• by David Goetzl  @dgoetzl, February 15, 2013

Over the next two years, if Congress chooses to get deeply involved in curtailing station blackouts, the Satellite Television Extension and Localism Act (STELA) offers a venue. The legislation covering an assortment of issues involving how satellite operators – principally Dish Network and DirecTV – offer local stations is set to expire at the end of 2014.

Congress can reauthorize it as is, let it lapse or make changes. Rep. Anna Eshoo (D-California) suggested as STELA is debated, questions will emerge about how to reform the retransmission consent process, where operators (satellite, cable and telcoTV) and station owners negotiate carrige deals. No deal can mean a station going dark.

“Simply put consumers should not be held hostage when negotiators fail to come to an agreement … it’s (a) where are the adults in the room kind of thing,” Eshoo said at a House subcommittee hearing this week.

(Eshoo is no novice on communications law, having authored legislation to turn down the volume on commercials. Maybe unlike some colleagues, she knows retransmission consent has nothing to do with getting a friend’s permission to upload a CD to an iPod.)

Perhaps to emphasize that the current retrans system needs changes, Eshoo said she was “fascinated” by emerging over-the-top services such as Sky Angel and Skitter.TV.

“These companies challenge existing business models, which is disruptive but very important … I think these services can contribute to the establishment of a vibrant video marketplace that promotes both consumer choice and competition,” she said.

Answering questions at the hearing from Eshoo and others was Dish general counsel Stanton Dodge, who repeatedly argued for a renewed STELA to include provisions to keep stations on the air even if carriage disputes reach an impasse.

“Consumers need to keep getting the signal while we work it out with the broadcasters,” he said.

He cited figures showing blackouts are on the rise with roughly 10 in 2010, 50 in 2011 and 100 last year.

Like his boss Dish Chairman Charlie Ergen, Dodge suggested broadcasters have the upper hand in carriage negotiations. “It’s an unfair fight … and the people that suffer are the consumers,” he said.

Also testifying was Jane Mago, who leads legal and regulatory affairs for the National Association for Broadcasters (NAB), the trade group for station owners.

Here’s a shocker: she disagreed with Dodge and suggested the system is working.

Mago, who noted Dish has had a role in multiple blackouts, said broadcasters are living up to the requirement they negotiate in “good faith.”

“We negotiate in good faith all the time and will continue to do that as appropriate to make sure the consumers are able to receive our signals … it’s important for us to reach every single member of our audiences,” she said.

On paper, STELA only governs the satellite business, but legislators have a knack for injecting all kinds of language into bills – stuff like naming a post office after an uncle in the Farm Bill. So, if retrans reform is put forward in STELA, it could apply not just to Dish and DirecTV, but also their cable and telcoTV competition.