By John Quale and Brian Weimer

On October 15^th, Rainbow DBS, the satellite division of Cablevision Systems Corp., unveiled its new direct broadcast satellite (DBS) service called "Voom." Voom will compete with rival DBS providers DirecTV and Echostar’s Dish Network–as well as cable operators–in the increasingly competitive multichannel video programming distribution (MVPD) market.

Voom’s draw will be its extensive offering of high definition television (HDTV) programming, which Rainbow DBS is banking on as a key advantage over its rivals. Voom offers subscribers up to 39 high definition (HD) channels along with 88 standard definition channels, including over 40 cable channels such as FX, AMC, Discovery, A&E and more. The centerpiece of the new Voom service is a suite of 21 commercial free 1080i HD channels created for Rainbow DBS by its immediate parent Rainbow Media Holdings LLC. The programming on each of the 21 new channels was specifically designed to appeal to the niche market of pioneer HDTV owners whose numbers are forecasted to reach six million by the end of this year and 12 million by the end of 2005. The exclusive package includes, among others, channels devoted to world sports, collectibles, news headlines and the arts.

Hardware for Voom will include a satellite dish and set top receiver manufactured by Motorola, as well as an over-the-air antenna which will allow customers to receive local digital broadcast channels delivered in standard definition and high definition where available. Local digital broadcasts will be integrated into the same user interface with Voom’s other product offerings. The initial cost for the satellite dish and set top receiver will be $749 and monthly service fees are expected to start at $39.90 for the basic subscription package.

Voom will be delivered over Rainbow DBS’ recently launched satellite Rainbow 1, which is located on the far eastern end of the North American satellite arc at the 61.5 degrees W orbital position. The company holds a license for 11 channels at this orbital slot. The company also recently received special temporary authority (STA) from the FCC to operate on two additional unassigned channels (23 and 24) located at the 61.5 degreesW orbital slot that were previously utilized by Echostar under a similar STA grant from the Commission.

Although Voom claims its service will be available to subscribers throughout the continental United States, some analysts have raised questions about how much reach Rainbow DBS’ single satellite can have given its extreme-easterly orbital position. In this regard, although one beam on the satellite covers the contiguous United States, the receive antenna elevation angles in certain far western parts of the United States will be less than 15*.As a result, some subscribers in those areas may require a larger dish to receive a sufficiently robust signal.

Rainbow DBS is presently in the hunt for more capacity. In addition to its STA authority to operate on the unassigned channels at the 61.5 degrees orbital location, the company also recently filed applications to launch and build up to five new satellites that will operate over Ka-band frequencies. Rainbow DBS apparently intends to utilize the spectrum to enhance and expand its service offerings to include interactive data and video applications, streaming video and other broadband data applications.

The arrival of Voom heralds another step forward both for HDTV programming and for the FCC’s recent attempts to increase competition in the satellite-delivered MVPD market. Following its Ninth Report on the Status of Competition in the Market for the Delivery of Video Programming, which highlighted the lack of competition to cable in the MVPD market, the FCC has made several moves designed to increase competition via satellite. The latest of these occurred in August when the FCC granted authority to SES Americom, a foreign corporation, to enter the U.S. direct-to-home (DTH) market. Also, in May, the FCC granted an application by Digital Broadband Applications Corp. to use a Canadian-licensed satellite to provide DBS and DTH services to the United States

Voom represents the culmination of more than 14 years of regulatory challenges that were overcome in no small measure due to the leniency of the FCC’s International Bureau. The original construction permit (CP) for the DBS service was issued to Continental Satellite Corp. in 1989. The construction milestones set forth in that license required Continental to enter into a satellite manufacturing contract within one year and initiate service within six years following the grant of the CP. In November of 1995, when the CP was set to expire for failure to initiate service, the International Bureau granted Continental a four-year extension of the service-initiation milestone. The Bureau also extended the construction milestones set forth in the CP on at least two subsequent occasions for Rainbow DBS after it acquired the CP from Continental. Fourteen years after the initial grant of the CP, the satellite is in the sky and providing service to consumers. In view of the Commission’s new very tough enforcement ethic concerning satellite construction milestones, permitees in the future may not be afforded as many second chances to complete construction. For the time being, Voom represents another step toward more vigorous competition to cable in the MVPD marketplace.

John Quale and Brian Weimer are attorneys in the Washington, DC, office of Skadden, Arps, Slate, Meagher & Flom LLP. Quale’s email address is [email protected] and Weimer’s email address is [email protected] .