It’s Now Up To The Market To Make 3.0 Work

Welcome to the new era of broadcast regulation.

With its 3-2 vote yesterday to permit use of ATSC 3.0 on a voluntary basis, the FCC endows broadcasters who adopt the standard unprecedented freedom to determine what businesses they want to be in; what new services they want to provide;and how to go about implementing them.

They become more like all their competitors who have been gradually gnawing away at their viewers and revenue over the past 40 years — cable, satellite, wireless and OTT.

Right now, there is no consensus among broadcasters on how to proceed with 3.0. That’s a reflection of the freedom and, I think, is a good thing.

This is the time for new ideas and experimentation, for seeing what works and what doesn’t. And we are starting to see that.

Sinclair Broadcast Group, the leading proponent of the new standard, is charging ahead with a plan to use 3.0 to provide datacasting services. It’s a whole new business that has nothing to do with conventional broadcasting of news and entertainment for the masses.

For a fee, it would haul great gobs of from data for third parties from one point to another or from one point to many and some of those points could be in moving cars and trucks.

Sinclair is convinced there is great demand for such a service at the prices it has in mind.

Sinclair is keen on all the other things that 3.0 can do, but it believes that datacasting has the greatest potential for immediate returns.

Significantly, Pearl TV, a consortium of other leading station groups that is gung-ho for 3.0, has concluded that datacasting is a non-starter, that broadcasters cannot compete with the broadband and wireless carriers in that arena.

So, it is focusing on what it calls the “core TV services,” which are not new business, but rather enhancements of the existing business — better picture and sound; more channels, targeted and interactive advertising; and more granular and accurate viewer measurement.

The day before the FCC vote, Pearl announced that it will turn Phoenix into a “model market” for developing and testing some of the services it has in mind. All the major stations in the market, including those of non-Pearl groups NBCU, Univision and Fox, have agreed to participate.

I spoke with Pearl’s Anne Schelle today and she would offer little more on what will be happening in Phoenix other than to say that at least one station will broadcast in 3.0 and that another will dutifully simulcast it with the existing standard so as not to disrupt service to any viewers. She promised details at CES in January.

The involvement of NBCU and Fox in Phoenix notwithstanding, the Big Four networks have yet to show much enthusiasm for rolling out 3.0. CBS has been almost hostile toward it and ABC gives the impression it couldn’t care less.

That the nation’s four most prominent broadcasters aren’t not yet with the 3.0 program should serve as a reminder that 3.0 is very much an iffy proposition.

A year from now, Pearl TV may walk away from its Phoenix testbed, having judged that 3.0 is simply not worth the cost and trouble, that none of its applications will bring a return on the investment broadcasters must make.

And Sinclair may discover that Pearl was correct, that broadcasting can’t compete in the datacasting business. Years ago, millions were invested on building a datacasting business on the back of the existing digital standard and all were lost.

Without datacasting revenue, it may lose interest in a massive 3.0 roll out.

The risk is the flip side of the FCC’s marketplace approach to 3.0. Broadcasters are on their own. There are no commission mandates forcing broadcasters to adopt it and TV set and smartphone manufacturers to build receivers for it.

There is only the opportunity.

That’s that way the broadcasters wanted it and that’s the way they got it.

The speculative nature of 3.0 completely escaped the thinking of the two Democratic commissioners, who accounted for the two nay votes yesterday.

In their minds, 3.0 is a done deal and broadcasters will soon be upgrading to 3.0 without sufficient regard for the tens of millions of Americans who rely on over-the-air broadcast TV.

In their race to 3.0, they believe, broadcasters will deprive full HD service to the OTA viewers who won’t or can’t buy new 3.0 sets and invade the privacy of all their viewers by recording what they watch.

If it were within her power, Commissioner Jessica Rosenworcel made clear, she would put the brakes on 3.0 until the government and broadcasters at least came up with a detailed transition plan that would leave no viewer behind — just as they did in the 2000s when Congress mandated the switch from analog to digital so that it could take back some broadcast spectrum.

“We should be testing ATSC 3.0 in every household in a single market — and learning from it — before giving the green light nationwide,” she said just before the vote.

For her part, Commissioner Mignon Clyburn charged that the FCC order is “not ready for primetime. And for a commission that touts the importance of cost benefit analyses,” she said, “there is absolutely no showing that this item has attempted to weigh the costs to consumers — both in loss of services and access costs — against the touted benefits.”

Fortunately, Rosenworcel and Clyburn are in the minority and FCC Chairman Ajit Pai and the majority believe that cost-benefit analyses are best left to the private sector whenever possible and that broadcasting is best left to imagine and shape its own future with minimal regulatory protections and burdens.

It’s an approach broadcasters have not really seen before from the FCC.

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