What’s the current Auction Value of the TV Broadcast 600MHz Band? Comparing recent spectrum transfers with the 2008 FCC 700MHz auction and prior transactions.

Nearly two years ago (March 2010), the FCC released its National Broadband Plan announcing “the 600 MHz DTV Spectrum Grab” proposing that 120 MHz of TV broadcast spectrum be vacated and auctioned off for broadband wireless use, expected to benefit the wireless providers like AT&T, Sprint, T-Mobile and Verizon. We revisit the question whether a future DTV 600 MHz band auction can match the relative financial success of the 2008 FCC 700 MHz auction, by estimating the current auction value of the DTV 600 MHz band, if an auction was held in 2012.

The “FCC Doomed” TV Channels . . .
UHF Ch.31 through Ch.51

The FCC’s National Broadband Plan specified that 120 MHz of UHF spectrum was to be removed from the TV broadcast band and auctioned off as broadband wireless spectrum to highest bidders in 2012, subject of course to receiving the necessary congressional approvals. The spectrum has been dubbed the 600 MHz band, ranging from 572-698 MHz, and located immediately below the 700MHz band which was removed from the TV broadcasters and auctioned off in a 2008 auction resulting in the finalization of the DTV transition in 2009. The 600 MHz band is presumed to include Ch.37, for many years assigned to non-broadcast use, thus the Author believes that the 600 MHz band comprises 126 MHz when Ch.37 is included.

The TV Broadcasters may stand to lose 20 UHF channels in this “FCC Spectrum Grab”, comprising channels 31 through 36 plus channels 38 through 51, totaling 120 MHz

The remaining TV OTA broadcast band will then total 12 VHF channels plus 17 UHF channels, for a total of 29 DTV channels. Out of the currently active 49 DTV channel assignments, over 40% of the DTV spectrum is proposed removed, requiring the reassignment (or going permanently off air) of some 682 currently operating DTV channels across the U.S. However, this article will not discuss in any detail the substantial problems of such reassignment, but rather look at the likely spectrum value if an auction was held in 2012.

Revisiting the FCC 2008 DTV (700 MHz) Auction

In the wireless telecom industry, the value of spectrum is often quoted in $/MHz-Pop, to enable a direct comparison of spectrum transaction values of different sizes (bandwidth and population covered).

$/MHz-Pop is calculated as follows:
Total price paid for license(s)
Divided by (Bandwidth in MHz x Population covered by the license)
= $/MHz-Pop
Example:
Company X paid $1 billion for a 6 MHz license covering 100 million population
6 x 100 million = 600 million
Divide $1 billion by 600 million = $1.67/MHz-Pop

FCC’s 2008 700 MHz band auction (Auction #73) covered the part of the TV broadcast spectrum from UHF channels 52 through 69 (18 channels or 108 MHz) which had not been auctioned off earlier or already assigned for public use. 62 MHz was actually offered in the auction, of which a total of 52 MHz of spectrum was actually bought. What about the balance of 46 MHz (108 MHz less 62)? The “missing” 46 MHz had already been spoken for in a 2002 and a 2003 auction (22 MHz sold) and Ch.63/64 and Ch.68/69 (2×12 MHz) was reserved/assigned to public safety. Included in the 62 MHz offered, a 2x 5MHz pair was offered for “private/public partnership” but the FCC reserve amount was not met, as no private party wanted to take on the associated “public baggage”. This accounted for the 10 MHz not sold in the 2008 auction.

FCC completed the 700 MHz band auction in March 2008, collecting nearly $19 billion for the U.S. Treasury. The average price paid was about $1 per MHz-Pop if AT&T’s inflated bid for nationwide Block B ($2.25 per MHz-Pop) is discounted, as AT&T apparently really wanted spectrum adjacent to the 12 MHz block (2x 6 MHz) purchased from Aloha Partners before the 2008 auction, in October 2007 for $2.5 billion ($1.06 per MHz-Pop) covering nearly 200 million U.S. residents. AT&T average price per MHz-Pop for all 24 MHz (equivalent of 4 DTV 6 MHz channels) was $1.65.

The Chart plots the purchase prices in $/MHz-Pop vs. frequency band obtained by FCC auctions and in major private buy/sell transactions over the last few years (up to Q3-2010), represented by RED dots. BLUE dots are auction sales for local DTV OTA station licenses. GREEN dot is AT&T Aloha transaction, and the ORANGE dot is the combined value of the nationwide sale of Ch.56 by DISH and Qualcomm (separate winning bids).

At the lower price end for the 700 MHz band is the sale of nationwide Ch.56, where DISH purchased part of the coverage for $712 million while Qualcomm purchased the balance for $555 million, both added up to $1.3 billion or only $0.72 per MHz-Pop. Ch.56 was not paired, thus at the time not of sufficient priority to the wireless providers to bid it up higher.

