Fiber Costs Driving Decisions on Centralized Operations
Although the past two years have seen a number of ambitious attempts at centralizing the operations of multiple stations within a group, not all have been successful in reducing operating costs as originally envisioned. What their experiences have shown is that, for some, "centralcasting" may not be the right strategy at all.
Facing decreasing revenue, broadcast companies that were once enthusiastic about centralcasting are now taking a closer look at the hidden costs of "last-mile" fiber-optic interconnections that could cost $50,000 to $80,000 per month or more, depending on the number of facilities participating and the distance between stations and a telephone company's point-of-presence (POP).
Kelly Alford, vice president of engineering at the Ackerley Group, said that intense competition among telephone companies and a wealth of installed fiber have resulted in a "buyers' market," so stations should shop around to get the best deal. He recently renegotiated the deal he had with his fiber provider, resulting in substantial savings.
"There's a lot of dark fiber available and good deals to be made if you're smart," he said.
Most agree that centralizing operations is a business decision, not a technical one. In the current tight economy, it's a model that most stations are not entering into lightly.
"There's a lot of interest in [centralizing operations], but I think there's also some hesitation in making a buying decision until stations see how the financial picture sorts itself out," said David Netz, vice president of marketing for Denver-based Encoda Systems, which makes automation equipment and designs the electronic billing and scheduling used in centralized systems.
One of the first centralcasting models attempted in the U.S. was the system designed by USA Broadcasting (which sold its 17 stations nationwide to Univision in 2001) and completed in 1999. The plan was to link all of USA's stations to a central facility in Ontario, Calif., via a fully redundant system. Although exact figures are not available, sources said the system proved to be very expensive to maintain.
Quality of service was also a concern, according to Rich Schmeltz, a senior project director at NTC (National TeleConsultants Inc.), the Glendale, Calif.-based company that designed and installed USA's centralized master control facility. "The critical ‘always on' nature of 24-7 broadcast operations demands a level of constant data integrity and ‘eyes-on' monitoring that presents a challenge for the existing traditional high-speed data carrier services," he said.
NTC helped USA Broadcasting connect four stations to the central facility before work was stopped. The new owner, Vivendi, has abandoned the original centralized plan and will resort to each individual facility creating and broadcasting its own content.
"I think the cost of fiber interconnects will cause many to change their plans," said John Luff, an engineering consultant and senior vice president of business development at Cannonsburg, Pa.-based systems integrator Azcar. "It's only a matter of time before it's cheaper to distribute material inside one broadcast group on fiber than any other way. Right now, however, the numbers just don't support the models out in the field today."
The goal may be to reduce operating costs by eliminating personnel, but the savings don't always add up for smaller station groups when factoring in today's telco costs. Staffing a station's master control room in most markets smaller than the top 10 costs $6 to $10 per hour per operator; a broadcaster could easily spend double that for fiber connectivity.
The Ackerley Group, which owns 15 stations, is another centralcasting pioneer, copyrighting the term "Digital Centralcasting" to describe a series of "clusters" (in California and New York) that share master control and administrative functions with a central hub facility. For Ackerley, the fiber connectivity costs among its clusters, using DS-3 lines in California and an OC-48 connection in New York to centralize a number of administrative duties and to share content, averages about $9,000 per station per month. Optical SONET networks that accommodate an OC-48 connection often provide better value than the standard twisted-pair DS-3 lines because they offer twice the bandwidth for slightly more money, but the service is not available everywhere in the country. By comparison, digital data can travel at approximately 150 Mbps on an OC-3 optical connection, versus 45 Mbps for a DS-3 telco line.
"We're gaining more efficiencies as we go along, because you don't just flip a switch and everything is connected," said Alford. "You begin to find more savings with time and more ways of using this connectivity to your advantage. Although we haven't done the final math, I have to believe that at the end of the day there's more than $9,000 per month of savings that will happen."
Centralcasting also helped Ackerley transition its stations to DTV much sooner than the group would have otherwise, according to John Dresel, president of Ackerley Television Group. He said that the entire conversion to centralization cost Ackerley about $2 million per hub to build. His net savings by not having to build out all 15 stations at roughly $1.5 million each is about $16.5 million.
Ackerley has since sold its stations to Clear Channel Communications, which would not comment on whether it would continue with the centralcasting model.
Broadcasters have other less costly options, such as an Asynchronous Transfer Mode (ATM) system that sends and receives data packets in a store-and-forward method, or low-orbiting satellites that some groups already use for the reception of syndicated programming and commercial spots. Low-level cellular towers are another possibility.
