[opendtv] Re: Radical Proposal for Change
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Wed, 26 Jan 2005 08:37:36 -0500
At 4:52 PM -0500 1/24/05, Mark Aitken wrote:
>Looks like a massive changing of the guard at FCC. A whole lot of where
>broadcasting ends up will (very much) be in the hands of the next gang.
>Any odds on who runs it next?
>We continue to try to make made OTA a viable business.
>
Whoever takes the job just might get fired, along with the rest of
the Commission. At BEST, whoever takes over will be even more
ineffectual than Powell, for many of the same reasons.
1. The courts will block ANY action that is not explicitly spelled
out in legislation. If the FCC attempts to interpret anything in its
legislative mandates from Congress, it will be challenged in court.
2. If the FCC does anything to upset one of the constituencies that
it regulates, they will go around the agency; first to the courts,
then to Congress. Any decision in ongoing legacy issues that have
been tied up in the courts will be challenged - witness the Ownership
cap rules. When challenged, the courts look to Congress to provide
clarity; hence, the legislation to establish the national ownership
cap at 39% after the FCC authorized a 45% cap.
3. Congress holds all of the cards. They have the ability to set the
agenda for the FCC, and the ability to undermine that agenda when the
FCC upsets one of the constituencies that help Congress fund
re-election campaigns. The Communications Act of 1996 is a prime
example, requiring the FCC to establish a DTV transition; to deal
with the opening of the local loop to potential competitors; to open
up the market for cable STBs; to determine the classification of
broadband and telephone services offered by Telco competitors; etc.
It took Congress only three months to gut the DTV transition plan
after the FCC pissed off the NAB and the networks.
In this environment the FCC is a government liability - that is, the
cost of operating the agency is greater than the revenues that it can
produce. Don't be surprised if there is an attempt to de-authorize
the agency in the planned re-write of the Telecommunications Act next
year. At best, the FCC is a tool, which can be used by the majority
that controls it, to push an agenda that will force Congress to
create legislative clarity.
I'm glad to hear that Sinclair wants to continue to make OTA a viable
business. But let's be realistic about this. Broadcast television IS
a viable business. A highly profitable business. But the OTA
component is not the primary reason for that economic viability. Must
Carry, Re-Transmission Consent and the Satellite Home Viewers Act are
the primary reasons for current and future economic viability.
Yesterday I did some research for an analyst to help him understand
the issues in the current DTV must carry decision. I came across the
following in a paper written by two professors here at the University
of Florida College of Journalism (I do not know them, nor do I agree
with all of their findings:
The paper can be downloaded here:
Market-Based Alternatives to Digital Must-Carry
Justin S. Brown, Department of Telecommunication, University of Florida
Sylvia Chan-Olmsted, Department of Telecommunication, University of Florida
http://web.si.umich.edu/tprc/papers/2004/380/Market-Based%20Alternatives%20to%20DTV%20Must-CarryTPRC%20(rev9-04).pdf
Regarding Congressional intent in the 1992 Cable Act which added
Re-transmission Consent while codifying existing Must Carry rules:
Congress also found there was both a "substantial governmental and First
Amendment interest in promoting a diversity of views provided through multiple
technology media." More importantly, Congress articulated an important
governmental interest by having cable systems carry local stations.
The carriage of
these stations was necessary to provide a "fair, efficient, and
equitable distribution of
broadcast services," as laid out in Section 307(b) of the 1934
Communications Act.
Local origination of programming was seen as a primary objective and
benefit of must carry
regulation because local broadcast stations are an "important source
of local news
and public affairs programming," which are vital to having "an
informed electorate."
Translating the "Congress speak" here our representatives were saying:
Don't mess with the election channel! We will do whatever is
necessary to make certain that the local broadcast stations we use to
reach the electorate are carried by every broadcast competitor.
The paper goes on to examine the 1997 Supreme Court challenge to these rules:
In 1997, by a five-to-four vote, the Supreme Court ruled the
must-carry rules to be
constitutionally valid under intermediate scrutiny as specified by
the O'Brien test. The
Court examined the two inquiries left open during its prior review in
Turner I: first,
whether the factual record developed by the three-judge district
court "supports
Congress' predictive judgment that the must-carry provisions further important
governmental interests," and second, whether the rules did "not
burden substantially
more speech than necessary to further those interests.
In answering its first question, the Court reasserted the rules furthered three
important, interrelated governmental interests:
(1) preserving the benefits of free, over-the-air local broadcast
television, (2) promoting the widespread dissemination of information
from a multiplicity of sources, and (3) promoting fair competition in the
market for television programming.
Even the Supremes can look stupid at times. These rules are the very
instrument that has been used to eliminate competition in the market
for television programming.
The 1992 Cable Act was also an attempt to mitigate the growing power
of the cable industry, which was using the tight coupling of content
and carriage to build its empire. The '92 act attempted to mitigate
the power of the cable industry to give preferential carriage to the
programming being developed by vertically integrated cable companies
and their owned and operated programming divisions.
Just over a decade after the passage of this Act the issue of
vertical integration has now shifted to the big media conglomerates
that own the television networks and the TV stations that serve ~39%
of U.S. homes. All that is left of the vertically integrated cable
empire is Time Warner. The media conglomerates now control the
creation and distribution of 90% of the programming viewed by U.S.
households.
The FACT that less than 15% of these households still rely
exclusively on the OTA service is irrelevant. The economic viability
of broadcasting is assured, as long as Congress guarantees that local
broadcast markets will be protected and that competitors must carry
all local broadcasters, or none.
From here Mark, it looks like Sinclair and the rest of your broadcast
colleagues are comfortably wedged between a rock and a hard place. Do
nothing and it is likely that you can keep those "oil wells,"
disguised as TV towers, pumping. Challenge the ever growing power of
the conglomerates and you risk losing the content that keeps your
lucrative franchise viable. To the credit of Sinclair , you do have
the wonderfully annoying habit of challenging the status quo. News
Central is a perfect example. Stick your neck out to actually create
a new programming service that seeks to fulfill your public interest
obligations, and you are labeled a propaganda tool by your peers.
Unless broadcasters unite to challenge the growing power of the media
conglomerates, the OTA franchise will be little more than the hammer
that the media conglomerates use to continue down the path of
consolidation.
I was a bit surprised about the ABC News Now announcement yesterday.
Every broadcasters should look at this announcement and then the date
that their affiliation agreement(s) expire.
ABC was using ABC News Now to build credibility for the argument that
cable systems should carry the entire DTV multiplex. Now that it is
clear that the FCC will not mandate carriage of the entire multiplex,
ABC is following the money. There is no economic benefit to ABC to
deliver this news network via broadcast affiliates. In fact it would
be nearly impossible for ABC to create a viable 24/7 news channel
without cable and DBS carriage. With Re-transmission consent, ABC
will have NO problem gaining clearances for ABC News Now, AND the
monthly subscriber fees that will help ABC build this new service.
The good news is that your franchise will survive, until must carry
and re-transmission consent are no longer useful tools for the media
conglomerates. For some reason, this seems to be inextricably linked
to the date that you must return your analog franchise.
;-(
Regards
Craig
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