New Opportunities for Next Gen Broadcasters and Simulcast “Host” Stations, but Controversies Remain.

Photo courtesy of Flash.Pro via Flickr through the Creative Commons License

Yesterday, the FCC adopted a Report and Order authorizing television broadcasters to use the “Next Generation” broadcast television (Next Gen TV) transmission standard (also called “ATSC 3.0”) on a voluntary, market-driven basis. This Order may herald a revolutionary change in TV broadcasting, opening new business models for Next Gen broadcasters as well as for other stations that act as “hosts.”

The Order requires full power TV stations voluntarily transmitting in ATSC 3.0 will still be required, however, to continue transmitting current-generation digital television (DTV) service using the ATSC 1.0 transmission standard to their viewers. This requirement to simulcast ATSC 1.0 with ATSC 3.0 is to be accomplished by stations partnering with other stations acting as “hosts” to transmit the “guest” station’s 1.0 or 3.0 format signal. Class A and low power TV (“LPTV”) stations will be allowed to “flash cut” directly to transmission in ATSC 3.0. In connection with the release of the Order, the Commission also issued a Further Notice of Proposed Rulemaking seeking comments on issues related to exceptions and waivers of the simulcast requirement, and on whether to let broadcasters use vacant TV channels to encourage use of Next Gen TV. These changes will also likely impact MVPDs and even wireless carriers. However, the Order has generated significant controversies that may not go away quickly. But let’s take a few steps back before we address all that.

First off, what is Next Gen TV? Glad you asked.

ATSC 3.0 is the new TV transmission standard developed by Advanced Television Systems Committee as “the world’s first Internet Protocol (IP)-based broadcast transmission platform.” It is designed to merge the capabilities of over-the-air (OTA) broadcasting with the broadband viewing and information delivery methods of the Internet, while using the same 6 MHz channels presently allocated for DTV service. The promise of this new TV transmission standard is the potential to enable broadcasters to provide consumers with a “more immersive and enjoyable television viewing experience” both at home and on mobile screens. Live TV transmission to mobile phones would open a potentially huge new market for TV broadcasters. Additionally, ATSC 3.0 is designed to enable delivery of “Ultra High Definition” television, with greater spatial resolution, higher dynamic range and frame rate, along with enhanced audio.

Lastly, ATSC 3.0 is also designed to allow broadcasters to geographically localize, as well as personalize, the delivery of TV programming. Geographic localization can be used to provide targeted public safety messages. But most importantly for the broadcast industry, it can provide targeted advertising, a la the Internet. Put this all together, and implementation of this next standard may not only be more revolutionary than the implementation of DTV, but it holds the promise of providing broadcasters significant new bases for revenue streams. That’s big. Notably, by requiring the simulcasting of ATSC 3.0 and 1.0 for full power stations, the Order establishes an important role for LPTV, Class A, and independent full power stations as “host” stations. This may be a temporary but multi-year economic lifeline for such stations.

A number of regulatory issues are triggered with the authorizing TV stations to commence broadcasting on the ATSC 3.0 standard.

While the text of the Order has not been released at the time this blog publication, based on the FCC’s fact sheet and draft order (released last month), here are some of the most important elements of the Order:

