House Passes Modified SHVIA With New Royalty Rate Agreement

As expected, the bill retained the “2-dish” provision that would ban EchoStar’s practice of using a 2nd dish to carry some local stations. The legislation didn’t include the “digital white area” provision in the Senate Commerce Committee SHVIA bill, which would have let DBS providers deliver digital signals to areas that don’t receive local digital broadcasts. The bill instructs the FCC to report to Congress by the end of 2005 how to institute digital white area provisions for DBS. The most significant adjustment from the committee approved bills is having DBS and copyright holder negotiate royalty rates, rather than letting the Copyright Arbitration Royalty Panel (CARP) determine them.

Hailed by members as proconsumer and procompetition, SHVIA faced no objections in the House and was praised by Republicans and Democrats alike. The bill also received praise from industry and members. NAB Pres. Edward Fritts said the bill would balance the needs of consumers, local television and the satellite industry. SBCA also said it was pleased, but added that Congress should still add a “digital white area” proposal before passing the bill. EchoStar said the white area was needed to force broadcasters to invest more in DTV. “Where local broadcasters fail to invest in the equipment necessary to allow consumers to view digital channels off air, a digital white area would allow those consumers to receive high definition distant networks by satellite, providing millions of consumers the only current path to participation in the HD revolution,” an EchoStar spokesman said. The bill would also let DBS providers show “significantly viewed” regional broadcasts, a measure lawmakers said would take away some of cable’s competitive advantage.

A broadcast industry source said the overwhelming passage of the bill, without objection, could influence senators to move on its SHVIA legislation. The 2 Senate SHVIA bills have passed both Commerce and Judiciary committees, but a Senate source said it was very unlikely SHVIA would move before the Senate adjourns on Fri. until after the election. Senate and industry sources said Senate Communications Subcommittee Chmn. Burns (R-Mont.) had a hold on SHVIA because it would authorize the FCC to allow DBS providers to beam into digital white areas a distant network DTV signal. Several industry and congressional sources speculate that if there’s no resolution to the white area impasse, Congress could pass an extension of the bill’s compulsory license provisions while saving for later the bill’s other provisions. Congress is expected to leave Oct. 8 and return Nov. 15 for a “lame duck” session.

The bill also included an agreement by EchoStar, DirecTV, MPAA and Joint Sports on copyright fees. EchoStar described the agreement as “fair to all parties,” but it added that while it mean price increases, they will be minimized. House Judiciary Intellectual Property Subcommittee Chmn. Berman (D-Cal.) said if no party objected to the agreement, it would be included in the bill. A CARP hearing would determine rates whether there’s an objection, Berman said.

EchoStar received most of the criticism on the House floor, particularly for its 2-dish policy. Rep. Engel (D- N.Y.) mentioned EchoStar by name and said its putting local Spanish-language and religious channels on the 2nd dish was “discriminatory.” Engel said only about 5% of EchoStar consumers use the 2nd dish, meaning 95% of consumers are “paying for services they don’t receive.” But an EchoStar spokesman said: “The current bill would potentially force the installation of millions of second satellite dishes that consumers neither want nor need, benefiting only broadcaster special interests in other markets.”

The bill was renamed after former House Commerce Committee Chmn. Tauzin (R-La.), who is undergoing cancer treatment. House Telecom Subcommittee Chmn. Upton (R- Mich.) said: “It is particularly fitting that this bill is named after my good friend Billy Tauzin, since he was a chief architect of the regulatory landscape which promoted the creation of a vibrant satellite television industry - to the benefit of so many consumers across the land.”