Comments of ICLE and New America on Space Modernization for the 21st Century

Introduction

Over the past two decades, the space industry has evolved at warp speed. Access to orbits and resources beyond the Karman Line has become more available, cost-effective, and competitive than ever before. New products and industries are rapidly emerging. And critically, satellite connectivity that can meet the needs of modern Internet applications and users is being realized in low-Earth orbit. This progress has emerged despite a licensing regime that is precisely the opposite: anachronistic and incompatible with modern realities. As the Commission acknowledges, its current licensing process is a remnant of a bygone era, and “a modern, efficient space licensing system that enables innovation and exploration” is overdue.[1]

The International Center for Law & Economics (“ICLE”) and New America’s Open Technology Institute (“OTI”) applaud the Commission’s comprehensive proposal for space licensing reform. The Commission’s proposals align with many of the insights and recommendations offered in a recent report by the bipartisan LEO Policy Working Group co-chaired by our two organizations. The report, Low Earth Satellites: Policies to Promote Spectrum Sharing, Foster Competition, and Close Digital Divides, was the culmination of a nearly year-long process of research and discourse by a diverse group of individuals with industry, public policy, academic, and regulatory experience with the shared goal of “explor[ing] the challenges facing the development and deployment of LEO satellites for universal connectivity.”[2]

The report is attached to these comments as an Exhibit. Chapter 1 of the report focuses on spectrum policy and the discusses policy considerations and tradeoffs related to the imperative to streamline satellite licensing and modifications. Excerpts of the report and accompanying commentary are provided below as a brief summary in response to the proposals and questions raised by the Commission.

1. A Modernized Space Licensing Process Is Necessary

The NPRM’s ultimate aim is “to align our rules with the pace, growth, and innovation in the space economy[.]”[3] Doing so will require extensive reform that gets to the core of the licensing process rather than merely creating change at the margins. As our report recognizes, “[t]he FCC’s current framework for spectrum allocation and licensing was not designed for this emerging dense and dynamic LEO environment.”[4] Instead, LEO operators must weather a process mired in delay, inflexibility, and uncertainty by requiring “[h]ighly customized application requirements, duplicate processes between the FCC and ITU filings, and the combination of technical, spectrum, and orbital debris reviews [that] lead to a long process and restrictive, sometimes inconsistent licensing conditions.”[5]

The NPRM’s “three pivots” for modernizing the licensing process are a necessary first step toward meeting many of the report’s suggested proposals for reform. Specifically:

Presumed Acceptable Criteria. The NPRM asks whether the licensing process should shift to bright-line performance metrics the Commission presumes to be acceptable, rather than prescriptive rules and individualized assessments.[6] The answer is unequivocally yes. As the report proposes:[7]

One overarching reform would be adoption of the presumption that NGSO applications that comply with existing FCC rules, especially those related to technical and sustainability standards, are in the public interest. This would reduce the need for case-by-case bespoke reviews and conditions. . . . Instead of tailoring conditions to each operator, standardized operational rules—including for space sustainability—could provide clarity and predictability. Applicants seeking deviations from the rules would be required to seek waivers, creating a more rule-bound and transparent system.

The Commission’s suggested presumption of acceptability and reliance on objective metrics matches this recommendation to the letter.

Enhanced Application Design. With streamlining and automation in mind, the NPRM asks whether a more standardized process with modular features would be more responsive to operator needs.[8] As the report notes, “[r]eforms that seek to better standardize and streamline authorizations through clear, uniform ex-ante rules and conditions, while shifting to target ex post enforcement as needed”[9] remove the common constraints of “overly slow, bespoke, and burdensome”[10] review. In enacting such reforms, the Commission “would promote a more streamlined and consistent process, similar to how terrestrial wireless services are licensed.”[11]

Increased Freedom. The NPRM notes the prior practice of “over-prescrib[ing]” system design features and the imposition of bespoke conditions on individual system approvals.[12] A byproduct of this failure, as recognized in the report, is that licenses cannot be altered or modified without losing their priority status[.]”[13] Operators’ ability to nimbly respond to system needs or consumer demands without regulatory delay is paramount.

2. Processing Timelines Should Be Tightened and Standardized

The Commission notes that the time required for full action on a satellite operator’s application has varied from one day to six years.[14] This degree of uncertainty surrounding application processing is untenable. To address this problem, the report supports a the adoption of a shot clock with limited exceptions. “A ‘shot clock’ for application review should provide operators with more certainty about licensing timelines.”[15] A definitive and uniform timeline, such as the Commission’s proposed 60-day framework, accomplishes that. At the same time, “[f]lexibility mechanisms could be included, such as pausing the clock in unusual review cases or if applicants fail to provide necessary information[,]” as offered in the report.

The report also raises a complementary proposal for accelerating applications that do not satisfy its certification requirements, but nonetheless warrant rapid response. As the report suggests, “some systems could seek a waiver of shot-clock rules to allow more time-sensitive applications to be addressed first.”[16]

3. Processing-Round Reform Will Require More Work

The NPRM proposes restructuring the processing round structure so that rounds are initiated automatically and for a set duration each calendar year. This reform remedies one glaring shortcoming of the processing round regime. As the Working Group Report explains:[17]

Applicants may face significant delays if they are forced to wait for a new round to open after a lead applicant files, or risk missing a narrow filing window if they are not prepared. These dynamics, while intended to ensure fairness and spectrum sharing among competitors, are frequently cited as a primary source of delay for NGSO licensing.

A consistent processing round window avoids many of these problems. Still, larger issues remain embedded within the processing round regime, as the report notes:[18]

[T]he framework fails to provide security of expectations to existing systems. For example, aggregate interference limits cannot be defined because there is no telling how many lower-priority systems may contribute to interference, or how many processing rounds may occur within a given satellite band. It leads to the inevitable question: What happens to the spectrum sharing framework when a third processing round emerges in the Ka-band? A fourth? It seems foolish to presume that the framework’s sunsetting of priority system protections will take hold before these realities emerge.

While the industry consensus has been that aggregate interference limits are premature and the Commission’s dual-protection criteria are enough,[19] that sentiment may be quickly waning as the initial assumptions underlying the processing round framework begin to unravel.[20]

4. Milestone Requirements Should be More Incremental

For NGSO systems, the Commission proposes mirroring the ITU’s bring-into-use (“BIU”) benchmarks.[21] As the report acknowledges, “[a] key concern is whether these milestone requirements strike the right balance between facilitating market entry and deterring frivolous or infeasible applications,”[22] and “[t]he primary issue is how the FCC should distinguish systems that are legitimately trying to meet buildout requirements versus purely speculative or frivolous applications.”[23] It is unclear how the BIU benchmark strikes this balance or if it does so effectively.

Another option, and one that the report recommends, is that “[d]eployment requirements could also be restructured into more graduated, measurable steps.” At the same time, the Commission could require that larger “performance bonds [be] structured to release funds as verified buildout milestones are met [to] reinforce deployment incentives.”[24] If necessary, “[e]xtensions would only be granted for deployment requirements in extenuating circumstances.”[25]

5. Earth Station Light-Licensing and Database Coordination Will Accelerate Deployments

The NPRM proposes shifting to a nationwide, non-site licensing of fixed earth stations.[26] This is a welcome reform. As the report recognizes, “[a]s LEO constellations scale, gateway siting and authorization have become a key bottleneck. . . . through the FCC’s traditional process.”[27] In alignment with the NPRM’s view, the report notes that “[i]ntegrating satellite [earth stations] into [a] database-coordination could streamline the process, enabling faster, scalable NGSO-gateway deployments; reduce the burden of application development and processing on satellite operators and FCC staff; and help facilitate coexistence between terrestrial and satellite systems.”[28]

A reference framework is already available. As the report offers:

[The Commission] could also leverage the FCC’s existing 70/80/90 GHz lightweight coordination database, which for many years has successfully coordinated terrestrial fixed links (and, now, high-altitude platform links) operating in the 71–76, 81–86, and 92–95 GHz bands. This existing model allows for rapid, relatively easy registration and interference checking through third-party coordination without a full Part 25 review. This model is well-suited for sharing between satellite and terrestrial users, such as in the lower 37 GHz band, where the FCC has already requested comment on moving to a “lightly licensed” and automated coordination of terrestrial fixed and mobile network siting.

[1] In re Space Modernization for the 21^st Century, SB Docket No. 25-306, at ¶ 2 (rel. Oct. 29, 2025) (“NPRM”).

[2] Low Earth Orbit Satellites: Policies to Promote Spectrum Sharing, Foster Competition, and Close Digital Divides, LEO Policy Working Group, Int’l Ctr. for Law & Econ. & New America, at 2 (Oct. 30, 2025) (“LEO Working Group Report”), https://www.newamerica.org/oti/wireless-future-project/reports/leo-satellites/.

[3] NPRM at ¶ 6.

[4] LEO Working Group Report at 20.

[5] Id. at 21.

[6] NPRM at ¶¶ 14-18.

[7] LEO Working Group Report at 25.

[8] NPRM at ¶¶ 19-23.

[9] LEO Working Group Report at 21.

[10] Id. at 8.

[11] LEO Working Group Report at 25.

[12] NPRM at ¶ 24.

[13] LEO Working Group Report at 28.

[14] Id. n 17.

[15] LEO Working Group Report at 25.

[16] Id. at 26.

[17] LEO Working Group Report at 25.

[18] Id. at 50.

[19] 47 C.F.R. § 25.261.

[20] See In re Revising Spectrum Sharing Rules for Non-Geostationary Orbit, Fixed-Satellite Service Systems, SB Docket No. 21-456, at ¶¶ 51-61 (rel Nov. 15, 2024).

[21] NPRM at ¶¶ 169-74.

[22] LEO Working Group Report at 24.

[23] Id.

[24] LEO Working Group Report at 26.

[25] Id.

[26] NPRM at ¶ 90.

[27] LEO Working Group Report at 27.

[28] Id.

I. Introduction and Overview

The International Center for Law & Economics (ICLE) submits these comments in response to the Federal Communications Commission’s (FCC) notice of proposed rulemaking (NPRM) on advancing internet-protocol (IP) interconnection. ICLE is a nonprofit, nonpartisan research center that promotes the use of law & economics methodologies to inform public policy. ICLE’s work is intended to ensure that competition policy and regulation are grounded in sound economic analysis and promote consumer welfare, particularly in dynamic, technology-driven markets such as media and telecommunications.

The transition to all-IP networks offers substantial benefits for both providers and consumers. Maintaining legacy copper networks imposes significant and growing costs that divert resources away from new services and infrastructure. Copper networks have limited remaining value and require continued investment in aging, active components. By contrast, passive fiber networks cost less to maintain, operate more efficiently, and deliver higher-quality service.

Current FCC rules require incumbent carriers to maintain legacy time-division multiplexing (TDM) switches so that rural and competitive local exchange carriers can continue to serve their customers. These requirements impose real costs. They force incumbents to support obsolete infrastructure, constrain investment in next-generation networks, and ultimately raise prices for consumers. The rules also distort incentives by allowing providers that continue to rely on TDM technology to benefit from intercarrier compensation arrangements, reducing their incentive to upgrade even when doing so would benefit their customers.

For these reasons, the FCC should forbear from applying the Section 251(c)(2) and Section 251(c)(6) interconnection requirements, as proposed in the NPRM. The commission has both the legal authority and a strong policy rationale to adopt these changes. Doing so would remove barriers to investment, accelerate the transition to IP-based networks, and better serve consumers in an increasingly broadband-centric communications market.

II. Advancing IP Interconnection Requires Modernizing Legacy Rules

The FCC has taken several steps to facilitate the transition to IP-based networks. These include eliminating the “functional equivalency” test for replacement services, streamlining the Section 214 discontinuance process, and updating consumer protections, such as requiring providers to offer backup battery options.[1] The commission adopted these reforms to capture the substantial benefits that all-IP networks deliver to both providers and consumers.[2] As the FCC considers changes to its interconnection rules, it should weigh any potential risks against the significant economic and consumer benefits of completing the transition.

A. Dynamic Competition Requires Removing Barriers to IP Transition

In prior comments, ICLE highlighted the dynamic competition that has driven creative destruction in voice markets.[3] As the FCC considers changes to its interconnection rules—particularly their effects on rural and competitive carriers—it should facilitate, not hinder, this process by removing barriers to innovation and market entry.

Dynamic competition analysis treats competition as an ongoing process of innovation and adaptation, not a static comparison among existing providers. New products and services often displace older ones entirely, delivering better performance and greater value to consumers.[4] This perspective encourages regulators to look beyond today’s market participants and consider how emerging technologies can replace legacy offerings.

Voice markets illustrate this dynamic clearly. Mobile and voice-over-internet-protocol (VoIP) services have largely replaced traditional switched-access lines, increasing competition and improving consumer welfare.[5] Yet in this proceeding, the FCC is considering rules that would effectively prevent carriers from completing the transition to all-IP networks simply because some competitors choose not to upgrade. While the commission should carefully assess the effects of any rule changes, it should do so with the understanding that modern IP-based voice and data services can fully replace legacy landline communications—and will continue to do so until the next technological shift occurs.

B. Retiring Copper Networks Unlocks Cost Savings and Investment

Transitioning to all-IP networks will significantly reduce operating costs and free resources for greater investment and expanded coverage. The largest savings come from replacing legacy copper infrastructure with fiber.[6]

Copper networks rely on electrically powered equipment distributed throughout neighborhoods to maintain signal quality.[7] Data travels through copper as electrical pulses, and resistance in the wire degrades the signal over distance. To compensate, providers must deploy repeaters, amplifiers, remote terminals, and TDM switches to clean and retransmit the signal.[8] These active components drive up maintenance, power, and labor costs.

Fiber networks operate differently. They rely primarily on passive infrastructure between the central office or interconnection point and the customer’s premises.[9] Fiber transmits data as pulses of light, which travel much longer distances without signal degradation. Aside from equipment at the central office and the customer’s modem, fiber networks require little powered infrastructure in the field.

This shift reduces operating expenses in several key ways. First, fiber networks cost less to maintain than aging copper systems, which depend on numerous active components and a shrinking pool of specialized technicians.[10] Second, fiber networks consume far less electricity because they eliminate power-hungry TDM switches and neighborhood-level electronics.[11] Third, IP networks allow providers to bypass large central offices filled with copper termination and switching equipment, enabling consolidation and lower real-estate costs. Finally, copper networks face frequent theft and vandalism, forcing providers to replace facilities more often;[12] fiber infrastructure is far less vulnerable.

The transition to IP networks also reduces costs by eliminating the need to operate parallel systems. Until full IP migration is achieved, providers must maintain both circuit-switched networks for voice and packet-switched networks for data.[13] Running dual networks requires separate technical expertise, supply chains, and power arrangements. Rules that force providers to retain TDM switches for interconnection prevent full network convergence and lock in unnecessary costs.

Beyond cost savings, IP and fiber networks strengthen competition. Higher bandwidth and improved service quality increase average revenue per user and reduce customer churn.[14] As competitors migrate to fiber and modern cable platforms, retaining legacy voice infrastructure puts providers at a competitive disadvantage.

Finally, retiring copper networks creates additional value. Providers can recover revenue through copper salvage, helping offset removal costs and further encouraging network upgrades in more communities.

C. IP Networks Deliver Clear Consumer Benefits

The benefits providers gain from transitioning to IP networks flow directly to consumers through broader coverage, better service quality, and lower costs.

IP-based networks deliver greater reliability than legacy TDM systems. Aging copper lines are highly sensitive to rain, humidity, and temperature changes, which introduce noise and degrade service quality.[15] Fiber networks transmit signals as light and rely on far fewer active components. As a result, environmental conditions that disrupt copper networks do not impair call quality on fiber-based IP networks.[16]

IP networks also offer higher call quality. Copper systems compress audio into narrow channels, while IP networks support wideband audio that provides greater clarity and more natural sound.[17] Clearer calls particularly benefit consumers who are hard of hearing or who struggle to understand speakers with strong accents.[18] In addition, deploying fiber enables providers to offer advanced data services that copper networks cannot support.

As the NPRM recognizes, IP networks also play a critical role in combating robocalls.[19] Robocalls remain the FCC’s top consumer complaint, and effective implementation of STIR/SHAKEN requires IP-based infrastructure.[20] STIR/SHAKEN attaches an encrypted digital signature to calls to verify caller identity. When verification fails, providers can label calls with a spam-risk warning.[21] TDM networks cannot carry these signatures, and even a single TDM hop can strip the authentication information. As long as legacy copper networks remain in service, robocallers can exploit them to evade detection and make their traffic appear legitimate.

D. Current Interconnection Rules Block Full IP Transition

To realize the full benefits of all-IP networks, providers must retire large, energy-intensive TDM switches and replace them with more efficient IP equipment. As the FCC notes, however, many competitive local exchange carriers (CLECs) and rural local exchange carriers (RLECs) still rely on copper-based TDM networks to complete calls.[22] While these carriers can interconnect with IP networks, current rules effectively prevent incumbent local exchange carriers (ILECs) that have migrated to IP from fully retiring their legacy copper infrastructure.

Under the existing framework, ILECs must maintain media gateways to convert IP calls for delivery to TDM networks. These gateways are costly to operate and retain many of the same inefficiencies as legacy systems, including high power consumption and the need to maintain large central offices for interconnection.

The core problem is not simply that ILECs must keep some conversion equipment, but how much of it they must maintain. Legacy copper networks interconnected at the local loop, requiring hundreds of local switches and offering competitors many points of interconnection. By contrast, an all-IP network can replace hundreds of local switches with a single regional IP router.[23] If the FCC preserves the current rules, it will force ILECs to maintain extensive copper infrastructure even in markets where they have already deployed fiber to every home.[24]

As the commission considers rule changes and potential forbearance in this proceeding, it should weigh the transitional costs to CLECs and RLECs against the substantial efficiency gains for ILECs and the broader communications network. Allowing full IP transition would reduce unnecessary costs, accelerate modernization, and better serve consumers across the network.

E. Intercarrier Compensation Rules Distort Investment Incentives

Current interconnection rules do more than impose costs on ILECs that have transitioned to IP networks. They also encourage CLECs and RLECs to retain legacy copper systems that deliver little value to consumers. Many of these carriers rely on higher per-minute access charges available under TDM-based intercarrier compensation rules.[25] Those rules treat local and long-distance calls differently and pay higher compensation for terminating long-distance traffic.

In an all-IP environment, the distinction between local and long-distance calls disappears. IP networks support a “bill-and-keep” framework, under which providers recover costs directly from their own customers rather than through per-minute termination charges.[26] This model aligns incentives toward efficiency, investment, and consumer value.

If the FCC’s goal is to deliver better service at lower cost, its rules should encourage network upgrades rather than regulatory arbitrage that extracts rents and creates deadweight loss. The current framework effectively requires ILECs to subsidize CLECs’ and RLECs’ decisions to delay modernization.

Forbearance from Section 251(c)(2) would correct these incentives. CLECs and RLECs would either need to upgrade their networks to IP or operate their own gateways to convert TDM traffic before interconnecting with ILEC IP networks. Without the ability to rely on intercarrier compensation arbitrage, carriers would face stronger incentives to transition to IP, accelerating modernization across the network and ultimately benefiting consumers.

III. Weighing Transitional Costs Against the Benefits of IP Interconnection

Rule changes that allow providers to retire TDM switches will impose transition costs on carriers that still rely on legacy infrastructure to serve their customers. As the FCC considers forbearance from its interconnection rules, it should weigh these transitional costs against the substantial economic and consumer benefits of completing the shift to IP-based networks.

A. Who Should Bear the Costs of TDM–IP Interconnection?

The central issue in this proceeding is how to allocate the costs of interconnecting legacy TDM networks with all-IP networks. Under the current rules, ILECs that have upgraded to fiber-based IP networks effectively subsidize CLECs and RLECs by maintaining multiple TDM tandem switches to support legacy interconnection.

If the FCC adopts the proposed forbearance, those costs would shift to CLECs and RLECs. Without a continuing duty to interconnect “at any technically feasible point,” ILECs could retire legacy TDM switches and rely instead on a smaller number of regional IP routers. This change would affect CLECs and RLECs in two ways: it would limit their ability to rely on TDM-based intercarrier compensation, and it would encourage them to upgrade their own networks to reach IP interconnection points that may sit farther from existing TDM facilities.

Higher costs for CLECs and RLECs following these rule changes would not mean that the rules themselves caused those costs, nor would they justify requiring ILECs to subsidize continued reliance on legacy technology. Market forces are driving the transition to IP networks because they offer clear efficiency and consumer benefits. Carriers that choose not to upgrade make a business decision, but other providers should not bear the cost of that choice.

B. Managed IP Networks Ensure Voice Quality and Reliability

The NPRM raises concerns that voice traffic routed over the public internet could suffer degradation under a “best-efforts” quality-of-service model, particularly during congestion or outages. Those concerns, while understandable, overstate the practical risks.

First, most IP voice traffic does not traverse the open public internet. Carriers typically transport calls over private, managed fiber-backhaul networks using multiprotocol label switching (MPLS).[27] These networks incorporate high redundancy and reliability standards and often deliver better call quality than legacy copper-based systems. Beyond individual carrier networks, the industry has coordinated interconnection through common technical standards, most notably IP Exchange (IPX).[28] IPX functions as a global private interconnection framework that allows carriers to interconnect through highly reliable hubs, rather than negotiate bilateral peering arrangements. Where call quality and reliability matter, carriers can and do enforce performance through contractual commitments.

Second, IP networks allow operators to prioritize traffic based on use case.[29] Under the current Title I framework, providers can offer specialized services that give voice traffic higher priority when needed. This capability ensures that time-sensitive communications, such as voice calls, receive appropriate treatment without degrading overall network performance.

Third, forbearance would improve public-safety communications. Allowing full transition to IP networks would extend the reliability and quality of IP-based communications to public-safety calls. Improved call quality can have direct, positive effects for consumers and first responders alike. As the NPRM notes, Next Generation 911 (NG911) relies on IP-based architecture and Session Initiation Protocol (SIP), not legacy circuit switching.[30] Carriers that delay network upgrades risk limiting the effectiveness and functionality of NG911 services.

IV. Forbearance from Legacy Interconnection Rules Is Consistent with the Telecommunications Act

Section 10 of the Telecommunications Act directs the FCC to forbear from applying statutory requirements when specific conditions are met. The act provides that the FCC shall forbear if it determines that:

(1) enforcement of the requirement is not necessary to ensure that the charges, practices, classifications, or regulations by, for, or in connection with that telecommunications carrier or telecommunications service are just and reasonable and are not unjustly or unreasonably discriminatory; (2) enforcement of that requirement “is not necessary for the protection of consumers”; and (3) forbearance from applying such provision or regulation is consistent with the public interest.[31]

The FCC’s forbearance authority does not operate in isolation. Section 706 further instructs that “[t]he Commission … shall encourage the deployment on a reasonable and timely basis advanced telecommunications capability to all Americans.”[32] Section 706 thus provides the proper framework for evaluating forbearance. The commission should remove outdated regulatory requirements that impede innovation and delay the deployment of advanced services, including IP-based voice networks.

Forbearance from Section 251(c)(2) and relevant portions of Section 251(c)(6) satisfies these statutory standards.

A. COMPTEL Confirms Forbearance Is Appropriate in Competitive Voice Markets

The first prong of the forbearance analysis focuses on preventing market-power abuse and protecting competition. COMPTEL v. FCC provides useful guidance.[33] In that case, as in this proceeding, the court reviewed forbearance from Section 251 obligations—specifically requirements related to leasing network elements to CLECs and “avoided-cost resale.”[34] Congress adopted those provisions to promote competitive entry into telecommunications markets.

The court concluded, however, that market conditions had changed. ILECs compete vigorously for voice services in a national market, and any advantage from legacy copper infrastructure is “of rapidly declining importance.”[35] As a result, the court rejected the notion that continued regulatory obligations were necessary to constrain market power.

The concern raised by opponents of forbearance from Section 251(c)(2) does not rest on a credible risk that ILECs will exploit market power to extract supracompetitive rents from CLECs or RLECs. Instead, the concern is that CLECs and RLECs will lose access to subsidized interconnection with a larger legacy voice network. As the court explained, “it is myopic to look at the incumbents’ possession of copper loops as giving them meaningful market power in the national voice market,” and there is no sound economic justification for forcing incumbents to provide legacy facilities to competitors at subsidized rates.[36] While the interconnection obligations at issue here do not impose explicit price subsidies, they function in much the same way by requiring ILECs to support CLECs’ and RLECs’ continued reliance on obsolete TDM infrastructure.

The court also confirmed that the FCC may reasonably rely on a national market perspective when making national policy. As it explained, although competitive alternatives may be less robust in isolated geographic areas, the commission is not required to assess market power on a locality-by-locality basis when adopting nationwide rules.[37] That reasoning applies here. The FCC is setting national policy to encourage deployment of advanced telecommunications capabilities, and a national market framework provides an appropriate and reasonable basis for its forbearance analysis.

B. Forbearance Promotes Consumer Welfare

The second prong of the forbearance analysis focuses on consumer protection. Forbearance from the FCC’s interconnection rules would not harm consumers; it would benefit them.

As discussed above, current interconnection requirements force ILECs to maintain legacy TDM-based voice networks to support interconnection with CLECs and RLECs. These obligations impose significant costs on ILECs, and those costs ultimately fall on consumers.

First, legacy interconnection rules impose technical constraints that limit the benefits of all-IP networks, particularly in areas where voice traffic still travels over copper facilities. TDM networks require audio to be “down sampled” to narrowband, reducing call quality. Consumers often attribute poor call quality to their provider, which undermines trust and satisfaction. TDM networks also prevent consumers from fully benefiting from IP-based protections, such as STIR/SHAKEN and Rich Call Data, which improve caller identification and reduce unwanted calls. In addition, TDM systems generally do not support end-to-end encryption, limiting the availability of modern privacy and security features.

Second, these requirements divert resources away from investment in advanced telecommunications services that deliver greater value to consumers. Broadband networks support data-intensive applications such as video streaming, gaming, and web access, and IP-based voice networks enable Next Generation 911 (NG911), which does not operate over copper infrastructure. When the FCC requires providers to maintain legacy TDM switches to accommodate carriers that choose not to upgrade, it constrains investment that would otherwise improve service quality, coverage, and reliability for consumers.

Third, forcing carriers to operate parallel legacy and IP networks increases costs that consumers ultimately bear. Allowing the market to converge on a single, more efficient IP standard would reduce operating costs and improve efficiency. In the competitive voice market described in COMPTEL, providers have strong incentives to pass those savings on to consumers through lower prices, improved quality, or both.

C. Public-Interest Analysis Focuses on Competition, Not Competitors

The FCC’s public-interest analysis for forbearance begins with the text of the Telecommunications Act. The act directs the FCC to consider whether forbearance “will promote competitive market conditions, including the extent to which such forbearance will enhance competition among providers of telecommunications.”[38] In this context, the public interest turns on competition—specifically, whether forbearance strengthens competitive conditions.

Modern antitrust law offers useful guidance. The Supreme Court has long distinguished competition from the fortunes of individual competitors.[39] Conduct that disadvantages a particular firm may still promote competition if it improves efficiency, lowers prices, or increases quality. Antitrust analysis therefore evaluates competition through the lens of consumer welfare.

The FCC’s public-interest inquiry should follow the same approach. Forbearance should promote consumer welfare, consistent with Section 706’s directive to encourage the deployment of advanced telecommunications capability. When assessing whether forbearance serves the public interest, the commission should give substantial weight to policies that expand access to modern, IP-based communications services and accelerate network investment.

V. Conclusion

Forbearance from Sections 251(c)(2) and relevant portions of Section 251(c)(6), as proposed in the NPRM, would remove these barriers. Allowing providers to retire obsolete TDM switches would accelerate network modernization, reduce operating costs, and promote efficient interconnection based on IP architecture. As the FCC has recognized, IP-based networks offer superior reliability, improved call quality, stronger robocall mitigation through STIR/SHAKEN, and essential support for next-generation services such as NG911.

Forbearance would also better align regulatory incentives with market realities. Competitive voice markets no longer depend on legacy copper infrastructure, and continued reliance on outdated interconnection mandates risks subsidizing delay rather than encouraging innovation. Carriers that choose to maintain legacy networks may continue to do so, but the FCC should not require other providers to bear the costs of that decision.

Adopting the proposed forbearance would advance the commission’s statutory objectives under Sections 10 and 706 of the Telecommunications Act. It would promote competition, enhance consumer welfare, and encourage the timely deployment of advanced telecommunications capability to all Americans. For these reasons, the FCC should move forward with the proposed forbearance and allow the transition to all-IP networks to proceed.

[1] See Accelerating Wireline Broadband Deployment by Removing Barriers to Infrastructure Investment, Report and Order, Declaratory Ruling, and Further Notice of Proposed Rulemaking, WC Docket No. 17-84 (2017), https://docs.fcc.gov/public/attachments/FCC-17-154A1.pdf; see also Ensuring Continuity of 911 Communications, Report and Order, PS Docket No. 14-147 (Aug. 7, 2015), https://docs.fcc.gov/public/attachments/FCC-15-98A1.pdf.

[2] Statement of Ajit Pai, Accelerating Wireline Broadband Deployment by Removing Barriers to Infrastructure Investment, Report and Order, Declaratory Ruling, and Further Notice of Proposed Rulemaking, WC Docket No. 17-84 (2017), https://docs.fcc.gov/public/attachments/FCC-17-154A1.pdf (“One study found that a package of reforms-including many we adopt today- would make it economically viable for the private sector to deploy fiber to the premises in millions of additional rural locations….The FCC can either strand investments in the modern equivalent of the fax machine, or it can deliver value for consumers, today and tomorrow.”)

[3] Comments of the International Center for Law & Economics, Reducing Barriers to Network Improvements and Service Changes; Accelerating Network Modernization, Docket No. 25-209, Docket No. 25-208 (Aug. 22, 2025), https://laweconcenter.org/wp-content/uploads/2025/08/Comments-on-Copper-Retirement.pdf.

[4] Id. at 2.

[5] Id. at 3-4.

[6] Comments of Corning Inc., Accelerating Wireline Broadband Deployment by Removing Barriers to Infrastructure Investment, WC Docket No. 17-84, Attach. A (Jun. 15, 2017), https://www.fcc.gov/ecfs/document/106151419705353/1 (“All told, copper retirement can result in savings of $45-50 per home passed per year. This too may be conservative, as in 2006 Verizon estimated that in a full decommission scenario they may be able to save $110 of opex per line per year.”)

[7] Paroma Sanyal et al., Economic Benefits of Fiber Deployment, Brattle Group (Nov. 20, 2024), at 20, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5370089.

[8] Operational Expenses for All-Fiber Networks are Far Lower Than for Other Access Networks, Fbr. Broadband Ass’n (Jun. 2020), at 7, https://fiberbroadband.org/wp-content/uploads/2023/03/Access-Network-OpEx-Analysis-White-Paper.pdf (“Fiber OpEx White Paper”).

[9] Sanyal et al., supra note 7, at 5.

[10] Fiber OpEx White Paper, supra note 8, at 8.

[11] Id. at 7-8.

[12] Comments of USTelecom – The Broadband Association, Reducing Barriers to Network Improvements and Service Changes et al., WC Docket No. 25-209 et al. (Sep. 29, 2025), at 17, https://www.fcc.gov/ecfs/document/109291513505400/1.

[13] NPRM at ¶ 13.

[14] FFB Week 44: Two Decades of Broadband Growth: How Fiber is Powering Modern Life, Fbr. Broadband Ass’n (Oct. 29, 2025), https://fiberbroadband.org/2025/10/29/ffb-week-44-two-decades-of-broadband-growth-how-fiber-is-powering-modern-life/#:~:text=Consumers%20consistently%20rank%20fiber%20highest,higher%20average%20revenue%20per%20user.

[15] How Fiber Internet Stays Reliable in Bad Weather Conditions, C Spire (Jan. 2, 2025), https://blog.cspire.com/home-fiber-tv-phone/how-fiber-internet-stays-reliable-in-bad-weather-conditions.

[16] Id.

[17] Williard Joshua Jose, AMRConvNet: AMR-Coded Speech Enhancement Using Convolutional Neural Networks, arXiv (Aug. 2020), at 1, https://arxiv.org/pdf/2008.10233.

[18] Linda Kozma-Spytek & Christian Vogler, Factors Affecting the Accessibility of Voice Telephony for People with Hearing Loss: Audio Encoding, Network Impairments, Video and Environmental Noise, 14 ACM Trans. Access. Comput. 21:30 (Oct. 2021), https://dl.acm.org/doi/epdf/10.1145/3479160.

[19] NPRM at ¶ 14.

[20] CGB – Consumer Complaints Data, FCC Open Data (updated Jan. 14, 2026), https://opendata.fcc.gov/Consumer/CGB-Consumer-Complaints-Data/3xyp-aqkj/about_data; NPRM at ¶ 14.

[21] Comments of Cloud Communications Alliance, Call Authentication Trust Anchor et al., WC Docket No. 17-97 et al. (May 15, 2020), at 2, https://www.fcc.gov/ecfs/document/1051525807181/1.

[22] NPRM at ¶ 12.

[23] Petition of AT&T, AT&T Petition to Launch a Proceeding Concerning the TDM-to-IP Transition at 12 (Nov. 7, 2012), https://www.fcc.gov/ecfs/document/6017153130/1.

[24] Jericho Casper, Twenty-One States Push to Scrap Carrier-of-Last-Resort Laws, Broadband Breakfast (Apr. 11, 2025), https://broadbandbreakfast.com/twenty-one-states-push-to-scrap-carrier-of-last-resort-laws.

[25] Updating the Intercarrier Compensation Regime to Eliminate Access Arbitrage, Report and Order and Modification of Section 214 Authorization, WC Docket No. 18-155 ¶¶ 1-2 (Sep. 27, 2019), https://www.fcc.gov/ecfs/document/0927225032050/4.

[26] Comments of the Digital Progress Institute, In Re Delete, Delete, Delete, GN Docket No. 25-133 (Apr. 14, 2025), at 5, https://www.fcc.gov/ecfs/document/1041199587219/1.

[27] Joseph Gillan & David Malfara, The Transition to an All-IP Network: A Primer on the Architectural Components of IP Interconnection, NRRI 12-05 (May 2012), at 5-6, https://pubs.naruc.org/pub/FA866A60-BB97-47F1-16BE-8520597FF45F.

[28] IP eXchange, GSMA (last visited Jan. 14, 2026), https://www.gsma.com/get-involved/working-groups/networks-group/ip-exchange.

[29] See Restoring Internet Freedom, Declaratory Ruling, Report and Order, and Order, WC Docket No. 17-108 ¶¶ 253–260 (2018), (explaining that bans on prioritization block “efficient pricing” and prevent operators from guaranteeing quality of service (QoS) for latency-sensitive applications, thereby effectively reducing overall consumer welfare.).

[30] NPRM at ¶ 12.

[31] 47 U.S.C. § 160(a).

[32] 47 U.S.C. § 1302.

[33] COMPTEL v. FCC, 978 F.3d 1325 (D.C. Cir. 2020).

[34] Id. at 1328.

[35] Id. at 1332.

[36] Id.

[37] Id.

[38] 47 U.S.C. § 160.

[39] Sam Bowman, The Consumer Welfare Standard: Bringing Objectivity to Antitrust, Int’l Ctr. for Law & Econ. (Feb. 2021), https://laweconcenter.org/wp-content/uploads/2021/02/tldr-Consumer-Welfare-Standard.pdf.

