I Want My Satellite TV

The government's television grab


Bud Smith is all worked up. "I won't go back," he insists. "I'm not about to–in no way, shape, or form–put up a 1950s antenna." And, he promises in an accent that recalls Ross Perot's, "I'm not going to buy into cable. There's a ghost in it and the sound's not good."

Smith lives in Port St. Lucie, Florida, where TV reception is poor and the area's high winds, lightning storms, and corrosive salt air constitute good arguments against erecting a 30-foot antenna over his home. That's why, in 1985, he bought a satellite dish–one of the big ones. As a result, he was able at last to pull down clear programming. Today, Smith pays his satellite company, PrimeTime 24, $17 a month for about 20 stations of his choosing, including network feeds off both the East and West Coasts, A&E, and three Showtimes.

But unless Congress acts soon, the government will take network television from Smith and approximately 2.2 million other people by the end of April. The reason: Smith is bypassing the local network affiliates. The government offers him two options: Buy cable TV or install a TV antenna. But Smith, a retired federal civil servant, thinks his own solution–keeping his satellite dish–is a whole lot better.

Congress and the Federal Communications Commission have long pursued their notions of "the public interest" in broadcasting, requiring plenty of restrictions. The government, for example, sets the price at which program copyright holders must sell to cable and satellite distributors, forces cable systems to carry all local broadcasting, and prevents satellite companies from delivering the same local programming. It's complicated terrain where each interest, except the consumer, has a fief.

There is, however, a small exception for satellite companies that puts them in direct competition with both cable and local TV. Under the 1988 Satellite Home Viewer Act (SHVA), satellite companies, while prohibited from distributing local programming, are allowed to deliver distant network affiliates to people who are unable to receive local, over-the-air network signals and who haven't subscribed to cable in 90 days. But Congress and the FCC never established a precise procedure for determining who was "unserved" by the networks. Satellite companies like Smith's PrimeTime 24 signed up people who claimed they couldn't get good reception, and before long they had more than 2 million customers.

Network affiliates, who have franchise agreements with the networks, consider this unfair. Last July, a Fox station and an NBC affiliate in Florida convinced a federal judge that it was illegal under the SHVA. The judge issued an injunction against PrimeTime 24 that will soon take effect.

At the core of the controversy lies simple protectionism for the broadcast and cable industries. After all, why shouldn't Smith, who used to live in Los Angeles, be able to buy West Coast TV feeds? Why shouldn't my own West Coast godparents, early risers both, be able to get the day's news, weather, sitcoms, and sports on an East Coast schedule, provided the owners of the programming are willing to sell it? And why shouldn't a TV consumer who lives between the two coasts be able to buy whatever she wants, including local affiliate programming, over her satellite?

Why? Because consumers who want to make such choices threaten "the public interest," according to Dennis Wharton, a spokesman for the National Association of Broadcasters. By circumventing the local television cartel (local network affiliates and cable TV), people who make such decisions deprive stations of ad revenue. Such seemingly private harm could precipitate a public calamity, Wharton warns, because local affiliates are the cornerstone of "localism and free over-the-air television." Says Wharton, "For years, the hallmark of American television has been the network-affiliate relationship. If you have 20 to 30 percent of your customers starting to leak off, and they are getting their signals from New York, that is very damaging to the network-affiliate relationship."

But TV viewers don't care. Today, 78 percent of American households buy their television, mostly through cable companies (with whom they have a love-hate relationship). These consumers want more choice, not less. And they aren't likely to stand by while the government protects industry interests at their expense.

PrimeTime 24 informed customers like Smith that, "due to circumstances beyond our control, we must terminate the NBC service you receive." Since then, congressional offices have received thousands of letters and calls of protest.

Smith, like many other satellite subscribers, did two things. First, he wrote to his local network affiliates asking each for a waiver–a signed letter permitting him not to consume their product. The ABC affiliate responded by advising him to "purchase and install an over-the-air antenna," or "purchase a basic `lifeline' cable service that provides local broadcast." The NBC affiliate had the same advice. Then Smith fired off letters to each federal and state elected official for whom he can cast a vote.

Meanwhile, in Finland, Minnesota, Crystal Peterson managed to secure the necessary waivers only after five weeks of sending letters and making phone calls of her own; she's not going to lose her network television. But after she was quoted on the matter in the local paper, she says the phone started to ring and neighbors started stopping by, wondering how they too could keep their satellite-delivered networks. "They are talking about a lawsuit," says Peterson, who adds that it would be "awesome" to get local network affiliate programming through her dish, too.

