Congressional Documentation of the Satellite Home View Extension and Reauthorization Act of 2004

Wireless technology is moving forward when it comes to television pictures. From black and white in the late 1940s and 1950s top color, and now to the future of high Definition, the federal government has usually provided some sort of guidance to benefit home viewers. As transmission of signals increased, in terms of distance and viewer location, Congress obviously was spurred to find a way to amend a communications bill that was some seventy years old. Pressure was surely put on the FCC and Congress because vital issues arose among the television networks which operated on "regular" signal feeds and the new and increasingly popular satellite "dish") networks which were beginning to find an increasing number of viewers dissatisfied with either their local cable companies or regular roof antenna reception. Basically here is what the bill is all about:

"The purpose of H.R. 4501, the `Satellite Home Viewer Extension and Reauthorization Act of 2004' (SHVERA), is to modernize satellite television policy and enhance competition between satellite and cable operators. The bill does so by reauthorizing certain provisions of the Communications Act that govern satellite retransmission of distant broadcast signals; increasing regulatory parity by extending to satellite operators the same type of authority cable operators already have to carry `significantly viewed' signals into a market; amending other provisions to reflect the increased carriage by satellite operators of local broadcast signals; and beginning to address how satellite operators may retransmit digital broadcast signals" (Library of Congress 2005 1)..

It is in the area of cable television that viewer increases were found, compared to roof antenna reception. This, of course, occurred mainly in urban or suburban areas where houses were fairly close together, since retransmission from the cable company's central transmission point was by various types of cable. "As of 2001, 65% of homes subscribed to cable service, up from 55.5% in 1990....As of yearend 2001, 17.7% subscribed to satellite services, mainly DBS" (Levy, Ford-Livene, Levine 2002 4). So, it is clear that while cable television is available in over 90% of potential subscriber areas, satellite TV is on the increase. One reason for subscriber interest in satellite dishes is the increasing cost of cable and the lack of competition in given areas among cable companies which tends to provide no price competition.

But, what about satellite transmission? Its DBS- or Direct Broadcast Satellite transmission system now makes it possible for homes equipped with small dishes to receive hundreds of different programs- mainly cable or specialty networks, pay-per-view sports and movies, and nearly everything conveniently "packaged" except local television stations (more on that shortly). There are two major competitors in the satellite industry today- EchoStar and Direct TV. EchoStar, better known as the Dish Network offers world-wide services, and, while it originated low price equipment and bargain packages, is now in heated competition with Direct TV in many markets. On its website, EchoStar provides the names of local retailers who handle sales and service. DirectTV, likewise, offers packages most of which may be lower than cable bills. Both companies brag that they are available in 100% of the country and offer more hours of high definition programming than cable or regular broadcast TV.

So, what made an amendment to a 199 and an even older (1934) communications act necessary? "In December 2004, Congress enacted the Satellite Home Viewer Extension and Reauthorization Act of 2004 ("SHVERA"), which amended the copyright laws and the Communications Act of 1934, as amended (the "Act"), to further aid the competitiveness of satellite carriers and expand program offerings for their subscribers. Specifically, SHVERA amended Section 339(a)(2)(D) of the Act to permit satellite subscribers to qualify for satellite retransmission of distant digital network signals under circumstances specified in the Act" (FCC 2006 2). The FCC's website goes on to explain that this 1999 Act permitted satellite companies to provide a station's signal to subscribers in the station's market, as that market Designated Market Area (DMA) is defined by Nielsen Media Research. SHVIA also permitted satellite companies to provide "distant" network broadcast stations to eligible subscribers. "Distant" means television broadcast stations that are not in a subscriber's local market. For example, if you live in Billings, Montana, a station from Los Angeles, California would be "distant." What is interesting here is that while satellite viewers may receive (or have the option to receive) distant stations, the satellite systems are not required to carry local programming. So, if you lived in Los Angeles and were a satellite subscriber, chances are you would have to pay extra to receive the local channels. This FCC website makes it quite clear that A satellite company is not required to carry more than one local broadcast TV station within the DMA that is affiliated with a particular TV network in the same state. Local Public Broadcasting System (PBS) stations and other noncommercial stations are usually included in the "local" stations offered in areas where the satellite companies choose to offer local-into-local service.

