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92–119 PDF 2004

REAUTHORIZATION OF THE SATELLITE

HOME VIEWER IMPROVEMENT ACT

HEARING

BEFORE THE

SUBCOMMITTEE ON COURTS, THE INTERNET, 

AND INTELLECTUAL PROPERTY

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

FEBRUARY 24, 2004

Serial No. 69

Printed for the use of the Committee on the Judiciary

(

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

(II)

COMMITTEE ON THE JUDICIARY 

F. JAMES SENSENBRENNER, JR., Wisconsin, Chairman 

HENRY J. HYDE, Illinois 

HOWARD COBLE, North Carolina 

LAMAR SMITH, Texas 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

STEVE CHABOT, Ohio 

WILLIAM L. JENKINS, Tennessee 

CHRIS CANNON, Utah 

SPENCER BACHUS, Alabama 

JOHN N. HOSTETTLER, Indiana 

MARK GREEN, Wisconsin 

RIC KELLER, Florida 

MELISSA A. HART, Pennsylvania 

JEFF FLAKE, Arizona 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

JOHN R. CARTER, Texas 

TOM FEENEY, Florida 

MARSHA BLACKBURN, Tennessee 

JOHN CONYERS, JR., Michigan 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

MARTIN T. MEEHAN, Massachusetts 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

TAMMY BALDWIN, Wisconsin 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

LINDA T. SA ́ NCHEZ, California

PHILIP G. KIKO, Chief of Staff-General Counsel 

PERRY H. APELBAUM, Minority Chief Counsel 

SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY

LAMAR SMITH, Texas, Chairman

HENRY J. HYDE, Illinois 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

WILLIAM L. JENKINS, Tennessee 

SPENCER BACHUS, Alabama 

MARK GREEN, Wisconsin 

RIC KELLER, Florida 

MELISSA A. HART, Pennsylvania 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

JOHN R. CARTER, Texas 

HOWARD L. BERMAN, California 

JOHN CONYERS, JR., Michigan 

RICK BOUCHER, Virginia 

ZOE LOFGREN, California 

MAXINE WATERS, California 

MARTIN T. MEEHAN, Massachusetts 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

TAMMY BALDWIN, Wisconsin 

ANTHONY D. WEINER, New York

BLAINE MERRITT, Chief Counsel 

DAVID WHITNEY, Counsel 

JOE KEELEY, Counsel 

MELISSA L. MCDONALD, Full Committee Counsel 

ALEC FRENCH, Minority Counsel 

(III)

C O N T E N T S 

FEBRUARY 24, 2004

OPENING STATEMENT 

Page 

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

of Texas, and Chairman, Subcommittee on Courts, the Internet, and Intellectual Property .................................................................................................... 1

The Honorable Howard L. Berman, a Representative in Congress From the 

State of California, and Ranking Member, Subcommittee on Courts, the 

Internet, and Intellectual Property .................................................................... 3

WITNESSES 

Honorable Marybeth Peters, Register of Copyrights, Copyright Office of the 

United States, The Library of Congress 

Oral Testimony ..................................................................................................... 5

Prepared Statement ............................................................................................. 7

Mr. Fritz Attaway, Executive Vice President for Government Relations and 

Washington General Counsel, Motion Picture Association of America 

(MPAA) 

Oral Testimony ..................................................................................................... 12

Prepared Statement ............................................................................................. 14

Mr. David K. Moskowitz, Board Chairman, Senior Vice President and General 

Counsel, EchoStar Communications Corporation, on behalf of Satellite 

Broadcasting and Communications Association (SBCA) 

Oral Testimony ..................................................................................................... 16

Prepared Statement ............................................................................................. 18

Mr. Robert G. Lee, President and General Manager, WDBJ Television, Inc., 

on behalf of National Association of Broadcasters (NAB) 

Oral Testimony ..................................................................................................... 21

Prepared Statement ............................................................................................. 23

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Prepared Statement of the Honorable Howard L. Berman, a Representative 

in Congress From the State of California .......................................................... 55

Prepared Statement of the Honorable Bob Goodlatte, a Representative in 

Congress From the State of Virginia .................................................................. 56

Letter to the Honorable Lamar Smith from Marilyn Bergman, the American 

Society of Composers, Authors and Publishers (ASCAP), and Frances W. 

Preston, Broadcast Music, Inc. (BMI) ................................................................ 57

Letter to the Honorable Lamar Smith from Patricia Schroeder, President 

and CEO, Association of American Publishers (AAP), and Ken Wasch, Software & Information Industry Association (SIIA) .............................................. 59

Prepared Statement of the Association of Public Television Stations (APTS) ... 61

(1)

REAUTHORIZATION OF THE SATELLITE

HOME VIEWER IMPROVEMENT ACT 

TUESDAY, FEBRUARY 24, 2004

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON COURTS, THE INTERNET,

AND INTELLECTUAL PROPERTY, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC.

The Subcommittee met, pursuant to call, at 4:05 p.m., in Room 

2141, Rayburn House Office Building, Hon. Lamar Smith (Chair of 

the Subcommittee) presiding. 

Mr. SMITH. The Subcommittee on Courts, the Internet, and Intellectual Property will come to order. Today’s hearing is on the reauthorization of the Satellite Home Viewer Improvement Act. 

I am going to recognize myself and the Ranking Member for 

opening statements, and then we will look forward to the testimony 

of our witnesses today. 

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

Viewer Improvement Act, SHVIA, 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. 

Since its enactment in 1999, the Satellite Home Viewer Improvement Act has provided consumers greater access to broadcast network programming using their satellite dishes. Today’s hearing will 

mark the first serious reexamination by this Congress of the many 

issues and interests that were involved in the enactment of the 

original legislation 5 years ago. 

The Satellite Home Viewer Improvement Act and its predecessor, 

the Satellite Home Viewer Act, have clearly succeeded in helping 

direct broadcast satellite providers deliver multi-channel video programming to millions of American consumers. 

Barely a decade old, the direct broadcast satellite industry has 

experienced remarkable growth. Over the last 5 years, the industry 

has more than doubled its number of customers and now serves in 

excess of 20 million households. 

Although a cable company remains the largest distributor of 

multi-channel video programming in the U.S., two satellite providers, DirecTV and EchoStar, now serve as the second and fourth 

largest distributors of television programming. 

While there are a number of significant provisions to the Satellite Home Viewer Improvement Act, two provisions of the law will 

expire on December 31, 2004, unless Congress acts to provide an 

extension. These provisions are known as the distant network sigVerDate 0ct 09 2002 16:32 May 13, 2004 Jkt 089266 PO 00000 Frm 00005 Fmt 6633 Sfmt 6601 G:\WORK\COURTS\022404\92119.000 HJUD1 PsN: 92119
2

nal compulsory license, sometimes referred to as the grade B 

grandfathering provision, and the copyright compulsory license. 

By providing a distant network signal license, Congress intended 

to ensure that Americans who were not able to receive an acceptable over-the-air local network signal would have access to network 

programming by satellite. As part of this license, Congress agreed 

to grandfather certain satellite customers who had been receiving 

distant network signals illegally, so long as the satellite company 

could demonstrate that their customer was unable to receive a 

strong local signal. 

Satellite industry proponents insist that the distant signal provision ought to be extended and that a decision not to do so could 

cause several hundred thousand satellite customers to lose programming they have been receiving. 

Local broadcasters who serve communities with free over-the-air 

and digital programming believe the distant signal provision undermines the value of their licensing arrangement with networks. 

Further, they believe that any justification for the provision 5 years 

ago has been eliminated by the satellite provider’s rapid rollout of 

local into local programming, that will soon be available by satellite 

delivery in all 210 U.S. Television markets. 

The copyright compulsory license provision that is also due to 

end December 31, 2004, governs the amount and payment of compensation to copyright owners of the television programming that 

satellite companies retransmit to their customers. 

Content providers, such as the Motion Picture Association of 

America, advocate letting this license expire or, alternatively, a 

royalty rate increase to more fully compensate them for the use of 

their works. Not surprisingly, the satellite industry takes the opposite tack, supporting an extension of the license and a reduction in 

their payments to copyright owners. 

Members of this Subcommittee recognize that the use of a compulsory license is an exception to the general rule that the owner 

of an intellectual property right should be allowed to negotiate and 

receive fair value in the open market for the use of their work. 

Where Government does determine that a compulsory license is 

in the public interest, it is imperative that its use be circumscribed 

and exercised only when absolutely necessary. As the original 

House report that accompanied the 1988 Satellite Home Viewer Act 

stated, these provisions sunset because of the ‘‘assumption that 

Congress should issue a compulsory license only when the marketplace cannot suffice.’’

There is no disputing that the copyright compulsory licenses that 

apply to the cable and satellite industries have benefited consumers, copyright owners, local stations, networks, and cable and 

satellite distributors. One thing that parties will dispute is the necessity of extending the compulsory licenses and the terms of those 

licenses. 

The Subcommittee will also need to address other issues such as 

a request to create parity between the cable and satellite licenses, 

as well as a request by the satellite industry to create a so-called 

digital white area that would enable satellite companies to broadcast a national digital network signal to communities where no 

local signal exists. 

3

As we commence this process, I am committed to the proposition 

that any legislation must strike an appropriate balance between 

the interests of intellectual property owners and the interests of 

those who distribute copyrighted programming. 

Now, that concludes my opening statement; and I will recognize 

the gentleman from California, Mr. Berman, for his. 

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

Around 5 years ago, I had my first hearing as Ranking Member 

of this Subcommittee, involving the reauthorization of the section 

119 satellite license; and a lot has changed since then but, unfortunately, a lot has stayed the same. 

The changes have been, for the most part, positive. While relevant stakeholders will air a wide variety of differences today, they 

appear to be united in the praise of section 122, the local to local 

license Congress created in 1999. 

Five years ago, local-into-local satellite TV service functionally 

didn’t exist. Today, 87 percent of U.S. TV households can receive 

local broadcast stations via satellite. What is more, it appears most 

households have a choice between satellite TV providers. I understand that EchoStar provides local-into-local service to more than 

83 percent of all U.S. TV households. By end of this year, DirecTV 

will provide local-into-local service to 92 percent of all U.S. TV 

households. 

The current availability of local into local satellite service is a 

pretty dramatic development in 5 years’ time. The growth in the 

satellite industry has been equally dramatic over the last 5 years. 

Satellite TV subscribership has nearly doubled in the last 5 years, 

from 13 million in 1999 to 22 million today. 

With 25 percent of multi-channel video subscribers, satellite has 

become a truly formidable competitor to cable. These dramatic 

changes show that the Government subsidies embodied in the sections 122 and 119 licenses have conveyed tremendous benefits to 

satellite TV providers and to their consumers. 

The situation isn’t so bright for those on whose backs these subsidies are levied. For copyright owners, much remains unhappily 

the same. Royalties paid under the section 119 license for retransmission of distant broadcast signals have remained frozen for 5 

years. In fact, they have remained frozen at deep discounts to 1999 

marketplace rates. 

The statutory inflexibility of these rates is unique and uniquely 

unfair. Virtually every other compulsory license that requires royalty payments includes a mechanism for increasing those payments. 

Furthermore, the inflexibility of section 119 rates is totally inconsistent with marketplace realities. In voluntary negotiations over 

the past 5 years, satellite TV providers have agreed to provide 

markedly increased compensation to owners of copyrights in nonbroadcast programming. 

If the section 119 is to be reauthorized, and it appears a virtual 

certainty it will be, owners of copyrighted broadcast programming 

should be more fairly compensated. 

In another example of how things remain the same, some satellite subscribers continue to receive a distant signal of a broadcast 

4

station despite the fact that they now receive a local signal of that 

broadcast via satellite. 

During our hearing nearly 5 years ago, I noted that such situations might arise and wondered whether there was any justification 

for allowing them to exist. I continue to believe that compulsory licenses, including the section 119 license, should only count against 

the minimal abrogation of copyright in order to accomplish their 

goals. If a satellite subscriber can receive a local broadcast via satellite, there appears to be no justification for abrogating copyright 

protection in order to provide that subscriber with a distant signal 

under the section 119 license. 

While some of the problems we face today are identical to those 

we discussed 5 years ago, our witnesses will identify many entirely 

new issues. 

One issue of particular concern to me is the two-dish system in 

play by EchoStar. I understand that EchoStar relegates certain stations, like Univision, to a second dish, which may violate the requirement that it carry all stations in a non-discriminatory manner. 

Another new issue involves subscribers in one State who, due to 

the vagaries of the DMA definition, receive their local broadcast 

signal from another State. And there is the issue whether the 

grade B signal intensity standard will be useless in a future world 

of all-digital broadcasts. I don’t mean to opine here and now on the 

appropriate resolution of these new issues. This hearing is only the 

first step in educating ourselves about them. 

However, I do believe the emergence of these new issues indicates the wisdom of reauthorizing section 119 on a temporary 

basis. New problems with the satellite licenses are bound to come 

up again; and, as it does today, the looming expiration of the 119 

license gives us an opportunity to address them. 

Thank you, Mr. Chairman. 

Mr. SMITH. Thank you Mr. Berman. 

Our first witness is the Honorable Marybeth Peters, who has 

served as Register of Copyrights since August 1994. Prior to assuming this office, Ms. Peters served as the Policy Planning Adviser to the Register Acting General Counsel of the Copyright Office and as Chief of both the Examining and Information Reference 

Divisions. 

As the Register of Copyrights, Ms. Peters is a frequent witness 

before our Subcommittee. Her duties require her to administer the 

copyright law, prepare technical studies, provide advice to Congress, and draft legislation. Ms. Peters received her law degree 

from the George Washington University Law School. She received 

her undergraduate degree from Rhode Island College. 

Our second witness is Fritz Attaway, the Executive Vice President for Government Relations and Washington General Counsel 

for the Motion Picture Association of America, who he is representing today. 

Mr. Attaway has served MPAA and its member companies since 

1976. Currently, his responsibilities include the direction of all 

Federal public policy activities of the Association, including congressional and Federal Agency affairs. In addition, he participates 

5

in the management of world-wide public policy interests for the Association. 

Mr. Attaway is a graduate of The College of Idaho where he received a B.A. in political science and business administration. He 

received his J.D. From the University of Chicago. 

Our third witness is David K. Moskowitz, who is the Senior Vice 

President and General Counsel For EchoStar Communications Corporation, a satellite distributor that serves over nine million subscribers. He is the current chairman of the Satellite Broadcasting 

and Communications Association, an organization that represents 

the satellite service industry; and he testifies on their behalf. 

Mr. Moskowitz received his J.D. From the George Washington 

University Law School and his B.A. From Western Maryland College. 

Our final witness is Robert G. Lee, President and General Manager of WDBJ Television, a CBS affiliate that, according to Nielsen, 

is the leading station in the Roanoke/Lynchburg, Virginia, market. 

Mr. Lee also serves as chairman of the CBS Television Network 

Affiliates Association, an organization that advocates the interests 

of nearly 200 local community-based CBS affiliates. 

Mr. Lee’s testimony will be presented on behalf of the National 

Association of Broadcasters, an organization whose principal goal is 

to represent the interests of free over-the-air radio and television 

broadcasters. 

Welcome to you all. I thank you for participating in today’s hearing. Without objection, your written testimony will be made a part 

of the record; and again we look forward to your comments. 

Mr. SMITH. We will start with Ms. Peters. 

STATEMENT OF THE HONORABLE MARYBETH PETERS, REGISTER OF COPYRIGHTS, COPYRIGHT OFFICE OF THE 

UNITED STATES, THE LIBRARY OF CONGRESS 

Ms. PETERS. Mr. Chairman, Mr. Berman, Mr. Boucher, I am 

pleased to appear before you today to testify on the extension or 

reauthorization of the satellite carrier section 119 statutory license. 

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

In my written testimony, I have laid out the history and operation of the statutory licenses dealing with the retransmission of 

local and distant over-the-air broadcast signal by cable operators, 

section 111, the section 122 local, and the section 119 distant statutory licenses covering the retransmission of over-the-air broadcast 

signals by satellite carriers. 

Today, the focus is on section 119, which is scheduled to expire 

at the end of this year. The question is, should this license be allowed to expire? 

The Office faced this question in 1994 and again in 1999. Our position remains the same. In principle, the Copyright Office 

disfavors statutory licenses. A statutory license should be a last resort. We favor marketplace solutions. 

Having said that, the cable compulsory license has been part of 

the law since 1978. It is not scheduled for elimination. Believing 

in parity among providers, the Office supports reauthorization of 

the section 119 license for satellite carriers. 

6

While I believe that, in principle, the satellite license should continue for as long as the cable license is in place, the written testimony of other participants in this hearing has persuaded me that 

we are in an area and a period of transition. Issues such as transition from analog to digital broadcast and the projected expansion 

of local-into-local service to virtually all households that in only a 

few years from now will make it necessary to reexamine the terms 

and conditions of the satellite license. Therefore, at this point, I 

would favor a 5-year extension of the section 119 license. 

I recommend that, during this 5-year period, issues relating to 

digital technology and the impact of other changes that affect the 

license be examined. During that 5-year period, the section 111 

cable operator license should also be subject to the same examination, because many of the same issues will affect the cable industry 

as well. 

As I stated in my 1997 report to the Chairman of the Senate 

Committee on the Judiciary, the cable and satellite licenses should, 

where possible, be harmonized to avoid unduly affecting the competitive balance between the industries. 

During this legislative session, this Subcommittee should, however, consider several amendments to the section 119 license. 

First, several existing provisions should be removed. They are 

the provision concerning the public broadcasting satellite feed 

which expired on January 1 of 2002; second, the provisions related 

to the copyright arbitration royalty panel proceeding to adjust the 

rates, which was concluded in 1997 and which was superseded by 

the 1999 extension; and, last, the provision establishing an interim 

home subscriber testing regime for satellite service of network signals, which expired in 1996. 

Second, with respect to distant signals, the Office believes Congress will have to reexamine how to determine what is an unserved 

household; that is, a household that cannot receive an adequate 

network signal as a transition from digital to analog broadcast 

takes place. 

The time will come when television stations broadcast only digital signals, and as analog signals become a thing of the past, the 

current unserved household definition based on reception of a signal of grade B intensity will become irrelevant. As you consider the 

reauthorization of the section 119 license, you will need to determine whether that issue needs to be addressed now or whether it 

can wait. 

A related issue has been identified in the testimony of the National Association of Broadcasters. Should a satellite carrier be permitted to transmit a distant network signal to a household that 

cannot receive an acceptable over-the-air signal, but that can receive the local network affiliate signal from the satellite carrier 

using the section 122 statutory license? 

I am inclined to believe that there is no justification for permitting delivery of the distant signal under those circumstances. 

We look forward to working with you, Mr. Chairman and Members of the Subcommittee, as well as staff, to resolve these and 

other matters involving the reauthorization of section 119. 

Thank you. 

Mr. SMITH. Thank you, Ms. Peters. 

7

[The prepared statement of Ms. Peters follows:]

PREPARED STATEMENT OF MARYBETH PETERS

Mr. Chairman, Mr. Berman, and distinguished members of the Subcommittee, I 

appreciate the opportunity to appear before you to testify on the extension of the 

Satellite Home Viewer Improvement Act of 1999 and the statutory license contained 

in section 119 of the Copyright Act. As you know, the section 119 license enables 

satellite carriers to retransmit over-the-air television broadcast stations to their subscribers for private home viewing upon semi-annual payment of royalty fees to the 

Copyright Office. Since its enactment in 1988, the Office has collected over $500 million in royalties and distributed them to copyright owners of the over-the-air television broadcast programming retransmitted by satellite carriers. The section 119 

license, along with its counterpart for the cable television industry, the section 111 

license, have provided the means for licensing copyrighted works to broadcast programming in the television retransmission marketplace. 

BACKGROUND

There are currently three statutory licenses in the Copyright Act, title 17 of the 

United States Code, governing the retransmission of over-the-air broadcast signals. 

A statutory copyright license is a codified licensing scheme whereby copyright owners are required to license their works to a specified class of users at a governmentfixed price and under government-set terms and conditions. There is one statutory 

license applicable to cable television systems and two statutory licenses applicable 

to satellite carriers. The cable statutory license, 17 U.S.C. § 111, allows a cable system to retransmit both local and distant over-the-air radio and television broadcast 

stations to its subscribers who pay a fee for such service. The satellite carrier statutory license in section 119 of the Copyright Act, 17 U.S.C. § 119, permits a satellite 

carrier to retransmit distant over-the-air television broadcast stations (but not radio 

stations) to its subscribers for private home viewing, while the statutory license in 

section 122 permits satellite carriers to retransmit local over-the-air television 

broadcast stations (but not radio) stations to its subscribers for commercial and private home viewing. The section 111 cable license and the section 122 satellite license are permanent. The section 119 satellite license, however, will expire at the 

end of this year. 

It is difficult to appreciate the reasons for and issues relating to the satellite license without first understanding the cable license that preceded it. Therefore, I 

will describe the background of the cable license before addressing the satellite license. 

1. The section 111 cable statutory license. 

The cable statutory license, enacted as part of the Copyright Act of 1976, applies 

to any cable televison system that carries over-the-air radio and television broadcast 

signals in accordance with the rules and regulations of the Federal Communications 

Commission (FCC). These systems are required to submit royalties for carriage of 

their signals on a semi-annual basis in accordance with prescribed statutory royalty 

rates. The royalties are submitted to the Copyright Office, along with a statement 

of account reflecting the number and identity of the over-the-air broadcast signals 

carried, the gross receipts from subscribers for those signals, and other relevant filing information. The Copyright Office deposits the collected funds in interest-bearing accounts with the United States Treasury for later distribution to copyright 

owners of the over-the-air broadcast programming through the procedure described 

in chapter 8 of the Copyright Act. 

The development of the cable television industry in the second half of the twentieth century presented unique copyright licensing concerns. Cable operators typically carried multiple over-the-air broadcast signals containing programming owned 

by scores of copyright owners. It was not realistic for cable operators to negotiate 

individual licenses with numerous copyright owners and a practical mechanism for 

clearing rights was needed. As a result, Congress created a statutory copyright license for cable systems to retransmit over-the-air broadcast signals. The structure 

of the cable statutory license was premised on two prominent congressional considerations: first, the perceived need to differentiate between the impact on copyright 

owners of local versus distant over-the-air broadcast signals carried by cable operators; and, second, the need to categorize cable systems by size based upon the dollar 

amount of receipts a system receives from subscribers for the carriage of broadcast 

signals. These two considerations played a significant role in evaluating what economic effect cable systems have on the value of copyrighted works shown on overthe-air broadcast stations. Congress concluded that a cable operator’s carriage of 

8

1 It should be noted, however, that cable systems that carry only local signals and no distant 

signals (a rarity) are still required to submit a statement of account and pay a basic minimum 

royalty fee. All cable systems must pay at least a minimum fee for the privilege of using the 

section 111 license. 

local over-the-air broadcast signals did not affect the value of the copyrighted works 

broadcast because the signal is already available to the public for free through overthe-air broadcasting. Therefore, the cable statutory license essentially allows cable 

systems to carry local signals for free. 1 Congress also determined that distant signals do affect the value of copyrighted over-the-air broadcast programming because 

the programming is reaching larger audiences. The increased viewership is not compensated because local advertisers, who provide the principal remuneration to 

broadcasters enabling broadcasters to pay for programming, are not willing to pay 

increased advertising rates for cable viewers in distant markets who cannot be reasonably expected to purchase their goods. As a result, broadcasters have no reason 

or incentive to pay greater sums to compensate copyright owners for the receipt of 

their signals by distant viewers on cable systems. The classification of a cable system by size, based on the income from its subscribers, assumes that only the larger 

systems which import distant signals have any significant economic impact on copyrighted works. 

The royalty payment scheme for the section 111 license is complicated. It stands 

in sharp contrast to the royalty payment scheme for the section 119 satellite carrier 

license which uses a straightforward flat rate payment mechanism. To better understand the marked differences between the two licenses, it is necessary to explain 

how royalties are paid under the section 111 cable license. 

Section 111 distinguishes among three sizes of cable systems according to the 

amount of money a system receives from subscribers for the carriage of broadcast 

signals. The first two classifications are small to medium-sized cable systems—Form 

SA–1’s and Form SA–2’s—named after the statement of account forms provided by 

the Copyright Office. Semiannually, Form SA–1’s pay a flat rate (currently $37) for 

carriage of all local and distant over-the-air broadcast signals, while Form SA–2’s pay a fixed percentage of gross receipts received from subscribers for carriage of 

broadcast signals irrespective of the number of distant signals they carry. The large 

systems, Form SA–3’s, pay in accordance with a highly complex and technical formula, based in large part on regulations adopted by the FCC that governed the operation of cable systems in 1976, the year that section 111 was enacted. This formula requires systems to distinguish between carriage of local and distant signals 

and to pay accordingly. The vast majority of royalties paid under the cable statutory 

license come from Form SA–3 systems. 

