Perhaps the biggest issue in this market today is the proposed merger of Echostar and DIRECTV.  This union, if approved by regulators, would marry the nation's two DBS providers, creating a satellite company larger than the largest cable MSO today, AT&T. This hearing, among other things, will examine this proposed merger's impact on competition in the MVPD marketplace, its impact in the broadband marketplace, and most importantly, its impact on consumers. 

In my mind, the question of whether this merger should go forward comes down to three tests:  (1) will a combined Echostar/DIRECTV increase the likelihood that DBS and cable industries will remain the formidable competitors they are today?; Test 2: will a combined Echostar/DIRECTV yield real benefits to consumers?  Will it ensure that DBS and cable continue to prod each other to serve an increasing number of markets, offer increasingly competitive prices, and improve service offerings through technological innovation?  And finally Test Three: will a combined Echostar/DIRECTV result in an MVPD marketplace that will accommodate new, aspiring MVPD competitors?   

As most of you know, I strongly believe that it is absolutely vital to have a vibrant DBS industry to provide head-to-head competition with the incumbent cable industry.  They make each other better and consumers win.   Moreover, as the cable industry continues to undergo its own consolidation - indeed a number of cable companies want to acquire ATT's cable unit-- this committee must consider whether or not the satellite industry needs this merger if it is going to survive and thrive as one of several competitors for video services in the future. 

Echostar and DIRECTV need to demonstrate clearly the consumer benefits that would result from this merger.  In particular, I am interested in the nine million rural consumers who do not have access to cable.  Today, they can choose between Echostar or DIRECTV.  Should this merger be blessed by DOJ and the FCC, these consumers will be left with what some believe to be a Hobson's choice of obtaining video services from the merged company or from no one at all.  Because enabling the creation of a viable and vibrant satellite TV industry was to create more choice for consumers, I must ask: how would this merger increase or diminish consumer choice in video services?  

This merger also will have a tremendous impact on the broadband marketplace.  If satellite is going to be a competent competitor in the broadband world, providing video services along with interactive high-speed data services and Internet services, it needs to do a better job than it does today. Cable has a superior broadband product, and the local phone companies need regulatory relief to unleash their great potential as broadband competitors  (which is why I am working hard to bring HR 1542 to the floor). A merged DBS entity, with more financial strength, may indeed be more capable of developing and providing competitive broadband products.  

While there has been much talk regarding this merger, there is other activity in this marketplace I hope will be addressed this afternoon. 

For example, in 1992 Congress was concerned that the majority of cable operators enjoyed a monopoly in program distribution at the local level, and concluded that the use of exclusive contracts between vertically integrated programming vendors and cable operators served to thwart the development of competition among distributors.  So Congress absolutely prohibited exclusive contracts between vertically integrated programming vendors and cable operators in areas unserved by cable.  

However, we generally prohibited exclusive contracts within areas served by cable, unless the FCC determined that such a contract was in the public interest.  We did this because we recognized that in these instances, some exclusive contracts provide countervailing benefits to the programming market or to the development of competition among distributors.  This general prohibition on exclusive contracts in areas served by cable will sunset on October 5, 2002, unless the FCC determines that the prohibition continues to be necessary. At this point I have come to no absolute conclusions on whether or not this rule has served its purpose so I hope to learn more today.  

On another issue, Congress also passed the Satellite Home Viewer Improvement Act of 1999, which granted DBS providers the authority to distribute local broadcast television stations in their local markets without obtaining copyright permission to do so.   For the first time the DBS industry would be able to compete on comparable footing with local cable operators when it comes to the availability of broadcast programming. However, SHVIA requires satellite carriers, by January 1, 2002, to carry upon request all local TV broadcast stations in local markets in which the satellite carriers carry at least one TV broadcast station, also known as the 'carry one, carry all' rule.  The DBS industry has brought suit saying that this law violates their constitutional rights.  How does this lawsuit dovetail with Echostar's commitment to serve more local markets?  I look forward to discussing this issue with Echostar, DIRECTV and NAB today.   

Last but not least, this hearing will cover the FCC's recently initiated proceeding to re-examine its horizontal and vertical limits for cable companies.  The FCC's rules were remanded because the court determined that the FCC's prior cable ownership limits had not been adequately supported and that the FCC had not sufficiently considered changes in the MVPD marketplace.    Just yesterday, the Supreme Court declined to review that ruling. 

I am anxious to hear from our witnesses on these and other issues.