I’ve been working on the issue of retransmission consent, the process by which broadcasters and television service providers negotiate a price for delivering video content to consumers, for years now. The issue is heating back up as everyone prepares for a busy 2014. As Rep. Greg Walden, R-Ore., chairman of the Energy and Commerce Subcommittee on Communications and Technology, gears up for a substantial rewrite of communications law, it seems clear that retransmission consent will be the subject of substantial discussion next year.
To help guide those conversations, there’s a fantastic piece of legislation that was just introduced by Rep. Steve Scalise, R-La., the head of the caucus of House conservatives known as the Republican Study Committee. Dubbed the Next Generation Television Marketplace Act, H.R. 3720 takes a free-market, deregulatory approach to reducing government influence on negotiations between those producing and those delivering video content. It does this by eliminating completely, rather than just tweaking or restructuring, several regulations that serve as an artificial advantage for broadcasters, while simultaneously wiping away restrictions that prevent content creators from charging market rates for their products.
It does this in five interrelated steps.
- It eliminates retransmission consent regulations.
- It ends “network non-duplication” and “syndicated exclusivity” mandates, both of which essentially prevent service providers from negotiating with broadcasters outside of a given geographic region.
- It repeals “must carry” rules, which allow broadcasters to force service providers to carry their signals even if they don’t want to. This is generally asserted by low-value broadcasters that may not get picked up at all, absent the ability to require that their signal be carried.
- In perhaps its most consequential single provision, the Scalise bill would get rid of so-called “compulsory licensing” rules that date to the Copyright Act of 1976. That law effectively established the federal government as price-setter and administrator for all content licensing, preventing content creators from experimenting with pricing in truly free negotiations with service providers.
- The bill also ends a series of media ownership restrictions that are outdated and unnecessary in the modern world.
As you can see, the entirety of the bill is eliminating regulations that were drafted decades ago in a world where technology and competition were hilariously inadequate by modern standards and where information asymmetries (or in some cases, complete lack of information) made free-market negotiations vastly more difficult than they would be today. And it does this in a way that, in theory at least, includes some things to love and to hate for both the content and service side of television today.
That’s not to say that the bill doesn’t have opposition, of course. Most notably, entities like the National Association of Broadcasters have come out against the bill, claiming that it would hamper their ability to negotiate compensation for their programming. They seem unpersuaded by the elimination of compulsory licensing in the bill, a long-time thorn in their side, and they point to the fact that the bill does not address other regulations that hamper them on matters such as broadcast decency. They also suggest that impasses leading to blackouts are rare and nothing to worry about. The claim that they’ll no longer be compensated for use of their signal isn’t accurate, in my view, and the latter claim on blackouts is not a sufficient guide to policy since the appropriate question is whether or not we have more under the convoluted retrans rules than if those regulations didn’t exist (which is quite likely).
The Scalise bill would not force any property holder, whether that property is a copyrighted television show, a broadcast signal, or a cable or satellite network, to give up use or transmission of that property without just compensation. If, in fact, it did open the door to uncompensated use, NAB and others would be right to raise concerns. What the bill does, then, is remove the various layers of federal regulation that have been heaped on this market over the course of decades in order to create truly unfettered negotiations between those property holders.
What that legitimately free-market negotiation process would look like, I’m not entirely sure. Cable and satellite businesses haven’t had to negotiate specific payments to content providers because compulsory licensing has long dictated the price and terms for them, so this would indeed be a brave new world we’d be forging if the NGTMA were to pass. That world would undoubtedly be messy for some time, but there’s nothing about these negotiations that make them particularly ill-suited for markets.
The Scalise bill is quite distinct from the approach taken by Rep. Anna Eshoo, D-Calif., in her retrans bill, known as the Video CHOICE Act. Her legislation would dramatically empower the Federal Communications Commission, charging it with intervening in retransmission consent negotiations several ways, most notably by forcing interim carriage of a signal in the case of an impasse. For as deregulatory and market-oriented as the Scalise bill is, the Eshoo bill appears to be the opposite. It gives the FCC more power (that the agency may not even want at this point!) while doing little to address the underlying regulations that help muddle negotiations.
NGTMA is no silver bullet, surely, but nothing in Washington is. It wouldn’t eliminate service blackouts at the stroke of a pen, as even free-market negotiations can lead to an impasse. It wouldn’t immediately cut everyone’s cable bill in half or give them all the premium channels for free, either. And it provides no free puppies. But it would place negotiators on a level playing field, afford property owners the full right to negotiate for how their property will be used, and all without further empowering the FCC or other arms of the federal government.
Hard to argue with that from a free market perspective.