[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
SATELLITE VIDEO 101
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
FEBRUARY 13, 2013
__________
Serial No. 113-4
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
RALPH M. HALL, Texas HENRY A. WAXMAN, California
JOE BARTON, Texas Ranking Member
Chairman Emeritus JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky Chairman Emeritus
JOHN SHIMKUS, Illinois EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska ANNA G. ESHOO, California
MIKE ROGERS, Michigan ELIOT L. ENGEL, New York
TIM MURPHY, Pennsylvania GENE GREEN, Texas
MICHAEL C. BURGESS, Texas DIANA DeGETTE, Colorado
MARSHA BLACKBURN, Tennessee LOIS CAPPS, California
Vice Chairman MICHAEL F. DOYLE, Pennsylvania
PHIL GINGREY, Georgia JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana JIM MATHESON, Utah
ROBERT E. LATTA, Ohio G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington JOHN BARROW, Georgia
GREGG HARPER, Mississippi DORIS O. MATSUI, California
LEONARD LANCE, New Jersey DONNA M. CHRISTENSEN, Virgin
BILL CASSIDY, Louisiana Islands
BRETT GUTHRIE, Kentucky KATHY CASTOR, Florida
PETE OLSON, Texas JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia JERRY McNERNEY, California
CORY GARDNER, Colorado BRUCE L. BRALEY, Iowa
MIKE POMPEO, Kansas PETER WELCH, Vermont
ADAM KINZINGER, Illinois BEN RAY LUJAN, New Mexico
H. MORGAN GRIFFITH, Virginia PAUL TONKO, New York
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Missouri
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina
Subcommittee on Communications and Technology
GREG WALDEN, Oregon
Chairman
ROBERT E. LATTA, Ohio ANNA G. ESHOO, California
Vice Chairman Ranking Member
JOHN SHIMKUS, Illinois EDWARD J. MARKEY, Massachusetts
LEE TERRY, Nebraska MICHAEL F. DOYLE, Pennsylvania
MIKE ROGERS, Michigan DORIS O. MATSUI, California
MARSHA BLACKBURN, Tennessee BRUCE L. BRALEY, Iowa
STEVE SCALISE, Louisiana PETER WELCH, Vermont
LEONARD LANCE, New Jersey BEN RAY LUJAN, New Mexico
BRETT GUTHRIE, Kentucky JOHN D. DINGELL, Michigan
CORY GARDNER, Colorado FRANK PALLONE, Jr., New Jersey
MIKE POMPEO, Kansas BOBBY L. RUSH, Illinois
ADAM KINZINGER, Illinois DIANA DeGETTE, Colorado
BILLY LONG, Missouri JIM MATHESON, Utah
RENEE L. ELLMERS, North Carolina G.K. BUTTERFIELD, North Carolina
JOE BARTON, Texas HENRY A. WAXMAN, California, ex
FRED UPTON, Michigan,ex officio officio
C O N T E N T S
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Page
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, opening statement...................................... 1
Prepared statement........................................... 3
Hon. Anna G. Eshoo, a Representative in Congress from the State
of California, opening statement............................... 4
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 5
Prepared statement........................................... 5
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 7
Witnesses
Eloise Gore, Associate Bureau Chief, Enforcement Bureau, Federal
Communications Commission...................................... 8
Prepared statement........................................... 11
R. Stanton Dodge, Executive Vice President and General Counsel,
DISH........................................................... 18
Prepared statement........................................... 20
Answers to submitted questions............................... 77
Jane Mago, Executive Vice President and General Counsel, Legal
and Regulatory Affairs, National Association of Broadcasters... 28
Prepared statement........................................... 30
Answers to submitted questions............................... 78
Jennifer Kieley, Director, Government Relations, Association of
Public Television Stations, on behalf of Lonna Thompson,
Executive Vice President, Chief Operating Officer and General
Counsel, Association of Public Television Stations............. 41
Prepared statement........................................... 43
Michael O'Leary, Senior Executive Vice President, Global Policy
and External Affairs, Motion Picture Association of America.... 48
Prepared statement........................................... 50
Answers to submitted questions............................... 81
SATELLITE VIDEO 101
----------
WEDNESDAY, FEBRUARY 13, 2013
House of Representatives,
Subcommittee on Communications and Technology,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:32 a.m., in
room 2322 of the Rayburn House Office Building, Hon. Greg
Walden (chairman of the subcommittee) presiding.
Members present: Representatives Walden, Latta, Shimkus,
Terry, Scalise, Lance, Gardner, Pompeo, Kinzinger, Long,
Ellmers, Barton, Upton (ex officio), Eshoo, Welch, Lujan,
Pallone, and Matheson.
Staff present: Gary Andres, Staff Director; Ray Baum,
Senior Policy Advisor/Director of Coalitions; Sean Bonyun,
Communications Director; Andy Duberstein, Deputy Press
Secretary; Neil Fried, Chief Counsel, C&T; Debbee Hancock,
Press Secretary; Nick Magallanes, Policy Coordinator, CMT;
David Redl, Counsel, Telcom; Charlotte Savercool, Executive
Assistant, Legislative Clerk; Lyn Walker, Coordinator, Admin/
Human Resources; Roger Sherman, Democratic Chief Counsel;
Margaret McCarthy, Democratic Staff; Patrick Donovan, FCC
Detailee; and Kara Van Stralen, Democratic Special Assistant.
OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
Mr. Walden. OK, we will call to order the Subcommittee on
Communications and Technology for our hearing on Satellite
Video 101. I know we had to move this hearing up from an
earlier scheduled time because of some shifts in our
scheduling, so we appreciate your response to this hearing on
such a short time notice. And again, this is meant to be an
educational hearing, meant to be Satellite Video 101. There
will be other hearings where I am sure there will be a lot of
vibrant discussion about what we should do going forward. But I
thought it was important for the subcommittee to be able to
understand the issues and intent with this legislation, and
what we should or should not do going forward. So we welcome
certainly all of our witnesses today and appreciate your
willingness to come on short notice.
SHVA, SHVIA, SHVERA, and STELA. This law has been known by
a lot of different names, and many of those acronyms, I am
told, strike fear into the hearts of some, and some, I am sure,
wish they could turn back to Punxsutawney Phil after seeing his
shadow. I prefer to see, as Phil did this year, signs of an
early spring.
We have an opportunity with our partners in the Judiciary
Committee to examine whether the satellite law is still serving
its purpose in a video market that, frankly, would be
unrecognizable to those who worked on the original legislation
back in 1988. I won't ask for a show of hands of those who did
that, but I know at least somebody at the FCC has been involved
in all of these. Broadcasting has gone digital. Satellite
television is no longer a nascent industry. Phone companies,
wired and wireless, are in the video business. Consumers can
stream and download their favorite shows over the Internet.
Viewers have more choices, and more expectations, than ever
before. Companies are trying to keep up: launching new
services; embarking on spin-offs, mergers, and partnerships. We
have read in the last day or so, Comcast, NBC Universal, all
coming together. Intel proposing a new service of video, and
experimenting with new business models to meet consumer demand
in a new and competitive reality. Our laws are also trying to
keep up in a world where traditional classifications and
regulations that emanate from them seem increasingly strained.
The goal, of course, is to provide consumers more of what
they want while ensuring companies have the investment
resources to get it to them. Can we better ensure television
viewers have access to the broadcast programming of their
choice while respecting the rights of stations that transmit it
over the air and the networks that create it? Would finally
letting the law expire help that cause? Is it better to
reauthorize it as is, or are revisions called for, either
narrow or sweeping? Is there something we can do to address the
ongoing frustration viewers have who find themselves assigned
to ``local markets'' that are outside their states or who live
in places that don't have a full complement of network
affiliates?
Today we are going to set the table for this discussion by
examining the current state of satellite television law. This
is perhaps the most arcane and complicated area of law we
confront in this subcommittee, other than Universal Service
Fund reform, of course. That is why I thought it wise to start
early, giving us ample time to hear from all parties in advance
of the December 31, 2014, sunset that applies to some of the
existing provisions. Rest assured, we will have several more
hearings, providing additional opportunity to consider not only
the satellite issues directly before us, but also affording
time to those who would ask us to take this opportunity to
revisit other areas of communications law.
I look forward to hearing from our witnesses today. I am
particularly pleased to welcome Eloise Gore, associate bureau
chief of the FCC's Enforcement Bureau. And as I said, my
understanding is this could be your fourth reauthorization
while at the Commission, if we do in fact reauthorize the law.
I want to thank you for you willingness to share your
expertise. It is most helpful. I also want to set some ground
rules. Ms. Gore is in a position to share her considerable
knowledge on how the law operates and perhaps even on what may
be working and may not. She will not, however, be making policy
recommendations on how the law should change, so please don't
ask her to do that. That is a pleasure reserved for us on this
dais and in the Congress, in consultation with our constituents
back home and those in the television business who can help us
create an environment that entertains, informs, and creates
jobs.
[The prepared statement of Mr. Walden follows:]
Prepared statement of Hon. Greg Walden
In a tradition we've been observing every 5 years or so for
a quarter century, today we begin discussing the law
authorizing satellite video providers to distribute broadcast
television signals. It is important we do these period look-
backs.
SHVA. SHVIA. SHVERA. STELA. These are acronyms that strike
fear into the hearts of many. Some, I'm sure, wish they could
turn back like Punxsutawney Phil after seeing his shadow. I
prefer to see, as Phil did this year, signs of an early spring.
We have an opportunity with our partners in the Judiciary
Committee to examine whether the satellite law is still serving
its purpose in a video market that would be unrecognizable to
those who worked on the original legislation in 1988.
Broadcasting has gone digital. Satellite television is no
longer a nascent industry. Phone companies, wired and wireless,
are in the video business. Consumers can stream and download
their favorite shows over the Internet. Viewers have more
choices-and more expectations- than ever before. Companies are
trying to keep up: launching new services; embarking on spin-
offs, mergers, and partnerships; and experimenting with new
business models to meet consumer demand in a new competitive
reality. Our laws are also trying to keep up in a world where
traditional classifications and the regulations that emanate
from them seem increasingly strained.
The goal, of course, is to provide consumers more of what
they want while ensuring companies have the investment
resources to get it to them. Can we better ensure television
viewers have access to the broadcast programming of their
choice while respecting the rights of stations that transmit it
over the air and the networks that create it? Would finally
letting the law expire help that cause? Is it better to
reauthorize it as is? Or are revisions called for, either
narrow or sweeping? Is there something we can do to address the
ongoing frustration viewers have who find themselves assigned
to ``local markets'' outside their states or who live in places
that don't have a full complement of network affiliates?
Today we are going to set the table for this discussion by
examining the current state of satellite television law. This
is perhaps the most arcane and complicated area of law we
confront in this subcommittee. That is why I thought it wise to
start early, giving us ample time to hear from all parties in
advance of the December 31, 2014, sunset that applies to some
of the existing provisions. Rest assured, we will have several
more hearings, providing additional opportunity to consider not
only the satellite issues directly before us, but also
affording time to those who would ask us to take this
opportunity to revisit other areas of communications law.
