NAB Public Service bannerHere at the NAB Show in Las Vegas, the hottest topic is the FCC’s desire to take away some TV channel space and convert it to wireless internet spectrum. That would be good for a future of ubiquitous internet access, but not so good for the bumped stations and their viewers.

In defending their position, various NAB spokesmen bring up the same arguments. Broadcasters serve their local audiences in times of emergency. They provide local weather, news, and community support in a way no national network or web service can.

There’s nothing wrong with those points, but I’m surprised that I never hear the most compelling reason to keep OTA stations on the air: They serve people who can’t afford to pay for TV.

Imagine a working mom just barely scraping by. You want her kids to have educational programming to help them succeed in school. You want her to be able to relax when she has an hour off to watch something entertaining and diverting. You don’t want to make her pay $50/month for basic cable or satellite TV.

I wonder why no one at the NAB talks about this great public service to the needy. Could it be that some people believe that anyone without enough cash doesn’t deserve TV? There must be some reason, but I just don’t know what it is.

In my next post tomorrow evening, I’ll talk about the Big Question of the future of satellite TV. See you then.

Texas Bluebonnet

The Texas bluebonnets were blooming near Rocket Park on the NASA campus.

I’m back from a visit to Houston, where I used to live a stone’s throw from the NASA campus. Except now, with heightened security, they’ll probably track you down if you try to throw stones at NASA.

So there I was, in a third-floor hotel room about 30 miles from downtown Houston, and just for fun, I hauled out my little USB stick ATSC tuner. I plugged in my 3-inch rabbit ears, stuck that next to a window, fired up my netbook, and scanned. I came up with 62 digital channels. That’s twice as many channels as I could watch in my first cable TV subscription! (I’m pretty sure it’s also more channels than I paid for when I lived there.)

And what a variety! In addition to the major networks and Spanish-language stations, there were several independents with RTV-style reruns., ABC News Now, and even CCTV News.

Free TV via satellite is really cool, but remember that free TV with an over-the-air antenna is really easy. If you haven’t already, scan the digital airwaves where you live and see how many extra channels you can find. Leave a comment to let us know how many you’ve got.

* At Time-Warner Cable, the director of digital communications coined a great phrase: “Television is melting.” You can read his entire blog post here, but the basic idea is that folks who watch video on screens other than their TVs still want to watch the content that they’ve paid for. Video delivery is morphing, and TWC’s streaming (in-home) app wants to be a part of that.

* But I read a much better summation of the state of things on Diane Mermigas’s blog at Business Insider. She points out that the big media companies know as well as anyone that the delivery systems are shifting, yet they want to maintain their profits from the status quo. “The growing rift between content providers and mainstream distributors … is beginning to resemble an existential play.” Go read it!

OMVC logoThe Open Mobile Video Coalition has been, well, coalescing over the past three years or so. Its goal sounds pretty good; the OMVC wants to use another platform to spread free TV. But unless it can bag partnerships with some major cell phone manufacturers, this is going to be another solution in search of a problem.

Let’s back up to the beginning. The changeover from analog to digital over-the-air TV killed the signals to millions of old portable analog TVs. The new digital channels work beautifully with HD sets, but a small screen doesn’t really need all those extra pixels. And apparently it’s difficult for a digital TV to maintain its picture if the TV is moving, as in the back seat of a car.

Enter the OMVC, which agreed on a particular type of digital subchannel designed for a particular type of receiver. Mobile viewers will be able to tune in to any of these “mobile TV” channels in their market if they use one of these new mobile TV receivers.

Now let me tick off some of the problems with this plan.

  • Will there be enough mobile TV channels to make viewers want to buy a receiver? I sympathize with the OMVC, which has a chicken-egg problem. They’re trying to get enough stations in enough markets to broadcast enough mobile TV channels that electronics manufacturers will feel good about creating more mobile TV receivers. And the OMVC needs to have some mobile TV receivers available so enough stations will want to devote some broadcast bandwidth to mobile TV. But will this reach critical mass in enough markets to reward the broadcasters and manufacturers?
  • Will these channels be free? As the OMVC tries to get as many stations as it can under its tent, it’s stayed kind of fuzzy about subscription channels. Clearly, some stations want to broadcast some kind of pay TV, hopefully as a supplement to some free channels. OMVC just chose Neustar as its “Mobile DTV Trust Authority”, or DRM system, so pay-TV channels are a definite possibility. I thought that the failure of Flo TV showed that there aren’t many consumers who are ready to buy a mobile TV device and pay for a subscription to watch it.
  • Who’s going to watch? The prototypical mobile TV viewer is a commuter on a train. Otherwise, hmm. You can’t watch while you’re driving to work. If you’re home, you can get a better picture on your regular set. If you’re sitting at work, or sitting in a stadium, or if the power goes out, you can watch from a regular, battery-powered portable digital TV. So how many train commuters are there? Will the signal reach down into subways?

The only way mobile TV will catch on is if it’s free (or mostly free) and it’s already in your pocket. Later this year, there’s supposed to be a mobile TV device that works with iPhones, and I’ve seen mobile TV USB dongles for netbooks and laptops, but that still requires making customers go out and buy and carry around some extra thingie just to watch mobile TV. On the other hand, if your Android phone or iPhone 5 already had a mobile TV chip built in and the antenna was your earbuds, that would make a nice feature. You might find yourself watching local news while you waited in a checkout line. But that’s only if you didn’t have to buy or do anything extra to the phone you were probably going to get anyway.

The OMVC will be exhibiting at the NAB Show again this year, (free exhibits pass still available here) and it promises to show off a prototype mobile phone equipped with mobile TV. If that works, and if the OMVC can get installed on enough phones, then it has a chance. Unless all that works out, mobile TV is going to be just another failed branch on the tree of technology.

