FCC Proposes Rules To Reduce TV Blackouts, Potentially (But Probably Not) Lower Prices

The FCC has proposed a kind of arcane-sounding rule change that on the surface might not seem to affect consumers very much. But if all goes well, the rule will prove to be the kind of upstream change that prevents all the you-know-what from flowing on downhill to everyone else, and makes one of the most annoying things about cable TV into ancient history.

The new proposal is going to tackle two of consumers’ least-favorite things, the FCC announced this week: hikes in cable prices, and the blackouts that happen when content companies and distribution companies can’t agree on terms.

Just in the last year, subscribers to various cable and satellite pay-TV services have faced blackouts of Cartoon Network, CBS, CNN, Fox News, and The Weather Channel, among others. At this point the disagreements are routine enough and frequent enough that basically anyone could recite the PR script for both sides without looking.

It’s bad enough that consumers lose access to content they pay for when companies fight, but what’s even worse is that consumers get used as pawns in that fight. Every time there is a channel blacking, each multimillion-dollar business spends time and money crafting marketing campaigns trying to make annoyed would-be viewers blame and harangue the other guy. The idea is that if a horde of angry subscribers descends upon and blames Party A for the problem, Party B can win the more advantageous contract terms. And consumers continue to lose.

The new proposals won’t solve every contract dispute out there, but they will address the problems that arise specifically between broadcast networks — the CBS, NBC, ABC, and Fox stations of the world — and cable and satellite companies, like the month-long CBS/Time Warner Cable dispute in 2013.

Cable companies obviously want to spend as little money as possible on getting broadcasters’ content. Broadcasters, on the other hand, want to make as much money as possible. It’s a recipe ripe for an impasse.

To address some of those challenges, FCC chairman Tom Wheeler is circulating a proposal that would review the “totality of the circumstances test” for retransmission negotiations. Basically, that test is the tool the FCC uses to determine if negotiations are actually happening in good faith. If negotiations are not in good faith, the FCC can intervene.

Another separate, but related, proposal from Wheeler would eliminate “exclusivity rules.” Those are the rules that prohibit your cable company from swapping in a different city’s network affiliate if contract negotiations have resulted in yours being blacked out or dropped. So for example if CBS had another dispute with a provider and pulled their owned and operated stations from the lineup, the cable or satellite company in question could swap in an independently-owned affiliate instead.

Wheeler described that change as “the Commission tak[ing] its thumb off the scales” and letting businesses come to their own agreements instead. And changing that policy would indeed give cable companies more leverage in their disputes with content providers, since they would be able to say, “We don’t need you; we’ll swap someone cheaper in instead.”

If you’re wondering, “Okay, but why is the FCC doing this now? What took so long?” the answer is, Congress. The FCC (and every other regulatory agency, for that matter) acts within a mandate that comes from laws enacted by Congress. At the tail end of last year Congress passed the STELAR (Satellite Television Extension and Localism Act Reauthorization) Act of 2014, which basically told the FCC to come up with a way to modernize a bunch of rules regarding satellite, cable, and broadcast TV. And so the FCC is doing just that.

Will it actually work out to consumers’ benefit in the long run? That’s anybody’s guess. Cable companies cite high retransmission fees as a major driver behind the skyrocketing prices that consumers pay, but it is also true that cable companies are monopolies that enjoy making money. So only time will tell.