[opendtv] Re: FCC Eliminates Simulcast Rules
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Wed, 15 Sep 2004 10:03:33 -0400
At 11:56 AM -0400 9/13/04, Manfredi, Albert E wrote:
>Perhaps these are two different discussions.
>
>I continue not to understand what this "protecting NTSC
>franchise" means in the context of an NTSC shut-off date, but
>maybe you mean "broadcasters get to retain their current
>analog OTA TV audience after analog shutoff." Trivially
>true, if analog viewers buy an STB or a new digital TV set.
No I am simply talking about the FACT that broadcasters are doing
almost everything in their power to DELAY the date at which they must
return the analog spectrum.
Perhaps there is another angle that needs to be pursued here.
Let's talk about the possible impact of the transition on the
audience that still relies on OTA broadcasts.
Today, this group has the equipment to receive NTSC broadcasts; in
order to continue receiving "Free TV" after NTSC is turned off, this
group must decide on a migration strategy:
- Do they buy an expensive ATSC receiver/display? This could cost
upwards of $500.
- Do they buy an ATSC capable STB that they can use with their
existing NTSC receiver? This could cost several hundred dollars per
NTSC receiver that they want to keep working.
- Do the hold out for a hand-out? Will the government step forward
and spend tens of millions to provide, or subsidize STBs for this
group?
- Do they subscribe to a multichannel TV service?
The implication here is that as long as NTSC broadcasts continue,
this audience is being served, and they do not have a major incentive
to consider these options. I would note, however, that the OTA
audience continues to get smaller, as some of the holdouts subscribe
to a multichannel service.
None of the issues discussed above involve any kind of conspiracy.
This is just the reality of a forced transition to a new technology.
But the conspiracy theories cannot be discarded. We are deep into a
significant technology shift with the potential to significantly
change the landscape of TV as we know it. Clearly the broadcasters DO
NOT see much, if any competitive advantage in embracing the new
digital transmission technology; what they see is significant
downside risk. So of this can be attributed to the issues discussed
above. And some of it can be attributed to the fact that the NTSC
franchise is STRONGLY protected by existing laws and regulations.
Only broadcasters enjoy nearly 100 access to U.S. homes. In the small
percentage of homes that do not subscribe to cable or rely on OTA
broadcasts (i.e. DBS homes), the subscriber has three options:
1. Where available, pay for local channels;
2. Put up an antenna to receive local channels;
3. Forget about the local channels.
What local broadcasters are MOST concerned about is that consumers
might be able to access direct feeds from the networks. The reality
is that MANY people are only interested in the Network prime time and
sports content offered by local broadcasters; when it comes to local
programming, they could care less.
IMHO, if the DBS systems were allowed to deliver the broadcasts
networks directly, bypassing local broadcasters, they would
experience another major surge in subscribers.
>The consolidation of media companies is another matter
>entirely, which has nothing to do with the DTV transition.
>It would happen even without any DTV transition. It's simply
>the result of a maturing market segment. It happens in all
>industries. Why should entertainment be any different?
It has everything to do with the DTV transition. Clearly, the big
media conglomerates consider OTA broadcasters to be a "liability."
They would love to end the current arrangement that allows local
broadcasters to capture nearly half of the revenues generated -
PRIMARILY - by the content that the networks provide to local
broadcasters.
The reality is that local broadcasters and the networks are on the
opposite side of the table when it comes to advancing the DTV
transition.
It is important to note that the DTV transition is running in
parallel with major changes in media ownership rules. The networks
are not threatened; it is the survival of local broadcasting that is
on the table. If the networks can continue to put financial pressure
on their affiliates, and win more concessions in Washington on
ownership caps, in time they will be able to take control of the
entire broadcast infrastructure and use it to compete more
effectively with cable and DBS.
>How do viewers get to pay ever more to watch free TV? The
>cost of an STB? Or do you mean that there are more ads on
>free TV? If the latter, again, that trend happened
>independent of any DTV transition. Overall, viewers of free
>TV should be beneficiaries too, with better image quality
>and more program choice, and potentially also new services,
>at prices which should soon rival the price of analog TV.
The reality Bert, is that about 85% of U.S. homes PAY for a
multichannel TV service that provides them with 50 or more channels
of advertiser supported content. The reality is that the media
conglomerates now control 90% of the audience...again. For the
portion of the audience that relies exclusively on OTA broadcasts,
the conglomerates must share the revenues with local broadcasters.
For the rest, they receive ADDITIONAL compensation; not just the
advertising revenues, but subscriber fees as well.
These fees keep growing, often for disconnected reasons. The worst
offense is the way that the networks/broadcasters have used
retransmission consent agreements to blackmail the multichannel
services into paying higher subscriber fees for the non-broadcast
networks that they operate. It is very important to note that the
regulations that allow them to do this are tied directly to the NTSC
franchise; it is unclear whether they will enjoy the same leverage
with their digital broadcasts. Currently they are trying to INCREASE
that leverage, by requiring the multichannel services to carry the
entire digital multiplex.
One cannot look at the broadcast service in a vacuum. It is the
interplay between the various forms of distribution that gives the
conglomerates their power; and the ability to manipulate Washington
to give them ever more economic power.
>
>Viewers of free TV would certainly be the losers if OTA
>broadcasting were to cease, on the other hand, constaining
>them too to become dependent on umbillical services.
While this is certainly the conventional wisdom, it may not be true.
There are MANY technology options that could be used to bypass the
entire crowd: cable, DBS and OTA.
When my power returned after Frances, my best source of information
was the Internet:
Not my broken cable service;
Not the two channels of OTA broadcasts I could receive;
Not the DBS service that I could subscribe to.
Speaking of DBS, however, it appears that it is far less vulnerable
to the impact of a major weather event that cable. Yesteday I spoke
with a salesperson at Sears about the Broadcast Flag, for an article
I am writing. For what it is worth, he did not have a clue about the
BF, and he is one of the most knowledgeable salespeople in the store.
In the course of our discussion, I learned that he is a DISH customer
and that the DBS service NEVER failed during the storm. He did lose
power for a few hours, but he never lost signal during heavy rains
and winds that gusted to 60-70 MPH.
If there are any other list members with DBS experience during recent
hurricanes, I would love to hear additional reports.
The most significant information from this salesperson is the fact
that Sears experienced a surge in new DBS subscriptions as a result
of Frances. Apparently the loss of cable service by MANY Cox cable
customers, was an adequate incentive to switch to DBS.
Perhaps there is a lesson to be learned here, when some external
factor causes consumers to re-evaluate their decisions about TV
service. I would humbly suggest, that broadcasters would like to
delay, as long as possible, the day when the remaining OTA audience
is forced to make the decision I outlined at the beginning of the
e-mail.
Regards
Craig
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