Free State Panelists Free to Hammer Retrans

Media Bureau Chief says retrans proceeding remain live and FCC continues to review it with eye on marketplace events

By John Eggerton -- Broadcasting & Cable, 3/21/2013 2:48:29 PM

Cable and satellite operators, an activist, an academic, and a former FCC official took turns taking aim at the must-carry retransmission consent regime Thursday at a Free State Foundation forum in Washington -- there was no broadcaster on the panel.

The general thrust of the attacks was that the rules were monopoly based rules tailored to a market that doesn't exist.

National Cable & Telecommunications Association President Michael Powell freely admitted that the cable business in 1992, when the Cable Act and its rate regs and retrans regime was adopted, was a monopoly with 98% of the MVPD market. But that was before DBS and the Internet and phone video, he pointed out. Powell said, as he has before, that the Act was also meant to protect the broadcast model as an inherent public trust and social compact, a judgment that was made when over-the-air viewership was close to 70%. Now that audience is more like 14% over-the-air only, he pointed out. He said there can be a debate on whether to continue to protect broadcasters, but that what isn't debatable is that the rules should continue to be justified on the basis of a monopoly market.

Former Media Bureau Chief Donna Gregg said that retrans/must-carry was adopted with teh best of intentions, but that it had not proved to be consumer-friendly. She said the rules have caused viewer "outrage" over blackouts. She also took aim at network nonduplication and syndicated exclusivity rules as a "questionable set of regulations." She said it led to "deprivation of channels" for consumers. 

Gigi Sohn, president of Public Knowledge was on the same page. "Consumers are held hostage by retrans fights and blackouts, she said. She also said that while getting rid of the regs was preferable, alternatively the FCC should keep stations on during retrans disputes and mandate outside arbitration, the latter which she said the FCC has the authority to do, although the commission has said it doesn't. Sohn thinks the FCC is reading that authority too narrowly. She called syndicated exclusivity, distant-signal protections and sports blackout rules decades-old regulatory nonsense that kept viewers from watching the TV stations they want to watch.

Sohn suggested there was some talk in Congress about introducing legislation clarifying that the FCC has the authority to mandate arbitration.

Time Warner Cable SVP Steven Teplitz called retrans/must carry the "poster child" for "what happens when you get it wrong" and the harm regulation can cause. He said government had inserted itself between MVPDs and broadcasters that have caused blackouts and rate increases, both ot which he said harm

Stacy Fuller, VP at DirecTV, said that back in 1992 retrans/must carry might have made sense when the negotiation was between two monopolies, broadcasting and cable, but now broadcasting, still a monopoly protected by the government, gets to play a range of MVDPs against each other, leading to higher prices. She said it was one of the few times when more competition leads to higher prices.

The person with the most power over the issue was the most circumspect. Bill Lake, current Media Bureau chief, called it a "very odd regime" of regulated negotiations. But, he said, "that's the regime we have and we try to thread that needle. And while the FCC has taken no action on a proposed rulemaking now going on a couple of years old, he insisted the proceeding was not dead. "We continue to look at it  and to watch events in the marketplace. " But he also repeated that the FCC has concluded it does not have the authority for some of the remedies, like mandating arbitration.

The panelists had different ideas of what vehicles could be used to update the regs they said were outdated. Most pointed to the Satellite Television Extension and Localism Act (STELA) as a way to address the issue of giving TV viewers station options, though Sohn said she did not expect the reauthorization to be "larded" with extras.

FCC reform was another option; with the suggestion by Commissioner Ajit Pai and others that Congress could extend the forbearance authority it has to lift outdated telecom regs to the video space.

Powell said outside forces such as a decision in the Aereo TV case or Cablevision's challenge of bundled programming could also be one of those vehicles. Powell said that with everything else on its plate, he did not see a major rewrite of communications law this year.