At the NAB Show in Las Vegas last month, Pearl TV, the consortium of broadcasters, manufacturers and industry advocates showcased prototypes of new converter boxes that would allow consumers to upgraded to ATSC 3.0 (aka NextGen TV) without having to purchase a new TV or one of the more expensive converter/DVR boxes currently available.
TV Tech Content Director Tom Butts recently discussed the status of the new campaign and reaction at the NAB Show with Pearl TV Managing Director Anne Schelle. Here is an edited transcript.
TV Tech: Can you give us an update on what Pearl and the ATSC were showing in terms of NextGen TV advances at the NAB Show?
Anne Schelle: Pearl was focused on the converter box program and meeting with SOC companies that we invited to come to the show, as well as some of the current box makers and others that would be part of the ecosystem. The FCC also had an opportunity to come by and learn about the program. So there were great conversations and it's just continuing to move the program along in terms of the mechanics, with the special pricing conversations, with the ecosystem that would be involved with making the box, the testing, certification, all of those business parts of the program.
TVT: What's the biggest challenge right now that you face? Is it time or technology?
AS: We’re waiting on a signal from the FCC, which we're hopeful is coming soon. We were also having conversations about just updating the whole [3.0] system, the transmission vendors and everybody that's involved in selling equipment to support a transition to the boxes themselves. And the more time lags on this, resources get reallocated, investments get reallocated. So we've been expressing the urgency to the FCC.
TVT: Will you need government support to bring it to $60 a sub $60 price level?
AS: We're following the NTIA model [the basis for the ATSC 1.0 converter box program established in the 2000s], where we're establishing specifications, testing rigor around elements that don't exist today for other devices—specifically around sensitivity and recepetibility—and then the program would allow for a certification logo that makes us a very distinct category of a box.
Given its distinction, part of the program is to go out and broadly negotiate lower building material costs, whether that's in IP or in components, and we've been successful on that route. In essence, we're helping to establish a pre-, lower-cost box, or pre-subsidized in the sense that the industry is doing it, the players (as the component parts), are doing it, knowing that this device is a bridge device. It's very much needed to enable the consumers that can't afford to buy a television to have access to something readily available in the marketplace.
So by coalescing around a program, we're able to sort of recreate what occurred [with the NTIA program], if you look at that pricing point too, that is based on research that might change over time, and overall rises and seed pricing due to supply chain and other global events. But what we're coming in with is essentially almost lower than the NTIA program did back in the day without a subsidy, the economics being such that we're able to deliver something a consumer would be willing to purchase, which is what our study showed. The other part about our study was what really needs to be on this very affordable box, and how do consumers think about features vs. cost vs. value in over the air.
In terms of government funding, that's not available, so I don't know why we would be asking that.
TVT: What kind of feedback have you gotten from broadcasters?
AS: Well, this is broadcast led, so they're very supportive of this. At the end of the day, we need a signal from the FCC, because consumers will go purchase this box that we've made very affordable if they know that they need to go purchase it. There is no global transition that's ever really happened until there is a transition end date and concurrently an update to standards, so we need that.
We’re getting ready for that by developing and answering the question of the affordable device for the consumer that does not want to change out their television and otherwise wants. That's why we did the [Magid] study to see what their willingness would be to go purchase this device and at what price point. And what we heard was overwhelmingly over 81% saying yes they would purchase and the price points were $60 and below.
TVT: So is your goal to have this in place and get it moving as soon as you get the word from the FCC?
AS: We’re developing all the program mechanics. We did all the research, and now we have an understanding of the messaging and how the consumer feels about it. We're working with early development set top box makers to understand, what are the components and what are the feature sets that are doable at these price points, and does that match up with willingness from consumers to buy it? The answer is yes, and that's our specification that was announced.
We have a utilization of the current connected TV umbrella logo. All of these require agreements and mechanisms and processes to be able to onboard a set top box maker for them to understand what the specifications are, to go through the certification to ultimately get the logo, for that logo to have some teeth to it.
So we make sure that the logo, if it's misused, can be revoked, and at the same time, that logo is what these set top box makers would take to the IP holders as well as the component makers that we've negotiated with to get that favorable pricing for this device category.
So we're putting in all of the program mechanics and working with three manufacturers [ADTH, Skyworth, and Zinwell] through that process to harden that and ensure that we've got the right systems in place so that once we have the go light, we're able to effectively turn this on. We have not focused fully yet on the go to market strategy, other than to say that we do have a website that we currently know works and consumers go to. That would probably be our initial funnel, alongside promotional marketing that the station groups would undertake, but that whole program is really reliant on timelines.
Pearl has been focused on helping the industry establish a way to find an affordable device path for consumers.
TVT: Pearl TV has joined others in asking for a sunset year, a date of 2028, for the top markets, followed by remaining markets by 2030. How would you characterize your conversations with the FCC in terms of this plan… what kind of feedback have you gotten from them, and do you believe that this is going to help them reach a final decision?
AS: We're looking for something in that range, specifically for a go date, on an update to the receiver rules that could happen, and within three years, the majority of receivers could be upgraded. I think the idea still stands around moving top markets and then looking to smaller markets but the exact timing is really up to the commission.
Pearl has been focused on helping the industry establish a way to find an affordable device path for consumers. We met with the FCC and there's high interest in it that I think helps in terms of getting a favorable rulemaking from the commission.
TVT: The Consumer Technology Association has been very vocal in their opposition to a tuner mandate. Do you believe their concern is justified? In other words, do you see the possibility of a tuner mandate on the horizon?
AS: We are asking for a receiver upgrade. I don't think you have a transition without it. And I think every past transition has proved that this is not the first time that the commission has taken that path, and again, globally, I don't know how you move forward without that.
We're in a situation where the marketplace took it as far as it could, and this is what's needed in order to really fully realize a full transition. So that's basically my answer to that.
TVT: Do you believe retailers have done a good job promoting NextGen TV? Do you think that they'll be ready to market these new boxes?
AS: Again, when there's a signal for a full transition—just like in the last go round, nobody stepped in to really market until that happened, because you have something to organize around, both retailers, CTA and broadcasters. So you can't take one without the other. Retailers are pay to play and they're organized around the manufacturers telling them what to do.
So you can't really fault their involvement, yet. You can just look at history, the last DTV transition, the minute it got organized—between a transition end date and upgrade to the receiver requirements—you had everybody step in with some terrific marketing.
TVT: Will you put these boxes on the market before the FCC makes a decision on the deadline?
AS: We're working on the development with the three main manufacturers and hoping we can get something out by the end of the year, [but] we are facing some headwinds in regards to the supply chain, and that's no surprise. There's memory shortages out there and price hikes, plastic has gone up 20%.
So it's a timing question for us because without the volume guarantee, it's hard for us to be able to come out with a box, and so it just depends.
We’re agnostic to the chip, to the OS, we really leave that up to the box manufacturer. We just have this price ceiling, and they're working right now to figure that out, and getting pretty creative and looking at lowering memory and using various OS systems that take up less memory. I think you're going to see that in everything going forward for a couple years.
[The initiative] is really similar to NTIA. It's just commercially implemented and commercially executed.
