Satellite Television: Provisions of SHVIA and LOCAL, and Related Issues

CRS Report for Congress
Satellite Television: Historical Information on
Marcia S. Smith
Resources, Science, and Industry Division
Congress has passed several laws to provide consumers greater access to local
network television stations, particularly via satellite. The 1988 Satellite Home Viewer
Act (SHVA), amended in 1994, was expanded in 1999 with the Satellite Home Viewer
Improvement Act (SHVIA). SHVIA allows (not requires) satellite companies to
retransmit a local broadcast network signal back into the same local market area from
which it originates (“local-into-local”). Concerned that satellite TV companies do not
plan to offer local-into-local in all parts of the country, Congress then passed the
Launching Our Communities Access to Local Television Act (LOCAL). That act
creates a loan guarantee program to help ensure that consumers in small and rural
markets receive local network TV stations via satellite or other technologies. This
historical report summarizes SHVIA and LOCAL, and the debate over whether a
company called Northpoint should be able to use the same frequencies as satellites to
transmit data and television using terrestrial systems. It does not address the 2004
Satellite Home Viewer Extension and Reauthorization Act (SHVERA). See CRS
Report RS21768 instead. This report will not be updated.
The Satellite Home Viewer Improvement Act (SHVIA)
The 1999 Satellite Home Viewer Improvement Act1 (SHVIA) expands on and
extends some provisions of the 1988 Satellite Home Viewer Act (SHVA), as amended,
regarding consumer reception of television signals via satellite dishes. Two major
companies, EchoStar and DirecTV (a subsidiary of News Corp.), offer satellite television

1 SHVIA is Title I of the Intellectual Property and Communications Omnibus Reform Act of

1999, included by cross reference in the FY2000 Consolidated Appropriations Act, P.L. 106-th

113. The final version of the bill, S. 1948, was introduced in the closing days of the 106st

Congress, 1 session to reflect changes the Senate wanted to make to the conference version of
H.R. 1554 (H.Rept. 106-464) that had already passed the House. S. 1948 was not reported from
any committee and hence there is no report language to accompany it. The report on H.R. 1554,
excluding the sections on the loan guarantee program and whether the compulsory license should
extend to Internet companies, is indicative of congressional views, however.
Congressional Research Service ˜ The Library of Congress

services today through their direct broadcast satellite (DBS) systems. EchoStar’s service
is called Dish TV. DirecTV’s programming is also distributed through the National Rural
Telecommunications Cooperative (NRTC) and by Pegasus Communications. Another
company, Rainbow DBS (a subsidiary of Cablevision) offers a comparatively small
number of satellite channels though a service called Voom. Historical information on
SHVA and the issues Congress faced in revising it are available in CRS Report 98-942.
The 1999 law, SHVIA, provides consumers greater access to broadcast network
television programming via their satellite dishes. The original law permitted rebroadcast
of distant network signals to consumers who lived outside the “Grade B contour” of
broadcast network affiliate stations. The 1999 law continues to permit that activity, but
also allows satellite companies to rebroadcast local network signals back into the same
local market area. They are not required to do so, however.
Local versus Distant Network Signals. The distinction between local and
distant network signals is important to understanding SHVIA. A local signal is received
within a network television affiliate’s local area. A distant signal is from elsewhere in the
country. If a consumer lives in Denver and is receiving a signal from a Denver network
affiliate, that is a local signal. If a consumer lives in West Virginia and is receiving a
signal from that Denver network affiliate via satellite, it is a distant network signal.
Who May Receive Distant Network Signals. The original SHVA established
the “Grade B”2 contour as the determining factor as to whether a particular household
was eligible to receive distant network signals via satellite. Consumers living inside the
Grade B contour were not allowed to receive such signals while those outside the contour
(in so-called “white areas”) were allowed to receive them. Some satellite companies
transmitted distant network signals to consumers inside Grade B contours, however,
leading to court challenges by the networks to try to force the satellite companies to obey
the law. Based on decisions by a Miami judge in 1998, over 2 million consumers
reportedly had, or were scheduled to have, distant network signals terminated by their
satellite companies. EchoStar appealed the decision to the Supreme Court in 2002, which
declined to hear the case.
In the 1999 law, Congress “grandfathered” consumers who had been receiving
distant network signals illegally as long as they could not receive a signal of “Grade A”2
intensity. For new subscribers, however, the original rules apply. To receive distant
network signals, new subscribers must not be able to receive a signal of Grade B intensity
as determined using the Individual Location Longely-Rice (ILLR) method for predicting
signal strength established by the Federal Communications Commission (FCC) in
February 1999. SHVIA directed the FCC to review whether the Grade B standard should

