local communities, such as local 

news, severe weather and emergency alerts, school closings, high school sports, local 

elections and public affairs. Localism is support for local charities, civic organizations 

and community events. Local broadcasters help create a sense of community. Locally 

based broadcast stations are also the means through which local businesses educate 

and inform the public about their goods and services and, in turn, create jobs and 

support local economies. They address the needs of the public, based on a familiarity 

with and commitment to the cities and towns where they do business. 

A second important principle to consider in the context of this legislation is 

government respect for contractual relationships freely entered into by private parties. 

Especially with regard to local television service, respect for contractual rights fosters 

the very localism, diversity, competition and high quality service that policymakers 

expect from broadcasters. Promoting relationships, freely negotiated among parties, 

that create and distribute the diverse mix of broadcast television programming 

addressing the needs and interests of local viewers clearly serves the public interest. 

With these principles in mind, let me briefly provide some background for the 

issues raised by STELA reauthorization. 

II. Statutory Copyright Licenses 

A statutory or compulsory copyright license is a mechanism whereby users of the 

license are permitted to use copyrighted works in exchange for compliance with certain 

2 
33 


79666.019

statutory conditions and payment of royalties at governrnent regulated rates. Three 

statutory licenses in the Copyright Act govern the retransmission of distant and local 

over-the-air broadcast station signals: 

• Section 111 permits a cable operator to retransmit both local and distant radio 

and television signals to subscribers. 

• Section 119 permits a satellite carrier to retransmit distant television signals to 

subscribers for private home viewing and to commercial establishments for a per 

subscriber fee. 

• Section 122 permits satellite carriers to retransmit the signals of each local 

television station into the station's local market and also outside the station's 

market where the station is "significantly viewed," on a royalty-free basis. 

All of these licenses are contingent upon the users complying with certain 

conditions, including rules, regulations, and authorizations established by the Federal 

Communications Commission (FCC) governing the carriage of television broadcast 

signals. The Section 119 license sunsets at the end of 2014 and is the subject of this 

hearing. The Section 111 and 122 licenses are permanent. 

III. The Section 119 License 

In 1988, Congress, in the Satellite Home Viewer Act (SHVA), created the Section 

119 statutory license enabling satellite carriers to retransmit the signals of distant 

television network stations and superstations to satellite dish owners for their private 

home viewing. The Section 119 license enabled satellite carriers to provide network 

programming to households unable to receive adequate over-the-air signals from their 

local network affiliates. 

3 
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79666.020

The conditions of Section 119 are key, Respecting the principle of localism, only 

those subscribers that live in unserved households are eligible to receive distant 

network station signals, SHVA defined an "unserved household" as a household that 

cannot receive, through the use of a "conventional, outdoor rooftop receiving antenna," 

an over-the-air signal of a network station of Grade B intensity, This provision was 

intended to protect the local viewing public's ability to receive locally oriented news, 

information and other programming by preserving the exclusivity local television stations 

have in their network and syndicated programs, That exclusivity, in turn, enables 

stations to generate revenue needed to provide local service, 

Although it was originally set to expire at the end of 1994, Congress reauthorized 

Section 119 in 1994 and again in 1999 for additional five year periods, The 1999 

renewal, called the Satellite Home Viewer Improvement Act of 1999 (SHVIA) also 

created a new royalty-free Section 122 license that allowed, but did not require, satellite 

carriers to retransmit local television signals into their own markets, 

The Section 122 license, intended to make the satellite industry more competitive 

with cable, gave satellite companies statutory copyright parity, Satellite carriers have 

increasingly relied upon the license to provide local television signals to their 

subscribers, Currently, DISH provides local-into-Iocal service in all television markets 

(referred to as Designated Market Areas (DMAs», and DIRECTV reportedly offers localinto-local service to all but 15 DMAs, 

The Satellite Home Viewer Extension and Reauthorization Act of 2004 

(SHVERA) reauthorized Section 119 once again, but also set rules to further limit 

importation of distant network station Signals into local television markets, For example, 

4 
35 


79666.021

SHVERA required the satellite carriers to phase out retransmission of distant signals in 

markets where they offered local-into-Iocal service. Generally, a satellite carrier was 

required to terminate distant station service to any subscriber that elected to receive 

local-into-Iocal service and was precluded from providing distant network station signals 

to new subscribers in markets where local-into-Iocal service was available. 

SHVERA additionally permitted satellite carriers to deliver television station 

signals from adjacent markets that were determined by the FCC to be "significantly 

viewed" in the local market so long as the satellite carrier provided local-into-Iocal 

service to those subscribers. SHVERA also expanded the copyright license to make 

express provision for digital signals. 

IV. STELA: Part Copyright Law, Part Communications Act 

Sections 119 and 122 discussed above are part of the Copyright Act. These 

copyright sections work in tandem with parallel and closely inter-related provisions in 

the Communications Act. For example, Section 325 of the Communications Act requires 

satellite carriers to obtain retransmission consent for the carriage of local stations, but 

exempts carriers from obtaining such consent to retransmit distant network signals to 

unserved households. 

Section 338 of the Communications Act contains provisions governing the 

carriage of local stations. These provisions include the "carry one carry all" requirement 

under which a carrier offering carriage of one local station in a market must offer 

carriage to all stations in the market. 

Section 339 of the Communications Act governs the carriage of distant signals. 

Its provisions include: provisions relating to replacing distant signals with local signals; 

5 
36 


79666.022

carriage of distant digital signals; digital signal strength prediction testing; and program 

exclusivity rules for satellite. 

Section 340 has provisions relating to the carriage of significantly viewed signals. 

None of the Communications Act sections are scheduled to sunset, but some 

provisions within them do sunset in 2014. Specifically, the following provisions related to 

retransmission consent are set to expire: (1) the exemption satellite carriers enjoy from 

having to obtain retransmission consent from stations whose signals they provide to 

unserved households; (2) the prohibition against stations entering into an exclusive 

carriage agreement with only one cable or satellite provider; and (3) the requirement to 

negotiate retransmission agreements in good faith. 

V. Distant Signals 

Given the narrow scope of the Section 119 license, this Subcommittee may 

consider whether the time has come for its sunset The distant signal license today is 

principally an artifact While the satellite companies are in the best position to precisely 

identify the number of their subscribers currently receiving distant signals, in 2009 when 

the STELA was under conSideration, only around two percent continued to receive a 

distant signal package, and that number was steadily declining. 

Experience has shown that the Section 122 local-into-Iocal compulsory license is 

the right way to address delivery of over-the-air television stations to satellite 

subscribers. Local-into-Iocal has provided a boon for the satellite industry and greatly 

enhanced its ability to compete with cable. This license also has promoted localism. 

Thus, Congress's focus at this time should be to further these trends and promote localinto-local service in all markets. 

6 
37 


79666.023

To a great extent, Section 119 has outlived its usefulness, Unlike the local-intolocal compulsory license, the distant-signal compulsory license as applied to distant 

network signals threatens 10calism,1 As a result, its only defensible justification is as a 

"hardship" exception-to make network programming available to the small number of 

households that otherwise have no access to it The 1999 SHVIA Conference Report 

states that principle eloquently: "the specific goal of the 119 license, , , is to allow for a 

life-line network television service to those homes beyond the reach of their local 

television stations." SHVIA Conference Report, 145 Cong. Rec. at H11792-793 

(emphasis added) . .? 

Today, over 98 percent of all U,S, television viewers have the option of viewing 

their local network affiliates by satellite-and that number is growing all the time. As a 

real-world matter, with few exceptions, there are no unserved viewers in areas in which 

local-into-Iocal satellite transmissions are available, because it is no more difficult for 

subscribers to obtain local stations from their satellite carriers than to obtain distant 

stations from those same carriers, Accordingly, no public policy justifies treating satellite 

subscribers in local-into-Iocal markets as "unserved" and therefore eligible to receive 

distant network stations, Quite the contrary, there is every reason to close this loophole, 

1 The portion of Section 119 enabling retransmission of "superstations" does not pose 

such a threat to localism, 

See, e.g., Satellite Home Viewer Act of 1988, H.R Rep, No. 100-887, pt 2 at 20 

(1988) ("The Committee intends [by Section 119J to ... bring[] network programming to 

unserved areas while preserving the exclusivity that is an integral part of loday's 

network-affiliate relationship"); id. at 26 ("The Committee is concerned that changes in 

technology, and accompanying changes in law and regulation, do not undermine the 

base of free local television service upon which the American people continue to rely"); 

id. at 14 (1988) ("Moreover, the bill respects the network/affiliate relationship and 

promotes localism."). 

7 
38 


79666.024

The Section 119 distant-signal compulsory license is not designed, and should 

not be allowed, to permit satellite carriers to undermine the locally-oriented contractual 

exclusivity of the network/affiliate relationship by delivering to viewers in served 

households-who can already watch their own local ABC, CBS, Fox, and NBC 

stations-network programming from another distant market. This importation of 

duplicative distant programming undermines the local network affiliated stations that 

offer the local news, weather and emergency information that viewers value, 

VI. Retransmission Consent 

As noted above, three narrow retransmission consent related provisions in the 

Communications Act are set to expire in 2014, Consideration of these narrow provisions 

should not be used to bring unnecessary arguments outside the scope of this 

legislation, 

It is very important that the STELA reauthorization process not be used as a 

vehicle for re-opening retransmission consent generally or delving into extraneous 

issues that undermine localism, There is no need to change the present retransmission 

consent process,;)' Congress should continue to rebuff the efforts of the satellite and 

cable industries to persuade the government to intervene in free-market retransmission 

;, 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 2005) at ~ 34 (FCC Retransmission Report) (recommending no revisions to 

statutory or regulatory provisions related to retransmission consent), See Navigant 

Economics, Jeffrey A Eisenach, Ph.D, and Kevin W, Caves, Ph,D" Retransmission 

Consent and Economic Welfare (April 2010) at Executive Summary (concluding that 

retransmission consent has achieved Congress' intended purpose in enacting it, and 

has "benefit[ed] consumers by enriching the quantity, diversity, and quality of available 

programming, including local broadcast programming"), 

8 
39 


79666.025

negotiations, which the FCC has expressly found benefit cable/satellite operators, 

broadcasters and, "[m]ost importantly, consumers." FCC Retransmission Report at 1144. 

CONCLUSION 

With the perspective gained from 25 years of experience with STELA and its 

predecessors, Congress should be guided by the same principles it has consistently 

applied: that localism and free-market competition are the bedrocks of sound policy 

when addressing the copyright protections that support the public's free, over-the-air 

local broadcast service. 

The distant signal license, which dates back to the inception of satellite 

legislation in the 1980s, has outlived its usefulness. This Subcommittee may wish to 

consider whether that distant signal license should, to a large extent, expire. At the 

same time, Congress should promote the principle of localism by encouraging localinto-local satellite service for all Americans in each of the 210 television markets. 

Finally, Congress should resist any calls to revise the retransmission consent rights of 

local television stations in the context of this legislation. 

9 
40 


79666.026

Overview of NAB Testimony 

• Two principles must guide this Subcommittee's discussion over whether to 

reauthorize the Satellite Television Extension and Localism Act of 2010, 

• The first must be localism - the bedrock principle rooted in the 

Communications Act of 1934 that has guided communications and related 

copyright policy for decades, For the public served by local television 

broadcasters, this includes coverage of matters of importance for 

communities large and small across the country, such as local news, 

severe weather and emergency alerts, school closings, high school 

sports, local elections and public affairs, 

• The second important principle is government respect for contractual 

relationships freely entered into by private parties for the retransmission 

of broadcast Signals, 

• Three statutory licenses in the Copyright Act govern the retransmission of local 

over-the-air broadcast Signals, These Copyright Act licenses work in tandem with 

related provisions of the Communications Act. The Section 119 license, which is the 

subject of this reauthorization discussion, creates a statutory license that permits a 

satellite carrier to retransmit a distant television signal to a subscriber for a persubscriber fee, subject to certain conditions, This license sunsets on December 31, 

2014, 

• The conditions of Section 119 are key, Respecting the principle of localism, only 

those subscribers that live in "unserved households," i.e" households determined 

not to receive a local broadcast signal, are eligible for a distant network signal. This 

provision was intended to protect the local viewing public's ability to receive locally 

oriented news, information and other programming by preserving the exclusivity 

local television stations have in their network and syndicated programs, 

• This Subcommittee may choose to consider whether the time has come to allow the 

Section 119 license to sunset as Congress originally intended, While originally 

adopted to provide network programming to the large number of satellite viewers 

unable to receive it from their local station, today more than 98% of viewers have 

the option of viewing network programming from their local affiliate, 

• None of the related Communications Act sections are scheduled to sunset; however 

three narrow provisions within those sections related to retransmission consent are 

set to expire, Consideration of these narrow provisions should not invite 

unnecessary arguments outside the scope of this legislation, Specifically, this 

reauthorization discussion should not be used as a vehicle for re-opening 

retransmission consent generally or delving into extraneous issues that undermine 

localism, 
41 

Mr. WALDEN. Ms. Mago, thank you very much for your testimony. 

