July 17, 2003

Too much bickering over HDTV
Category: Technology

As a huge advocate of HDTV I am starting to get very frustrated with the current standoff between my local television stations and my local cable operator.

It seems that the stations are unwilling to let the cable operators rebroadcast HD without further charges. Their rationale is twofold a) we just spent large amounts of money upgrading our systems. Why should we give it away for free? And b) HDTV is cable's silver bullet against the satellite companies (They just don't have the bandwidth to provide HD-LIL*s (local in locals)). We're going to make them pay for it.

On the other side, the cable companies are unwilling to pay (in many cases pay more) for content that should be advertisement driven and is public in its very nature. They also feel that the stations were given (for free) the spectrum.
Meanwhile, the consumer sits on the sideline without any access to the content (Over the air signals are often blocked and made unusable by hills, trees, etc).

This is where the FCC needs to step in with the following mandate:

"If the consumer is unable to receive an HDTV channel with standard rabbit ears, satellite companies are legally allowed to sell out of market stations** to that user. Furthermore, any user that signs up for out of market service for a particular channel will continue to be able to purchase that signal for a period of x years."

If both of the parties suddenly have potential competition, we might be able to end this Mexican standoff. If they are just too stupid to stop bickering, who cares? I will get my 'Alias' from DirecTV.

It’s not a new concept. That’s how it is done for regular TV (more or less). It just needs to be applied to HDTV as well.


*LILs are when each market (e.g. Seattle) gets their local ABC, NBC, etc.
** Out of market is when a user gets the ABC, NBC, etc. from a different market. This allows the satellite to carry one ABC, NBC, etc. for all the markets instead of one for each market.

(If you thought that this post was interesting, why not read another? Perhaps a random link? Or you could just read about me.)

Posted by Stephen Speicher at July 17, 2003 12:08 PM



Comments

Yes, this is a problem whose time has come.
TV stations now pay Networks for programming whereas 20 years ago were paid by Networks. These things do change. TV stations are in a position where these days they operate very similarly to cable. Both pay for programming and both companies compete with each other for the local advertising dollars. The difference is that cable has subscriber fees amounting to millions of dollars per month to pay for programming, while TV stations can only rely on the local advertising revenues which cable also competes for.
TV stations see that their Network programming is some of the most popular programming that the cable company offers it's customers and while cable pays thousands of dollars every month for other channels, they don't want to pay the TV stations arguing that it should be free for them to redistribute because it's a free service.
It seems that this is a business relationship doomed to failure.
TV stations use their free spectrum to provide service to the public such as Emergency Alerts and public services. I don't think they ever intended it to be resold by their competition without compensation.
HDTV gives broadcasters an opportunity to review this relationship without adverse affects on their ratings and revenues. It's not so much about what it cost to do HDTV it's about the whole relationship with cable.
I don't know of any business model that is similar to this.
I have to have some sympathy for TV stations who at least offer some free services to viewers. I don't think they intended to create a free product for content distributors to resell. The evolution of television has left TV stations in a position where they couldn't deny cable carriage as it would adversly affect their ability to compete for advertising. HDTV allows them to have an additional service that could have retransmission contracts with cable and allow them to stay competitive while they attempt to change this awkward relationship.
This is why it is happening. It's not good for viewers but cable pays for all other programming except the ones that currently belong to their advertising competitors.
How could that relationship continue?

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