I look forward to hearing from our witnesses. I am
particularly pleased to welcome Eloise Gore, associate bureau
chief of the FCC's Enforcement Bureau. My understanding is this
will be her fourth reauthorization while at the Commission, if
we do in fact reauthorize the law. I want to thank her for her
willingness to share her expertise. I also want to set some
ground rules. Ms. Gore is in a position to share her
considerable knowledge on how the law operates and perhaps even
on what may be working and what may not be. She will not,
however, be making policy recommendations on how the law should
change. That is a pleasure reserved for us on this dais and in
the Congress, in consultation with our constituents back home
and those in the television business who can help us create an
environment that entertains, informs, and creates jobs.
# # #
Mr. Walden. I would turn now to the vice chairman of the
committee, Mr. Latta, for the remaining amount of my time.
Mr. Latta. I appreciate the chairman for yielding, and I
also thank our distinguished panel for being here today.
I believe that today will be the beginning of a thoughtful
and productive policy process. We have important issues in the
satellite TV industry, as the chairman said, before us, which
we all know need to be addressed by the end of next year when
the Satellite Television Extension Localism Act of 2010, STELA,
expires. I also look forward to a thorough discussion among our
subcommittee members, stakeholders, and consumers as we grapple
with the issues in STELA and others stemming from our decades
of communication and cable laws.
Mr. Chairman, I look forward to the hearing today and
hearing from our witnesses on this subject, and I yield back
the remainder of my time.
Mr. Walden. I thank the gentleman.
I now turn to the distinguished ranking member of the
subcommittee, Ms. Eshoo, for 5 minutes in an opening statement.
OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Ms. Eshoo. Thank you, Mr. Chairman. Good morning to you, to
all the members of the subcommittee, and most importantly, our
witnesses. I might note that in my memory, I think this is the
first time I am looking at a panel where the majority of those
that are testifying are women. So congratulations, and welcome.
Mr. Chairman, less than 3 years ago, Congress passed and
the President signed into law the Satellite Television
Extension and Localism Act of 2010, STELA. Ms. Gore, maybe that
is your--we should rename you, give you that as your first
name. I am pleased, as the chairman is, and other members, that
we are starting this discussion of reauthorization early, and
only to ensure that we have adequate time to work through all
the relevant issues, the new ideas that come forward, but also
for the benefit of the several new members of our subcommittee,
and that is very important so that the level of understanding
is brought up, so that we are all up to speed on this.
The estimate of one analyst today is that because of STELA,
between one and one-and-a-half million satellite subscribers
who live in areas where a signal from the local network
affiliate is not possible now have access to broadcast
programming. These satellite subscribers also enjoy the
benefits of public television stations, multi-digital signals,
as well as their HD transmission, ensuring that consumers from
all states have the opportunity to view publically funded
programming, one of my all-time favorites, so I am--I think
that it is important to underscore that.
While my preference is to pursue a clean reauthorization of
STELA, there will no doubt be other video-related topics raised
over the course of this Congress, and chief amongst my concerns
are the programming disruptions that consumers experience when
retransmission disputes break down. Simply put, consumers
should not be held hostage when negotiators fail to come to an
agreement. These high profile disputes have impacted millions
of Americans, often prior to or during highly watched
programming, such as the 2010 World Series. That simply is not
acceptable. I mean, where are the adults in the room kind of
thing. Our constituents all pay the price for it.
I am fascinated by the emergence of new video services,
such as Skitter and Sky Angel. These companies challenge
existing business models, which is disruptive but very
important, and they provide a new means of delivering
traditional broadcast or cable content into the homes of
consumers. I think these services can contribute to the
establishment of a vibrant video marketplace that promotes both
consumer choice and competition.
So today's panel of witnesses offer, and will offer, a
wealth of knowledge to us, spanning from the FCC to a cross
section of impacted industries, including broadcast, satellite,
and content. I thank each witness in advance of their
testimony, and for working with us to reauthorize STELA.
I yield back the balance of my time, and thank you, Mr.
Chairman.
Mr. Walden. Thank you. I now recognize the distinguished
chairman of the full committee, the gentleman from Michigan,
Mr. Upton.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Upton. Well thank you, Mr. Chairman. It is hard to
believe that the time has already come to revisit the satellite
TV legislation. For members on this committee, it has almost
become a right of passage.
Americans now have an endless amount of content available
to them and the technology at their fingertips to watch it at
almost any time, anywhere, and on any device. Our job is to
create an atmosphere where they can do so in a way that
respects the investments of the companies that create and
distribute that content, as well as the underlying economics
necessary to make those businesses work. We need to do our very
best to make sure that our laws don't prevent willing producers
of programming to strike arrangements with willing distributors
to reach interested viewers.
Issues surrounding this particular law are by no means easy
to grapple with, but it is important that we do so. The
competitive landscape has evolved significantly in the video
marketplace, and we must ensure our laws are having their
intended effect. If they are no longer needed, they need to be
eliminated. If they are missing the mark, they should be
revised. If they are working well, we should leave them alone.
But periodic oversight is essential to make that determination.
It is particularly true of all laws in the communications
sector. Technology is changing this industry at an astonishing
rate, and we must work to ensure that our laws keep pace,
fostering continued growth, particularly in the innovation
area. Indeed, while it certainly makes for more work, we should
consider using the sunset provisions perhaps a little bit more
often.
I look forward to the testimony and the interaction, and
yield and offer my time to Mr. Scalise.
[The prepared statement of Mr. Upton follows:]
Prepared statement of Hon. Fred Upton
It's hard to believe the time has already come to revisit
the satellite television legislation. For the members on this
committee, it has almost become a rite of passage.
Americans now have an endless amount of content available
to them and the technology at their fingertips to watch it
almost at any time, anywhere, and on any device. Our job is to
create an atmosphere where they can do so in a way that
respects the investments of the companies that create and
distribute that content as well as the underlying economics
necessary to make those businesses work. We should do our best
to make sure our laws do not prevent willing producers of
programming to strike arrangements with willing distributers to
reach interested viewers.
The issues surrounding this particular law are by no means
easy to grapple, but it is important we do so. The competitive
landscape has evolved significantly in the video marketplace,
and we must ensure our laws are having their intended effect.
If they are no longer needed, they should be eliminated. If
they are missing the mark, they should be revised. If they are
working well, we should leave them alone. But periodic
oversight is essential to making that determination.
This is particularly true of all the laws in the
communications sector. Technology is changing this industry at
an astonishing rate, and we must work to ensure our laws keep
pace, fostering continued growth in the innovation era. Indeed,
while it certainly makes for more work, we should consider
using sunset provisions more often.
But these are larger questions to discuss along the way.
The focus of today's hearing is what the law requires now. I
look forward to the testimony.
# # #
Mr. Scalise. Thank you, Mr. Chairman, for yielding, and I
will just make a couple of observations at the outset of the
hearing.
It is clear that based on some of today's written testimony
that as much as there is somewhat a focus only on the expiring
narrow satellite provisions, there is also an interest in
raising other interconnected issues, like additional compulsory
licenses, retransmission consent rules, and regulations that
govern negotiations between broadcasters and pay TV providers.
If stakeholders want to describe the various compulsory
copyright licenses of 1976 and 1988 as relics or anachronistic,
which I will be the first to agree with, then I am sure they
would also agree that the same is true of the 1992 Cable Act.
The truth is that there is a litany of regulations still
burdening the video marketplace that have been piled one on top
of the other over the years. So much has changed in the video
distribution since the days before the commercialization of the
Internet, and it is time that we recognize this fact.
So I welcome this expanded conversation, appreciate our
panelists for coming, and look forward to the hearing. I yield
back.
Mr. Walden. You said Mr. Barton wanted some time?
Mr. Barton. Well, I have been here long enough to remember
before we had the Satellite Home Viewer Act. I just purchased a
new home down in Texas. It was--if it was a car dealer, it
would be a pre-owned home. And back in the back yard is one of
these huge satellite dishes that could get the signal from the
satellite directly, not through Dish or anything like that. I
have no idea what it is worth. I have tried to figure out a way
to salvage it and perhaps sell it for scrap. But I bet when
that satellite dish was purchased, they probably paid $5,000 to
$10,000 for it.
Well today we don't need it, and we are here for the second
or third reauthorization of the Satellite Home Viewers Act. It
is good we are doing this ahead of time. I want to commend the
subcommittee chairman and the full committee chairman for
moving to reauthorize something before it is expired. That is a
good thing. It appears we are going to have a bipartisan
hearing and a bipartisan reauthorization. I supported the
original legislation. I have supported all the
reauthorizations, and I look forward to a similar situation in
this committee in the near future.
With that, Mr. Chairman, I yield back.
Mr. Walden. Gentleman yields back. Anyone else on
Republican side seeking time? If not, we will move on then to
our witnesses.
Before we do that, Mr. Waxman is not able to be with us at
this hearing this morning. I do have his opening statement
which I would ask unanimous consent to be allowed to be put
into the record. Without objection, so done.
[The prepared statement of Mr. Waxman follows:]
Prepared statement of Hon. Henry A. Waxman
Today's hearing marks the beginning of the Energy and
Commerce Committee's consideration of reauthorization and
updates to the Satellite Television Extension and Localism Act
of 2010 or STELA.
STELA is the most recent in a series of laws that permit
satellite providers to offer broadcast programming to their
subscribers. Americans across the country have benefited from
these actions taken by Congress.
We have fostered the development of satellite as a viable
competitor in the video market, preserved and expanded access
to local broadcast content, and ensured compensation for the
creators whose work compels consumers to seek out these video
services in the first place.
Many of our members are new to this Committee since our
last consideration of these issues during the 111th Congress.
Under the leadership of former subcommittee Chairman Rick
Boucher, our committee's consideration of STELA was a
bipartisan legislative effort from start to finish.
Although STELA was the work product of two committees, I
was especially proud of the fact that the provisions within
Energy and Commerce jurisdiction were completed on time and
without controversy. Chairman Walden, it is my hope that our
work this Congress will proceed in the same bipartisan manner.
We began our efforts in the 111th Congress with the
expectation that Congress would pursue a clean reauthorization
of the expiring provisions of the law. Even with that limited
scope, however, the reauthorization was not completed in a
timely manner.
Some stakeholders have suggested that Congress examine
broader issues in the video marketplace as part of the
reauthorization. I am open to those conversations, but I urge
my colleagues to recognize what a complicated task we have
ahead of us and to be wary of getting sidetracked by disputes
about other topics.
Thank you to our panel of witnesses for appearing today. We
look forward to your testimony and your continued engagement as
we move forward with our consideration of this reauthorization.
Mr. Walden. Now we will turn to our witnesses. Again, we
want to thank you for putting together your testimony and being
able to be here on short notice. We are going to start with Ms.
Eloise Gore, the Associate Bureau Chief of the Enforcement
Bureau, Federal Communications Commission. Ms. Gore, thank you
very much for being here. Slide that microphone close and turn
it on, and the show is yours for the next 5 minutes.
STATEMENTS OF ELOISE GORE, ASSOCIATE BUREAU CHIEF, ENFORCEMENT
BUREAU, FEDERAL COMMUNICATIONS COMMISSION; R. STANTON DODGE,
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL, DISH; JANE MAGO,
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL, LEGAL AND
REGULATORY AFFAIRS, NATIONAL ASSOCIATION OF BROADCASTERS;
JENNIFER KIELEY, DIRECTOR, GOVERNMENT RELATIONS, ASSOCIATION OF
PUBLIC TELEVISION STATIONS, ON BEHALF OF LONNA THOMPSON,
EXECUTIVE VICE PRESIDENT, CHIEF OPERATING OFFICER AND GENERAL
COUNSEL, ASSOCIATION OF PUBLIC TELEVISION STATIONS; AND MICHAEL
O'LEARY, SENIOR EXECUTIVE VICE PRESIDENT, GLOBAL POLICY AND
EXTERNAL AFFAIRS, MOTION PICTURE ASSOCIATION OF AMERICA
STATEMENT OF ELOISE GORE
Ms. Gore. There we go.