On the FCC Consumer website, the Commission explains some details of the Act: "Subscribers to satellite television service today have a number of options for receiving local broadcast channels. Subscribers can install a traditional TV broadcast antenna in conjunction with their satellite antenna. Since 1999, many satellite subscribers also have the option to subscribe to local broadcast stations over their satellite systems. This "local-into-local" service became possible under The Satellite Home Viewer Improvement Act of 1999 (SHVIA)" (FCC 2006 1).

This Act of 2004 is a step in the right direction, especially because it legitimizes the improved satellite transmission industry. "The Satellite Home Viewer Extension and Reauthorization Act of 2004...will benefit consumers. Over the next several years, the bill will allow satellite TV carriers to begin offering distant high definition TV network channels to many consumers if the local broadcasters lapse on their promises to Congress to begin broadcasting full-power HDTV to their viewers" (BusinessWire 2004 1).

One of the legislators sponsoring this bill was Republican Frederick Upton of Michigan, who, until the recent election was senior member of the House Energy and Commerce Committee and chairman of the powerful Telecommunications Subcommittee, "Fred Upton has jurisdiction over newly emerging high-tech issues such as telemedicine, broadband deployment, and the wiring of America's classrooms for Internet technology" (Upton 2007 2).

However, everything is not as smooth in the passage of the bill, because there continue- even to this date- some areas of concern. One of these is that there may be viewers of satellite transmission well beyond the normal areas serviced by these companies, and there then is the problem of royalties to copyright holders who may have a limited agreement with these transmission companies which cover only a stated geographic limit. "The Copyright Office was charged by Congress, under the Satellite Home Viewer Extension and Reauthorization Act of 2004, to study whether content licensing policies in the act treats copyright holders fairly" (Haugsted 2005 3).

What has happened since the original passage of the Act is that various waivers, for all sorts of reasons, were asked for by television stations as well as satellite transmission. networks to work on some rules, including the aforementioned copyright tangle. The original bill also required a number of amendments. Fred Upton, who was the original bill's "sponsor" offered one: "to (1) allow "grandfathered Grade B subscribers" who have both distant and local signals at the date of enactment to keep their distant signal or their local signal, whichever they prefer, but not both; (2) to make a technical correction; and, (3) to change the date to the later date of 60 days after enactment of the Satellite Home Viewer Extension and Reauthorization Act of 2004 or within 60 days after the local signal of a network station of the same network is available pursuant to a statutory license under section 122, as it relates to notices to subscribers concerning grandfathered signals" (Upton 2004 1).

A second amendment dealt with customer privacy: "An amendment by Mr. Markey, No. 2, to amend section 338 of the Communications Act of 1934 to require a satellite carrier to provide to each subscriber the same protections for privacy rights that a cable operator is required to provide to a subscriber of cable service under section 631 of the Communications Act of 1934, and establish parity for satellite carriers to cable operators for the purposes of section 631" (Markey 1 2004).

The Congressional website reports the following committee hearings:

"The Subcommittee on Telecommunications and the Internet held two hearings on satellite-delivered broadcast television during the second session of the 108th Congress. The Subcommittee received testimony in an oversight hearing on March 10, 2004, from: David Moskowitz, Senior Vice President & General Counsel, EchoStar Communications Corp.; Robert Lee, President & General Manager, WDBJ-TV, on behalf of the National Association of Broadcasters; Matthew Polka, President, American Cable Association; Gene Kimmelman, Senior Director of Public Policy and Advocacy, Consumers Union; Martin Franks, Executive Vice President, CBS Television; and, Eddy Hartenstein, Vice Chairman, Hughes Electronics Corp. The Subcommittee received testimony in a legislative hearing on April 1, 2004, from: Eloise Gore, Assistant Division Chief, Media Bureau's Policy Division, Federal Communications Commission; David Moskowitz, Senior Vice President & General Counsel, EchoStar Communications Corp.; Eddy Hartenstein, Vice Chairman, The DirecTV Group; Robert Lee, President & General Manager, WDBJ-TV, on behalf of the National Association of Broadcasters; and Frank Wright, President, National Religious Broadcasters". (Library of Congress 1005 31)

