WASHINGTON—A new ex parte filing from Edward Czarnecki uses game theory to analyze the risks and potential rewards of different policy approaches and regulations governing the NextGenTV/ATSC 3.0 transition.
The analysis which explores a number of different scenarios in an a very detailed, nuanced fashion, is particularly notable because it raises questions about the impact of a market driven transition with no mandated cutoff date on the future of broadcasting.
“If broadcast television continues to serve important public interest functions, and ATSC 3.0 can credibly preserve or expand those functions, then an indefinite transition with no target date is the policy structure least able to address the coordination problem identified in the model,” he concludes.
Czarnecki, who is currently a vice president, international and government affairs at Digital Alert Systems, Inc., a member of the board of the Advanced Television Systems Committee (ATSC) and a recognized expert on both emergency alerting and the 3.0 broadcast standard, filed the analysis as an individual.
In the analysis, he stresses that “the use of game-theoretic analysis to evaluate communications policy choices is well known. FCC decisions and staff analyses have employed game-theoretic models to examine spectrum allocation, licensing rules, bargaining behavior, market concentration, and strategic interactions among regulated parties. The Commission's spectrum-auction history is one of the more notable real-world applications of game theory, and FCC staff have published analyses explicitly using Nash equilibria to examine policy and auction-design questions. This type of approach provides a structured way of examining a transition in which the decisions of broadcasters, manufacturers, consumers, and regulators are interdependent.”
“The purpose of the model is to make assumptions, incentives, strategic choices, and tradeoffs explicit” he added.
It “examines three paths: a market-driven transition with no required date, a nearer-term target date, and a later target date. Each path changes incentives in different ways," he wrote. "A firm date can reduce uncertainty and the reason to wait, but it can also raise near-term costs if the industry and consumers are not ready. A later date gives more time for receivers, services, and other parts of the market to develop, but it also leaves more room for delay while broadcasting continues to lose ground to competing technologies.”
“Put more directly,” Czarnecki explained, “the record shows that television broadcasting still provides important public interest value and that ATSC 3.0 can preserve or expand that value. The model in this analysis also shows that an open-ended, market-based transition is not a neutral starting point. Without a deadline, participants keep a strong reason to wait for others to move first, which adds to the industry's coordination problem. The policy question therefore becomes not whether there should be a target date, but when that date should be and what conditions should apply.”
In the analysis, he highlights the importance of the transition for the future of broadcasting in a rapidly changing media landscape and lays out the important public policy issues involved in their ability to deliver vital local news and emergency coverage.
Despite the obvious benefits, both for private broadcasters and the public, of ATSC 3.0 he also stresses that the transition faces serious challenges in terms of the timing and market based pressures.
“ATSC 3.0 has the basic structure of an assurance game with network effects,” he writes. “A broadcaster gets more value when compatible receivers, nearby stations, MVPDs, advertisers, application developers, and service partners also participate. However that same dependence gives each participant a reason to wait for others to move first. Slow adoption can therefore be a reasonable private choice even when most participants would prefer a mature ATSC 3.0 system.”
“Real-options theory explains why it can make sense to delay a costly or hard-to-reverse investment while uncertainty falls,” he added. “However that is only part of the problem here. Broadcasting is competing in a market that keeps changing during the delay. The value of waiting for more information must therefore be weighed against the risk that audience attention, advertising, device support, and industry investment move elsewhere before ATSC 3.0 reaches scale.”
More specifically, he uses game theory to lays out a number of the factors that the FCC should consider in guiding the transition and setting a cutoff date for ATSC 1.0
“The Commission's ATSC 3.0 proceeding is about more than replacing one technical standard with another,” he explains. “It also concerns the future of free local broadcast television in a market increasingly centered on streaming and IP-based delivery. The continued strength of broadcasting is therefore a public interest question as well as an industry investment question. The game-theory analysis helps narrow the policy choice rather than simply listing competing concerns.”
“First, the Commission must decide whether a viable broadcast television platform still provides important public interest value through free local service, local news and community programming, emergency alerts and information, resilience, and platform diversity. The record to date strongly supports the conclusion that it does,” he concludes.
“Second, the Commission must decide whether ATSC 3.0 offers a credible way to preserve or expand that value,” he adds. “The question is not simply whether the standard has more features on paper. It is whether IP-based delivery, improved reception, advanced emergency information, hybrid broadcast/broadband services, portable and mobile reception, datacasting, and other capabilities can meaningfully improve the usefulness and competitive position of broadcast television.
“If the evidence supports both findings, and the record provides strong support for them, an open-ended transition is no longer a neutral policy choice. It allows broadcasters, receiver manufacturers, MVPDs, consumers, and other participants to keep waiting for one another, which preserves the coordination problem seen throughout the transition,” he noted. “At the same time, the television market continues to change. The value of waiting must therefore be weighed against the risk that broadcasting loses audience, investment, device support, and strategic relevance during the delay.”
“Under those conditions, the main policy question becomes when a target date transition can occur and what conditions should apply, rather than whether the transition should remain open-ended. Evidence about transition readiness determines the next step. If receiver availability, consumer continuity, broadcaster and supply-chain capacity, MVPD integration, accessibility, and other requirements are at a sufficient level, then a nearer target date can reduce indefinite waiting and give everyone a common planning horizon. If those conditions are not ready, the problem is readiness rather than coordination. Here, more time, staging, milestones, targeted relief, or different treatment for some participants can address real implementation limits.”
“However, extra time is useful only if it produces measurable progress. An open-ended transition is unlikely to improve readiness by itself. A firm date is more likely to focus planning and investment, although the Commission still must decide whether that date should be nearer or farther away.”
“The model therefore leads to this conditional policy conclusion: If broadcast television continues to serve important public interest functions, and ATSC 3.0 can credibly preserve or expand those functions, then an indefinite transition with no target date is the policy structure least able to address the coordination problem identified in the model.
“Once that threshold finding is made, the discussion should turn from whether a transition date is needed to how near or far away that date should be. Evidence about readiness then determines whether the date can be relatively near term or whether the transition needs more time, stages, milestones, or targeted relief.”
“In today's television market, time itself matters,” he concludes. “Streaming services, viewing habits, advertising models, device systems, and content distribution continue to change while the broadcast transition remains incomplete. The cost of waiting therefore includes more than dual operation or delayed deployment. It also includes the risk that the broadcast platform becomes less relevant before the technologies meant to modernize it reach enough scale.”