Mr. Walden. There we go.
Ms. Gore. Very good. Chairman Walden, Ranking Member Eshoo,
and members of the subcommittee, thank you for the opportunity
to appear before you today. I am currently the Associate Bureau
Chief for the Enforcement Bureau at the FCC, but for most of my
FCC career, I was in the Media Bureau, where my
responsibilities included the Satellite Home Viewer Act, SHVA,
and its progeny, SHVIA, SHVERA, and STELA. I was pleased to
provide technical assistance to Congress on these
reauthorization bills, as well as spearheading the
implementation of the enacted laws. I appreciate the chance to
participate with the subcommittee and my fellow panelists this
morning in Satellite Video 101 to refamiliarize ourselves with
the legislative and regulatory structure we have in place.
My written statement provides a board overview of the
statutory changes made by the previous reauthorization and the
expiring provisions. I would like to spend my brief time this
morning outlining how the current rules apply to consumers.
As noted in my written statement, my views are my own, and
I am very happy to provide technical assistance, but will
respectfully decline to provide any opinions on suggested
modifications.
STELA and its predecessors govern satellite delivery of
broadcast television to satellite subscribers and treat local
and distant broadcast stations in different ways. Local
channels are the stations that are assigned to the designated
market area, DMA, in which the subscriber resides, based on
designations by the Nielson Media Company. My outstanding
colleague, Laurie Robier, will hold up the map, which is a
precious commodity, I must tell you. Thank you, Laurie. Nicely
done.
Distant signals are those stations that are assigned to a
different DMA from the one in which the subscriber resides.
SHVIA created local into local service in 1999. Initially, the
two satellite providers offered the local stations in fewer
than 40 out of the 210 DMAs. Now they have increased their
local market offerings so that nearly all subscribers in the
210 designated market areas have access to the local station
package from one or both satellite carriers. DISH provides
service to all 210; DirecTV, I believe, provides service to 196
of the markets.
The local stations available to satellite subscribers are
essentially limited to the stations designated for the DMA,
although there are some additional options in certain
circumstances, such as significantly viewed stations or distant
stations that can be used to fill in what we call a short
market, where there are not four of the top four networks
available over the air. There are certain areas in the country
in which Congress provided a special exception to allow
carriage of additional signals in the local market.
Distant signals are generally available only to satellite
subscribers who are unserved by an over-the-air signal and for
whom the local into local stations are not available. We call
this no distant where local. This being 101, I will try to
describe some of the little terminology that you will hear us
use. Local into local, no distant where local, DMA. Unserved
means that the subscriber's household cannot receive the over-
the-air signal of a local network station with sufficient
signal strength. Notwithstanding the principle of no distant
where local, some subscribers have been statutorily
grandfathered as the eligibility rules have changed in
successive reauthorizations. Some of the grandfathered
subscribers may keep the distant signals, others may, at some
point, be required to relinquish the distant signals, and some
subscribes who are outside the satellite's spot beam, and
therefore unable to receive the local package, may also be
eligible for distant signals. Distant signal subscribers are
limited to no more than two network affiliated signals from
each broadcast network, and time shifting may be limited based
on the subscriber's local time zone. The subscriber cannot
specify which distant signals he or she wishes to receive.
Further, the satellite carrier is only permitted to provide
distant signals if it complies with the requirement to provide
the networks with lists of the subscribers who are receiving
distant signals.
If the local stations are not available to a subscriber via
satellite, the subscriber may request distant signals through
his or her satellite carrier. The carrier determines whether
the subscriber is considered served or unserved by using a
computer model that predicts the signal strength at the
subscriber's household. Satellite carriers use a computer model
designed by the Commission. It is called the ILLR computer
model, but the Commission is not involved in making individual
predictions. If the model determines the household is unserved,
that is, the signal strength is too low from the broadcast
station, the satellite carrier is permitted to provide distant
network signals to the household. If the model predicts that
the household is served by a particular local network station
over the air, the household is not eligible for distant signals
for that network. The subscriber may request waivers from each
of the local stations that are predicted to serve the household
in order to be eligible for distant signals. Waivers are
requested through the satellite carrier and the local broadcast
station must accept or reject a waiver request within 30 days.
If a local station denies the waiver request, the subscriber
can request a signal test to measure the actual signal strength
of the over-the-air signal.
Finally, the law allows satellite carriers to provide
distant signals to subscribers in some other situations, such
as recreational vehicles, commercial trucks, or C-band
satellite receivers. Mr. Barton, your C-band may be useful yet.
Thank you for inviting me to participate in today's
hearing. I look forward to assisting the committee as it begins
this reauthorization process, and would be happy to take your
questions. Thank you so much.
[The prepared statement of Ms. Gore follows:]
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Mr. Walden. That is the best news Joe has gotten all day.
We now turn to our next witness, Mr. R. Stanton Dodge, who
is the Executive Vice President and General Counsel of DISH.
Mr. Dodge, thanks for joining us this morning. We look forward
to your testimony.
STATEMENT OF R. STANTON DODGE
Mr. Dodge. Chairman Walden and Ranking Member Eshoo,
Chairman Upton, and members of the subcommittee, I very much
appreciate the opportunity to testify today. My name is Stanton
Dodge, and I am the Executive Vice President and General
Counsel of DISH Network, the Nation's third largest pay TV
provider with over 14 million customers and 25,000 employees
nationwide.
This morning, I would like to highlight the benefits that
STELA and its predecessors have conferred upon consumers.
STELA provided two big wins for consumers, giving them
access to more programming than ever before. First, it
challenged DISH to offer local stations in all of the Nation's
210 television markets. We embraced that challenge, and today
we are the only pay TV provider to offer local channels in
every market. Plus, we are the largest distributor of PBS
nationwide. Second, STELA allowed us to give consumers in short
markets access to all the big four networks. And for those of
you who don't know, short markets are markets that lack one or
more of the big four stations, and they tend to be small, rural
communities. Thanks to STELA, consumers in 21 short markets
across 19 States can watch the valued network programming that
the rest of the country has long enjoyed.
So how did we get here? Well, let us start with the basics.
We all know that broadcast stations are important to consumers.
They are freely available over the air, but even after the
digital transition, many households cannot get a signal,
especially in large western markets. Over-the-air reception
often just cannot match the coverage and consistency of
satellite and cable television.
The first incarnation of STELA, the Satellite Home Viewer
Act of 1988, created a statutory copyright license that enabled
satellite carriers to provide consumers with broadcast signals
originating outside of their home markets. This copyright
license came with an important restriction. It only allowed
network transmissions to ``unserved households,'' households
that cannot receive a strong local signal using an off-air
antenna. In exchange for the license, satellite carriers paid a
monthly per-subscriber fee to the copyright office. That fee
was set either by private negotiations, or by an administrative
proceeding, and the revenues were then distributed to the
mosaic of copyright holders. This copyright fee structure
remains in place today.
Congressional legislation evolved further in 1994, 1999,
and 2004, and throughout this time, technological advances
prompted significant updates to the law. For example, with the
advent of spot beam technology, satellites can target signals
into individual local markets, rather than the whole country at
once. This led Congress to add the so-called local into local
license, which allowed for satellite retransmission of local
broadcast signals back into their local markets. Satellite
carriers seized that new opportunity. They built and launched
spot beam satellites and they started providing local stations
almost immediately. As a result, satellite providers emerged as
a key competitive force in the pay TV market.
I am going to ask you to please refer to my written remarks
for a more comprehensive summary of the various satellite
television bills over the years.
As many of you are aware, DISH was barred from providing
distant network signals to subscribers in 2006, after a decade-
long court proceeding. Among other things, the injunction
prevented us from filling up short markets, because we needed a
distant signal license to import the out-of-market stations to
replace the missing local affiliates. Through STELA, Congress
presented an incentive for DISH to receive a waiver of that
injunction if we offered local stations in all of the Nation's
210 markets, then they would allow us to win back our distant
signal license. Working cooperatively with the NAB, we followed
the path precisely as Congress envisioned. The result, on June
3, 2010, we initiated service to all local TV markets, becoming
the first, and to date, the only pay TV provider to offer local
service in all 210 DMAs.
And so, STELA stands as an example of how targeted
legislative solutions can work to everybody's benefit. It
should be reauthorized before December 31, 2014, but there is
much more that Congress can do through STELA to expand
consumer's access to local programming. In an era of fast-
changing technology and the explosion of video on the Internet,
we believe that Congress should take this opportunity to look
at ways that the current statute can be updated to better
reflect consumer expectations and desires.
We look forward to a dialogue addressing those options in
the months ahead, and I thank you again for the opportunity to
testify here today, and look forward to answering any questions
you might have.
[The prepared statement of Mr. Dodge follows:]
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Mr. Walden. Thank you, Mr. Dodge. We appreciate your being
here, and your testimony.
We will now go to the Executive Vice President and General
Counsel for Legal and Regulatory Affairs, the National
Association of Broadcasters, Jane Mago. We are delighted to
have you here this morning, and look forward to your comments.
STATEMENT OF JANE MAGO
Ms. Mago. Thank you, Chairman Walden----
Mr. Walden. Go ahead and turn that on.
Ms. Mago. Turn on the microphone. Thank you, Chairman
Walden, and thanks to Ranking Member Eshoo and Chairman Upton,
and all the members of the subcommittee for having me here to
speak with you today. As Chairman Walden just said, I am the
Executive Vice President and General Counsel of the National
Association of Broadcasters.
Now over the next 2 years, this subcommittee, as well as
your colleagues on the Judiciary Committee, will consider
whether certain provisions of the legislation that is
affectionately known to all of us as STELA should be allowed to
sunset. The narrow issue that is before you is whether the
legal framework that permits the country's two satellite
providers to retransmit our stations continues to be in the
public interest. As the committee begins this dialogue, your
broadcast constituents ask you to be mindful of two principles
that are at the core of STELA and all its predecessors that we
have heard about today.
First, free over-the-air local television should remain
widely available to American households, and second, the
government should not interfere with the contractual
relationships that promote broadcasting's local focus.
Adherence to these principles will help ensure that the public
benefits from free over-the-air broadcasting.
Now, the bedrock principle of the American broadcast system
continues to be this localism. Whether it is local news,
emergency alerts, weather information, election coverage, or
sports, local television broadcasters provide these services
and programming for free to communities across the country.
Broadcasters support charities, civic organizations, and
community events, and our locally tailored advertising provides
the opportunity for your hometown businesses to promote their
goods and services. Simply put, free local service is our
focus. It is what differentiates American broadcast television
from others around the world, and from every other medium.
Broadcasters have invested billions of dollars in recent
years to improve the quality and reach of our service. The
digital television transition allowed us to proliferate high
definition programming, launch mobile D-TV service, and offer
multiple program streams. These innovations enable our viewers,
who are also your constituents, to receive higher quality and
more diverse programming on many platforms.
