Interesting (scary?) article in Wall Street Journal

[pjpjpjpj]

http://online.wsj.com/article/SB123422910357065971.html

Fear for those who dropped cable/sat and went all-OTA, if OTA goes away? Or fear for those who have cable/sat and will have to pay extra for "locals" because the local channels are charging cable/sat for the feed?

This will be interesting to follow over the next few years.

[TorontoSage]

Over the long term, I don't think OTA broadcasts will survive, but no one knows how long the long term is. But the writing is on the wall.

The only reasons OTA broadcasts are able to survive is because of inertia and legislation. If one was designing the television infrastructure today, the quickest and least expensive method to get TV signals out there still would be to set up broadcast antennas and have users buy TV's with antenna's as the capital investment required to build out cable systems is high and the time frame is long.

But, now that the cable infrastructure has been mostly built out, OTA broadcasters are losing their influence. I think they are still a viable alternative, but if they cannot make money then they will slowly disappear.

Sad, but true. Then we'll all have to buy HD-PVRs and the like in order to record HD broadcast television the way we want to (and pay the cable companies monthly fees in the process). But then there is the looming spectre of Hollywood, in collusion with manufacturers, closing the analog loophole (recording out of the unencrypted component video ports). Hopefully the huge inventory of devices in people's homes that only have component video ports and no HDMI ports will result in this not happening, at least in our lifetimes.

[reggie14]

The article's main point is that local TV stations might go away. It also touched on the idea that some or all of the networks could move to cable, which is related, but a separate issue. I think small local stations will die off, and, as the article pointed off, even larger local stations will drastically cut back on their local programming. But, I think in most cases we'll still have local affiliates, and in nearly all cases we'll have OTA broadcasts. My main reason for thinking this is that anything else would be too big of change, and you don't often see big changes in industries that have been around for a long time and where there's a lot of money involved.

But, I do think there's going to be major changes with TV in the not-too-terribly-distant future. I don't think there's going to be a separation of video and data lines for long. Pretty soon we'll move to on-demand distribution over the Internet, and in that scenario networks and channels no longer make sense. We'll see shows basically standing on their own with loose ties to some distributing/funding entity, similar to films.

They'll be a gray area as we move from the current system to an Internet-based on-demand system. I'm not sure if broadcast networks will see what's coming and move to cable. I doubt it. I think they'll follow the path of least resistance and embrace their OTA channels as a way of advertising their on-demand media. Then, slowly over time, you'll see the OTA die off.

So, I wouldn't worry about losing OTA HDTV. I think it will be around as long as DVRs are around. I just don't expect to be using DVRs in 20 years.

[pjpjpjpj]

All good points. I don't think it will be long - the article touches on this - where instead of your cable service having local Wxxx, it will just carry "the CBS Channel", which will come directly from CBS itself and cut out the "middle man" local affiliate. It will carry the sports and prime-time shows (and stuff like Oprah, The Price is Right, soaps, etc.), but will fill in the time currently assigned to local stuff with either infomercials, syndicated reruns, or maybe even a national news program (either their own, or else they'll strike a deal to pick up CNN or Fox News or something). The thing that will be missing will be local weather and breaking news alerts... similar to how The Weather Channel on DirecTV doesn't have "local on the 8's" like cable does, since it doesn't "know where you are".

If this happens, the question will then be whether the networks keep some (doubtful all) local affiliate stations alive simply as a transmitter for these "network channels" via OTA. In other words, the stations would effectively become a "substation with a tower", and there would be no "on-air personalities" working there. And if they did this, it would allow them to give leeway for break-ins of weather/news alerts that could be injected from the local building.

Of course, I agree with Reggie too - that the entire face of broadcast media will eventually morph into this "general availability" situation where everything will be on-demand and not necessarily gotten from a particular "source"... but that will be a LONG time coming. I can't see it happening for several generations (likely not even in any of our lifetimes). And we around here - blessed as we are - don't think too much about poor people who can barely afford their old black and white TV with an antenna, and who won't be able to afford whatever gadgets are required to access this "new media" (not to mention people who are too far in the country for cable, and can't afford satellite, and get by with one or two stations they can pull in with an antenna)... and I can't see the government letting those people be forced to "go without", especially after the response to the outcry we've just seen from the few who haven't bought their converter boxes yet...