The royalty scheme for Form SA–3 systems employs the statutory device of the 

distant signal equivalent (DSE). Distant over-the-air broadcast stations are determined in accordance with two sets of FCC regulations: the ‘‘must-carry’’ rules for 

over-the-air broadcast stations in effect on April 15, 1976, and a station’s television 

market as currently defined by the FCC. A signal is distant for a particular cable 

system when that system would not have been required to carry the station under 

the FCC’s must-carry rules, and the system is not located within the station’s local 

television market. 

Cable systems pay for carriage of distant signals based upon the number of distant signal equivalents (DSE’s) they carry. The statute defines a DSE as ‘‘the value 

assigned to the secondary transmission of any nonnetwork television programming 

carried by a cable system in whole or in part beyond the local service area of a primary transmitter of such programming.’’ 17 U.S.C. § 111(f). A DSE is computed by 

assigning a value of one to a distant independent over-the-air broadcast station, and 

a value of one-quarter to distant noncommercial educational and network stations, 

which have a certain amount of nonnetwork programming in their broadcast days. 

A cable system pays royalties based upon a sliding scale of percentages of its gross 

receipts depending upon the number of DSE’s it carries. The greater the number 

of DSE’s, the higher the total percentage of gross receipts and, consequently, the 

larger the total royalty payment. 

As noted above, operation of the cable statutory license is intricately linked with 

how the FCC regulated the cable industry in 1976. The FCC regulated cable systems extensively, limiting them in the number of distant signals they could carry 

(the distant signal carriage rules), and requiring them to black-out programming on 

a distant signal where a local broadcaster had purchased the exclusive rights to that 

same programming (the syndicated exclusivity rules). In 1980, the FCC deregulated 

the cable industry and eliminated both the distant signal carriage and syndicated 

exclusivity (‘‘syndex’’) rules. Cable systems were now free to import as many distant 

signals as they desired. 

9

2 Royalties collected from the syndex surcharge later decreased considerably when the FCC 

reimposed syndicated exclusivity protection in certain circumstances. 3 Under the cable statutory license, a cable operator that carries any part of an over-the-air 

broadcast signal, no matter how momentary, must pay royalties for the signal as if it had been 

carried for the full six months of the accounting period. 

The Copyright Royalty Tribunal, pursuant to its statutory authority, and in reaction to the FCC’s deregulation, conducted a rate adjustment proceeding for the cable 

statutory license to compensate copyright owners for the loss of the distant signal 

carriage and the syndex rules. This rate adjustment proceeding established two new 

rates applicable only to Form SA–3 systems. 47 Fed. Reg. 52,146 (1982). The first 

new rate, to compensate for the loss of the distant signal carriage rules, was the 

adoption of a royalty fee of 3.75% of a cable system’s gross receipts from subscribers, 

for over-the-air broadcast programming for carriage of each distant signal that 

would not have previously been permitted under the former distant signal carriage 

rules. 

The second rate, adopted by the Copyright Royalty Tribunal to compensate for the 

loss of the syndex rules, is known as the syndex surcharge. Form SA–3 cable systems must pay this additional fee when the programming appearing on a distant 

signal imported by the cable system would have been subject to black-out protection 

under the FCC’s former syndex rules. 2

Since the Tribunal’s action in 1982, the royalties collected from cable systems 

have been divided into three categories to reflect their origin: 1) the ‘‘Basic Fund,’’ which includes all royalties collected from Form SA–1 and Form SA–2 systems, and 

the royalties collected from Form SA–3 systems for the carriage of distant signals 

that would have been permitted under the FCC’s former distant carriage rules; 2) 

the ‘‘3.75% Fund,’’ which includes royalties collected from Form SA–3 systems for 

distant signals whose carriage would not have been permitted under the FCC’s 

former distant signal carriage rules; and 3) the ‘‘Syndex Fund,’’ which includes royalties collected from Form SA–3 systems for carriage of distant signals containing 

programming that would have been subject to black-out protection under the FCC’s 

former syndex rules. 

In order to be eligible for a distribution of royalties, a copyright owner of overthe-air broadcast programming retransmitted by one or more cable systems on a distant basis must submit a written claim to the Copyright Office. Only copyright owners of nonnetwork over-the-air broadcast programming are eligible for a royalty distribution. Eligible copyright owners must submit their claims in July for royalties 

collected from cable systems during the previous year. Once claims have been processed, the Librarian of Congress determines whether there are controversies among 

the parties filing claims as to the proper division of the royalties. If there are no 

controversies—meaning that the claimants have settled among themselves as to the 

amount of royalties each claimant is due—then the Librarian distributes the royalties in accordance with the claimants’ agreement(s) and the proceeding is concluded. 

The Librarian must initiate a Copyright Arbitration Royalty Panel (CARP) proceeding in accordance with the provisions of chapter 8 of the Copyright Act for those 

claimants who do not agree. 

The section 111 statutory license is not the only means for licensing programming 

on over-the-air broadcast stations. Copyright owners and cable operators are free to 

enter into private licensing agreements for the retransmission of over-the-air broadcast programming. Private licensing most frequently occurs in the context of particular sporting events, where a cable operator wishes to retransmit a sporting event 

carried on a distant broadcast station, but does not wish to carry the station on a 

full-time basis. 3 The practice of private licensing is not widespread and most cable 

operators rely exclusively on the cable statutory license to clear the rights to overthe-air broadcast programming. 

2. The section 119 satellite carrier statutory license. 

The cable statutory license was enacted as part of the Copyright Act of 1976 and 

is a permanent license. In the mid-1980’s, the home satellite dish industry grew significantly, and satellite carriers had the ability to retransmit over-the-air broadcast 

programming to home dish owners. In order to facilitate this business and provide 

rural America with access to television programming, Congress passed the Satellite 

Home Viewer Act of 1988, Pub. L. No. 100–667 (1988), which created the satellite 

carrier statutory license found in 17 U.S.C. § 119. 

The section 119 license is similar to the cable statutory license in that it provides 

a means for satellite carriers to clear the rights to over-the-air television broadcast 

programming (but not radio) upon semi-annual payment of royalty fees to the Copyright Office. The section 119 license differs from the cable statutory license, howVerDate 0ct 09 2002 16:32 May 13, 2004 Jkt 089266 PO 00000 Frm 00013 Fmt 6633 Sfmt 6621 G:\WORK\COURTS\022404\92119.000 HJUD1 PsN: 92119
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4 Certain exemptions to the unserved household limitation were added by the Satellite Home 

Viewer Improvement Act of 1999, including recreational vehicles and commercial trucks, certain 

grandfathered subscribers, subscribers with outdated C-band satellite dishes and subscribers obtaining waivers from local network broadcasters. 5The section 122 statutory license is discussed infra. 

ever, in several important aspects. First, the section 119 license was enacted to 

cover only distant over-the-air television broadcast signals. In 1988, and for many 

years thereafter, satellite carriers lacked the technical ability to deliver subscribers 

their local television stations. Local signals are not covered by the section 119 license. Second, the calculation of royalty fees under the section 119 license is significantly different from the cable statutory license. Rather than determine royalties 

based upon the complicated formula of gross receipts and application of outdated 

FCC rules, royalties under the section 119 license are calculated on a flat, per subscriber per signal basis. Over-the-air broadcast stations are divided into two categories: superstation signals (i.e., commercial independent over-the-air television 

broadcast stations), and network signals (i.e., commercial televison network stations 

and noncommercial educational stations); each with its own attendant royalty rates. 

Satellite carriers multiply the respective royalty rate for each signal by the number 

of subscribers who receive the signal during the six-month accounting period to calculate their total royalty payment. 

Third, while satellite carriers may use the section 119 license to retransmit superstation signals to subscribers located anywhere in the United States, they can retransmit only network signals to subscribers who reside in ‘‘unserved households.’’ An unserved household is defined as one that cannot receive an over-the-air signal 

of Grade B intensity of a network station using a conventional rooftop antenna. 17 

U.S.C. § 119(d). 4 The purpose of the unserved household limitation is to protect local 

network broadcasters whose station is not provided by a satellite carrier from having their viewers watch another affiliate of the same network on their satellite television service, rather than the local network affiliate. 

The section 119 satellite carrier statutory license created by the Satellite Home 

Viewer Act of 1988 was scheduled to expire at the end of 1994 at which time satellite carriers were expected to be able to license the rights to all over-the-air broadcast programming that they retransmitted to their subscribers. However, in 1994 

Congress reauthorized the section 119 license for an additional five years. In order 

to assist the process of ultimately eliminating the section 119 license, Congress provided for a Copyright Arbitration Royalty Panel (CARP) proceeding to adjust the 

royalty rates paid by satellite carriers for network stations and superstations. Unlike cable systems which pay fixed royalty rates adjusted only for inflation, Congress 

mandated that satellite carrier rates should be adjusted to reflect marketplace 

value. It was thought that by compelling satellite carriers to pay statutory royalty 

rates that equaled the rates they would most likely pay in the open marketplace, 

there would be no need to further renew the section 119 license and it could expire 

in 1999. 

The period from 1994 to 1999 was the most tumultuous in the history of the section 119 license. The satellite industry expanded its subscriber base considerably 

during this time and provided many of these subscribers with network stations in 

violation of the unserved household limitation. Broadcasters issued challenges, lawsuits were brought, and many satellite customers had their network service terminated. Angry subscribers wrote their congressmen and senators protesting the loss 

of their satellite-delivered network stations, focusing attention on the fairness and 

application of the unserved household limitation. In the meantime, the Library of 

Congress conducted a CARP proceeding to adjust the royalty rates paid by satellite 

carriers. Applying the new marketplace value standard as it was required to do, the 

CARP not surprisingly raised the rates considerably. The satellite industry, with 

less than 10 million subscribers, was required to pay more in statutory royalty fees 

than the cable industry, which had nine times the number of subscribers. The satellite industry and its customers were irate. 

Congress’s response to the furor over the section 119 license was the Satellite 

Home Viewer Improvement Act of 1999. The Act codified a new vision for the statutory licensing of the retransmission of over-the-air broadcast signals by satellite carriers. The heart of the conflict over the unserved household limitation—indeed the 

reason for its creation—was the inability of satellite carriers (unlike cable operators) 

early on to provide their subscribers with their local television stations. By 1999, 

satellite carriers were beginning to implement local service in some of the major television markets in the United States. In order to further encourage this development, Congress created a new, royalty-free license. 5 Congress also made several 

changes to the unserved household limitation itself. The FCC was directed to conVerDate 0ct 09 2002 16:32 May 13, 2004 Jkt 089266 PO 00000 Frm 00014 Fmt 6633 Sfmt 6621 G:\WORK\COURTS\022404\92119.000 HJUD1 PsN: 92119
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6The Commission confirmed that the Grade B signal intensity standard provided an adequate 

television picture when received with a conventional rooftop receiving antenna, and adopted a 

predictive model to determine when subscribers likely received an over-the-air signal of Grade 

B intensity. Report, 15 FCC Rcd 24321 (Nov. 29, 2000)(Grade B intensity); First Report and 

Order, 15 FCC Rcd 12118 (May 26, 2000)(predictive model). 

duct a rulemaking to set specific standards whereby a satellite subscriber’s eligibility to receive service of a network station could accurately be predicted. 6 For 

those subscribers that were not eligible for network service, a process was codified 

whereby they could seek a waiver of the unserved household limitation from their 

local network broadcaster. In addition, three categories of subscribers were exempted from the unserved household limitation: owners of recreational vehicles and commercial trucks, provided that they supplied certain required documentation; subscribers receiving network service which was terminated after July 11, 1998, but before October 31, 1999, and did not receive a strong (Grade A) over-the-air signal 

from their local network broadcaster; and subscribers using the old-style large Cband satellite dishes. 

In reaction to complaints about the 1997 CARP proceeding that raised the section 

119 royalty rates, Congress abandoned the concept of marketplace value royalty 

rates and reduced the CARP-established royalty fee for network stations by 45 percent and the royalty fee for superstations by 30 percent. Finally, the Satellite Home 

Viewer Improvement Act of 1999 extended the revised section 119 statutory license 

for five years until midnight on December 31 of this year. 

3. The section 122 satellite carrier statutory license. 

The section 122 satellite carrier statutory license completes the regime for satellite retransmission of over-the-air television broadcast stations. While the section 

111 license permits cable systems to retransmit both local and distant over-the-air 

television broadcast signals, such a privilege is parsed among two statutory licenses 

for the satellite industry. As discussed above, the section 119 license covers retransmissions of distant signals. The section 122 license covers the retransmission of 

local signals and, unlike the section 119 license, is permanent. The section 122 license is royalty free, and is conditioned on a satellite carrier carrying all local overthe-air television stations within a given market. In other words, a satellite carrier 

may not pick and choose which stations in a given local market it wishes to provide 

to its subscribers residing in that market. 

SHOULD THE SECTION 119 LICENSE BE EXTENDED?

The Copyright Office has traditionally opposed statutory licensing for copyrighted 

works, preferring instead that licensing be determined in the marketplace by copyright owners through the exercise of their exclusive rights. However, in my report 

to the Senate and House Judiciary Committees before to the passage of the Satellite 

Home Viewer Improvement Act of 1999, I stated that ‘‘the satellite carrier industry 

should have a compulsory [statutory] license to retransmit broadcast signals as long 

at the cable industry has one.’’ A Review of the Copyright Licensing Regimes Covering Retransmission of Broadcast Signals (Report of the Register of Copyrights, August 1, 1997) at 33. Nothing has changed since 1997 to alter this point of view, and 

I can think of no reason that would justify retaining the section 111 cable statutory 

license while abandoning the section 119 satellite carrier statutory license. Consequently, the Copyright Office supports extension of section 119. 

SHOULD THERE BE OTHER AMENDMENTS TO THE SECTION 119 LICENSE?

Today’s hearing marks the start of a process whereby this Subcommittee will be 

presented with many ideas for changes to the existing terms and conditions of the 

section 119 license. We look forward to working with you, Mr. Chairman, and, if 

requested, will offer our analysis and views on any proposed amendments to section 

119. However, I would like to call your attention to two issues. 

First, there are some outdated provisions in section 119. Specifically, there are 

provisions governing the licensing of the PBS satellite feed which expired in 2003. 

There are also a number of provisions regarding the 1997 Copyright Arbitration 

Royalty Panel (CARP) rate adjustment. The rates established by that proceeding 

were superseded by the Satellite Home Viewer Improvement Act of 1999 and are 

no longer relevant. Further, the Grade B signal testing regime, created by the Satellite Home Viewer Act of 1994, expired in 1996. These outdated sections should be 

deleted from section 119. 

Second, there are matters related to the transition by the broadcast industry from 

over-the-air analog television signals to digital signals. The FCC has directed that 

12

the conversion to digital should take place by 2006. While this date may ultimately 

change, the conversion to digital nonetheless raises some questions with respect to 

statutory licensing. The Copyright Office strongly supports a formal Congressional 

recognition that the section 119 license, and the section 122 license, apply to satellite carriers of over-the-air digital broadcast television stations. In so recognizing 

this application, it will be necessary to address the unserved household limitation 

set forth in the section 119 license. 

As described earlier in this testimony, the unserved household limitation restricts 

satellite carriers from making use of the section 119 license for network television 

stations to subscribers that do not reside in unserved households. An ‘‘unserved 

household’’ is defined as one that ‘‘cannot receive, through the use of a conventional, 

stationary, outdoor rooftop receiving antenna, an over-the-air signal of a primary 

network station affiliated with that network of Grade B intensity as defined by the 

Federal Communications Commission....’’ 17 U.S.C. § 119(d)(10)(A). The Grade B 

standard applies to television stations that broadcast in analog format, not digital. 

Consequently, there will be no standard to determine when a household receives an 

adequate over-the-air signal of a network station that is broadcast in digital. The 

unserved household limitation will not function in the era of digital television unless 

it is amended. 

It is reasonable to assume that a new signal strength standard for digital broadcasting might mirror the Grade B standard applicable to analog broadcasting. In establishing a new standard, I offer a word of caution. A television signal of Grade 

B intensity received by a household does not always guarantee a perfect television 

picture, but it virtually always guarantees a watchable picture. Atmospheric conditions, terrain features and background noise can sometimes make an analog television picture fuzzy or snowy, but there is still a receivable signal. Such is not the 

case, however, with digital broadcasting, which is an all or nothing proposition. If 

a digital signal is too weak at any given time, the household will not receive a fuzzy 

or snowy picture; it will receive nothing. Therefore, the signal intensity strength 

standard for digital television must be sufficiently strong to assure that a household 

receiving an over-the-air digital broadcast station can receive it twenty-four hours 

a day, seven days a week. 

We look forward to working with you, Mr. Chairman and members of the Subcommittee, to resolve these and other matters regarding the extension of the section 

119 license. Thank you.

Mr. SMITH. Mr. Attaway. 

STATEMENT OF FRITZ ATTAWAY, EXECUTIVE VICE PRESIDENT FOR GOVERNMENT RELATIONS AND WASHINGTON 

GENERAL COUNSEL, MOTION PICTURE ASSOCIATION OF 

AMERICA (MPAA) 

Mr. ATTAWAY. Thank you, Chairman Smith, Mr. Berman, Mr. 

Boucher, Mr. Meehan. 

I appreciate this opportunity today to present the views of television content owners on extension of the Satellite Home Viewer 

Act. Although I speak today only on behalf of the member companies of the Motion Picture Association, I am authorized to tell you 

that my statement is endorsed by the Office of the Commissioner 

of Baseball, the National Football League, the National Basketball 

Association, the National Hockey League, the National Collegiate 

Athletic Association, and Broadcast Music, Inc. 

The Satellite Home Viewer Act of 1988 created in section 119 of 

the Copyright Act, for a 5-year period, a compulsory license that allows satellite program distributors, such as EchoStar and DirecTV, 

to retransmit broadcast television programming from distant markets without the permission of copyright owners of that programming. This satellite compulsory license forces copyright owners to 

make their copyrighted programs available without their consent 

and without any ability to negotiate with the satellite companies 

for, among other things, marketplace compensation. 

13

The SHVA was extended for 5-year periods in 1994 and 1999. In 

1999, in response to fierce lobbying by the satellite industry, Congress imposed a substantial discount on market-based compulsory 

license rates set a year earlier by an independent arbitration panel 

and approved by the Copyright Office and the Librarian of Congress. These discounts, 30 percent for superstation programming 

and 45 percent for network and PBS programming, went into effect 

in July 1999. 

Since the reduction in royalty rates in 1999, there have been no 

further adjustments to the compulsory license rates. 

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

license, the cost of programming that satellite companies license in 

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

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

compensation provided to owners of retransmitted broadcast programming. 

Satellite carriers now pay only 18.9 cents per subscriber per 

month for all the programming on a distant independent broadcast 

station like WGN in Chicago and KTLA in Los Angeles. They pay 

only 14.85 cents for network stations. The satellite carriers then 

sell this programming to their subscribers for many times that 

amount. 

Let me put this in perspective. This bag of pinto beans cost $0.69 

at the Safeway store. A satellite carrier, under the Government-imposed compulsory license, pays 18.9 cents a month for movies, series, sporting events, local news shows, and other programming 

broadcast 24 hours a day. 

Mr. Chairman, it is a fact that, for all of this programming, 

which costs millions of dollars to produce, satellite carriers don’t 

pay beans. 

Mr. SMITH. I thought that phrase was coming myself, yes. 

Mr. ATTAWAY. The landscape has changed dramatically since the 

first satellite compulsory license was enacted in 1988. It has been 

14 years. It is time for Congress to reexamine the need for a wealth 

transfer from content owners to satellite carriers. At the very least, 

Congress should demand from proponents of the satellite compulsory license clear and convincing evidence that an extension of the 

license is necessary to serve the public interest. 

These carriers provide hundreds of channels of programming for 

which they negotiate in the free market. It is only this handful of 

distant broadcast stations that use a compulsory license. There is 

no justification for that in my mind. But if you decide to continue 

to subsidize the satellite industry, I urge you to provide some semblance of fairness to the content owners who pay for this subsidy, 

by making three changes in law. 

First, the royalty rates for the year 2004 should be increased to 

reflect increases that satellite companies have paid in the marketplace for comparable programming; second, starting in 2005, the 

royalty rates should be adjusted annually to keep pace with the license fees paid by satellite companies in the free market for comparable programming; and, third, copyright owners should have the 

right to audit satellite companies to ensure that they are accurately reporting and paying their royalties. 

14

Mr. Chairman, these are not radical changes. They are reasonable. They would inject some degree of fairness in the compulsory 

license by bringing compensation to program owners closer to market levels. 

I respectfully urge the Committee to make these changes if it decides to extend the compulsory license, and thank you very much 

for your time. 

Mr. SMITH. Thank you, Mr. Attaway. 

[The prepared statement of Mr. Attaway follows:]

PREPARED STATEMENT OF FRITZ ATTAWAY

Chairman Smith, ranking minority member Berman, members of the Subcommittee, thank you for giving me this opportunity to present the views of owners 

of television programming, and representatives of authors whose works appear in 

that programming, on extension of the Satellite Home Viewer Act. Although I speak 

only for the member companies of the Motion Picture Association of America, I am 

authorized to tell you that the following organizations endorse the views set forth 

in this statement: the Office of the Commissioner of Baseball, the National Football 

League, the National Basketball Association, the National Hockey League, the National Collegiate Athletic Association, and Broadcast Music, Inc. 

BACKGROUND

The Satellite Home Viewer Act (SHVA) of 1988 created in Section 119 of the 

Copyright Act, for a five-year period, a ‘‘compulsory license’’ that allows satellite program distributors (such as EchoStar and DirecTV) to retransmit broadcast television 

programming from distant markets without the permission of the copyright owners 

of that programming. This satellite compulsory license forces copyright owners to 

make their copyrighted programs available without their consent and without any 

ability to negotiate with the satellite companies for, among other things, marketplace compensation. 

The SHVA was extended for five-year periods in 1994 and 1999. The 1994 renewal 

provided for a royalty rate adjustment procedure aimed at providing copyright owners with market value compensation for the use of their programming by satellite 

companies. This procedure was in fact exercised, which resulted in the assessment 

of market-based royalty rates in 1998 by a panel of independent arbitrators appointed by the Copyright Office. 

Although satellite companies pay market based license fees for scores of program 

services that they sell to their subscribers, they strongly objected to paying market 

based royalty rates for the retransmitted broadcast programming they sell to their 

subscribers, and successfully petitioned Congress to impose a substantial discount 

on the market based rates. These discounts—30 percent for ‘‘superstation’’ programming and 45 percent for network and PBS programming—went into effect in July 

of 1999. 

Since the reduction of royalty rates in 1999, there have been no further adjustments to the compulsory license rates. If the SHVA were simply extended for another five years, at the end of that period the satellite royalty rates will have been 

frozen for a period of ten years. In the five years since the last extension of the satellite compulsory license, the cost of programming that satellite companies license 

in the free market for resale to their subscribers has increased substantially, as 

have the fees charged by satellite companies to their subscribers. The only fiscal 

measure that has not increased is the compensation provided owners of retransmitted broadcast programming. 

COPYRIGHT OWNERS’ POSITION

1. Compulsory licenses are a serious derogation of the rights of copyright owners. 

They substitute the heavy hand of government for the efficient operation of the 

marketplace and arbitrarily transfer wealth from copyright owners to privileged 

users. Compulsory licenses should be imposed only as a last resort when marketplace forces clearly are incapable of operating in the public interest. It has been 

14 years since the satellite compulsory license was first imposed. Congress 

should demand from proponents of the satellite compulsory license clear and convincing evidence that an extension of the license is necessary to serve the public 

interest.

15

2. If Congress reauthorizes the satellite compulsory license, the royalty rates for the 

year 2004 should be increased to reflect increases that satellite companies have 

paid in the marketplace for comparable programming.

3. Starting in 2005, the royalty rates should be adjusted annually to keep pace with 

the license fees paid by satellite companies in the free market for comparable 

programming services.

4. Copyright owners should have the right to audit satellite companies to ensure 

that they are accurately reporting and paying their royalties. 

BASES FOR COPYRIGHT OWNERS’ POSITION

There is no equitable justification for freezing the satellite compulsory license royalty rates for a period of ten years.

• The rate freeze that has been in effect since 1999 is unique among the compulsory licenses. All of the other compulsory licenses in the Copyright Act have 

procedures for increasing the royalty rates, either automatically or through 

rate adjustment proceedings. Satellite companies have unjustifiably received 

special treatment by not having their royalty rates subject to periodic adjustments.

