Consumer Project on Technology P.O. Box 19367, Washington, DC 20036 (202) 387-8030; http://www.essential.org/cpt _______________________________________________ May 8, 1996 Mr. Donald J. Russell Chief, Telecommunications Task Force Antitrust Division U.S. Department of Justice Room 8104 555 4th Street, NW Washington, DC 20001 Re: EchoStar's Attempt to Monopolize North American DBS Spectrum and TCI's Cross-Ownership of Traditional Cable and DBS Dear Mr. Russell: We are writing to request that the Department of Justice investigate two matters in the emerging field of DBS service. The Consumer Project on Technology,1 the Media Access Project, and the Center for Media Education are primarily concerned about EchoStar's attempts to monopolize DBS frequencies and attempts by TCI, the largest cable provider in the country, to become a major DBS player, raising serious issues of cross-ownership between cable and DBS. Both of these matters impact whether a truly competitive DBS sector will evolve and increase the possibility that many of the anti-competitive possibilities previously raised by DOJ will come to fruition if left unchecked. See Comments of the U.S. Department of Justice, Antitrust Division-Telecommunications Task Force, Revision of Rules and Policies for the Direct Broadcast Satellite Service, IB Docket No. 95-168, PP Docket No. 93-253 (Nov. 20, 1995). EchoStar's Aggregation of DBS Spectrum EchoStar is attempting to monopolize North American DBS spectrum by capturing control of a second full-CONUS orbital slot in addition to the 22 full-CONUS frequencies it currently controls. As you may know, EchoStar has already filed applications with the Federal Communications Commission ("FCC"), which if approved, would consolidate under its control 43% of all partial-CONUS frequencies in the U.S. EchoStar's full-CONUS holdings amount to 23% of U.S. full-CONUS frequencies. These aggregations have already gone too far, yet EchoStar has shown no signs of slowing down. We were alarmed to learn that Echostar is also in the process of acquiring control of a Canadian full- CONUS DBS satellite location (1 of Canada's 3 full-CONUS slots) for the purpose of broadcasting to the U.S. In comments filed with the FCC (IB Docket No. 95-168), the Justice Department warned against the anti-competitive effects of single entity controlling more than one orbital position of 32 full-CONUS channels. We agree with the Department's concerns and they apply equally to the Canadian satellite positions. Canada's DBS orbital slots are not only a scarce resource, but essential facilities necessary for a new competitor to enter the U.S. market. EchoStar's use of the Canadian satellite position would also violate the principle behind the FCC's auction rule announced in the DBS Rulemaking. That rule required a winning bidder of a new full-CONUS slot, in the interest of promoting competition, to divest itself of the full-CONUS frequencies it previously controlled. Revision of Rules and Policies for the Direct Broadcast Satellite Service, FCC 95- 507, IB Docket No. 95-168, PP Docket No. 93-253, para. 28 (Dec. 15, 1995). Although the possible addition of the Canadian satellite positions for U.S. service increases these scarce resources, a single entity controlling over 20 frequencies at each of 2 full-CONUS positions will still have serious anti-competitive effects. The Department has jurisdiction over this matter-the role of a Canadian DBS orbital slot to serve the United States-to the extent it impairs competition in the U.S. market. If its attempts in Canada are successful, EchoStar will gain control of 50 to 54 full-CONUS frequencies (approximately 28 % of all U.S. and Canadian full-CONUS frequencies), which is well over the 32 U.S. frequency limit suggested in the Department's comments. EchoStar's efforts to aggregate DBS frequencies represent exactly the type of anti-competitive behavior that warrants an investigation by the Department of Justice. TCI and Cable/DBS Cross-Ownership WTCI, a subsidiary of TCI, one of the largest cable providers in the U.S., is also pursuing access to the Canadian full-CONUS orbital positions. This raises issues of cable and DBS cross-ownership about which DOJ also expressed concern in its DBS comments. We filed an objection to WTCI's request with the FCC's International Bureau. (Attachment A). TCI has applied for FCC authority to establish an earth station for the transmission of programming to the full- CONUS Canadian satellite at 82( W.L. for retransmission to the U.S. (Attachment B). In addition to the application's technical deficiencies, we oppose TCI's request because it is against the public interest for a major cable provider to become a significant player in the DBS arena. We have requested, in addition to rejecting WTCI's present application, that the FCC reevaluate its position on DBS/cable cross-ownership and we urge DOJ to investigate this important matter. As DOJ stated in its DBS comments, numerous factors all point to the conclusion that a cable company's entry in the DBS market will have anti-competitive effects. The FCC's apparent lack of concern thus far does not mean that DOJ must defer to that judgment. The enactment of the 1996 Telecommunications Act and the 1992 Cable Act relieved certain media ownership restrictions previously enforced by the FCC. These laws as well as clear congressional intent, however, indicate that the protective antitrust provisions were to remain in full force. Due to the FCC's reduced role in matters of media concentration and cross-ownership, DOJ has an even greater responsibility to ensure enforcement of the antitrust laws. We urge DOJ to investigate these matters to ensure a healthy DBS market. We would like to discuss this matter further and I will follow up this letter with a phone call within the next week. Thank you for your consideration and we look forward to speaking with you. __________________ __________________ Todd J. Paglia Andrew J. Schwartzman Consumer Project on Technology Media Access Project PO Box 19367 2000 M Street, NW -Suite 400 Washington, DC 20036 Washington, DC 20036 __________________ Jeff Chester Center for Media Education 1511 K Street, NW, Suite 518 Washington, DC 20005 cc: Anne Bingaman, Esq. 1 CPT was created by Ralph Nader in 1995 to represent the rights of consumers in telecommunications and other technology intensive matters. A more detailed description of our organization can be found on the Internet at http://www.essential.org/cpt.