The House Subcommittee on Telecommunications, Trade and Consumer Protection held a hearing Thursday to listen to testimony regarding H.R. 3615, the Local Broadcast Signal Act. The bill would authorize the federal government to subsidize the construction of multichannel video systems that could deliver local broadcast signals to rural markets and other services such as high-speed Internet access. The loan program was hotly debated at the hearing, with Commerce Committee Chairman Bliley (R-Va.) calling attention to a Wall Street Journal article from Thursday that cited criticisms of the Rural Utilities Service (RUS) outlined in a report from the Inspector General of the Department of Agriculture. "The Wall Street Journal reported this morning, that the Inspector General...has found that the telephone and electric utility programs are in need of serious review. The Inspector General found, for example, that many of the telephone companies that borrow from the RUS are financially strong and more than capable of obtaining financing from private lenders," Bliley said. "As for the electric utilities that borrow from the Rural Utilities Service (RUS), the Inspector General found that these utilities are playing the stock market, rather than investing in their communities as Congress had intended," he said. "Congress needs to proceed very cautiously before expanding the RUS' authority," Bliley said. USDA Inspector General Roger Viadero said the rural electric utilities are not investing in their communities, and therefore shouldn't be asking for federal money to back up loans when the money is available through their investments in the stock market. Later in the hearing, Telecommunications Subcommittee Chairman Billy Tauzin (R-La.) said he wouldn't be in favor of loan money going to people who didn't need it. RUS Acting Administrator Christopher McLean countered using the example of the Northern Virginia Electric Cooperative who used money it had invested "to prepay $11 million for power service to its area." McLean also defended the RUS's record by pointing out that in 50 years of service, no telecommunications program has ever been "written off." Dan Crippen, director of the Congressional Budget Office (CBO) said the loan program could cost taxpayers an estimated $360 million. On Wednesday, the CBO said the Senate version of this proposed program could cost $265 million in federal appropriations. Crippen added, "Providing local television service in rural areas is likely to prove financially and technically risky." Crippen restated the CBO's position that 97 percent of the United States is passed by cable, and therefore, the total maximum number of rural subscribers to such a rural local signal program would be 2 million. Congressman Rick Boucher (D-Va.) blasted the CBO's 2 million maximum figure, telling Crippen that, "with all due respect, you just don't understand the market." In considering the risks of such a loan program, Boucher asked whether the CBO took into account the rapid growth of DBS and the fact that Wall Street predicts strong growth into the future. "Local-into-local is driving the growth, with many customers leaving cable for DBS," Boucher said. He added, "There are going to be millions of subscribers to rural local-into-local, beginning with those satellite consumers who currently subscribe to distant network signals." In his testimony, R. Kent Parsons, vice president of the National Translators Association, said that in many rural areas, free over-the-air reception is available through translators. Some lawmakers, including Tauzin, said the use of translators would be an option the committee would explore. The debate over the bill will continue, as Tauzin asked for supplemental statements from the witnesses. The bill will likely be voted on before the end of March.

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DirecTV Raises Prices For New Subscribers

Citing rising costs for programming and other expenses, DirecTV announced plans to increase prices for its packages by $2 a month for new customers who activate accounts beginning May 25. The company emphasized that prices will remain unchanged for the more than 8.2 million existing customers of the high-power service and medium-power PrimeStar By DirecTV. The price increases are for Total Choice packages. Total Choice movie packages will see the increase, but a la carte premium movie programming is not part of the jump. Prices for pay-per-view movies and local channel packages also remain unchanged. Prices for special sports packages, such as NFL Sunday Ticket, aren't controlled by the DBS provider but are not part of this round of price increases. As for current subscribers, "We cannot rule out a price increase in the future," spokesman Bob Marsocci said. "However, this price increase is for new customers only." DirecTV said its programming costs have risen more than 35 percent since 1997. Other expenses include a second broadcast center, the launch of a fifth high-power satellite and the opening of six permanent new customer call centers in the past year.

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NBC Focus of DISH Retrans Battle

EchoStar's battle over a $500 million demand for retransmission consent reportedly involves NBC, the General Electric broadcaster that also owns CNBC, MSNBC and parts of other cable/satellite networks, according to Bloomberg. EchoStar wouldn't comment on the report and wouldn't confirm whether its recent retransmission consent skirmish is with the Peacock Network. In a letter sent to the Federal Communications Commission last week, EchoStar said an unnamed broadcast entity wanted up to $500 million for specialty programming in order to get retransmission consent of its local stations. EchoStar presented the allegation as information for the commission to consider during its implementation of the Satellite Home Viewer Improvement Act. According to the letter, the unnamed broadcaster wants a monthly 10 cent charge for each subscriber getting the group's affiliated cable/satellite networks. In addition, there's a requirement "of tying retransmission consent to EchoStar's purchasing, at a price in excess of $500 million, the distribution rights for other specialty programming that, while popular, may only be attractive to a percentage of EchoStar's subscribers," the letter said. According to Bloomberg, NBC responded in a statement charging that it had offered "EchoStar proposals that are comparable to deals" made with satellite and cable competitors. EchoStar rejected the offer. DirecTV has a retransmission consent agreement with NBC covering the network's 13 major-market stations. Meanwhile, EchoStar confirmed that it will acquire Kelly Broadcasting, a provider of international and foreign-language programming. Michael Kelly, president and owner of Kelly Broadcasting, will become senior vice president of International Programming and Operations at EchoStar. The company will issue approximately 255,000 shares of DISH Class A common stock and pay $3.5 million in cash for the company. Kelly provides ethnic programming for DirecTV. This week, DirecTV filed a counter-claim against EchoStar. One of the allegations is tortuous interference with the contract involving Kelly and DirecTV.

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Iridium Birds Could Become Toast

What will happen to Iridium's 66 satellites? According to Reuters, the birds operated by the bankrupt sat-phone company will eventually "de-orbit." That means they will exit their positions 485 miles above the earth, bounce off the atmosphere and burn up as they come closer to the planet. That's unless another potential buyer comes forward today to buy the costly $5 billion system or some other act saves the satellites from the celestial vaporizer. Since the process could take some time, don't expect to see satellites falling out of the sky this weekend or in the near future. Motorola, Iridium's primary backer, said last week that service could end today. After today, Iridium's latest funding package will run out of money, and the business is expected to close its doors. Iridium filed for bankruptcy in August. There was one reported bid for the company. Closely-held Venture Partners made a $25 million offer for the assets. Analysts, however, said the package isn't sufficient enough to prevent the bankrupt satellite-telephone company from shutting down. The U.S. Bankruptcy Court in Manhattan is expected to rule on the Venture Partners bid or any other last-minute items today.

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SIA Readies Satellite Industry Survey

The Satellite Industry Association is hosting a half-day seminar on March 27 in New York City to release the results of its 1999-2000 Global Satellite Industry Survey. Results will show top line numbers on the size, growth and employment trends in the commercial satellite industry. The survey, conducted by Futron Corporation for SIA, polls more than 700 leading space and telecommunications companies worldwide. The seminar will also include data that tracks government spending on space programs around the world. The government data is collected in an annual survey of international space agencies by senior analysts at The George Washington University Space Policy Institute. The SIA seminar will be presented the day before the 13th semi-annual SkyFORUM satellite/financial symposium. Both events will be held at the Marriott Marquis in New York City. For information on the SIA seminar, contact Tracy Jones at 703-549-8697 or 1-800-541-5981, ext. 358. For more information on SkyFORUM, please visit www.sbca.com or contact Rachel Zink at 703-549-6990, ext. 363.

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ON TV: Soccer Kicks Off This Weekend