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Witness Testimony
Mr. Richard DalBello
Advancing the DTV Transition: An Examination of the FCC Media Bureau Proposal
Thank you Mr. Chairman and members of the Subcommittee, my name is Richard DalBello, and I am the president of the Satellite Broadcasting and Communications Association, or SBCA. SBCA is the national trade association that represents the consumer satellite services industry - our members include satellite television, radio and broadband providers, programmers, equipment manufacturers, distributors and retailers. Thank you for taking the time to hear the satellite industry's perspective on the digital transition. The digital transition has long been a priority for the Congress and the FCC. SBCA supports the FCC Media Bureau proposal as it has been described to SBCA by FCC staff, because we believe the proposal will: " Accelerate the timeframe in which millions of Americans will receive quality digital and high definition television services " Rapidly increase the sales of digital and HD televisions " Spur the production of high-quality digital and HD programming " Return more than $50 billion to the US treasury as a result of the auction of the analog spectrum " Free up valuable spectrum for new applications and essential public safety services DBS and the Digital Transition Today, over 22 million households in the U.S. receive multi-channel video service via satellite-that is one out of every five television households in the country. The growth that DBS has experienced and the resulting benefit to consumers of having a competitive alternative to cable are due in large part to the support the industry has received from Congress-especially in the form of a local-into-local license from the 1999 Satellite Home Viewer Improvement Act-and the FCC. DBS has offered subscribers a 100% digital transmission since its launch in 1994. For consumers with analog televisions, the digital signal sent from the satellites operated by the DBS providers is, for the most part, transformed back to an analog signal in the subscriber's set-top box, enabling service to these customers. Without the introduction of DBS as a viable competitor in the multi-channel video market, the word "digital" would not be part of the cable industry on such a widespread scale today. By offering a superior quality product at a competitive price, the DBS industry has not only given consumers a choice, but it has also accelerated the digital transition by introducing digital signals to the U.S. television industry. DBS also pioneered the carriage of High Definition, or HD, television by broadcasting the first HD signals by a multi-channel video programming distributor in 1999. By providing compelling content on an all-digital platform, DBS providers are giving the American consumer a reason to invest in digital equipment. DBS providers offer movies, sporting events, documentaries, concerts, public affairs programming and original series in HD. Right now, the two largest DBS service providers, DIRECTV and EchoStar, offer eight and nine HD channels respectively, and programmers are continuing to roll out HD programs and channels to meet this growing demand. With regard to network programming, both DIRECTV and EchoStar have negotiated a deal with Viacom to permit the rebroadcast of a distant HDTV feed of CBS into the owned-and-operated markets of Viacom providing a viable alternative to over-the-air reception. In addition, a new DBS operator, Rainbow DBS's VOOM, launched late last year. They offer an exclusive package of 39 High-Definition channels via satellite-including 21 exclusive HD channels and HD channels from many popular national cable networks. The DBS industry is also addressing the digital transition from the hardware side of the equation. All DBS providers currently offer set top boxes, or the boxes which sit on top of your television set, which decode both satellite and terrestrial (over-the-air) HD programming. Furthermore, DBS providers are the first pay television providers to offer high definition receivers with personal video recording capabilities. By continuing to lead the way in providing HD to homes across America, DBS is not only meeting consumer's wants and needs but also driving money into the economy by giving consumers a reason to upgrade their existing television sets. Issues Raised by FCC's Proposal In the past two years, the FCC has done a commendable job of resolving many of the complex technical and legal issues surrounding the transition to digital, which at one time seemed an impossible task. I would like to take this opportunity to thank them for their hard work and their efforts to come up with a feasible plan for this transition. However, there are two issues that I'd like to raise for discussion surrounding the overall digital transition: what material must be carried by satellite operators under the must-carry regime, and how to define an un-served digital household for the importation of a distant digital network signal. Digital must-carry concerns The carriage regime for over-the-air digital television stations both during and after the transition has not yet been finalized by the Commission. Due to technical burdens shouldered only by satellite operators because of the finite amount of spectrum available, special consideration must be taken when imposing mandatory carriage of local digital signals on satellite operators. DBS operators have spent billions of dollars to design, build, launch and operate satellites that now are now in orbit. The bandwidth consumption required by full digital must-carry obligations (dual carriage, multicast must-carry, full local HD carriage) would force DBS companies to dramatically restructure their entire business model, potentially eliminating the local-into-local services currently being offered in 127 markets. This undermines the Congressional and FCC intent to provide local-into-local service to as many consumers as possible as rapidly as possible. Dual Carriage of Analog and Digital Signals During the Transition In 2001, the FCC correctly concluded that "a dual carriage requirement may burden cable operators' First Amendment interests more than is necessary to further the important government interests they would promote." While the FCC Order did not address dual carriage requirements for DBS, technical and statutory reasons exist that make dual carriage even less appropriate for satellite operators. Satellite operators have a fixed amount of allocated spectrum within which to operate. If a dual carriage regime were imposed during the transition that required a satellite operator to carry both a broadcaster's analog and digital signal, DBS operators would be forced to turn off local service in many of its 127 markets