[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 U.S. GOVERNMENT PRINTING OFFICE 79-666 WASHINGTON : 2014 ----------------------------------------------------------------------- For sale by the Superintendent of Documents, U.S. Government Printing Office, http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202�09512�091800, or 866�09512�091800 (toll-free). E-mail, [email protected]. 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 ---------- 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:] [GRAPHIC] [TIFF OMITTED] T9666.001 [GRAPHIC] [TIFF OMITTED] T9666.002 [GRAPHIC] [TIFF OMITTED] T9666.003 [GRAPHIC] [TIFF OMITTED] T9666.004 [GRAPHIC] [TIFF OMITTED] T9666.005 [GRAPHIC] [TIFF OMITTED] T9666.006 [GRAPHIC] [TIFF OMITTED] T9666.007 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:] [GRAPHIC] [TIFF OMITTED] T9666.008 [GRAPHIC] [TIFF OMITTED] T9666.009 [GRAPHIC] [TIFF OMITTED] T9666.010 [GRAPHIC] [TIFF OMITTED] T9666.011 [GRAPHIC] [TIFF OMITTED] T9666.012 [GRAPHIC] [TIFF OMITTED] T9666.013 [GRAPHIC] [TIFF OMITTED] T9666.014 [GRAPHIC] [TIFF OMITTED] T9666.015 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:] [GRAPHIC] [TIFF OMITTED] T9666.016 [GRAPHIC] [TIFF OMITTED] T9666.017 [GRAPHIC] [TIFF OMITTED] T9666.018 [GRAPHIC] [TIFF OMITTED] T9666.019 [GRAPHIC] [TIFF OMITTED] T9666.020 [GRAPHIC] [TIFF OMITTED] T9666.021 [GRAPHIC] [TIFF OMITTED] T9666.022 [GRAPHIC] [TIFF OMITTED] T9666.023 [GRAPHIC] [TIFF OMITTED] T9666.024 [GRAPHIC] [TIFF OMITTED] T9666.025 [GRAPHIC] [TIFF OMITTED] T9666.026 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:] [GRAPHIC] [TIFF OMITTED] T9666.027 [GRAPHIC] [TIFF OMITTED] T9666.028 [GRAPHIC] [TIFF OMITTED] T9666.029 [GRAPHIC] [TIFF OMITTED] T9666.030 [GRAPHIC] [TIFF OMITTED] T9666.031 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:] [GRAPHIC] [TIFF OMITTED] T9666.032 [GRAPHIC] [TIFF OMITTED] T9666.033 [GRAPHIC] [TIFF OMITTED] T9666.034 [GRAPHIC] [TIFF OMITTED] T9666.035 [GRAPHIC] [TIFF OMITTED] T9666.036 [GRAPHIC] [TIFF OMITTED] T9666.037 [GRAPHIC] [TIFF OMITTED] T9666.038 [GRAPHIC] [TIFF OMITTED] T9666.039 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.] [Material submitted for inclusion in the record follows:] [GRAPHIC] [TIFF OMITTED] T9666.040 [GRAPHIC] [TIFF OMITTED] T9666.041 [GRAPHIC] [TIFF OMITTED] T9666.042 [GRAPHIC] [TIFF OMITTED] T9666.043 [GRAPHIC] [TIFF OMITTED] T9666.044 [GRAPHIC] [TIFF OMITTED] T9666.045