Saturday, September 29, 2012

The End of Broadcast TV

Broadcasters as an Impediment
Color TV was introduced to the public 61 years ago and was immediately withdrawn from the market. Though, nominally, the withdrawal was to conserve resources during the Korean war, in truth, it was a technology dispute between the broadcasters. The original CBS color scheme involved a monochrome CRT and a color wheel generating field sequential color. RCA, the owner of NBC, was developing a different color technology, the familiar shadow mask and spatial integrating color. The dispute delayed the implementation of color TV for over a decade and it was not until the mid-1960’s that the networks were all broadcasting in color in prime time.

Twenty-five years later, analog HDTV had been implemented in Japan and the US was planning to convert to HDTV as well. The conversion meant that all of the broadcast stations would have to upgrade their equipment for a questionable return on investment. The upgraded signal and consequent investment did not allow them to charge more for their air time. At the same time, some of the remaining US consumer electronics companies, not wanting to cede the rest of the market to Japan, proposed a digital HDTV format. The digital HDTV format was decided upon in large part because it delayed implementation of HDTV. To sweeten the deal for broadcasters, the US government decided on an implementation scheme that gave the broadcasters additional, valuable, spectrum.

Long before the implementation of HDTV, with the growth of cable, over the air broadcast ceased being important to consumers as a content source. However, the TV market being what it was, the “rabbit ears” connection on the back of the TV set remained until the transition to HDTV. In truth, the vast majority of consumers needed neither the rabbit ears connection nor the tuner; however it was kept on the platform to preserve incremental marketshare.

Value of Spectrum
In the early growth period for cellular phones, it was common for cell phone companies to buy local taxi-cab operations, not to get around town but for the spectrum they had for communicating with their cabs. Once the cellular networks were in place, the cab drivers could uses cell phones as easily as their old radios; but the purchase of cab companies showed just to buy their allocated spectrum proved a windfall for the previous owners.

As wireless communications have grown, radio spectrum has become more and more valuable. Now, it seems that the government has decided that the TV spectrum is too valuable to leave it in service of little used broadcast TV reception and has begun the process of buying out the broadcast stations. The stations do not actually own the spectrum, but as with all government transfers payments the status quo is something of a contract with those that benefit from the current policy and the government will not change the policy without buying out the incumbents.

Implications As with the transition to HDTV, when NTSC to HDTV converters were provided at a subsidized rate or free, no doubt consumers that are dependent on broadcast will get some help from the government. Possibly, in addition to subsidizing cable or satellite access, it might also subsidize internet access thereby preserving access to free news and other content. The major networks and broadcaster might suffer some decline in viewership as their captive audience goes away. However, their profit from the sale of their spectrum should be more than their loss.

For the CE market, a major encumbrance is removed for TV set innovation. The current HDTV format was designed in large part to accommodate broadcast TV. The removal of broadcasters from the picture will enable some experimentation in formats. Actually, Vizio is already doing this with its Cinema-Wide product. As with 3D, even further control of TV formatting might fall to the movie industry once the broadcasters are gone. Better sound might also rise from an option to standard. And… as there is no longer an access advantage to the broadcasters, more diverse sources of local content will develop. As cable made possible new networks without the investment in a broadcast and local infrastructure, the departure of broadcast TV might enable a blossoming of the blogosphere into video content. Finally, the additional spectrum that is made available might be further enabling to new services and to ubiquitous digital signage.

Broadcast TV, with its large distributed infrastructure, has been a traditional impediment to TV innovation. As broadcast goes away, a round of innovation both in hardware and content is certainly in the offing. Advancements in mobile electronics, and the additional spectrum freed up will advance this as well. As with any change of this type, it can’t come soon enough but will likely take much longer than it should as it has to handle the objections of those dependent on the current infrastructure. It would be nice if it was decided that this is inevitable so let’s just do it. However, as with HDTV, the change will likely take 10 years.


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  2. Back when satellite dishes were yards across and were thousands to install, I read an article that described them as the "State Flower" of West Virginia. The point was that for the first time, people in very rural locations could get TV and even those of modest means were willing to pay huge amounts for access. Today, those same consumers might be better served by providing internet access rather than free "Honey Boo-Boo".

    The FCC was given $4.5 Billion out of the Stimulus funding to expand rural internet access and aims to have universal access by 2020.

  3. HONEY BOO BOO ? Yep the TV with Legs & Knobs & "ears" is gone,
    by way of the UHF Converter. But, the Information Highway,
    for entertainment ? I heard the phrase a long time ago, , ,
    THE DUMBING OF AMERICA Where are we gonna get out future techs ?
    Like us ! There won't be anything to take apart to see how it works !

  4. It's starting!


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