• Satellite companies themselves have raised the prices that consumers pay to 

receive distant broadcast signals. For example, according to the web site 

‘‘Echostar Knowledge Base,’’ which states that it is not affiliated with 

Echostar Communications, the EchoStar satellite service raised the monthly 

price of its package of distant ‘‘superstation’’ signals from $4.99 per subscriber 

in 1998 to $5.99 in 2002—despite the fact that the royalty cost of distant signal programming was reduced by Congress in 1999. In other words, since 

1998 this satellite service has increased its charges for distant broadcast programming by 20 percent, while its copyright royalty payment for that programming has been reduced by 30 percent!! Copyright owners of retransmitted broadcast programming should not be forced to accept freezes in the 

satellite compulsory license royalty rates when all other costs to satellite carriers are increasing and the fees charged by satellite carriers to their subscribers are increasing as well.

• The fees that satellite companies pay for comparable programming not subject 

to compulsory licensing have steadily increased. For example, in 1998, a panel 

of independent arbitrators determined that broadcast programming transmitted pursuant to the satellite compulsory license was most comparable to 

the programming on the 12 most widely carried cable networks, such as TNT, 

CNN, ESPN, USA and Nickelodeon. The license fees for those twelve networks have increased by approximately 60 percent since 1998. A report issued 

by the General Accounting Office last year found that cable and satellite service programming costs had risen 34 percent in the previous three years. 

These increases reflect substantial increases in the production costs of entertainment programming. For instance, the average production cost of network 

half-hour sitcoms increased from $994,000 to $1,227,000 per episode, or 23.4 

percent, between 2000 and 2003 alone.

• There is well-established precedent for allowing copyright owners some royalty 

rate increases over the years. When Congress first extended the satellite compulsory license in 1994, it adopted rates that represented an increase over the 

rates in the original satellite compulsory license, and provided a mechanism 

for adjusting those rates in the future to reflect the market value of programming. In the 1999 extension legislation, Congress again adopted rates that 

represented an increase over those put in place in 1994, even though those 

rates were less than those that were set by an independent arbitration panel.

Annual adjustments should be built into the royalty rates so that those 

rates reflect increases in payments for programming made by satellite companies in the free market.

• A provision to allow annual royalty rate adjustments will eliminate the unfairness of discriminatory rate freezes for long periods of time. Building in annual 

rate adjustments tied to an objective marketplace benchmark will ensure 

some measure of fair compensation to copyright owners over the life of the 

compulsory license.

• Periodic royalty fee adjustments will simplify the royalty rate process. With a 

built-in annual adjustment based on a known benchmark, there will be less 

potential for dramatic rate changes necessary to make up for long periods 

16

without adjustments and greater certainty for copyright owners and satellite 

companies as well.

• Other compulsory licenses have provisions for periodic royalty rate increases.

Section 119 is alone among the royalty-based compulsory licenses in not providing a mechanism for royalty rate increases on a periodic basis.

Copyright owners should have a reasonable opportunity to ensure that 

satellite companies are properly reporting and calculating the royalties 

due under the satellite compulsory license.

• Under the current law, copyright owners have no means of verifying royalty 

payments short of initiating copyright infringement lawsuits. Copyright owners have no ability under the compulsory license to resolve unexplained discrepancies between satellite companies’ public statements concerning 

subscribership and their compulsory license royalty payments. The only current avenue available to copyright owners is to institute wasteful and expensive copyright infringement litigation over what may be honest or simple errors in reporting and calculating royalties.

• Other compulsory licenses have provisions for verifying royalty payments.

Other compulsory licenses in the Copyright Act, including Sections 112 and 

114, allow copyright owners to inspect the records of the compulsory licensees 

to ensure compliance with the compulsory license.

• Licensing agreements that satellite companies enter into for other programming routinely contain audit provisions. Inclusion of an audit provision in the 

satellite compulsory license would not add any new burden on satellite companies, and is a provision that they have been willing to accept in the marketplace.

Again, I thank you for this opportunity to present the views of television program 

copyright owners, and I look forward to responding to your questions.

Mr. SMITH. Mr. Moskowitz. 

STATEMENT OF DAVID K. MOSKOWITZ, BOARD CHAIRMAN, 

SENIOR VICE PRESIDENT AND GENERAL COUNSEL, 

ECHOSTAR COMMUNICATIONS CORPORATION, ON BEHALF 

OF SATELLITE BROADCASTING AND COMMUNICATIONS ASSOCIATION (SBCA) 

Mr. MOSKOWITZ. Thank you, Chairman Smith, Ranking Member 

Berman, Congressman Boucher and Congressman Meehan. 

My name is David Moskowitz, and I am chairman of the board 

of the Satellite Broadcasting and Communications Association. Our 

members include satellite TV, radio, and broadband platforms. We 

also include programmers, distributors, retailers, manufacturers, 

and others. We work to represent the interests of more than 22 

million U.S. households that receive programming direct by satellite today. 

When consumers are left behind by local network stations whose 

off-air signal does not reach a household, section 119 of the Copyright Act allows satellite to offer other network channels. We urge 

the Committee to allow these millions of underserved consumers, 

most of whom live in rural America, to continue receiving distant 

network channels and superstations through permanent extension 

of the Satellite Home Viewer Improvement Act. 

Cable enjoys a permanent statutory license. A permanent satellite license, together with the following modifications to the 

SHVIA, would allow satellite to compete on a more level playing 

field against cable. 

Consumers also rely on the congressionally provided grandfather 

clause of section 119 to continue receiving the channels they have 

watched for over 5 years. It has been suggested by some that ConVerDate 0ct 09 2002 16:32 May 13, 2004 Jkt 089266 PO 00000 Frm 00020 Fmt 6633 Sfmt 6601 G:\WORK\COURTS\022404\92119.000 HJUD1 PsN: 92119
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gress should take away distant network channels from grandfathered consumers. We urge continued protection of the rights of 

these consumers. 

Despite progress, satellite carriers are still saddled with regulations that are not imposed on cable. For example, cable pays lower 

per subscriber royalties than satellite for the exact same programming. Without taking a position with respect to the level for the 

specific rate and without fierce lobbying, we think it fair that Congress establish equivalent rates for satellite and cable; and, of 

course, the beans can be purchased at your local store and don’t 

need to be launched into space at a cost of hundreds of millions of 

dollars. 

Additionally, there are at least 50 communities that do not have 

local affiliates of all major networks. Cable routinely fills these 

holes by adding additional network channels from other markets. 

DBS is prohibited from doing so. 

Further, cable is permitted to include significantly viewed channels in their offerings. DBS is not. For example, in Washington, 

D.C., as in dozens of other DMAs across the country, Comcast customers watch both Baltimore and Washington NBC network channels. DBS cannot offer the Baltimore NBC station in Washington. 

These disparities, we believe, should be rectified. 

Turning to technology innovation, currently only about 600 of the 

1,600 broadcasters across the U.S. have fully complied with their 

digital obligations. The DBS industry is uniquely positioned to be 

a catalyst to Congress’ goal that digital television become available 

to all Americans. 

We would ask that you to consider allowing consumers who cannot receive digital signals from their local station to receive them 

by satellite. Satellite can make distant network HD programming 

available to every household in America today, while continuing to 

provide all of the analog channels consumers have come to rely on. 

A clear license to offer digital network channels in digitally 

unserved areas would provide the encouragement these stations 

need to fulfill their promises to Congress. 

Addressing corrections to the SHVIA, consumers do not understand why they should be prohibited from getting network channels 

by satellite when they can’t get their local channels off air. They 

are angry when told they cannot purchase network channels by 

satellite if stations in neighboring markets are predicted by a computer to offer a channel off air. We would ask Congress to make 

clear that only stations in the consumer’s home market can grant 

or deny a waiver. 

Finally, consumers should only be permitted to request signal 

strength tests at their home if they are predicted to receive a weak 

signal. Consumers living near the local station’s tower are uniformly frustrated when they request a test and find that they clearly do not meet the standard. 

The answer for these millions of consumers to get the choice they 

deserve can only be found in revisions to the antiquated grade B 

standard to take into account changes in technology and consumer 

expectations over the past 50 years and to take into account ghosting and other factors which cause poor reception, even in areas reVerDate 0ct 09 2002 16:32 May 13, 2004 Jkt 089266 PO 00000 Frm 00021 Fmt 6633 Sfmt 6601 G:\WORK\COURTS\022404\92119.000 HJUD1 PsN: 92119
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ceiving a strong off-air signal. Please direct the FCC to revise the 

standard to meet today’s consumer expectations. 

Mr. Chairman, the SBCA and the satellite industry appreciate 

the efforts of Congress to ensure that DBS is a more effective competitor to cable. 

Thank you for allowing me to testify, and I would look forward 

to your questions. 

Mr. SMITH. Thank you, Mr. Moskowitz. 

[The prepared statement of Mr. Moskowitz follows:]

PREPARED STATEMENT OF DAVID K. MOSKOWITZ

Thank you Chairman Smith, Representative Berman, and members of the Subcommittee, my name is David Moskowitz, and I am Chairman of the Board of the 

Satellite Broadcasting and Communications Association (SBCA). SBCA is the national trade association that represents the satellite services industry. Our members 

include satellite television, radio and broadband providers, launch vehicle operators, 

programmers, equipment manufacturers, distributors and retailers. 

Thank you to the members of this Subcommittee and to Congress for recognizing 

early on the potential of satellites to provide consumers with an alternative source 

for news, information and entertainment programming. The current Chairman of 

the Judiciary Committee, Mr. Sensenbrenner, was one of the original sponsors of 

the first Satellite Home Viewer Act (SHVA) in 1988. Much of the industry’s success 

can be attributed to the actions of Congress in general, and this Committee in particular, in fostering satellite as an effective competitor in the multichannel video 

programming marketplace. 

On behalf of the SBCA member companies, I urge the Committee to reauthorize 

the Satellite Home Viewer Improvement Act (SHVIA) and extend the satellite distant network signal and superstation compulsory license permanently. I would also 

like to recommend a handful of modifications to the SHVA that will ensure satellite 

television providers can continue to meet consumer expectations and compete effectively with other multichannel video programming distributors. 

OVERVIEW

The satellite operators that SBCA represents provide the most advanced television choices in the multichannel video market, including high-definition television, 

personal video recorders and interactive services. The benefit of satellite-delivered 

technology like DBS is that it can reach consumers across the country without discriminating between rural and urban, sparsely or densely populated areas. Currently, nearly 22 million U.S. households receive television programming via satellite, from both direct broadcast satellite (DBS) and C-Band operators. To illustrate 

the tremendous growth of satellite television and DBS in particular, the last time 

this Subcommittee met to discuss the reauthorization of the SHVA, in 1999, there 

were 13 million satellite subscribers, over 10 million of whom subscribed to DBS. 

In five years, that number has more than doubled. Despite the emergence and continuing growth of DBS in the multichannel video marketplace, cable operators still 

serve 75% of multichannel video subscribers. Many factors have contributed to the 

growth of DBS in the multichannel video market, including the superior customer 

service, competitive pricing and the wide range of programming offered by DBS operators. 

LOCAL-INTO-LOCAL

The growth that DBS has experienced, and the resulting benefit to consumers, is 

due in large part to the support the industry has received from Congress. Throughout the 16-year SHVA reauthorization process, Congress has recognized satellite’s 

potential and the need to amend the Act to accommodate our technological innovations and new marketplace realities. The 1999 Satellite Home Viewer Improvement 

Act (SHVIA) was no exception. The provision allowing DBS providers for the first 

time to retransmit local broadcast stations was certainly a catalyst for the industry’s 

recent growth. 

Congress’ decision to allow DBS providers to offer local-into-local service, and the 

subsequent roll out of that service by DBS providers, continues to be a principal reason that customers subscribe to DBS. This permanent statutory provision has given 

DBS providers the ability to compete with cable head-to-head, on a level playing 

field, in many markets. 

19

Currently, consumers in 112 designated market areas (DMAs), reaching 87 percent of U.S. television households, are able to receive local broadcast stations via 

satellite from one or both of the DBS operators. In 2000, the first year that DBS 

providers were allowed to retransmit local broadcast stations into local markets, 

only 19 percent of DBS subscribers had local signals available to them via DBS. Satellite television providers have invested significant capital to improve the technology 

used to offer local-into-local service and to expand their satellite fleets, which has 

resulted in the ability to offer local broadcast stations to an increasing portion of 

the country, thereby creating a more competitive multichannel video programming 

distribution (MVPD) market. 

REAUTHORIZATION OF SHVIA

Reauthorization of the Satellite Home Viewer Improvement Act provides Congress 

with an excellent opportunity to further improve the environment for providing advanced services and true competition in the MVPD market, in addition to continuing 

many of the established and proven provisions of the Act. In many critical respects, 

satellite carriers are saddled with regulatory provisions that are not imposed upon 

their competitors, and that makes satellite a less attractive option for many potential subscribers. One of the SBCA’s principle objectives is to ensure that the satellite 

industry is able to compete more effectively with other MVPD providers. 

Section 119 of the Copyright Act, which expires on December 31, 2004, allows satellite carriers to make network programming available to viewers unable to receive 

the over-the-air signals of their local network affiliates. Although this important 

provision does not affect many households in urban and suburban areas, the service 

is critical to consumers in rural areas. It is imperative that satellite providers be 

able to make network programming available to all of its subscribers when they are 

unable to receive their local broadcast channels over-the-air. Without distant network signals, many subscribers would be left with no alternative for network programming. 

Additionally, section 119 permits satellite carriers to retransmit non-network 

broadcast stations to satellite subscribers. These so-called ‘‘superstations,’’ such as 

WGN, have been a staple of cable system lineups since cable first began making its 

service available to consumers in the 1970’s, and helped drive the growth of the satellite television industry. They continue to be among the most popular program offerings. The compulsory license ensures that satellite carriers have the same legal 

authority as cable to make this popular programming available to satellite subscribers. 

Section 119 also allows certain eligible households to continue receiving distant 

network signals if they subscribed to these signals prior to October 31, 1999. The 

SBCA strongly supports extension of the distant network ‘‘grandfather’’ clause. This 

group of satisfied, long-term customers has come to rely upon this service for at 

least the last five years, and much longer in some cases. It makes no sense from 

a public policy standpoint to tell consumers that they can no longer receive this programming. 

In order for both DBS and C-Band consumers to continue receiving this programming, the satellite compulsory license must be extended beyond its current expiration date of December 31, 2004. Our industry is still dependent upon the compulsory 

license to legally retransmit distant network signals and superstations. There is no 

private sector mechanism for the licensing of copyrighted programming carried on 

a distant network signal or superstation, and there have been no efforts that SBCA 

is aware of to establish such a rights clearing organization for either satellite or 

cable providers. The Subcommittee has aptly recognized in the past that clearing 

the rights to the hundreds of programs that make up a retransmitted broadcast signal would be administratively and economically burdensome. The compulsory license—while not perfect—makes clearing these rights possible. Moreover, as long as 

the satellite industry’s chief competitor—cable—continues to enjoy a permanent, 

statutorily-granted compulsory license, both equity and the Congressional desire to 

promote competition in the MVPD marketplace dictate that satellite carriers be permitted to avail themselves of a compulsory license under the same terms as cable. 

REGULATORY PARITY

One of the SBCA’s principle objectives in the legislative process this year is to ensure that all MVPD providers can compete on a level playing field, which means 

establishing some degree of regulatory parity with cable when it comes to regulations governing carriage of broadcast channels. As I noted earlier, the SHVIA saddles the satellite industry with a number of affirmative obligations and prohibitions 

that make it difficult for DBS providers to offer programming comparable to that 

20

offered by cable. For example, while the cable industry enjoys virtually unlimited 

ability to provide broadcast signals—both network and non-network, and distant or 

local—to its subscribers, satellite providers face strict restrictions on the broadcast 

signals they can provide to subscribers. 

ROYALTY RATES

Another area of concern for satellite providers is the lack of parity between royalty rates paid under the satellite compulsory license and the cable compulsory license. In addition to enjoying a permanent license that never expires, the statutory 

licensing fees that cable pays are calculated differently. The result is that cable pays 

far lower per-subscriber royalty fees for distant network stations and superstations 

than do satellite providers for the exact same programming. Cable royalty rates are 

calculated using a formula based on the size in both subscribers and revenue of the 

cable system. Satellite royalty rates were last calculated by a Copyright Arbitration 

Royalty Panel (CARP) based on a set of factors designed to arrive at royalty rates 

that was as close to ‘‘fair market value’’ as possible. The rate that the CARP arrived 

at was so far in excess of the royalty rates paid by other MVPDs that Congress overturned the CARP decision and established its own statutory rates. And, as this Subcommittee knows, the whole CARP process has now been abandoned for an alternative approach. The disproportion between royalty rates paid by competing MVPDs 

remains a major issue for the satellite industry. In reauthorizing the SHVIA, Congress should take care to ensure that the rates are equivalent for both satellite and 

cable so that neither service provider enjoys an advantage over the other. In other 

words, the royalty rates for DBS should be adjusted downward so as to equal cable’s 

rates. 

CARRIAGE OF BROADCAST SIGNALS

The first issue of carriage of broadcast signals that I would like to address involves DBS providers’ ability to offer a full complement of broadcast station programming. As DBS providers continue to offer more and more local-into-local services farther down the list of the 210 DMAs, there are at least 50 markets that do 

not have a full complement of local affiliates of the major networks. Current law 

does not allow DBS providers to make available to subscribers a broadcast station 

from a neighboring DMA to ensure that they get the whole complement of broadcast 

stations. This is because the local-into-local license contained in Section 122 of the 

Copyright Act only allows DBS operators to retransmit local stations back into the 

DMA to which they are assigned. Cable, on the other hand, can fill in holes in local 

station affiliate offerings with neighboring stations and routinely adds network affiliates and other broadcast stations so that its subscribers have the full line up of 

major network and other popular stations. The inability of DBS providers to offer 

subscribers a full complement of broadcast signals leaves them at a serious disadvantage vis-a`-vis cable in competing for customers and is inconsistent with the 

FCC’s policy objective of ensuring that consumers have access to all network programming. 

Similarly, DBS operators are not permitted to tailor their local channel offerings 

to respond to local community needs or interests. Cable, on the other hand, is permitted to include broadcast channels that do not originate in their local markets if 

those signals are ‘‘significantly viewed’’ by the community. There is no such provision for DBS. As a result, DBS providers must adhere to DMA market designations 

that do not conform to a local community’s viewing habits. For example, Comcast 

in New Haven, Connecticut, which is in the Hartford-New Haven DMA, offers CBS, 

NBC and FOX affiliates from both Hartford and New York City and ABC affiliates 

from both New Haven and New York City. DBS providers in New Haven cannot 

offer the New York City stations at all, and are thus at a serious competitive disadvantage. 

TRANSITION TO DIGITAL TELEVISION

There is a new matter that I ask you to consider relating to the Section119 compulsory copyright license for distant network signals offered by DBS. As you are 

aware, the transition to digital television (DTV) is mired by many technical and 

legal complexities. At this point, more than 1,000 broadcasters have not met their 

obligations to broadcast their programming in DTV. Of these stations, 252 TV stations are not broadcasting HDTV service and 749 are broadcasting at low power.1 

They continue to hoard this analog spectrum worth hundreds of billions of dollars 

that could be auctioned by the FCC to wireless companies eager to offer new advanced services. The DBS industry is uniquely positioned to make good on Congress’

21

goal that digital television become available to all Americans. By amending SHVIA, 

Congress can advance the digital transition. 

Our proposal is simple. Allow households that cannot receive their local affiliates’ digital signals to receive network DTV signals from their satellite TV provider. This 

can be done by broadening the existing compulsory license to permit DBS providers 

to offer network digital service in unserved areas. The expanded license would limit 

DBS service to only those households that cannot receive an over-the-air digital network signal. The availability of distant digital signals would have no real impact 

on the roll out of analog local-into-local service to additional markets by DBS operators. It would simply afford consumers nationwide new digital services currently unavailable. 

WAIVER AND SIGNAL STRENGTH TESTING PROCESS

Although waivers represent a small portion of the issues DBS providers must deal 

with, we believe the current waiver and signal strength testing process for the receipt of distant network signals by those who are predicted to receive a Grade B 

over-the-air signal but who nonetheless do not receive a clear picture, as spelled out 

in SHVIA, needs to be revisited. The waiver process is not functioning as Congress 

envisioned when the law was enacted. After five years of experience working with 

the waiver process, we can testify that the current process often leads to a bad customer experience. In some cases the law is unclear; in other cases consumers have 

unrealistic expectations; still in other cases DBS providers and their customers are 

subject to the whims of broadcasters. We recommend only permitting consumers receiving a weak Grade B signal to request a signal strength test and prohibiting 

broadcasters from revoking waivers once given as long as the subscriber receives 

continuous service from their DBS provider. Further, the rules should be clarified 

to eliminate consumer confusion when a subscriber lives in an area that borders on 

another DMA by limiting the Grade B contour to a broadcaster’s DMA for the purposes of securing waivers for a DBS subscriber to receive distant network signals. 

This will eliminate the need for customers to get multiple waivers from affiliates 

of the same network. 

CONCLUSION

Mr. Chairman, in closing I’d like to reiterate that the SBCA and the satellite industry appreciate the efforts of Congress to ensure that DBS is a true competitor 

in the MVPD marketplace. With few exceptions, our experience under the SHVIA 

has been a positive one. While the DBS industry is growing, it is still necessary for 

Congress to reauthorize the extension of the satellite compulsory license and to ensure that the DBS industry is able to compete on a level playing field. To that end, 

this Committee should pay special attention to the royalty rates paid by satellite 

carriers and should endeavor to eliminate any competitive regulatory disadvantages 

faced by the DBS industry as it considers legislation to reauthorize the SHVIA. 

1 FCC, ‘‘Summary of DTV Applications Filed and DTV Build Out Status, January 

28, 2004.

Mr. SMITH. Mr. Lee. 

STATEMENT OF ROBERT G. LEE, PRESIDENT AND GENERAL 

MANAGER, WDBJ TELEVISION, INC., ON BEHALF OF NATIONAL ASSOCIATION OF BROADCASTERS (NAB) 

Mr. LEE. Thank you, Mr. Smith, Ranking Member Berman, Mr. 

Boucher, and Mr. Meehan. 

I appreciate your having a small-market broadcaster appear 

today to talk about the real-world impact of SHVIA. As someone 

who has been in the television business for more than 30 years, I 

can tell you that our business is built on serving local viewers’

needs with free, compelling, over-the-air local programming. As 

SHVIA affects how we reach local viewers, I am pleased to have 

an opportunity to comment on its reauthorization as well. 

As you know and we’ve heard today, SHVIA contains two compulsory licenses. The first, the local into local license, has been a 

win/win for local broadcasters, for the satellite industry, and most 

importantly, I think, for the American television viewer. Tens of 

22

millions of your constituents now have an additional option of receiving their local stations via satellite; and, as Mr. Moskowitz concedes, carriage of these local stations is one of the primary reasons 

viewers subscribe for satellite service. So our hope is that soon 

local television stations in all 210 local markets will be delivered 

by satellite. Clearly, the satellite industry is capable of doing so. 

By year end, DirecTV expects to serve at least 130 markets, covering 92 percent of U.S. Television households. EchoStar already 

serves 107. Unfortunately, in our opinion, this service is marred by 

EchoStar’s use of a discriminatory two-dish scheme, requiring subscribers in many markets to obtain a second dish to receive certain 

stations, especially religious and Spanish language stations. 

The second compulsory license, the distant signal license, as we 

all know, has been plagued by satellite industry abuse. There is no 

other way to characterize it. 

For 10 years, DBS ignored the standard that determines eligibility of a subscriber for distant signals by signing up almost anyone willing to say they were unhappy with their over-the-air picture. When this service was rightfully terminated, there was a 

firestorm of outrage and confusion, and you know who they pointed 

it at. Congress. 

Even today, EchoStar continues providing illegal service to hundreds of thousands of subscribers. In fact, a Federal district judge 

recently found that EchoStar broke a sworn promise to a Federal 

court by failing to disconnect them. 

With this sordid record, EchoStar and DirecTV today ask you to 

expand the digital signal license by creating this so-called digital 

white area. This proposal is a recipe for mischief. 

If Members of the Committee are concerned about preserving 

free local over-the-air broadcasting in the digital age, you must reject it. A digital white area would undercut what would otherwise 

be a market-driven race between DirecTV, EchoStar and cable to 

deliver digital high-definition signals on a local-to-local basis. And 

when stations later sought to reclaim their own local viewers, there 

would be that same consumer uproar that would dwarf the outrage 

of 1999. In short, EchoStar and DirecTV are proposing a loophole 

big enough to drive a DISH network installation truck through. 

The DBS industry suggests a digital white area will stimulate 

the DTV transition. Mr. Chairman, that is complete and total bunk 

as far as I am concerned. 

