[opendtv] Re: STB hunting
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Tue, 24 Jan 2006 09:37:26 -0500
At 10:44 AM -0500 1/23/06, Manfredi, Albert E wrote:
>I suppose this is as believable as the theory that cable
>and DBS are conspiring to kill off OTA, by paying off CE
>vendors and retailers. It makes a good story, but the facts
>don't completely line up, Cliff.
One more time Bert. There is no conspiracy here.
This is simply an issue of business models and the realities of how
you get CE retailers to promote your products.
The reality is that there is a small degree of competition among the
multi-channel service providers. And they have chosen to use
subsidies (both for consumers and for the CE retailers) to market
their services.
>
>The FCC receiver mandate still holds, has been set at March
>2007 for all TV sets and recording devices, and these built
>in receivers are reportedly of good quality. So that would
>certainly contradict any notion the government is secretly
>trying to kill off OTA. They could have said "let the market
>decide," which is what they do when truly not interested
>(e.g. analog stereo AM radio). *That's* the kiss of death.
I agree that there is no evidence that the government is trying to
kill off OTA broadcasting. But there is overwhelming evidence that
the politicians want to recover some of the broadcast spectrum so
they can auction it off to help balance the budget.
Governments, at all levels WANT to maintain the status quo. They have
become dependent on the revenues from franchise fees, excise taxes,
and the rest of the crap that comes with political gerrymandering.
Any effort to make the marketplace more competitive, especially as it
relates to services that the politicians cannot tax, will be opposed
by governments at some level.
For example, local governments have been desperately trying to figure
out how to tax DBS services, as these services are taking away market
share from cable, for which they get significant revenues at the
local level. Los Angeles tried to tax DirecTV because they had some
earth stations in the LA market.
As for the receiver mandate, Mark accurately portrayed the reality.
The marketplace is moving to monitors, in large part because
consumers are not buying integrated receivers. This is especially
true for the smaller LCD panels that are rapidly taking over the
market once dominated by direct-view CRT displays.
But the real reason that the CE industry is not pushing ATSC STBs is
because there is no market and the broadcasters have no interest in
developing this market, or the market for integrated receivers for
that matter.
You continue to ignore the reality that what the broadcasters really
want is to keep those oil wells pumping. Thye are more than happy to
maintain the status quo, as cable and DBS are now starting to replace
the revenues that they once received from the networks in the form of
affiliate compensation.
Yesterday Nexstar announced that it has completed retransmission
consent agreements with more than 140 cable systems that carry their
stations. Nexstar has about 46 mid-sized stations that they own or
operate under marketing agreements. The deals they just negotiate
will provide about $40 MILLION in revenues to Nexstar over the next
3-5 years. You are going to see dozens of similar stories over the
next few years as old agreements expire and new deals are cut that
use the cable and DBS operators to collect revenues from their
subscribers.
NOw, given this reality, WHY would broadcasters want to compete with
cable and DBS? Can Nexstar make 40 million in NET PROFITS, by filling
their DTV multiplexes with content that they must pay for? Content
that may draw viewers away from their primary programming?
You are NOT going to see any significant changes in the status quo,
because it is working for everyone involved, and the public will
tolerate rate increases at 2-3 times the inflation rate.
>
>> Why else have none of the manufacturers spent much effort
>> developing and *marketing* OTA STBs like they are in the
>> rest of the world?
>
>I think there are more credible reasons. For example, since
>broadcasters are spending no effort to make their digital
>tier particularly attractive, e.g. by offering some added
>programs that would encourage people to buy into DTT, the
>vendors are waiting for the analog cutoff date to make STBs.
>After all, they do have to build in receivers into 100
>percent of their TV sets anyway, well before any analog
>cutoff date, so what's the rush?
First. they DO NOT need to put receivers into monitors. Monitors
represent the largest portion of DTV sales.
Second, there is no viable market for ATSC STBs. Retailers cannot
make a profit selling them and the volumes are too small to be of
interest to the manufacturers.
It is not even clear that a $1.5 BILLION government subsidy is going
to change this. The reasons that STBs are selling in other parts of
the world have little to do with technology. They are selling because
of the broadcast business models in those countries.
The one thing we do agree about is that changing modulation schemes
without changing the business model of U.S. broadcasters is unlikely
to change a thing.
>
>Imagine what would happen if broadcasters made it so people
>would rush to stores to get DTT reception. You know, offer
>something interesting over their new subchannels. There are
>so many possibilities.
You mean like offering the content that is now available only to
subscribers of multi-channel services?
Great idea Bert. Now who is going to pay for it?
We already have adequate evidence that a pared down multi-channel
service at say $20/mo is a non starter. So how do you offer all of
this programming that people want without charging subscriber fees?
They are doing it with Freeview. And the revenues are coming from advertising.
So once again I will ask:
What would Nexstar need to do in terms of building DTV multiplexes,to
generate an additional $40 million in net revenues over a 3-5 year
time frame?
> > Why is DTV mostly advertised as available over satellite
>> and cable? Why don't any of the sales people at the
>> consumer electronics stores know you can receive DTV OTA?
>
>Because they're stupid? The guy I talked to at Circuit City
>seemed to know. So while this is the impression one gets,
>it's not necessarily 100 percent true. Retail clerks in all
>industries have a special way of being clueless.
Perhaps they are concerned that they might come across as being
clueless, if they promote OTA DTV?
A bit of television archaeology.
I am now installing drainage in preparation for the building of an
elaborate deck on the home I have been remodeling for the past year.
Near a corner of the house (built about 1956) there were three metal
pipes coming out of the ground forming a equilateral triangle.
Unfortunately they were right in the path of the drainage system. I
started digging, only to find about a cubic yard of concrete under
the posts, which were welded to a metal plate. At first we though it
was part of an old irrigation system, but the portion of the pipes
above the plate had holes through them.
After scratching my head for a moment the picture became clear. This
was the mounting base for a steel TV antenna tower. Back in the '50s
there was only one TV station in Gainesville (channel 5/PBS). To
receive the commercial networks you needed a tall tower (30-50 feet)
with a rotor. Before I moved to Californai in 1981 I had to build a
similar set-up because we lived out in the country where there was no
cable service.
So here's another question for you Bert. What do you think the
average Gainesville consumer today would think of a CE salesperson
who suggests that they invest hundreds of dollars in a 30-50 foot
tower to receive DTV broadcasts? By the way, there are now two DTV
stations on the air in Gainesville, and the Fox affiliate may get on
the air eventually.
The reality is that most consumers would think that a CE salesperson
suggesting that they choose OTA DTV versus cable or DBS would be
considered to be COMPLETELY CLUELESS.
>The US likes to do its own thing. This one is not a big deal.
>A simple change of *one* component, the demod, makes a DVB-T
>box into an ATSC box. Big whoop. Besides which, it's not all
>bad. I've already reported that I seem to get solid
>reception whenever the SNR stays above 15.1 dB or so. This is
>very, very repeatable. Compare that with COFDM. Not all bad.
Forget the technical arguments Bert.
You are correct. The U.S. does like to do its own thing. We have
nearly a century of history behind the current telecommunication
infrastructure in the U.S. A century dominated by political
gerrymandering and a VERY PROSPEROUS run for every company that plays
by the political rules.
Regards
Craig
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