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COPYRIGHT LICENSING IN A DIGITAL AGE: COMPETITION, COMPENSATION AND THE NEED TO 

UPDATE THE CABLE AND SATELLITE TV LICENSES 

HEARING 

BEFORE THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

FEBRUARY 25, 2009 

Serial No. 111–3 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 

(II) 

COMMITTEE ON THE JUDICIARY 

JOHN CONYERS, JR., Michigan, Chairman 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO PIERLUISI, Puerto Rico 

LUIS V. GUTIERREZ, Illinois 

BRAD SHERMAN, California 

TAMMY BALDWIN, Wisconsin 

CHARLES A. GONZALEZ, Texas 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

LINDA T. SA ́ NCHEZ, California 

DEBBIE WASSERMAN SCHULTZ, Florida 

DANIEL MAFFEI, New York 

[Vacant] 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM ROONEY, Florida 

GREGG HARPER, Mississippi 

PERRY APELBAUM, Staff Director and Chief Counsel 

SEAN MCLAUGHLIN, Minority Chief of Staff and General Counsel 

(III) 

C O N T E N T S 

FEBRUARY 25, 2009 

Page 

OPENING STATEMENTS 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, and Chairman, Committee on the Judiciary ..................... 1 

The Honorable Lamar Smith, a Representative in Congress from the State 

of Texas, and Ranking Member, Committee on the Judiciary ......................... 3 

The Honorable Rick Boucher, a Representative in Congress from the State 

of Virginia, and Member, Committee on the Judiciary .................................... 4 

The Honorable Bob Goodlatte, a Representative in Congress from the State 

of Virginia, and Member, Committee on the Judiciary .................................... 6 

The Honorable Howard Coble, a Representative in Congress from the State 

of North Carolina, and Member, Committee on the Judiciary ......................... 7 

WITNESSES 

Ms. Marybeth Peters, Register of Copyrights, U.S. Copyright Office 

Oral Testimony ..................................................................................................... 7 

Prepared Statement ............................................................................................. 9 

Mr. Fritz Attaway, Executive Vice President, the Motion Picture Association 

of America (MPAA) 

Oral Testimony ..................................................................................................... 28 

Prepared Statement ............................................................................................. 30 

Mr. Bob Gabrielli, Senior Vice President, DIRECTV, Inc. 

Oral Testimony ..................................................................................................... 48 

Prepared Statement ............................................................................................. 51 

Mr. Chris Murray, Internet and Telecommunications Counsel, Consumers 

Union 

Oral Testimony ..................................................................................................... 66 

Prepared Statement ............................................................................................. 68 

Mr. Kyle McSlarrow, President and CEO, the National Cable & Telecommunications Association (NATA) 

Oral Testimony ..................................................................................................... 77 

Prepared Statement ............................................................................................. 79 

Mr. David K. Rehr, President and CEO, the National Association of Broadcasters (NAB) 

Oral Testimony ..................................................................................................... 89 

Prepared Statement ............................................................................................. 91 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Prepared Statement of the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, and Chairman, Committee on 

the Judiciary ......................................................................................................... 2 

APPENDIX 

Material Submitted for the Hearing Record .......................................................... 151 

(1) 

COPYRIGHT LICENSING IN A DIGITAL AGE: 

COMPETITION, COMPENSATION AND THE 

NEED TO UPDATE THE CABLE AND SATELLITE TV LICENSES 

WEDNESDAY, FEBRUARY 25, 2009 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:13 a.m., in room 

2141, Rayburn House Office Building, the Honorable John Conyers, 

Jr. (Chairman of the Committee) presiding. 

Present: Representatives Conyers, Boucher, Nadler, Lofgren, 

Cohen, Baldwin, Schiff, Sa ́nchez, Smith, Sensenbrenner, Coble, 

Goodlatte, Issa, King, Franks, and Jordan. 

Staff present: Stacy Dansky, Majority Counsel; and David Whitney, Minority Counsel. 

Mr. CONYERS. Good morning. The Committee will come to order. 

The purpose of our hearing today is to assess the Satellite Extension and Reauthorization Act and to consider what direction we are 

going in. 

We are delighted to have the Chairman of a Subcommittee of the 

Energy and Commerce Committee, who is on the Judiciary Committee as well, Rick Boucher, who had hearings on this same subject yesterday, and I am going to ask him, after Lamar Smith 

makes some comments, to review with us and make any additional 

statements that he might. 

We are indebted to Stacey Dansky and David Whitney who for 

the first time put out a single bipartisan document describing the 

issues and challenges that are involved in this satellite extension 

provision, and we are reminded that David Whitney was the person 

when Chairman Caldwell was the head of the Committee, who on 

this same subject had done so much work. And we are delighted 

that our staffs are working together so well. 

I merely want to indicate that we are all sensitive to the importance of this particular form of communication in our society. It is 

the primary source of information for the government, local events, 

weather, political considerations, emergencies—and so we are trying to determine how we sort out from a group of laws on copyright 

that have been inactive over a period of time where some of them 

did not anticipate the other, some are obsolete, some are overlapping, some are something else, and what I am suggesting, Members 

2 

of the Committee, is that this is a quite long-range proposition that 

is going to be before us. 

True enough we are talking about the satellite extension, but it 

is hard not to involve some of the other issues that are before us. 

As you know, the Title 17 contains the Copyright Act. Section 122 

licenses satellite, Section 111, bless its heart, cable, and then, of 

course, we come to the one that is expiring, 119, and so I am so 

happy that we have the six people that are with us. 

And it seems to me that what we are doing and thinking here 

is strikingly different from 1976 when the cable license was enacted and 1988 which was satellite license. Competition has grown 

between cable and satellite providers, there are a greater range of 

options for consumers, and so some of the same rationale that we 

likely agreed on 30 years ago are not as relevant now, and it is in 

that spirit that I have been talking to Lamar Smith and Jim Sensenbrenner and Rick Boucher about strategies that we may employ 

that would get everybody deeper into the real challenges that are 

before us. 

So we are looking and listening today for some of the very ideas 

which are already all over the map for us to begin to turn around 

and pull together. So it is in that spirit that we open this discussion, and I am going to put the rest of my statement in the record 

and recognize the Ranking Member, the gentleman from Texas, 

Lamar Smith. 

[The prepared statement of Chairman Conyers follows:] 

PREPARED STATEMENT OF THE HONORABLE JOHN CONYERS, JR., A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF MICHIGAN, AND CHAIRMAN, COMMITTEE ON THE

JUDICIARY

The purpose of today’s hearing is to assess the Satellite Home Viewer Extension 

and Reauthorization Act of 2004 (SHVERA), to begin formal consideration of what 

changes, if any, Congress should make to this law as we evaluate how and whether 

to reauthorize the act. 

One cannot overstate the importance of television in our society. 

It is the primary source of information about government, weather, local events 

and emergencies. In a time of where most Americans have less money to spend, 

many rely on television as the most affordable entertainment for their dollar. 

That is why my critical test of this legislation will be whether it protects consumers and adapts their interests to this new digital age of broadcasting. 

First, for the consumer, we must preserve competition. Satellite television continues to be the main competitor to cable television in most areas, and helps to drive 

down prices and improve customer service. In some areas, satellite television is the 

only way a consumer can get television reception. A key question is whether we 

need to change the law to give satellite companies the ability to provide lower prices 

and more choices for consumers. 

For example, should we allow satellite companies to offer signals from adjacent 

markets—or markets that are next door to the market where a consumer lives— 

so that a consumer has more choices? This would also allow the satellite company 

to increase its bargaining power in negotiations with network affiliates. 

But we must also ask whether both of these changes would begin to erode local 

broadcasting and result in a loss of local weather, news, and emergency information? There can be little doubt that local stations play a critical role in educating 

the public about local government, community activities, and public safety information. 

Second, with the digital transition delayed, and the broadcasting world in transition, for how long should we extend the Satellite Home Viewer Act? Although we 

have traditionally done 5 year extensions in the past, this time we may need to revisit the law sooner to ensure that the changes we make today still make sense for 

consumers as we see the results of the digital transition. For example, what is considered a poor quality signal in today’s analog world, may be a better quality signal 

3 

in the digital world. The reverse may also be true. This will be a critical question 

in determining whether a consumer is entitled to a distant signal. 

Third, do we need to further level the playing field between cable and satellite 

by streamlining the licensing system? There is a patchwork of different royalty 

structures that satellite and cable companies are required to pay and I think it is 

time to ask whether this helps or hinders competition for consumers. 

Fourth, to ensure consumers have quality programming, we must protect copyright owners. They create the programming that people want to watch. Without the 

programming there is no cable or satellite television. 

For thirty years, we have used compulsory licenses to compensate creators of content. Under sections 119 and 111 of the Copyright Act, this has allowed the cable 

and satellite companies to broadcast programming and pay the copyright owner at 

a rate set by the government—a rate that most content owners would say is grossly 

below-market. 

I think it is time to ask—should we continue to require creators to take the rate 

that the government gives them, or should they be free to get a better deal through 

individual negotiations? Or is that unworkable? 

I intend to consider each of these options and want to take a broad and expansive 

look at the different possibilities. This means every single issue is on the table at 

this point. I want each of the witnesses to approach this hearing with that in mind, 

and I look forward to a robust conversation among all of you. 

Mr. SMITH. Thank you, Mr. Chairman, and I certainly agree with 

you on the need to stay this issue. 

Fortunately, the license does not expire until the end of the year, 

and as you and I discussed a few minutes ago, that gives us ample 

time to educate ourselves a little bit more and make sure that we 

have study all the issues that you have mentioned and come to a 

good conclusion in plenty of time before the end of the year. So the 

informal task force that you have proposed, I think, is a good idea, 

and I thank you for suggesting that. 

Mr. Sherman, one thing we can all agree on, for better or for 

worse, is that Americans care passionately about their TV. Today, 

consumers want to have more rather than fewer options for determining how, when, and what programs to watch. A recent example 

of this was reported just last week in Joplin, Missouri, where Walter Hoover decided to shoot his TV set after he lost his cable and 

was unable to get his new digital television converter to work. 

After a brief standoff with police, Mr. Hoover was apprehended, 

placed under arrest, and charged with unlawfully discharging a 

firearm. After his arrest, I suspect Mr. Hoover found his TV choices 

were even more limited than before. [Laughter.] 

Mr. Chairman, I hope when we complete the process of evaluating the compulsory copyright licenses that no one will feel compelled to shoot their TV set—or anything else, for that matter. 

Absent congressional action, similar provisions of the distant satellite license in Section 119 of the Copyright Act will expire at the 

end of 2009. First enacted in 1988, this license was extended for 

5 years when last reauthorized in 2004. This license is one of three 

that permits cable and satellite providers to retransmit copyrighted 

broadcast programming to subscribers without negotiating and 

reaching separate agreements with each affected copyright owner. 