Now as you have heard, in the beginning the satellite acts
were crafted to help the satellite companies become competitive
with cable services, and ensure that satellite subscribers
could access network programming. It was always a concern,
however, that the service should not undermine local broadcast
stations. And so specifically, Congress prohibited a satellite
provider from importing a network signal from a distant market
to households that could receive that network's programming
from a local station. These provisions were and remain
essential to prevent diversion of local station viewers and
reduction in the advertising revenue that is needed to provide
vital local services. Now even as it created this distant
signal license, Congress foresaw that one-day technological
advances might make that license unnecessary, so it included a
5-year sunset provision. That premonition was really correct.
Technology has evolved so that satellite companies could
provide each market with the market's own local signals. As
Stanton just told us, today DISH provides its local service
into all 210 television markets, and DirecTV is in either 195
or 196, that is not somewhat clear, but thus the need to import
distant network signals has dramatically diminished. Only a
small percentage of the 34 million satellite subscribers
receive network programming via this distant signal. Indeed,
over 98 percent of all U.S. television viewers have the option
of viewing their local networks. So accordingly, this
subcommittee may want to consider whether the public interest
would be best served by allowing the distant signal and related
communications act provisions to sunset, as Congress originally
intended.
Because local viewers are best served when they receive
local service, every satellite and cable subscriber should
receive this local into local service.
Now alternatively, if STELA is reauthorized, broadcasters
urge a clean, minimalist approach targeted to the problem to be
solved. Efforts to graft unrelated and unnecessary issues onto
this narrow legislation would be inappropriate and unwise.
I thank you for all your efforts to promote vibrant local
broadcast industry, now and into the future, and I am happy to
answer any questions that you may have.
[The prepared statement of Ms. Mago follows:]
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Mr. Walden. Ms. Mago, thank you very much for your
testimony.
We will now go to Jennifer Kieley, and before we do, I
should point out that she is a fill-in witness this morning.
Lonna Thompson was supposed to testify but fell ill last night,
and so be kind to Jennifer. She is the Director of Government
Relations, Association of Public Television Stations, and Lonna
is the Executive Vice President, Chief Operating Officer, and
General Counsel for Association of Public Television Stations,
so today we have the Director of Government Relations, Jennifer
Kieley. Jennifer, thank you for joining us, and we look forward
to the testimony of the public television stations.
STATEMENT OF JENNIFER KIELEY
Ms. Kieley. Thank you, Chairman Walden and Ranking Member
Eshoo, members of the subcommittee. I greatly appreciate the
opportunity to substitute in Lonna's place today on this very
important issue to the Association of Public Television
Stations.
This issue is of great importance to our 368 local public
television stations throughout this country. It has a
tremendous influence on the services that are available to your
constituents, our viewers, nationwide, but particularly those
living in rural America that are often limited to their paid
television programming options and disproportionately depend on
satellite services.
First and foremost, we would like to thank this committee
and the Congress as a whole for the passage of STELA which
recognized the critical services that local public broadcasting
stations provide their communities nationwide. Because of that
legislation, viewers in even the most remote corners of this
country that receive local satellite HD service, have access to
the best that public television has to offer in the full
splendor of HD. We are also appreciative of the language that
was included in STELA which allows satellite carriers to carry
local public television statewide licensees' signals throughout
the entire state where DBS providers have the bandwidth to do
so. This provision removed statutory roadblocks that restricted
the ability of residents and tax payers in states to receive
the full benefits of their state's public television statewide
network.
Public broadcasting is charged by the Public Broadcasting
Act with providing universal service to every corner of this
country, and STELA has enabled us to help meet this mission and
provide the highest quality of services to our satellite
viewers.
As Congress looks to reauthorize STELA, public television
proudly highlights the private carriage agreements that we have
been able to negotiate with almost all major MVPDs. Rather than
rely on Congress to work out these carriage agreements, which
can admittedly be challenging, we pioneered our own private
agreements with cable, Verizon and DirecTV.
Before the passage of STELA, we were still hopeful that we
would be able to negotiate a similar carriage agreement with
DISH. Unfortunately, after years of unsuccessful negotiations,
we were never able to close a deal with DISH that would have
guaranteed carriage of all of our stations' HD signals. As a
result, before STELA was signed into law, DISH was not carrying
a single HD signal of any local public television station, but
STELA mandated the carriage of local public television
stations' HD signals by any carrier that had not entered into
private carriage negotiations with public television. And now,
DISH is required by law to carry the local HD signals of public
television stations in all markets where they offer local HD
service.
This provision was included in STELA because Congress
recognized the unique educational mission of local public
television stations and the void that was felt by citizens that
were previously denied access to these critical services. We
were also pleased that when DISH challenged us all in the
courts, the courts upheld STELA.
As a result of STELA, viewers in Oregon are able to watch
Oregon Field Guide, a valuable source of information about
outdoor recreational issues, ecological issues, natural
resources and travel destinations in the full detail of HD. In
the San Francisco Bay area, subscribers to satellite have
access to the HD version of Quest, KQED's award-winning
multimedia science and environment series. And in Michigan,
Ohio, Illinois, Pennsylvania, Nebraska, and communities
nationwide, Americans can travel the galaxies with NOVA, tune
in for a live performance at the Met, celebrate the 4th of July
with a front row seat at the Nation's Capital, catch up on the
latest drama of Downton Abbey, all this and so much more, in
the sunny display of high-definition television. This is public
television as it is meant to be seen and appreciated.
Public television is in the business of providing local
public service. We treat our viewers as citizens, not
consumers. Our stations provide over 98 percent of Americans
with the highest-quality, free, educational media available.
And in addition to all the great broadcast services that local
public television stations offer, our stations are also
providing cutting edge public services to communities beyond
the broadcast, from educational services to public safety, to
veterans job retraining, these services and so much more are
part of the vibrant public service media that this country has
invested in and we are proud to deliver to your constituents.
Because an investment in public media is truly an investment in
the unique needs of local communities nationwide.
Again, we would like to thank this committee, and
particularly Representative Eshoo, who authored the amendment
which guaranteed our HD carriage, for all your work in crafting
legislation that recognized the incredible value and critical
services that are provided by local public television stations.
Thank you for inviting us to participate in today's
hearing. We look forward to continuing to work closely with you
as prepare to reauthorize this legislation.
[The prepared statement of Ms. Kieley follows:]
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Mr. Walden. Thank you, Ms. Kieley, and I can assure you, we
are not going to get between your viewers and Downton Abbey.
Ms. Kieley. Good plan.
Mr. Walden. That would not be good.
Let us go now to Mr. Michael O'Leary, Senior Executive Vice
President of Global Policy and External Affairs, the Motion
Picture Association of America. Mr. O'Leary, thanks for joining
us this morning and rounding out our panel. We look forward to
your testimony, sir.
STATEMENT OF MICHAEL O'LEARY
Mr. O'Leary. Thank you, Chairman Walden, Chairman Upton,
Ranking Member Eshoo, and members of the subcommittee. Thank
you for inviting me to testify this morning on behalf of the
Motion Picture Association of America. I also want to
acknowledge my fellow panelists. It is an honor to be on the
panel with the folks today, and to provide our perspective on
the potential reauthorization that this subcommittee is
undertaking.
My message on behalf of the industry that creates much of
what you see on television is very simple and very
straightforward. The satellite and the cable compulsory
licenses are historically anachronistic that are no longer
justified in today's television programming marketplace. If
those licenses were to be retained, however, they should not be
expanded in our view. Program owners should be more fairly
compensated, and a direct marketplace should be encouraged.
I want to be clear at the outset that we share the goal
that was articulated by the chairman in his opening remarks,
and I believe by everyone on this committee, and that is to
provide consumers with the highest quality entertainment and
informational experience possible, and to expand choices
available in television in new and innovative ways. At the same
time, it is imperative that the hardworking men and women who
invest their talent and capital to create the programming
receive fair market compensation, and that the law promote
marketplace innovation.
Mr. Chairman, there is no better time to be a consumer of
content than today, and we are confident that the future will
bring even more high quality entertainment to viewers around
the Nation, and frankly, to those around the world. The studios
I represent create much of the programming that we all enjoy
today. We have an incentive to get those programs in front of
as many viewers as possible, and we believe that the
marketplace can have a big role in making that happen.
Just as the television landscape will continue to evolve in
the months and years ahead, it has changed dramatically since
the enactment of the compulsory licenses being discussed here
and in the coming months. The market conditions that led
Congress to create the cable and the satellite compulsory
licenses have long since disappeared. Congress decided, as you
know, in 1976 and again in 1988 to introduce compulsory
licenses to help what were then fledgling cable and satellite
industries acquire retransmission rights in television
programming. Government intervention in the marketplace was
deemed necessary at those times to ensure the viability of what
were then new services. Today, the overwhelming majority of
programming being offered by cable and satellite is licensed
through marketplace transactions. There is simply no
justification in today's market for a satellite compulsory or
cable compulsory licenses. There is certainly no justification
for retaining a license that imposed below market rates for the
acquisition of that programming.
As my written testimony notes, the royalty rate paid by
satellite carriers under Section 119 today is roughly the
equivalent of the market rate paid for programming in 1999,
almost 15 years ago. At the same time, in that same period of
years, the cost of producing programming has continued to
increase. Today, the cable and satellite industries are, to
their credit, very successful. They have over 90 million
subscribers and report a combined revenue in excess of $80
billion. The compulsory license royalty fees paid, however,
equal less than one half of one percent of their combined
revenues. One can not help but ask how government intervention
in licensing of retransmitted programming by these industries
can be justified in today's marketplace, and we believe this
should be a threshold consideration for the committee as you
move forward over the next 2 years.
Should Congress, however, as a result of these proceedings
determine that compulsory licenses should be prolonged, we
would strongly urge the committee not to expand either license
to new market entrants. Congress should not further impede the
ability of program owners to obtain the true economic value of
their work, and instead should encourage development of
marketplace regimes.
On behalf of our members, Mr. Chairman, I again want to
express our sincere gratitude to you and this committee for
holding this hearing, for getting, as you indicated, an early
start. This is a complicated issue. It is a difficult issue,
and we are confident that this will be the first of many
conversations over the next few months, and we welcome and look
forward to the opportunity to be a part of that. Thank you.
[The prepared statement of Mr. O'Leary follows:]
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Mr. Walden. Thank you very much, Mr. O'Leary. You are
absolutely right. We will have additional hearings, and I am
sure a lot of conversations in the months ahead.
That concludes our panelist's testimony. We appreciate all
of your words and your comments.
I will start out with questions this morning. This one is
for the entire panel. I have read reports that--to the extent
they are able to answer. I have read reports that between 1 and
1.5 million subscribers still receive distant signals. Is that
accurate? Are those households predominantly rural, urban, or
evenly distributed? And if Congress were to let the
retransmission consent exemption and the distant signal
compulsory license expire, would those households lose access
to all local broadcast service? So first, is the million to
million and a half number correct, where are those households,
and what happens if we allow the distant signal compulsory
license and retransmission consent exemption to expire?
Ms. Gore, can you tackle any piece of that?
Ms. Gore. The only piece of that that I can tackle, we do
not keep figures on how many distant subscribers there are out
there. I believe my colleagues on the panel here may be able to
help you out there. I am aware that the distant signal license
is used, as I think we all touched on, in many different
circumstances. Sometimes it's someone who doesn't have access
to any local broadcast stations, and so they are receiving what
I tend to call a truly distant signal, which would mean perhaps
from New York or Los Angeles, when they are not at all in that
area.