The facts are television broadcasters have spent billions of dollars bringing digital television to consumers. To date, 1,155 stations are on the air in digital; and despite claims that stations are 

not transmitting at full power, 92 percent of households with access to an analog television signal also have access to a digital local 

signal. In those instances where stations have not powered up, 

there are tangible regulatory and technical obstacles beyond their 

control in many cases. Some stations have not received FCC authorization to go to full power. Some stations are experiencing 

tower location delays. Many stations have not received their final 

channel assignment. And, as stations increase power levels, interference issues have arisen. 

At the end of the day, Congress may elect to simply reauthorize 

SHVIA in its current form for another 5 years. Should you, howVerDate 0ct 09 2002 16:32 May 13, 2004 Jkt 089266 PO 00000 Frm 00026 Fmt 6633 Sfmt 6601 G:\WORK\COURTS\022404\92119.000 HJUD1 PsN: 92119
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ever, take a broader approach, we would urge a couple of improvements to SHVIA: 

First, amend the definition of unserved household. If a household 

is in a market where the satellite companies offer local stations, 

there is no reason to bring in a distant signal; and, secondly, outlaw EchoStar’s two-dish practice. 

I strongly urge Congress to reauthorize a SHVIA that preserves 

and advances localism in television and does not harm it, and I 

thank you. 

Mr. SMITH. Thank you, Mr. Lee. 

[The prepared statement of Mr. Lee follows:]

PREPARED STATEMENT OF ROBERT G. LEE

INTRODUCTION AND SUMMARY

Ever since this Committee took the lead in crafting the Satellite Home Viewer Act 

of 1988 (‘‘SHVA’’), Congress has worked to ensure both (1) that free, over-the-air 

network broadcast television programming will be widely available to American television households, and (2) that satellite retransmission of television broadcast stations will not jeopardize the strong public interest in maintaining free, over-the-air 

local television broadcasting. Those two goals remain paramount today. 

There can be no doubt that delivery of local stations by satellite is the best way 

to meet these twin objectives. The first two times this Committee considered the 

topic—in 1988 and 1994—delivery of local stations by satellite seemed far-fetched. 

Congress therefore resorted to a considerably less desirable solution: permitting importation of distant television stations, although only to households that could not 

receive their local network stations over the air. 

When Congress revisited this area in 1999, the world had changed: local-to-local 

satellite transmission had gone from pipe dream to technological reality. And in response, in the 1999 Satellite Home Viewer Improvement Act (‘‘SHVIA’’), Congress 

took an historic step, creating a new ‘‘local-to-local’’ compulsory license to encourage 

satellite carriers to deliver local television stations by satellite to their viewers. At 

the same time, Congress knew that allowing satellite carriers to use the new license 

to ‘‘cherry-pick’’ only certain stations would be very harmful to free, over-the-air 

broadcasting and to competition within local television markets. Congress therefore 

made the new ‘‘local-to-local’’ license available only to satellite carriers that deliver 

all qualified local stations. 

Congress’ decision to create a carefully-designed local-to-local compulsory license 

has proven to be a smashing success. Despite gloomy predictions by satellite carriers 

before enactment of SHVIA that the ‘‘carry-one-carry-all’’ principle would sharply 

limit their ability to offer local-to-local service, the nation’s two major DBS companies, DirecTV and EchoStar, today deliver local stations by satellite to the overwhelming majority of American television households. 

Thanks to the wise decision by the FCC and the Department of Justice to block 

the proposed horizontal merger of DirecTV and EchoStar, the two DBS firms continue to compete vigorously against one another in expanding their delivery of local 

stations. While EchoStar predicted when it sought to acquire DirecTV that it would 

never be able to serve more than 70 markets without the merger, EchoStar now 

serves 107 Designated Local Markets (‘‘DMA’s’’) that collectively cover more than 

83% of all U.S. TV households. Nor is there any sign that EchoStar’s expansion of 

local-to-local service has stopped. 

The story with DirecTV is even more dramatic. With the launch of a new satellite 

this spring, DirecTV expects to serve 100 DMAs covering 85% of all U.S. TV households. By the end of 2004, DirecTV has committed to providing local-to-local in an 

additional 30 markets, for a total of at least 130 DMAs covering 92% of all TV 

households. And as early as 2006 and no later than 2008, ‘‘DirecTV will offer a 

seamless, integrated local channel package in all 210 DMAs.’’ In Re General Motors 

Corporation and Hughes Electronics Corporation, Transferors and The News Corporation Limited, Transferee, for Authority to Transfer Control, ¶ 332, MB Docket 

No. 03–124 (released Jan. 14, 2004) (emphasis added). 

The local-to-local compulsory license is the right way—and the distant-signal compulsory license is the wrong way—to address delivery of over-the-air television stations to satellite subscribers. If Congress wishes to do anything other than briefly 

extend the expiration date of Section 119, it should—as a matter of simple logic—

limit the distant-signal compulsory license to markets in which the satellite carrier 

24

does not offer local-to-local service. It makes no sense, for example, to treat a satellite subscriber as ‘‘unserved’’ by its local CBS station when the subscriber’s DBS 

firm offers that station as part of its satellite-delivered package, with what the satellite industry describes as ‘‘a 100 percent, crystal-clear digital audio and video signal.’’

Although the rapid rollout of DBS local-to-local service has vindicated the actions 

that Congress took in SHVIA in 1999, there is one major blemish on the success 

story: an outrageous form of discrimination that EchoStar has inflicted on some 

local stations. EchoStar’s method of discrimination is simple, but devastating. While 

placing what it considers the most ‘‘popular’’ stations in a market on its main satellites, EchoStar relegates certain stations (particularly Hispanic and foreign-language stations) to a form of satellite Siberia—placing them on remote ‘‘wing satellites’’ far over the Atlantic or Pacific, which can be seen only if one obtains a second satellite dish. Very few subscribers actually do acquire a second dish, thereby 

rendering many local stations invisible to their own local viewers. As even DirecTV 

has acknowledged, this practice violates the ‘‘carry one, carry all’’ principle of the 

SHVIA. The FCC has thus far tolerated this grossly improper practice, imposing 

only minor restrictions on this form of discrimination. If the Commission fails to 

take prompt and decisive steps to halt this misconduct, Congress will need to step 

in to do so. 

While the local-to-local compulsory license has (with the exception of EchoStar’s 

two-dish abuse) generally worked well, the history of the distant-signal compulsory 

license (codified in Section 119 of the Copyright Act) has been just the opposite. For 

the first ten years after this law was enacted, satellite carriers systematically ignored the clear, objective definition of ‘‘unserved household’’ and instead delivered 

distant signals to anyone willing to say that they did not like their over-the-air picture quality. Only through costly litigation—culminating in a 1998 ruling against 

PrimeTime 24 and a 1999 ruling against DirecTV—were broadcasters able to bring 

a halt to most of this lawlessness. Even after those rulings, however, EchoStar has 

continued to serve hundreds of thousands of illegal subscribers, forcing broadcasters 

to spend years chasing it through the courts to obtain relief. Last June, a United 

States District Court found (after a ten-day trial) that EchoStar willfully or repeatedly violated the distant-signal provisions of the Copyright Act—and, in the process, 

broke a sworn promise to the court to turn off large numbers of illegal subscribers. 

Startlingly, having been content to violate the distant-signal license until ordered 

by a court to stop breaking the law, the DBS firms now urge Congress to radically 

expand the distant-signal compulsory license. In particular, EchoStar and DirecTV 

now ask that they be allowed to import ABC, CBS, Fox, and NBC programming 

from New York and Los Angeles stations to millions of households that can receive 

the same programming from their local stations over the air—and in most cases, 

can also get their local stations in superb quality, by satellite, from EchoStar and 

DirecTV as part of their local-to-local package. Although these homes are unquestionably ‘‘served’’ by their local stations, the DBS industry proposes to be allowed 

to deliver the same programming from New York or Los Angeles if the household 

is—in their view—‘‘digitally unserved.’’

The DBS industry proposal—by an industry with a long track record of lawlessness—is a recipe for mischief. As this Committee has repeatedly recognized, the distant-signal compulsory license is a departure from marketplace principles that is appropriate only as a ‘‘lifeline’’ for households that otherwise cannot view network programming. It would make no sense to override normal copyright principles for 

households that can readily view their own local stations. It would give the DBS 

firms a government-provided crutch that would set back for years what would otherwise be a market-driven race between DirecTV and EchoStar—further spurred by 

competition with cable—to deliver digital signals on a local-to-local basis. And when 

local stations later sought to reclaim their own local viewers from the distant digital 

transmissions, there would be a consumer firestorm much like what occurred when 

two major satellite carriers were required to turn off (illegally-delivered) distant 

analog signals to millions of households in 1999. 

Finally, given the rapid pace of technological and economic change, Congress 

should again specify that Section 119 will sunset after a limited, five-year period, 

so that Congress can decide then if there is any reason to continue this government 

intervention in the free market for copyrighted television programming. 

I. THE PRINCIPLES OF LOCALISM AND OF RESPECT FOR LOCAL STATION 

EXCLUSIVITY ARE FUNDAMENTAL TO AMERICA’S EXTRAORDINARILY 

SUCCESSFUL TELEVISION DELIVERY SYSTEM 

As this Committee has consistently recognized—going back to 1988, when it took 

the lead in crafting the first satellite compulsory license in the SHVA—the prinVerDate 0ct 09 2002 16:32 May 13, 2004 Jkt 089266 PO 00000 Frm 00028 Fmt 6633 Sfmt 6621 G:\WORK\COURTS\022404\92119.000 HJUD1 PsN: 92119
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1First Report and Order, 14 FCC Rcd 2654, ¶ 11 (1999); see SHVA Notice of Proposed Rule 

Making, ¶ 3 (‘‘The network station compulsory licenses created by the Satellite Home Viewer Act 

are limited because Congress recognized the importance that the network-affiliate relationship 

plays in delivering free, over-the-air broadcasts to American families, and because of the value 

of localism in broadcasting. Localism, a principle underlying the broadcast service since the 

Radio Act of 1927, serves the public interest by making available to local citizens information 

of interest to the local community (e.g., local news, information on local weather, and information on community events). Congress was concerned that without copyright protection, the economic viability of local stations, specifically those affiliated with national broadcast network[s], 

might be jeopardized, thus undermining one important source of local information.’’) 

ciples of localism and of local station exclusivity have been pivotal to the success 

of American television. 

A. The Principle of Localism is Critical To America’s Extraordinary Television 

Broadcast System 

Unlike many other countries that offer only national television channels, the 

United States has succeeded in creating a rich and varied mix of local television 

outlets through which more than 200 communities—including towns as small as 

Glendive, Montana, which has fewer than 4,000 television households—can have 

their own local voices. But over-the-air local TV stations—particularly those in 

smaller markets such as Glendive—can survive only if they can generate advertising revenue based on local viewership. If satellite carriers can override the copyright interests of local stations by offering the same programs on stations imported 

from other markets, the viability of local TV stations—and their ability to serve 

their communities with the highest-quality programming—is put at risk. 

The ‘‘unserved household’’ limitation is simply the latest way in which the Congress and the FCC have implemented the fundamental policy of localism, which has 

been embedded in federal law since the Radio Act of 1927.1 In particular, the ‘‘unserved household’’ limitation in the SHVA implements a longstanding communications policy of ensuring that local network affiliates—which provide free television and local news to virtually all Americans—do not face importation of duplicative network programming. 

The objective of localism in the broadcast industry is ‘‘to afford each community 

of appreciable size an over-the-air source of information and an outlet for exchange 

on matters of local concern.’’ Turner Broadcasting Sys. v. FCC, 512 U.S. 622, 663 

(1994) (Turner I); see United States v. Southwestern Cable Co., 392 U.S. 157, 174 

& n.39 (1968) (same). That policy has provided crucial public interest benefits. Just 

a few years ago, the Supreme Court declared that

Broadcast television is an important source of information to many Americans. 

Though it is but one of many means for communication, by tradition and use 

for decades now it has been an essential part of the national discourse on subjects across the whole broad spectrum of speech, thought, and expression.

Turner Broadcasting Sys. v. FCC, 117 S. Ct. 1174, 1188 (1997).

Thanks to the vigilance of Congress and the Commission over the past 50 years 

in protecting the rights of local stations, over-the-air television stations today serve 

more than 200 local markets across the United States, including markets as small 

as Presque Isle, Maine (with only 28,000 television households), North Platte, Nebraska (with fewer than 15,000 television households), and Glendive, Montana (with 

only 3,900 television households). 

This success is largely the result of the partnership between broadcast networks 

and affiliated television stations in markets across the country. The programming 

offered by network affiliated stations is, of course, available over-the-air for free to 

local viewers, unlike cable or satellite services, which require substantial payments 

by the viewer. See Turner I, 512 U.S. 622, 663; Satellite Broadcasting & Communications Ass’n v. FCC, 275 F.3d 337, 350 (4th Cir. 2001) (‘‘SHVIA . . . was designed to preserve a rich mix of broadcast outlets for consumers who do not (or cannot) pay for subscription television services.’’); Communications Act of 1934, § 307(b), 

48 Stat. 1083, 47 U.S.C. § 307(b). Although cable, satellite, and other technologies 

offer alternative ways to obtain television programming, tens of millions of Americans still rely on broadcast stations as their exclusive source of television programming, Turner I, 512 U.S. at 663, and broadcast stations continue to offer most of 

the top-rated programming on television. 

The network/affiliate system provides a service that is very different from nonbroadcast networks. Each network affiliated station offers a unique mix of national 

programming provided by its network, local programming produced by the station 

itself, and syndicated programs acquired by the station from third parties. H.R. Rep. 

100–887, pt. 2, at 19–20 (1988) (describing network/affiliate system, and concluding 

26

2See National Football League v. TVRadioNow Corp. (d/b/a iCraveTV), 53 U.S.P.Q.2d (BNA) 

1831 (W.D. Pa. 2000); 145 Cong. Rec. S14990 (Nov. 19, 1999) (statements by Senators Leahy 

and Hatch that no compulsory license permits Internet retransmission of TV broadcast programming). 3 Report and Order, In Re Amendment of Parts 73 and 76 of the Commission’s Rules Relating 

to Program Exclusivity in the Cable and Broadcast Industries, 3 FCC Rcd 5299, 5319 (1988), 

aff’d, 890 F.2d 1173 (D.C. Cir. 1989); see also Southwestern Cable Co., 392 U.S. at 165; Wheeling 

Antenna Co. v. WTRF-TV, Inc., 391 F.2d 179, 183 (4th Cir. 1968). 

that ‘‘historically and currently the network-affiliate partnership serves the broad 

public interest.’’) Unlike nonbroadcast networks such as Nickelodeon or USA Network, which telecast the same material to all viewers nationally, each network affiliate provides a customized blend of programming suited to its community—in the 

Supreme Court’s words, a ‘‘local voice.’’ The local voices of America’s local television broadcast stations make an enormous 

contribution to their communities. In Appendix A, we list just a few examples of television broadcasters’ commitment to localism in the form of help to local citizens— and local charities—in need. It is through local broadcasters that local citizens and 

charities raise awareness and educate members of the community. 

Community service programming—along with day-to-day local news, weather, and 

public affairs programs—is made possible, in substantial part, by the sale of local 

advertising time during and adjacent to network programs. These programs (such 

as ‘‘Alias,’’ ‘‘CSI,’’ ‘‘American Idol,’’ and ‘‘Friends’’) often command large audiences, 

and the sale of local advertising slots during and adjacent to these programs is 

therefore a crucial revenue source for local stations. 

A variety of technologies have been developed or planned—including cable, satellite, open video systems, and the Internet—that, as a technological matter, enable 

third parties to retransmit distant network stations into the homes of local viewers. 

Whenever those technologies posed a risk to the network/affiliate system, Congress 

or the Commission (or both) have acted to ensure that the retransmission system 

does not import duplicative network programming from distant markets. A recent 

example is the threat of unauthorized Internet retransmissions of television stations, which was quickly halted by the courts (applying the Copyright Act) and condemned by Congress as outside the scope of any existing compulsory license.2

In the case of cable television, for example, the FCC has since the mid-1960’s imposed ‘‘network nonduplication’’ rules on cable systems. 47 C.F.R. §§ 76.92–76.97 

(1996). As the Commission explained when it strengthened the network nonduplication rules in 1988:

[I]mportation of duplicating network signals can have severe adverse effects on 

a station’s audience. In 1982, network non-duplication protection was temporarily withdrawn from station KMIR-TV, Palm Springs. The local cable system 

imported another network signal from a larger market, with the result that 

KMIR-TV lost about one-half of its sign-on to sign-off audience. Loss of audience 

by affiliates undermines the value of network programming both to the affiliate 

and to the network. Thus, an effective non-duplication rule continues to be necessary.3

2. Protecting the Rights of Copyright Owners to License Their Works in 

the Marketplace is Another Principle Supporting a Highly Circumscribed Distant-Signal Compulsory License 

By definition, the Copyright Act is designed to limit unauthorized marketing of 

works as to which the owners enjoy exclusive rights. See U.S. Constitution, art. I, 

§ 8, cl. 8 (‘‘The Congress shall have Power . . . To promote the Progress of Science 

and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries’’); Mazer v. Stein, 347 U.S. 

201, 219 (1954) (‘‘The economic philosophy behind the clause empowering Congress 

to grant patents and copyrights is the conviction that encouragement of individual 

effort by personal gain is the best way to advance public welfare through the talents 

of authors and inventors in ‘Science and useful Arts.’ ’’). 

While Congress has determined that compulsory licenses are needed in certain 

circumstances, the courts have emphasized that such licenses must be construed 

narrowly, ‘‘lest the exception destroy, rather than prove, the rule.’’ Fame Publ’g Co.

v. Alabama Custom Tape, Inc., 507 F.2d 667, 670 (5th Cir. 1975); see also Cable 

Compulsory License; Definition of Cable Systems, 56 Fed. Reg. 31,580, 31,590 (1991) 

(same). The principle of narrow application and construction of compulsory licenses 

is particularly important as applied to the distant-signal compulsory license, because that license not only interferes with free market copyright transactions but 

also threatens localism. 

27

3. In Enacting the SHVA and the SHVIA, Congress Reaffirmed the Central Role of Localism and of Local Program Exclusivity 

When Congress (led by this Committee) crafted the original Satellite Home Viewer Act in 1988, it emphasized that the legislation ‘‘respects the network/affiliate relationship and promotes localism.’’ H.R. Rep. No. 100–887, pt. 1, at 20 (1988). And 

when Congress temporarily extended the distant-signal compulsory license in 1999, 

it reaffirmed the importance of localism as fundamental to the American television 

system. For example, the 1999 SHVIA Conference Report says this:

‘‘[T]he Conference Committee reasserts the importance of protecting and fostering 

the system of television networks as they relate to the concept of localism.... [T]elevision broadcast stations provide valuable programming tailored to local 

needs, such as news, weather, special announcements and information related 

to local activities. To that end, the Committee has structured the copyright licensing regime for satellite to encourage and promote retransmissions by satellite of local television broadcast stations to subscribers who reside in the local

markets of those stations.’’

SHVIA Conference Report, 145 Cong. Rec. H11792 (daily ed. Nov. 9, 1999) (emphasis added).

The SHVIA Conferees also stressed the need to interfere only minimally with 

marketplace arrangements—premised on protection of copyrights—in the distribution of television programming:

‘‘[T]he Conference Committee is aware that in creating compulsory licenses . . . [it] needs to act as narrowly as possible to minimize the effects of the government’s intrusion on the broader market in which the affected property rights 

and industries operate. . . . [A]llowing the importation of distant or out-of-market network stations in derogation of the local stations’ exclusive right—bought 

and paid for in market-negotiated arrangements—to show the works in question 

undermines those market arrangements.’’

Id. The Conference Report also emphasized that ‘‘the specific goal of the 119 license, which is to allow for a life-line network television service to those homes beyond the reach of their local television stations, must be met by only allowing distant 

network service to those homes which cannot receive the local network television 

stations. Hence, the ‘unserved household’ limitation that has been in the license 

since its inception.’’ Id. (emphasis added). 

Finally, the SHVIA Conferees highlighted ‘‘the continued need to monitor the effects of distant signal importation by satellite,’’ and made clear that Congress would 

need to re-evaluate after five years whether there is any ‘‘continuing need’’ for the 

distant signal license. Id. That time, of course, is now. 

II. PROPERLY IMPLEMENTED, THE LOCAL-TO-LOCAL COMPULSORY LICENSE IS A WIN-WIN-WIN FOR CONSUMERS, BROADCASTERS, AND SATELLITE COMPANIES 

Unlike the importation of distant network stations, which can do grave damage 

to the network/affiliate relationship, delivery of local stations to the stations’ own 

local viewers—e.g., San Antonio stations to viewers in the San Antonio area—is a 

win-win-win for consumers, local broadcasters, and DBS firms alike. As Congress 

explained in 1999 when it created a new local-to-local compulsory license in Section 

122 of the Copyright Act, the new Act ‘‘structures the copyright licensing regime for 

satellite to encourage and promote retransmissions by satellite of local television 

broadcast stations to subscribers who reside in the local markets of those stations.’’

145 Cong. Rec. H11792 (daily ed. Nov. 9, 1999) (emphasis added). 

A. Satellite Firms Have Enjoyed Extraordinary Growth, Thanks In Major 

Part To the Local-to-Local Compulsory License 

As the FCC recognized in its January 2004 Annual Assessment of the Status of 

Competition in Markets for the Delivery of Video Programming, the Direct Broadcast Satellite (‘‘DBS’’) industry is thriving—and offering potent competition to cable. 

The DBS industry, which signed up its first customer only decade ago, grew to more 

than 20 million subscribers as of June 2003. Annual Assessment, MB Dkt. No. 03–

172, ¶ 8 (released Jan. 28, 2004). The growth rate for DBS ‘‘exceeded the growth of 

cable by double digits’’ in every year between 1994 and 2002, and in 2003 exceeded 

the cable growth rate by 9.2%. Id. Just in the 12 months between June 2002 and 

June 2003, the DBS industry added 2.2 million net new subscribers, surging from 

18.2 million to 20.4 million households. Id.

DirecTV is currently the second-largest multichannel video programming distributor (‘‘MVPD’’), behind only Comcast, while EchoStar is the fourth-largest 

28

4 EchoStar Press Release, www.dishnetwork.com, DISH Network Satellite Television Brings 

Local TV Channels to Tri-Cities, Tenn.—Va. (Feb. 19, 2004) (EchoStar now serving 107 DMAs); 

EchoStar Press Release, www.newstream.com/us/story—pub.shtml?story—id=11738 &user— ip=208.197.234.126, DISH Network Celebrates Availability of Local Channels in 100 Markets

(Dec. 2003) (EchoStar serving more than 83% of U.S. television households through service to 

100 markets). 5Press Release, DIRECTV Names 18 New Local Channel Markets to Launch in 2004 (Jan. 

8, 2004), www.directv.com/DTVAPP/aboutus/headline.dsp?id=01—08—2004B. 6 In the Matter of General Motors Corporation and Hughes Electronics Corporation, Transferors and The News Corporation Limited, Transferee, for Authority to Transfer Control, ¶ 332, 

MB Docket No. 03–124 (released Jan. 14, 2004) (emphasis added). 

MVPD. Id., ¶ 67. The DBS firms take many subscribers away from cable: ‘‘according 

to [DirecTV] internal data, approximately 70% of its customers were cable subscribers at the time that they first subscribed to DirecTV.’’ Id., ¶ 65. 

The growth of the DBS industry has far outstripped even optimistic predictions 

made just a few years ago. In its January 2000 Annual Assessment, for example, 

the FCC quoted bullish industry analysts who predicted that ‘‘DBS will have nearly 

21 million subscribers by 2007.’’ 2000 Annual Assessment, 15 FCC Rcd. 978, ¶ 70. 

As the statistics quoted above show, DBS reached that level not in 2007, but in 

2003—four years earlier than predicted. 

As the FCC has repeatedly pointed out, delivery of local stations by satellite has 

been a major spur to this explosive growth. E.g., 2004 Annual Assessment, ¶ 8. In 

June 1999, just before the enactment of the new local-to-local compulsory license in 

the SHVIA, the DBS industry had 10.1 million subscribers. 2000 Annual Assessment, ¶ 8. Only four years later, the industry had more than doubled that figure to 

20.4 million subscribers. 2004 Annual Assessment, ¶ 8. That this growth has been 

spurred by the availability of local-to-local is beyond doubt: the DBS industry’s own 

trade association, the Satellite Broadcasting & Communications Association, 

stressed just a few months ago that ‘‘[t]he expansion of local-into-local service by 

DBS providers continues to be a principal reason that customers subscribe to DBS.’’

SBCA Comments at 4, Dkt. No. 03–172 (filed Sept. 11, 2003) (emphasis added). 