Resulting Averages – FCC 2008 Auction #73:
52 MHz of bandwidth for $19 billion

Overall $/MHz-Pop = $1.22
($19 billion / 52MHz x 300 million population)
Average per MHz for nationwide coverage = $365 million
Average per 6 MHz for nationwide coverage = $2.2 billion
(But, remember Ch.56 “un-paired” nationwide sold for “only” $1.3 billion)
(Wireless Providers prefer “paired and separated” spectrum)
Total “scaled” value for 120 MHz of nationwide coverage = $44 billion
(Based on the overall average of $1.22/MHz-Pop achieved in the 2008 Auction 73, applied to the 120 MHz FCC now wants to grab from broadcasters in the 600 MHz band)

The Most Defining “TV Channel” Spectrum Transaction since the 2008 FCC Auction:
AT&T buying Qualcomm’s FLO-TV Ch.55/56

The largest recent (700 MHz) transaction for pure spectrum licenses (no ongoing business operations or customers/subscribers included) seems to be AT&T’s purchase of Qualcomm’s spectrum holdings after Qualcomm announced in the fall of 2010 that they would end their wireless TV service (FLO TV) on nationwide Ch.55 by early 2011. A deal was made between AT&T and Qualcomm in late 2010 that AT&T would pay $1.93 billion for Qualcomm’s nationwide Ch.55 and major metro coverage Ch.56. The deal was very recently approved by FCC and closed just a few weeks ago.

Qualcomm’s Ch.56 licenses included the greater metro areas of New York, Los Angeles, San Francisco, Philadelphia and Boston, covering an estimated population of nearly 80 million. When we divide up the $1.93 billion purchase price proportionally between Ch.55 (nationwide) and Ch.56 (major metro areas), the $/MHz-Pop ends up at about $0.83 or more than 30% lower than the Auction #73 average of $1.22. Again, these are un-paired blocks, although Ch.55 and Ch.56 are adjacent but not “guard band” separated.

This AT&T/Qualcomm transaction may be very important as an indication of declining spectrum valuation in a near future FCC 600 MHz auction, and will reduce AT&T’s appetite for buying expensive 600 MHz spectrum for the following reasons:

• AT&T gets an additional 12 MHz (Ch.55 and Ch.56 – 2x 6 MHz) of “prime beachfront 700 MHz property” in New York City, Los Angeles, San Francisco, Philadelphia and Boston, in the top population centers where broadband wireless capacity is needed in the longer term.
• AT&T has stated that it intends to “deploy this spectrum as supplemental downlink, using carrier aggregation technology. This technology is designed to deliver substantial capacity gains and is expected to be enabled with the completion of 3GPP Release 10. AT&T expects to begin deploying this spectrum once compatible handsets and network equipment are developed.”
• Note that 3GPP Release 10 will be marketed to consumers as 4G-LTE, as it is comparable in speed to the “4G-LTE offerings” by Verizon, T-Mobile and Sprint. In the consumer space, downlink speed (bandwidth demand) needs to be much faster than uplink speed, as more and more (one way) TV-video program streams are delivered to smartphones and tablets in the future.
• AT&T’s total investment in 700 MHz spectrum is now estimated at around $12 billion: $6.6 billion from the FCC’s 2008 auction + $2.5 billion paid to Aloha Partners + $1.9 billion for the Qualcomm purchase + smaller local deals including Vulcan/Paul Allen’s 700 MHz spectrum in the Northwest.

Spectrum Bargains in the 600 MHz Band?
Did the FCC overestimate the need for Spectrum?

Yes and yes, in the Author’s opinion. AT&T and Verizon combined have so far invested nearly $24 billion in reclaimed UHF broadcast spectrum (700 MHz band), while Sprint and T-Mobile have largely ignored the 700 MHz band to favor and develop their spectrum holdings in the 1900 MHz and AWS bands (Advanced Wireless Services: 1700/2100 MHz). Some experts believe that AT&T and Verizon now have sufficient reclaimed UHF broadcast spectrum (700 MHz band) to meet their expected 4G-LTE capacity demand for several years, and that they may not come to the auction table in 2012 with the really big multi-billion dollar checks to buy 600 MHz spectrum, as they did in Auction #73.

Verizon just agreed to acquire AWS spectrum from SpectrumCo (joint venture of Comcast, TWC, Brighthouse) for $3.6 billion and from Cox for some $300 million, adding up to a $4 billion spectrum investment NOT in any reclaimed UHF broadcast spectrum. As a result of the failed merger between AT&T and T-Mobile, AT&T is obligated to transfer AWS spectrum to T-Mobile as part of the break-up fee, which may actually increase AT&T’s interest in buying 600 MHz spectrum.

AWS spectrum is suddenly becoming more popular amongst the wireless broadband leaders, partly because of the higher cell density requirement in large urban centers where AWS frequency propagation may be more predictable over shorter distances than the 600 MHz band. But perhaps more importantly: The national 4G-LTE providers are convinced that it will take years to clear the broadcasters from the 600 MHz broadcast spectrum, and AWS seems to be “today’s choice supplemental spectrum” to work with the current 700 MHz band for cost effective and soon 4G-LTE expansion.

The Author believes that, based on the AT&T-Qualcomm deal and the above analysis, the 600 MHz TV broadcast band (the “Doomed” TV Channels 31 through 51) has a current 2012 auction valuation in the range of $0.75/MHz-Pop, perhaps less if a large part of the 120 MHz FCC Spectrum Grab is offered in a 2012 auction.

Yes, the FCC overestimated the demand for wireless broadband spectrum in their March 2010 National Broadband Plan and in their post-report activities, done in an atmosphere of trying to find ways to raise billions of dollars for the U.S. Treasury in a relatively short time. The Author believes that the right time frame for a successful 600 MHz spectrum auction will be after 2013, perhaps as late as 2015, but not in 2012.

So, if 100 MHz (holding back 20 MHz for public use) in the 600 MHz band was all sold at a 2012 auction at an average value of $0.75/MHz-Pop, the gross take for the U.S. Treasury would total about $23 billion. Nationwide licenses for 24 MHz paired blocks (2x 12 MHz) would each go for $5.6 billion which may seem attractive to Verizon and AT&T. Within the 100 MHz spectrum, there are a possible four (4) such 24 MHz blocks (with guard bands), or one 24 MHz block for each of the Big 4 Wireless Broadband Providers (AT&T, Sprint, T-Mobile and Verizon).