There are other situations where the distant signal
license, I gather, is used for filling in a short market, which
we have talked about, and there the signal is coming from
generally a more nearby area. What would happen if the distant
signal license were let to expire, I cannot say. I know that
the copyright office studied this and I know that the GAO
looked into what the copyright office had reported, so they
probably can speak for themselves. But it is a complex
intertwining.
Mr. Walden. All right. Mr. Dodge?
Mr. Dodge. I am not exactly sure, I must admit, where the 1
million to 1.5 million number came from. I know at DISH, we
actually don't keep track, although we may be able to get you
that information, so we will take an action item to try to do
that. But certainly, I believe it is a bigger issue for DirecTV
today, because with the utility, the license is a little
different for each of us. Where DirecTV still has some
grandfathered subscribers, I believe, from years gone by and
they are not in all 210 markets today, they still use a true
distant license there for, I believe, providing programming to
unserved households in the markets where they don't offer local
programming, but how many customers that might impact, I don't
know.
Mr. Walden. OK.
Mr. Dodge. With respect to DISH, we use a license primarily
for three purposes, the largest of which is to fill in short
markets, as Ms. Gore noted, so you know, for example in a
market where someone doesn't have a FOX station, we import a
FOX so that they are able to watch American Idol and similar
programming, just like all other Americans, and without the
license we would have to shut those people off.
Similarly, we provide service outside the spot beam to
certain customers, which allows service to a safer state, like
Utah, which is largely rectangle, our spot beams are round, and
so the corners get cut off. And unless those folks are able to
get local programming via an off-air antenna, we would have to
shut those folks out as well, and RVs and commercial trucks,
too.
Mr. Walden. All right. Ms. Mago?
Ms. Mago. I think what you have heard here is that there is
getting to be fewer and fewer of these people that use the
distant signal license, and I think it is--the exact number
would be in the hands of the carriers to know that number, and
I don't know that we have it. But even those instances that Mr.
Dodge just talked about, they are becoming fewer and fewer as
well, because as you provide local into local service into all
210 markets, it is relatively easy to provide that local signal
to the--to anyone within that spot beam, and that seems to be a
logical thing to do. Short markets are also disappearing as a
result of the digital television transition. A lot of stations
are able to use their multicast capacity to provide a second
networks signal within the market.
So I think the key point for us continues to be our focus
on localism, and making sure that we recognize how much fewer
there are.
Mr. Walden. All right, and I am going to go to Ms. Kieley
and then Mr. O'Leary, but I am running out of time, so sorry.
Ms. Kieley. My answer will be easy. We unfortunately do not
track that at the Association of Public Television Stations,
and defer to our friends in the satellite industry to help us
get a better handle on that, but I will echo what Ms. Mago has
said, that localism is a top priority for us in public
television.
Mr. Walden. All right. Mr. O'Leary?
Mr. O'Leary. I will be brief. I know I can't validate that
number. I have no way to dispute it. It ultimately would lie
with the carriers. I agree with the comments of Ms. Mago. I
would also note that even if it is retained, the distant signal
license is still woefully under market--the rate is still
woefully under market.
Mr. Walden. OK. I thank you all for your answers, and now
turn to the ranking member of the subcommittee, Ms. Eshoo, for
questions.
Ms. Eshoo. Thank you, Mr. Chairman, and thank you again to
the panel for your very helpful testimony. I have a whole list
of questions and I think that I will submit them in writing,
but I want to ask you, with the exception of Ms. Gore, since
she put it right out there that she was not going to recommend
any kind of policy--no policy recommendations. To the four of
you, starting with Mr. Dodge, so I have got 5 minutes with four
people, so about a minute and a half. If you were going to
choose your top policy preference in the reauthorization of
STELA, what would it be? So that is to each one of you,
starting with Mr. Dodge.
Mr. Dodge. It would be to ensure that consumers are able to
continue to receive network programming during retransmission
disputes.
Ms. Eshoo. Very good, thank you.
Ms. Mago. As I said in my opening testimony, our top policy
preference is to preserve localism and allow broadcasters to
continue to provide the service to their communities.
Ms. Eshoo. Great. Ms. Kieley?
Ms. Kieley. We just hope that any reauthorization of STELA
continues to recognize the unique services of local public
television stations, and how we are different in the
marketplace.
Ms. Eshoo. Well, I am here.
Ms. Kieley. We do appreciate that.
Ms. Eshoo. Thank God we got that one worked out. Thank you,
Mr. Dodge. Thank you for your advocacy.
Ms. Kieley. And that would be our top priority, as well as
maintaining vibrant local service for our public television
stations.
Ms. Eshoo. Great, thank you. Mr. O'Leary?
Mr. O'Leary. Sure. I think that our top priority, as I
outlined, is to get the content that we make in front of as
many people as possible. That is our business model in simplest
terms, and I think that we would advocate that the committee do
that by one of two ways. One would be to step back and look at
the entire context and see if the current regime continues to
make sense, and if it ultimately comes to the conclusion that
there needs to be some type of regime in place, to make sure
that it is updated to reflect the times in which we live, and
it is not necessarily bound up in the past.
Ms. Eshoo. Thank you very much. I think that we need to
know more from you about--you referred to content, and I think
there is an old context, an older context to it, and I think
that there needs to be a new appreciation on the part of
members of what you mean exactly by content and the Motion
Picture Industry Association and in the 21st century. I think
there are so many exciting things, but I would just make that
as a recommendation.
Mr. O'Leary. Absolutely, and we would be happy to provide
that to the committee.
Ms. Eshoo. That members really be instructed and be brought
up to snuff on what you are referring to.
Well, that is great. We have got--I like all of your
answers. Thank you very much. I yield back.
Mr. Walden. Gentlelady yields back the balance of her time.
Chair now recognizes Mr. Barton for 5 minutes.
Mr. Barton. I am here.
Mr. Walden. I was looking down my list and others weren't,
but you were here at the gavel dropping, so----
Mr. Barton. Thank you, Mr. Chairman.
Mr. O'Leary, I want to make sure I understand. Your
testimony is not that these acts should not be reauthorized, it
is that certain parts of them should be allowed to expire. Is
that correct?
Mr. O'Leary. I think there is that is something that should
be part of the consideration that you undertake over the next 2
months whether or not it is essential to reauthorize all
aspects of this, yes.
Mr. Barton. OK, so I want to make sure I understand before
I go to Ms. Mago. You--the motion picture industry is not
advocating allowing them to expire, it is simply saying we
should think about it? So you are a little bit--you are not a
hard-hard, you are kind of a medium-soft, am I right? I mean, I
am not being funny, I am just----
Mr. O'Leary. No, I understand. I think that we believe
that, as I said in my testimony, that certain provisions here
are anachronistic, and that they do not necessarily need to
be--they could be allowed to expire. Having said that, we are
also mindful, as has been alluded to in the comments made by
members of the panel and members of this panel, this is an
incredibly complex web of pieces that all kind of fit together.
And so what I am trying to portray to you--I am not trying to
be soft and squishy and in the middle, but the truth of the
matter is, I am trying to be realistic. We think that some of
these things are woefully outdated and could be allowed to
expire. We think that is----
Mr. Barton. But that is different than supporting the
expiration. So you are--let me ask you a straight question, yes
or no.
Mr. O'Leary. Sure.
Mr. Barton. If this subcommittee and the full committee
were to support a clean straight reauthorization, no changes
except the date, would your industry support that? Yes or no?
Mr. O'Leary. I am not in a position to say right now what
they would support. I do think that that would be preferable,
frankly, Congressman, to expanding the license in any way.
Mr. Barton. I am going to go to Ms. Mago, since I have
gotten a pretty squishy answer from Mr. O'Leary.
Would your trade association support clean reauthorization
with no changes except the dates?
Ms. Mago. I am sorry, Mr. Barton, I have to frustrate you
as well. We are so early in this process that at this point, we
are still considering where the marketplace is, as I indicated,
and while we see that there are anachronistic pieces and we
think that expiration should be on the table, we haven't formed
a final position.
Mr. Barton. So if we put your group with Mr. O'Leary's
group, you all will hug each other and then talk around each
other for as long as we allow you to.
Ms. Mago. We would all hug each other on this panel. We are
like that.
Mr. Barton. Anyway, I yield back, Mr. Chairman. I would
definitely vote for a clean reauthorization. If there is a
meeting of the minds from the stakeholders, I would certainly
take a look at that. My guess is that the stakeholders have
different views, and as they should, because of the economic
consequences, and it is probably not as much peace and love at
that table as they are portraying this morning.
Mr. Walden. And we could bring some other folks up and
there would be real fireworks.
Mr. Barton. Right. Thank you, Mr. Chairman.
Mr. Walden. We might do that today.
I thank the gentleman and now we go to Mr. Lujan from New
Mexico for questions.
Mr. Lujan. Mr. Chairman, thank you very much.
To Ms. Gore, there are some questions that I have for you
which maybe aren't appropriate for this hearing, but we will be
working with the FCC to look into the equitable treatment of
tribal communities as well, as we talk about some of the
rulings and renderings and many of the very complex world, so I
will get those to you and submit them into the record.
But for today's hearing, I am interested with all the
witnesses, should Congress consider the changes in the
competitive landscape for video services as we examine STELA,
and especially with the question that Ranking Member Eshoo
asked, content is very much different now. We are getting
content in many different areas, and how far reaching should
this be, or what should be included in that? Ms. Gore?
Ms. Gore. Well, I think I have mentioned that I am not
going to give too many opinions. I will note one factual point,
and that is that one of the things that expires is the
requirement in Section 325 of the Communications Act for good
faith negotiating, so that is one of the expiring provisions
that perhaps you might want to consider.
Mr. Lujan. Thank you. Mr. Dodge?
Mr. Dodge. I guess what I would say policy-wise is we think
that the law needs to be improved to address the interest of
consumers in two key areas, which are, one--I mean, really, in
the spirit of localism that consumers should be able to get
network programming during takedowns, and two, folks in orphan
counties, which are counties that actually are in a state but
don't receive signals from a DMA in that state, should be given
the opportunity to get local network channels from their state.
Mr. Lujan. I would agree with that. Ms. Mago?
Ms. Mago. First of all, let me say for the record that
broadcasters are always in favor of good faith. We negotiate in
good faith all the time and will continue to do that, as
appropriate, to make sure the consumers are able to receive our
signals, because that is very important. It is important for us
to reach every single member of our audiences that we can.
I think as we look at this legislation, as I indicated
earlier, you have got to look at localism. Providing that local
into local service in all 210 markets is a very important goal.
Mr. Lujan. I appreciate that.
Ms. Kieley. I would just say on behalf of public
television, that we recognize that these are very complex
issues, many of which are intertwined, and we are very
appreciative of the chairman and the leadership of this
committee for taking an early look at this piece of
legislation. And that we continue to look forward to working
with Congress as you look at these issues, we too are looking
at them, or early into the implementation, it feels, from the
passage of STELA, and we are looking closely--as I mentioned to
Ms. Eshoo's question, we first and foremost would want to make
sure that any type of legislation that looks at the overall
video competition would recognize a unique role that local
public television stations play in that marketplace and
preserve some of the unique protections that have been in place
for our local public television stations.
