Technology360

FCC’s 13th Annual Video Competition Report

The FCC is out with its annual report on video competition (news release with thanks to Bert Manfredi on the OpenDTV list).  I'll link to the full report when it's posted.  --Dennis

Here are specific findings from the news release:

• The number of TV households and the number of MVPD subscribers increased since the FCC released its last report. As of June 2006, there were 110.2 million TV households, compared to 109.6 million in June 2005. Of that number, approximately 95.8 million TV households subscribe to an MVPD service, versus 94.2 million as of June 2005.
• Section 612(g) of the Act states that: (1) “at such time as cable systems with 36 or more activated channels are available to 70 percent of households within the United States” and (2) “are subscribed to by 70 percent of the households to which such systems are available, the Commission may promulgate any additional rules necessary to provide diversity of information sources.” According to Warren Communications News, a source on which we have traditionally relied, 71.4 percent of households passed by cable systems offering 36 or more channels subscribe to these systems. However, other data sources do not demonstrate that the second prong has been met. As a result, we conclude that the only way to accurately measure the 70/70 test is to collect data directly from the cable industry.  Therefore, the Commission requires each cable operator to submit the following information for 2006 within 60 days under penalty of perjury: 1) the total number of homes the cable operator currently passes; 2) the total number of homes the cable operator currently passes with 36 or more activated channels; 3) the total number of subscribers; and 4) the total number of subscribers with 36 or more activated channels.
• Cable continues to serve the largest percentage of MVPD subscribers. The Report finds that as of June 2006, approximately 68.2 percent of MVPD subscribers received video programming from a franchised cable operator.
• DBS subscribers comprise the second largest group of MVPD households, representing 29 percent of total MVPD subscribers as of June 2006. DBS operators continue to add local-into-local broadcast television service. In approximately 175 of the 210 television markets, at least one DBS provider offers the signals of local broadcast stations.
• The number of MVPD subscribers choosing all other delivery technologies represented 2.6 percent of all subscribers in June 2006.
• The Nielsen Company estimated that, as of January 2007, 15.5 million households, or about 14 percent of all television households rely on over-the air television broadcasts for video programming.  In addition, many households that subscribe to an MVPD also rely on over-the-air signals to receive broadcast programming on some of their television sets.
• From June 30, 2005 to June 30, 2006, the number of commercial and noncommercial television stations rose from 1,747 to 1,753. As of January 2007, approximately 1,600 stations nationwide were on the air with DTV operations, including all 119 stations affiliated with the top-four network affiliates in the top 30 television markets.
• Incumbent local exchange carriers also are providing video service. At the end of 2006, Verizon reported that it offered video programming via FiOS TV to more than 2.4 million households in 200 cities in 10 states and served 207,000 subscribers. At the end of 2006, AT&T served approximately 11 cities through U-verse TV. In addition, Qwest has taken steps to provide IPTV service in its service area.
• As of June 2006, Broadband Service Providers (“BSPs”) served approximately 1.4 million subscribers, representing 1.5 percent of all MVPD households.
• Electric and gas utilities also provide MVPD and other services on a limited basis. The American Public Power Association, which represents more than 20,000 not-for-profit community and state-owned electric utilities, reports that the average subscriber penetration rate for its members offering video service was 50 percent of the homes passed by utility video services, and that 40 percent of these subscribers purchase a combination of video and high-speed Internet access service.
• The number of subscribers to private cable operator systems, also known as satellite master antenna systems, has declined to 900,000 subscribers as of 2006, a decrease of ten percent from last year’s one million subscribers.
• The number of wireless cable subscribers has declined steadily from a peak of 1.2 million in 1996 to approximately 100,000 as of June 2006, unchanged from a year earlier.
• In recent years, major commercial mobile radio service and other wireless providers have begun offering services that allow subscribers to access video programming through handheld devices, such as mobile telephones.
• The amount of web-based video provided over the Internet continues to increase significantly each year. In July 2006, 107 million Americans, three out of every five Internet users, viewed video  online. In July 2006, about 60 percent of U.S. Internet users downloaded videos. More than 7 billion videos were downloaded that month.
• Between July 2005 and June 2006, a total of 28 MVPD transactions were announced. Together these transactions were valued at approximately $5.3 billion and affected approximately 1.8 million subscribers.
• In 2006 we identified 565 satellite-delivered national programming networks, an increase of 34 networks over the 2005 total of 531 networks. Of the 565 networks, 84 (14.9 percent) were vertically integrated, or affiliated, with at least one cable operator. Five of the top seven cable operators own, in whole or in part, all of the networks that are affiliated with any cable operator.
• In 2006, we identified 101 regional networks, an increase of six over those identified in 2005. These networks provide programming of local or regional interest and are distributed to subscribers of one or more MVPDs in an area. Of these, 57 networks, or 56.4 percent, were vertically integrated with at least one multi-system cable operator (“MSO”). There are 43 regional sports networks, representing 42.6 percent of all regional networks, as compared to the 37 we reported last year. Of the 43 regional sports networks, 19, or 44.2 percent, are vertically integrated with a cable MSO.
• The sale of DTV consumer electronics continues to accelerate. The Consumer Electronics Association (“CEA”) estimates that, in 2006, digital televisions (“DTVs”) will have outsold analog televisions by 66 percent.
• The development and deployment of CableCARDs continued in 2006. CableCARDs permit the reception of secured digital cable services without the addition of a set-top box. As of December 22, 2006, more than 216,000 CableCARDs had been deployed by cable operators, up from 90,000 the previous year.
• The Report also surveyed developments in foreign markets. MVPDs in a number of countries provide programming on an a la carte basis or in mixed bundles, themed tiers, and subscriber-selected tiers. For example, in Hong Kong, consumers receive a free basic package and also can subscribe to more programming for an additional charge per channel. In Canada, the largest cable operators offer a la carte services. In the United Kingdom, consumers may select additional programming services they want, either on a subscription or pay-as-you-go basis, without first purchasing a monthly basic-tier package. In India, as of January 1, 2007, consumers in certain cities can subscribe to programming on a per channel basis.