Unlike the Section 119 license, the other two licenses, which regulate the retransmission of local broadcast programming via satellite in both local and distant broadcast programming over cable, 

are permanent. It is due in part to this permanency that these licenses have not undergone a serious review by the Committee. Today’s hearing presents an excellent opportunity to begin a comVerDate Aug 31 2005 12:20 May 21, 2009 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6601 H:\WORK\FULL\022509\47627.000 HJUD1 PsN: 47627
4 

prehensive examination of the policies embodied in these licenses 

and the challenges of adapting these laws to the emergence of new 

technologies and new competition. 

The starting point for our analysis is the Copyright Office’s Section 119 report which stated, ‘‘The current versions of Section 111 

and Section 119 are arcane, antiquated, complicated, and dysfunctional.’’ The office recommended Congress adopt a new forwardlooking unified statutory license with a view toward encouraging 

the development of free market alternatives to compulsory licensing. This hearing is an important first step to educate ourselves on 

what steps Congress ought to contemplate addressing this year and 

what steps, though desirable, may take a little longer to achieve. 

Mr. Chairman, thank you for having this hearing, and I will 

yield back the balance of my time. 

Mr. CONYERS. Rich Boucher has been working on this subject 

and related ones from a very unique vantage point by being on Energy and Commerce. He is now Subcommittee Chairman of that 

part of the Energy and Commerce Committee that is involved with 

us in these considerations. We consider it a privilege to have him 

working with us now, and I would yield him as much time as he 

needs. 

Mr. BOUCHER. Well, Mr. Chairman, thank you very much for recognizing me this morning, and I also want to commend you for organizing what I think is a very timely hearing on the reauthorization of the Satellite Home Viewer Act. 

The legislation expires at the end of this year, and if it is not reauthorized within the course of this year by a new statute passing, 

then the Section 119 license, which enables the importation of distant network signals into households that cannot get local television signals over the air from a local TV station, would also expire, and that expiration would operate to the disadvantage of hundreds of thousands of viewers across the country, mostly in rural 

areas, who would be adversely affected by it. So I appreciate your 

very timely scheduling of the hearing this morning. 

As you have indicated, the jurisdiction over this matter is shared 

between the House Judiciary Committee and the House Committee 

on Energy and Commerce, and we began our process yesterday by 

having our first hearing on the reauthorization of the act, and some 

of the same witnesses who are with us this morning and many of 

the same organizations were represented at our hearing yesterday, 

and I am sure many of the issues we explore today will be somewhat similar to the conversation we had in the Commerce Committee yesterday. 

It is my hope, Mr. Chairman, that working with you and Mr. 

Smith and our excellent staff here on the House Judiciary Committee, Stacey Dansky and David Whitney—and we are very fortunate to have their expertise—that we can agree through our conversations and our work together on a coordinated text. And then 

a common text, perhaps at the proper time, could be introduced by 

both of us, and then we could proceed very quickly to process that 

agreed upon legislation through both of our Committees. I hope 

that process can work, and from our vantage point on the Commerce Committee, we would be fully committed to doing that. 

5 

And I want to say thank you to you and Mr. Smith and your very 

excellent staffs for the outstanding cooperation you have provided 

so far to me and to my staff as we have undertaken our preliminary conversations. 

I thought I would take just a moment this morning to highlight 

a couple of the key issues that surfaced during the course of our 

hearing yesterday. These are matters that Members of our Committee had expressed particular interest in, and I know these 

issues will be the focus of our ongoing considerations. Our focus 

necessarily is more on the communications aspect of the law, and 

the focus here will be somewhat more directed toward the copyright aspects of the legislation, and I would just indicate two key 

areas of conversation that we had yesterday suggesting that our 

principal debate is likely to be on these subjects. 

The first of these is a measure that has been separately introduced by our colleague, Mr. Stupak from Michigan, that would require that local-into-local television service be delivered in all of 

the 210 television markets across the United States. Today, there 

are about 30 of those markets that do not have local-into-local service delivered through the Section 119 copyright license. 

That license is now 10 years old. Technology has improved. Spot 

beams are now in much more common usage, and that allows for 

a far more efficient use of the satellite spectrum, and so many are 

saying, including those who represent these 30 rural markets, that 

the time has come for the satellite carriers to offer those markets 

through the local-into-local service also. 

Many of those are very rural, they are mountainous, and the 

viewers in that area cannot get a local television signal over the 

air because it is blocked by the mountains and because of distance 

from the station. And that means that in the absence of local-intolocal service delivered by satellite, that those viewers simply do not 

have access to local television service at all and the kind of emergency information about natural disasters that typically comes 

from the local TV station. And so many are saying the time has 

come to add that feature to the law and make sure that service is 

available in all of the 210 television markets. 

The other key concern that was raised is the circumstances, if 

any, under which there should be a permission for residents in a 

given television market to be able to access the local television stations in an adjacent market within that same state, and two circumstances have been highlighted. 

The first of these is where the market in which that individual 

resides does not have a full complement of local affiliates for the 

major networks. So, for example, a market in which a person resides might have an NBC affiliate. It might have an ABC affiliate, 

but it might not have the CBS and FOX affiliates. And the argument is that in that kind of situation, rather than have a distant 

network signal imported from the East Coast or the West Coast in 

order to complement network affiliates that are already there and 

fill in the gap, it might be better to allow the local TV station from 

the adjacent market in the same state to be accessible by that individual as a gap filler, so that the full complement of local network 

affiliates is made available, the thought being that that provides 

more relevant information because it is in-state news and programVerDate Aug 31 2005 12:20 May 21, 2009 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6601 H:\WORK\FULL\022509\47627.000 HJUD1 PsN: 47627
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ming and weather that might be relevant, certainly more so than 

a distant network signal imported into that market. 

So we call these short markets, and so the situation would be in 

short markets to allow the adjacent local stations to be uplinked 

to fill the gap. 

The other situation that was raised is markets that straddle 

state lines, and in many of these instances, you have viewers in 

one state receiving television service that originates in another 

state, and under the existing law, they are therefore restricted in 

terms of local-into-local delivery to out-of-state television programming. And that means the local news is more oriented to a state 

other than the one they live in, and the argument has been raised 

that in that narrow circumstance, it might also make sense to 

allow the adjacent market in that person’s state of residence and 

the local signals in that market to be available to that resident so 

that his local service carries in-state news. 

We had a number of more technical issues that were addressed, 

and I know some of those are on our list for conversation here 

today. But those two matters are the primary things that we focused on during our hearing yesterday, and I would predict that 

those would be two matters that would be subject to our debate as 

this consideration progresses. 

Well, Mr. Chairman, you are very kind to recognize me this 

morning. I do appreciate the promptness with which the House Judiciary Committee is beginning to examine this subject, and I look 

forward to close cooperation with you, Mr. Smith, and your staffs 

as we undertake this exercise with the hope that we can agree on 

a uniform text that you and I at the proper time can then process 

together. 

Thank you, Mr. Chairman. I yield back. 

Mr. CONYERS. Thank you, Rick Boucher, Subcommittee Chair, 

and we will be depending on your long work in this area. 

Bob Goodlatte has asked to express an opinion. I recognize him 

at this point. 

Mr. GOODLATTE. Thank you, Mr. Chairman. I very much appreciate your holding this hearing, and I look forward to working with 

you and Ranking Member Smith on this very important legislation. 

I, too, was very involved, along with Mr. Boucher, in the creation 

of the original license that allows satellite providers to retransmit 

local broadcast stations via satellite back into their local DMAs. 

And I continue to have a keen interest in ensuring that consumers 

have access to their local stations and, thus, local news and emergency information. And I applaud the efforts so far by the satellite 

providers to get local-into-local service deployed to the vast majority of areas. But I, along with Congressman Boucher, have a keen 

interest in the rural areas and areas with geographical obstacles to 

clear broadcast signal transmission. 

One topic I am particularly interested in is examining why significantly viewed stations are not more frequently offered by satellite companies, especially in areas where there is not a full complement of local stations. Another important topic we need to address is how the mandatory transition to digital television broadcasting will affect the statutory licenses for retransmitting television signals. 

7 

The transition is an exciting time, but, as we have seen, all too 

often, it is very challenging to enact static laws in the area of technology because of its dynamic and ever-evolving nature. We need 

to make sure that we are taking the necessary steps to anticipate 

and address any necessary challenges that the digital transition 

will bring. 

I look forward to hearing from our expert witnesses today on 

these topics and to hear their ideas for how we can continue to ensure that creators have the incentive to continue producing quality 

television programming and that consumers continue to have ready 

access to that programming. 

Thank you, Mr. Chairman. 

Mr. CONYERS. Thank you very much, Bob. 

I would like to recognize the former Chairman of the Intellectual 

Property Committee, Howard Coble, for any comments he might 

have before we call our witnesses. 

Mr. COBLE. Thank you, Mr. Chairman. I will be very brief. 

I want to thank you and Mr. Smith for having arranged this very 

significant hearing, and it is real good to see old friends back at 

the title table. 

Thank you, Mr. Chairman. 

Mr. CONYERS. All right. You are welcome. 

We welcome Mr. Rehr, Mr. McSlarrow, Mr. Murray, Mr. 

Gabrielli, Mr. Attaway, and I introduce, of course, our continual 

leadoff witness who has been before us more than anybody else I 

can remember, Marybeth Peters, the Register of Copyrights for 

many years and, before that, the policy planning adviser to the 

Register for over a decade, served as acting general counsel to the 

Copyright Office, and is the author of ‘‘The General Guide to the 

Copyright Act of 1976.’’ 

So start us off again on the path we are going to be taking between now and December 31, 2009. Welcome, again, Ms. Peters. 

TESTIMONY OF MARYBETH PETERS, REGISTER OF 

COPYRIGHTS, U.S. COPYRIGHT OFFICE 

Ms. PETERS. Thank you, Mr. Chairman. 

Mr. Chairman, Ranking Member Smith, distinguished Members 

of the Committee, I appreciate the opportunity to appear before you 

to testify on our recent comprehensive report to Congress on the 

cable and satellite statutory licenses found in Sections 111, 119, 

and 122. 

Our report and this hearing today are part of an important debate on the continuing viability of these statutory licensing regimes 

and their relevancy in today’s ever-evolving digital marketplace. 

Sections 111, 119, and 122, as you have already mentioned, were 

enacted in 1976, 1988, and 1999, respectively, and they govern the 

retransmission of distant and local broadcast signals by cable operators and satellite carriers. These provisions cover the public performance of copyrighted works transmitted by broadcast stations licensed by the Federal Communications Commission. 

