FCC should leave legislating to Congress and leave the ‘exclusivity rule’ alone

The Federal Communications Commission (FCC) seems bent on usurping congressional Article One authority, as their just-announced decision to consider including the “exclusivity rule” on their docket for their next open meeting shows.

{mosads}Let’s be clear: There is no legitimate free-market argument for the FCC to once again overstep its authority and throw local, over-the-air broadcasters into a legal limbo with an existential threat by arbitrarily changing the exclusivity rule. This is particularly obvious when one remembers that local broadcasters are required to provide their product free of charge for public services as a requirement of their FCC-issued broadcasting license.

What is the exclusivity rule?

It is a longstanding telecommunications rule that allows local, free, over-the-air broadcasters to enforce their agreements for exclusive content over their broadcast region. Without this ability, a cable or telecommunications competitor could negotiate an independent agreement with another broadcaster to carry first-run “NCIS” episodes in the same market. The net effect would be the dilution of the number of viewers the show commands for the local broadcaster and a resulting loss of advertising revenue. The more popular the show, the more likely that viewer poaching would occur, with the ironic impact that it would have less value in attracting advertisers.

Fred Campbell, former chief of the FCC’s Wireless Technology Bureau, explains that exclusivity is “fundamental to local television,” writing that “[l]ocal TV stations could not survive without broadcast exclusivity rights that are enforceable both legally and practicably.”

Why is this so? Because free, over-the-air broadcasters have one product to sell to their limited reach area: the viewers generated by the content they put on their airwaves. If the same football game can be seen on the local ABC affiliate and on a local cable sports channel, those viewers get split up and the value of the product is diminished.

What is more, the local, free, over-the-air broadcasters, who pay the federal government in the form of regulatory fees and mandated public service for exclusive use of spectrum bandwidth to air their content, would be denied the value of that investment. Their implicit contract with the federal government in paying for exclusive use of the airwaves would be violated as that contract was created under the reasonable expectation that content exclusivity is the rule of law. Should the FCC or any government eliminate the exclusivity rule, by definition the value of the airwaves is diminished, as the ability to generate revenues off of the spectrum sale comes under intense pressure.

It would take extreme arrogance for the FCC to touch this issue, with the survival of local, free, over-the-air broadcasters at stake. While it is the natural hubris of the Obama administration to use their perceived regulatory power to pick winners and losers, the possible ramifications of any action by the FCC in this area of law should flash a gigantic, red stop-sign in their path.

But arrogance is in no short supply at the Obama-appointee-dominated FCC, which has been repeatedly slapped down by the federal courts for overstepping its legal bounds. In 2015, consumers have more visual entertainment options at their disposal right now than at any time in history. Given this diversity of options, there is no justification for the FCC to even consider making changes to the exclusivity rule that ensures local broadcasters are able to operate in a fair, open and competitive marketplace under unique regulatory requirements.

Regulatory requirements that create the precondition of receiving an FCC license to operate mandate that a certain amount of the airwaves have to be used for public purposes, benefitting local communities all over the nation.

All of this argues against any FCC action, and it doesn’t even take into account the disproportionate impact that the regulatory destruction of local broadcasters would have on the less-affluent consumers who cannot afford to spend a thousand dollars a year on pay television for entertainment. Nor does it mention the loss of quality, invested local news broadcasts that keep the public informed about weather, news and events in their communities.

Local, free, over-the-air broadcasters are valuable parts of the American communication and entertainment landscape, and for the FCC to even consider jeopardizing their ability to compete is beyond irresponsible. Let’s hope that they drop the dangerous notion of overturning the exclusivity rule and leave the legislating to Congress, where it belongs.

Manning is president of Americans for Limited Government.