Which corporations with sufficient interest in wireless broadband (and wireless/mobile TV) may have the financial muscle to bring big billion dollar+ checks to a 2012 auction? The short-list includes AT&T, Verizon, Sprint and T-Mobile, in addition to Apple, DISH, DirecTV, Google and Microsoft. Which would or could bring five billion dollar+ checks? Only AT&T and Verizon. Don’t hold your breath in 2012.

In Auction #73 (700 MHz band), the FCC established reserve pricing for the various blocks of spectrum, which totaled $8.7 billion for the nationwide 52 MHz actually sold, or about 46% of gross auction revenues of $19 billion. The average reserve pricing scaled to a 6 MHz nationwide UHF TV channel was nearly exactly $1 billion, although the specific E-block (6MHz Ch.56) had a specific reserve of $904 million, which was purchased in part by Qualcomm and in part by DISH for a combined total of about $1.3 billion.

The reserve pricing was developed by the FCC by looking at the 2006 Auction #66 offering AWS spectrum. Thus it is likely that the FCC will use the 2008 Auction #73 as the basis for developing the reserve pricing for the 600 MHz spectrum auction. At 80% of actual $/MHz-Pop for Auction #73, the average reserve pricing will end up at $1/MHz-Pop or 33% higher than the Author’s estimate for his 2012 valuation at $0.75/MHz-Pop. The 600 MHz band auction is not likely to take place in 2012, in the opinion of the Author.

2012 Auction Value for 600 MHz DTV Channel Spectrum in Top-10 DMAs at $0.75/MHz-Pop:
What it means for TV Broadcasters . . .

The table below shows estimated valuation for each of the Top-10 DMAs in terms of a) total value of local 600 MHz spectrum, and b) value of a 6 MHz UHF channel slice, at an average price of $0.75/MHz-Pop based on selling 100 MHz nationwide of the 600 MHz band (reserving 20 MHz for public use) for gross auction revenues of $23 billion in 2012.

Note that the DMAs used by the TV broadcasting industry does not match the geographical areas used by the FCC for wireless industry purposes, but the table below gives a good indication of the value of the spectrum as it is based upon the estimated population of each DMA. 2011-2012 DMA ranking and TV households are courtesy of Nielsen. Population is estimated by multiplying the TV household number by 2.5 (persons per TV household).

In the New York DMA, with an estimated population of 18.5 million, the 100 MHz of spectrum (20 MHz reserved for public use) in the 600 MHz DTV broadcast band may be valued at about $1.4 billion at the current “depressed” estimated 2012 auction valuation of $0.75/MHz-Pop. A 6 MHz DTV channel slice in the New York DMA is thus auction valued at $82 million, just the 6 MHz spectrum. Comparatively, if a 2012 auction matched the $1.22/MHz-Pop obtained in the 2008 Auction #73, the 100 MHz of New York spectrum would be worth well over $2 billion, and the 6 MHz slice well over $100 million, to the U.S. Treasury.

Again at the Author’s depressed estimated valuation of $0.75/MHz-Pop in 2012, in Houston (DMA #10) with about 5.5 million population, the local 100 MHz is valued at more than $400 million, with each 6 MHz DTV channel slice at about $24 million.

To clear 120 MHz of Spectrum, DMA by DMA . . .
FCC says: Voluntary Incentive Auction first

Each and every TV station OTA on any UHF channel in the range 31 through 51 must either relocate to a channel below 31 (through a possible channel sharing arrangement or agree to relocate to a VHF channel), become just a local cable channel or simply cease to exist. That applies to all 682 TV stations currently transmitting in that spectrum range (572 – 698 MHz) across the U.S. once the Congress gives authority to the FCC. In a FCC power point presentation dated October 5, 2011, basic ground rules for a Voluntary Incentive Auction were outlined on slide 18:

The Top-10 DMAs present a massive problem

There are 197 full power TV stations OTA in the Top-10 DMAs, of which 108 (55%) are operating on a “FCC doomed” UHF channel (Ch.31 through Ch.51). In order to maximize what the bidders are prepared to pay for the 600 MHz spectrum, the time from auction to actual spectrum utilization must be as short as possible. Offering spectrum in 2012 without probability for use until 2015 (and even that year may be uncertain) will surely depress auction bids. A major reason for the financial success of Auction #73 (700 MHz band in 2008) was that successful bidders were reasonably assured by the advanced status of the DTV transition that utilization by 2009 was probable. Here, in the case of a 600 MHz band auction in 2012, utilization is not expected until 2015, perhaps later, by FCC’s own words in the National Broadband Plan, to “make it available within 5 years” (from when?). And remember that the wireless broadband providers are first and foremost interested in the Top-25 DMAs where the growth potential is and where capacity problems may first surface in the future. Rural and small town 4G-LTE potential is so small in comparison, it will not drive any auction interest.

The worst of the Top-10 DMAs: Los Angeles

Without going into details, Los Angeles (DMA#2) has 16 full power TV stations transmitting within the “doomed” spectrum, including some major network stations. With only 10 licensed full power channels below Ch.31, we’re looking at a very difficult task taking perhaps years to sort out. The 26 full power TV stations licensed to the Los Angeles DMA are actually transmitting nearly 100 TV channels OTA including many secondary multicast and a few MDTV channels. Perhaps many of the smaller TV station operations will surrender their licenses and “take the money and run”.

