Cable and satellite broadcasters have long relied on a special set of three narrow statutory licenses that Congress gave them years ago to help prop up the pay-TV industry in its infancy. The licenses (found in sections 111, 119, and 122 of the Copyright Act) allow the pay-TV providers to grab certain over-the-air signals from local broadcasters or from far-off "superstations" like WGN in Chicago and transmit them over their own networks without asking permission. They have to pay, but the amount is fixed by Congress and is likely below market rates. A new report from the Copyright Office (PDF) suggests that this system should come to an end, and that it should not be extended to Internet broadcasters.

As examples of the ways in which Congress intervenes with remarkable specificity on behalf of particular industries, the three licenses in question are matchless. They were enacted in the early years of cable and then, later, in the early years of satellite. Retransmission issues were still contentious and broadcasters had all the power; if they thought that cable or satellite looked like a threat to their own over-the-air transmissions, they might simply refuse to sign a retransmission deal. And what cable or satellite service could gain traction without offering the major networks?

The Congressional carve-outs were about more than creating competition, though; they were also about supporting localism, as much of the rest of the programming on cable and satellite was national.

Today, of course, the power positions are reversed. Pay-TV has become the norm, with over-the-air broadcasting declining in popularity. Given the success of the cable and satellite industries, a new 200+ page report from the Copyright Office this week suggests that they no longer need the boost provided by sections 111 and 119 (satellite's license for local stations will apparently remain). Instead, market agreements and rates should be the order of the day.

The Copyright Office also found that AT&T's U-Verse and Verizon's FiOS TV services qualify for the current licenses despite not actually being cable or satellite operators. Nevertheless, because their systems are functionally similar to those offerings, "both AT&T and Verizon's operations can be viewed as cable systems and consequently, they may use the Section 111 license to retransmit broadcast signals, provided that they adhere to all of the FCC's broadcast signal carriage rules," said the Copyright Office.

Internet broadcasters, however, aren't given the same latitude to retransmit local TV onto the 'Net. Why is it okay for AT&T to do so, using the same protocol, but not webcasters?

"First, there are serious questions about signal security that need to be addressed," said the Copyright Office. "Second, the United States has entered into a number of Free Trade Agreements with several international trading partners that include provisions prohibiting statutory licensing for the retransmission of broadcast content over the Internet. Third, carriage of programming on the Internet has been subject to marketplace negotiations and private licensing with some degree of success. As such, there is no market failure warranting the application of a statutory license in this context."

While the report is of interest only to those with a passion for the intricacies of copyright law, it is notable for mentioning BitTorrent, Joost, and Slingbox...positively. All three are described as making legal Internet video possible and showing the vibrancy of the market.