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Retransmission Costs Affecting Rural Broadband Deployment

Steve Pastorkovich Oct 23, 2019

The outdated retransmission consent regime is not just saddling rural video providers with higher rates. It is also impeding rural broadband deployment, according to the panel on a recent podcast produced by ACA Connects (formerly the American Cable Association).

“There’s no competition; it’s a monopoly. It’s creating a barrier to closing the digital divide. It’s not just hurting people paying the exorbitant rates; it’s preventing the people who don’t have access to high-speed broadband from getting it,” said Aaron Bradshaw, CEO and general manager of Co-Mo Connect (part of Co-Mo Electric Cooperative) in Missouri. “And add to that, more rural providers are getting out of the video business because they can’t afford it. People in rural areas are getting the shaft. It isn’t right and it needs to be fixed.”

Retransmission consent rates – what video providers pay to carry local broadcasters’ signals – continue to rise at exorbitant rates. Frank Scotello, NRTC’s senior VP of Operations and Programming, gave the example of one video provider who saw rates rise 255 percent over the past five years and another who experienced a 387 percent increase.

The 1992 Cable Act blunts video providers’ negotiating power by prohibiting them from carrying broadcast signals from outside their local market, with only limited exceptions. This leaves providers with no choice but to either pay whatever the broadcaster demands, or have the broadcaster deny customers access to their signal. Darren Moser, chief financial officer of NRTC member AcenTek, said these are not really negotiations; some broadcasters “won’t even meet with you … You get all the blame due to the lack of transparency,” he said.

Some home viewers have the option of abandoning a linear video service and picking up local signals with an antenna. Many live too far away from the broadcast tower. They have no choice but to stick with a video provide or do without broadcast network programming. This also undermines the business case for deploying broadband infrastructure in high-cost areas.

“The industry as a whole is busily charging toward the cliff, [while] station groups seem to be putting the pedal down instead of trying to find a solution that stops it from going over,” Co-Mo’s Bradshaw said.

ACA Connects President Matt Polka, who moderated the podcast, said that STELAR – the Satellite Television Extension Localism Act Reauthorization is a vital retransmission consent-related issue. Many believe STELAR is must-pass legislation. Without reauthorization, a requirement that local stations to provide access to satellite TV customers expires at the end of 2019. Broadcasters favor sunsetting that requirement, giving them even more control and market dominance.

Key Congressional leaders of both parties have expressed a desire to pass STELAR, and there are efforts to alter key provisions, such as strengthening “good faith” negotiating rules and extending them to buying groups (such as NRTC’s TelcoVido). Another provision would block broadcasters from blacking out stations under certain circumstances. The panel’s consensus was that STELAR improvements would not solve all retransmission consent problems but would improve upon the current situation for rural video providers and their viewers.

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