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Why Pay for Free TV?Why Pay for Free TV?

Broadcast TV retransmission consent rules just punish cable subscribers now.

Joseph D. Jensen

August 29, 2013

4 Min Read
Why Pay for Free TV?

Much has changed in the arena of US local broadcast television since its beginnings in the 1940s. Today, local broadcast networks still enjoy the protections that were put in place during those nascent years of free over-the-air programming. Cable television began in the same decade as a means to provide better signal quality to homes not able to get adequate reception of these off-air signals.

It is enlightening to compare today's regulatory environment with that of other media. For example, Federal Communications Commission (FCC) regulations require that local broadcast stations be included in the most basic cable television tier. The requirement stands that these local affiliates must be in any package offered to cable subscribers.

In other words, to get ESPN or Discovery channels or any other viewing package, cable subscribers must take the basic package of local programming from the likes of the CBS., NBC., and other broadcasters.

Have you ever considered what this rule would entail if applied to another medium, such as print? The equivalent scenario would be to require readers to subscribe to the local newspaper if they wanted to also subscribe to Time magazine. Such an arrangement would be unthinkable. Yet that's the way it is.

Another interesting rule, one called "network non-duplication," allows a local broadcaster to request that a cable television provider black out any duplicate content that may be presented on a similar cable channel. For example, a local Toledo NBC affiliate can require that the cable company block any prime time programming found on the Detroit NBC affiliate if both are carried on the same cable system. What would be the equivalent in the world of the daily newspaper? The Toledo Blade, as a local newspaper, could require that any stories carried by an out-of-town newspaper, such as the Detroit Free Press, be clipped out of any editions available in the Toledo service area.

Most local broadcasters take advantage of what is called "retransmission consent," which means the local cable provider negotiates with the local broadcast television station for the carriage rights. These days, cable systems could be paying as much as $2 per month per channel for these local broadcasters. These rates have increased dramatically and have contributed largely to the significant rate increases seen by cable customers.

What is ironic, in my humble opinion, is that the cable subscriber is paying to receive what was originally provided free over-the-air (OTA). Gone are the days when most homes had television antennas attached to the outside. Now a cable television provider must pay for these signals and those payments are reflected in the rates paid by cable television subscribers.

Without the appropriate outdoor antenna, many homeowners and apartment dwellers would not be able to receive these local signals consistently. Use of even the best indoor television antennas may not yield sufficient signal to watch all the local broadcast stations. So, the local broadcasters get paid to have their programming reach a larger audience.

Because the local broadcaster's advertising revenue is tied to station viewership, the cable television systems provide a significant increase in the value of the broadcast programming. Yet the systems have to pay dearly for the privilege.

So why are different members of the media, local television broadcast and local newspapers, treated so differently? Why do local television broadcasters see significant increases in the compensation they receive and protections enforced to maintain a virtual monopoly while newspapers are being buried by competitive information sources?

As the disputes continue between multi-channel video programming distributors and the national broadcasters, it is clearly time for a change. The current rules have created winners and losers. In this case, the losers are other media types, such as print, which receives no equivalent protection to the local broadcasters, and consumers who must now pay indirectly for what has been a free service for decades. Meanwhile, the winners are local broadcasters, who continue to enjoy protection by government fiat.

If the local broadcasters want to be compensated for their content like the cable channels, then they should be governed by the same rules. Cellular providers must buy spectrum licenses to conduct business; the same should be true for any other spectrum user. Fair competition in media produces a better product than antiquated government protection.

— Joe Jensen, Executive Vice President – Cable and Telecom, Block Communications Inc., and CTO, Buckeye Cablevision Inc.

About the Author(s)

Joseph D. Jensen

In 1996, Joe joined Buckeye Cablevision, Inc. where he served in dual capacities; in addition to his role as cable CTO, he also functioned as president of the competitive local exchange carrier, Buckeye TeleSystem, Inc. In 2010, Joe was promoted to his current position where he is responsible for the Block Communications, Inc. subsidiaries, Buckeye Cablevision, Inc, the cable TV company serving Northwest Ohio and Southeast Michigan, and Buckeye TeleSystem Inc., the competitive local exchange carrier (CLEC) serving customers in 13 states. Joe also retained his title of Chief Technology Officer for the Buckeye Companies. Joe also serves on the board of directors of the Society of Telecommunications Engineers (SCTE) and chairs the society's engineering committee.

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