Senate DTV Bill Could Thwart DBS

Satellite TV’s advantage of offering digital video signals since the mid-1990s is waning because the $70 billion the big cable-TV operators have spent on the technology is allowing those carriers to catch up. However, satellite-TV service providers still will be a key delivery mechanism of local digital television signals in the United States once terrestrial broadcasters give up their analog spectrum. Whenever that happens.

The timetable and circumstances for broadcasters to return their analog spectrum was the subject of a mark-up last week by the Senate Commerce Committee that resulted the advancement of a bill favorable to broadcasters that want more lenient conditions and another time extension regarding just when those channels go back to the Federal Communications Commission (FCC). Satellite-TV providers will need to be ready for whatever deadlines ultimately are set as the bill, S.B. 2820, moves forward. The transmission of digital signals will not change the role these carriers play as a delivery mechanism but the competitive landscape will be tilted in one direction or another if and when final legislation is signed.

Richard DalBello, president of the Satellite Broadcasting and Communications Association (SBCA), said his organization was disappointed that a firm date still has not been set for the transition to digital TV. The SBCA has been a proponent of the transition that has been recommended by the FCC and mandated by Congress.

The move toward digital television could help to boost satellite TV sales, as consumers move further into the digital era. Satellite TV has been digital since its inception and consumers who lack satellite or cable TV services may be motivated to buy them due to the digital transition.

EchoStar Communications [SPOT] has argued that if certain local broadcasters are not providing high definition singals, satellite TV should be able to do so to their subscribers in those markets by importing distant network signals. However, EchoStar’s proposal is not part of the McCain bill but it could resurface during the legislative process.

The proposed legislation is a broad-based bill that deals with the reallocation of current analog TV spectrum to public-safety interests. Dubbed the “Save Lives” bill in the Senate, it appears destined to be passed by Congress in one form or another. Sen. John McCain (R-Ariz.) introduced the legislation that provides a firm date for the clearing of 24 megahertz of spectrum in the 700 MHz band long promised to first-responders.

To that end, the committee adopted the following amendments:

–Sen. Conrad Burns (R-Mont.) and Sen. Fritz Hollings (D-S.C.) proposed that the FCC take back certain broadcasters’ licenses by 2008 unless certain conditions are met. That spectrum would be reallocated to public-safety entities. This was approved 13-9.

–Sen. Frank Lautenberg (D-N.J.) proposed a provision to require the FCC to publish minimum quantitative guidelines for locally originated programming. This passed in a 13-8 vote.

–A “second-degree” amendment by McCain that would have added the Burns amendment to the original version of the bill rather than replacing language already in the legislation failed in a 13-9 vote.

The terrorist attacks of 9/11 showed the acute need for more uncongested, interoperable public-safety communications. However, the spectrum cannot be reassigned until the digital-television transition is completed.

Under current law, the deadline for the digital transition will be extended from 2006 if less than 85 percent of the U.S. TV-watching households in any given market are able to receive digital signals. In Sept. 8 testimony before the committee, FCC Chairman Michael Powell said that without government action, the existing extension could allow the digital TV transition to continue for decades or “multiples of decades.” The bill states that the federal government should ensure that transition is completed and the spectrum is available for use by public-safety organizations by Jan. 1, 2009. The current deadline is 2006.

Now here’s where the real rub begins. “Any plan to end the digital transition would be incomplete if it did not ensure that consumers would be able to continue to enjoy over-the-air broadcast television with minimal disruption,” said the McCain bill. “If broadcasters air only a digital signal, some consumers may be unable to view digital transmissions using their analog-only television set. Local broadcasters are truly an important part of our homeland security and often an important communications vehicle in the event of a national emergency. Therefore, consumers who rely on over-the-air television, particularly those of limited economic means, should be assisted.”

The cost of helping those estimated 17.4 million households that do not subscribe to either satellite TV or cable TV by providing them with digital-compatible equipment would be close to $1 billion, according to the bill. That price reportedly would be roughly 3 percent of the federal revenue that could be generated by auctioning off the analog television spectrum.

The New America Foundation estimated that the federal government’s auction of the spectrum would generate between $30 billion and $40 billion to the U.S. Treasury. Chairman Powell estimated that amount could rise to $70 billion.

Former FCC Chairman Reed Hundt said during an April 28 hearing before the committee that the analog TV spectrum would be a “fit and proper home” for wireless broadband. The spectrum could be used to allow millions of people in rural America gain affordable access to the Internet, he added. McCain’s bill also says the reclaimed spectrum, when used for new purposes, could create “millions of new jobs” in the telecommunications sector of the economy.

(Sen. John McCain, 202/224-2235; Richard DalBello, Satellite Broadcasting and Communications Association, 703/739-8342; Edward Fritts, NAB, 202/429-5350)