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During the latter half of the twentieth century, over-the-air broadcast TV and cable TV dominated the US television industry. As these industries expanded, from three major channels to dozens, Congress and the Federal Communications Commission (FCC) slowly built a regulatory thicket that served to protect various regulator prerogatives, social goals, and entrenched business interests.
Since 2000, technological progress and the development of the Internet have led to competitive TV alternatives from telephone companies, satellite providers, and online video providers, as well as the creation of hundreds of TV channels. As a result, since 2002, cable TV operators have lost nearly 15 million subscribers and significant market share as consumers have sought out these newer options. 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.
This chart introduces readers to many of the major federal requirements and prohibitions facing cable, satellite, Internet Protocol TV (IPTV), and online video providers. The chart draws from federal statutes and regulations from the FCC and Copyright Office in place in early 2016. Cable and satellite TV providers must comply with a complex web of rules that dictate what content they are required to carry and are prohibited from carrying. Further, the government is deeply involved in compensation rates for programming and the regulation of TV packages. While the regulatory status of IPTV is unclear, IPTV providers like Google Fiber TV and AT&T U-Verse serve millions and generally follow cable regulations. Currently, as the chart indicates, online video providers like Netflix, Sling, and Amazon TV face few restrictions.
TV regulations illustrate how regulations build up over time to remedy real or perceived problems and create competitive asymmetries as technology changes. These asymmetries are then often used as justification for additional regulations. Rather than imposing cable and satellite rules onto online video, Congress and the FCC should modernize TV regulations and dismantle the outdated TV regulatory system—much of which was designed to sustain the media markets established when I Love Lucy was popular.
As long as these legacy regulations remain, determined regulators—with the encouragement of some incumbent operators—will be tempted to regulate online TV. Online video helped bring about today’s Golden Age of Television, in which consumers have access to more high-quality television shows and movies than ever before. There should be a level playing field where all video distributors, like online video distributors, are free to contract with programmers, thereby creating flexible, inexpensive TV packages that consumers want.