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Loan Money For Rural TV

BY McGregor McCance
by McGregor McCance on 5/16/02.

The federal farm bill signed into law this week plants seeds that may produce local television signals for rural satellite television subscribers.

Included in the massive bill is $80 million in loan guarantees designed to encourage companies to launch satellites that could bring local channels to more subscribers.

Most satellite TV subscribers cannot get local channels over a dish. They must rely on regular TV antennas, which often can't clearly pick up local TV stations in rural areas.

Rep. Rick Boucher, D-9th, said the local-channel issue is the top telecommunications item discussed by his constituents in Southwest Virginia.

"They are blocked by the mountains from getting television over the air and they can't get local stations on the dish," he said.

Boucher and Rep. Robert W. Goodlatte, R-6th, co-sponsored legislation in 2000 that authorized use of the loan guarantees.

The $80 million included in the farm bill adds to $20 million earmarked in last year's agriculture appropriations bill for the program. Overall, the farm bill would spend $190 billion over the next decade.

The loan guarantees would give companies access to credit with lower interest rates than they could get without government backing.

Though many dish subscribers cannot get local channels, the dominant satellite providers, EchoStar Communications Corp. and Hughes Electronics Corp., have begun broadcasting local stations in the largest U.S. markets. They also plan to continue phasing in local stations in additional markets during the next few years.

The firms say they don't have the satellite capacity to offer local stations everywhere.

But they also want to merge. If allowed to do so, they promise to provide local station signals nationwide.

Boucher supports the merger. He added that the loan program was developed with EchoStar and Hughes in mind, though neither company committed to pursuing low-interest loans.

The companies could not be reached for comment yesterday.

Others might use the loans to launch satellites and sell the capacity to provide local signals to EchoStar and Hughes. Or local TV broadcasters might team up to seek loans and launch local services.

"No one has committed to do this," Boucher said. "But as we put the bill forward all these parties said this is a good idea. And somebody will."

Not everyone favors the loan guarantees.

Citizens for a Sound Economy, an organization that favors a limited government role, argued against the original bill authorizing the loan guarantee program. The group said the program could encourage specious investments, leaving taxpayers liable for federally guaranteed loans.