Dish Network may put Anchorage TV stations on satellite

A battle for customers between cable TV and satellite TV providers has been quietly playing out in Alaska in recent weeks.

In September, General Communication Inc. began providing feeds of five Anchorage television stations to cable systems in small communities around the state. Also this month, a representative of Dish Network was in Anchorage talking to local stations about carrying their signals.

Was it a coincidence? Hardly, according to one TV station executive. "In my view, Dish Network’s discussion of entering the marketplace energized and motivated GCI," said Al Bramstedt Jr., general manager of Channel 2 Broadcasting Co. in Anchorage, which owns KTUU-TV.

Bramstedt and other local broadcasters are in the enviable position of having local content, specifically news, that both cable TV and satellite programmers need to be competitive. As Bramstedt pointed out, the most popular cable TV channels have always been the local over-the-air network TV stations, despite the hundreds of competing cable-only channels.

In Alaska, GCI has long carried Anchorage stations on its Anchorage cable system, Fairbanks stations on its Fairbanks system and Juneau stations in Juneau. Until this month, GCI’s other systems in smaller communities were carrying Lower 48 network affiliates; they are now receiving feeds from the Anchorage stations instead.

Cable companies around the country had local stations all to themselves for years until the advent of two competing direct-broadcast satellite systems operating under the brand names Dish Network and DirecTV. In Alaska, Dish Network has dominated, especially in recent years with a more-powerful satellite channel aimed at the state that allows reception with a smaller dish.

The satellite systems beam dozens of high-quality digital channels to customers at monthly rates significantly lower than what cable TV charges. While differences in packages make direct comparisons difficult, Dish Network’s 100-channel lineup costs $32.99 per month in Alaska, which would increase to about $38 per month to add the local stations.

That compares to current promotions from GCI Cable in Anchorage, which range from $55 per month for 57 channels to $63 per month for 150 channels.

Nevertheless, cable TV still dominates, thanks to having the local stations. The cable companies have added to their dominant position by offering high-speed Internet access to their customers via cable modems, and in this arena they have the price advantage over satellite. GCI’s cable modem service cost as little as $40 per month, while satellite-delivered Internet costs about $70 per month.

In 1998, Congress gave the satellite companies the right to add local stations to their service under the same rules that govern cable TV. Those rules say that the local stations can either invoke the "must-carry" rule, which requires the distributor to carry the station, or the "retransmission consent" rule, where the cable or satellite company pays the station to carry its signal.

Bramstedt said he met in mid-September with Eric Sahl, director of programming for Dish Network, and made it clear KTUU is expecting to be paid for its signal. "We didn’t invest millions in a news product just so we could give it away," said Bramstedt, whose station has dominated Anchorage TV news for years. He said GCI Cable has long paid KTUU for its signal and he would expect the same from Dish Network.

Bramstedt declined to say how much GCI pays KTUU for its signal, saying it is covered by a confridentiality agreement. He said the information is not reported to the Federal Communications Commission. Likewise, GCI spokesman David Morris would not say how much his firm pays for any local station’s signal.

Sahl declined comment and referred the Journal to Dish Network spokesman Marc Lumpkin in Littleton, Colo., who confirmed that Anchorage is on the company’s list of 50 communities slated to get local channels. He wouldn’t say how high the priority is for Anchorage.

Jerry Bever, vice president and general manager of Alaska Broadcasting Company Inc., which owns KTVA Channel 11 and has a shared services agreement with KTBY Channel 4 in Anchorage, said he has been talking with Dish Network. Bever declined to provide specifics.

Chuck Schumann, vice president of Sateo Inc., which operates as Microcom, one of the largest Dish Network dealers in Alaska, said Dish Network officials are trying to reduce the amount they pay to broadcasters to offset the cost of putting the channels on the satellite.

Schumann said Dish Network plans to transport the signals via fiber optic cable to the Lower 48 and uplink them to the satellite from one of its control centers, a long and expensive round trip.

Schumann said the talks have been difficult because the broadcasters are accustomed to being paid by GCI and have been distributed statewide by satellite for free for years over the state-owned ARCS network.

However, Schumann thinks an agreement is near, after about six months of negotiations. "The fuse is lit on this," he said. "A decision is imminent."

GCI has not been sitting idly by while all this has been going on. The state’s largest cable TV operator, with 135,000 customers, had long recognized the value of adding local stations to its more remote systems, according to Morris.

Morris said that until now, most GCI cable TV customers in Alaska’s smaller communities wanting NBC programming would not get KTUU, the Anchorage NBC affiliate. Instead, they would get a station in Denver. He said GCI’s customers have long asked for local Alaska stations.

That began to change Aug. 1, when GCI put KIMO Channel 13 in Anchorage on a satellite for distribution to remote cable TV systems. On Sept. 4, GCI added KTUU, KTBY and KTVA and has since begun testing KYES.

Was the new service prompted by customer requests or was it a competitive response to the imminent arrival of Dish Network? "A little of both," Morris said. He added that digital technology that allows more than one station to be carried on the same satellite channel also made the service more affordable for GCI to provide.

GCI is making the Anchorage stations available to any cable TV operator in Alaska, not just those owned by GCI. KTUU’s Bramstedt said he’s already gotten calls from some of them, and praised GCI for its new service. "It was an assertive and positive step," Bramstedt said.

Hanging over all this is the pending merger between Dish Network owner EchoStar Communications Corp. and DirecTV owners General Motors Corp. and Hughes Electronics Corp. Announced Oct. 28, the merger has proven controversial because it would leave only a single, monopoly satellite cable TV provider. Nearly a year after it was announced, the merger remains unapproved by the Federal Communications Commission and the U.S. Department of Justice.

If the merger is approved, the companies have promised to deliver local stations to all 210 markets in the country, including Anchorage, Fairbanks and Juneau. That’s something they currently can’t do because there’s not enough room on their satellites to carry all those local stations.

The merger also would allow the satellite companies to offer high-speed Internet at a rate competitive with cable modems, Lumpkin said.

Merger or not, Dish Network has continued to add new capacity by launching additional satellites, including two this year, on Feb. 21 and Aug. 22. That, in turn, has allowed the company to add local TV stations to several local markets in recent months, including Hawaii and Reno, Nev. The February launch of EchoStar VII provided the bandwidth needed to send local stations to Alaska, according to Schumann.

09/29/2002 - 8:00pm