[reggie14]

Originally Posted by pjpjpjpj

All good points. I don't think it will be long - the article touches on this - where instead of your cable service having local Wxxx, it will just carry "the CBS Channel", which will come directly from CBS itself and cut out the "middle man" local affiliate.

I think that's a little unlikely. A move would crumble the vast system of local affiliates that are out there, and there's just too much money in those affiliates to see them disappear. As of right now, I'm guessing affiliate agreements, and probably law, prevent the networks from selling feeds directly to cable companies.

What I think is far more likely, and what probably would tide over affiliates long enough, is an expansion of carriage fees from cable companies to local affiliates. It's starting to happen now, and I think it's just a short matter of time before it's universal. Before that happens, I really think the FCC has to revisit their rules on this subject. As it stands, FCC rules and affiliate agreements prevent a cable company from rebroadcasting an out-of-market network affiliate. So, in Minneapolis, MN, if Comcast wants to carry NBC, they have to go through KARE-11. I think that gives the local affiliates too much power to demand absurd amounts of money. I'm not sure what the best policy is, but there ought to be something in place that gives cable companies another choice in case the local affiliates are unreasonable.

Of course, I agree with Reggie too - that the entire face of broadcast media will eventually morph into this "general availability" situation where everything will be on-demand and not necessarily gotten from a particular "source"... but that will be a LONG time coming. I can't see it happening for several generations (likely not even in any of our lifetimes).

I'm curious why you think it's so far off. Today I have a 10mbps down/2mbps up connection, and that's basically Comcast's standard speed in my area. 20 years ago a 9.6kbps Internet connection was fast. 20 years before that black and white TV was commonplace and ARPANET was still getting off the ground.

It seems like 20 years is plenty of time to get on-demand TV going. The copper cable line into your house has plenty of bandwidth potential. The cable back-end needs improvements, but probably only in the range of an order of magnitude or two.

Now, it might be that there just isn't much demand for it, or that the major players out there now wouldn't let it happen. I could believe that. But, there doesn't seem to be a technical reason against on-demand TV in 20 years.

... and I can't see the government letting those people be forced to "go without", especially after the response to the outcry we've just seen from the few who haven't bought their converter boxes yet...

Well, this is an argument against both on-demand TV and broadcast stations on cable. In general, the two should be roughly the same price for consumers after it's commonplace.

I think this is a good point. As much as people don't like the idea of TV as a right, I think for all practical purposes it's going to get treated that way. I think at some point they'll be a general acceptance of some form of the right of access to information. I'm not sure exactly what will come of that, but I think the FCC's idea of free wireless Internet might provide a clue. I don't think broadcast TV is going to go away without an almost-free alternative taking its place.

[pjpjpjpj]

Originally Posted by reggie14

I think that's a little unlikely. A move would crumble the vast system of local affiliates that are out there, and there's just too much money in those affiliates to see them disappear.

I would agree, except the article points to instances where affiliates are being shut down or consolidated (more likely the latter) because they are not able to make money.

Originally Posted by reggie14

As of right now, I'm guessing affiliate agreements, and probably law, prevent the networks from selling feeds directly to cable companies.

Yup, it said that in the article...

Originally Posted by reggie14

What I think is far more likely, and what probably would tide over affiliates long enough, is an expansion of carriage fees from cable companies to local affiliates. It's starting to happen now, and I think it's just a short matter of time before it's universal.

In the article as well...

Originally Posted by reggie14

Before that happens, I really think the FCC has to revisit their rules on this subject. As it stands, FCC rules and affiliate agreements prevent a cable company from rebroadcasting an out-of-market network affiliate. So, in Minneapolis, MN, if Comcast wants to carry NBC, they have to go through KARE-11. I think that gives the local affiliates too much power to demand absurd amounts of money. I'm not sure what the best policy is, but there ought to be something in place that gives cable companies another choice in case the local affiliates are unreasonable.

Interesting thought. What if a local affiliate was being effectively ripped off, and said "we're going to show the affiliate from the next town over"? Of course, it would make the "local" news not-so-local...

