Satellite Television: Historical Information on SHVIA and LOCAL
Released: 2004-12-15T00:00:00

RS20425 -- Satellite Television: Historical Information on SHVIA and LOCAL

Updated December 15, 2004

The Satellite Home Viewer Improvement Act (SHVIA)

The 1999 Satellite Home Viewer Improvement Act (1) (SHVIA) expands on and extends some provisions of the 1988Satellite Home Viewer Act (SHVA), as amended, regarding consumer reception of television signals via satellitedishes. Two major companies, EchoStar and DirecTV (a subsidiary of News Corp.), offer satellite televisionservicestoday through their direct broadcast satellite (DBS) systems. EchoStar's service is called Dish TV. DirecTV'sprogramming is also distributed through the National Rural Telecommunications Cooperative (NRTC) and byPegasusCommunications. Another company, Rainbow DBS (a subsidiary of Cablevision) offers a comparatively smallnumber of satellite channels though a service called Voom. Historical information on SHVA and the issuesCongressfaced in revising it are available in CRS Report 98-942.

The 1999 law, SHVIA, provides consumers greater access to broadcast network television programming via theirsatellite dishes. The original law permitted rebroadcast of distant network signals to consumers wholived outside the"Grade B contour" of broadcast network affiliate stations. The 1999 law continues to permit that activity, but also allows satellite companies to rebroadcast local network signals back into the same localmarket area. They are notrequired to do so, however.

Local versus Distant Network Signals. The distinction between local and distant network signals is important to understanding SHVIA. A local signal is received within a networktelevision affiliate's local area. A distant signal is from elsewhere in the country. If a consumer lives in Denver andisreceiving a signal from a Denver network affiliate, that is a local signal. If a consumer lives in West Virginia andisreceiving a signal from that Denver network affiliate via satellite, it is a distant network signal.

Who May Receive Distant Network Signals. The original SHVA established the "Grade B" (2) contour as thedetermining factor as to whether a particular household was eligible toreceive distant network signals via satellite. Consumers living inside the Grade B contour were not allowed toreceivesuch signals while those outside the contour (in so-called "white areas") were allowed to receive them. Somesatellitecompanies transmitted distant network signals to consumers inside Grade B contours, however, leading to courtchallenges by the networks to try to force the satellite companies to obey the law. Based on decisions by a Miamijudge in 1998, over 2 million consumers reportedly had, or were scheduled to have, distant network signalsterminatedby their satellite companies. EchoStar appealed the decision to the Supreme Court in 2002, which declined to hearthecase.

In the 1999 law, Congress "grandfathered" consumers who had been receiving distant network signals illegally as longas they could not receive a signal of "Grade A" 2 intensity. For new subscribers, however, the originalrules apply. Toreceive distant network signals, new subscribers must not be able to receive a signal of Grade B intensity asdetermined using the Individual Location Longely-Rice (ILLR) method for predicting signal strength establishedbythe Federal Communications Commission (FCC) in February 1999. SHVIA directed the FCC to review whethertheGrade B standard should still be used for the purposes of SHVIA. The FCC concluded it should (FCC-016, ETDocket No. 00-90).

Consumers who believe they are not receiving a Grade A or Grade B signal despite predictive models showing thatthey are may seek a waiver to receive distant network signals via satellite. Consumers must apply to their satellitecompany for the waiver. The satellite company forwards the request to the local network affiliate. There is no timelimit for the satellite company to take that action. Once the request is received, the local affiliate has 30 days todecidewhether or not to grant the waiver. If the waiver is granted, or if no action is taken by the affiliate, the consumermaythen receive distant network signals from the satellite company. If a waiver is denied, consumers may then requestasignal intensity test from their satellite company. The satellite company and the local affiliate are required jointlytochoose someone to conduct the test. The consumer does not bear the cost of the test. Instead, the "loser" pays(eitherthe satellite company or the affiliate), or the satellite company and the affiliate may choose some other method ofpaying the costs as long as the consumer does not pay. Exceptions were made for recreational vehicles (as definedbyDepartment of Housing and Urban Development regulations), commercial trucks (as defined by Department ofTransportation regulations), and for consumers using large "C-band" satellite dishes. The RV or commercial truckcannot be a fixed dwelling.

In summary, the following consumers may receive distant network signals until December 31, 2004, the period forwhich the compulsory license (see below) was extended:

if they do not receive a signal of Grade B intensity from the local affiliate of a particular network;

if their satellite dish is installed on an RV or commercial truck, or

if they had been receiving distant network signals illegally and those signals were terminated orscheduled to be terminated under the 1998 Miami court rulings, and they do not receive a signal ofGrade A intensityfrom the local affiliate of the network.