Mr. Lujan. I appreciate that. Mr. O'Leary?
Mr. O'Leary. Congressman, I don't know that I have a whole
lot to add at this point. I don't disagree with anything I have
heard.
Mr. Lujan. That is a good answer.
Mr. O'Leary. All right, I will stop.
Mr. Lujan. Ms. Gore, does the FCC have information on how
many consumers are receiving distant signals, how many of those
households are receiving distant signals because Congress has
grandfathered them in during previous satellite authorizations?
Ms. Gore. No, Mr. Lujan, we do not have that information.
That is not provided to us. We don't track how many distant
signal subscribers----
Mr. Lujan. Does anyone have that information?
Mr. Dodge. We don't actually have any grandfathered
subscribers at DISH.
Mr. Lujan. OK. Anyone? No?
Ms. Mago. I think it is uniquely in the hands of the
carriers.
Mr. Lujan. OK, maybe we can go to the carriers and chat
with them. Mr. Dodge, do you agree with Mr. O'Leary's statement
that the current satellite royalty rates under Section 119 are
only equal to the market rate from 1999?
Mr. Dodge. Well, I agree with Mr. O'Leary on one key point.
We certainly are all for fully compensating artists, you know,
as they well deserve, and we are all for paying the market
rate, so I guess in our view, the devil is in the detail of
what a market rate should be. And if the proxy for that are
retransmission rates today, we would argue that that is not a
fair market rate, because it is not a fair fight today. In each
DMA, you have got one broadcaster who effectively has been
given a monopoly and plays all of the distributors off each
other, and the rates are just going up 100 percent each year.
And we would put forth that those are not comparable market
rates.
But we also think the system today works where we sit down
with the interested stakeholders, the MPA, the sports leagues,
and negotiate what the rate should be after each
reauthorization. And if we don't reach an agreement, then I
believe it goes to the FCC or the copyright office to actually
arbitrate that, and we have been able to reach agreement every
reauthorization to this point.
Mr. Lujan. I appreciate that, Mr. Chairman, and as I yield
back, you know, it has been brought up about the economic
consequences and whether there is a permit or a reauthorization
or STELA is not reauthorized, Mr. Chairman, I hope that we are
able to explore what the economic consequences are one way or
another, and what those impacted parties will fully realize.
So thank you, and with that, Mr. Chairman, I yield back.
Mr. Walden. Gentleman yields back the balance of his time.
Chair now recognizes the Vice Chairman of the Subcommittee on
Communications and Technology, Mr. Latta.
Mr. Latta. Thank you very much, Mr. Chairman, and again,
thanks very much to our panel for being here. You know, these
are really important questions. You know, I represent what you
might consider a suburban, rural-type district, and when we had
the switchover to digital, I knew it was going to--we got a lot
of phone calls from people about--because, you know, TV viewing
is something that is important to a lot of folks out there. I
can remember one day I was doing courthouse conferences, and I
think I had five people in a row that came in and sat down and
asked the exact same question about what was happening to their
TV viewership, and so I know that these are very important
questions to folks out there.
And if I could, Ms. Gore, I would like to start with you
with this question. Do television viewers--and this could be
maybe a loaded question. Do television viewers understand how
the current law works, and following up with that, what kind of
complaints about satellite law does the FCC receive from
viewers?
Ms. Gore. Mr. Latta, we looked into that and I am happy to
report that the number of complaints that we got over the past
year, 2012, was about--between 60 and 70 complaints that were
catalogued as in this category. They have shifted, over my
experience with this subject area, from a focus on concern
about distant signals, and now the questions are more about
local stations. The questions--I can't break them down into
individual categories, but basically there are some situations
where a consumer is getting the local package and then for some
reason, they are suddenly getting a different local package.
And so they contact us to understand why that was changed, and
there were different reasons why it was changed. Sometimes it
is an error on the part of the satellite operator, and
sometimes it is because that DMA map may have changed, and so
it is something that is accurate.
The essence of those complaints actually seems to be that
consumers would like to choose the local stations that they are
offered, as opposed to being confined to those within the DMA.
I am not expressing an opinion, I am reporting what their
complaints are.
Mr. Latta. Let me just follow up with that just a little
bit. When you do get those complaints, how long does it take
for the turnaround time for the FCC to get back to the consumer
with those answers?
Ms. Gore. Well actually, typically we have our wonderful
call center folks who take a call, and they talk to the person
on the phone and they explain it to them. If they submit a
complaint in writing, then someone gets back to them, and
oftentimes, if it is a complaint that is specifically about a
particular satellite carrier, they will, I believe they use the
term ``serve'' that complaint on the satellite carrier in order
to get a response. So there is a process in place that has a
certain time frame for the satellite carrier to respond in that
case. Every once in a while, a consumer finds his or her way to
me and we get to have a lesson in copyright.
Mr. Latta. Well following up with that, if we could, on the
predictive model indicates that if a viewer can get an adequate
signal over the air, and is ineligible to receive distant
signal service, the law allows the viewer to challenge that
finding on a location test. Do the viewers ever request such
tests, and if so, what happens?
Ms. Gore. The tests would be requested from the satellite
carrier, not from us, so I do not have data on that. I do not
know how often it happens. It used to be an issue before. That
used to be the topic of some complaints and inquiries. As I
said, over the past year, we have not heard any of those so--
but I can't speak to that. The satellite carriers would know
whether they are being requested to arrange for tests.
Mr. Latta. Well, I guess if I could then turn to DISH then
to maybe answer that question. Do you get those types of
questions that come in from the consumers, Mr. Dodge?
Mr. Dodge. Since today we provide local channels in all 210
markets, we don't provide traditional distant service, if you
will, where that would really come into play, but my
understanding is historically, very few, you know, back when we
did provide those services.
Mr. Latta. Thank you very much, Mr. Chairman. I yield back.
Mr. Walden. Thank you. I thank the vice chairman for his
work on this and other issues. I now recognize the fill-in
ranking member from the great State of Vermont, Mr. Welch.
Mr. Welch. Thank you very much, Mr. Chairman.
Many of us on this committee represent rural areas, both
Republicans and Democrats, and many of the challenges that
folks face in rural areas, both consumers and some of our
broadcasters, seem to be different than some of the challenges
that urban areas face for consumers and broadcasters. I really
would be interested in the view of you who have so much
experience about how you would describe some of the particular
challenges that tend to face folks and broadcasters in rural
areas. Ms. Gore, could I start with you?
Ms. Gore. As I mentioned, the complaints that we get or the
inquiries that we get are often about the local package, and
sometimes, very often, that is a rural area where consumers
want to be able to get, perhaps, more of the stations that are
from their own state. I know that that has been an issue in
Vermont, historically, and in other places as well.
Mr. Welch. But not just Vermont, right, I mean, that is a
rural area as a whole?
Ms. Gore. It is a rural area issue all across the country.
That was what we were talking about, which we sometimes
informally call the orphan county issue where the country is in
one state, but it is part of a DMA that is located
predominantly in another state, and so there are not a lot of
or perhaps any in-state stations available to those consumers.
It is a small problem, but it is a big problem just in the way
it is reported to me for those areas where that occurs.
Mr. Welch. Thank you. I would like to really get the
benefit of each of you telling us your thoughts on the rural
challenges. Mr. Dodge?
Mr. Dodge. Sure, and so I would echo everything that Ms.
Gore said. It is really the short market problem, it is areas
outside of our spot beams, as you would imagine, you know,
using Utah as an example. The corners of the state are very
rural, and then also the orphan county issue is a predominantly
rural issue, and that occurs in 40 states today.
Mr. Welch. Do you have any suggestions on addressing that?
Mr. Dodge. Yes. What we have historically proposed, which I
think is pretty darn fair, but let us use Colorado as the
example where we have two counties in the southwestern portion
of the state that are actually in the Albuquerque DMA. Our
proposal has always been that we will provide those folks
Albuquerque locals, but let us also give them one in-state
signal of their choice, preferably Denver, because our spot
beam covers down there, and ultimately let them choose which
they prefer.
Mr. Welch. Ms. Mago? Thank you, Mr. Dodge.
Ms. Mago. From the broadcaster's perspective, one of the
key challenges they face in the rural areas is making sure they
have enough revenues so they can continue to provide the
quality programming that they need to. But let me address the
DMA issue for just a moment, if I could, please, because DMAs
are not just sort of random boxes that are put around. They are
designed by the Nielsen Company to reflect where viewers are
actually listening to the stations, and that is why they shift,
as Ms. Gore was explaining. They shift when viewer patterns
change. But for the most part, providing the local into local
DMA market signal is going to address the needs of the county.
There are a few places where that becomes a little bit more
challenging, and one of the things that the carriers can do is
to provide the in-state programming that is not duplicating
that network prime time programming, and they can do that, and
it has been done in several areas to address the issue of
making sure that those that are in-state are able to receive
their in-state information.
Mr. Welch. Thank you. Ms. Kieley?
Ms. Kieley. Congressman, I would say from public
television's perspective, serving rural areas is a top agenda
item for us. We have a universal service mission, as I
mentioned earlier, and we take that mission very seriously. I
think part of our challenge, and with any paid television
provider, is that on a broadcast--from a broadcast perspective,
we serve over 98, close to 99 percent of this country with a
free over-the-air signal, and it has been very costly to do
that, and from a public television perspective, particularly in
these rural areas. Rural areas, such as Vermont, often--your
state, you would know quite well, can be mountainous and the
terrain can be difficult, and for public television to serve
those areas, we do that with a series of expensive equipment,
many translators to fill in those coverage areas, and of
course, in those areas we also have limited populations from
which we can derive, you know, local support for our stations.
And so we have a very robust broadcast presence in rural areas,
from a public television perspective, and we very much
appreciate the local into local that is part of the satellite
bill that helps us to mimic that presence in satellite
legislation.
I would say, touching a little bit one other special fix
that public television has that was in the STELA law, we have a
unique situation where a handful of our states, about 21 of
them, have statewide licensees that are--the licenses are
issued from the state to serve the residents of the entire
state. Many of those rural, not all of them, but many of them
are rural and so we were appreciative of the language in STELA
that allows the satellite carriers, should they get the
capacity, to serve those statewide licensees with the signal
originating out of their state public television networks.
Mr. Welch. OK, thank you very much. I yield back.
Mr. Walden. Just for the record, my district is seven times
the size of Vermont, plus, so----
Ms. Kieley. Many translators.
Mr. Walden. District of many translators. We go now to
Representative Shimkus from Illinois.
Mr. Shimkus. Thank you, Mr. Chairman. Of course, a great
committee, great issues, a lot of fun. I have been on it a long
time.
I think every member should be issued a teenager in this
digital age, because then you are up-to-speed on the new
technology and how they watch, how they view movies. I was
talking to my son just before we came out, and he is watching--
I have never seen it--``The Walking Dead'' and he can get the
first 2 years, I guess, he watches on the Internet, and then,
of course, the third year, he can't. He has got to wait for the
broadcast or whatever. And it just reiterates the difference of
how people are viewing content and how they go about it, and so
there is one benefit of a teenager. There are some
disadvantages. I can talk about those later.
