More thoughts on broadcast's future
By BroadCasting & Cable Staff -- Broadcasting & Cable, 8/18/2002 8:00:00 PM
In his Aug. 5 cover commentary, "Sink or Swim," Editor in Chief Harry A. Jessell argued that TV broadcasters should end their dependency on cable and satellite and use their digital stations to launch a multichannel TV service in competition with cable and satellite. Such an initiative would require unprecedented cooperation among broadcasters and the development of a broadcast-only set-top box that would transform the 260 million analog TV sets into receivers of the new service. Here's more reaction to the commentary:
Editor: Harry Jessell's thoughtful and provocative commentary "Sink or Swim" makes the strong case that, despite the distribution inroads made by cable and satellite companies, broadcasters must reestablish their own gateway to the television home, remaining "broadcasters" in every sense of the word.
Unfortunately, hard economic times and difficult budget issues have resulted in a weakening of the transmitter and tower infrastructure at many broadcast stations. Complex and emotional zoning and environmental issues have added to the difficulty of siting and building new towers. In the New York metropolitan area, the situation is particularly critical, since all of the broadcast stations shared a single tower atop the World Trade Center. Nearly a year has gone by and New York-area broadcasters, not through lack of initiative on their part, are operating in a degraded mode from the Empire State Building. What has been positive in New York is that the World Trade Center tragedy has brought about a level of cooperation that should serve as a model for our industry. New York-area television-station general managers meet biweekly to work together toward the common goal of quality reception for all viewers of all stations.
The broadcast spectrum remains local television's most valuable asset. As the digital transition moves forward, the need to maintain robust technical capabilities in transmission is particularly important. The proposal from [FCC] Chairman Powell to require digital tuners in television sets and projects such as [former BROADCASTING & CABLE Editor in Chief] Don West's Video Edge will go a long way to preserving over-the-air broadcasting. Most of all, we need the industry leadership and cooperation your perspective piece so strongly recommends.
Our future as broadcasters may look different than our past, but the intelligent use of our valuable spectrum is a clear part of that future. —Edward Grebow, president, Metropolitan Television Alliance
Editor: Enjoyed your think piece on how broadcasters might adapt to an increasingly harsh future. The overall concept that a single channel and a single revenue stream is less attractive in a digital world is appropriate. I'll point out two items about the broadcast set-top box that bode ill.
One: Consumers have frequently told cable operators and the overbuilders of cable that they hate the box. They don't like the extra electronic apparatus.
Two: The 20-to 30-channel package by multiple TV stations with some popular cable programming sounds a lot like 24- to 36-channel MMDS, or wireless cable, a failed distribution method of the 1990s.
I'd imagine a deeper risk/reward partnership with the broadcast networks, or local joint ventures with cable groups, might hold potential once the retransmission bad blood is behind all.
Good, different article nonetheless.— Jim Boyle, media analyst, managing director, Wachovia Securities Inc., New York
Editor: Harry Jessell's call for television broadcasters to reinvent themselves through the use of an industry-exclusive digital set-top box is a bold challenge indeed. But it doesn't cut to the heart of the matter. It's true that technological problems are formidable. It's equally true, and perhaps more difficult, to develop a workable business plan, bring broadcasters into a cooperative model and deal with Congress. But the push and shove of technology and economics will never be truly useful until decision-makers recognize change at a much more profound level.
Television today must be conceived not as the common experience of regulated "flow," drawing numbers to aggregation, but as a viewer-demanded, usable array of special interests. This configuration is variously described as the "radio model," the "publishing model," or the "music-industry model." I prefer to think of it as a library model.
It is, of course, still a subscription library, like those that preceded free public libraries as we now know them. But, even in this context, users think of libraries differently, use them differently, than they do "broadcasting." Publishers and authors think of libraries differently. Regulators think of them differently.
If broadcasters begin to think of themselves as librarians or publishers or authors, as warehousers and retailers, they must completely rethink their "transactional relationship" with media users. And if they don't, if "transactional relationship" remains an abstraction or, worse, is applied with the same old broadcasting assumptions, lots of viewers will use their set-top boxes for paperweights, and lots of media people will go broke. —Horace Newcomb, director of the Peabody Awards Program, Grady College of Journalism and Mass Communication, University of Georgia, Athens, Ga.
Editor: Congratulations, you hit the nail on the head on both counts: Broadcasters must reinvent the medium's business model, and broadcasters must cooperate.
After spending most of the last five years straddling the broadcast and tower industries and the 20 years before that as a consultant and an owner-operator in the radio business, I fear your warning will fall on deaf ears. With some notable exceptions (Don West; your magazine; David Donovan and MSTV; John Abel and GeoCast; Jim Goodman's WRAL-TV Raleigh, N.C.; iBlast; AccessDTV; and a handful of others), this business is dominated by people who got rich respecting the status quo. They will likely not jeopardize their 50% margins, nor are they likely to embrace the enemy, whom they still believe to be—and this will be their undoing—other broadcasters.
