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Like Netflix? It might get more expensive as federal regulators eye streaming services

Published in Blog on July 17, 2017 by Convention Of States Project

Television today looks nothing like it did just 10 years ago, when the only way to watch most channels was to subscribe to packages offered by cable and satellite companies.

In 10 more years, the world of television might be completely unrecognizable, as online content, streaming services and traditional channels continue to evolve into who knows what.

Many of the newest innovations – streaming platforms like Netflix and Hulu, but also live television services like Sling and the recent foray by Apple into the live TV market – are happening outside the traditional understanding of what television is and how it operates. That’s partially because the Internet has made it possible, but partially out of necessity, too.

By getting outside the old framework of cable and satellite, those new services have been able to bypass a slew of federal regulations that tie traditional television down and keep it from being able to innovate.

Now, the FCC is looking to bring those new “outside the box” services into the massive regulatory structure that has been built up over the decades and now is nearly impossible to navigate for anyone except the most powerful and well-connected companies.

This flow chart, created by the tech policy gurus at the Mercatus Center, shows what it takes to get a show on the air in the traditional television formats versus the new online-based model:


Brent Skorup, a research fellow on tech policy at Mercatus, says this regulatory thicket protects politically driven prerogatives (like mandatory hours of so-called “educational programming” required by the FCC), but also protects entrenched businesses interests.

Like with any set of complex regulations, the big companies already occupying the market have a bit of an advantage – it takes time and money to navigate the rules, and that makes it harder for new competition to disrupt the current top dogs.  It has helped companies like Comcast and Time Warner develop a virtual monopoly over cable service, and, as any economist can tell you, that’s why you pay so much for cable and get such terrible customer service in return.

Since 2002, however, online technology has allowed would-be competition to bypass that regulatory fortress.  Look at the two columns on the left side of the chart and compare them to the columns for cable and satellite.

That has meant more choices and better pricing for consumers. As a result, cable TV has lost 15 million subscribers since 2002 (full disclosure, I am one of them).

“Despite these pro-consumer outcomes, members of Congress and officials in the FCC are considering applying legacy cable and satellite regulations to online video streaming providers, which currently face few restrictions,” warns Skorup.

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