B. Contrary to the DBS Industry’s Pessimistic Predictions, Satellite Local-toLocal Service is Now Available to the Overwhelming Majority of American 

Television Households 

Over the past few years, EchoStar and DirecTV have repeatedly claimed that capacity constraints will severely limit their ability to offer local-to-local service to 

more than a small number of markets. The DBS firms used that argument—unsuccessfully—in 1999 in attempting to persuade Congress that it should permit DBS 

companies to use a new compulsory license to ‘‘cherry-pick’’ only the most heavilywatched stations in each market. They used it again in arguing—again unsuccessfully—in 2000 and 2001 that the courts should strike down SHVIA’s ‘‘carry one, 

carry all’’ principle as somehow unconstitutional. And they trotted out the same 

claims as a justification for the proposed horizontal merger of the nation’s only two 

major DBS firms, DirecTV and EchoStar. As recently as 2002, for example, the two 

DBS firms claimed that unless they were permitted to merge, neither firm could 

offer local-to-local in more than about 50 to 70 markets. EchoStar, DirecTV CEOs 

Testify On Benefits of Pending Merger Before U.S. Senate Antitrust Subcommittee,

www.spacedaily.com/news/satellite-biz-02p.html (‘‘Without the merger, the most 

markets that each company would serve with local channels as a standalone provider, both for technical and economic reasons, would be about 50 to 70.’’) (quoting 

DirecTV executive). 

Contrary to these pessimistic predictions, the two DBS firms already offer localto-local programming to the overwhelming majority of U.S. television households. 

Although the DBS firms claimed they would never be able to serve more than 70 

markets unless they merged, EchoStar already serves 107 Designated Local Markets (‘‘DMA’s’’), which collectively cover more than 83% of all U.S. TV households.4

Nor is there any sign that EchoStar’s expansion of local-to-local service has stopped. 

DirecTV’s plans are still more ambitious. As of November 2003, DirecTV offered 

local-to-local to 64 markets covering more than 72% of all U.S. television households. With the launch of a new satellite in the next few months, DirecTV expects 

to serve 100 DMAs covering 85% of all U.S. TV households. By the end of 2004, 

DirecTV has committed to providing local-to-local in an additional 30 markets, for 

a total of at least 130 DMAs that collectively include 92% of all U.S. TV households.5 And as early as 2006 and no later than 2008, ‘‘DirecTV will offer a seamless, 

integrated local channel package in all 210 DMAs.’ 6/ In other words, DirecTV alone 

will soon offer local-to-local service to virtually all American television households—

29

7 In the SHVIA, Congress directed the FCC to prepare a report about whether Grade B intensity—or instead some other standard—should be used for determining whether households are ‘‘unserved’’ by their local stations. In its report, the FCC recommended retaining the Grade B 

intensity standard. See In Re Technical Standards for Determining Eligibility For Satellite-Delivered Network Signals Pursuant To the Satellite Home Viewer Improvement Act, ET Docket No. 

00–90 (released Nov. 29, 2000). 

even though DirecTV told Congress and the FCC just two years ago that this result 

was unthinkable unless it merged with EchoStar. 

C. Echostar And DirecTV Boast About The Excellent Technical Quality Of 

Their Current Local-To-Local Service—Which Retransmits ‘‘Digitized’’ Analog Signals 

As discussed below, the satellite industry now demands that Congress expand the 

distant-signal compulsory license—which EchoStar has systematically abused over 

the past eight years—by creating a new category of households that are ‘‘digitally 

unserved.’’ But any suggestion that EchoStar and DirecTV have difficulty attracting 

customers under the current law is belied by the following facts. 

First, both DirecTV and EchoStar can now—or will within a few months—each 

be able to deliver local television stations by satellite to nearly 90% of U.S. television households. Second, both DBS firms obtain excellent-quality analog signals 

from the stations, often working with the stations themselves to obtain a direct feed 

from the station’s studios. Third, after receiving a high-quality analog signal, the 

DBS firms then ‘‘digitize’’ the signals and retransmit them in digital format to their 

customers. See www.dishnetwork.com/content/programming/ index.shtml (‘‘DISH 

Network now has your digital local channels.’’) <visited Feb. 16, 2004> (emphasis 

added). While these signals do not equal the quality of a signal originating from a 

digital broadcast, or particularly of a high-definition broadcast, the result, according 

to the DBS industry’s trade association, is that DBS ‘‘always delivers a 100 percent, 

crystal-clear digital audio and video signal,’’ even if the original source is an analog 

broadcast. SBCA Web site, www.sbca.com/mediaguide/faq.htm <visited Feb. 19, 

2004> (emphasis added). 

In other words, consumers who receive an excellent-quality ‘‘digitized’’ analog signal from a local station from a DBS firm—as opposed to an imported digital station—are scarcely in a ‘‘hardship’’ position. Of course, it has never been the case that ‘‘obtaining the best-quality signal’’ would justify abandoning the principles of localism and free market competition. The principle behind the long-standing ‘‘Grade B 

intensity’’ standard for determining which households are ‘‘unserved’’ is that Grade 

B intensity is an objective proxy for an acceptable signal, not for the optimal signal. 

If localism could be so easily sacrificed, Congress would not have adopted—and 

twice reaffirmed—the Grade B intensity standard.7

Finally, these local channel offerings have made DBS so attractive to consumers 

that it is gaining millions of new subscribers every year while the number of cable 

subscribers is actually shrinking. 2004 Annual Assessment, ¶ 8 (‘‘In the last several 

years . . . cable subscribership has declined such that as of June 2003, there were 

approximately the same number of cable subscribers as there were at year-end 

1999.’’) While delivery of local digital signals by DirecTV and EchoStar would be a 

highly desirable development, there is no basis for suggesting that DirecTV and 

EchoStar need to import distant digital signals to serve their customers. 

D. DirecTV and EchoStar Have Many Options For Continuing To Expand 

Their Ability To Deliver Local Signals, Including Local Digital Signals 

As discussed above, DirecTV and EchoStar have brilliant engineers who constantly find ways to deliver more programming in the same spectrum. Nevertheless, 

in policy debates in Washington, the two firms regularly assure Congress (and the 

FCC) that no further technological improvement can be achieved. To mention one 

other example: even as DirecTV was doubling its ‘‘compression ratio’’ between 1998 

and 2001—enabling it to carry twice as many channels in the same amount of spectrum—it repeatedly told the FCC that it had hit a brick wall as far as any further 

progress in compression technology:

• July 31, 1998: ‘‘DIRECTV has substantially reached current limits on digital 

compression with respect to the capacity on its existing satellites. Therefore, 

the addition of more channels will necessitate expanding to additional satellites....’’

• Aug. 6, 1999: ‘‘DIRECTV has substantially reached current limits on digital 

compression with respect to the capacity on its existing satellites.’’

• Sept. 8, 2000: ‘‘DIRECTV has substantially reached current technological limits on digital compression with respect to capacity on its existing satellites. 

30

8See, e.g., Comments of DIRECTV, Inc., [1998] Annual Assessment of the Status of Competition in the Markets for the Delivery of Video Programming, CS Docket No. 98–102, at 5 (filed 

July 31, 1998); Comments of DIRECTV, Inc., [1999] Annual Assessment of the Status of Competition in the Markets for the Delivery of Video Programming, CS Docket No. 99–230, at 9 

(filed Aug. 6, 1999); Comments of DIRECTV, Inc. [2000] Annual Assessment of the Status of 

Competition in the Markets for the Delivery of Video Programming, CS Docket No. 00–132, at 

16 (filed Sept. 8, 2000); Comments of DIRECTV, Inc. [2001] Annual Assessment of the Status 

of Competition in the Markets for the Delivery of Video Programming, CS Docket No. 01–129, 

at 16 (filed Aug. 3, 2001) (emphasis added in all cases). 9The SHVIA permits a satellite carrier to offer all local stations via a second dish, but not 

to split local channels into a ‘‘favored’’ group (available with one dish) and a ‘‘disfavored’’ group 

(available only with a second dish).

Although there are potentially very small gains still possible through the use 

of advanced algorithms, such technological developments can neither be predicted nor relied upon as a means of increasing system channel capacity.’’

• Aug. 3, 2001: ‘‘DIRECTV has offered digitally compressed signals from its inception, and has substantially reached current technological limits on digital 

compression with respect to capacity on its existing satellites. Although there 

are potentially very small gains still possible through the use of advanced algorithms, such technological developments can neither be predicted nor relied 

upon as a means of increasing system channel capacity.’’ 8

This year, the Committee can expect to hear from the DBS firms yet again that 

they have no hope of significantly expanding their capacity. For example, we can 

expect to hear from DirecTV and EchoStar that they will never be able to carry the 

digital signals of local television stations, and that they should instead be given a 

crutch by Congress to help them compete with cable. In fact, the satellite firms have 

available to them a wide range of potential new techniques for massively expanding 

their capacity, including:

• pectrum-sharing between DirecTV and EchoStar;

• use of Ka-band as well as Ku-band spectrum;

• higher-order modulation and coding;

• closer spacing of Ku-band satellites;

• satellite dishes pointed at multiple orbital slots;

• use of a second dish to obtain all local stations; 9 and 

• improved signal compression techniques.

If Congress allows the power of American technical ingenuity to continue to move 

forward, we can expect to see DirecTV and EchoStar continue to make tremendous 

progress in doing more with the same resources. Just as today’s desktop computers 

are unimaginably more powerful than those available just a few years ago, we can 

expect similar quantum improvements from America’s satellite engineers—if Congress leaves the free market to do its magic, and leaves necessity to continue to be 

the mother of invention. 

E. If The FCC Does Not Act, Congress Will Need To Step In To Correct A 

Major Abuse Of Local-To-Local By Echostar 

In crafting the SHVIA, Congress was well aware that if a DBS firm were permitting to select only some—but not all—local stations for retransmission, the stations 

left off the service would have little chance of reaching viewers who obtain their TV 

service from the satellite company. In the same spirit as the requirement in the 

1992 Cable Act that cable systems carry all qualified local stations in each market 

in which they operate, the SHVIA specifies that if a satellite carrier chooses to use 

the local-to-local license to carry signals in a particular market, it must carry all

qualified local stations. 47 U.S.C. § 338(a)(1). That requirement has been upheld 

against constitutional attack by EchoStar, DirecTV, and their trade association. Satellite Broadcasting and Communications Ass’n v. FCC, 275 F.3d 337 (4th Cir. 2001). 

The purpose of the ‘‘carry one, carry all’’ principle is, of course, to ensure the continued availability of a wide variety of different over-the-air channels, and to prevent 

the local-to-local compulsory license from interfering with existing vigorous competition among all of the broadcast stations in each local market. 

Since late 2001, EchoStar has egregiously violated the requirement that it carry 

all stations in a nondiscriminatory manner: in many markets, EchoStar forces consumers to acquire a second satellite dish to receive some—but not all—local stations. Here in the Washington, D.C. area, for example, EchoStar enables its customers to see the ABC, CBS, Fox, and NBC stations (and a handful of other local 

stations) with a single satellite dish, pointed at EchoStar’s main satellites. See

31

10Declaratory Ruling & Order, In re National Association of Broadcasters and Association of 

Local Television Stations Request for Modification or Clarification of Broadcast Carriage Rules 

for Satellite Carriers, Dkt. No. CSR–5865–Z (Media Bureau Apr. 4, 2002). The Commission has 

to date required only that EchoStar fully disclose its discriminatory treatment and that it pay 

for the installation of the second dish. Not surprisingly, these requirements have not solved the 

fundamental problem that acquiring a second dish requires a major expenditure of time and effort on the part of the subscriber, with the result that—just as EchoStar hopes—few viewers 

ever actually acquire a second dish. 

Moreover, EchoStar has, on many occasions, violated even the minimal requirements of the 

Ruling & Order by failing adequately to notify subscribers about the need for a second dish, 

actively discouraging subscribers from obtaining a second dish, falsely telling them they would 

have to pay for the second dish, or falsely stating that they could not have a second dish installed at the time of their original installation. In re University Broadcasting, Inc. v. EchoStar 

Communications Corp., Mem. Op. & Order, Dkt. No CSR–6007–M (Feb. 20, 2003); In Re 

Entravision Holdings, LLC, Mem. Order & Op., Dkt. No. CSC–389 (April 15, 2002); In Re TriState Christian, Inc., Mem. Op. & Order, Dkt. No. CSR–5751 (Feb. 5, 2004). 11See Separate Statement of Chairman Michael K. Powell, at 2 n.3, In Re General Motors Corporation and Hughes Electronics Corporation, Transferors and The News Corporation Limited, 

Transferee, for Authority to Transfer Control, MB Docket No. 03–124 (released Jan. 14, 2004). 

EchoStar web site, www.dishnetwork.com/content/programming/ locals/index.shtml. 

On the other hand, viewers wishing to see Channel 14 (Univision), Channel 32 

(WHUT—PBS), Channel 53 (WNVT—International), Channel 56 (WNVC—International), or WJAL (Channel 68—Independent) are forced to obtain a second satellite dish aimed at a satellite far over the Atlantic. Id. (In this and other markets, 

EchoStar targets public television, Hispanic, and other foreign-language stations for 

this discrimination.) Because few viewers will go to the time and trouble of obtaining a second dish—e.g., a long wait at home for an installer—the net result is that 

only a tiny percentage of EchoStar subscribers can actually view all of their local 

stations. To date, the FCC has taken only ineffective steps to address this egregious 

form of discrimination,10 even though EchoStar’s fellow DBS company, DirecTV, has 

told the FCC that EchoStar’s two-dish ploy ‘‘is inconsistent with the language of the 

Satellite Home Viewer Improvement Act.’’ See Letter from Merrill S. Spiegel to Marlene H. Dortch, Dkt. No. 00–196 (Jan. 16, 2003).

The Commission has recently indicated that it plans to take action soon to address EchoStar’s two-dish practices,11 but it remains uncertain when it will act on 

pending petitions for review. Should the Commission fail to take prompt action, 

Congress should step in to ensure that EchoStar can no longer thumb its nose at 

Congress’ unmistakable directive that DBS firms that local-to-local means carriage 

of all local stations, without relegating many of the stations to an inaccessible electronic ghetto. 

III. THE DISTANT-SIGNAL COMPULSORY LICENSE HAS BEEN EGREGIOUSLY ABUSED BY SATELLITE CARRIERS, AND THE NEED FOR IT IS 

RAPIDLY DIMINISHING WITH THE GROWTH OF LOCAL-TO-LOCAL 

America’s free, over-the-air television system is based on local stations providing 

programming to local viewers. When satellite carriers began delivering television 

programming in the 1980’s, however, retransmission of local television stations by 

satellite was not yet technologically feasible. In 1988, Congress therefore fashioned 

a stopgap remedy: a compulsory license that allows satellite carriers to retransmit 

distant network stations, but only to ‘‘unserved households.’’ 17 U.S.C. § 119. The 

heart of the definition of ‘‘unserved household’’ is whether the residence can receive 

an over-the-air signal of a certain objective strength, called ‘‘Grade B intensity,’’

from an affiliate of the relevant network. Id., § 119(d)(10) (definition of ‘‘unserved 

household’’). In 1994, Congress extended the distant-signal license for another five 

years, although it expressly placed on satellite carriers the burden of proving that 

each of their customers is ‘‘unserved.’’ 17 U.S.C. § 119(a)(5)(D). 

In 1999, Congress again extended the distant-signal license as part of the SHVIA, 

and statutorily mandated use of the FCC-endorsed computer model (called the ‘‘Individual Location Longley-Rice’’ model, or ‘‘ILLR’’) for predicting which households are 

able to receive signals of Grade B intensity from local network stations. 17 U.S.C. 

§ 119(a)(2)(B)(ii). In the SHVIA, Congress also classified certain very limited new 

categories of viewers as ‘‘unserved,’’ including (1) certain subscribers who had been 

illegally served by satellite carriers but whom Congress elected to ‘‘grandfather’’

temporarily, see 17 U.S.C. § 119(e), and (2) qualified owners of recreational vehicles 

and commercial trucks, see id., § 119(a)(11). 

By its terms, grandfathering will expire at the end of 2004. 17 U.S.C. § 119(e). 

Unlike in 1999, when Congress saw grandfathering as a way to reduce consumer 

complaints by allowing certain ineligible subscribers to continue receiving distant 

32

12First, by the end of the year, DirecTV will offer local-to-local in no fewer than 130 DMAs, 

which collectively cover more than 90% of U.S. television households. EchoStar already offers 

local-to-local in 107 DMAs, and that figure is constantly growing. All of the subscribers in these 

markets (including subscribers claimed to be grandfathered) will be able to receive their local 

channels by satellite, making the availability of distant signals irrelevant. Second, a federal 

judge found in 2003 that EchoStar forfeited the right to rely on grandfathering by defaulting 

at trial in proving that any of its subscribers actually satisfy the requirements for 

grandfathering. Third, because of ordinary subscriber churn and relocation, many grandfathered 

subscribers are no longer DBS customers or are no longer grandfathered. Fourth, for the small 

number of subscribers in non-local-to-local markets that they might claim are currently grandfathered, DirecTV and EchoStar are free to seek (and may already have obtained) waivers from 

the affected stations. Finally, any grandfathered subscriber is (by definition) predicted to receive 

at least Grade B intensity signals over the air from their local network stations, and thus to 

be able to view their own stations even if they obtain no network stations by satellite. 13For the first few years, DirecTV and EchoStar hid behind a small, foreign-owned company 

called PrimeTime 24. See CBS Broadcasting Inc. v. PrimeTime 24, 48 F. Supp. 2d 1342, 1348 

(S.D. Fla. 1998) (‘‘PrimeTime 24 sells its service through distributors, such as DIRECTV and 

EchoStar . . . [M]ost of PrimeTime’s growth is through customer sales to owners of small dishes 

who purchase programming from packagers such as DirecTV or EchoStar.’’). Starting in 1998 

(for EchoStar) and 1999 (for DirecTV), the two companies fired PrimeTime 24 in an effort to 

dodge court orders to obey the Copyright Act. 

signals, the end of grandfathering will have little impact in the marketplace. This 

special exception should therefore be allowed to expire routinely.12

A. Delivery Of Distant Signals Is A Poor Substitute For Delivery Of Local Television Stations 

From a policy perspective, there is no benefit—and many drawbacks—to satellite 

delivery of distant, as opposed to local, network stations. Unlike local stations, distant stations do not provide viewers with their own local news, weather, emergency, 

and public service programming. Nor does viewership of distant stations provide any 

financial benefit to local stations to help fund their free, over-the-air service. To the 

contrary, distant signals, when delivered to any household that can receive local 

over-the-air stations, simply siphon off audiences and diminish the revenues that 

would otherwise go to support free, over-the-air programming. 

Members of Congress and other candidates for election are uniquely injured by 

distant signals: a viewer in Phoenix, for example, will never see political advertisements running on local Phoenix stations if he or she is watching New York or Los 

Angeles stations from EchoStar or DirecTV instead. Such viewers become virtually 

unreachable by political advertising, unless (for example) a candidate in Phoenix 

wishes to purchase advertising on stations in the costliest media markets in the 

United States—New York and Los Angeles. 

B. Satellite Carriers Have Grievously Abused the Distant-Signal Compulsory 

License 

Satellite carriers—most egregiously EchoStar—have systematically abused the 

distant-signal compulsory license since its creation. To the extent that satellite carriers have complied with the limitations placed by Congress on the distant-signal 

license, it is solely as a result of litigation that broadcasters were forced to undertake to halt satellite carrier lawbreaking. 

From 1988 until 1998, satellite carriers simply ignored the objective ‘‘Grade B intensity’’ standard and instead signed up anyone willing to say that they were dissatisfied with their over-the-air picture. Starting in the mid-1990s, when the large ‘‘Cband’’ dishes began to be replaced by the hot-selling 18-inch dishes offered by 

DirecTV and EchoStar, the carriers’ distant-signal lawbreaking quickly became a 

crisis. 

When DirecTV went into business in 1994, and when EchoStar did so in 1996, 

they immediately began abusing the narrow distant-signal compulsory license to illegally deliver distant ABC, CBS, Fox, and NBC stations to ineligible subscribers. 

In essence, the DBS companies pretended that a narrow license that could legally 

be used only with remote rural viewers was in fact a blanket license to deliver distant network stations to viewers in cities and suburbs.13

As a result of EchoStar’s and DirecTV’s lawbreaking, viewers in markets such as 

Meridian, Mississippi, Lafayette, Louisiana, Traverse City, Michigan, Santa Barbara, California, Springfield, Massachusetts, Peoria, Illinois, and Lima, Ohio were 

watching their favorite network shows not from their local stations but from stations in distant cities such as New York. Since local viewers are the lifeblood of local 

stations, EchoStar’s and DirecTV’s copyright infringements were a direct assault on 

free, over-the-air local television. 

When broadcasters complained about this flagrant lawbreaking, the satellite industry effectively said: if you want me to obey the law, you’re going to have to sue 

33

14The trial was conducted by the Hon. William Dimitrouleas, who took over the case after 

the original District Court judge, the Hon. Lenore Nesbitt, passed away in 2002. While Judge 

Nesbitt also ruled that EchoStar was committing massive copyright infringements, EchoStar 

was able—by making false claims about its supposed compliance efforts—to obtain a delay in 

enforcement of that ruling. 

EchoStar’s appeal of this decision is set to be argued before the 11th Circuit in late February 

2004.

me. Broadcasters were finally forced to do just that, starting in 1996, when they 

sued the distributor (PrimeTime 24) that both DirecTV and EchoStar used as their 

supplier of distant signals. But even a lawsuit for copyright infringement was not 

enough to get the DBS firms to obey the law: both EchoStar and DirecTV decided 

that they would continue delivering distant stations illegally until the moment a 

court ordered them to stop. 

The courts recognized—and condemned—the satellite industry’s lawbreaking. See, 

e.g., CBS Broadcasting Inc. v. PrimeTime 24, 9 F. Supp. 2d 1333 (S.D. Fla. 1998) 

(entering preliminary injunction against DirecTV’s and EchoStar’s distributor, 

PrimeTime 24); CBS Broadcasting Inc. v. PrimeTime 24 Joint Venture, 48 F. Supp. 

2d 1342 (S.D. Fla. 1998) (permanent injunction); CBS Broadcasting Inc. v. DIRECTV, Inc., No. 99–0565–CIV–NESBITT (S.D. Fla. Sept. 17, 1999) (permanent 

injunction after entry of contested preliminary injunction); ABC, Inc. v. PrimeTime 

24, 184 F.3d 348 (4th Cir. 1999) (affirming issuance of permanent injunction). 

By the time the courts began putting a halt to this lawlessness, however, satellite 

carriers were delivering distant ABC, CBS, Fox, and NBC stations to millions and 

millions of subscribers, the vast majority of whom were ineligible urban and suburban households. See CBS Broadcasting, 9 F. Supp. 2d 1333. 

By getting so many subscribers accustomed to an illegal service, DirecTV and 

EchoStar put both the courts and Congress in a terrible box: putting a complete stop 

to the DBS firms’ lawbreaking meant irritating millions of consumers. Any member 

of Congress who was around in 1999 will remember the storm of protest that 

DirecTV and EchoStar stirred up from the subscribers they had illegally signed up 

for distant network stations. 

Even when the courts ordered EchoStar and DirecTV to stop their massive violations of the Copyright Act, they took further evasive action to enable them to continue their lawbreaking. In particular, when their vendor (PrimeTime 24) was ordered to stop breaking the law, both DBS firms fired their supplier in an effort to 

continue their lawbreaking. 

When DirecTV tried this in February 1999, a United States District Judge found 

that DirecTV’s claims were ‘‘a little disingenuous’’ and promptly squelched its 

scheme. CBS Broadcasting Inc. et al v. DirecTV,No. 99–565–CIV–Nesbitt (S.D. Fla. 

Feb. 25, 1999); see id. (S.D. Fla. Sept. 17, 1999) (stipulated permanent injunction). 

EchoStar has played the game of ‘‘catch me if you can’’ with greater success, 

thanks to a series of stalling tactics in court. But in 2003, a United States District 

Court judge for the Southern District of Florida held a 10-day trial in a copyright 

infringement case brought by broadcast television networks, and trade associations 

representing local network affiliates, originally filed against EchoStar in 1998.14 In 

June 2003, the District Court issued a meticulously-documented 32-page final judgment, holding EchoStar liable for nationwide, willful or repeated copyright infringement by violating the distant-signal compulsory license. CBS Broad., Inc. v. 

EchoStar Communications Corp., 276 F. Supp. 2d 1237 (S.D. Fla. 2003).

EchoStar had the burden of proving that each of its subscribers receiving distant 

ABC, CBS, Fox, and NBC stations is an ‘‘unserved household.’’ 17 U.S.C. 