Originally Posted by reggie14

I'm curious why you think it's so far off. ... there doesn't seem to be a technical reason against on-demand TV in 20 years.

I don't disagree with that - I never said the technology couldn't be there..... (see next, and pardon me for rearranging some of your quotes together into topics)

Originally Posted by reggie14

Now, it might be that there just isn't much demand for it, or that the major players out there now wouldn't let it happen. I could believe that. ... I don't think broadcast TV is going to go away without an almost-free alternative taking its place.

That's why I don't think we will see it "take over" in our lifetimes. Will it be available? Probably. But there are too many people who are not even the slightest bit interested in technological advances, and there are too many people who just plain can't afford it. As I hinted in my last post, we Sage'rs sorta live in a little bubble where most, if not all, of us have reasonable means (enough to buy this equipment!), some technical knowledge (if not TONS of it and a job in the tech field), and, at very least, an interest in "tinkering" in, or trying out, technology. We forget that there are millions of Americans who don't even know how to set the VCR - if they even own one - and don't care. They just want their TV, the way they have always had their TV, and they'll raise holy hell if it's taken away (see outcry over digital switch). My parents, for example, are just young enough to get new technology (my mom emails, surfs the web, and plays games on her laptop, has hi-speed internet, and they have an HDTV with HD cable). But they still have no interest whatsoever in a DVR. I set up their old VCR where they can record the analog cable (used a splitter before the STB) if they feel they need to record something (though they have not, to this point).

But the key quote you said above was the "almost free" alternative. That's why it will be a long time until things change... the costs. Think about cable TV staying analog. Why? Because they can't switch to digital cable until everyone with cable has an STB at every TV. And realize some people probably have 7+ TVs in their houses on that analog cable feed. That switch, if and when it comes, will make the currently-ongoing OTA switch look like a drop in the bucket. In fact, I don't think you will ever see everyone having a cable STB at every TV... I think it will wait until ATSC-only TVs have been in production for a long time (long enough that presumably everyone's old NTSC sets are dead and gone), and then they'll switch cable to digital and the box won't be needed except for premium content. But again... how long will that take? Probably our lifetimes. That's a lot of TVs that need to die (and too many people don't have the means to replace them until they have to).

Originally Posted by reggie14

As much as people don't like the idea of TV as a right, I think for all practical purposes it's going to get treated that way. I think at some point they'll be a general acceptance of some form of the right of access to information.

"At some point"? "Going to get"? That's happening right now. You should have seen the news reports from the Q&A open forum with the FCC Chairman when he came to my town (local news! I saw it on that old dinosaur "local news"! ) People were literally screaming at the guy "Why are you taking away our TV? We've always had TV, why should we have to pay for it now? It should be like the mail and radio... free!" It was abundantly clear that people - misinformed or otherwise - do in fact feel that TV is a right.

[sandor]

FUD


look at this graph:
http://tinyurl.com/b5r7dl


and this one:
http://tinyurl.com/d6gamh


is wall street and the DJIA going to go extinct just like the affiliates?!?

this recession is second only to the Great Depression here in the US, to trend coming decades off of current economic data is foolhardy.

[sandor]

okay, News Corp owned WSJ didn't like the direct link, so you will have to click on the "interactive graphic" yourself. but if you compare it to the DJIA over the past decade or so, you will see that wall street is doing even worse than Fox is...

[reggie14]

Originally Posted by pjpjpjpj

I would agree, except the article points to instances where affiliates are being shut down or consolidated (more likely the latter) because they are not able to make money.

The article indicated most affiliates are still making profits. I'm guessing most of the consolidations are occurring in small markets. I know several towns in Minnesota with populations around 30,000 people that have at least one local affiliate. That seems unnecessary, and I don't see how they could make enough money to go on even when the economy was good.

Interesting thought. What if a local affiliate was being effectively ripped off, and said "we're going to show the affiliate from the next town over"? Of course, it would make the "local" news not-so-local...

I think you hit the key point- the local affiliates have the advantage because people will want access to local news. The local affiliate will be able to charge more than a neighboring affiliate, but not so much more that it's not worth the added cost.

