*Pages 1--2 from  Microsoft Word - 22007.doc*
 STATEMENT  OF  CHAIRMAN  MICHAEL  K.  POWELL 
 Re:  Application  of  EchoStar  Communications  Corporation  (EchoStar);  General  Motors  Corporation  and  Hughes  Electronics  Corporation  (DirecTV) 


 Today,  the  Commission  has  declined  to  approve  the  merger  of  EchoStar  and  DirecTV.  The  record  in  this  case  compels  this  result.  The  combination  of  EchoStar  and 
 DirecTV  would  have  us  replace  a  vibrant  competitive  market  with  a  regulated  monopoly.  This  flies  in  the  face  of  three  decades  of  communications  policy  that  has  sought  ways  to 
 eliminate  the  need  for  regulation  by  fostering  greater  competition.  I  decline  the  invitation  to  turn  our  national  communications  policy  back  so  many  years. 


 The  record  before  us  irrefutably  demonstrates  that  the  proposed  merger  would  eliminate  an  existing  viable  competitor  in  every  market  in  the  country.  The  case  against 
 approving  the  transfer  application  is  particularly  compelling  with  respect  to  residents  of  rural  America  who  are  not  served  by  any  cable  operator.  Those  Americans  would  be  left 
 with  only  one  choice  for  their  subscription  video  service,  now  and  in  the  foreseeable  future.  But  that  alone  is  not  the  cornerstone  of  our  decision.  At  best,  this  merger  would 
 create  a  duopoly  in  areas  served  by  cable;  at  worst  it  would  create  a  merger  to  monopoly  in  unserved  areas.  Either  result  would  decrease  incentives  to  reduce  prices,  increase  the 
 risk  of  collusion,  and  inevitably  result  in  less  innovation  and  fewer  benefits  to  consumers.  That  is  the  antithesis  of  what  the  public  interest  demands. 


 DirecTV  and  EchoStar  propose  a  “national  pricing”  condition,  to  alleviate  the  competitive  harms  of  this  transaction.  Under  this  plan,  EchoStar  and  DirecTV  would 
 have  us  replace  healthy  competition  with  a  monopoly  governed  by  a  scheme  of  regulated  pricing.  The  Communications  Act  and  the  Commission’s  overall  policy  goals  aim  at 
 replacing  regulated  monopoly  service  providers  with  free  market  competition  among  multiple  service  providers.  If  economic  history  has  taught  us  anything,  it  is  that  healthy 
 competitive  markets,  not  regulated  monopolies  maximize  consumer  welfare. 
 The  Merger  Application  rests  on  the  following  claims;  (1)  EchoStar  and  DirecTV  only  compete  with  cable  but  not  with  each  other;  (2)  Standing  alone  they  are  weak 
 competitors  to  cable;  (3)  Absent  the  merger,  the  applicants  cannot  provide  “local  into  local”  broadcast  services. 


 The  facts  undermine  these  claims.  First,  the  record  shows  that  EchoStar  and  DirecTV  compete  vigorously,  not  only  with  cable,  but  with  each  other.  Second,  neither 
 operator  is  failing  in  its  efforts  to  compete  against  cable.  DBS  subscriber  growth  rates  are  2.5  times  larger  than  those  of  cable.  Cable  is  attempting  to  respond  to  the  DBS  threat 
 by  increasing  channel  capacity  and  adding  new  services  for  consumers.  Third,  the  record  shows  that  each  company  standing  alone  will  be  capable  of  offering  local  broadcast 
 stations  to  80-  85%  of  American  homes  in  a  very  short  period  of  time.  They  have  the  economic  incentive  to  do  so,  since  both  EchoStar  and  DirecTV  are  much  stronger 
 competitors  to  cable  in  markets  where  they  offer  “local  into  local”  service. 
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 In  short,  the  very  premises  upon  which  this  proposed  merger  rest  are  themselves  without  foundation. 
 The  DBS  story  so  far  is  one  of  successful,  intra-  modal,  facilities-  based  competition.  This  competition  has  led  to  more  innovation,  more  programming,  and  more 
 subscribers;  exactly  the  benefits  one  would  expect.  For  those  who  believe,  as  I  do,  that  these  benefits  flow  from  competition  between  DBS  providers,  the  elimination  of  that 
 competition,  absent  a  more  compelling  showing,  cannot  be  squared  with  the  public  interest. 
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