SOURCE: American Consumer Institute

American Consumer Institute

December 04, 2013 08:07 ET

ACI Study Finds Retransmission Consent Will Discourage Broadcasters From Spectrum Auctions

Could Lead to One-Half Trillion in Consumer Welfare Losses

WASHINGTON, DC--(Marketwired - Dec 4, 2013) - A new study by the American Consumer Institute Center for Citizen Research (ACI) finds that regulations put in place over twenty years ago to protect TV broadcast stations from eroding market share will now have a devastating impact on wireless consumers. The study, "Consumer Welfare on Hold: The Unintended Consequences from Retransmission Consent Regulations on Spectrum Auctions," finds that these old regulations are making broadcasting so lucrative that major TV stations will be reluctant to give up spectrum in future FCC wireless auctions.

Under these regulations, TV stations benefit by charging programming fees to pay-TV networks (such as video, satellite and cable TV providers), and they benefit from a requirement that pay-TV networks carry over-the-air advertising. As the pay-TV market has become more competitive, TV stations have gained considerable negotiating clout, as evidenced by a 46% annual increase in fees charged to pay-TV providers. These fees mean higher prices for pay-TV consumers.

Even more significant, however, is that these regulations will discourage TV stations from relinquishing underutilized broadcast spectrum, which will mean that this spectrum will not be repurposed for wireless broadband services and will result in adverse consequences on wireless consumers. This study estimates the resulting consumer welfare loss from auction failure to be roughly a half trillion dollars.

In effect, retransmission consent regulations run counter to the public policy goal of repurposing spectrum to its highest and best use, and these regulations conflict with the goals of the National Broadband Plan. Addressing this problem requires reforming these old regulations for the benefit of consumers.

The American Consumer Institute Center for Citizen Research is a 501c3 educational and research institute. For more information about ACI or a copy of the study, please visit the Institute's website at www.theamericanconsumer.org.