Will it be available? Probably. But there are too many people who are not even the slightest bit interested in technological advances, and there are too many people who just plain can't afford it.

As I said, I see no reason why, after a relatively small amount of time, it wouldn't be the same price as regular digital cable. You can imagine people paying a premium early on, but very quickly it just won't make sense to have the regular digital cable system and a second on-demand cable system.

Also, I don't see why it would it would just be adopted by techies. Basically, I think on-demand TV is probably the next big step in cable after the move to digital cable (with switched video being a possible half-step). Early on it's going to attract more advanced users, but relatively quickly it's just going to become standard.

But the key quote you said above was the "almost free" alternative. That's why it will be a long time until things change... the costs.

I think we're talking about two different kinds of cost there. When I was talking about an "almost-free alternative" I meant something other than OTA broadcast that would give people nearly-free access to a limited amount of news and entertainment. You seem to be talking about infrastructure.

Think about cable TV staying analog. Why? Because they can't switch to digital cable until everyone with cable has an STB at every TV.

I imagine it's less about the STB's and more about back-end equipment, no immediate need, and a general desire to not fix things that aren't broken. I'm moved 4 times in the last 4 years, and lived in 3 different states. Every time I moved the cable company supplied an STB. People have them, even the people without the expensive cable packages. When cable companies go all-digital, what seems to happen is people don't bother getting boxes for the TVs in, say, the spare bedroom or den.

In fact, I don't think you will ever see everyone having a cable STB at every TV... [snip] But again... how long will that take? Probably our lifetimes.

Digital cable is coming long before analog TVs die off. Cable companies have already started the transition. Comcast wants to move to all digital in all markets by the end of 2010. I don't think they'll make that target, but it tells you it's coming very soon.

In general, I don't think the cost in moving to an on-demand system will be that much different than the cost of going all-digital (at least, it won't be that different in 20 years). So, I think the real issue ends up being will an all-digital cable network be able to thrive for 20 years without a major update of some sort? I think the odds of that are extremely small.

[emveepee]

I find it a bit ironic discussing the fate of OTA broadcasts given the emphasis of the PVR community on avoiding the commercials that allow them to be free. Perhaps as a modest proposal we need a reverse comskip, forcing us to watch commercials.

In Canada the rules are a bit different the local stations are available not because they are that lucrative for OTA, but because the local presence allows their broadcasts with their commercials to replace any simultaneous American cable broadcasts ("simsub"). Some Americans may even remember something called the "Hedi Game" we live with this experience every day.

Martin

[davephan]

There might be a way the local OTA TV broadcasters to increase their revenue.

If the OTA digital TV stations could work out a deal with small groups of cable/satellite channels, the OTA digital TV stations might be able to bring in extra revenue. It may be a way to offer the OTA customers limited cable, a few cable channels.

If the OTA digital channels can be scrambled, and legal agreements could be worked out, then consumers could subscribe to limited cable type channels broadcasted on the spare OTA digital channels. Perhaps one digital OTA broadcaster could carry only news channels on their extra digital channels. Meanwhile, other OTA digital broadcasters could carry other types of channels.

The consumers would benefit that do not want to buy 200 channels to only get a few channels they want. The local OTA digital broadcasters would benefit with the extra monthly revenue provided by the cable/satellite type channels they carry on the extra digital OTA channels. The cable/satellite providers may also be able to benefit with extra revenue by gaining some subscribers that would normally be lost. However, the cable/satellite providers would fight this concept since some of their subscribers would drop, switching to the cheaper OTA digital limited cable channels.


Dave

[pjpjpjpj]

My point is, and I think this responds both to Reggie and Davephan, is that I think we underestimate the number, and the (for lack of a better descriptor) "ability to b!tch", of those who can not afford to pay for television, or simply, absolutely refuse to do so. In other words, if you said "for only $5 a month, you can have any program you want, when you want, in perfect digital clarity", their response would be "tell me what I can get FOR FREE on my old trusty 17-inch black-and-white that I have been watching for 30 years... because it's all I need and I'm not paying for anything more!"

