The US comms regulator has voted to review the rules governing retransmission consent negotiations between pay-TV operators and broadcasters.
Since Congress re-authorised the Satellite Television Extension and Localism Act (STELA) last year, the FCC has been compelled to open a rulemaking by 4 September to examine and modernise rules governing the video industry. This particular review will examine the existing "totality of the circumstances test," which determines whether parties are negotiating in good faith.
The hope is to lessen the frequency of blackouts due to content carriage disputes between broadcasters and pay-TV companies.
Must-carry regulation dictates that broadcasters can demand that cable and direct broadcast satellite operators compensate them to carry their station feeds. The cost of these retransmission consent agreements has skyrocketed over the last five years, leading to prolonged blackouts in some circumstances.
And in many of those circumstances, cable companies have said that broadcasters have not negotiated in good faith, using tactics like blocking access to online content, bundling TV station signals with affiliated cable nets, and relying on FCC exclusivity rules, which say that pay-TV companies can't find a different source for the blacked out content during a dispute. Last month, FCC Chairman Tom Wheeler proposed ending the latter.
"The retransmission consent system is broken and the FCC must take action to protect consumers from broadcaster blackouts and broadcaster abuses," said Trent Duffy, spokesman for the American Television Alliance, which represents cable and satellite operators.
In announcing the review, the FCC noted that broadcasters had much more leverage in retransmission talks than they did in 1992, when the current rules were formed.
"In the end, ACA hopes the FCC will establish vigorous policies designed to stop TV station misconduct, including sudden TV signal blackouts as well as blocking MVPDs' broadband subscribers from accessing otherwise free online content during or after a negotiating impasse," said American Cable Association president and CEO Matthew Polka.
"The FCC also ought to require broadcasters to provide information substantiating their reasons for bargaining positions taken when requested to in the course of their negotiations, and bring a halt to the practice of TV stations insisting on setting prices, terms or conditions for broadcast stations they may later acquire or for programming networks they may launch in the future as part of current retransmission consent negotiations."
The National Association of Broadcasters (NAB) had a different take.
"The notice, at first blush, appears to go much further than Congress directed," said NAB spokesman David Wharton, in a statement. "We were struck by the FCC's admission that nothing in this proceeding will necessarily translate to lower cable prices for consumers. We also question whether the FCC should be taking actions that benefit heavily consolidated companies that dominate the video landscape like Dish, AT&T/DirecTV, Time Warner Cable/Charter and Verizon. Consumers will be left wondering why the FCC is working overtime to tip the scales even further in favour of these mega-companies."