July 15, 1996 The Honorable Trent Lott Senate Majority Leader 487 Russell Senate Office Building Washington, DC 20510-2403 Re: TCI's Attempt to Acquire Canadian Orbital DBS Position Dear Senator Lott: We are writing regarding recent efforts by TCI, through its subsidiary Western Tele-Communications Inc. ("WTCI"), to acquire access to a direct broadcast satellite ("DBS") orbital position belonging to Canada. WTCI has an application pending before the FCC seeking a license for uplink authority to the Canadian satellite position. While we agree that the availability of additional DBS spectrum for the US market holds the potential to increase competition and benefit consumers, these benefits are significantly eroded if the company acquiring the Canadian frequencies is TCI. TCI is uniquely ill-suited to serve the US market from Canada's orbital position. By virtue of being the largest US cable operator, TCI has the most to lose from competition with DBS operators. Allowing TCI to control a significant share of the available DBS spectrum would undermine the development of this promising new technology, which is intended to compete with traditional cable monopolies. Moreover, TCI has an infamous reputation for heavy-handed practices in dealing with content providers. Often working in concert with Time-Warner, TCI has been able to obtain huge concessions from programmers, including equity ownership, for the privilege of offering services in the TCI monopoly cable franchises. TCI's power to do so stems from the fact that TCI and Time-Warner can make or break any content provider by exercising complete control over the services offered over this non-common carrier platform. DBS provides an opening up of the video platform, giving rise to more competition for consumers and programmers. But these benefits are lost if TCI and other cable operators are allowed to acquire or control the DBS spectrum. The danger posed by a cable operator entering the DBS market was recognized by the Department of Justice ("DOJ") during the DBS Rulemaking. Although the FCC has not thus far heeded these warnings, it is important to note the basis for DOJ's position and the fact it retains jurisdiction for antitrust concerns. DOJ summed up its opinion regarding a scenario in which a cable company became involved in DBS by stating that the company would "offer DBS products and prices that will maximize its aggregate profits in both DBS and cable." DOJ went on to say that "[e]ven if only one of those three providers is a large cable firm ... DBS competition with cable will be significantly reduced."1 More recently, DOJ was joined by the Departments of Commerce and State and the Office of the US Trade Representative in a letter to the FCC citing concerns over TCI's pattern of anti-competitive behavior and the impact this would have on the DBS market. In the case of the Canadian orbital position, TCI has argued that the US will benefit from the addition of new spectrum; however, this is highly misleading. TCI is only one of many companies who are eager to acquire US landing rights for the Canadian spectrum. US consumers would be better off if these rights were obtained by firms who are not the leading investors in the cable industry. The opportunity presented by the additional Canadian spectrum must not be squandered on TCI. We urge you to protect the public interest in having DBS evolve into a true competitor with cable providers. This can only occur if non-cable entrants are awarded the rights to broadcast to the US from the Canadian orbital positions. What's good for TCI is not good for US consumers, and if you and your colleagues in Congress weigh in on TCI's behalf, it will be to the detriment of the public interest. __________________ __________________ Todd J. Paglia Andrew Jay Schwartzman Consumer Project on Technology Media Access Project PO Box 19367 2000 M Street, NW - Suite 400 Washington, DC 20036 Washington, DC 20036 (202) 387-8030 __________________ __________________ Jeffrey S. Hops Jeffrey A. Chester Alliance for Community Media Center for Media Education 666 11th Street, NW, Suite 806 1511 K Street, NW, Suite 518 Washington, DC 20001-4542 Washington, DC 20005 __________________ Brad Stillman Consumer Federation of America 1424 16th Street, NW, Suite 604 Washington, DC 20036 cc: The Honorable Reed Hundt The Honorable James H. Quello The Honorable Rachelle B. Chong The Honorable Susan Ness Don Gips, Acting Chief, International Bureau Tom Tycz, Chief, Satellite & Radiocommunication Division Ambassador Vonya B. McCAnn, US Coordinator, Department of State Ambassador Jeffrey M. Lang, Deputy USTR, Office of the Trade Representative David S. Turetsky, Deputy Assistant Attorney General, Department of Justice Larry Irving, Assistant Secretary, Department of Commerce 1 Comments of the United States Department of Justice, In the Matter of Revised Rules and Policies for the Direct Broadcast Satellite Service, IB Docket No. 95-168, PP Docket No. 93-253, Nov. 20, 1995.