What TV Blackouts Have to Do With
Mobile Phone Data
Two major FCC battles are merging into one big hybrid mess, says a study recently published by my colleagues at the American Consumer Institute. The interwoven policies could have devastating effects on consumers of both television and mobile data.
For decades, when it has come to negotiations between cable companies and broadcast networks, the FCC has tilted the playing field to favor the latter. If a broadcast network has undesirable programming, cable companies are often required to carry it anyway, under the FCC's "must carry" rules. But if a network has desirable programming, the network may avail itself of "retransmission consent" rules. This means that, instead of being forced to carry the programming, cable companies must gain permission from the network -- usually in return for significant compensation -- to air the content that is available to broadcast consumers for free. When broadcast networks have monopoly rights to highly desirable programming, such as major sporting events, they can charge incredibly high prices.
The proof is really in the numbers, with broadcasters' consent fees rising an average of 46 percent every year over the last six years and consumers suffering through numerous blackouts. Higher fees ultimately mean higher prices for consumers. But the new American Consumer Institute study, authored by the organization's president, Steve Pociask, brings to light an entirely new problem born from these old retransmission regulations: the spectrum crisis.
Local broadcasters use huge chunks of wireless spectrum to send their signals through the air. Decades ago -- before the spectrum crunch -- it was harmless to offer each station a sizable chunk of wireless space. As most households mounted antennae and grabbed their local over-the-air feeds, this setup only made sense. Now things are vastly different. Today, only 7 percent of households rely exclusively on "over-the-air" (broadcast) programming. The fact is that broadcasters are heavily reliant on the payments they receive from cable and satellite providers.
As the study concludes, because local broadcast networks are able to collect such hefty sums from their multichannel brethren, their incentive to sell off spectrum and join the ranks of cable networks is nearly nil. Broadcasters, essentially squatting on a goldmine of spectrum, would just as soon collect their government-enforced tolls from cable companies, rake in ad revenue from their sponsors (largely thanks to cable viewers), and let their spectrum rights become even more valuable as demand rises.
In the meantime, consumers are facing an impending pinch. By the end of last year, the number of wireless subscribers requiring spectrum rose to over 326 million. These customers' data use had grown by over 65 percent in a single year, to more than 1.5 trillion megabytes. Experts predict that, in some U.S. urban areas, the impending spectrum shortage will be reality by early 2014. Indeed, Deloitte predicts that we may fall short of needed spectrum by almost 50 percent of our current allotment. Most agree that, by the end of next year, Americans will need an additional 275 megahertz of spectrum to provide even adequate service.
Without a quick influx of new space, consumers face a scary reality: usage caps, throttled speeds, and shoddy service. Without government action to eliminate or rewrite retransmission consent regulations, cable companies won’t be the only ones feeling blackmailed by the networks of yesteryear.
Zack Christenson writes on digital tech issues for the American Consumer Institute Center for Citizen Research.