The satellite industry is one of the fastest growing and most
important high-technology sectors of today's U.S. economy. It
provides, among other things, communications, television, cable,
and sophisticated imagery and sensory satellites for U.S.
intelligence-gathering operations. Over the past decade, home
satellite subscriptions for television service have grown
dramatically. Five years ago, for example, there were barely 1
million home satellite subscribers; today, there are over 8
million. For many of these subscribers, satellite transmission is
the only way they can receive broadcast television programs from
such networks as ABC, CBS, NBC, and Fox Television.
Soon, however, millions of Americans may
lose these network broadcasts. A U.S. District Court judge in
Florida has ruled that satellite providers must begin terminating
the retransmission of network broadcasts to customers by February
28, 1999. If this ruling stands, 2.2 million subscribers could lose
their service by late spring, and millions of new satellite
consumers would be unable to receive such broadcasts in the future.
As Federal Communications Commission Chairman William B. Kennard
recently warned, "an impending train wreck" will occur if reform is
Senators John McCain (R-AZ) and Conrad
Burns (R-MT) have introduced the Satellite Television Act of 1999
(S. 303) to address this issue by correcting some of the problems
in an obscure statute known as the Satellite Home Viewer Act of
1988 (SHVA). The SHVA allows satellite providers to retransmit
broadcast station signals to "unserved households," subscribers who
otherwise could not receive network broadcast signals
S. 303, as written, cannot prevent the "impending train wreck."
Legislators are becoming mired in a debate over the legalities and
technicalities associated with SHVA reform. For example, under S.
303, by 2002 satellite carriers would be required to carry every
local broadcast signal upon request by a local station. It is
uncertain whether the technology will be available to accomplish
this goal. Even if it is, such "must-carry" mandates interfere with
the workings of the free market in satellite service.
addition, the new standards that S. 303 would establish are just as
subjective as the current standards in the SHVA. S. 303 merely
alters the status quo to appease the interests of local broadcast
affiliates. Policymakers appear to be putting the interests of
consumers behind those of industry. If S. 303 passes as currently
written, millions of Americans will lose their current satellite TV
service, and many more will be unable to obtain high-quality
television programming signals from the providers of their
Congress would do well to adopt a bold new
paradigm for the industry which embraces the principles of
deregulation, competition, and consumer choice. Specifically, all
television consumers should be able to purchase service from
whomever they prefer and on whatever terms they can negotiate, and
neither legislation nor regulation should stand in the way of such
voluntary market transactions. These "consumers first" principles
would help guarantee that competition is preserved in this vital
sector of the economy.
the short term, to fix the SHVA, Congress should:
court-imposed deadline to cut off satellite transmission of network
broadcasting until this problem is resolved;
Allow households that
already subscribe to broadcast affiliates through a satellite
provider to be grandfathered into any new arrangement;
subscribers to carry over grandfathered services when they change
Eliminate the 90-day
waiting period for
canceling cable service for new satellite subscribers;
Allow a grace period
after a reform bill is passed during which additional consumers may
sign up for distant network signals; and
"unserved households" so that consumers are seen by the government
as the best judges of whether the quality of their local broadcast
signals is satisfactory.
the longer term, Congress should create a deregulatory framework to
sunset all regulations governing satellite signal delivery and
competition. Such a framework should:
Articulate a clear and
unfettered "consumer choice" standard;
Sunset the SHVA's
compulsory licensing requirements and allow voluntary negotiation
and freedom of contract between buyers and sellers of television
Reject the new
"must-carry" mandates; and
Clarify that state and
local regulation of the delivery of global satellite programming
interferes with interstate commerce, and therefore would be
reforms would help bring about a more competitive and innovative
satellite industry that guarantees consumers greater choice in
programming and service. It also would ensure continued vitality
and growth in an industry with important ramifications for U.S.
global competitiveness, as well as U.S. national security.
Adam D. Thierer is a former Alex C. Walker
Fellow in Economic Policy in The Thomas A. Roe Institute for
Economic Policy Studies at The Heritage Foundation. Bryan T.
Johnson is a former Policy Analyst for International Economic
Affairs in The Kathryn and Shelby Cullom Davis International
Studies Center at The Heritage Foundation.