Sinclair Broadcast Group CEO David Smith is demonstrating industry leadership in his drive to get the industry to adapt ATSC 3.0, the next-gen TV standard. His fervent and repeated claims that only the swift adoption of a new standard will save the industry from a slow, but inevitable obsolescence, may not always be welcome, but there’s no denying it’s a message that needs to be heard and acted on.
TV Should Heed Smith’s Next-Gen Urgency
Leadership is a loose ball.
It usually goes to the one who wants it the most. Right now, in local TV broadcasting, that seems to be David Smith of Sinclair Broadcast, the fast-growing station group out of suburban Baltimore.
When he is not outbidding his peers for more TV stations, he is out pushing the idea that the industry’s fundamental technology — the ATSC digital broadcast standard — is fundamentally flawed and that only the swift adoption of a new standard will save the industry from a slow, but inevitable obsolescence.
The next-generation standard, some variation of the OFDM standards used by much of the rest of the world, would give broadcasters a much fatter pipe for delivering more channels of programming and new services like 4K and 3D.
But more important, as Smith sees it, it would generate a signal rugged enough to be received not only on every set in the house, but on smartphones and tablets, the viewing platform of choice for a growing slice of the population.
What’s more, he says, it will allow broadcasters to compete in the coming world of TV advertising, where spots are targeted to neighborhoods, to homes and even to individuals based on the massive amounts of data that are being collected about them. Big data driving big broadcasting will make for a powerful marketing force.
Smith lays out the vision in an interview that we posted last week.
The Advanced Television Systems Committee has already begun work on the new standard, which it’s calling ATSC 3.0. What the effort lacks is urgency.
Without a big push from the owners and top managers, the first next-gen sets won’t be arriving in stores until 2020. Smith believes that will be way too late, that other TV media will have blown past broadcasting. He is calling for a Manhattan project, whose mission will be to define a new OFDM standard within the next year so that the new receivers and new services can be introduced by the end of 2016.
Sounds like a plan, but it raises some tough questions.
For instance, is this OFDM technology all it’s cracked up to be? If broadcasters go through the effort and expense, will the signal really cover a market like a blanket as Smith insists it will? Will I be able to watch at home with a simple antenna and on my smartphone with an internal antenna? If not, what’s the point?
On the other hand, will the signal be too good? By that I mean if it is as good as Smith says it is, won’t it accelerate cord-cutting — the cancellation of cable and satellite video services — and cut into broadcasters’ retrans revenue?
If we move too fast on the new standard, won’t we be essentially cobbling together existing off-the-shelf technology — some variation of the DVB-T2 Euro-standard — rather than searching for — or perhaps developing — the best cutting-edge technology? The industry might be locking itself into last-gen technology rather than next-gen technology.
But the big question is, how will the industry — how will the country — transition to the new standard. The standard will be incompatible with the current one, meaning that all those tens of millions of digital sets that have been sold over the past 10 years will not be able to receive the new signals off air.
The transition from analog to digital was long, expensive and traumatic. And it ended just four years ago. Is the country ready for another one just two or three years from now?
Smith believes that the new standard will unlock so much value in broadcasting that the industry will be able to bear the cost of making sure that all of today’s OTA viewers will be able to receive the next-gen signals. His idea is to give each OTA viewer a dongle that plugs into the back of the set and that converts the new signal to the old.
Even assuming that such a dongle would work, that sounds like an extremely expensive proposition. Let’s say there are 30 million homes that demand a dongle, which I will arbitrarily price at $100 including shipping and handling. That’s $3 billion – a lot of money that the industry will have to spend before any new revenue flows from the new standard.
Smith is being more than a little glib when he says the cost of accommodating the OTA viewers is “a rounding error” in the revenue-generating potential of next-gen TV.
Broadcasters can’t look to the federal government to subsidize the transition as it did in 2009. There will be no associated auction of TV spectrum to generate the cash.
Speaking of the federal government, Congress will certainly have something to say about implementing a new broadcast standard, especially if members start hearing from constituents about some new-fangled scheme of the broadcasters that will render their $1,000, 50-inch TVs somewhat obsolete.
Is the NAB ready to manage this on the Hill and at the FCC at the same time it is trying to protect the integrity of TV band from the FCC incentive auction and channel repacking?
These are good questions, but they are also the kind that can paralyze. If broadcasters wait to act until they can find the perfect technology or come up with the perfect transition plan, they risk falling hopelessly behind other TV media.
As I said, in the ATSC, the industry has the vehicle for developing and implementing the new standard.
But the speed at which ATSC works is largely dependent on the urgency that the broadcast networks and the station groups demand and the support they supply in the form of resources and participation.
I know that for many broadcasters Smith is not an easy man to follow. He likes to play the maverick, he periodically causes political problems for the industry and he acts like he is the smartest guy in the room. His enthusiasm for OFDM sometimes comes across as an I-told-you-so jab at those who rejected it when the current digital broadcast standard was being implemented in the 1990s.
But all broadcasters should be grateful for his incessant calls for action on a next-gen standard, for trying to keep it front and center and for insisting that the future of broadcasting is at stake as I believe it is. Nobody else is.
That’s called leadership.