We will now go to Jennifer Kieley, and before we do, I should 

point out that she is a fill-in witness this morning. Lonna Thompson was supposed to testify but fell ill last night, and so be kind 

to Jennifer. She is the Director of Government Relations, Association of Public Television Stations, and Lonna is the Executive Vice 

President, Chief Operating Officer, and General Counsel for Association of Public Television Stations, so today we have the Director 

of Government Relations, Jennifer Kieley. Jennifer, thank you for 

joining us, and we look forward to the testimony of the public television stations. 

STATEMENT OF JENNIFER KIELEY 

Ms. KIELEY. Thank you, Chairman Walden and Ranking Member 

Eshoo, members of the subcommittee. I greatly appreciate the opportunity to substitute in Lonna’s place today on this very important issue to the Association of Public Television Stations. 

This issue is of great importance to our 368 local public television 

stations throughout this country. It has a tremendous influence on 

the services that are available to your constituents, our viewers, 

nationwide, but particularly those living in rural America that are 

often limited to their paid television programming options and disproportionately depend on satellite services. 

First and foremost, we would like to thank this committee and 

the Congress as a whole for the passage of STELA which recognized the critical services that local public broadcasting stations 

provide their communities nationwide. Because of that legislation, 

viewers in even the most remote corners of this country that receive local satellite HD service, have access to the best that public 

television has to offer in the full splendor of HD. We are also appreciative of the language that was included in STELA which allows satellite carriers to carry local public television statewide licensees’ signals throughout the entire state where DBS providers 

have the bandwidth to do so. This provision removed statutory 

roadblocks that restricted the ability of residents and tax payers in 

states to receive the full benefits of their state’s public television 

statewide network. 

Public broadcasting is charged by the Public Broadcasting Act 

with providing universal service to every corner of this country, 

and STELA has enabled us to help meet this mission and provide 

the highest quality of services to our satellite viewers. 

As Congress looks to reauthorize STELA, public television proudly highlights the private carriage agreements that we have been 

able to negotiate with almost all major MVPDs. Rather than rely 

on Congress to work out these carriage agreements, which can admittedly be challenging, we pioneered our own private agreements 

with cable, Verizon and DirecTV. 

Before the passage of STELA, we were still hopeful that we 

would be able to negotiate a similar carriage agreement with 

DISH. Unfortunately, after years of unsuccessful negotiations, we 

were never able to close a deal with DISH that would have guaranteed carriage of all of our stations’ HD signals. As a result, before 

STELA was signed into law, DISH was not carrying a single HD 

42 

signal of any local public television station, but STELA mandated 

the carriage of local public television stations’ HD signals by any 

carrier that had not entered into private carriage negotiations with 

public television. And now, DISH is required by law to carry the 

local HD signals of public television stations in all markets where 

they offer local HD service. 

This provision was included in STELA because Congress recognized the unique educational mission of local public television stations and the void that was felt by citizens that were previously denied access to these critical services. We were also pleased that 

when DISH challenged us all in the courts, the courts upheld 

STELA. 

As a result of STELA, viewers in Oregon are able to watch Oregon Field Guide, a valuable source of information about outdoor 

recreational issues, ecological issues, natural resources and travel 

destinations in the full detail of HD. In the San Francisco Bay 

area, subscribers to satellite have access to the HD version of 

Quest, KQED’s award-winning multimedia science and environment series. And in Michigan, Ohio, Illinois, Pennsylvania, Nebraska, and communities nationwide, Americans can travel the galaxies with NOVA, tune in for a live performance at the Met, celebrate the 4th of July with a front row seat at the Nation’s Capital, 

catch up on the latest drama of Downton Abbey, all this and so 

much more, in the sunny display of high-definition television. This 

is public television as it is meant to be seen and appreciated. 

Public television is in the business of providing local public service. We treat our viewers as citizens, not consumers. Our stations 

provide over 98 percent of Americans with the highest-quality, free, 

educational media available. And in addition to all the great broadcast services that local public television stations offer, our stations 

are also providing cutting edge public services to communities beyond the broadcast, from educational services to public safety, to 

veterans job retraining, these services and so much more are part 

of the vibrant public service media that this country has invested 

in and we are proud to deliver to your constituents. Because an investment in public media is truly an investment in the unique 

needs of local communities nationwide. 

Again, we would like to thank this committee, and particularly 

Representative Eshoo, who authored the amendment which guaranteed our HD carriage, for all your work in crafting legislation 

that recognized the incredible value and critical services that are 

provided by local public television stations. 

Thank you for inviting us to participate in today’s hearing. We 

look forward to continuing to work closely with you as prepare to 

reauthorize this legislation. 

[The prepared statement of Ms. Kieley follows:] 

43 


79666.027

Testimony of Lonna Thompson 

Executive Vice President, COO and General Counsel 

Association of Public Television Stations 

Before the House Energy and Commerce Committee 

Subcommittee on Communications and Technology 

February 13, 2013 

Chairman Walden, Ranking Member Eshoo, 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 Television Extension and Localism Act 

(STELA) which governs the transmission of local public television signals to millions of direct 

broadcast satellite (DBS) viewers, is of great importance to the 368 public television stations 

across the country. This law directly impacts the carriage of our local stations throughout the 

country and it has tremendous influence on the services that are available to your constituents 

and our viewers nationwide, particularly those in rural America that are often limited in their 

Multichannel Video Programming Distributors (MVPDs) choices and disproportionately depend 

on satellite as a means to receive their paid television programming. 

First and foremost, we would like to thank this Committee and the Congress as a whole 

for the passage of STELA which recognized the critical services that local public broadcasting 

stations provide their communities nationwide. Because of that legislation, viewers in even the 

most remote corners of this country that receive local satellite HD service, have access to the 

best that public television has to offer in in the full splendor of high definition. No longer are 

customers denied access to the HD presentations of NOVA, Nature, Masterpiece Theater and 

exceptional local programming, thanks to the work that Congress did ensuring that all satellite 

providers that carry local HD channels must also carry the HD signals of local public 

broadcasters. 
44 


79666.028

Lonna Thompson Association of Public Television Stations 

We are also appreciative of the language that was included in STELA which allows 

satellite carriers to carry public television statewide licensees' signals throughout the entire 

state where the DBS providers have the bandwidth to do so. This provision removed statutory 

roadblocks that restricted the ability of residents and tax payers in states to receive the full 

benefits of their state's public television statewide network. 

Public broadcasting is charged by the Public Broadcasting Act with providing universal 

service to every corner of this country. We take that mission seriously and we are proud to 

deliver unparalleled children's educational content, the best in nature and science, in-depth 

historical and cultural programming, unmatched public affairs programming and some of the 

finest dramas on television. STELA enabled public broadcasters to meet this universal service 

mission and provide the highest quality of services to our satellite viewers. 

PUBLIC TELEVISION'S PRIVATE CARRIAGE AGREEMENTS 

As Congress looks to reauthorize STELA, public television proudly highlights the private 

carriage agreements that we have been able to negotiate with almost all major 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. 

THE NEED FOR A LEGISLATIVE SOLUTION IN STELA 

When I last testified before Congress, before the passage of STELA, we were still hopeful 

that we would be able to negotiate a similar carriage agreement with DISH. Unfortunately, after 

years of unsuccessful negotiations, we were never able dose a deal with DISH that would have 

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lonna Thompson Association of Public Television Stations 

guaranteed carriage of all of our stations' HD signals. As a result, before STELA was signed into 

law, DISH was not carrying the HD signal of any local public television station -even in markets 

where they offered the HD service of commercial broadcasters. 

STELA mandated the carriage of local public television stations' HD signals by any 

satellite carrier that had not entered into private carriage negotiations with public television. 

Now, DISH is required by law to carry the local HD signals of public television stations in all 

markets where they offer local HD service. DISH challenged this law in court and we were 

pleased that the courts upheld STELA. 

This provision was included in STELA because Congress recognized the unique 

educational mission of local public television stations and the void that was felt by citizens that 

were previously denied access to these critical services. 

RESULTS OF STELA PASSAGE 

As a result of STELA, viewers in Oregon are able to watch Oregon Field Guide, a valuable 

source of information about outdoor recreation, ecological issues, natural resources and travel 

destinations in the full beauty of High Definition. In the San Francisco Bay area, subscribers to satellite 

have access to the HD version of Quest, KQED's award-winning multimedia science and environment 

series. In Ohio, viewers in the Bowling Green area can tune into WBGU's HD programming and watch 

Scenic Stops, the station's new local program that explores what is off the beaten path in WBGU's 19-

county viewing area. And in Pittsburg, viewers can tune into WQED and watch the special production of 

Pittsburg From the Air which will take them on an HD aerial sightseeing tour of some of the most visually 

stunning attractions in Southwestern Pennsylvania. 

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Lonna Thompson Association of Public Television Stations 

In Massachusetts, Illinois, Iowa, Nebraska, Tennessee and communities nationwide, Americans 

can travel the galaxies with NOVA, tune in for a live performance at the Met, celebrate the fourth of July 

with a front row seat at the Nation's Capital, catch up on the latest drama of Downton Abbey, and so 

much more, all in beautiful display of high-definition television from the comfort of their own living 

rooms. This is public television as it is meant to be seen and appreciated. 

Public television is in the business of providing local public service. We treat our viewers 

as citizens, not consumers. Our stations provide over 98 % of Americans with the highestquality, free, educational media available. This includes unique community resources that would 

not otherwise be available, like unparalleled noncommercial children's educational content, local 

programming, formal and informal educational instruction for all ages, in-depth news and public affairs 

coverage and unmatched cultural programming. Thanks to STELA, those services are available to all DBS 

subscribers, regardless of where they live. 

In addition to all the great broadcast services that local public television stations offer, our 

stations are also providing cutting edge public service to communities beyond the broadcastparticularly in the area of education. These services include bringing multimedia course work and lesson 

plans to teachers in Oregon; using new media tools to foster financial literacy in ESL classrooms in 

Northern California; pioneering educational technology in Massachusetts in a way that allows public 

television stations throughout the country to offer curriculum-aligned, standards-based digital learning 

objects for use in classrooms nationwide; and producing innovative online and video adult education 

resources in Kentucky, aligned to the Common Core Standards, that help adults successfully prepare for 

the GED® test. 

Stations across the country are also partnering with their local public safety officials to use their 

broadcast spectrum to send encrypted information to police and rescue respondents at headquarters 

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Lonna Thompson Association of Public Television Stations 

and in remote locations. Many stations are serving as the CSPAN of state legislatures, broadcasting all 

state legislative activities to viewers throughout the state so that even those in the most remote corners 

of the country can be connected with their legislators. Stations have also made it a mission retrain the 

American workforce and serve America's returning veterans, with some stations offering extensive job 

retraining and certification courses for both veterans and nonveterans. 

All of these services and more, are part of the vibrant public service media this country has 

invested in and we are proud to deliver to your constituents. Because an investment in public media is 

truly an investment in meeting the unique needs of local communities nationwide. 

Again, we would like to thank this Committee, and particularly Representative Eshoo, 

who authored the amendment which guaranteed our HD carriage, for all your work crafting 

legislation that recognized the incredible value and critical services that are provided by local 

public television stations. 

Thank you for inviting me to participate in today's hearing. The reauthorization of STELA 

is critical to all public television stations and we look forward to continuing to work closely with 

you as prepare to reauthorize this legislation and assess what needs remain. 

Page 5 of 5 
48 

Mr. WALDEN. Thank you, Ms. Kieley, and I can assure you, we 

are not going to get between your viewers and Downton Abbey. 

Ms. KIELEY. Good plan. 

Mr. WALDEN. That would not be good. 

Let us go now to Mr. Michael O’Leary, Senior Executive Vice 

President of Global Policy and External Affairs, the Motion Picture 

Association of America. Mr. O’Leary, thanks for joining us this 

morning and rounding out our panel. We look forward to your testimony, sir. 

STATEMENT OF MICHAEL O’LEARY 

Mr. O’LEARY. Thank you, Chairman Walden, Chairman Upton, 

Ranking Member Eshoo, and members of the subcommittee. Thank 

you for inviting me to testify this morning on behalf of the Motion 

Picture Association of America. I also want to acknowledge my fellow panelists. It is an honor to be on the panel with the folks 

today, and to provide our perspective on the potential reauthorization that this subcommittee is undertaking. 

