OVERSIGHT OF THE SATELLITE HOME VIEWER IMPROVEMENT ACT HEARING BEFORE THE SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET OF THE COMMITTEE ON ENERGY AND COMMERCE HOUSE OF REPRESENTATIVES ONE HUNDRED EIGHTH CONGRESS SECOND SESSION MARCH 10, 2004 Serial No. 108–75 Printed for the use of the Committee on Energy and Commerce ( Available via the World Wide Web: http://www.access.gpo.gov/congress/house U.S. GOVERNMENT PRINTING OFFICE 92–540PDF WASHINGTON : 2004 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001 VerDate 11-MAY-2000 08:51 Jun 08, 2004 Jkt 000000 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 92540.TXT HCOM1 PsN: HCOM1 COMMITTEE ON ENERGY AND COMMERCE JOE BARTON, Texas, Chairman W.J. ‘‘BILLY’’ TAUZIN, Louisiana JOHN D. DINGELL, Michigan RALPH M. HALL, Texas Ranking Member MICHAEL BILIRAKIS, Florida HENRY A. WAXMAN, California FRED UPTON, Michigan EDWARD J. MARKEY, Massachusetts CLIFF STEARNS, Florida RICK BOUCHER, Virginia PAUL E. GILLMOR, Ohio EDOLPHUS TOWNS, New York JAMES C. GREENWOOD, Pennsylvania FRANK PALLONE, Jr., New Jersey CHRISTOPHER COX, California SHERROD BROWN, Ohio NATHAN DEAL, Georgia BART GORDON, Tennessee RICHARD BURR, North Carolina PETER DEUTSCH, Florida ED WHITFIELD, Kentucky BOBBY L. RUSH, Illinois CHARLIE NORWOOD, Georgia ANNA G. ESHOO, California BARBARA CUBIN, Wyoming BART STUPAK, Michigan JOHN SHIMKUS, Illinois ELIOT L. ENGEL, New York HEATHER WILSON, New Mexico ALBERT R. WYNN, Maryland JOHN B. SHADEGG, Arizona GENE GREEN, Texas CHARLES W. ‘‘CHIP’’ PICKERING, KAREN MCCARTHY, Missouri Mississippi, Vice Chairman TED STRICKLAND, Ohio VITO FOSSELLA, New York DIANA DEGETTE, Colorado STEVE BUYER, Indiana LOIS CAPPS, California GEORGE RADANOVICH, California MICHAEL F. DOYLE, Pennsylvania CHARLES F. BASS, New Hampshire CHRISTOPHER JOHN, Louisiana JOSEPH R. PITTS, Pennsylvania TOM ALLEN, Maine MARY BONO, California JIM DAVIS, Florida GREG WALDEN, Oregon JANICE D. SCHAKOWSKY, Illinois LEE TERRY, Nebraska HILDA L. SOLIS, California MIKE FERGUSON, New Jersey CHARLES A. GONZALEZ, Texas MIKE ROGERS, Michigan DARRELL E. ISSA, California C.L. ‘‘BUTCH’’ OTTER, Idaho JOHN SULLIVAN, Oklahoma BUD ALBRIGHT, Staff Director JAMES D. BARNETTE, General Counsel REID P.F. STUNTZ, Minority Staff Director and Chief Counsel SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET FRED UPTON, Michigan, Chairman MICHAEL BILIRAKIS, Florida EDWARD J. MARKEY, Massachusetts CLIFF STEARNS, Florida Ranking Member Vice Chairman ALBERT R. WYNN, Maryland PAUL E. GILLMOR, Ohio KAREN MCCARTHY, Missouri CHRISTOPHER COX, California MICHAEL F. DOYLE, Pennsylvania NATHAN DEAL, Georgia JIM DAVIS, Florida ED WHITFIELD, Kentucky CHARLES A. GONZALEZ, Texas BARBARA CUBIN, Wyoming RICK BOUCHER, Virginia JOHN SHIMKUS, Illinois EDOLPHUS TOWNS, New York HEATHER WILSON, New Mexico BART GORDON, Tennessee CHARLES W. ‘‘CHIP’’ PICKERING, PETER DEUTSCH, Florida Mississippi BOBBY L. RUSH, Illinois VITO FOSSELLA, New York ANNA G. ESHOO, California STEVE BUYER, Indiana BART STUPAK, Michigan CHARLES F. BASS, New Hampshire ELIOT L. ENGEL, New York MARY BONO, California JOHN D. DINGELL, Michigan, GREG WALDEN, Oregon (Ex Officio) LEE TERRY, Nebraska JOE BARTON, Texas, (Ex Officio) (II) VerDate 11-MAY-2000 08:51 Jun 08, 2004 Jkt 000000 PO 00000 Frm 00002 Fmt 6011 Sfmt 0486 92540.TXT HCOM1 PsN: HCOM1 C O N T E N T S Page Testimony of: Franks, Martin D., Executive Vice President, CBS Television ..................... 94 Hartenstein, Eddy W., Vice Chairman, Hughes Electronics Corporation ... 99 Kimmelman, Gene, Senior Director, Public Policy and Advocacy, Con- sumers Union ................................................................................................ 46 Lee, Robert G., President and General Manager, WDBJ-TV ....................... 18 Moskowitz, David K., Senior Vice President and General Counsel, Echostar Communications Corporation ...................................................... 12 Polka, Matthew M., President, American Cable Association ........................ 42 Material submitted for the record by: Association of Public Television Stations, prepared statement of ................ 