  1. Voluntary Use. The Order authorizes the voluntary use of the ATSC 3.0 transmission standard. Broadcasters will be permitted, but not required, to transmit ATSC 3.0 signals, as long as they comply with the requirements of the Order and related rules. Alternatively, broadcasters may choose to continue transmitting their signals solely in the currently authorized ATSC 1.0 transmission standard. This may make sense for many stations, at least until new consumer equipment capable of receiving and displaying ATSC 3.0 signals penetrates a significant percentage of the market.
  2. Local Simulcasting. The Order requires Next Gen TV broadcasters to simulcast the primary video programming stream of their ATSC 3.0 channels in an ATSC 1.0 format. This is so that viewers will continue to receive ATSC 1.0 service. Broadcasters must meet this requirement by partnering with a temporary “host” station in their local market to either: 1) air an ATSC 3.0 channel at the host’s facility, while using their original facility to continue to provide an ATSC 1.0 simulcast channel, or 2) air an ATSC 1.0 simulcast channel at the temporary host’s facility, while converting their original facility to provide an ATSC 3.0 channel. For five years, the programming aired on the ATSC 1.0 simulcast channel must be “substantially similar” to the programming aired on the 3.0 channel, and Next Gen TV broadcaster’s 1.0 simulcast channel must continue to cover its entire community of license. Stations that partner to facilitate simulcasting will be required to enter into written simulcasting agreements similar to the agreements currently required between stations engaged in channel sharing.
  3. Licensing. The Order states that 1.0 and 3.0 channels aired on a partner host station be licensed as temporary second channels of the originating broadcaster. That is, the ATSC 1.0 and ATSC 3.0 signals of a Next Gen TV broadcaster will be two separately authorized companion channels under the broadcaster’s single, unified license. Broadcasters will be required to file an application to obtain Commission approval before a 1.0 simulcast channel or a 3.0 channel aired on a partner host station can go on the air, and before an existing 1.0 station can convert to 3.0 operation. However, such applications will generally be treated as minor modifications, and the Order adopted a streamlined “one-step” expedited processing approach with a target of granting applications 15 business days after publication of Public Notice of the application.
  4. MVPD Carriage. A station’s ATSC 1.0 signal with mandatory carriage rights will retain those rights, but a station’s 3.0 signal will not have mandatory carriage rights during the time while the Commission requires local simulcasting. The Commission did not adopt new rules to govern carriage of 3.0 signals pursuant to retransmission consent. Rather, voluntary carriage of 3.0 signals is left to marketplace negotiations between broadcasters and MVPDs. Stations relocating their 1.0 simulcast channel to a host facility will be required to provide notice to MVPDs currently carrying the station 1) at least 120 days in advance of relocating their 1.0 simulcast channel to a temporary host facility if the location occurs during the post-incentive auction transition period; and 2) at least 90 days in advance of relocating their 1.0 simulcast channel to a temporary host facility if the relocation occurs after the post-incentive auction transition period.

Attached to the Order is a Further Notice of Proposed Rulemaking, seeking comments on a few related issues. Specifically, the Commission seeks comments on the criteria to be used to evaluate exceptions and waivers of the requirement that Next Gen TV broadcasters partner with a local station to simulcast DTV signals. The Commission also seeks comment on the extent to which it should let full power broadcasters use vacant TV channels to encourage use of Next Gen TV, and how it should define a channel as “vacant.”

Of course, it would be difficult for an Order that so extensively impacts the future of TV broadcasting to avoid controversy, and there is plenty of controversy in this case. Both Commissioner Clyburn and Commissioner Rosenworcel dissented from the Order. Commissioner Clyburn’s dissent primarily raised the concern that ATSC 3.0 transmissions are not “backward compatible” with the current DTV standard, and as a result, consumers will have to purchase equipment to access free over the air TV once the simulcasting period concludes. She also wondered whether ATSC 1.0 simulcasts will be made available in HD format. Broadly, she is worried that this Order will create a new kind of “digital divide.” Lastly, she raised a concern about the uncertain impact of ATSC 3.0 operations on consumer privacy, in light of significant amount of data that Next Gen broadcasters would be collecting, on their TV audience’s viewing habits, apparently without their consent, in connection with providing targeted advertising. Commissioner Rosenworcel shared those concerns and argued that the Commission should take an approach similar to the analog-DTV transition, by seeking Congressional input, providing for interim testing, and making funds available for consumers to purchase ATSC 3.0 compatible equipment.  She also noted that in light of the ATSC 3.0 patents owned by Sinclair Broadcasting, there is a real risk that Sinclair will use those patents improperly to extort excessive licensing fees from MVPDs and others, with the costs passed on to consumers. This only enhances concerns by many parties regarding Sinclair’s dominant position if its pending proposed purchase of Tribune Media is approved.

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In any case, this Order may have a revolutionary impact on the TV broadcast industry. Comments are due on the Further Notice 60 days after publication in the Federal Register, which has not yet occurred. Please contact us if you would like more details on the Order and Further Notice.

Editor’s note: At the time of publication of this Blog post, the FCC had not yet released the text of the final Order. That document has been was subsequently released and is available here.