Kevin Hunt: What Is $1.50 'Broadcast TV Fee' On Cable Bill? (It's Worth Billions)

Q: "My latest Comcast bill includes a new fee, the Broadcast TV Fee, for $1.50. The explanation is the 'fee recovers a portion of the cost of retransmitting television broadcast signals.' Isn't that basically what cable TV does? Why a separate fee? A company rep said it has something to do with the large TV networks. With the merger of Comcast with Time Warner, your insight is much needed."

Bruce Jachym, Simsbury

A: Yes, that is exactly what cable TV does. But Comcast and other providers must pay for retransmitting those local television broadcast signals. Broadcasters get $3 billion a year in retransmission fees from cable and satellite providers, according to research firm SNL Kagan. Another study, from Pew Research Center, estimates a doubling of retransmission fees from 2012 to 2014.

"Beginning this year," says Laura Brubaker Crisco, a Comcast spokeswoman, "we began itemizing a portion of broadcast retransmission costs as a separate item to be more transparent with our customers about the factors that drive price increases."

Cox Communications has been somewhat less transparent with the charges. After saying it does not charge a retransmission fee, it acknowledged the cost is folded into subscribers' monthly bills. Most Cox customers probably noticed an unexplained increase in their bills in March.

"The prices Cox pays for retransmission content are included in our limited basic rates for Standard TV packages," says Dana Wolfe, a company spokeswoman, "much in the same way that Cox's prices for all its video packages reflect increases in the wholesale costs of programming."

DirecTV, a satellite provider, raised rates by close to 4 percent in February, though it said its costs to broadcasters has increased 8 percent. Dish Network, another satellite provider, raised monthly rates by up to $5 in February.

Here's how the local retransmission fee works. Congress authorized broadcasters such as ABC, CBS, Fox and NBC to allow (or disallow) the retransmission of their signals locally to cable and satellite providers. The agreement is usually renegotiated every three years.

When negotiations get ugly, the viewer pays. Last year, Time Warner dropped CBS in New York, Los Angeles, Dallas and other major markets. Time Warner cable subscribers in Los Angeles later filed suit against Time Warner for dropping the network. In 2010, Fox prohibited Cablevision from showing the first two games of the World Series. In 2012, Cablevision of Litchfield County appealed to Tribune Company, owners of FoxCT, to lift a two-month blackout of the network affiliate so 50,000 affected could watch the World Series.

Then the viewer pays again, with higher fees.

How to explain the cable industry's support of Aereo, a small Long Island company attracting disenchanted cable subscribers by offering low-cost streaming and cloud recording of local broadcasts in 11 U.S. cities? Aereo does not pay retransmission fees because it streams live broadcasts using miniature antennas for each subscriber — which, the company argues, is no different than what a subscriber would get with a personal TV antenna.

The antenna use is an important distinction. Because a cable company does not use an antenna, the local broadcasts it carries are considered retransmissions subject to licensing fees. In legal terms, the broadcasts would be considered a public performance.

The copyright owners are the broadcasters, who say Aereo's service violates copyright laws. But if Aereo prevails, cable companies could use similar technology to provide its subscribers local programming without paying billions in retransmission fees.

The fight between Aereo, backed by media mogul Barry Diller's IAC, and broadcasters reached the Supreme Court last week. The court did not appear impressed with Aereo's argument.

"Your technological model is solely based on circumventing [the law]," said Chief Justice John Roberts.

But Justices Stephen Breyer and Sonia Sotomayor questioned the implications of a ruling against Aereo. If Aereo's use of cloud storage of broadcast recordings is ruled a public performance that violates copyright regulations, then cloud-storage users, Apple, Google, Dropbox also could face copyright violations when someone downloads a video or photograph.

There's a lot more at stake than your $1.50 a month to Comcast. The Supreme Court decision is due in late June.





Look for this special section in your
Baltimore Sun newspaper on Dec. 29, 2013.
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