2 Grade A and Grade B contours can be visualized as circles around a TV station’s transmitter
indicating the strength of a signal received within that area. The Grade A contour is close to the
transmitter and reception there is better than in the Grade B contour, but reception within the
Grade B contour is still considered acceptable. The FCC describes these contours as follows: “a
quality acceptable to the median observer is expected to be available for at least 90 percent of the
time at the best 70 percent of receiver locations at the outer limits of [Grade A] service. In the
case of Grade B service the figures are 90 percent of the time and 50 percent of the locations.”
(FCC Cable Services Bureau, report FCC 99-14, CS Docket 98-201, paragraph 33.)

still be used for the purposes of SHVIA. The FCC concluded it should (FCC-016, ET
Docket No. 00-90).
Consumers who believe they are not receiving a Grade A or Grade B signal despite
predictive models showing that they are may seek a waiver to receive distant network
signals via satellite. Consumers must apply to their satellite company for the waiver. The
satellite company forwards the request to the local network affiliate. There is no time
limit for the satellite company to take that action. Once the request is received, the local
affiliate has 30 days to decide whether or not to grant the waiver. If the waiver is granted,
or if no action is taken by the affiliate, the consumer may then receive distant network
signals from the satellite company. If a waiver is denied, consumers may then request a
signal intensity test from their satellite company. The satellite company and the local
affiliate are required jointly to choose someone to conduct the test. The consumer does
not bear the cost of the test. Instead, the “loser” pays (either the satellite company or the
affiliate), or the satellite company and the affiliate may choose some other method of
paying the costs as long as the consumer does not pay. Exceptions were made for
recreational vehicles (as defined by Department of Housing and Urban Development
regulations), commercial trucks (as defined by Department of Transportation regulations),
and for consumers using large “C-band” satellite dishes. The RV or commercial truck
cannot be a fixed dwelling.
In summary, the following consumers may receive distant network signals until
December 31, 2004, the period for which the compulsory license (see below) was
!if they do not receive a signal of Grade B intensity from the local affiliate
of a particular network;
!if their satellite dish is installed on an RV or commercial truck, or
!if they had been receiving distant network signals illegally and those
signals were terminated or scheduled to be terminated under the 1998
Miami court rulings, and they do not receive a signal of Grade A
intensity from the local affiliate of the network.
Consumers using “C-band” dishes are not subject to the five year limitation. They
may receive distant network signals they were receiving before October 31, 1999
Who May Receive Local Signals. SHVIA permits DBS companies to provide
“local-into-local” service, where a local broadcast TV signal is transmitted up to the
satellite and back down to consumers in that same “designated market area” (DMA). The
law does not require the DBS companies to provide this service. There is considerable
confusion on this point, stemming, in part, from the fact the law also created a “must
carry” provision. Under must carry, each DBS company must provide all local broadcast
stations in a particular market if it provides any local station in that market. This does not
mean that DBS companies must carry local broadcast programming throughout the
country. Instead, if a DBS provider chooses to provide local broadcast programming in
a market, it must carry all local TV stations in that market that wish to be carried (with
exceptions for duplicative programing and educational stations). The DBS companies
still may choose not to provide local-into-local service in any particular market.