At Azcar, Luff said they've developed a strategy called "distributed broadcasting" that keeps local elements at the station, while taking advantage of a centralized model for the reception and handling of syndicated programs. These programs would come off satellite down to a central site and then be distributed to others within the group, reducing costs considerably by eliminating the requirement for full-time redundant links, Luff said.
The system is also less costly to build, according to Luff, because content is sent in a nonreal-time, store-and-forward mode via ATM. And, the quality remains high. Using an ATM-type system also ensures that a station won't go off the air if a fiber-optic link fails.
Broadcasters could centralize only some of their content, Luff said.
In another cost-saving example, Quebec-based Miranda Technologies is working with a Canadian broadcaster that is taking a hybrid (telco and satellite) approach in which all master control and monitoring operations are centralized. Programming from regional stations is backhauled to the hub station via DS-3 lines while the finished and branded signal is transmitted to the regional stations via satellite. This hybrid architecture provides the ability not only to send signals to the main transmitter at the regional station but also to distribute the branded signal to other repeater transmitters.
This strategy, said Michel Proulx, Miranda's vice president of product development, allows the broadcasters to save on expensive fiber and microwave links that had previously been used to carry the signal from the regional station to the repeater transmitters. Miranda equipment is used to monitor signal presence at each of the remote stations and to allow remote router control from the central hub.
The makeup of a station group can also play a determining factor in how centralized programming is distributed, as well. Equity Broadcasting Corp., a Little Rock, Ark.-based station group with 40 full-power TVstations – including PAX, WBand Univision network affiliates and some stand-alone home shopping channels – uses satellite uplinking to connect eight of those stations to a centralcast hub provided by Sunnyvale, Calif.-based Omneon Video Networks. Equity looked at the fiber option when it was planning its hub last year, but found fiber costs to be more than double that of satellite, according to company spokesman Doug Krile. In addition, the low bitrate of 3 Mbps feed (for the home shopping channels, which feature minimal movement) – versus fiber, which wanted to offer a 40 Mbps feed – and the fact that none of the eight stations offers local newscasts made satellite a more viable option.
"If we were using this to feed a station that did a local newscast, we would have to take a completely different look at it in regards to cost-savings," Krile said.
DOING YOUR HOMEWORK
Another model, utilized by McGraw-Hill (14 TV stations) and The New York Times Company (eight stations), features "PC-anywhere" control of local automation in each of the participating stations. The amount of savings for both companies is nominal, clearly not the substantial reduction in operating costs they had envisioned.
That's the point that Mark Siegel, vice president of business development/partner at Digital Systems Technologies, Inc. (DST) tries to make clear when he talks with clients about centralization. Although it might look like a good idea, he said, the key for stations considering this model is to investigate all the possibilities and costs involved.
"I don't think there's been one centralized model that was implemented correctly," Siegel said. "A lot of people think that [centralizing] is a technical issue, but it's not at all. It's a business decision."
Jay Adrick, vice president of strategic business development at Harris Broadcast, says some stations are looking to save money by negotiating with their local cable TV provider to acquire bandwidth on the cable company's service.
Harris has been working with several public television stations on a complex centralization project known as the northwest Advanced Digital Distribution Entity (ADDE), hoping to link multiple PBS stations by early 2003. Facing the costs of the DTVtransition, a group of PTVengineers led by Project Chairman Dennis Haarsager of KSWU, Pullman, Wash., has spent two years designing this model. Five other PTVstations have since joined the group.
Haarsager, associate vice president and general manager of educational telecommunications and technology at Washington State University-owned KWSU-TV in Pullman, Wash., designed the ADDE (and coined the phrase) with the help of engineers at KCTS-TV in Seattle and Oregon Public Broadcasting to utilize new compression technologies that enable the economical distribution of content and other digital material. Internet Protocol (IP) distribution over a fiber network, using "packets" of data sent as e-mail, is part of the system he envisions.
Last October, Harris supplied a prototype of its new Media Gateway product (to debut at NAB in April) for a connectivity test between public stations in Spokane, Wash., and Seattle. The live-to-air test showed that a 50 Mbps connection could provide the quality necessary for on-air broadcasts. "I believe that there are some IP-based solutions that broadcasters should be looking at," Adrick said.
The Gateway is a multiplexer employing a combination of routing and switching functions to convert transport streams into ATM protocol packets for distribution. This "universal network bridge" includes error correction and allows a user to transition from one network circuit type to another.
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