I. Introduction and Overview

The International Center for Law & Economics (ICLE) submits these comments in response to the Federal Communications Commission’s (FCC) notice of proposed rulemaking (NPRM) on the permissive use of the ATSC 3.0 “Next Generation Television” standard.[1] ICLE is a nonprofit, nonpartisan research organization that promotes the use of law & economics methodologies to inform public policy. ICLE’s work is intended to ensure that competition policy and regulation are grounded in sound economic analysis and that they promote consumer welfare, particularly in dynamic, technology-driven markets such as media and telecommunications.

Broadcast television has long played a vital role in American households and communities. As technology evolves, the FCC must ensure that its rules allow broadcasters to improve service quality and respond to changing consumer and community expectations.[2] The commission’s decision to permit a voluntary transition from ATSC 1.0 to ATSC 3.0 reflects this goal and has already enabled broadcasters to begin offering new capabilities and higher-quality service.[3]

ATSC 3.0 offers clear potential benefits. Unlike prior broadcast standards, it combines an internet protocol (IP) based broadcast signal with broadband connectivity. This architecture enables significantly improved audio and video quality, more efficient spectrum use, and more reliable coverage. It also supports interactivity, personalization, targeted advertising, and enhanced emergency alerts through consumers’ broadband connections. At a time when broadcast television faces intense competition from digital alternatives, these features could help broadcasters meet modern consumer expectations and increase the value of advertising-supported services.

Despite these benefits, the voluntary transition to ATSC 3.0 has proceeded slowly. In its recent petition, the National Association of Broadcasters asked the FCC to adopt regulatory changes intended to accelerate adoption, including allowing broadcasters to shut off legacy ATSC 1.0 service. The petition frames this as a “chicken-and-egg” problem: broadcasters hesitate to invest without widespread consumer adoption, while consumers delay purchasing new equipment until broadcasters fully deploy ATSC 3.0.[4]

While these concerns are understandable, the FCC should avoid distorting the market to favor a single set of stakeholders. One straightforward explanation for limited consumer adoption is that, for many households, ATSC 3.0 does not yet deliver enough incremental value to justify the added cost of new equipment. If consumers remain satisfied with ATSC 1.0 service, the case for rapid transition weakens.

The FCC therefore should not mandate adoption. Instead, it should preserve regulatory flexibility that allows broadcasters to manage their services in ways that align with their business models and audience demand. The NPRM’s tentative conclusion to continue a voluntary transition appropriately relies on market signals to determine when and where ATSC 3.0 deployment makes sense.[5]

Where ATSC 3.0 creates sufficient value—whether through improved viewer experiences or more effective advertising—broadcasters will adopt it. Many stations already have done so, either through direct deployment or through shared “lighthouse” arrangements in local markets.[6] Even so, consumer adoption of ATSC 3.0 equipment remains limited, and viewing habits have not shifted in meaningful ways.[7] Broadcasters, not regulators, should bear the responsibility of persuading consumers that the new standard merits investment.

The burden also should not shift to equipment manufacturers. Consumer demand for ATSC 3.0 functionality remains modest, and many television manufacturers therefore continue to exclude ATSC 3.0 receivers from their products.[8] Uncertainty surrounding encryption and the costs associated with compliance further raise barriers to inclusion.[9] Some consumers may rationally prefer lower-cost displays without broadcast tuners at all, relying instead on streaming services or multichannel video providers.

In short, the FCC’s continued commitment to a voluntary, market-driven transition best protects consumer choice and avoids imposing costs that the market has not yet shown a willingness to bear.

A. Preserve a Voluntary Transition by Expanding Regulatory Flexibility

While the FCC should not mandate a transition to ATSC 3.0, it should give broadcasters greater flexibility to manage that transition. The commission can do so through several targeted reforms.

First, the FCC should eliminate the simulcasting requirement. When the commission authorized the voluntary transition to ATSC 3.0, it required broadcasters to continue simulcasting their programming in ATSC 1.0.[10] Because ATSC 3.0 transmission equipment cannot broadcast ATSC 1.0 simultaneously, broadcasters must rely on simulcast arrangements with other stations. These arrangements raise costs and can degrade signal quality, particularly for ATSC 3.0 services.[11] Removing the simulcast requirement would reduce these costs and allow broadcasters to deploy ATSC 3.0 more efficiently. If consumers continue to prefer ATSC 1.0, broadcasters will have strong incentives to maintain simulcasts voluntarily to avoid losing audience share and advertising revenue.

Second, the FCC should eliminate the “substantially similar” programming rule. That rule effectively requires broadcasters to air the same content on both ATSC 1.0 and ATSC 3.0, limiting their ability to experiment with interactive features or application-specific programming that the new standard enables.[12] Greater flexibility would allow broadcasters to differentiate ATSC 3.0 offerings and better demonstrate their value to consumers. Even if ATSC 1.0 service quality declines modestly, consumers could choose whether to upgrade, while those who rely on ATSC 1.0 would continue to receive service.

Finally, the FCC should permit MPEG-4 compression for ATSC 1.0 signals. More efficient compression would mitigate the quality loss associated with “lighthousing” ATSC 1.0 signals and improve overall spectral efficiency. This change would reduce transition costs without forcing consumers or broadcasters into premature adoption of ATSC 3.0.

B. Encryption and Copyright Issues in the ATSC 3.0 Transition

As the industry transitions to ATSC 3.0, copyright protection becomes increasingly important. Content piracy has long challenged broadcasters, and the IP-based architecture of ATSC 3.0 makes unauthorized copying and retransmission easier for bad actors. Congress has already considered proposals that would expand broadband providers’ obligations to identify and remove pirated content, underscoring the salience of these risks.[13]

ATSC 3.0 allows broadcasters to encrypt signals and manage access in ways that can help deter piracy.[14] The FCC should allow the industry to determine how best to deploy these tools. Market incentives already discipline overuse of encryption. If consumer equipment cannot decrypt signals, broadcasters will lose viewers. If certification or licensing requirements raise costs for manufacturers, fewer devices will reach consumers, slowing adoption. A continued voluntary transition works best if FCC rules allow these market forces to balance access, security, and adoption.

If competitive concerns arise from the standards-setting or implementation process, existing antitrust law provides an adequate backstop. The U.S. Justice Department (DOJ) can investigate and, where appropriate, bring enforcement actions. Courts can then assess alleged anticompetitive conduct, alongside any procompetitive justifications, to determine whether the net effect harms competition.

Finally, the use of encryption does not transform ATSC 3.0 into a different category of media for legal or regulatory purposes. Even as distinctions between broadcast and other media platforms continue to blur, broadcasters still transmit signals directly to the public free of charge, and consumers with approved equipment can receive any available signal.[15]

C. Application of Retransmission-Consent Rules to ATSC 3.0

The FCC asks whether retransmission-consent and must-carry obligations should extend to ATSC 3.0 signals.[16] As the record reflects, requiring carriage of ATSC 3.0 would impose significant additional costs on cable operators, while consumer demand for the new standard remains limited.[17] Although uniform application of FCC rules can offer administrative simplicity, the commission should weigh these costs carefully against any potential benefits to consumers and to broadcasters’ transition efforts.

Rather than creating separate retransmission-consent regimes for different technologies, the FCC should consider modernizing its existing rules across platforms. Congress enacted the Cable Act at a time when cable operators were thought to exercise bottleneck control over video distribution.[18] Today, with the growth of internet-based and alternative distribution channels, cable systems no longer hold that position, if they ever did.[19]

While retransmission-consent and must-carry requirements remain statutory, Congress granted the FCC discretion to define and enforce “good faith” negotiation standards, establish collective bargaining mechanisms for smaller multichannel video programming distributors (MVPDs), and prevent coercive contract provisions.[20] The commission could use this authority to update its approach—for example, by strengthening good-faith negotiation requirements or adopting final-offer arbitration—so that broadcast stations negotiate retransmission consent on terms comparable to those faced by other content providers.[21]

D. Improving Spectrum Efficiency Through ATSC 3.0

ATSC 3.0 enables more efficient compression, allowing broadcasters to use spectrum more effectively. Because the primary broadcast stream requires less bandwidth than a station’s licensed allocation, broadcasters gain flexibility to offer additional subchannels, enhanced programming, or new services.[22] If broadcasters identify other innovative ways to use their licensed spectrum, the FCC should support those efforts by granting regulatory flexibility. Doing so will encourage continued gains in spectral efficiency and free additional capacity for expanded programming and other consumer-facing services.

II. Market Realities Support a Voluntary, Consumer-Driven ATSC 3.0 Transition

The FCC rightly proposes to continue a voluntary transition to ATSC 3.0. As a guiding principle, the commission should ensure that its rules allow market forces—not mandates—to drive technological change. Consumers who value ATSC 3.0 will choose to purchase compatible equipment. If they do not, the FCC should not compel them to upgrade.

A. The Modern Media Marketplace Has Changed

Many of the FCC’s broadcast and cable rules reflect market conditions that no longer exist. Broadcast-ownership limits, for example, arose from concerns that limited distribution options would allow a small number of stations to control public access to information.[23] Congress enacted the Cable Act in part because policymakers believed cable operators could act as bottlenecks for video distribution, leaving broadcasters with little leverage in retransmission negotiations.[24]

Today’s media marketplace looks very different. No single technology dominates video distribution, and the internet has sharply reduced barriers to entry for content creators.[25] Nielsen data show that broadcast and cable television together account for roughly 41.6% of viewing time, while streaming services account for about 46.4%. At the same time, no individual streaming service captures more than 13.1 of total viewing, underscoring the competitive and fragmented nature of the market.[26]

Content producers now reach consumers through multiple independent channels. Broadcast networks distribute programming directly through their own streaming platforms. Smaller creators can rely on open platforms such as YouTube or negotiate distribution through virtual MVPDs like Sling TV. These options give content providers far more flexibility and bargaining power than in prior decades.

Consumers likewise enjoy unprecedented choice. Where viewers once had to watch programs at scheduled broadcast times or subscribe to cable for broader access, they can now watch free content on social media and streaming platforms or subscribe to services offering premium television and film libraries. Consumers also increasingly substitute other forms of entertainment—such as video games, podcasts, and interactive media—for traditional broadcast programming.

B. The Role of Consumer Demand in the ATSC 3.0 Transition

Concerns about a “chicken-and-egg” problem in the transition to ATSC 3.0 have some merit.[27] Without access to robust ATSC 3.0 content, viewers have little reason to upgrade their equipment. At the same time, broadcasters hesitate to invest in ATSC 3.0 programming when they lack a sufficient audience, especially while they must continue to simulcast in ATSC 1.0.

That dynamic, however, represents only part of the challenge. Increased competition in the video marketplace further reduces consumers’ incentives to upgrade their broadcast-television equipment. Faced with the choice between upgrading to ATSC 3.0 or losing access to a broadcast channel, many viewers may instead turn to streaming services, online video platforms, or other forms of entertainment. As a result, broadcasters must ensure that ATSC 3.0 delivers enough incremental value to compete with these alternatives. This market discipline ensures that broadcasters adopt the new standard only when it provides consumer benefits sufficient to sustain viewership.

A mandated transition would bypass this market test. For some stations, continued operation under ATSC 1.0 may provide sufficient value to viewers, making an upgrade economically unjustified. If the FCC forces a transition before consumer demand develops, viewers may not follow, and some broadcasters could face significant financial harm. Even with a mandate, consumer adoption is not guaranteed, creating the risk of substantial deadweight loss.

A voluntary transition better aligns incentives. It encourages broadcasters to develop and deploy ATSC 3.0 services that reflect consumer preferences and to demonstrate the value of the new standard to both viewers and device manufacturers. Without a mandate, broadcasters must address concerns about encryption, digital rights management, and equipment certification by offering solutions that are affordable, efficient, and responsive to market demand.

A voluntary approach also encourages broadcasters to use ATSC 3.0 to its full potential. Broadcasters have noted that “lighthousing” often requires additional compression, which can limit ATSC 3.0 functionality and reduce consumer benefits.[28] Combined with reforms to simulcasting rules, a voluntary transition would give broadcasters stronger incentives to deploy ATSC 3.0 in ways that fully realize its technical capabilities—if, and only if, those capabilities deliver meaningful benefits to consumers.

While broadcasters face real challenges, the FCC should not shift the costs of transition onto consumers, particularly where they have not expressed a clear desire to upgrade.

C. Legacy Authority Does Not Justify an ATSC 3.0 Tuner Mandate

Congress granted the FCC authority to require that consumer television equipment include broadcast receivers.[29] The National Association of Broadcasters asks the commission to use that authority to require manufacturers to include ATSC 3.0 tuners in all new television sets.[30]

ATSC 3.0 tuners add meaningful cost to consumer devices, which helps explain why manufacturers continue to prioritize ATSC 1.0 receivers. External ATSC 3.0 tuners typically cost between $80 and $250, compared to roughly $30 to $70 for ATSC 1.0 tuners.[31] To keep prices low, many entry-level and midrange televisions therefore include only ATSC 1.0. The Consumer Technology Association has noted that most televisions on the market still lack ATSC 3.0 tuners and that models including them cost more than 23% more on average.[32] While these price differences may also reflect other premium features, the evidence suggests that consumers who want ATSC 3.0 capability must pay more for it.

Congress enacted the All-Channel Receiver Act in 1962 to address a facially similar concern.[33] At the time, the FCC allocated broadcast frequencies across Very High Frequency (VHF) and Ultra High Frequency (UHF) bands,[34] but consumers hesitated to buy UHF-capable equipment because little UHF programming existed.[35] The statute thus aimed to promote competition, localism, diversity, and consumer choice by ensuring that viewers could receive all broadcast signals.[36]

Those market conditions no longer exist. The logic underlying the FCC’s authority in 1962 does not translate well to today’s media environment.

First, the statute sought to promote competition by enabling smaller and independent stations to reach viewers and compete with the dominant broadcast networks—ABC, CBS, and NBC. Today, improved compression allows broadcasters to carry multiple subchannels, and content producers that wish to avoid large networks can distribute programming through cable channels, virtual MVPDs, or the internet.[37] A mandate requiring ATSC 3.0 tuners could actually serve to push price-sensitive consumers away from broadcast television altogether and toward alternative platforms, undermining competition rather than promoting it.

Second, mandating ATSC 3.0 tuners would do little to advance localism or diversity. Local broadcast stations already reach viewers through ATSC 1.0, and consumers can access that content today. Higher equipment costs could deter some consumers from purchasing televisions with broadcast capability at all, leading them to rely exclusively on streaming or other technologies. Moreover, local news and community content increasingly reach audiences through podcasts, local websites, and social media.[38] A tuner mandate would not meaningfully expand the range of content available to consumers.

A voluntary transition offers a better path to lower costs and broader adoption. One significant barrier to ATSC 3.0 equipment deployment is approval by A3SA, the private entity created by broadcasters and networks to manage the ATSC 3.0 security framework, including encryption and digital-rights-management standards.[39] Those standards have prevented some devices from decoding ATSC 3.0 signals, even when they otherwise functioned effectively.[40] For example, certain network tuners that allow consumers to access broadcast signals throughout the home previously supported ATSC 3.0 but lost that capability after failing to obtain A3SA approval.[41]

A voluntary transition also better aligns incentives for standards bodies to approve devices that pose no consumer harm while continuing to block genuinely problematic ones. Broader device availability would increase competition among manufacturers, lower prices, and expand consumer adoption—outcomes far more likely to advance the goals of the transition than a blanket equipment mandate.

III. Market-Driven Transition Requires Relief from Simulcasting Rules

The FCC correctly declines to mandate a transition to ATSC 3.0. Moreover, the NPRM’s proposals to grant broadcasters additional flexibility will allow market forces to determine the appropriate transition timeline.

Today’s broadcast market effectively requires stations that adopt ATSC 3.0 to continue simulcasting in ATSC 1.0. Advertising provides the primary source of broadcast revenue, and without a sufficient audience capable of receiving ATSC 3.0 signals, an ATSC 3.0–only approach would sharply reduce viewership and advertising value. Without that revenue, many broadcasters could not remain viable.

At the same time, simulcasting imposes significant costs. Because stations cannot transmit ATSC 3.0 and ATSC 1.0 signals from the same facilities, broadcasters must enter channel-sharing arrangements—commonly known as “lighthousing”—to maintain both signals.[42] These arrangements increase operational costs but, to date, have generated little additional revenue. In a highly competitive media marketplace, these added costs further disadvantage broadcasters relative to well-capitalized digital competitors.

More importantly, the FCC’s simulcasting rules actively impede the ATSC 3.0 transition. Lighthousing requires multiple broadcasters to share limited bandwidth, which forces additional compression and reduces signal quality and functionality.[43] In theory, a broadcaster could instead lighthouse its ATSC 1.0 signal. In practice, commission rules require the ATSC 1.0 simulcast to cover the station’s entire community of license and remain substantially similar to the ATSC 3.0 signal.[44] Meeting those requirements through a shared facility would often degrade service quality or reduce coverage, exposing stations to regulatory risk.

As a result, broadcasters have largely been forced to lighthouse their ATSC 3.0 signals. This choice shifts the technical constraints onto the very service meant to showcase the new standard. As the “Future of Television Initiative Report” explains, ATSC 3.0 lighthouses can offer only a limited subset of the standard’s full capabilities.[45] When stations attempt to deploy advanced ATSC 3.0 features, compliance with the “substantially similar” rule becomes even more difficult. Consumers who access ATSC 3.0 today therefore experience only a fraction of its potential benefits, weakening incentives for broader adoption.

The FCC should promote flexibility by eliminating mandatory simulcasting requirements. Paired with the substantial similarity rule, mandatory simulcasting distorts the broadcast market and offers little additional benefit to consumers. Broadcasters should instead retain discretion over whether and how long to simulcast ATSC 1.0.

First, broadcasters will not adopt changes that undermine their own viability. If viewers cannot receive a signal, broadcasters will not make the switch. Eliminating mandatory simulcasting would simply allow stations to retire ATSC 1.0 signals that no longer deliver meaningful value to consumers.

Second, voluntary simulcasting may increase overall consumer welfare even if a small number of viewers do not transition. If ATSC 3.0 meaningfully improves service quality and functionality, the benefits to the vast majority of viewers may outweigh the costs to a shrinking minority, who may turn to other local stations or digital alternatives. Broadcasters—rather than regulators—are best positioned to judge when their communities are ready for that shift.

Third, if the Commission retains any simulcasting requirement, it should ease compliance. Eliminating the substantial similarity rule and allowing more advanced compression for ATSC 1.0 signals would enable broadcasters to preserve legacy service while fully deploying ATSC 3.0. For example, a station that can reach most of its market through a lighthouse could dedicate its primary channel to ATSC 3.0 without having to meet rigid coverage or programming constraints, allowing it to deliver the quality and interactivity needed to drive consumer adoption.

By removing these regulatory barriers, the FCC can best facilitate a successful transition to ATSC 3.0—one guided by consumer demand and competitive conditions, rather than regulatory compulsion.

IV. Allow Market-Driven Use of Encryption and DRM

If the FCC adopts flexible simulcasting rules and maintains a voluntary transition to ATSC 3.0, it should not impose new rules governing encryption or digital rights management (DRM).

Broadcasters today compete directly with a wide range of internet-based services and face growing pressure from digital rivals. Encryption and DRM give broadcasters tools to protect their content and develop new revenue models that can sustain free, over-the-air service. The FCC should allow broadcasters to decide whether and how to deploy these tools.[46]

First, DRM helps prevent unauthorized redistribution of valuable content, including live sports and primetime programming. In 2024, episodic television piracy generated an estimated 96.8 billion visits worldwide, with global digital piracy imposing costs of roughly $75 billion.[47] Cable operators and streaming platforms already rely on DRM to protect their services, while broadcasters historically have lacked comparable tools. ATSC 3.0 closes that gap by limiting unauthorized copying and redistribution and by enabling compliance with licensing requirements imposed by studios and major sports leagues.[48] Without DRM, broadcasters risk losing access to premium content, pushing viewers further toward digital alternatives.

Second, DRM enables technical restrictions that were not possible under ATSC 1.0, such as limits on DVR functionality, commercial skipping, or content-retention periods. Some commenters argue that these capabilities could degrade the user experience or infringe fair use.[49] But broadcasters cannot adopt DRM practices that alienate viewers without harming their own business. If ATSC 3.0 reduces functionality that consumers value, audiences will migrate elsewhere. At the same time, certain restrictions may better support broadcast economics. For example, limiting ad skipping can increase the value of advertising, generating revenue that supports content investment and innovation. Broadcasters, not regulators, are best positioned to strike the appropriate balance between consumer access and economic sustainability.

Claims that DRM necessarily violates fair use also misread relevant precedent. Public Knowledge cites Sony Corp. of America v. Universal City Studios to argue that restricting recording features infringes consumer fair-use rights.[50] But Sony addressed whether a device manufacturer could be held liable for copyright infringement for enabling recording—not whether broadcasters must allow recording in the first place.[51] DRM does not impose liability on device manufacturers and does not require broadcasters to provide any particular functionality. Fair-use doctrine therefore does not compel FCC intervention here.

Third, DRM enables broadcasters to experiment with paywalled or subscription-based content. As consumers increasingly skip or avoid advertisements, ad-supported revenue becomes less reliable. Other media industries have responded by developing subscription models, and broadcasters may need similar flexibility. ATSC 3.0 could support premium or subscription content delivered over broadcast subchannels, or more targeted advertising enabled by secure, internet-connected devices.

Although broadcasting traditionally has been free to consumers, nothing in the public-interest standard requires that it remain so indefinitely. Congress charged the FCC with regulating spectrum in the public interest, not with mandating a particular pricing model. If broadcasters cannot sustain operations, communities lose access to local content altogether. Because ATSC 3.0 remains a broadcast service with limited geographic reach, stations will continue to tailor offerings to local audiences.

If the FCC remains concerned that subscription offerings could blur the distinction between broadcasting and other services, it could require licensees to maintain at least one free, over-the-air primary channel. That approach would preserve the core attributes of broadcast service while allowing broadcasters to use additional subchannel capacity—made possible by improved compression—for optional premium offerings.

Outdated assumptions about broadcast business models risk harming consumers by limiting broadcasters’ ability to compete. The FCC should therefore allow broadcasters the flexibility to deploy encryption, DRM, and new monetization strategies as part of a market-driven transition to ATSC 3.0.

V. Defining ‘Broadcasting’ in the Context of Encrypted ATSC 3.0 Services

The NPRM asks whether the current ATSC 3.0 encryption regime—administered by A3SA and implemented by broadcasters—qualifies as “broadcasting” under the Communications Act.[52] The statute defines broadcasting as the dissemination of radio communications intended for reception by the public. FCC rules further explain that this definition applies to services meant to be received indiscriminately by the public.[53]

The FCC has identified several indicia relevant to that determination. These include whether the service is receivable on a conventional television without requiring a programmer-provided special antenna or signal converter; whether encryption prevents viewers from enjoying the programming without proprietary decoding; and whether the service depends on a private contractual relationship between the provider and the viewer.[54]

A. Encrypted ATSC 3.0 Transmissions Remain ‘Broadcasting’

Some commenters argue that encryption and DRM, as implemented through A3SA, transform ATSC 3.0 into a functionally and legally distinct service from broadcasting. Public Knowledge, for example, contends that ATSC 3.0 requires viewers to use A3SA-certified devices and that this framework imposes technological and contractual barriers inconsistent with what has historically been a free and open medium.[55] On that basis, Public Knowledge claims that encryption and DRM are incompatible with the legal definition of broadcasting as a service to the general public.[56]

These arguments fail for two reasons.

First, encryption and DRM operate as part of the technical standards governing ATSC 3.0–capable equipment, not as station-specific access controls. This requirement is no different in principle from the need to own a television capable of receiving ATSC 1.0 signals. While not all manufacturers may choose to meet A3SA specifications, those that do can produce devices capable of receiving any ATSC 3.0 broadcast. The presence of technical standards does not convert broadcasting into a restricted service.

Second, the contractual arrangements cited apply to broadcasters and device manufacturers, not to viewers.[57] The A3SA broadcaster agreement governs access to security credentials used to encrypt and sign ATSC 3.0 signals.[58] The A3SA adopter agreement governs manufacturers’ access to the credentials needed to decrypt those signals in compliant devices.[59] Neither agreement creates a contractual relationship between broadcasters and consumers. Once a consumer purchases compliant equipment, they may receive any ATSC 3.0 signal without entering into a private contract.

Public Knowledge correctly notes that the FCC has authority to distinguish broadcast from non-broadcast services, citing National Ass’n for Better Broadcasting v. FCC.[60] But that case does not support the conclusion that encrypted ATSC 3.0 transmissions fall outside the definition of broadcasting. NABB addressed subscription-based services that required consumers to pay for access to programming. ATSC 3.0, by contrast, does not require consumers to subscribe or contract with broadcasters to receive signals. As such, encrypted ATSC 3.0 transmissions remain fundamentally different from the services at issue in NABB and continue to meet the statutory definition of broadcasting.

B. Broadcasting Need Not Be Free to Be ‘Public’

Even if ATSC 3.0 broadcasters offer paid services, the FCC retains both the authority and the responsibility to revisit its definition of “broadcasting.” National Ass’n for Better Broadcasting v. FCC relied in part on Chevron deference to uphold the commission’s interpretation of the statute.[61] With Chevron now overruled, courts no longer defer automatically to agency interpretations. In that context, courts could reasonably conclude that the statutory phrase “intended to be received by the public” does not turn on whether programming is funded by advertisers or paid for directly by consumers.[62]

The legislative history of the Radio Act—the predecessor to the Communications Act—supports a broader reading. Congress anticipated the development of subscription-based radio and other future broadcast services. Sen. Clarence Dill (D-Wash.), coauthor of both statutes, emphasized that “legislation [is] imperative if government is to retain jurisdiction over radio transmission in its many present and developing forms.”[63] That principle remains relevant as broadcasting continues to evolve.

ATSC 3.0 represents an advancement in broadcast technology and broadcast business models, not a departure from broadcasting itself. Although the FCC has previously treated paid services as distinct from broadcasting, the statute addresses communications transmitted over the airwaves and intended for reception by the public. It does not require that broadcasting be free of charge, nor does it codify a distinction between advertiser-supported and consumer-paid models.

Requiring broadcasters to rely exclusively on advertising—at a time when advertising revenue increasingly flows to competing digital platforms—could undermine the long-term viability of broadcast service. Such a constraint risks reducing consumer choice as more content migrates to over-the-top alternatives.

VI. MVPD Carriage and Retransmission Consent in the ATSC 3.0 Transition

The transition to ATSC 3.0 raises broader questions about the continued role of MVPD carriage and retransmission-consent rules in a rapidly evolving video marketplace. Any consideration of ATSC 3.0 carriage should occur within a larger reform framework. Absent such reform, the FCC should not extend must-carry or retransmission-consent obligations to ATSC 3.0 signals.

A. Modernizing MVPD Carriage and Retransmission-Consent Rules

The FCC asks whether it should modify MVPD carriage rules in light of proposals to eliminate the ATSC 1.0 simulcasting requirement.[64] Although much of the NPRM focuses on whether to extend mandatory carriage rights to ATSC 3.0 signals, this proceeding—along with related broadcast-reform efforts, such as the quadrennial review—highlights the need for broader reforms to carriage and retransmission-consent rules.

Ongoing reforms to broadcast-ownership limits will inevitably affect retransmission-consent negotiations. Regulation in this area reallocates bargaining power, but that reallocation is not inherently harmful.[65] The relevant question is whether reform increases consumer choice, lowers prices, and improves efficiency.

As the FCC revises broadcast-ownership rules and broadcasters deploy ATSC 3.0 services, the commission should consider broader changes to the carriage and retransmission framework. One option is to sunset retransmission-consent and must-carry obligations altogether. Doing so would treat broadcast programming like other video content, allowing MVPDs to select programming based on consumer demand and market value. Although this approach would present legal and political challenges, it offers the greatest potential to improve consumer welfare.

If the FCC chooses instead to extend carriage or retransmission rules to ATSC 3.0, it should adopt incremental reforms to limit market distortion. These could include strengthening good-faith negotiation requirements, restricting automatic fee-escalation clauses, adopting final-offer arbitration, and implementing targeted arbitration mechanisms to address disputes during high-value programming periods.[66] These measures would preserve the core objectives of the retransmission regime while minimizing distortions as the FCC modernizes broadcast regulation and facilitates the transition to ATSC 3.0.

B. Do Not Extend Must-Carry Obligations to ATSC 3.0

Until the FCC adopts a broader carriage and retransmission-consent framework that reflects today’s media marketplace, it should not extend must-carry obligations to ATSC 3.0 signals. The NPRM asks whether broadcast stations should be allowed to assert mandatory-carriage rights for ATSC 3.0 in light of proposals to eliminate the simulcasting and substantially similar rules. The commission should decline to do so for two reasons. First, mandatory carriage of ATSC 3.0 would require MVPDs to make technical upgrades that increase costs for consumers. Second, the market—not regulation—should determine the value and demand for ATSC 3.0 carriage.

As NCTA explains, mandatory ATSC 3.0 carriage would impose significant technical burdens, including costly system and equipment changes.[67] Broadcasters may use ATSC 3.0 to deliver enhanced audio and video features that many existing cable set-top boxes do not support.[68] Carriage could also require additional bandwidth, straining cable systems and increasing the risk of service disruptions, consumer confusion, and degraded performance.[69] MVPDs would ultimately pass these costs on to subscribers, either through higher prices or reduced service quality. Faced with those tradeoffs, some consumers may abandon MVPD services altogether, weakening competition in the video marketplace.

More fundamentally, if the FCC allows broadcasters to transition to ATSC 3.0 based on market demand, it should also allow market forces to determine whether MVPDs carry ATSC 3.0 signals. Consumers value access to broadcast programming, but ATSC 3.0 carriage may impose additional costs on MVPD subscribers. If consumers do not value those features, the FCC should not force them to pay for them. Conversely, if consumers value ATSC 3.0 enough to justify the cost, MVPDs will have strong incentives to make the necessary investments. Extending must-carry to ATSC 3.0 would short-circuit that market test and risk distorting outcomes to the detriment of consumers.

VII. Broadcast Spectrum Should Serve Its Highest-Value Use

The FCC seeks comment on the appropriate use of broadcast spectrum in the ATSC 3.0 era.[70] Some commenters express concern that ATSC 3.0 allows broadcasters to devote a substantial portion of their licensed bandwidth to data-based services at the expense of the primary broadcast feed.[71] The commission has also stated that the fundamental use of television broadcast spectrum is to provide free, over-the-air television service, and it asks how much capacity stations should reserve for that purpose after transitioning to ATSC 3.0.

This framing assumes that free, over-the-air broadcasting represents the primary and best use of broadcast spectrum. Broadcast television undoubtedly provides value to local communities. But dedicating spectrum to free television necessarily forecloses alternative uses that may generate greater consumer benefits. The relevant question is not whether free broadcasting has value, but whether it represents the highest-value use of that spectrum in all circumstances.

If a broadcaster can deliver greater value by using part of its licensed capacity for nonbroadcast services, the FCC should allow that flexibility rather than impose arbitrary capacity limits. Doing so would enable broadcasters to maximize consumer value and would encourage more efficient use of scarce spectrum resources. At a minimum, the commission should require only that each station provide a single free, over-the-air broadcast stream, while allowing licensees discretion over how they use the remainder of their allocated bandwidth.

Technical constraints may limit the viability of alternative services in some cases, and many broadcasters will continue to prioritize traditional free television. But the FCC should not predetermine outcomes that the market can resolve. While the FCC must protect licensees from harmful interference, it should otherwise grant broadcasters the flexibility to deploy their spectrum in its highest and best use.

VIII. Conclusion

The FCC should continue to pursue a voluntary, market-driven transition to ATSC 3.0 while removing regulatory barriers that slow adoption and limit consumer benefits. In particular, the FCC should end mandatory simulcasting and the related “substantially similar” requirements, which impose significant costs, constrain ATSC 3.0 functionality, and dilute the very features that could make the new standard valuable to viewers. Allowing broadcasters to decide when and how to transition—based on audience demand, competitive conditions, and local market needs—will better align incentives and promote efficient investment.

A flexible approach also recognizes the realities of today’s media marketplace. Broadcasters compete not only with one another, but with streaming platforms, social media, and other digital services that face far fewer regulatory constraints. Rules that force broadcasters to maintain legacy services, limit spectrum use, restrict encryption and monetization strategies, or mandate carriage and equipment adoption risk pushing consumers toward those alternatives rather than preserving free, over-the-air television.

The FCC should therefore resist mandates that shift transition costs onto consumers, MVPDs, or equipment manufacturers, and instead allow market signals to guide adoption. Where consumer demand exists, broadcasters will deploy ATSC 3.0, manufacturers will supply compatible devices, and MVPDs will carry new services. Where demand does not exist, regulation should not compel investment that consumers have not chosen to make.

By focusing on flexibility rather than prescription, the FCC can facilitate a successful ATSC 3.0 transition that preserves local broadcasting, encourages innovation, and maximizes the value of broadcast spectrum, all without distorting markets or undermining consumer choice.

[1] Authorizing Permissive Use of the “Next Generation” Broadcast Television Standard, Further Notice of Proposed Rulemaking, GN Docket No. 16-142 (2025), https://docs.fcc.gov/public/attachments/DOC-415053A1.pdf (“NPRM”).

[2] 47 U.S.C. § 303.

[3] ATSC 3.0 Is Now On-The-Air in 45 Markets, Reaching More than 40% of U.S. TV Viewers. 70 Television Models Now Come Equipped with NEXTGEN TV Electronics, and More Are on the Way, Adv. Television Sys. Comm. (2022), https://www.atsc.org/wp-content/uploads/2022/02/ATSC-CES-Market-Map-web.pdf.

[4] Authorizing Permissive Use of the “Next Generation Broadcast Television Standard,” Petition for Rulemaking, GN Docket No. 16-142 (Feb. 26, 2025), https://nab.org/documents/newsRoom/pdfs/Petition_for_Rulemaking_ATSC3.pdf (“NAB Petition”).

^[5] NPRM at 14.

^[6] NPRM at 16.

^[7] The Future of Television Initiative Report, at 5–6, GN Docket No. 16-142 (Jan. 17, 2025).

^[8] Id. at 5.

^[9] Letter from Alisa Valentin, Broadband Policy Director Public Knowledge, Authorizing Permissive Use of the “Next Generation” Broadcast Television Standard, GN Docket No. 16-142 (Oct. 20, 2025), https://www.fcc.gov/ecfs/document/1020046267433/1.

^[10] 47 C.F.R § 73.3801(b).

^[11] NAB Petition at n. 24.

^[12] Id. at 11.

^[13] Foreign Anti-Digital Piracy Act, H.R. 791, 119th Cong. (2025), https://www.congress.gov/bill/119th-congress/house-bill/791/text#:~:text=Introduced%20in%20House%20(01%2F28,Ms.; Block Bad Elec. Art & Recording Distribs. Act of 2025 (discussion draft released Jul. 30), https://www.tillis.senate.gov/services/files/24A0311C-E658-4440-A259-AA8A876115E6.

^[14] Paving the Way for Enhanced Security, ATSC 3.0 Sec. Auth. (last visited Jan. 8, 2026), https://a3sa.com.

^[15] 47 C.F.R. § 2.1(c).

^[16] NPRM at ¶ 44-57.

^[17] Comments of NCTA – The Internet & Television Association, Authorizing Permissive Use of the ”Next Generation” Broadcast Television Standard, at 9-17, GN Docket No. 16-142 (May 7, 2025), https://www.fcc.gov/ecfs/document/10508334120287/1.

^[18] Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385, 106 Stat. 1460 (codified as amended in scattered sections of 47 U.S.C.).

