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Is Broadcast TV Going Away?

June 23, 2011 | Author: Ibex Marketing

I mentioned topic this in passing during my discussion of the dustup over wireless broadband vs. GPS, but I think the time has come to officially recognize this as a subject of interest.

Here’s the situation as I see it in a nutshell. Some 8% to 15% of the U.S. population relies on the free terrestrial (local) broadcasts for their television content. They do not have cable or satellite subscriptions. (There are also people who have subscription television service and also watch the free broadcasts, but they are not included in these numbers.) According to a study by Knowledge Networks, this amounts to more than 45 million people in 17 million households. It is worth noting that about 40% of these people are minorities, and that nearly a quarter of all households with annual income under $30,000 rely solely on broadcast TV.

Some people look at the radio spectrum assigned to local television broadcasting and argue that it would be much more valuable to society if it were to be used for other purposes, including wireless broadband. They argue that another shopping channel or reruns of 1980s sitcoms do not provide significant societal benefits.

In the middle are advocates who want the local broadcasters to sell off the parts of their assigned spectrum that they aren’t using. The radio spectrum in this country belongs to the people, and the Federal Government is charged with managing that resource. The FCC wants to auction off this unused spectrum in a sale where the TV stations would volunteer to give back spectrum in return for a share of the revenues. Some in the TV industry want to hang onto this spectrum for new applications such as digital mobile TV broadcasts.

One factor that is bringing this issue to a head is that the old model of networks and local channels is falling apart. Federal regulations require that subscription television services carry local programming, which is part of the negotiating advantage for the stations during the retransmission fights that have become so common. And now the networks are demanding a share of those retransmission fees from the local stations. All the while, network viewership is declining which leaves them scrambling to find new revenue sources. According to some sources, it is possible that some of the major networks are looking into transitioning to cable-only channels, leaving the local stations on their own to obtain programming content.

How serious is the possibility that big changes are ahead for broadcast TV in this country? It is way to soon to know for sure, but here’s one interesting data point. A company named Modulation Sciences announced this week that it is exiting the the U.S. market. The company makes signal processing products for the television and radio markets. Here is a quote from the company press release:

Citing the near demise of the United States over the air broadcast marketplace and MSI’s continued growth and acceptance in Latin America and Mexico; Modulation Sciences will no longer manufacture or support U.S. standard products.

I am not saying that the sky is falling, but it certainly is starting to look cloudy. The people who rely most on terrestrial TV broadcasts are the poor, minorities, and residents of sparsely-populated rural areas. None of these groups are known for their political clout, so it’s not clear how much influence they will have in the growing debate. The voices of the folks with smartphones and tablets and other devices that are hungry for high-speed wireless data access are likely to be heard more loudly in the halls of power. We have a long way to go before we’re likely to see any definitive changes, but it is a complex issue that is likely to affect all of us before these issues get resolved.