In April 17-21, nearly 100,000 people attended the annual convention of the National Association of Broadcasters in Las Vegas. It is the world's largest electronic media show, covering all aspects of terrestrial radio and television, including DTV and HDTV with 800,000 square feet of exhibit space. The exhibits cover all forms of video production technology.
Two years ago there was a dispute between the Big Four Networks (CBS, NBC, ABC, Fox) and their affiliates. NAB tried to remain neutral but was forced to side with the affiliates. The Big Four then quit NAB. It is unlikely that they will ever return. This weakens NAB politically. But they have worse problems.
The theme of this year's conference was Your Future Starts Here. This is ironic because terrestrial Broadcasting is rapidly becoming obsolete and the Broadcasting Industry is facing a very harsh climate, possibly even extinction. As a result, this is a very emotional conference, the most emotional conference I have attended. The Broadcasters think they are unfairly carrying the burden of the DTV transition while everyone but the Broadcasters is making money.
Audiences would burst into applause for statements like
There were strong statements of patriotism in which Love of Country is confused with Love of Analog Broadcasting:
The official conference began with standing for the National Anthem, which is very unusual at a business conference. Even more unusual, it was followed by a Christian Prayer.
The broadcasters deeply believe that they are being victimized and attacked on all sides. They believe that
Some of the Broadcaster's complaints are valid, some are not. I think it is worth looking at them in detail:
The Broadcasters do badly with DTV. It is driving their customers to Cable and Satellite, which offer lots of competitive programming. ATSC's bad multipath characteristics mean that some viewers who used to be able to receive broadcasts will no longer be able to. Broadcasters are under extreme pressure to release spectrum and go to all digital transmission, but analog sets still represent half of the sets being sold today, and those sets carry no warning labels about the digital transition. Indeed, consumers are extremely confused about digital television. The argument between CE and Broadcasting is becoming bitter.
The Broadcasters want instead to continue simulcasting as they do now until they determine that the number of remaining analog receivers is so small as to make the analog service unprofitable. However, the digital transition is a matter of national technology policy, and as such should not necessarily be subject to the whims of the market or of the Broadcasters.
Congress needs to reassign spectrum to other services. Currently each Broadcaster has two channels, one analog and one digital. If I were an FCC Commissioner (and there are now or will soon be three seats vacant) I would demand that Broadcasters return one channel at the end of 2006, and that they can operate the remaining channel as either digital or analog, their choice. This honors their demand to let market forces work, and it immediately returns spectrum that can be used for essential services like Public Safety, and higher value services like licensed WiMAX. It also informs the broadcasters who intend to go digital to start telling their listeners immediately. To date, the Broadcasters have been almost silent on the topic of the digital transition.
The President's proposal is to charge Broadcasters steep fees for continuing use of the extra channel.
There are two satellite radio services in the US: XM and Sirius. They are licensed to provide nationwide programming only. They are not allowed to offer local programming in competition with AM and FM radio.
Both XM and Sirius are now offering weather and traffic services. The broadcasters feel this is a license violation. Regulators think it is not because the channel that reports on the traffic in Baltimore is available to everyone in the country.
The Broadcasters are developing HD Radio, a local digital radio product. I think it is unlikely to build a sufficiently large audience. It is too late.
When the analog switchoff happens, all sets that rely solely on analog broadcasts will go dark. The current law calls for the switchoff at the end of 2006 or when 85% of homes can receive digital signals.
85% of homes now receive programming via cable and satellite, so it appears, technically, that the switchoff can go into effect at the end of 2006. Congress and FCC are reluctant to declare that the 85% test has been met because they are afraid of what happens to the remaining 15%. Senator Conrad Burns of Montana is particularly worried about the hardship this will inflict on the people in his state. 70% of all translators in Montana are owned by community organizations. (A translator is a repeater: it receives a signal on one channel and rebroadcasts it on another. They are used to move signals over mountains.) I had lunch with a guy from Montana who produces Extreme Snowmobile videos. I asked him what he thought people in his state would get really angry if analog broadcasting stops. He said no, Satellite is really popular in Montana.
It turns out that most of the 15% who rely on Broadcasting are poor and cannot afford to buy a digital converter, or are old and lacking the brainpower to buy and install a digital tuner. Congressman Barton wants the government to subsidize STB for these people. I think it would be much better to subsidize Internet connectivity for the poor. There is no way that television can help people to escape from poverty.
Cable began as CATV (Community Antenna Television). It was started by retailers who wanted to sell sets in areas that could not receive over-the-air transmission of sufficient quality. They put an antenna on a hilltop, and connected homes to it with a cable.
Cable, I think, was a benefit to Broadcasting because it increased the size of its markets. The Broadcasters, however, felt that their product was being stolen, and that they deserved a share of the Cable operator's money. The product in this case was free over-the-air which the community would have received for free if Broadcasting were a more reliable program carrier.
That set off a battle between Broadcasting and Cable that still continues.
Now, Cable has grown larger than Broadcast. More hours of Cable programming are viewed than Broadcast programming. More advertising is sold on Cable than on Broadcast. Cable is growing in importance and significance, while Broadcasting, which was once the most powerful form of communication in history, is now fading away. Cable is fragmenting Broadcast's audience. Mass Marketing is obsolete.
The one bright spot for Broadcasting in DTV is multicast. This allows a Broadcaster to include two or more MPEG streams in a digital channel. This effectively gives a Broadcaster more virtual channels that they can operate, which could potentially result in increased revenue.
The FCC's latest Must-Carry rule says that Cable is only required to carry a single MPEG stream per channel. Since most people get their TV from Cable or Satellite, this rule destroys the Broadcasters' hopes of earning more money with multicasting. They are angry with Cable when it carries their programs, and they are even angrier when it does not.