^[19] Eric Fruits, Geoffrey A. Manne, & Kristian Stout, Broadcast Ownership, Retransmission, and the Case for Comprehensive Reform, Int’l Ctr. for Law & Econ. (Nov. 18, 2025), https://laweconcenter.org/resources/broadcast-ownership-retransmission-and-the-case-for-comprehensive-reform.

[20] Id.

^[21] Id.

^[22] Promoting Broadcast Internet Innovation through ATSC 3.0, Report and Order, MB Docket No. 20-145 para. 4 (Dec. 10, 2020), https://docs.fcc.gov/public/attachments/FCC-20-181A1.pdf.

^[23] Ben Sperry, First Amendment Jurisprudence Should Reflect Economic Reality: Why Red Lion and Pacifica Must Fall, Truth on the Mkt. (Oct. 14, 2025), https://truthonthemarket.com/2025/10/14/first-amendment-jurisprudence-should-reflect-economic-reality-why-red-lion-and-pacifica-must-fall.

^[24] See Fruits, Manne, & Stout, supra note 19.

^[25] See Comments of the International Center for Law and Economics, FCC Quadrennial Regulatory Review of Broadcast-Ownership Rules, MB Docket No. 22-459 (Dec. 17, 2025), https://laweconcenter.org/wp-content/uploads/2025/12/FCC-Broadcast-Ownership-NPRM-2025.pdf.

^[26] See Comments of the International Center for Law and Economics, FCC Quadrennial Regulatory Review of Broadcast-Ownership Rules, MB Docket No. 22-459 (Dec. 17, 2025), https://laweconcenter.org/wp-content/uploads/2025/12/FCC-Broadcast-Ownership-NPRM-2025.pdf.

[27] NPRM at n. 106.

[28] Rick Ducey, ATSC 3.0’s Road from Lighthouse to Cutover: Discussion with NAB’s Lynn Claudy on Leading Local Insights Podcast, BIA Advis. Svcs. (Mar. 14, 2023), https://www.bia.com/blog/atsc-3-0s-road-from-lighthouse-to-cutover-discussion-with-nabs-lynn-claudy-on-leading-local-insights-podcast (“If you have five broadcasters that want to participate, and only one lighthouse in the market, that means each broadcaster only gets access to essentially 20% of the data rate of that channel. And that’s going to be true until we can turn off what I sometimes call POD TV, or Plain Old DTV. This leads to the issue of when you can turn off ATSC 1.0 and not have mass viewer disenfranchisement, and how do you make sure no viewer is left behind. When you can get rid of ATSC 1.0 television, then each station gets their own six MegaHertz channel. Then they can have all the flexibility of ATSC 3.0 and all the data rate that the channel is capable of, for their own station. The implications of this for the services that are available currently, are that it’s really hard to support things like 4K, Ultra HDTV, for example, because stations are sharing their data capacity, and 4K takes up a lot of data space.”)

[29] All-Channel Receiver Act, Pub. L. No. 87-529, 76 Stat. 150 (1962) (codified as amended at 47 U.S.C. § 303(s)).

[30] NAB Petition at 17.

[31] Jim Kimble, ATSC 3.0 (NextGen TV): What It Is and Whether It’s Worth It, Antenna Land (Jul. 8, 2025), https://www.antennaland.com/what-is-nextgen-tv-should-you-try-it/#:~:text=ATSC%203.0%20is%20not%20backward,There’s%20Still%20Time%20to%20Wait.

[32] Comments of Consumer Technology Association, Authorizing Permissive Use of the “Next Generation” Broadcast Standard, MB Docket No. 16-142 (May 7, 2025), https://www.fcc.gov/ecfs/document/10507299146733/1.

[33] 47 U.S.C. § 303(s).

[34] Thomas W. Hazlett, The U.S. Digital TV Transition: Time to Toss the Negroponte Switch? (AEI-Brookings Joint Ctr. for Regul. Stud. Working Paper No. 01-15, Nov. 2001), at 27-28, https://ssrn.com/abstract=294206.

[35] Id.

[36] Id.

[37] Jon Lafayette, Diginets’ Future May Just Be Now, Next TV (Feb. 9, 2015), https://www.nexttv.com/news/diginets-future-may-just-be-now-137823.

[38] See Comments of the International Center for Law and Economics, FCC Quadrennial Regulatory Review of Broadcast-Ownership Rules, MB Docket No. 22-459 (Dec. 17, 2025), https://laweconcenter.org/wp-content/uploads/2025/12/FCC-Broadcast-Ownership-NPRM-2025.pdf.

[39] Matthew Keys, Broadcast Group, SiliconDust Trade Blame Over NextGen TV DVR Issue, TheDesk.net (Jul. 21, 2025), https://thedesk.net/2025/07/silicondust-pearl-tv-hdhomerun-atsc-3.

[40] Comments of Public Knowledge, Petition for Rulemaking and Future of Television Initiative Report Filed by the National Association of Broadcasters, at 3, MB Docket No. 16-142 (May 7, 2025), https://www.fcc.gov/ecfs/document/105071750416733/1.

[41] Jared Newman, NextGen TV’s DRM Puts Future of the Over-the-Air DVR in Doubt, TechHive (Jul. 28, 2023), https://www.techhive.com/article/2009693/nextgen-tv-drm-puts-future-of-the-over-the-air-dvr-in-doubt.html.

[42] Next Generation Television (ATSC 3.0) Station Transition Guide, Nat’l Ass’n Broad. (2020), https://www.atsc.org/wp-content/uploads/2020/05/NAB-ATSC-3.0-Guide_Final.pdf.

[43] Ducey, supra note 28.

[44] 47 C.F.R. § 73.3801(b)(1), (f)(5).

[45] The Future of Television Initiative Report, at 18, GN Docket No. 16-142 (Jan. 17, 2025).

[46] Comments of Sinclair Inc., Authorizing Permissive Use of the “Next Generation” Broadcast Television Standard, at 12, GN Docket No. 16-142 (May 7, 2025), https://www.fcc.gov/ecfs/document/1050739202137/1.

[47] What 216 Billion Visits to Piracy Sites Reveal About Global Media in 2024, MUSO (Jun. 12, 2025), at 2, https://www.muso.com/blog/what-216-billion-visits-to-piracy-sites-reveal-about-global-media-in-2024.

[48] George Winslow, Securing the Future of Broadcast TV in the U.S., tvtech (Dec. 9, 2025), https://www.tvtechnology.com/news/securing-the-future-of-broadcast-tv-in-the-u-s.

[49] See, e.g., Comments of Manoj George, Authorizing Permissive Use of the “Next Generation” Broadcast Television Standard, at 12, GN Docket No. 16-142 (Dec. 29, 2025), https://www.fcc.gov/ecfs/search/search-filings/filing/12290840709265.

[50] Public Knowledge, supra note 40 at 18.

[51] See Sony Corp. of America v. Universal City Studios, 464 U.S. 417 (1984).

[52] NPRM at ¶ 37.

[53] 47 U.S.C. § 153(6)-(7); Subscription Video, 52 Fed. Reg. 6123, 6153 (1987), aff’d sub nom. Nat’l Ass’n for Better Broad. v. FCC, 849 F.2d 665 (D.C. Cir. 1988).

[54] Authorizing Permissive Use of the “Next Generation” Broadcast Television Standard, Report and Order and Further Norice of Proposed Rulemaking, GN Docket No. 16-142 ¶ 9 (Nov. 16, 2017), https://docs.fcc.gov/public/attachments/FCC-17-158A1.pdf.

[55] Public Knowledge, supra note 40 at 23.

[56] Id.

[57] Id.

[58] Security Systems for NextGen TV Broadcasts: Executive Summary, A3SA (Mar. 24, 2022), at 1, A3SA.com.

[59] Id. at 2.

[60] 849 F.2d 665 (D.C. Cir. 1988).

[61] See id. at 668.

[62] 47 U.S.C. § 153(7).

[63] 67 Cong. Rec. 12,351 (1926) (statement of Sen. Dill), https://www.congress.gov/bound-congressional-record/1926/06/30/senate-section.

[64] NPRM at ¶ 44.

[65] Fruits, Manne, & Stout, supra note 19.

[66] Id.

[67] Comments of NCTA – The Internet & Television Association, Authorizing Permissive Use of the “Next Generation” Broadcast Television Standard, at 2, GN Docket 16-142 (May 7, 2025), https://www.fcc.gov/ecfs/document/10508334120287/1.

[68] Id. at 11.

[69] Id. at 14.

[70] NPRM at ¶ 68.

[71] Id.

I. Introduction and Summary

The International Center for Law & Economics (ICLE) submits these comments in response to the Federal Communications Commission’s (FCC) notice of proposed rulemaking (NPRM) on rules to streamline wireless broadband deployment.[1] ICLE is a nonprofit, nonpartisan research organization that applies law & economics methodologies to inform public policy, with the goal of promoting competition and consumer welfare in dynamic, technology-driven markets, including telecommunications.

The FCC has made substantial progress in reducing regulatory burdens on broadband providers and encouraging investment in next-generation networks.[2] These reforms have been especially important as wireless providers upgrade and densify their networks through both small wireless facilities and macro-cell deployments using mid-band spectrum. Nevertheless, existing rules do not fully address the continued use of state and local permitting processes to delay or effectively block network deployment and densification. Given current spectrum constraints, such barriers impede timely 5G deployment and risk harming consumer welfare and U.S. competitiveness.

As the FCC considers rule changes in this proceeding, it should focus on reducing both the direct and indirect costs that state and local permitting authorities impose on collocations, infrastructure modifications, and new deployments.[3] In particular, the commission should: (1) codify the concealment-element interpretations adopted in the 2020 Declaratory Ruling to ensure that aesthetic considerations only limit modifications that would defeat true stealth designs; and (2) extend the shot clocks and fee caps applicable to small wireless facilities to macro-cell sites supporting mid-band operations.

Congress expressly directed the FCC to preempt state and local actions that prevent the provision of personal wireless services.[4] Modern wireless networks require substantial investment to upgrade equipment and densify coverage in order to make efficient use of limited spectrum resources.[5] By lowering unnecessary regulatory costs and delays, the commission can enhance the incentives for investment directly and accelerate deployment.[6] Accordingly, the FCC should adopt the proposed reforms to prevent state and local measures that impose unjustified costs, delays, or prohibitions on wireless deployment.

II. Wireless Deployment Progress and the Remaining Barriers to Densification

The FCC’s prior wireless infrastructure reforms were premised on widespread deployment of small wireless facilities to support the transition from 4G to 5G.[7] Although significant progress has been made, network densification has not yet reached early industry expectations, for a variety of technical and economic reasons.[8] As the commission considers rule changes in this proceeding, it should not lose sight of that original objective or interpret the pace of deployment to date as a policy failure. Rather, the FCC should continue to promote a regulatory environment that enables network upgrades consistent with technical and economic realities, so that providers can meet growing consumer demand for wireless services.

A. Non-Permitting Cost Drivers Continue to Constrain Small-Cell Deployment

The FCC’s permitting reforms have significantly reduced deployment costs, particularly for small wireless facilities. Permitting costs, however, represent only one component of total deployment expenses. A range of non-permitting cost drivers continues to constrain network densification. While the commission cannot eliminate these costs entirely, it can adopt targeted regulatory reforms that better align costs with deployment benefits.

Early 5G business cases understated several non-permitting cost drivers, most notably power. Densification requires substantially more grid interconnection points, increasing the need for reliable power access. Utilities frequently require a dedicated meter for each connection point, which can be infeasible on decorative light poles due to space or local aesthetic constraints.[9] In addition, providing power often requires trenching that can cost more than $200 per linear foot.[10] These “last-meter” power costs are largely fixed on a per-site basis. While macro sites can amortize these costs across broader coverage areas and higher traffic volumes, the same per-node costs materially increase the average cost of small-cell deployment and can push projects below investment hurdle rates, effectively foreclosing deployment.

Fiber backhaul requirements further compound these challenges. In dense urban areas, fiber access is often readily available. In suburban areas, however, individual poles frequently lack nearby fiber, requiring lateral builds that can cost between $4 and $24 per foot.[11] For a macro site serving thousands of users, an additional $50,000 per mile in fiber costs may still support a viable investment. For a small cell serving a limited footprint, the same expense can extend payback periods from months to years. Although FCC action can reduce administrative barriers and facilitate fiber expansion, it cannot overcome the underlying economics of construction. Where fiber is not proximate, lateral build costs remain a binding constraint on small-cell deployment.

Labor constraints also continue to raise deployment costs. The Fiber Broadband Association estimates a shortage of up to 30,000 skilled technicians nationwide.[12] Power-related work further requires licensed electricians, who are in high demand across competing sectors, such as electric-vehicle (EV) infrastructure and data-center construction.[13] Moreover, regulatory requirements governing rights-of-way access, pole attachments, metering, and make-ready work are often administered in isolation. Even when each requirement is reasonable on its own terms, their combined effect increases transaction costs, complicates coordination across trades, and heightens the risk of delays. This uncertainty, coupled with lower per-site margins, makes it more difficult for small wireless facilities to secure crews and can render otherwise viable deployments uneconomic.

B. Overbroad Concealment Standards Undermine Section 6409(a)

Although the FCC has made substantial progress in streamlining wireless permitting, additional reform is needed. While the 2018 Order and much of the 2020 Declaratory Ruling were upheld on judicial review, several provisions—particularly those at issue in this proceeding—were vacated or limited, creating uncertainty in the Section 6409(a) framework.

A central dispute under Section 6409(a)’s “eligible facilities request” regime concerns the scope of “concealment elements.” Under existing rules, a modification that “defeats concealment” may be treated as a “substantial change” and denied. In League of California Cities v. FCC, the 9th U.S. Circuit Court of Appeals rejected the FCC’s interpretation that “concealed” and “stealth” facilities should be treated as synonymous, observing that the 2014 Order used the terms distinctly.[14] As a result, state and local governments now have greater latitude to treat a broad range of aesthetic conditions as protected concealment, expanding the set of modifications that can be deemed “substantial changes” and denied under the Section 6409(a) framework.[15]

In practice, some localities have adopted “invisibility” standards that effectively prohibit any new or modified equipment. For example, Albemarle County, Virginia, requires denial of wireless applications unless facilities are designed to minimize visibility.[16] Similar approaches elsewhere make collocation on existing structures difficult or impossible.

Localities have also adopted expansive definitions of what constitutes “defeating” a concealment method.[17] Where a concealment element is defined as an entire structure or a specific silhouette, even minor alterations can be deemed a defeat of concealment, functioning as a de facto bar on upgrades.

These concealment and aesthetic requirements increasingly conflict with modern 5G network architecture. Unlike 4G systems, which relied on passive antennas and remote radio heads that generated little heat, 5G deployments use active antenna units that integrate radio and antenna components to enable beamforming.[18] These units generate significantly more heat and often cannot be fully enclosed in stealth canisters or shrouds without creating safety or performance issues.

Similarly, 5G’s use of massive multiple-input multiple-output (MIMO) technology[19] requires physical separation of antenna elements to enable beamforming.[20] If localities treat modest dimensional changes—such as widening a “stealth” flagpole to accommodate additional antennas—as defeating concealment, those structures can be locked into legacy 4G configurations. This approach yields minimal aesthetic benefit while imposing substantial costs on providers and consumers, particularly where FCC rules already tolerate limited dimensional increases.[21]

These restrictions impose direct and indirect costs on wireless providers. Some applications are denied outright, such as when T-Mobile sought to expand a concealment shroud from 18 to 38 inches to accommodate new antennas.[22] Others become prolonged and costly, such as when Verizon faced objections to modifying a faux-pine-tree pole based on perceived “branch density.”[23] In one extreme case, permit conditions in Adirondack Park, New York imposed ongoing landscaping obligations, including requirements to replace screening vegetation lost to natural causes.[24]

Lengthy, uncertain, or prohibitive permitting processes increase project-level fixed costs and regulatory risk, raising providers’ cost of capital and required investment hurdle rates. The predictable result is reduced network investment: fewer small-cell deployments, fewer macro-site collocations, and fewer upgrades at the margin. Reduced deployment intensity, in turn, limits network density and coverage, degrading service quality and consumer welfare.

C. Mid-Band Spectrum Mitigates Deployment Costs but Remains Constrained

In response to the high costs associated with deploying small wireless facilities to support higher-frequency bands, wireless providers have increasingly shifted their deployment strategies toward mid-band spectrum. Mid-band frequencies offer comparable bandwidth and latency to higher-frequency bands, while providing broader coverage due to more favorable propagation characteristics.

This shift has allowed providers to rely more heavily on existing macro-cell infrastructure. Rather than deploying large numbers of new small cells, providers can upgrade approximately 250,000 existing macro-cell sites in a more cost-effective manner.[25]

Mid-band spectrum, however, is already heavily encumbered. Federal users rely on mid-band frequencies for mission-critical applications, including high-power radar for air and missile defense, tactical data links for unmanned aircraft systems, and radio telemetry for testing.[26] Commercial users also operate extensively in these bands, supporting functions such as radio altimeters, unlicensed services, vehicle-safety systems, and public-safety communications.

As a result, even with increased reliance on mid-band spectrum, interference constraints and sharing requirements continue to necessitate additional network investment to ensure reliable service and capacity.

D. Rising Demand Requires Continued Network Investment and Densification

Wireless providers have upgraded and densified their networks where economically feasible, even if deployment has not yet reached early industry expectations. As of 2025, providers have deployed 166,264 small wireless facilities nationwide, representing approximately 6% year-over-year growth.[27]

At the same time, network usage has increased substantially. Video content now accounts for approximately 82% of all internet traffic, and rising upload demand has begun to strain wireless networks.[28] In addition, a growing number of households are relying on fixed wireless access in place of traditional cable or fiber service, further increasing network load.[29]

To meet this growing demand, wireless providers must continue to upgrade equipment and further densify their networks. Modern 5G equipment allows more efficient use of existing spectrum and increases throughput, but these upgrades require collocation on existing structures and remain subject to the cost constraints described above. In high-traffic areas, providers will also continue to rely on the streamlined treatment of small wireless facilities to support additional densification.

These investments will proceed only where expected returns justify the associated costs. While some costs are fixed and unavoidable, the FCC can reduce others through targeted reforms, thereby improving investment incentives and supporting continued network upgrades and densification.

E. Targeted Commission Action Is Needed to Effectuate Congressional Intent

Congress directed the FCC to reduce barriers to broadband deployment and to ensure that state and local zoning authorities do not use zoning processes to delay or prevent network construction. The commission’s prior reforms have helped foster substantial investment, but as discussed above, some localities continue to exploit gaps in the rules to impede deployment. The FCC should adopt the proposals outlined below to prevent such practices from undermining congressional intent.

In addition, many of the protections applicable to small wireless facilities do not extend to macro-cell projects, even though macro-cell upgrades and collocations are now central to 5G deployment. The FCC should therefore apply existing small-cell shot clocks and fee caps to applications for macro tower collocations, modifications, and new deployments.

Most importantly, the FCC should preempt state and local measures that prohibit or effectively prevent network densification. Sections 253 and 332 direct the commission to preempt laws that impede the provision of personal wireless services, and as explained above, densification is essential to the deployment of next-generation networks.

By adopting targeted regulatory reforms, the FCC can better enable wireless providers to make the investments necessary to upgrade their networks and meet consumer demand.

III. Codifying Concealment Standards to Preserve Section 6409(a)’s Purpose

The FCC should codify the concealment definitions adopted in the 2020 Declaratory Ruling to ensure that “concealment” does not become a discretionary veto under Section 6409(a). Much of the commission’s broader deployment policy addresses new construction, where local siting concerns are naturally more significant. Section 6409(a), by contrast, is specifically designed to expedite collocations and modifications on existing structures.

In many collocation cases, siting concerns are materially reduced because the structure is already in place and the proposed change is incremental, often limited to the addition of antennas or related equipment. Reflecting this premise, Section 6409(a) requires state and local governments to approve eligible modification requests unless they would result in a “substantial change,” including a substantial change to the physical dimensions of the tower or base station.

A. Section 6409(a) Focuses on Physical Dimensions, Not Aesthetic Judgments

Section 6409(a) refers only to changes in the physical dimensions of a tower or base station. In implementing the statute, the FCC concluded in the 2014 Order that certain changes defeating concealment elements of stealth facilities could constitute a “substantial change.”[30] Notably, however, the statutory term “substantial change” is expressly limited to changes in “the physical dimensions of such tower or base station.”[31] Read naturally, this language encompasses objective measurements—such as height, width, depth, or length—not broader aesthetic or design considerations. Treating the defeat of a concealment element as a “substantial change” in physical dimensions therefore risks extending beyond the text of the statute.

League of California Cities v. FCC did not resolve this underlying statutory question. Instead, the 9th Circuit addressed only whether the FCC’s interpretation of its own rules was entitled to deference. The court focused on whether the 2014 Order treated “concealed” and “stealth” facilities as a single category or as distinct concepts.[32] Challenges to the 2014 Order itself similarly argued that the commission’s interpretation did not go far enough in defining what constitutes a “substantial change,” not that the FCC lacked authority to consider factors beyond physical dimensions.

If the FCC elects to further interpret Section 6409(a), it should codify the definitions adopted in the 2020 Declaratory Ruling. The NPRM proposals that track the 2020 Declaratory Ruling would treat a “defeat of concealment” as a substantial change only for true stealth facilities—such as poles designed to appear as something other than a tower or base station. That approach more closely aligns with Congress’ focus on physical dimensions, because modifications to such facilities often alter dimensions in ways that undermine the concealment design itself.

To the extent localities are concerned that modifications may make existing towers more visible, Congress explicitly considered that possibility and nonetheless chose to prioritize deployment.[33] Congress recognized that some approved modifications would affect appearance but determined that non-substantial changes should not prevent wireless providers from upgrading facilities and deploying service.

B. Aesthetic Conditions Are Being Used to Circumvent Section 6409(a)

Permitting authorities too often use aesthetic considerations to delay or deny modification requests. The record contains numerous examples. CTIA reports that one California county limits wireless facility height to 60 feet or less based on “visual impact.”[34]  AT&T describes a case in New York in which a town denied eligible facilities request status for a lattice-tower modification because an exterior cable run was deemed to defeat concealment of interior cabling.[35] AT&T also cites an example in Oregon where a city treats antenna height itself as a concealment element.[36]

To address these practices, the FCC should clarify that a modification implicates a concealment element—and may constitute a substantial change—only where the concealment element is part of a true stealth facility, such as a pole designed to appear as something other than a tower or base station. The commission should further clarify that siting conditions based on aesthetics may not be used to deny modifications that otherwise comply with 47 C.F.R. § 1.6100(b)(7)(i)–(iv), which define the dimensional changes that constitute a “substantial change.”

As wireless providers continue to upgrade equipment and collocate facilities to densify their networks, aesthetic-based delays and denials will increasingly constrain deployment. When approval costs are uncertain or the risk of denial is significant, providers may forego otherwise efficient upgrades altogether. Congress made clear its intent to promote wireless deployment, and clarifying the FCC’s rules would provide greater certainty for investment and planning.

Allowing localities to use aesthetic criteria to circumvent Section 6409(a) would also discourage providers from deploying higher-frequency technologies and small wireless facilities. Reduced deployment in these bands would place additional strain on already-encumbered mid-band spectrum and increase pressure for reallocation. Given the wide range of existing mid-band uses—including Wi-Fi, public safety, and government operations—such constraints risk slowing the development of 5G and 6G networks while also affecting other critical services.

IV. Extending Small-Cell Deployment Protections to Macro-Cell Sites

As discussed above, wireless providers are increasingly relying on macro-cell towers to collocate and deploy 5G equipment using mid-band spectrum. The FCC’s recent infrastructure reforms, however, have focused primarily on small wireless facilities, resulting in different regulatory treatment for different deployment technologies. The commission should use this proceeding to update its rules to apply the same shot clocks and fee caps to macro-cell sites that currently apply to small wireless facilities. Doing so would reduce deployment costs, encourage additional investment, and promote more efficient use of limited mid-band spectrum resources.

A. Permitting Delays Impose Significant Costs and Warrant Updated Shot Clocks

Unreasonable permitting delays impose significant costs on wireless providers, both at the individual project level and across the industry as a whole. At the site level, delays can prevent providers from deploying upgraded equipment and more resilient networks, undermining service quality and competitive positioning. Delay risk also increases uncertainty around new collocations and builds, including the risk that approval may never be granted. When approval timelines extend by even a few months, capital tied to a pending project may remain unavailable for other investments until the site is approved and deployed. Where disputes result in litigation, delays can extend for years, leaving providers with “dead capital” that generates no revenue for extended periods.

At scale, these site-specific delays accumulate and slow the broader deployment of 5G networks. As 5G increasingly competes with traditional fixed broadband and supports new services and usage patterns, permitting delays at individual sites can materially constrain network expansion.[37] Available data indicate that deployment delays can result in billions of dollars in lost consumer value annually and have a direct, negative effect on U.S. gross domestic product (GDP).[38]

The FCC should therefore update its existing shot clocks for macro-cell sites to align with the 60-day and 90-day shot clocks that apply to small wireless facilities.

First, doing so would better align with Section 332, which provides that state and local regulation of wireless facilities “shall not prohibit or have the effect of prohibiting the provision of personal wireless services.”[39] Lengthy permitting delays can effectively preclude service at a specific location and, by increasing time-to-revenue and tying up capital, reduce investment across a provider’s broader network footprint.[40] Both effects ultimately reduce consumer welfare.

Second, there is little practical justification for treating small wireless facilities and macro towers differently with respect to review timelines, particularly as permitting workflows have modernized.[41] Some municipalities report that review processes that once took months have been reduced to days through the use of digital permitting platforms and AI-assisted prescreening.[42] These developments should allow localities to conduct any additional review required for macro-cell applications in a fraction of the time currently asserted.

At the same time, some localities may lack the infrastructure needed to implement these tools. The FCC’s Broadband Deployment Advisory Committee (BDAC) found that, during the COVID-19 pandemic, certain local offices struggled to process applications due to inadequate digital infrastructure.[43] Where appropriate, the commission should support state and local governments by identifying best practices and facilitating adoption of modern permitting tools, including AI-assisted review.

Ultimately, however, Congress placed the responsibility on local permitting authorities to review applications in a timely manner. Updating macro-cell shot clocks would encourage permitting offices to modernize their processes, benefiting local communities, the wireless industry, and U.S. leadership in wireless technologies.

B. Above-Cost Fees Depress Investment and Warrant Cost-Based Caps

The FCC’s approach to small wireless facilities rests on a core economic principle: capital available for network investment is finite, and costs imposed on one deployment necessarily reduce investment elsewhere.[44] That principle applies equally to macro-tower modifications and small wireless facilities. Because local governments control access to public rights-of-way and face little competitive discipline in granting that access, they can impose fees that materially exceed the direct and reasonable costs of application processing and rights-of-way management.[45]

The economic rationale underlying the FCC’s deployment policy remains valid today. Wireless providers must make large, upfront capital investments with long payback periods, and investment decisions are governed by the net present value of expected cash flows, discounted by the firm’s cost of capital. In practice, providers’ ability to deploy capital is constrained by balance-sheet limits, free cash flow, and investor risk tolerance. As a result, firms must prioritize among competing projects, allocating scarce capital to deployments with the highest risk-adjusted returns and the most predictable payback periods. When regulatory costs reduce expected returns below a firm’s cost of capital, investment is deferred or redirected to other sectors.

In practice, this means that high-return locations are prioritized, and local governments in those areas may be able to extract economic rents.[46] When fees materially exceed cost-based levels, however, they operate as transfers that reduce capital available for other network investments.[47] In competitive markets with elastic demand, such fees cannot be fully passed through to consumers without reducing usage. Instead, they are largely absorbed by providers and result in reduced deployment.[48] Excessive fees can also deter entry by new competitors, including cable operators seeking to expand wireless offerings.

The FCC should therefore adopt fee caps for macro-cell sites that limit charges to the direct and incremental costs of processing applications and administering access to the rights-of-way. While it is appropriate for providers to compensate localities for the reasonable costs associated with managing public rights-of-way, fees should not be used as a general revenue source. Allowing recovery of unrelated or common costs would improperly shift expenses that benefit multiple users onto wireless providers alone, creating cross-subsidies and enabling above-cost charges that function as economic rent extraction.

Imposing cost-based fee caps would reduce barriers to macro-cell deployment. Excessive fees not only discourage individual projects but also depress investment more broadly by making marginal deployments in other communities less attractive. Limiting such fees is consistent with congressional intent, promotes broadband deployment, and still allows local governments to recover reasonable costs associated with rights-of-way access.

The FCC should also prohibit localities from imposing unrelated fees as a condition of permitting approval. As the NPRM notes, these may include consulting fees or gross-revenue-based charges that bear no relationship to the costs of processing an application. Fees unrelated to actual permitting costs should be barred.

Finally, to the extent that some states continue to impose de facto moratoria on new collocations or deployments, the FCC should use this proceeding to preempt inconsistent state laws that prohibit or delay the acceptance and approval of broadband applications.

C. Preventing Network Densification Constitutes a Prohibition of Service

As discussed above, network densification is essential to the provision of modern wireless services, particularly given the scarcity of spectrum resources. Sections 253 and 332(c)(7) prohibit state and local governments from using zoning authority to prevent the provision of personal wireless services and grant the FCC authority to preempt laws and regulations that have that effect. As the commission observes in the NPRM, some state and local governments condition approval on whether a “coverage gap” exists. Such criteria necessarily impede densification, because providers must deploy additional facilities within already-served areas to improve capacity, reliability, and service quality.

By restricting network densification, these requirements effectively prevent the provision of personal wireless services. The FCC should therefore preempt state and local regulations that restrict or prohibit densification.

V. Conclusion

The FCC’s wireless infrastructure reforms have produced meaningful progress, but additional action is needed to sustain network investment and deployment. Wireless providers must continue to upgrade equipment and densify their networks to meet rising demand and to make efficient use of limited spectrum resources. Yet state and local permitting practices continue to impose unnecessary costs, delays, and uncertainty that constrain investment, particularly for collocations and upgrades on existing macro-cell sites.

As the record demonstrates, permitting delays, above-cost fees, and expansive aesthetic and concealment standards can raise project-level costs, increase regulatory risk, and push otherwise viable deployments below investment hurdle rates. These burdens divert scarce capital away from network upgrades, slow densification, and ultimately reduce service quality and coverage for consumers. Although the FCC cannot eliminate all deployment costs, it can address those that are regulatory in origin.

Targeted reforms—such as clarifying concealment standards under Section 6409(a), extending existing shot clocks and fee caps to macro-cell deployments, and preempting state and local measures that effectively prohibit densification—would directly reduce deployment costs and uncertainty. Aligning the regulatory treatment of macro-cell sites with that of small wireless facilities would reflect current 5G deployment realities, lower barriers to investment, and promote more efficient use of mid-band spectrum.

By building on its prior reforms and closing remaining regulatory gaps, the FCC can better effectuate congressional intent, encourage continued private investment in wireless infrastructure, and ensure that next-generation networks are deployed in a timely and economically sustainable manner.

[1] Build America: Eliminating Barriers to Wireless Deployments, WT Docket No. 25-276 Notice of Proposed Rulemaking (Sep. 30, 2025), https://docs.fcc.gov/public/attachments/FCC-25-67A1.pdf.

[2] Accelerating Wireless Broadband Deployment by Removing Barriers to Infrastructure Investment, WT Docket No. 17-79, Declaratory Ruling and Third Report and Order, 33 FCC Rcd 9088 (2018) (“2018 Order”); Implementation of State and Local Governments’ Obligation to Approve Certain Wireless Facility Modification Requests Under Section 6409(a) of the Spectrum Act of 2012, WT Docket No. 19-250, Declaratory Ruling and Notice of Proposed Rulemaking, 35 FCC Rcd 5977 (2020) (“2020 Declaratory Ruling”).

[3] See 2020 Broadband Scorecard Report, R St. Inst. (2020), https://www.rstreet.org/wp-content/uploads/2021/02/updated-final-2020-Broadband-Scorecard.pdf.

[4] 47 U.S.C. §§ 253(a), 332(c)(7)(B)(i)(II).

[5] USTelecom’s 2024 Broadband Capex Report indicates that broadband providers invested $89.6 billion in network infrastructure in 2024 alone. As wireless providers increasingly densify their networks to address spectrum constraints, overall investment levels are likely to continue to rise. 2024 Broadband Capex Report, USTelecom (Oct. 2025), https://ustelecom.org/research/2024-broadband-capex-report; see also White Paper: 6G Spectrum – Enabling the Future Mobile Life Beyond 2030, Ericsson (Dec. 2025), https://www.ericsson.com/49ac9c/assets/local/reports-papers/white-papers/2024/6g-spectrum.pdf.

[6] For example, the implementation of Title II classification was associated with a measurable decline in broadband investment. See George S. Ford, Net Neutrality, Reclassification, and Investment: A Counterfactual Analysis, Phoenix Ctr. for Adv. L. & Econ. Pub. Pol. Stud. (Apr. 25, 2017), https://www.phoenix-center.org/perspectives/Perspective17-02Final.pdf.

[7] 2018 Order, supra note 2, ¶ 3.

[8] John Celentano, Outdoor Small Cells Grow with Escalating Mobile Data Demand, Inside Towers (Jun. 28, 2024), https://insidetowers.com/outdoor-small-cells-grow-with-escalating-mobile-data-demand (“Our previous analysis concluded that once the first phase 5G wide area buildout with low-band spectrum on macrocells plateaued, then the MNOs would ramp up small cell deployments using both mid-band spectrum and millimeter wave frequencies to densify their networks as the anticipated mobile data demand escalates. It turns out that both Verizon (NYSE: VZ) and AT&T (NYSE: T), having invested heavily in C-band and 3.45 GHz mid-band spectrum, each with 100 MHz wide channels, and T-Mobile (NASDAQ: TMUS) using 2.5 GHz, found that much of the increased capacity demand could be handled from macrocells. As a consequence, the projected high-volume small cell rollout slowed or certainly has been deferred. Outdoor small cell installations in network applications are expected to stay muted through 2024 and into mid-2025, when network densification starts to pick up.”)

[9] Small Cell Siting Challenges and Recommendations, 5G Americas (Aug. 1, 2018), p. 18, https://www.5gamericas.org/wp-content/uploads/2019/07/Small_Cell_Siting_Challenges__Recommendations_Whitepaper_final.pdf.

[10] For example, a conduit-trenching project in Berkeley was estimated to cost between $150 and $200 per linear foot. Memorandum from Christine Daniel, City Manager, City of Berkeley, to Honorable Mayor and Members of the City Council, Broadband Infrastructure Report and Recommendations, at 4 (Jun. 23, 2015), https://newspack-berkeleyside-cityside.s3.amazonaws.com/wp-content/uploads/2015/06/2015-06-23-Item-11-Broadband-Infrastructure.pdf.

[11] Fiber Deployment Annual Report, Fiber B.B. Ass’n (2023), https://fiberbroadband.org/wp-content/uploads/2024/01/Fiber-Deployment-Annual-Report-2023_FBA-and-Cartesian.pdf.

[12] Broadband Market Workforce Needs, Continuum Capital (Jun. 26, 2024), https://fiberbroadband.org/wp-content/uploads/2024/08/PCCA_FBA_6-26-2024_vFinal_1.pdf.

[13] See Tamima Elbashbishy & Islam El-adaway, Skilled Worker Shortage Across Key Labor-Intensive Construction Trades in Union versus Nonunion Environments, 40 J. Mgmt. Eng’g. 1, 15 (2024) (“Findings show that plumbing and electrical trades experience the highest levels of skilled labor shortages among the identified labor-intensive trades….”).

[14] League of Cal. Cities v. FCC, 118 F.4th 995, 1027 (9th Cir. 2024).

