Satellite Television: An Analysis of Legislation Creating Loan Guarantees for Providing Local Broadcast TV Signals

Publication Date: January 2001

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Media, telecommunications, and information

Type:

Abstract:

The 106th Congress passed legislation to establish a loan guarantee program to help ensure that consumers can obtain local broadcast television channels via satellite or other technologies. Called the "Launching Our Communities Access to Local Television Act," or LOCAL, it is Title X of the FY2001 Commerce-Justice-State (CJS) appropriations bill, enacted as part of the FY2001 District of Columbia (DC) appropriations bill (P.L. 106-553).

The impetus for the legislation was passage of the Satellite Home Viewer Improvement Act (SHVIA, see CRS Report RS20425) in 1999, which allowed satellite companies, for the first time, to offer local network television to their customers--called "local-into-local" service. A major factor in Congress' decision to allow satellites to offer local stations was to increase competition to cable because of consumer complaints about cable rate increases. The two existing satellite TV companies, EchoStar and DirecTV, plan to offer local-into-local only to the top markets in the country, however. Some Members were concerned that consumers in small and rural markets would not benefit from the new service, while others more broadly wanted to ensure that consumers in all markets, regardless of size, have competition to cable. Consequently, a provision was added to SHVIA during conference in 1999 to offer loan guarantees to satellite and other companies to build systems to provide local TV stations. The provision was removed before final passage, however, and House and Senate leaders agreed that new legislation reflecting the same concerns would be considered by each chamber in 2000.

By mid-April 2000, the House and Senate had passed H.R. 3615 and S. 2097, respectively. No conferees were appointed. Instead, a modified version was included in the conference version of the FY2001 DC/CJS appropriations bill as noted above. Representative Markey expressed concern during floor debate on that version of the bill on October 26 (Congressional Record, page H11283) over the extent to which cable companies will be able to apply for the loan guarantees. While the bill contains some limitations on cable companies, but certain Members wanted stricter requirements. Generally, the bill is technology neutral.

As enacted, LOCAL establishes a four person Board (Secretaries of Treasury, Agriculture, and Commerce, and the Chairman of the Federal Reserve) to select recipients of loan guarantees for up to $1.25 billion in loans (generally, 80% of the loan may be guaranteed). The loans are to be used to build systems that would ensure that consumers throughout the country can receive local television signals. The Board is to take into account whether a project would provide service to "nonserved" or "underserved" areas and whether it also would provide high-speed Internet access. The program will be administered by the Rural Utilities Service in the U.S. Department of Agriculture.