The president signed the Satellite Home Viewer Improvement Act of 1999 (SHVIA) on Nov. 29, 1999. SHVIA permits satellite companies to provide "local into local" service -- that is, they may provide local broadcast TV signals to all subscribers who reside in the local TV station’s designated market. Satellite companies also may provide "distant" network broadcast stations to certain eligible satellite subscribers, the so-called "unserved households" that are unable to obtain local network stations over the air.

    SHVIA is designed to promote competition among multichannel video programming distributors (MVPDs), such as satellite companies and cable operators, by placing them on an equal footing as to the availability of broadcast programming. The act also gives consumers more and better choices in selecting an MVPD.

    SHVIA delegated numerous tasks to the Federal Communications Commission to implement the legislation within a number of strict statutory deadlines. The law requires the Commission to establish rules for satellite companies in regard to mandatory carriage of broadcast signals, retransmission consent, and program exclusivity. The FCC also must make recommendations on use of the Grade B signal standard (an FCC-defined measure of the strength of a television station’s signal as received at a specific location) and improve the computer model that predicts signal intensity at a household for the purpose of determining eligibility for receiving distant television broadcast signals via satellite.

    The FCC began its tasks immediately, issuing on Dec. 22, 1999, a notice of proposed rulemaking on retransmission consent negotiations between broadcast television stations and MVPDs such as cable and satellite companies -- that is, the process whereby television broadcasters negotiate and consent to carriage of their signals by MVPDs. Implementation of the Satellite Home Viewer Improvement Act of 1999: Retransmission Consent Issues, Notice of Proposed Rule Making, CS Docket No. 99-363, FCC 99-406 (rel. Dec. 22, 1999).

    In March 2000, months ahead of the statutory deadline, the FCC adopted rules for retransmission consent. Implementation of the Satellite Home Viewer Improvement Act of 1999, Retransmission Consent Issues: Good Faith Negotiation and Exclusivity, First Report and Order, CS Docket No. 99-363, FCC 00-99 (rel. March 16, 2000) ("Retransmission Order").

    SHVIA prohibits broadcasters from entering into exclusive retransmission consent agreements and requires broadcasters, until 2006, to negotiate in good faith with MVPDs with respect to the broadcasters’ signals. The Retransmission Order adopts a two-part test for such good faith. The first part consists of a brief, objective list of negotiation standards. For example, a broadcaster may not refuse to negotiate and may not put forth a single, unilateral proposal. Retransmission Order, at paras. 40-47. The second part of the test is based on a "totality of the circumstances" standard: An MVPD may allege facts that, even if they do not constitute a violation of the specific standards enumerated in the first part, constitute a failure to negotiate in good faith given the totality of the circumstances. Id. at para. 32.

    The law states that agreements based on "competitive marketplace considerations" do not violate the good faith requirement, but the FCC concluded that it could not identify objective competitive marketplace factors broadcasters must use in negotiating. Instead the Commission offered some guidance by listing several conditions that would meet the legal standard and some that would not. Id. at paras. 56-58.

    As to exclusivity, the Retransmission Order prohibits not only entering into exclusive retransmission consent agreements, but also negotiating such agreements that would take effect after the sunset of the prohibition on Jan. 1, 2006. Id. at paras. 65-72.

    SHVIA requires satellite carriers, by Jan. 1, 2002, to carry upon request the signals of all local television broadcast stations in those local markets in which the satellite carrier carries at least one such signal. Having dealt with retransmission consent and exclusivity in the Retransmission Order discussed above, the FCC then set forth rules governing these must-carry requirements in Implementation of the Satellite Home Viewer Improvement Act of 1999: Broadcast Signal Carriage Issues; Retransmission Consent Issues, Report and Order, CS Docket Nos. 00-96, 99-363, FCC 00-417 (rel. Nov. 30, 2000) ("Must-Carry Order").

    While Congress indicated that satellite carriage requirements should be comparable to must-carry for cable, the FCC noted that, unlike cable operators who must carry some broadcast stations, SHVIA does not require satellite operators to carry any television stations in markets where they do not offer local-into-local service. But if a satellite company does carry at least one broadcast station in a local market, it must carry all television stations in that market without regard to any statutory channel capacity cap as cable enjoys. Must-Carry Order, at para. 5.

    Among the most significant carriage rules the Must-Carry Order implements are the following: Television stations in markets with local-into-local service must elect between retransmission consent and mandatory carriage on an election cycle comparable to that for cable; under SHVIA’s provisions as to what duplicative broadcast signals a satellite carrier must carry, the duplication definition for commercial television stations mimics that for cable carriage, and a satellite carrier is not obligated to carry two of the same network affiliates even if their signals do not duplicate; and a satellite carrier must carry all non-duplicative noncommercial educational television stations in a market where it provides local-into-local service.

