‘Local Choice’: Bipartisan Senate proposal brings market reform to broadcast industry

​​The broadcast and cable television industry remains one characterized by needless overregulation and a dearth of free market dynamics. 

In welcome news, however, a new bipartisan proposal from Sens. John Thune (R-S.D.) Jay Rockefeller (D-W.Va.) aims to improve the situation.  Their plan, known as “Local Choice,” introduces much-needed reform and injects market forces into an industry that desperately needs them. 

{mosads}For American consumers, the bottom line effects would include greater transparency and elimination of dreaded blackouts. 

By way of background, the federal Satellite Television Extension and Localism Act (“STELA”) broadly regulates satellite and cable television services.  Among its labyrinthine and outdated provisions dating back decades, broadcasters like ABC, NBC and CBS—which possess government-granted monopolies on public spectrum worth billions of dollars free of charge—are guaranteed retransmission by cable providers in their basic channel packages.  That, in turn, compels cable companies to not only negotiate pricing with broadcasters who exploit their government-provided advantage, but it also forces cable subscribers to pay for broadcast channels that are free over the air.  And when the broadcasters and cable providers reach an impasse on fees, the common result is blackouts, to the detriment of consumers. 

This outdated state of affairs dates back to a time when cable companies possessed monopoly power in most American markets, which placed local broadcasters at a disadvantage.  Over two decades later, however, today’s television market has transformed alongside technology.  Broadcasters are now the ones possessing monopoly power through government decree, while alternatives to cable such as satellite, streaming services such as Netflix, fiber and other options provide an ever-growing array of alternatives to cable. 

Accordingly, the status quo amounts to a crony capitalist environment, with broadcasters enjoying government protections aimed to address industry realities that disappeared years and even decades ago.   Existing law allows broadcasters to charge higher and higher retransmission prices to consumers under the threat of blackout, thereby creating higher cable bills for customers due to stations that are free over the air. 

That’s where “Local Choice” comes in.  The proposal from Thune and Rockefeller would change existing law via amendment to STELA reauthorization.  Broadcasters would still be able to set the price they charge cable and satellite customers, and cable and satellite providers would collect those charges and make payment to the stations.  What would change is that cable and satellite television subscribers could finally select local broadcast stations on an individual basis, just as they currently can for such premium channels as HBO or Showtime.   

In other words, the proposal would add consumer choice and flexibility where none currently exists. 

Under Local Choice, consumers could opt for access to local broadcast stations via their cable or satellite providers, and the providers would still collect the charges from subscribers for remittance to the broadcasters.  The difference would be that consumers would see more clearly the prices the broadcasters were charging, and they could decline subscription to those broadcasters and instead receive their digital broadcasts over the airwaves.  Customers would know what each broadcaster was individually charging for transmission via cable or satellite, instead of broadcasters continuing to conceal their price under the existing retransmission consent regime. 

Naturally, broadcasters oppose the Local Choice proposal because it would introduce an element of deregulation and undermine the crony capitalist protection they’ve enjoyed for decades.  Broadcasters claim to advocate a free market, but the fact that they’ve fiercely opposed deregulatory proposals like the Next Generation Television Marketplace Act from Rep. Steve Scalise (R-La.) exposes their pretense. 

In a perfect world, complete market deregulation would occur and the federal government would cease overregulating an industry in which informed consumers are fully capable of comparing alternatives and choosing the options they prefer.  Toward that end, the Local Choice proposal from Senators Thune and Rockefeller constitutes a step in the right direction.  It updates an outdated regulatory scheme, strikes a blow against crony capitalism, allows free market forces to dictate carriage rates and brings greater choice and transparency to American consumers. 

It’s a common-sense, bipartisan idea whose time has come.

Lee is senior vice president of Legal and Public Affairs at the Center for Individual Freedom (CFIF)