Path To Next-Gen Broadcasting Not Easy

If broadcasters switch to a new ATSC 3.0 broadcast standard, TV stations will be able to offer a new generation of ultra high-definition television — not only to the big sets in the living rooms, but to smart phones and other mobile devices, proponents say.

What’s more, stations may be able to create new revenue streams by offering interactive programming and data services.

Most important, observers say, with ATSC 3.0 broadcasters will be able to keep pace with wireless broadband companies, like AT&T and Verizon, that are targeting the TV business.

“It’s a competitive issue for broadcasters,” said Jay Adrick, former VP broadcast technology for Harris Broadcast, which is now GatesAir. Adrick is technology adviser to GatesAir, which is part of an ATSC 3.0 system proponent that includes LG and Zenith.

“They [telephone, cable, satellite and other broadcast TV competitors] can get their signals on a variety of platforms that broadcasters currently can’t reach,” Adrick said.

But developing the standard may be an easier task than actually rolling it out, even some of ATSC 3.0’s most ardent optimistic supporters concede.

“I can’t tell you exactly when and how, but I can tell you it’s going to happen,” said Mark Richer, president of the Advanced Television Systems Committee, the U.S.-based standards organization that is hoping to have a recommended ATSC 3.0 standard in place by late 2015 or early 2016, setting the stage for a massive industry transition as soon as 2017.

Transition architects have their work cut out for them, because one enormous down side to ATSC 3.0 is that it won’t be compatible with ATSC 1.0, the existing U.S. standard.

That means that consumers won’t be able to use their existing ATSC 1.0 TV receivers to receive ATSC 3.0 signals over the air without technical upgrades.

To get around a similar incompatibility before the industry switched from the analog TV standard to the digital ATSC 1.0 standard in 2009, Congress authorized a second TV channel for all broadcasters so they could simulcast analog and digital TV signals.

Congress approved the use of the second channels in 1996. The first simulcasts began in 1998, and all simulcasts didn’t end until a decade later in 2009.

During the analog-to-digital transition, the federal government also provided $1.5 billion for a program to subsidize converter boxes that consumers could use to upgrade analog TV sets to receive the new ATSC 1.0 digital signals.

Today, there’s not enough unclaimed spectrum capacity to give every broadcaster a second channel to simulcast ATSC 3.0 and ATSC 1.0, industry and FCC sources said.

“Unfortunately, there will not be a simulcast period,” said Mark Fratrik, SVP and chief economist for the financial consulting firm BIA/Kelsey. “It’s a challenge to both broadcasters and the consuming public as well.”

In addition, the federal government is unlikely to subsidize a converter program.

“That’s a nonstarter,” said Mark Aitken, VP of advanced technology for Sinclair Broadcast Group. SBG, in league with Coherent Logix, is promoting a system that it hopes will be the new standard.

So this time around, industry executives are huddling over how the industry may be able to pull off the transition on its own.

Under one of the leading ideas under consideration, TV industry sources said, TV stations would use voluntary channel-sharing arrangements in their markets to phase in ATSC 3.0, perhaps with the larger markets going first. Under the plan, one or more stations in a market would permit other stations in the market to offer ATSC 1.0 signals over their channels, while other channels in the market could be designated for shared station introduction of ATSC 3.0 signals, the industry sources said.

“Most people believe it’s going to be an industry collaborative effort among broadcasters in a given market to work up a transition plan that works for them,” said ATSC’s Richer.

“It’s going to be a voluntary cooperative transition,” added Sinclair’s Aitken. “We’ve got to come together on this. If we try to do it separately, we’re going to fall flat on our face.”

Other challenges to the transition include how to pay for the millions of converters or dongles that will be needed to prevent consumers who currently rely exclusively on over-the-air reception from losing access to broadcast signals during a transition. At the same time, the industry needs to figure out how to help broadcasters make the shift without wreaking havoc on their capital reserves.

Within the ATSC itself, two groups — a specialist group headed by consultant Merrill Weiss, and an ad hoc committee group headed by National Association of Broadcasters CTO Sam Matheny — are deconstructing transition scenarios.

Weiss’s group is focused on ways to help broadcasters keep a lid on costs while updating their technology at the station level. Matheny’s group is exploring bigger-picture issues such as how broadcasters can make the switch without millions of consumers losing service.

Matheny’s group, according to an ATSC blog, has been analyzing a variety of scenarios to help make the switch, including use of low-power simulcasting, “and/or temporary channel-sharing approaches among local TV stations during a transition period.”

Along with ATSC 3.0’s incompatibility with ATSC 1.0, another downside to the switch is the cost — both to broadcasters and consumers.

The costs for a station to convert to ATSC 3.0 could start from as little as $70,000 — to essentially be able to pass through the station’s current standard-definition and high-definition program material, and a network’s ultra high definition signals, said GatesAir consultant Adrick.

Booster stations that many broadcasters may want to install to enhance their mobile and in-home reception capabilities would cost each station  — assuming there are some station-sharing arrangements in the market — anywhere from $350,000 to $700,000 apiece, said Adrick.