My message on behalf of the industry that creates much of what 

you see on television is very simple and very straightforward. The 

satellite and the cable compulsory licenses are historically anachronistic that are no longer justified in today’s television programming 

marketplace. If those licenses were to be retained, however, they 

should not be expanded in our view. Program owners should be 

more fairly compensated, and a direct marketplace should be encouraged. 

I want to be clear at the outset that we share the goal that was 

articulated by the chairman in his opening remarks, and I believe 

by everyone on this committee, and that is to provide consumers 

with the highest quality entertainment and informational experience possible, and to expand choices available in television in new 

and innovative ways. At the same time, it is imperative that the 

hardworking men and women who invest their talent and capital 

to create the programming receive fair market compensation, and 

that the law promote marketplace innovation. 

Mr. Chairman, there is no better time to be a consumer of content than today, and we are confident that the future will bring 

even more high quality entertainment to viewers around the Nation, and frankly, to those around the world. The studios I represent create much of the programming that we all enjoy today. We 

have an incentive to get those programs in front of as many viewers as possible, and we believe that the marketplace can have a big 

role in making that happen. 

Just as the television landscape will continue to evolve in the 

months and years ahead, it has changed dramatically since the enactment of the compulsory licenses being discussed here and in the 

coming months. The market conditions that led Congress to create 

the cable and the satellite compulsory licenses have long since disappeared. Congress decided, as you know, in 1976 and again in 

1988 to introduce compulsory licenses to help what were then 

fledgling cable and satellite industries acquire retransmission 

rights in television programming. Government intervention in the 

marketplace was deemed necessary at those times to ensure the viability of what were then new services. Today, the overwhelming 

49 

majority of programming being offered by cable and satellite is licensed through marketplace transactions. There is simply no justification in today’s market for a satellite compulsory or cable compulsory licenses. There is certainly no justification for retaining a 

license that imposed below market rates for the acquisition of that 

programming. 

As my written testimony notes, the royalty rate paid by satellite 

carriers under Section 119 today is roughly the equivalent of the 

market rate paid for programming in 1999, almost 15 years ago. 

At the same time, in that same period of years, the cost of producing programming has continued to increase. Today, the cable 

and satellite industries are, to their credit, very successful. They 

have over 90 million subscribers and report a combined revenue in 

excess of $80 billion. The compulsory license royalty fees paid, however, equal less than one half of one percent of their combined revenues. One can not help but ask how government intervention in licensing of retransmitted programming by these industries can be 

justified in today’s marketplace, and we believe this should be a 

threshold consideration for the committee as you move forward 

over the next 2 years. 

Should Congress, however, as a result of these proceedings determine that compulsory licenses should be prolonged, we would 

strongly urge the committee not to expand either license to new 

market entrants. Congress should not further impede the ability of 

program owners to obtain the true economic value of their work, 

and instead should encourage development of marketplace regimes. 

On behalf of our members, Mr. Chairman, I again want to express our sincere gratitude to you and this committee for holding 

this hearing, for getting, as you indicated, an early start. This is 

a complicated issue. It is a difficult issue, and we are confident that 

this will be the first of many conversations over the next few 

months, and we welcome and look forward to the opportunity to be 

a part of that. Thank you. 

[The prepared statement of Mr. O’Leary follows:] 

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79666.032

STATEMENT OF MICHAEL P. O'LEARY, 

SENIOR EXECUTIVE VICE PRESIDENT, 

GLOBAL POLICY AND EXTERNAL AFFAIRS, 

ON BEHALF OF 

THE MOTION PICTURE ASSOCIATION OF AMERICA, INC. 

BEFORE THE HOUSE ENERGY AND COMMERCE 

SUBCOMMITTEE ON COMMUNICATIONS AND 

TECHNOLOGY 

"SATELLITE VIDEO 101" 

RAYBURN HOUSE OFFICE BUILDING, ROOM 2322 

WASHINGTON, D.C. 

WEDNESDAY, FEBRUARY 13,2013 

10:30 A.M. 
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Chainnan Walden, Ranking Member Eshoo and members of the subcommittee, thank 

you for this opportunity to testify on behalf of the Motion Picture Association of America, 

Inc, and its member companies to present the views of the creators and distributors of 

movies, television series, specials and other prerecorded entertainment programming that 

constitute the largest category of television programming retransmitted by satellite carriers 

and cable operators under the statutory compulsory licenses in sections 11 I, 119 and 122 of 

the Copyright Act.; 

With due respect to the satellite carriers and cable operators who ever more efficiently 

deliver programming to the homes of consumers, it is not headends, or satellites, or fiberoptic cables that consumers crave and for which they are willing to pay. It is entertaining and 

infonnative programming that consumers desire. As the Committee begins its reexamination of the Satellite Television Extension and Localism Act of2010, [ want to stress 

that our goal is to provide consumers the highest possible quantity and selection of television 

programming in the most innovative ways. To do that, the men and women who invest their 

talent and capital to create that programming must receive fair market compensation, and the 

law must promote marketplace innovation. 

With that in mind, my message today is simple and straightforward: 

1. The cable and satellite compulsory licenses are historical anachronisms that are no 

longer justified in today's television program marketplace; 

2. If the compulsory licenses are retained, their scope should not be broadened, program 

owners should be fairly compensated, and direct marketplace program licensing 

should be encouraged. 

Because the sunset oftlle latest extension of the satellite compulsory license at the end 

of2014 offers an opportunity to discuss the efficacy of continuing the compulsory licenses, I 

will start with a short history of the satellite license and then move on to some of the issues 

that are sure to be raised during the course of this discussion. 

HISTORY OF THE SATELLITE COMPULSORY LICENSE 

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The Satellite Home Viewers Act ("SHVA") of 1988 created in Section 119 of the 

Copyright Act a five-year "compulsory license" that allows direct-to-home satellite program 

distributors (such as Dish Network and DirecTV) to retransmit broadcast television 

programming from distant markets to "unserved households" without the permission of the 

copyright owners of that programming. This satellite compulsory license, like the cable 

compulsory license enacted more than a decade earlier, limits the rights of copyright owners 

and forces them to make their creative works available for retransmission without their 

consent and without any ability to negotiate a fair, marketplace price. 

The satellite compulsory license was extended for five-year periods in 1994, 1999, 

2004, and 2009. The 1994 renewal included a royalty rate adjustment procedure aimed at 

providing copyright owners with market value compensation for the use of their 

programming by satellite companies. This procedure resulted in the establishment of market 

based royalty rates in ! 998 by a panel of independent arbitrators appointed by the Copyright 

Office.;' However, these market based rates were short lived. 

Although satellite companies pay market-based license fees for the hundreds of nonbroadcast program services that they sell to their subscribers, they strongly objected to paying 

market based royalty rates for llliY retransmitted broadcast programming. They successfully 

petitioned Congress to impose a substantial discount on the market based rates, essentially 

creating a subsidy for satellite television services borne by the creators of broadcast 

programming. 

After the reduction of satellite royalty rates in 1999, Congress in the 2004 

reauthorization provided for an adjustment of the rates under the supervision of the Librarian 

of Congress. Voluntary negotiations between satellite carriers and program owner groups 

resulted in only a marginal rate increase and an annual inflation adjustment. More than ten 

years later, the current royalty rate paid by satellite carriers under Section 119, finally equals 

what was considered the market rate in 1999, notwithstanding substantial increases in 

programming costs and the market-based rates paid by cable and satellite operators for nonbroadcast channels since that time. 

NEITHER THE SATELLITE NOR THE CABLE COMPULSORY LICENSE IS 

JUSTIFIED IN TODA YS MARKETPLACE 

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The market conditions that gave rise to the cable compulsory license in 1976, and the 

satellite compulsory license in 1988, have long since disappeared. In! 976, distant and local 

television broadcast signals were the Q!l)y programming cable operators could sell to their 

subscribers. By 1988, the emerging direct-lo-home satellite industry offered some nonbroadcast networks, but being able to offer distant television broadcast signals was critical to 

the ability of then-nascent satellite television services to compete with more established cable 

services. In both instances, the prevailing opinion was that the "transaction cost" of 

negotiating retransmission rights for the television broadcast programming that was so 

essential to these still emerging services justified government intervention in the marketplace 

to ensure the viability of these services. 

Today, local and out-of-market ("distant") television broadcast signals remain a 

valuable part of cable and satellite program packages, even though they account for a 

relatively small amount of the programming sold by satellite carriers and cable systems to 

their subscribers. 

If it were not, we would not be here. But, in thinking about whether compulsory 

licensing can be justified in today's marketplace environment, it is important to recognize 

that each one of the tens of thousands of hours of non-broadcast programming sold by cable 

and satellite systems to their subscribers is licensed on marketplace tenns and conditions. 

The rapidly growing market for online video is also governed entirely at anm-Iength 

marketplace negotiations. Only the relatively small amount of local and distant broadcast 

programming retransmitted by cable and satellite providers is subject to a government 

imposed compulsory copyright license.J1l 

The fact that the overwhelming majority ofprogramrning offered by cable and 

satellite companies is licensed in marketplace transactions suggests that there is no longer any 

justification for retaining the historical relics that are the cable and satellite compulsory 

licenses. And there is certainly no justification for requiring licensing of broadcast television 

content to cable and satellite operators at below market, govemment imposed rates. 

As the Register of Copyrights stated in the Copyright Office's most recent Section 

109 Report: 

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79666.036

The cable and satellite industries are no longer nascent entities in need of government 

subsidies through a statutory licensing system. They have substantial market power 

and are able to negotiate private agreements with copyright owners for programming 

carried on distant broadcast signals. The OffIce finds that the Internet video 

marketplace is robust and is functioning well without a statutory license. The Office 

concludes that the distant signal programming marketplace is less important in an age 

when consumers have many more choices for programming from a variety of 

distribution outlets.iv 

THE SATELLITE AND CABLE COMPULSORY LICENSES WERE SEPARATELY 

DESIGNED FOR VERY DIFFERENT SERVICES, EACH WITH ITS OWN 

DISTINCT NEEDS AND BUSINESS MODELS 

Although the programming services offered by cable systems and satellite carriers are 

largely indistinguishable today, they were very different when the satellite license was first 

imposed in 1988. Cable systems from the outset offered subscribers a collection of local and 

distant broadcast signals. In many instances, the primary appeal of cable service was that it 

provided better reception of local signals while eliminating the need for roof-top antennas. 

And cable was largely an urban and suburban service because of the high cost of stringing 

cable wires in sparsely populated, nlral areas. 

When direct-to-home satellite services came on the scene, they provided no local 

stations and only a few distant signals because of bandwidth limitations. They catered to 

nlral customers who had available few, if any, over-the-air local stations and in areas where 

satellite service had an infrastructure cost advantage over cable. 

Because of these significant differences between the two services, the cable and 

satellite compulsory licenses were drafted quite differently. The cable compulsory license, 

enacted in 1976, employs a royalty fonnula based on a percentage of cable subscriber 

receipts that was not geared to market prices, but produced a royalty payment in the amount 

that Congress thought appropriate in 1976.v This fonnula did not directly link the royalty fee 

to the number of TV signals carried. Rather, the largest cable systems' fee is based on cable 

subscriber revenues multiplied by "distant signal equivalents," a 1976 construct of the amount 

5 
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of non-network proi,,'ramming on different types of distant retransmitted TV signals. Congress 

did require, however, that even if a cable system carries ,-",--"",~"-"-,"""",,,-,,, a minimum 

royalty fee must be paid "for the privilege of retransmitting distant non-network 

programm ing. "Vl 

The distant signal equivalent royalty fees are intricately tied to the number of distant 

signals that could be carried under Federal Communications Commission CFCC) rules that 

were last in effect in 1981. For distant signals that a cable system could not have carried 

under those FCC rules, a much higher royalty rate applies. In effect, the rate structure creates 

an incentive for the largest cable systems to limit the number of distant signals that they carry 

to the number allowed under the FCC rules rescinded in 1981. 

The rates set by Conl,'l'ess in the cable compulsory license formula were set at less 

than market value under a government-run compulsory licensing system as a means to 

encourage the growth of the then-emerging cable industry. In 1988, direct-to-home satellite 

companies provided a very different service as compared to the service offered by cable 

companies. As a result, Congress chose a very different royalty formula in the satellite 

compulsory license, one based on the number of subscribers per month that receive each 

retransmitted distant broadcast station multiplied by a monthly per subscriber rate. In 

contrast to the more complicated cable compulsory license royalty calculation, the satellite 

fee relates directly to "the total number of subscribers that received such retransmissions"vii 

and is the same for all distant signals carried. The satellite flat fee per subscriber per month 

is also much simpler to administer than the complicated cable royalty fee calculations. 