Remember the BAS relocation project?

Remember the recent Sprint-Nextel BAS (Broadcast Auxiliary Services) relocation, which involved some 1000 TV stations across the country which just dealt with the relocation of the microwave band used by broadcasters primarily for ENG backhaul. Sprint-Nextel spent five years and nearly one billion dollars (some say just $750 million) completing that project.

What about FCC Option 4: Choose NOT to participate?

What does it mean for a TV station currently OTA on a “FCC doomed” UHF channel? After all is said and done, will the FCC reassign a new channel to the station below Ch.31? Looks like any TV station on a “FCC doomed” channel must really participate, one way or another, to control its destiny, while any TV station currently OTA below Ch.31 may choose NOT to participate without any penalty (like channel sharing) by keeping its current channel assignment? TV station OTA licensing (or renewal) is NOT tied to auction participation, FCC says, but the FCC surely will retain the authority to “repack and move” channel assignments.

Sharing what proceeds?
TV Stations to set “Reserve Pricing” . . .
FCC to pay for “Repacking Costs”

The FCC says that participation is voluntary and that each participating TV station will share in the proceeds from the 600 MHz band auction. The FCC further states that the auction must take place first, after which the repacking of remaining TV stations OTA will be accomplished, with the outcome that the 600 MHz band (572 – 698 MHz) or major part of it will be available for wireless broadband use (or any other permitted use) by the successful bidders.

If you’re a TV station in Los Angeles OTA above Ch.30, the Author’s estimated 2012 gross auction value for a 6 MHz slice of DMA #2 spectrum is $62 million based on $0.75/MHz-Pop. Actually, it does not matter whether your station is in the “FCC doomed” spectrum or below in the “safe” spectrum, because your participation will benefit the evacuation and repacking regardless.

How much of the $62 million should be your share?

Well, the FCC is trying hard to make the 600 MHz band spectrum evacuation highly competitive (to reduce the sharing of proceeds), by requiring the participating TV stations to choose the level of participation AND to set a reserve price as a condition of participation. The level of participation offers varying (presumed) degrees of proceeds sharing levels:

Most attractive to the FCC: Option 1 = Go off the air (6 MHz evacuated) = Highest share

Least attractive to the FCC: Option 4 = Not participating = NO share

Which of Option 2 (Channel Sharing) and Option 3 (move from UHF to VHF) is most attractive to the FCC depends upon a number of factors. In Los Angeles, there is no VHF low band TV station, thus there are potentially three (3) non-adjacent VHF channels available (Ch.2 & 4 & 6) subject to TV stations in nearby DMAs operating on those channels and thus causing interference. Also (presumed) to be very attractive to the FCC is “moving to VHF” AND “channel share” if that is an option, which should command a high share of proceeds.

Channel sharing is of course subject to two (2) TV stations agreeing to channel share. Just one TV station within the DMA choosing that option will not make it. The channel sharing option may be most effective when two (2) TV stations agree together to channel share in its FCC submission. Ideal candidates for this would be duopolies, such as KCBS/KCAL and KTTV/KCOP in Los Angeles, but only if the owners have no plans for multicast or MDTV, as we assume that major network stations must transmit HDTV on the main channel leaving little or no bits left for secondary multicast or MDTV.

So, in the “worst DMA” of Los Angeles, a total of 16 full power TV stations are required to vacate the 600 MHz band. This task seems impossible unless the FCC is prepared to share proceeds at a very substantial level.

The Author believes that a 50% share of the 6 MHz local auction value (~$30 million in LA) is not unreasonable for going off the air, with a 25% share (~$15 million in LA) for channel sharing or move to VHF.

So, in Los Angeles, if all 26 TV stations participate with an average proceed share of $20 million, the total shared proceeds cost adds up to $520 million, or about 50% of the total auction proceeds of about $1 billion attributable to the 100 MHz of local LA spectrum (in the 600 MHz band) if successfully sold in a 2012 auction at the Author’s estimated auction value of $0.75/MHz-Pop.

Looking at it nationally, most DMAs are not nearly as difficult as the Los Angeles market, thus if we attach a national average shared proceeds cost of 35% of the national gross of $23 billion (100 MHz spectrum covering 310 million population at $0.75/MHz-Pop) in a successful 2012 auction, the net auction proceeds will be $15 billion BEFORE paying for “repacking costs”. Net proceeds to the U.S. Treasury may be in the $12 billion range. A measly amount considering trillion dollar+ deficits and the highly complicated proposed “spectrum grab process”.

In the opinion of the Author: Very small.

(Is local content, news, weather, traffic the Mobile DTV advantage?)

Mobile Television competition is brewing, between local TV broadcasters starting to deliver Mobile DTV as a part of their ATSC OTA transmission and the 4G wireless providers (AT&T, Sprint, T-Mobile and Verizon) offering both free and subscription-based television service to display on smartphones and tablets. This article explores the current competitive landscape and whether local news, weather and traffic, and local content, may be material in achieving Mobile DTV long term existence by the broadcasters. There are 3 primary launch issues for Mobile DTV as it attempts to compete with 4G TV.