Cable operators under Section 111, and satellite carriers under 

Section 119, pay distant signal royalties to the Copyright Office as 

a condition of the licenses. Section 122, which permits the retransmission of all those signals by satellite carriers, is a royalty-free liVerDate Aug 31 2005 12:20 May 21, 2009 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6601 H:\WORK\FULL\022509\47627.000 HJUD1 PsN: 47627
8 

cense. Sections 111 and 122 are permanent. Section 119, however, 

is limited to 5 years, and it expires on December 31 of this year 

unless you reauthorize it. 

We are required to examine the licenses and recommend legislative changes. That was the charge that we got by Congress. We 

were instructed by you to analyze the differences among the three 

licenses and consider whether they should be eliminated, changed, 

or maintained with the goal of harmonizing their operation. We released our report to Congress as required on June 30 of 2008. 

The main factival findings in our report, which provided the 

basis for all of our recommendations, are as follows: 

One, the distant signal licenses whose foundations were built 

upon analog broadcast technology cannot readily accommodate digital television. 

Two, changes in the structure, size, program offerings of the 

cable and satellite industries cast doubt on the continuing need for 

the distant signal licenses. 

Three, new video distribution systems, such as AT&T’s U-verse, 

test the scope of the Section 111 statutory license. 

Four, the economic rationales for the distant signal licenses are 

less justifiable in light of the success of marketplace models for 

video program distribution over the Internet. 

And, five, statutory royalties for the retransmission of distant 

broadcast signals are lower than the license fees paid to comparable non-broadcast networks, such as USA and TNT. 

We also examined the historical technical and regulatory disparities between Sections 111 and 119. We noted that while communications technology and media marketplaces have evolved and 

converged, the statutory licenses remain separate and unequal. For 

example, under Section 119, satellite carriers pay a flat royalty fee 

on a per-subscriber basis, while under Section 111, cable operators 

pay royalties based on a complex gross-receipts system tied to the 

cable system’s size and based on FCC rules that were repealed 30 

years ago. 

Satellite carriers are only permitted to market and sell distant 

network signals to unserved household, while cable operators are 

not so restricted and can serve every household with distant signals as long as they pay the required royalties. 

These and other significant differences affect competition between the cable and satellite industries and the provision of video 

services, especially in the distant signal context. In fact, the current statutory licensees not only pay copyright owners below market rate, they also create distortions in the delivery of distant 

broadcast signals. 

Our personal recommendation to you is that you should move toward abolishing the Section 111 and 119 licenses. The cable and 

satellite industries are no longer considered nascent entities in 

need of government subsidies through statutory licenses. They 

have a substantial market presence. They are able to negotiate private distant signal programming agreements, as they now do for 

basic cable networks. Moreover, the Internet video marketplace is 

robust and is functioning well without a statutory license. We do 

believer however, that a royalty-free, local-into-local license should 

be retained. 

9 

We believe, however, that a transition period is necessary, and 

we suggest that the transition period should be from January 1, 

2010, through December 31, 2014, and we suggest that, for that period, you create a unified statutory license covering the retransmission by cable operators and satellite carriers of local and distant 

broadcast signals. This license should incorporate the best elements 

of the existing statutory licenses while at the same time address 

the unique characteristics of digital television signals. Such a license would establish parity between cable operators and satellite 

carriers as they both would operate under the same terms and conditions. 

However, if Congress decides that the existing separate statutory 

licenses should be maintained, we believe a number of changes 

should be made to those licenses, and our recommendations are set 

forth in our report. 

This is the beginning of your process. You will receive many 

other recommendations for changes, and you no doubt will need to 

consider and address the issues presented to you, and we would be 

pleased to assist you in any way that you deem appropriate. 

One final note: As you move forward in this debate, you, of 

course, should be cognizant of and address the challenging economic conditions confronting each of the industries represented on 

this panel. However, this should not be a bar from examining what 

works, what does not work, and what needs to be fixed. 

Thank you. 

[The prepared statement of Ms. Peters follows:] 

PREPARED STATEMENT OF MARYBETH PETERS


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APPENDIX 1 


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Mr. CONYERS. Well, I am glad you got your recommendations in 

first, as usual, and we are happy to have you here as we have this, 

I think, initial discussion which will be very interesting. 

The Motion Picture Association is normally represented by Dan 

Glickman, but the vice president is here today, Fritz Attaway. Dan 

was a Member of the Committee on Judiciary, so we hope we will 

be seeing him before too long. But Attorney Attaway was the advisor in the cable television bureau of FCC, he is a current member 

of the Advisory Committee on International Communications and 

Information Policy in the State Department, and he is vice president of the Motion Picture Association. 

Thank you for being here. 

TESTIMONY OF FRITZ ATTAWAY, EXECUTIVE VICE PRESIDENT, THE MOTION PICTURE ASSOCIATION OF AMERICA 

(MPAA) 

Mr. ATTAWAY. Thank you, Mr. Chairman. And I want to thank 

you in particular for not mentioning how long ago it was that I was 

at the Federal Communications Commission. 

As you mentioned, Dan Glickman had a longstanding commitment with Diversity Kansas in Wichita and could not be here, and 

thank you for accepting me as, I am sure, a poor substitute. 

I would also like to express particular appreciation for old friends 

being here who have heard this presentation many times before in 

the last 20 years, and, Mr. Coble, Mr. Goodlatte, Mr. Smith, Mr. 

Boucher, I am really pleased to see you once again here. 

Chairman Conyers, Ranking Member Smith, Members of the 

Committee, I want to thank you for allowing me this opportunity 

to present the views of creators and distributors of 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 

111, 119, and 122 of the Copyright Act. 

MPAA represents its six member companies and some 200 other 

producers and syndicators of programming in proceedings relating 

to the distribution of cable and satellite compulsory license royalties. To stay in business, these program creators and distributors, 

big and small, along with the tens of thousands of people they employ, rely on revenues from exhibition of their creative works, including the retransmission of those works by cable and satellite 

companies. 

Mr. Chairman, as you examine the cable and satellite compulsory licenses, I urge you to focus on programming and the people 

who create it because that programming is why consumers subscribe to cable and satellite systems. Consumers do not pay monthly fees because they love headends or satellites or fiber-optic cables. 

They want access to creative, entertaining programming. The actions you take today or you will take as a result of this hearing 

should be designed to promote the overarching public interest in 

maintaining a steady supply of quality programming to consumers. 

The cable and satellite compulsory licenses, as Ms. Peters mentioned, were enacted a long time ago under very different marketplace circumstances. They were fashioned to meet the needs of then 

emerging industries. But, today, cable and satellite are well enVerDate Aug 31 2005 12:20 May 21, 2009 Jkt 000000 PO 00000 Frm 00032 Fmt 6633 Sfmt 6601 H:\WORK\FULL\022509\47627.000 HJUD1 PsN: 47627
29 

trenched, mature industries that can and do acquire programming 

without government assistance. 

In today’s cable and satellite market environment, the compulsory licenses are historic anachronisms, no longer needed or justified. The government-imposed subsidies that they confer on cable 

and satellite industries, which are borne by program creators and 

distributors, should be eliminated in favor of negotiated marketplace licenses similar to those governing the vast majority of programming now provided by cable and satellite companies. 

If the compulsory licenses are nevertheless retained, their statutorily imposed subsidized royalty fees should be replaced by marketplace compensation to program owners. By any objective standard, the current compulsory license fees do not fairly compensate 

program owners. Yet, despite widespread recognition of the inadequacy of the current royalties, there will be calls to lower compulsory license royalty payments further and also to broaden the scope 

of the licenses. 

The end result of such actions should be obvious: even more meager compensation to programs creators and further lessening of 

their ability to obtain market fees from new and existing delivery 

systems, and, of course, reduced incentives to create the programming that viewers find most attractive and on which the cable and 

satellite industries are built. 

Mr. Chairman, whatever you do, please do not further hinder the 

ability of program creators to produce the programming that consumers want to see. The drive to harmonize the cable and satellite 

rates is nothing more than tinkering around the edges of the existing compensation schemes. To be sure, harmonization will create 

some short-term winners and losers among those who pay, but, 

more important, it will do nothing to encourage the creation of 

abundant and affordable television programmers that consumers 

want to watch. 

Current compulsory license royalties constitute a miniscule portion of the cable and satellite operational costs, roughly one-tenth 

of 1 percent of their revenues. Based on past experience, increases 

or decreases in the royalty fees have a negligible impact on the 

monthly subscriber fees paid by consumers. On the other hand, 

many program suppliers, particularly the smaller ones, depend on 

these compulsory license royalty fees to sustain their business. 

Finally, program owners should be able to verify that whatever 

royalty payments are due them under the compulsory licenses are, 

in fact, paid. The current licenses provide no verification mechanism. Program owners should be afforded the right to audit cable 

and satellite records to ensure compliance with the compulsory licenses. In addition, marketplace licensing alternatives to the statutory plan should be encouraged. 

Thank you, once again, for the opportunity to be here today, and 

I look forward to responding to your questions. 

[The prepared statement of Mr. Attaway follows:] 

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Mr. CONYERS. Thank you so much. 

From DIRECTV satellite, Mr. Bob Gabrielli, senior vice president, who is now leading the biggest satellite organization in the 

country. 

We welcome you here to discuss that portion of the copyright law 

that we are beginning to tackle and try to unravel, along with our 

friends on the Energy and Commerce Committee. Welcome to our 

hearing. 

TESTIMONY OF BOB GABRIELLI, SENIOR VICE PRESIDENT, 

DIRECTV, INC. 

Mr. GABRIELLI. Thank you, Chairman Conyers, Ranking Member 

Smith, and Members of the Subcommittee. Thank you for the opportunity to testify here today. 

My name is Bob Gabrielli. I am the senior vice president for programming operations and distribution at DIRECTV, and on behalf 

of our more than 17 million customers, I offer the following suggestions for updating SHVERA. 

First, Congress should retain and modernize the existing satellite 

distant signal statutory license. 

Second, Congress should improve consumer access to local stations. 

Third, Congress should not require satellite subscribers to bear 

the burden of nationwide mandatory carriage. 

And, fourth, the retransmission consent system should be modernized to protect consumers from high prices and withheld signals. 

To begin, I would like to discuss the digital signal license. Today, 

the vast majority of subscribers get network programming from 

local, not distant stations. Only about 2 percent of satellite subscribers receive distant signals, but those rely on distant signals to 

receive network programming and many will continue to do so in 

the future. 

Congress should thus renew the distant signal license. It should 

also modernize the license to make it simpler and to protect consumer access to network programming. In particular, it should ensure that consumers in markets missing one or more local affiliates 

have access to network programming through distant signals. 

