DIRECTV 2006 Annual Report Download - page 29

THE DIRECTV GROUP, INC.
•Geographic Service Rules. The FCC requires DBS licensees to comply with certain geographic
service obligations intended to foster the provision of DBS service to subscribers residing in the
states of Alaska and Hawaii. We believe that we are in compliance with these rules, but the
State of Hawaii has filed a petition for administrative sanctions against us taking a contrary view,
and urging the FCC to take enforcement action against us. A satellite television dealer named
MicroCom has also requested the FCC to examine our quality of service to Alaska and Hawaii.
We cannot be sure that the FCC will agree with our view that we are in compliance with the
agency’s geographic services rules, or that the FCC will not require us to make potentially
cumbersome and costly changes to our offerings.
•FCC Conditions Imposed In Connection With the News Corporation Transactions. The FCC
approved the acquisition by News Corporation of its equity investment in us in December 2003.
In doing so, the FCC imposed a number of regulatory conditions on us and News Corporation,
some of which directly or indirectly affect our business. In particular, the FCC has imposed on
us program carriage conditions, intended to prevent discrimination against all forms of
unaffiliated programming; and certain program access conditions, intended to ensure
non-discriminatory access to much of the programming carried on the DIRECTV service. We
cannot predict what effect our compliance with or the FCC’s enforcement of the remaining
conditions will have on our business.
•International Telecommunications Union Rules. We are required by international rules to
coordinate the use of the frequencies on our satellites with other satellite operators who may
interfere with us or who may suffer interference from our operations.
•Other Legal and Regulatory Requirements. DBS/DTH providers are subject to other federal and
state regulatory requirements, such as Federal Trade Commission, FCC and state telemarketing
and advertising rules, and subscriber privacy rules similar to those governing other MVPDs. We
have agreed with the Federal Trade Commission to (1) review and monitor compliance with
telemarketing laws by any companies we authorize to do telemarketing as well as by independent
retailers, (2) investigate and respond to complaints about alleged improper telemarketing and
(3) terminate its relationship with marketers or retailers found in violation. Similarly, we have
agreed with certain state attorneys general to comply with advertising disclosure requirements
and monitor compliance by independent retailers.
In addition, although Congress has granted the FCC exclusive jurisdiction over the provision of
DTH satellite services, aspects of DBS/DTH service remain regulated at the state and local
level. For example, the FCC has promulgated rules prohibiting restrictions by local government
agencies, such as zoning commissions and private organizations, such as homeowners
associations, on the placement of DBS dish receiving antennas. Local governments and
homeowners associations, however, may continue to regulate the placement of such antennas if
necessary to accomplish a clearly defined public safety objective or to preserve a recognized
historic district, and may also apply to the FCC for a waiver of FCC rules if there are other
local concerns of a special or unusual nature. In addition, a number of state and local
governments have attempted to impose consumer protection, customer service and other types
of regulation on DBS operators. Also, while Congress has prohibited local taxation of the
provision of DBS service, taxation at the state level is permissible, and many states have imposed
such taxes. Incident to conducting a consumer directed business, we occasionally receive
inquiries or complaints from authorities such as state attorneys general and state consumer
protection offices. These matters are generally resolved in the ordinary course of business.
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