Briefly, the basic ATSC M/H (Mobile DTV) standard was finalized in 2009, after about two years of committee work following successful concept demonstrations at the CES and NAB in 2007. Several key manufacturers provided substantial support in the process, working with the OMVC (Open Mobile Video Coalition) which membership consists of group station owners covering about 800 full power TV stations across the U.S. By October 2009, about 30 TV stations were on the air with Mobile DTV. Two years later, as of November 9, 2011, surprisingly, only 83 TV stations seem to be on the air with Mobile DTV according to RabbitEars.info. Earlier this year, the Author projected that over 160 TV stations would be on the air with Mobile DTV based upon about 110 TV stations stating that they planned such services by the end of 2011, adding to the 50 or so TV stations already transmitting Mobile DTV back then. But now it seems that only about 30 to 40 of the 110 actually will be on-Mobile DTV-air by end 2011. With the OMVC members controlling more than 800 TV stations, what is the problem?

Mobile Television over broadband wireless has experienced substantial growth with the emergence of 3G several years ago, but particularly over the past year with the building out of the 4G wireless network capabilities by the major wireless providers AT&T, Sprint, T-Mobile and Verizon. 4G service delivers download speeds exceeding 3 Mbps and upload speeds exceeding 1 Mbps, sometimes significantly higher, supporting relatively good quality full motion video with audio as required by live streaming of TV programs. Most new models of 4G smartphones now feature a display of about 4 inches (diagonal). The Author’s T-Mobile HTC Sensation 4G pictured in this article features a 4.3-inch display with quarter HD resolution (960×540) providing a convenient and satisfying personal on-the-go high resolution viewing experience. Is Mobile DTV serious competition for broadband wireless mobile television? Read on for Author’s opinion.

Issue 1 – A Start-up Audience Problem:
Millions of Smartphones vs. Thousands of Mobile DTV Receivers

A major initial problem facing the TV broadcasters in this competitive start-up phase is that the wireless service providers already operate with an installed U.S. base of 4G smartphones counted in the millions, and growing at an exponential rate, and adding millions more for existing 3G devices (including.Apple iPhones) also capable of receiving streaming TV programs, while the U.S. installed base of Mobile DTV capable receiver/displays is currently estimated to be only in the thousands and limited to portable single purpose (DTV/Mobile DTV) use only.

Will the public at large accept the proposition that they need to buy and to carry with them not only their (essential) smartphone, but also a second (Mobile DTV) receiver/display for enjoying their favorite local TV station while on the go? Not likely.

And this point of view seems accepted by the major consumer electronics manufacturers and the CE retailers. The Best Buy website offers only one Mobile DTV device in November 2011, which is the year-old LG DVD player with 7-inch display and Mobile DTV tuner. Only available on-line, not stocked in the stores. The RCA-branded DTV/Mobile DTV receiver with 7-inch display pictured above is offered by an independent Korean-based supplier together with several additional portable DTV/Mobile DTV products, sold on-line through a California-based distributor.

Issue 2 – The Missing Link:
4G Smartphones with integrated Mobile DTV Receiver?

Logic says that most consumers will NOT carry more than one (pocket-size) smartphone/display device, although a laptop, netbook or tablet may also be carried in the briefcase. The “missing link” to accomplish fast and wide distribution and potential substantial viewing of local Mobile DTV transmissions is the smartphone when fitted with a built-in Mobile DTV receiver. LG Electronics has been active in showing Mobile DTV enabled smartphone and receiver prototypes, but it takes a major broadband wireless provider to offer such “dual service” smartphones to the public before any manufacturer makes it available.

Will AT&T, Sprint, T-Mobile and Verizon offer Smartphones
with built-in Mobile DTV tuner/receiver?

Mobile DTV OTA reception requires an RF tuner section capable of tuning in all current DTV OTA channels, with a current frequency range covering VHF and UHF bands from 54 MHz to 698 MHz. The 698 MHz upper end will be lowered to an estimated 578 MHz if the FCC is successful in their “spectrum grab” efforts over the next several years, which will remove the 578 – 698 MHz spectrum from TV broadcasting and auction it off for broadband wireless purposes. It is generally agreed that a built-in non-protruding antenna will not work for the VHF TV broadcast bands (54 – 216 MHz), and it is not likely that future smartphones will be fitted with pull-out whip antennas as this would still be an uncertain fix for a difficult VHF signal acquisition. Even Mobile DTV UHF OTA signal acquisition by a built-in non-protruding antenna will likely be difficult.

Mobile DTV is generally talked about as a free-over-the-air service, just like TV broadcasting has been for years, although fee-based Mobile DTV services are being explored. Remember Qualcomm’s FLO TV, which shut down in early 2011 for lack of consumer support. FLO TV was transmitted over a nationwide network of local transmitters, all on UHF TV channel 55 with a Qualcomm proprietary modulation scheme delivering 16 (lower resolution) TV channels (largely major cable channels) within a standard 6 MHz TV channel (Ch.55). FLO TV was distributed through agreements with Verizon and AT&T where those wireless carriers offered several models of cell phones with color video displays and with built-in FLO TV Ch.55 tuner/receiver. Verizon’s FLO TV offering was named V-Cast with a monthly subscription fee in the range of $15, which, presumably was shared with Qualcomm. FLO TV was also offered directly to consumers over-the-air (bypassing Verizon and AT&T subscription), then requiring the consumer to buy a dedicated FLO TV receiver/display (and a monthly subscription directly from Qualcomm), just like the need to buy a single purpose Mobile DTV receiver/display in order to enjoy Mobile DTV today. FLO TV service lasted from late 2007 to early 2011 (3+ years), before the plug was pulled by Qualcomm reportedly aided by AT&T and Verizon not wanting to renew, partly because such would require the wireless providers to continue to offer “dual service” smartphones (with the additional FLO TV Ch.55 tuner/receiver built-in) in an uncertain consumer demand and coverage environment..