The Copyright Office has proposed harmonizing the satellite and 

cable licenses. While this is a laudable goal, we recommend repeating the separate licenses as they reflect fundamental technological 

differences between the two platforms. For example, the harmonization program will replace the unserved household test that satellite uses with the cable exclusivity rules. This would be completely unworkable for DIRECTV because we cannot block out 

thousands of programs from across the country 24 hours a day. 

Next, let me discuss DMAs. Millions are unable to receive truly 

local news, sports, and entertainment because they live in one 

state, while their DMA is mostly in another state. For example, 

viewers in Fulton County, Pennsylvania, are assigned to the Washington, DC, DMA. As a result, they do not receive any Pennsylvania-based local programming. Five years ago, SHVERA addressed a handful of these situations by creating special results. 

The time is right for a more general approach. Congressman 

Ross has proposed allowing delivery of neighborhood stations to 

49 

households in these orphan counties, like Fulton County, and 

DIRECTV endorses this effort. Time and again, consumers tell us 

what local channels best meet their needs and, where possible, we 

should be able to meet those demands. 

I would like now to discuss local carriage. Satellite is an excellent medium for distributing national programming to even the 

most remote locations, but it is far more difficult to deliver thousands of local network stations from a handful of satellites in 

space. Congress recognized the difficulty of this task when it created the carry-one-carry-all rules. 

We have nonetheless made extraordinary progress in offering 

local programming. Our track record speaks for itself. We have 

spent billions of dollars to provide local service. We now offer local 

television stations by satellite to 95 percent of households, and we 

intend to add six more markets by the end of this year. 

Using the FCC calculations, over 80 percent of our satellite capacity is now devoted to this local service, nearly triple the amount 

cable operators are required by law to carry. For the remaining 5 

percent of the households, we now offer a local seamless solution. 

We will install a rooftop antenna, a tuner that integrates broadcasting into the set-top box to our subscribers off their signals, and 

it will now appear and function exactly as any other channel. It 

will be on the guide function, in the DVR, et cetera. 

If the broadcasters made their signals available throughout the 

DMA, every DIRECTV subscriber could receive local channels in 

this fashion. This would be a simple investment in repeaters and 

translators by broadcasters. It would be the fastest and most efficient way to reach all markets. 

Last, I would like to discuss the retransmission consent. Congress created the must-carry retransmission consent regime before 

we ever offered local channels. The regime functioned until recently, in part because of the equilibrium that existed between monopoly broadcasters and monopoly cable operators. But as satellite 

emerged, broadcasters found their relative bargaining power increased. 

Today, with satellite and telephone companies in the mix, broadcasters now routinely demand fees three times those previously 

paid, and it does not appear that this additional money is being 

used to provide more or better local programming. In fact, the opposite appears to be true. Many broadcasters are producing less 

and less local news, while others have replaced local programming 

with national infomercials. 

DIRECTV willingly pays for high-quality content. We think programmers do get fair and reasonable compensation for the products 

they create, but it is not fair to the American public if broadcasters 

have the unfettered ability to raise rates without any obligation to 

provide local content. We would like to work with you to establish 

a new retransmission consent policy that compensates the broadcaster fairly for its investment in high-quality content, yet protects 

consumers from withheld service. 

In closing, millions of your constituents throughout America, 

whether they subscribe to satellite or not, are better off because of 

the legislation this Committee has championed over the years. I 

50 

ask you to keep those consumers in mind as you consider SHVERA 

reauthorization this year. 

Thank you. 

[The prepared statement of Mr. Gabrielli follows:] 

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PREPARED STATEMENT OF BOB GABRIELLI


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Mr. CONYERS. Thank you. We will keep those recommendations 

in mind. 

We will turn to Chris Murray, Consumers Union, publisher of 

the magazine, and has been before the Committee repeatedly, and 

we welcome you today to share with us your concerns about satellite TV and the licensing issue that is before us and any other 

related matters. 

Welcome to the Committee. 

TESTIMONY OF CHRIS MURRAY, INTERNET AND 

TELECOMMUNICATIONS COUNSEL, CONSUMERS UNION 

Mr. MURRAY. Chairman Conyers and Ranking Member Smith as 

well as the distinguished Members of the Committee, I do appreciate the opportunity to appear before you once again. 

Today’s question is whether or not we should extend the license 

that allows satellite services to be a robust competitor for pay television services. We submit that the answer is an easy and emphatic yes. Since we have deregulated the pay television market in 

1996, we have seen consumer prices for television service go up and 

up at nearly twice the rate of inflation, and while I do not believe 

that competition from satellite is a perfect solution to counterbalance the problem of market power for pay TV services, it is 

probably the best partial solution we have by a mile. 

I have heard a little bit about challenging economic circumstances that are facing some industries here today, but I would 

also like to submit that the challenging economic circumstances 

facing consumers are quite severe. 

So the question is: What can be done to ensure that satellite and 

other competitors for pay TV services can be as robust a competitor 

as possible? And I will submit three quick suggestions. 

The first, as we have heard not only from Mr. Gabrielli, but also 

I think we heard from a number of witnesses at yesterday’s Commerce hearing, we need to reform the distant signal qualification 

process. We think that there is no good reason to prevent consumers from having greater choice in local broadcast content, and 

we applaud efforts to move toward a greater number of DMAs that 

are served by satellite. 

I think some study is also warranted as to what percentage of 

capacity do they have to put up in order to get those local-into-local 

signals in all 210 markets. I think we would find that it is a significant percentage of capacity and that we would be loathe to require 

other services at the table, such as cable television, to dedicate as 

much of their capacity as we are asking of the satellite guys. But 

I do believe that that is something that needs to be looked at. 

The second important thing is how do video competitors get video 

programming and what do they pay for it, and perhaps as importantly, what happens when the process of negotiation for those 

channels breaks down. What do we do? We have all seen an instance, if we have satellite TV or another service, where because 

a negotiation is not going well, consumers actually lose a television 

signal for a while, and we see consumers being used as a bargaining lever in order to get a higher price for programming. 

We think that fresh scrutiny is warranted to look at how can we 

fix program negotiation processes, how can we close things like the 

67 

terrestrial loophole, and how can we ensure that exclusive programming arrangements are not being used with those who have 

a vertical arrangement where they own both the content and the 

distribution for that to shut out competition. We think that if Congress has decided that competition is going to be the way that we 

are going to keep consumer prices down, we have to be sure that 

we are making competition function as fully as possible. 

My final suggestion is regarding rate transparency. We see a lot 

of finger-pointing at the table and a lot of name-calling for why 

consumer rates continue to go up, and I cannot tell you exactly 

what the reason is that they do continue to go up, but what I can 

tell you is that we need more transparency in the rates that cable 

programming providers are paying for content, that satellite providers are paying for content. We need to see the whole input process to understand where is it that consumers are being price 

gouged and where is it perhaps that they are being undercompensated. 

I am frankly astonished at the suggestion that we should not extend this compulsory license because if you want to see the marketplace break down almost instantaneously and you want to see consumer prices go through the roof almost instantaneously, then let’s 

consider just allowing, you know, market-by-market, copyright-bycopyright negotiation. It is almost an unthinkable mechanism. 

But we look forward to any questions that the Committee may 

have, and thank you again for the opportunity to appear before 

you. 

[The prepared statement of Mr. Murray follows:] 

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PREPARED STATEMENT OF CHRIS MURRAY


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Mr. CONYERS. Thank you for your testimony. 

The president and CEO of the National Cable and Telecommunications Association is Kyle McSlarrow, and he is here. We are delighted. He has been on the advisory committee and has been the 

deputy secretary of the U.S. Department of Energy, chief of staff 

for Senator Paul Coverdell, vice president of political and government affairs for grassroots.com, and assistant to the general counsel of the Army. 

We welcome you here today, sir, and look forward to your suggestions. 

TESTIMONY OF KYLE McSLARROW, PRESIDENT AND CEO, THE 

NATIONAL CABLE & TELECOMMUNICATIONS ASSOCIATION 

(NATA) 

Mr. MCSLARROW. Thank you, Mr. Chairman, Ranking Member 

Smith, and distinguished Members of the Committee. 

Let me just say at the outset I understand that this Committee 

and the Energy and Commerce Committee have several different 

options in terms of the path you want to go down with reauthorization of SHVERA, and whatever path you choose, you have my commitment that our industry will work constructively with you as 

with other stakeholders represented at the table. 

I should also say, as odd as it may sound, we support the reauthorization of SHVERA. We support continuing what has been a 

success story in a rough, competitively neutral balance among us 

and our competitors, principally the satellite industry and now the 

telephone industry. It is very clear that competition—and it is very 

intense competition now—among cable, satellite, and telephone 

providers, in video has produced great benefits for consumers. 

I guess there are three things that I would—I would break it 

down—ask you to consider. 

First, the notion of the compulsory license itself: I have to admit, 

as I prepared for this hearing and started examining the cable 

compulsory license, it is horrifyingly complex, and the quite natural 

reaction, as was mine, is to say, ‘‘Let’s clean it up. Let’s make it 

simpler. Let’s harmonize it,’’ and that is just the natural reaction. 

But I would ask you to consider two things that make that very 

tough. 

The first is, even though on average, there may only be two distant signals that an average cable subscriber gets, there are something like 25 million households that have two or more distant signals available to them and another 25 million that have one distant signal. There are really settled expectations. So we have to be 

very careful as we go through this process. And all of us are living 

through the digital transition that is taking place right now and 

understand the great length that all the stakeholders and Congress 

have gone to ease that transition. 

The second point I would make about it is that, as complex as 

it is, the compulsory license for us and for satellite has basically 

worked. It is actually a great public policy success story. So, even 

though it may look arcane, if you step back and you ask the question: ‘‘Is the consumer being served?’’—yes, because we are disseminating content that the consumer wants as widely as possible; ‘‘Are 

the distributors being helped?’’—yes, because we are at a rough 

78 

competitive balance in terms of how we are treated; ‘‘Are the copyright holders being compensated fairly?’’—our answer would be yes. 

So, on the one hand, one direction this Committee can go would 

be—and we would urge you to consider this—straightforward reauthorization with some modest reforms. 

One reform that we would ask the Committee to consider is reforming what we call the phantom signal policy where you actually 

have an interpretation of the statute where consumers who do not 

receive a distant signal actually have to pay for other consumers 

receiving a distant signal. 

Nonetheless, the Copyright Office, as Congress asked it to do, 

has come forward with a report and has made a number of fairly 

far-reaching reform proposals, and harmonization or suggestions of 

a flat fee at first blush are very appealing, but one has to understand that you cannot solve those issues in the context of just the 

Copyright Act itself. You have to open up the Communications Act 

in significant ways, particularly on the carriage side. 

