By Robert C. Kenny | September 3, 2014
As the Congressional session draws to a close, a move is afoot in the Senate Commerce Committee to introduce a last-minute legislative proposal — known as “Local Choice” – designed to permanently shift the competitive landscape of the nation’s video marketplace by granting the cable and satellite TV industry an unfair regulatory advantage over television broadcasters.
The proposal was first floated as an idea by Time Warner Cable during its retransmission consent dispute with CBS back in August 2013, when it offered to sell the CBS channel to subscribers on an à la carte basis. The proposal also mimics a March 2014 ex parte filed by rural cable giant Mediacom at the Federal Communications Commission (FCC). This Congressional plan would essentially allow cable and satellite TV providers to separate out local broadcast TV stations from cable network programming and offer these channels to their customers on an à la carte basis.
Similar itemized pricing and channel distribution models have been widely criticized by the cable and satellite TV industry in the past. In fact, the pay-TV lobby has collectively dismissed such proposals as unproven business models that would create uncertainty in the marketplace and result in increased costs for consumers. By their own admission, the core à la carte components of the Local Choice proposal raise significant policy questions regardless of how and to which sector of the industry it is applied.
Even the American Cable Association (ACA), the biggest cheerleader for Local Choice, agrees that this proposal, if implemented, would cost consumers more to access broadcast TV channels. ACA President and CEO Matt Polka publicly stated this week that, “Local stations… would be able to command truly rich market rates (from consumers).” Does this sound like a pro-consumer statement? No.
What the pay-TV lobby is really attempting to do under Local Choice is decrease the number of subscribers who watch local broadcast TV on their systems, giving them a market advantage to pull in more advertising revenues over broadcast TV stations. This will lead to many local TV stations setting their channel rates at unattractively higher prices in an attempt to make up for lost pay-TV viewers and, subsequently, lost advertising revenues. The higher prices will result in more and more subscribers choosing not to pay to receive all of their broadcast TV channels as part of their pay-TV service. This is bad economics and it hurts consumers and America’s local TV stations, especially in small-town rural America.
Given the proposal’s negative impact on competition – as well as America’s television viewers and local TV stations – little justification exists for Congressional haste to pass such legislation by year’s end.
Congress must act with openness and transparency, and move forward with a more inclusive process to address comprehensive statutory reform, while still allowing Congress to take immediate legislative action to reauthorize the Satellite Television Extension and Localism Act (STELA) before the close of this legislative session.
There is no need to rush Local Choice to a vote this legislative session without allowing for a robust public dialogue. The best way to do this would be to hold a series of Congressional hearings to address the issues that Local Choice raises for consumers, competition and the future of the U.S. video marketplace.
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Robert C Kenny is the Director of Public Affairs for TVfreedom.org, a coalition of local broadcasters, community advocates, network TV affiliate associations, and other independent organizations; he formerly served as Press Secretary at the FCC.
