Opinion

The FCC’s Parting Shot to TV Consumers

As the current Federal Communications Commission looks at its remaining priorities, broadcasters and lobbyists for consumer electronics manufacturers have been urging them to quickly endorse a new national standard for broadcast TV transmission, known as ATSC 3.0. There’s no small amount of irony in the fact that the FCC is looking at these standards in the weeks just after Black Friday, as consumers are looking for the best deals on new TVs for Christmas and the Super Bowl.

The new standard would make it possible to broadcast enhanced programming to televisions, as well as mobile broadband devices for the first time. At first glance, this looks non-controversial and even like a promising development, but there remain too many unanswered questions about the cost to taxpayers before such a costly and far-reaching government mandate can be finalized. For context, the first nationwide upgrade from analog to digital in 2009 wound up costing the federal government $1.3 billion in vouchers for low-income families. The process of hammering through an upgrade to ATSC 3.0 has been so rushed, there hasn’t even been time to produce estimates around the cost to the federal government for this proposed transition.

While broadcasters would reap monetary and competitive benefits totaling billions of dollars, tens of millions of consumers will be forced to spend approximately/at least $50 for a new tuner or be left with a useless TV once the transition to ATSC 3.0 is done. No one who watches free, over-the-air TV should be left behind in this transition. Moreover, those who want to fully participate in this next gen TV transition will need to pay $750 or more for a new TV set and digital router to stream broadcast content online.

By endorsing a nationwide change in the way we broadcast television, the FCC would be imposing an unfunded mandate on U.S. consumers, as well as cable and satellite providers, who are required by law to carry local broadcast TV signals due to “must carry” or retransmission consent agreements, regardless of how they’re delivered to them by broadcasters.

While American families are asked to underwrite this costly transition, one broadcasting entity in particular will profit hugely from the adoption of these new standards. Sinclair Broadcast Group holds many of the technology patents needed to implement ATSC 3.0, meaning they will receive the royalties that result from the adoption of the new system. Estimates have indicated Sinclair will reap billions of dollars in profits—essentially a government handout for just one company. This is cronyism at it’s crony-est, and precisely the kind of mindset that brought a sea change in the executive branch in the 2016 elections!

The FCC would essentially be picking winners and losers by approving the ATSC 3.0 standard, creating a huge cash windfall for broadcasters and forcing pay-TV companies to upgrade equipment, which will ultimately raise rates for pay-TV subscribers.

There are also questions regarding spectrum efficiency and how the transition will potentially free up more broadcaster spectrum for mobile broadband services. Recognizing that broadcasters provide local news coverage, emergency and severe weather information and updates on the most important breaking news, the federal government previously provided them with premium spectrum access for free so they could fulfill these necessary public services. Spectrum not used for broadcasting generates billions of dollars in auction revenues, which has been used to pay down the national debt.

With the new standard, much has been made of the fact that broadcasters will be able to fulfill their core functions using less spectrum than ever before, but this raises questions as to what they plan to do with the remainder. Using their leftover spectrum to pursue other ventures goes beyond the original intent of granting them access in the first place, and the FCC should look closely at a solution that reduces the size of the federal government’s subsidy for these companies and encourages them to put unused spectrum on the free market instead. Broadcasters should not be given a windfall at the expense of U.S. taxpayers.

The FCC would be prudent to examine the impact the next gen TV transition will have on consumers and the marketplace very much in the same way that it moved forward with the first digital television transition.

Everyone can agree that improving the way we consume entertainment and information is a good goal, but until broadcasters and the FCC can account for the true economic cost and justify this as a good use of taxpayer funds, it would be irresponsible to expedite this nationwide transition. In this instance, as in many before, it’s better to approach such a far-reaching set of standards in a way that ensures it’s done well, rather than quickly done. At the very least, the FCC needs to stop making policy proposals that will drive up the cost of TVs for everyday Americans—and they certainly shouldn’t do it in order to benefit one company.

 

Andrew Langer is president of the Institute for Liberty.

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