Broadcast TV Regs Protect the “Killer App of 1952,” Stifling Competition, Consumer Choice

Former FCC Chief Economist Hazlett Makes the Case for Deregulation

WASHINGTON, D.C. May 23, 2011 – The nation’s “broadcast TV system is today a needless expense, propped up not by customer demand, technical efficiency, or business necessity, but legacy regulation generations outdated,” says former FCC Chief Economist Thomas W. Hazlett. In a paper released today, Hazlett makes the case for deregulation, saying that government “protections for broadcast TV signals are trade barriers favoring one politically selected interest over another, stifling consumer choice and market efficiency.” The paper, titled “If a TV Station Broadcasts in a Forest…” was commissioned by the American Television Alliance and is available at this link.

The Hazlett paper comes days before the May 27 deadline for comments on the Federal Communication Commission’s rulemaking on retransmission consent regulations. On that topic, he notes that “the idea that cable or satellite platforms can snuff out a local TV station was Bad Science when it was advanced on behalf of ‘must carry’ and ‘retransmission consent’ rules in the 1990s. Today, it is absurd. Video
platforms compete intensely to provide vast, diverse viewing packages to subscribers, knowing that if viewers want more local programming their rivals will be happy to provide it to them.” While broadcast programming competes successfully in this market, “the traditional broadcast TV distribution platform has been virtually abandoned by consumers. It has been pushed to the brink of oblivion by new forms of technology, emerging modes of competition, and innovative business models.”

Hazlett explains the enormous expense incurred in propping up the industry structure: “Considering just the opportunity cost of the 49 channels set aside for broadcast television, and subtracting the (relatively minor) cost of switching all non-subscriber households to cable or satellite, produces an astounding estimated loss of $1 trillion in social welfare.”

He concludes that “protecting broadcast TV in a world where ‘broadcast TV’ is already an anachronism and video programs are themselves fleeing to new media is not a good way for the government to support the emerging markets of the 21st Century…The social evolution that will deliver exponentially superior opportunities for video viewers and program producers is now well underway. It is not a radical gamble to advance our legal framework, syncing it with reality.”

Click here to read “If a TV Station Broadcasts in a Forest…”