And I would identify just one provision which I think illustrates 

this, and that is that the cable industry has an obligation that 

every broadcaster we carry must be shown to every consumer before they can go on to buy any other service, any other cable network, any other premium channel. The satellite industry does not 

have a similar obligation. For them, the choice of carrying the 

broadcaster is an optional one. So, if you move to a flat fee, which 

sounds appealing at first blush, by definition, because we have a 

must-buy requirement, every one of our consumers is paying for 

the signals, whereas, for a satellite customer, they would have a 

choice. 

It is not a question of right or wrong. It is just different, and it 

has a huge significant impact. 

The other point that I would make is that if you are looking at 

the Copyright and Communications Act in tandem, to some extent, 

we would be focusing on the wrong issue. A couple of folks have 

already mentioned that if you are looking at carriage obligations 

and how we compensate copyright holders, it would be odd not to 

think about taking a hard look at retransmission consent, which is 

a Communications Act provision, but I would submit is at odds 

with the theory behind the compulsory licenses. 

Compulsory licenses work because they provide an efficient and 

seamless way to get programming out while fairly compensating 

copyright holders, and it does so with a minimum of disruption, 

whereas the retransmission consent provision, by definition, increasingly poses a threat of disruption where broadcasters can 

threaten to withhold or actually do withhold signals from consumers in order to extract more compensation in some form or another. 

Again, those two are in conflict with one another. So, if the Committee does choose to examine both these statutes and the carriage 

obligations in their entirety, we would urge that you examine retransmission consent as well. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. McSlarrow follows:] 

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PREPARED STATEMENT OF KYLE MCSLARROW


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Mr. CONYERS. Thank you very much. 

We have three short votes, but we will save the biggest witness 

for last, maybe the one in the most trouble. 

Mr. Rehr, we will be looking forward to your testimony when you 

get back. 

We will stand in recess now. 

[Recess.] 

Mr. CONYERS. Mr. David Rehr is the president and CEO of the 

National Association of Broadcasters, NAB, and has led in his field 

of expertise for nearly 25 years on Capitol Hill. He has worked 

with us across the years. We are delighted to have him today and 

we are going immediately into the questions following his statement. 

Welcome, sir. 

TESTIMONY OF DAVID K. REHR, PRESIDENT AND CEO, 

THE NATIONAL ASSOCIATION OF BROADCASTERS (NAB) 

Mr. REHR. Thank you, Mr. Chairman. 

Chairman Conyers and Congressman Gonzalez, thank you very 

much for having me here today. My name is David Rehr, and I 

serve as the president and CEO of the National Association of 

Broadcasters. 

The NAB proudly represents over 8,300 diverse television radio 

stations across the United States, employing nearly 250,000 hardworking Americans. Our member companies keep their communities informed and connected. We work every day to embody the 

spirit of localism, which Congress has embraced and affirmed time 

and time again as a vital public policy goal. 

We do not charge our viewers to watch our programming. We 

rely on payments from advertisers to deliver a free service to your 

constituents. Without free over-the-air television, pay TV models 

would be unrestrained their ability to attempt to maximize their 

profitability. 

Broadcast television stations remain the primary source of the 

most diverse and popular entertainment, news, weather, and sports 

programming in the country. In fact, according to data from 

Nielsen Media Research, in the 2007-2008 television season, 488 of 

the top—that is most watched programs—500 primetime television 

programs were broadcast over the air. While these stations represent a relatively small number of channels on pay systems, 

broadcasters offer a highly demanded and desired unique and valuable service to local markets and to your viewers. 

I would like to make two points. Number one, localism must remain central to any policy deliberations with respect to satellite 

and/or cable compulsory licenses. Two, the Copyright Office recommendations must be evaluated individually for both intended 

and unintended consequences. 

Starting with my first point. One, localism must remain central 

to any policy deliberations with respect to satellite and/or cable 

compulsory licenses—unlike other countries that only offer national 

television channels, the United States has succeeded in creating a 

rich and varied mix of local television service providers so more 

than 200 communities, including towns as small as Glendive, Montana, which has fewer than 4,000 television households, can have 

90 

their own voices. This is the genius of the American system and 

should be celebrated. 

The pillars of this system are the availability of signals to viewers throughout the market and the ability to offer exclusive programming in that market, often through a network affiliation relationship. We urge this Committee to view any changes through the 

prism of localism and the core principles of localism. 

Two, the Copyright Office recommendations must be evaluated 

individually for both intended and unintended consequences. 

Broadcasters and cable have been working under the cable compulsory license for over 30 years and, by and large, this system has 

worked well. The experience under the satellite compulsory licenses 

has been more challenging. Here are a few reactions to some of the 

report’s recommendations. 

We agree with the office on the retention of a local-into-local 

compulsory license. We agree with the office on the call for phasing 

out the distant signal license for satellite providers. Beyond that, 

in fact, broadcasters believe that the license should be replaced 

with a requirement for local-into-local carriage in all television 

markets. 

There are 31 of the 210 television markets in small and rural 

areas that satellite companies do not serve. The satellite companies 

have said that this is a capacity issue, yet it is more likely a simple 

business decision. 

Broadcasters, including those in the 31 smallest markets, have 

invested well over a billion dollars in making the transition to digital television, and I think we have done a pretty good job educating America. So far, there is very little economic return on that 

investment. Nevertheless, those investments were made and are in 

the public interest. 

The satellite industry investment in providing local-into-local to 

all Americans is also in the public interest. I am certain that if 

Congress does not step in, local service will never be provided. 

We disagree with the Copyright Office on the recommendations 

to harmonize cable and satellite licenses. They are very different 

business models, different technologies, and have different evolutions. We are unsure of all the unintended consequences of that 

harmonization, particularly in this difficult economic period. 

We share the concerns of the Copyright Office as expressed in 

their report regarding compulsory licenses to permit retransmission 

of broadcaster signals on the Internet as well as the requirements 

they would impose. As you know and as you have heard here today, 

the reauthorization is complicated, yet extremely important to 

American television viewers. 

The underlying principle or focus, which I encourage this Committee to use as its guide in its deliberations, is localism. Localism 

continues to provide Americans a connection to their communities. 

Thank you for giving me the opportunity to testify, and I welcome any questions you might have. 

[The prepared statement of Mr. Rehr follows:] 

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Mr. CONYERS. Thank you, Mr. Rehr. 

I am going to ask Judge Charles Gonzalez of Texas to begin 

questioning. 

Mr. GONZALEZ. Thank you very much, Mr. Chairman. 

Mr. Rehr, I love the fact that you start off with a dilemma that 

I face—and I am sure Mr. Boucher and others that serve on Energy 

and Commerce—and we are on Judiciary and we talk about retransmission, and I thought I understood retransmission, but this 

is a totally different and distinct issue. It is really kind of difficult. 

So if I ask an Energy and Commerce question, forgive me, Mr. 

Chairman. I really did not mean to do that. 

The delivery system appears to determine policy many times, 

and the delivery system on the box can be an Internet delivery system and such and what that means. But, Ms. Peters, you said 

something—or you may not have actually covered it. I am not real 

sure—on page 7 of your testimony, ‘‘On a related subject, it must 

be noted that the Copyright Office is not in favor of a statutory license for retransmission of broadcast signals over the Internet.’’ 

The last sentence is interesting. ‘‘An Internet statutory license, in 

fact, would likely remove incentives for individuals and companies 

to develop innovative business models.’’ 

Now why wouldn’t that same reasoning apply to what we have 

in not the newcomer, but the existing technologies and delivery 

systems of cable and satellite? 

Ms. PETERS. Actually, the point I was actually trying to make 

was that because there is no statutory license and because Internet 

deals are being made every day, it actually proves the point that 

you do not need the statutory licenses for cable and satellite. 

So I was actually trying to say you do not need to go there. And 

I think that if, in fact, we took away the cable and satellite, they 

would be able to do the same kind of things, kind of deals that they 

are doing today with regard to the Internet and mobile phones and 

all kinds of mobile devices, as well as service to your computer at 

home. 

I do not know. I mean, I just really believe that the Internet is 

where more and more people are going, more and more of these 

mobile devices are what people have and the way they are getting 

things, and the licensing seems to be working in that area. 

Mr. GONZALEZ. Yes. And you are probably right that we are not 

going to do anything that we do not have to do at this point, and 

then harmonization is probably between cable and satellite, and 

most of our attention, I think, would be directed in that manner. 

Mr. Murray, I think you indicated a position that I think would 

be contrary to Mr. Attaway. And that is if you do not have statutory licenses and you do not have some uniformity—and that is the 

concept and that is the model—and then if you break it down and 

you do not have it, that would open the door, obviously, to a lot of 

individual and separate transactions, negotiations, and so on. What 

is wrong with that? And, in fact, is it the model that is defective, 

or is it just that component of trying to establish adequate compensation? 

Mr. MURRAY. It is certainly not a problem of establishing adequate compensation. I think if you ask consumers who have had, 

143 

let’s say, a satellite channel withheld from a programmer, what is 

the problem with the situation that you are in? 

So what I am talking about here is the situation where satellite 

companies try to negotiate with a program provider, and because 

the program provider cannot get exactly the terms that they do, 

they use the lever of withholding that content from consumers. So 

consumers, you know, have American Idol go dark or something 

like that. 

Now if you take that model and extend it to the point where now 

what you have basically set up is a marketplace where market-bymarket, broadcaster-by broadcaster—because this is not just a national broadcaster negotiation, this is a local broadcaster-by-local 

broadcaster negotiation—you have a market destined for gridlock, 

destined for higher prices for consumers. And I do not think that 

is the result that Congress wants here. 

I think that this—the compulsory license here has served as a 

very positive model. It is the only force that has kept cable television prices in check, and I cannot see any rationale for undoing 

that system. 

Mr. GONZALEZ. Mr. Attaway? 

Mr. ATTAWAY. Well, as you indicated, we certainly do have a difference of opinion. I am just astonished that Mr. Murray thinks 

that eliminating the compulsory licenses would be unthinkable 

when, if you look at the program schedule for a cable or satellite 

provider—I happen to have DIRECTV’s right here—you go down 

the list of offering. And the vast majority of channels that are 

being offered, all of the programming is negotiated for in the marketplace, channel by channel, and it works quite well to serve the 

interests of the consumers as well as the satellite and cable companies and as well as program producers. 

There is no reason to think that the marketplace cannot work. 

Maybe in 1976, there were problems. Those problems do not exist 

today, and if you look at the Internet, that is a perfect example of 

how the marketplace is working to meet the needs of consumers. 

Almost every television program available today on broadcast television is also being made available on the Internet. The marketplace works. 

Mr. GONZALEZ. Thank you very much. I yield back, Mr. Chairman. 

