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Two-Dish Solution Stirs Controversy

By | October 11, 2004

      One of the most controversial issues involved in the current Congressional effort to re-authorize the Satellite Home Viewer Improvement Act (SHVIA) that expires at year-end is whether satellite-TV provider EchoStar Communica-tions [DISH] should be allowed to provide local channels in roughly 30-40 U.S. markets by requiring its subscribers to use two satellite dishes. To maximize use of its limited satellite capacity, EchoStar is asking its subscribers in those markets to use two dishes rather than just one to receive all the local channels in each locale.

      As reflected in last week’s House floor vote that went against EchoStar, the politically formidable National Association of Broadcasters has opposed the two-dish solution successfully.

      “The bureau had an order which originally allowed EchoStar to do the two-dish approach; that was based on a statutory reading. It wasn’t a policy decision about whether it was good or bad, and it may change. Congress is looking at it,” Ferree explained.

      He continued, “I don’t know where that is going to go. In a broad sense, it is not entirely clear to me why in a world where we like to see the satellite operators provide as many local services in as many local markets as possible you would want to hamstring them and get the government into management of the spectrum and where they put what programming. Why not just let the company do it the most efficient way they can. Markets are pretty good at making companies operate efficiently and providing customers with what they want.”

      With the U.S. presidential elections coming soon, the SHVIA legislation is unlikely to spur Senate action until after lawmakers return to Washington in November from an election-related recess. It is possible that SHVIA could be re-authorized in some form during a lame-duck session of Congress to allow satellite TV to carry certain national signals for a fee.

      However, the use of two dishes is a highly contentious issue in Washington. If EchoStar were forced to put all the local channels it offers in a given market on one dish, the move would come at a high price, said Steve Caulk, director of media relations at EchoStar.

      “We have estimated that the cost of the conversion would probably be about $100 million,” Caulk said.

      In terms of a potential timeframe for moving all its customers to one dish, Caulk said, “Eighteen months is one period that has been kicked around in order to convert our customers to a single dish for local channels. However, this is not long enough for us to be able to make that conversion in a way that would avoid disruption to our customers. We are eager to provide customers with local channels on one satellite dish, and we have plans to do that — as soon as we have the capacity.”

      Others are not so complimentary of EchoStar’s strategy. Dennis Wharton, senior vice president of corporate communications at the NAB, said some local TV channels get a bad deal under EchoStar’s two-dish strategy.

      “DirecTV is able to accommodate all the stations on a single dish. We don’t think it is fair, particularly to the Spanish- language stations, for EchoStar to relegate them to second-class citizenship,” he said. “I think the FCC stepped up and indicated that they have offered some suggestions to EchoStar. What is going on right now is that Congress is getting involved in this renewal of the SHVIA Act. It is setting a deadline for ending the discriminatory two-dish treatment, and we support the legislation.”

      NAB also disputed the EchoStar’s complaint about having limited capacity to offer a one-dish solution. “EchoStar portrays this as they don’t have the spectrum to put [local channels] on one dish. That is just not the case. They do have the capacity to put all these stations on one dish,” Wharton commented. “They choose, however, to relegate some of these stations to a second dish, instead allocating channel capacity for some of their PPV (pay-per-view) programming, including adult movies, for which they collect a handsome fee for every time someone orders an adult movie. It is their choice these stations on a second dish. It has nothing to do with channel capacity,” Wharton said.

      (Kenneth Ferree, FCC, 202/418-7200; Steve Caulk, EchoStar,; Dennis Wharton, NAB, 202/428 5350)

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