    In addition, a satellite carrier must carry all local television stations in a contiguous manner on its channel line-up and not discriminate as to its electronic program guide, degree of picture quality, or price terms to subscribers between television stations that elect mandatory carriage or elect retransmission consent; and a satellite carrier must carry the primary video and accompanying audio of local television stations and all program-related material in a station’s vertical blanking interval unless it is technically infeasible to do so. As to the advent of digital broadcast television, the Commission left satellite digital carriage issues to be determined later at the same time it addresses cable digital carriage issues. Id. at para. 9.

    At least one lawsuit was filed late in 2000 claiming SHVIA’s carriage requirements are unconstitutional for several reasons. Id. at para. 10 & n.16.

    Contemporaneously with its must-carry order, the FCC further implemented SHVIA by establishing regulations to apply network program non-duplication, syndicated program exclusivity, and sports blackout requirements to satellite television carriers. Implementation of the Satellite Home Viewer Improvement Act of 1999: Application of Network Non-Duplication, Syndicated Exclusivity, and Sports Blackout Rules to Satellite Retransmissions of Broadcast Signals, Report and Order, CS Docket No. 00-2, FCC 00-388 (rel. Nov. 2, 2000) ("Program Exclusivity Order").

    These three sets of program exclusivity rules previously have been applied in the cable context to protect exclusive contractual rights negotiated between program providers and broadcasters or other rights holders. These exclusive contract rights could be threatened by cable systems importing duplicative programming from distant sources beyond the control of the contracting parties. The cable program exclusivity rules therefore provide that specific programs must be deleted from distant television broadcast signals delivered to cable subscribers if the programs are subject to exclusive rights pursuant to contracts with local stations. The cable sports blackout rule also requires that sporting events carried on distant stations be deleted when cable carriage would violate sports teams’ or leagues’ arrangements to protect gate receipts in the local market. Program Exclusivity Order, at para. 3.

    SHVIA requires the FCC to apply network non-duplication protection, syndicated exclusivity protection, and sports blackout protection to the retransmission of the signals of nationally distributed superstations by satellite carriers to subscribers, and to apply sports blackout protection also to such retransmission of network stations to the extent technically feasible and not economically prohibitive. These rules for satellite operators are to be as similar as possible to the cognate rules applicable to cable operators in keeping with Congress’s goal of creating parity between satellite carriers and cable operators, while taking into consideration their different operational structures, and promoting competition among MVPDs. Id. at paras. 4-5.

    The FCC has summarized its three rules as follows. The Network Program Non-Duplication Rule allows a local TV broadcast station to protect its exclusive distribution rights for network programming against duplicating programming carried on a nationally distributed superstation by a satellite carrier. The Syndicated Program Exclusivity Rule allows a local TV broadcast station or syndicator to protect its exclusive distribution rights for syndicated programming against duplicating programming carried on a nationally distributed superstation by a satellite carrier.

    For both these rules, the local TV broadcast station may demand that the satellite carrier black out any duplicate carriage of the program (network or syndicated), regardless of whether the local TV station’s signal is carried by the satellite carrier in question. Both of these rules apply only to programming that appears on six specifically defined superstations, and only within a specified geographic area based on the location of the station and the zip code of the subscriber. Id. at paras. 6-7.

    The Sports Blackout Rule protects a sports team’s or league’s exclusive distribution rights to a local sporting event. The sports blackout rule applies only if a local TV broadcast station is not carrying the local sporting event. If a local TV broadcast station does not have permission to carry the local game, then no other broadcaster’s signal displaying the game can be shown in the protected local blackout zone. The rule applies to a satellite carrier’s retransmission of nationally distributed superstations and network stations. Id.

    The new rules apply to both C-Band (large dish) and DBS (small dish) satellite service providers.

    Finally, in 2000 the FCC addressed a number of technical matters involved in implementing SHVIA. In compliance with the statutory mandate, the Commission prescribed an improved point-to-point predictive model for determining the ability of individual locations to receive an over-the-air television broadcast signal of a specific intensity through the use of a conventional over-the-air rooftop antenna. Establishment of an Improved Model for Predicting the Broadcast Television Field Strength Received at Individual Locations, First Report and Order, ET Docket No. 00-11, FCC 00-185 (rel. May 26, 2000).

    This model will be used to determine whether individual households are "unserved" by their local (network affiliate) stations and therefore eligible to receive distant network signals through satellite carriers. The FCC also provided for this model’s continued refinement by the use of additional data as such becomes available.

    Later in the year the FCC, as required by SHVIA, reported to Congress as to what signal intensity standard should be used to determine which satellite television subscribers are "unserved" and therefore eligible to receive retransmitted distant signals of network stations. Technical Standards for Determining Eligibility for Satellite-Delivered Network Signals Pursuant to the Satellite Home Viewer Improvement Act, Report, ET Docket No. 00-90, FCC 00-416 (rel. Nov. 29, 2000).

    The Commission recommended that the Grade B signal intensity standard with a number of "planning factors" be used for this purpose. The Commission also recommended that the establishment of such a standard for digital television signals be deferred until there is greater digital television penetration and more experience with digital television.

    The Commission’s various proceedings on satellite television during 2000 should greatly facilitate implementation of SHVIA and spur further competition in the MVPD market.