Mr. MURRAY. I was just going to say and yet we see proposals 

right now to make broadcast programming available exclusively. 

So, if we are talking Internet here, I am talking about—and this 

is a very recent thing that has just come up this week where there 

is a proposal out there to take cable programming, put it on the 

Internet, and then the only place it could be available is to subscribers of that particular pay cable television service. 

So we see this marketplace closing. We have seen instances of 

folks blocking content because it might be a competitor, and, you 

know, clearly, if I am the content industry, I would love to have 

the maximum lever over consumers and over other vendors in the 

marketplace, but does that serve consumers? I submit that it does 

not. I think it is going to result in higher prices and an absolute 

gridlock of copyright clearance. 

Mr. CONYERS. Ms. Peters, you okay on that? 

144 

Ms. PETERS. No, I actually disagree. I think the marketplace is 

the best place to resolve these issues. Nobody produces a program 

not to sell it. They really want to make it available. It may be that 

the terms and conditions, you know, are at issue, but you don’t not 

license your program, and any business that is not meeting the expectations of its consumers is not going to last very long. So I happen to be a very strong advocate of the marketplace and consumer 

choice. 

Mr. MURRAY. And I am an advocate of the marketplace, but isn’t 

our counterfactual here that many instances of programming 

exclusives—because this cuts exactly against what you are saying, 

that, of course, you produce content, you want to sell it to the maximum amount of people, maybe, unless what you can do is really 

price gouge some folks with exclusives. And that is what we see 

this marketplace trending towards, you know, and so I think the 

existence of exclusives is the proof that we have these problems, 

and that it is going to get worse if we allow the content industry 

to have greater leverage over consumers. 

Ms. PETERS. I would argue that with the Internet, it is becoming 

less exclusive, that you see content in many different forums 

throughout the world on many different devices. The exclusivity of 

only giving it to one person, I think, is exactly the opposite of the 

trend today. 

Mr. CONYERS. Help us, Lamar Smith. 

Mr. SMITH. Thank you, Mr. Chairman. 

Ms. Peters, on the way to larger issues, I wanted to ask you 

about a specific provision. You mentioned in your written testimony 

that you felt that the unserved household requirement had basically outlived its usefulness. Real quickly would you explain why? 

Ms. PETERS. The whole purpose of the unserved household piece 

was that if you cannot get the full complement, and you prove 

yourself to be unserved, then you can bring a distant signal in. 

With more and more local signals being made available, I think the 

need is less. 

I am a strong advocate of serving consumers their local programming. That seems to be where the push is. Now I heard people testify and say people still get two distant signals and they still get 

one. I still think that that could be licensed content if that is what 

they really want, but I do not think you need a compulsory license 

for it. 

Mr. SMITH. Okay. Thank you. 

Did you want to respond, Mr. Gabrielli, really quickly? 

Mr. GABRIELLI. I would. And for DIRECTV, because we have 

spent the billions of dollars and do cover 95 percent of the country 

with local channels, our number of distant subscribers has gone 

down by more than half in the last 4 years. But there still are a 

couple of cases where customers need distant signals. They need 

them where we do not cover the market yet and the broadcaster 

does not cover that. This is—— 

Mr. SMITH. Is that the 5 percent you are talking about? 

Mr. GABRIELLI. That is the 5 percent. 

Mr. SMITH. And, Ms. Peters, what about the 5 percent? I am sure 

that is millions of people, but anyway—— 

145 

Ms. PETERS. Well, I am not sure. I still do not get who is not 

served and why that could not be licensed content from some provider. 

Mr. SMITH. Okay. 

Mr. Gabrielli—— 

Mr. GABRIELLI. Well, again, the satellite is a secondary transmission of a primary broadcast. If the broadcaster covered the entire market, there would be no need for distant signals. 

Mr. SMITH. Right. 

Mr. GABRIELLI. So we only get the license where they do not 

cover. We have done a great job of covering 95 percent of those 

with local channels. There is still 5 percent. There are markets 

that are missing networks. We have to bring in a network from another market. That is a distant signal. Otherwise, you would have 

some markets that have one or two stations. That is all we could 

provide if we did. 

You still have RVs, long-haul trucks, airplanes, and ships that 

are not in any market that we use a distant signal license for, and 

there is always the public safety officials given in any country that, 

you know, or county that need these—— 

Mr. SMITH. Okay. All right. Thank you. Two sides on that issue. 

Mr. Attaway, you mentioned in your oral testimony—or was it in 

your written testimony which you sourced—that royalty payments 

are only one-tenth of 1 percent of revenues. I am going to ask some 

of the witnesses to your left what they think about that. What do 

you think is the significance of the fact that, as you claim, the royalties are only one-tenth of 1 percent? 

Mr. ATTAWAY. Well, I think that goes to illustrate that the royalties that are paid by cable and satellite providers are de minimis. 

There is certainly no consumer issue here because, in terms of 

their overall cost structure, they are de minimis. If you are really 

concerned about prices being passed on to consumers, you ought to 

be looking at postage rates because the cost of sending out monthly 

invoices is almost four times what cable and satellite systems 

may—— 

Mr. SMITH. Let me ask the other witnesses if they agree with 

your one-tenth of 1 percent and the significance that you just mentioned. 

Mr. GABRIELLI. I am assuming you are strictly talking about the 

royalty payments, and I actually do not know about percentages, 

but, overall, we pay 50 percent of our gross revenue for programmer payments to the broadcast stations, to the cable networks. So we are at a 50 percent number from our opinion. 

Mr. SMITH. From your point. Okay. 

Anyone else on the panel want to comment? 

Mr. McSlarrow? 

Mr. MCSLARROW. Well, the situation for cable operators is the 

same as Mr. Gabrielli just described. The only additional point I 

would make is that under this regime, we are essentially paying 

for distant signals. On average, a cable system has hundreds of 

channels and only on average two of them are distant signals. So 

the fact that our two industries together plus the telephone companies are paying a quarter of a billion dollars a year in copyright 

146 

royalties suggests to me that content owners are probably not underpaid here. 

Mr. SMITH. Okay. Mr. McSlarrow, I am going to have time for 

one more question, which I am going to direct to you. You mentioned in your testimony a few minutes ago that you favor a 

straight reauthorization with modest reforms, compulsory licenses 

work, and so forth. I wonder if you might explain part of the reasoning for your stand as being that there is a technological difference between satellite and cable, and if you want to explain 

what those technological differences might be that would support 

your position. 

Mr. MCSLARROW. Part of it is a technological difference, and I 

think the technology differences play out in carriage obligations. 

So, for example, I made the point in my oral testimony that we 

have an obligation to carry every broadcaster on the must-buy a 

tier. That is something the satellite industry does not have. We 

also have a difference with must-carry obligations where we have 

to carry every must-carry station. The rule for DBS is carry one, 

carry all. 

So I think over time, interestingly enough, the technological differences have actually diminished, but they are still present. But 

I would also say that I think it is actually the regulatory differences today that are probably the larger issue. 

Mr. SMITH. Thank you. 

Thank you, Mr. Chairman. 

Mr. CONYERS. Thank you. 

Rick Boucher? 

Mr. BOUCHER. Well, thanks very much, Mr. Chairman. 

I am going to be directing questions to Ms. Peters. 

And, Ms. Peters, welcome again. We are delighted to have you 

here today. Before I ask you some questions about areas in which 

we might consider amending the statute, let me just briefly comment on your proposal to phase out the Section 119 license, and I 

really do not want to spend my 5 minutes on this. So I am not 

going to ask you to respond. I have heard carefully what you have 

had to say and others have had to say. 

The purpose of this license was never to subsidize satellite service. It was always to serve people who could not get a distant network signal any other way. They could not get it from the local station. In the days when we originated this license back in 1988, 

there was no local-into-local service. 

Today, we have local-into-local service, but it only serves—well, 

it does not serve 30 markets. I cannot do the math in my head. 

There are 210 and 30 are not served. So what is that, 180 are 

served and 30 are not, and within those 30 markets not served by 

local-into-local, you have, I am sure, more than a million people 

who cannot get that network signal by any means other than the 

import under Section 119. 

And my sense is that negotiating the clearance rights in the absence of the 119 license might be somewhat more difficult than 

some of the conversation here has suggested. I suspect it is not as 

simple a matter as dealing directly with the networks themselves. 

There are probably syndicated programs and other things contained within that network signal that would require a multiplicity 

147 

of negotiations with a variety of parties, and that might be quite 

complex. 

So that is my comment. We need to keep this 119 license, and 

it would be my goal strongly to defend it. 

The questions I have for you are these. Under the existing Section 111 license, the cable compulsory license, is there any doubt 

in your mind about whether the telephone companies that are now 

seeking to offer multichannel video using an IP-based platform to 

do that would be entitled to use the Section 111 compulsory license, 

and if you think the statute is unclear in that regard, should we 

amend it to clarify it? 

Ms. PETERS [continuing]. Talking about AT&T and Verizon, or 

are you talking about—— 

Mr. BOUCHER. Yes. 

Ms. PETERS [continuing]. Cable—— 

Mr. BOUCHER. Yes. No. I am talking about specifically AT&T—— 

Ms. PETERS. Right. 

Mr. BOUCHER [continuing]. And perhaps also Verizon is in that 

category, but I know AT&T intends to use an Internet technology 

solution, an IP solution, to offer its multichannel video service. Do 

you believe that the statute clearly makes them eligible for the 111 

license, or should we clarify it to ensure that? 

Ms. PETERS. My recollection, what was in the study, was that the 

definition of cable system in 111 would cover AT&T in general, but 

the definition of cable system in other contexts may not fit exactly. 

I know that our recommendation is that one of the things is the 

issue of whether or not they comply with FCC regulations, and so, 

in our study, we recommend that if they are going to take advantage of the 111 license, they should also be required to comply with 

FCC regulations. 

Mr. BOUCHER. Okay. Does your report answer this question, or 

do you address the subject in your report? 

Ms. PETERS. Yes, we do. 

Mr. BOUCHER. I will turn to the report for the answer then. 

Thank you. 

The second question I have is this. The Section 119 license allows 

the import of distant signals to households that cannot receive an 

analog over-the-air television signal from the local station, and 

with the DTV transition, obviously, the analog signals are going to 

be turned off. The natural consequence of that with the statute 

unamended is that the entire Nation will be a white area, and distant network signals could be imported into every home once the 

DTV transition is complete. I assume you would agree we should 

amend the statute to replace analog with the digital. 

Ms. PETERS. Yes. 

Mr. BOUCHER. Okay. 

Ms. PETERS. I do agree. 

Mr. BOUCHER. Next question: Should we, in your opinion, move 

the significantly viewed provisions from the current Section 119 license to the Section 122 local-into-local license? 

