Obsolete Television Law Needs Modernization

[Commentary] Important free market communications legislation introduced in mid-December warrants flagging because it brings needed attention to a real and growing problem: how obsolete communications law stifles innovation, growth and consumer benefit.

The DeMint-Scalise bill, “The Next Generation Television Marketplace Act,” introduced by Sen Jim DeMint (R-SC) and Rep Steve Scalise (R-LA), would repeal antiquated restrictions of the 1992 Cable Act that have been made obsolete by dramatic changes in the market, competition and technology over the last twenty years. The 1992 Cable Act incorrectly assumed that cable was a natural monopoly requiring permanent, extensive, and intrusive regulation of cable rates and content prices, terms and conditions. The Act neither anticipated, nor accommodated for, the implications of a rapid increase in video competition from DBS competitors (DirecTV & Dish), telco competitors (Verizon-FIOS & AT&T’s UVerse), and new entrants (Netflix, Google-YouTube, etc.). To underscore how obsolete the Cable Act’s core monopoly assumption has become, to date cable has lost ~40% video market share to competitors, Netflix has become the nation’s leading video provider measured by subscribers, and cable’s main online video offerings are ranked #8 (NBC Universal) and #10 (Hulu) in the U.S. while garnering only one sixth of the audience share of online video market leader Google-YouTube. Cable is no video monopoly today, despite the Cable Act’s obsolete baseline assumption that it is. Thus the 1992 Cable Act is a legal anachronism that blindly careens into the future like a 1992 time capsule devoid of knowledge of the real world of today or the amazing technological innovations in the pipeline.