A few weeks ago, the House Committee on Energy and Commerce and the House Committee on the Judiciary both voted to move bills reauthorizing parts of STELAR (the Satellite Television Extension and Localism Act Reauthorization) to the full House floor. You might be wondering: What is STELAR, how does it affect consumers, and what should Congress do about it? We’re going to answer these questions, provide current political context, and shed light on why, if Congress fails to act, 870,000 residents could lose access to broadcast content and suffer through more-frequent blackouts.
What is STELAR?
To understand what STELAR is and why it matters, it helps to understand our current television viewership system. Under the United State’s current system, local broadcast television stations (e.g. NBC, ABC) are available for free over the air to consumers with antennas. However, many Americans choose to subscribe to cable or satellite service so that they can get cable and network TV stations. To carry local broadcast programming for their customers, these television providers must get a copyright license and obtain consent from broadcast stations (“retransmission consent”), usually in exchange for payment.
Unlike cable, which depends on wires running to individual homes, satellite television is a nationwide service because subscribers can receive TV through it so long as their satellite Dish Network can see the right parts of the sky. Satellite television providers carry mostly national content and then “spot beam” local content to subscribers in a particular area.
STELAR has gone by a lot of names in the past — STELA, SHIVA, and SHIVERA — but it’s usually had two primary provisions.
The first provision of STELAR is called the “distant signal” provision, and while it is primarily in the Judiciary Committee’s jurisdiction, it technically touches on Commerce issues as well. This provision applies when a satellite subscriber lives in an area (usually rural) where they either don’t have a local broadcast station or cannot receive their local broadcast station over the air (through an antenna). To ensure that these customers could access news, sports, and entertainment, Congress passed the distant signal provision, which allows satellite TV providers to carry a “distant” broadcast station (often the next city over, but sometimes from New York or Los Angeles) to those who can’t get a local signal over the air. In this way, consumers can access news, sports, and entertainment even if it’s not the most local coverage. STELAR makes this lawful both under copyright law (through a statutory license) and under communications law (through an exemption to retransmission consent requirements).
There are three primary buckets of people who are currently eligible to receive a distant signal instead of no signal. The first is satellite subscribers in “short markets,” which are areas without a broadcast station. People living in these areas cannot get a local TV station because there isn’t one. The second group includes those who use a satellite to get television service in RVs, campers, and long-haul trucks, who have no local broadcast station because they are constantly on the move.
The final group of people who can currently get a distant signal are those in “underserved” markets, which is an area that does have a local station, but the satellite provider has not come to an agreement with the local broadcast station to carry it. Satellite subscribers in these markets can usually receive local stations over the air with an antenna, like in the good old analog days. STELAR’s distant signal license doesn’t apply to those consumers because they are able to receive a full lineup of TV programming. The distant signal license does, however, apply to underserved market satellite subscribers who live in the outskirts of the market or behind a mountain or some other obstruction and thus, cannot receive signals over the air.
The second provision, which has a broader impact than distant signal, is called the “good faith” provision. It lies primarily in Commerce’s jurisdiction and specifies that when television providers (both satellite and cable) negotiate with broadcast stations in order to carry broadcast programming, the two parties must — to put it delicately — not be jerks. For example, it would probably be bad faith for a broadcast station to say to a satellite TV company, “Since the Super Bowl is next week, we are raising your retransmission consent fees by 500 percent. And if you don’t pay it, you can’t retransmit our channel so your customers won’t get to watch the Super Bowl. Now pay up.” Likewise, it would probably be bad faith for Dish Network and DirecTV to negotiate together and say to a small broadcaster who only owns one station, “Both of our companies will only pay you $10/year for your station, and if you don’t agree, no satellite customers will have access to your station. Deal with it.”