§ 119(a)(5)(D). Yet the District Court found that EchoStar had failed to prove that 

any of its 1.2 million distant-signal subscribers is in fact ‘‘unserved.’’ That is, 

EchoStar did not prove that any of its subscribers is unable to receive a Grade B 

signal, is grandfathered, or is eligible on any other basis. Id., ¶ 82. 

Worst of all, the District Court found that EchoStar had deliberately sought to 

mislead the court about what it did with the vast pool of illegal subscribers it accumulated between 1996 and 1999. Most important, EchoStar made—and then deliberately broke—a sworn pledge (in a declaration by its CEO, Charles Ergen) to turn 

off the many ineligible subscribers it signed up using the unlawful do-you-like-yourpicture method. Id., ¶ 46. Far from turning off its accumulated illegal subscribers, 

EchoStar knowingly continued delivering distant signals to many hundreds of thousands of customers that it knew—from a study EchoStar itself ordered—to be ineligible. Id., ¶¶ 38–47. 

EchoStar’s decision to continue its highly profitable lawbreaking was the height 

of cynicism: as the District Court found, ‘‘EchoStar executives, including Ergen and 

[General Counsel] David Moskowitz, when confronted with the prospect of cutting 

34

15See, e.g., Copyright Office Report at 104 (‘‘The legislative history of the 1988 Satellite Home 

Viewer Act is replete with Congressional endorsements of the network-affiliate relationship and 

the need for nonduplication protection.’’) (emphasis added); Satellite Home Viewer[] Act of 1988, 

H.R. Rep. No. 100–887, pt. 2 at 20 (1988) (‘‘The Committee intends [by Section 119] to . . . 

bring[] network programming to unserved areas while preserving the exclusivity that is an integral part of today’s network-affiliate relationship’’) (emphasis added); id. at 26 (‘‘The Committee 

is concerned that changes in technology, and accompanying changes in law and regulation, do 

not undermine the base of free local television service upon which the American people continue 

to rely’’) (emphasis added); H.R. Rep. No. 100–887, pt. 1, at 20 (1988) (‘‘Moreover, the bill respects the network/affiliate relationship and promotes localism.’’) (emphasis added). 

off network programming to hundreds of thousands of subscribers, elected instead 

to break Mr. Ergen’s promise to the Court.’’ Id., ¶ 46 (emphasis added). This is, of 

course, the same EchoStar that now asks Congress to expand the distant-signal 

compulsory license. 

C. With The Widespread Availability Of Local-To-Local Service, The Number 

Of Truly ‘‘Unserved’’ Households Is Minimal 

Unlike the local-to-local compulsory license, the distant-signal compulsory license 

threatens localism and interferes with the free market copyright system. As a result, the only defensible justification for that compulsory license is as a ‘‘hardship’’ exception—to make network programming available to the small number of households that otherwise have no access to it. The 1999 SHVIA Conference Report states 

that principle eloquently: ‘‘the specific goal of the 119 license . . . is to allow for 

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

television stations.’’ 145 Cong. Rec. at H11792–793. (emphasis added).15

Today, more than 80% of all U.S. television viewers have the option of viewing 

their local network affiliates by satellite—and that number is growing all the time. 

Even satellite dish owners in local-to-local markets who cannot receive Grade B intensity signals over-the-air (e.g., a household in a remote part of the Washington, 

D.C. DMA) are obviously not ‘‘unserved’’ by their local stations: they can receive 

them, with excellent technical quality, directly from their satellite carrier, just by 

picking up the phone. 

The widespread availability of local-to-local network affiliate retransmissions 

means that, as a real-world matter, there are no unserved viewers in areas in which 

local-to-local satellite transmissions of the relevant network are available, because 

it is no more difficult for viewers to obtain their local stations from their satellite 

carriers than to obtain distant stations. There is therefore no policy justification for 

treating satellite subscribers in local-to-local markets as ‘‘unserved’’ and therefore 

eligible to receive distant network stations. 

The distant-signal compulsory license is not designed to permit satellite carriers 

to sabotage the network/affiliate relationship by delivering to viewers in served

households—who can already watch their own local ABC, CBS, Fox, and NBC stations—network programming from another source. Yet satellite carriers have aggressively advertised the benefits to served households of obtaining distant signal 

programming, including most notably:

• time-shifting (e.g., Mountain and Pacific Time Zone viewers watching network 

programming two or three hours earlier from East Coast stations)

• out-of-town sports: because TV networks often show different sports events 

(such as NFL games) in different cities, a subscription to an out-of-town network station enables viewers to see sports events that are not televised locally.

These abuses of the compulsory license damage both the network/affiliate system 

and the free market copyright regime. Consider, for example, a network affiliate in 

Sacramento, California, a DMA in which there are today no DBS subscribers who 

are genuinely ‘‘unserved’’ because both DIRECTV and EchoStar offer the local Sacramento ABC, CBS, Fox, and NBC stations by satellite. Nevertheless, for any Sacramento-area viewer who is technically ‘‘unserved’’ under the Grade B intensity 

standard, DIRECTV and EchoStar can scoop the Sacramento stations with the stations’ own programming by offering distant signals from East Coast stations. The 

Sacramento station—and every other station in the Mountain and Pacific Time 

Zones that has local-to-local service—therefore loses badly needed local viewers, 

even though the viewers have zero need to obtain a distant signal to watch network 

programming. 

Similarly, the ability of satellite carriers to offer distant stations that carry attractive sports events is a needless infringement of the rights of copyright owners, who 

offer the same product—out-of-town games—on a free market basis. For example, 

the NFL has for years offered satellite dish owners (at marketplace rates) a package 

35

16 National Association of Broadcasters, DTV Stations in Operation, http://www.nab.org/Newsroom/issues/digitaltv/DTVStations.asp (last checked Feb. 19, 2004). 

called ‘‘NFL Sunday Ticket,’’ which includes all of the regular season games played 

in the NFL. The distant-signal compulsory license creates a needless ‘‘end-around’’

this free-market arrangement by permitting satellite carriers to retransmit distant 

network stations for a pittance through the compulsory license. 

IV. THE DBS INDUSTRY’S PROPOSAL TO EXPAND THE DISTANT-SIGNAL 

COMPULSORY LICENSE DEFIES LOGIC AND WOULD SET BACK LOCALTO-LOCAL CARRIAGE OF DIGITAL SIGNALS FOR YEARS 

Having elected to deliberately violate the limits that Congress imposed on the existing compulsory license unless and until ordered by a federal court to obey them, 

EchoStar and DirecTV now demand that Congress radically expand the distant-signal license they have abused. The Committee should reject this irresponsible proposal out of hand. 

In essence, the DBS firms ask the Committee to create a brand-new compulsory 

license to permit them to deliver the digital broadcasts of the New York and Los 

Angeles ABC, CBS, Fox, and NBC stations to millions of households nationwide, 

even though (a) the households can receive the same programming over the air from 

their local station’s analog signal and (b) in the overwhelming majority of cases, 

EchoStar and DirecTV already deliver the same programming via what SBCA describes as ‘‘a 100 percent, crystal-clear digital audio and video signal’’ retransmitted 

from the local station’s analog broadcasts. 

The simple greed behind this DBS industry proposal is clear, and the tactic is familiar. In the 1990s, the DBS industry sought to offer network broadcast programming ‘‘on the cheap’’ by delivering the analog broadcasts of New York and Los Angeles stations nationwide—completely bypassing the network/affiliate system that 

Congress and the FCC have worked so hard to foster. (Indeed, in the 1990s satellite 

companies urged Congress to eliminate the ‘‘unserved household’’ restriction entirely 

and to permit universal distribution of New York and Los Angeles stations in return 

for payment of a ‘‘surcharge.’’) This Committee, and Congress as a whole, blocked 

those maneuvers, instead insisting on localism and on marketplace solutions. By 

standing its ground against the ‘‘quick fix’’ urged by the DBS industry, Congress has 

fostered the win/win/win result described above: DirecTV and EchoStar (and their 

contractors) dug deep to find technical solutions to enable them to offer local-to-local

broadcast programming to the overwhelming majority of U.S. television households—and soon to all of them. (They found these solutions, of course, only after repeatedly telling Congress and the FCC that the technical problems were 

unsolvable.) 

The DBS industry’s current proposal is equally self-serving. EchoStar and 

DirecTV would enjoy a tremendous financial benefit from being able—again ‘‘on the 

cheap’’—to deliver the digital broadcasts of New York and Los Angeles ABC, CBS, 

Fox, and NBC stations to many millions of viewers nationwide. Instead of investing 

in delivering local digital broadcasts, as cable systems are gradually beginning to 

do, DirecTV and EchoStar could use a single, inexpensive national feed (e.g., of 

WCBS in New York) to deliver digital programming of a particular network around 

the country. Although this gambit would cost the DBS firms virtually nothing, they 

would gain enormously, both in additional customers (at $40, $50 or more per 

month) and in selling additional network packages (at $6 per month) to both old 

and new customers. 

While the ‘‘distant digital’’ proposal would be a tremendous windfall for DirecTV 

and EchoStar, it would be a disaster for Congress, the public, and broadcasters. As 

discussed in detail below, the supposed ‘‘factual’’ basis for this proposal—that the 

broadcast television industry has not been diligent in pushing the digital transition—is palpable nonsense. And as also described below, this gift to the DBS industry would come at a crippling cost in terms of Congress’ public policy objectives. 

A. The Broadcast Industry Has Spent Enormous Sums and Dedicated Extraordinary Efforts to Implementing the Transition to Digital Broadcasting—With Tremendous Success in Rolling Out Digital to the Vast Majority of American TV Households 

Contrary to the satellite industry’s ill-informed accusations, broadcasters have 

worked tirelessly to implement the transition to digital broadcasting. Thanks to the 

expenditure of billions of dollars and millions of person-hours, broadcasters have 

built—and are on-air with—digital television (‘‘DTV’’) facilities in 203 markets that 

serve 99.42% of all U.S. TV households.16 Midway through the transition, almost 

36

17See Mark R. Fratrik, Ph.D, Reaching the Audience: An Analysis of Digital Broadcast Power 

and Coverage (BIA Financial Network, Oct. 17, 2003) (prepared for the Association for Maximum Service Television, Inc.) (‘‘MSTV Study’’). 18See www.fcc.gov/mb/video/dtvstatus.html (‘‘FCC statistics’’). 19 Id. 20 Id. 21See MSTV Study, supra, at 16. 22MSTV Study, supra, at i. 

three-quarters—73.7%—of U.S. television households have access to at least six free, 

over-the-air digital television signals.17 Nationwide, 1380 television stations in 203 

markets are delivering free, over-the-air digital signals today.18 More than 70 million households receive six or more DTV signals; 49 million households receive nine

or more DTV signals; and a full 30 million households receive 12 or more DTV signals. More digital stations are resolving their obstacles and going on the air almost 

daily. The digital transition is working and moving ahead quickly, and the claims 

of the satellite industry to the contrary are empty rhetoric, not fact. 

In the top ten markets, covering 30% of U.S. households, all top four network affiliates are on-air—38 with licensed full-power digital facilities and two New York 

city stations with Special Temporary Authority (‘‘STA’’) currently covering a significant chunk of their service areas and with plans to expand even more. In markets 

11–30 (representing another 24% of U.S. households), 77 of 79 top four affiliated 

stations are on-air—72 with full-power licensed digital facilities and five with STAs. 

Two other stations in that group have been stymied in their roll-out, but are reporting regularly to the Commission about their progress in overcoming the obstacles. 

Thus, virtually all ABC/CBS/Fox/NBC affiliates in the top 30 markets, representing 

53.5% of all U.S. households, are on-air with DTV—110 stations with full power licensed digital facilities and seven with STAs.19

Even as to smaller stations in these markets and stations in smaller markets— which have far fewer resources but equally high costs—1263 of 1569 stations are 

on air with digital,20 having overcome enormous challenges and in many cases mortgaging their stations to do so, despite having no immediate prospect of revenues to 

offset these huge investments. 

Those who do not understand the digital transition sometimes claim that DTV 

stations operating with STAs broadcast with very low power. That is simply wrong. 

Many stations, particularly those outside the largest stations in the largest markets, 

are ‘‘DTV maximizers,’’ i.e., are maximizing their power to greatly exceed their analog coverage. Many maximizers need only a fourth or less of their maximum (licensed) power to cover their entire analog service area. Maximizers operating at 

even much reduced power are still covering 70% or more of their analog service 

areas. Almost 19% of current DTV stations operating pursuant to STAs currently 

serve more than 100% of their analog service area with a digital signal.21 This number will expand exponentially as the transition continues. This high percentage is 

particularly striking given that there are still no FCC rules for digital translators 

or booster stations, which will further expand digital signals in rural areas (at still 

further cost to local broadcasters). Free, over-the-air broadcasters take seriously the 

potential for expanding their service area and diminishing the very small number 

of households nationwide that cannot receive local signals, and the digital transition 

will provide an opportunity to increase nationwide broadcast service. 

An authoritative study from last fall shows that on-air DTV facilities are serving 

92.7% of the population served by the corresponding analog stations.22 The small 

percentage of viewers who do not yet receive a fully replicated digital signal of their 

local television stations is shrinking by the day as broadcasters work hard, at great 

expense, to expand the coverage of their digital stations. 

On the programming side, broadcasters, both networks and local stations, are providing an extraordinary amount of high-quality DTV and high-definition television 

(‘‘HDTV’’) programming to entice viewers to join the digital television transition and 

purchase DTV sets to display the glory of dazzling HDTV programs and the multiple offerings of the growing DTV multicasts. Three networks offer virtually all 

their prime time programming in HDTV, as well as high-profile specials and sporting events, such as

• The Academy Awards

• The Grammys

• 11 National Hockey League playoff games

• The Kentucky Derby

• The Super Bowl

• The AFC Championship

37

• Masters’ Golf

• US Open Tennis

• College football

• NCAA Tournament games

• The Stanley Cup

• The NBA Finals

• The primary NFL games of the week

• The entire schedule of Monday Night Football

PBS is launching its HD Channel, in addition to its multicast channels of educational fare. WB is doubling its amount of HD programming this fall to account 

for more than half of its program schedule. PAX is multicasting on its digital channels, including prime time fare. And now many special effects, like the first-down 

marker and graphics, are also going high definition, to enhance the viewer experience and move the transition along faster and faster. 

While it is local stations that bring these national HDTV programs to the vast 

majority of viewers, these local stations also are doing more and more on the local 

level to supplement the network HDTV and multicast fare. Examples abound of 

local HDTV and multicast broadcasts (at an enormous cost for full local HD production facilities):

• WRAL-TV produces its local news in HDTV

• Post-Newsweek’s Detroit station broadcast live America’s Thanksgiving Day 

Parade in HD

• WRAZ-TV in Durham NC broadcast 10 Carolina Hurricanes hockey games in 

HD last winter

• KTLA in LA broadcast last January’s Rose Parade in HD in a commercialfree broadcast simulcast in Spanish and closed captioned and repeated it 

throughout the day and distributed it on many Tribune and other stations

• Last April, Belo’s Seattle station KING-TV began producing its award-winning local programs Evening Magazine and Northwest Backroads in HDTV. 

Evening Magazine is daily. These programs are broadcast on Belo’s other Seattle and Portland and Spokane stations

• KTLA last March broadcast live LA Clippers and the Lakers in HD. It was 

the third sports presentation by KTLA, which included two Dodgers games

• Many public TV stations are providing adult and children’s education, foreign 

language programming and gavel-to-gavel coverage of state legislatures

• NBC and its affiliates are planning a local weather/news multicast service

• ABC is multicasting news/public affairs and weather channels at its KFSN 

station in Fresno, Calif. It plans to replicate this model at the nine other stations it owns.

• WKMG in Orlando plans to broadcast a Web-style screen with local news, 

weather maps, headlines and rotating live traffic views.

This ever-increasing variety of DTV and HDTV programming, being broadcast to 

the vast proportion of American households, will attract consumers to purchase DTV 

sets. Another major driver of the transition is the FCC’s August 2002 Tuner Order, 

which requires all new television sets, on a phased-in basis and starting this summer with the half of the largest sets, to have a DTV tuner. As a result, DTV tuners 

will be available in an ever-increasing number of households, thereby further hastening the transition. 

In short, the suggestion that broadcasters have somehow failed America in the 

transition to digital broadcasting is demonstrably false. And the notion that new 

compulsory license for ‘‘digital white areas’’ would improve matters is sheer fantasy. 

In fact, allowing satellite carriers to deliver distant digital (or HD) signals to socalled ‘‘digital white areas’’ would set the stage for a consumer nightmare almost 

identical to what occurred in 1999, when hundreds of thousands of households had 

to switch from (illegally-delivered) distant signals to over-the-air reception of local 

stations. 

The reason is simple: as Congress painfully experienced from mountains of letters, 

emails, and phone messages in 1999, viewers who are accustomed to receiving all 

of their TV programming (including network stations) by satellite are often enraged 

when told that they must switch to a hybrid system in which they combine satellite 

reception with an off-air antenna or cable service. The import of the ‘‘distant digital’’

proposal is therefore clear: after the DBS firms had ‘‘grabbed’’ customers with a disVerDate 0ct 09 2002 16:32 May 13, 2004 Jkt 089266 PO 00000 Frm 00041 Fmt 6633 Sfmt 6621 G:\WORK\COURTS\022404\92119.000 HJUD1 PsN: 92119
38

23 E.g., SHVIA Conference Report, 145 Cong. Rec. H11792 (‘‘the specific goal of the 119 license, 

which is to allow for a life-line network television service to those homes beyond the reach of their 

local television stations must be met by only allowing distant network service to those homes 

which cannot receive the local network television stations. Hence, the ‘unserved household’ limitation that has been in the license since its inception.’’ Id. (emphasis added). 24The Committee should be aware that, in the guise of a letter seeking advice about how to 

fill out a Copyright Office form, EchoStar sought last year to obtain from the Copyright Office 

a statement that the Copyright Act as now in force already recognizes the ‘‘distant digital’’ con- cept. See Letter from David Goodfriend, EchoStar Communications Corp. to David O. Carson, 

General Counsel, Copyright Office (June 18, 2003). The Office swiftly, and properly, rebuffed 

that back-door effort. Letter from William J. Roberts to David Goodfriend (Aug. 19, 2003). 25 In other markets, while stations have gone on-air with their digital signals, their coverage 

area is temporarily reduced for reasons entirely beyond their control—such as the destruction 

by terrorists of the World Trade Center and its broadcasting facilities. 26Of course, the tiny number of genuinely unserved households (e.g., those unable to receive 

Grade B intensity analog signals over the air) can receive either an analog or a digital signal 

from a distant affiliate of the same network. See Letter from William J. Roberts, U.S. Copyright 

Office, to David Goodfriend (Aug. 19, 2003). 

tant digital signal, the costs to local broadcast stations of reclaiming those viewers 

would go sky-high, since stations would face not only the same financial costs they 

do now but also the high costs of confronting thousands of angry local viewers with 

the need to change their reception setup. The DBS firms know all of this, and they 

fully understand the implication: the ‘‘distant digital’’ plan would not encourage a 

smooth digital transition, and would not encourage stations to invest in the digital 

rollout, but would simply make it easy for EchoStar and DirecTV to hook customers 

on (distant) satellite-delivered digital signals and keep them forever. 

If there were any doubt about the DBS firms’ tenacity in retaining distant-signal 

customers once they begin serving them—regardless of the legality of doing so— EchoStar’s behavior with regard to analog distant signals would eliminate it. As a 

District Court found last year after a 10-day trial, EchoStar was so determined to 

retain its illegal distant-signal customers that, ‘‘when confronted with the prospect 

of cutting off network programming to hundreds of thousands of subscribers,’’ the 

key ‘‘EchoStar executives, including [CEO Charles] Ergen and [General Counsel] 

David Moskowitz,’’ choose instead ‘‘to break Mr. Ergen’s promise to the Court’’ that 

it would turn them off. CBS Broad., Inc. v. EchoStar Communications Corp., 276 

F. Supp. 2d at 1246, ¶ 46. 

B. The Radical New Compulsory License Demanded by EchoStar and 

DirecTV Is Unnecessary and Would Do Lasting Damage to Localism 

At all times since 1988, the purpose of the distant-signal license has been to make 

over-the-air broadcast programming available by satellite solely as a ‘‘lifeline’’ to 

satellite subscribers that had no other options for viewing network programming.23

The EchoStar/DirecTV proposal would do exactly the opposite: Congress would override normal copyright principles to permit DBS companies to transmit distant network stations to many millions of additional households, even though (1) the households get a strong signal from their local stations over the air and (2) in most cases, 

the DBS firm already offers the local analog broadcasts of the same programming, 

in crisp, digitized form, as part of a local-to-local package. The suggestion that Congress needs to step in to offer a ‘‘lifeline’’ under these circumstances is baffling.24

The consequences of this radical proposal, if adopted, would be likely to be grave. 

According to EchoStar and DirecTV, for example, if a station (through no fault of 

its own, e.g., because of a local zoning obstacle) has been unable to go on-air with 

a digital signal , every household in that station’s market would be considered ‘‘unserved’’—and therefore eligible to receive a retransmitted signal from the New 

York or Los Angeles ABC, CBS, Fox, and NBC affiliates’ digital broadcasts. In these 

markets, EchoStar and DirecTV would take us back to the dark days of the mid1990s, when, before courts began to intervene, the DBS firms used national feeds 

to deliver ABC, CBS, Fox, and NBC network programming to any subscriber who 

asked for it.25 And they would do so even though, in most cases, the DBS firms are 

themselves already delivering the same programming by satellite from the local stations. With DBS penetration already at more than 20 million households nationwide, and with the highest levels of DBS penetration in smaller markets, the impact 

on the viability of local broadcasters could be devastating.26 Worse yet, based on the 

misconduct of EchoStar in their retransmission of distant analog signals, once 

EchoStar has begun delivering distant digital stations, it will take enormous efforts 

(and years of struggle) to get them to ever stop doing so, even if they have ‘‘promised’’ to do so, and even if the law squarely requires them to do so. 

Granting this enormous government subsidy to the DBS industry, at the expense 

of local broadcasters (and ultimately at the expense of local over-the-air audiences), 

39

would also have profoundly negative long-term consequences for the continued 

progress of the satellite industry. Over-the-air broadcasting is a local phenomenon, 

and the right way to deliver local stations is on a local-to-local basis. In their drive 

to compete with cable, and with each other, DirecTV and EchoStar are likely to devise ingenious technical solutions to enable them to carry digital broadcasts on a 

local-to-local basis, just as they have—despite their gloomy predictions—found a 

way to do so for analog broadcasts. But rewriting the laws to give EchoStar and 

DirecTV a cheap, short-term, government-mandated ‘‘fix’’ will take away much of 

the incentive that would otherwise exist to continue to find creative technological 

solutions. Congress wisely refused to abandon the bedrock principles of localism and 

free market competition in the 1990s, when the satellite industry made similar proposals, and Congress should do the same now. 

The DBS proposal would also sabotage another key objective of the SHVIA, namely minimizing unnecessary regulatory differences between cable and satellite. If 

DirecTV and EchoStar could deliver an out-of-town digital broadcast to anyone who 

does not receive a digital broadcast over the air, they would have a huge (and wholly unjustifiable) leg up on their cable competitors, which are virtually always barred 

by the FCC’s network non-duplication rules from any such conduct. See 47 C.F.R. 

§§ 76.92–76.97 (1996). 

Finally, it would be particularly inappropriate to grant EchoStar and DirecTV a 

vastly expanded compulsory license when they have shown no respect for the rules 

of the road that Congress placed on the existing license. If Congress were to adopt 

this ill-conceived proposal, it can expect more years of controversy, litigation, and—

ultimately—millions of angry consumers complaining to Congress when their ‘‘distant digital’’ service is eventually terminated. This Committee should rebuff the invitation to participate in such a reckless folly. 

V. WHAT CONGRESS SHOULD DO THIS YEAR 

As the Committee is aware, the local-to-local compulsory license is permanent, but 

Congress has wisely extended the distant-signal license (in Section 119 of the Copyright Act) only for five-year increments. Given the short legislative calendar and the 

press of other urgent business, Congress may wish simply to extend Section 119, 

as now in force, for another five years. 

If Congress wishes to do anything other than a simple extension of the existing 

distant-signal compulsory license, NAB urges:

• No distant signals where local-to-local is available. For the reasons discussed above, Congress should amend the definition of ‘‘unserved household’’

to exclude any household whose satellite carrier offers the household’s own 

network stations on a local-to-local basis. There is no logic to interfering with 

localism—and with basic copyright principles—under these circumstances. It 

makes no sense, for example, to give satellite carriers the right to ‘‘scoop’’

local stations on the West Coast (and in the mountain West) by delivering 8 

Simple Rules, Everybody Loves Raymond, 24, or The Tonight Show two or 

three hours early, or to permit EchoStar to evade normal copyright restrictions by delivering out-of-town NFL games to local-to-local households without ever negotiating for the rights to do so.