Cable companies already were subject to must carry rules (depending on the size of
the cable system). The must carry provisions for DBS went into effect on January 1,
2002.3 The DBS companies oppose the must carry requirement (see below) and
unsuccessfully attempted to overturn it in court.
According to their respective websites, as of October 2004, EchoStar offered local-
into-local in 152 markets and DirecTV in 106 markets. Both plan to add more markets
as additional capacity becomes available. There are 210 designated market areas (DMAs)
in the United States as identified by Nielsen Media Research, meaning that many smaller
communities do not receive local signals via satellite. DMAs differ in size, so the number
of DMAs served is not necessarily indicative of the percentage of the population able to
receive local-into-local. When EchoStar passed the 100 DMA mark, it reported that 83%
of the population could receive its local-into-local service. DirecTV asserts that it will
provide local-into-local in at least 130 DMAs by the end of 2004, which it says represents
92% of TV households. Congress passed the LOCAL Act (see below) in 2000 to help
ensure that small and rural areas that cannot obtain local-into-local service from EchoStar
or DirecTV can receive local television via other satellite or terrestrial technologies.
Compulsory Copyright License. Another issue regarding satellite
retransmission of television programming concerns compensation to those who own the
copyright on the programming. Under both the 1988 and 1999 laws, satellite carriers
were given a compulsory copyright license for restransmitting distant network and
superstation signals. That means that the copyright owners must make that programming
available to the satellite companies at government-set prices.4 Without such a license, the
satellite companies would have to negotiate with each copyright owner individually. The

1999 law extended the compulsory license for distant network signals for five years, untilth

December 31, 2004. The 108 Congress is considering whether to extend it further, and
whether to change how the prices are set (see CRS Report RS21768). For retransmitting
local signals, however, Congress gave the satellite companies a royalty-free permanent
compulsory copyright license. Cable has a permanent compulsory copyright license.
(Copyright compensation is separate from business arrangements negotiated to obtain
retransmission consent, which is explained in footnote 3 below.)

3 Each TV station chooses whether or not it wants to be carried by the satellite company.
Commercial stations choose between “retransmission consent” or “must carry” status. Under
retransmission consent, the station negotiates with the satellite company the terms under which
the station will be carried (usually involving payment of a fee by the satellite company, and
sometimes requiring the satellite company to carry other programming as well). Non-commercial
stations, and commercial stations that do not believe they can negotiate a favorable
retransmission consent arrangement, may elect “must carry” status where there are no payments
by either party. SHVIA also made four other cable regulations — syndicated exclusivity, sports
blackout, network nonduplication, and retransmission consent — applicable to satellite
companies. The first three apply to retransmission of signals of nationally distributed
superstations. Of those three, only sports blackout applies to network stations and only if
technically feasible and not economically prohibitive. For more on retransmission consent, see
CRS Report RL32026.
4 The rate set in 1997, 27 cents per subscriber per month for both superstations and distant
network stations, was controversial (see CRS Report 98-140A). The rates are set periodically
under procedures of the Copyright Office of the Library of Congress. SHVIA reduced the rate
for distant network signals by 45% and for superstation signals by 30%.

Table 1: Summary of SHVIA Provisions
!permits satellite companies to offer local-into-local television service;
!makes must-carry requirements effective for satellites on January 1,


!makes syndicated exclusivity, sports blackout, and network
nonduplication applicable to satellite retransmission of nationally
distributed superstations, but for network stations, only sports blackout
applies and only if technically feasible and not economically prohibitive;
!allows subscribers who do not receive a Grade A intensity signal and
whose distant network signals were terminated or were going to be
terminated because of 1998 Miami court rulings to have those signals
restored or continued until December 31, 2004 (“grandfathering” many
of the subscribers affected by the 1998 court decision);
!retains the Grade B signal intensity standard as the criterion for who may
receive distant network signals;
!allows subscribers unable to receive a Grade B signal, as well as
recreational vehicles and commercial trucks that are not fixed dwellings,
to receive no more than two distant network signals of each television
network on a single day;
!establishes a process for consumers to seek waivers from local affiliates
to receive distant network signals if signal strength is in doubt, at no cost
to the consumer;
!allows C-band satellite customers to continue receiving distant network
signals they were receiving as of October 31, 1999 indefinitely;
!extends the existing satellite copyright compulsory license for distant
network and superstation signals until December 31, 2004 and creates a
new compulsory license for local network signals with no sunset date;
!reduces the rate set in 1997 for copyright royalty payments satellite
companies must pay by 45% for distant network signals and 30% for
superstation signals (no copyright fees may be charged for local signals);
!eliminates the 90-day waiting period for cable subscribers; and
!allows satellite companies to offer a national Public Broadcasting Service
(PBS) feed through January 1, 2002; after that, local PBS stations would
have to be carried in markets where local-into-local service is provided.
The LOCAL Act: Loan Guarantees, and “Northpoint”
In 1999, the conference version of H.R. 1554 would have created a loan guarantee
program to help ensure that subscribers in small and rural markets benefit from the local-
into-local provisions even though EchoStar and DirecTV do not plan to offer such service
in all areas. The provision was deleted before final passage because of objections by
Senator Gramm that the proposal had not been sufficiently debated. Congress
subsequently passed the “Launching Our Communities Access to Local Television Act”
(LOCAL) as Title X of the FY2001 Commerce-Justice-State Appropriations Act as
enacted by the FY2001 District of Columbia Appropriations Act (P.L. 106-553).
Loan Guarantees. LOCAL created a four-person board, consisting of the
Secretaries of Treasury, Agriculture, and Commerce, and the Chairman of the Federal