COMPULSORY LICENSE ROYALTIES PAID BY CABLE AND SATELLITE 

COMPANIES HAVE NEGLIGBLE IMPACT ON CONSUMERS 

For 2011, cable systems paid royalties totaling $213,977,846 and satellite carriers 

paid royalties totaling $93,902,149, for a grand total of $307,879,995.viii While this is a 

substantial amount of money it is a negligible portion of cable and satellite's operational 

costs. 

The National Cable & Telecommunications Association (NCTA) reports that 2011 

estimated cable video revenue was $ 56,938 Billion.ix Compulsory cable royalties are less 

6 
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79666.038

than 0.4% of these revenues. DirecTV reported 2011 U.S. revenues of$ 21.87 Billion.' The 

other major satellite carrier, Dish Network, reported 20 II revenues of $3.63 Billion. xi 

Royalty fees paid under the satellite compulsory license will amount to some 0.4% of these 

revenues. 

NCTA reports 58 million cable video subscribers in 2011.'ii DirecTV and Dish 

Network subscribers totaled 19.981 million and 14.042 million, respectively, in 201l.xiii 

IF THE COMPULSORY LICENSES ARE RETAINED, CONGRESS SHOULD 

ENSURE FAIR-MARKET COMPENSATION TO PROGRAM OWNERS, THE 

LICENSES SHOULD NOT BE EXPANDED, AND MARKETPLACE LICENSING 

SHOULD BE ENCOURAGED 

The evidence is overwhelming that the progran1 marketplace can and, for the vast 

majority of cable and satellite programming, does work without the need for compulsory 

licensing. Certainly there is no justification for continuing the practice of below-market 

license rates to compensate program owners, or for further expanding the current licenses 

beyond the entities now eligible, or to cover retransmission of distant programming not 

currently permitted. In particular, because both the cable and satellite licenses are 

inextricably bound to regulations of the FCC, such as those governing network program nonduplication and syndicated exclusivity, any entity not subject to those regulations should be 

excluded from the scope of the existing compulsory licenses. 

If Congress decides to continue to allow cable and satellite companies to use 

broadcast programs pursuant to statutory license, Congress should not further impede the 

ability of program owners to obtain the full economic value of their creations through 

exclusive licenses with broadcast stations and networks, or diminish the value of such 

licenses once they are entered into. Respect for freely negotiated program licenses with 

stations and networks written into the existing compulsory licenses by incorporating the FCC 

network non-duplication and syndicated exclusivity ruJes should be maintained and, where 

necessary, strengthened where broadcast stations and program owners have bargained for 

exclusive rights. xlV Congress should encourage marketplace transactions that strike a fair 

bargain between rights owners and program users. The existing licenses are "compulsory" 

only for program owners. They allow cable and satellite companies to enter the marketplace 

7 
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79666.039

and license programs directly from owners even when the compulsory licenses might apply.xv 

Such direct licensing should be encouraged. Whatever Congress does in this area, it should 

ensure that these licenses in no way discourage such direct licensing and preserve the option 

to engage in direct, marketplace licensing rather than taking advantage of the mechanism of 

the compulsory licenses. 

! Motion Picture Association of America. Inc, ("MPAA") is a trade association representing six of the world's largest producers and 

distributors of motion pictures and other audiovisual entertainment material for viewing in theaters, on prerecorded media, over broadcast 

TV, cable and satellite services, and on the Internet MPAA members include Paramount Pictures Corporation. Sony Pictures Entertainment 

Inc., Twentieth Century Fox Film Corporation, Universal City Studios LLC, Walt Disney Studios Motion Pictures. and Warner Bros. 

Entertainment Inc. MPAA also represents some 200 non~rnember program producer and syndicator claimants to cable and satellite 

compulsory license royalties \vith respect to the distribution of such royalties. 

n The Panel specifically endorsed the approach taken by PBS that looked to the viewing rights to 12 popular basic cable networks (A&E, 

CNN, Headline News, Discovery, ESPN, the Family Channel, Lifetime, MIV, Nickelodeon, TNN, TNT, and USA) that represented the 

closest alternative programming to broadcast programming for satellite homes. PBS then calculated a 'bench-mark' rate for these networks 

as representative of the fair market value of broadcast signals retransmitted by satellite carriers. That benchmark rate produced average 

market rates 01'26 cents in in 199& and 28 cents in 1999. which translated to a royalty rate of at least 27 cents for the 1997-99 

period. Carner Compulsory License, 62 Fed. Reg. 55742 at 55648 (Oct. 28, 1997), affd SBCA v. 

Lthronan (?fCongress, (D.C-Cir 

ill Local station programming is also 

the retransmission oftoca! broadcast programming 

retransmission consent. See 47 U.s.C §325(b)(n 

licenses. However, copyright owners receive no compensation for 

markets. Local station programming is subject either to must carry or 

lv Satellite Home Viewer Extension and Reauthoriz.ation Act, Section 109 Report, A Report (!fthe Rcgls/<!f' (ifCopyngilts, June 20{)8, at page 

219. 

, H.R. Rep. No. 1476, 94th Cong , 2d Sess. at page 91. 

\1 Id. at page 96. 

'.lj 17 U.S.c. Section 

'~Copyright Office Royalty Fees Financial Statements as of 12113/2012. 

~ http://investor.directv.comireleasecletail.cfm?ReleaseID=649162 

,\ http://about.dish.com/press-re1ease/financial/dish-network ~repol1s-fourth-quarter-and-year-end-20 II-financial-results 

'1~ http://W\\-w.ncta.com.Stats/SasicCableSubscribcrs.aspx 

A\~ http:wv.'W.ncta.comiStats/TopMSOs.a.<;px 

.... ,1" The cable license requires cable operators to provide exclusivity for syndicated programming on both independent and nenvork distant 

stations retransmitted in local markets ("Syndicated Exclusivity" or "Syndex Protection"). That is, if a local station has exclusive rights to 

broadcast a particular syndicated program, the cable operator upon request from the local station must not violate the local station's 

exclusive rights by retransmitting that same program from a distant station. The satellite license provides syndicated exclusivity with 

respect to distant independent stations, but not distant network stations. This disparity along \vith the network non~duplication disparity 

should be corrected by amending the satellite license to afford the same syndicated exclusivity protection rights as the cable license. 

I.' For instance, a cable system located in a DMA that encompasses areas in adjacent states and carrying "local" signals from another state 

could negotiate \vith distant in-state stations for retransmission rights to the news and public affairs programming owned by those in~state 

stations separate and ap,lrt from the cable compulsory license. 

8 
58 

Mr. WALDEN. Thank you very much, Mr. O’Leary. You are absolutely right. We will have additional hearings, and I am sure a lot 

of conversations in the months ahead. 

That concludes our panelist’s testimony. We appreciate all of 

your words and your comments. 

I will start out with questions this morning. This one is for the 

entire panel. I have read reports that—to the extent they are able 

to answer. I have read reports that between 1 and 1.5 million subscribers still receive distant signals. Is that accurate? Are those 

households predominantly rural, urban, or evenly distributed? And 

if Congress were to let the retransmission consent exemption and 

the distant signal compulsory license expire, would those households lose access to all local broadcast service? So first, is the million to million and a half number correct, where are those households, and what happens if we allow the distant signal compulsory 

license and retransmission consent exemption to expire? 

Ms. Gore, can you tackle any piece of that? 

Ms. GORE. The only piece of that that I can tackle, we do not 

keep figures on how many distant subscribers there are out there. 

I believe my colleagues on the panel here may be able to help you 

out there. I am aware that the distant signal license is used, as I 

think we all touched on, in many different circumstances. Sometimes it’s someone who doesn’t have access to any local broadcast 

stations, and so they are receiving what I tend to call a truly distant signal, which would mean perhaps from New York or Los Angeles, when they are not at all in that area. 

There are other situations where the distant signal license, I 

gather, is used for filling in a short market, which we have talked 

about, and there the signal is coming from generally a more nearby 

area. What would happen if the distant signal license were let to 

expire, I cannot say. I know that the copyright office studied this 

and I know that the GAO looked into what the copyright office had 

reported, so they probably can speak for themselves. But it is a 

complex intertwining. 

Mr. WALDEN. All right. Mr. Dodge? 

Mr. DODGE. I am not exactly sure, I must admit, where the 1 

million to 1.5 million number came from. I know at DISH, we actually don’t keep track, although we may be able to get you that information, so we will take an action item to try to do that. But certainly, I believe it is a bigger issue for DirecTV today, because with 

the utility, the license is a little different for each of us. Where 

DirecTV still has some grandfathered subscribers, I believe, from 

years gone by and they are not in all 210 markets today, they still 

use a true distant license there for, I believe, providing programming to unserved households in the markets where they don’t offer 

local programming, but how many customers that might impact, I 

don’t know. 

Mr. WALDEN. OK. 

Mr. DODGE. With respect to DISH, we use a license primarily for 

three purposes, the largest of which is to fill in short markets, as 

Ms. Gore noted, so you know, for example in a market where someone doesn’t have a FOX station, we import a FOX so that they are 

able to watch American Idol and similar programming, just like all 

59 

other Americans, and without the license we would have to shut 

those people off. 

Similarly, we provide service outside the spot beam to certain 

customers, which allows service to a safer state, like Utah, which 

is largely rectangle, our spot beams are round, and so the corners 

get cut off. And unless those folks are able to get local programming via an off-air antenna, we would have to shut those folks out 

as well, and RVs and commercial trucks, too. 

Mr. WALDEN. All right. Ms. Mago? 

Ms. MAGO. I think what you have heard here is that there is getting to be fewer and fewer of these people that use the distant signal license, and I think it is—the exact number would be in the 

hands of the carriers to know that number, and I don’t know that 

we have it. But even those instances that Mr. Dodge just talked 

about, they are becoming fewer and fewer as well, because as you 

provide local into local service into all 210 markets, it is relatively 

easy to provide that local signal to the—to anyone within that spot 

beam, and that seems to be a logical thing to do. Short markets are 

also disappearing as a result of the digital television transition. A 

lot of stations are able to use their multicast capacity to provide 

a second networks signal within the market. 

So I think the key point for us continues to be our focus on localism, and making sure that we recognize how much fewer there are. 

Mr. WALDEN. All right, and I am going to go to Ms. Kieley and 

then Mr. O’Leary, but I am running out of time, so sorry. 

Ms. KIELEY. My answer will be easy. We unfortunately do not 

track that at the Association of Public Television Stations, and 

defer to our friends in the satellite industry to help us get a better 

handle on that, but I will echo what Ms. Mago has said, that localism is a top priority for us in public television. 

Mr. WALDEN. All right. Mr. O’Leary? 

Mr. O’LEARY. I will be brief. I know I can’t validate that number. 

I have no way to dispute it. It ultimately would lie with the carriers. I agree with the comments of Ms. Mago. I would also note 

that even if it is retained, the distant signal license is still woefully 

under market—the rate is still woefully under market. 

Mr. WALDEN. OK. I thank you all for your answers, and now 

turn to the ranking member of the subcommittee, Ms. Eshoo, for 

questions. 

Ms. ESHOO. Thank you, Mr. Chairman, and thank you again to 

the panel for your very helpful testimony. I have a whole list of 

questions and I think that I will submit them in writing, but I 

want to ask you, with the exception of Ms. Gore, since she put it 

right out there that she was not going to recommend any kind of 

policy—no policy recommendations. To the four of you, starting 

with Mr. Dodge, so I have got 5 minutes with four people, so about 

a minute and a half. If you were going to choose your top policy 

preference in the reauthorization of STELA, what would it be? So 

that is to each one of you, starting with Mr. Dodge. 

Mr. DODGE. It would be to ensure that consumers are able to 

continue to receive network programming during retransmission 

disputes. 

Ms. ESHOO. Very good, thank you. 

60 

Ms. MAGO. As I said in my opening testimony, our top policy 

preference is to preserve localism and allow broadcasters to continue to provide the service to their communities. 

Ms. ESHOO. Great. Ms. Kieley? 

Ms. KIELEY. We just hope that any reauthorization of STELA 

continues to recognize the unique services of local public television 

stations, and how we are different in the marketplace. 

Ms. ESHOO. Well, I am here. 

Ms. KIELEY. We do appreciate that. 

Ms. ESHOO. Thank God we got that one worked out. Thank you, 

Mr. Dodge. Thank you for your advocacy. 

Ms. KIELEY. And that would be our top priority, as well as maintaining vibrant local service for our public television stations. 

