Satellite TV Merger Could Boost Distance Learning, Homeschooling

Published June 1, 2002

A pending merger between the nation’s two largest digital satellite television service providers could be a major advance for distance learning and homeschooling. However, opponents are lobbying to prevent the merger, claiming it would lead to fewer choices for consumers and higher prices.

In October 2001, EchoStar Communications, which operates the DISH network, announced plans to merge with Hughes Electronics, which operates DIRECTV. The combined company would have 16.7 million subscribers, about 91 percent of the satellite television market, though only 17 percent of the pay-television market, which includes both satellite and cable delivery.

The merger would allow the companies to pool their licenses and bandwidth to provide local network channels, something currently possible in only 42 television markets. The combined company would be able to offer local channels in “all 210 television markets … every television market in the country, including Alaska and Hawaii,” offering more rigorous competition to cable and conventional broadcasting stations.

The merger could boost distance learning and homeschooling by expanding access to broadband data services. Fewer than 5 percent of small towns and rural communities now have access to broadband via digital subscriber lines (DSL) or cable operators. Broadband means faster, more reliable, “always on” access the Internet.

In his statement announcing the merger plan, EchoStar Chairman and Chief Executive Officer Charles Ergen said the merger would result in “cost savings from the elimination of costly duplicate satellite bandwidth and infrastructure” and enable satellite television “to compete more effectively against the dominant U.S. cable and broadband providers.”

The combined company, he said, would “increase significantly the number of markets served with local channels via satellite, provide additional channel offerings, increase high-definition TV (HDTV) offerings, accelerate the introduction of next-generation high-speed Internet services, and offer nationwide competitive prices.”

Educational Programs

EchoStar Communications currently offers several distance learning and homeschooling education networks on the DISH Network, serving over 6.4 million subscribers. Those channels are presented commercial-free.

  • StarNet, an initiative of the United Star Distance Learning Consortium (USDLC), Inc., is a nonprofit organization broadcasting 24 hours a day with a two-channel selection. First launched in 1985 to serve rural Texas school districts, it is now a leading distance learning network serving schools in more than 30 states using live, interactive satellite broadcasts with CD-ROM and Web-based integration.

StarNet annually delivers more than 150 hours of innovative professional development, more than 20 student courses, and more than 120 hours of student enrichment programming.

  • PBS YOU is a 24-hour-a-day, seven-day-a-week program service offering formal and informal education programming, including adult learning, foreign language instruction, how-to, and educational documentaries. Viewers can simply watch the programs for entertainment and self-enrichment; self-teach without a formal interface; or in some cases enroll and obtain college credit. Such enrollment can lead to college degrees from more than 1,000 colleges that offer PBS telecourses.
  • The Learning Studio is a pilot project of Educating Everyone, South Carolina Educational Television, and the United States Distance Learning Association to test the effectiveness and use of instructional resources delivered via satellite, with an emphasis on foreign language instruction.

The Learning Studio concentrates on K-12 education, specifically foreign language instruction, English as a Second Language (ESL), Graduation Equivalency Degree (GED) curricula, and teacher training. It also serves as a platform for educational programmers to experiment and develop digital television and multi-media curriculum materials.

Competition and Pricing

Opponents of the merger of EchoStar and Hughes contend the new company would have too much market power against competitors and would be able to raise prices to captive customers.

Defenders of the merger counter that satellite broadcasting competes with a wide variety of means of obtaining video and other types of electronic data, including traditional television broadcasters, cable television, and even videocassette players, DVD players, and broadband services over the Internet. That competition, they say, will force the combined company to keep its prices competitive.

Malcolm Wallop, a former U.S. Senator from Wyoming, says he has seen the positive impact a strong satellite industry can have on cable and telephone companies that otherwise enjoy a “cozy monopoly” in many rural areas.

“The satellite industry has a strong track record of serving rural areas, not with promises but with programming,” Wallop wrote in an essay published in the Rocky Mountain News in late January. “This is especially true in the West. Satellite providers deliver service in areas other companies literally won’t go near.”

The proposed merger, according to Wallop, “would be a competitive shot in the arm for the whole pay-TV market. … The competition from satellite put the heat on cable providers to roll out new services for customers, including digital broadband services. That’s how a competitive free market is supposed to work.” He goes on to call the proposed merger “a winner for everyone” and, for many rural areas of the West, “the only affordable ticket to the digital future.”

While some fear the combined company would use its dominance in the satellite arena to raise prices, EchoStar and DIRECTV have pledged to continue to offer uniform, nationwide pricing for television programming. This means rural customers would benefit from competitive pricing occurring in urban settings. The merger makes such a pricing system—which clearly benefits rural residents—easier to maintain.

Joseph L. Bast is president of The Heartland Institute, publisher of School Reform News. He writes frequently on antitrust issues.