MVPDs Ratchet Up Criticism of Terrestrial TV in Fight Over Retrans
Pay-TV interests ratcheted up criticism of terrestrial broadcasters Monday, in a fight over whether the FCC should change rules on retransmission consent deals. Terrestrial TV is archaic, a “needless expense” that’s “propped up” by outdated rules for a technology with a “brilliant run to obsolescence,” wrote an economist who often opposes regulation. The paper, heavy with historical reviews of regulation and technology, was paid for by pay-TV companies and others seeking retransmission-consent changes. In it, George Mason University Professor Thomas Hazlett backed reallocating TV stations’ frequencies for newer technologies like mobile broadband. The NAB, which along with its members has said retrans works, criticized the paper, while the CEA said it offered some good points on reallocating spectrum.
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Hazlett pegged the “opportunity cost” of not switching all TV stations off at $1 trillion. He cited another academic economist. The move toward delivery of Internet video over-the-top (OTT), through Internet connections to TVs and other devices, is more likely to increase content diversity than to lower prices for monthly pay-TV customer bills, Hazlett wrote. “While some broadcasting services may yet outbid mobile applications for bandwidth, existing trends suggest that prime bandwidth (below 3 GHz, like TV frequencies) will be largely devoted to two-way mobile applications. These networks already generate very large social benefits; making the TV Band available for such services would likely generate at least $1 trillion in new consumer surplus."
"Traditional TV broadcasting is the most expensive and the least valuable” means of delivering video, compared to delivering video on broadband networks and wireline and wireless services, Hazlett said. His paper at http://xrl.us/bkpc4g was released by the American TV Alliance, whose members include the two largest U.S. telcos, both major DBS companies, as well as Time Warner Cable and other cable operators and the New America Foundation. Ex-FCC chief economist Hazlett last week told a panel that there’s an abundance of competition in the U.S. wireless market (CD May 20 p2).
NAB isn’t “surprised the pay TV-lobby has funded another author to support the ludicrous notion that local broadcasting is a ‘needless expense,'” a spokesman said. “The reality is that ATVA’s members are threatened by cord-cutting and the multicast free DTV options offered by broadcasters,” he added. “We look forward to a debate over whether local TV is unimportant.” Hazlett’s paper “raises some compelling points on the need for the broadcast industry to have its spectrum be governed by free-market dynamics, not outmoded government regulations,” a CEA spokesman said. “Over-the-air TV viewing is a relic of the past, and CEA continues to believe broadcast spectrum should be repurposed for wireless broadband via incentive auctions."
The 49 6-MHz channels in every market now allotted to TV “could productively enhance other wireless deployments, of which mobile phone networks are today’s most prominent example,” wrote Hazlett. “Enormous social gains could be unleashed by allowing stations to deploy bandwidth allocated TV licenses to their highest valued uses, supplying programs to customers via alternative distribution platforms -- as done in 91 percent of U.S. households already.” Legacy U.S. regulations protect the “killer app of 1952,” Hazlett wrote: “Protecting broadcast TV in a world where ‘broadcast TV’ is already an anachronism and video programs are themselves fleeing to new media is not a good way for the government to support the emerging markets” of this century.
Hulu shows how broadcasters are looking to other media for distribution, Hazlett said of the website owned by Comcast’s NBCUniversal, Disney and News Corp. that delivers programming from the ABC, Fox and NBC networks to the Internet. OTT “is here,” while the phenomenon of “cord cutting” in which pay-TV subscribers cancel service for online content “has yet to go viral,” Hazlett said. “A transition from cable, satellite, or telco TV would still require a broadband connection, the more capacious the better,” he wrote. “Mobile networks may also play a competitive role, ’salvaging’ over-the-air television by supplying 3G and 4G technologies that accommodate generous levels of throughput; indeed, the rising popularity of video on mobile handsets is pushing a `mobile data tsunami’ that is driving -- quite appropriately -- discussion of how to solve the spectrum shortfall.”