I would add one other revenue source to your model. It is spectrum aggregation and leasing. While this concept has also largely been overlooked, at any given moment in a built-out digital radio and television future, there would be a good deal of unused spectrum. I have long foreseen an industry growing out of this surplus capacity. My bet was that broadcasters and tower owners would become spectrum aggregators and lessors. That read has proven premature.
To your cautionary phrase "catch the wave or miss the future" I would add that timing is everything: Paddle too soon and you'll miss the wave; too late, and it will crush you. —Jon Sinton, JSA Inc., Atlanta
Editor: Your article "Sink or Swim" is an enlightening piece on the need for television broadcasters to enter the digital era now, not in the distant future.
Finding digital solutions is essential to growing a broadcaster's business. Digital represents a significant new source of revenue at a time of increased strain on broadcasters' margins. In addition, the set-top box is the enabling device to get broadcasters what they need: a direct digital connection to the consumer's home.
As you alluded to in your article, we at WOW Digital TV have spent over two years researching the needs of the marketplace, assembling a world-class group of technology and investment partners, attracting prominent broadcast stations, and conducting successful tests on our set-top box. WOW is poised to deploy our state-of-the-art box in Salt Lake City in the fourth quarter. Together with our broadcast, retail and technical partners, WOW is enabling the digital era to occur NOW.
Historically, competition has prevented broadcasters from uniting and is hampering the adoption of over-the-air digital television. You make this clear in your article. However, we at WOW are pleased to be working closely with many progressive broadcast groups—including LIN, McGraw-Hill, Sinclair, Sunbelt and others—to participate in the testing and the deployment of our product in the upcoming months.
We wholly support your accurate assessment: that broadcasters must unite if we are to give the American public a digital television service at a reasonable cost with ease of installation. We invite MSTV or other interested parties to unite with us as we help move digital TV closer to reality.
At WOW, we are moving forward with our business plan, are confident in our product, and anticipate a very high acceptance rate. Our hope is that competitive interests can be put aside and broadcasters from around the country can join together to ensure that over-the-air television "takes its place in the digital future." —Steven Lindsley, chairman and CEO, WOW Digital TV, Salt Lake City
Editor: I read with great interest your recent article titled "Sink or Swim." As one of the world's leading developers of digital set-top box design, Pace has been watching these developments with enthusiasm. As you may know, in Europe, there has been a groundswell in the adoption of free-to-air digital terrestrial products available at retail. Pace has been one of the early pioneers in this space. This year, we began shipping a digital terrestrial unit called DTVA (Digital Television Video Adapter) for $150 at retail. The demand has been very good, and the product has been well-received.
Aside from offering 30 channels of digital television and teletext, the product comes with MPEG support to allow for additional advanced functionality down the road.
It is our opinion that a similar unit with HD support could be offered to the U.S. market for less than $200. Your article is right on the money. A nationwide service, sponsored by each terrestrial broadcaster, should be the ultimate goal. With such a service, we could easily and quickly launch a very affordable set-top to the market. —David Novak, vice president of marketing, Pace Micro Technology Americas, Boca Raton, Fla.
Editor: Great article on a wonderful concept. Once the technology is worked out, I envision farsighted broadcasters joining forces to form new businesses, which would program all the secondary digital channels offered by the station combine and share in the profits from the new revenue streams. They will still compete with their primary channels, but I foresee the day when all the reps in a market are selling advertising on the secondary digital channels against their local print and cable competitors. Perhaps digital will enable over-the-air television broadcasters to finally displace their local newspapers as the No. 1 advertising medium in their markets. —Joseph J. Sullivan Jr., president, Joe Sullivan & Associates, New York
Editor: I agree DTV is a new frontier the broadcasters will need to address. Most stations now feed the cable and satellite companies directly with little consideration to their over-the air-signals.
Just a few years ago, a TV station being off the air was unthinkable but now is becoming commonplace. It seems that, as long as the station is feeding the cable and satellite, there is not much interest in properly maintaining the transmission system or returning the station to the air as soon as possible. This kind of thinking will get the industry in so much trouble they will have difficulty overcoming it. This is like a newspaper allowing its printing press to go down, thinking printing the paper is not very important since it has a Web site on the Internet.
Stations now have the perfect opportunity to bring back their over-the-air viewers with DTV and all the other important services the stations can now offer. Both the NTSC and DTV systems will have to be kept up and running with the best maintenance and best signals possible in order to sell the service. I really hope the industry sees the light before it is too late. Just my two cents. —Rusty Wallace, Bartlett, Tenn.
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