A Subsidy by Any Other Name: First Amendment Implications of the Satellite Home Viewer Improvement Act of 1999

I. INTRODUCTION The Satellite Home Viewer Improvement Act ("SHVIA")(1) changed the face of the market for television video services by authorizing direct broadcast satellite ("DBS") carriers to carry local television stations within their own local markets. Prior to the passage of this law, households could subscribe to satellite-delivered network programming only if they could demonstrate that they could not receive good over-the-air signals from their local network affiliates. Since the passage of SHVIA on November 29, 1999, DBS carriers have become powerful players in the marketplace for video distribution--a market currently dominated by rapidly consolidating cable companies. To encourage this new competitor with cable, SHVIA granted DBS carriers a royalty-free statutory copyright license to carry local broadcast stations in their own markets.(2) In exchange, to ensure the availability of all local channels over satellite, the local carriage provisions of SHVIA (codified at section 338 of the Communications Act) establish that, by 2002, if a DBS system carries a local broadcast station pursuant to this statutory copyright license, the satellite carrier must carry all of the local broadcast stations in that market.(3) On September 20, 2000, this carry-one/carry-all provision was challenged in federal court on the grounds that it violated the First Amendment rights of satellite carriers.(4) In Part II, this Article examines how the "local-into-local" portion of SHVIA works to equalize the treatment of DBS and cable in the market for the distribution of video services. Part III discusses the constitutional challenge to the law and examines the constitutional geography of SHVIA within the context of current broadcast jurisprudence. Part IV then applies these principles, arguing: (a) DBS has been, and should be, considered a broadcast technology for constitutional purposes; (b) [sections] 338 imposes content-neutral restrictions on speech; (c) [sections] 338 therefore survives under rational basis scrutiny; and (d) alternatively, [sections] 338 survives under intermediate scrutiny as well. II. THE SATELLITE HOME VIEWER IMPROVEMENT ACT OF 1999: LOCAL CARRIAGE PROVISIONS DBS services (alternatively known as "Direct-to-Home" or "DTH" services) provide video programming directly to a consumer's home via satellite transmission to a small receiving dish at the home.(5) The two largest DBS service providers are DirecTV(6) and EchoStar's Dish Network.(7) DBS had its origins in the large direct-to-home satellite dishes introduced in the 1970s for the reception of video programming transmitted via satellite over the low-power C-band frequencies.(8) Although the C band is still used in some circumstances, DBS service providers currently operate mostly in the Ku band(9) and plan to operate in portions of the Ka band(10) in the near future.(11) Since 1982, DBS service has been governed on an "interim" basis by Part 100 of the rules of the Federal Communications Commission ("FCC" or "Commission"),(12) and until 1999, consisted mostly of the delivery of national network feeds, nonlocal network stations, and nonbroadcast proprietary programming. In 1988, the Satellite Home Viewer Act ("SHVA") became law and restricted the reception of satellite-delivered television signals to those "unserved households" that could not receive acceptable over-the-air signals from their local network affiliates with stationary roof-top antennae.(13) SHVA did this through the mechanism of a statutory copyright license. Ordinarily, broadcast television stations possess the exclusive right to create copies of their signals through the retransmission of those signals over other services, because the broadcast signals are considered a copyrighted "compilation" of audiovisual works.(14) In accordance with this right, and with limited exceptions, anyone who seeks to retransmit the signal of an over-the-air broadcast station must first seek permission from the broadcast station prior to doing so. …