This good faith provision matters to consumers because when the two parties can’t agree on how much the television providers should pay to the broadcasters to “retransmit” their content, customers of the television provider can’t access that station. This is called a “blackout,” and blackouts are on the rise. In fact, there were over 230 blackouts in just the first seven months of 2019. If you’re wondering why there are blackouts even if current law requires television providers and broadcasters to negotiate in good faith, it’s because the rules are rarely enforced. The Federal Communications Commission is in charge of enforcing these provisions, but the agency rarely does so. Thus, the companies try to see what they can get away with — and consumers get hurt in the process.
STELAR is typically reauthorized every five years. The debate around reauthorization usually involves satellite providers, broadcasters, cable TV providers, and, of course, viewers. Broadcasters want both provisions of STELAR to go away. Cable television providers and consumers, meanwhile, want to keep both provisions and use STELAR to reform the retransmission consent regime so that it works more efficiently and reduces prices for subscribers.
Most of the discussion around whether or not the distant signal license should be renewed focuses on those in underserved markets because these consumers should be able to access local news, sports, and entertainment to be engaged with their community. However, Dish Network already has deals with stations in every local market, so Dish Network customers in underserved markets do not need to take advantage of the distant signal license. In 2010, Dish Network was able to overcome an injunction preventing it from utilizing distant signals by offering local service in all markets with a local station. However, DirecTV (owned by AT&T) never faced a similar injunction, and consequently never agreed to offer local service in the 12 underserved markets. Its customers in underserved markets do benefit from the distant signal license, but broadcasters believe AT&T uses STELAR as an excuse to avoid making agreements with broadcasters in underserved markets.
Most of the discussion around whether “good faith” should be renewed concentrates around the time period for renewal. Television providers believe good faith should be renewed for five years (or sometimes less), because they believe it is important for Congress to periodically consider reforms to the television marketplace. On the other hand, broadcasters, who are well served by today’s television marketplace rules, believe that these provisions should not be renewed, or, if they must be, then they should be renewed permanently so that Congress does not periodically consider video marketplace reforms when STELAR comes up for reauthorization. Consumers, who just want access to TV, simply want to see STELAR reauthorized — ideally forever, but at least for a few years. At stake: Potentially 870,000 people who won’t be able to view local broadcast content after January 1, 2020.
What is Congress Doing?
The state of play can get a bit confusing because two committees have jurisdiction over STELAR. The House Energy and Commerce, House Judiciary, and Senate Commerce committees are taking steps to reauthorize STELAR so consumers can continue viewing their local broadcast stations.
Senator Roger Wicker, the Chairman of the Senate Committee on Commerce, Science, and Transportation, introduced the Satellite Television Access Reauthorization Act (STAR Act) in early November 2019. In addition to giving STELAR yet another name, the STAR Act reauthorized both the good faith and distant signal provisions for five years. Although the STAR Act was scheduled for a markup in November, Senator Wicker eventually pulled it off the agenda, and, to date, it has not been rescheduled.
Meanwhile, because Senator Lindsey Graham, Chairman of the Senate Committee on the Judiciary, apparently expects STELAR to sunset, the Senate Judiciary Committee has not taken any legislative action on it. The split jurisdictional boundaries have been somewhat muddied on the Senate side, given the opposing viewpoints of the two committee chairs.
The House committees, however, decided to keep themselves clearly within jurisdictional boundaries. The House Energy and Commerce Committee took action first. In November, Representative Mike Doyle, Chairman of the Subcommittee on Communications and Technology, introduced the Television Viewer Protection Act, which reauthorizes the good faith provision permanently, requires certain television and internet providers to advertise the full price of their services (including how much consumers will be required to pay in taxes, fees, and equipment rentals), and allows small cable companies to negotiate together with broadcasters during retransmission consent negotiations. That bill sailed through markup (despite some protests about the lack of a legislative hearing) and referred out of the committee by a voice vote.
