Local station's argue that local advertisers are getting the shaft from those of us like you and me who opt to subscribe to distant networks. That's mainly the reason why they wanted you and I to be denied the option of distant networks because Joe Blow's Ford/Mercury/Cadillac located "on the edge of town" ain't getting business from you and I. Even if Joe Blow's Ford/Mercury/Cadillac ads were being seen by me, the chances of me dropping in to see his show room clear across the state are slim to none.
It's based on "DMA's." Neilsen Media's "Designated Market Areas" which are shown here:
http://www.truckads.com/licensed_affiliates1.asp#usamap
Whichever city's stations are most viewed in that area are what you get, period. Which sucks, because it's always done county-by-county. The exception is in parts of Southern California where the counties are physically so large that the county is 400 miles across. I guess they have to draw the line SOMEWHERE but it's annoying.
I'd favor a system that just lets you pick one or multiple markets to get your networks from. Or, perhaps even you can pick stations a la carte. If you never watch CBS, you don't have to pay for it, etc. If you moved from Dayton, OH to Raleigh, NC, they ought to let you get the Dayton stations if you wish to keep up on local news (although I don't know why anyone would watch local TV news...but I digress...)
Even a compromise where you can get your home "DMA" plus one other market is reasonable.