Big-government video proposal puts Thune in league with ‘Net Neutrality’ extremists

Republican Sen. John Thune (S.D.), who is in line to become chairman of the Commerce Committee if the Senate change hands, is advancing a dangerous plan that reveals his willingness to disregard free market principles.

The proposal would force TV stations to sell their channels to cable customers on an individual, ‘á la carte’ basis while prohibiting market negotiations between cable companies and TV stations. The Local Choice “mandate would effectively remove any leverage cable companies or broadcasters would have over each other” by eliminating the ability of cable companies to play a role in the pricing and packaging of the TV channels distributed on their systems. In effect, the proposal would turn cable companies into “pure conduits” for the distribution of TV channels to pay-TV customers.

{mosads}Thune’s support for the ‘Local Choice’ proposal should be particularly alarming to free market conservatives. The intellectual basis for the proposal, which inherently distrusts market negotiations between the operators of cable ‘conduits’ and content providers, shares the same DNA as net neutrality. Separating “content from conduit” is what Susan Crawford and other net neutrality advocates have always wanted.

Net neutrality is designed to prevent cable companies from influencing the pricing and packaging of Internet content through market negotiations with Internet intermediaries (e.g., Google, Netflix, and Amazon) in the same way that cable companies currently negotiate with TV stations for the distribution of video programming. That’s why Crawford sometimes describes net neutrality as a way of preventing the ‘cable-ization’ of the Internet: She doesn’t want the market-based regulatory model applicable to cable services to govern Internet content.

If Thune’s Local Choice proposal were to gain traction, Crawford would need to flip her description of net neutrality. The Local Choice proposal would prevent Comcast from negotiating with CBS stations for the pricing and packaging of their TV channels on Comcast’s cable service in the same way that net neutrality would prevent negotiations regarding the distribution of CBS channels on Comcast’s Internet service. Comcast uses exactly the same ‘conduit’ for both its Internet and cable services and both the Local Choice and net neutrality proposals would have the same effect on the distribution of video content over that ‘conduit’.

The direct link between the Local Choice proposal and net neutrality explains why Sen. Jay Rockefeller (D-W.Va.) has been so willing to work with Thune on video reform. While Thune presumably views the Local Choice proposal as a relatively limited intrusion on free market negotiations, Rockefeller “has bigger ambitions.” Rockefeller is interested in using the Thune proposal as a means of providing net neutrality “protections” for online video companies like Netflix. Thune’s endorsement of an á la carte mandate for TV channels would permit Rockefeller to use the critical ‘bipartisan’ label as he moves forward with plans to regulate online content.

Thune should kill the proposal before it becomes a bill. Otherwise, free market conservatives will be left with an important question. If Thune doesn’t believe market negotiations are capable of producing fair outcomes for pay-TV customers with respect to TV channels, does he still believe the free market is capable of producing fair outcomes for Internet content?

Campbell is executive director of the Center for Boundless Innovation in Technology and former chief of the FCC’s Wireless Telecommunications Bureau.