• No expansion of the distant-signal compulsory license. Congress should 

flatly reject any proposal to expand the distant-signal compulsory license, 

such as the irresponsible ‘‘distant digital’’ proposal discussed above. Since the 

compulsory license is intended only to address ‘‘hardship’’ situations in which 

viewers have no other means of viewing network programming, there is no 

policy basis for expanding the compulsory license to cover households that receive can view their local station’s analog signals over the air. Still less would 

it make any sense to declare a household to be ‘‘unserved’’ when it already 

receives (or can receive with a phone call) a crisp, high-quality digitized retransmission of their local station’s analog broadcasts from DirecTV or 

EchoStar. 

The Committee not take seriously the DBS firms’ predictable claims that 

they lack the technological capacity over time to offer local digital signals, 

since—as discussed above—EchoStar and DirecTV are notorious for ‘‘underpredicting’’ their ability to solve technological challenges. Moreover, it would 

be wholly inappropriate to reward companies such as EchoStar, which have 

40

27 EchoStar’s callous disrespect for legal requirements extends well beyond litigation with 

broadcasters. In a lawsuit filed by EchoStar claiming antitrust violations for alleged conspiracy 

and boycott, for example, a United States Magistrate Judge recommended Rule 11 sanctions 

against EchoStar and its in-house counsel. Recommendation of United States Magistrate Judge, 

EchoStar Satellite Corp. v. Brockbank Ins. Servs., Inc., No. 00–N–1513 at 19 (D. Colo. Nov. 6, 

2001) (Exhibit A hereto). The court held that ‘‘the complaints filed [by EchoStar] in this action 

were nothing but an effort to involve the insurers in expensive litigation in an attempt to force 

the insurers to increase their settlement offers or to pay a total loss on the EchoStar IV claim.’’

Id. at 25. The court also found that ‘‘Echostar acted with an improper purpose in violation of 

Rule 11(b)(1)’’ and acted ‘‘in bad faith.’’ Id.

knowingly violated the existing law and broken sworn promises to courts 

about compliance, by broadening the compulsory license they have abused.27

• Five-year sunset. Congress should again provide that Section 119 will sunset after a five-year period, to permit it to evaluate at the end of that period 

whether there is any continuing need for a government ‘‘override’’ of this type 

in the free market for copyrighted television programming.

• Stopping the ‘‘two-dish’’ scam. As discussed above, Congress should—if the 

FCC does not do so first—bring a halt to EchoStar’s two-dish gambit, which 

is thwarting Congress’ intent to make all stations in each local-to-local market equally available to local viewers. 

CONCLUSION

With the perspective available after 16 years of experience with the Act, the Committee should adhere to the same principles it has consistently applied: that localism and free-market competition are the bedrocks of sound policy concerning any 

proposal to limit the copyright protection enjoyed by free, over-the-air local broadcast stations. 

If the Committee makes any change to the existing distant-signal license, it 

should amend the Act to specify that a household that can receive its own local stations by satellite from the satellite carrier is not ‘‘unserved.’’ The Committee should 

flatly reject reckless bids by companies like EchoStar—which have scoffed at the 

law for years—to expand the distant-signal license. 

Far from rewarding EchoStar for its indifference to congressional mandates, Congress should—if the FCC does not—make clear that EchoStar’s flouting of ‘‘carry 

one, carry all’’ through its two-dish gambit must come to an end. And as it has done 

in the past, Congress should limit any extension of the distant-signal license to a 

five-year period, to enable a fresh review of the appropriateness of continuing this 

major governmental intervention in the free marketplace.

APPENDIX A

RECENT EXAMPLES OF LOCAL TV STATION PUBLIC SERVICE

Helping People In Need 

WXYZ ‘Can Do’ Raises 500,000 Pounds of Food for Food Banks 

WXYZ-TV Detroit (E.W. Scripps-owned ABC affiliate) undertook its 22nd annual 

‘‘Operation Can-Do’’ campaign this winter, bringing in more than 500 thousand 

pounds of canned and non-perishable food to help feed families and individuals 

through soup kitchens and food banks in the tri-county area. Since it began the program, WXYZ has collected more than six million pounds of food, providing more 

than 20 million meals to the hungry of Metropolitan Detroit. (Jan/Feb 2004) 

WHSV-TV Builds a Habitat House 

WHSV-TV Harrisonburg, VA (Gray Television-owned ABC affiliate) decided the 

best possible way to celebrate its October 2003 50th Anniversary would be to partner with Habitat for Humanity to raise $50 thousand over the summer to build a 

house for a needy family. January 2003 marked the first time that the StauntonAugusta-Waynesboro Habitat affiliate partnered with a television station to build a 

house and show the public the Habitat miracle. WHSV had several fundraisers, including production and distribution of a Shenandoah Valley cookbook commemorating the station’s 50 years of service and the Habitat chapter’s 10 years of service. 

In August, WHSV hosted a special benefit screening of ‘‘From Here to Eternity,’’

which won the Academy Award in the same year WSVA-TV (now WHSV) sent out 

its first broadcast. Community members who supported the screening were driven 

by limousine to the theater and entered on a red carpet. WHSV sent out calls for 

41

and coordinated volunteers throughout the fundraising and building process. The 

station met its goal, the house was built and a grateful family of four moved in. 

(Jan/Feb 2004) 

Children 

WFAA-TV Collects 82,000 Toys in Four-Week Campaign 

WFAA-TV Dallas/Fort Worth (Belo-owned ABC affiliate) in 2003 ran its most successful Santa’s Helpers campaign in the 34-year history of this program. WFAA was 

able to collect more than 82,000 toys over the course of the four-week campaign, allowing the station to help more than 50,000 children in the North Texas area. In 

2002 the station collected 76,000 toys. Santa’s Helpers is promoted on air through 

numerous promos and PSAs, and also by WFAA’s chief weathercaster, Troy Dungan, 

who has served as Santa’s Helpers spokesman for 28 years. Each year, the highlight 

of the campaign is a ‘‘drive-thru’’ event that is held in front of the station, where 

WFAA anchors and reporters greet viewers as they drop off toys. After all of the 

toys have been collected, they are distributed to needy children by more than 40 

nonprofit organizations in the Dallas/Fort Worth area. (Jan/Feb 2004) 

Healthy Communities 

KTTC-TV: 50 Years On-Air, 50 Years Fighting Cancer 

KTTC-TV Rochester, MN (QNI Broadcasting-owned, NBC) celebrated its 50th anniversary in July and nearly 50 years of partnership with the local Eagles Lodge 

producing and airing a 20-hour telethon to raise money for cancer research. Fifty 

years ago young Rochester television sportscaster Bernie Lusk was searching for a 

way to use the powerful new medium of television to make a difference. At a time 

when the battle with polio garnered much attention, Bernie wanted to tackle another disease that claimed many lives—cancer. Bernie shared his idea with fellow 

Eagles Lodge members, and the now 50-year-old, totally local telethon was born. 

In its first year, the 1954 KTTC/Eagles Cancer Telethon raised $3,777. In 2003, 

$702,900 was raised for the Mayo Clinic, the University of Minnesota, and the 

Hormel Institute of Research. To date the telethon has raised more than $9 million 

dollars. (Nov/Dec 2003) 

KLAS-TV Promotes Breast Cancer Awareness 

KLAS-TV Las Vegas (Landmark Broadcasting, CBS) runs the Buddy Check 8 program asking viewers to call a buddy on the 8th day of the month to remind her 

to do a breast self-examination. KBLR-TV (Telemundo) also produces the same messages in Spanish. (September 2003) 

Helping Animals 

KEYE Raises $172,000 for Humane Society 

KEYE-TV Austin, TX (Viacom, CBS) hosted the Austin Humane Society’s 6th Annual Pet Telethon June 20 and 22, raising $172,000 and resulting in the adoption 

of 104 animals. The society runs a no-kill shelter, where animals accepted into the 

adoption program are kept for as long as it takes to find them a loving home. The 

society has saved approximately 2,700 animals in the past year alone. (July 2003) 

Drug Prevention 

Hawaii TV Stations Forego New Network Shows to Blanket Islands with Drug Documentary 

Television stations in the Hawaiian Islands simultaneously aired an unprecedented, commercial-free drug documentary at 7 p.m. on September 24, with network 

affiliates pre-empting the first hour of primetime during the networks’ debut of their 

new fall shows. The stations were honoring their commitment to help battle Hawaii’s biggest drug problem. ‘‘Ice: Hawaii’s Crystal Meth Epidemic,’’ produced by 

Edgy Lee’s FilmWorks Pacific, details the epic proportions of crystal meth abuse, 

with grassroots reaction and views. Originally conceived as a 30-minute show, it 

was expanded to an hour because of the magnitude of the epidemic and originally 

was to air in August to avoid the fall network season. The commercial-free airing 

agreement did not come without a cost. It meant thousands of dollars in lost ad revenues for the stations and the canceling or delayed airing of the season premieres 

of ‘‘Ed,’’ ‘‘60 Minutes II,’’ ‘‘My Wife and Kids’’ and ‘‘Performing As.’’ KITV-TV (Hearst 

Argyle, ABC) general manager Mike Rosenberg estimated the loss was as much as 

$10 thousand per station. Stations that simulcast the program included: Honolulu 

stations KITV-TV (Hearst Argyle, ABC), KBFD (Independent), Raycom Media stations KHNL (NBC) and KFVE (WB), KIKU (International Media Group, Independent), Emmis Communications stations KHON (Fox) and KGMB (CBS) and 

42

KWHE (Independent). Some stations even added additional ice programming to follow Lee’s film. Among them were KHON, which showed an hour-long panel including Governor Linda Lingle and Lt. Governor James Aiona; and KFVE, which aired 

a half-hour program focusing on teen drug usage. (October 2003) 

Broadcasters Without Borders 

Roanoke Station’s Viewers Come Through for Troops 

A six-day promotion at WDBJ-TV Roanoke, VA (Schurz Communications, CBS) to 

gather items such as toiletries and snack foods for American troops serving in the 

Iraq war resulted in more than two tons of welcome supplies. Viewers overwhelmed 

the station and collection points at several Roanoke area automobile dealerships 

with more than 4,000 pounds of Packages from Home to be sent overseas. The 

American Red Cross local chapter helped get the goods to the Middle East. ‘‘Thursday and Friday afternoons, the cars were bumper to bumper at our front door,’’ said 

WDBJ President and General Manager Bob Lee. ‘‘We filled up the lobby, and then 

the packages started to spill over into other areas of the building.’’ Red Cross and 

station volunteers sorted the DOD-approved personal items. Said Lee, ‘‘Who would 

have thought we would end up with more than two tons of merchandise! We were 

beginning to think we’d need our own C–130 for the delivery.’’ (April 2003) 

Education 

KTLA Student Scholarships 

KTLA-TV Los Angeles (Tribune-owned WB affiliate) is launching its sixth Annual 

Stan Chambers Journalism Awards competition—a partnership with area county 

departments of education and member school districts. The station has invited more 

than 300 high schools to have their seniors submit essays on ‘‘What Matters Most,’’

for the opportunity to receive scholarships to further their education. Five winners 

will receive $1,000 and a chance to experience work in the KTLA Newsroom. Winners will produce videos of their entries, with guidance from KTLA News writers, 

producers and reporters. The program honors KTLA’s veteran reporter and journalist Stan Chambers for his contributions to the community. (Jan/Feb 2004) 

KRON-TV’s ‘Beating the Odds’

KRON-TV San Francisco’s ‘‘Beating the Odds’’ is a series of news stories and specials reported by anchorwoman Wendy Tokuda and other KRON News reporters. 

Tokuda’s ‘‘Beating the Odds’’ series features extraordinary high school students who 

are rising above tough circumstances. Some are growing up without parents, others 

are homeless and some are raising siblings. All of them want to go to college. The 

stories are tied to a scholarship fund established by KRON and the Peninsula Community Foundation to help low-income, high-risk Bay Area high school students pay 

for college. Following each ‘‘Beating the Odds’’ report, viewers are encouraged to donate to the fund. Since 1997, the fund has raised more than $1.5 million for students profiled in the series. The Foundation waives all its fees, so 100% of the taxdeductible donations go to the students. KRON is an independent station owned by 

Young Broadcasting. (March 2003) 

Belo/Phoenix Launches Statewide Education Initiative 

Belo Broadcasting/Phoenix has launched a six-month, statewide initiative on education to address major issues affecting students and schools. Running through 

March, ‘‘Educating Arizona’s Families’’ involves monthly topics ranging from early 

brain development and learning readiness to literacy, accountability, dropout, postsecondary education, the teaching profession and the economic impact of education 

on the state. The stations focus on each initiative for one month, producing two 

dozen stories per topic. Weekly public affairs programming is directed toward the 

specific issues being covered each month and guests on mid-day newscasts, three 

times weekly, offer insight to parents, caregivers and other viewers. KTVK-TV Phoenix (Independent) is driving the initiative through news and daily promotional announcements that also air in Tucson on Belo’s KMSB-TV (Fox) and KTTU-TV 

(UPN). Promotion spots change monthly and individual 30-second sponsor announcements address education interests of each sponsor. (Nov/Dec 2003) 

Protecting the Environment/Endangered Species 

Emmis Makes $90,000 Grant to Indianapolis Zoo For Endangered Species 

Radio and television station owner Emmis Communications will donate $90,000 

to the Indianapolis Zoo for a multi-year conservation research project aimed at saving one of the planet’s most endangered species, the ring-tailed lemur. A portion of 

the donation will be used to research potential problems that could occur from the 

43

re-introduction of the animals into the wild from zoos around the world, paving the 

way for future reintroduction of the species into their native range. (January 2002)

Mr. SMITH. Ms. Peters, let me direct my first question toward 

you but, first of all, preface it by saying that in your testimony, 

both written and oral, you suggested two amendments, both of 

which I think are non-controversial. One is eliminating the outdated provisions and the other is coming up with a new signal intensity standard for TV stations that broadcast in digital. 

Now what that standard is may be controversial, but I think the 

idea that we have to come up with a new standard is not. So what 

I want to do is ask you a couple of other questions. The first one 

is: What do you think of Mr. Moskowitz’s suggestion that there be 

parity between cable and satellite when it comes to the statutory 

licenses? 

Ms. PETERS. We actually, in general, believe that there should be 

parity. There are certain provisions, but, for us, we were focusing 

much more when we did our study, and we stayed there today, 

with the fact that we believe in marketplace rates. It is a statutory 

license. We think that a lot of the things that are wrong are in the 

cable license, not the satellite license. 

Mr. SMITH. Okay, so you do not think that the historical, technological, regulatory, and sometimes different tax treatments would 

justify something other than parity? 

Ms. PETERS. No, I think that there are perhaps some instances 

where parity may not work, but to the extent that it is possible, 

I think there should be parity. But I would aim toward the satellite 

standard, rather than to go—— Mr. SMITH. Go that direction rather than the other. 

Ms. PETERS. Yes. 

Mr. SMITH. Okay, thank you, Ms. Peters. 

Mr. Attaway, in both your written and oral testimonies, I am 

going to read from your prepared remarks, you made the point 

that, since 1998, the satellite services have increased their charges 

for distant broadcasting programming by 20 percent, but copyright 

royalty payment for that programming has been reduced by 30 percent. Why do you think that is? 

Mr. ATTAWAY. Well, when Congress accepted the statements of 

the satellite industry in 1999 and reduced the marketplace compulsory license rates by 30 or more percent, I think Congress thought 

that this savings would be passed on to consumers. That did not 

happen. 

I have seen no evidence that the prices charged by the satellite 

carriers went down in 1999 or any other time. They keep going up. 

And what this compulsory license is is simply a wealth transfer. 

Congress is taking money out of the pockets of program owners and 

putting it in the pockets of the satellite distributors. 

Mr. SMITH. Okay. Mr. Moskowitz, you probably anticipated my 

question, which is: Why the 20 percent increase in charges and the 

30 percent decrease in royalties? 

Mr. MOSKOWITZ. Well, the only time that satellite—and I guess 

I can only speak for EchoStar here, because I don’t know about 

DirecTV’s price increases—but the only time EchoStar has ever 

raised its prices on distant programming was a couple of years ago 

when we added PBS to our line-up, and so we did increase the 

44

price to reflect the fact we were adding an additional channel to 

the line-up. Now, so we have kept prices steady, notwithstanding 

the fact that our costs are very significant. 

People think: Well, gee, they just get the programming and that 

is the beginning and the end of it, but, of course, that is not the 

case at all. We have to back-haul it to a facility. We have to then 

uplink it to a satellite. We have to pay for the construction and 

launch of these satellites at a cost of $250 million each. We have 

to comply with very burdensome regulations, with respect to the 

SHVIA, which we are comfortable complying with, but they are not 

without very significant costs. And so it is really kind of inaccurate 

to say that there aren’t significant costs involved in doing this. 

Mr. SMITH. Okay, fair enough. 

Mr. Lee, of all the proposals made by Mr. Moskowitz, which is 

the least attractive to the National Association of Broadcasters? 

Mr. LEE. Mr. Chairman, it would have to be this digital white 

space——

Mr. SMITH. White space. 

Mr. LEE.—notion. 

The fact is, most of what we know about digital television was 

created in a computer simulation. You may recall there was limited 

field testing of digital television here in Washington, I think down 

in the Charlotte area, and then we all galloped off to do digital television. 

At our station, we’ve spent about $14 million on equipment. My 

power bill alone went up about $72,000 a year to operate the digital transmitter, and the coverage pattern predicted by the FCC’s 

computer models was said to replicate the footprint of our analog 

NTSC signal. What we found, in fact, is digital travels much further than anybody expected and it is much more robust, but it has 

some holes in it, and, frankly, nobody knows why yet. There is 

some testing occurring out West, I think primarily in the Salt Lake 

area, to understand how on-channel translators will work in digital. 

We are most eager to see the outcome of that, and—frankly, I am 

the only lawyer in the room, I think, so I am not sure I am able 

to say this—the broadcaster experience with EchoStar leaves us so 

cautious, we just think that once the camel gets his nose under the 

tent anything can happen. 

It is just a bad idea, and I urge you to forget it. 

Mr. SMITH. Thank you, Mr. Lee. 

The gentleman from California, Mr. Berman, is recognized for his 

questions. 

Mr. BERMAN. Thank you, Mr. Chairman. 

To Mr. Attaway, you recommend increasing the section 119 royalty rates. Mr. Moskowitz recommends lowering them. Mr. 

Moskowitz bases his recommendation on the argument that section 

119 rates should equal cable’s rates under section 111. Mr. 

Moskowitz indicates that cable pays far lower per subscriber royalty fees than satellite carriers. Do you agree with that statement? 

Mr. ATTAWAY. Absolutely not. 

I agree with the statement that there is not parity, but the parity—the lack of parity is in satellite’s failure, at least according to 

the research I have done. 

45

The dish superstation package of EchoStar includes five distant 

independent stations for which they charge $5.99, and they pay 

94.5 cents in compulsory license royalties. Now the same package, 

if it were carried by the San Antonio cable system, would cost that 

cable system $1.50 per subscriber per month. At the Century TCI 

cable system in Los Angeles, it would pay $3.53 for that package 

of distant independent television stations; and here in Montgomery 

County, Comcast would pay $2.12 for that very same package. 

Mr. BERMAN. What about western Virginia? 

Mr. ATTAWAY. I am sorry, I didn’t look in western—Mr. Boucher, 

I do apologize to you. I will go back tonight and look that up and 

send it to you tomorrow. 

Mr. BOUCHER. Actually, I think Mr. Berman asked the question. 

You should send it to him. 

Mr. ATTAWAY. Well, the point is, Mr. Berman, there does not 

seem to be parity, but it does seem to work in satellite’s favor. Satellite pays far less for a package of distant independent television 

stations than many and I believe most cable systems would pay. 

Mr. BERMAN. Thank you. 

Mr. Moskowitz, when you testified before the Subcommittee 5 

years ago, I asked you whether some EchoStar subscribers were receiving distant signals via satellite even though they could receive 

a local signal of grade A intensity by a rooftop antenna. You replied, quote: I can tell you that EchoStar does not sign up customers in grade A unless we actually go out and do a test and find 

that the consumer does not get a grade B signal. 

In a 2003 decision, the U.S. District Court for the Southern District of Florida found that EchoStar was delivering distant network 

stations to more than 630,000 subscribers who were predicted to 

receive a grade A signal from at least one of the four networks. 

The court further found that EchoStar has failed to present credible evidence, either in the form of an ILLR analysis or signal intensity measurements, that any of its subscribers are unserved as 

defined under the Satellite Home Viewer’s Act. 

It also found no credible evidence that EchoStar turned off distant signals to any of these grade A subscribers. 

In other words, the court found EchoStar had signed up hundreds of thousands of customers in grade A areas without doing 

any of the tests you assured me it had done. In light of this, how 

do you expect us to feel comfortable that your proposal for addressing digital white areas won’t create another grandfathering problem? 

Mr. MOSKOWITZ. Congressman, I think there are several things 

to talk about with that. First, I am here in my capacity as chairman of the SBCA; and with your permission I would prefer to focus 

my remarks on those issues that are important to the entire industry. That said, I think it important to respond directly to your 

question. And in doing so——

Mr. BERMAN. Five years ago, you were representing EchoStar 

then? 

Mr. MOSKOWITZ. That is correct. 

In doing so, I think the first thing to keep in mind is that this 

same court found that EchoStar’s practices for signing up new subVerDate 0ct 09 2002 16:32 May 13, 2004 Jkt 089266 PO 00000 Frm 00049 Fmt 6633 Sfmt 6601 G:\WORK\COURTS\022404\92119.000 HJUD1 PsN: 92119
46

scribers for the past many years had been in full compliance with 

the requirements of the Act. 

What we are talking about here are subscribers from a long time 

ago, from before EchoStar took this action itself and relied on third 

parties, as did everyone in the industry. 

The second thing that I think is important to remember is the 

statute—the NAB did a great job. They got a statute that puts the 

burden of proof on satellite to prove every single one of its customers comply. And, what is more, it did an even better job, because they could make you do it, as they did in that case, more 

than 5 years after the customer was first signed up and records no 

longer existed. 

So was the burden very difficult to meet? Absolutely, it was. 

Did that same judge find that EchoStar was complying in its 

practices for signing up new subscribers for the past many years? 

Absolutely, he did. 

So I think that we have shown that—and I think the other thing 

to keep in mind is it actually was EchoStar that went to the court 

initially and said we think our practices comply, but we want you 

to tell us whether they do or not. It wasn’t the broadcasters who 

went into court initially to do that. 

So we are doing our best to comply in an ever-changing field, and 

we think we have done a pretty good job of doing that. There are 

certainly older subscribers who have in retrospect become difficult, 

and we are continuing to work through that. 

Mr. BERMAN. Thank you, Mr. Chairman. 

Mr. SMITH. Thank you, Mr. Berman. 

The gentleman from Alabama, Mr. Bachus, is recognized for his 

questions. 

Mr. BACHUS. Thank the Chairman. And, Mr. Moskowitz, I am 

afraid I am going to ask you some additional questions, as opposed 

to other panel members. I almost wish I could ask somebody else 

a question. 

How many of your subscribers are currently unable to receive the 

signal of their local network affiliate, either through an over-theair signal or through satellite-provided digitized local signal? You 

can answer that as an association and then as EchoStar. 

Mr. MOSKOWITZ. Congressman, I am afraid I do not have the specific statistics with me. I can look into it and get back to you with 

that information. 

I can tell you that it is very difficult to determine what percentage of consumers in the United States get an off-air signal, most 

importantly because that standard is so antiquated as to change 

and really is in need of serious change. Certainly, the 1950s standard that was created isn’t applicable in today’s marketplace. 

I believe that the percentage who have—well, certainly, the percentage who EchoStar can provide local channels by satellite is 

today a little over 85 percent of the entire U.S. Population; and I 

think with respect to DirecTV it is lower. We serve about 108 markets today. They serve about 70. They plan to increase that this 

summer to about the same number as us and perhaps even more. 

Mr. BACHUS. But you are not sure—maybe in numbers, is there 

a million of those subscribers unable to receive the local signal 

from their local affiliate? 

47

Mr. MOSKOWITZ. Right, I am sorry. There are certainly many 

millions who cannot receive their local channels by satellite, and 

they are probably at least—of EchoStar and DirecTV’s customers 

today, I would estimate that there are well over a million who cannot receive their local channels today off air. 

Mr. BACHUS. Okay. Over-the-air signal. 

