The Federal Communications Commission will soon decide whether to grant local TV broadcasters enhanced “must-carry” rights on cable TV systems. Specifically, broadcasters seek to expand their current one-program must-carry right to a multi-program must-carry right, which they call “multicast” must-carry.
The current debate has evolved out of the so-called digital TV (DTV) transition. Since the advent of TV, local stations have received an FCC license, at no cost, to broadcast a single program over a “channel” defined as 6 MHz of prime, low-frequency spectrum. In 1997, broadcasters received a second 6 MHz channel to transition to digital TV. The stated purpose of the DTV transition was to allow broadcasters to use one, 6 MHz channel to continue their current analog transmissions while simultaneously launching high-definition and other digital programming on the second, 6 MHz channel—a switch-over originally expected to last ten years as consumers upgraded from analog to digital tuners.
Under current law, TV broadcasters are entitled to mustcarry rights on cable systems for one TV program plus information embedded in the channel directly related to that program. The one program limitation means that additional digital information (“bits”) that broadcasters will be transmitting over-the-air might no longer be carried on cable TV. This is because digital technology allows broadcasters to squeeze many TV programs in the space previously occupied by one. The specific number of TV programs they can cram in depends on a number of assumptions. But a reasonable benchmark is a half dozen standard definition TV (“SDTV”) programs with the current digital TV standard (“8VSB”) and a dozen with the next generation standard (“enhanced 8VSB”). One implication of multicast must-carry rights, therefore, is that in an average TV market with thirteen analog SDTV programs, cable TV operators could be required, free of charge, to carry the equivalent of 100 or more digital SDTV programs.
Analog must-carry rights are hugely valuable for broadcasters and a major factor in determining the value of a broadcaster’s FCC license. Without must-carry rights, broadcasters could in theory lose as much as 85% of their audience for multicast programming, since that is the percentage of households that receive their primary TV signals via either cable or satellite TV. The cable industry has invested more than $100 billion in bringing cable TV service to American homes, and broadcasters are entitled to free use of up to a third of that capacity. This uncompensated use of their property largely explains the cable industry’s fierce opposition to expanding broadcasters’ must-carry rights.
Must-carry rights typically come with a bundle of subsidiary rights including retransmission consent and quality-of-service rules. Retransmission consent gives broadcasters the option to demand payment for their programming. They can either demand free carriage (must-carry) or payment for carriage (retransmission consent). Quality-of-service rules dictate that broadcasters can demand a minimum of standard definition TV quality from cable TV operators and a host of other data and picture quality standards. Henceforth, we will refer to the entire bundle of must-carry, must-pay, must-quality rights as simply “must-carry.”
The New America Foundation argues that 1) the policy objectives of multicast must-carry can better be met via other means, including what we call the “Berlin DTV Transition Model,” and 2) if broadcasters receive multicast must-carry, it should be a) tied to the simultaneous and unconditional giveback of their analog spectrum, b) limited to the bit rate necessary to provide one HDTV program, c) compensated for by additional public interest obligations, and d) sunset based on the penetration of standard definition quality Internet TV.
For the complete document, please see the attached PDF version below.