Ms. PETERS. Yes, we do. 

Mr. BOUCHER. Thank you. 

And then the fourth question: The Section 119 license says that 

if local signals are offered in a given market, then distant network 

148 

signals cannot be imported into that market, say, for some special 

grandfathering situations. 

But there are markets in some rural areas, largely out in the 

West, where the markets are extremely large and where the new 

spot beam technologies that the satellite carriers are using do not 

cover the entire market. So you will have homes within these very 

large DMAs served with spot beans where local-into-local is offered 

on the spot beam, but it does not reach all the homes. 

Now, in those instances, should those homes that are not served 

with the local-into-local service be permitted to import a distant 

signal, and should we amend the statute to permit that? 

Ms. PETERS. I am not sure what we said in the study, so, at the 

moment, I am not sure. If I can get back to you—I think the answer is yes, but let me get back to you. 

Mr. BOUCHER. Okay. I will look forward to your response to that. 

And then finally, do you have any comment on whether or not 

we should amend the statute to permit adjacent local signals to be 

brought into DMA in instances where that DMA is short from a 

network affiliate, so that the gap is filled, in essence not by an imported network signal, but by a local signal imported from the adjacent market for that missing affiliate? 

And then, secondly, for markets that straddle state lines where 

the television coverage originates out of state and is serving people 

who live in another state in that DMA, should the people who live 

in the state where the TV stations are not located be able to get 

local signals imported from an adjacent market in the state where 

they live? 

Ms. PETERS. I think the premise that we believe in is that everybody should be able to get their local signals, and I think we do 

cover that situation in our report. Yes. 

Mr. BOUCHER. So just to take these one by one, with regard to 

the short markets, today under the law you could bring in a distant 

network signal. Do you think it would be better to let a local television signal from an adjacent market to be brought in to fill the 

gap in that instance? 

Ms. PETERS. Mr. Boucher, I am going to be honest and basically 

say that I am not an expert in communications policy and those 

kind of issues. We do have those people on my staff—— 

Mr. BOUCHER. Okay. 

Ms. PETERS [continuing]. So we would be happy to respond to 

your question—— 

Mr. BOUCHER. Thank you. I realize the question—— 

Ms. PETERS [continuing]. In an accurate way. 

Mr. BOUCHER [continuing]. Is a little bit beyond the purview of 

copyright. 

Thank you very much. I appreciate your answers. 

Ms. PETERS. Okay. Thank you. 

Mr. BOUCHER. Thank you, Mr. Chairman. 

Mr. CONYERS. You are welcome. 

Before we go to vote, because Mr. Rehr, David, has been so cooperative, I want to ask him has there been any reconsideration of 

whether broadcasters should pay artists for performance of their 

copyrighted works since you want everybody else to get it. Thinking about it? 

149 

Mr. REHR. Yes. No. Thank you, Mr. Chairman. I expected to get 

that question today. 

The performance fee which our member stations consider by 

many to be a fee, a royalty, a tax really is not part of this SHVERA 

discussion. The suggestion that NAB’s opposition to performance 

rights in sound recordings is inconsistent with its support for the 

compulsory license in SHVERA notwithstanding. 

Cable and satellite systems, unauthorized third-party Internet 

retransmitters, and others seeking to exploit broadcasters’ signals 

are competitors to broadcasters for programming, advertising, and 

for our viewers. In some instances, these unauthorized retransmissions from distant markets result in broadcasters having to 

compete against their own programming. 

By contrast, it is a different matter with radio. Radio stations do 

not compete with record companies. Rather, radio stations use the 

records, promotes their sale, a fact reflected in industry practice, 

in some instances, of radio stations being provided complimentary 

copies of records. Unlike the recording industry, which provides its 

product for sale to consumers, television programming has no retail 

market enhanced by earlier broadcast play. 

So, in essence, I think that there is a difference between radio 

broadcasters and television broadcasters on this issue. I know we 

are hoping to more fully explore this with you in the upcoming 

weeks, and I look forward to it. 

Mr. CONYERS. I could not have you come before me without tossing that out. You know that. 

Mr. REHR. I know that. 

Mr. CONYERS. All right. 

We are going to have a vote on the rule, one vote. We will be 

right back. 

All right. Sheila Jackson Lee? 

Ms. JACKSON LEE. It will not be a question, Mr. Chairman. I 

want to thank you for holding this hearing, and I am conflicted because I am in between Homeland Security, but this is very important to me. 

What I would just leave on the table for a question to be answered in writing is the importance of consistent modernization in 

our reauthorization, why wouldn’t that be the right approach, that 

we reauthorize all of the facets together. And then, secondly, how 

much of an expanded outreach would come about through the modernization and putting the different facets together? 

So I hope that I can get an answer, and I will look forward to 

working with you, Mr. Chairman, on the question you previously 

asked. 

Thank you. I yield back. 

Mr. CONYERS. Thank you. 

Lady and gentlemen, because of the scheduling, we are going to 

ask—if you are in agreement, we will submit the remainder of the 

questions to you and free you up. I feel badly keeping all of you 

here for a few more hours. So just count this as the first opening 

salvo of a discussion that is probably going to go a little bit longer 

into the spring. And I thank you all for your attendance. 

The Committee stands adjourned. 

[Whereupon, at 12:09 p.m., the Committee was adjourned.] 

(151) 

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

PREPARED STATEMENT OF THE HONORABLE SHEILA JACKSON LEE, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF TEXAS, AND MEMBER, COMMITTEE ON THE JUDI- CIARY

Mr. Chairman, thank you for convening today’s very important hearing on copyright licensing in a digital age. This hearing will examine competition, compensation, and the need to update the cable and satellite TV licenses. The Committee on 

the Judiciary will conduct an oversight hearing on the copyright compulsory licenses 

that govern the ‘‘retransmission’’ of broadcast television programming. Central to 

this inquiry is consideration of the Satellite Home Viewer Extension and Reauthorization Act (SHVERA), which contains provisions that are scheduled to expire December 31, 2009. 

SHVERA was enacted in 1988 and created a copyright compulsory license for the 

benefit of the satellite industry to retransmit distant television signals to its subscribers. The license, codified in section 119 of the Copyright Act, was originally intended to ensure the availability of broadcast programming to satellite providers. 

This was intended to assist the satellite industry which was then in its infancy in 

the 1980s. As discussed above, Section 119 is about to expire in December 2009. 

The Committee is likely to consider both modernizing and simplifying the statutory licenses governing the retransmission of over-the-air broadcasting television 

stations, including sections 119 and 111 (for cable retransmission) and 122 (localinto-local) of the Copyright Act. 

Three of the most common methods consumers use to receive television signals 

are broad cast, cable, and direct broadcast satellite. Broadcast television is free to 

consumers. In the broadcast context, consumers receive signals via over-the-air, either via rooftop or ‘‘rabbit ear’’ antennas. Cable and direct broadcast satellite compete in the multichannel video programming distribution marketplace. In this situation, providers offer packages of video and sometimes audio programming for a 

monthly subscription fee. These media tend to offer consumers diversity of programming and better signals than over the air broadcasting but they are costly. There 

is considerable competition in this area and it is encouraged by Congress. Each requires compulsory licenses. The purpose of these compulsory licenses is to provide 

a mechanism for the retransmission of over-the-air broadcast signals by cable and 

satellite operators without those operators incurring the transaction costs associated 

with marketplace negotiations for the carrying copyrighted programs. In exchange 

for these licenses to perform copyrighted works, the users of the license pay royalty 

fees at government regulated prices, which are distributed by the Copyright Royalty 

Judges to the Copyright Owners. 

Section 119 contains the satellite distant signal license and is set to expire in December 2009. It lays out the terms and conditions that govern the ability of satellite 

providers to retransmit distant network and superstation programming. Recently, 

Section 119 was amended to permit satellite providers to retransmit certain ‘‘significantly viewed’’ stations from nearby local markets. This change was made to form 

parity between broadcasts between satellite and cable providers and to provide more 

viewing options for subscribers. 

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

television signals to its subscribers. Today’s hearing will address whether these compulsory licenses have outlived their utility, whether the licenses should be unified, 

and what should be done to illegal subscribers, among other significant issues. 

I am delighted to hear from today’s witnesses. The witnesses are distinguished 

and include: Marybeth Peters, Register of Copyright, Bob Gabrielli, Sr. Vice President of DIRECTV, Kyle McSlarrow, President and CEO of NCTA, Fritz Attaway, 

Vice President of the MPAA, Chris Murray, Internet Counsel for Consumers Union, 

152 

and David Rehr, President and CEO of the NAB. I welcome today’s witnesses and 

I look forward to their testimony. 

Thank you, and I yield the balance of my time. 

f 

PREPARED STATEMENT OF CHARLES W. ERGEN, CHAIRMAN AND CHIEF EXECUTIVE

OFFICER OF DISH NETWORK CORPORATION

The U.S. Copyright Office has provided this Committee with a roadmap for updating the cable and satellite compulsory copyright licenses to reflect the changing 

video landscape. We agree with the Copyright Office that the digital age has arrived 

and the laws need to catch up. I would like to highlight three issues from the 2008 

Copyright Office Report: 

First, the separate cable and satellite copyright regimes no longer make sense. 

We compete for the same customers and should have the same rules; 

Second, many consumers cannot get local news and sports from their home 

state because of the way local markets are defined; and 

Third, many rural communities are missing one or more of the four major networks. 

In addition, Congress should also address the interrelated issues of retransmission consent and must-carry when updating the compulsory copyright licenses 

this year. 

With respect to the first issue, the Copyright Office recommended folding the existing licenses into a unitary digital copyright license to reflect changes in technology and place all providers on a level playing field. We support that approach. 

Specifically, a unitary license for all pay-TV providers would ensure that all consumers get the services they need in a digital world, in a manner that is fair to 

the copyright holders, broadcasters, cable, satellite, and new entrants such as the 

telcos. 

Absent a unified license, we agree with the Copyright Office that there should at 

least be parity going forward between cable, satellite, and telco regimes. Consumers 

should have the benefit of the same bundle of rights under the law regardless of 

the pay-TV provider they select. It should not be harder or more expensive for one 

pay-TV provider to carry a local, significantly viewed, or nearby broadcaster than 

a rival platform because of distinctions in copyright law. 

With respect to the second issue, the Copyright Office also recognizes the need 

for DMA reform and enhanced competition between video providers. itizens living in 

DMAs that straddle state borders are often denied access to news, weather, and 

election coverage from their home state. This is an issue in 45 states. 

Indeed, this has been a key constituent concern for many years. During the last 

reauthorization, the stranded-county issue was addressed for four specific DMAs. 

