Congress Likely to Allow Satellite TV Service to Go Local

Congress is nearing a solution for frustrated consumers who are currently barred by federal law from receiving network programming via satellite transmissions.

Consumers who use bicycle wheel-sized direct broadcast satellite dishes or big backyard “C-band” dishes cannot get local network broadcasts if a signal can be captured by a regular antenna.

The satellite reform measures being cobbled together in Congress would permit satellite operators, which now serve about 10 million households, to carry the same local broadcast affiliates that their cable rivals offer to their 67 million customers.

That’s good news for people like Bob McAllister, a satellite TV fan since seeing the technology produce crystal-clear pictures on a set in a store showroom several years ago.

Convinced of its potential, McAllister bought 50 shares of a leading satellite TV company and sang the praises of the technology to anyone who would listen. But McAllister, a Calimesa, Calif., businessman, never made the plunge himself. The reason: Satellite TV subscribers can’t get local TV stations.

“My wife wants to watch her soap operas and I want to watch a [local] football game every now and then. . . . I’m stuck with cable for now,” McAllister explained.

The reforms that could alleviate his exasperation could be enacted before the end of this month and are expected to ratchet up competition in the $34-billion-a-year cable industry, which for years has been dogged by complaints of poor service, high monthly rates and lackluster innovation. The ability to offer local stations via satellite could especially bolster satellite TV in cable’s stronghold: suburban and urban markets that have tall buildings, hills or other structures that prevent good local TV reception.

“I notice that when I walk the dog, there are quite a few people who have the satellite dish on their roof so I guess the cable companies have something to worry about,” said Joyce Henderson, a secretary at a Boston law firm who recently joined her neighbors and dumped her cable provider for a DBS dish.

Consumer groups and lawmakers want to improve satellite companies’ ability to compete because cable TV companies were freed from rate regulation this spring. The message in support of reform has been trumpeted by DBS provider EchoStar and its chief rival, DirecTV, which have used satellite air time as well as their Web sites to urge support for the reform legislation. “Don’t let special-interest groups take away your programming,” EchoStar warns visitors to its Web page.

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In case anyone doubted the prominent role of TV in American life, lawmakers say the warnings have generated more calls and mail to Congress than any other controversy in recent memory.

“I’ve gotten more calls and e-mail on this than gun control” or impeachment, said Rep. Thomas J. Bliley (R-Va.), chairman of the House Commerce Committee and one of the conferees working to hammer out a final bill. “Our members know they better not go home without approving this.”

A survey of cable viewers conducted last spring by the Boulder, Colo., research firm Talmey-Drake Research & Strategy for the trade magazine Cable World found that viewer interest in satellite TV nearly doubled when local channels were included in the viewing package.

However, for all of the polling numbers on Main Street and lobbying fury on Capitol Hill, it’s not certain that the addition of local channels will provide a big boost for satellite broadcasters.

That’s because DBS operators don’t have the satellite capacity to beam local channels to the estimated 50 million households in small towns and cities that have the most difficulty receiving local channels. What’s more, DBS technology has other limitations that may give pause to the nation’s couch potatoes.

Most cable subscribers, for instance, can receive multiple channels simultaneously in their homes for no additional charge watching, say, MTV in the kitchen and the Cable News Network in the den. But DBS subscribers must buy a $100 receiver for each additional TV set they want to be able to tune to its own DBS channel.

What’s more, because cable operators have many more subscribers, they often win deeper programming discounts than their DBS counterparts. That can translate into lower monthly rates for cable service, especially when the cost of the satellite-receiving equipment is factored in, said David Card, a video programming analyst at Jupiter Communications in New York.

More important, EchoStar and DirecTV currently lack the capacity to provide local station programming nationwide. And a third company that had promised to serve the entire U.S. with DBS, Raleigh, N.C.-based Capitol Broadcasting Co., has backed away from that plan. As a result, many experts say it could take years to blanket the nation with local satellite coverage.

EchoStar last month launched a new satellite aimed at doubling current DBS capacity to about 500 channels so that it can carry roughly 200 local stations. DirecTV launched its own satellite upgrade Oct. 9 and has already brokered a deal with Fox Entertainment Group to carry Fox stations in the nation’s 22 largest TV markets.

Even after the satellites are operational, however, DBS would still only be able to beam local stations to roughly 60% of all television households. Even in big markets like Los Angeles, which has 22 local stations, only network affiliates like KNBC, KABC, KCBS, FOX’s KTTV and big independent stations like KTLA are likely to be offered, said Steve Cox, senior vice president of new ventures at Direc- TV.

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Those handicaps perhaps explain the surprisingly wide support for reform, even from DBS’ rivals.

The National Assn. of Broadcasters, which represents the owners of the nation’s 1,600 local stations, for example, has thrown its support behind the measure. And even the cable industry has agreed not to oppose the legislation.

“We support the measure with the understanding that it treats DBS like it treats the cable industry,” said Joe Kaz, a vice president for Philadelphia-based Comcast Corp., the nation’s third-largest cable operator. “Congress should be opening markets up to more competition. . . . We are confident that we can hold our own.”

Lawmakers are trying to stitch together slightly different bills approved earlier this year by the House and Senate that would require DBS operators, after Jan. 1, 2002, to carry every local TV signal in a market if they choose to carry any.

The measures also aim to reduce the copyright fees on satellite companies for carrying distant network programming and would eliminate a provision in current law that requires consumers of cable TV to wait 90 days after they cancel their subscription before receiving satellite service.

House and Senate conferees are in broad agreement on the right of TV viewers to receive local broadcast stations from their DBS operator. But they are said to be torn over what rules would apply in communities poorly served by local TV reception.

In those communities, DBS operators want the right to pick and choose which local stations they will carry or offer subscribers programming from local network affiliates in distant markets. Broadcasters, and some lawmakers, want DBS to carry every available local TV channel as cable operators must.

The loosening of restrictions on satellite TV providers would come as the cable industry--after years of being the scourge of consumers--is struggling to transform its poor reputation by providing new technology like high-speed Internet access and digital video.

“Consumer complaints are trending down as cable companies upgrade and offer better services and improve quality,” said Janis Paul, acting assistant general manager for the Los Angeles Department of Telecommunications, which oversees the city’s cable operators.

But DBS providers have fortified themselves as well. DirecTV has signed up telephone giants Bell Atlantic Corp., GTE Corp. and SBC Communications Inc. to market its dishes. Meanwhile, DirecTV’s parent company Hughes Corp. announced a $1.5-billion partnership with Internet giant America Online Inc. to extend Internet interactivity to satellite TV.

Bruce Leichtman, a satellite analyst at the Yankee Group consulting firm in Boston, predicts that the number of DBS subscribers will skyrocket to 16.5 million within four years if providers gain the authority to broadcast local stations. Other experts agree.

“If local broadcast channels become available to small-dish owners, cable companies better look out,” predicts Bob Drake, a principal in the Talmey-Drake research firm. “Pent-up demand for these dishes will be unleashed,” especially where tall buildings, mountains and other interference makes reception of local signals impossible without cable.