Retransmission Consent Revisit, Distant Signal Rule Elimination Urged at STELA Hearing

Chairman Greg Walden, R-Ore., said the House Commerce Committee has an opportunity with the House 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.” Viewers have more choices, and more expectations, than ever, he said in opening remarks. Companies are trying to keep up, he said. “Our laws are also trying to keep up in a world where traditional classifications and the regulations that emanate from them seem increasingly strained."

Rep. Anna Eshoo, D-Calif., said she’s pleased “that we're starting the discussion of this reauthorization early, not only to ensure adequate time to work through all the relevant issues, but also for the benefit of the many new members of our subcommittee.” Eshoo said she prefers “a clean reauthorization of STELA.” But, “there will no doubt be other ‘video’ related topics raised over the course of the 113th Congress,” she said. “Chief among my concerns are the programming disruptions consumers experience when retransmission disputes break down. Simply put, consumers should not be held hostage when negotiators fail to come to an agreement."

The subcommittee 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,” Walden said.

MPAA and NAB said portions of the existing STELA are “anachronistic.” Certain provisions need to expire, said Michael O'Leary, MPAA senior executive vice president of global policy. “Some of these things are woefully outdated,” he said. Making no change to the statute would be preferable to expanding the license, he said.

The distant signal license is used in different circumstances, said Eloise Gore, FCC Enforcement Bureau associate chief. Sometimes it’s used to reach someone who doesn’t have access to any local broadcast stations, “so they are receiving a truly distant signal,” she said. In other situations it’s used to fill in a short market, she said. Viewers in “short markets” do not receive over-the-air broadcasts of all major network affiliates. The FCC doesn’t have data on the number of people served with a distant signal, she said.

Dish Network is concerned that allowing the distant signal license to expire would hurt subscribers that receive local broadcasts from such a license, said Stanton Dodge, Dish executive vice president. Dish uses the license to fill in short markets, he said. “Without the license, we would have to shut those people off.” Dish also uses it to provide services to customers outside its satellites’ spot beams, he said. Unless those folks can get local programming with an antenna, “we have to shut those folks off as well,” he said. It’s a bigger issue for DirecTV, Dodge said. “DirecTV has grandfathered subscribers from years gone by and they're not in all 210 markets today.” It still uses a true distant license to provide programming to unserved households and markets, he added.

The need for the distant signal license is decreasing, said Jane Mago, NAB executive vice president. The circumstances that have called for such a license are “becoming fewer and fewer as well, because as you provide local-into-local services in to all 210 markets, it’s relatively easy to provide that local signal to anyone in that spot beam,” she said. “Short markets are disappearing as a result of the digital television transition."

Witnesses offered suggestions to the kind of policy they'd prefer around delivery of broadcast signals from satellites. Dodge said he supports a policy ensuring that consumers “are able to continue to receive network programming during retransmission disputes.” The law needs to be improved to allow consumers to get local programming during takedowns and to ensure that service reaches people in “orphaned communities,” where they don’t receive signals from the designated market area in their state, he added.

Improving localism and allowing broadcasters to continue to provide the local service is a top concern for NAB, Mago said. The Association of Public Television Stations urged Congress to ensure that any STELA reauthorization “continues to recognize the unique services of local public television stations,” said Jennifer Kieley, government relations director.

Congress should determine whether the current regime continues to make sense, said MPAA’s O'Leary. If Congress concludes that a regime is still necessary, it should make sure “that it is updated to reflect the times in which we live,” he said.

Dodge cautioned against a sunset of the rules on satellite secondary transmission of distant TV programming without considering the impact on other parts of the statute: “If you're going to let that sunset, you're going to have to look at the entire mosaic or quilt” of all the licenses, which includes retransmission consent and must-carry rules, he said. “They're all interrelated."

The hearing “showed that some members of Congress, and perhaps broadcasters themselves, may not consider STELA to be ‘must pass’ the way it was five years ago,” Guggenheim Partners analyst Paul Gallant said in a research note. “We assume part of the reason broadcasters are unsure about supporting extension of STELA is that the bill could become a vehicle for Congress to revise retransmission consent law.” It will be important to monitor whether Eshoo’s comments on retransmission consent blackouts are echoed by other members in future hearings, he said.