The Telcos are offering to carry everything the broadcasters have to offer on their new IPTV systems.
The US, unlike other countries like Japan and Great Britain, does not have any sort of viewer tax. All Broadcasting is either commercial (paid for primarily by :30 spots) or public (which is paid for primarily by corporate underwriting, foundation grants, and voluntary viewer contributions).
Free over-the-air is how Broadcasters distinguish themselves from Cable and Satellite. They conflate Free with Freedom, imagining that their system of transmission is more patriotic or democratic.
Broadcasters pay essentially nothing for their Right to Broadcast. The spectrum they use is owned by the People and regulated by the FCC to operators who must serve the public interest, convenience, and necessity. Spectrum is limited, but the FCC also considers market size when granting licenses. It in effect grants near monopolies to Broadcasters. In that sense, Broadcasting is anything but free.
Broadcasting is being disrupted to a great extent by DTV and HDTV, and to a much greater extent by TiVo and other DVRs. People who have DVRs skip commercials. Advertisers are becoming aware of this, and are beginning to pull their money out of television.
This is the sole revenue source for most Broadcasters. The threat of the failure of Spot Advertising worries them. Some console themselves by saying that Broadcasting is still the most effective Mass Marketing tool. They also point to the fact that other products that were supposed to die didn't.
Television almost killed radio. Radio used to be full of drama and comedy programs. When those forms moved to television, radio suddenly had no product to sell. It ultimately survived by going to the lowest cost programming: prerecorded music and talk. Most listening occurs in cars. Radio is now under extreme pressure from satellite and MP3 players.
Only live programming is immune to commercial skipping. In the beginning, all television was live because there was no recording technology. Soon, television may go live again because commercials only stick to programs with immediate time value. Broadcasters can also profoundly reduce the cost of programming and cater to the technologically backward demographic of people who can't or won't buy and use a TiVO: the poor and the old. This is a low-value demographic.
The average age of a viewer of the network evening news shows is 60.
Advertisers want to develop better, more targeted, more accountable methods. They do not want to annoy people anymore, and they do not want to waste money delivering messages to people who are not interested.
TiVo can create new advertising models, but even these can be problematic. For example, TiVo can replace an old ad in the DVR with a new ad with greater time value. But who owns that slot on the DVR? The original advertiser? The Broadcaster? TiVo? The Consumer?
The Religious Right is continuing to put pressure on Congress and FCC to put pressure on Broadcasters to eliminate obscenity. Such pressure is in direct opposition of our Constitutional Right of Free Speech. Cable, Satellite, and DVD are not subject to this pressure. This is because someone cannot accidentally receive a pay service. You must explicitly demand and pay for these services. Only free over-the-air broadcasting using the public's spectrum is subject to the huge fines and threats of license revocation.
The broadcasters feel this is twice unfair: It is unfair because the Government should not be regulating speech, and it is unfair because Cable and Satellite should be bound by the same regulations.
Clearly, V-chip is having no effect in reducing the number of complaints submitted to the FCC. I think the solution is the DVR. With a DVR, you watch deliberately: There is always programming available that you want to watch. With a DVR, you never channel surf because there are always things to watch that are a better use of your time. As a result, you tend to never see programs that you don't want to see. Giving the user positive control is much more effective than giving the Government negative control.
Because of the digital convergence, I can usually find interesting and useful technical sessions at any conference. That is not the case at NAB. The technical papers are extremely specialized with little applicability outside of broadcasting. For example, Dramatic Power Savings Using Depressed Collector IOT Transmitters in Digital and Analog Service has no applicability outside of broadcast engineering.
It is clear that Broadcasters must adapt to survive, but is not clear at all how they must adapt.
Broadcaster have already been experimenting with websites and streaming video. This has not yet been demonstrated to be a profitable alternative.
PODcasting is the packaging of a program in a file that can be downloaded into an MP3 player or portable video player.
Programs can be distributed through a wireless broadband format like WiMAX or EV-DO or broadcast over DVB-H. These will probably be small-screen LDTV (Low Definition Television) devices.
A huge problem with all of these alternatives is that Broadcasters acquire most of their programming from Networks and Syndicators. They do not generally have the rights to also release the content in other technologies. Broadcasters do not own their own content.
Some Broadcasters own broadcast towers that could be used to support wireless broadcast equipment.
There was a DRM panel, and it was interesting to watch the continuing transformation of Brad Hunt, CTO of MPAA. He said several times that if DRM or interoperability is hard for consumers then they will circumvent. He also said that interoperability is really hard. He is still holding out hope for a technical solution, but I can see that he is beginning to mentally prepare himself for DRM's failure.
There may be a rewrite of the Telecommunications Act this year. If so, it is likely to be the Mother of All Legislative Battles as all of the industries and companies who are now forced by digital convergence to contend with each other all descend on Washington in order to get a favorable legal standing. It is hard to imagine good law coming from such a process.
HP mentioned wobbulation as a technique for improving the apparent resolution of projectors. They use oversampling with a vibrating mirror to overlay staggered pixels. I asked to see a video demonstration, but the result looked like it had been faked. Also, the faked demonstration was only a still image. There was no indication of what sort of temporal artifacts would result.
The cost of HDTV production gear is falling almost as fast as the cost of TV sets. It is now possible to buy an HDTV camcorder and a computer that can do editing than it used to cost to rent a camera. New equipment formats like Sony's HDV and JVC's DVCPRO HD produce great looking pictures and are small and easy to use.
The Music Industry is radically changing because cheap and good prosumer equipment allows musicians to easily produce their own stuff. This trend is going to move into HDTV. Individuals, schools, and theater groups will be able to shoot and edit their own productions and make them look really good on very small budgets.
I think this is a really exciting development. What we currently call Independent Film is about to get much bigger and much more independent.