Revamping Retransmission Consent: Cable Customers as Company Collateral

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The broadcast "retransmission consent" regulatory structure isn't exactly the hottest topic of the moment, so you might wonder why PK recently filed Reply Comments (and joined the Petition for Rulemaking) urging the FCC to revamp its rules governing negotiations between over-the-air broadcasters and cable companies.

Getting the retransmission consent rules right is important if the FCC wants to protect consumer choice by ensuring a vibrant marketplace for multichannel video programming distributors (including cable companies, digital broadcast satellite, incumbent local exchange carriers, and online video distributors).  Right now consumers are caught in the middle, and are being used as pawns in the negotiations for cable companies' rights to offer broadcast programming to their customers.  In recent years, these negotiations have consistently resulted in either higher cable rates for consumers or loss of programming.  PK's reply comments urge the FCC to stop letting consumers get trampled in a system that was intended to benefit the public by preserving "free" over-the-air broadcasting.

In its comments, PK recommended that the FCC fix the broken retransmission consent system by creating the following new rules to protect cable customers:

  1. A dispute resolution structure for when negotiations break down between broadcasters and cable companies.
  2. Interim carriage, so cable companies could continue to offer broadcast programming if the current retransmission consent agreement expires while the parties are still negotiating.
  3. Wholesale unbundling, to prevent broadcasters from requiring cable companies to carry additional cable programming in order to get the broadcaster's basic "must-have" channel (for example, NBC requires carriage of CNBC, MSNBC, and other co-owned channels).
  4. Requirements that retransmission consent agreements be transparent, and that their terms be reasonable and non-discriminatory.

The retransmission consent regime has spiraled out of control because broadcasters now have a choice of subscription TV providers in each market, which allows them to play a game of chicken without the threat that their programming won't be seen in that market.  Moreover, broadcasters currently enjoy broad statutory protections that give them extra negotiation leverage that they no longer need.  For example, broadcasters enjoy the protections of the "syndicated exclusivity" and "non-duplication" rules, which means that cable companies are not allowed to import distant broadcast signals (it's either the local market's broadcaster or bust).  For more discussion of distant signal protections, see PK President Gigi Sohn's blog post on the issue.

This results in higher consumer costs and less choice, which worries PK, but more fundamentally, the mechanisms that cause higher rates could also have serious consequences.  For example, what constitutes a "distant signal" in the Internet age?  If someone uses a Slingbox to send a broadcast signal to her computer located in another state, does that violate the local broadcaster's exclusivity rights?  Or what if a cable subscriber lives in a state adjacent to the local market from which the cable operator is forced to carry broadcast signals, but is prohibited from carrying signals from that state?  How will he receive news and campaign messages relevant to his community?

As Gigi Sohn emphasized in her testimony on the Satellite Home Viewer Extension and Reauthorization Act, we're working with a broken system here, a patchwork of laws that hurts the availability and affordability of valuable content to consumers.  The FCC should take the opportunity to fix it now.

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