The cable companies opposed some of this bill, mainly because they believe it gives an edge to satellite transmission. At issue is also the opportunity to service local residents too far from local broadcast transmitters. In the American Cable Association's newsletter of March 31,m 2005, ACA states: "The ACA estimated that more than 1 million rural consumers cannot receive a full complement of quality local signals solely because they live in remote regions that are distant from the broadcast transmitters. However, despite efforts...to negotiate for local-into-local access, but DirecTV and EchoStar have refused" (ACA 2005 15). However, the opposition is not so much about better reception as it is about coming to terms with pricing. Like it or not, it's all about money.

It is also about convenience, as the CEO, Glen English of the National Rural Telecommunications Cooperative said when both houses of Congress passed the bill during a lame duck session. One important portion of the bill is that satellites can now offer two local programming selections. As the NRTC's newsletter states: "For example DirectTV and EchoStar customers living in Columbia MD- located exactly between Baltimore and Washington- can now receive signals from both markets instead of one" (NRTC 2005 4). Of course, the same article also points out that EchoStar's executives felt that the bill discriminated against them.

Frankly, outside the industry, this bill received rather scant attention, since it was part of an omnibus multi-billion dollar spending bill.

The most important aspect of this bill is what could be called "Satellite parity." On the website of the committee, its chairman, Rep. Joe Barton- summarizes the bill rather fairly: ""In our age of technological globalization, we need to create an environment where all of our citizens, from Times Square to the most rural point in Texas, have the opportunity to stay informed of national and world events. Satellite programming meets this need, and passage of this legislation will ensure that more Americans have this availability"(Committee on Energy and Commerce 2005 2).

Clearly the idea of availability has been applauded by local stations. In some cases (as in the Columbia MD example) local stations in either Washington or Baltimore were left out in the cold, because the satellite customer had to choose one or the other. In some areas, to receive local programs on the satellite dish a separate dish had been necessary. All this is now much easier. We have move into one-dish territory and the viewer now has choices of local stations' programming. At the same time, the future of the satellite industry, given the conditions of this Act would seem to indicate that they will be providing an all high definition (HD) programming choice long before the "regular" networks and cable are required to switch to HD, sometime in 2009.

Actually, despite some high-blown oratory, this bill is the best road to customer parity in his choice of cable, normal broadcast, or satellite. But, one needs to return to the one vexing problem this bill did not adequately address. If royalties are paid to a copyright owner for transmission of his intellectual property in one market, or three markets, say, what happens when his intellectual property is now transmitted- thanks to satellite parity- to dozens? Who pays? Is the copyright owner entitled to increasing royalties? This could be an extremely costly answer for broadcast transmission companies- especially those whose dishes now provide customers with signals from outlets far distant from his home or office.

It is becoming clear that the viewer shift is strongly to satellites from cable: "According to data from the Leichtman Research Group, satellite operators DirecTV and EchoStar Communications added 2.34 million net new subscribers during the first nine months of the year, with the top 10 U.S. cable firms losing a total of 449,000 basic subscribers. Satellite won more than 700,000 users in each of the first three quarters of the year, according to Leichtman" (Szalai 2004 5).

The competition between cable and satellite continues to heat up. But, it isn't money in this competition. Most cable companies have a monopoly ion specific areas, so customers are stuck with their bills. However, cable is increasingly resorting to areas where satellites cannot compete: such as combining television with the internet and with telephone services. AT&T, Verizon and Sprint are now working either together with cable operators like Time-Warner, or separately to find specific niches where they would offer services that satellites are unable to offer.

