Hearing on Loan Guarantees and Rural Television Service


Prepared Testimony of Mr. Christopher McLean
Acting Administrator
Rural Utilities Service
U.S Department of Agriculture

10:00 a.m., Tuesday, February 1, 2000 - Dirksen 628

Mr. Chairman, it is an honor to testify today on the idea of a new loan guarantee program to finance the delivery of local television programming to subscribers of satellite television in rural and small markets. United States Department of Agriculture (USDA) appreciates the Committee's concern, both in the existing coverage of rural access to local broadcasting and the possibility that developing technologies can broaden that problem.

The Rural Utilities Service (RUS) is a rural development agency of USDA. We administer a $42 billion loan portfolio of more than 9,000 loans for telecommunications, electric and water and wastewater infrastructure projects throughout rural America. Our agency also administers the Distance Learning and Telemedicine loan and grant program and is a leading advocate for rural consumers before federal and state regulatory bodies.

RUS RECORD OF SUCCESS

For nearly sixty-five years the REA and RUS have been empowering rural America. Just this last October, the RUS telecommunications program celebrated its 50th anniversary. In those fifty years, the RUS telecommunications program has helped close the digital divide in rural areas. The telecommunications program has maintained an unprecedented level of loan security over the history of the program.

Since 1993, the RUS has financed more than $1 billion in fiber optic facilities and more than $725 million in digital switching for telecommunications companies and cooperatives serving rural areas. In 1999 alone, RUS provided nearly half a billion dollars in financing for rural telecommunications infrastructure. In addition, since its inception in 1993, the RUS Distance Learning and Telemedicine (DLT) program has provided $83 million in funding to 306 projects in 44 states and two territories.

The RUS is fortunate to have an accomplished corps of engineers, accountants, financial specialists and rural infrastructure experts. I am confident that the RUS has the necessary skills to administer new initiatives that will bring the benefits of the information revolution to all America.

THE NEED FOR LOCAL ACCESS

For America's rural residents, access to television signals has long been a challenge. Distance and geography have been significant impediments to the reception of consistently viewable broadcast signals. While cable television is available in many rural towns, it does not reach America's most rural citizens.

Since its inception, satellite delivered television and now direct broadcast satellite services have provided increased access for all communications services to rural residents. Satellite television gave America's many rural residents first time access to vital sources of news, information, educational programming, entertainment and sports. As good as these services were, satellite services did not connect rural residents to their local communities.

The 1999 amendments to the Satellite Home Viewers Act (SHVA) dramatically changed the dimensions of satellite service by giving carriers the right to deliver local television signals to viewers via satellite. However, that legislation limited the ability of these carriers to deliver distant network programming to consumers.

Since the enactment of the SHVA amendments, satellite broadcasters have announced significant new initiatives to provide local signals to viewers. Current satellite carriers are offering "local into local" service primarily to larger urban markets. There is little evidence that under current conditions significant "local into local" offerings will be made in the markets below the 40th largest markets. The smaller the market, the more rural residents will be impacted.

Once the amendments to the SHVA are fully implemented, many rural residents will likely lose their ability to purchase distant network signals. Many will still be unable to receive a suitable signal via antennae from their local broadcaster. Given the capacity limitations of current satellite providers, and the cost of nationwide local to local service, it is doubtful that current carriers will provide local signals to many smaller markets.

The availability of local programming will become more problematic as the television industry converts to a digital system of signal delivery. The propagation of digital signals is different from analog signals. Analog signals fade out with distance from the transmitters. Digital signals drop off suddenly. The likely result is that some current rural viewers of broadcast television may lose their ability to receive a viewable signal once the conversion to digital is complete.

Without the ability to retain and perhaps expand their viewer base, rural broadcasters may not have the financial ability to upgrade their systems. Once digital conversion is complete, the technology will make it likely that rural viewers will be able to receive fewer channels over a conventional TV antenna than currently available in analog mode.

ENSURING PUBLIC SAFETY

Access to a full range of news, weather, sports, entertainment and information is certainly important to maintaining and enhancing rural quality of life. But maintaining expanding access to the most local sources of news, weather and information is critical to rural public safety. The 1999 violent tornado season, and recent weather events such as this month' back to back winter storms in the South and East, highlight the importance of local television as a means of disseminating life saving information.

Linking local residents to their communities of interest is also important to maintaining and enhancing the vitality of the local rural economy and civic life. From both an educational standpoint and one of public safety, it is in the public interest that rural citizens have access to local and network programming. Rural America should not fall into a new digital divide: either as a result of the amendments to the SHVA or the coming conversion to digital television.

LOAN GUARANTEES

The delivery of local signals to rural viewers will require significant infrastructure investment, regardless of the technology utilized. RUS loans, loan guarantees and grants have helped bring modern electric, telecommunications, and water infrastructure to the 80 percent of America that is rural. This public-private partnership has been the hallmark of rural infrastructure investment. RUS is capable of helping rural America meet this new infrastructure challenge.

We welcome the opportunity to comment on any specific legislative language and look forward to working with the Committee. We believe that legislation should be technologically neutral, expand consumer choice, and be consistent with Federal credit policies.

CONCLUSION

Preserving and enhancing access to local and network television signals is important not only for rural quality of life, but is vital to rural public safety and community. Linking rural viewers to more local signals will also enhance the economics of rural broadcasting and their rural advertisers. In addition, the infrastructure necessary to deliver "local into local" services, regardless of mode, can bring new broadband capacity to rural areas. Just as the Rural Electrification Administration helped rural America become part of the national economy, the Rural Utilities Service can help rural America thrive in the information age.

Thank you Mr. Chairman.




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