[15] The Spectrum Act requires state and local governments to approve eligible facilities requests unless the proposed modification would result in a “substantial change” to the physical dimensions of a tower. Concealment elements are relevant to that determination. In practice, however, many localities have expanded these concepts to treat nearly any modification as implicating concealment, effectively bypassing the act’s mandatory-approval requirement. See Middle Class Tax Relief and Job Creation Act of 2012, Pub. L. No. 112-96, § 6409, 126 Stat. 156, 232–33.

[16] Albemarle County, Virginia, Zoning Ordinance § 5.1.40.

[17] Comments of CTIA, Implementation of State and Local Governments’ Obligation to Approve Certain Wireless Facility Modification Requests Under Section 6409(a) of the Spectrum Act of 2012, WT Docket No. 19-250 at 8 (Oct. 29, 2019), https://www.fcc.gov/ecfs/document/10290388730901/1.

[18] Advanced Antenna Systems for 5G, 5G Americas White Paper (Aug. 2019), https://www.5gamericas.org/wp-content/uploads/2019/08/5G-Americas_Advanced-Antenna-Systems-for-5G-White-Paper.pdf.

[19] Massive MIMO for New Radio, Samsung (Dec. 2020), https://images.samsung.com/is/content/samsung/assets/global/business/networks/insights/white-papers/1208_massive-mimo-for-new-radio/MassiveMIMOforNRTechnicalWhitePaper-v1.2.0.pdf.

[20] Claire Masterson, Massive MIMO and Beamforming: The Signal Processing Behind 5G Buzzwords, Analog Devices (Jun. 2017), https://www.analog.com/media/en/analog-dialogue/volume-51/number-3/articles/massive-mimo-and-beamforming-the-signal-processing-behind-the-5g-buzzwords.pdf.

[21] See Reply Comments of the Wireless Infrastructure Association, Implementation of State and Local Governments’ Obligation to Approve Certain Wireless Facility Modification Requests Under Section 6409(a) of the Spectrum Act of 2012, WT Docket No. 19-250 (Nov. 20, 2019), https://www.fcc.gov/ecfs/document/1120077802948/1.

[22] See Bd. of Cnty. Comm’rs v. Crown Castle USA, Inc., 2020 WL 109208 (D. Colo. Jan. 9, 2020).

[23] Although the request was ultimately approved, the application remained pending for more than 18 months before Verizon received approval. Verizon Wireless Fort Rosecrans. Process Three Decision, City of Berkeley Off. of the City Manager, Report No. HO-17-082 (Dec. 13, 2017), https://www.sandiego.gov/sites/default/files/ho-17-082.pdf.

[24] In particular, the permit was approved subject to a condition requiring Verizon to restore “substantial invisibility” through revegetation or redesign if natural causes resulted in the partial loss of vegetation providing screening or backdrop for the antennas. Cellco Partnership d/b/a Verizon Wireless , and Thomas E. Jenkin & Mary Joan Jenkin, Adirondack Parak Agency Permit 2013-128, Condition 9 (Jul. 3, 2014), https://ru.apa.ny.gov/meeting/2014/07/FullAgency/P2013-0128-20140703-Verizon-permit-mlr.pdf.

[25] Mike Dano, Small Cells Cool Off While Midband 5G Buildouts Begin, LightReading (May 11, 2021), https://www.lightreading.com/5g/small-cells-cool-off-while-midband-5g-buildouts-begin; Tracy Ford, Wireless Infrastructure By the Numbers: 2024 Key Statistics, WIA – Wirel. Infrastructure Ass’n (May 7, 2025), https://wia.org/wireless-infrastructure-by-the-numbers-2024.

[26] 47 C.F.R. § 2.106 (2024).

[27] Summary of CTIA’s Annual Wireless Industry Survey, CTIA (Aug. 2025), https://api.ctia.org/wp-content/uploads/2025/08/2025-CTIA-Survey-Summary-and-Background.pdf.

[28] Naveem Kumar, 93 Latest Video Marketing Statistics 2026 [Data & Trends], Demandsage (Nov. 24, 2025), https://www.demandsage.com/video-marketing-statistics; Mobility Report, Ericsson (Nov. 2025), at 30 (“Ericsson Mobility Report”), https://www.ericsson.com/4aca6f/assets/local/reports-papers/mobility-report/documents/2025/ericsson-mobility-report-november-2025.pdf.

[29] Id. at 6.

[30] Acceleration of Broadband Deployment by Improving Wireless Facilities Siting Policies, WT Docket Nos. 13-238 and 13-32, WC Docket No. 11-59, Report and Order, 29 FCC Rcd 12865 (2014) (“2014 Order”).

[31] 47 U.S.C. § 1455(a).

[32] The 2014 Order used both “concealed” and “stealth.” In the 2020 declaratory ruling, those terms are interpreted as synonymous. The court applied Auer deference in assessing whether that interpretation was entitled to judicial deference. The court’s decision applied Auer deference to determine whether the interpretation should receive deference. See League of Cal. Cities v. FCC, 118 F.4th at 1014.

[33] The House Report on the Spectrum Act makes clear that, although state and local governments retain authority to apply zoning procedures to modification requests, the act intended to preempt those procedures when they operate as barriers to wireless deployment. H.R. Rep. No. 112-399, at 133 (2012), https://www.congress.gov/committee-report/112th-congress/house-report/399/1?outputFormat=pdf.

[34] Comments of CTIA, Build America: Eliminating Barriers to Wireless Deployments, at 22, WT Docket No. 25-276 (Dec. 31, 2025), https://www.fcc.gov/ecfs/document/12312417000463/1.

[35] Comments of AT&T, Build America: Eliminating Barriers to Wireless Deployments, at 6-7, WT Docket No. 25-276 (Dec. 31, 2025), https://www.fcc.gov/ecfs/document/123130126615/1.

[36] Id. at 7.

[37] Ericsson Mobility Report, supra note 28, at 6.

[38] Debra J. Aron & Olga Ukhaneva, Economic Impacts of Delayed 5G Deployment and Adoption in the US, Charles River Assocs. (last visited Jan. 6, 2025), https://www.crai.com/engagements/economic-impacts-of-delayed-5g-deployment-and-adoption-in-the-us.

[39] 47 U.S.C. §332(c)(7)(B)(i)(II).

[40] T. Randolph Beard, George S. Ford, & Michael Stern, Infrastructure Investment and Franchise Fee abuse: A Theoretical Analysis, Phoenix Ctr. Pol’y Bull. No. 45 (2019), at 3, https://www.phoenix-center.org/PolicyBulletin/PCPB45Final.pdf.

[41] Karyn Hede, Faster, More Informed Environmental Permitting with AI-Guided Support, Pacific Northwest Nat’l Lab’y (Dec. 3, 2024), https://www.pnnl.gov/news-media/faster-more-informed-environmental-permitting-ai-guided-support#:~:text=PNNL%20data%20scientists%20collected%20and,Share%3A.

[42] Although not specific to telecommunications permitting, Honolulu’s adoption of online permitting portals and AI-based prescreening reduced review times from approximately six months to two to three days. Ludo Fourrage, How AI Is Helping Government Companies in Honolulu Cut Costs and Improve Efficiency, nucamp (Aug. 19, 2025), https://www.nucamp.co/blog/coding-bootcamp-honolulu-hi-government-how-ai-is-helping-government-companies-in-honolulu-cut-costs-and-improve-efficiency; see also Use AI to Transform City Operations, Nat’l League of Cities (Jul. 31, 2025), https://www.nlc.org/article/2025/07/31/use-ai-to-transform-city-operations/#:~:text=In%20Honolulu%2C%20the%20city%20added,months%20to%202%2D3%20days.

[43] Report and Recommendations: COVID-19 Response, Disaster Response and Recovery Working Group of the Broadband Deployment Advisory Committee (Oct. 29, 2020), 12-13, 38,  https://www.fcc.gov/sites/default/files/bdac-disaster-response-recovery-approved-rec-10292020.pdf.

[44] 2020 Declaratory Ruling, supra note 2, at ¶ 60.

[45] Petition for Rulemaking to Accelerate Wireless Broadband Deployment by Amending the Rules Implementing Section 6409 of the Spectrum Act of WIA – The Wireless Infrastructure Association, RM-11849 at 12 (Aug. 27, 2019), https://www.fcc.gov/ecfs/document/108273047516225/1.

[46] Anita Thronipara, Rolf Sternberg, Till Proeger, & Lukas Haefner, Digital Divide Craft Firms’ Websites and Urban-Rural Disparities – Empirical Evidence from a Web-Scraping Approach, 43 Rev. Reg. Res. 69, 76 (2023).

[47] For example, imposing spectrum-auction fees unrelated to the costs of repurposing the spectrum reduces the amount of spectrum made available for use. T. Randolph Beard, George S. Ford, Michael Stern, Innovation in Spectrum Repurposing: The C-Band as a Principle-Agent Problem, Phoenix Ctr. Pol’y Bull. No. 4 (Sep. 2019), at 12, https://www.phoenix-center.org/PolicyBulletin/PCPB47Final.pdf.

[48] 2018 Order, supra note 2, ¶ 62.

Executive Summary

The Federal Communications Commission (FCC) proposes to streamline its broadband-consumer label requirements by eliminating five mandates that impose costs exceeding their benefits to consumer decision making. The International Center for Law & Economics (ICLE) supports these reforms, which preserve all information relevant to purchase decisions while removing requirements that convey information ineffectively, create post-sale confusion, or serve purposes unrelated to helping consumers choose service plans.

The Infrastructure Investment and Jobs Act (IIJA) directed the commission to require broadband labels disclosing information about service plans, referencing the FCC’s 2016 public notice. The commission’s 2022 implementing rules exceeded this mandate by adding requirements not contemplated by the referenced notice. After three years of implementation experience, the FCC now proposes targeted corrections.

Research in behavioral economics suggests the effectiveness of disclosures depends not on the volume of information presented, but whether it enables better consumer decisions. The Federal Trade Commission (FTC) Bureau of Economics has concluded that disclosures providing “too much, irrelevant, or unnecessary information” may induce consumers to ignore the information completely.

The five proposed changes address specific documented problems. Eliminating the telephone-reading requirement corrects a mismatch created when a visual-comparison tool designed for quick scanning is forced into a sequential oral format.

Allowing aggregation of location-variable fees reduces compliance burdens and consumer confusion. The current rules require itemizing fees that vary across jurisdictions, forcing providers to generate numerous label variations. Lengthy fee lists make comparing total monthly costs more difficult.

Eliminating customer-portal display removes a post-sale mandate that creates confusion, as point-of-sale labels become outdated when promotional rates expire or customers modify plans. Monthly bills and existing account disclosures already provide accurate current information.

Eliminating machine-readable format requirements removes a mandate that primarily benefits researchers and other third parties, rather than consumers. Three years after adoption, there is no evidence that significant consumer-facing comparison tools use these files.

Eliminating the two-year archiving requirement removes a recordkeeping mandate with speculative benefits unrelated to consumer shopping. Consumers need current labels for available plans, not historical labels for discontinued services.

Collectively, these changes reduce regulatory costs that would otherwise be passed through to consumers via higher prices or reduced network investment. The proposals preserve all decision-relevant information, while eliminating requirements that add cognitive burden without decision value, thereby improving consumer welfare.

I. Introduction

The International Center for Law & Economics (ICLE) submits these comments supporting the Federal Communications Commission’s (FCC) notice of proposed rulemaking (“NPRM”) to streamline its broadband-consumer labeling rules.[1] The FCC’s proposals represent an effort to improve the effectiveness of disclosure requirements by removing elements that impose substantial costs, while delivering minimal benefits to consumer decisionmaking.

The Infrastructure Investment and Jobs Act (IIJA) directed the FCC to require the display of broadband-consumer labels “to disclose to consumers information regarding broadband internet access service plans.”[2] The commission’s 2022 Broadband Label Order implemented this mandate by requiring labels that illustrate monthly prices (including introductory rates), fees, data allowances, contract terms, typical speeds and latency, and network-management practices.[3] The current proposals refine these requirements based on three years of implementation experience and stakeholder feedback.

In comments to the “Delete, Delete, Delete” proceeding, ICLE argued that the FCC should amend the broadband-consumer label rules in several ways consistent with the NPRM:

Simplify broadband “nutrition labels.” The FCC’s broadband-nutrition-label rules, implemented in 2024, represent a significant regulatory intervention in how internet service providers (ISPs) communicate their service offerings to consumers. The rules exceed the statutory requirements by mandating detailed disclosures—such as “typical” upload/download speeds and latency figures—that exceed the basic transparency provisions outlined in the Infrastructure Investment and Jobs Act.[4]

Additionally, the requirement that internet service providers (ISPs) update labels at all physical points of sale whenever a service plan changes its terms imposes administrative burdens not explicitly required by the statute.

The economic framework for evaluating disclosure mandates recognizes that effective transparency regulation is not measured by the volume of information required, but by whether the information helps consumers to make better decisions. Research in behavioral economics demonstrates that when disclosure requirements exceed consumers’ cognitive-processing capacity, decision quality deteriorates, rather than improves. The FCC’s proposals address this problem by eliminating requirements that add cognitive burden without corresponding decision value, thereby improving the label’s signal-to-noise ratio.

Eliminating the telephone-reading requirement corrects a regulatory mismatch where a visual-disclosure tool designed for quick comparison is forced into a sequential oral format.[5] The label’s tabular structure—which allows scanning and comparing key fields—is lost when read aloud. NTCA—The Rural Broadband Association describes this requirement as creating “a burdensome and potentially confusing interaction” where representatives must “read the label verbatim while consumers may interrupt to ask questions.”[6] The FCC’s proposal preserves accessibility obligations under Section 255 of the Communications Act while removing a specific mandate that serves consumers poorly.[7]

Allowing aggregation of location-variable fees reduces both compliance burdens and consumer confusion.[8] The current rules require itemizing discretionary pass-through fees like right-of-way charges and pole-attachment rates that vary across jurisdictions. This forces providers to create and maintain dozens or hundreds of label variations for identical service plans. For consumers, lengthy itemized fee lists create clutter that makes it more difficult to focus on total monthly costs, the most decision-relevant figure. Displaying aggregates preserves full price transparency while eliminating unnecessary detail.

Eliminating customer-portal display removes a post-sale requirement that creates confusion rather than clarity.[9] The point-of-sale label illustrates terms offered to new customers. After subscription, this static label becomes outdated as promotional rates expire, prices change, or customers modify their plans. Monthly bills and service agreements provide accurate current information. The portal requirement serves no useful consumer purpose and should be eliminated.

Eliminating machine-readable format requirements removes a mandate that primarily benefits third-party researchers rather than consumers shopping for service.[10] The IIJA directed the FCC to assist consumers in making informed purchasing decisions, rather than generating public-data feeds for academic research. If the commission requires structured pricing data for the enforcement of digital-discrimination rules or other regulatory purposes, targeted data collection through mandatory filings is more efficient than requiring all providers to maintain publicly accessible, machine-readable files.

Eliminating two-year archiving removes a recordkeeping requirement with speculative benefits unrelated to consumer shopping.[11] Consumers need current labels for available plans, not historical labels for discontinued services. For billing disputes, customers rely on their service agreements and monthly bills, not archived point-of-sale labels. If the FCC needs historical labels for enforcement, it can require providers to maintain records for production upon regulatory demand, rather than mandating public archives.

These changes will reduce regulatory costs that are ultimately passed through to consumers via higher prices or reduced investment in network quality. In reasonably competitive telecommunications markets, regulatory compliance costs are borne by consumers through these mechanisms, rather than by providers as reduced profits.[12] The FCC’s proposals eliminate costs where they exceed benefits to consumers.

The proposals preserve all decision-relevant information, including the monthly price with all fees, typical speeds, data allowances, and contract terms. They eliminate requirements that convey information in ineffective formats, create post-sale confusion, or serve purposes other than consumer shopping. This is sound regulatory refinement that improves consumer welfare.

II. Behavioral and Economic Limits of Mandatory Disclosure

Effective consumer disclosures should emphasize information that helps people make better decisions. Because consumers often “satisfice,” rather than analyze every detail, disclosures work best when they highlight key facts—such as price, performance, or usage suitability—in clear, simple formats. When labels include too much extraneous information, people tend to ignore them altogether, defeating their purpose. Research and FTC analysis shows that overly complex disclosures increase confusion and search costs, whereas focused, well-designed ones improve comparison shopping. In the case of broadband labels, the goal is to remove unnecessary details and make critical information—cost, speed, and data limits—easy to find and understand.

A. More Information Is Not Better Information

Mandatory disclosure aims to correct information asymmetries between sellers and buyers, reducing consumers’ search costs and facilitating comparison shopping.[13] The theoretical benefit depends on the disclosure improving consumer decisions. This outcome is not automatic. The design, format, and content of disclosure requirements determine whether they help or hinder consumer choice.

Research on consumer perception of product labels demonstrates that consumers do not systematically read and weigh every piece of disclosed information. Most people engage in what psychologists term “satisficing”: scanning for key information sufficient to make an acceptable choice, rather than the “optimal” one.[14] Because attention, time, and cognitive resources are limited, effective label design should therefore present information in a way that supports satisficing, thereby enabling consumers to reach a “good-enough” decision that aligns with their preferences and constraints.[15]

Studies of nutrition and energy labels show that when key attributes are salient, summarized, and evaluatively coded—e.g., through color coding or single-grade indicators—they can improve consumer choices; thus, traffic-light systems are more effective than nutrition tables. For example, the Food and Drug Administration’s (FDA) literature review of food-packaging labels indicates that consumers generally prefer “simple labels (such as the ones using a summary system)” and that “interpretational aids”—rather than detailed numeric data—can help consumers identify healthy foods and make healthy point-of-purchase choices.[16]

The FTC Bureau of Economics examined these issues specifically in the context of disclosure regulation. The staff report concluded:

Developing consumer disclosures is tricky. … Difficult-to-understand and confusing disclosures, and disclosures that provide too much, irrelevant, or unnecessary information, can make it difficult, time-consuming, and frustrating for consumers to understand what is being conveyed and sort the important points from the minor detail. Such disclosures may induce consumers to ignore the information completely because it is simply too much trouble.[17]

The report recommended that disclosure requirements focus on decision-relevant information and avoid overwhelming consumers with details that do not facilitate comparison shopping. When disclosure documents contain excessive detail, consumers are more likely to skip the disclosure entirely or rely on crude heuristics that ignore the disclosed information.

Applied to broadband labels, this research suggests that a disclosure format cluttered with low-value information makes it harder for consumers to focus on the key factors: total monthly cost, speeds that meet their needs, and whether data allowances match their usage patterns. The FCC’s proposals improve the label’s effectiveness by enhancing the signal-to-noise ratio—removing information that does not aid comparison shopping while preserving all decision-relevant content.

B. Compliance Costs Are Consumer Costs

Regulatory compliance imposes direct costs on firms, including administrative expenses for data collection and verification, technological costs for building and maintaining disclosure systems, legal costs for ensuring compliance, and opportunity costs resulting from resources diverted to compliance rather than productive investment. In competitive markets, firms earn normal returns and cannot sustain below-market profits indefinitely. These costs are therefore passed through to consumers via higher prices or offset by reduced expenditures on network investment and service quality.[18]

Firms without substantial market power cannot absorb large cost increases on their own. Instead, these costs are passed on to consumers through multiple channels. The most direct channel is higher monthly prices, which allow providers to recover compliance costs. A provider facing increased annual compliance costs of $1 million must recover those costs by increasing aggregate revenue by approximately $1 million. Less directly but potentially more significantly, compliance costs divert resources from productive investment. A small ISP operating in rural areas faces a choice between allocating resources to regulatory compliance systems and investing in network expansion. The opportunity cost of compliance is reduced service quality or slower deployment to unserved areas.

Regulatory compliance costs disproportionately burden smaller firms because these firms’ fixed compliance costs cannot be spread across as large a customer base. This matters particularly for broadband, where small providers serve many rural and underserved areas. Requirements like maintaining machine-readable data files or two-year archives impose fixed costs that must be spread across relatively few subscribers, making these providers less competitive and potentially slowing deployment to areas that need it most.

The proper evaluation of disclosure requirements would therefore ask: Do the incremental benefits to consumer decision making justify the additional costs imposed? When costs exceed benefits, the regulation makes consumers worse off. The FCC’s proposals eliminate requirements where this cost-benefit analysis tilts against the mandate.

C. Markets Already Reward Transparency

Providers operating in competitive markets have commercial incentives to communicate effectively with potential customers. Clear information about pricing, speeds, and terms helps to attract customers. Confusion and opacity can increase customer-service costs, lead to billing disputes and result in negative word of mouth. These market incentives often align with transparency goals, reducing the need for prescriptive mandates.

A provider seeking to attract customers who prefer Spanish-language communications benefits from providing marketing materials, labels, and customer service in Spanish. The provider bears the translation cost but captures the benefits through increased sales and reduced customer-service costs. These incentives operate regardless of regulatory mandates. Prescriptive requirements add value primarily in cases where market incentives fail, but they also impose costs in cases where market incentives already operate effectively.

The economic question for any mandate is whether it corrects a market failure or simply imposes costs where providers would have acted similarly in the absence of regulation. The FCC’s proposals recognize that not all requirements pass this test. Some mandates impose substantial costs in situations where market incentives already encourage similar behavior, or where the mandated approach is less effective than alternatives providers might choose.

III. Analysis of Specific Proposals

Several existing broadband-label requirements are poorly aligned with how consumers shop and should therefore be either removed or relaxed. Forcing providers to read the entire visual label aloud over the phone turns a quick comparison tool into a confusing, linear script, while customers would be better served by conversational explanations tailored to their questions. Allowing providers to aggregate small, location-specific fees into a single line item would enable consumers to focus on total monthly costs, rather than being overwhelmed by “fee clutter.” Requiring labels in customer portals, in machine-readable formats, and in public archives for two years primarily creates costs and confusion, as these do little to assist current customers in making choices and primarily serve speculative or third-party purposes. Performance-based standards (like accessibility and accurate total pricing) are superior to prescriptive formatting mandates that are costly and often counterproductive.

A. Eliminating the Telephone-Reading Requirement

The FCC correctly proposes to remove the requirement that providers read entire labels to customers shopping over the phone.[19] This requirement exemplifies what former U.S. Supreme Court Justice Stephen Breyer termed “regulatory mismatch,” where the regulatory tool is poorly suited to the problem it aims to solve or attempts to solve a “market failure” that does not exist.[20]

The broadband label is designed as a visual-comparison tool. It uses a tabular format with distinct sections for pricing, speeds, data allowances, fees, and contract terms. This visual structure allows consumers to quickly scan, compare multiple plans side-by-side, and return to specific sections as needed. The format is modeled on nutrition labels, which research shows to be effective because consumers can quickly locate the specific information they care about most.[21]

Reading this visual format aloud transforms it into a sequential stream of information that consumers must process and retain aurally without the ability to scan, compare, or refer back. NTCA describes this as creating “a burdensome and potentially confusing interaction as ISP representatives could be required to read the label verbatim while consumers may interrupt to ask questions or seek clarification.”[22]

This is not merely an industry complaint about cost. It describes a genuine mismatch, in that the mandated format serves neither the customer-service representative nor the consumer effectively.

The FCC’s proposal does not eliminate telephone sales or reduce information available to telephone customers. It removes the specific requirement to read the entire formatted label verbatim. Customer-service representatives can still discuss pricing, speeds, data allowances, contract terms, and other plan features. They can answer specific questions customers have. They can provide information in a conversational manner suited to telephone communication. The proposal simply eliminates a prescriptive mandate that forces information into an ineffective format.

The current rule also goes beyond congressional intent. The IIJA directed the FCC to require “display” of labels.[23] Reading information aloud does not constitute “display”; it is, instead, an attempted translation of visual information to an oral format for which the label was not designed. The 2016 Broadband Labels Public Notice, which the act referenced, did not contemplate or require reading labels over the phone.[24]

The FCC explicitly preserves accessibility obligations, noting that this change “would not negate providers’ continuing obligation to ensure the accessibility of broadband labels for people with disabilities.”[25] Section 255 of the Communications Act requires telecommunications providers to make their services and information accessible to and usable by individuals with disabilities, “if readily achievable.”[26] This includes ensuring that information about services is available in accessible formats. Providers must comply with these obligations through whatever means are effective, which might include screen-reader compatibility, conversational explanation by trained representatives, or other accommodations. A performance standard that requires accessibility, while allowing flexibility in how to achieve it, is consistent with modern accessibility law and often produces better outcomes than prescriptive mandates.

B. Allowing Aggregation of Location-Variable Fees

The FCC’s proposal to allow aggregation of discretionary recurring fees that vary by consumer location addresses a genuine compliance burden, while improving label clarity for consumers.[27] Current rules require itemizing such fees as state and local right-of-way charges and pole-rental fees that differ across jurisdictions. This forces providers to create and maintain separate label versions for each unique combination of location-variable fees.

USTelecom explains that “listing itemized discretionary charges, including pass through government-imposed fees, is onerous because providers must create labels to account for geographic variability” and “the burden of compliance far outweighs any consumer benefit.”[28] A provider operating across multiple states may face dozens or even hundreds of different combinations of local fees. The current rule requires creating and maintaining a separate label for each combination. This creates substantial administrative costs for data collection, label generation, version control, and ongoing maintenance as local fees change.

From the consumer’s perspective, itemized lists of location-variable fees create what some call “fee clutter.” When shopping for broadband service, the decision-relevant information is the total monthly cost. A consumer comparing two providers needs to know: “What will I pay each month for this service at my address?” Breaking that total into numerous small components—$1.50 for one local fee, $2.25 for another, $0.75 for a third—does not improve the comparison. It adds cognitive burden without decision value.

Research has found that, while some amount of price partitioning can help consumers (e.g., separating taxes from base prices), excessive itemization creates cognitive burdens that reduce consumer welfare.[29] When the number of itemized charges becomes large, consumers struggle to calculate and compare total costs, undermining the very transparency the itemization was meant to provide.

The FCC proposes allowing providers to display these fees as an aggregate amount, rather than itemizing each component.[30] This approach preserves transparency—consumers would continue to see the total monthly cost, including all fees—while eliminating the compliance burden of maintaining multiple label versions and reducing the cognitive burden of processing lengthy fee lists. The consumer gets the decision-relevant information (total cost) without the clutter of itemized breakdowns that do not aid comparison.

The commission seeks comment on whether the aggregate amount should be the precise amount or the maximum amount consumers might incur.[31] The latter approach—displaying the maximum or “up to” amount—would further reduce compliance costs by allowing a single label to cover a range of locations with somewhat different fee structures. This sacrifices a small amount of precision (the consumer might pay slightly less than the stated maximum) for a large gain in simplicity. Given that consumers primarily need to compare total costs across providers, this tradeoff appears favorable.

This proposal should not be confused with concerns about so-called “junk fees.” Several federal agencies have appropriately moved to address fees with misleading names like “Network Enhancement Fee” or “Broadcast TV Fee” that represent core costs of providing service, artificially separated to make the advertised prices appear lower.[32] The proper solution to such fees is all-in pricing requirements or prohibition of deceptive fee structures. The FCC’s proposal here addresses a different category: genuine external costs that vary by location and that providers pass through to consumers. The aggregate display preserves transparency about total cost while eliminating unnecessary itemization.

C. Eliminating Customer-Portal Display

The FCC proposes to eliminate the requirement that providers display labels in customer-account portals.[33] This requirement addresses a post-sale context where the point-of-sale label is no longer the appropriate disclosure tool.

The broadband label is designed to facilitate pre-purchase comparison shopping. It shows the terms offered to new customers at the point of sale. After a customer subscribes, the relevant service information is contained in their service agreement and monthly bills. These documents reflect the customer’s current pricing (which may have changed from promotional rates), actual usage, any modifications they have made to the plan, and current charges.

Displaying the original point-of-sale label in the customer portal creates confusion, rather than clarity. Consider a straightforward example: A customer subscribes under a monthly promotional rate of $49.99 for the first year, after which the price increases to $69.99, as disclosed at the time of purchase. Six months into the contract, the customer upgrades to a higher speed tier, increasing the price to $79.99. If the point-of-sale label displayed in the portal still shows the original $49.99 promotional rate and the original speed tier, then the label is misleading and does not reflect the customer’s current service or pricing.

The monthly bill, updated in real-time, provides accurate current information about charges, usage, and plan features. If a customer wants to compare their current service to other available options, they can access point-of-sale labels for currently available plans on the provider’s public website, which FCC rules already require.[34] The portal label serves neither the purpose of showing current charges (which bills do better) nor the purpose of facilitating comparison to available alternatives (which current point-of-sale labels on the website do better).

The elimination of this requirement would not leave customers without information or recourse. Customers retain their service agreements, monthly bills showing all charges, and access to current labels for available plans. These tools provide the information customers need in the post-sale context. The portal-display requirement imposes costs (technical implementation, ongoing maintenance, and risk of consumer confusion from outdated information) without corresponding benefits.

D. Eliminating Machine-Readable-Format Requirements

The FCC’s proposal to eliminate the requirement that providers display label information in machine-readable format addresses a mandate that primarily serves third parties, rather than consumers shopping for service.[35] The IIJA directed the commission to require labels “to disclose to consumers information regarding broadband internet access service plans.”[36] The purpose is to help consumers make informed purchasing decisions. The machine-readable format requirement does not serve this purpose directly.

Current rules require providers to “provide the information in any label separately in a spreadsheet file format on provider websites via a dedicated URL that contains all of their labels.”[37] This creates structured data files that can be downloaded and analyzed. The primary beneficiaries are researchers, advocacy organizations, and journalists who want to analyze pricing and service-quality patterns across providers and geographic areas. While such research can have value, it differs from the statutory mandate to help consumers choose among service plans. Moreover, at this point, such research benefits are merely hypothetical, as we were unable to find any published academic research that has relied on machine-readable label information published by providers.

The compliance costs are substantial. USTelecom notes that “it is costly for providers to update and maintain spreadsheets with data from potentially hundreds of labels.”[38] Breezeline characterizes the requirement as adding “significant technical complexity and cost” and creating difficulties with “the highly granular nature of the required information and the static format of machine-readability.”[39] The expense is not data storage but the systems development and maintenance required to extract label information from providers’ various systems, format it consistently according to specifications, validate it for accuracy, and update it continuously as plans change. These are nontrivial software-development and database-management tasks.

The FCC asks the appropriate questions: “Is there evidence the requirement has benefited consumers or will benefit consumers in the future? Are there third-party shopping comparison tools for broadband internet access services that use the machine-readable spreadsheets?”[40] Three years after the rules were adopted, we find no significant consumer-facing tools relying on machine-readable label information published by providers. The requirement imposes costs on providers, and thus ultimately on their customers, to generate a public good that might someday benefit a small group of researchers.

If the FCC determines that it needs structured data on pricing and service terms for enforcement of digital-discrimination rules or other policy purposes, targeted data collection through mandatory filings is more efficient. The FCC regularly collects data from providers through forms and reports for specific regulatory purposes.[41] This approach imposes costs only where the commission has determined collection is necessary for statutory purposes. It also allows the FCC to specify exactly what data it needs, in what format, with what periodicity, and with what geographic granularity—rather than requiring providers to guess what researchers might want and to maintain public-data feeds indefinitely.

The machine-readable label requirement is a one-size-fits-all approach that may not match what the FCC needs for enforcement. It mandates that providers post all label information in spreadsheet format at dedicated URLs. This is prescriptive, rather than targeted. If the commission needs granular pricing data to enforce digital-discrimination rules, it can require submissions of specific data elements. If researchers want access to provider data for analysis, they can request it through Freedom of Information Act requests for FCC-collected data or through academic data-sharing agreements with providers.

The proper policy framework distinguishes between serving consumers directly (the statutory mandate) and generating public goods for third parties (a worthy goal but beyond the core mandate). When the two goals diverge, the FCC should focus on the statutory purpose. Eliminating the machine-readable requirement removes costs imposed on all consumers to serve a diffuse public benefit, while the FCC would retain full authority to collect whatever data it needs for regulatory purposes through targeted requirements.

E. Eliminating Two-Year Archiving

The FCC correctly proposes to eliminate the requirement that providers archive labels for two years after a service plan is no longer offered to new customers.[42] This recordkeeping requirement imposes costs without serving the label’s purpose of facilitating informed consumer choice.

Consumers shopping for broadband service need information about currently available plans. Historical labels for discontinued services do not aid current purchase decisions. The two-year archive serves a different purpose: providing potential evidence for regulatory enforcement actions or billing disputes that might arise years after a plan was offered.

For billing disputes between customers and providers, the relevant documents are the customer’s service agreement, monthly bills, and records of any plan changes during their subscription. These documents reflect the customer’s actual service and charges. Providers maintain these records as part of normal business operations and for their own accounting purposes. When a customer disputes a charge, they reference their service agreement and bills, not the archived point-of-sale label that was displayed to prospective customers at some point in the past.

The archived labels are point-of-sale disclosures showing what was offered to new customers at a particular time. They are not evidence of the specific terms to a given customer agreed. A customer who subscribed three years ago has their own service agreement from that time, which governs their relationship with the provider. The archived label from three years ago shows what was offered to the market generally but is not the binding contract document for any particular customer.

The primary use case for the archive is regulatory enforcement. If the FCC investigates whether a provider engaged in deceptive advertising or made misleading claims about a plan that is no longer offered, the archived label could serve as evidence. This is a legitimate enforcement concern, but it differs from consumer benefit in shopping for service—the focus of the statutory mandate.

If the FCC determines it needs historical labels for enforcement purposes, more targeted approaches are available. The FCC can require providers to maintain archives for potential production in response to FCC investigations. This is the standard approach for business records in regulated industries: Firms must maintain records and produce them upon regulatory demand but need not make them publicly available indefinitely.[43] Alternatively, the FCC could require providers to submit discontinued labels to the FCC for its own archive. Either approach serves the enforcement goal without imposing costs on all providers to maintain public archives based solely on speculation that they might someday be needed.

The distinction between serving consumer-shopping decisions and serving speculative enforcement needs matters because the costs differ. Mandating that all providers maintain public archives of all historical labels imposes costs to serve a purpose that may never materialize for most providers. If and when the FCC needs historical labels for specific enforcement actions, it can obtain them through targeted requests.

IV. Recalibrating the Rules to Match Congressional Intent

The FCC’s proposals rest on sound statutory interpretation. The IIJA directed the commission to “promulgate regulations to require the display of broadband consumer labels, as described in the Public Notice the FCC issued on April 4, 2016 (DA 16-357), to disclose to consumers information regarding broadband internet access service plans.”[44] The act specified that labels must “include information regarding whether the offered price is an introductory rate and, if so, the price the consumer will be required to pay following the introductory period.”[45]

This statutory directive is more limited than the rules the FCC adopted in 2022. The IIJA references the 2016 public notice, which proposed a straightforward label focused on key plan characteristics: monthly price, speeds, data allowances, contract terms, and links to additional information.[46] The 2016 notice did not propose or contemplate machine-readable formats, two-year archiving, display in customer portals, or reading labels over the phone.

