SBCA PUSHES FOR REASONABLE, CONSISTENT ROYALTY RATE STANDARDS FOR SATELLITE AND CABLE

Alexandria, Va., May 6, 2004 –The Satellite Broadcasting and Communications Association (SBCA) today urged Congress to level the playing field on royalty rate increases proposed in the House Judiciary Committee’s subcommittee on Courts, the Internet, and Intellectual Property’s version of the Satellite Home Viewer Extension and Reauthorization Act, or SHVERA. SHVERA would mandate a rate increase for the satellite industry yet would leave the cable industry’s rates untouched. The subcommittee held a mark-up of the legislation this morning.

Satellite providers’ compulsory license and royalty rates are subject to review by Congress every five years, while the cable industry enjoys a permanent compulsory license and copyright structure with their rate increases subject only to inflation. The satellite royalty rates determined by a 1997 Copyright Arbitration Royalty Panel (CARP) resulted in a rate increase of 350% for distant network signals, which was completely out of line with cable’s royalty rate. Consequently, during the 1999 reauthorization of the satellite compulsory license, Congress reduced the rates to the levels they are today.

“This type of one-sided increase is anti-competitive. If Congress’s goal is to ensure that consumers have an affordable alternative for multi-channel video then they need to – at the very least - come up with a uniform system of evaluating increases for both the cable and satellite industries,” said Richard DalBello, president of SBCA. “The satellite industry currently pays higher royalty rates and yet we still manage to offer our consumers service at prices that are often cheaper than our cable competitors.” 

The subcommittee’s proposal in SHVERA will recalculate the royalty rate based on cost-of-living adjustments since 1999 then require a CARP to determine the “fair market value” for distant signals. This creates uncertainty for satellite subscribers and cripples the satellite industry’s competitive capabilities. Congress should not put satellite carriers at a further competitive disadvantage vis-à-vis cable by calculating satellite’s rates for fair market value when cable’s rates are adjusted for inflation only. The rates satellite carriers pay should be adjusted in the same manner as those for cable.

The Satellite Broadcasting and Communications Association is the national trade organization representing all segments of the satellite industry. It is committed to expanding the utilization of satellite technology for the broadcast delivery of video, audio, data, music, voice, interactive, and broadband services. The SBCA is composed of DBS, broadband, satellite radio, and other satellite service providers, content providers, equipment manufacturers, distributors, retailers, encryption vendors, and national and regional distribution companies that make up the satellite services industry. Additional information can be found at www.sbca.com.