Ms. ESHOO. Great, thank you. Mr. O’Leary? 

Mr. O’LEARY. Sure. I think that our top priority, as I outlined, 

is to get the content that we make in front of as many people as 

possible. That is our business model in simplest terms, and I think 

that we would advocate that the committee do that by one of two 

ways. One would be to step back and look at the entire context and 

see if the current regime continues to make sense, and if it ultimately comes to the conclusion that there needs to be some type 

of regime in place, to make sure that it is updated to reflect the 

times in which we live, and it is not necessarily bound up in the 

past. 

Ms. ESHOO. Thank you very much. I think that we need to know 

more from you about—you referred to content, and I think there 

is an old context, an older context to it, and I think that there 

needs to be a new appreciation on the part of members of what you 

mean exactly by content and the Motion Picture Industry Association and in the 21st century. I think there are so many exciting 

things, but I would just make that as a recommendation. 

Mr. O’LEARY. Absolutely, and we would be happy to provide that 

to the committee. 

Ms. ESHOO. That members really be instructed and be brought 

up to snuff on what you are referring to. 

Well, that is great. We have got—I like all of your answers. 

Thank you very much. I yield back. 

Mr. WALDEN. Gentlelady yields back the balance of her time. 

Chair now recognizes Mr. Barton for 5 minutes. 

Mr. BARTON. I am here. 

Mr. WALDEN. I was looking down my list and others weren’t, but 

you were here at the gavel dropping, so—— 

Mr. BARTON. Thank you, Mr. Chairman. 

Mr. O’Leary, I want to make sure I understand. Your testimony 

is not that these acts should not be reauthorized, it is that certain 

parts of them should be allowed to expire. Is that correct? 

Mr. O’LEARY. I think there is that is something that should be 

part of the consideration that you undertake over the next 2 

months whether or not it is essential to reauthorize all aspects of 

this, yes. 

Mr. BARTON. OK, so I want to make sure I understand before I 

go to Ms. Mago. You—the motion picture industry is not advocating 

allowing them to expire, it is simply saying we should think about 

it? So you are a little bit—you are not a hard-hard, you are kind 

61 

of a medium-soft, am I right? I mean, I am not being funny, I am 

just—— 

Mr. O’LEARY. No, I understand. I think that we believe that, as 

I said in my testimony, that certain provisions here are anachronistic, and that they do not necessarily need to be—they could be 

allowed to expire. Having said that, we are also mindful, as has 

been alluded to in the comments made by members of the panel 

and members of this panel, this is an incredibly complex web of 

pieces that all kind of fit together. And so what I am trying to portray to you—I am not trying to be soft and squishy and in the middle, but the truth of the matter is, I am trying to be realistic. We 

think that some of these things are woefully outdated and could be 

allowed to expire. We think that is—— 

Mr. BARTON. But that is different than supporting the expiration. 

So you are—let me ask you a straight question, yes or no. 

Mr. O’LEARY. Sure. 

Mr. BARTON. If this subcommittee and the full committee were 

to support a clean straight reauthorization, no changes except the 

date, would your industry support that? Yes or no? 

Mr. O’LEARY. I am not in a position to say right now what they 

would support. I do think that that would be preferable, frankly, 

Congressman, to expanding the license in any way. 

Mr. BARTON. I am going to go to Ms. Mago, since I have gotten 

a pretty squishy answer from Mr. O’Leary. 

Would your trade association support clean reauthorization with 

no changes except the dates? 

Ms. MAGO. I am sorry, Mr. Barton, I have to frustrate you as 

well. We are so early in this process that at this point, we are still 

considering where the marketplace is, as I indicated, and while we 

see that there are anachronistic pieces and we think that expiration should be on the table, we haven’t formed a final position. 

Mr. BARTON. So if we put your group with Mr. O’Leary’s group, 

you all will hug each other and then talk around each other for as 

long as we allow you to. 

Ms. MAGO. We would all hug each other on this panel. We are 

like that. 

Mr. BARTON. Anyway, I yield back, Mr. Chairman. I would definitely vote for a clean reauthorization. If there is a meeting of the 

minds from the stakeholders, I would certainly take a look at that. 

My guess is that the stakeholders have different views, and as they 

should, because of the economic consequences, and it is probably 

not as much peace and love at that table as they are portraying 

this morning. 

Mr. WALDEN. And we could bring some other folks up and there 

would be real fireworks. 

Mr. BARTON. Right. Thank you, Mr. Chairman. 

Mr. WALDEN. We might do that today. 

I thank the gentleman and now we go to Mr. Luja ́n from New 

Mexico for questions. 

Mr. LUJA ́ N. Mr. Chairman, thank you very much. 

To Ms. Gore, there are some questions that I have for you which 

maybe aren’t appropriate for this hearing, but we will be working 

with the FCC to look into the equitable treatment of tribal communities as well, as we talk about some of the rulings and renderings 

62 

and many of the very complex world, so I will get those to you and 

submit them into the record. 

But for today’s hearing, I am interested with all the witnesses, 

should Congress consider the changes in the competitive landscape 

for video services as we examine STELA, and especially with the 

question that Ranking Member Eshoo asked, content is very much 

different now. We are getting content in many different areas, and 

how far reaching should this be, or what should be included in 

that? Ms. Gore? 

Ms. GORE. Well, I think I have mentioned that I am not going 

to give too many opinions. I will note one factual point, and that 

is that one of the things that expires is the requirement in Section 

325 of the Communications Act for good faith negotiating, so that 

is one of the expiring provisions that perhaps you might want to 

consider. 

Mr. LUJA ́ N. Thank you. Mr. Dodge? 

Mr. DODGE. I guess what I would say policy-wise is we think that 

the law needs to be improved to address the interest of consumers 

in two key areas, which are, one—I mean, really, in the spirit of 

localism that consumers should be able to get network programming during takedowns, and two, folks in orphan counties, which 

are counties that actually are in a state but don’t receive signals 

from a DMA in that state, should be given the opportunity to get 

local network channels from their state. 

Mr. LUJA ́ N. I would agree with that. Ms. Mago? 

Ms. MAGO. First of all, let me say for the record that broadcasters are always in favor of good faith. We negotiate in good faith 

all the time and will continue to do that, as appropriate, to make 

sure the consumers are able to receive our signals, because that is 

very important. It is important for us to reach every single member 

of our audiences that we can. 

I think as we look at this legislation, as I indicated earlier, you 

have got to look at localism. Providing that local into local service 

in all 210 markets is a very important goal. 

Mr. LUJA ́ N. I appreciate that. 

Ms. KIELEY. I would just say on behalf of public television, that 

we recognize that these are very complex issues, many of which are 

intertwined, and we are very appreciative of the chairman and the 

leadership of this committee for taking an early look at this piece 

of legislation. And that we continue to look forward to working 

with Congress as you look at these issues, we too are looking at 

them, or early into the implementation, it feels, from the passage 

of STELA, and we are looking closely—as I mentioned to Ms. 

Eshoo’s question, we first and foremost would want to make sure 

that any type of legislation that looks at the overall video competition would recognize a unique role that local public television stations play in that marketplace and preserve some of the unique 

protections that have been in place for our local public television 

stations. 

Mr. LUJA ́ N. I appreciate that. Mr. O’Leary? 

Mr. O’LEARY. Congressman, I don’t know that I have a whole lot 

to add at this point. I don’t disagree with anything I have heard. 

Mr. LUJA ́ N. That is a good answer. 

Mr. O’LEARY. All right, I will stop. 

63 

Mr. LUJA ́ N. Ms. Gore, does the FCC have information on how 

many consumers are receiving distant signals, how many of those 

households are receiving distant signals because Congress has 

grandfathered them in during previous satellite authorizations? 

Ms. GORE. No, Mr. Luja ́n, we do not have that information. That 

is not provided to us. We don’t track how many distant signal subscribers—— 

Mr. LUJA ́ N. Does anyone have that information? 

Mr. DODGE. We don’t actually have any grandfathered subscribers at DISH. 

Mr. LUJA ́ N. OK. Anyone? No? 

Ms. MAGO. I think it is uniquely in the hands of the carriers. 

Mr. LUJA ́ N. OK, maybe we can go to the carriers and chat with 

them. Mr. Dodge, do you agree with Mr. O’Leary’s statement that 

the current satellite royalty rates under Section 119 are only equal 

to the market rate from 1999? 

Mr. DODGE. Well, I agree with Mr. O’Leary on one key point. We 

certainly are all for fully compensating artists, you know, as they 

well deserve, and we are all for paying the market rate, so I guess 

in our view, the devil is in the detail of what a market rate should 

be. And if the proxy for that are retransmission rates today, we 

would argue that that is not a fair market rate, because it is not 

a fair fight today. In each DMA, you have got one broadcaster who 

effectively has been given a monopoly and plays all of the distributors off each other, and the rates are just going up 100 percent 

each year. And we would put forth that those are not comparable 

market rates. 

But we also think the system today works where we sit down 

with the interested stakeholders, the MPA, the sports leagues, and 

negotiate what the rate should be after each reauthorization. And 

if we don’t reach an agreement, then I believe it goes to the FCC 

or the copyright office to actually arbitrate that, and we have been 

able to reach agreement every reauthorization to this point. 

Mr. LUJA ́ N. I appreciate that, Mr. Chairman, and as I yield back, 

you know, it has been brought up about the economic consequences 

and whether there is a permit or a reauthorization or STELA is not 

reauthorized, Mr. Chairman, I hope that we are able to explore 

what the economic consequences are one way or another, and what 

those impacted parties will fully realize. 

So thank you, and with that, Mr. Chairman, I yield back. 

Mr. WALDEN. Gentleman yields back the balance of his time. 

Chair now recognizes the Vice Chairman of the Subcommittee on 

Communications and Technology, Mr. Latta. 

Mr. LATTA. Thank you very much, Mr. Chairman, and again, 

thanks very much to our panel for being here. You know, these are 

really important questions. You know, I represent what you might 

consider a suburban, rural-type district, and when we had the 

switchover to digital, I knew it was going to—we got a lot of phone 

calls from people about—because, you know, TV viewing is something that is important to a lot of folks out there. I can remember 

one day I was doing courthouse conferences, and I think I had five 

people in a row that came in and sat down and asked the exact 

same question about what was happening to their TV viewership, 

64 

and so I know that these are very important questions to folks out 

there. 

And if I could, Ms. Gore, I would like to start with you with this 

question. Do television viewers—and this could be maybe a loaded 

question. Do television viewers understand how the current law 

works, and following up with that, what kind of complaints about 

satellite law does the FCC receive from viewers? 

Ms. GORE. Mr. Latta, we looked into that and I am happy to report that the number of complaints that we got over the past year, 

2012, was about—between 60 and 70 complaints that were 

catalogued as in this category. They have shifted, over my experience with this subject area, from a focus on concern about distant 

signals, and now the questions are more about local stations. The 

questions—I can’t break them down into individual categories, but 

basically there are some situations where a consumer is getting the 

local package and then for some reason, they are suddenly getting 

a different local package. And so they contact us to understand 

why that was changed, and there were different reasons why it was 

changed. Sometimes it is an error on the part of the satellite operator, and sometimes it is because that DMA map may have 

changed, and so it is something that is accurate. 

The essence of those complaints actually seems to be that consumers would like to choose the local stations that they are offered, 

as opposed to being confined to those within the DMA. I am not 

expressing an opinion, I am reporting what their complaints are. 

Mr. LATTA. Let me just follow up with that just a little bit. When 

you do get those complaints, how long does it take for the turnaround time for the FCC to get back to the consumer with those 

answers? 

Ms. GORE. Well actually, typically we have our wonderful call 

center folks who take a call, and they talk to the person on the 

phone and they explain it to them. If they submit a complaint in 

writing, then someone gets back to them, and oftentimes, if it is a 

complaint that is specifically about a particular satellite carrier, 

they will, I believe they use the term ‘‘serve’’ that complaint on the 

satellite carrier in order to get a response. So there is a process in 

place that has a certain time frame for the satellite carrier to respond in that case. Every once in a while, a consumer finds his or 

her way to me and we get to have a lesson in copyright. 

Mr. LATTA. Well following up with that, if we could, on the predictive model indicates that if a viewer can get an adequate signal 

over the air, and is ineligible to receive distant signal service, the 

law allows the viewer to challenge that finding on a location test. 

Do the viewers ever request such tests, and if so, what happens? 

Ms. GORE. The tests would be requested from the satellite carrier, not from us, so I do not have data on that. I do not know how 

often it happens. It used to be an issue before. That used to be the 

topic of some complaints and inquiries. As I said, over the past 

year, we have not heard any of those so—but I can’t speak to that. 