When Congress references a specific document in delegating regulatory authority, that reference serves to bound the delegation. The most natural reading is that Congress wanted the type of labels described in that notice—a clear, visual disclosure at the point of sale showing key plan features—not whatever expanded requirements the FCC might later determine would be useful for other purposes. As ICLE’s Gus Hurwitz and Geoffrey Manne explain:

Regulation as a discovery process, in its simplest formulation, asks regulators to consider that they might be wrong. That they might be asking the wrong questions, collecting the wrong information, analyzing it the wrong way—or even that Congress has given them the wrong authority or misunderstood the problem that Congress has tasked them to address. And, in response to these concerns, regulation as a discovery process asks regulators to build them into the regulatory process itself. This is because regulation does not operate like a competitive market. If Amazon Prime had not been the successful idea that it was, consumers would not have adopted it, other firms would have obtained competitive advantage over Amazon, and the idea would have fallen into the dustbin of history. But when an agency promulgates a rule pursuant to APA processes, that rule takes on the force of law—good or bad, there is no market mechanism by which it will succeed [or] fail.[47]

The FCC’s 2022 Broadband Label Order exceeded the IIJA’s core requirements by adding elements not contemplated in the 2016 public notice. The current proposals recalibrate the rules to better match congressional intent. This recalibration reflects sound regulatory practice: adopting rules based on the best information available at the time, observing their effects during implementation, soliciting stakeholder feedback, and adjusting based on evidence.

The FCC’s “Delete, Delete, Delete” initiative, which prompted this review, represents this kind of evidence-based reassessment.[48] Regulations can produce unintended consequences. Requirements that appear reasonable ex ante may prove burdensome or ineffective in practice. A regulatory system that cannot adapt based on implementation experience will accumulate inefficient rules over time through “regulatory accretion,” or more informally, “regulatory creep.”

The FCC’s willingness to propose eliminating requirements that have proven burdensome or ineffective creates a valuable precedent. It demonstrates that agencies can and should revisit regulations, acknowledge when initial rules had unintended consequences, and make corrections based on evidence. This approach benefits consumers through more efficient regulation that focuses resources on requirements that improve decision making.

V. Conclusion

The FCC’s proposals to streamline broadband-label requirements represent sound regulatory refinement based on implementation experience. The proposals preserve all decision-relevant information for consumers—monthly price including all fees, typical speeds, data allowances, and contract terms—while eliminating requirements that convey information in ineffective formats, create post-sale confusion, or primarily serve purposes other than consumer shopping.

The economic analysis supports these changes. Research on consumer decision making demonstrates that excessive information reduces, rather than improves, decision quality. Regulatory costs are ultimately borne by consumers through higher prices or reduced investment. The proper evaluation asks whether the benefits to consumer decision making justify the costs imposed. The FCC’s proposals eliminate requirements where costs exceed benefits.

The specific proposals address genuine problems:

• The telephone-reading requirement forces a visual-comparison tool into a sequential oral format that serves consumers poorly.
• The itemization requirement for location-variable fees creates compliance burdens and consumer confusion without improving comparison shopping.
• The customer-portal-display requirement creates confusion by showing outdated point-of-sale labels after subscription.
• The machine-readable-format requirement serves researchers, rather than consumers shopping for service.
• The two-year archiving requirement imposes costs to serve speculative enforcement needs unrelated to consumer shopping.

These changes will improve the label’s effectiveness for its core purpose: helping consumers make informed choices among broadband-service plans. By reducing the cognitive burden of processing low-value information and eliminating costs that are passed through to consumers, the proposals serve the public interest.

ICLE urges the FCC to adopt the proposed streamlining changes and to continue this approach of evidence-based regulatory refinement in other contexts.

[1] Empowering Broadband Consumers Through Transparency; Delete, Delete, Delete, 90 Fed. Reg. 55,713 (proposed Dec. 3, 2025) (to be codified at 47 C.F.R. pt. 64) [hereinafter “NPRM”]; see also Empowering Broadband Consumers Through Transparency; Delete, Delete, Delete, CG Docket No. 22-2, GN Docket No. 25-133, Second Further Notice of Proposed Rulemaking and Notice of Proposed Rulemaking, FCC 25-74 (Nov. 3, 2025) [hereinafter “Draft NPRM”]. The FCC’s publicly released NPRM (FCC 25-74) includes statements not reproduced in the Federal Register publication. While the Federal Register version is the operative text for notice and comment, these comments refer to the FCC-released version, where necessary, to reflect the Commission’s articulated reasoning and to respond to questions that appear only in that version.

[2] Infrastructure Investment and Jobs Act, Pub. L. No. 117-58, § 60504(a), 135 Stat. 429, 1244 (2021), codified at 47 U.S.C. § 1753(a).

[3] Empowering Broadband Consumers Through Transparency, CG Docket No. 22-2, Report and Order and Further Notice of Proposed Rulemaking, 37 FCC Rcd. 13686 (2022) [hereinafter “Broadband Label Order”].

[4] Comments of the International Center for Law & Economics Re: Delete, Delete, Delete, GN Docket No. 25-13352 (Apr. 11, 2025), available at https://laweconcenter.org/wp-content/uploads/2025/04/2025-Delete-Delete-Delete-Comments-r3.pdf.

[5] NPRM ¶ 4.

[6] Draft NPRM ¶ 11.

[7] NPRM ¶ 4; 47 U.S.C. § 255(c) (“A provider of telecommunications service shall ensure that the service is accessible to and usable by individuals with disabilities, if readily achievable.”).

[8] NPRM ¶ 5.

[9] NPRM ¶ 7.

[10] NPRM ¶ 8.

[11] NPRM ¶ 9.

[12] See, e.g., Eric Fruits & Geoffrey A. Manne, Quack Attack: De Facto Rate Regulation in Telecommunications, Int’l Ctr. Law & Econ. (Mar. 30, 2023), available at https://laweconcenter.org/wp-content/uploads/2023/03/De-Facto-Rate-Reg-Final-1.pdf (“Even if a regulator disavows explicit rate regulation, intervention into providers’ business models and technical decisions will inevitably shape pricing in much the same way as explicit price regulation does, through the “hydraulic effect” of regulation.”) citing Geoffrey A. Manne, The Hydraulic Theory of Disclosure Regulation and Other Costs of Disclosure, 58 Ala. L. Rev. 473 (2007).

[13] Jonathan Kanter et al., Comment of the Antitrust Division of the United States Department of Justice on Trade Regulation Rule on Unfair or Deceptive Fees, Docket No. 2023-24234 note 5 (Feb. 7, 2024), https://www.justice.gov/atr/media/1337936/dl?inline (citing economic research regarding the potential benefits of pricing transparency, including how pricing transparency lowers costs for consumers).

[14] Herbert A. Simon, Rational Choice and the Structure of the Environment, 63 Psychol. Rev. 129 (1956) (“Evidently, organisms adapt well enough to ‘satisfice’; they do not, in general, ‘optimize.’”); Herbert A. Simon, A Behavioral Model of Rational Choice, 69 Q.J. Econ. 99 (1955); see also Bounded Rationality: The Adaptive Toolbox (Gerd Gigerenzer & Reinhard Selten eds., 2001).

[15] Peter M. Todd & Gerd Gigerenzer, Ecological Rationality: Intelligence in the World (2012).

[16] Linda Verrill et al., Front of Package Labeling Literature Review, Food & Drug Admin. (2023), https://www.fda.gov/media/175617/download.

[17] James M. Lacko & Janis K. Pappalardo, Improving Consumer Mortgage Disclosures: An Empirical Assessment of Current and Prototype Disclosure Forms 127 (FTC Bur. of Econ. Staff Rept., Jun. 2007), available at https://www.ftc.gov/sites/default/files/documents/reports/improving-consumer-mortgage-disclosures-empirical-assessment-current-and-prototype-disclosure-forms/p025505mortgagedisclosurereport.pdf.

[18] See, e.g., Brian Albrecht, Stop Blaming Rising Egg Prices on Market Power, Truth on the Mkt. (Feb. 21, 2025), https://truthonthemarket.com/2025/02/21/stop-blaming-rising-egg-prices-on-market-power (“In fact, competitive markets often show larger cost pass-through than monopolistic ones.”); see also Eric Fruits, Ben Sperry, & Kristian Stout, Re: Promoting Competition in the American Economy: Cable Operator and DBS Provider Billing Practices, FCC, MB Docket No. 23-405 (Feb. 5, 2024), available at https://laweconcenter.org/wp-content/uploads/2024/02/2024-Early-Termination-Fee-Comments-Final.pdf (concluding that a ban on early-termination fees would almost certainly lead to higher prices for cable and direct-broadcast-satellite customers).

[19] Draft NPRM ¶ 10.

[20] Eric Fruits, ‘Regulation and Its Reform’ by Stephen Breyer and ‘Contrived Competition’ by Richard Vietor, Truth on the Mkt. (Oct. 28, 2025), https://truthonthemarket.com/2025/10/28/regulation-and-its-reform-by-stephen-breyer-and-contrived-competition-by-richard-vietor, citing Stephen Breyer, Regulation and Its Reform (1982).

[21] Broadband Label Order ¶ 55.

[22] Draft NPRM ¶ 11.

[23] 47 U.S.C. § 1753(a).

[24] Consumer and Governmental Affairs, Wireline Competition, and Wireless Telecommunications Bureaus Approve Open Internet Broadband Consumer Labels, GN Docket No. 14-28, Public Notice, 31 FCC Rcd 3358 (CGB/WCB/WTB 2016) [hereinafter “2016 Broadband Labels PN”].

[25] Draft NPRM ¶ 11.

[26] 47 U.S.C. § 255(c).

[27] NPRM ¶ 5.

[28] Draft NPRM ¶ 14, note 31.

[29] Vicki G. Morwitz, Eric A. Greenleaf, & Eric J. Johnson, Divide and Prosper: Consumers’ Reactions to Partitioned Prices, 35 J. Marketing Res. 453 (1998), (“a large proportion of consumers do not account fully for surcharges and, therefore, underestimate the total product cost”).

[30] NPRM ¶ 5.

[31] Id.

[32] See, e.g., Trade Regulation Rule on Unfair or Deceptive Fees, 16 C.F.R. pt. 464, 90 Fed. Reg. 2066 (Jan. 10, 2025); Trade Regulation Rule on Unfair or Deceptive Fees, 88 Fed. Reg. 77420 (Nov. 9, 2023), (“The Consumer Federation of America cited a review of internet bills by Consumer Reports that showed providers using terminology such as ‘network enhancement fee,’ ‘internet infrastructure fee,’ ‘deregulated administration fee,’ and ‘technology service fee,’ that made fees look like government-imposed, mandatory fees.”).

[33] NPRM ¶ 7.

[34] 47 C.F.R. § 8.1(a)(2).

[35] NPRM ¶ 8.

[36] 47 U.S.C. § 1753(a).

[37] Broadband Label Order, ¶ 68; see also 47 C.F.R. § 8.1(a)(3).

[38] Draft NPRM ¶ 20, note 43.

[39] Draft NPRM ¶ 20.

[40] NPRM ¶ 8.

[41] See, e.g., 47 C.F.R. Part 1, Subpart EE (Integrated Broadband Data Collection).

[42] NPRM ¶ 9.

[43] See, e.g., 47 C.F.R. § 42.73 (Commission authority to issue subpoenas for documents).

[44] 47 U.S.C. § 1753(a).

[45] 47 U.S.C. § 1753(b)(1).

[46] 47 U.S.C. § 1753(a).

[47] Justin (Gus) Hurwitz & Geoffrey A. Manne, Regulation as a Discovery Process (Oct. 16, 2024), https://ssrn.com/abstract=4721112.

[48] Delete, Delete, Delete, GN Docket No. 25-133, Public Notice, 40 FCC Rcd 1601 (GEN 2025)

Executive Summary

The International Center for Law & Economics (ICLE) urges the Federal Communications Commission (FCC) to repeal the Local Radio Ownership Rule, the Local Television Ownership Rule, and the Dual Network Rule. Section 202(h) of the Telecommunications Act of 1996 requires the FCC to review its ownership rules every four years and to repeal or modify regulations no longer in the public interest. The 8^th U.S. Circuit Court of Appeals held in Zimmer Radio that the statute permits the FCC only to loosen regulations, not to tighten them, and creates a presumption favoring deregulation.

The Commission must justify retaining rules against evidence of increased competition—a burden the record cannot support. These regulations, conceived when spectrum scarcity limited media choices, now harm the public interest by preventing local broadcasters from achieving the scale necessary to compete with largely unregulated digital platforms.

Defining relevant markets too narrowly and treating broadcast radio and television as isolated from digital competitors has proven a fundamental error. Consumers substitute freely between broadcast stations, streaming services, podcasts, and social media for both entertainment and advertising exposure. From 2018 to 2025, terrestrial radio’s share of audio listening time fell from 46% to 34%, while streaming audio rose from 14% to 23%, and podcasts climbed from 3% to 10%. Nielsen data show that streaming now accounts for 46% of television viewing time, compared to broadcast’s 19% share. Defining markets as “local broadcast radio” or “local broadcast television” ignores how consumers experience media and how advertisers allocate budgets across platforms.

The current ownership caps prevent broadcasters from achieving economies of scale that would enable them to invest in costly local-news operations and community programming. The Local Radio Ownership Rule’s numerical caps and AM/FM subcaps create portfolios of financially weak stations, rather than allowing consolidation that could cross-subsidize quality content. The Local Television Ownership Rule limits entities to two stations per market, preventing the shared newsgathering resources and infrastructure that could support expanded local journalism. The Dual Network Rule dates to 1941 and prohibits local stations from affiliating with entities owning multiple major networks. It reflects concerns about spectrum scarcity that have largely vanished, as digital platforms have built global distribution without owning a single broadcast affiliate.

Adopting a clean-slate approach and repealing all three rules would not leave a regulatory void. The U.S. Justice Department (DOJ) and Federal Trade Commission (FTC) remain empowered to review media mergers under general antitrust law, conducting fact-specific analyses that define relevant markets to include all competitive platforms and that would assess actual effects on advertising rates and consumer welfare. Case-by-case antitrust review is superior to the FCC’s prophylactic structural prohibitions, which apply the same restrictions to every market, regardless of the competitive local conditions. Repealing these outdated rules would allow broadcasters to compete effectively, increase their investment in local content, and better serve the public interest in an era of media abundance.

I. Introduction and Overview

The International Center for Law & Economics (ICLE) submits these comments in response to the Federal Communications Commission’s (FCC or “the Commission”) notice of proposed rulemaking (NPRM) regarding review of its broadcast-ownership rules.[1] ICLE is a nonprofit, nonpartisan research center that promotes the use of law & economics methodologies to inform public policy. ICLE’s work is intended to ensure that competition policy and regulation are grounded in sound economic analysis and promote consumer welfare, particularly in dynamic, technology-driven markets such as media and telecommunications.³

The Commission’s quadrennial review, mandated by Section 202(h) of the Telecommunications Act of 1996 (“1996 Act”), leads to the conclusion that the Local Radio Ownership Rule, the Local Television Ownership Rule, and the Dual Network Rule are no longer “necessary in the public interest as the result of competition.”[2] Conceived in an era of spectrum scarcity and limited media choice, these rules now produce consequences that are contrary to the public interest. They function as asymmetrical regulatory restraints, preventing local broadcasters from achieving the scale and efficiency needed to compete with the largely unregulated digital firms that now operate in the modern media landscape. By constraining broadcasters, the Commission’s rules reduce investment in local news, limit innovation, and reduce the diversity of high-quality content available to the U.S. public.

The NPRM, framed by the deregulatory language of Section 202(h) and the opinion of the 8th U.S. Circuit Court of Appeals in Zimmer Radio of Mid-Missouri Inc. v. FCC, creates a presumption against retaining the rules.[3] The FCC is statutorily directed to justify their continued existence in the face of new competition, a burden the record cannot support. The NPRM notes that the Zimmer court held that the term “modify” in Section 202(h) permits the Commission only to “loosen” regulations,[4] and it interprets the quadrennial review as a mandate for deregulation.[5] Retaining these rules is not only poor policy but would be inconsistent with the statute as interpreted by the 8th Circuit.

ICLE urges the FCC to adopt a “clean slate” approach to broadcast regulation. Rather than modify outdated and harmful regulations, the Commission should fulfill its statutory duty by repealing these three rules in their entirety. This action would not leave a regulatory void. Instead, it would shift the oversight of media consolidation to the U.S. Justice Department (DOJ) and the Federal Trade Commission (FTC). Their case-by-case analysis under general competition law is better suited to protect competition in today’s complex, multiplatform marketplace than the FCC’s prescriptive structural prohibitions. The public interest is no longer served by rules that treat broadcasters as dominant gatekeepers in a world of abundant media choices.

A. Section 202(h)’s Deregulatory Mandate and Zimmer v FCC

Section 202(h) of the Telecommunications Act of 1996 requires the FCC to review its ownership rules every four years and to “repeal or modify any regulation it determines to be no longer in the public interest.”[6] The 8th Circuit’s decision in Zimmer v. FCC identified a key flaw in the FCC’s 2018 review was a failure to grapple with the modern competitive landscape, which led the court to find the agency’s retention of the Top-Four Prohibition arbitrary and capricious.[7]

The court’s holding that Section 202(h) is a deregulatory statute that does not permit the FCC to tighten rules provides a clear directive for this proceeding. The court’s finding that the statute only allows the FCC to loosen these regulations was a direct repudiation of the 3rd U.S. Circuit Court of Appeals’ earlier interpretation in Prometheus I:

We recognize that our decision appears to put us in tension with the Third Circuit’s decision in Prometheus I, 373 F.3d at 394-95, in which the court declined to read the “repeal or modify” provision of Section 202(h) as a “one-way ratchet.” But the Third Circuit’s brief analysis on this point improperly suggested that such a reading “ignores both ‘modify’ and the requirement that the Commission act ‘in the public interest.’” Id. at 394. The narrow reading of “modify” we adopt does neither. It still allows the Commission to tweak its regulations so long as it does not tighten them, and it still requires the Commission to act “in the public interest” as it does so.[8]

The Zimmer decision established a legal framework under which the FCC’s discretion may be channeled in only one direction. Any proposal to retain the rules as-is, or to modify them in any way that is not a clear loosening, faces a high legal hurdle. The statute places the burden of proof on those who wish to retain regulations and requires a demonstration that the rules remain “necessary” specifically “as the result of competition.” Given the growth of competition from digital media, this burden is now insurmountable.

B. Redefining ‘Public Interest’ for the Digital Age

The NPRM notes that the FCC has historically evaluated the public interest through three policy goals: competition, localism, and viewpoint diversity.[9] However, the Commission’s application of these goals has not evolved with the marketplace. In an environment of digital abundance, these goals are best served not by preserving a set number of broadcast licensees, but by ensuring that broadcasters are sufficiently viable financially to produce high-quality local content and compete against their scaled, global, and unregulated rivals.[10]

A regulatory framework that weakens broadcasters in the name of preserving viewpoint diversity—as measured by counting the number of local owners—while ceding the media market to a handful of global tech platforms is counterproductive to the public interest. Localism requires capital investment in newsgathering and producing local content. Viewpoint diversity requires a multiplicity of financially healthy voices, not a larger number of struggling ones.

The FCC’s framework implicitly creates a false choice between the number of broadcast owners and the quality of local content. In the current economic reality, the ownership rules result in more owners of financially weaker stations, leading to a net decrease in the quantity and quality of local-news production. This prioritization of a metric (number of owners) that has become detached from the desired outcome (robust local service) should be abandoned. The public interest now requires that the FCC remove the regulatory constraints that prevent broadcasters from competing.

II. The Centrality of Correct Market Definition

The error that has affected the FCC’s past analyses, and which must be corrected in this proceeding, has been the Commission’s persistent reliance on narrow, backward-looking market definitions that treat broadcast radio and television as isolated silos.[11] This approach is inconsistent with modern antitrust economics. Sound economic analysis, as practiced by the DOJ and FTC and advocated by ICLE, demands a functional approach based on substitutability from the perspective of both consumers and advertisers. For example, as ICLE President Geoffrey Manne reported in 2019:

That television broadcasters and cable networks compete with digital services is by now broadly well-understood. And they do so on virtually all dimensions: for user attention, for labor, for content and other inputs—and for advertising. The same is true for competition among both television/cable and digital platforms and newspapers, radio, magazines, video games, etc. This competition was not always apparent, of course.[12]

From the consumer’s perspective, the platform through which media content is conveyed has grown increasingly irrelevant; what matters are content and convenience. Consumers substitute between broadcast television, cable, and an array of on-demand and linear streaming services for video content.[13] Many do not perceive NBC as existing in a separate market from Peacock (NBC’s streaming service), YouTube TV (which streams NBC affiliates), or streaming services that distribute popular NBC shows such as Friends. In the FCC’s request for comments regarding affiliate arrangements, the agency suggests that both providers and consumers view broadcast and streaming as substitutes:

For instance, the national programming networks have moved some popular programming from broadcast television to their streaming platforms, and sometimes simulcast marquee network sports programming, such as the Super Bowl and the Olympics, on their streaming platforms.[14]

Similarly, in the audio space, a listener may choose among a local FM station, SiriusXM satellite radio, a Spotify playlist, or a podcast, all delivered through the same car speakers. Defining the market as “local broadcast radio” ignores the consumer experience.

Nielsen data from 2025 show that streaming accounts for 46% of household television viewing time, more than double the 19% share of broadcast television.[15] Ad-supported audio accounts for only 64% of listening time, and radio accounts for only 64% of that.[16] That means radio itself accounts for just 41% of consumer-listening time.

From the advertiser’s perspective, the market is the audience. Advertisers allocate their budgets across a wide array of platforms—broadcast, cable, digital, and social media—based on reach, targeting capabilities, and return on investment. To pretend that a local television station does not compete with YouTube, Google Search, Facebook, Instagram, or Netflix for local advertising dollars is to ignore the commercial reality of the modern advertising market.

Netflix reports that more than half of new subscribers sign up for the service’s ad-supported tier.[17] Digital platforms now offer the same, and often superior, geo-targeting capabilities that were once the exclusive domain of local broadcasters. The FCC’s narrow market definitions create a cycle in which the rules weaken broadcasters, making them appear less competitive within their regulatory silos, which the Commission then uses as a justification to “protect” the weakened industry with the very rules that caused the harm. Breaking this cycle requires a shift in the analytical starting point—the market definition itself.

The competitive disparity is quantifiable. The FCC’s rules subject local broadcasters to ownership constraints that are entirely alien to their primary competitors. The market capitalizations of the major tech companies are measured in the trillions, while those of the largest broadcast groups are in the single-digit billions. The business models also highlight the competitive threat. For tech companies, media content often acts as a component of a larger business in e-commerce, hardware sales, or data collection—a strategy unavailable to broadcasters, whose survival depends directly on advertising and retransmission-consent revenues.

Under the Administrative Procedure Act, courts must “hold unlawful and set aside agency action, findings, and conclusions found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”[18] To maintain ownership rules for broadcasters under the fiction that they do not compete with streamers is likely to run afoul of the Administrative Procedure Act.

III. Local Radio Ownership Rule Unnecessarily Restrains Competition

The Local Radio Ownership Rule,[19] with its sliding scale of numerical caps and AM/FM subcaps, is a product of an earlier technological era that bears no resemblance to the modern audio marketplace. Its continued existence stifles investment, prevents efficiencies, and harms listeners by weakening local radio stations’ ability to serve their communities. The rule is no longer necessary in the public interest and must be repealed.

A. Relevant Audio Market Is Broad and Dynamic

The NPRM’s question regarding the Local Radio Ownership Rule—whether the FCC should revise its product-market definition to include non-broadcast audio sources—must receive an affirmative answer. The Commission’s past practice of defining the relevant market as the “radio listening market” and excluding satellite and internet-based services is inconsistent with economic analysis of the market.

The modern audio marketplace is a dynamic and integrated ecosystem. From the perspective of a consumer, broadcast radio competes directly with a plethora of alternatives:

• Satellite Radio: SiriusXM offers hundreds of channels of curated music, news, sports, and talk programming with nationwide coverage.
• Interactive Streaming Services: Spotify, Apple Music, Amazon Music, and YouTube Music provide on-demand access to tens of millions of songs, allowing users to create personalized playlists.
• Non-Interactive Streaming: Services like Pandora offer customized “radio stations” based on user preferences.
• Podcasts: The growth in podcasting has created a vast new universe of on-demand spoken-word content, competing directly with news/talk and personality-driven radio formats.
• Other Digital Audio: Audiobooks, webcasting, and other platforms further fragment the listener’s attention and the advertiser’s dollar.

Edison Research reports that, since 2018, terrestrial radio’s share of audio-listening time has fallen by 12%, while streaming audio’s share has grown by 9% and the share devoted to podcasts has risen by 7%, demonstrating that consumers view streaming audio and podcasts as competitive substitutes for AM/FM radio broadcasts. The company reports that one-third of adults use either Apple CarPlay or Android Auto in their vehicles, where alternatives to AM/FM radio are available literally at the touch of a button.[20]

Additionally, consumers often use audiovisual media solely for the audio component, disregarding the video component entirely. For example, video essays are generally long-form video content that covers a wide range of topics, including video-game lore, fan theories, historical studies, and social critiques.[21] These types of long-form content take up 73% of the average viewing time spent by U.S. YouTube users,[22] largely in part because individuals can put the video on in the background or while on long drive. But even shorter-form videos can serve the same function, allowing the user to listen to just the audio portion of a video on the latest episode of Survivor or a top 10 list of the greatest moments in NFL history. While this type of content may appear on its face to be radically different from traditional radio, in a practical sense, many consumers do use these kinds of audiovisual content as a direct substitute for radio on long drives or while going to sleep.

Consumers do not distinguish between these platforms based on their regulatory classification or their technological features. They choose among their options based on content, convenience, cost, and the listening context. The idea that these services are not substitutes for broadcast radio defies economic reality. They compete for the same finite resource: the listener’s time. They also compete for the same advertising revenue, as digital-audio platforms now offer sophisticated targeting capabilities that rival and often exceed those of broadcast radio. Retaining ownership limits based on an arbitrary and archaic market definition that includes only broadcast stations would ignore or dismiss actual consumer behavior.

Table 1: Share of Time Spent Listening to Audio Sources

SOURCE: 2018 Quadrennial Review; Edison Research[23]

B. Arbitrary Caps Stifle Investment and Efficiency

The rule’s rigid numerical ownership caps and its AM/FM subcaps also have negative consequences. They prevent radio operators from achieving the necessary economies of scale and scope, which has direct negative consequences for the public interest.

The caps inhibit investment in localism. High-quality local news, community-affairs programming, and the employment of local on-air talent are expensive fixed costs. For context, the Knight Foundation reports that Oregon Public Broadcasting (OPB), considered a “jewel of the public media system,” spent $7.2 million on local content in fiscal year 2017, which was “dwarfed by the $25 million spent on everything else,” noting that OPB’s spending is “very impressive in a system where there are still small stations that spend virtually nothing on local content.”[24] The report emphasizes:

[B]roadcasting is incredibly expensive. You need big buildings, studios, master control centers and towers, highly-skilled people to operate and maintain all those facilities and a leadership team to administer them. And, of course, you need an army of fundraisers and underwriting sales reps to bring in the money that pays for all of the above. Broadcasting is expensive.[25]

Rural stations face particular challenges, as “broadcasting and engineering costs are higher at rural stations than at urban ones, and represent 19 percent of the average station’s total expenses, versus 14 percent for non-rural stations.”[26]

The National Association of Broadcasters (NAB) has argued that current ownership rules harm investment and threaten the future of local news and community programming.[27] By preventing station groups from spreading these fixed costs across a larger number of outlets in a single market, the ownership rules make it economically challenging to provide robust local service. Consolidation would enable efficiencies through shared resources—such as sales staff, administrative functions, and studio space—which would free up capital to invest in programming.

As the NAB has stated, owning more stations locally enables broadcasters to program each outlet differently, attracting distinct audiences and expanding program diversity, which in turn would make a station group more attractive to advertisers who support its operations.[28] If every radio station in a market is owned by an independent firm, the stations may attempt to reach the same audience with similar programming and coverage, aiming to target the most valuable demographics for advertisers. If a firm owns multiple stations, however, it can better focus each station on a different audience, producing and disseminating content that better serves the specific needs of each audience base.

By increasing the total number of listeners to their radio networks, a broadcast firm can offer more valuable advertising and better compete with the numerous types of content vying for consumers’ time and attention. This, in turn, would provide both more diversity in the type of content delivered and competition for the attention of different demographics.

The AM/FM subcaps create additional distorted incentives and are particularly detrimental. FM stations generally have technical and, consequently, commercial advantages over AM stations.[29] The argument that subcaps are needed to protect the viability of AM radio is flawed. For example, Salem Communications claims that deregulating subcap limits would result in the “migration of leading radio brands to the FM Band [that] could accelerate the departure of the AM audience.”[30] To illustrate their point, Salem provided examples of AM stations in several markets that began simulcasting their content on FM bands, with one market seeing listeners migrate from the AM broadcast to the FM broadcast.[31] Looked at another way, Salem’s example suggests that, when given a choice, consumers prefer receiving broadcasts via FM over AM. In many markets, the subcap limits deprive consumers of exercising that choice.

The financial instability of the AM band is widely acknowledged, as belied by the FCC’s interest a decade ago in “revitalizing” AM service in MB Docket No. 13-249. The subcaps, however, create a distorted incentive structure. By limiting the number of more desirable FM stations an owner can acquire, the rule may force consolidation among less-viable AM stations. This creates portfolios of struggling assets rather than allowing for the creation of robust, mixed-signal groups that can cross-subsidize and innovate. Thus, the rule initially intended to promote diversity might instead promote fragility across the AM band. A more effective path to AM revitalization would be to allow operators to build sustainable business models through consolidation and investment. Eliminating the subcaps would allow the market to determine the most efficient and sustainable combinations of assets.

C. Public Safety Best Served by Financially Viable Broadcasters

The NPRM notes that commenters have emphasized the role of broadcast media in disseminating information during emergencies.[32] The Communications Act itself establishes the FCC for the purposes of “national defense” and “promoting the safety of life and property.”[33]

Furthermore, fears that relaxing ownership caps would compromise the availability of emergency information are unfounded, given the existing structure of local radio markets. As the FCC’s 2024 Communications Marketplace Report indicates, the vast majority of local radio markets are served by more than 10 terrestrial radio stations, with many served by several dozen.[34] This large number of independent outlets creates a robust and resilient system for disseminating emergency alerts.

The key to a reliable emergency broadcast system is redundancy, a point the NAB has emphasized in its filings on the Emergency Alert System. In such a saturated environment, the consolidation of a few stations, or even the potential for a struggling station to go silent, would not materially diminish the overall capacity of the system to inform the public during a crisis. It is unlikely that provision of emergency information to the public would suffer significantly, even if the number of stations in a market were to decline. The sheer number of remaining broadcast voices would ensure that critical information would continue to reach affected communities.

Increased consolidation in local radio markets could, in fact, increase the reach of public-safety messages over radio. If consolidation allowed stations to better target different demographics and diversify their content delivery, the total number of radio listeners could increase, or not decrease at the same rate as under current rules.[35] While there are other means of reaching these consumers, a more robust radio marketplace would also enhance the benefits of public-safety messaging.

A broadcaster’s ability to provide service during an emergency depends on its financial health and operational resilience. Providing reliable service during a crisis requires investment in hardened infrastructure, backup power generation, robust transmission facilities, and skilled local journalists and engineers. The current ownership rules inhibit these investments by preventing broadcasters from achieving necessary economies of scale. Stations with limited financial resources are less able to make the capital improvements and maintain the staffing levels required to ensure they stay on the air when their communities need them most.

Repealing the ownership rules would permit broadcasters to achieve efficiencies that could support investment in public-safety infrastructure. A regulatory framework that enhances broadcasters’ financial viability is one that supports public safety.

D. Recommendation: Full Repeal

The FCC should eliminate the Local Radio Ownership Rule in its entirety. The rule is premised on a narrow market definition and undermines the public-interest goals of localism, diversity, competition, and innovation. Concerns that repealing this rule could lead to excessive concentration in a specific local-advertising market are misplaced. Such concerns are properly and more precisely handled by the DOJ and FTC under general antitrust laws. Antitrust enforcers can conduct a fact-specific analysis of proposed transactions, defining the relevant market as including all competitive audio platforms and assessing the likely effects on advertising rates. This case-by-case approach is preferable to the FCC’s one-size-fits-all prophylactic rule.

Full repeal of the Local Radio Ownership Rule is not only within the FCC’s discretion but is compelled by the statutory framework of Section 202(h). The statute directs the Commission to repeal any rule it determines is “no longer in the public interest as the result of competition.” As demonstrated above, the growth of competition from satellite radio, streaming services, podcasts, and other audiovisual media has rendered the rule’s narrow focus on broadcast-only competition obsolete and counterproductive. A determination that the rule is no longer needed is therefore a straightforward exercise of the FCC’s analytical duty.

Moreover, the 8th Circuit’s decision in Zimmer confirms that Section 202(h) is a deregulatory statute under which the FCC’s authority to “modify” is limited to loosening, not tightening, its rules. Repeal is the ultimate loosening of a regulation and thus both fall squarely within the Commission’s statutory authority and align with judicial precedent.

IV. Local Television Ownership Rule Undermines Localism by Weakening Local Broadcasters

The Local Television Ownership Rule,[36] which generally limits an entity to owning two television stations in a single designated market area (DMA), is another regulation that has been rendered obsolete by changes in the video marketplace. The rule undermines the FCC’s goal of localism by preventing local broadcasters from achieving the scale necessary to survive in a competitive environment. Its repeal is necessary to ensure the continued provision of high-quality, locally focused news and public-affairs programming.

The FCC’s prior finding in the 2018 Quadrennial Review that broadcast television constitutes its own distinct product market was questionable then and is inconsistent with the current state of the video market now.[37] The NPRM’s query about the appropriate product-market definition must be answered by acknowledging the vast and interconnected video ecosystem in which broadcasters compete.

Today’s consumers have a plethora of choices for video programming that are direct substitutes for over-the-air broadcasting:[38]

• Traditional Multichannel Video Programming Distributor (MVPDs): Cable and satellite providers (e.g., Comcast, DirecTV) remain a significant source of video programming.
• Virtual MVPDs (vMVPDs): Services like YouTube TV, Hulu + Live TV, and Sling TV offer packages of linear broadcast and cable channels delivered over the internet, competing directly with both broadcasters and traditional MVPDs.
• Subscription Video-on-Demand (SVOD): Global firms like Netflix, Amazon Prime Video, Disney+, and Apple TV+ have become dominant forces, investing tens of billions of dollars annually in original and licensed content.⁹
• Free Ad-Supported Streaming Television (FAST): Platforms like Tubi and Pluto TV offer thousands of linear channels and on-demand titles for free, competing directly with broadcasters for both viewers and advertising dollars.
• Social Media and Short-Form Video: Platforms like YouTube and TikTok command a massive share of video consumption and are formidable competitors for advertising revenue.

Each of these platforms competes directly with local television stations on every meaningful dimension: for audience attention, for programming rights, and for local and national advertising revenue.[39] Even solely audio products like podcasts and audiobooks provide competitive pressure on broadcasters, as many consumers use broadcast television as background noise while doing household chores, reading, or chatting with friends. The notion that a consumer who can watch their local news on a station’s website, a vMVPD, or a FAST service, and can watch primetime entertainment on Netflix or Hulu, still views broadcast television as a “distinct product market” is an inaccurate description of the market.

A. Consolidation Is Necessary for Local Content to Survive

The NPRM seeks comment on whether and to what extent non-broadcast video entities provide local news and other local content. According to Pew, 56% of U.S. adults often get their news from digital devices, while 32% often get their news from TV.[40] Despite their technological and regulatory differences, consumers increasingly view online and TV news as substitutes.

By way of example, in late September and early October, President Donald Trump announced his intent to send National Guard troops to quell protests outside an Immigration and Customs Enforcement facility just outside of downtown Portland, Oregon. In addition to coverage from local ABC, NBC, CBS, and Fox affiliates, more than a dozen video reports were available from cable outlets (e.g., CNN) and internet news outlets such as NewsNation, Instagram, and TikTok. Even niche local content, such as the announcement of a World Naked Bike Ride through Portland, was aired on local affiliates, cable outlets, and through distributed by videos on Instagram, Facebook, and X/Twitter. Every local government in the Portland region—such as the City of Portland, Multnomah County, the Metro regional government, and the Portland Public Schools district—streams its meetings and distributes them via YouTube, along with full transcripts that can be quickly queried and summarized using AI.

