ATSC logo-1The FCC has adopted its anticipated Notice of Proposed Rule Making looking toward allowing television broadcasters to transition from the present ATSC 1.0 technical standard to the new, recently developed ATSC 3.0 standard. ATSC 3.0 is Internet Protocol (IP) based and offers many potential benefits, including both multiple broadcast streams and non-broadcast IP services; but it is not compatible with existing receivers, so viewers will have to buy add-on devices or new TV sets to receive the new services.

The transition will be completely voluntary. No station will have to convert to ATSC 3.0, and no multi-channel video program distributor (MVPD, cable or satellite) will have to carry an ATSC 3.0 signal under must-carry rules. The FCC has also tentatively concluded that it will not mandate that ATSC 3.0 reception capability be built into television receivers.

However, the FCC has proposed some roadblocks that impose burdens that may keep some broadcasters from making decisions in a completely free marketplace.

First, and most importantly, every TV station that converts to ATSC 3.0 will be required to continue to provide ATSC 1.0 service. Because a given facility can broadcast in only one standard, that means that ATSC 3.0 cannot be implemented unless the converting station enters into an agreement for carriage of its programming in ATSC 1.0 by some other station that is not converting; in other words, some stations have to stay behind for a while and be willing to host their competitors. (Duopoly owners, however, could potentially operate one station in each standard, avoiding the need to negotiate with, or involve, third parties). No station will be required to agree to serve as an ATSC 1.0 host, nor will the FCC regulate how much the host station may charge for its services or whether it may charge different amounts to different stations.

Second, MVPD must-carry rights will apply to only the ATSC 1.0 service. The FCC asks whether it should permit TV stations that have elected retransmission consent to demand ATSC 3.0 carriage as part of their negotiations with MVPDs. Since most TV stations deliver their signals to MVPDs over fiber or microwave in an IP format that is neither ATSC 1.0 nor ATSC 3.0, we are not sure why the FCC is so concerned about this issue, other than the fact that they have been pressured by MVPD interests to block broadcaster pressure to carry ATSC 3.0 streams.

Finally, stations will be obligated to undertake, and absorb their own costs for, a consumer education program with announcements warning viewers about the migration of their ATSC 1.0 service to another station.

The FCC is concerned that viewers not lose any services they now enjoy, so requirements for children’s programming requirements by full power and Class A stations and local programming by Class A stations will apply to ATSC 3.0 broadcast streams. This new concern about loss of service to the public contrasts rather starkly with the position the FCC took during the recently concluded incentive auction that there would be no harm to the public if a community were left with no public television, or no television station at all, as a result of station shut-downs after the auction. (In the end, few enough stations were bought in the auction that it is not likely that any community will be left without any service.)

The Commissioners have expressed considerable excitement about the potential of the new technology, including hyper-local content directed to sub-zones of a station’s service area and the numerous benefits of IP format transmission. However, they may not recognize some of the complexities they have put on the table. For example, concern was expressed over loss of high definition (HD) ATSC 1.0 service. If stations convert to ATSC 3.0 and move their ATSC 1.0 service to another station acting as a host, there may not be enough room for continuation of ATSC 1.0 services in HD rather than standard definition (SD) format, because one station can normally accommodate only two HD streams. In addition to technical concerns, compressing signals onto a single ATSC 1.0 host will create business issues that will need to be worked out between stations and their program providers (e.g. networks and syndicators). Moreover, Commissioner Clyburn expressed concern about the loss of diverse programming now carried on ATSC 1.0 subsidiary streams (dot 2, dot 3, etc.). Will the FCC require all ATSC 1.0 streams to be moved to a host station? If so, there will likely not be room for all the streams, and the conversion to ATSC 3.0 will be stymied.

The draft NPRM that we saw included Class A and low power television (LPTV) stations in the proposal, rather than leaving those stations out of the transition until later (LPTV was left out of ATSC 1.0 digital transition until after full power rules were in place). However, the problem of finding a host for ATSC 1.0 service may be more difficult for LPTV stations than for full power stations, as not all communities have enough LPTV stations to serve as hosts to accommodate many streams, and many LPTV stations transmit 4 or more program streams that would be too numerous to accommodate on a host station in anything but a low-grade SD format.

In other words, the FCC is not really ready to let television evolve in a completely free marketplace. But with the recent resurgence of over-the-air viewing, and the ability of ATSC 3.0 to reach ever more pervasive mobile receivers, should the TV industry instead be left completely free to use their best judgment all around? Will the demands and preferences of viewers and advertisers act as sufficient constraints to allow the FCC to take a fully “hands-off” approach? These questions and others will undoubtedly be addressed in comments on the NPRM.

The deadline for comments in GN Docket No. 16-142 will be known when the NPRM is published in the Federal Register.

If you have any questions about the FCC’s proposals or the potential benefits and detriments of converting to ATSC 3.0, FHH attorneys stand ready to help.