Under fire from angry constituents, members of Congress looked to the FCC to bail them out. The FCC opened a rulemaking procedure on November 17 to establish the standard for what it means to be an "unserved" TV consumer, but the results, released the first week of February, provide Congress with little cover.

The FCC decided that a household is "unserved" if it can't get a "Grade B" signal 50 percent of the time. And a Grade B signal, according to talking points put out by the FCC to assist Congress, "will not guarantee a perfectly clear image, but has been determined to be adequate for home viewing." In reality, this means some households, like Smith's, aren't able to get anything but snow. Says Smith: "That's ridiculous."

Worse for Congress, the FCC concluded that "only Congress can approve local-into-local [i.e., local network television signals provided through the satellite dish in the same service areas as the broadcast signal] legislation or fundamentally change the definition of `unserved household.'" That ought to keep the angry calls, letters, and e-mails coming.

Even the NAB is back-pedaling under assault from unhappy viewers and unhappier congressmen. "We don't blame the consumer here," says Wharton. "The fact is that they were duped. The consumers were duped into receiving this product thinking it was part of the package they could receive." He does, however, blame the "scofflaw satellite companies." Their strategy, he says, is "let's try to gin up all these customers [they] have hooked up illegally and put the wrath of several hundred thousand or more customers onto Congress and get them to change the law."

Actually, it's not a bad strategy.

When government blocks a new technology or innovative process, more often than not there's no large constituency to argue for the innovation, while there are plenty of vested interests eager to employ the rhetoric of "the public interest" to block it. But denying Americans their choice of something they already have is not a winning idea. Tell them they can no longer buy what they want, and you're in for a fight. A fight is exactly what Congress has.

The NAB's arguments boil down to these: We've fixed the law in our favor and it should never change. Local stations will lose advertising revenue when 20 percent to 30 percent of their customers peel off for clearer pictures, better sound, and better customer service. Without protectionism, NAB warns, Americans won't be able to get local weather and disaster news.

"Say you have an earthquake," Wharton suggests, after I tell him I'm originally from California and he realizes a snow storm example wouldn't work. "Local TV stations are the ones which provide information on breaking weather, emergencies, school closings, and things like that."

Not exactly. I was seven miles from the epicenter of Northern California's 1989 earthquake. I didn't need TV to tell me the ground was shaking, and I discovered that a portion of the Bay Bridge had collapsed and that the World Series game had been canceled from listening to my battery-powered radio. (The electricity tends to go out in a major quake.)

As for the need to get local weather news from local TV, remember Crystal Peterson? Her husband plows the Minnesota snow in the winter for extra income. He certainly needs accurate weather reports. Yet the Petersons happily tossed out their cable for the clarity of satellite TV. Until Crystal can get her local station through her dish, she reports, the radio works just fine for the weather report.

The SHVA is up for reauthorization this year. And come April, cable TV rates will be deregulated, and many in Congress would like to see that industry face some real competition. One solution would be to eliminate everyone's protections.

Cable could be freed from "must carry" regulations, which require local cable systems to transmit every broadcast station within their area, even if that means dumping C-SPAN to offer a fourth home-shopping station; satellites could be liberated from "can't carry" restrictions, which restrict them from providing local stations; and all parties could be urged to come to voluntary agreements over the rates paid to copyright holders. Consumers could pay for what they view, or limit themselves to what local networks provide.

This isn't likely to happen. Far more probable is a solution fashioned by Sen. John McCain (R-Ariz.), who chairs the Senate Commerce Committee, and Orrin Hatch (R-Utah), who chairs the Judiciary Committee. Their solution would permit satellite companies to broadcast "local-to-local" so long as they beamed down all the area's stations, a satellite version of cable's must-carry rules.

The NAB supports this approach. Congress will have to weigh the NAB's argument against Bud Smith's. "There's no reason I shouldn't be able to buy [my networks]," says Smith. "It's my money. I bought the dish. I maintain the dish. I should be able to buy what I want."

According to Wharton, Smith is simply "duped." Maybe Congress will come to a different conclusion.

Michael W. Lynch (mlynch@reasondc.org) is REASON's Washington editor.