The satellite carriers would know whether they are being requested 

to arrange for tests. 

Mr. LATTA. Well, I guess if I could then turn to DISH then to 

maybe answer that question. Do you get those types of questions 

that come in from the consumers, Mr. Dodge? 

65 

Mr. DODGE. Since today we provide local channels in all 210 

markets, we don’t provide traditional distant service, if you will, 

where that would really come into play, but my understanding is 

historically, very few, you know, back when we did provide those 

services. 

Mr. LATTA. Thank you very much, Mr. Chairman. I yield back. 

Mr. WALDEN. Thank you. I thank the vice chairman for his work 

on this and other issues. I now recognize the fill-in ranking member from the great State of Vermont, Mr. Welch. 

Mr. WELCH. Thank you very much, Mr. Chairman. 

Many of us on this committee represent rural areas, both Republicans and Democrats, and many of the challenges that folks face 

in rural areas, both consumers and some of our broadcasters, seem 

to be different than some of the challenges that urban areas face 

for consumers and broadcasters. I really would be interested in the 

view of you who have so much experience about how you would describe some of the particular challenges that tend to face folks and 

broadcasters in rural areas. Ms. Gore, could I start with you? 

Ms. GORE. As I mentioned, the complaints that we get or the inquiries that we get are often about the local package, and sometimes, very often, that is a rural area where consumers want to be 

able to get, perhaps, more of the stations that are from their own 

state. I know that that has been an issue in Vermont, historically, 

and in other places as well. 

Mr. WELCH. But not just Vermont, right, I mean, that is a rural 

area as a whole? 

Ms. GORE. It is a rural area issue all across the country. That 

was what we were talking about, which we sometimes informally 

call the orphan county issue where the country is in one state, but 

it is part of a DMA that is located predominantly in another state, 

and so there are not a lot of or perhaps any in-state stations available to those consumers. It is a small problem, but it is a big problem just in the way it is reported to me for those areas where that 

occurs. 

Mr. WELCH. Thank you. I would like to really get the benefit of 

each of you telling us your thoughts on the rural challenges. Mr. 

Dodge? 

Mr. DODGE. Sure, and so I would echo everything that Ms. Gore 

said. It is really the short market problem, it is areas outside of 

our spot beams, as you would imagine, you know, using Utah as 

an example. The corners of the state are very rural, and then also 

the orphan county issue is a predominantly rural issue, and that 

occurs in 40 states today. 

Mr. WELCH. Do you have any suggestions on addressing that? 

Mr. DODGE. Yes. What we have historically proposed, which I 

think is pretty darn fair, but let us use Colorado as the example 

where we have two counties in the southwestern portion of the 

state that are actually in the Albuquerque DMA. Our proposal has 

always been that we will provide those folks Albuquerque locals, 

but let us also give them one in-state signal of their choice, preferably Denver, because our spot beam covers down there, and ultimately let them choose which they prefer. 

Mr. WELCH. Ms. Mago? Thank you, Mr. Dodge. 

66 

Ms. MAGO. From the broadcaster’s perspective, one of the key 

challenges they face in the rural areas is making sure they have 

enough revenues so they can continue to provide the quality programming that they need to. But let me address the DMA issue for 

just a moment, if I could, please, because DMAs are not just sort 

of random boxes that are put around. They are designed by the 

Nielsen Company to reflect where viewers are actually listening to 

the stations, and that is why they shift, as Ms. Gore was explaining. They shift when viewer patterns change. But for the most 

part, providing the local into local DMA market signal is going to 

address the needs of the county. There are a few places where that 

becomes a little bit more challenging, and one of the things that 

the carriers can do is to provide the in-state programming that is 

not duplicating that network prime time programming, and they 

can do that, and it has been done in several areas to address the 

issue of making sure that those that are in-state are able to receive 

their in-state information. 

Mr. WELCH. Thank you. Ms. Kieley? 

Ms. KIELEY. Congressman, I would say from public television’s 

perspective, serving rural areas is a top agenda item for us. We 

have a universal service mission, as I mentioned earlier, and we 

take that mission very seriously. I think part of our challenge, and 

with any paid television provider, is that on a broadcast—from a 

broadcast perspective, we serve over 98, close to 99 percent of this 

country with a free over-the-air signal, and it has been very costly 

to do that, and from a public television perspective, particularly in 

these rural areas. Rural areas, such as Vermont, often—your state, 

you would know quite well, can be mountainous and the terrain 

can be difficult, and for public television to serve those areas, we 

do that with a series of expensive equipment, many translators to 

fill in those coverage areas, and of course, in those areas we also 

have limited populations from which we can derive, you know, local 

support for our stations. And so we have a very robust broadcast 

presence in rural areas, from a public television perspective, and 

we very much appreciate the local into local that is part of the satellite bill that helps us to mimic that presence in satellite legislation. 

I would say, touching a little bit one other special fix that public 

television has that was in the STELA law, we have a unique situation where a handful of our states, about 21 of them, have statewide licensees that are—the licenses are issued from the state to 

serve the residents of the entire state. Many of those rural, not all 

of them, but many of them are rural and so we were appreciative 

of the language in STELA that allows the satellite carriers, should 

they get the capacity, to serve those statewide licensees with the 

signal originating out of their state public television networks. 

Mr. WELCH. OK, thank you very much. I yield back. 

Mr. WALDEN. Just for the record, my district is seven times the 

size of Vermont, plus, so—— 

Ms. KIELEY. Many translators. 

Mr. WALDEN. District of many translators. We go now to Representative Shimkus from Illinois. 

Mr. SHIMKUS. Thank you, Mr. Chairman. Of course, a great committee, great issues, a lot of fun. I have been on it a long time. 

67 

I think every member should be issued a teenager in this digital 

age, because then you are up-to-speed on the new technology and 

how they watch, how they view movies. I was talking to my son 

just before we came out, and he is watching—I have never seen 

it—‘‘The Walking Dead’’ and he can get the first 2 years, I guess, 

he watches on the Internet, and then, of course, the third year, he 

can’t. He has got to wait for the broadcast or whatever. And it just 

reiterates the difference of how people are viewing content and how 

they go about it, and so there is one benefit of a teenager. There 

are some disadvantages. I can talk about those later. 

So it is very exciting, and again, we want to support all of the 

work you do, and—but we are talking locally, too, and I was trying 

to—using my new technology and all this stuff, figure out my 

DMAs. I think I’ve got five, Springfield, Champagne, Decatur—that 

is the only one that is in Illinois—St. Louis, Cape Gerardo, Paducah, and Terre Haute. So I border three states, so we have this 

issue of the DMA and bleed over and the like, and we have just 

got to be careful, because in a congressional district that has any 

size, sometimes the folks will not want an Illinois signal. They will 

want the St. Louis DMA and they want to be there, where there 

may be others who will say well, can’t we get Illinois news, because 

we are in a part of the state where they are receiving an Indiana 

station. So there is not a hard and fast rule of when you, you know, 

you want to default to one or the other, based upon the citizens of 

that area, so it is very tricky. I am just laying that out. We have 

experienced that. 

Let me ask a question on—does anyone know how many actually 

short markets there are? 

Mr. DODGE. There are 21. 

Mr. SHIMKUS. And are there any in my—no, I mean, because— 

and so since there are 21, what is a way that we can kind of fix 

that problem, and is that—is this an avenue in reauthorization to 

try to do that? 

Ms. MAGO. To some extent, the market is fixing itself. As I noted 

earlier, the—with digital technology, stations are able to have multiple streams that they can put out over their signal and they are, 

in fact, carrying—— 

Mr. SHIMKUS. Let me ask again, because I like that, the digital 

answer, so I don’t know the answer now, but the digital cliff that 

we had initially, the analog signal went a long ways, and then we 

have digital TV and we have the digital cliff. Has technology 

pushed that digital signal back further out to meet the analog 

broadcast, or do we still struggle with that? 

Ms. MAGO. The Commission did a lot of work in terms of trying 

to raise power levels to make sure that you were, in fact, duplicating those coverage areas that had been there before, and we are 

about to face it again as we look at the repacking that may happen 

as a result of the incentive auctions and reclamation of some of the 

broadcast—— 

Mr. SHIMKUS. Voluntary incentive auctions. 

Ms. MAGO. Voluntary incentive auctions that will be part of that. 

The repacking part has never been voluntary. They hate it when 

I say that, but the repacking is not—has never been voluntary, and 

that is going to cause some issues, but I think for purposes today, 

68 

the spot beams that are provided on the satellite can help to bring 

in some of that service as well. 

Mr. SHIMKUS. OK, let me finish up. I have got 1 minute left, and 

I agree with a lot of folks who are talking up here. Everyone views 

that there is some anachronism in the law, so that could be dealt 

with, so going—starting with Mr. Dodge, what would be an anachronism that you would like to get solved in a reauthorization or a 

rewrite in the law? Anything? 

Mr. DODGE. I would—— 

Mr. SHIMKUS. This is trying to smoke you out to say, OK, what 

is your problem? What do you want fixed? I am using a big word. 

I usually don’t use them that much. 

Mr. DODGE. Sure. I would say the anachronism writ large in all 

these laws is the fact that it is an unfair fight in retransmission 

consent negotiations today, and the people that suffer are the consumers, because there are more and more takedowns occurring. I 

think in 2010, there were roughly 10, 2011, there were 50, last 

year there were 100, and it is the consumer that is paying the 

price. So I think that needs to be fixed. Consumers need to keep 

getting the signal during the—you know, while we work it out with 

the broadcasters, so to speak. And I would also say the orphan 

county issue is an anachronism of the whole system that needs to 

be worked out, and I think you raised a very good point. I mean, 

it may very well be that folks in southwestern Colorado prefer 

watching Albuquerque stations because they buy their Chevys in 

Albuquerque and they want to see those advertisements. But I 

think we should give them the opportunity to make that decision 

for themselves. 

Mr. SHIMKUS. OK. I am going way over my time. If I can get, 

Mr. Chairman—so why don’t we just go down the line? Thanks. 

Ms. MAGO. First of all, you may have seen me kick Mr. Dodge 

under the table. We think that the retransmission consent negotiations are going forward. There have been a few—— 

Mr. SHIMKUS. This is what we want. I have been trained by Billy 

Tozan to get the fight going, so—— 

Mr. WALDEN. Maybe this was the education—you missed the previous. 

Ms. MAGO. DISH Network has been involved in a number of 

those disputes, but we all try to work them out together and will 

continue to do that. I will note also, Mr. Shimkus, that I determined that there are no short markets in your district—— 

Mr. SHIMKUS. Thank you. 

Ms. MAGO [continuing]. So that is an issue that you don’t need 

to worry about. 

Ms. KIELEY. I would just echo my earlier comments and say we 

think this is a very complicated process and we appreciate being 

included from the very beginning, and we will be looking for those 

anachronisms in the law along with you. 

Mr. O’LEARY. The only thing I would say, it goes back to what 

I said at the outset which I think that as a threshold, the committee, the subcommittee should look at whether or not the role of 

government, as it was originally constituted, you know, 20 years 

ago, 30 years ago, what have you, is still applicable in the current 

69 

state that we are in right now. I think that is the single biggest 

issue that needs to be addressed. 

Mr. SHIMKUS. Thank you. 

Mr. WALDEN. OK. We now turn to the former vice chair of the 

committee, Mr. Terry, for 5 minutes if you have questions. 

Mr. TERRY. Sure, why not. It has been asked several times before, but I haven’t asked it. I am slightly confused on the local into 

local, and here I will just lay out the scenario. In the Sand Hills 

area in the middle of Nebraska where very few reside, the only option is satellite. In an area that is right outside of—in Nebraska, 

pretty good size town that has their own TV stations, in North 

Platte, Nebraska, but yet the satellite for that area, even just barely outside of the signal range from those stations, they get Denver. 

And the networks that cover—if you are cable or in the signal, get 

the Husker games and the Husker news, and people around 

Plattsmouth that get their satellite get Denver Broncos news, they 

don’t like that. They like the Broncos, but they want the Huskers. 

So what is the technology issue here? What is forbidding the satellite companies from being able to put in the local TV that is an 

hour drive, hour and a half drive from these areas? Mr. Dodge, 

since you are a satellite guy, I will let you try and answer that. 

Mr. DODGE. I am indeed. Well, with all due respect to what Ms. 

Mago said about the DMA system, I think it is largely a DMA system issue. We view it largely as a system that was set up in the 

1950s based on what people were watching back then, and although theoretically DMAs shift over time based on actual 

viewership, there really is no way to change that viewership if you 

can only provide the local signal authorized for each DMA into that 

DMA. If, for example, we were allowed to do what I proposed for 

southwestern Colorado, which is give people the choice between Albuquerque and Denver, then over time, it may switch to Denver, 

but to Congressman Shimkus’s point, it may not because those people may actually be interested in Albuquerque. Our view is let 

them decide and then maybe the maps shift. 