where it is currently offered today, and the roll out of new markets would be aborted. Multicast Must-Carry Should Not be Required The FCC addressed cable's carriage requirement for a broadcasters' multicast programming stream in 2001, and determined that only one video stream and program-related services can be considered "primary" for carriage under the cable must-carry regime. Program-related services that are entitled to carriage include: closed captioning, V-chip/program ratings, Source ID Codes (used by Nielsen), and channel mapping and tuning protocol. We believe the FCC made the appropriate determination that multicast programming should not have to be carried by any MVPD. However, multicast must-carry is a bigger strain on DBS than cable, due to the nationwide nature of DBS and the severe spectrum limitations in which we operate. If a broadcaster's multicast content is compelling enough and our subscribers want it, we would carry it on our systems. The selection of HD and multicast programming stations should be driven by consumer choice and market demand rather than a government mandate. DBS Should be Allowed to "Downres" High-Definition Local Broadcasts Since High Definition (HD) provides up to six times greater the resolution of standard definition television, HD transmissions require significantly larger amounts of bandwidth than a standard digital definition (SD) signal. On our current satellites, compression methods allow for as many as 12 standard definition broadcast channels per transponder - with HD broadcasts, only 2-3 channels can be carried per transponder. Therefore, a DBS provider broadcasting 1 HD program must eliminate approximately 6 standard definition channels. A requirement that satellite carriers retransmit the full HD signal of every local broadcaster would severely reduce the number of local markets where DBS offers local-into-local. As long as the local broadcasters are making their digital signal available over-the-air, DBS consumers can receive the local HD transmissions through the digital tuners included in high-definition set-top boxes, therefore avoiding loss of local HD content while at the same time, conserving spectrum. For this reason, we encourage broadcasters to increase the power of their digital broadcast signals. These HD set-top boxes are becoming more widespread, and will continue to do so as the transition to digital television progresses. Un-served digital viewers It is inevitable that certain households, for topographic reasons or due to their distance from a broadcaster's tower, will not be able to receive an over-the-air digital signal. The compulsory license which authorizes satellite carriers to transmit distant network signals to those households who are unable to receive an over the air network signal doesn't distinguish between digital or analog transmissions. Despite the fact that nothing in the compulsory license itself would prevent a DBS provider from retransmitting a broadcaster's digital signal to subscribers, there are both regulatory and practical limitations on the satellite industry's ability to make digital signals available to consumers. Section 119 of the Copyright Act includes a very important limitation on the transmission of distant network signals. Such signals can only be retransmitted to un-served households. Un-served households are determined according to the Individual-Longley Rice (ILLR) model developed by the FCC. The FCC's ILLR is based on each individual broadcast station's analog signal propagation characteristics. In other words, the statute only defines the un-served analog households - not the un-served digital households. While propagation of digital signals may have many of the same characteristics as the analog signals, there will be differences. Indeed, a representative of the NAB told the House Judiciary Committee earlier this year that broadcasters have discovered that the digital contour "has some holes in it." In other words, some people who can receive the broadcaster's analog signal are not able to receive the digital signal. Before satellite carriers can avail themselves of the compulsory license to retransmit digital signals, Congress, the FCC and the Copyright Office will have to develop an un-served household definition for digital broadcast signals. Once there is a reliable predictive model of which consumers will be un-served by over-the-air digital broadcast stations, the DBS industry is uniquely positioned to make good on Congress' goal that digital television become available to all Americans. Our proposal is simple. Allow households that cannot receive their local affiliates' digital signals to receive network DTV signals from their satellite TV provider. This can be done by broadening the existing compulsory license to permit DBS providers to offer network digital service in un-served areas. The expanded license would limit DBS service to only those households that cannot receive an over-the-air digital network signal. The availability of distant digital signals would have no real impact on the roll out of analog local-into-local service to additional markets by DBS operators. Conclusion SBCA and the DBS industry support the FCC's plan to accelerate the transition to digital broadcasting. As we have stated, we believe the plan will result in tangible and important benefits for consumers, taxpayers, and the security of our nation. We understand that the plan could mean that there are people who will no longer be able to receive an over-the-air signal on their analog televisions. However, as an industry, we have been providing a national digital signal to consumers with analog televisions since our inception. We believe that affordable technologies can be made available to solve the analog to digital conversion problem. The DBS industry is willing to work with Congress to aid in any additional solutions to meeting these consumers needs in a manner that's reasonable to the consumer, the government and the DBS industry. Satellite operators were the first to offer digital multi-channel video to consumers, spurring a $75 billion investment by the cable industry to keep up with our digital offerings. We have long believed in digital. However, due to the technical burdens of spectrum constraints and the questionable constitutionality of forced dual, multicast and full local HD carriage, we encourage Congress and the FCC to continue to not impose a carriage regime for digital signals that will slow the rollout of local channels via satellite and thus harm the MVPD competition fostered by over ten years of this Subcommittee's and FCC policy. Thank you again for your time today, I look forward to answering any questions that you may have. Related Documents |
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