Another issue is the difficulty for the broadband wireless providers to justify to charge for streaming data consumption of Mobile DTV as it is received OTA through the separate built-in Mobile DTV tuner which does not tax the 4G broadband wireless pipe. To compensate for the lack of data consumption revenues, monthly subscription to Mobile DTV service through the wireless providers’ smartphones may require a monthly fee higher than the “customary” $10 to $15, which may not support to develop a mass market demand. The wireless providers may worry about that Mobile DTV-over-built-in-receiver may siphon off TV watching over 4G, reducing billable streaming data consumption. There may be no sufficiently attractive business plan for Mobile DTV over smartphones in the minds of the broadband wireless providers. In other words, Mobile DTV broadcasters may need the 4G wireless providers to succeed, while the 4G wireless providers may be of the opinion that they don’t need or want the Mobile DTV broadcasting to be received by their smartphones. But there may be one essential area of interest: To deliver comprehensive local news, weather, traffic and local content to their 4G TV subscribers in a managed data-billable approach.

Congress have the ability to mandate that smartphones must have built-in Mobile DTV receiver capability, as they did back in the 1960s directing that all TV sets sold in the U.S. must have built-in UHF tuner. This is not likely to happen to the Mobile DTV issue, for several reasons.

CE manufacturers are prepared to invest in trial programs, but if the consumers don’t respond (directly or indirectly), the manufacturers will fast lose interest. This seems to be the case with Mobile DTV. The Author believes that the failing of FLO TV and the slow rate by which TV stations are actually going on air with Mobile DTV have caused most CE manufacturers to question whether Mobile DTV is a profitable mass market business opportunity for them, and taken a-wait-and-see attitude before bringing Mobile DTV products to market.

Issue 3 – Local and Regional Coverage:
One “Big Stick” DTV Antenna vs. Hundreds of Local Cell Towers:

A TV station on the air with Mobile DTV is obviously only addressing the local DMA audiences with its OTA transmission, to the extent Mobile DTV enabled receivers are able to reliably acquire the signal. The TV station covers the local DMA through one “big stick” full power ATSC transmitter/antenna strategically located to yield the best possible OTA coverage of the DMA. Remember that less than 20% of all TV households rely on OTA reception, with about half of those (~10% of all TV households) exclusively. Many of these viewers may require much more than the old “bow tie antenna” to enjoy OTA reception of DTV (not Mobile DTV) in their homes. Mobile DTV is not intended for in-home use. Although a case can be made for such use, any Mobile DTV business plan must be based on outside-the-home use, viewing while being on-the-go.

Also remember: the Mobile DTV signal is an integral part of the ATSC DTV OTA channel transmission, and NOT transmitted on a separate carrier, thus you need to acquire the DTV channel carrier in order to extract the Mobile DTV program. That’s why if you’re on-the-go but stationary (i.e. sitting at the airport lounge), if Mobile DTV OTA is available, then the primary DTV program is generally also available but with less reliability. (The RCA-branded Mobile DTV receiver/display pictured in here offers dual mode Mobile DTV and DTV.)

So, then, how reliable is Mobile DTV acquisition within the DMA/DTV coverage map?

But first, a few words about 4G wireless service, which is based on cellular architecture, meaning that hundreds of cells are scattered throughout the metropolitan area (the DMA in broadcast terms) where each (relatively small) cell area has its own transceiver base station, rather than one “big stick” DTV antenna approach requiring hundreds of kW of effective radiated power. While the single “big stick” antenna serves the entire DMA comprising thousands of square miles (a 60-mile radius circle covers over 11,000 square miles), each cell base station only serves several square miles, less in urban settings but more in rural areas. Remember, DTV broadcasting is a one-way transmission, while cell phone communication is by definition a two-way process. With extremely limited power available in any portable cell phone, the coverage area of each cell is limited to make sure that the cell phone’s limited transmit power is sufficient to reach and reliably communicate with the closest base station.

The Author is based in Los Angeles, but has had the opportunity to spend significant time in the greater NYC area over the past two months, temporarily based in the Danbury, Connecticut area which is part of the New York DMA. Danbury is about 50 air miles north-north-east from the Empire State Building in Manhattan, the “antenna farm” for DMA #1. Driving and commuting options to the business areas of Stamford/Greenwich, Westchester County and Manhattan include interstate highways, parkways, buses, subways and Metro North railroad, with sufficient commuting time for commuters to take advantage of desirable mobile television offerings.

The Author has conducted mobile television field tests in the New York DMA over the past two months using his RCA DTV/Mobile DTV receiver with pull-out antenna and his T-Mobile HTC Sensation 4G smartphone, recently mounted on the dashboard of his SUV (see picture above), with the following results:

