Freedom Line Blog

“Today’s thriving video content market offers consumers an endless array of options according to their own needs and tastes. So why do some in Congress seek to dictate which channels appear in your cable package?”

That is the question posed and addressed in a recent op-ed authored by CFIF’s Timothy Lee and published by The Daily Caller.

“Whether it’s discriminatory tax incentives for favored programming, preferential treatment for rural-themed channels, or partisan attempts to de-platform conservative news stations, lawmakers from both parties seem under the illusion that our almost unfathomably competitive video marketplace needs the meddling hand of Congress to fix what isn’t broken,” writes Lee.

As a current example, Lee notes that “some lawmakers openly promote RFD-TV – a pay-TV channel owned by Rural Media Group that mixes agribusiness news content with rural-themed entertainment programming. In previous years, Rural Media Group pushed legislation that would effectively require pay-TV companies to carry RFD on their basic tiers – and to pay for the privilege, ultimately increasing costs for consumers. Although those efforts failed, the company is now back pushing a resolution to artificially impose more rural programming.”

That resolution should be rejected.

Lee goes on to offer a simple solution: “[L]et the free market decide, and get the government out of the discussion altogether.”

Read the entire op-ed here.

In our Liberty Update this week, we highlight the Biden Administration’s role in rising inflation, some of its under-discussed negative consequences and its shockingly tone-deaf responses and rationalizations.  In  positive news from NCTA, The Internet & Television Association, however, internet service provider costs are actually declining:

Good News: Internet Service Costs Decline

In just over two months at the end of this calendar year, the Satellite Television Extension and Localism Act (STELA) is once again set to expire, pending reauthorization.

Although the law probably remains unfamiliar to most Americans, it governs the way in which people who live beyond the reach of broadcast signals can retain access to local television programming.  In addition to ensuring continued local programming access, however, the reauthorization process underway in Congress offers an opportunity to finally institute badly-needed free market reforms to the law as it currently exists.

Specifically, this week’s Senate Committee on Commerce, Science, and Transportation hearing on reauthorizing the law provides a critical opportunity for pro-market reform by modernizing anachronistic regulations like retransmission consent agreements and must-carry provisions of the 1992 Cable Act.

For those unfamiliar with STELA, here’s a brief primer and an explanation of why the current reauthorization process is so critical.

When the Cable Act became law in 1992, the overriding fear among voters and legislators was that cable operators might leverage monopoly power to block local broadcast stations in their respective areas.  Consequently, the law artificially tipped the regulatory scales in favor of broadcasters by granting them the right to guaranteed carriage or the right to compel cable operators to pay stations for consent to retransmit their broadcasts to local subscribers.  Then, in 2010 when STELA was enacted, it unfortunately maintained many of those outdated 1992 Cable Act rules.

Now, almost three decades later, the American television consumer marketplace is much more competitive and no longer resembles its 1992 state of affairs.

Among other changes over the past three decades, consumers now possess innumerable options in channel selection and the means to access them, from cable to fiber optics to online services to multiple satellite and cable providers.

Despite that evolution, however, the government-imposed advantage for broadcasters remains.  Multi-channel video programming distributors (MVPDs) like cable, satellite and fiber providers are prohibited under current regulations from disconnecting service during sweeps week, but broadcasters remain free to do the exact same thing during such events as a World Series or Super Bowl in which the local team is playing.

Accordingly, broadcasters maintain their government-created negotiating advantage through the retransmission consent rules, and are guaranteed a place on cable companies’ basic tier.  That tipping of scales has resulted in consumers suffering service disruptions and cost increases.  In fact, we’ve witnessed record blackouts already this year.

But as referenced above, the current STELA reauthorization process provides the perfect opportunity for Congress to do something about it, and allow greater negotiating balance and a more even playing field.   At a minimum, Congress can finally end the unfair prohibition against MVPDs disconnecting service during sweeps week if necessitated by a negotiating impasse with intransigent broadcasters, as well as broadcasters’ government-granted right to placement on cable companies’ basic tier, which it appears ready to do.

The bottom line is that federal government shouldn’t be playing favorites or tipping the scales in an ever-evolving consumer television marketplace like ours, and STELA reauthorization provides the perfect opportunity to correct those existing defects.

Next month’s arrival of a new Trump Administration, alongside a Congress ready to hit the ground running, promises a flurry of corrective activity after eight years of Barack Obama.

However, Americans should remain vigilant against regulatory mischief that some are trying to push through unnoticed at the outset of the new Administration and Congress.

Exhibit A:  An effort by broadcasters to convince Obama’s Federal Communications Commission (FCC) to approve an entirely new broadcast television standard known as ATSC 3.0.

In a nutshell, the ATSC 3.0 standard amounts to yet another new federal action upon a private marketplace and a handout to a favored industry that could inflict significant and unnecessary costs, ultimately to be paid by consumers.

Under current law, cable and satellite television providers must carry local television stations, so the regulatory scales are already tipped in broadcasters’ favor.  The proposed new mandate could extend the scope of providers’ obligations requiring them to transmit broadcast signals in the new standard to the public.

As a result, consumers who currently receive local stations over the air or via cable or satellite providers suddenly would face the possibility of incurring the cost of new equipment in order to receive the new signal, as current equipment does not support the new standard.  Obviously, millions of consumers who are already struggling to make ends meet could thus be forced to pay – whether through higher monthly subscription fees or direct charge – for new equipment for a “benefit” that may not be needed or even desired.