Organizations like Free Press[41] and the National Hispanic Media Coalition[42] argue that media mergers threaten local-news coverage, as new owners seeking efficiency gains replace costly community reporting with cheaper, centrally produced national content. This concern reflects real economic pressures: local newsrooms require substantial investments in staff, equipment, and production, making cost consolidation appear economically rational after mergers. The 2023 closure of WNWO-TV’s local-news operations in Toledo, Ohio—where Sinclair replaced local newscasts with centrally produced content—would appear to validate these fears about corporate consolidation prioritizing cost-cutting over community service, as the perpetually underperforming station could no longer justify funding its money-losing local news operation.[43]

The relationship between ownership and local content is more, however, complex than this lone anecdote would suggest. WOOD-TV in Grand Rapids, Michigan, moved in the opposite direction, drastically reducing syndicated national programming to expand local-news broadcasts and lifestyle shows.[44] This market bifurcation reveals that station positioning matters more than ownership structure. Strong stations like WOOD-TV are investing in local content because it provides irreplaceable “must-have” programming that appeals to local advertisers and creates leverage in fee negotiations, while struggling stations like WNWO-TV abandon local-news operations they cannot financially sustain. Both strategies reflect rational economic decision making in response to the same market pressures.

The consumer response to these changes has been notably muted. Reports indicate there was no significant public outcry when WNWO-TV ceased local-news production, with the station’s relatively small audience simply switching to competing local newscasts.[45] This suggests consumer indifference to programming changes at underperforming stations, raising questions about whether the threat to local coverage from mergers is as severe as critics suggest, or whether market dynamics and station competitiveness play a more decisive role in determining local-news investment than ownership structure alone.

By limiting an entity to owning two stations per market, the Local Television Ownership Rule undermines the economic model for local-content production. It prevents broadcasters from achieving the operational efficiencies needed to sustain and expand local-content operations in the face of declining linear viewership and the diversion of advertising revenue to digital platforms. Common ownership allows for:

• Shared Newsgathering Resources: A single, larger news department can serve multiple stations in a market, allowing for more comprehensive coverage and more investigative journalism.
• Shared Infrastructure: Combining studios, satellite trucks, helicopters, and administrative staff would reduce duplicative overhead costs.
• Enhanced Bargaining Power: A larger station group has a better negotiating position for syndicated programming and with national networks.

Financially stronger, scaled station groups are better positioned to make the long-term investments in local journalism that serve the communities in which they are licensed. The current rule, by prioritizing the number of owners over the financial health of the stations they own, is contributing to the decline in local-content output in many markets. It ensures a greater number of weaker competitors, leading to a reduction in local-content investment. In contrast, repealing the Local Television Ownership Rule would enable weaker affiliates to merge with stronger affiliates, generating efficiencies that could be invested in producing in-demand local content.

B. Zimmer Decision and Top-Four Prohibition

The 8th Circuit’s vacatur of the Top-Four Prohibition was a crucial and correct step, with the court recognizing that the rule was arbitrary and lacked a rational connection to the competitive realities of the current market. The FCC should not attempt to resurrect this prohibition.

The logic that compelled the vacatur of the Top-Four Prohibition applies with equal force to the underlying duopoly rule itself. If the video market is broadly competitive (which it is), there is no economic justification for a per se numerical limit on the number of stations an entity can own in a market. The competitive constraint comes not from the third or fourth local broadcaster, but from YouTube, Netflix, and dozens of other video options available to consumers.

C. Recommendation: Full Repeal

The FCC should repeal the Local Television Ownership Rule in its entirety. The rule is based on an obsolete market definition and harms the public interest by undermining the economic viability of local news. By allowing broadcasters to generate efficiencies and deliver the content that consumers want, FCC repeal of the rule would promote localism, competition, and content diversity.

The potential competitive effects of any given local-television merger—for example, on local spot-advertising rates or retransmission-consent negotiations—can and should be evaluated by the expert antitrust agencies on a case-by-case basis. The DOJ and FTC can define a relevant local advertising market that includes all video platforms and assess whether a proposed transaction would substantially lessen competition. This tailored, fact-based approach is superior to the FCC’s rigid, outdated, and counterproductive structural prohibition.

D. FCC Discretion to Repeal the Rule

The FCC has clear authority under Section 202(h) to repeal the Local Television Ownership Rule. The statutory mandate requires the Commission to repeal rules that are no longer “necessary in the public interest as the result of competition.” The evidence of a hyper-competitive video marketplace—where local broadcasters are dwarfed by traditional and virtual MVPDs, SVOD services, and other online platforms—provides sufficient basis for the FCC to conclude that the rule is no longer necessary.

Making such a finding based on the competitive record is the core of the discretion granted by Congress. Furthermore, the Zimmer court’s interpretation of Section 202(h) as a one-way deregulatory mandate means that any action taken must be a loosening of the rules. Repealing the rule entirely is a definitive deregulatory action, fully consistent with the FCC’s statutory obligations and the 8th Circuit’s interpretation of the law.

V. Dual Network Rule Is an Anachronism that Harms Consumers

The Dual Network Rule does not directly prohibit a merger between the major broadcast networks. Instead, it operates by prohibiting a local television-broadcast station from affiliating with any entity that owns two or more of the networks defined as such in 1996: ABC, CBS, NBC, and Fox.[46] This restriction on local affiliates has the practical effect of prohibiting a merger between or among any of the “Big Four” networks, as a combined entity would be unable to distribute its programming through the affiliate model that underpins broadcast television.

The rule is a policy solution to a market structure that no longer exists. In today’s global media environment, it serves only to handicap domestic companies and prevent the emergence of a competitor to dominant streaming services.

The Dual Network Rule is an anachronism dating back nearly 80 years, as the FCC explained in 2001:

The Commission first adopted a dual network rule in 1941, following its investigation of “chain” broadcasting. The rule adopted then mandated a flat prohibition on an entity maintaining more than a single radio network. … [W]hen the Commission extended the rule to television networks in 1946, it determined that permitting an entity to operate more than one network might preclude new networks from developing and affiliating with desirable stations. These stations might already be tied up by the more powerful network entity and might provide the commonly owned networks with too much market power.[47]

Thus, the original justification for the rule—adopted during the “First Network Television Season”[48]—was concern that a powerful entity owning more than one network could “preclude new networks from developing and affiliating with desirable stations.”[49] At the time, there were only six commercial stations on the air[50] and two networks, the National Broadcasting Co. (NBC) and the DuMont Television Network.[51]

In an era when there were only a handful of television stations in the entire country, this concern about concentrated ownership was plausible. Decades ago, access to a limited number of local broadcast affiliates was the only path for a network to reach a national audience. In that environment of extreme scarcity, a multinetwork owner could theoretically foreclose market entry by signing exclusive deals with the few available stations.

Over time, the original justification weakened. By 2023, the FCC shifted toward a different reason for maintaining the Dual Network Rule, specifically to maintain affiliate bargaining power vis-à-vis networks:

By keeping the rule in place, the Commission finds that the bargaining power of local broadcast affiliates, including many small entities, is promoted by enabling such entities to better influence top-four network programming decisions in ways that better serve the interests of local communities. … The Commission finds that the bargaining power of affiliates would diminish were there to be a reduction in the number of the Big Four broadcast networks. The lasting economic impacts from the retreat of such bargaining power may diminish local broadcasters’ abilities to provide the type of local programming that the Commission believes increases competition for local audiences. Thus, by eliminating the Dual Network Rule, local affiliates would be further displaced from the networks in terms of their negotiating power.[52]

A. The Scarcity-Based Rationale Is Obsolete

The rule’s original scarcity-based rationale is no longer relevant in today’s media market of overwhelming abundance. The development of new “networks” is no longer dependent on the traditional broadcast-affiliate model. The last “new” major broadcast network, The CW, was founded in 2006 and is now owned by Nexstar and Warner Bros. Discovery.[53] It would be reasonable to conclude that, regardless of FCC ownership rules, the United States may never again see the entry of a new affiliate-based network. The world has moved on from that model.

The most powerful and dominant video programmers today are entities that did not exist when the rule was written and that have achieved global scale without affiliating with a single local broadcast station. Global streaming services like Netflix, Amazon Prime Video, and Disney+ operate as worldwide networks, directly reaching consumers over the internet. These firms, along with tech giants like Apple and Google (via YouTube), invest tens of billions of dollars annually in original content, dwarfing the programming budgets of the Big Four broadcast networks. Their success demonstrates that the path to content distribution is no longer through network formation and the acquisition of local broadcast affiliates, but through capital investment in content and technology.

Furthermore, the distribution landscape has undergone a complete transformation. A network seeking to distribute its programming today has a multitude of options beyond the local-broadcast station model, including virtual vMVPDs like YouTube TV and Hulu + Live TV, FAST services, and the networks’ own direct-to-consumer streaming platforms such as Peacock and Paramount+, which allow them to bypass the affiliate system entirely. The original fear of a powerful entity tying up desirable stations is irrelevant when those stations are no longer the sole gatekeepers to the consumer audience. The rise of these alternative distribution platforms means that, even if a hypothetical merged broadcast network had affiliations in every market, a new content distributor could still launch and reach a national audience through numerous other channels.

The premise of the Dual Network Rule—that the four legacy broadcast networks constitute a uniquely powerful and discrete market whose combination would prevent new entry—is therefore demonstrably false. The market for national programming is now global and multiplatform. The barriers to entry are no longer based on access to a limited number of broadcast licenses, but on the ability to compete for content and viewers against trillion-dollar technology companies. The concern that animated the rule in 1946 has been rendered moot by decades of technological innovation and market evolution.

Streamers, vertically integrated studios, and tech platforms compete directly with the Big Four for every key input and output: talent, production resources, premium content rights, audience viewership, and national advertising dollars. In this environment, any merger among the Big Four would more likely be driven by economic or financial distress, rather than the anticipation of exercising any market power. The relevant market for video content is expansive, dynamic, and global. In that market, the Big Four are smaller players, not dominant forces.

By prohibiting a merger among any of the Big Four, the rule artificially constrains the market and prevents the formation of a scaled, broadcast-centric entity that could more effectively compete with the dominant streaming services. A combined network entity would have a larger library of content, greater financial resources to bid for premium programming like major sports leagues, and the scale to invest in technological innovation. Such an entity could represent a more formidable competitor to the streaming giants, fostering greater price and quality competition in the overall video market. In its current form, the rule effectively serves to protect the market positions of Netflix and Amazon by preventing the legacy media companies from combining to challenge them effectively.

B. Network-Affiliate Bargaining Dynamics Have Changed

The FCC’s more recent rationale that the Dual Network Rule protects the bargaining power of local affiliates is flawed and outdated. It is flawed because it considers repeal of the Dual Network Rule independently from repeal of the Local Television Ownership Rule, when it should have considered the effects of repealing both rules simultaneously.

A case could be made that repeal of the Dual Network Rule by itself might lead to a merger that tilts bargaining power in favor of networks at the expense of affiliates. Similarly, a case could be made that repeal of the Local Television Ownership Rule by itself might lead to mergers that tilt bargaining power in favor of affiliates at the expense of networks. It is not clear whether the FCC has considered how the balance of bargaining power would shift if both rules were repealed. As we’ve witnessed with the recent Jimmy Kimmel Live! contretemps, affiliates with many stations can exercise substantial power over a network’s programming decisions.[54]

An affiliate’s negotiating position today is determined less by its ability to switch its affiliation from one legacy network to another and more by the overall health of the broadcast ecosystem and the value that network programming provides relative to streaming alternatives. The networks have altered the historic relationship by launching their own direct-to-consumer streaming platforms (e.g., Peacock, Paramount+). They can also bypass their affiliates entirely to distribute content, a development that has shifted bargaining power in the networks’ favor.

In this new reality, a stronger, combined network entity could prove a better partner for affiliates. Such a network would have a greater ability to invest in high-quality programming that drives viewership to local stations and could offer affiliates a more robust platform to navigate the transition to a hybrid broadcast/digital future. The notion that preserving four separate, weaker networks benefits affiliates more than allowing the formation of two stronger ones is a relic of a bygone era.

C. Recommendation: Full Repeal

The Dual Network Rule is a regulation designed to solve problems that no longer exist. It harms competition by preventing the formation of a challenger to the dominant streaming platforms. Any proposed merger between two of the former “Big Four” networks should be reviewed under standard antitrust principles by the DOJ and FTC. The agencies can identify the relevant national market for video programming—a market that must include all major streaming providers—and assess whether a transaction would lead to a substantial lessening of competition. This fact-specific inquiry would be the appropriate mechanism to protect the public interest, not a prophylactic ban based on an archaic view of the media world.

D. FCC Discretion to Repeal the Rule

The FCC’s authority to repeal this rule is unambiguous. Section 202(h) empowers and directs the Commission to repeal regulations that are no longer “necessary in the public interest as the result of competition.” The premise of the rule—that the Big Four networks constitute a unique and dominant market—is factually incorrect in today’s global media landscape.

An FCC finding that the rule is no longer necessary would be a rational conclusion based on the evidence of competition from scaled, global streaming services. This exercise of judgment is precisely what the statute contemplates. The deregulatory imperative of Section 202(h), as clarified by the 8th Circuit in Zimmer, further supports repeal as the appropriate course of action. Because repeal is the most complete form of “loosening” a regulation, it is an action that is plainly within the FCC’s legal authority.

VI. General Antitrust Principles Are the Proper Competition Safeguard

Repealing the FCC’s media-ownership rules would not mean the abandonment of regulatory oversight of media consolidation. It would means replacing the Commission’s ex-ante structural prohibitions with case-by-case analysis based on economic principles of the Clayton Act and the Sherman Antitrust Act, as enforced by the nation’s expert competition agencies, the DOJ and the FTC.

This approach would not only be more efficient and effective but would also align with a regulatory philosophy that trusts dynamic market forces over centralized planning, as envisioned by the FCC’s Delete, Delete, Delete proceeding[55] and other administration initiatives.

A. Superiority of Case-By-Case Review

The core deficiency of the FCC’s ownership rules is their prophylactic nature. They are designed to prevent a potential market structure from forming, regardless of the actual competitive effects of a specific transaction in a specific market. This one-size-fits-all approach is ill-suited for the complex and varied media markets across the country.

In contrast, general antitrust law provides a flexible toolkit to evaluate mergers. The DOJ and FTC are equipped with the economic expertise and legal authority to define relevant markets, analyze competitive effects, consider pro-competitive efficiencies, and tailor remedies.

Unlike the FCC’s static rules, antitrust agencies define relevant product and geographic markets based on a given transaction’s specific facts and the competitive realities on the ground, considering evidence of substitutability from both consumers and advertisers. Antitrust agencies conduct a detailed analysis of potential unilateral and coordinated effects. They can assess whether a merger is likely to harm competition with respect to consumer prices (e.g., retransmission-consent fees paid by MVPDs), advertising rates, or innovation and quality.

The antitrust framework also explicitly allows for consideration of pro-competitive efficiencies that a merger might generate, such as cost savings that could allow for greater investment in local news. The FCC’s rules, by their nature, ignore such benefits. If a transaction is found to pose a competitive threat, antitrust agencies can impose tailored remedies, such as targeted divestitures, rather than blocking an entire transaction that may be, on balance, pro-competitive.

The FCC’s continued use of structural ownership rules reflects an institutional perspective rooted in the Communications Act’s Progressive Era origins. A modern approach requires not just repealing the rules, but a philosophical shift at the Commission toward recognizing that dynamic competition, backstopped by general antitrust enforcement, is a more effective regulator than arbitrary ownership limits.

B. Avoiding Duplicative and Conflicting Regulations

Maintaining a separate, industry-specific competition regime at the FCC is inefficient and creates the potential for conflicting regulatory outcomes. A transaction that might be cleared by the expert antitrust agencies could still be blocked by the FCC’s outdated structural rules, leading to the scuttling of pro-competitive and pro-consumer combinations. This duplicative system imposes unnecessary costs on merging parties and creates uncertainty in the market.

The FCC should embrace regulatory modernization by ceding primary jurisdiction over media-merger review to the antitrust agencies. Its institutional role should focus on its core competencies of spectrum management and enforcing licensee obligations to serve the public interest, not on acting as a second-string competition authority wielding outdated tools. The antitrust laws are universally applicable and have proven sufficiently flexible to handle the unique characteristics of media markets without imposing the kinds of rigid rules the FCC currently maintains.

VII. Conclusion

The FCC faces a straightforward choice in this proceeding. Section 202(h) directs the agency to repeal regulations no longer necessary in the public interest as a result of competition. The evidence of competition in both audio and video markets is overwhelming.

Consumers allocate their attention across broadcast stations, streaming services, podcasts, social media platforms, and dozens of other video and audio sources without regard to regulatory classifications. Advertisers chase audiences across all these platforms, seeking reach and targeting capabilities wherever they can find them.

The market capitalizations of the dominant digital platforms—measured in trillions of dollars—dwarf those of the largest broadcast groups by orders of magnitude. In this environment, maintaining ownership rules premised on the assumption that broadcasters operate in isolated silos constitutes failure to fulfill the statutory mandate. The 8th Circuit’s interpretation in Zimmer clarifies that Section 202(h) permits only the loosening of regulations, placing the burden squarely on the FCC to justify retention. That burden cannot be met.

Repealing the Local Radio Ownership Rule, the Local Television Ownership Rule, and the Dual Network Rule would serve the FCC’s core public-interest goals: competition, localism, and viewpoint diversity. Allowing broadcasters to achieve necessary scale through consolidation would enable greater investment in local-news operations and community programming, the fixed costs of which cannot be sustained by artificially fragmented ownership structures. Stronger, more efficient broadcast groups would be better positioned to compete for audiences and advertising revenue against global technology firms, fostering genuine competition in the media marketplace rather than preserving the illusion of competition among weakened local entities. Viewpoint diversity depends not on maximizing the count of struggling station owners but on ensuring the financial viability of multiple voices capable of producing quality content.

The DOJ and FTC possess the expertise and legal authority to review individual transactions for anticompetitive effects, defining relevant markets to include all competitive platforms and imposing tailored remedies where necessary. This case-by-case approach under general antitrust principles is superior to the FCC’s rigid, one-size-fits-all prohibitions.

The FCC should exercise its statutory authority and discretion to repeal these three rules in their entirety. The alternative of retaining regulations that weaken the very industry the FCC purports to protect, while leaving dominant digital platforms entirely unconstrained, serves neither the statute’s objectives nor the American public’s interest in access to diverse, high-quality local content.

The record supports repeal. The law requires it. The FCC should act accordingly.

[1] 2022 Quadrennial Regulatory Review—Review of the Commission’s Broadcast Ownership Rules and Other Rules Adopted Pursuant to the Telecommunications Act of 1996, 90 Fed. Reg. 51, 291 (Nov. 17, 2025), (to be codified at 47 C.F.R. pt. 73) [hereinafter “NPRM”]; see also 2022 Quadrennial Regulatory Review—Review of the Commission’s Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996 (Notice of Proposed Rulemaking, FCC 25-64, MB Docket No. 22-459, Sep. 30, 2025), available at https://docs.fcc.gov/public/attachments/FCC-25-64A1.pdf [hereinafter “Draft NPRM”]. The Commission’s publicly released NPRM (FCC 25-64) includes statements not reproduced in the Federal Register publication. While the Federal Register version is the operative text for notice and comment, these comments refer to the FCC-released version, where necessary, to reflect the Commission’s articulated reasoning and to respond to questions that appear only in that version.

[2] Telecommunications Act of 1996, Pub. L. No. 104-104, § 202(h), 110 Stat. 56, 111-12 (1996) (1996 Act); Consolidated Appropriations Act, 2004, Pub. L. No. 108-199, § 629, 118 Stat. 3, 99-100 (2004) (Appropriations Act) (amending Sections 202(c) and 202(h) of the 1996 Act). In 2004, Congress revised the then-biennial review requirement to require such reviews quadrennially. See Appropriations Act § 629, 118 Stat. at 100.

[3] Zimmer Radio of Mid-Missouri Inc. v. FCC, 145 F.4th 828 (8th Cir. 2025).

[4] NPRM, supra note 1, at para. 5 (“Regarding 202(h)’s grant of statutory authority, the court held that the statute allows the Commission to loosen regulations but not tighten them.”).

[5] Draft NPRM, supra note 1, at para. 2, n. 4 (“Section 202(h) of the 1996 Act further requires the Commission to ‘repeal or modify any regulation it determines to be no longer in the public interest.’”) [emphasis added].

[6] Telecommunications Act of 1996, Pub. L. No. 104-104, § 202(h), 110 Stat. 56, 111-12 (1996).

[7] Zimmer, supra note 3, at 854 (“Because the FCC’s justifications for the Top-Four Prohibition ‘run[] counter to the evidence before the agency,’ we find the Commission’s decision to retain the rule arbitrary and capricious.”) (quoting Motor Vehicle Manufacturers Ass’n of the U.S. v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29, 43 (1983)).

[8] Id. at 861-62.

[9] NPRM, supra note 1, at para. 3.

[10] Eric Fruits, Your Local News Anchors Might Welcome Their New Corporate Overlords, Truth on the Mkt. (Sep. 25, 2025), https://truthonthemarket.com/2025/09/25/your-local-news-anchors-might-welcome-their-new-corporate-overlords (“The greatest threat to localism may not be concentration in a mid-sized market, but the financial collapse of stations forbidden from adapting to competitive reality.”).

[11] Dissenting Statement of Commissioner Brendan Carr, Report and Order, In the Matter of 2018 Quadrennial Regulatory Review—Review of the Commission’s Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996, MB Docket No. 18-349 (Dec. 22, 2023), available at https://docs.fcc.gov/public/attachments/FCC-23-117A3.pdf (“[D]espite a record bursting with evidence of a vibrant media marketplace, the Commission continues to advance the fiction that broadcast radio and broadcast television stations exist in markets unto themselves.”).

[12] Geoffrey A. Manne, Comments of the International Center for Law & Economics (Department of Justice Workshop on Competition in Television and Digital Advertising, Jun. 15, 2019), at 3 https://www.justice.gov/atr/page/file/1201476/dl?inline.

[13] Eric Fruits, Video Competition in 2025: It’s Literally on Heebee, Truth on the Mkt. (Feb. 14 2025), https://truthonthemarket.com/2025/02/14/video-competition-in-2025-its-literally-on-heebee.

[14] Public Notice, Empowering Local Broadcast TV Stations to Meet Their Public Interest Obligations: Exploring Market Dynamics Between National Programmers and Their Affiliates (MB Docket No. 25-322, DA 25-961, Nov. 19, 2025), available at https://docs.fcc.gov/public/attachments/DA-25-961A1.pdf.

[15] The Gauge, Nielsen Media Res. (Aug. 2025), https://www.nielsen.com/data-center/the-gauge.

[16] The Record: Q2 U.S. Audio Listening Trends, Nielsen Media Res. (Jul. 2025), https://www.nielsen.com/insights/2025/the-record-q2-audio-listening-trends-2.

[17] Alyssa Boyle, More Than Half of Netflix Subscribers Now Sign up for Ads, AdExchanger (Jan. 21, 2025), https://www.adexchanger.com/tv/more-than-half-of-netflix-subscribers-now-sign-up-for-ads.

[18] 5 U.S.C. § 706(2)(A).

[19] 47 CFR § 73.3555(a).

[20] The Infinite Dial 2025, Edison Res. (Mar. 2025), available at https://www.edisonresearch.com/wp-content/uploads/2025/03/The-Infinite-Dial-2025-Presentation.pdf.

[21] Kristy Major, Conspiracies, Costume Changes, and Three-Hour Deep Dives: Inside the Wild West of YouTube Video Essays, The Guardian (Sep. 4, 2025), https://www.theguardian.com/tv-and-radio/2025/sep/04/youtube-video-essays-leftist-cooks-conspiracy-folding-ideas-angry-video-game-nerd.

[22] Press Release, Digital I Launches YouTube Measurement, digital i (Feb. 12, 2025), https://www.digital-i.com/news-articles/press-release-digital-i-youtube-measurement.

[23] Report and Order, In the Matter of 2018 Quadrennial Regulatory Review—Review of the Commission’s Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996 (MB Docket No. 18-349, at para. 37, Dec. 22, 2023), available at https://docs.fcc.gov/public/attachments/FCC-23-117A1.pdf [hereinafter “2018 Quadrennial Review”]; How Do Americans Spend Their Day with Audio?, Edison Res. (Jul. 23, 2025), https://www.edisonresearch.com/how-do-americans-spend-their-day-with-audio.

[24] Adam Ragusea, Topple the Towers, Knight Found. (Dec. 2017), at 11, available at https://kf-site-production.s3.amazonaws.com/media_elements/files/000/000/111/original/Topos_KF_White-Paper_Adam-Ragusea_V2.pdf.

[25] Id.

[26] CPB Support for Rural Stations, Corp. for Pub. Broad., https://cpb.org/aboutpb/rural (last accessed Oct. 7, 2025).

[27] Press Release, NAB Statement on FCC Broadcast Ownership NPRM, Nat’l Ass’n of Broadcasters (Sep. 30, 2025), https://www.nab.org/documents/newsRoom/pressRelease.asp?id=7331.

[28] See, e.g., Reply Comments of NAB, In the Matter of 2024 Communications Marketplace Report (GN Docket No. 24-119, at 19, Jul. 8, 2024), available at https://www.nab.org/documents/filings/Communications_Marketplace_Reply_Comments_July_2024.pdf (citing Peter Steiner, Program Patterns and Preferences, and the Workability of Competition in Radio Broadcasting, 66 Q. J. Econ. 194 (1952)); Schurz Commc’n Inc. v. FCC, 982 F.2d 1043, 1054 (7th Cir. 1992); see also Reply Comments of NAB, In the Matter of 2020 Communications Marketplace Report (GN Docket No. 20-60, at 13-14, May 28, 2020); Reply Comments of NAB, In the Matter of2018 Quadrennial Regulatory Review—Review of the Commission’s Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996 (MB Docket No. 18-349, at 45-46, May 29, 2019).

[29] First Report and Order, Further Notice of Proposed Rule Making, and Notice of Inquiry, In the Matter of Revitalization of the AM Radio Service (MB Docket No. 13-249, 30 FCC Rcd 12145, at para. 3, 2015), (“AM listenership has nevertheless declined with the rise of newer, higher fidelity media alternatives, as well as the rise in environmental noise and interference from man-made sources.”); see also AM vs. FM: How Radio Advertising Rates Differ Across Stations, Nat’l Media Spots (Apr. 18, 2025), https://nationalmediaspots.com/am-vs-fm-radio-advertising-rates (“FM stations often command higher Radio Advertising Rates because they reach larger, more diverse, and younger audiences, especially during peak listening hours like morning and evening commutes.”).

[30] Comments of Salem Media Group, Inc., In the matter of 2022 Quadrennial Regulatory Review – Review of the Commission’s Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996 (MB Docket 22-459, at 4, Mar. 3, 2023), https://www.fcc.gov/ecfs/document/10303297027747/1.

[31] Id.

[32] NPRM, supra note 1, at para. 10.

[33] 47 U.S.C. § 151.

[34] 2024 Communications Marketplace Report, In the Matter of Communications Marketplace Report (GN Docket No. 24-119, Fig. II.F.4, Dec. 30, 2024).

[35] Reply comments of NAB, supra note 28, at 36.

[36] 47 CFR § 73.3555(b).

[37] 2018 Quadrennial Review, supra note 28, at para. 73 (“[W]e continue to find that broadcast television remains unique and non-substitutable with other sources of video programming, particularly with respect to fulfilling our traditional public interest objectives of competition (e.g., in terms of competition among local broadcast television stations and with respect to local programming), localism (e.g., in terms of supplying locally responsive programming), and viewpoint diversity (e.g., in terms of airing a multitude of viewpoints through local news and other local programming).”).

[38] Fruits, supra note 13.

[39] See generally Kristian Stout & Geoffrey A. Manne, Promoting Competition and Innovation in the Evolving Video Sector, Int’l Ctr for Law & Econ. (May 29, 2025), available at https://laweconcenter.org/wp-content/uploads/2025/05/VCP-Innovation-in-the-Video-Sector.pdf.

[40] News Platform Fact Sheet, Pew Res. Ctr (Sep. 25, 2025), https://www.pewresearch.org/journalism/fact-sheet/news-platform-fact-sheet.

[41] See Press Release, Nexstar’s Unlawful Acquisition of TEGNA Is a Bad Deal for the Public, Free Press (Aug. 19, 2025), https://www.freepress.net/news/nexstars-unlawful-acquisition-tegna-bad-deal-public.

[42] See Press Release, NHMC Opposes the $6.2 Billion Merger Between Nexstar/Tegna, Nat’l Hispanic Media Coal. (Aug. 19, 2025), https://www.nhmc.org/nhmc-opposes-the-6-2-billion-merger-between-nexstar-tegna.

[43] Tim Dillon, Why Some TV Stations May Start Ditching Local News, TVREV (Mar. 20, 2025), https://www.tvrev.com/news/why-some-tv-stations-will-start-to-ditch-local-news.

[44] Luke Bouma, The End of Syndicated Day Time TV on ABC, CBS, FOX, & NBC, Cord Cutters News (Aug. 24, 2025), https://cordcuttersnews.com/the-end-of-syndicated-day-time-tv-on-abc-cbs-fox-nbc.

[45] Dillon, supra note 43.

[46] 47 CFR § 73.658(g).

[47] Report and Order, In the Matter of Amendment of Section 73.658(g) of The Commission’s Rules—The Dual Network Rule, (MM Docket No. 00-108, at para. 2, Apr. 19, 2001), [hereinafter “Dual Network Rule”].

[48] Steve Baltin, Music’s Television Empire, Grammy Awards (Aug. 13, 2016), https://www.grammy.com/news/musics-television-empire.

[49] Dual Network Rule, supra note 47, at para. 2.

[50] American Television Society, American Television Directory 86 (1946), available at https://ia601502.us.archive.org/3/items/americantelevisi01amer/americantelevisi01amer.pdf; see also id. at 14 (Paul Porter, FCC Hopes and Expectations for Television, “For the benefit of historians who will some day be poring over a yellowed and crumbling copy of this Directory and Yearbook and who get little fun out of life anyway—I want to record that as of this writing the nation has six commercial television stations in operation.”)

[51] Troy Brownfield, The Origins of America’s First TV Networks, Sat. Evening Post (Mar. 4, 2019), https://www.saturdayeveningpost.com/2019/03/the-origins-of-americas-first-tv-networks.

[52] 2018 Quadrennial Review, supra note 28, at para. 30.

[53] Jennifer Maas, Nexstar to Acquire 75% Stake in the CW Network From Paramount Global, Warner Bros. Discovery, Variety (Aug. 15, 2022), https://variety.com/2022/tv/news/the-cw-nexstar-acquisition-paramount-warner-bros-discovery-1235150229.

[54] See, e.g., Ben Sperry, Kimmel, Coercion, and the Public Interest Standard: The Problem of Boundless Government Power, Truth on the Mkt. (Sep. 19, 2025), https://truthonthemarket.com/2025/09/19/kimmel-coercion-and-the-public-interest-standard-the-problem-of-boundless-government-power.

[55] Public Notice, In re: Delete, Delete, Delete, 40 FCC Rcd 1601 (2025).

Executive Summary

The relationship between television networks and their affiliates has changed over time, but these changes have little to do with the Federal Communications Commission’s (“FCC” or “commission”) chain-broadcasting rules. The value proposition that affiliates once provided to networks long hinged on their ability to provide the last-mile connection to consumers. Without affiliates, networks would not be able to generate returns on their costly investments in high-quality programming. In recent years, however, technological developments have diminished affiliates’ value to networks, who are now able to deliver this content nationally through various means. Most notably, such programming may be delivered through streaming services offered over the top of broadband connections. While it may be appropriate for the FCC to reexamine its chain-broadcasting rules, changes to those rules will not alter the market realities of modern broadcasting.

Instead, the commission should focus on changes to its media-ownership and retransmission-consent rules. Broadcast television still provides several unique qualities that some consumers prefer. If the FCC were to allow independent broadcasters to expand their reach, their value would likewise increase. And if the commission reforms its retransmission-consent rules to treat broadcast content like any other content, independent broadcasters will have an incentive to develop their own valuable content, and potentially no longer affiliate with larger networks.

If the FCC does choose to reconsider its chain-broadcasting rules, it should focus primarily on ensuring that affiliation agreements do not lead independent stations to involuntarily transfer station control to larger networks. While the commission does have legal authority to regulate chain broadcasting, this authority is limited, and major changes could give courts the opportunity to revisit the FCC’s broad public-interest authority over broadcasting.

I. Introduction and Overview

The International Center for Law & Economics (ICLE) submits these comments in response to the Federal Communications Commission’s (“FCC” or “commission”) public notice regarding review of the commission’s network-affiliation rules.[1] ICLE is a nonprofit, nonpartisan research center that promotes the use of law & economics methodologies to inform public policy. ICLE’s work aims to ensure that competition policy and regulation are grounded in sound economic analysis and that they promote consumer welfare, particularly in dynamic, technology-driven markets such as media and telecommunications.

The public notice poses various questions regarding the power dynamics inherent to network-affiliation agreements and raises concerns that local affiliates can no longer air content they choose. Undoubtedly, the economics of broadcasting have changed as a result of technological development; the value that local affiliates once provided to larger networks has been diminished by new alternatives to reach consumers.[2] But the network-affiliation rules have played little role in that change, and changes to the rules should not be expected either to protect affiliates or promote the public interest.

Therefore, rather than reexamining the network-affiliation rules in isolation, the FCC should focus on broader reforms to its broadcast-ownership, content, and retransmission-consent rules to allow broadcasters to compete with alternative technologies on equal footing. If a major network wants to reach a nationwide audience without maintaining an affiliate in every market, allowing an independent broadcaster to increase its reach will provide that broadcaster more leverage in network-affiliation negotiations. Likewise, if large networks can’t leverage local broadcasters’ retransmission rights to extract rents from multichannel video-distribution programmers (MVPDs), the networks will have less incentive to exert control over those same local affiliates.

The FCC should also take care not to invoke its chain-broadcasting authorities too broadly. While the Communications Act does give the commission authority to regulate broadcast networks and their affiliation agreements, the primary purpose of these provisions is to promote competition and diversity of programming.[3] As more technological options become available to consumers, the First Amendment justification for the agency to invoke these authorities may be on shaky ground.[4] The FCC should instead either retain the existing rules or eliminate them entirely, and allow market forces to dictate the value of content to consumers.

II. Power Has Shifted Away from Local Broadcasters

The public notice raises reasonable concerns about the relative power imbalance between networks and their affiliates.[5] The real challenge for affiliates, however, stems not from monopoly power or anticompetitive conduct on the part of the networks, but from market realities brought about by technological change. The market dynamics that originally gave rise to the network-affiliate model simply no longer exist, and changing the rules in an effort either to restore those dynamics or to arbitrarily shift power between the networks and their affiliates would inevitably lead to consumer harm.

A. Origins of Network-Affiliate Relationships

Historically, the network-affiliate model arose through a mutually beneficial arrangement in which both parties provided value to the other. Large broadcasting networks wanted to produce expensive, high-quality content designed to be consumed by a national audience, and to use that content to negotiate national advertising agreements.[6] The major networks, however, were limited in their ability to reach a national audience.

