Allowing STELAR to Expire Will Bring Regulatory and Market Parity

There are few markets that have changed more in the last 30 years than video distribution. When Congress passed the Satellite Home Viewer Act in 1988, it intended to favor the fledging home satellite industry so it could grow to compete with cable. Today, the satellite industry is a multibillion-dollar industry that has close to a 30 percent share of the paid television market and, in addition to cable providers, there is a robust and flourishing over-the-top marketplace. Yet vestiges of this legislation – it’s most recent iteration is known as STELAR – persist to favor the home satellite industry at least until it is scheduled to sunset this year on December 31.

Allowing STELAR to expire would bring the same private sector retransmission negotiations to the last 12 media markets where DirecTV still benefits from the distant signal provisions of STELAR. This would level the playing field for them with all other video distributors with whom they compete.

In 2012, former Competitive Enterprise Institute (CEI) research fellow and regulatory counsel Ryan Radia wrote an essay entitled, “A Free Market Defense of Retransmission Consent,” and noted that “policymakers would be loath to lose sight of the basic principles that underlie free markets—voluntary exchange, property rights, and regulatory neutrality—in governing the television marketplace.” These were wise words then and should be the guiding principles for policymakers examining the vibrant and competitive video marketplace today.

The expiration of STELAR would end the involuntary compulsory copyright license granted under Section 119 of the Copyright Act, a misappropriation of property rights any free market advocate should object to. This exemption currently allows DirecTV – without consent of the broadcaster – to import a distant signal often from New York City or Los Angeles at government-set rate and terms. Ending this practice and moving these pricing and distribution decisions away from the Copyright Royalty Board will be a significant step towards a free market exchange.

In a recent position paper, the Copyright Alliance also called for letting Section 119 to expire, saying, “[T]he Copyright Alliance believes that creators are most fairly compensated when there are no distortions in the marketplace. We recognize that the licensing marketplace for broadcast television programming is very complex, involving a number of regulatory and statutory provisions spanning the Communications Act and Copyright Act, but that alone is not a compelling reason to retain the compulsory license in Section 119.”

Today, the video marketplace is more robust than ever before with broadcasters, cable companies, satellite and over-the-top providers aggressively competing for viewers in a complex entertainment and information ecosystem. This modern-day market includes competition for viewers, both in the form of paid subscribers and advertising, with streaming platforms, social media, search engines and every other form of content beaming into our homes.

Congress will do best to let these markets evolve without favoring or disfavoring specific platforms or providers. Letting STELAR expire will remove the last vestige of favoring the satellite industry and meaningful step in the direction of regulatory parity.