Importantly, these fixes helped consumers and did not cause any actual harm to 

broadcasters. Building off the hard work started in 2004, we recommend a more 

global DMA fix. Specifically, a broadcast station from a neighboring DMA should be 

treated as ‘‘local’’ for purposes of the copyright laws, particularly if it furthers the 

concept of ‘‘state unity.’’ With this change, citizens living in DMAs that straddle 

state borders would no longer be prevented from receiving local news from their 

home state. 

Third, we agree with the Copyright Office that all consumers should have access 

to NBC, CBS, ABC and FOX programming. Today, DISH provides local service in 

178 markets, reaching 97 percent of households nationwide. This translates into 

over 1400 local broadcast stations, which is far more than any other pay-TV provider. In most of the remaining markets, one or more of the big four networks is 

missing. If a local community is missing a broadcast station, pay-TV providers 

should be able to treat a nearby affiliate as the ‘‘local’’ affiliate under copyright and 

communications law. 

* * * 

Finally, Congress should use this opportunity to examine retransmission consent 

and must carry, given that those issues have been tied to our compulsory license. 

Technology and competition have come a long way in the past five years since the 

last reauthorization of the Satellite Home Viewer Act. Today, there are multiple 

pay-TV providers in every DMA. Broadcast stations electing retransmission consent 

hold DISH customers hostage, as they play their local monopoly off multiple providers to extract huge license fees. In 2008 alone, consumers lost programming in 

153 

approximately 15 percent of our markets because of retransmission consent fee disputes. Yet the same broadcasters provide their content for free on the Internet and 

to those lucky enough to live within the shrinking areas of digital over-the-air coverage. 

Because the broadcasters received billions of dollars of spectrum for free, we think 

retransmission consent should be free. Failing that, we support the creation of a national retransmission consent rate. Satellite providers already pay a fixed, per-subscriber copyright royalty rate, and we see no reason why a similar concept would 

not work for retransmission consent. Alternatively, we support the creation of an 

actual market. If a broadcaster threatens to drop programming, pay-TV providers 

should be able to go get a nearby affiliate to fill the gap. Consumers should never 

have to wonder what happened to Sunday Night Football. 

With respect to must carry, we are forced to carry hundreds of must carry stations 

that have little or no local content. This increases our costs, and raises our prices 

to consumers at a time when consumers need all the disposable income they can 

get. Must carry stations should be required to earn carriage by airing 20 hours of 

local programming every week. This would be beneficial to consumers and would 

have no harmful effect on broadcasters that invest in their local market. 

* * * 

We are in the middle of a digital transition that is changing the way people watch 

TV. It is pretty simple: people want to watch what they want, when they want, 

where they want. The Copyright Office recognizes that TV has changed fundamentally and concludes in its report that incremental changes to outdated rules are not 

good enough. We encourage you to build on the hard work of the Copyright Office 

and act boldly on behalf of your constituents. 

f 

PREPARED STATEMENT OF MIKE MOUNTFORD, CEO, 

NATIONAL PROGRAMMING SERVICE

National Programming Service (NPS) submits this testimony for inclusion in the 

record as part of the Subcommittee on Communications, Technology, and the Internet’s oversight hearing entitled ‘‘Reauthorization of the Satellite Home Viewer Extension and Reauthorization Act.’’ 

INTRODUCTION

NPS is a small business located in Indianapolis, IN that has been serving the direct-to-home satellite industry for the past two decades by offering satellite reception equipment, consumer electronics and programming to customers through its 

website. Since 2006 NPS has been offering DISH subscribers that qualify as 

unserved households distant network signals. The company has approximately 

108,000 subscribers nationwide. That is the part of NPS’ business that is the subject 

of this hearing. 

The Satellite Home Viewer Act and its subsequent reauthorizations have been 

very successful in creating an alternative way for consumers to receive multi-channel video programming. Initially, the Act’s focus was on rural and exurban households that utilized the big C-band satellite dishes to receive multiple channels of television programming. As technology has evolved the Act has been revised to keep 

pace with the latest developments in satellite technology. The dish sizes have gotten 

smaller, the technology has improved and all of these benefits have been passed on 

to the satellite consumer. 

Throughout the 20-plus year history of the Satellite Home Viewer Act, however, 

one category of satellite subscriber has seen little change. Satellite households that 

cannot receive a viewable picture of their local network station continue to face barriers and limited choices. Even in markets where local signals are available via satellite, many households are unable to get their local signals because of the limitations of the technology. As the nation converts to all digital television programming 

there is a concern that the number of households unable to receive a local network 

signal over-the-air may actually increase. An examination of the Satellite Home 

Viewer Act should include a discussion about changes to the law that could benefit 

the unserved household. 

SATELLITE HOME VIEWER ACT: THE NEED FOR CHANGE

Many of the changes to the Satellite Home Viewer Act over the last 20 years have 

benefited the broadcaster at the expense of the consumer. As Congress considers 

154 

legislation to reauthorize the Act it should be mindful that there will continue to 

be households that must rely upon distant network signals to access network programming. 

Picture Quality Standard—Unserved households are disserved by the law’s 

current methodology for determining an acceptable television signal. The Committee 

should take the opportunity to revise this methodology to ensure that all consumers 

have access to a viewable television picture. This is particularly important as the 

nation moves to all digital television. 

The law currently defines an acceptable television signal as 90% of the time the 

consumer receives 60% of the picture. Understandably most consumers are unhappy 

watching a signal with such low quality transmission but at least with an analog 

signal it is possible to follow the content being presented and to hear the audio accompanying the pictures. Digital television will operate quite differently. Applying 

this methodology for determining a viewable picture to digital transmissions doesn’t 

make sense. With a digital picture the signal is either 100% on or the consumer 

sees nothing. A standard that accepts only 60% of a picture as viewable will not 

be acceptable to most television viewers. Nor will consumers stand for a picture that 

goes out 10% of the time. With digital transmissions even very short interruptions 

in the signal make it impossible to follow the content or to hear the action. Congress 

should ensure that a viewable digital picture is 100% of the signal 100% of the time 

with exceptions for periodic interference. 

Revise the Predictive Model—The predictive model now in use to qualify subscribers for distant network signals is based on the analog signal contour of each 

television station. To be relevant for digital transmissions, the predictive model 

must be based on the new digital contours of broadcast stations. The model should 

also take into account all of the anomalies and differences that occur between the 

two different types of transmissions. While the predictive model has been extremely 

helpful in ensuring that only those consumers who are truly unserved receive access 

to distant network signals, the current fails to recognize that by its nature the 

model is only a prediction of whether a particular household should be able to receive an over-the-air signal. It is not 100% accurate. When the predictive model is 

wrong, the current law provides consumers with a difficult path to overcome the 

presumption that the consumer gets a viewable picture. 

Signal Testing Requirement—The requirement that consumers get a signal 

strength test at their home has not worked in the past and should be eliminated. 

While it makes sense in theory, the reality is that this provision is never used. The 

high costs of the tests and the difficulty in finding someone to perform the tests 

have resulted in the consumers not using this provision. 

The Waiver Process—The current system of consumers’ obtaining waivers from 

their local broadcasters if they want to receive a distant network signal has not 

worked. NPS hears from frustrated subscribers every day who have attempted to 

get a waiver from their local broadcaster with no success. While some broadcasters 

are diligent in evaluating waiver requests, hundreds of broadcasters either reject 

them outright or worse—they don’t even respond to the customer. Waivers haven’t 

worked in the past and they won’t work in the future if they are structured as they 

have been under the present Act. 

The waiver provisions of the Act are in need of revamping. The burden under the 

current law is on the consumer to prove that they are unable to receive a viewable 

picture. NPS’s experience shows that consumers want access to their local broadcast 

stations. They view distant network signals as a last resort to obtain access to network programming. Unserved households, eligible to receive distant network signals 

make up a small percentage of the total satellite television households. For this reason NPS believes the burden should be shift to the broadcaster to prove that the 

consumer is receiving a viewable signal. The broadcaster is in a better position to 

know the where the signal goes and where it doesn’t. 

NPS supports changing the law so that a consumer can sign a legal affidavit that 

declares the inability to receive a network signal. This affidavit would be sent to 

the satellite carrier. The consumer would be authorized to receive the signal. The 

affidavit would be filed and forwarded to the broadcaster. The broadcaster would 

have the option of challenging the affidavit and if successful there could be a fine 

and legal costs could be recovered by the broadcaster from the consumer. This is 

essentially the current process that is used to qualify owners of recreational vehicles 

to receive distant network signals. NPS is unaware of any abuse of process or unaware of any charges that consumers have falsified data on the affidavits. 

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DISTANT SIGNAL LIMITATIONS

The world today is much different than it was when the Satellite Home Viewer 

Act was first enacted. Consumers have more access to content than before from a 

variety of sources. Today consumers can access television programming remotely 

through a Sling Box. You can be at any place in the world and watch local television 

with a broadband connection and the Sling Box. Networks are streaming much of 

their content over the Internet. With a computer and an Internet connection consumers can access local news programming as well as network programming from 

a variety of free and subscription sources. The digital video recorder allows consumers the flexibility and convenience to watch television programming when they 

want rather and studies show consumers are watching more television as a result. 

Americans expect to have access to information and do not understand when that 

access is denied them. If you live in Washington, DC you can subscribe to the New 

York Times or the Chicago Tribune but you can’t watch a Chicago or New York local 

network station. Our democratic society depends upon an informed electorate. Government policies have been designed to create more access to information not less. 

Rights holders should be compensated for the increased distribution of their works 

and as we have seen in other industries, such as radio and music licensing, there 

are schemes that facilitate payment and ensure adequate compensation. 

Lifting the distant signal limitations would afford consumers’ the same opportunity to access television programming that they currently enjoy for other sources 

of news and information like newspapers and radio. Opening the skies to consumers 

is an important improvement for consumers, especially consumers on a limited 

budget, that is justified given the way that technology is changing the way consumers access information. While some may resist that change, as we have learned 

from the past, technology ultimately will win. Congress should use the reauthorization of the Satellite Home Viewer Act to make fundamental changes to law to benefit the consumer. 

CONCLUSION

The Satellite Home Viewer Act’s provisions authorizing the retransmission of network signals to households otherwise unable to obtain access to a local broadcast 

network signal have ensured that hundreds of thousands of homes can watch network television programming. The need for this provision continues today despite 

the many technological advances that have given most consumers more choices in 

how they receive television programming. Congress should use the reauthorization 

process to make needed pro-consumer improvements in the Act such as eliminating 

the signal testing requirement, creating an accurate digital predictive model and 

shifting the burden of proof in the waiver process. Satellite households that cannot 

receive local over-the-air television signals should not be penalized but rather the 

government should assist these consumers by making the process of obtaining distant network signals less burdensome. 

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