More U.S. Households Rely on TV Broadcasts

In a recent letter to the FCC (as reported by TV Technology), head of the National Association of Broadcasters (NAB) Gordon Smith cited new figures about over-the-air television in the U.S. in support of his statement about the FCC auction of part of the TV radio signal spectrum.

According to his statement, the portion of U.S. television households that rely solely on free broadcasts has grown to almost 18%. In a separate blog post, Smith mentions a study by GfK Media, nearly 7 million more viewers dropped their subscription services bringing the total who watch over-the-air exclusively has risen to more than 20 million.

If the subscription services are losing customers, it is probably due to a combination of cost-cutting by consumers and a switch to online-streaming sources over broadband Internet connections. It may be impossible to separate the two, but I expect that tight finances is probably the larger factor.

Whatever the reason, we cannot ignore the need for broadcast television for a significant portion of the population. Any reform of the free over-the-air system and reassignment of spectrum is going to have to preserve these services for those who cannot afford or choose not to pay for access to the information that these broadcasters provide.

Supreme Court Throws Out FOX and ABC Sanctions

The FCC suffered a bit of an “enforcement malfunction” yesterday when the Supreme Court threw out sanctions against ABC and FOX. Disney had been hit with a $1.2 million penalty for nudity in an “NYPD Blue” episode on ABC, while FOX was warned about expletives that were uttered on the air during two live award show broadcasts.

The Supreme Court decision did not address the overall issue concerning the constitionality of the FCC’s indecency rules. Instead, it took a much more narrow view, ruling that the agency did not give the networks fair warning about the “fleeting expletive” rules, which were announced after the incidents in question.

The decision may also lead to the elimination of the FCC’s half-million dollar fine against NBC for the infamous Janet Jackson halftime incident at the SuperBowl.

The decision does put a nick in the FCC’s enforcement sword, though it might have been worse had the Court extended the judgment to consider the First Ammendment free speech issues that could be drawn into the discussion. For now, it appears that broadcast television will continue to be held to higher standards of “decency” than content on channels that are only available on subscription services such as cable and satellite.

I suspect that this not the last we hear of this argument, however. The FCC has a backlog of 1.5 million complaints about indecent content in broadcasts, and is mandated by Congress to protect young viewers from inappropriate content. On the other hand, the broadcast networks chafe at facing enforcement actions that do not apply to the cable channels. So you can expect that this issue will likely come before the Supreme Court again before long.

You may have noticed a new look to the HDTV Almanac. This is way overdue, but was prompted by an upgrade to a new version of the WordPress software that caused our ancient files to format incorrectly. We’ve still got some tweaks to work out, so please ignore the extra noise and sawdust while we complete the remodelling. And if you have any questions or comments, feel free to write to me at alfred@hdtvprofessor.com.

Verizon Jacks Up the Speed

Verizon’s FiOS service has become very popular with some users for its outstanding broadband service speeds. It doesn’t seem that long ago that getting a couple Mbps over DSL was amazing; now FiOS service starts at 15 Mbps download and 5 Mbps upload. And Verizon has now raised the ante.

Recognizing that broadband households are using more and more data from the Internet, Verizon has introduced “FiOS Quantum” service. This covers four new options: 50/25, 75/35, 150/65 and 300/65. (The first number is the download speed in Mbps, and the second number is the upload speed.) These rates are intended to support simultaneous streaming of video content from the Internet to multiple devices in the home at the same time. (Netflix recommends at least 3 Mbps download speeds for DVD quality, and 5 Mbps for HD quality.) It also will speed the downloading of content; Verizon estimates that you’ll be able to download a full-length DVD-quality move in about 20 seconds at the top speed of 300 Mbps, which can also suck down a full HD movie in a little over two minutes.

Triple-play bundles with the 50/25 service will start at $110, which is just $10 more than the starting price for triple-play bundles with 15/5 service. That’s more than triple the download speed, which could be attractive for many households.

Neither the press release nor the Verizon website makes any mention of monthly data caps, so presumably you get unlimited use at these speeds (unlike the company’s plans to put limits on wireless data transfers for their mobile phones and other devices).

This is a smart move for Verizon; it helps put some open water between them and their cable company competitors in terms of top speeds offered. It also sets up the FiOS service as the go-to choice for a fat data pipe into the home. It may also signal that Verizon recognizes that future success may lie in delivering data on-demand to consumers, as opposed to the linear broadcast of content that we still call “television.”

