FCC and 4As in an unlikely team

by Dave Lindorff

     Talk about your strange bedfellows. The Federal Communications Commission, so often a thorn in the side of the advertising industry, and the American Association of Advertising Agencies are fighting together for passage of a law deregulating the satellite broadcast industry.
      Hard to believe, but there it is.
     ''It's the only time the FCC and the ad industry have seen things the same way,''  observes John Kamp, senior vice president of the AAAA's lobbying operation in Washington. ''We're both saying the more media there are out there the more efficient advertising will be, and the FCC is saying more competition is good for the consumer.''
     At issue is a pair of bills working their way through Congress--one passed a month ago in the House and one just passed last week in the Senate--that must now be reconciled and approved by both houses before being sent to the White House for the President's signature.
       There are differences in the two bills that could still delay passage. The House version attempts to ease regulation of the satellite broadcast industry while still leaving the FCC some regulatory discretion. For example, it would require satellite broadcasters like Echostar and DirectTV to carry all local TV stations in any local area they broadcast to. It would in turn direct cable companies that are unwilling to provide service to households in remote areas to provide those homes with workable antennas.
     The Senate bill, in contrast, would simply deregulate the satellite industry entirely, effective in 2002, much as the cable industry was deregulated this past March 31.
     ''I don't think the differences between the two bills pose much of an obstacle to passage,''  says one legislative aide who has worked closely on the House bill. ''There is a lot of consumer pressure to pass this bill and not much opposition to it, and it's come a long way in a short time.''
     One big factor working in favor of passage is that the two satellite companies, Echostar and DirectTV, while intensely competitive in the marketplace, have agreed to share their four satellites to send their signals to the entire continental U.S. Any household in America would be able to choose which of the two services it wanted to subscribe to.
        Satellite TV now reaches only 11 million households, many of them in rural areas, compared to cable’s 67 million largely urban and suburban households. But satellite TV is likely to grow rapidly and pose a major competitive challenge to cable once urban and suburban consumers are given an option to the one cable company that typically serves a given locale.
        Advertisers would benefit as well as consumers. A deregulated satellite industry, by offering advertisers an option to cable, could well dampen the upward push of cable rates since deregulation. This year cable ad rates are expected to soar some 20 percent--twice the expected increase in network ad rates.
     AAAA's Kamp believes passage in some form or other is assured, certainly some time this year. ''We're not lobbying for this bill. We think that any compromise that moves the ball forward on this is a good thing. We just want something passed. The more media the better.''
     The main point of contention in Congress at this point seems to be over copyright. The networks are concerned about the low level of copyright fees they receive for network programs beamed down to satellite dishes and are seeking increases. Congress, in its efforts to spur development of the fledgling satellite industry, doesn't want it killed or stunted by high costs at the outset and wants to keep copyright fees at a minimum.  Some compromise must be reached.
     "The networks see bigger battles in the future as new media like satellite TV and the internet expand,''  says a legislative aide.  ''They have the legal high ground on copyright issues at this point, and they don't want to create a bad precedent now that will be used against them later when it could be really costly.''

-Dave Lindorff is a Philadelphia-based writer.