I posted the link to this article in a couple of forums I read and have seen some interesting discussion (that's the point ) but there are always several people who think it can all be worked out by creating some sort of inexpensive cable alternative that provides the "locals". This misses my point above. Too many people live too far away from cable, too many people can't afford a monthly payment (they can barely make rent), and too many people refuse to pay for television no matter what. Those people raise a loud fuss, and the government listens (at least the newly-elected government does). And as Reggie said, the government appears to believe TV is a "right", and doesn't want to take that "right" away.

As I said way above, probably everyone on this site has the means to pay for TV (and would) if necessary. But I just don't see the US government taking away television from millions of people (read: VOTERS), because they refuse to pay the costs of getting the "new and better" technology. We here are generally tech snobs - c'mon admit it, we are - and we always tend to discount or ignore (or roll our eyes and laugh at?) those places we consider "backwoods," where technology hasn't taken hold. Heck, I chose to go OTA-only and I get the "Huh? What's wrong with you?" from a lot of people myself.

I do think technology will get there - absolutely. I just don't think they (networks, cable/sat companies, the government) can force it to be the only technology available (and take away the current free option) for a long, long time.

[psklenar]

Originally Posted by pjpjpjpj

... the government appears to believe TV is a "right", and doesn't want to take that "right" away. ...

Also known as "Bread and Circuses".

pat----

[Taddeusz]

On demand TV is already beginning in the cable industry. AT&T's U-verse is a case in point. Whereas with traditional cable TV all stations are broadcast all the time U-verse streams only the channel or channels you want to watch. This is also being done with cable TV and has been for years. Just not on such a grand scale as U-verse with the limited on-demand programming that is provided by the cable companies. Newer technology however is going to eventually change the way cable TV works and it will be just like U-verse. Rather than wasting bandwidth and broadcasting all the channels all the time they'll be able to stream only the one you're watching. Yes, it's a backend thing that the cable companies need to upgrade to fully support. But they won't be able to do that until all their customers have an STB.

We live in interesting times and this is only the beginning.

[reggie14]

pjpjpjpj-

I think we sort of agree on a major issue, but disagree on the implications. While this is changing, network TV (regardless of how it's received) is still the primary source for news and entertainment for a lot of people out there. I agree that, for the foreseeable future, the government will make sure there's a sufficiently free source of information and entertainment that is also accessible to people with limited resources (e.g., old equipment).

But, I'm not sure what that will mean in 20 years. The specific source of information in 20 years might change, as will what constitutes "sufficiently free." TV isn't really free now, since even with OTA you need to pay for electricity. Maybe in 20 years high-speed Internet access (even in rural areas via, e.g., satellite, wireless, etc.) will be so common it's essentially like electricity today. So, maybe it's fine to get rid of OTA TV if everyone has Internet access and there's free material online. Alternatively, maybe the government would provide limited internet access. Maybe the government would even provide little boxes for hooking TVs up to Internet sources.

In general though, I don't think OTA TV is going anywhere anytime soon. I think we'll see cable TV, as we know it today, die off before OTA TV. As I said before, I think OTA will mostly stick around for quite a while as a way of advertising online offerings. We might even see federal incentives for local OTA broadcast affiliates to stick around to encourage the distribution of local news and maintain the accessibility of TV to people with limited resources and those living in rural areas.


Taddeusz-

It seems like fully on-demand TV, while sort of only an evolutionary change in technology, is actually a revolutionary change otherwise. You end up having to storage and push around much, much more data than a mostly switched-video system like U-verse. And, I think it has much more potential to revolutionize the TV industry by making TV networks and channels obsolete, and radically changing the role of video/data providers.

But, I think few would argue (although, pjpjpjpj seems to be) that IPTV and on-demand TV isn't the the wave of the future. I think it's a bit more interesting to think about how that change will impact the industry and user-experience.

[rmac321]

I find it interesting that the article didn't address what I would consider to be a key element to this whole discussion: PROGRAMMING. Has it really occurred to no one that there is an inverse relationship between the amount of "reality" and other inexpensive production programs on broadcast networks and the number of viewers/ad revenue? The network execs seem to be enamored with cost/benefit ratios that say cheap programming makes a higher profit. Well it may be a higher percentage profit, but it turns out a higher percentage profit of a lower gross isn't really more profitable, is it? Combine that with the networks inability to leave a quality program on the air long enough to develop a following.