Mr. MOSKOWITZ. That is correct by today’s standard. And if you 

updated that standard, the number would grow dramatically. 

Mr. BACHUS. Now is that over a million, but it could be less than 

2 million? 

Mr. MOSKOWITZ. Yes. I believe it would be—again, using the definitions, not whether a consumer really can, because the fact of the 

matter is that a lot of times, while a consumer is predicted—I am 

talking about whether they are predicted to be able to receive the 

signal—in fact, because of ghosting and the antiquated standard, 

if you went to your neighbor’s home, you might well find that they 

did not think they got an acceptable picture, but the law says they 

do. And by that standard it is probably between a million and two 

million of our customers today. 

Mr. BACHUS. Okay. Assume you have a satellite customer on the 

edge of Washington, the Washington DMA, and say they are too far 

from D.C. to view our local stations over the air. Since EchoStar 

delivers ABC, CBS, Fox, all those channels, and you deliver those 

stations by satellite to everyone in the Washington, D.C., area, 

those same channels, in what respect is this household underserved 

by those networks? 

Mr. MOSKOWITZ. I think, Congressman, that the fundamental 

issue is an issue of choice for the consumer. When the consumer 

can’t get their local channels off air and therefore has to pay to receive them, we believe that the consumer ought to have a choice 

as to what they pay for. 

Mr. BACHUS. A choice between a distant CBS affiliate and their 

locals? 

Mr. MOSKOWITZ. That is right. Because they are now paying us 

for those channels. If the local broadcaster improved its plant and 

its power and added repeaters so that the local broadcaster could 

provide service, then there would be no issue. 

Mr. BACHUS. Okay, let’s say, in the Washington area, of your 

total charge—what is your average charge, say, in the Washington 

area, in an area I have just described, for all your package? 

Mr. MOSKOWITZ. For our whole package, I think the average consumer pays approximately $50, give or take. 

Mr. BACHUS. How many channels do they get? 

Mr. MOSKOWITZ. For that, I think they probably get 150–170—

about 170-plus channels. 

Mr. BACHUS. How much are they paying for that ABC, CBS, Fox, 

and CBS station for that local? 

Mr. MOSKOWITZ. They would be paying $5.99 for not only the 

ABC, NBC, CBS and Fox but also for the PBS and all of the independents. In Washington I think that amounts to 12 or 14 channels. 

Mr. BACHUS. So maybe 10 or 12 percent of their bill, is that 

right? 

Mr. MOSKOWITZ. Approximately. 

48

Mr. BACHUS. Okay. 

Could I ask one—— Mr. SMITH. Without objection, the gentleman is recognized for an 

additional minute. 

Mr. BACHUS. Mr. Lee, let me just switch gears, for a minute. 

How much money have the broadcasters spent on the digital rollout? 

Mr. LEE. Congressman, I apologize. I do not have a clue. If our 

station is average, we are way up on the high side of a billion dollars. 

Mr. BACHUS. Okay. 

Mr. LEE. Our plant costs for digital so far have been about $14 

million. 

Now, we were lucky. We had—Mother Nature gave us a 3,500-

foot mountain to put a 150-foot tower on so we didn’t have to go 

out and build a 2,000-foot tower, and we had a spare standing 

there. So we are two or three million dollars lighter than a station 

that would have to put up a 2,000-foot tower. 

Mr. BACHUS. How effective are you at serving your market with 

a digital signal? 

Mr. LEE. That is a question better asked our viewers, but I think 

we are very effective, and maybe I can get some help from the distinguished gentleman from southwest Virginia over here. We operate at full power, have from day one. 

The positioning statement of our television station is ‘‘Your 

hometown station.’’ and I just could not see how we could put a digital signal on the air that served one community but not another. 

So we have been high definition from day one, we are multi-casting, we have HD carriage on cable in our market, we have, we are 

about to have multi-casting carriage on cable in our market. I 

think we have done it pretty damn well, if you will pardon me. 

Mr. BACHUS. I will yield to the gentleman from western Virginia. 

Mr. SMITH. The gentleman’s time has expired. 

The gentleman from Virginia, Mr. Boucher, is recognized for his 

questions. 

Mr. BOUCHER. Well, thank you very much, Mr. Chairman. At the 

outset, Mr. Lee, I’m going to have to apologize and say I have yet 

to purchase a digital set—— Mr. LEE. Shame on you. 

Mr. BOUCHER. —you and I can have a private conversation about 

my shortcomings in that respect at a later time. 

Mr. LEE. I think Mr. Goodlatte gave himself one for Christmas. 

Mr. BOUCHER. Well, he is a technological jump ahead of me. 

Let me say welcome to each of these witnesses and thank each 

of you for your informative and often very spirited testimony here 

this afternoon. 

I want to direct, first, several questions to Mr. Moskowitz; and 

let me begin by commending your particular company, EchoStar, 

for its performance in providing local-into-local services to more 

than 100 markets around the Nation. You have done better than 

the competition in that respect, and I think that your subscribers 

are well-pleased with the service they get. 

Having said that, there are a total of 210 television markets 

across the country. And I would be interested in your observations 

49

of what now needs to happen in order to expand dramatically the 

number of local markets that get local television signals delivered 

via satellite and what role is there for Congress to take additional 

steps? 

A number of years ago Mr. Goodlatte and I partnered together 

and passed through the Congress a loan guarantee program that 

provides about $1.25 billion in Federal loan guarantees, a very 

large part of which has now been funded with appropriations that 

would encourage the construction and launch and operation of satellites, should that prove to be necessary, in order to extend the 

number of markets that are served with local-into-local service. As 

far as I know, that loan guarantee hasn’t been drawn upon yet. 

Just comment, if you would, about what the private sector intends to do in terms of expanding these services and what role, if 

any, there might be for us to take additional steps to help facilitate 

it. 

Mr. MOSKOWITZ. Congressman, the satellite industry applauds 

your efforts to enact legislation that provides for the rural loan 

guarantees, and I think that there is an April 1st deadline for applications to be in, and I hope that we will find that many of our 

members attempt to take advantage of that opportunity. And that 

is one of the legs of the stool, is building more satellites, because 

today’s satellites simply physically cannot handle adding many 

more local markets. 

The second leg of the stool is we need more spectrum. There simply is not physically enough spectrum that we have been allocated 

so far in order to provide many more local markets. So I think that 

the thing that Congress can do is work with the satellite industry 

and the FCC to free up additional spectrum and make it available 

so that that, together with the—so that the technological questions 

can be addressed. 

And then, of course, there are always the financial issues. And 

we are driven to provide competition in as many markets as is economically feasible and will continue to work hard to increase that 

number. 

Mr. BOUCHER. Well, let me just ask you this. Let’s suppose that 

we resolve whatever spectrum issues there are. Make a projection, 

if you would, 2 years from today, how many markets around the 

country do you think, you and DirecTV together are going to be 

serving? 

Mr. MOSKOWITZ. If I had to project, I would say it would certainly be in excess of 150, and how far in excess of 150 is very difficult to say. 

Mr. BOUCHER. Okay. Well, that’s not the answer I was hoping to 

hear. And I think we have to do better. We can have some conversations about how to do that, but that is a major concern of 

mine in particular. 

Your two-dish solution that EchoStar has for offering local signals in some markets has been challenged by the NAB. I think Mr. 

Berman had something to say about it also. 

Let me ask you this. Is there any cost to the consumer to obtain 

that second dish in a market where the second dish is necessary 

to get the EchoStar-delivered local signals? 

50

Mr. MOSKOWITZ. Thank you for asking. In fact there is absolutely 

no cost whatsoever to the consumer for that second dish. EchoStar 

absorbs that cost completely itself, and, moreover, the existence of 

the second dish is completely transparent to the consumer. So 

other than the fact that there is a second 18-inch dish up on the 

roof, when the consumer turns on his program guide, the channels 

that are on one dish or the other all appear contiguous in the program guide, and if you press a button to get one, you press the 

same button to get the other. 

And, of course, the other thing we do is that we do inform all 

consumers of the availability of this free dish. 

So we have chosen to try to serve more markets with local programming by satellite. And in order to do that, we have had to put 

some of these channels out of the wing slot. But we have done it 

in a manner which we believe makes it completely seamless to the 

consumer. And if they want that channel, it is absolutely available 

to them and they know that it is available to them at no cost. 

Mr. BOUCHER. Thank you very much, Mr. Moskowitz. 

Mr. Chairman, may I ask unanimous consent to proceed for one 

additional minute? 

Mr. SMITH. Without objection, the gentleman is recognized for an 

additional minute. 

Mr. BOUCHER. Thank you, Mr. Chairman. 

Mr. Lee, I want to offer a special welcome to you as general manager of the television station that provides a tremendous service in 

the western part of Virginia. Your station serves approximately 

one-half of my district and at least that much of our Committee colleague, Bob Goodlatte’s district. And we are very pleased to have 

you here today, and thank you for your testimony. 

Mr. LEE. Thank you, Mr. Boucher. 

Mr. BOUCHER. Let me ask you about two special circumstances 

that do prevail in my part of Virginia, the part of Virginia that you 

serve, and I know also prevail in a number of other areas around 

the Nation. 

Circumstance number one is where a particular market has no 

affiliate of a given major network. What happens at the present 

time when that local market is uplinked to the satellite for localinto-local service, is that the subscribers to satellite within that 

market have the opportunity to subscribe to a distant network signal under the statutory license with respect to that particular network. But if there is an adjacent market that happens to be next 

door, right there within the same State that offers that affiliate, 

under current law there is no opportunity for that particular subscriber to subscribe to the network signal that happens to emanate 

from the adjacent market. 

Should we not amend the law in order to make that adjacent 

market signal available through local-into-local uplink? 

Mr. LEE. Mr. Boucher, I have wrestled with that question, and 

let me emphasize again, I am not an attorney so my reading of the 

law may be incorrect. But in studying some of this stuff last week 

in preparation for coming here, it occurred to me that it might be 

possible, let’s say, in the Bluefield DMA, which would be part of 

your congressional district, but in which there is no local-into-local 

service, I can’t find it in the law—can’t find in the law a provision 

51

that limits who DirecTV and EchoStar can import for distant network signals. It doesn’t have to be New York or Los Angeles. If I 

read the law correctly, it could just as easily be Richmond or 

Charleston, West Virginia, or whatever. 

But I would urge the Subcommittee staff to research that question further. That would be a very elegant solution. But I think the 

only downside for the DBS carriers would be they wouldn’t be able 

to carry the local signals—they wouldn’t be able to treat a Roanoke 

signal as a section 122 rate base. They would have to treat it as 

a section 119; pay distant signal copyright fees without regard for 

where it was coming from. 

Mr. BOUCHER. Well, I think the proposal would be to treat it as 

a local signal, so that if it comes from an adjacent market it is 

treated as a local signal. You wouldn’t have any objection to that, 

would you? 

Mr. LEE. Oh, no, no. They would get a free ride that way, but 

I would have no objection at all. 

Mr. BOUCHER. Let me ask about one other circumstance that—— Mr. SMITH. The gentleman is recognized for an additional 

minute. 

Mr. BOUCHER. Thank you, Mr. Chairman. I appreciate your indulgence. 

This situation prevails in one of my counties. It is Patrick County, Virginia, which has a very interesting natural geography. There 

is a very high mountain range that divides this county. The lower 

half of the county is where most of the population is, well below 

this mountain. And that area is adjacent to North Carolina. And 

under the Nielsen ratings, most of the residents of the county living down below this mountain are receiving their over-the-air and 

cable-delivered television from North Carolina, from WinstonSalem, North Carolina. However, the station that you operate is actually a little bit closer in terms of just raw miles to most of this 

population. 

You are also within the same State, your market is adjacent to 

the market that, under the Nielsen ratings, most people are currently looking at in over-the-air TV. I am confident if you took a 

poll of the residents of this particular county, the vast majority 

would say they would much more prefer to receive the Roanoke 

market signals delivered in local fashion. But under the current 

law, they have to subscribe to that market which the Nielsen ratings say is most significantly viewed. And that is the Winston 

Salem market. 

So I would very much like to see us change the law to say that 

in an instance like that, the in-State adjacent market could be 

uplinked and provided to a county in that kind of circumstance. I 

would welcome your comments about such an amendment should 

it be offered. 

Mr. LEE. I know there are a number of counties around the country in which, with each annual Nielsen cycle, a county flip-flops 

back and forth between one DMA versus another. I have heard 

some talk about that phenomenon as to western Massachusetts, 

eastern New York, very much parallel to the State line phenomenon you and I are discussing. It really depends on whose ox 

is being gored. 

52

The NAB does not yet have a position on that. The CBS Affiliates Group does not have a position on that. We recognize a solution needs to be found, and I would welcome an opportunity to 

work with you on that going forward. 

Mr. BOUCHER. All right. Well, thank you very much Mr. Lee. I 

want to thank all the witnesses and, Mr. Chairman, I particularly 

thank you for your indulgence this afternoon. 

Mr. SMITH. Thank you, Mr. Boucher. 

The gentleman from Alabama, Mr. Bachus, is recognized for additional questions. 

Mr. BACHUS. Thank you. 

Mr. Moskowitz talked about this new digital white area license. 

Suppose the Congress creates such a license and there was a satellite provider, your company or one—another—a satellite provider 

gives a customer in this area a distant signal, say, from New 

York—Fox, NBC, ABC. And let’s say at a local—at a later time, the 

local stations in Alabama expand their digital broadcasting and 

they reach into this area which you have called the digital white 

area. What would happen if at that time the subscriber had to give 

up his satellite-delivered digital stations and switch to using the 

over-the-air antenna to get the network stations? What do you 

think his reactions would be? 

Mr. MOSKOWITZ. Well, first, we have tried to address that in our 

strategy, because every HD box satellite receiver that EchoStar 

builds, and many if not all of the HD receivers built by DirecTV 

as well, include an off-air digital tuner; so that while they could 

use the box to receive those digital distant network signals today, 

they would also have the inherent capability by putting up what 

hopefully at some point in time would be a small and unobtrusive 

off-air antenna to receive their local digital channels, when the 

local provider, the local station, upgrades its plan. The other 

very——

Mr. BACHUS. Well, what you are saying, at that time—what you 

are saying is at that time they wouldn’t continue to get the distant 

network broadcast over satellite; right? That’s—I am assuming 

that what you are asking us to do is temporarily give them that 

distant signal, but at such time that they get their local signal, 

that that service that they were getting would be withdrawn; right? 

Mr. MOSKOWITZ. No, Congressman. We believe that while no new 

customer should receive it thereafter, that customers who get it already should be able to keep it as long as they also have the capability which we would assure of also receiving their local network 

channels. 

Mr. BACHUS. Wouldn’t that mean that a person, say—you know, 

on the same street, you would have some people that had—that 

could get it, other people that couldn’t get it? 

Mr. MOSKOWITZ. Yes. That would be a consequence of the fact 

that some broadcasters will adopt the technology and upgrade their 

plant more expeditiously than others will. We have that in analog 

today, where some consumers on the street are entitled to receive 

distant networks and others are not. The interesting thing about 

the digital is you either get it or not. So, unlike the analog, we 

don’t expect there would be the same contentious issues, because 

53

you can very simply determine whether somebody gets the signal 

or not. 

Mr. BACHUS. I guess what I am saying, you could see a real problem with giving a customer a service and, all of a sudden, telling 

him he couldn’t have it? That’s not going to work, is it? 

Mr. MOSKOWITZ. I believe that that would create problems that 

we would need to talk and work through. 

Mr. BACHUS. If Congress created such a scheme, they would be 

basically setting themselves up for a firestorm of consumer protests 

down the road, wouldn’t we? 

Mr. MOSKOWITZ. If those channels were subsequently taken away 

from the small number of people who would adopt, then, yes. On 

the other hand——

Mr. BACHUS. You think it would just be a small number. 

Mr. MOSKOWITZ. Well, I think it would depend on how quickly 

broadcasters met their promise to Congress and actually implemented the service that they promised when they were given the 

digital spectrum for free. 

Mr. BACHUS. So you anticipate this digital white area just being 

a small number of people. 

Mr. MOSKOWITZ. I believe that if you give this ability to satellite, 

that broadcasters will much more expeditiously meet their obligations, and therefore that number will be small. 

Mr. BACHUS. But it will end up being small, but it would initially 

have been significant; right? 

Mr. MOSKOWITZ. I am not sure I follow, Congressman. 

Mr. BACHUS. Well, initially, if it were given initially you are saying, initially there would be a large number of people. 

Mr. MOSKOWITZ. Well, the number of adopters early on is not 

great because there aren’t—we have a chicken and an egg right 

now, where, you know, the broadcasters don’t want to upgrade 

their plant because there aren’t a lot of people with the TV sets to 

watch, and the manufacturers don’t want to produce the sets in 

bulk and bring the price down because there is not a lot of content. 

Satellites, uniquely positioned, would provide that transition. 

Mr. BACHUS. But that is not the fault of the broadcasters. 

Mr. MOSKOWITZ. No, no, no. I am not saying it is. 

Mr. BACHUS. That is really just the customers aren’t—that is not 

really—I think you kind of cut to the essence of it, is that it is not 

the broadcasters’ fault that people aren’t receiving that signal now. 

The fault is that the public just isn’t, you know, they are not investing in the set right now, as Mr. Boucher was a pretty good example of, or Mr. Bachus. You know, I mean, until I get all of my 

kids out of college, I am not investing in it. 

Mr. MOSKOWITZ. But I agree with you completely. I am not saying that the NAB or the broadcasters are at fault in this respect. 

I am just saying that the adoption would occur more expeditiously. 

Mr. BACHUS. But you know, of course, and they have also been 

required by Congress to come up with this, to do this expenditure 

which they are not getting much return for now. And if we require 

them to do that, and then at the same time turn around and let 

satellite providers provide a service, that is sort of adding insult to 

injury; is it not? 

54

Mr. MOSKOWITZ. Well, I don’t know. While I think the broadcasters have many good reasons why they have not, I think in 

large part the insult is that so few of them met the promise they 

made to meet the standard by 2002 and 2003. I think that to leave 

consumers behind when there is an option readily available to meet 

that——

Mr. SMITH. Would the gentleman like an additional minute? 

Mr. BACHUS. I will just stop. But again, I think at least you have 

acknowledged that the reason the people aren’t using the service 

is they don’t have the TV sets. It is not that the signals aren’t 

going out. 

Mr. MOSKOWITZ. I think it is a combination of factors, and certainly that is one of them. Without a doubt, that is one of the big 

ones. 

Mr. BACHUS. Thank you. 

Mr. SMITH. Okay. Thank you, Mr. Bachus. 

I thank the Members for their presence and the witnesses for 

their testimony today. It has been very informative. It is a little bit 

more of a controversial subject than perhaps we first realized, but 

we will get there, and there are some areas I think that we can 

agree on inevitably. I think we are moving toward reauthorization 

perhaps of 5 years, and we will talk about some of the details later 

on. 

Thank you again, and we stand adjourned. 

[Whereupon, at 5:22 p.m., the Subcommittee was adjourned.] 

(55)

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

PREPARED STATEMENT OF THE HONORABLE HOWARD L. BERMAN, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF CALIFORNIA

Mr. Chairman, 

My very first hearing as Ranking Member of this Subcommittee, which occurred 

five years ago tomorrow, involved reauthorization of the section 119 satellite license. 

A lot has changed since then, but unfortunately, a lot has stayed the same. 

The changes have been, for the most part, positive. While relevant stakeholders 

will air a wide variety of differences today, they appear to be united in praise of 

the section 122 local-into-local license Congress created in 1999. Five years ago, 

local-into-local satellite TV service functionally didn’t exist. Today, 87% of U.S. TV 

households can receive local broadcast stations via satellite. 

Whats more, it appears most households also have a choice between satellite TV 

providers. I understand that EchoStar provides local-into-local service to more than 

83% of all U.S. TV households. By the end of this year, DirecTV will provide localinto-local service to 92% of all U.S. TV households. 

The current availability of local-into-local satellite service is a pretty dramatic development in five year’s time. 

The growth of the satellite TV industry has been equally dramatic over the last 

five years. Satellite TV subscribership has nearly doubled in the last five years, 

from 13 million in 1999 to 22 million today. With 25% of multichannel video subscribers, satellite has become a truly formidable competitor to cable. 

These dramatic changes show that the government subsidies embodied in the section 122 and 119 licenses have conveyed tremendous benefits to satellite TV providers and their consumers. 

However, the situation is not so bright for those on whose backs these subsidies 

are levied. For copyright owners, much remains unhappily the same. 

Royalties paid under the section 119 license for retransmission of distant broadcast signals have remained frozen for five years. In fact, they have remained frozen 

at deep discounts to 1999 marketplace rates. The statutory inflexibility of these 

rates is unique, and uniquely unfair. Virtually every other compulsory license that 

requires royalty payments includes a mechanism for increasing those payments. 

Furthermore, the inflexibility of section 119 rates is totally inconsistent with marketplace realities. In voluntary negotiations over the past five years, satellite TV 

providers have agreed, often with vociferous reluctance, to provide markedly increased compensation to owners of copyrights in non-broadcast programming. 

If the section 119 is to be reauthorized—and it appears a virtual certainly it will 

be—owners of copyrighted broadcast programming should be more fairly compensated. 

In another example of how things remain the same, some satellite subscribers 

continue to receive a distant signal of a broadcast station despite the fact that they 

now receive a local signal of that broadcast via satellite. During our hearing nearly 

five years ago, I noted that such situations might arise, and questioned whether 

there was any justification for allowing them to exist. I continue to believe that compulsory licenses, including the section 119 license, should only countenance the 

minimal abrogation of copyright in order to accomplish their goals. If a satellite subscriber can receive a local broadcast via satellite, there appears to be no justification 

for abrogating copyright protection in order to provide that subscriber with a distant 

signal under the section 119 license. 

While some of the problems we face today are identical to those we discussed five 

years ago, our witnesses will identify many entirely new issues. One issue of particular concern to me is the two-dish system employed by EchoStar. I understand 

that EchoStar relegates certain stations, like Univision, to a second dish, which may 

56

violate the requirement that it carry all stations in a nondiscriminatory manner. 

Another new issue involves subscribers in one state who, due to the vagaries of the 

DMA definition, receive their local broadcast signal from another state. And there 

is the issue of whether the Grade B signal intensity standard will be useless in a 

future world of all digital broadcasts. 

I do not mean to opine here and now on the appropriate resolution of these new 

issues. This hearing is only the first step in educating ourselves about these issues. 

However, I do believe the emergence of these new issues indicates the wisdom of 

reauthorizing section 119 on a temporary basis. New problems with the satellite licenses are bound to come up again, and as it does today, the looming expiration 

of the 119 license will give us an opportunity to address them. 

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

PREPARED STATEMENT OF THE HONORABLE BOB GOODLATTE, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF VIRGINIA

Mr. Chairman, thank you for holding this important hearing on the reauthorization of the Satellite Home Viewer Improvement Act. 

The reauthorization of this important statute provides Congress with the opportunity to continue to ensure that consumers in rural television markets have access 

to their local television station signals. 

In 1999, Congress passed the Satellite Home Viewer Improvement Act (SHVIA), 

which allowed direct broadcast satellite providers to retransmit local television 

broadcast signals into the broadcast station’s area. This law eliminated the legal 

barriers to the delivery of local TV via satellite. To date, the major satellite carriers 

have made significant progress toward offering local television signals via satellite 

to local television markets, and they have plans to expand the number of markets 

in which they will offer the service. 

With this expansion, satellite dish owners, the majority of which live in rural 

areas, as well as medium and small cities and towns across the United States, will 

have access to their local news, sports coverage, weather, and emergency information. As this expansion continues to all 210 television markets, satellite service will 

continue to grow as an attractive, fully competitive television alternative for all 

Americans. 

The reauthorization of SHVIA provides an opportunity for Congress to look back 

to the past five years to see what has worked and what has not. In addition, technological and industry advancements over the past five years pose new issues regarding the reauthorization, including whether to create a new quality standard for 

when a consumer is considered ‘‘unserved’’ for purposes of digital service, whether 

to reauthorize the compulsory license in section 119 of the Copyright Act at what 

rates and for how long, and many others. 

I am eager to hear from the expert witnesses here today regarding these issues 

and regarding the progress that satellite carriers are making toward offering localinto-local service to all 210 markets. Thank you again Mr. Chairman for holding 

this important hearing.

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LETTER FROM THE AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS

(ASCAP), AND BROADCAST MUSIC, INC. (BMI)


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LETTER FROM THE ASSOCIATION OF AMERICAN PUBLISHERS, INC. (AAP), AND THE

SOFTWARE & INFORMATION INDUSTRY ASSOCIATION (SIIA)


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PREPARED STATEMENT OF THE ASSOCIATION OF PUBLIC TELEVISION STATIONS


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Æ


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