First, Congress and the FCC limited how many stations a broadcaster could own nationwide. These early restrictions eventually grew into the FCC’s 1953 “Rule of 7,” which allowed companies to own up to seven AM, seven FM, and seven television stations.[7] Changes in the 1980s and deregulatory efforts in the 1990s have eased these restrictions, but even today, a broadcast group (including both the major networks and independent broadcasters) cannot own stations that combine to reach more than 39% of U.S. households, and there are limitations on the number of stations that can be owned in individual markets.[8] While these restrictions were designed to promote competition, diversity, and localism, they provide little value in the modern media marketplace, which has largely shifted to internet-based alternatives.[9]

Moreover, not all markets provide enough value to the major networks, as measured in advertising revenue, to make it worthwhile to own and operate local stations. A television station in New York City can reach almost 7.5 million households,[10] while one in Omaha, Nebraska, only has access to 458,000 households.[11] Each station comes with overhead costs for facilities, a newsroom, sales staff, and costly broadcast equipment.[12] Station ownership also poses risks, such as potential liability for defamation or violation of FCC rules.[13] Finally, each local station must contend with local politics, and independent broadcasters are often better tuned to these politics and FCC obligations.[14] Ultimately, the major networks found that it was only worthwhile to maintain owned-and-operated stations in the largest markets, with their much higher potential returns on investment.

Local affiliates provided value to the major networks by allowing them to obtain last-mile connections in the majority of markets where the attendant costs and risks of station ownership made it uneconomical to maintain owned-and-operated stations. The network could invest in higher-quality programming and then use local broadcasters’ facilities to reach more consumers. This, in turn, allowed the networks to raise revenue from national advertising. The affiliates, for their part, received compensation from the networks, and generated additional advertising revenue by delivering local content that consumers wanted to see.

B. Disruptions to the Economics of Affiliate Relationships

Because an affiliate’s value to a network is found in that last-mile connection, any other last-mile connection presents a competitive challenge for the broadcaster. Without exclusive access to the consumer, the value of local broadcasting decreases.

MVPD systems were the first major disruption to the broadcaster market. An MVPD—originally offered by cable providers, and later joined by satellite, fiber, and “virtual” multichannel video-distribution programmers (vMVPDs) offered over the internet—provides much the same functionality to the consumer as broadcast television, but with vastly more content. While consumers could still receive broadcast signals free over-the-air, many were willing to pay a subscription fee in exchange for that additional content. Over time, MVPDs became the most common television option for consumers.

In the early years of MVPDs, such packages would either carry a local broadcaster’s signal with no payment to the broadcaster or not host the broadcast at all.[15] While most consumers could still access their local broadcast stations over-the-air, many wanted to access local broadcasters through their MVPD system instead. Due to concerns about the franchising model that granted cable MVPDs a monopoly in each franchise area, Congress eventually required cable providers to retransmit local broadcasters’ signals in their local market, either through an elected “must-carry” option or through the retransmission-consent regime.[16] The combination of consumer demand for local broadcast stations and FCC rules requiring MVPDs to negotiate with local broadcasters for retransmission consent would ultimately lead MVPDs to pay significant retransmission-consent fees, especially for network affiliates that had access to high-quality content and live sports.[17]

This may seem like a boon for local affiliates. Consumer demand for local affiliate stations was, however, always driven primarily by their interest in costly high-quality network content, not in the news and lifestyle programming the broadcaster would produce locally or the relatively low-cost content they would purchase on the syndication market. Over time, the power shifted back toward the networks; if an affiliate wanted to continue receiving hefty retransmission fees from cable providers, they would have to share a portion of that revenue with the network.[18] This flipped the traditional dynamic of networks paying local affiliates for last-mile access to consumers into a relationship where affiliates paid the network a portion of their retransmission revenue in order to access to the network’s content.

C. Networks No Longer Need Affiliates to Access Consumers

The rise of over-the-top streaming services has all but eliminated the need for broadcast networks to rely on local affiliates. Broadband is a multi-purpose connectivity option that allows consumers to access television programming, much like broadcast or cable services long have, but also offers additional functionality like on-demand viewing, gaming, or general internet browsing. Because most Americans have access to a broadband connection, broadcast networks no longer need the affiliates to make that last mile-connection to consumers.[19] Instead, all four of the major broadcast networks either own their own streaming services or are part of corporate families that include one or more streaming services. The studios that own the networks typically also have extensive content-licensing deals with even-larger streaming services like Netflix and Amazon Prime. This allows them to deliver network content to consumers directly.

Local broadcasters do still hold some value. The concerns outlined in the public notice, however, do not stem primarily from a problem with the FCC’s existing network-affiliation rules, but from the nature of the market. Local broadcasters’ unique value to networks was found in their access to consumers; once that unique value was diminished by technological advancements, the nature of the network-affiliate dynamic inevitably changed.

Networks have no duty to deal with a local broadcaster; they can bypass the relationship entirely and reach consumers directly over the internet. If the FCC wishes to promote the public interest, it must resist the urge to take a “command-and-control” approach that seeks to artificially shift the balance of power between networks and affiliates beyond what the market dictates.

III. Ease Regulatory Burdens on Broadcasters and MVPDs

The commission inquires about various network-affiliate rules that prevent stations from relinquishing control of the station to networks.[20] The current power dynamics, however, are instead driven partly by separate FCC regulations that encourage networks to leverage local affiliates for revenue, while simultaneously limiting independent broadcasters’ ability to compete.

A. Eliminate Broadcast-Ownership Restrictions

While technological advancements have reduced the value of the broadcast business model, broadcasting still has advantages that can allow stations to compete with alternative technologies. Broadcasters are inherently local and can respond more directly to local community needs. Advertisers also may see value in campaigns targeted at a broadcaster’s local market.[21] Further, broadcasting is free and over the air, meaning consumers can access it when there are internet outages or when the consumer either does not want, or is unable, to pay for costly subscriptions. Finally, some locations still lack adequate broadband connectivity; a low-income family in a remote rural area, for example, may have few television options other than local broadcasts.[22]

If the commission is concerned about the existing power dynamics of the network-affiliate relationship, it should eliminate rules that limit broadcast stations’ ability to compete. The market for broadcasting services still exists, but myriad FCC rules dictate how broadcasters may operate.[23] These include ownership restrictions that limit a broadcaster from owning stations that reach more than 39% of U.S. households, as well as restrictions on how many stations a broadcaster can own in a single market.[24] Eliminating or modifying these ownership restrictions to allow independent broadcasters to assemble a collection of stations with greater consumer reach would boost their value to both national networks and advertisers. It would also give individual broadcasters more leverage in negotiations with both large networks that do not want to own and operate stations nationally and with cable operators. Moreover, it would do so in a way that lets the market, rather than FCC mandates, dictate the value of broadcast service.

Further, there are various content-based FCC regulations still on the books for broadcasters that do not apply to the other communications services with which they compete in the modern market.[25] These rules would clearly be found to violate the First Amendment but for outdated court precedents that hinge on the supposed scarcity of the broadcast medium.[26] For example, broadcasters must dedicate a portion of their programming to children’s television, a requirement with which no other media must comply.[27] This both adds costs to the broadcaster’s bottom line, and limits affiliates’ value to larger networks that may want to program other types of content at specific hours to meet consumer needs and demands.

Most importantly, the commission should eliminate its news-distortion policy.[28] As the Chairman Carr has rightly noted, FCC rules on news distortion prevent a broadcaster from intentionally distorting the news.[29] While this is a very high bar, some local affiliates may worry that content provided by the national networks violates these rules.[30] Where and when this happens, it is the local affiliate that is ultimately at risk of an FCC enforcement action, up to and including potential revocation of its broadcasting license. While the public notice asks about ways that an affiliate might push back on such content, eliminating the news-distortion policy entirely would absolve the regulatory concern for broadcasters altogether.

B. Reform Retransmission-Consent Rules

MVPD services are inextricably linked to the challenges faced by local affiliates. When Congress passed the Cable Television Consumer Protection and Competition Act of 1992, it determined that MVPD services had “undue market power” over programming due to the local-franchise model that granted MVPDs exclusive access to local markets.[31] But by 2009, the U.S. Circuit Court of Appeals for the D.C. Circuit determined this bottleneck power no longer existed.[32] Moreover, in the 16 years since that case, MVPD services’ market power has continued to diminish.[33] Broadcasters are now able to extract rents through the retransmission-consent regime that aren’t justified by market forces.

At the same time, these additional fees have shifted power from affiliates to the major networks, because the content the MVPD services most want and for which they are willing to pay will rarely be the local news or other programming a local broadcaster develops. Instead, it is costly national network content, with live sports taking the lion’s share of attention.[34] Because local broadcasters need that network content to successfully negotiate with the MVPD services, networks can charge local broadcasters to enjoy access to their content and essentially dictate what content the broadcaster must air.

If the FCC were to eliminate its broadcast-ownership rules, one resulting effect may be that networks and their affiliates would have even more leverage to negotiate with MVPD services. The commission should therefore also consider eliminating the existing retransmission-consent framework.[35] This approach would treat broadcasters like any other content creators. If the content they produce is valuable, MVPD services will negotiate with broadcasters to carry that content, or risk losing their own customers. Networks could also negotiate directly with MVPD services for access to their content, either through one of the network’s affiliated cable channels or through a new service, such as a live feed on one of the network’s streaming apps.

At the same time, independent broadcasters would have more incentive to develop and distribute their own content. For example, if independent broadcasters want retransmission fees without having to pay a portion to a larger network, the company could produce their own national or local content, providing an alternative to the large networks.[36] Without the built-in advantage broadcasters currently receive in retransmission negotiations, they would be forced to improve and develop higher-quality content if they want MVPD services to carry their signal.

Even if the FCC chooses not to abolish the current retransmission-consent regime, it could still make incremental changes to the process to better allow market forces to dictate outcomes. These reforms might include strengthening good-faith negotiations standards, limiting automatic fee-escalation clauses, and implementing final-offer arbitration or other targeted arbitration mechanisms that provide backstops during high-value programming periods.[37]

To the extent that the commission has concerns about the existing power dynamics between networks and their affiliates, the best approach would be to get the FCC out of the broadcasting business. By allowing broadcasters to access more consumers and eliminating the financial incentive for networks to leverage local broadcasters in retransmission-consent negotiations, the commission could allow the market to determine broadcasters’ value. Large networks with significant content libraries may not need a local affiliate to reach consumers, and the local broadcaster could be better off developing and delivering its own content. But so long as FCC rules restrict market forces, large networks will continue to have an incentive to leverage their local affiliates for gain.

IV. Network-Affiliation Rules Shouldn’t Further Distort Markets

The Communications Act grants the FCC specific authority to regulate broadcast networks, but invoking those provisions to dictate the shape of network-affiliate relationships would both run counter to the public interest and could exceed agency authority. Section 303(i) allows the FCC to regulate chain broadcasting in the public interest, but the legal justification for commission rules is tied to Section 310(d), which prevents a broadcaster from indirectly transferring control over the station without FCC approval. The network-affiliation rules, therefore, serve a specific narrow purpose and should not be seen as a blunt tool to dictate how network and broadcaster affiliation agreements should operate.

While independent broadcasters can enter into affiliation agreements with a network, the individual licensee still has ultimate control over the content it chooses to air. Its decision to abide by affiliation-agreement terms that relinquish some content decisions to the network is voluntary. Most modern affiliation agreements last three to five years, giving stations ample opportunity to revisit agreements that no longer serve the best interests of the station or its viewers. To the extent that FCC rules are needed to ensure the license remains effectively in the local broadcaster’s hands, the commission should retain them.

If, however, the commission were to adopt the changes to broadcast-ownership and retransmission-consent rules outlined above, it may also find that eliminating the network-affiliation rules could promote competition and the public interest. For example, allowing a network to purchase stations in any market it desires would diminish the need for a network-affiliate framework. Local stations competing with the larger networks would have incentive to develop their own content, and independent broadcasters with a large inventory of stations could offer additional value to networks, justifying a more balanced split of retransmission and advertising revenue.

Similarly, if the FCC pursues reform to the retransmission-consent regime, networks may find that specific local markets are unprofitable and abandon those affiliations. Independent broadcasters could either enter into more economical affiliation agreements that account for lost retransmission revenue or forego a larger network to focus on local content that specifically targets a market untapped by nationwide content options in that community.

The FCC should be skeptical of proposals to use its chain-broadcasting authority to dictate how networks and affiliates negotiate if it wants to retain jurisdiction over broadcasting more generally.

Courts have previously granted the commission broad leeway to regulate broadcasters, including through specific rules governing network-affiliation agreements.[38] As the Supreme Court explained in National Broadcasting Co. v. United States, the Communications Act “does not restrict the Commission merely to the supervision of traffic. It puts upon the Commission the burden of determining the composition of that traffic.”[39]

But the broadcast market of 1943, when the NBC case was decided, was markedly different from broadcast markets today.[40] Earlier decisions relied on the scarcity of the electromagnetic spectrum for radio waves—presumed at the time to be the only medium capable of delivering televisual content—that the rise of MVPDs, satellite television, and internet-based alternatives all demonstrate no longer holds true.[41]

If the FCC decides to change its rules to exert greater control over network-affiliate interactions, the Court could take up broader First Amendment questions that have cast a long shadow over the FCC’s regulation of broadcasting. It would not be surprising if the end result were that the agency lost much of its authority to regulate broadcast content generally. While this might be the ideal outcome for consumers, it is likely not the FCC’s intent in launching this proceeding.

V. Conclusion

The FCC should take this opportunity to reexamine the broadcast market, and specifically how the network-affiliate relationship has changed over time. Broadcasters today face market challenges from rivals that offer a very different value proposition, and it is one that most consumers have demonstrated they prefer. But simultaneously, various existing FCC rules have contributed to a system that puts independent broadcasters at a disadvantage in their negotiations with the national networks.

If the FCC wants independent broadcasters to remain an option for consumers, it should eliminate rules that encourage the major networks to leverage the last-mile connection offered by local affiliates and instead enable broadcasters to better compete with these emerging content-generation and distribution rivals.

[1] Public Notice, Empowering Local Broadcast TV Stations to Meet Their Public Interest Obligations: Exploring Market Dynamics Between National Programmers and Their Affiliates (Fed. Commc’n Comm’n  MB Docket No. 25-322, 2025), available at https://docs.fcc.gov/public/attachments/DA-25-961A1.pdf (hereinafter “Public Notice”).

[2] Kristian Stout & Eric Fruits, Toward Comprehensive Reform of Broadcast Rules, Int’l Ctr. for Law & Econ. (Nov. 19, 2025), https://laweconcenter.org/resources/toward-comprehensive-reform-of-broadcast-rules.

[3] See 47 U.S.C. § 303(i); 47 U.S.C. § 310(d).

[4] Ben Sperry, First Amendment Jurisprudence Should Reflect Economic Reality: Why Red Lion and Pacifica Must Fall, Truth on the Mkt. (Oct. 14, 2025), https://truthonthemarket.com/2025/10/14/first-amendment-jurisprudence-should-reflect-economic-reality-why-red-lion-and-pacifica-must-fall.

[5] Public Notice, at 2 (“This Public Notice is an important step in gathering the information needed to consider whether the national programming networks are exerting undue influence or control over their affiliate stations, whether the Commission’s rules are operating to ensure the independence of affiliate stations, and whether the Commission’s rules require any clarification or amendment to ensure that local affiliates are empowered to meet their statutory public interest obligations.”)

[6] Report on Chain Broadcasting (Commission Order No. 37, Docket No. 5060, May 1941) at 4, 30, https://babel.hathitrust.org/cgi/pt?id=mdp.39015026285083&seq=5 (“Because of the basic nature of the network broadcasting system, the ability to transmit high quality programs and the volume of commercial programs which flow through these companies, affiliation is a desirable factor for the individual broadcast stations.”)

[7] Herbert H. Howard, A Critique of the Fowler FCC’s 1984-85 Multiple Ownership Rule, 10 U.C. L. S.F. Commc’ns & Entm’t J. (1988), 555, 557 n. 15, citing Multiple Ownership of Television Broadcast Stations (Report and Order in Docket No. 10822, F.C.C. 54-1185, 19 Fed. Reg. 6099, 11 Rad. Reg. (P & F) 1519, para. 3, adopted Sep. 17, 1954).

[8] Consolidated Appropriations Act of 2004, Pub. L. No. 108-199, § 629, 118 Stat. 99 (2004), available at https://www.congress.gov/108/plaws/publ199/PLAW-108publ199.pdf.

[9] Comments of the International Center for Law and Economics (GN Docket No. 25-133, Apr. 11, 2025), 6-10, available at https://laweconcenter.org/wp-content/uploads/2025/04/2025-Delete-Delete-Delete-Comments-r3.pdf (hereinafter “ICLE Delete, Delete, Delete Comments”).

[10] New York, U.S. Television Database, https://ustvdb.com/markets/new-york (last visited Dec. 1, 2025).

[11] Omaha, U.S. Television Database, https://ustvdb.com/markets/omaha (last visited Dec. 1, 2025).

[12] Reply Comments of the National Association of Broadcasters (GN Docket No. 24-119, Jul. 8, 2024), 28-29, https://www.fcc.gov/ecfs/document/10708547922642/1.

[13] The chairman has indicated a preference for more vigorous enforcement of individual stations’ public-interest obligations, especially in relation to content from nationwide networks—e.g., “frankly, I think that it’s really sort of past time that a lot of these licensed broadcasters themselves push back on Comcast and Disney and say ‘listen we are going to preempt, we are not going to run Kimmel anymore until you straighten this out because we licensed broadcaster are running the possibility of fines or license replication from the FCC if we continue to run content that ends up being a pattern of news distortion.’” See Palm Beach Post, FCC vs. Jimmy Kimmel: Brendan Carr Condemns Charlie Kirk Comments, Challenges Local Broadcasters, YouTube (Sep. 18, 2025), https://www.youtube.com/watch?v=ved5hVb4yfM.

[14] For example, broadcasters must sell airtime during the “political window” at a discount, and political ads can create inventory shortages that damage relationships with long-term local clients like car dealerships and furniture stores. Stations must also keep a political file available for public inspection and cannot censor candidate ads. See Brian Wallheimer, How All Those Political Ads Affect Commercial Advertising, Chicago Booth Rev. (Jun. 10, 2021), https://www.chicagobooth.edu/review/how-all-those-political-ads-affect-commercial-advertising.

[15] The FCC implemented must-carry obligations in 1966 that were in place until the Supreme Court invalidated the rules in 1985. See Jeffrey A. Eisenach, Delivering for Television Viewers: Retransmission Consent and the U.S. Market for Video Content, NERA Economic Consulting (Jul 2014), available at https://www.freetv.com.au/wp-content/uploads/2020/05/Eisenach-Retransmission-Consent-Report.pdf.

[16] Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385, 106 Stat. 1460 (1992).

[17] Aaron Heresco & Stephanie Figueroa, Over the Top: Retransmission Fees and New Commodities in the U.S. Television Industry, 29 Democratic Communiqué 19, 20-21 (2020), https://journals.flvc.org/demcom/article/download/121286/120253/182736.

[18] Michael Grotticelli, Reverse Compensation Could Strain Network-Affiliate Relations, TV Tech (Jul. 7, 2011), https://www.tvtechnology.com/news/reverse-compensation-could-strain-networkaffiliate-relations.

[19] Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion (2024 Section 706 Report, Mar. 18, 2024), available at https://docs.fcc.gov/public/attachments/FCC-24-27A1.pdf (hereinafter “Section 706 Report”).

[20] Public Notice at pp. 3-4.

[21] Local TV News Fact Sheet, Pew Res. Ctr. (Sep. 14, 2023), https://www.pewresearch.org/journalism/fact-sheet/local-tv-news.

[22] Section 706 Report at ¶ 4 (“Rural areas and Tribal lands significantly trail more urban area, with approximately 28% of people living in rural areas and approximately 23% of people in tribal lands lacking access to 100/20 Mbps fixed broadband service.”)

[23] ICLE Delete, Delete, Delete Comments, at 6.

[24] 47 C.F.R. § 73.3555; Consolidated Appropriations Act, 2004, Pub. L. No. 108-199, § 629, 118 Stat. 99 (2004), available at https://www.congress.gov/108/plaws/publ199/PLAW-108publ199.pdf.

[25] Jeffrey Westling, The FCC’s News Distortion Rules Highlight Need for Updates, Am. Act. Forum (Oct. 8, 2024), https://www.americanactionforum.org/insight/the-fccs-news-distortion-rules-highlight-need-for-updates.

[26] Sperry, supra note 4.

[27] 47 C.F.R. § 73.670.

[28] See Serafyn v. FCC, No. 95-1385 (D.C. Cir. 1998), https://law.justia.com/cases/federal/appellate-courts/cadc/95-1385/95-1385a-2011-03-24.html.

[29] Jon Brodkin, “How About No”: FCC Boss Brendan Carr Says He Won’t End News Distortion Probes, Ars Technica (Nov. 14, 2025), https://arstechnica.com/tech-policy/2025/11/how-about-no-fcc-boss-brendan-carr-says-he-wont-end-news-distortion-probes.

[30] For example, some broadcasters chose to preempt the Jimmy Kimmel show shortly after Carr outlined the news-distortion policy and warned that licensees could see enforcement action for network content the affiliate decides to air. See Faith Wardwell, Nexstar, Joining Sinclair, Will Preempt Jimmy Kimmel’s Late Night Show, Politico (Sep. 23, 2025), https://www.politico.com/news/2025/09/23/jimmy-kimmel-return-preempt-nexstar-00576320.

[31] Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385, § 2(a)(2), 106 Stat. 1460 (1992).

[32] Comcast Corp. v. FCC, 579 F. 3d 1, 8 (2009).

[33] As of August 2025, cable television only accounts for 22.5% of U.S. television viewing. See Eric Fruits, The FCC’s Broadcast-Ownership Review: Will the Agency Open the Door for Comprehensive Reform?, Truth on the Mkt. (Sep. 29, 2025), https://truthonthemarket.com/2025/09/29/the-fccs-broadcast-ownership-review-will-the-agency-open-the-door-for-comprehensive-reform.

[34] Harry A. Jessell, Broadcasting Wins Big With NFL Deals, TVNewsCheck  (Dec. 16, 2011), https://tvnewscheck.com/uncategorized/article/broadcasting-wins-big-with-nfl-deals.

[35] Eric Fruits, Geoffrey A. Manne, & Kristian Stout, Broadcast Ownership, Retransmission, and the Case for Comprehensive Reform, Int’l Ctr. for Law & Econ. (Nov. 18, 2025), https://laweconcenter.org/resources/broadcast-ownership-retransmission-and-the-case-for-comprehensive-reform.

[36] Hank Price, Will Stations Revolt Over Network Payments, TVNewsCheck (Sep. 23, 2024), https://tvnewscheck.com/business/article/will-stations-revolt-over-network-payments.

[37] See Fruits, Manne, & Stout, supra note 35.

[38] See Nat’l Broad. Co. v. United States, 319 U.S. 190 (1943).

[39] Id., at 215-16.

[40] Fruits, supra note 33.

[41] Sperry, supra note 4.

Executive Summary

We thank the European Commission (the Commission) and the European Data Protection Board (EDPB) for launching this consultation on their draft joint guidelines (Draft Joint Guidelines) on the interplay between the Digital Markets Act (DMA) and the General Data Protection Regulation (GDPR). ICLE is a nonprofit, nonpartisan research centre that applies law & economics methodologies to analyse technology governance, competition, and consumer-protection policy. Our interest is to ensure that the EU’s digital rulebook advances consumer welfare and innovation through clear, predictable, and proportionate rules grounded in evidence and sound economics.

The approach adopted in the Draft Joint Guidelines will lead to a new proliferation of “consent popups” at a time when the Commission is seeking to address similar past failures of EU law regarding “cookie banners”. Users of digital services regulated under the DMA are likely to see further declines in the quality of their experience, and this could further damage the reputation of EU law. The DMA’s goals do not necessitate this approach, and we encourage both the EDPB and the Commission’s DMA Team to address the issue of consent in a more user-friendly way.

The guidelines disproportionately contradict the aims of EU data protection and cybersecurity laws by requiring that gatekeepers do not warn users about clear and realistic risks that attend data portability (especially real-time and continuous portability) and by preventing gatekeepers from excluding known bad actors as recipients of user data. Effectively, the Draft Joint Guidelines would even mandate that gatekeepers support and enable campaigns by criminal or foreign-enemy-state actors to collect EU personal data, so long as those actors inform the gatekeeper—even falsely—that they’re EU organisations and don’t plan to transfer personal data outside the European Economic Area (EEA).

More generally, the guidelines depart from previously stated Commission policy, supported directly by the DMA, that gatekeepers have a duty to ensure DMA-implementation measures comply with other laws, including those on data protection and cybersecurity. Instead, the Draft Joint Guidelines propose to prohibit gatekeepers from implementing the most effective measures to achieve such compliance.

The guidelines interpret the DMA and the GDPR inconsistently. Without appropriate justification, some serious data-protection risks (e.g., those related to data portability) are not addressed as robustly as others (e.g., the sharing of search data).

The Draft Joint Guidelines also omit interoperability mandates under Article 6(7) DMA, incorrectly suggesting that such obligations pose no serious privacy issues. In fact, such issues include questions regarding the interplay between the DMA and the GDPR, as well as the ePrivacy Directive.

I. Proliferation of Consent Requests (Articles 5(2), 6(10) DMA)

The European Commission last month proposed legislation to address the problem of “cookie consent fatigue” by changing rules that are “outdated and inadequate for contemporary privacy and data needs”.^[1] It is therefore surprising to see the EDPB and the Commission’s DMA team pursue guidelines that would vastly increase the proliferation of consent requests with which EU users of digital services are bombarded.[2]

The excessive reliance on ever-more consent requests, without any investigation of ways to reduce the need for them in accordance with the law, flies in the face of the current research on data protection. Even vocal critics of the ways that digital services use personal data recognize that the consent-centric approach has been a failure.^[3]

We should expect more from public authorities than the unthinking application of the consent paradigm, while failing to address the actual problems of data protection and security.

The Draft Joint Guidelines contribute to the disproportionate proliferation of consent requests in the following ways:

• Consent requests for the use of third-party data for online advertising, combining and cross-using personal data (Article 5(2) DMA) are meant to be further divided into various “purposes” like “personalisation of content, personalisation of advertisements, and service development”.^[4] While the guidelines direct gatekeepers to combine DMA and DMA-GDPR requests, avoiding the need to further double many consent requests, this doesn’t address the increased consent fatigue that users will experience.^[5]
• The Draft Joint Guidelines’ section on “ensuring user-friendly choices and consent designs”^[6] is a stark example of what has been dubbed the “nerd harder” approach,^[7] without providing much actionable guidance on consent design. In its preoccupation to present choices in a “neutral” manner, the section fails to propose even the contours of a positive guiding example (g., must “yes” and “no” buttons have same the colour and contrast even if it’s a basic user-experience practice to give them different colours, thus enabling rather stifling choice?). Moreover, the section presents vague goals regarding user comprehension as a benchmark, merely paraphrasing the legal texts.^[8] In doing so, it fails to adopt a realistic assessment of users’ level of interest and familiarity with legal frameworks like the DMA and GDPR.^[9]
• The guidelines are unclear regarding separate consent requests for processing special category data under Article 5(2). They may be read as imposing a new disproportionate requirement to seek such consent, together with Article 5(2) DMA consent, even where there is no requirement to ask for it under the GDPR (g., when the gatekeeper has already obtained consent).^[10]
• The Draft Joint Guidelines acknowledge that users could be overwhelmed by a large number of requests from businesses for user-data portability under Article 6(10) DMA (“in particular where requests are repetitive or disruptive of the end user’s experience”).^[11] Even with regard to obvious cases of abuse, however, the guidelines fail to state clearly that gatekeepers can protect users from “repetitive or disruptive” requests. Instead, they offer a vague statement about “layered and intuitive consent interfaces”, which does not address whether gatekeepers can refuse to convey some consent requests.

II. Anti-Data Protection and Security Requirements (Articles 6(9) and 6(10) DMA)

The DMA’s provisions on data portability, in Article 6(9) and 6(10), indisputably create data-protection and security risks. This is true not only for end users of DMA-regulated services, but also for any other person whose data happens to be in the user’s service account or—on the guidelines’ broad interpretation—even on the user’s device. These include new risks that users would neither expect, nor understand. Consider the following example.

A user, currently logged into a major social-networking service (the Gatekeeper), encounters a viral third-party application promising a “Digital Nostalgia” service. The application claims to use artificial intelligence (AI) to scan the user’s history and generate a sentimental video montage of their friendships. To initiate this process, the user is forwarded from the third-party website to the Gatekeeper’s authorization screen.

Because the user is already authenticated on the platform, they do not need to enter credentials; they are immediately presented with a standard consent popup. This popup bears the social network’s familiar and trusted branding. It lists the permissions the third-party app requires, which include access to historical photos—including images shared only with close friends or romantic partners—private message archives, and contact lists.

Crucially, the user sees only the Gatekeeper’s familiar interface and instinctively applies the trust they have in that established platform to the unknown third party. The Gatekeeper’s consent screen effectively launders the legitimacy of an unvetted requestor. Conditioned by years of “consent fatigue” from cookie banners and terms-of-service updates, the user performs a cursory scan of the permission list—indistinguishable from dozens of benign requests they have approved before—and clicks “Allow” to access the promised feature.

In that single instant, the nefarious application triggers the data-portability interfaces mandated by the DMA. This grants the third-party actor immediate access to a massive trove of sensitive historical data, allowing them to exfiltrate years of private correspondence and intimate media without further interaction from the user. The application need not even deliver the promised nostalgia video, although this may be helpful to attract more victims. The Gatekeeper’s trusted UI effectively cloaks the risk of the unknown third-party requestor, creating a “Trojan Horse” effect where the ease of portability is weaponised against the user’s privacy.

Under the requirement for “continuous and real-time” access, the threat extends beyond the user’s historical data. By granting this permission, the user has inadvertently authorised a persistent data stream—effectively a “live wire” connected to their account. Even after the user closes the “Digital Nostalgia” tab and forgets the application exists—not having received any ongoing notification that data sharing continues (at least for months)—the third-party service retains a valid access token or webhook subscription. This allows the nefarious actor to instantaneously receive copies of every new private message sent, every new photo uploaded, and every location tag created. The user is under active surveillance, with their ongoing digital life being mirrored to a malicious server.

This asymmetry compounds the harm: a single click grants access, but revocation—if the user even remembers the application exists—can only break the link for future data. Any data already exfiltrated is, of course, already in the attacker’s possession. The harvested information opens multiple vectors for exploitation: intimate images may be leveraged for sextortion; private messages mined for credentials, security questions, or blackmail material; and complete social graphs may be sold to data brokers, stalkers, or abusive ex-partners. All this stems from a single, momentary click on a consent form that took less time to approve than to read.

This textbook example of “consent phishing”^[12] has some resemblance with the infamous Cambridge Analytica case.^[13] But much less information was available to Facebook apps like “This Is Your Digital Life” in 2014-15 than would be under the DMA; importantly, there was no risk to private photos or messages. This is what is new about the risk: at a single click, an entire account and its most private contents could be sent to a third party (not to mention setting up ongoing surveillance).

Neither the European Commission, nor any other EU body, is currently conducting a public-information campaign to address this issue. This is despite the obvious fact that users of at least some DMA-regulated services have grown accustomed, with good reason, to trust that the manufacturer/service provider would not allow users to harm themselves so easily. But this is now possible under the DMA.^[14]

Indeed, the Draft Joint Guidelines are generally dismissive of DMA-created risks to data protection and data security, which is surprising given the participation of the EDPB. Instead, they are preoccupied with interpreting the DMA’s explicit security and privacy provisions as narrowly as possible. The example detailed above illustrates two key problems with the guidelines:

1. They require gatekeepers not to warn users about clear and realistic risks of data portability; and
2. They prevent gatekeepers from excluding known bad actors as recipients of user data.

The guidelines state that “portability options and the wording used to describe them should be provided in a neutral and objective manner and should not nudge end users towards a specific choice”.^[15] In other words, they require gatekeepers to act as if every choice to port data—even a choice that would expose an entire service account (with private messages, etc.) or all data on a user device—is equally neutral and safe, which is obviously not the case.

Moreover, the guidelines explicitly forbid gatekeepers from restricting third parties’ receipt of user data—even when, e.g., the third party has previously been fined or convicted for GDPR violations or is known to engage in practices like “consent phishing”. The Draft Joint Guidelines state:

Gatekeepers should also not gather information pertaining to the authorised third party’s compliance measures under the GDPR, including potential administrative or judicial proceedings the third party has undergone in relation to compliance with the GDPR, or whether the third party has suffered breaches of data security in the past.^[16]

Gatekeepers would only be permitted to request “third parties’ identity details and information on whether, and to what extent’ the data to be ported” will involve transfers outside the EEA (to a country without an adequacy decision).^[17] The guidelines do not mention the possibility of gatekeepers being allowed to verify whether such minimum information is even provided truthfully.  In effect, gatekeepers are entirely disarmed from protecting users, even where they know the user is about to become a victim of consent phishing or another kind of attack.

The shortsightedness of this approach is especially staggering given the current geopolitical situation and well-known cyber operations of unfriendly states against the EU. The answer that the Draft Joint Guidelines provides to the issue of potential violations by third-party DMA beneficiaries is that such third parties are subject to the GDPR and potential GDPR enforcement (see the next section). Obviously, data-protection authorities will deter no criminal or state actor, and it is trivially easy to concoct front businesses putatively based in the EU, especially when gatekeepers are barred from verifying any information.

III. Prohibiting Gatekeepers from Implementing the Most Effective Measures for Data Protection and Cybersecurity

As noted above, according to the Draft Joint Guidelines, any privacy or security violations by DMA-beneficiary third parties can only be policed by actors other than the gatekeepers. The key problem with this approach is that gatekeepers are, in at least some cases, best placed to perform this oversight. Indeed, prevention is likely to be the only intervention that matters, especially in cases like data exfiltration through “consent phishing”.

Effective approaches are needed, because data protection and security are exceedingly difficult to police in practice—both in terms of deterrence and in terms of enforcement against violators. It simply cannot be credibly maintained that the mere fact that DMA’s beneficiaries are theoretically subject to the GDPR solves the issue of GDPR compliance. This is especially true for non-EU actors who aim to benefit from the DMA, either through legitimate but economically insignificant EU establishments, or by simply lying to gatekeepers about their identities.

In adopting this approach, the guidelines depart from previously stated Commission policy, supported directly by the DMA, that gatekeepers have a duty to ensure DMA implementation measures comply with other laws, including those on data protection and cybersecurity. For instance, Commissioner Margrethe Vestager stated in the European Parliament that:

It is for the companies to decide how will they present their services, their operating system, how will they make them safe for you and comply with the DMA.^[18]

This aligns with Article 8(1) DMA, which states:

The gatekeeper shall ensure that the implementation of those measures complies with applicable law, in particular Regulation (EU) 2016/679, Directive 2002/58/EC, legislation on cyber security, consumer protection, product safety, as well as with the accessibility requirements.

The guidelines note that,^[19] but add, in the context of Article 6(4):

At the same time, gatekeepers should not seek to instrumentalize their compliance with other applicable laws with a view to make their compliance with Article 6(4) DMA less effective. When selecting among several possible appropriate measures to comply with obligations stemming from other applicable laws, gatekeepers should select the measures that less adversely affect the pursuit of the objectives of Article 6(4) DMA, provided that they remain effective in ensuring compliance with those other applicable laws.

