Communications Satellite Corp. received the go-ahead yesterday from the Federal Communications Commission to begin building a revolutionary system to broadcast television programs directly to viewers' homes via satellite, bypassing existing local television stations.
By a 6-1 vote, the commission gave Comsat's subsidiary, Satellite Television Corp., permission to launch the first phase of its direct-broadcast satellite service, which ultimately could compete with the nation's three television networks.
The first phase, which is not expected to become operational until 1986, would provide three pay television channels to consumers in the eastern United States. With the future approval of the FCC, STC hopes to expand its service nationwide.
Also yesterday, the FCC began making plans to assign broadcasting and other telecommunication licenses through a lottery system, instead of through the lengthy and costly comparative hearing process for applicants to win government appoval to operate.
STC immediately hailed the FCC's decision, calling it a "great day . . . the beginning of a new era in the history of television."
The National Association of Broadcasters denounced the agency's action and said it would challenge it in court, arguing that the FCC granted the STC's permit prematurely, before it completed all the necessary legal review of this new service.
The STC application is the first of several direct-broadcast satellite applications expected to be approved by the commission in the next several weeks. Nine companies have applied to offer similar systems, which the commission has long hailed as a way to increase diversity in television programming and to bring programming to some rural areas -- with about 5 million residents -- that receive no television signals at all.
STC wants to provide three channels of television programming, without commercials, for a monthly fee of about $25. That fee would include a leasing fee for equipment needed to receive STC's signal, including a 2-foot diameter dish antenna on each home's rooftop to receive the satellite signal plus a device to convert the satellite signal into one that can be received on television sets.
Although the FCC was enthusiastic about this new broadcasting service, it expressed concern about STC's involvement, noting that it was a very risky venture that could cost Comsat a great deal of money -- to the detriment of the company's regulated activities, which provide international satellite service to communications companies.
The fear that this could drive up the rates of these regulated activities prompted Commissioner Anne Jones to vote against STC's applications. Other commissioners, however, argued that it was not up to the agency to second-guess Comsat and tell them not to take a risk.
Nonetheless, the FCC imposed several conditions on STC's operations to bar Comsat from funneling more than the $225 million it plans to its subsidiary without further FCC approval.
STC has estimated that it needs $225 million from Comsat, provided it is able to find a partner to help it operate its nationwide system. Irving Goldsten, Comsat executive vice president, said yesterday that STC is still searching for a partner and is talking with a number of companies.
Barring any court challenges, the FCC hopes to have its lottery system in place by March. Among other things, the lottery will be used to select the winners in the hotly contested battles to operate low-power television stations in hundreds of cities.
The FCC will not use the lottery, however, to parcel out licenses for the brand-new mobile telephone service that scores of firms are now lining up to offer. A majority of FCC commissioners argued that this service requires more technical expertise and capital than low-power television.