Additionally, Congressman Jerry Nadler introduced legislation in the House Committee on the Judiciary called the Satellite Television Community Protection and Promotion Act, which partially reauthorizes the distant signal provision. It (1) permanently extends the distant signal provision for customers that are eligible to receive it because they live in short markets, or roam the country in an RV, camper, or truck; (2) ends distant signal eligibility for Americans living in “underserved” markets; and (3) precludes satellite providers from giving any of its customers (including those in short markets or truckers) access to distant signals unless they provide local broadcast stations to those in underserved markets. During markup it was amended by Representative Zoe Lofgren. Rep. Lofgren’s amendment gives the satellite companies some time to provide local broadcast stations to underserved Americans by extending the distant signal license for all three buckets of consumers for six months, and then for unlimited 90-day periods, provided the satellite provider is in the process of offering local broadcast content to underserved Americans. Rep. Nadler’s legislation, as amended by Rep. Lofgren, was also voted to the House floor by a voice vote.
What Should Congress Do Now?
We firmly believe that during conference when elements from each bill are combined into one, both provisions of STELAR should be reauthorized permanently so that Americans don’t face even more blackouts or lose access to network programming. However, absent a permanent reauthorization, a reauthorization for any period of time will protect consumers in the short-term while allowing Congress time to reform video marketplace rules. Given the legislation that has already been introduced in various committees, Congress should keep some things, and nix others, as described below.
Specifically, we’d love to see legislation move forward that incorporates Congressman Doyle’s Television Viewer Protection Act, particularly its “truth in advertising” provisions. Not only does this legislation make good faith permanent, and thereby decrease the likelihood that consumers face frustrating blackouts of important content, but it also ensures that consumers can make informed decisions about what they buy. The average consumer pays an additional $450 per year in unexpected fees attached to their TV package. Without transparency, Americans may be lured into signing a contract for a service they cannot afford based on misleading information. This legislation will help prevent companies from taking advantage of consumers by luring them into contracts on the basis of misleading advertisements.
We’d also like to see final legislation permanently reauthorize the distant signal license for all subscribers who currently benefit from it. This would ensure that consumers never have to go without access to certain broadcast content. However, a five-year reauthorization, as proposed in Senator Wicker’s STAR Act, would at least protect consumers in the near future.
Hopefully, any conferenced legislation would ignore Congressman Nadler’s Satellite Television Community Protection and Promotion Act, which could produce a monopoly for distant signal subscribers. Despite its noble goal of ensuring that every American can have access to their local news, this bill mistakenly leaves the fate of some consumers currently benefiting from STELAR in the hands of AT&T and assumes AT&T will make a decision that is not in its economic interest. If AT&T chooses to provide local programming in underserved markets, its customers would be in a better spot than they were in before because they’d have access to local broadcast stations. However, if AT&T chooses not to provide local programming to underserved markets, then none of AT&T’s DirecTV customers could benefit from distant signals. Consumers would then have to either switch to Dish Network (who could take advantage of its monopoly to raise prices or take other consumer unfriendly actions) or lose access to certain broadcast network content. We are worried that AT&T is unlikely to provide local content in underserved markets because doing so is not profitable. In order to offer local content to these consumers, AT&T would have to invest in infrastructure and pay retransmission consent fees. If it was profitable, they’d probably be doing it already.
Ultimately, we think the House Committee on the Judiciary legislation is too risky to pass, as it could fail to achieve its mission and leave consumers with higher prices or no broadcast content. This is particularly problematic because most of those who benefit from distant signal are those without other options for broadcast content. The number of people benefiting from the distant signal licenses has decreased during every STELAR reauthorization, as those who can access broadcast content in a different way likely do. Those who continue to receive distant signals cannot receive certain broadcast stations over the air, and likely live in areas with poor broadband access, preventing them from getting Sling or YouTube TV. Policy should not harm the most vulnerable consumers.
Congress needs to take action to protect vulnerable consumers by reauthorizing STELAR permanently and including provisions ensuring that consumers know the true cost of services before they buy them.