The legal interpretation implicit in this paragraph is highly questionable, as it appears to assume that DMA obligations take precedence over obligations from other EU legislation. One should ask whether the Draft Joint Guidelines apply the same logic to their interpretation of the DMA. In other words, when there are several ways to interpret the DMA and pursue its goals, do the guidelines choose those that less adversely affect pursuing other EU law objectives, including minimising restrictions of the rights protected by the EU Charter? Little in the Draft Joint Guidelines suggests that such balancing has been conducted, and that the guidelines are defensible from this perspective.

Setting this aside, Article 8(1) is entirely absent from the guidelines’ section on the data-portability mandate under 6(10) DMA. The section on Article 6(9) references Article 8(1) in its discussion on authorised third parties, mentioning the GDPR’s principle of integrity and confidentiality (Article 5(1)(f) GDPR) and the requirement to ensure the security of personal-data processing (Article 32 GDPR).^[20] Notably, the principle of data minimization (Article 5(1)(c) GDPR) is not mentioned.

In that discussion, the Draft Joint Guidelines make the already-quoted point that gatekeepers should neither gather information on GDPR compliance by third parties wanting to benefit from the DMA, nor act on any information about their noncompliance. That point is followed by the following sentence:

Such information would not necessarily be an indicator of future compliance or the security of an application or related processing, and as such is not strictly necessary to comply with the gatekeeper’s own responsibility under the GDPR.^[21]

This reveals two important assumptions implicitly made in the guidelines, detailed in the next two subsections.

A. Gatekeepers Only Responsible for Own GDPR Compliance

First, Article 8(1) DMA concerns only “the gatekeeper’s own responsibility under the GDPR”. This is not the only possible reading of Article 8(1), and the guidelines provide no argument why this reading should be adopted. On an alternative reading, which aligns with previous Commission policy as stated by Commissioner Vestager, gatekeepers are meant to ensure that DMA implementation measures comply with other laws, full stop.

In other words, it is the gatekeepers’ responsibility to ensure—to the extent they can—that implementation measures do not lead to noncompliance with those other laws. It is true that gatekeepers cannot fully control, for instance, what third parties do with ported user data. But this does not mean that they should not at least implement technical and organisational measures (e.g., contractual measures) to safeguard compliance to the feasible extent. They are, after all, best placed to adopt such safeguards.

If gatekeepers do not do so, then DMA-created risks like the “consent phishing” example from the previous section will meet with no effective prevention. In other words, gatekeepers are the lowest-cost avoiders of harm.^[22] It is hard to argue that the aim of preventing them from performing a necessary service that they are best placed to do could be attributed to a rational choice by the EU legislature.

What is most puzzling is that the Draft Joint Guidelines do recognise this rather obvious point, but only in the section on search-engine data sharing under Article 6(11) DMA. There, the guidelines explicitly contemplate an implementing act that:

…may include an obligation for gatekeepers to contractually impose measures, where appropriate, on eligible third-party undertakings as a condition to access the data. Contractual requirements may, among others, limit onward sharing of the data received by eligible third-party undertakings. The implementing act may also impose specific monitoring obligations on the gatekeeper and also specify appropriate measures that gatekeepers must take in case of an established violation by third-party undertakings providing online search engines of requirements set out in the contract. Such measures may include requiring the gatekeeper to notify the competent data protection supervisory authority in case of an alleged breach of the GDPR, cease sharing data with the third-party undertaking providing an online search engine, and providing it with the contractual right to order the third party to delete any data it received from the gatekeeper.^[23]

We will return in the next section to this inconsistency in how the guidelines treat Article 6(11) and other provisions.

B. GDPR Applies Only to the Extent ‘Strictly Necessary’

The other revealed assumption in the Draft Joint Guidelines is that gatekeepers’ responsibility under the GDPR should be interpreted narrowly, placing the DMA’s goals above the GDPR’s goals. The sentence from the guidelines cited above restricts the GDPR’s application in a way that has no basis in the DMA: Gatekeepers are only allowed to comply with the GDPR to the extent this is “strictly necessary”^[24]. And not just “strictly necessary” as this is typically understood, but in some qualified, extreme sense.

In fact, it is hard to see the limiting principle of this restriction, given how facially unreasonable the provided example is. The guidelines state that, because it is not always the case (“would not necessarily be an indicator”) that third parties’ previous GDPR violations are predictive of future GDPR violations, there can never be a situation where prior violations indicate a strong likelihood of future violations. More precisely, there can never be a situation where knowledge of prior violations would permit a gatekeeper to better comply with the GDPR by refusing to transfer user personal data (likely including special categories of data) to such third parties. This is extremely surprising, given the EDPB’s co-authorship of the guidelines.

As far as the DMA is concerned, it states that it applies “without prejudice” to the GDPR.^[25] The DMA contains no general qualification that laws with respect to which it remains “without prejudice” apply only to the “strictly necessary” extent, much less in the extreme version suggested by the cited sentence.

IV. Inconsistent Interpretation of the DMA and the GDPR

As noted throughout this submission, the Draft Joint Guidelines adopt a restrictive interpretation of gatekeepers’ ability to implement data-protection and security measures in the context of data portability under Articles 6(9) and 6(10) DMA. Gatekeepers are prohibited from gathering information about third parties’ GDPR compliance history, from warning users about realistic risks, and from excluding known bad actors from receiving user data.

Yet the guidelines take a strikingly different approach when addressing search-engine data sharing under Article 6(11) DMA. There, the Draft Joint Guidelines appropriately recognise that data-protection risks require robust mitigation—even though Article 6(11) mandates that personal data be anonymised before sharing. The guidelines rightly acknowledge that anonymisation techniques may leave residual reidentification risks, depending on the means available to recipients and third parties. Of course, such risks should be primarily minimized by allowing gatekeepers to adopt state-of-the-art anonymization measures—the law requires nothing less than that.

To address these residual risks, the guidelines contemplate an implementing act that would:

• oblige gatekeepers to contractually impose measures on third-party undertakings as a condition of data access;
• limit onward sharing of received data;
• impose monitoring obligations on gatekeepers;
• require gatekeepers to notify competent data-protection authorities of alleged GDPR breaches (specifically, attempts to reidentify data);
• empower gatekeepers to cease sharing data with noncompliant third parties; and
• grant gatekeepers contractual rights to order third parties to delete any received data.

These are sensible and proportionate measures to address risks created by legally mandated sharing of personal data and may even in some cases be defensible in addressing risks related to data anonymized using state-of-the-art techniques. What is inexplicable is why the Draft Joint Guidelines do not apply the same logic—with at least equal force—to Articles 6(9) and 6(10), where the data transferred is explicitly personal and includes private messages, intimate photographs, and complete account histories.

The asymmetry cannot be justified on principled grounds. Both contexts involve transfers of data from gatekeepers to third parties. Both create risks that those third parties may violate the GDPR. Both involve situations where gatekeepers are best placed to prevent harm through technical and organisational measures. If anything, the case for robust protective measures is stronger under Articles 6(9) and 6(10), where there is no anonymisation requirement, and the data at stake is inherently more sensitive.

The “consent phishing” scenario we described earlier illustrates precisely why equivalent safeguards are needed: A single momentary click can expose an individual’s most intimate data to malicious actors, with no effective prevention mechanism if gatekeepers are prohibited from implementing protective measures.

We do not suggest that the measures contemplated under Article 6(11) are necessarily inappropriate—although they cannot be a substitute for robust anonymization. Rather, we urge the Commission and the EDPB to adopt a consistent approach across all DMA provisions involving the transfer of data to third parties. The principle that gatekeepers should serve as effective first-line defenders against data-protection violations—as the lowest-cost avoiders of harm—should apply uniformly throughout the DMA’s data-sharing provisions, and with no less rigour where actual personal data is at stake.

Absent such consistency, the Draft Joint Guidelines create a regulatory framework that is difficult to defend. It is one in which gatekeepers may monitor compliance and enforce contractual safeguards to protect against residual reidentification risks in anonymised search data but are forbidden from taking equivalent steps to protect users’ private messages and intimate photographs from known bad actors.

V. Omission of Interoperability Mandates (Article 6(7) DMA)

The Draft Joint Guidelines omit interoperability mandates under Article 6(7) DMA, incorrectly suggesting that such obligations come with no serious privacy issues, including questions about the interplay between the DMA and the GDPR, as well as the ePrivacy Directive.^[26]

In its Article 8(2) DMA decision from 19 March 2025 directed to Apple,^[27] the Commission correctly noted that:

• “Article 6(7) of Regulation (EU) 2022/1925 shall be interpreted in conformity with the principle of proportionality and the fundamental rights guaranteed in the Charter of Fundamental Rights of the European Union”^[28].
• “… pursuant to Article 8(1) of Regulation 2022/1925, the gatekeeper shall ensure that the implementation of any measures pursuant to Article 6(7) of Regulation 2022/1925 complies with applicable law, in particular Regulation (EU) 2016/679, Directive 2002/58/EC, legislation on cybersecurity, consumer protection, product safety, as well as with the accessibility requirements”^[29].

In the same decision, however, the Commission appeared to ignore those points—including the third sentence of Article 8(1) DMA—and stated that “the measures that gatekeepers may introduce in relation to the interoperability solutions are limited to integrity measures”.^[30] This statement requires, at the very least, robust justification, as it appears to contradict Article 6(7) DMA read not in isolation, but together with, i.e., Article 8(1) third sentence.^[31]

It is an appropriate subject for the Draft Joint Guidelines to explain how Article 6(7) DMA interplays with the GDPR (especially regarding virtual-assistant services that may be designated under the DMA) and with the ePrivacy Directive—particularly its Article 5(3).

^[1] Digital Omnibus Regulation Proposal, SWD (2025) 836 final, Eur. Comm’n (19 November 2025), https://digital-strategy.ec.europa.eu/en/library/digital-omnibus-regulation-proposal.

[2] Joint Guidelines on the Interplay Between the Digital Markets Act and the General Data Protection Regulation, Eur. Comm’n & Eur. Data Prot. Board (9 October 2025), available at https://digital-markets-act.ec.europa.eu/document/download/8ba0913f-2778-4a6d-9c58-10f8c7ead009_en?filename=Joint_COM-EDPB_GLS_interplay_DMA_GDPR_for_public_consultation.pdf (hereinafter “Draft Joint Guidelines”).

^[3] Daniel J. Solove, Murky Consent: An Approach to the Fictions of Consent in Privacy Law, 104 B.U. L. Rev. 593 (2024), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4333743.

^[4] Draft Joint Guidelines, para 31.

^[5] Draft Joint Guidelines, para 42.

^[6] Draft Joint Guidelines, paras 40-45.

^[7] See Amanda Reid, Lorcan Neill, & Evan Ringel, Nerd Harder: A Typology of Techno-Legal Solutionist Logics in Child Online Safety Laws, Policy + Internet (29 June 2025), https://onlinelibrary.wiley.com/doi/full/10.1002/poi3.70012.

^[8] Draft Joint Guidelines, para 45 (“Therefore, the choice presented to end users should not leave them unsure of how their data is processed or as to the degree of control they might have over their personal data under Article 5(2) DMA and the data protection rights conferred by the GDPR”.).

^[9] On user rational disinterest (ignorance), see, e.g., Daniel J. Gilman & Liad Wagman, The Law and Economics of Privacy, 29(2) UCLA J. L. & Tech. 55 (2024), available at https://laweconcenter.org/wp-content/uploads/2023/08/JOLT29-2_Gilman-Wagman.pdf.

^[10] Draft Joint Guidelines, para 37.

^[11] Draft Joint Guidelines, para 172.

^[12] See, e.g., Microsoft Delivers Comprehensive Solution to Battle Rise in Consent Phishing Emails, Microsoft Threat Intelligence (14 July 2021), https://www.microsoft.com/en-us/security/blog/2021/07/14/microsoft-delivers-comprehensive-solution-to-battle-rise-in-consent-phishing-emails.

^[13] See, e.g., Investigation into the Use of Data Analytics in Political Campaigns: A Report to Parliament, Info. Comm’r’s Off. (6 November 2018), available at https://ico.org.uk/media2/migrated/2260271/investigation-into-the-use-of-data-analytics-in-political-campaigns-final-20181105.pdf.

^[14] Mikolaj Barczentewicz, The DMA’s Challenge to User Safety: Lessons from Apple’s Porn App Controversy, Truth on the Mkt. (4 February 2025), https://truthonthemarket.com/2025/02/04/the-dmas-challenge-to-user-safety-lessons-from-apples-porn-app-controversy.

^[15] Draft Joint Guidelines, para 126.

^[16] Draft Joint Guidelines, para 131.

^[17] Draft Joint Guidelines, para 130.

^[18] Committee on Internal Market and Consumer Protection Meeting, Eur. Parl. (3 April 2024), https://multimedia.europarl.europa.eu/en/webstreaming/event_20240403-0900-COMMITTEE-IMCO?start=240403071120&end=240403094524&audio=en; see also Mikolaj Barczentewicz, Does the DMA Let Gatekeepers Protect Data Privacy and Security?, Truth on the Mkt. (4 April 2024), https://truthonthemarket.com/2024/04/04/does-the-dma-let-gatekeepers-protect-data-privacy-and-security.

^[19] Draft Joint Guidelines, para 88.

^[20] Draft Joint Guidelines, para 129.

^[21] Draft Joint Guidelines, para 131.

^[22] By analogy with Guido Calabresi, The Costs of Accidents: A Legal and Economic Analysis (Yale University Press, 1970).

^[23] Draft Joint Guidelines, para 189.

^[24] Draft Joint Guidelines, para 131.

^[25] See, e.g., Recital 12.

^[26] On privacy and security risks of interoperability mandates, see, e.g., Mikołaj Barczentewicz, Privacy and Security Implications of Regulation of Digital Services in the EU and in the US (TTLF Working Papers No. 84, Stanford-Vienna Transatlantic Technology Law Forum, 2022), https://law.stanford.edu/publications/no-84-privacy-and-security-implications-of-regulation-of-digital-services-in-the-eu-and-in-the-us.

^[27] Case DMA.100204, SP – Apple – Article 6(7) – Process, Eur. Comm’n (19 March 2025), available at https://ec.europa.eu/competition/digital_markets_act/cases/202523/DMA_100204_2073.pdf.

^[28] DMA.100204, para 85.

^[29] DMA.100204, para 116 (similarly para 39).

^[30] DMA.100204, para 40.

^[31] The remainder of the decision’s para 40 does not address the question of gatekeeper compliance with other laws under Article 8(1) third sentence when discharging their duties under Article 6(7). The paragraph merely lists how other DMA duties could interact with duties under other legislation.

I. Introduction and Overview

This submission provides an economic and legal assessment of the proposed Regulation on the Safety, Resilience, and Sustainability of Space Activities in the Union (the EU Space Act).[1] Our analysis is founded on the principles of law & economics, concentrating specifically on how the design of the EU Space Act (in particular, the provisions detailed in preferred Policy Option 2+) would affect market structure, costs, and international competitiveness.

The stated objectives of the EU Space Act are commendable: laying down a coherent framework to foster innovation, ensure trackability of space objects, reduce space debris, tailor a cybersecurity framework for space infrastructure, and create a common method to assess environmental impact.[2] Furthermore, the Commission aims for this action to strengthen the functioning of the internal market, leading to increased legal certainty and global competitiveness for the EU space industry.[3]

A closer examination of the EU Space Act, however, reveals that its mechanisms introduce economic distortions and structural barriers that are likely to impede, rather than enhance, the goals of competitiveness and predictable regulation. The act’s architecture selectively targets foreign (specifically, U.S.-based) large-constellation operators through discriminatory registration requirements, novel technical thresholds, and a structural conflict of interest embedded within the oversight body.

As detailed in the International Center for Law & Economics’ (ICLE) previous analysis submitted during the consultation conducted by the U.S. Commerce Department and U.S. State Department, we maintain that the EU Space Act functions as a non-tariff barrier (NTB) under World Trade Organization (WTO) principles.[4] The proposed structure imposes disproportionate burdens on foreign actors providing services in the EU market, thus undercutting the stated objective of establishing a competitive and open single market.

This comment addresses specific questions raised by the Commission’s Regulatory Scrutiny Board (RSB) during the impact-assessment process, focusing particularly on the proportionality of costs, the impact on small and medium-sized enterprises (SMEs) and startups, and the efficacy of the enforcement mechanisms.[5] To achieve the goal of a robust, safe, and competitive market, the Commission must revise the EU Space Act to align its technical requirements with global standards, clarify ambiguous regulatory requirements through timely adoption of implementing acts, and eliminate administrative structures that create conflicts of interest and regulatory friction.

II. The EU Space Act as an Economic Barrier to Trade

An examination of the EU Space Act’s chosen legal basis—Article 114 of the Treaty on the Functioning of the European Union (TFEU)—reveals that its primary objective is the “establishment and functioning of the internal market”.[6] The Act explicitly avoids using Article 189 TFEU, the legal basis for space policy, because that article prohibits the harmonization of national laws.[7] The stated rationale for the EU Space Act is to prevent “fragmentation of the internal market” and enhance the “competitiveness of the Union space industry”.[8]

Such legal framing is telling, in that it demonstrates the legislation’s principal driver is industrial policy and market integration, not a response to an external safety imperative that requires a novel, EU-specific regime. The safety, resilience, and sustainability objectives, while laudable, are thus positioned as instruments to achieve the primary goal of constructing and protecting the EU’s internal market. This context is crucial to understand the EU Space Act’s protectionist character under the World Trade Organization’s (WTO) Technical Barriers to Trade (TBT) Agreement, which is centrally concerned with preventing the use of legitimate policy objectives as pretext for trade distortions.[9] In contrast, the EU Space Act’s bespoke technical requirements force non-EU operators to make EU-specific investments in engineering, legal compliance, and administrative systems that provide no value in other markets.

A. Discriminatory Thresholds and Scope

The EU Space Act’s structural design establishes explicit discrimination through size-based technical categorization. Article 73 defines the “giga-constellation” category as those constellations comprising more than 1,000 operational satellites.[10] Exceeding this threshold triggers additional compliance obligations, including requirements for intra-constellation collision avoidance and specific reporting obligations.[11]

As ICLE notes in Appendix A, this categorization is a unilateral innovation, lacking grounding in established international technical standards developed by bodies like the Inter-Agency Space Debris Coordination Committee (IADC) or the International Organization for Standardization (ISO). Risk assessment in these established international frameworks typically relies on operational parameters and orbital density, not an arbitrary numerical cutoff.

The economic consequence of this singular definition is market exclusion. The requirement is tailored to capture foreseeable or currently operating large U.S. satellite systems, while exempting current and projected EU systems like the IRIS² program, which is anticipated to deploy approximately 264 satellites.[12] This discriminatory scope alters the competitive dynamics, functioning as an NTB designed to burden foreign firms and implicitly favor domestic EU actors. For example, research by Richard Baldwin and Paul Krugman on strategic trade policy demonstrates how regulations requiring market-specific investments can deter entry by raising the minimum efficient scale needed to profitably serve that market.[13]

B. Fragmentation Costs and Deviation from Global Standards

The EU Space Act mandates that launch and spacecraft operators comply with technical requirements laid down in its annexes.[14] While aiming for standardization, the act introduces bespoke EU rules that deviate from globally accepted best practices established by international bodies like the IADC and ISO, thereby leading to fragmentation costs. When different jurisdictions adopt incompatible technical standards, firms face higher costs to serve multiple markets and lose economies of scale from standardization. Aaditya Mattoo and Arvind Subramanian’s work on regulatory barriers demonstrates how divergent standards can be as trade-restrictive as traditional tariffs, particularly in technology-intensive sectors where interoperability is crucial.[15]

For instance, Annex II sets out specific requirements for space-debris mitigation for launchers, and Annex V details mitigation plans for spacecraft. The EU Space Act forces operators serving multiple jurisdictions to maintain parallel compliance systems by requiring compliance with EU-specific collision-avoidance protocols and reporting requirements. This requirement reduces the economic benefits of achieving global economies of scale and undermines interoperability across the space sector. The existence of diverse, uncoordinated requirements across EU member states already creates barriers.[16] The imposition of new and unique EU-wide standards risks replacing national fragmentation with EU-centric fragmentation, contradicting the objective of promoting the EU as a global standard setter.[17]

III. Proportionality, Cost Assessment, and Impacts on Competitiveness

The Regulatory Scrutiny Board (RSB) raised specific concerns regarding the clarity and consistency of the cost-benefit analysis, emphasizing the need to quantify impacts on competitiveness, particularly for SMEs and startups.[18] The EU Space Act should demonstrate that the costs imposed are proportionate to the benefits gained, especially within the context of the Commission’s mandated “One In, One Out” (OIOO) approach.[19]

A. Disproportionate Compliance Costs and the OIOO Mandate

The proposed mandatory binding framework (Option 2+) carries significant costs for the industry, as it is estimated to increase satellite-manufacturing costs by 3% to 10%.[20] These increased costs, categorized as direct adjustment costs, are necessary to comply with heightened technical requirements for debris prevention and resilience.

As ICLE notes in Appendix A, these compliance costs function as sunk fixed-entry barriers. They disproportionately affect new entrants and smaller entities seeking to access the EU market. While the total calculated costs (€322.8 million annually) are projected to be offset by operational benefits (€1,000.8 million annually), justifying a net benefit, the distribution of these costs is uneven.[21]

The RSB explicitly required the impact assessment to comprehensively present administrative and adjustment costs within the OIOO framework.[22] For non-EU operators, the costs associated with meeting EU-specific technical demands—which necessitate EU-specific investments in engineering and administrative compliance—are burdens that cannot be easily offset or recouped in other jurisdictions, thus inhibiting market entry.

B. Regulatory Uncertainty and Investment Deterrence

A further, and largely unacknowledged, component of the cost burden is regulatory uncertainty. The EU Space Act delegates critical technical details—including specific criteria for debris mitigation, reflectivity standards, and operational parameters—to future implementing acts (IAs).[23] These IAs are deferred, potentially until months before the law takes effect in 2030, with agency technical opinions due in 2028. Such open-ended delegation allows for the selective imposition of burdens that can be crafted to fit emerging EU industrial-policy goals, rather than neutral safety objectives.

In capital-intensive industries such as satellite-constellation deployment, finance theory—specifically the real-options analysis described by Avinash Dixit and Robert Pindyck—demonstrates that firms facing irreversible investments will significantly delay commitment until regulatory obligations are clearly defined.[24] By magnifying the uncertainty of future regulatory requirements, the EU Space Act increases the projected risk for investment returns. This increased risk reduces the confidence of private operators and consequently reduces or eliminates the incentives to invest the massive capital required to serve the EU market, thereby slowing the pace of innovation and the introduction of new capacity.

C. Impacts on SMEs and the Proportionality Principle

The RSB sought clarification on how lighter regulatory regimes would be implemented to protect the competitiveness of SMEs and startups.[25] The impact assessment acknowledges the unique challenges faced by smaller actors, noting that they often lack the financial and human resources to adapt easily to new technical requirements.[26]

The proposed solution involves proportionality criteria and support measures. Lighter regimes are envisaged for small-sized enterprises or research and educational institutions, primarily relating to resilience obligations (simplified risk management for critical assets) and temporary exemptions from the environmental-footprint (EF) calculation.[27]

The efficacy of the proposed mitigation measures (such as technical assistance, capacity building, and one-stop-shop approaches) is, however, insufficient to counteract the initial fixed-cost burdens created by the new regulatory framework. For a non-EU SME seeking to enter the EU market, navigating the mandated dual-track registration process (discussed below) remains a significant overhead cost, regardless of whether a one-stop-shop portal exists for internal EU compliance.

Surveyed SMEs have acknowledged that binding measures are necessary to create a level playing field, but 67% expressed concern that nonbinding measures provide less legal clarity.[28] The crucial economic requirement is for the initial mandated technical requirements to be aligned globally. If the baseline requirements compel specialized, EU-unique investments, the administrative support merely subsidizes the cost of complying with an inherently protectionist structure.

IV. Governance, Conflict of Interest, and Enforcement

The EU Space Act establishes distinct governance and enforcement paths for EU and non-EU operators. EU-based firms register through national competent authorities, possibly utilizing qualified technical bodies (QTBs) established under national law. Non-EU operators, conversely, face a compulsory dual-track process overseen by the European Union Agency for the Space Programme (EUSPA).

A. Structural Conflict in Dual-Track Registration

The dual-track system requires third-country space operators providing services in the EU to undergo authorization and ongoing compliance checks by a compliance board housed within EUSPA.[29] This structure presents a clear and inherent conflict of interest.

ICLE notes in Appendix A that EUSPA is statutorily tasked with critical regulatory and technical assessment functions. Simultaneously, EUSPA participates in the management and operation of EU constellations, such as IRIS². This positions EUSPA as both a regulator of, and a de facto competitor to, the foreign constellation operators it reviews.

Regulatory scrutiny requires that QTBs possess independence and an absence of conflict of interest.[30] By housing the ultimate compliance authority for non-EU actors within an agency intimately involved in developing competing EU space assets, the EU Space Act creates a system vulnerable to regulatory capture. EUSPA staff and compliance board members—though required to act independently—may have structural incentives to advise the Commission on technical specifications and registration requirements that favor the EU’s proprietary systems, such as the mandatory collision-avoidance (CA) services managed by EU Space Surveillance and Tracking (EU-SST) Partnership, which EUSPA oversees. Moreover, it would do so while creating technical and administrative friction for foreign competitors. This lack of objective and impartial assessment undermines the goal of transparent and fair market access.

B. The Extraterritorial Inspection Authority

The EU Space Act grants the Commission and EUSPA broad investigative powers, including the authority to conduct inspections and investigations at space-services providers’ premises.[31] The act’s text holds that third-country space operators providing services in the EU must designate a legal representative within the EU to ensure effective cooperation and compliance.[32]

Critically, the EU Space Act grants the European Commission the right to request inspections of non-EU operators’ facilities located outside the EU as a condition of market access.[33] This provision introduces a “poison pill” barrier for U.S. operators. Allowing foreign regulators to inspect facilities outside the EU conflicts directly with national-security controls, notably U.S. export-control laws, such as the International Traffic in Arms Regulations (ITAR).[34] ITAR restricts the sharing of certain technical data and access to controlled facilities, making compliance with the EU Space Act’s inspection requirement a potential breach of U.S. law. The Commission could use a denial of access—even on the basis of protecting national-security interests—as grounds to withhold licensing and market access, effectively coercing compliance incompatible with U.S. sovereignty and security policy.

V. Need for Alignment and Predictability

To successfully support the internal market and global competitiveness, the EU Space Act must immediately address the regulatory uncertainty and non-alignment with international practices.

A. International Alignment and Technical Standards

As noted above, the EU Space Act currently defers the development of key technical standards to future implementing acts. This ambiguity contrasts starkly with robust and long-established international standards and guidelines for space safety, sustainability, and debris mitigation. These include frameworks developed by:

• The International Standards Organization (ISO);
• The Inter-Agency Space Debris Coordination Committee (IADC);
• The National Aeronautics and Space Administration (NASA); and
• The Federal Communications Commission (FCC).

For instance, the act specifies technical requirements for spacecraft manoeuvrability for orbits above 400 km and limits for orbital lifetime.[35] But by creating EU-specific metrics, it fragments the market. Achieving global market access and strengthening the EU’s role as a standard setter requires adopting these established international frameworks directly into the EU Space Act text. Alignment would reduce operational friction and avoid forcing firms into specialized, high-cost compliance regimes designed solely for the EU market.

B. The Mandatory Collision-Avoidance Requirement

The EU Space Act mandates that all EU spacecraft operators subscribe to the CA services provided by the EU’s designated provider (the EU-SST Partnership).[36] Third-country space operators must also subscribe to a public or commercial CA provider that meets certain technical requirements.[37]

This mandatory subscription—particularly when coupled with EUSPA’s governance role—eliminates competition in the EU market for CA services. Competition drives innovation and efficiency. By mandating the use of a service overseen by a state-affiliated entity, the EU Space Act risks stifling innovation in safety technology and could potentially lead to higher long-term costs or lower service quality than would prevail in an open, competitive market.

VI. Conclusion and Recommendations

The EU Space Act, particularly Policy Option 2+, provides a legislative baseline intended to address the fragmentation of the single market and ensure the safe use of space. The economic reality, however, is that the proposed structure functions primarily as a non-tariff barrier, imposing disproportionate costs and regulatory uncertainty on non-EU actors, while undermining the goals of competitiveness and predictable investment.

To rectify these deficiencies and ensure the EU Space Act delivers genuine benefits—namely, regulatory certainty, open-market access, and enhanced safety outcomes—the Commission should execute the following revisions:

1. Eliminate discriminatory market thresholds: Immediately remove the arbitrary size-based “giga-constellation” threshold and instead structure technical requirements based solely on recognized orbital risk and operational metrics, consistent with international standards from IADC and ISO.
2. Ensure regulatory certainty: Accelerate the definition and adoption of technical implementing acts. Failure to clarify critical operational and technical requirements in a timely manner would increase regulatory uncertainty, dramatically reducing the incentives for irreversible, capital-intensive investment in serving the EU market, consistent with the findings of real-options theory.
3. Resolve structural conflict of interest: Separate the regulatory function from competitive market roles. The mandate to review and enforce compliance for non-EU operators (via the EUSPA Compliance Board) must be transferred to a body demonstrably independent from the design or operation of competing EU space systems.
4. Align with international standards: Require technical specifications to conform to widely adopted global orbital-safety standards (g., ISO, IADC, FCC, NASA). This would prevent market fragmentation, maximize economies of scale, and reduce unnecessary, market-specific adjustment costs for all global operators.
5. Reconsider extraterritorial enforcement: Eliminate the authority to compel inspections of foreign facilities outside the EU. This provision creates insurmountable legal conflict with the national-security laws of key partners and operates as an explicit barrier to market access.

The EU Space Act must prioritize regulatory coherence and proportionality over protectionist industrial policy. Implementing these recommendations would transform the act into a globally responsible and economically sound legislative framework, promoting safety and resilience, without sacrificing the principles of open competition and international trade.

[1] Proposal for a Regulation of the European Parliament and of the Council on the Safety, Resilience and Sustainability of Space Activities in the Union, 2025/0335 (COD), Eur. Parl. (25 June 2025) [hereinafter “EU Space Act”].

[2] Id. at 1, 117.

[3] Id. at 4.

[4] Kristian Stout & Eric Fruits, ICLE Comments to U.S. Departments of State and Commerce on the EU Space Act, Int’l Ctr. for Law & Econ. (13 August 2025), available at https://laweconcenter.org/wp-content/uploads/2025/08/EU-Space-Act-Comments.pdf [attached as Appendix A].

[5] Regulatory Scrutiny Board Opinion, EU Space Law, COM(2025) 335, SWD(2025) 335-336 (22 February 2024) [hereafter “RSB Opinion”].

[6] EU Space Act, supra note 1 at 3.

[7] Id.

[8] Id. at 2, 5, 8, 16, 118.

[9] Agreement on Technical Barriers to Trade, World Trade Org. (1995), https://www.wto.org/english/docs_e/legal_e/tbt_e.htm [hereinafter “TBT Agreement”] (“measures necessary to ensure the quality of its exports, or for the protection of human, animal or plant life or health, of the environment, or for the prevention of deceptive practices” should “not [be] applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail or a disguised restriction on international trade”.).

[10] EU Space Act, supra note 1 at Art. 5.

[11] EU Space Act, supra note 1 at Art. 73.

[12] Jean-Pierre Diris, IRIS²: Everything You Need to Know About This New European Constellation, Polytechnique Insights (11 March 2025), https://www.polytechnique-insights.com/en/columns/industry/iris2-everything-you-need-to-know-about-this-new-european-constellation.

[13] Paul R. Krugman, Import Protection as Export Promotion: International Competition in the Presence of Oligopoly and Economies of Scale, in Imperfect Competition and International Trade (Gene E. Grossman ed., 1992) (demonstrating that, in an oligopolistic market with economies of scale, “giving a domestic firm a privileged position in one market, a country gives it an advantage in scale over foreign rivals”.); Richard Baldwin & Paul Krugman, Market Access and International Competition: A Simulation Study of 16K Random Access Memories, in Empirical Research in Industrial Trade (Robert C. Feenstra ed., 1987) (demonstrating that a protected home market was a crucial advantage to domestic firms, “which would otherwise have been uncompetitive both at home and abroad”.)

[14] EU Space Act, supra note 1 at Art. 15.

[15] See, e.g., Aaditya Mattoo & Arvind Subramanian, Regulatory Autonomy and Multilateral Disciplines: The Dilemma and a Possible Resolution, 1 J. Int’l Econ. L. 303 (1998).

[16] Commission Staff Working Document, Impact Assessment Report, Part 1/2, COM(2025) 335, SEC(2025) 335, SWD(2025) 336, Eur. Comm. (25 June 2025), at 8 [hereafter “Impact Assessment 1”] (“While the growing number of players in the space industry fosters cross-border activities, the increasingly diverse licencing requirements will create barriers for the space industry in the single market, with a negative impact on its competitiveness”.).

[17] Id. at 28 (“A common approach at EU level could position the EU as a global leader in setting standards in a field that is urgently calling for solutions63. The EU space industry would contribute to shaping regulations and creating EU norms, which would lead to mutual recognition agreements between the EU and non-EU countries”.); EU Space Act, supra note 1 at 118 (“the successful implementation of the Regulation would enhance the ability of the Union to influence global standards in the space domain and increase the competitiveness of the Union industry in the global markets”.); RSB Opinion, supra note 5 at 7 (“The implementation of a comprehensive legal framework on space activities by the EU could catalyse global regulatory efforts, positioning the EU as a standard-setter, similarly to what was achieved through GDPR in terms of data privacy”.)

[18] RSB Opinion, supra note 5 at 1, 14.

[19] Id. at 2, 11.

[20] Impact Assessment 1, supra note 16 at 46, 59.

[21] Commission Staff Working Document, Impact Assessment Report, Part 2/2, COM(2025) 335, SEC(2025) 335, SWD(2025) 336, Eur. Comm. (25 June 2025), at 41 [hereafter “Impact Assessment 2”].

[22] RSB Opinion, supra note 5 at 2.

[23] See EU Space Act, supra note 1 at Art. 40

[24] Avinash K. Dixit & Robert S. Pindyck, Expandability, Reversibility, and Optimal Capacity Choice (NBER Working Paper No. 6373, January 1998), available at https://www.nber.org/system/files/working_papers/w6373/w6373.pdf.

[25] RSB Opinion, supra note 5 at 2, 14.

[26] Impact Assessment 1, supra note 16 at 61 (“Because SMEs often lack the financial and human resources to easily adapt to new operational and technical requirements, introducing new requirements are likely to increase costs for all industry, including SMEs, potentially resulting in an increase in manufacturing costs ranging from 3% to 10%. For smaller actors it would be proportionally more expensive to comply with such measures”.); Impact Assessment 2, supra note 21 at 142 (Option 2 is likely to trigger additional costs for SMEs across the three areas (safety, resilience and environment) due to mitigation measures (a 3 to 10% increase in manufacturing costs). … This would lead to one-off and recurrent financial and human resources costs, which would impact the competitiveness of SMEs).

[27] EU Space Act, supra note 1 at 26.

[28] Impact Assessment 2, supra note 21 at 142.

[29] EU Space Act, supra note 1 at Chapt. II.

[30] EU Space Act, supra note 1 at 32.

[31] EU Space Act, supra note 1 at Art. 50.

[32] EU Space Act, supra note 1 at 18.

[33] EU Space Act, supra note 1 at Arts. 48(4) & 52.

[34] See, e.g., Parts 120(10), 121 Cat. IV(h)(3), 124.1, 127.1.

[35] EU Space Act, supra note 1 at Art. 66.

[36] EU Space Act, supra note 1 at Art. 64.

[37] EU Space Act, supra note 1 at Art. 15.