TPA Sends Coalition Letter to Congress Urging Reform on Outdated Video Marketplace Rules

Retransmission consent and the Cable Act of 1992 may not initially sound like a hot button issue for taxpayers and consumers.  But, a closer look shows that it is an issue that affects millions of people when major sports championships like the World Series or Super Bowls are blacked out because of disputes between content providers (CNS, ABC, et.) and video distributors (cable systems, satellite providers).  In fact, in 2012 the Federal Communications Commission’s (FCC) retransmission consent rules almost stopped some Bostonians from watching the Super Bowl.   According to a January 26, 2012 article in the Union Leader, “Villandry is among 200,000 DirecTV subscribers who may be blacked out from watching Super Bowl XLVI, the result of an ongoing dispute between the satellite provider and Sunbeam Television Corporation, which owns the NBC affiliate in Boston. A conflict over retransmission consent fees has prevented DirecTV customers in Greater Boston and New Hampshire from watching NBC since Jan. 14.”  The Taxpayers Protection Alliance has been writing about retransmission consent and the need to update the Cable Act of 1992, and how there is an inherit advantage for broadcasters: leverage in negotiations with monopoly cable providers, granting broadcasters the right to choose between guaranteed carriage or insisting that multichannel video programming distributors (cable and satellite providers) obtain and pay for a station’s consent to retransmit the station to local subscribers. The latest consequence of this leverage is the continued standoff between CBS and Time Warner which has led to blackouts for certain regional customer bases. The conflict not only gives more incentive to revisit current legislation, but it also serves as a reminder of the dangers of other legislation, specifically net neutrality and why it would be harmful for customers and businesses in the industry. That is why today, along with Americans for Job Security, Center for Individual Freedom, Council for Citizens Against Government Waste, and Less Government, the Taxpayers Protection Alliance sent a letter to the House of Representatives urging them to follow the example set by the Next Generation Television Marketplace Act, which was introduced in the 112th Congress by Rep. Steve Scalise (R-La.) and former Sen. Jim DeMint (R-S.C) in order to get government out of the video marketplace, and to allow negotiations to take place in a true free market.

Here’s the coalition letter TPA sent: 

August 12, 2013

U.S. House of Representatives

Washington, D.C.  20515

Dear Representative:

The current dispute between Time Warner Cable and CBS calls attention to the urgent need to reform badly outdated rules governing the video marketplace – rules that pick winners and losers and harm consumers, namely the millions of Americans being deprived of access to CBS’ “free” content due to the standoff.  The undersigned organizations urge you to support a full deregulation of the video marketplace.  The best way to do this is to follow the lead of the Next Generation Television Marketplace Act, which was introduced in the 112th Congress by Rep. Steve Scalise (R-La.) and former Sen. Jim DeMint (R-S.C).  This will allow free markets to govern the negotiations between broadcasters and multichannel video programming distributors (MVPDs).

Not only are CBS stations blacked out for Time Warner Cable subscribers, but anyone who receives a broadband connection from Time Warner Cable is blocked from online content that CBS offers to the general public for free. The current rules governing retransmission consent, must-carry obligations, and the compulsory copyright were authored in 1992, at a time when most markets were served by a single monopoly cable provider. More than twenty years later, the marketplace has changed radically, with cable, satellite and telecommunications providers all offering MVPD and broadband services, not to mention the multitude of new video options offered on the Internet. Meanwhile, the rules remain unchanged, with broadcasters enjoying government protection in negotiations, allowing them to demand exorbitant retransmission consent fees, while still retaining the option to invoke must-carry. Rules such as the importation ban prohibit basic free market functions, such as the option for the MVPD to negotiate with another broadcaster for the same content. The MVPD is left with few options but to eventually accede to broadcasters’ demands.

The best solution to this problem is to get government out of the video marketplace, and to allow negotiations to take place in a true free market. MVPDs will have an incentive to bring broadcasters’ popular content to their subscribers, and broadcasters will have an incentive to reach the 85% of Americans who receive their television from an MVPD.  In a deregulated marketplace neither side will enjoy a litany of government rules that allow them to hold the other side hostage.

The Next Generation Television Marketplace Act is aimed to create a true free market by doing away with the retransmission consent scheme and the must-carry obligation. It would also eliminate the compulsory copyright license, so that broadcasters would enjoy full rights to be compensated for their content under copyright law. The bill would also eliminate broadcast ownership caps so that free markets would determine how many television stations a network could own, not a government bureaucracy.  All of the players in the video marketplace will benefit from the removal of government interference.

The CBS-Time Warner Cable dispute demonstrates that the problems created by outdated video regulations are getting worse, not better. Therefore, we urge Congress to follow the example set by the Next Generation Television Marketplace Act and to get government out of the negotiations between broadcasters and MVPDs.

Sincerely,

David Williams, President, Taxpayers Protection Alliance

Stephen DeMaura, President, Americans for Job Security

Jeff Mazzella, President, Center for Individual Freedom

Tom Schatz, President, Council for Citizens Against Government Waste

Seton Motley, President, Less Government