Echostar Communications has petitioned the Federal Communications Commission (FCC) to abolish a rule that prevents its two pay television services Dish Network and Sling TV from carrying alternative broadcast network feeds as a substitute for local TV stations during carriage disputes.
The comment was submitted to the FCC on Friday as part of the agency’s broad initiative to review, amend and revoke rules that are considered to be outdated or otherwise obsolete, a movement coined by FCC Chairman Brendan Carr as “Delete, Delete, Delete.”
Under current federal rules, local TV stations affiliated with a major network — ABC, CBS, Fox, NBC and the CW Network, among others — have exclusive in-market rights to distribute their programming. Accordingly, cable and satellite TV providers cannot replace a local major network affiliate with a station from another market (though in very limited cases, they can replace it with a national feed).
That has proven to be problematic over the past decade, because local TV station owners are allowed to charge fees for the distribution of their channels on cable and satellite — and, faced with a downturn in traditional TV ad revenue, most local broadcasters have chosen to raise distribution fees, which drive up the cost of cable and satellite service.
Some companies — including Verizon, Charter (Spectrum), Dish Network and DirecTV — have resisted efforts to raise prices on customers, though that tactic usually involves having to drop one or more local stations, which can be highly disruptive.
On Friday, Echostar said local stations have the ability to approve “waivers” that give Dish Network and other pay TV companies permission to import a distant local TV station affiliate, but they typically have no incentive to do so.
“Such a refusal, particularly when an alternative signal is readily available and its importation is solely dependent on the station’s waiver, can be used as a potent form of negotiating leverage, intentionally maximizing customer disruption to pressure the [pay TV] provider into accepting the station’s terms for ever-increasing retransmission consent fees,” Echostar said.
Most cable and satellite companies typically agree to whatever fee is requested after a brief blackout, and those tend to lead to higher fees. In some cases, pay TV providers have filed complaints with the FCC, arguing that broadcasters are not negotiating in “good faith” toward a new distribution contract, which is required under federal law, though the term has never been definitively defined.
The solution proposed by Echostar would allow cable and satellite companies to negotiate temporary carriage of a distant network-affiliated station during a prolonged blackout, while it continues to work toward a new distribution agreement with the owner of an in-market affiliate.
If the owner of the local station refuses to accept a waiver for carriage of a distant network affiliate, Echostar said it and other companies should be allowed to raise this as proof that a broadcaster is not negotiating in “good faith.”
“This clarification would recognize that a station’s refusal to grant a waiver during a retransmission consent blackout can be relevant to the Commission’s good faith evaluation under the totality of the circumstances standard,” Echostar said.
Echostar feels this is a fairer way to handle broadcast-related blackouts, especially when it deprives cable and satellite TV customers of network news and major sports programming.
In addition to the distant local rule, Echostar has asked the FCC to eliminate a rule that requires satellite companies to carry all high definition (HD) stations in a customer’s market if they opt to distribute just one HD station.
The rule pre-dated the analog broadcast TV shutdown of 2009, and came at a time when broadcasters — particularly those with non-commercial, educational and religious programming — were concerned that their signals would be offered only in standard definition on satellite platforms, which are bandwidth-constrained.
“The Commission’s HD must-carry rules have placed unique, disproportionate burdens on [satellite TV] providers,” Echostar argued. “The rule in fact limits competition because it imposes a significant technical and financial burden on satellite carriers. Satellite and cable services differ substantially in terms of technology, business model, and capacity constraints. [Satellite TV] platforms operate with limited down link spectrum, placing significantly greater constraints on channel capacity than those faced by terrestrial cable operators.”
By mandating satellite providers carry every HD station in a market, Echostar argues that the FCC has required satellite providers to operate inefficiently, because some local HD channels have significantly lower viewership compared to major network affiliates or PBS member stations.
The bandwidth constraints means Dish Network and DirecTV, the two major satellite providers in the U.S., have been limited in their ability to launch ultra high-definition (UHD/4K) channels or interactive features, most of which require an Internet-connected set-top box today because they can’t be delivered over satellite. Similar burdens are not placed on cable TV providers, Echostar noted, and the FCC should remove them.