Broadcast TV cameraLast year, I wrote (here and here) about the way that TV video systems were changing, and that TV broadcasting’s future was unsettled. This week, there are several signs that good old fashioned broadcast TV might do pretty well for a while.

Most recently, the National Association of Broadcasters launched a site promoting The Future of TV. Much of the site promotes mobile DTV, of which I’m still skeptical. The NAB talks about getting mobile DTV added to cell phones, but they’re having trouble even getting a $1 FM radio chip added to cell phones. Standalone devices still look pricy, although I hear that the Consumer Electronics Show will include some battery-powered regular and mobile DTV sets. I wouldn’t mind having something like that in the basement when a storm rolls through.

Speaking of storms, a Rasmussen poll released this week (and quoted here) said that over half of us still rely on local broadcast TV as our primary source for weather information. That’s exactly the edge that a local station has over anyone else; it can broadcast whatever is important and immediate to local viewers.

While those are positive signs for local broadcast stations, the topper came in a TV Business Report article which described a new Moody’s Investors Service report. Moody’s analyzed all aspects of TV viewing, and when it came to locals, Moody’s saw an advantage that no one can match. Local stations might continue to lose viewers, but they “will still generate a sizeable share of local advertising dollars as the content will continue to generate the largest audience.”

In other words, don’t fixate on the audience numbers, think about the advertisers. If you’re a local restaurant or car dealer, where can you get exposure to more customers than through local broadcast TV? Certainly not through the local newspaper with its dwindling readership.

So even if advertisers are paying for 80% of the audience local stations had five years ago, there’s still no better way for them to attract local customers. As long as that holds true, broadcast TV stations should be just fine.

Economics logoFirst, before I forget, I owe you a review of the SatHawk / Solomend FTA receiver I’ve been using. (It uses the same innards as the OpenBox S9.) So far, everything is great, and even the DVR is working pretty well. I’ll write much more about it next week.

When Dish Network and Fox couldn’t reach an agreement to renew a bunch of regional sports networks and a couple of other pay-TV channels, Fox yanked them from Dish. Trade publications had a note on it, local newspapers where the sports networks went out mentioned it, and a few perceptive souls noticed that the dispute might spread to include some Fox over-the-air channels in November. Congress and the national media yawned.

But last weekend, when Fox yanked over-the-air channels away from Cablevision, which services New York and Philadelphia, that’s when US Representatives felt moved to act. Or at least talk about acting. In a way that somehow keeps the channels on while allowing the free market to work it out. But which punishes those who bargain in “bad faith”, a determination that courts rarely make.

Long Side Note: Dish and Cablevision often say they’re holding the line to keep customers’ prices low. That’s garbage. They’re holding the line to provide the best return for their investors, as is their duty. The retail cost of anything is set to maximize profit. Set the price too high, and reduced sales drop the total profit. Set it too low, and the thin margins produce a smaller profit.

Here’s a concrete example. Once upon a time, I bought and sold used and collectible books. (I bought them used and sold them collectible.) Suppose that I bought a pile of them at $1 each. Now suppose that the next pile I bought cost $3 each. Would I automatically raise prices by $2/book? Of course not! The price was always set based on demand and competition. Higher costs cut into my profit, but they had no effect on the customer’s price.

When a business has an increased cost, such as a higher wholesale fee for a channel, it merely changes the floor for the minimum price to consumers. And that higher floor only changes whether the business will sell that thing at all; it won’t automatically set a higher price. Back to the books, if demand for those $3 books fell off, the competitive price might drop to $2 or less. I’d sell however many I had left in inventory at below cost, but I’ll know not to buy any more of those at $3.

These rate disputes are all about which company gets to keep more of subscribers’ fees. This talk about protecting consumers from rate increases is hogwash.

Anyway, there’s one painless way to solve all retransmission disputes. It’s used in similar markets, yet I never hear it brought up as a solution to this mess. As personal inspiration and drive-in movie critic Joe Bob Briggs often puts it, “I’m surprised I have to explain these things.”

Get the networks (a handful of companies own most of them) on one side of a bargaining table. Get the cable and satellite companies on the other. Make them work out one national formula for how much any given network is paid per subscriber. Repeat every couple of years or so. Everyone gets a fair shake, and viewers never see holes in their lineup from channel disputes.

Personally, I’d like to see the formula tied to the number of viewers, not subscribers. If your channel adds interesting programs, ratings go up, then you get more money next quarter. If you rerun the same old crud and no one watches, you get less money.

This model works in music. It works for streaming radio stations. In Canada, it works for schools photocopying text and for retransmitting OTA channels. There’s no reason this kind of system couldn’t work here.

Think of all the money this would save these companies. Take the number of channels. Multiply by the number of cable/satellite providers. Multiply by the number of worker-hours (or lawyer-hours) needed to negotiate each carriage agreement. Multiply by the hourly cost of company workers or lawyers. No matter how much a central agreement would cost to negotiate, it would be a lot less than this.

However, without being forced to the table, the channel providers would never agree to this. Disney thinks that ESPN is indispensible (maybe it is), charges almost as much as HBO for it, and demands that it be included in the lowest tier on every system. Other providers also have a long history of winning the big fights like the current dispute. Why be forced to take a standard rate when you have the leverage to demand a premium? But if Congress really wants to build a system that’s fair to everyone, this is it.

Or Congress could mandate a la carte pricing, as supported by Consumers Union. Everyone pays a set amount to connect, then buys each channel separately, so if a channel raises its rate, subscribers can decide whether they’d rather pay extra or drop it. Opponents say a la carte pricing would make users pay more for fewer channels, but have the folks who make Consumer Reports ever been really wrong about anything like that?