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Will Congress Finally Treat Video Services Equally?

by Pete Sepp / /

Telecommunications is once again in the policy spotlight for taxpayers, almost as quickly as the flip of the switch that would activate the spotlight’s shining beam. Earlier this week, the bipartisan Wireless Tax Fairness Act was introduced in the House. This bill, which NTU has long supported, would declare a five-year “time-out” on discriminatory state and local taxes for mobile phone services.

Yesterday, the House’s attention turned to subcommittee hearings of the Energy and Commerce Committee on whether to end, mend, or keep on defending the Satellite Television Extension and Localism Act, or STELA. Whenever government policy toward this technology is discussed, one major issue of concern to taxpayers and consumers is states’ tax treatment of satellite TV services. NTU has endorsed several iterations of the State Video Tax Fairness Act, which would prohibit inequitable tax policies based on the method through which video is delivered to a consumer (e.g., satellite vs. Internet-based).  As we pointed out in a 2011 letter to the House:

Telecommunications of all varieties have been targets for disproportionate and punitive taxes since the Spanish-American War, slowing much of the progress and productivity that could have emerged to enrich our society sooner. There is an obvious need to reduce telecommunication tax burdens on all providers, promote consumer choice, and provide a neutral playing field among similar products.

Yet, there are additional matters of equity that arise when deliberating STELA and other TV-related policies, primarily of the regulatory kind –  carriage requirements, “retransmission consent” between content and service providers, compulsory licensing, ownership restrictions, and proposals for “a la carte” programming mandates, to name a few. All of them raise weighty questions such as:

  • How and where has competition in the video services marketplace increased?
  • What is the proper balance of rights and bargaining capacity among parties negotiating deals over broadcasting?
  • Can government constructively facilitate this balance or are there better market-based mechanisms that treat everyone more fairly?

To NTU, the answers to all these questions begin with less, not more, red tape from Washington, particularly when it comes to the Federal Communications Commission (FCC). Far from acting as an impartial referee on a level playing field, the FCC has often behaved like an overbearing “amateur” by obstructing the game. (Witness, for example, the FCC’s ongoing attempts, which NTU strenuously opposes, to commit an end-run around Congress and establish “net neutrality” dictates for the online realm). Seasoned free-market observers like Larry Downes and Geoffrey Manne with Tech Liberation Front are calling for a major reassessment of the FCC’s role. Commenting late last year about the FCC’s tendency toward mission creep in evaluating mergers and crafting spectrum policy, Downes and Manne hit on a point that bears relevance to Washington’s entire regulatory stance toward telecom:

Increasingly, the agency is using that limited authority to restructure communications markets, beltway-style, elevating the appearance of increased competition over the substance of an increasingly dynamic, consumer-driven mobile market. Given the very different speeds at which Silicon Valley and Washington operate, the expanding scope of FCC intervention is increasingly doing more harm than good.

As far as video is concerned, the end result of this unnecessary federal roughness serves no one well – whether they’re broadcasters, cable companies, satellite firms, or, especially, their customers.  Participants at yesterday’s hearing, however, were somewhat more focused on immediate issues surrounding STELA’s future.  Their perspectives often clashed, but each tended to raise some kind of concern about the current regulatory regime.

Testimony on behalf of the National Association of Broadcasters largely supported STELA’s basic precepts and believed any alterations to the law should be “narrowly tailored,” but asked the Subcommittee to “remain vigilant” as the FCC implements an often-criticized incentive auction process for allocating spectrum. DIRECTV’s representative observed a “growing tension between innovation and stale broadcast regulation,” calling on Congress to either “jettison broadcast regulation altogether and create a truly free market” or “make the laws smarter to reflect the 21st century video marketplace.” Geoffrey Manne recommended another course to the panel: instead of reliance on STELA and other regulatory acts, “Government’s role should be [to] protect the copyrights of content owners and police market power through antitrust.”

In short, there are many views in the telecom sphere over where issues like retransmission consent should be headed. One attempt to simplify, rationalize, and minimize government’s role in such matters was the Next Generation Television Marketplace Act (NGTMA), which caught NTU’s eye in the last Congress. Other approaches worth considering (along with, potentially, a new version of NGTMA) are likely to be offered as the session moves forward.

NTU and its members eagerly await lawmakers’ responses to one of the most urgent tasks facing the future of our nation’s economic prosperity: limiting the burden and interference of government so as to allow the continued development of a robust, competitive telecommunications marketplace. The 21st century arrived more than 10 years ago; it’s time for federal policy to recognize that fact.