MSTV, Centris Spar On DTV Reception

Research firm predicts 8 million over-the-air homes will shift to cable, DBS.

The Association for Maximum Service TV (MSTV), which represents broadcasters on spectrum issues, and market research firm Centris continue to battle over how many homes that currently rely on over-the-air TV will lose service come Feb. 17, 2009, the day high-powered analog broadcasts will cease.

MSTV has pointed to FCC field-test data that shows digital TV (DTV) reception working better than analog TV signals, while Centris predicts that a significant number of analog over-the-air homes won’t be able to receive DTV signals, many due to having inadequate antennas. MSTV president David Donovan and Centris senior vice president Barry Goodstadt traded verbal blows on the issue Tuesday at the ISCe Satellite Investment Symposium in New York, where they were speaking on a panel addressing the DTV transition and its impact on the pay-TV landscape.

Donovan pointed to a successful switch to DTV in Wilmington, N.C., a market which turned off its analog signals last month with only minor complaints from over-the-air viewers, mainly due to the contour of the DTV signal reaching a slightly different area than analog signals for one station in particular, WECT.

“The DTV signal is covering the same number of people, but the outer edge of the contour might be drawn in, so you’re covering different people,” said Donovan.

Goodstadt wouldn’t reveal Centris’ DTV reception analysis of Wilmington since the switch, saying his clients haven’t agreed to make it public. But he discounted the Wilmington results, as the market has flat terrain. Goodstadt said that “digital signals don’t travel precisely the same way analog signals do,” and that as a result, over-the-air analog households will have more trouble receiving DTV signals in hilly areas. A major issue, said Goodstadt, is that Centris research indicates that 72% of over-the-air households have indoor antennas and only 13% have the type of directional, rooftop-mounted antennas the FCC used in its reception tests.

“Some viewers may find they don’t get the kind of signal they get in analog, and there may be some disappointment,” said Goodstadt. “Wilmington, because it’s flat, is not subject to those types of problems.”

“The aim of the digital transition is to give consumers a better viewing experience, but people may find a mismatch between the type of antenna they had versus what they need to have,” he added. “They may decide to move away from going over-the-air and go to multichannel providers.”

Centris’ research indicates that there are 15.2 million households who rely on over-the-air reception, which is higher than Nielsen estimates, and Goodstadt thinks that “8 to 9 million will got to pay TV,” with about one-third going to satellite and two-thirds going to cable.

Donovan said that Goodstadt’s analysis was “a little off-base,” and like broadcast engineers that B&C has spoken with, he pointed out that Centris’ DTV reception analysis is based on running numbers through a computer database, not on actual field measurements.

“And the idea that a digital signal doesn’t go as far as a broadcast signal just isn’t correct,” said Donovan, who noted that FCC and ATSC testing in Charlotte, Chicago, New York and Seattle indicated that DTV signals significantly outperformed analog signals in both the VHF and UHF frequency bands, and delivered much better reception in the contour 30-50 miles from the transmitter.

“It’s a better picture further out, which is why many cable headends have shifted to DTV signals [for backhauling broadcast signals],” declared Donovan.

Moreover, Donovan noted that some 700 stations have filed with the FCC to boost their signal power to improve DTV coverage, and that with over 500 stations changing their digital channel as part of the analog turnoff, many are still broadcasting from less-than-optimal side-mounted antennas. He predicts that DTV reception will be much better a year from now, when those transitional issues are worked out, and says that is a major reason why Centris’ predictions on DTV reception are inaccurate.

“When you try to take a snapshot of something halfway through the ballgame, you’re not going to know what the real outcome was,” said Donovan.

Donovan did concede that some households will have to upgrade their antennas. But he said the real lesson from Wilmington was how important it is for new digital-TV viewers to properly “channel scan” their digital-to-analog converter box or new DTV set. Most viewers will also need to re-scan their boxes after Feb. 17, 2009 to find stations on their new DTV channel assignments, something that the FCC and NAB are trying to educate consumers about now.

While the percentage of the 115 million U.S. TV households that rely solely on over-the-air TV is still relatively low by anyone’s count—most industry experts agree it is 15% or less---that outcome still comes with big financial stakes. Goodstadt projects that over-the-air viewers who shift to DBS service will pay an average of $59 a month, adding $2 billion in revenues to the satellite industry, while those who shift to cable will pay $71 a month, adding $4 billion to the cable industry’s top-line.

Barclays Capital analyst James Ratcliffe, who joined Donovan and Goodstadt on the panel along with FCC staffer Charlene Lagerwerff and moderator (and former B&C editor-in-chief) Harry Jessell of TV, was not as bullish as Goodstadt about digital TV’s impact on pay-TV operators. Nonetheless, Ratcliffe predicted that 2.5 million households will acquire some sort of pay-TV service because of DTV reception problems. Like Goodstadt, he projected that 2/3 will go to cable, with the rest going to satellite.

Ratcliffe expects that Dish Network will get a larger share of the satellite converts than DirecTV, as Dish had “been historically a better marketer to over-the-air customers.” Ratcliffe predicts that Dish’s large selection of Spanish-language programming will also be a draw to the high-percentage of over-the-air households who are Spanish-speaking.