Satellite TV Fails Public Television

Consultant (and former PBS exec) Michael Soper contacted both DirecTV and Dish about carriage of PBS station HD programming and got noncommittal answers.  This is from DirecTV's response:

... While I do not have any information specifically about PBS in your area, we do value programming like this and realize PBS in HD is important to our customers. Unfortunately, due to limits in bandwidth, we are not able to offer all of the local channels we provide to the Salt Lake area in HD. ...

Link:  Rare Medium.  He also did an earlier post on this topic.  I agree with Michael, of course, but we in public television could be doing something to make this happen much faster.  Currently, most public television stations are still broadcasting the PBS HD feed, not an HD version of our main channel.  Therefore, the two main satellite companies would need to set aside large chunks of spectrum for 7x24 programming differentiated only by station IDs.  More stations need to do HD versions of their main analog channel with all the localization (acquisitions, local programming, underwriting, and pledge breaks) that implies -- that is, HD when it's available and upconverted SD when it's not -- not just to make satellite carriage more attractive but because their "main" program channel looks pretty pathetic next to their HD channel and that of their commercial colleagues.  PBS is moving to help stations do this, but I fear we'll be missing out on early adopter interest if we don't move fast.  For my stations, that means not waiting for PBS.  --Dennis

The Bottom Line

Michael Rosenblum says that this chart "contains the inevitable seeds of the future. " Click to enlarge image.

He writes:

... Suddenly we move from 3 networks to 500 cable channels. The limitation on number of channels is now no longer the EM spectrum, but rather the capabilities of coaxial cable to carry signal. And as a result, there are a lot more channels. And a lot more channels means a demand for a lot more content.  ¶  In fact, we go from a gross demand for content of 64,000 hours in 1974, to nearly  4.5 million hours in 2003.  ¶  However, at the same time as the number of channels is expanding, the size of the audience remains the same. Now there are many more channels dividing a pie that is essentially the same size as it was in 1973. ...

Link:  Rosenblumtv.  This is important reading.  --Dennis

Average U.S. Home Now Receives A Record 104.2 TV Channels

The Nielsen Company has issued a new report, including the following:

The number of television channels that the average U.S. home receives has now reached a record high of 104.2 TV channels. This and other television trends were released in a report from Nielsen that highlights population, television ownership and advertising trends in the United States.

Highlights from this Nielsen study include:

• In 2006, the average U.S. home received 104.2 channels, an increase of almost eight channels since 2005 and a record level.
• As the number of channels available to a household increases, so does the number of channels tuned. In 2006, the average household tuned to 15.7, or 15.1% of the 104.2 channels available for at least 10 minutes per week.
• General dramas still dominate the broadcast networks program lineups, comprising 50% (67 of 134) of the primetime programs, an increase of four programs since last year.
• The 30-second commercial is still the television advertising standard in primetime, accounting for 57% of all commercial units. ...