• Mobile DTV receiver scanned (when located at the northern tip of Manhattan) and found three (3) Mobile DTV channels OTA: WNBC on Ch.28, ION on Ch.31, WNJU on Ch.36
• Driving north from Manhattan through Riverdale and Yonkers (10+ miles from Empire State Building), Mobile DTV reception was lost when driving through low ground, becoming very spotty and unreliable approaching White Plains (15+ miles from Empire State Building). Once past White Plains, Mobile DTV reception was nearly non-existent. The HTC Sensation 4G was selected to stream Fox News (cable channel) through the T-Mobile TV service, which stayed connected from Riverdale back to Danbury except for several shorter interruptions (indicated by “buffering”) when transitioning from a 4G cell to a 2G cell and then back to a 4G cell driving north on the parkway. 2G does not have the download speed to support live TV streaming. T-Mobile does not have 3G, which would have supported live TV streaming. However, the good news for T-Mobile smartphone users is that the 2G cell locations are likely to be upgraded to 4G soon throughout larger metropolitan areas. That’s the great advantage of cell-based architecture over the single “big stick” transmitter antenna approach: upgrading a cell from 2G to 4G service is technically generally easy, and, of course, as is adding new cells to cure dead areas and isolated suburban communities where service is desirable. The TV station’s “big stick” antenna may alter propagation pattern a bit (and increase ERP if permitted by the FCC), but such may not materially improve the Mobile DTV coverage within the DMA’s dead spots.
• Starting from Danbury driving south to White Plains on I-684 (see DMA map below), the Mobile DTV receiver was set to search for and lock on WNBC Mobile as soon as available. The HTC Sensation 4G was set to streaming Netflix movie leaving Danbury. WNBC Mobile did show up on the Mobile DTV receiver entering White Plains (about 20 air miles from the Empire State Building), although spotty. The HTC 4G kept on streaming the Netflix movie all the way from Danbury to White Plains, with three relatively short interruptions (again indicated by “buffering”) when the HTC smartphone transitioned from a 4G cell to a 2G cell, and then back to the 4G cell.
• Earlier tests in Northern New Jersey (Wayne area, about 18 air miles from Empire State Building) indicated difficult Mobile DTV receiving conditions, while good Mobile DTV receiving conditions exist on Staten Island (relatively flat and line of sight to the Empire State Building about 10 to 15 air miles away).
• No Mobile DTV reception sitting inside American Airlines Admirals Club at the JFK Airport. HTC Sensation 4G delivered Netflix movie as well as T-Mobile TV (Fox News selected) without any problem.

So, we ask again, how reliable is Mobile DTV acquisition within the DMA/DTV coverage map?
Regrettably, the Author’s New York field tests are not very encouraging in supporting reliable Mobile DTV service for “street level” on-the-go consumers, at least not in the New York DMA where the topography is challenging, although the hills and valleys are far from extreme. It appears that, unless you have reasonable line of sight to the “big stick” antenna (or major reflections), the Mobile DTV service beyond 15 miles or so from the TV transmitter may be less than acceptable or non-existent.

4G wireless broadband TV program delivery seems superior in reliability and availability in large area DMAs where there are topographic challenges.

It is interesting to note, however, that the Author’s Mobile DTV experience from his home town of Los Angeles is better than the New York experience reported in here. But even in DMA #2, the 4G seems superior in reliability and availability overall.

Bear in mind that the Author’s test facility was limited by using a pull out whip antenna on the RCA DTV/Mobile DTV receiver mounted on the dashboard of the SUV, although the HTC smartphone was quite happy to perform nearly flawlessly with the built-in antenna also located on top of the dashboard. It is possible that a properly designed car-roof-mounted Mobile DTV antenna may improve the reception reliability. The RCA DTV/Mobile DTV receiver was not tested for RF input sensitivity. The Author did not explore mobile television service in and around Manhattan.

4G Wireless Providers deliver a wide variety
of TV programs right now, but no local news!

AT&T, Sprint, T-Mobile and Verizon are all offering a subscription-based streaming TV service delivering live TV and on-demand. Their live TV often includes typical cable channels like Fox News, CNBC, MSNBC, ESPN, ABC Mobile, Disney, NBC Sports and many more. On-demand offers movies and reruns. But no one has mastered the delivery of local news, weather, traffic and local content over 4G wireless, as typically delivered by major local TV stations. Of course, any 3G/4G wireless subscriber with a smartphone (with internet service) can access your TV station’s website and stream whatever is available whether live simulcast or replays. There is definitely an opportunity here to become the leading local TV station over all of the 4G wireless providers’ networks, by offering the appropriate apps to make it very easy for the local audience to access the most powerful local news, weather, traffic and content. And this does not necessarily require any Mobile DTV OTA transmissions, but it may make sense for local TV stations to offer “duopoly-style” service between Mobile DTV and broadband wireless service at the DMA level.

The Data-rate Limitations of 4G Wireless TV

The data-rate capabilities of 4G wireless networks are NOT unlimited. One 4G cell’s current LTE implementation is likely to have a maximum downlink bandwidth capacity (transmit) of about 75 to 100 Mbps with (electrically) single antenna using 20 MHz of spectrum. This is the total concurrent bitrate capacity covering all smartphones communicating with this one cell. Using emerging LTE technologies, the 20 MHz bandwidth may provide up to 300 Mbps in the future.

Thus most current 4G cell implementations with 20 MHz base station transmit bandwidth can supply up to 200 unique TV program streams of 0.5 Mbps (500 Kbps) each, providing a high resolution viewing experience on a HTC Sensation 4G 4.3-inch screen. A Netflix stream to a smartphone may approach 500 Kbps, however, TV cable channels provided over 4G TV service (i.e. T-Mobile TV) may consume significantly less than 500 Kbps and still look very good. (A net Mobile DTV program stream of 500 Kbps is also sufficient to provide a high resolution viewing experience on the 7-inch RCA Mobile DTV screen.) Obviously, if thousands of viewers assembled within one cell area (i.e. sports stadium) are all requesting TV streams at the same time, such will cause 4G service interruptions. This is where broadcasters’ Mobile DTV one-to-many one way transmission is superior, as all viewers are receiving the same Mobile DTV stream, and where 50,000 spectators at Yankee Stadium, each with a Mobile DTV receiver/display unit, can receive the Mobile DTV OTA channel they each tune in (if there is ATSC OTA coverage at Yankee Stadium).

