Transmission gridlock

There is a school of thought that suggests that it is in the best interest of the electorate to vote for a divided government. That is, to elect the president from one party and Congress from the other. And that's just what has happened in the United States as a result of the midterm elections this past November.

From time to time, this column takes a look at the techno-political landscape of the U.S. Capitol, seeking to learn and predict where the latest political winds may blow the broadcast industry. As U.S. broadcasters now rely on their competitors to reach the vast majority of their audience, these periodic glimpses at the legislative and regulatory inner workings of our business must include the gamut of related telecommunications businesses that compete with — some of which also enable the continued existence of — “free” over-the-air television.

As a starting point, it is important to observe that the NTSC transmitters are still pumping out megawatts of analog broadcasts to U.S. homes tuning in with rabbit ears. Jan. 1, 2007 — the date set by the FCC in 1997 for NTSC shutdown — has come and gone, and only a tiny percentage of U.S. homes are now watching the new ATSC broadcast service.

Looking back at the efforts of the previous Congress, it is fair to say it passed one piece of legislation that will have a significant effect on broadcasters. That legislation set a new date of Feb. 17, 2009, for the shutdown of the NTSC service. Some people question whether the politicians will stick to the deadline this time.

Here's my prediction of what the current Congress will do regarding broadcasters: The 2009 deadline date will not be changed. However, the Democrat-controlled Congress may throw more money into the National Telecommunications and Information Administration (NTIA)-administered program to provide coupons that subsidize the purchase of ATSC set-top receivers for those who want to continue using their old NTSC receivers. That's it.

For the next two years, Congress will be operating in gridlock, much as it did for the past two years. Attention is likely to shift to the FCC. For broadcasters, ownership caps and spectrum sharing (i.e. the white space debate) will be the hot topics this year.

To be honest, the politicians have little choice but to move on to more important issues. They need the revenues that will be produced from auctions of the spectrum that broadcasters will be returning in 2009.

Attempts to create national franchise agreements that would allow the telcos to enter the multichannel TV business without gaining local franchise approval likely died with the previous Congress. And it is unlikely that network neutrality legislation will get through the current Congress because of gridlock in the Senate.

But network neutrality is likely to be the subject of considerable debate over the next two years. At stake is the ability of one set of gatekeepers to turn the information superhighway into a toll road, not unlike what has happened to “free” television, thanks to the content conglomerates that now control television content creation and distribution.

Significant milestones

At a global level, several significant milestones were passed in 2006. The Netherlands became the first nation to turn off its analog transmitters. This is not surprising given the fact that 95 percent of homes in the Netherlands subscribe to cable, and it has one of the highest rates of broadband penetration in the world. It's worth noting that the United States has slipped to 13th in the world in the rate of broadband penetration, an area that is drawing considerable interest from Congress.

Another big change last year was new display technologies overtaking the venerable CRT display in unit sales. HDTV-capable displays were one of the top product categories for Christmas sales in the United States. This is due in part to significant price drops for LCD and plasma panels.

Many of those new displays now offer 1080-line progressive scanning. Virtually all of the new display technologies can be used to view traditional television content and new forms of square pixel digital content from the world of computing and the Internet.

In 2006, YouTube became a phenomenon, and the ability to share user-generated video content finally caught the attention of the media conglomerates. Late in the year, Internet powerhouse Google acquired YouTube.

Using the Internet to download entertainment content is likely to gain steam in 2007, with major pushes by Apple, Google, Microsoft and Yahoo. This, in turn, is fueling the network neutrality debate.

Tollbooth ahead?

“Allowing broadband carriers to control what people see and do online would fundamentally undermine the principles that have made the Internet such a success,” said Vinton Cerf, credited by many as one of the fathers of the Internet, to a Senate panel in February 2006. Cerf is now vice president and chief Internet evangelist (no joke, it's his actual title) for Google.

Cerf went on to say, “Google believes that consumers should be able to use the Internet connections that they pay for the way that they want. This principle — that users pick winners and losers in the Internet marketplace, not carriers — is an architectural and policy choice critical to innovation online.” A who's who of consumer advocacy groups have lined up behind Cerf in the network neutrality debate.

On the other side, AT&T and BellSouth went on the offensive last year. They say carriers should be able to receive compensation from the companies using their Internet pipes to deliver services. This compensation could include carriage fees for downloading content or the ability to give the services of a paying company preferential treatment over another that does not pay.

On Dec. 29, 2006, the FCC approved the proposed merger of AT&T and BellSouth. Terms of the approval include a provision that will require the merged company to maintain network neutrality for two years, or until Congress enacts legislation regarding the network neutrality issue.

And the media conglomerates are paying attention. As gatekeepers for television content, they fully understand the potential to control consumer behavior that network neutrality represents. They also understand that this could be used against them, allowing the telcos and cable companies to control the tollbooths on a digital superhighway that virtually everyone believes will be used to distribute digital media content — someday.

The more things change …

Meanwhile, broadcasters seem content to sit back and milk their legacy business model for all it is worth until that someday comes. There is a growing awareness that the lobbying power is waning for the NAB, MSTV and other organizations that represent the interests of broadcasters in the nation's Capitol. But gridlock can be a good thing, especially when one is trying to postpone the inevitable.

Unfortunately, this strategy may lead directly to the digital cliff. Many analysts are suggesting that TV broadcasting will wither rapidly after analog shutoff. This is a likely scenario if broadcasters fail to update a dying business model.

On the other hand, the digital revolution could save broadcasting — even revitalize it. It is an era when consumers literally have a world of content available to choose from via broadband networks.

Television broadcasters have the ability to deliver bits to things that move, and they have the ability to leverage the Internet to develop relationships with their viewers. We will explore some of those possibilities next month as we take a look at ways to exploit broadcast Web sites.

Craig Birkmaier is a technology consultant at Pcube Labs, and he hosts and moderates the OpenDTV forum.

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