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Multicasting: Doom and gloom on the airwaves

Ever since talk about offering broadcasters additional RF channels began, people have used the word multicast to describe a potential revenue model for digital broadcasting. The term was ill-defined, and remained so for many years. But, finally, people are making proposals, both formally and informally, about directions that this model could take.

Modest proposals

These proposals are a world apart from the four traffic-camera images that KRON TV's digital channel has multicast, or the view of Detroit from the Canadian side of the Detroit River that WDIV TV has multicast. In conversations at NAB2004, it was clear that people are treating some of the ideas quite seriously. But are they practical?

Just before NAB, NBC announced that it was going to start a national digital network called “The Weather and Alert Channel,” which it expects its O&Os and 92 percent of its 215 affiliates to carry as a multicast channel. A definite first in this program is that NBC proposes to split the costs of set-up and operations 50/50 between itself and the stations that adopt the programming. Networks will find this to be a useful weapon in their effort to pressure the cable industry and the FCC to ensure that must-carry rules apply to multicast channels. The rest of the multicast offerings out there today are rather tepid material compared to the seemingly daily appearance of new channels that are vying for space in cable systems' limited bandwidths.

Multicast numbers are already rather impressive. According to Decisionmark, which tracks the DTV roll out, 213 stations were multicasting in January 2004. Of those, about half were public TV stations multicasting mostly adult and children's educational material. The commercial stations are offering news/weather type options, which would obviously be a threat to cable's Weather Channel if must-carry applied.

Bold proposals

But the big plans are much more extensive. One proposal I've heard, going beyond the limited offerings that USDTV has made in its start-up cities, is to compete directly with cable and satellite by banding digital RF channels together, with four to six SD programs on each channel. The broadcasters in the group would carry their own feeds, as usual, plus cable-type offerings. If everybody cooperated, and presumably PBS stations could not play at this party, the higher-DMA cities might be able to offer a dozen RF channels to give a maximum of, say, 72 program choices.

The viewers would then have to obtain, by buying, renting or as a giveaway, a set-top box that could sort out all these terrestrial channels and their content. And, to be able to pay for all these services, the stations would charge participating viewers the standard $19.95 a month. USDTV has a Chinese minority partner to supply the STBs.

The degree of cooperation by all these stations would have to be incredible and the viewing public would have to accept a major change in its life: the idea that over-the-air broadcasting would no longer be free. This contradicts a concept that has almost become a fundamental right for many of us. A separate entity would have to form to handle the distribution of the STBs and billing/collections. And, of course, once this model was in place in a city that has killed HDTV, unless you accept a reduction from, say, six SD programs to only two when HD content is being transmitted. Viewers' reaction would not be pleasant. A short while ago, my state's daily newspaper eliminated the overnight grids from its TV listings because most of the programming consisted of paid advertorials and to save ink. Those grids have since been restored because of the howls from the many late-night viewing owls out there.

Doom and gloom

No, I just don't see this model as feasible. And, looking at the other models centered around news, broadcasting news has never been a smart way of making money in television (not that you would think that when you look at the more than 40 companies that offered news/weather products at NAB). But, if there is no revenue stream from multicasting, what will happen to terrestrial TV broadcasting?

I have to say that I see nothing but doom in the future unless the broadcasters supplement an HD offering with novel content in one or two channels of multicast SD signals. Even then, the must-carry of that content on cable will be critical. If broadcasters don't take that direction, I can see them handing back a large number of digital channel licenses to the FCC at about the same time that the analog licenses go away. Those additional licenses may turn out to be the kiss of death for the industry as we know it.

Paul McGoldrick is an industry consultant based on the West Coast.

Send questions and comments to:paul_mcgoldrick@primediabusiness.com