With the debate over the FCC’s plan for Title II reclassification getting most of the attention in telecom policy circles the past few weeks, a bold provision attached to the Satellite Television Access and Viewer Rights Act (STAVRA) flew under the radar. STAVRA is the Senate’s version of the House bill to extend the Satellite Television Extension and Localism Act of 2010, which is due to sunset at the end of this year. The Act sets rules for the retransmission of local network stations and affiliates on cable and satellite systems. The House version passed in June.
STAVRA added a provision, called Local Choice, that would have permitted cable and satellite companies to place broadcast TV stations—ABC, NBC, CBS, Fox and CW—into optional pay tiers, akin to HBO and Showtime. It had bi-partisan support from Sen. John Thune (R-SD) and Jay Rockefeller (D-WV).
The idea upends presumptions about “a la carte” cable and the future of “basic cable” packages. Until recently, it would have been unthinkable for cable and satellite systems to exclude the networks from their most basic packages. STAVRA itself is designed to guarantee retransmission of local stations, but the original act dates from a time when local broadcast TV was considered essential for the community and networks still carried superior programming with ratings that dwarfed even the popular cable channels.
That has changed in the last several years. Broadcast viewership has dropped precipitously for a number of reasons. Cable TV networks have matured to the point where they can afford to produce quality programming that is equal or better than broadcast offerings. Over-the-top services such as Netflix increase nightly user choices with on-demand movies or programming of their own, like House of Cards and Orange is the New Black. Viewers can also stream current network programming on Hulu, iTunes or the broadcasters own web sites.
Broadcasters still hold a big ace in the form of live sports programming, but the past few years have seen major national sports coverage, including Major League Baseball and NBA playoff games, early rounds of in the NCAA basketball tournament and World Cup soccer, migrate to cable tiers. Web streaming also looks be growing here, too.
The reality is that the broadcast networks have lost their cachet. It’s hard to find a reason for the government or the FCC to accord their programming or availability any special status. Likewise, local TV affiliates aren’t the first place users go for local news. Local newspapers and TV stations use their web sites to deliver breaking news through subscriptions or social media.
Supporters of a la carte cable once envisioned an option allowing consumers to pick and choose only the channels they wanted watch, such as the five major networks, Fox News, ESPN, Discovery Channel and A&E. Audiences have gone one better, and reached virtual a la carte programming. Using a combination of video-on-demand, Netflix, Hulu, iTunes and DVDs, viewers today can select the individual shows they want to watch, sometimes at substantially less cost than cable packages.
Of course, old regulatory attitudes die hard. The National Association of Broadcasters, acting on behalf local broadcasters who feared Local Choice would result in a massive loss of viewership over and above the steady attrition of viewers they face already, protested the provision. Rather than hold up a vote on STAVRA, Thune gracefully agreed to drop Local Choice from the bill. He should be commended for an act of bipartisanship that will yield true legislative progress in these last few months of the current session.
Thune is also correct when he says Local Choice is a bold idea that deserves more discussion and a full consideration by policymakers. Indeed, Thune has looked at 21st century technology and market shifts and questioned 20th Century notions about whether certain industry subsets—in this case broadcast networks—are still so unique and indispensable that they require special government carve-outs.
This type of thinking is both rare and welcome on Capitol Hill. It will even more critical as we move onto the sweeping reform that will be necessary in the Telecom Act rewrite, which, as in 1996, will require bipartisan participation. Here, Thune’s ability to work successfully across the aisle, along with his understanding the limits of legacy regulatory approaches and ability to craft legislation that addresses the public interest in the here-and-now, has him poised for a leadership role. I look forward to watching this debate, and seeing Thune’s contribution.