Leahy Introduces Bill To Modernize Satellite Television Services

WASHINGTON (Tuesday, September 15, 2009) – Senator Patrick Leahy (D-Vt.) Tuesday introduced legislation to reauthorize, modernize and simplify portions of the statutory license used by satellite television providers.  The authorization for the license is set to expire on December 31.

The bipartisan Satellite Television Modernization Act will reauthorize the expiring statutory licenses that permit satellite providers to retransmit broadcast stations to consumers.  The bill will also modernize and simplify the licenses, while making adjustments that will encourage satellite providers to make more local content available.  The Leahy-authored legislation includes a provision that will particularly benefit Vermont satellite television customers in Vermont’s southern-most counties, allowing DISH Network viewers, like DirecTV viewers, to receive Vermont broadcast stations by satellite.  The legislation will also make it easier for satellite providers to serve local markets that are missing a network affiliate.

“This bill will give consumers in southern Vermont more options by allowing DISH Network to offer local Vermont broadcast stations in Windham and Bennington Counties, a service DirecTV already provides,” said Leahy.  “Competition between providers benefits consumers, and this change will finally place satellite companies and cable on an equal footing throughout Vermont.  The bill also preserves access to the channels that Vermonters are used to receiving on cable, such as WCAX in the south and Canadian television in the north.  Cable viewers in Vermont have long enjoyed a unique mix of stations, and this bill ensures that they will continue to well into the future.”

The Satellite Television Modernization Act will:

• Make technical changes to bring statutory licenses into the digital age by defining an unserved household based on the ability of a consumer to receive a good quality digital signal, rather than an analog signal.
• Expand access to low power stations by broadening the license for low power stations to cover the entire local market.
• Permit satellite providers to carry a noncommercial educational broadcast station from within a consumer’s state if the station is part of a state-wide network.
• Improve the ability of both DirecTV and DISH Network to provide local signals to local markets by making several minor improvements.
• Address the “phantom signal” issue in which, under current law, cable providers may be required to pay royalty fees under Section 111 based on subscribers who do not receive the content for which the royalty is being paid.

On February 25, the Senate Judiciary Committee, which Leahy chairs, held a hearing to examine expiring satellite television provisions.  The hearing included testimony from television networks, satellite providers and broadcasters to address the concerns and changes of reauthorizing the legislation.  Congress first passed the Satellite Home Viewer Act in 1988 and it was last reauthorized in 2004.  The legislation introduced Tuesday draws on recommendations made by the United States Copyright Office in a June 2008 report.    

The text of the Satellite Television Modernization Act is available online.

The full text of Leahy’s statement on the introduction of the Satellite Television Modernization Act follows.

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Statement Of Senator Patrick Leahy (D-Vt.),
Chairman, Committee On The Judiciary,
On Introduction Of The Satellite Television Modernization Act Of 2009
September 15, 2009

We have witnessed over the past decade a tremendous development in the way video content is made available to consumers.  Today, as a result of digital technology, we can watch movies, television programs, and other video content not only on our television sets, but also on our computers, phones, and other mobile devices.  In order to maximize the potential of digital content, Congress must ensure that our copyright and communications laws are similarly modernized and updated to accommodate the digital revolution.  Today, I join with Senators Sessions, Kohl, Hatch, and Kyl in introducing the Satellite Television Modernization Act of 2009, which was drafted with those goals in mind.  The legislation will reauthorize, modernize, and simplify important portions of the statutory license used by satellite providers that expires at the end of this year.

The transition to digital television requires Congress to modernize the statutory copyright licenses that allow cable and satellite providers to retransmit the content of local broadcast stations.  In February, many stations across the country, including those in Vermont, made the digital transition and can now offer multiple programming channels over a single, crystal-clear digital signal.  In June, the remaining broadcast stations across the country completed the digital transition.  The current statutory licenses are based on the now outdated analog standard; in this reauthorization, we will ensure that the licenses work properly in the digital world.

In June 2008, the United States Copyright Office issued a report on the statutory licenses, and offered recommendations on how to improve the current system.  The Office’s principle recommendation was to move toward abolishing the compulsory licenses, in particular the distant signal licenses; short of that, the Office offered suggestions on how to harmonize and streamline the licenses. 

The legislation we introduce today draws on the recommendations of the Copyright Office and takes important steps toward limiting future reliance on the section 119 distant signal license used by satellite providers.  This legislation will move locally-oriented elements out of the distant signal license, such as the special exception that allows Vermonters in the State’s southern-most counties to receive Vermont broadcast stations by satellite, and place them into the section 122 license, which facilitates the retransmission of local content with the consent of the broadcaster.  The bill will also fix an anomaly in the distant signal license, which will make it easier for satellite providers to serve local markets that are missing a network affiliate.  

Making these changes will improve the ability of satellite providers to deliver a full complement of network stations to consumers, as well as make it easier for them to offer local stations.  In Vermont, these changes will have the additional benefit of fostering competition between DISH Network and DirecTV, by allowing DISH to offer Vermont broadcast stations in southern Vermont, a service DirecTV provides today.  The legislation also adds a new provision to the local license that will allow satellite providers such as DISH to import a missing network station from an adjacent market when the local market is not served by all four principle networks, after that the provider first obtains the station’s consent.  This new provision will make it more likely and reasonable for DISH to launch local service in these markets, which is good for local broadcasters, good for satellite providers, and good for consumers.    

These changes will not only improve the satellite licenses, but will begin the process of truly phasing out the distant signal license as satellite providers offer local service in more markets.  As the distant signal license fades, Congress should follow the Copyright Office’s suggestion and move ultimately toward a market-based system, in which statutory licenses are unnecessary. 

One step we can further take toward a marketplace model this year is to allow broadcast stations to opt-out of the statutory licenses.  All non-broadcast channels carried by cable and satellite providers, such as ESPN and the USA Network, are able to aggregate a complex series of content rights, and negotiate for carriage in the free market.  Local broadcasters should be permitted to do the same if they, too, are able to aggregate the necessary rights to license directly to cable and satellite providers.  This is a proposal I expect the Judiciary Committee to examine as the bill moves through the mark up process.  I encourage all industry participants to work with the Committee so that we can address any concerns about this market-based approach. 

Short of repealing the compulsory licenses, the Copyright Office recommended harmonizing the cable and satellite licenses in order to create regulatory parity between the two industries.  The section 111 license used by cable, for instance, is based on FCC rules that have long since been repealed, and the license itself has not been significantly updated since it was established more than thirty years ago.  The arcane nature of the cable license can at times produce unintended results, such as cable companies paying copyright holders for content that consumers do not actually receive.  This is referred to as the phantom signal problem.  In contrast, satellite companies do not experience this issue because they pay a flat, per subscriber rate based on consumers actually receiving a broadcast station.  Comprehensive reforms to section 111 that aim to modernize the statute and create regulatory parity between cable and satellite providers would address these disparities, but we take a more modest approach in the bill we introduce today.  The legislation contains an amendment that will resolve the phantom signal issue.  I appreciate that members of the content community and the cable system came together to find a solution on which they can all agree.

The Satellite Television Modernization Act is one component of the reauthorization.  Portions of the expiring law are within the jurisdiction of the Senate Committee on Commerce, and I look forward to working with the leadership of that Committee, and our counterparts in the House of Representatives, to enact legislation that once again improves the law by fostering competition, protecting broadcasters, and improving service to consumers.

I ask unanimous consent that the full bill text be inserted in the Record.

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