Broadcast Lobby’s Indecent Posture: Asking for Big Public Hand-out

April 26, 2004

Television broadcasters have their special-interest eyes on a political prize that will enrich the industry with tens of billions of dollars in new revenues. They are now political arm-twisting both the FCC and Congress to help achieve this goal. Once again, the public will be forced to bankroll a handful of big media companies, who will be guaranteed a secure economic future. And once again, the public--including children, families, and communities--will be left to pay the tab while getting nothing back in return.

Last week, the National Association of Broadcasters (NAB) held its annual convention in Las Vegas. Over the last decade, the NAB has used its political muscle to advance the interests of its handful of very powerful members, scoring victories worth hundreds of billions of dollars in federal legislation. It now has its sights on advancing a scheme that will turn every TV station into a “multi-channel” powerhouse, forcing cable (and ultimately satellite) operators to send these channels to every TV set in the U.S. It’s a classic flimflam operation, the digital-age equivalent of Willy Sutton robbing banks because “that’s where the money is.” The money today is in the digital spectrum, owned by the public, that broadcasters have been allowed to use freely. TV stations want to transform this public asset into a private, multi-channel, broadband bank account.

The con game is called “multicasting must-carry.” It’s the “endgame” of a ruse that the broadcast lobby and TV networks came up with twenty years ago. In the late 1980s, as a way of grabbing additional valuable spectrum (once called “public airwaves”) broadcasters launched a misinformation campaign claiming that the U.S. was falling behind Japan in rolling out high-definition TV (HDTV). They quickly had official Washington falling for that line. In the 1996 Telecommunications Act give-away to the media industry, broadcast TV stations scored a new chunk of valuable airwaves for free use in making the transition to digital broadcast. One of the key provisions of this act was to give broadcasters “flexibility” in how they used their new spectrum. Ultimately, that meant goodbye to the HDTV divide with Japan, and hello to finding ways to take this lobbying victory and make even more money with it

Broadcasters already knew, in fact, what they wanted to do (but hadn’t really told a clueless Congress). The broadcast TV industry has long understood that their future as an industry was in jeopardy. Cable is the dominant medium in television (reaching some 70 percent of all households). The key to TV’s future lies in the ability to send many channels to viewers, not just the single one that broadcasters can transmit today. TV’s business model will also require access to a set-top box for the delivery of video on demand and personalized advertising. Broadcasters recognize that unless they could use their political clout to gain greater control over cable, then the days of huge profit margins would eventually end.

So broadcasters now want the FCC to award them a new policy that would require cable systems to carry any channels they can transmit. Since the new digital spectrum each TV station has can be “sliced” into several channels, broadcasters want to “multicast.” Today’s single channel in one’s hometown will be able to send out six or more different signals. With multicast “carriage” on cable, each TV station owner will have ensured their financial viability in the broadband era.

Just how much is the multicasting of digital broadcast communications worth to stations? In her keynote speech to the NAB, Hewlett-Packard CEO Carly Fiorina reminded broadcasters that “…instead of one stream coming out of your station, there will be six. It means that instead of having to compete on one program schedule--during prime time, when cable is at its best by being at its worst --you'll have six streams which allow you to do what you can't do right now: target programming for families or local communities, creating a whole new level of value and new revenue opportunities.”

And NAB chief lobbyist Eddie Fritts was clear that gaining access to cable for broadcasting’s new multiple channels was at the top of their agenda. He called on the FCC to award so-called multicasting must-carry, complaining that “our DTV and high definition signals are all dressed up with no place to go.”

Why should the FCC award this give-away to broadcasters? Because, as Fritts said, broadcasting is the public’s “local town square.” He boasted of how the industry serves communities while he derided the role of the Internet, asking, “…What has the Internet done for community service? How many kidnapped kids have been saved by a Web site?”

Fritts claimed that the broadcasting industry’s provision of such things as public service announcements was proof of how broadcasters serve the public interest, and hence worthy of more special-interest give-aways. He claimed that broadcaster efforts contributed more to the public “…than the top 100 foundations combined!” In defense of such claims, the NAB has launched a new “Reclaiming the Public Interest” PR effort to convince policymakers that broadcasters are serving their communities. But the campaign fails to inform the public about the real issues regarding digital TV and the broadcast lobby. It doesn’t acknowledge the gifts broadcasters have received from the American public, and it says nothing about how digital TV could serve the interests of children and communities, if public interest standards were enforced.

Multicasting must-carry will not provide the public with any real benefit, unless policies are first put in place to ensure that broadcasters must effectively serve “the public interest, convenience, and necessity.” That promise, made back in 1934, must now be honored in the digital TV age. FCC Commissioners Adelstein and Copps have already vowed to do so. Will Commissioners Martin, Abernathy and Chairman Powell do the same, or will they once again promote broadcasters’ interests over the public’s?