Mr. TERRY. How about if the people in the area have actually received a letter from the FCC saying that they should be getting the 

North Platte TV stations? Is there a technical reason why the satellites couldn’t do that area? 

Mr. DODGE. I think what you are referring to is a case of significantly viewed, perhaps? 

Mr. TERRY. Yes. 

Mr. DODGE. I am not sure what their specific reason is in that 

particular area, but generally speaking, the problems we have had 

with significantly viewed are technology-wise, the signal that is significantly viewed may or may not be on the same spot beam as the 

local channel, which makes it very difficult to provide, and then 

there are also contractual issues sometimes where the station is 

being invaded, so to speak, might condition their retransmission 

consent unless not importing a signal, but similarly, we have to get 

the consent of the station we want to import to actually do the importation, and they may not grant us that consent. 

Mr. TERRY. OK. I don’t know if that is the issue. I would think 

that would be odd that they don’t want somebody 100 miles away 

from their station not to see their station. But the answer is the 

70 

technology changes would be too costly, and I just didn’t understand what that entailed, the technology changes. 

Mr. DODGE. Yes, typically the issue is that the station that folks 

desire to import or that is significantly viewed is not on the same 

spot beam as the local market. 

Mr. TERRY. How much generally does that cost a satellite company? 

Mr. DODGE. It depends. Satellites cost typically these days about 

$350 million a piece, so—— 

Mr. TERRY. OK, so you would have send up a whole new satellite 

to bring that—— 

Mr. DODGE. In certain cases, yes. 

Mr. TERRY. OK, interesting. Well, my time is almost up, but I am 

not done yet. 

Mr. DODGE. We would be happy to get the specifics of that particular issue for you. 

Mr. TERRY. You have them. You may not, personally, but your 

company does. 

Mr. WALDEN. Gentleman yields back the balance of his time. 

Chair now recognizes the gentleman from Louisiana, Mr. Scalise, 

for 5 minutes. 

Mr. SCALISE. Thank you, Mr. Chairman, for the 101 hearing we 

are having to start getting into this. Of course, the reason we are 

here is because STELA expires. The laws that we are discussing 

today have sunset provisions and that is why we get to these various iterations, and it forces Congress to come back and look and 

work with industry and say what works, what doesn’t work, and 

you know, hopefully when we are going into the next iteration before the expiration of STELA at the end of next year, we address 

the problems and the changes in the marketplace. It is a very dynamic marketplace. A lot of you have done some wonderful things 

to allow and bring high definition and great programming to more 

people, and so that sunset provision allows that to happen. 

Now, you know, as we look at the broader marketplace of video 

regulations, most of them do not have sunsets, and I would be curious to take—it is more a policy question, so Ms. Gore, I will hold 

you harmless on this one, but I would be curious to see what the 

rest of the panel, what your thoughts are and not just looking at 

Section 119, but having sunset provisions on all of these laws that 

we would then force Congress to go back and say what is working, 

and what isn’t, not just in the satellite arena, but in the others? 

I will start with you, Mr. Dodge. 

Mr. DODGE. And I think since 119 is the actual statute that is 

expiring at the end of 2014, people tend to look at just that and 

say I like this or I don’t like that. It should sunset, it shouldn’t. 

And our view of the world is if you are going to consider letting 

that sunset, it is a much broader discussion. We do think there are 

problems with 119. I have mentioned a bunch of those today. But 

if you are going to let that sunset, then I think you have to look 

at the entire mosaic, if you will, or quilt of all the statutory copyright licenses, 122, the cable licenses, because in my view and as 

long as I have been involved in this, they are all interrelated, and 

you can’t just throw out 119 and not look at things like must carry, 

71 

retrans, et cetera, et cetera. And I think it is a discussion that is 

worthy of having. 

Mr. SCALISE. Maybe another day we will have that discussion. 

Ms. Mago? 

Ms. MAGO. Well, if you let me go outside of the realm of the specific hearing that we have here, I mentioned the broadcast ownership regulations are ones that we have advocated for some time 

need to have someone relook at them. 

Mr. SCALISE. I agree with you there. Thank you. Ms. Kieley? 

Ms. KIELEY. Thank you. I would echo, it is very complicated and 

very intertwined. Many of these pieces are very intertwined and we 

do just hope, you know—public television are must-carry stations 

and doing things like doing away with the compulsory license could 

actually—even though we aren’t involved in retransmission consent, could impact public television stations and so we are just appreciative that the committee is taking an early look at this and 

hope that they will continue to look at how intertwined these 

issues are, and what the unique needs of local public television stations are. 

Mr. O’LEARY. Congressman, I would agree with what you said. 

I think it is never a bad idea to have Congress go back and see 

what is working and what is not working. I think implicit in your 

question is the simple fact that these thing are intertwined and 

that if you look at them collectively, you are more likely to have 

a better view of what works for the consumer in the long run and 

so I would agree with what you are saying. 

Mr. SCALISE. Thank you, and I think you had talked in your testimony about, you know, what is it that consumers really want? 

Consumers, you know, they want content. They want the entertainment. They are not—they don’t necessarily want to have—they 

don’t want to buy a satellite dish, they want to have the content 

and the entertainment that comes with it. They don’t want cable 

or fiber optic, that is not why they are paying the monthly bill. It 

is because of what comes in, and so when you look at what they 

are really interested in, is it the broadcast signal that they are interested in or is it the content that comes with that broadcast signal? 

Mr. O’LEARY. Well, I think quite honestly it is a little bit of both. 

I think that there is—you know, people want local broadcasters for 

news and things like that. I think they want content. I think the 

short answer, Congressman, is consumers want everything right 

now, and the good news is that they are living in an era where you 

have got a better chance of getting everything than you did before. 

You look at the television as it existed when we were children and 

you look at the television that our children are growing up with, 

those are vastly different platforms, frankly, and in the future, it 

is going to be even more. I think the real question and the question 

which is underlying the entire discussion today is what is the proper role of the government in terms of facilitating that happening? 

And my focus, frankly, is on the compulsory licenses because we 

think they unnecessarily dampen the development of that market. 

But to your question, it bears looking at all of the different issues 

that are before us. 

72 

Mr. SCALISE. OK, last question before I run out of time. Ms. 

Mago, when you look at what has happened with—of course, DISH 

is here, DirecTV, the ability to negotiate with cable companies for 

their copyright content, we have seen in a real dramatic expansion 

of cable companies, you have got the Food Network, Nickelodeon, 

a lot of these other pay TV companies that have seen real expansion in their viewership because of their ability to negotiate in a 

more open marketplace. Would you say that the same kind of marketplace should exist with the retransmission consent, with compulsory, with—— 

Ms. MAGO. For local stations, the signal that they put together 

is the amalgamation of all of the programming, and there are 

many, many different kinds of authorizations, licenses, that one 

needs to get in that area. Our members continue to be concerned 

that trying to put that together on a local station basis is one that 

is a difficult process. 

Mr. SCALISE. Thank you. We can continue that conversation and 

look forward to it, but I appreciate all of your input today for being 

here. I yield back. 

Mr. WALDEN. Thank the gentleman. Chair now recognizes the 

gentleman from Colorado, Mr. Gardner, for 5 minutes. 

Mr. GARDNER. Thank you, Mr. Chairman. Thank you for holding 

the hearing today. I just wish my colleague from Nebraska was 

still here so we could give him a hard time for wanting to watch 

Nebraska football. 

Mr. WALDEN. He may be watching on a distant signal somewhere 

in an orphan area. 

Mr. GARDNER. I don’t have much room to talk, though, according 

to some of the performance we have seen the past couple years out 

of some Colorado teams, so I will just stop with that. 

But I wanted to particularly welcome Mr. Dodge to the committee today. As a result of redistricting, DISH is a constituent 

company and I am glad that you could be here today, and all the 

witnesses, thank you for your time. 

I wanted to just talk briefly about some of the issues that most 

of you have touched on already at various times throughout the 

testimony and so to Mr. Dodge, can you just give me a quick explanation—the committee a quick explanation, what would happen if 

STELA were to expire and what would that effect be on consumers 

across the country? 

Mr. DODGE. Yes, with respect to DISH particularly, it would 

mean that the short markets I described, those folks would no 

longer be at level playing field with folks in other markets around 

the country, because they would lose whatever affiliates are not 

represented in their particular DMAs. They would lose the ability 

to access that programming. Similarly, folks who are outside of our 

spot beams would lose their local channels. RVs and commercial 

trucks would no longer be able to get network programming via 

satellite. And with respect to DirecTV, who doesn’t provide local 

service in all markets, they would lose the ability to provide network programming to folks who are unserved by their local broadcast stations, and presumably, they would lose subscribers who 

have been grandfathered from prior Satellite Home Viewer Act reauthorizations. 

73 

Mr. GARDNER. Ms. Gore, would you add anything to that, or 

want to add anything to that, if you can? 

Ms. GORE. No, I think that covered the list that I am aware of. 

Mr. GARDNER. Ms. Mago? 

Ms. MAGO. Only to note that I think, again, as I said in my testimony, that that is a diminishing number as we go through the various fixes that are happening, including addressing the issues in 

short markets through the stations, channels, and such things. 

Mr. GARDNER. OK, and then I wanted to take another opportunity at Mr. Dodge to perhaps have you respond to something that 

was in Ms. Mago’s testimony, and I believe it was stated on page 

seven, ‘‘That today over 98 percent of all U.S. television viewers 

have the option of viewing their local network affiliates by satellite’’, and then goes on to say ‘‘With few exceptions, there are no 

unserved viewers in areas in which local into local satellite transmissions are available, and that accordingly, no public policy justifies treating satellite subscribers in local into local markets as 

unserved and therefore eligible to receive distant network signals.’’ 

It talks a little bit about viewing that language as perhaps a loophole, but I was wondering if you could respond to that assertion 

and whether or not you view that as a loophole, and what would 

happen to your customers if that were to change? 

Mr. DODGE. Yes, we don’t view that as a loophole. We view that 

as exactly what the law says, which is if there is a retransmission 

dispute, then we are no longer offering a local affiliate related to 

that network, and we are allowed to import a distant signal to folks 

who are unserved in the traditional sense, meaning they don’t get 

an off-air signal of decent quality. 

Mr. GARDNER. OK, and then to both you and Ms. Mago as well, 

conditions in the law sometimes prevent viewers from getting access to the programming they really want. We have talked about 

that here. Broadcasters can waive some of these conditions on a 

case-by-case basis, and do they ever, and if not, why not? I guess 

Ms. Mago, I will start with you. 

Ms. MAGO. I think Mr. Dodge said a little while ago that that 

doesn’t really happen on the DISH Network, as I understood it. If 

I misunderstood your question, I am sorry, but in terms of the 

broadcasters, what broadcasters are looking for is to make sure 

that they are able to serve their audiences and continue to be able 

to do that by having local viewers. We are able to do that, maximize the amount of the revenues that we can then plow back into 

the better service, and that is why we look at those markets and 

make sure that the local into local service is there. It helps the 

viewers themselves because they are able to get whatever local 

weather information and other things that are important to them, 

and that is why we continue. 

Mr. GARDNER. Do broadcasters ever do the waiver, talking to—— 

Ms. MAGO. There are a few that I know of that have done that. 

I think it is becoming less now because one of the concerns that 

was waivable for a while was that the high definition programming 

wasn’t available through the satellite, and we are now getting to 

the point where that is always going to be available for the local 

stations as well. I am aware of a marketplace in Wilmington, North 

Carolina, and the local station there, in fact, had granted a waiver 

74 

to allow the distant signal to come in because it was more—it was 

high definition when the local signal was not. I am hoping that has 

been corrected. 

Mr. GARDNER. And the good news for Mr. Terry is that in a couple of years, the Cornhuskers and the Buffalos will be playing 

again, so he will be able to at least watch that game, even if it 

comes from Colorado. 

Ms. MAGO. That sounds like many—— 

Mr. GARDNER. To that point, the discussion that we have had, we 

have talked about the markets and I guess for the entire panel as 

I run out of time here, do we know how many viewers are assigned 

to a designated market area that is not within their state? So I 

know we have identified the number of areas, but do we actually 

know or have an idea of how many viewers are there? 

Ms. MAGO. I am sorry, I don’t. 

Mr. DODGE. I do know in Colorado I believe it is 10,000 folks or 

TV households—— 

Mr. GARDNER. The southwestern part? 