Net Neutrality: Justice Department Investigates Cable

The Wall Street Journal reported that the U.S. Justice Department has launched an investigation into cable television company practices, especially as they relate to streaming online video from sources such as Netflix and Hulu. One focus of the agency’s concerns is the fact that some cable companies are imposing data caps on subscriber usage of broadband network connections. In particular, the Justice Department is probing Comcast’s preferential treatment of its own Xfinity content streamed over a Microsoft XBox. The company contends that it treats all Internet data equally, but does not count the Xfinity content towards a subscriber’s data usage because the data is streamed just within Comcast’s own private network.

The Justice Department is concerned that this practice violates Comcast’s agreement that it would not “unreasonably discriminate” against streaming data from other companies.

According to the WSJ article, Justice is also looking into the emerging practice of authentication as part of the “TV Everywhere” initiatives by cable and satellite services. The idea is that viewers who subscribe to a package of channels using these services would then be able to access some of that content over the Internet using a computer or mobile device. The Justice Department is concerned that this may be an anti-competitive practice because it requires the user to subscribe to a bundle of products in order to access the online content. This prevents users from subscribing to just an online version of the available content.

Both avenues of investigation have important implications for the future of subscription television services. If the cable companies are allowed to selectively apply data caps to content delivered by competitors — such as Hulu and Netflix — it could make it much more difficult for those online outlets to succeed. On the other hand, if the agency decides that subscription television services have to open up their online streaming content to viewers who do not subscribe to their cable or satellite plans, this could hasten a la carte pricing and result in drastic changes in the market for these companies.

Here’s a video on this story from the WSJ site:

Alfred Poor on Video about HDTV

Yesterday, I had the pleasure of discussing HDTV and related topics with David Gewirtz of ZDNet, which he captured on video. We covered a wide range of topics, including OLED HDTVs, 3DTV, screen sizes, Smart TVs, and “direct LED” TVs. The video runs almost a full hour and was made during a Skype video call. (David has invested a lot of time and effort to develop a pretty sophisticated “Skype Studio” for recording interviews like this, and he gets some impressive results.)

So here’s the video if you want to hear more about my latest thoughts about buying HDTVs. If you or someone you know are thinking about getting a new set, you’ll probably find some helpful information here.

If you have any questions, you can email me at alfred@hdtvprofessor.com or send a Twitter message to @AlfredPoor.

Cable Loses; Telco Wins; SatTV Draws

The Leichtman Research Group, Inc. (LRG) recently reported on the pay television service subscriber counts for 2011. The numbers have not really changed much compared with 2010. The big losers continue to be the cable companies; the top 10 U.S. cable services lost more than 1.6 million subscribers in 2011. The telco services (Verizon’s FiOS and AT&T’s U-verse) picked up the lion’s share of the gains, splitting 1.5 million new video customers. The results were mixed for satellite TV services; according to LRG, DirecTV added more than 660,000 subscribers, but DISH Network dropped more than 160,000 from its rolls.

This trend is not good for cable. In a flat housing market, they continue to lose subscribers to the other services. Based on LRG’s numbers, Comcast lost about 2% of its total subscribers, Time Warner lost 4%, and Charter lost a significant 5% of its customers. It would appear that these companies will have to find a way to offer a better bargain. Maybe it will be to focus on delivering broadband services, or maybe they will be forced to offer subscription options that let viewers stop paying for all the channels that they never watch.

If there is any good news in all this, it is that the total number of pay TV subscribers increased by a modest 380,000 in 2011, in spite of the growth of streaming video over the Internet and the “cord cutting” movement.

Mobile DTV Stuck in the Mud?

I’ve gone on the record with my pessimism about Mobile DTV, and recent events have done nothing to change my view of the situation. TV Technology recently published an article about a discussion of Mobile TV at the Advanced Television Systems Committee (ATSC) in Washington that confirms my suspicions. Jay Adrick is Vice President for Broadcast Technology at Harris Broadcast, and he was involved in the development of the standard. According to the article, he warned the others at the meeting that “if we drag this out another two or three years, it will definitely be too late.” He went on to point out that details such as a viable business model need to be resolved.

I still believe that Mobile DTV is a solution in search of a problem. Consumers no longer want to access linear programming on their mobile devices. They are already streaming content on demand on their smartphones and tablets and computers, using both WiFi and wireless broadband connections. None of their devices have the tuners required to access Mobile DTV, and I don’t think they see any compelling reason to get a device that does.

The best explanation is that television broadcasters see Mobile DTV as a way to hold onto precious radio spectrum that they are not using. They may also see it as a way to try to keep linear broadcast television relevant, though that would appear to be an uphill battle. With as little as 10% of the U.S. population dependent on over-the-air broadcasts as their sole television source, it hardly seems that adding a little mobile content to the mix is going to make any difference. We’re way past the days when a transistor radio could transform the listening habits of consumers. Today, our phones and tablets and computers deliver far more content with far more focus than radio possibly can, and television content is really no different.

