Government policies help influence the course of the communications industry and its impact on consumers and society at large. We bear witness to how sound regulatory policies, based on a fundamental understanding of markets and consumer preferences, can help foster an environment that enables technological innovation and convergence to drive investment, promote competition and enhance consumer choice.
That’s why it is essential that government action reflects the true state of the marketplace and is supported by a factual foundation that is data-driven and grounded on fact-based analysis.
Yet, the Federal Communications Commission (FCC), the independent regulatory agency responsible for guiding communications policy, appears adrift from its traditional moorings of fact-based, data-driven decision-making.
In the FCC’s newly adopted "leap-without-looking" approach, it rammed through new rules this year that place limits on the joint advertising sales of local TV broadcasters without seeking any current data on the media and entertainment market, or the rapidly changing advertising marketplace to support the need for the new requirements. The FCC instead relied on an outdated joint sales rule designed for FM radio stations in the days before XM-Sirius and the iPod and applied it to local TV broadcasters.
Chairman Tom Wheeler justified acting without obtaining further data by articulating an unsupported claim that broadcasters could “circumvent”local TV ownership rules through the use of joint sales agreements (JSAs); specifically in those cases in which one station sells more than 15% of the weekly advertising sales for another station.
If the chairman had legitimate concerns regarding broadcast JSAs, then why the departure from fact-based decision-making to precipitously take action against one sector of the industry? The FCC, in this case, failed to raise or consider any similar joint sales agreements among cable and satellite TV providers, and rushed to judgment ahead of an anticipated Government Accountability Office (GAO) report that would address these very issues.
As it turns out, the GAO, a non-partisan Congressional watchdog eventually highlighted the FCC’s utter lack of data in its decision-making process when it stated:
“(The) FCC would benefit from improved data on and analysis of the extent to which broadcaster agreements affect its media ownership rules and its media policy goals of competition, localism, and diversity... This lack of analysis and information could undermine FCC’s efforts to ensure its media ownership regulations achieve their intended goals.”
Left unanswered is why the FCC would expend the effort and resources to implement biased rules that will ultimately distort the competitive video marketplace, where broadcasters today experience the same competitive pressures shared by cable and satellite TV providers.
The Commission’s action on broadcast JSAs appears capricious, and shows a fundamental lack of understanding of advertising in today’s dynamic video and on-line broadband market. The most recent data demonstrate that U.S. consumers on average spend about three hours each day online, with nearly 30 minutes exclusively devoted to watching video content. Moreover, 345 million wireless subscriptions in the U.S. now provide anywhere, anytime smart phone access to content.
Given the steady shift by consumers to greater online use, advertisers now actively target online platforms and buy more advertising from new digital competitors, driving advertising revenues downward for both pay-TV companies and broadcasters. According to Media Dynamics Inc., the U.S. television industry this year suffered its first dip in advertising-buying since 2009.
In the midst of all of these changes, however, public data reinforces that fact that television remains a primary medium for consumers across America. Studies show that television viewing and online video streaming go hand-in-hand, with the heaviest Internet users also watching the most TV.
Interestingly, while the FCC "leaped without looking" to challenge broadcast JSAs, Wheeler has recently used the mantra of “data-driven decisions” as the rationale for not rushing to judgment in other areas. Just last month Wheeler testified before the U.S. House Committee on Small Business that the agency could not act on pending “special access” regulatory proposals at the Commission given the lack of current data.
In this case Wheeler felt compelled to extol the virtues of a “data-driven” approach to Congress, yet he abandoned that approach by jumping head-long into adoption of one-sided regulations that will negatively impact the competitive playing field in the video market for broadcasters.
These intellectual and pragmatic inconsistencies beg the questions: What data-driven decisions are important to Wheeler? All of them, or just some, and for what reason?
Robert C. Kenny is director of Public Affairs for TVfreedom.org, a coalition of local broadcasters, community advocates, network TV affiliate associations and other independent organizations advocating for preserving the retransmission consent regime. He is a former press secretary at the FCC.
