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As Cable Act turns 25, operators and legislators weigh Communications Act update


According to Market Intelligence, December 2022


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As Cable Act turns 25, operators and legislators weigh Communications Act update

Legislators for years have debated updating the two laws that transformed the cable and telecom industries: the Cable Act of 1992 and the Telecommunications Act of 1996. With the laws now 25- and 21-years-old, respectively, some groups believe the time for action has come.

In an interview, American Television Alliance national spokesman Trent Duffy said the Cable Act in particular is "woefully outdated," describing the law as "a horse-and-buggy regime in a cell phone world." The alliance, known as ATVA, represents a coalition of consumer groups, cable providers, satellite operators, telephone companies and independent programmers, including Altice USA Inc., AT&T Inc., CenturyLink Inc., Charter Communications Inc., DISH Network Corp., Verizon Communications Inc., the American Cable Association and Discovery Communications Inc.

Broadcasters, though, maintain the law continues to work as Congress intended, with the marketplace determining the fair value of broadcast retrans fees. "The Cable Act righted a wrong that allowed pay TV monopolists to unfairly take and retransmit local TV signals without compensation. We're pleased that this law sustains a vibrant free and local television system to provide a competitive balance to national pay TV giants," National Association of Broadcasters spokesman Dennis Wharton said in an interview.

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Ad from the American Television Alliance
Source: American Television Alliance

The 1992 Cable Act sought to ensure cable operators did not have undue market power. The law required cable operators to offer a basic service tier that included public, educational and governmental access channels, as well as any broadcast station signal carried by the operator. In other words, any broadcast station carried by the cable operator had to be on the basic tier and could not be relegated to a more expensive, expanded package.

In addition, the law set up a carriage regime. Broadcasters could select between "must carry" status, under which cable companies must carry a broadcaster's signal within a local market without charge, or retransmission consent, where broadcasters could negotiate to receive compensation, monetary or otherwise, for the value of their signals.

With the video industry increasingly moving toward skinny bundles and over-the-top channel offerings, Duffy said, "At a time when Americans want a la carte and to pay only for what they want to see, this regime is driving in the opposite direction."

Three years ago, there was some interest in Congress in updating the law. Sen. John Thune, R-S.D., along with former Sen. Jay Rockefeller, D-W.Va., pushed to include Local Choice, a plan to turn broadcast networks a la carte for pay TV subscribers, as part of a required extension the Satellite Television Extension and Localism Act. Though the plan failed to make it into the final act, Thune pledged at the time to keep pushing for reform.

"When Congress wrote the Cable Act, it never envisioned telephone companies entering the TV space, let alone companies like Netflix [Inc.], TiVo [Corp.], Amazon[.com Inc.], Apple [Inc.], and YouTube revolutionizing how people watch video," Thune said in 2014, adding that, "With so much having changed in the video marketplace, now is a good time for Congress to examine our laws."

More recently, Thune as chairman of the influential Senate Commerce Committee has continued to push for updated communications laws, but his comments in 2017 have generally focused on the Telecommunications Act of 1996 and the portions of the Communications Act dealing with broadband. Currently, the Federal Communications Commission has classified broadband as a Title II service under the Communications Act, making it subject to more stringent regulatory authority.

"We need to modernize our communications laws to facilitate the growth of the internet itself" and to "better reflect the innovations made possible by the internet," Thune said earlier this year at the State of the Net internet policy conference.

In particular, he has pushed for legislation that would balance a light-touch regulatory approach while also preserving open internet protections. Reiterating his call for a legislative solution, Thune said Oct. 2, "The best way to provide long-term protections for the internet is for Congress to pass bipartisan legislation … that will resolve the dispute over net neutrality once and for all."

Given the partisan rancor over net neutrality, however, Tom Struble, technology policy manager at the free market think tank R Street, does not expect a communications-focused legislative update until after the 2018 midterm elections. "Surely at that point, if we get a change in the makeup of Congress, the [Democrats] would be much more willing to talk about it because it would have to be bipartisan at that point," Struble said.