Fate Of OTA TV Hangs In The Balance In 2016

It’s difficult to pinpoint any single year in the history of television broadcasting more momentous than 2016 is likely to be.

And when I say broadcasting, I mean the medium, not the business of assembling a linear TV channel of national and local (mostly news) programming and supporting it with revenue from advertising and retransmission consent fees.

The two have been intertwined since the beginning, but not inextricably. The business could presumably exist and perhaps thrive without the medium by relying on third-party distributors — cable, satellite and broadband.

This is the year in which policymakers and broadcasters will decide whether the medium is worth preserving, whether it is worth its weight in spectrum, whether it is worth a major investment to upgrade.

The decision will come in the way they conduct themselves in the repacking of the TV band that will follow the incentive auction this spring and how far they go in embracing the next-generation broadcast TV system known as ATSC 3.0 that is just about ready to go.

If all goes according to plan, in the incentive auction the FCC will buy a big swath of TV spectrum and sell it to wireless broadband companies. In the process, it will eliminate as many as 400 full-power TV stations that choose to sell or double up on other channels.

That, in turn, will trigger the start of a forced mass migration of between 800 and 1,200 of the remaining TV stations to new channels as the FCC repacks the old TV band to segregate broadcasting and wireless so they don’t interfere with each other.

Congress has commanded that the FCC make “all reasonable” efforts” to insure that the TV stations enjoy the same coverage on their news channels as they had on their old ones.

If the FCC still believes in broadcasting, it will go beyond reasonable in avoiding hobbling post-auction stations in any way:

• The FCC will aid broadcasters in convincing Congress to set aside more money from the auction proceeds to fully compensate broadcasters for moving to new channels. Broadcasters say the current pool of $1.75 billion will likely prove inadequate.
• The FCC will extend the deadline it has given stations to move to their new channels, recognizing that there are simply not enough hardware, engineers and tower crews to meet the current deadline (39 months after channel assignments).
• And, finally, the FCC will do all it can to implement 3.0, including working with broadcasters to develop a transition plan that insures that no viewer is left behind when stations begin turning on their incompatible 3.0 signals just as it did in 2009 when broadcasting moved from analog to digital.

Of course, the FCC cannot be counted on to do any of this — at least not this FCC of Chairman Tom Wheeler and probably not any subsequent FCC headed by a Democrat.

During the Clinton administration, when Reed Hundt was chairman, the FCC decided that broadcasting’s day had passed and that its policies should favor the Internet.

“We decided [in 1994] … that the Internet ought to be the common medium in the United States and that broadcast should not be,” he admitted in a March 2010 speech at Columbia University.

This has apparently become Democratic orthodoxy.

Hundt ran his FCC with promotion of the Internet as his guiding principle. When the Democrats recaptured the White House and the FCC in 2009, it returned in the form of the incentive auction.

The auction is nothing more than a quasi-marketplace mechanism for reallocating spectrum from TV to wireless broadband where the FCC believes it will do more good powering smartphones, tablets and other Internet-connected devices.

Obama’s first FCC chairman, Julius Genachowski, got the ball rolling on the incentive auction. His second chairman, Wheeler, is determined to bring it to fruition this spring.

Despite all this, I wouldn’t say the FCC is hostile to broadcasting, although I know some broadcasters who would argue otherwise. I would say the FCC is simply indifferent.

So, the broadcasters have a shot at getting the FCC to bend its way on repacking — on post-repack coverage, on the reimbursement fund and on the deadline. But it will require a concerted and sustained lobbying effort at the FCC and on Capitol Hill. If all else fails, broadcasters will have to go to court.

Broadcasters will answer the question of how much they believe in broadcasting by how much pressure they bring to bear.

The other task before broadcasters — and another measure of their belief in broadcasting — is 3.0.

Broadcast engineers began cooking up the next-gen standard almost as soon as they finished completing the transition to the first-gen digital standard in June 2009. By then, some elements of it were a decade-and-a-half old.

