Today, the Institute for Liberty submitted comments to the FCC on the ATSC mandate.

September 19, 2014

Hon. Julius Knapp, Chief

Office of Engineering and Technology

and

Hon. William Lake, Bureau Chief

Media Bureau

Federal Communications Commission

445 12TH ST SW

Washington. D.C. 20554

Dear Mr. Knapp and Mr. Lake:

As the summer comes to and an end many Americans families make the transition from convening around the patio and grill to gathering indoors back to their living rooms and televisions. Whether it’s the NFL or a seemingly endless selection television series and movies available in the press of a button or click of a mouse, there is no question that consumers have more choices than ever in what they choose to watch. And the way they receive the content is also coming from a more diverse set of providers. Gone are the days when antenna and cable are the only choices. A new influx of media available through the Internet provides consumers even more choices without having to pay a traditional cable bill.

However the ATSC license mandated by the FCC requires these consumers to pay a license fee built into the cost of their television whether or not they ever use it to receive a digital broadcast cable signal.

A growing number of people are eschewing traditional cable or satellite entirely, and are using broadband content services like Apple TV, Netflix or Roku to get entertainment streamed to them. Still others use them, quite literally, like a computer monitor, hooking up their desktop or laptop to them in order to watch YouTube or any of the Internet-available cable programming. Similarly the droves of college and professional sports fans that turn to satellite providers for their more robust coverage of their favorite events have no use for the ATSC license because the satellite signal is not reliant on the ATSC broadcast standard.

Because of the policies put in place during the Digital Transition of 2009, U.S. consumers are now paying what can essentially be considered a tax on every piece of equipment that contains a digital receiver, such as a modern cable box. This tax is basically the cost related to manufacturers paying the patent licensing fees mandated by your agency. The $5.00 per unit license fee may not seem like a lot, but as the price of televisions continue to drop, this tax makes up a larger percentage of the overall product cost. Making matters worse, a quarter of the individual patents within the ATSC standard have already expired, yet the license fee charged by MPEG LA remains unchanged. Similar licensing fees in Europe and Asia cost around $1.00. Under normal circumstances, the laws of supply and demand would push manufacturers toward a competing standard. However in this case, there are no alternatives due to the FCC granting monopoly power to MPEG LA, solidifying their ATSC pool as the only option for digital receivers.

The practice of including patent licenses in the cost of products is not in any way objectionable. Research and development costs are almost always included in the price of consumer goods. What is troubling about this case in particular is that the FCC is exclusively grating licensing privileges to the for-profit MPEG LA, who are abusing their position.  Consumers are left paying the inflated tab for a license filled with expired patents that many will never use because they don’t subscribe to broadcast cable.

Thank you for your consideration of this important issue and continued dedication to promoting policies that encourage innovation and fair competition that benefits consumers in the fast-evolving communications ecosystem.

Respectfully,

Andrew Langer, President

Institute for Liberty

CC:

Renee Gregory 

Legal Advisor to Chairman Wheeler

Office of Engineering and Technology, Wireless, and Incentive Auction

Maria Kirby 

Legal Advisor to Chairman Wheeler

Office of Media, Consumer and Governmental Affairs, and Enforcement