Link:  Nielsen Media.  Thanks to Mari Sibley at Zatz Not Funny!.  --Dennis

Viewers Fast-Forwarding Past Ads? Not Always

Louise Story writes:

... It turns out that a lot of people with digital video recorders are not fast-forwarding and time-shifting as much as advertisers feared. According to new data released yesterday by the Nielsen Company, people who own digital video recorders, or DVRs, still watch, on average, two-thirds of the ads.  ¶  One big reason is that many people with DVRs still tune in to watch about half of their shows at the scheduled start time, meaning they must sit through commercials.  ¶  And even when people watch recorded shows later, many are not fast-forwarding through the ads. On average, Nielsen found, DVR owners watch 40 percent of commercials that they could skip over — perhaps because they like ads, don’t mind them or simply can’t be bothered. ...

Link:  New York Times.  Thanks to Michael Soper for the tip.  --Dennis

Satellite radio and digital television

The February issue of Scientific American has a worthy pair of articles of interest to broadcasters, especially to those who don't want to admit to their chief engineers that they don't know this stuff already.  The links which follow provide only a tease, so you either need to purchase rights or buy the magazine.  The first is a short article by Mark Fischetti called Song Beams that does a particularly good job explaining the urban repeaters for Sirius and XM.  The second is a more complete article by Michael Antonoff called Digital TV At Last? which, not surprisingly, is about the transition from analog to digital television broadcasting.

I've been reading (or trying to read) this magazine for 40 years and it's been a great education.  But they sure have antediluvian ideas about DRM and linking.  --Dennis

DirecTV HR20 HD DVR

I was just about to order a DirecTV HR20 HD DVR when Phillip Swann saved me from that mistake -- at least for a few months.  I normally rely on CNET reviews, but hadn't checked this one yet.  Should have done that, though, because the average user rating is only about half the 8.1 rating that CNET gave it (an unusually large number of users gave it an average 4.4).  That alone should be a warning -- normally user ratings track the professional one pretty well.  Apparently, the unit is very buggy and recent software updates haven't solved the problem.  --Dennis

Karmazin Looks Forward to Sirius TV

P. J. Bednarski reports Mel Karmizan's (CEO, Sirius Satellite Radio) Credit Suisse media conference with analysts:

... Karmazin told analysts he looked forward to Sirius TV, a planned service that will mainly air kids video, and is slated to begin next year. Sirius is targeting family vehicles with TVs in the back seat. With an antenna "the size of a hockey puck," Sirius will be able to stream video to those sets. But he said that, neat idea aside, it's not a business he expects will be a big game changer for Sirius.

Link:  Broadcasting & Cable.

Mark Schubin digital television memo, 21 Nov 2006

Mark Schubin has issued his first "Monday Memo" since mid-September, having been busy with "an explosion of media" at the Metropolitan Opera under its new general manager.  Nice to have him back.

One particularly interesting tidbit is that by 1/2008 we should see a $60 DTV set-top box from LG (their 5th generation chip is the closest thing we now have to a reliable ATSC decoder).  And, of course, there's much more to read.  Link:  OpenDTV at FreeLists.  --Dennis

Protecting Local Broadcasters - Why?

Several years ago, I chaired the PBS board's New Technologies Committee at a time stations were seeking protection from distribution of the PBS signal (the fact it was named "Schedule X" didn't help much) over the death stars, ...er, DirecTV and Echostar.  One of those classic spear-catcher roles.  Nothing gets local broadcasters blood boiling faster than the thought of being bypassed by the network or by big market superstations.  The issues are very complicated, and perhaps that's why they continue.  This time, it's the commercial stations who are fighting the distant signal battle in court vs. EchoStar.

Gigi Sohn writes (the headline on this post is from her article):

Last Friday, a District Court Judge in Florida denied the request of the National Association of Broadcasters and Echostar Communications to stay a decision of the 11th Circuit Court of Appeals that requires Echostar to stop providing “distant” network TV signals to hundreds of thousands of subscribers nationwide.  Several broadcast networks had sued Echostar, claiming that it had violated 17 USC Section 119, which gives satellite companies such as Echostar a compulsory license to import network TV signals from outside a household’s viewing area if that household is deemed to be “unserved” by a local TV station. The law basically has two purposes: 1) to ensure that those viewers who cannot receive good network TV signals can receive them and 2) to protect local broadcasters (and their advertisers) from the competition distant signals might provide.

Link:  Public Knowledge.

Kim Hart at the Washington Post says some 800,000 subscribers are effected.

I know how broadcasters feel, "cuz-I-are-one," but, friends, bypass is everywhere in the producer/aggregator/station/user value chain.  While we keep doing our version of the old Smothers Brothers "looking up in the air gag," the important long-term bypass is happening under the ground.  And it's not just the four principal satellite companies (two TV, two radio) doing it, even our viewers (e.g., YouTube) and listeners (podcasts) are bypassing us.  Check out the first graphic in this post.  --Dennis