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EchoStar Communications Corp.’s $26 billion acquisition of DirecTV Inc. is running into trouble on Capitol Hill, with several prominent lawmakers telling the Federal Communications Commission that the merger would hurt consumers in rural areas. Senate Commerce Committee Chairman Ernest F. Hollings, D-S.C., and Senate Appropriations Committee ranking member Ted Stevens, R-Alaska, told the FCC to reject the deal, which would combine the two largest U.S. satellite television companies. “Such consolidation would leave consumers with few, if any, choices — particularly in rural America where a significant percentage of consumers depend solely on satellite service,” they said in a late December letter. Hollings and Stevens are the two most notable legislators so far to oppose the deal. Also objecting is Sen. Max Baucus, D-Mont., who questioned how the 130,000 households in his state that don’t get cable will fare if the merger closes. “For Americans without any cable lines, satellite is their sole option if they want to watch television,” Baucus said. He added that more than 30 million consumers nationwide have no cable. These senators were some of the early filers to the FCC during its public comment period, which started recently. The agency began to examine the transaction Dec. 21, and recently opened its doors to comments from individuals, companies and public interest groups. Initial comments are due Feb. 4 with responses accepted until Feb. 24. Separately, 90 members of the House sent a letter in December to FCC Chairman Michael K. Powell and Attorney General John Ashcroft urging scrutiny. “We believe that strictly enforced consumer safeguards regarding price, quality and access to vital telecommunication services must be part of any merger approval between EchoStar and Hughes,” they said in the Dec. 18 letter. Jerry Dubrowski, spokesman for DirecTV, which is a unit of General Motors Corp.’s Hughes Electronics Corp. unit, said the merger would enhance service to rural areas because the combined company will have the resources to quickly roll out satellite broadband Internet offerings. He noted that cable companies cannot provide rural consumers with high-speed Internet access because they do not have lines servicing those homes. The companies also would gain the necessary spectrum to provide local television in the largest 100 markets in the United States, he said. “The biggest rationale for this deal is that it will offer more channels and more local TV than these two companies could individually,” Dubrowski said. Blair Levin, an analyst at Legg Mason Inc. in Washington, said congressional intervention will not be decisive. “It is harmful to getting the deal done because it shows how the rural question is critical to the completion of the merger, ” he said. “ But ultimately the Department of Justice and the FCC will make the decision on whether to accept it or not.” That does not mean lawmakers can’t impede the merger. Levin, for instance, said the Senate Commerce Committee could hold hearings or introduce legislation making the deal illegal, although the latter is unlikely and would likely be unconstitutional. Copyright (c)2002 TDD, LLC. All rights reserved.

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