Satellite and cable providers could also face technological hurdles to accommodate the new standard, which could inevitably lead to additional costs and quality assurance issues.  Ultimately, subscribers could have to pay those costs and endure those potential technological glitches as well.

Keep in mind that all of these costs and changes could be imposed without a sober cost/benefit analysis from the FCC.  It’s precisely the sort of hasty, top-down, crony capitalist federal regulatory action that has tested the limits of American tolerance over the past decade.

Technological advance is a good thing, whether in the TV market or elsewhere.  But that’s something that should occur as the result of market forces, not through fast-tracked federal regulatory action riddled by too many uncertainties.

In this week’s Freedom Minute, CFIF’s Renee Giachino discusses the absurdity of the Federal Communications Commission’s cable set-top box proposal.

In recent weeks we’ve highlighted a destructive new initiative by the Obama Administration’s Federal Communications Commission (FCC) to impose a one-size-fits-all regulation forcing cable TV set-top boxes to become artificially compatible with third-party devices.  Translation:  in the ever-evolving home entertainment market, where cable companies themselves are already moving from traditional cable boxes toward devices owned by individual consumers, the FCC remains mired in a 1990s mindset and wants to regulate accordingly.  The FCC’s inexplicable proposal would freeze in place a technological state that is already outdated.

Check that.  Perhaps the FCC’s behavior isn’t so inexplicable at all.

This morning, The Wall Street Journal editorial board highlights many of the concerns that we and others address, but notes in “Government by Google” that crony capitalism constitutes the underlying foundation of the initiative:

The Federal Communications Commission has proposed rules that would force television providers to create a universal cable-box adapter.  This would hand over shows to companies – TiVo, Google – that would peddle programming as their own…

The new rule amounts to government-sponsored piracy in allowing TiVo and Google to broadcast programs that providers pay to distribute.  Google wouldn’t have to abide by carriage agreements or pay licensing fees, which is one reason content creators are pushing back.  The stealing would no doubt violate copyright.  Some 30 members of the Congressional Black Caucus sent a letter to FCC Chairman Tom Wheeler saying the rule would relegate minority programming to channels rarely visited by viewers.  Google prodded the supposedly independent FCC in 2014 to bust open cable boxes, and Chairman Wheeler followed orders.  The tech giant wants to sell ads against poached content, mowing over cable commercials and crushing advertising competitors.”

The federal government can’t be trusted to control our healthcare industry, our free speech rights, our children’s educational options, our Second Amendment rights and so on.  Why would control over our home entertainment choices or the constantly-advancing telecommunications industry somehow be any different?

The Journal concludes by noting another ominous element:  the Obama Administration’s mad rush to impose the remainder of its to-do list as the sun sets on its tenure:

The FCC rejected a similar proposal in 2010, but now the Democratic majority seems committed to ramming it through before President Obama leaves office.  Mr. Wheeler has already done great harm to his reputation by taking direction from the White House to regulate the Internet.  He’ll do even more damage if he does the cable-box bidding of Google.”

Well said.  Fortunately, a bipartisan Congressional consensus, the creative community, consumer groups and other elements stand ready to stop the FCC’s scheme at the legislative, judicial and regulatory levels.  Its up to the American electorate justifiably disgusted by crony capitalism and stifling federal overregulation to support them.

On December 31, 2014,the Satellite Television Extension and Localism Act (STELA) is set to expire.  The House Energy and Commerce Subcommittee on Communications and Technology is in the process of reauthorizing the law, and that provides a critical opportunity for pro-market reform by modernizing anachronistic regulations like retransmission consent agreements and must-carry provisions of the 1992 Cable Act.

So what is STELA, and why should conservatives and libertarians care?

Well, when the Cable Act became law in 1992, the prevailing concern was that cable operators might somehow employ monopoly power to block local broadcast stations in their home areas.  Accordingly, the Act tipped the scales in favor of broadcasters by granting them the right to guaranteed carriage or the right to compel cable operators to pay stations for consent to retransmit their broadcasts to local subscribers.  STELA, enacted in 2010 and due to expire at the end of this year, essentially maintained many of those outdated rules.

Today, more than two decades later, the television marketplace is much more competitive and no longer resembles the 1992 state of affairs.  Consumers now possess innumerable options in channel selection and the means to access them, from cable to fiber optics to online to multiple satellite and cable providers.  Yet despite that evolution, the government-imposed advantage for broadcasters remains.  Multi-channel video programming distributors (MVPDs) like cable, satellite and fiber providers are prohibited under current outdated regulations from disconnecting service during sweeps week, but broadcasters remain free to do the same thing during such events as the World Series in which the local team is playing.  Thus, broadcasters maintain government-created negotiating power through the retransmission consent rules, and are guaranteed a place on cable companies’ basic tier.  That tipping of scales has resulted in consumers suffering service disruptions and cost increases.

Fortunately, the opportunity has arrived for Congress to do something about it, and allow greater negotiating balance and a more even playing field.   As part of STELA reauthorization, Congress can at the very least jettison the prohibition against MVPDs disconnecting service during sweeps week if necessitated by a negotiating impasse with intransigent broadcasters, as well as broadcasters’ government-granted right to placement on cable companies’ basic tier, which it appears ready to do.

The federal government simply shouldn’t be playing favorites or tipping the scales in an industry as dynamic as this, and STELA reauthorization provides the perfect opportunity to correct those existing defects.