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The FCC, Trump, and Healing a Divided Nation Through Handouts
Here is the FCC Broadcast License for WCBS in New York. Broadcast Licenses were talked around a great deal during the Jimmy Kimmel situation but they weren't not talked about very much. This eventually became confusing for me. A lot of the rhetoric implied, and it makes intuitive sense, that removing a station's broadcast license is equivalent to stopping them from displaying their content. You had a license to speak, now you don't, so you don't get to speak.
But what actually happens when a broadcast license is revoked?
The answer eventually leads one to discover a fine distinction: the license permits the station to broadcast according to its specifications but that doesn't mean it's the only way the station has to broadcast. The license is covering the station as transmitter not the station as speaker. The license is really about spectrum allocation, not content. If WCBS loses their license there's no reason the station has to shut down and it's very likely that no one would even notice.
Broadcast stations have certain rights to be carried by distributors like a cable company or YouTube TV. Every 3 years they can chose to be either must-carry or retransmission: Must-carry means that all distributors must include the channel's content in their offerings but the broadcaster isn't allowed to be paid for it. This is common with public television channels or smaller market broadcasters. Retransmission is for broadcasters who have a product that distributors actually want. Local stations in big markets like WCBS-NY. This means distributors have to negotiate a contract with the broadcaster to carry the channel.
This is where we start to enter ground truth: money. Retransmission fees are a major source of revenue for these over the air (OTA) broadcasters. How much of their revenue? This is surprisingly hard to answer because all contracts in this distribution network make the numbers private. Redacted during lawsuits private. For a rough estimate, think 40-55% of their revenue.
There is one more technical aspect that it's important to understand: the distributors do not use the OTA broadcast signal for the retransmission. The OTA studios are sending their signal to the distributors digitally. At the technical level there is no difference for the distributor between an OTA channel and a cable one.
But there's a big difference in how much the distributor pays. Lots of variation but retransmission of a local channel is about 2-3x the cost of a non-sports or major cable channel. The delta is driven by two things: sports and regulatory arbitrage. Take out sports and local channels are essentially a low tier cable channel.
The details of the sports contracts are also proprietary but there are almost certainly reach clauses that a network like Fox would be in breach of if, for example, all of their stations simultaneously lost their FCC broadcast licenses. This would cause a healthy reshuffling across the entire media distribution system.
How
The FCC has the power to change or revoke licenses at any time for, among other reasons, "...if in the judgment of the Commission such action will promote the public interest, convenience, and necessity, or the provisions of this chapter or of any treaty ratified by the United States will be more fully complied with". The FCC currently has enough commissioners to form a quorum once the government reopens.
The public interest / good is a standard used throughout FCC regulations. It is also not a statutorily defined standard, it is meant to be interpreted by the Commission. The public good for allocating the spectrum has included technical and other non-content related considerations. The spectrum is a public good and there may be a better use for it even if there's nothing at all objectionable about how you're using it.
Which is how the FCC Commission will phrase it. And we know it is true because in 2017 an auction of OTA broadcaster frequencies brought in around 19 billion. Very imprecise but a rough value of auctioning off the spectrum used by current license holders would be the 25-50 billion range. This is a valuable natural resource and economically we are not being good stewards of it given technological advances.
Who Gets What
Trump: 25-50 billion, Drains The Swamp.
Democrats: No more fear of government censorship. Maybe kick some of the auction money their way.
Humble Citizens: lower cable bills, technological marvels from higher value spectrum uses, better access to the sports they desperately crave.
Economy: Redistribution of long standing revenue flows, creative destruction.
The best part - no legislative change necessary. The FCC can do this the moment they convene again following the shutdown using their existing statutory authority. The Administrative State's tools shall dismantle the Administrative State's house.
You're ignoring the fact that, according to Neilsen, about 20% of people in the US rely on OTA TV to receive local stations, myself included, and that number is in excess of 30% in some markets. This is up from 2008, when only 15% of households relied on antenna broadcasts. In 2008 on-demand and internet-based video services didn't really exist, and cable-television was bigger. Also in 2008, we were freeing up a part of the spectrum by making TV stations switch to digital transmission. This theoretically affected even fewer households, as nothing needed to be done unless your TV was several years old, but the changeover was delayed by six months, and the change was only accomplished by the government handing out coupons for free converter boxes. Telling 20% of the country that they have to pay for television or give it up is a nonstarter.
My apologies, I wasn't trying to ignore you. I considered calling out that many people who rely on OTA for TV and analyzing their alternatives but the original post was already getting long.
The short answer is that I don't care about you and I think others shouldn't either. It's a cost benefit analysis. I acknowledge that many people will lose access to OTA TV. My expectation is that most, 90%+, will be able to substitute the entertainment they get from local TV from any of the others in our modern grab-bag of entertainment distribution. Many are elderly people who will barely notice if the TV at the nursing home is repurposed for streaming. But even if more people are affected than I think I still don't think it's enough to overcome the benefits. I am sorry grandma, your stories are using a common resource that we need for growth.
There are emergency and public notification functions that OTA TV also serves. I think in many cases that information can be disseminated through other means but if there's a very low cost way to keep that or if the buyer of the spectrum can easily provide the service then sure, but it's these kinds of little carve outs and extra requirements for tiny populations that leads to the administrative and contracting bloat we are fighting. Sometimes maintaining backwards compatibility really is too expensive and we should make the change and let market forces solve for the edge cases.
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