Satellite companies warned about rural service

WASHINGTON -- Executives of the two major satellite television providers made their case for a merger Tuesday on Capitol Hill, dogged by opponents warning the deal would rob millions of rural Americans of choice when they watch TV.

The Justice Department and Federal Communications Commission will decide whether to allow the $25.8 billion merger of EchoStar's Dish Network and Hughes Electronics-owned DirecTV. Because Congress can influence the decision, its support is crucial to the companies.

The two CEOs were mostly on the defensive Tuesday, insisting that a combined company would offer wider varieties of service and lower prices for customers.

A union would help satellite TV compete with the cable industry, which with nearly 70 million subscribers claims more than three-quarters of the market, said Eddy W. Hartenstein, DirecTV's chairman and CEO. The combined EchoStar-Hughes would serve 15 million customers.

"This will make us a much stronger competitor to cable and bring the benefits of this robust competition to cable subscribers as well as to our own customers," Hartenstein said.

Critics pointed out that in many rural areas, millions of viewers still have no cable service. They dismissed a pledge by EchoStar's chief, Charlie Ergen, to set a nationwide flat-rate system to protect rural consumers from higher rates than those with cable access.

"Their choices go from two providers to one," said Bob Phillips, president and CEO of the National Rural Telecommunications Cooperative. "No price guarantee is going to solve the monopoly problem this merger creates. One supplier is a very lonely number for our rural consumers."