Having covered some of the high points of the bill- its earliest incarnation to passage, it is useful to see how so-called "parity" works both for the cable and satellite transmission companies as well as for the customers. The future will be comprised of viewer choice versus the type of technology best suited for individual needs. "Over the next few years, make no mistake, a new form of television-content distribution via Internet protocol will begin to make headway in the United States. This system, generically called IPTV, already has penetrated parts of Europe and most of Asia. Simply put, this is the future of television" (Dvorak 2007 1). This is truly the opening of the rest of the world to American viewers. With IPTV, you can literally route anything you want to your TV from anywhere in the world, if the system is open as it should be. It seems that this system is an advantage for cable systems.

If the idea of the Act and its amendments and updates was to provide greater access of programming for nearly every customer in the U.S. who wants it, the opportunity and the technology now seem to be ready to fall into place. If anything is holding this progress back it is the dollar amounts both satellite and cable companies would be willing to spend, with no specific return in

It is not necessarily accurate to say that every subscriber to satellite or cable TV will benefit from this Act and its amendments. It will be most important to outlying, rural areas and to those now positioned in between major markets who either have had to choose which local stations to receive or to require a second satellite dish to receive any local programming at all.

Of course, this Act might also influence some local TV stations to up their rate card, since they can now promise to cove more households than before.

At the same time, this Act does not really provide better information for the customer torn between cable and satellite, between phone service and a combination package that some phone companies now offer- including long distance, internet connections and television services. From some of the ads these phone services now run, it is obvious that there will be a clash of competitors in terms of pricing, product bundling and even availability of a number of channels.

Has the government, however, gone too far in forcing some issues- especially distance reception and transmission? Is this still Big Brother regulating the airwaves and cable? There are some who still fear over-regulation by the FCC and other agencies, especially when it comes to content. But, as for now SHVERA and SHVIA are a step in the right direction for many viewers.

REFERENCES:

American Cable Association: "Comments to FCC on SHVERA" May 31, 2005 Vol. 4, Issue 11

Businesswire: "EchoStar Statement on Passage of Satellite Bill" Nov. 21, 2004

Committee on Energy and Commerce: "Summary of Bill 4501) republicans.energycommerce.house.gov/108/News/10062004_1396.htm

Dvorak, John: "The Coming IPTV Wars: It's phone vs. cable again in fight for the future of television" CNN Market Watch, March 21, 2007 www.marketwatch.com/.../its-phone-vs-cable-again/story.aspx?guid=%7B46EC854A-2387-449C-9EA5-FCF3EF7F936D%7D

EchoStar website: www.dishnetwork.com/content/aboutus/index.

Federal Communications Commission "Waiver of Digital Testing Pursuant To the Satellite Home Viewer Extension And Reauthorization Act of 2004 MB Docket No. 05-317 October 31, 2006

Federal Communications Commission: " THE SATELLITE HOME VIEWER EXTENSION AND REAUTHORIZATION ACT OF 2004" www.fcc.gov/cgb/consumerfacts/shvera.html -

Hausted, Linda: "Dish: Keep the Exemption" Multichannel News, Sept 5, 2005 v26 i37 p3(1)

Levy, Jonathan, Ford-Livene, Marcelino, and Levine, Anne "Broadcast Television: Survivor in a Sea of Competition" FCC Working Paper, Sept. 2002 www.fcc.gov/ownership/materials/already-released/survivor090002.pdf

Library of Congress (Thomas) "Report on H.R. 4501"

rs9.loc.gov/cgi-bin/cpquery/T?&report=hr634&dbname=108&

Markey, Edward (D. MA) "Amendment to SHVEA" House Committee on Energy and Commerce energycommerce.house.gov/reparchives/108/Markups/04282004markup1261.htm

National Rural Telecommunications Cooperative: "Congress passes SHVERA With Significantly Viewed Provisions" www.nrtc.coop/us/main/nrtc_update/Update2004/NRTCU_112404.pdf

Szalai, George: "Subs, services drive pay TV war: sat brass beaming about '04 but expect cable to be more aggressive" Hollywood Reporter, December 27, 2994 p. 5

Upton, Fred: (R. MI) "Upton legislation" http://www.house.gov/upton/legislation/telecommunication.html

Upton, Fred: "Amendment to SHVEA" House Committee on Energy and Commerce energycommerce.house.gov/reparchives/108/Markups/04282004markup1261.htm