So it is very exciting, and again, we want to support all
of the work you do, and--but we are talking locally, too, and I
was trying to--using my new technology and all this stuff,
figure out my DMAs. I think I've got five, Springfield,
Champagne, Decatur--that is the only one that is in Illinois--
St. Louis, Cape Gerardo, Paducah, and Terre Haute. So I border
three states, so we have this issue of the DMA and bleed over
and the like, and we have just got to be careful, because in a
congressional district that has any size, sometimes the folks
will not want an Illinois signal. They will want the St. Louis
DMA and they want to be there, where there may be others who
will say well, can't we get Illinois news, because we are in a
part of the state where they are receiving an Indiana station.
So there is not a hard and fast rule of when you, you know, you
want to default to one or the other, based upon the citizens of
that area, so it is very tricky. I am just laying that out. We
have experienced that.
Let me ask a question on--does anyone know how many
actually short markets there are?
Mr. Dodge. There are 21.
Mr. Shimkus. And are there any in my--no, I mean, because--
and so since there are 21, what is a way that we can kind of
fix that problem, and is that--is this an avenue in
reauthorization to try to do that?
Ms. Mago. To some extent, the market is fixing itself. As I
noted earlier, the--with digital technology, stations are able
to have multiple streams that they can put out over their
signal and they are, in fact, carrying----
Mr. Shimkus. Let me ask again, because I like that, the
digital answer, so I don't know the answer now, but the digital
cliff that we had initially, the analog signal went a long
ways, and then we have digital TV and we have the digital
cliff. Has technology pushed that digital signal back further
out to meet the analog broadcast, or do we still struggle with
that?
Ms. Mago. The Commission did a lot of work in terms of
trying to raise power levels to make sure that you were, in
fact, duplicating those coverage areas that had been there
before, and we are about to face it again as we look at the
repacking that may happen as a result of the incentive auctions
and reclamation of some of the broadcast----
Mr. Shimkus. Voluntary incentive auctions.
Ms. Mago. Voluntary incentive auctions that will be part of
that. The repacking part has never been voluntary. They hate it
when I say that, but the repacking is not--has never been
voluntary, and that is going to cause some issues, but I think
for purposes today, the spot beams that are provided on the
satellite can help to bring in some of that service as well.
Mr. Shimkus. OK, let me finish up. I have got 1 minute
left, and I agree with a lot of folks who are talking up here.
Everyone views that there is some anachronism in the law, so
that could be dealt with, so going--starting with Mr. Dodge,
what would be an anachronism that you would like to get solved
in a reauthorization or a rewrite in the law? Anything?
Mr. Dodge. I would----
Mr. Shimkus. This is trying to smoke you out to say, OK,
what is your problem? What do you want fixed? I am using a big
word. I usually don't use them that much.
Mr. Dodge. Sure. I would say the anachronism writ large in
all these laws is the fact that it is an unfair fight in
retransmission consent negotiations today, and the people that
suffer are the consumers, because there are more and more
takedowns occurring. I think in 2010, there were roughly 10,
2011, there were 50, last year there were 100, and it is the
consumer that is paying the price. So I think that needs to be
fixed. Consumers need to keep getting the signal during the--
you know, while we work it out with the broadcasters, so to
speak. And I would also say the orphan county issue is an
anachronism of the whole system that needs to be worked out,
and I think you raised a very good point. I mean, it may very
well be that folks in southwestern Colorado prefer watching
Albuquerque stations because they buy their Chevys in
Albuquerque and they want to see those advertisements. But I
think we should give them the opportunity to make that decision
for themselves.
Mr. Shimkus. OK. I am going way over my time. If I can get,
Mr. Chairman--so why don't we just go down the line? Thanks.
Ms. Mago. First of all, you may have seen me kick Mr. Dodge
under the table. We think that the retransmission consent
negotiations are going forward. There have been a few----
Mr. Shimkus. This is what we want. I have been trained by
Billy Tozan to get the fight going, so----
Mr. Walden. Maybe this was the education--you missed the
previous.
Ms. Mago. DISH Network has been involved in a number of
those disputes, but we all try to work them out together and
will continue to do that. I will note also, Mr. Shimkus, that I
determined that there are no short markets in your district----
Mr. Shimkus. Thank you.
Ms. Mago [continuing]. So that is an issue that you don't
need to worry about.
Ms. Kieley. I would just echo my earlier comments and say
we think this is a very complicated process and we appreciate
being included from the very beginning, and we will be looking
for those anachronisms in the law along with you.
Mr. O'Leary. The only thing I would say, it goes back to
what I said at the outset which I think that as a threshold,
the committee, the subcommittee should look at whether or not
the role of government, as it was originally constituted, you
know, 20 years ago, 30 years ago, what have you, is still
applicable in the current state that we are in right now. I
think that is the single biggest issue that needs to be
addressed.
Mr. Shimkus. Thank you.
Mr. Walden. OK. We now turn to the former vice chair of the
committee, Mr. Terry, for 5 minutes if you have questions.
Mr. Terry. Sure, why not. It has been asked several times
before, but I haven't asked it. I am slightly confused on the
local into local, and here I will just lay out the scenario. In
the Sand Hills area in the middle of Nebraska where very few
reside, the only option is satellite. In an area that is right
outside of--in Nebraska, pretty good size town that has their
own TV stations, in North Platte, Nebraska, but yet the
satellite for that area, even just barely outside of the signal
range from those stations, they get Denver. And the networks
that cover--if you are cable or in the signal, get the Husker
games and the Husker news, and people around Plattsmouth that
get their satellite get Denver Broncos news, they don't like
that. They like the Broncos, but they want the Huskers. So what
is the technology issue here? What is forbidding the satellite
companies from being able to put in the local TV that is an
hour drive, hour and a half drive from these areas? Mr. Dodge,
since you are a satellite guy, I will let you try and answer
that.
Mr. Dodge. I am indeed. Well, with all due respect to what
Ms. Mago said about the DMA system, I think it is largely a DMA
system issue. We view it largely as a system that was set up in
the 1950s based on what people were watching back then, and
although theoretically DMAs shift over time based on actual
viewership, there really is no way to change that viewership if
you can only provide the local signal authorized for each DMA
into that DMA. If, for example, we were allowed to do what I
proposed for southwestern Colorado, which is give people the
choice between Albuquerque and Denver, then over time, it may
switch to Denver, but to Congressman Shimkus's point, it may
not because those people may actually be interested in
Albuquerque. Our view is let them decide and then maybe the
maps shift.
Mr. Terry. How about if the people in the area have
actually received a letter from the FCC saying that they should
be getting the North Platte TV stations? Is there a technical
reason why the satellites couldn't do that area?
Mr. Dodge. I think what you are referring to is a case of
significantly viewed, perhaps?
Mr. Terry. Yes.
Mr. Dodge. I am not sure what their specific reason is in
that particular area, but generally speaking, the problems we
have had with significantly viewed are technology-wise, the
signal that is significantly viewed may or may not be on the
same spot beam as the local channel, which makes it very
difficult to provide, and then there are also contractual
issues sometimes where the station is being invaded, so to
speak, might condition their retransmission consent unless not
importing a signal, but similarly, we have to get the consent
of the station we want to import to actually do the
importation, and they may not grant us that consent.
Mr. Terry. OK. I don't know if that is the issue. I would
think that would be odd that they don't want somebody 100 miles
away from their station not to see their station. But the
answer is the technology changes would be too costly, and I
just didn't understand what that entailed, the technology
changes.
Mr. Dodge. Yes, typically the issue is that the station
that folks desire to import or that is significantly viewed is
not on the same spot beam as the local market.
Mr. Terry. How much generally does that cost a satellite
company?
Mr. Dodge. It depends. Satellites cost typically these days
about $350 million a piece, so----
Mr. Terry. OK, so you would have send up a whole new
satellite to bring that----
Mr. Dodge. In certain cases, yes.
Mr. Terry. OK, interesting. Well, my time is almost up, but
I am not done yet.
Mr. Dodge. We would be happy to get the specifics of that
particular issue for you.
Mr. Terry. You have them. You may not, personally, but your
company does.
Mr. Walden. Gentleman yields back the balance of his time.
Chair now recognizes the gentleman from Louisiana, Mr. Scalise,
for 5 minutes.
Mr. Scalise. Thank you, Mr. Chairman, for the 101 hearing
we are having to start getting into this. Of course, the reason
we are here is because STELA expires. The laws that we are
discussing today have sunset provisions and that is why we get
to these various iterations, and it forces Congress to come
back and look and work with industry and say what works, what
doesn't work, and you know, hopefully when we are going into
the next iteration before the expiration of STELA at the end of
next year, we address the problems and the changes in the
marketplace. It is a very dynamic marketplace. A lot of you
have done some wonderful things to allow and bring high
definition and great programming to more people, and so that
sunset provision allows that to happen.
Now, you know, as we look at the broader marketplace of
video regulations, most of them do not have sunsets, and I
would be curious to take--it is more a policy question, so Ms.
Gore, I will hold you harmless on this one, but I would be
curious to see what the rest of the panel, what your thoughts
are and not just looking at Section 119, but having sunset
provisions on all of these laws that we would then force
Congress to go back and say what is working, and what isn't,
not just in the satellite arena, but in the others?
I will start with you, Mr. Dodge.
Mr. Dodge. And I think since 119 is the actual statute that
is expiring at the end of 2014, people tend to look at just
that and say I like this or I don't like that. It should
sunset, it shouldn't. And our view of the world is if you are
going to consider letting that sunset, it is a much broader
discussion. We do think there are problems with 119. I have
mentioned a bunch of those today. But if you are going to let
that sunset, then I think you have to look at the entire
mosaic, if you will, or quilt of all the statutory copyright
licenses, 122, the cable licenses, because in my view and as
long as I have been involved in this, they are all
interrelated, and you can't just throw out 119 and not look at
things like must carry, retrans, et cetera, et cetera. And I
think it is a discussion that is worthy of having.
Mr. Scalise. Maybe another day we will have that
discussion. Ms. Mago?
Ms. Mago. Well, if you let me go outside of the realm of
the specific hearing that we have here, I mentioned the
broadcast ownership regulations are ones that we have advocated
for some time need to have someone relook at them.
Mr. Scalise. I agree with you there. Thank you. Ms. Kieley?
Ms. Kieley. Thank you. I would echo, it is very complicated
and very intertwined. Many of these pieces are very intertwined
and we do just hope, you know--public television are must-carry
stations and doing things like doing away with the compulsory
license could actually--even though we aren't involved in
retransmission consent, could impact public television stations
and so we are just appreciative that the committee is taking an
early look at this and hope that they will continue to look at
how intertwined these issues are, and what the unique needs of
local public television stations are.
Mr. O'Leary. Congressman, I would agree with what you said.
I think it is never a bad idea to have Congress go back and see
what is working and what is not working. I think implicit in
your question is the simple fact that these thing are
intertwined and that if you look at them collectively, you are
more likely to have a better view of what works for the
consumer in the long run and so I would agree with what you are
saying.
Mr. Scalise. Thank you, and I think you had talked in your
testimony about, you know, what is it that consumers really
want? Consumers, you know, they want content. They want the
entertainment. They are not--they don't necessarily want to
have--they don't want to buy a satellite dish, they want to
have the content and the entertainment that comes with it. They
don't want cable or fiber optic, that is not why they are
paying the monthly bill. It is because of what comes in, and so
when you look at what they are really interested in, is it the
broadcast signal that they are interested in or is it the
content that comes with that broadcast signal?