Mr. DODGE. Yes, in those two counties, but nationwide, I don’t 

have the number off the top of my head. 

Mr. GARDNER. OK. 

Ms. KIELEY. From a public television perspective, I know we had 

about 21 of our statewide licensees that were impacted by that, 

with some states it being a much bigger problem. For instance, in 

Wyoming, I believe that—I think it was close to about 75 percent 

of viewers in that state resided outside of—from a public television 

perspective, the DMA where our public television station had all 

three of its transmitters located, so it varies from state to state, but 

for public television, some of those areas out West and in smaller 

parts of the East were problematic. 

Mr. GARDNER. Thank you, Mr. Chairman, for your leniency with 

the time. 

Mr. WALDEN. No problem. We are going to move now to the 

gentlelady from North Carolina, a new member of our subcommittee. We are delighted to have Renee Ellmers with us, and 

we look forward to your questions as we wrap up this hearing. 

Mrs. ELLMERS. Great, thank you, Mr. Chairman. I am happy to 

be here. I apologize for being late. I had dueling subcommittees 

going on, so thank you to our panel for being here as well. 

Ms. Gore, I have a question for you. Are there instances where 

the local broadcaster is not actually carrying news, alerts, closings, 

sports, civic affairs, and other content in the viewer’s state? 

Ms. GORE. Yes, I believe there are those situations. That plays 

into what we have been talking about as the orphan county situation, so that technically on paper it may appear that there is an 

in-state station in the DMA, but it may be a station that its programming does not include news or weather or traffic or public affairs of that sort. I am sure they are meeting their public interest 

requirements that Ms. Mago would know about. 

Ms. MAGO. Yes, they are. 

Ms. GORE. But they don’t necessarily have the kind of newsroom, 

staff, or situation to cover breaking weather events or something 

of that sort. 

75 

Mrs. ELLMERS. Thank you, and I have question, and I would like 

for each one of the panel to give a quick, brief response. Because 

this is kind of our introductory hearing on this issue, we are not 

yet debating on how to change the law, but we do need to know 

what the main problems are. So if every panelist could—without 

giving us a solution, touch on the problems to make us aware of 

what your main issue is with the law and what we can be looking 

towards in the future. I will start with Ms. Gore. 

Ms. GORE. Well, as I mentioned, I am not here to talk about any 

problems we have with the law. I will only say that there seem to 

be some circumstances where perhaps the hope was that the availability of significantly viewed stations might help to alleviate of the 

concerns that some consumers have had, and I am not sure if the 

significantly viewed option is being taken advantage of as often as 

it might be. My colleagues would know more about that, and also 

would know more about why that might be. 

Mrs. ELLMERS. OK. Mr. Dodge? 

Mr. DODGE. I would say the biggest thing we would like to see 

remedied is having the retransmission consent process be put on a 

more level playing field between the broadcasters and the distributors, and fixed in such a manner that consumers don’t inevitably 

lose access to network programming during disputes. 

Mrs. ELLMERS. Perfect. 

Ms. MAGO. And I, of course, disagree with what Mr. Dodge just 

said, but I would also say that our biggest issue is that we want 

to encourage local into local service. 

Mrs. ELLMERS. OK. 

Ms. KIELEY. And I would say we are taking an early look at the 

law and its implementation, and looking for any problem areas 

that are there, but I will reiterate that we were quite pleased with 

the process. We trust the process. It worked quite well last time, 

and we are very appreciative that our unique needs were addressed 

the last go around with STELA, and we hope that if we come upon 

any of those issues again, that we can again work with this leadership of this committee and Congress. 

Mrs. ELLMERS. Excellent. 

Mr. O’LEARY. From our perspective, it is very simply that the 

committee step back and take a look at the law and determine, you 

know, we believe there are pieces of it that are trying to solve a 

problem which no longer exists, and so we would ask them to look 

at those, and then at a minimum, to not expand those areas where 

we believe that the government intervention has, you know, reduced our ability to be compensated fairly for the work that we create. 

Mrs. ELLMERS. Well thank you. Thank you very much for your 

responses, and thank you, Mr. Chairman, for allowing me to wrap 

up this hearing. I yield back. 

Mr. WALDEN. Thank the gentlelady from North Carolina for her 

participation. 

And I think we should have an online contest to name this one 

ELOISE, but I have been struggling trying to figure out how we 

would do that, so we will welcome your suggestions. 

Ms. MAGO. Please just don’t name it Stanton. 

76 

Ms. GORE. I actually worked on that the last time, so I will get 

that back to you. 

Mr. WALDEN. You would get that to me. I know it is not weighing 

in on any policy, but the name is important, and given four reauthorizations you have lived through. 

We want to thank our panelists for testifying today. We appreciate your input as we begin down this path. We will have, obviously, additional hearings going forward, and I am sure all of us 

will have lots of individual meetings going forward to have these 

discussions. And so thank you all for your participation, and with 

that, the committee stands adjourned. 

[Whereupon, at 12:10 p.m., the Subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

77 


79666.040

Question from the Honorable Lee Terry 

for the witness R. Stanton Dodge of DISH Network L.L.C. 

"Satellite Video /0 J " hearing held by the House Energy and Commerce Subcommittee Oil 

Communications and Technology on February 13, 20 J 3 

Question: 

Technology keeps giving consumers more and better choices for watching TV when they want, 

where they want it and on what device they choose. How do we make sure the Satellite Act 

keeps up with those demands and responds to technology? 

Answer for the record from R. Stanton Dodge: 

First, at the very least, Congress should reauthorize the current statute to make sure that roughly 

1.5 million satellite TV homes relying on distant network signals for their network programming 

are not left without such programming at the end of2014. 

Second, Congress should, among other things, address the harm to consumers when a local 

broadcaster does not allow a pay-TV provider to carry its programming during a retransmission 

consent negotiation. Specifically, Congress should amend the definition of an "unserved 

household" to include households that lack a local broadcast signal in that situation. Congress 

should also amend certain exclusivity regulations, such as the network non-duplication and 

syndicated exclusivity rules, to give effect to the proposed changes in copyright law. These 

changes would then allow Direct Broadcast Satellite to import a distant signal of the same 

network affiliation, allowing consumers to at least receive their network programming while the 

DBS provider and local broadcaster continue to negotiate an agreement. Although a distant 

signal is not a perfect substitute for the local signal, it does afford the consumer some protection 

in the interim (unlike today). 
78 


79666.041

NAB 

NA nONAL ASSOCIA ilON Of SROAOCAsrEllS 

Hearing on 

"Satellite Video 101" 

United States House of Representatives 

Committee on Energy and Commerce 

Subcommittee on Communications 

and Technology 

February 13, 2013 

Responses to Questions for the Record 

of Jane E. Mago 

On behalf of the 

National Association of Broadcasters 
79 


79666.042

Question Offered by The Honorable Lee Terry 

1. Technology keeps giving consumers more and better choices for watching 

TV when they want, where they want it and on what device they 

choose. How do we make sure the Satellite Act keeps up with those 

demands and responds to technology? 

Answer: The Satellite Act was crafted to enable a viable satellite industry that is 

a true competitor to cable while promoting the free and local nature of broadcast 

television. As a result, today we have a vibrant satellite industry, as well as a 

broadcast system that continues to offer local news, emergency alerts, sports, 

weather and entertainment programming in communities around the country. 

These same bedrock principles of competition and localism should guide the 

Committee's consideration of the Satellite Act reauthorization today. As 

Congress crafted the section 119 distant signal license, members foresaw that 

one day, technological advances might make that license unnecessary, so it 

included a five year sunset provision. That premonition proved correct. 

Technology evolved so that satellite companies could provide each market with 

the market's own local stations to the benefit of many Americans. 

As Congress begins the dialog to extend the Section 119 license for another five 

years, the first question should be whether or not your constituents are better 

served with local programming from Lincoln and Omaha, rather than 

programming that is imported from a New York or San Francisco station? From 

what we have witnessed, our viewers are not well served by the importation of a 

distant broadcast signal in instances where a local signal could be made 

available, whether in the case of a satellite provider, or any distributor of 

broadcast content. Today's technology enables satellite carriers to provide local 

stations in all local markets, and the Satellite Act should incentivize providers to 

use this technology to provide local-into-Iocal service everywhere. 

Additionally, broadcasters recognize that it is in the best interest of industry and 

the viewers we serve to have our signals accessible through a multitude of 

platforms, whether it be smart phones, tablets, laptops, or 70 inch 3-D 

televisions. To that end, local broadcasters have and continue to invest billions of 

dollars in the digital television transition, mobile TV, multicast channels, and high 

definition production and signals. To fuel this broadcast innovation and the 

resulting benefits to viewers, the law must also continue to ensure that 

broadcasters are compensated for others' use of their signals, whether they are 

retransmitted and resold by a satellite provider or other platform. This 

compensation allows broadcasters to continue to innovate in ways that 

guarantee high quality local programming will be available to viewers whenever 

and however they want it. 
80 


79666.043

Lonna Thompson, Association of Public Television Stations 

Response to Questions for the Record on the 

February 13, 2013 Communications and Technology Hearing 

"Satellite Video 101" 

Question from Representative Lee Terry: 

Technology keeps giving consumers more and better choices for watching TV when they want, where they want 

it and on what device they choose. How do we make sure the Satellite Act keeps up with those demands and 

responds to technology? 

Thompson Response: 

Public broadcasting has a universal service mandate, and as such, we are committed to ensuring that all 

television viewers have access to the full breadth of our services no matter how they view their programming. 

We are proud of the fact that between a nearly 99% broadcast coverage area, the laws that govern cable and 

satellite carriage of our stations, and ground-breaking private carriage agreements that we have reached with 

almost all Multichannel Programming Distributors, Americans have many options to view their local public 

television stations. 

Even with the growth of programming viewing options, it is critical that we do not overlook the 34 million 

households that are current satellite subscribers. The Satellite Television Extension and localism Act (STELA) 

ensures that those households, many of which are in the most rural parts of the country, have access to highquality local broadcasting. It is critical that any updates to the law maintain the rights of satellite consumers to 

view these channels. 

We are very appreciative of the fact that STELA recognized the unique role that local public television stations 

play in their communities and ensured that satellite subscribers have access to the highest quality local public 

television programming. 

No matter how much technology changes, we would hope that any updates to STELA continue to preserve the 

rights of satellite viewers to have access to the full programming and services of their local public television 

stations. We cannot afford to deny 34 million subscribers access to their local public television stations which 

deliver unparalleled children's educational content, the best in nature and science, in-depth historical and 

cultural programming, unmatched public affairs programming and some of the finest dramas on television. 
81 


79666.044

Mr. Michael O'Leary 

Senior Executive Vice President 

Global Policy and External Affairs 

Motion Picture Association of America 

1600 Eye Street, N.W. 

Washington, D.C. 20006 

Dear Mr. O'Leary: 

March 28, 2013 

Thank you for appearing at the Subcommittee on Communications and Technology hearing 

entitled "Satellite Video 101» on February 13, 2013. 

Pursuant to the Rules of the Committee on Energy and Commerce, the hearing record remains 

open for 10 business days to permit Members to submit additional questions for the record, which are 

attached. The format of your responses to these questions should be as follows: (1) the name of the 

Member whose question you are addressing, (2) the complete text of the question you are addressing in 

bold, and (3) your answer to that question in plain text. 

To facilitate the printing of the hearing record, please e-mail your responses, in Word or PDF 

format, to Charlotle.savercool@mail.house.gov by the close of business on Thursday April II, 2013. 

Thank you again for your time and effort preparing and delivering testimony before the 

Subcommittee. 

irman 

Subcommittee on Communications and Technology 

cc: The Honorable Anna Eshoo, Ranking Member, 

Subcommittee on Communications and Technology 

Attachment 
82 

Æ 


79666.045

The Honorable Lee Terry 

1. Technology keeps giving consumers more and better choices for watching TV when 

they want, where they want it and on what device they choose. How do we make sure 

the Satellite Act keeps up with those demands and responds to technology? 

Content creators, along with consumer electronics companies and content distributors, are working 

together to provide new, innovative options for audiences to access licensed content whenever and 

wherever they want. We are excited by these new developments - from the iPad and Kindle to 

Netflix and Roku - and the promise of even more advanced platforms and applications in the 

future. 

Importantly, these new viewing options have been the result of marketplace negotiations, not a 

government-imposed compulsory copyright license. We agree with the Register of Copyrights' 

conclusion that the "Internet video marketplace is robust and is functioning well without a statutory 

license." The best way to ensure that changes in technology do not outpace the Satellite Act is to 

rely on the marketplace and free negotiations, which allow parties to take advantage of new 

technology and distribution platforms.