Consumers using "C-band" dishes are not subject to the five year limitation. They may receive distant network signalsthey were receiving before October 31, 1999 indefinitely.

Who May Receive Local Signals. SHVIA permits DBS companiesto provide "local-into-local" service, where a local broadcast TV signal is transmitted up to the satellite and backdown to consumers in that same "designated market area" (DMA). The law does not require the DBScompanies toprovide this service. There is considerable confusion on this point, stemming, in part, from the fact the lawalsocreated a " must carry " provision. Under must carry, each DBS company must provide all local broadcast stations ina particular market if it provides any local station in that market. This does not mean that DBScompanies must carrylocal broadcast programming throughout the country . Instead, if a DBS provider chooses to provide local broadcastprogramming in a market, it must carry all local TV stations in that market that wish to be carried (with exceptionsforduplicative programing and educational stations). The DBS companies still may choose not to providelocal-into-local service in any particular market.

Cable companies already were subject to must carry rules (depending on the size of the cable system). The must carryprovisions for DBS went into effect on January 1, 2002. (3) The DBS companies oppose the must carry requirement(see below) and unsuccessfully attempted to overturn it in court.

According to their respective websites, as of October 2004, EchoStar offered local-into-local in 152 markets andDirecTV in 106 markets. Both plan to add more markets as additional capacity becomes available. There are 210designated market areas (DMAs) in the United States as identified by Nielsen Media Research, meaning that manysmaller communities do not receive local signals via satellite. DMAs differ in size, so the number of DMAs servedisnot necessarily indicative of the percentage of the population able to receive local-into-local. When EchoStar passedthe 100 DMA mark, it reported that 83% of the population could receive its local-into-local service. DirecTVassertsthat it will provide local-into-local in at least 130 DMAs by the end of 2004, which it says represents 92% of TVhouseholds. Congress passed the LOCAL Act (see below) in 2000 to help ensure that small and rural areas thatcannotobtain local-into-local service from EchoStar or DirecTV can receive local television via other satellite or terrestrialtechnologies.

Compulsory Copyright License. Another issue regarding satellite retransmission of television programming concerns compensation to those who own the copyright on theprogramming. Under both the 1988 and 1999 laws, satellite carriers were given a compulsory copyright license forrestransmitting distant network and superstation signals. That means that the copyright owners must make thatprogramming available to the satellite companies at government-set prices. (4) Without such a license, the satellitecompanies would have to negotiate with each copyright owner individually. The 1999 law extended the compulsorylicense for distant network signals for five years, until December 31, 2004. The 108th Congress isconsidering whetherto extend it further, and whether to change how the prices are set (see CRS Report RS21768 ). For retransmittinglocalsignals, however, Congress gave the satellite companies a royalty-free permanent compulsory copyright license. Cable has a permanent compulsory copyright license. (Copyright compensation is separate from businessarrangements negotiated to obtain retransmission consent, which is explained in footnote 3 below.)

Table 1: Summary of SHVIA Provisions

permits satellite companies to offer local-into-localtelevision service;

makes must-carry requirements effective for satellites on January 1, 2002;

makes syndicated exclusivity, sports blackout, and network nonduplication applicable to satelliteretransmission of nationally distributed superstations, but for network stations, only sports blackout applies and onlyiftechnically feasible and not economically prohibitive;

allows subscribers who do not receive a Grade A intensity signal and whose distant networksignals were terminated or were going to be terminated because of 1998 Miami court rulings to have those signalsrestored or continued until December 31, 2004 ("grandfathering" many of the subscribers affected by the 1998 courtdecision);

retains the Grade B signal intensity standard as the criterion for who may receive distant networksignals;

allows subscribers unable to receive a Grade B signal, as well as recreational vehicles andcommercial trucks that are not fixed dwellings, to receive no more than two distant network signals of eachtelevisionnetwork on a single day;

establishes a process for consumers to seek waivers from local affiliates to receive distantnetwork signals if signal strength is in doubt, at no cost to the consumer;

allows C-band satellite customers to continue receiving distant network signals they werereceiving as of October 31, 1999 indefinitely;

extends the existing satellite copyright compulsory license for distant network and superstationsignals until December 31, 2004 and creates a new compulsory license for local network signals with no sunsetdate;

reduces the rate set in 1997 for copyright royalty payments satellite companies must pay by 45%for distant network signals and 30% for superstation signals (no copyright fees may be charged for localsignals);

eliminates the 90-day waiting period for cable subscribers; and

allows satellite companies to offer a national Public Broadcasting Service (PBS) feed throughJanuary 1, 2002; after that, local PBS stations would have to be carried in markets where local-into-local serviceisprovided.