At this point, Mobile DTV looks all dressed up with no place to go.

Olympic Online Coverage Will Include Every Event

NBC will cover all 302 of the Summer Olympic medal events this summer and you can watch them all online. Well, you probably can. The coverage is only available to those viewers who already have a subscription to a cable, satellite, or telco service that includes CNBC and MSNBC. But if you have a subscription, you’ll be able to watch on your computer as well as many smartphones and tablets. With an estimated 3,500 hours of coverage in all, even the most die-hard sports fan is likely to get enough of the Olympics.

This is an interesting development. There have been rumors about Hulu requiring “validation” from television subscribers, and if that works out for its owners (which own traditional broadcast networks themselves), we can expect to see more restrictions of this sort from sites that provide “free” access to major network and movie studio content.

Media Center, We Hardly Knew Ye!

Microsoft initially added the Media Center feature to Windows XP. It let you watch broadcast television on your computer, as well as play DVDs, your digitized music collection, and a lot more. It was there in versions of Windows Vista and 7, but according to news reports, it will be MIA in Windows 8. Apparently, you’ll be able to get it as an extra-cost option for some versions of the new operating system.

Microsoft explained the decision by saying that only about 6% of Windows 7 users ever launched the feature. Given the wide usage of Windows in business settings, I guess that makes sense. Microsoft says that it wants to avoid paying royalties for a feature that users don’t appear to want or need. Some people are upset about this decision.

Frankly, I’m glad to see Media Center put out to pasture. I tried it on Vista when I first started using a computer in the living room. After the digital broadcast transition, my hard-disk DVR no longer worked because it only had analog tuners. I dropped a tuner card in a PC and connected it to my big screen, and gave up on Media Center after a couple of days. The interface was a pain to use, the DVR features were limited, and it couldn’t even find the sub-channels in the digital broadcasts.

The fact that Microsoft has done little to improve on that experience is one of the reasons that I believe that Microsoft’s heart really isn’t in delivering television. It’s happy that so many people are using the Xbox to connect their TVs to the Internet, but I don’t see any evidence that they want to get into the business of helping people find the content to watch using that connection. And as a result, I expect Microsoft to get left behind as the home entertainment environment continues to evolve. It’s possible that Kinect may find a niche as a gesture control device for this new world of television, but I think that broad gestures to control a TV across the room is not going to be a popular solution (nor will a speech-recognition device, either).

So don’t count me among those mourning the departure of Media Center from Windows. It was behind the curve when it arrived, and it has not kept up. We’ll likely have to look elsewhere for help in navigation our new media choices.

Will Hulu Require a Cable Subscription?

Hulu has made some sizeable waves in the television industry pond. The service makes “catch-up” episodes of current television shows available for free; all you have to do is sign up and endure a relatively few commercial interruptions during the show. (The service also has an extensive list of old show episodes and some mediocre movies, but those don’t seem to get as much attention as the current shows.) The fascinating detail about Hulu is that it is owned by News Corp (which owns the FOX networks) and Disney (which owns ABC), and Comcast (which owns NBC). Somehow these three network owners have created a tiger that they now hold by the tail, trying to figure out what to do with it.

So now the New York Post has published a story that Hulu may start requiring its users to log on using their cable or satellite television subscription account information in order to access some of the content that’s available on the site. (Yes, the Post is also owned by News Corp.) In the industry parlance, this is known as “authentication.” I don’t usually spend much time discussing rumors, but this one appears to have stirred up a lot of debate. Some even predict doomsday scenarios if such a practice should come into effect. After all, it is the people who don’t want to have a cable bill who have made Hulu a success, right?

Well, I don’t think the sky is falling yet. First, 80% to 90% of U.S. television watching households already have a subscription to a television service. If you’re looking to drop that and replace it with Hulu, then yes, we have a problem. But most people use Hulu like a super-DVR of sorts, where you can decide to watch a recent episode of a show even if you forgot to record it.

Keep in mind that streaming video over the Internet is new, and the networks aren’t sure what to do to replace the money that they’ve lost due to declining advertising revenues. Authentication may be a way to bolster their demands for greater retransmission fees from the subscription services.

Also, it’s important to remember that Hulu already has an authentication requirement. If you have an account with certain services, then you get to watch some FOX show episodes the day after they air. If not, you have to wait eight days. That went into effect last summer, and it does not appear to have had a negative impact on Hulu’s growth.

It’s early days yet and there’s still a lot of stumbling around in the dark to be done before we settle on just what this new world of video entertainment will look like (and we figure out who is going to pay for it). My advice is to be patient, and let the various services know what you like and what you don’t like. I expect that it will only get better as we go along.