121 (III) VerDate 11-MAY-2000 08:51 Jun 08, 2004 Jkt 000000 PO 00000 Frm 00003 Fmt 0486 Sfmt 0486 92540.TXT HCOM1 PsN: HCOM1 VerDate 11-MAY-2000 08:51 Jun 08, 2004 Jkt 000000 PO 00000 Frm 00004 Fmt 0486 Sfmt 0486 92540.TXT HCOM1 PsN: HCOM1 OVERSIGHT OF THE SATELLITE HOME VIEWER IMPROVEMENT ACT WEDNESDAY, MARCH 10, 2004 HOUSE OF REPRESENTATIVES, COMMITTEE ON ENERGY AND COMMERCE, SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET, Washington, DC. The subcommittee met, pursuant to notice, at 10 a.m., in room 2123, Rayburn House Office Building, Hon. Fred Upton (chairman) presiding. Members present: Representatives Upton, Gillmor, Deal, Cubin, Shimkus, Wilson, Buyer, Bass, Markey, Wynn, McCarthy, Doyle, Boucher, Towns, Engel, and Dingell (ex officio). Staff present: Howard Waltzman, majority counsel; Kelly Zerzan, majority counsel; Neil Fried, majority counsel; Jaylyn Jensen, ma- jority professional staff; William Carty, legislative clerk; Gregg Rothschild, minority counsel; and Peter Filon, minority counsel. Mr. UPTON. Good morning, a second time. Today, we’re here to discuss the Satellite Home Viewer Improvement Act, also com- monly known as SHVIA. My wife Amy says it’s okay. The satellite industry has grown tremendously since Congress first became in- volved in 1988 and passed the SHVIA Act. All one has to do now- adays is to take a drive down the street, doesn’t matter if you live in the country or the city, to view firsthand the growth of the sat- ellite industry. Satellite dishes are now an everyday part of the landscape. Satellite Home Viewer Act was a piece of equal opportunity legis- lation, so to speak, for those folks who lived in parts of the country where broadcast signals were either weak or nonexistent. Legisla- tion was designed for consumers who lived in rural areas far from a local affiliate or who lived in areas that were blocked by sur- rounding terrain causing them trouble to receive broadcasts over the air. To help remedy that situation, the Satellite Home Viewer Act of 1988 allowed satellite operators to deliver distant signals to con- sumers in such white areas. Anyone who has been to my District in Southwest Michigan knows that it is a prime example for the need of such legislation. To facilitate that regime, SHVIA created a statutory copyright li- cense for the retransmission of such distant signals and set a roy- alty rate rather than require the satellite operator to negotiate re- transmission consent with the distant broadcaster. Consequently, (1) VerDate 11-MAY-2000 08:51 Jun 08, 2004 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 92540.TXT HCOM1 PsN: HCOM1 2 the statutory license is set to expire December 31 of this year. That’s just one of the issues before us today. In 1999, Congress adopted SHVIA to extend the Satellite Home Viewer Act which was due to expire as well as to expand it. But simply SHVIA was designed to promote competition among multi- channel video program distributors such as satellite companies and cable TV operators, while at the same time increasing the program- ming choices available to consumers. In SHVIA, Congress granted satellite operators for the first time a statutory copyright license to carry local stations into the sta- tions’ own markets and set the license fee at zero. The satellite op- erator chooses to carry a local station in that market. It generally must carry all of the local stations within that market, unlike with distant signals, satellite operators can provide local signals to con- sumers, regardless whether the consumers can receive those sig- nals over the area and the statutory license has no sunset date. As we’ve often seen in the world of telecommunications, it has been difficult for legislation to keep up with technological progress. Here we are today 5 years since the passage of SHVIA with several portions of it set to expire December 31. The purpose of this hear- ing is to consider whether to extend SHVIA and determine if Con- gress should make any other changes in the regime governing sat- ellite delivery of broadcast TV. Many issues that we have to take into account: What should the satellite industry’s role be in the transition to digital? How should State subscribers and grandfathered subscribers be addressed? What are the ramifications of distribution using two dishes? Those are all important issues that will have extensive effects on satellite providers, local broadcasters and consumers. Today is the first step in reviewing the process of SHVIA. I hope that we will have a thought-provoking, constructive discussion on how to pro- ceed with the important issues at hand. I recognize that March Madness is upon us. EchoStar and Viacom are currently involved in negotiations. I look forward to having a productive hearing on this issue and what steps should be taken next that are in the best interests of providers, broadcasters and the American public. I yield to my friend, the ranking member of the subcommittee, the gentleman from Massachusetts, Mr. Markey. Mr. MARKEY. I thank the Chairman very much and I thank you for this very, very important and it turns out timely hearing. I re- member many years ago there was a football player at Notre Dame whose name was Joe Theisman and he was a very promising fresh- man. People