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Whether we'll have one, two, or more direct broadcast satellite (DBS) services next year isn't clear today. But no matter how many DBS companies the future holds, if they want to re-transmit signals from local TV stations, they'll have to offer all or none.

That was the decision by a three-judge federal appeals court, which on Friday, December 7, upheld a ruling by a federal judge issued this past June. That decision upheld a law scheduled to go into effect January 1, 2002 requiring satellite services to treat all local television stations equally regardless of their market share or transmitter power.

Last year, satellite services successfully petitioned the Federal Communications Commission for the previously forbidden right to re-transmit local signals, a practice known as "local into local." They had claimed that cable services, which have always carried local stations, had an unfair advantage. The Satellite Home Viewer Improvement Act gave satellite services the right to re-transmit local stations, with the proviso that beginning on January 1, 2002, they would have to carry all local stations—without compensation for doing so. The services could elect to carry no local stations if they wished, without penalty, but would not be able to offer only the most popular ones.

This "must carry" provision provoked the ire of the Satellite Broadcasting and Communications Association, a trade group representing satellite services, including EchoStar and DirecTV. In September 2000, the SBCA sued the Federal Communications Commission and the US Copyright Office "to protect its First Amendment rights," claiming that having to carry all local stations was impractical, economically unfeasible, and not in their best interests.

"These must-carry requirements go far beyond those applicable to cable in dictating the content of a substantial portion of a satellite carrier's programming menu," said SBCA president Chuck Hewitt in a press release dated September 20, 2000. "Satellite must-carry is a major roadblock to the continued roll-out of local channels in areas outside the largest markets and will deprive Americans in mid-size and smaller markets of local television over their satellite systems. The marketplace should decide what programming satellite companies carry, not a federal mandate. Our litigation seeks to free up precious satellite capacity to enlarge the number of consumers to whom we can offer local broadcast channels. The must-carry regime is a grossly unfair waste of spectrum and does not serve any legitimate governmental purpose, let alone a compelling or important governmental interest."

That was the same argument SBCA lawyers presented to a federal appellate court last year, and again this fall to the 4th US Circuit Court of Appeals in Richmond, Virginia, both times unsuccessfully. The appellate court had ruled that the must-carry requirement was a "reasonable, content-neutral restriction on satellite carriers' speech," serving the interests of both the government and local communities. The SBCA may appeal to the US Supreme Court.

In a related development, the Supreme Court, the first week of December, upheld a federal appeals court ruling that struck down an FCC rule limiting cable operators to no more than 30% of the national audience. The appeals court found the 30% cutoff to be "arbitrary and unconstitutional." Eliminating the ownership cap could lead to further consolidation in the cable industry, as predicted recently by Turner Broadcasting System founder and AOL-Time Warner vice president Ted Turner. The Supreme Court ruling left room for the Republican-dominated FCC to institute a new ownership cap, an eventuality considered unlikely by many consumer advocates.