Another problem that is entrenched with broadcast networks is their intense need to put their best shows up against each other. Instead of killing a good show by putting it up against a proven show on another network, concede the time slot and put on something that appeals to a completely different demographic. Use that time slot to develop a niche program.

To those of you that like reality tv, more power to you, please don't flame. It has its place and certainly has a following. I'm just suggesting that not everyone likes it and the networks have banked too much of their futures on it and appear to be paying for it.

[reggie14]

Originally Posted by rmac321

I find it interesting that the article didn't address what I would consider to be a key element to this whole discussion: PROGRAMMING.

Actually, I'm not sure it's really particularly relevant to the discussion here. Except, I think we're moving to an on-demand system (and using DVRs in the meantime) where time slots will be a thing of the past.

Your comment about expensive vs. inexpensive shows is somewhat related as well. Despite your comment about networks moving towards cheaper reality tv programming, the broadcast networks are still responsible for the most expensive TV programming (with the exception of ESPN and MNF). Is that going to change over time? What if we do move to a fully on-demand system that lacks major broadcast networks. Will anyone make expensive shows like Lost or 24?

Part of me thinks the reality TV show is just a phase for now. I think the genre is here to stay, but there's probably a few more reality shows on right now than what is sustainable. I also kind of think the quality of TV programming has improved lately. There's plenty of enjoyable (non-reality) TV shows on to fill my demand. And, I tend to think the networks have done a pretty good job scheduling around each other. There's only one night a week when there are two shows are on at the same time that I want to watch- Mondays with Big Bang Theory/How I Met your Mother and House.

[pjpjpjpj]

Originally Posted by reggie14

But, I think few would argue (although, pjpjpjpj seems to be) that IPTV and on-demand TV isn't the the wave of the future.

For the third or fourth time () I will state that I agree with you and I DO think it is the wave of the future... I just don't think the "current method(s)" will become obsolete and go away as quickly as you believe. In the words of "Tiny E", "that's all I'm sayin', man." (obscure?)

Here's an idea... since you can do home networking via home power lines... is it possibly to send internet out via high-voltage main lines? In other words, if the internet did someday become government-provided, could it be sent out through the power grid to everyone? So we would just plug in our high-speed modem (or eventually it would be built into PCs) and get the power for the device, plus the internet connection, through the power cord?

Hey, we're just having a brainstorming discussion here (only point of this thread). As has been said, who the heck knows what things will be like in 20 years from now. The way the economy is going, it might be like The Road Warrior.

[reggie14]

Originally Posted by pjpjpjpj

Here's an idea... since you can do home networking via home power lines... is it possibly to send internet out via high-voltage main lines? In other words, if the internet did someday become government-provided, could it be sent out through the power grid to everyone?

It's possible, and it's been done. Unfortunately, it's never lived up to expectations. It's one of those things that was supposedly a couple years off for quite a while. Research and deployment has sort of died off, but it's not completely dead yet. Even if it did work, I wonder how well it would work on older parts of the power grid, which happen to be the same places that lack DSL/cable.

In general I think wireless and satellite are probably the way we'll expand coverage to remote regions. Who knows, maybe if the .com bubble would have lasted another 10 years Teledesic would have launched their huge satellite network and the issue would be moot. But, you probably can't pinpoint signals from satellites well enough for it to scale, even with low-orbit satellites. I think we'll have a better idea with wireless in a couple years after Sprint tries deploying WiMax in areas outside of major cities. They have plans to feed rural (and urban) WiMax towers using microwave links.

[wayner]

Originally Posted by emveepee

In Canada the rules are a bit different the local stations are available not because they are that lucrative for OTA, but because the local presence allows their broadcasts with their commercials to replace any simultaneous American cable broadcasts ("simsub").

But I don't know that you need local affiliates to do that - Global has never had local affiliates and they can simsub - they broadcast one signal, at least throughout Ontario.

Some of the Canadian networks are balking at the cost of going all digital, whcih is supposed to happen in 2011 in Canada. Some of them are wondering if there is any point since cable/sat penetration is very high in Canada.