Rural TV loan bills get closer to reality

Rural TV loan bills get closer to reality

By Rod Perlmutter, News Editor, Media Central

KANSAS CITY, Mo., March 31, 2000 (Media Central) – Proponents of a $1.25 billion program to help bring local broadcast television signals into rural areas may soon go to President Clinton to sign into law.

The question is which version of that program will go to the White House?

This week, the Senate and House discussed their own versions of the bill, which are similar but not identical.

On Thursday, by a 97-0 vote, the Senate approved S. 2097, the Launching Our Communities Access to Local (LOCAL) Television Act. The bill provides a loan guarantee program that will encourage television providers to develop technology to send local content to rural areas.

On Wednesday, the House Commerce Committee approved a similar bill, H.R. 3615, the Rural Local Broadcast Signal Act, with some amendments. The bill, sponsored by Bob Goodlatte (R-Va.) and Rick Boucher (D-Va.), had already received unanimous approval of the House Agricultural Committee.

Both bills originated out of the need to help rural viewers. On Nov. 29, President Clinton signed into law the Satellite Home Viewer Act, permitting satellite providers to, for the first time, distribute local broadcast signals within their local TV market. But the law meant nothing to many rural households, who could still not get the TV service they wanted.

Critics of last year’s law said that the response of the satellite providers was to focus first on urban areas. Based on the economies of scale, and the low population density of rural areas, it is more profitable for a satellite provider to give service to urban areas over rural areas.

Rural areas lag behind urban areas in their ability to get local television news and weather information, Goodlatte said, and he fears that the gap will only get worse as more stations convert from the analog to digital systems. According to the National Rural Telecommunications Cooperative, more than half of the nation’s households will not have access to local digital service, and at least 20 states will be left out entirely.

Proponents of the bills said the only way to get television services providers to invest the millions of dollars needed to get modern service to rural areas is a government-backed loan guarantee program.

But last fall, Sen. Phil Gramm, (R-Texas) opposed a loan guarantee program that was in included in the Satellite Home Viewer Act because he feared it would be a giveaway to wealthy corporations. He insisted that the Senate Banking Committee, for which he is chairman, hold hearings on the proposal first. The Senate stripped the loan guarantee program out of last year’s bill, and hearings were held in February. Gramm is one of the cosponsors of the bill passed on Thursday, which is also sponsored by Sen. Conrad Burns (R-Mont.), and Sen. Richard Lugar (R-Ind.).

Both the House and Senate versions call for a $1.25 billion loan guarantee program. Both say that the U.S. Agriculture will have a say in how the loans are approved.

But the bills differ in several ways:

  • Maximum loan. The House bill states that the maximum loan allowed under the program would be $625 million. But there is no such limit is on the Senate bill.
  •  Supervision. The Senate version creates a three-member board consisting of the Treasury Secretary, the Agriculture Secretary and the Federal Reserve chairman to approve all loan guarantees. The House version says that the program will be supervised by the Agriculture Department’s Rural Utility Service.
  •  Extent of loan guarantee. The House bill states that the federal loan guarantee can extend to 100 percent of the applied loan, but the Senate bill limits it to 80 percent.

On Wednesday, the House Commerce Committee further amended its version. By voice votes, it approved amendments by Billy Tauzin (R-La.) and Michael Oxley (R-Ohio.) The Oxley amendment conditioned approval of any loan guarantees under the bill to the Federal Communication Commission conducting an independent test of harmful interference to satellite services that are eligible for loan guarantees. The Tauzin amendment limited the number of local broadcast signals that must be carried by a multichannel video programming distributor (MVPD) to no more than the largest number of local broadcast signals carried by the cable system serving the largest number of subscribers in that market.

The committee rejected:

  • By a 24-6 vote, a proposal by Ed Markey (D-Mass.) requiring that borrowers seek loans from commercial lenders on reasonable terms before obtaining guaranteed loans from the Rural Utilities Service (RUS).
  • By a 28-7 vote, a proposal by Christopher Cox (R-Calif.) to require that at least one of the officers or directors of an applicant for a loan guarantee under the bill personally guarantee the repayment of sums owed the United States as a result of default on the loan.
  • By a 20-16 vote, another Cox proposal to require the loan board to collect a “loan guarantee origination fee” to cover the administrative costs of the program.

Rep. Tom Bliley, (R-Va.) the committee chairman ruled that a proposal by Rep. Bart Stupak (D-Mich.) to make the bill address other concerns about the “rural digital divide” were not germane to the bill. Stupak’s proposal directed the FCC to initiate a proceeding to provide federal universal service support for the deployment of broadband service to eligible rural communities.

One amendment to the Senate bill came this week when agreed to allow financial institutions without federal deposit insurance to take part.

That satisfied the demands of Senator Tim Johnson, (D-S.D.) and the National Rural Telecommunications Cooperative, which said that some organizations that provide funding for improving rural infrastructure, such as the Cooperative Finance Corp., are not FDIC-insured. The CFC is the financial arm of the National Rural Electric Cooperative Association, a lobby representing about 1,000 electric co-ops in 46 states.

Gramm said he looked forward to the House passing its version of the bill, so that he could meet with their representatives to hammer out a final bill. In a press release posted on the Senate Banking Committee’s website, Gramm said.

“Number one, we want to try to enhance the chances that people who live in rural America, especially in isolated areas, can receive their local television signals,” Gramm said. “Second, we want to be good stewards of the taxpayers’ money. We want to guarantee to the best of our ability that not only will the loans be made, but that they’ll be paid back. It doesn’t do us any good to make bad loans. Bad loans don’t produce local TV signals. Bad loans simply cost the taxpayer hundreds of millions of dollars and do no good.”

© 2000 Media Central, an IndustryClick community. All rights reserved.

Permission to repost article granted by IndustryClick. 


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