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Hatch Intros DBS Local-Carriage Bill

1/24/1999 7:00 PM Eastern

Washington -- Sen. Orrin Hatch (R-Utah) introduced a bill
last week that is the companion to a broader measure that would allow direct-broadcast
satellite carriers to serve local markets with their local TV stations.

Hatch is working in tandem with Sen. John McCain (R-Ariz.),
chairman of the Commerce Committee, who is preparing his own bill that would require DBS
companies to provide all local signals, to the extent that they provide any, starting Jan.
1, 2002.

Hatch's bill would amend copyright law to allow
"local-into-local" by DBS without having to pay royalties. The license would be
permanent, just like cable's compulsory license to retransmit local TV signals.

DBS provision of local TV signals is considered by
policymakers as the most important move that Congress can make, without regulating cable
further, to promote competition to cable operators, which continue to dominate local
video-distribution markets.

EchoStar Communications Corp. is aggressively pursuing a
DBS local-into-local strategy, and it is pressing Congress to remove legal barriers.
DirecTV Inc., in contrast, is not as sanguine as EchoStar is about DBS provision of local
TV signals as a business strategy against cable.

Hatch spokesman Jeanne Lopatto said she expects the
Judiciary Committee, of which Hatch is chairman, to hold hearings on the bill fairly soon.

Last year, Hatch passed the bill out of committee without
any hearings. But the action occurred late in the year, and it failed to progress because
McCain was unable to find a compromise between DBS and local TV stations over the
importation of distant-network signals.

Both the cable and broadcast industries are supportive of
McCain's approach on DBS must-carry -- a phase-in, followed by a date certain for
full carriage.

The holdup this year will likely be the same one that
killed McCain's bill last year: broadcasters' insistence that DBS providers stop
stealing audience from local-network affiliates by importing stations that carry the same
networks from other markets.

The DBS industry, on the other hand, said it is merely
serving households that cannot receive quality local signals.

But picture quality is not the standard in the law;
reception of grade-B signals using conventional rooftop antennae is.

Filing suit in federal district court in Miami,
broadcasters obtained an injunction that will cause 2.2 million DBS subscribers to lose
their distant CBS and Fox network signals starting Feb. 28.

McCain's bill would require the Federal Communications
Commission to conduct a rulemaking to determine how many dish-owners may continue to
receive distant networks without harming the local affiliates. Broadcasters opposed this
because it has the potential to shrink affiliates' audience size.

McCain's draft has another complication.

According to the Satellite Broadcasting and Communications
Association, the trade and lobbying arm of the DBS industry, McCain's draft bill
would terminate the distant-network-signal business Jan. 1, 2002.

A McCain aide said the SBCA was wrong, insisting that the
draft would ban distant signals only in markets that are being served on a full must-carry
basis by a DBS provider.

Importantly, Hatch's bill would extend DBS'
distant-network-signal license for another five years, until Dec. 31, 2004. The current
license is set to expire Dec. 31 -- a deadline that puts enormous pressure on the DBS
industry to see a bill pass this year.

Under other provisions, the Hatch bill would allow former
cable subscribers to switch to satellite and to buy distant-network signals immediately.
Currently, they must wait 90 days before doing so.

It would also slash monthly distant-network fees from 27
cents per month, per subscriber, to 15 cents, and monthly superstation fees from 27 cents
to 19 cents.

September