Freedom Line Blog

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  Then, in 2010 when STELA was enacted, it unfortunately maintained many of those outdated 1992 Cable Act rules.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.

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.