Direct broadcast satellite (DBS) services have emerged as the primary competitor to traditional cable television systems in the United States. The three major DBS companies - DirecTV, Echostar, and Primestar - now serve more than 10 million subscribers with very small, competitively priced satellite dishes. These services typically provide as many or more national entertainment channels than most cable systems and provide sophisticated pay-per-view systems for movies and events. But they are disadvantaged in their ability to compete with cable television by their lack of ability to provide local broadcast stations.

   Cable, of course, has long carried local broadcast stations under a compulsory copyright license, and viewers spend more time watching broadcast stations on cable than any cable programming service. Because DBS services traditionally have been national, one-size-fits-all services, copyright law has not provided a similar license to permit the carriage of local stations by DBS carriers. (There is a compulsory license that permits carriage of network stations to households that are "unserved" - that is, households that cannot receive via a standard outdoor antenna any station owned by or affiliated with that network. This license was created to extend network service to the few, mostly rural homes that truly cannot receive any over-the-air network station, and does not permit DBS providers to provide network stations to households that can receive the same station's signal over the air.)

Congressional Action on "Local Into Local" Service

   With new developments in satellite technology, however, some carriers now have proposed transmitting the signals of local broadcast stations to subscribers located in the same market (so-called "local into local" service). In 1998, several bills were introduced to create a statutory license that would permit DBS carriers to provide local-into-local service. Generally, these bills attempt to structure a regulatory regime for DBS carriage of broadcast signals that would be comparable to the plan established for cable carriage of broadcast signals by the Cable Television Consumer Protection and Competition Act of 1992.

   Under the 1992 Cable Act, broadcast stations may elect to require their signal to be carried by local cable systems. The constitutionality of these "must carry" provisions was upheld by the Supreme Court largely on the basis of Congress's findings that cable exercises a "gatekeeper" function over broadcast audiences by virtue of its service to some 60 percent of U.S. households and that stations not carried by cable could be expected to fail. See Turner Broadcasting System, Inc. v. FCC, 512 U.S. 622, 653 (1994). The statute did not violate the First Amendment, the Court held, because it furthered an important governmental interest; that interest was "unrelated to the suppression of free expression"; and "the incidental restriction on alleged First Amendment freedoms [was] no greater than is essential to the furtherance of that interest." Id., quoting United States v. O'Brien, 391 U.S. 367, 377 (1968).

   Congressional efforts to replicate the concept of local signal carriage for satellite providers have included must-carry requirements as well. The Copyright Compulsory License Improvement Act, H.R. 3210, introduced by Rep. Howard Coble (R-N.C.) on Feb. 12, 1998, was the first bill this session to attempt a comprehensive approach to the carriage of local broadcast stations by DBS systems. This bill intended to create regulatory parity between the cable and satellite legal structures by largely replicating the requirements of the 1992 Cable Act in the context of DBS signal carriage. It accomplished this goal, however, in a less restrictive manner than would have been the case for cable systems - no must-carry obligations were imposed upon any DBS carrier, but any DBS carrier wishing to avail itself of the federal license to provide local signals by satellite would be obligated to carry "all broadcast stations located within that local market." Exceptions and limitations similar to those in the 1992 Act were provided as well (for example, signals that largely duplicated one another need not be carried, and no carrier would be required to use more than one-third of its capacity for must-carry signals).

   Similarly structured bills were introduced by Sen. John McCain (R-Ariz.), Rep. Billy Tauzin (R-La.), and Rep. Richard Burr (R-N.C.). The mechanisms in these bills differed - for example, the Tauzin bill would have required carriage of a maximum of five stations per market until either 2002 or the point at which DBS providers served 15 percent of any community; the McCain bill would have required full must-carry by 2002, with compensation to be paid by DBS carriers to certain noncommercial educational stations that were not carried. But in all cases, the legislation would have established a system whereby any satellite carrier that wished to transmit the signal of any local broadcast station to its local community would have been required to carry the signals of additional, and in some cases all, stations at some point in time. These bills lapsed as Congress adjourned, but Rep. Burr reintroduced his bill as the 106th Congress convened in January 1999.

Constitutional Questions

   None of these bills was reported out of committee, largely because of disagreements between the satellite and broadcasting industries. The few brief hearings held on the bills focused largely on technical and industry issues rather than whether the proposed regimes would pass constitutional muster. There are at least three arguments in favor of the constitutionality of such requirements. First, much of the reasoning of the Turner case would be applicable to the transmission of broadcast signals by satellite as well as cable. Second, the U.S. Court of Appeals for the District of Columbia Circuit has held that a lower constitutional standard may be applied toward DBS carriers because they use scarce, governmentally allocated spectrum. In Time Warner Entertainment Co. v. FCC, 93 F.3d 957 (D.C. Cir. 1996), the court upheld a regulatory requirement that 4 percent to 7 percent of satellite capacity be dedicated to "public interest" programming under the less demanding constitutional standard applied to the traditional broadcast media. The court held that because the set-aside requirement is "' reasonable means of promoting the public interest in diversified mass communications,' it does not violate the First Amendment rights of DBS providers." Id. at 977, citing FCC v. National Citizens Comm. for Broadcasting, 436 U.S. 775, 802 (1978) ("NCCB"). Third, the must-carry requirements at issue here do not impose an across-the-board burden on all DBS providers, but require that any DBS providers that wish to avail themselves of the governmentally granted benefit of a compulsory copyright license must carry a full complement of stations.

   On the other hand, satellite carriers may be expected to argue that the Turner case was based on the unique circumstances of the cable medium, and that a regulatory response that may have been constitutional as applied to a "gatekeeper" medium would be unconstitutional as applied to a nascent new medium. As the Turner Court stated:

The must-carry provisions, as we have explained above, are justified by special characteristics of the cable medium: the bottleneck monopoly power exercised by cable operators and the dangers this power poses to the viability of broadcast television. Appellants do not argue, nor does it appear, that other media - in particular, media that transmit video programming such as MMDS and SMATV - are subject to bottleneck monopoly control, or pose a demonstrable threat to the survival of broadcast television. It should come as no surprise, then, that Congress decided to impose the must-carry obligations upon cable operators only. Turner, 512 U.S. at 661.