The current standard allowed broadcasters to pioneer HDTV and generate some extra revenue through multicasting. But it is a disappointment in its ability to reach homes. In too many cases, you still need a clunky outdoor antenna to pull in the signals.

The next-gen standard promises to correct the propagation problem, mostly by permitting the use of single frequency networks — multiple low-power stations strategically placed in a market that would simulcast the main signal on the same frequency and fill in the gaps in coverage.

Consumers will not only be able to receive signals reliably at home with small antennas, but also on mobile devices.

And that’s not all. With greater throughput and improved compression, 3.0 will also let broadcasters target different ads and newscasts to different parts of their markets. It will also allow them to provide 4K and other forms of advanced television and, in so doing, keep pace with other media.

Its principal drawback is its incompatibility. The tens of millions of TV sets now in use will not be able to receive the 3.0 signals. It’s a hurdle, but not an insurmountable one.

One proposal is to set aside a channel in each market so that stations can continue broadcasting their programming on the old standard in a low-bandwidth SD format.

The new standard is coming together quickly now. Critical milestones were passed in 2015 and advocates believe that by the end of this year it will be essentially complete.

But prospects for 3.0 dim if broadcasters don’t rally behind it. The industry has to sell the standard to the FCC, win its cooperation on a transition plan and commit millions upon millions for new broadcast gear and the single frequency networks.

Unfortunately, the industry has not universally or wholeheartedly embraced the standard.

The networks are withholding their support, apparently believing the current standard is good enough and that as programmers their future distribution needs can be fulfilled by cable, satellite and broadband — media that, not incidentally,  produce second revenue streams.

In talking to non-network broadcasters, I also hear doubts from time to time.

“Broadcasters don’t know with absolute certainty what the revenue stream we might generate as a result of the new standard would be,” Tegna CEO Gracia Martore told us last October. “I also think there are still questions about what the cost would be.”

That’s not the kind of talk that moves the ball in Washington.

Underlying all the talk this year about the spectrum repack and ATSC 3.0 will be the fundamental question: Is broadcasting really worth the trouble and expense to preserve for another generation or two?

Broadcasters who believe in the medium need to answer with a resounding and unequivocal “yes.”

N.B. In making the case for perpetuating free, universal, over-the-air broadcasting, broadcasters have plenty of powerful arguments.

Allow me to contribute one, actually a counter-argument.

In explaining his decision to champion broadband over broadcasting in his 2010 Columbia speech, Hundt said it was based on an “an anti-elite impulse.” In essence, he said, the Internet is a “disintermediating medium as opposed to broadcast that created intermediaries.”

“We also thought the Internet would fundamentally be pro-democracy and that broadcast had become a threat to democracy.”

I think I get what Hundt was saying. He was arguing that the Internet was superior because it was an open medium. Virtually anybody could get on the Internet and have his or her voice be heard if he or she were clever enough to break through the din. With the rise of Twitter and other social media, this may be more true today than it was in 2010.

To Hundt’s way of thinking, no longer was the marketplace of ideas governed by wealthy broadcasters — “intermediaries” — who got to decide what was said and who said it.

But while broadcasting  may not be “democratic” in the way Reed Hundt was thinking about it, it is democratic in another equally important way. It’s available to everybody — free, but for the price of a TV and antenna. No monthly bill for cable or satellite or broadband or wireless service necessary.

I can’t give a definitive percentage of the homes that rely solely on broadcasting for TV. But let’s stir up all the estimates and call it 15%.

Some people (like Hundt) would dismiss broadcasting because that’s not a very big number. But this is a very big country with a population of 322 million. That means nearly 50 million still count on broadcasting.

My guess that that most of the 50 million are not cord-cutting hipsters too cool for cable, but the old, poor and infirmed for whom broadcasting is an economical source of entertainment, news and reliable emergency information. It connects them to the rest of society.

In this sense of democratic, no digital medium can match it.

Harry A. Jessell is editor of TVNewsCheck. He can be contacted at 973-701-1067 or [email protected]. You can read earlier columns here.