Have a Little (Good) Faith in Retransmission Consent

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Last week the FCC announced the agenda for its March meeting, including a Notice of Proposed Rulemaking to reform some of the rules governing negotiations between broadcasters and cable companies over the retransmission of broadcast programs via cable.  In a letter [pdf] we sent to the FCC in January, Public Knowledge applauded this effort and explained that, now more than ever, the FCC must use its existing legal authority and act to protect consumers.  We also urged the FCC to grant our petition from last March, which would establish safeguards to prevent retransmission consent disputes from leaving customers cash-strapped or out in the cold.

At this point, chances are good that you have read about (or even experienced) a couple relatively recent TV blackouts, in which subscribers to a particular cable company couldn’t access all of the channels they paid for.  These blackouts happen because broadcasters can use certain legal protections to pull their programming from cable companies’ line-ups if the cable company doesn’t agree to all of the broadcasters’ terms (payment, carrying extra channels on the basic tier, etc.).  Broadcasters tend to time these blackouts so that they coincide with some important must-see event: for example, last March Disney made Cablevision customers miss part of the Oscars, and in October Fox prevented 3.1 million Cablevision subscribers from watching the first two games of the World Series during a two-week long blackout.  Even worse, in that last round of brinksmanship, Fox even temporarily disabled access to Fox.com and Fox shows on Hulu to Cablevision’s internet subscribers, whether or not they also had a Cablevision cable subscription.  Basically, on October 16th, consumers woke up to the equivalent of a partial Internet blackout solely because their Internet service provider was fighting with another company over its (completely separate) cable service.  This result is unacceptable, and sets a dangerous precedent for how far companies are willing to use consumers as collateral in the next big retransmission consent dispute.

As PK Legal Director Harold Feld not-so-subtly alluded to in a separate blog post, we at PK believe that the FCC has ample authority under existing law to revamp the retransmission consent regulations to protect consumers, but has thus far chosen not to use it.  The FCC’s recent remarks about fixing the retransmission consent regime are good signs that it will now begin to protect consumers from getting squeezed between corporate interests.

In the Satellite Home Viewer Improvement Act, Congress created an obligation for broadcasters and cable companies (multi-channel video programming distributors, or MVPDs, in lawyer-speak), to negotiate “in good faith” when they hammer out deals for cable companies to carry the broadcasters’ television programs.  This means no refusing to negotiate, no unreasonable delay tactics, and no putting just one proposal on the table on a take-it-or-leave-it basis.  What’s more, the FCC has actually implemented this law in its regulations, listing out the practices that constitute a violation of the good faith requirement and letting companies file complaints if their negotiation partners won’t negotiate in good faith.

So, I hear you say, if the FCC has statutory authority and already implemented regulations, then what’s the problem?  Well, the problem is actually getting the FCC to meaningfully enforce the laws and regulations.  By our count, the FCC has only once found that a company failed to negotiate in good faith, and even then its only solution was to tell the companies to call each other up and try again (but this time in good faith, please).  Instead of just giving companies a good scolding, the FCC could actually stop behavior that harms the public by granting PK’s petition and creating a mandatory dispute resolution framework to handle cases when negotiations break down between broadcasters and MVPDs.  As part of that framework, the FCC should also require broadcasters to continue to provide their programming during negotiation disputes (this is called “interim carriage”).  This both protects consumers from blackouts and removes the ability of broadcasters to use cable companies’ subscribers as collateral in negotiation disputes.

As companies battle over the FCC’s authority over retransmission consent disputes, keep in mind that the Cable Television Consumer Protection and Competition Act of 1992 was written “to promote competition in the multichannel video marketplace and to provide protection for consumers against monopoly rates and poor customer service.”  This is the exact opposite of how the retransmission consent regime currently works: broadcasters have been exploiting statutory protections to raise retransmission fees for cable companies, which then turn around and pass those increased fees onto their subscribers.  Even more specifically, though, Congress explicitly told the FCC to make sure that retransmission consent fees don’t make the rates for basic cable service unreasonably high.  In our letter, PK also explained why section 325(b)(1) of the Communications Act and the Administrative Dispute Resolution Act do not affect the FCC’s authority to step in and protect consumers in retransmission consent disputes.

Broadcasters and cable companies can cast blame all they want, but the bottom line is that these corporations are throwing their weight around to bump up profits, and it’s hurting consumers.  The FCC can and must act to stop companies from contorting the retransmission consent rules in ways that force their opponents to choose between making customers pay a small fortune for “basic” cable service or losing programming access entirely.  This entire system was designed to promote reasonably-priced television access for consumers.  The FCC should ensure that it does just that.

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