The LOCAL Act: Loan Guarantees, and "Northpoint"

In 1999, the conference version of H.R. 1554 would have created a loan guarantee program to help ensure that subscribers in small and rural markets benefit from the local-into-local provisions even though EchoStarand DirecTV do not plan to offer such service in all areas. The provision was deleted before final passage becauseofobjections by Senator Gramm that the proposal had not been sufficiently debated. Congress subsequently passedthe"Launching Our Communities Access to Local Television Act" (LOCAL) as Title X of the FY2001Commerce-Justice-State Appropriations Act as enacted by the FY2001 District of Columbia Appropriations Act( P.L.106-553 ).

Loan Guarantees. LOCAL created a four-person board, consisting of the Secretaries of Treasury, Agriculture, and Commerce, and the Chairman of the Federal Reserve, or theirdesignees, to select recipients of loan guarantees for up to $1.25 billion in loans (generally, 80% of the loan maybeguaranteed). The loans may be used to build systems to ensure that consumers throughout the country can receivelocal television signals. The Board is to take into account whether a project serves "nonserved" or "underserved"areas and whether it would provide high-speed Internet access. The act is technology neutral in that it does notspecifywhether local TV stations would be provided by satellite, cable, or other transmission media, but places some limitson which cable companies are eligible. The Board's website is http://www.usda.gov/rus/localtvboard/ . The Boardissued regulations for the LOCAL Television Loan Guarantee Program in the December 23, 2003 FederalRegister (pp. 74411-74433). An application period ended April 21, 2004. One application was received. On May 24, theBoard voted 3-1 to return that application because it was incomplete, and then voted unanimously to open another60-day application period. However, the Board rescinded the latter decision on July 6.

The loan guarantee program is administered by the Rural Utilities Service in the Department of Agriculture, whichreceived $280 million in the FY2002 Agriculture appropriations act ( P.L. 107-76 ) for the program. Section 6404ofthe Farm Security and Rural Investment Act ( P.L.107-171 , H.R. 2646 ) allocated $80 million for theprogram from the Commodity Credit Corporation through December 31, 2006. GAO is required to review theprogram annually, and criticized the slow progress of the program in its first such report (GAO-04-134, October2003). Its second report (GAO-05-18R, October 2004) stressed the need for the Board to accurately accumulateandreport administrative costs to meet federal cost accounting requirements and determine what portion must berecovered through fees.

The "Northpoint Provision". LOCAL required the FCC to select an independent entity to conduct tests to determine whether terrestrial systems operating in the same frequency bandas DBS satellites (12.2-12.7 Gigahertz) would cause unacceptable interference to DBS systems. This is often called"the Northpoint provision" because a company called Northpoint Technology, through its Broadwave subsidiary,wants to operate a terrestrial wireless system offering TV programming similar to that provided by DBS, and dataservices. It is seeking a license from the FCC for that terrestrial service, designated MVDDS (Multichannel VideoDistribution and Data Service). Until now, the 12.2-12.7 GHz band has been assigned only to satellites. The FCCchose the MITRE Corporation to conduct the interference tests in 2001, and it concluded that the two systems couldnot co-exist unless the MVDDS systems use a number of mitigating techniques. DBS operators hailed the MITREreport because it concluded that MVDDS would cause interference to their operations. Northpoint hailed the reportbecause it said there were mitigating steps that could be taken.

The FCC decided that MVDDS and DBS could co-exist, but dismissed without prejudice applications by Northpointand two other companies to provide MVDDS (FCC 02-116, ET Docket 98-206), deciding to auction the frequenciesinstead. Northpoint objected to that decision, and chose not to participate in the auction. Other companies did,however, and the auction was completed on January 27, 2004, raising $118.7 million http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-243253A1.pdf .

S. 564 , and H.R. 1320 as reported from the Senate Commerce Committee ( S.Rept. 108-168 ), would have eliminated the auction requirement for fixed terrestrial services (such as MVDDS) other thanmobile phones in the 12.2-12.7 GHz band. Similar language was in the Senate-passed version of the FY2004Commerce, Justice, State Appropriations bill (Sec. 626 of S. 1585 ), but not in the final version of the bill(part of the FY2004 Consolidated Appropriations Act, H.R. 2673 , P.L. 108-199 ).