March 5, 2014            

U.S. Congress
House Committee on Energy and Commerce
Washington, D.C.  20515

Dear House Energy & Commerce Chairman Upton, Ranking Member Waxman, House Communications Subcommittee Chairman Walden, and Ranking Member Eshoo,

The House Energy and Commerce Subcommittee on Communications and Technology was scheduled to hold a hearing on the expiration of the Satellite Television Extension and Localism Act (STELA) on March 5, 2014.  

When the hearing is rescheduled, I urge you, on behalf of the more than one million members and supporters of the Council for Citizens Against Government Waste (CCAGW), to consider eliminating outdated regulatory schemes, such as retransmission consent agreements and must-carry provisions of the Cable Act of 1992, as you discuss the framework to address the December 31, 2014 expiration of STELA.  Such changes to the regulatory structure would reflect the current, competitive marketplace, which includes satellite TV and are therefore appropriate to be included in any reauthorization of STELA.
 
When Congress passed the Cable Act of 1992, in response to cable television rate increases following deregulation, a lack of competition in the cable marketplace, and the concern of broadcasters that their local stations would not be carried by cable companies, it did not foresee the rapid growth and innovation in the commercial video marketplace.  While television has changed vastly since the days analog signals carried only three major networks and one or two other channels over the airwaves, today there are a wide range of viewing options available to consumers, ranging from cable and fiber optic networks on the ground, to satellite feeds and online distribution of programming.  Broadcasters no longer deal with a single cable monopoly; on the contrary, broadcasters choose among multiple providers ranging from cable to satellite to fiber optic networks.  As a result, broadcasters now hold enormous negotiating power under outdated retransmission consent rules.  This re-balancing of power has led to service disruptions and increases in the cost of service for consumers.  

Proponents of the status quo have argued that retransmission is good for the free market and that broadcast television programming would be threatened if the law regarding retransmission was modified or if retransmission was terminated.  However, it appears from past negotiation history that multichannel video programming distributors (MVPDs) such as cable, satellite and fiber providers are at a distinct disadvantage in the negotiating process.  The existing system is not pro-competition and fails to protect consumers.  Short of disposing of retransmission consent agreements and must-carry provisions altogether, I encourage you to eliminate the ban on MVPDs from disconnecting service during sweeps week, and eliminating a broadcaster’s right to placement on the basic tier in order to provide for a level playing field in negotiations.

Government rules and regulations should drive businesses into the twenty-first century, not hold them back.  In retransmission consent negotiations, consumers lose viewing time and pay increased costs.  It is time to reform antiquated regulatory schemes, including retransmission consent, and provide a new regulatory structure that reflects the current competitive marketplace.

I strongly urge you to include in STELA reauthorization legislation a reform plan that will remove the regulatory interventions that impede the free market, such as retransmission consent.

Sincerely,

Tom Schatz
President, CCAGW