Daily television news featuring both life-and-death developments and state- and municipal-level policy announcements have spurred a quarantine-fueled "golden age" for television, especially local news. But with the TV advertising market still anemic and Wall Street investors watching skeptically, this new golden age of television in the COVID-19 era has paradoxically brought a tremendous increase in viewership but a decline in ad revenue. This snapshot of ratings and P&L statements, however, misses the shape-shifting opportunity for TV that is underscored by the pandemic’s alteration of the way we live, do business, and consume content: Broadcast television spectrum is uniquely positioned to respond to how our lives are being fundamentally altered by the pandemic now and in the future.
Current conventional wisdom sees the paradox of broadcast television’s heightened societal relevance and revenue short-comings in, well, purely conventional terms. Reporters delivering face-masked updates on local business closures and re-openings, and doing stand-ups outside state capitol briefings and protests have made the localized nature of television more central to our lives than in memory. Indeed, the very localized nature of fast-evolving hotspots around the country heighten the importance of local broadcast TV news. But, the conventional wisdom continues, TV revenue comes from advertising, which is hurting. Local businesses are suffering and stalwart TV advertisers like the auto, hospitality, travel and restaurant sectors are sidelined, hoarding cash. What’s more, we’re told, streaming services like Netflix continue to erode the cultural significance of broadcast TV. And so, the thinking goes, TV’s spike in relevance is an interesting, but ultimately economically meaningless parenthesis in its steady decline.
There are an array of counterpoints, as the industry reports signs of returning ad-spending and retention of younger audiences. But these points, while critical to quarterly investor calls, necessarily view the analysis through the same jeweler’s loupe of short-term earnings. Rather, the quarantine gives us a telescopic glimpse into a changed future, accelerated by what now seem like temporary and idiosyncratic accommodations. This looming future is one made more possible by broadcasters’ secret weapon, hidden in plain sight: television spectrum.
Understanding this potential requires, first, an examination of the nature of broadcast television spectrum. The same conventional view that miniaturizes the business model of TV, might also misperceive TV spectrum as the antiquated over-the-air delivery system by which TV station programming reaches rabbit-ear antennas at home. But at the very time that we are quarantined inside, the very nature of the spectrum around us is changing.
Even amid delays caused by the pandemic, broadcasters’ pilot programs in test markets culminated in Las Vegas with the launch of the first multi-station, full-power commercial deployment for a new standard for utilizing the next generation TV transmission standard known as “ATSC 3.0”. The ATSC 3.0 standard enables existing TV spectrum to carry massively expanded quantities of broadband data at high speeds to deliver advanced broadcast internet services. Naturally, its most direct impact will be to change the nature of the TV experience, including impeccably sharp picture quality known as ultra HD, interactive functionality, and multiple program tracks with camera angles and audio commentary. But the true promise of ATSC 3.0 is to allow broadcasters to offer innovative internet services that take advantage of broadcast spectrum’s inherent technical advantages.
The FCC authorizes broadcasters to use ATSC 3.0 to offer “ancillary and supplemental” spectrum services beyond traditional TV broadcasting. Just this week, FCC Commissioner Brendan Carr revealed that the FCC plans to further maximize the potential of broadcast spectrum by exempting broadcasters from the FCC’s station ownership attribution rules when they enter into lease agreements with other stations in the same market to aggregate excess spectrum. Such aggregation among stations would facilitate the creation of regional and national scale for such new broadcast internet services. Commissioner Carr also suggested the FCC will propose a variety of deregulatory measures to ensure the FCC treats these new broadcast internet services like largely unregulated broadband internet access and OTT streaming services.
The result is that the robust one-to-many architecture of ATSC 3.0 standard may provide the essential, and perhaps ideal, means for supporting mass deployment of autonomous vehicles. The pandemic has shown the potential need and value in drone delivery of food and packages. The desire for “contactless” home deliveries could continue, whether for convenience or as a means of reducing exposure to public spaces.
Unlike many other bands of spectrum under consideration for autonomous vehicle navigational support, such as upper band 5G spectrum, broadcast television spectrum is far less vulnerable to latency and obstructions and can serve wide areas efficiently. In addition, unlike with 5G, broadcast stations are already constructed and serving millions of consumers in skyscrapers, cattle ranches and retirement communities all over the country. Before the pandemic (if we can remember such a time), we can recall wildfires and floods that closed roads and devastated entire areas, often making still more isolated those areas already poorly served by wireless telecom networks. It is easy to see the role that drone delivery could play, but it has been more challenging to envision it on a mass scale. ATSC 3.0 makes that possible.
The same is true for driverless cars and trucks. The use of ATSC 3.0 could repurpose TV’s vast broadband capacity and ability to easily penetrate buildings and tunnels to make autonomous vehicles truly connected and capable of meeting the need to constantly download data on the open road with immediacy, reliability, and massive scale. Just as the interstate highway system was the ultimate transformative development in the potential transcontinental network of trucking, the advent of self-driving vehicles still requires the equivalent in a data communications medium. In recent months, the pandemic has exposed the fragility of our logistics and delivery systems. The rich and reliable capacity of broadcast spectrum and its ubiquitous reach can be the key infrastructure to a driverless system for the delivery of raw materials and finished goods across the country from factory gates to distributors to our front-doors.
Moreover, this is not an exhaustive list of ATSC 3.0’s potential. The open architecture of ATSC 3.0 opens the door to an array of innovation. Industry observers also anticipate new consumer and enterprise internet of things (IoT) services, smart cities and agriculture, telemedicine, competitive sources for OTT video and other applications, and even help the deployment of wireless 5G networks by absorbing 5G data from cellular systems.
Even within the home, ATSC 3.0 presents a key to adapting to our changed lifestyles. The quarantine did not create our voracious appetite for quality in-home programming and binge-watching, but it has met and enlarged that demand. This accelerating trend – and the corresponding need to deliver rich programming into the home – will only continue to grow.
Already we are seeing the release of major films shift from movie houses to premium video-on-demand. Broadway, regional theaters, and concert venues may adapt to limits on live audiences by beaming performances into our homes. What sports events may look like is anyone’s guess as professional and collegiate sports and the viewing public adapt to public health considerations. But imagine how that equation may change if television provides an exceptionally vivid and multifaceted in-home experience, from audio and picture quality to multiple camera angles, audio tracks and perhaps even the potential to simultaneously play an esports version of the game and call the next play, in real time. With the overlaying developments of the pandemic and ATSC 3.0, both the live and at-home experiences are on the cusp of tectonic shifts.
Yet, the promise of the full potential of ATSC 3.0 feels elusive. The industry’s near-term focus is on adapting television sets to this next generation television spectrum standard. For now, the immediate needs of technical adoption and Wall Street’s inevitable focus on the next quarter’s earnings creates a dead spot in TV’s full potential. Viewing television through the tight-focused lens of ratings-shares, ad spending, and cable-carriage dollars, results in valuing a Pegasus for its ability to pull a plow. Rather, television is uniquely positioned to respond to our still evolving ways of living with COVID-19 and to play a key role in transforming our future. Just as our notion of a “phone” now refers to a staggeringly complex, multifunctional, handheld computer, “television” is poised to become a futuristic gateway to a new world of commerce and culture.
Marc S. Martin is a partner at Perkins Coie.
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