Consumer Project on Technology P.O. Box 19367, Washington, DC 20036 (202) 387-8030; http://www.essential.org/cpt _______________________________________________ April 25, 1996 Scott Blake Harris Chief, International Bureau Federal Communications Commission 2000 M Street, NW Room 800 Washington, DC 20006 Re: Application and Request for Declaratory Ruling of Western Tele-Communications, Inc. Dear Mr. Harris: The Consumer Project on Technology1 ("CPT") submits this letter respectfully requesting that the International Bureau dismiss the March 26, 1996 application of Western Tele-Communications ("WTCI"). WTCI seeks authority to establish an earth station for transmission of programming from the U.S. to a Canadian full-CONUS DBS satellite at 82( W.L. for retransmission to the U.S. In addition, WTCI requests a ruling which would allow it to use the Canadian satellite to serve U.S. consumers through unlicensed TVRO earth terminals. CPT believes WTCI's application should be rejected out of hand on public policy grounds. WTCI is a subsidiary of TCI, one of the largest cable companies in the U.S. While we recognize that the FCC declined in its DBS Rulemaking to promulgate a specific regulation prohibiting major cable companies from entering the DBS market, it is time to re- examine that position. From the rapid development of existing satellite services such as DirecTV and Primestar (which is partially owned by TCI), and the major players now in the market (MCI, News Corp., AT&T), it is clear that DBS is quickly maturing and will become a strong alternative to traditional cable. The purpose of DBS as a true alternative and competitor to traditional cable is defeated, however, if a TCI subsidiary, or any major cable operator, is permitted to offer full-CONUS DBS service. This cross- ownership undermines DBS's ability to evolve as a viable option that will be differentiated in price and diversity of programming from traditional cable. The Department of Justice, Antitrust Division- Telecommunications Task Force ("DOJ"), filed comments in the DBS Rulemaking consistent with CPT's concerns and the FCC should reevaluate them at this time. DOJ stated that "[c]able firms in DBS might, for example, primarily offer programming service that does not compete with cable head to head. They might also engage in pricing strategies that are less fully competitive with cable rates." Comments of the U.S. Department of Justice, Revision of Rules and Policies for the Direct Broadcast Satellite Service-IB Docket No. 95- 168/PP Docket No. 93-253, at 6 (November 20, 1995). The use of a Canadian orbital position would expand available DBS frequencies for serving the U.S., but this opportunity to increase potential competition should not be squandered by allowing a major cable operator to acquire this valuable resource. As DOJ also stated: "Even if only one of those three [full-CONUS] providers is a large cable firm or combination of cable firms, DBS competition with cable will be significantly reduced." Id. at 6 (emphasis added). This statement is no less true with the use of the additional Canadian satellite positions. At present, TCI/Tempo controls access to 22 DBS frequencies from the U.S. orbital positions, including 11 full-CONUS (119( W.L.) and 11 partial-CONUS (166( W.L.). Moreover, TCI is seeking in litigation to obtain control over 28 additional full-CONUS frequencies. TCI is also attempting to gain control of broadcasting rights from 1 of the 2 Canadian full-CONUS orbital positions. TCI's aggressive entry into the DBS market will inextricably lead to greater media concentration, and reduce active and potential competition from non-cable DBS operators. We are particularly concerned about TCI's enormous monopsony power in the market for video programming. New video programming ventures find it extremely difficult to succeed without access to the homes served by TCI or Time-Warner cable systems. Because TCI and Time-Warner exercise total control over the non-must carry commercial content on these systems, these two companies (which are partners in many ventures) can extract extraordinary concessions from programmers, including heavy-handed suggestions for direct equity investments or changes in programming formats. As you know, TCI and Time-Warner have been accused of censoring content from programs for a variety of reasons, both to protect affiliated programming interests (CNBC's efforts to offer 24 hours general news coverage), and to eliminate editorial content on the basis of political views (The 90s channel). Our concerns about TCI's role in DBS offerings might be different if the company intended to offer access to programmers on a non-discriminatory common carrier basis. Indeed, we urge the Commission to investigate common carrier non-discriminatory models for access to wireless spectrum, separating the control over the conduit from control over the content. Excessive concentration of media outlets harms content providers and consumers, and should be avoided under the FCC's public interest obligations. For these reasons we respectfully request that WTCI's March 26, 1996 application and request for declaratory ruling be denied. No significant cable operator should be permitted to control full-CONUS DBS frequencies, whether located in the U.S. or Canada. The FCC should take advantage of the possibility that Canadian full-CONUS frequencies will become available for delivering programming to the U.S. by ensuring greater competition, not less. Sincerely, Todd J. Paglia Staff Attorney Consumer Project on Technology cc: Larry A. Blosser Richard E. Wiley John C. Quale 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.