Reserve, or their designees, to select recipients of loan guarantees for up to $1.25 billion
in loans (generally, 80% of the loan may be guaranteed). The loans may be used to build
systems to ensure that consumers throughout the country can receive local television
signals. The Board is to take into account whether a project serves “nonserved” or
“underserved” areas and whether it would provide high-speed Internet access. The act is
technology neutral in that it does not specify whether local TV stations would be provided
by satellite, cable, or other transmission media, but places some limits on which cable
companies are eligible. The Board’s website is [].
The Board issued regulations for the LOCAL Television Loan Guarantee Program in the
December 23, 2003 Federal Register (pp. 74411-74433). An application period ended
April 21, 2004. One application was received. On May 24, the Board voted 3-1 to return
that application because it was incomplete, and then voted unanimously to open another

60-day application period. However, the Board rescinded the latter decision on July 6.

The loan guarantee program is administered by the Rural Utilities Service in the
Department of Agriculture, which received $280 million in the FY2002 Agriculture
appropriations act (P.L. 107-76) for the program. Section 6404 of the Farm Security and
Rural Investment Act (P.L.107-171, H.R. 2646) allocated $80 million for the program
from the Commodity Credit Corporation through December 31, 2006. GAO is required
to review the program annually, and criticized the slow progress of the program in its first
such report (GAO-04-134, October 2003). Its second report (GAO-05-18R, October
2004) stressed the need for the Board to accurately accumulate and report administrative
costs to meet federal cost accounting requirements and determine what portion must be
recovered through fees.
The “Northpoint Provision”. LOCAL required the FCC to select an independent
entity to conduct tests to determine whether terrestrial systems operating in the same
frequency band as DBS satellites (12.2-12.7 Gigahertz) would cause unacceptable
interference to DBS systems. This is often called “the Northpoint provision” because a
company called Northpoint Technology, through its Broadwave subsidiary, wants to
operate a terrestrial wireless system offering TV programming similar to that provided by
DBS, and data services. It is seeking a license from the FCC for that terrestrial service,
designated MVDDS (Multichannel Video Distribution and Data Service). Until now, the
12.2-12.7 GHz band has been assigned only to satellites. The FCC chose the MITRE
Corporation to conduct the interference tests in 2001, and it concluded that the two
systems could not co-exist unless the MVDDS systems use a number of mitigating
techniques. DBS operators hailed the MITRE report because it concluded that MVDDS
would cause interference to their operations. Northpoint hailed the report because it said
there were mitigating steps that could be taken.
The FCC decided that MVDDS and DBS could co-exist, but dismissed without
prejudice applications by Northpoint and two other companies to provide MVDDS (FCC
02-116, ET Docket 98-206), deciding to auction the frequencies instead. Northpoint
objected to that decision, and chose not to participate in the auction. Other companies did,
however, and the auction was completed on January 27, 2004, raising $118.7 million
[ h ttp://] .
S. 564, and H.R. 1320 as reported from the Senate Commerce Committee (S.Rept.
108-168), would have eliminated the auction requirement for fixed terrestrial services
(such as MVDDS) other than mobile phones in the 12.2-12.7 GHz band. Similar
language was in the Senate-passed version of the FY2004 Commerce, Justice, State
Appropriations bill (Sec. 626 of S. 1585), but not in the final version of the bill (part of
the FY2004 Consolidated Appropriations Act, H.R. 2673, P.L. 108-199).