Stations that want to provide locally originated ultra high definition services would have to upgrade expensive studio equipment.

The Consumer Electronics Association has no projections on how much the ATSC 3.0 conversion will cost its industry or consumers—or on the scale of the profits consumer electronics manufacturers can expect from selling new ATSC 3.0-compatible equipment, according to Laura Hubbard, a CEA spokeswoman.

But Adrick said that, with economies of scale, ATSC 3.0 dongles designed to use the USB and HDMI ports in consumer electronics products can probably be manufactured for about $100 apiece, and those could be plugged into the backs of many existing TV sets and other products. The dongles would be sufficient to upgrade ATSC 1.0 sets to receive ATSC 3.0 signals over the air, Adrick said.

GfK, a research firm frequently cited by the National Association of Broadcasters, last year said that 19.3% of TV homes — or 22 million — relied solely on over-the-air reception. So assuming the availability of $100 USB ATSC 3.0 tuners, it would cost $2.2 billion just to upgrade one TV set in each of those households.

If and when the transition takes place, broadcasters are hoping that consumer electronics manufacturers will begin including ATSC 3.0 receiver chips in laptops, tablets, smart phones and the other portable devices that consumers are increasingly using to receive their TV programming and information.

Consumer electronics manufacturers, of course, are also hoping that the UltraHD or 4K images that ATSC 3.0 will enable will encourage consumers to go out and buy new TV sets for their living rooms. Major consumer electronics companies, including LG, Samsung, Sony and Zenith, are key players in the ATSC standard process.

However, it’s unclear whether the manufacturers will be similarly enthusiastic about installing ATSC 3.0 chips in smartphones and other mobile devices.

Smartphones are subsidized by wireless companies like AT&T and Verizon, and the phone giants may view broadcasters as rivals for video distribution.

Still, some industry sources believe that that they may able to persuade the FCC to mandate the inclusion of the ATSC 3.0 chips in virtually all mobile devices, on grounds that the chips will clear the way for broadcast emergency alerts.

“Behind the scenes, broadcasters are working toward that goal,” one industry source confirmed.

Some broadcasters say that consumers will ultimately make the decision on whether ATSC 3.0 is worth their investment, and that, if so, they will pick up the tab for any needed upgrades during the transition.

“We believe if we have a compelling service in today’s TV technology marketplace, consumers will invest on their own with their own discretionary dollars,” Sinclair’s Aitken said.

ATSC’s Richer said the committee hopes that other countries besides the U.S. — including Mexico and Canada — adopt ATSC 3.0, a factor that could substantially add to the economies of scale — and result in lower costs — for ATSC 3.0-compatible consumer electronics products.

“For the public, the consumer products, I expect the costs will be fairly low, considering the scale of the market, particularly if we have international participation,” Richer said.

“I do believe there are ways to minimize the costs on the consumer side, to minimize costs on the broadcaster side, to enable a transition that would meet all stakeholders’ requirements,” added Anne Schelle, managing director of Pearl, a partnership of major broadcast companies and an ATSC member. “There are ways to do that, and that’s what broadcasters are looking at.”

Exactly how the FCC, which will have to approve any standard, will come down on the subject is unclear.

During the NAB Show last April, FCC Chairman Tom Wheeler said, ambiguously, that the agency will be “ready and responsive when the standard is completed.”

But Wheeler also said that fact that ATSC 3.0 would not be compatible with ATSC 1.0 was a “non-trivial challenge.”

“We just lived through one TV transition,” Wheeler said.  “We both know the magnitude of that challenge…. Government and broadcasting will need to work together, because it’s going to be a long and heavy lift.”

FCC support would be particularly critical if there is to be a new kind of bare-bones standard that establishes interference and power limits without dictating the kinds of service to be offered.

“We want the technical ability to evolve over time as the markets and technologies evolve,” said Sinclair’s Aitken. “We need the government to get out of the way, and let the markets go to work.”

Considering all the challenges that a transition to ATSC 3.0 presents, a lack of industry consensus only promises to make it harder to sell the new standard to federal lawmakers and regulators. Still, some influential broadcast players remain skeptical at best, or, like ABC, undecided.

“It’s probably fair to say that there are some broadcasters today, including CBS, who wonder what the business plan is and what they can get from a new standard,” said an industry source, who asked not to be identified.

Under the ATSC’s current timeline, a so-called “candidate standard” for the ATSC 3.0 transmission system is expected to be unveiled by the second or third quarter of 2015, with a final standard adopted by the end of the year or early 2016, Richer said.

A candidate standard sets most of major aspects of a standard, clearing the way for companies to start manufacturing and testing equipment. The publishing of a candidate standard also provides opportunity to fine-tune parts of the standard if testing reveals tweaks that should be made.

Richer also said that under the timeline, a transition may begin as soon as 2017.

“Transition is going to be a challenge, but I think we all understand that broadcasting needs to move to next-generation technology to be successful and thrive,” Richer said.