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TechnologyDaily Mobile
NAB Turns On, Tunes In To Not Drop Out
by Drew Clark
At the National Association of Broadcasters' annual convention in Las Vegas last week, outgoing CEO Eddie Fritts received more than one standing ovation from his organization, widely regarded as one of the most effective lobbyist groups in Washington.
Perhaps the most sustained applause came after Fritts, who announced in February that he would leave the group this year after 23 years at the helm, gave his final keynote address to his fellow broadcasters. He offered a defense of key legislative victories of the past two decades, and identified his own set of future legislative priorities that broadcasters face as they take the final steps to digital television and radio.
"At my very first NAB convention as president, Sen. Bob Packwood, then head of the powerful Senate Commerce Committee, bellowed from this podium, "The NAB can't lobby its way out of a paper bag," Fritts said.
"His statement had a ring of truth. It was a wake-up call to broadcasters, and I took it as a personal challenge." NAB rallied grassroots broadcasters and persuaded legislators about the value of free, over-the-air broadcasting. "Eventually, we proved Sen. Packwood wrong."
Fritts cited a string of legislative victories that, until recently, have burnished NAB's powerful reputation. They include the 1992 cable law guaranteeing broadcasters a place on cable television systems and the 1999 measure granting authority for satellite television firms to retransmit broadcast signals. Congress also followed the NAB's direction on digital and high-definition television, both in the late 1980s and in the 1996 Telecommunications Act.
The Bumpy Road To DTV
Fritts' swan song did not tune out the real question on everyone's mind at NAB 2005: What future do broadcasters have, given that Congress has mandated the transition?
Under a law established in 1997, most broadcasters must transmit digital and analog television signals over the airwaves. They will continue doing so until Dec. 31, 2006, or until 85 percent of Americans can receive digital signals, whichever comes later. In fact, most consumers do not receive either digital or analog broadcast signals, because the signals arrive on their television sets via cable or satellite. However, as soon as the first metropolitan area reaches that 85 percent threshold in 2007, analog over-the-air television will cease to exist in that marketplace.
The key legislative and regulatory debate is about what it means that 85 percent can receive a digital signal, and whether the loose, market-by-market deadline should be firmed up with a national "hard date," something endorsed by House Energy and Commerce Committee Chairman Joe Barton, R-Texas. That position is pushed by many other lobby groups in Washington, including the wireless, electronics and cable industries, and the high-tech sector and many public interest groups. Even public broadcasting stations have warmed to a fixed date, setting them apart from their commercial colleagues in the NAB.
Barton and his legislative aides came to Vegas and did not flinch from their unpopular view that the hard date should be in December 2006, or soon thereafter. Less well-noted was the assumption Barton was making: even without a change in law, many metropolitan areas will lose analog television service because 85 percent or more of households subscribe to cable or satellite television, triggering the transition. "That is current law, and that is a fact," he said at a breakfast with other lawmakers -- many of whom said they were wary of Barton's 2006 deadline.
Barton's assumption -- that cable and satellite subscribers count toward the magic 85 percent trigger -- was at the core of a controversial plan floated by former FCC Chairman Michael Powell in April 2004. Broadcasters slammed it at NAB 2004, even as it energized House leaders like Barton and then-Senate Commerce Committee Chairman John McCain, R-Ariz. FCC insiders blame NAB's recalcitrance last year for one of broadcasting's biggest defeats. In February 2005, the FCC rejected a petition to require cable operators to carry digital as well as analog signals.
Verizon's Lobbying Proposition
That decision "was a huge loss at the FCC," said Victor Miller, a Bear Stearn equity analyst sensitive to broadcasters' concerns. He also said the decision meant that broadcasters have no guarantee that the HDTV programming they create will be carried on cable. "That was a disaster," he said.
The ruling strengthened the already-formidable hand that the cable industry now enjoys in Washington. As the 1996 Telecom Act has shaken out, cable companies have been the only clear winners, with their data and telephone services largely unregulated while telephone rivals still face elaborate FCC rules. That is an irony not lost on Ivan Seidenberg, CEO of Verizon Communications, who came to Vegas and followed Fritts on the dais. He said he wanted a partnership with NAB to battle big cable.
Seidenberg said he was deeply concerned about "the future of an industry whose very definition of itself is being transformed by competition and technology and innovation," which is in the midst of a transition from analog to digital, is searching for new revenue sources as "its old markets contract."
This industry, Seidenberg said, is "striving to do all of that while staying true to its core, its customers, and its unique role in the thousands of local communities it serves, all across America. If you think that sounds like the broadcast industry, you're right. If you think it sounds like the communications business, you're also right."
The crucial difference with the industries is that broadcasters rely totally on advertisements. Telecommunications companies have a direct billing and subscription relationship with the customer -- which is precisely what broadcasters have historically abdicated to cable and satellite operators. In this era where the popular digital video recorder Tivo has spawned its own verb "to Tivo" meaning "to skip ads," that spells trouble for the NAB.
Technology To The Rescue?
This is where the technology industry has the opportunity to ride to broadcasters' rescue, said FCC Chief of Policy Development Robert Pepper. In his keynote speech to a broadcast engineering conference held in tandem with the main NAB show in Vegas, Pepper urged engineers to take advantage of Moore's Law by creating more advanced compression and storage technologies.
He said broadcasters should get in the cellular transmission game, citing a tower company called Crown Castle that bought a 5 megahertz license for only $9 million "because no one else wanted it." The company has plans to make digital video available on the go. "They are talking about mobile video entertainment to small handsets," Pepper said. "That is something to watch for."
The same theme was sounded by John Gage, chief technology officer for Sun Microsystems, in a luncheon address. Sun engineers created a $30 set-top box designed to convert digital television signals for reception on analog sets, he said. It is easy to imagine adding digital storage capabilities, something that presents broadcasters with the opportunity to sell digital content directly to consumers.
A Salt Lake City-based broadcasting company called USDTV already has taken that step and launched a low-cost converter box at Wal-Mart. It also will allow broadcasters to charge for digital over-the-air programs from ESPN, the Disney Channel and the FoodTV network. Currently available in only three markets, the company aims to capitalize when viewers lose access to analog television signals. "I think we have a great solution when it comes to the digital transition," said company Senior Vice President Brent Peterson. He said USDTV wants to "capture some of those people who might otherwise go to cable, when they find their signal is not functional."
But USDTV and other services have been slow to gain traction as broadcasters continue to focus on lobbying Congress to impose "multi-cast must-carry" rules on cable, or resist a near-term hard date. It is a paradox noted by many visitors to NAB 2005.
"In so many of the sessions, there seemed to be a pessimism; they seemed to desperately want to hold onto their analog spectrum," said public-interest advocate Celia Viggo Wexler, vice president for advocacy at Common Cause. At the same time, "on the convention floor among the exhibitors, you have this incredible wild optimism out there. There seems to be a real disconnect."
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