Mr. O'Leary. Well, I think quite honestly it is a little
bit of both. I think that there is--you know, people want local
broadcasters for news and things like that. I think they want
content. I think the short answer, Congressman, is consumers
want everything right now, and the good news is that they are
living in an era where you have got a better chance of getting
everything than you did before. You look at the television as
it existed when we were children and you look at the television
that our children are growing up with, those are vastly
different platforms, frankly, and in the future, it is going to
be even more. I think the real question and the question which
is underlying the entire discussion today is what is the proper
role of the government in terms of facilitating that happening?
And my focus, frankly, is on the compulsory licenses because we
think they unnecessarily dampen the development of that market.
But to your question, it bears looking at all of the different
issues that are before us.
Mr. Scalise. OK, last question before I run out of time.
Ms. Mago, when you look at what has happened with--of course,
DISH is here, DirecTV, the ability to negotiate with cable
companies for their copyright content, we have seen in a real
dramatic expansion of cable companies, you have got the Food
Network, Nickelodeon, a lot of these other pay TV companies
that have seen real expansion in their viewership because of
their ability to negotiate in a more open marketplace. Would
you say that the same kind of marketplace should exist with the
retransmission consent, with compulsory, with----
Ms. Mago. For local stations, the signal that they put
together is the amalgamation of all of the programming, and
there are many, many different kinds of authorizations,
licenses, that one needs to get in that area. Our members
continue to be concerned that trying to put that together on a
local station basis is one that is a difficult process.
Mr. Scalise. Thank you. We can continue that conversation
and look forward to it, but I appreciate all of your input
today for being here. I yield back.
Mr. Walden. Thank the gentleman. Chair now recognizes the
gentleman from Colorado, Mr. Gardner, for 5 minutes.
Mr. Gardner. Thank you, Mr. Chairman. Thank you for holding
the hearing today. I just wish my colleague from Nebraska was
still here so we could give him a hard time for wanting to
watch Nebraska football.
Mr. Walden. He may be watching on a distant signal
somewhere in an orphan area.
Mr. Gardner. I don't have much room to talk, though,
according to some of the performance we have seen the past
couple years out of some Colorado teams, so I will just stop
with that.
But I wanted to particularly welcome Mr. Dodge to the
committee today. As a result of redistricting, DISH is a
constituent company and I am glad that you could be here today,
and all the witnesses, thank you for your time.
I wanted to just talk briefly about some of the issues that
most of you have touched on already at various times throughout
the testimony and so to Mr. Dodge, can you just give me a quick
explanation--the committee a quick explanation, what would
happen if STELA were to expire and what would that effect be on
consumers across the country?
Mr. Dodge. Yes, with respect to DISH particularly, it would
mean that the short markets I described, those folks would no
longer be at level playing field with folks in other markets
around the country, because they would lose whatever affiliates
are not represented in their particular DMAs. They would lose
the ability to access that programming. Similarly, folks who
are outside of our spot beams would lose their local channels.
RVs and commercial trucks would no longer be able to get
network programming via satellite. And with respect to DirecTV,
who doesn't provide local service in all markets, they would
lose the ability to provide network programming to folks who
are unserved by their local broadcast stations, and presumably,
they would lose subscribers who have been grandfathered from
prior Satellite Home Viewer Act reauthorizations.
Mr. Gardner. Ms. Gore, would you add anything to that, or
want to add anything to that, if you can?
Ms. Gore. No, I think that covered the list that I am aware
of.
Mr. Gardner. Ms. Mago?
Ms. Mago. Only to note that I think, again, as I said in my
testimony, that that is a diminishing number as we go through
the various fixes that are happening, including addressing the
issues in short markets through the stations, channels, and
such things.
Mr. Gardner. OK, and then I wanted to take another
opportunity at Mr. Dodge to perhaps have you respond to
something that was in Ms. Mago's testimony, and I believe it
was stated on page seven, ``That today over 98 percent of all
U.S. television viewers have the option of viewing their local
network affiliates by satellite'', and then goes on to say
``With few exceptions, there are no unserved viewers in areas
in which local into local satellite transmissions are
available, and that accordingly, no public policy justifies
treating satellite subscribers in local into local markets as
unserved and therefore eligible to receive distant network
signals.'' It talks a little bit about viewing that language as
perhaps a loophole, but I was wondering if you could respond to
that assertion and whether or not you view that as a loophole,
and what would happen to your customers if that were to change?
Mr. Dodge. Yes, we don't view that as a loophole. We view
that as exactly what the law says, which is if there is a
retransmission dispute, then we are no longer offering a local
affiliate related to that network, and we are allowed to import
a distant signal to folks who are unserved in the traditional
sense, meaning they don't get an off-air signal of decent
quality.
Mr. Gardner. OK, and then to both you and Ms. Mago as well,
conditions in the law sometimes prevent viewers from getting
access to the programming they really want. We have talked
about that here. Broadcasters can waive some of these
conditions on a case-by-case basis, and do they ever, and if
not, why not? I guess Ms. Mago, I will start with you.
Ms. Mago. I think Mr. Dodge said a little while ago that
that doesn't really happen on the DISH Network, as I understood
it. If I misunderstood your question, I am sorry, but in terms
of the broadcasters, what broadcasters are looking for is to
make sure that they are able to serve their audiences and
continue to be able to do that by having local viewers. We are
able to do that, maximize the amount of the revenues that we
can then plow back into the better service, and that is why we
look at those markets and make sure that the local into local
service is there. It helps the viewers themselves because they
are able to get whatever local weather information and other
things that are important to them, and that is why we continue.
Mr. Gardner. Do broadcasters ever do the waiver, talking
to----
Ms. Mago. There are a few that I know of that have done
that. I think it is becoming less now because one of the
concerns that was waivable for a while was that the high
definition programming wasn't available through the satellite,
and we are now getting to the point where that is always going
to be available for the local stations as well. I am aware of a
marketplace in Wilmington, North Carolina, and the local
station there, in fact, had granted a waiver to allow the
distant signal to come in because it was more--it was high
definition when the local signal was not. I am hoping that has
been corrected.
Mr. Gardner. And the good news for Mr. Terry is that in a
couple of years, the Cornhuskers and the Buffalos will be
playing again, so he will be able to at least watch that game,
even if it comes from Colorado.
Ms. Mago. That sounds like many----
Mr. Gardner. To that point, the discussion that we have
had, we have talked about the markets and I guess for the
entire panel as I run out of time here, do we know how many
viewers are assigned to a designated market area that is not
within their state? So I know we have identified the number of
areas, but do we actually know or have an idea of how many
viewers are there?
Ms. Mago. I am sorry, I don't.
Mr. Dodge. I do know in Colorado I believe it is 10,000
folks or TV households----
Mr. Gardner. The southwestern part?
Mr. Dodge. Yes, in those two counties, but nationwide, I
don't have the number off the top of my head.
Mr. Gardner. OK.
Ms. Kieley. From a public television perspective, I know we
had about 21 of our statewide licensees that were impacted by
that, with some states it being a much bigger problem. For
instance, in Wyoming, I believe that--I think it was close to
about 75 percent of viewers in that state resided outside of--
from a public television perspective, the DMA where our public
television station had all three of its transmitters located,
so it varies from state to state, but for public television,
some of those areas out West and in smaller parts of the East
were problematic.
Mr. Gardner. Thank you, Mr. Chairman, for your leniency
with the time.
Mr. Walden. No problem. We are going to move now to the
gentlelady from North Carolina, a new member of our
subcommittee. We are delighted to have Renee Ellmers with us,
and we look forward to your questions as we wrap up this
hearing.
Mrs. Ellmers. Great, thank you, Mr. Chairman. I am happy to
be here. I apologize for being late. I had dueling
subcommittees going on, so thank you to our panel for being
here as well.
Ms. Gore, I have a question for you. Are there instances
where the local broadcaster is not actually carrying news,
alerts, closings, sports, civic affairs, and other content in
the viewer's state?
Ms. Gore. Yes, I believe there are those situations. That
plays into what we have been talking about as the orphan county
situation, so that technically on paper it may appear that
there is an in-state station in the DMA, but it may be a
station that its programming does not include news or weather
or traffic or public affairs of that sort. I am sure they are
meeting their public interest requirements that Ms. Mago would
know about.
Ms. Mago. Yes, they are.
Ms. Gore. But they don't necessarily have the kind of
newsroom, staff, or situation to cover breaking weather events
or something of that sort.
Mrs. Ellmers. Thank you, and I have question, and I would
like for each one of the panel to give a quick, brief response.
Because this is kind of our introductory hearing on this issue,
we are not yet debating on how to change the law, but we do
need to know what the main problems are. So if every panelist
could--without giving us a solution, touch on the problems to
make us aware of what your main issue is with the law and what
we can be looking towards in the future. I will start with Ms.
Gore.
Ms. Gore. Well, as I mentioned, I am not here to talk about
any problems we have with the law. I will only say that there
seem to be some circumstances where perhaps the hope was that
the availability of significantly viewed stations might help to
alleviate of the concerns that some consumers have had, and I
am not sure if the significantly viewed option is being taken
advantage of as often as it might be. My colleagues would know
more about that, and also would know more about why that might
be.
Mrs. Ellmers. OK. Mr. Dodge?
Mr. Dodge. I would say the biggest thing we would like to
see remedied is having the retransmission consent process be
put on a more level playing field between the broadcasters and
the distributors, and fixed in such a manner that consumers
don't inevitably lose access to network programming during
disputes.
Mrs. Ellmers. Perfect.
Ms. Mago. And I, of course, disagree with what Mr. Dodge
just said, but I would also say that our biggest issue is that
we want to encourage local into local service.
Mrs. Ellmers. OK.
Ms. Kieley. And I would say we are taking an early look at
the law and its implementation, and looking for any problem
areas that are there, but I will reiterate that we were quite
pleased with the process. We trust the process. It worked quite
well last time, and we are very appreciative that our unique
needs were addressed the last go around with STELA, and we hope
that if we come upon any of those issues again, that we can
again work with this leadership of this committee and Congress.
Mrs. Ellmers. Excellent.
Mr. O'Leary. From our perspective, it is very simply that
the committee step back and take a look at the law and
determine, you know, we believe there are pieces of it that are
trying to solve a problem which no longer exists, and so we
would ask them to look at those, and then at a minimum, to not
expand those areas where we believe that the government
intervention has, you know, reduced our ability to be
compensated fairly for the work that we create.
Mrs. Ellmers. Well thank you. Thank you very much for your
responses, and thank you, Mr. Chairman, for allowing me to wrap
up this hearing. I yield back.
Mr. Walden. Thank the gentlelady from North Carolina for
her participation.
And I think we should have an online contest to name this
one ELOISE, but I have been struggling trying to figure out how
we would do that, so we will welcome your suggestions.
Ms. Mago. Please just don't name it Stanton.
Ms. Gore. I actually worked on that the last time, so I
will get that back to you.
Mr. Walden. You would get that to me. I know it is not
weighing in on any policy, but the name is important, and given
four reauthorizations you have lived through.
We want to thank our panelists for testifying today. We
appreciate your input as we begin down this path. We will have,
obviously, additional hearings going forward, and I am sure all
of us will have lots of individual meetings going forward to
have these discussions. And so thank you all for your
participation, and with that, the committee stands adjourned.
[Whereupon, at 12:10 p.m., the Subcommittee was adjourned.]
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