I like your thought process. I think you can even take it a step further... have the retrans fee based on ratings (either per year or per book, whatever). The better the ratings, the more the locals get paid. The worse the ratings, the less they get. Use arbitration to determine the cost for each rating point. Arbitration could even set a percentage increase each year in the cost/point. Boom, no more negotiations, no more blackouts.
Umm, local broadcasters are MANDATED BY LAW to consider "public interest" because thsoe frequencies are owned by "We the People" and were provided to the broadcasters as a FREE LUNCH, DINNER, and smorgasboard without even a penney retrunred to the taxpayer, who also funded many of the broadcasters cost to transition to HD. MVPD's have no such "public" mandate, AND, in the case of cable, negotiated a franchise with local governmet and agreeing to a number of conditions, in some cases including MONEY, in exchange to operate a Cable TV service in a service area. In the case of satellite, they paid for the frequencies they use in an auction with all the money going to all of us by way of our government.
NAB has KILLED such an option in the past. It is TOTALLY up to Congress how to handle retransmission, and Congress is in the pocket of the NAB.
You do understand that broadcasters do pay the government for use the of the spectrum, right? And the government FORCED broadcasters to make the transition to DIGITAL broadcast (and reimbursed them to do so). Public money did not pay for transition to HD. Let's not let facts get in the way of a good rant though.
Sam you use this argument all the time and it don't work, those costs in the big scope of things are minuscule.
Years ago, while they didn't pay, they also didn't demand a fee, for the reason that they gain a much larger audience. In turn, they increase their advertising rate and made more money. Getting carriage on cable (and later, satellite) was no doubt a boon to them.
I never said it was a large amount of money.
In the big scope of things, $10/month (I still think the number is high, but I'll use it) is minuscule in a household. 
Couldn't you say that about all the cable nets? Without MVPDs, ESPN viewership would be 0. Without MVPDs, locals would still have viewers. What's ESPN's current monthly charge? Isn't it over $5? For one channel?
1) MOST people can receive OTA. So I'm not sure how much larger an audience satellite brought to locals. Did it increase? Sure. "Much larger"? I'm not as confident. Which brings me to my next point...
That can go both ways.
What is OETA? OTA is "Over The Air", referring to a local broadcasters signal. If you are saying most of the state can receive OTA, aren't you agreeing with me? I'm confused.
Again, using my market as an example, it extends ~60 miles away to the east, west, and north (south is the Cincinnati market) from the transmission towers. "Most" people aren't going to pick those up, not without putting up 25' or taller, outdoor antennas.
I just looked up Oklahoma population data. 3.8 million live in the state. Just over 1 million live in Oklahoma City and Tulsa. I did not look to see how many people are in those counties and the ones immediately surrounding the cities, maybe another million? That's why I refer to "most". MOST people live close to a populated area. I've never denied that OTA does not reach 100% of the population. I've also said I feel those who can't receive OTA shouldn't have to pay retrans fees. Too bad my opinion doesn't mean anything. Of course, if that was the case, you'd have people claim they couldn't receive OTA when a paperclip would serve as a working antenna.