However, the 4G LTE standard includes a transmission mode with support for MBSFN (Multicast-Broadcast Single Frequency Network). This feature can deliver efficient one-to-many services such as Mobile TV using the LTE infrastructure, and is a competitor for Mobile DTV and DVB-H-based TV broadcast, and expected to be implemented selectively within the next 3 to 5 years as commercial applications demand.

HD News and live HD ENG make
your local TV station highly competitive . . .
and ready to tackle Mobile DTV and 4G local news

The Author believes it to be essential for any TV station, with or without a mobile television business model component in its future, to transition to full HD news including live HD-ENG at the earliest time, and to accomplish such in the most cost effective way while maintaining local news leadership with options open for the future. The ProHD family of camera/recorders is one source of highly cost effective HD news acquisition tools. With nearly everything now coming up progressive, shooting and producing in 720p60 for HD newscasts will make your TV station ready to easily scale to any mobile television streaming format, and easily cross-convert to your 1080i if your OTA format is 1080i. Or chose to shoot and produce in 1080i.

Current and future flexibility, cost effective operations and buying more for less are the virtues of the JVC ProHD range of fully professional HD camcorders and cameras, ideally suited to support a highly competitive local TV station operation for years to come.
 
# # #

DTV Multicast is the inclusion of one or more TV sub-channels in the ATSC Over-the-Air (OTA) 6MHz channel transmission bandwidth, in addition to the main DTV channel which generally is HD quality in 720p60 or in 1080i60. The Big 4 Networks have differing sub-channel policies up to now, and the recent activities in “Diginet Multicast Channels” by smaller independent low cost networks and group TV station owners are certain to test out the several Diginet business models to establish success or failure over the next couple of years. And can TV news stations expand local audience reach by multicasting local news and content?

Revisiting the ATSC OTA Transmission Pipe

The ATSC OTA digital standard provides for a net payload bitrate of about 19.4 Mbps, relying on the (by now) outdated MPEG-2 compression developed through the 1990s. The 19.4 Mbps is the maximum user bitrate to be accommodated within a 6 MHz TV channel using the mature (but robust) 8-VSB modulation scheme.

But hold your horses! The leading encoder manufacturers have seen the significant sales potential in “new technology” ATSC MPEG-2 compression products due to the demand from TV broadcasters driven by sub-channel and Mobile DTV implementation, requiring “bit-space” within the ATSC pipe, squeezing the bandwidth available for the main HD OTA program which will reduce the main HD OTA video quality. So, the leading encoder manufacturers have solved the problem by recently bringing to market new and improved efficiency ATSC MPEG-2 encoders significantly reducing the bitrate required for HD OTA broadcast quality, for both 720p60 and 1080i60.

The ABC and FOX Networks have standardized their HD OTA transmissions on 720p60, which (progressive) compression process is significantly more efficient than for interlaced 1080i60 (the CBS and NBC standard), up to recently requiring 1080i TV stations to assign a minimum of 16 Mbps for the primary HD channel, as compared with a minimum of 12 Mbps for the 720p stations, out of the 19 Mbps total pipe bandwidth. See above illustration.

Thus, under the prior state-of-the-art ATSC MPEG-2 compression technology, 720p TV stations had significantly more bandwidth available (and flexibility) for sub-channels and/or Mobile DTV than the 1080i TV stations, in general about 6 Mbps vs. 2 Mbps, leaving 1080i stations with few choices if the priority was to assure broadcast quality ATSC OTA.

Again look at above illustration. With the latest MPEG-2 compression developments (and current state-of-the-art ATSC HD encoders installed), 1080i TV stations may now drop the primary HD channel bitrate to about 12 Mbps (a saving of 4 Mbps) making more than 6 Mbps available for sub-channels and/or Mobile DTV. 720p60 TV stations may now drop their bitrate to about 9 Mbps for the primary HD channel, making a whopping 9+ Mbps available for sub-channels and/or Mobile DTV.

Independent TV stations (non-affiliated with the Big 4) may decide that their primary channel be SD and not transmit any HD channel. A primary SD 480i channel requires a minimum of about 4 Mbps ATSC encoding to be SD broadcast quality. However, those stations choosing to transmit the maximum number of ten (10) TV programs over their DTV channels, the average bitrate for each program is 1.9 Mbps producing some rather soft images on a 50-inch HDTV! It is fair to say that “old VHS quality” presentations are not serious competition for the DMAs major TV stations. (Note that in TV broadcast context in here, 60 frames or fields actually refer to 59.94.)

Big 4 Network Multicasting Examples:

 
ABC’s Live Well Network with Sub-channel in HD!
The Disney-ABC Television Group launched its (sub-channel-based) Live Well HD Network in April 2009 and is by now featured on all of ABC’s ten O&O stations in HD, plus on numerous affiliate stations in SD. The “HD” was removed from the network branding after affiliate stations were allowed to carry the Live Well channel only in SD. Sources reported earlier that WABC-TV in New York divided up the 19 Mbps payload bitrate to the 3-channel multicast as follows:

This breakdown is interesting, and confirms that the progressive 720p60 can produce “in-home OTA broadcast quality” in HD at 10 Mbps MPEG-2 compression. Presumably, all of ABC’s O&O stations use substantially the same bitrate assignment. The Author resides in Los Angeles and often watches KABC-TV (7.1), including OTA although a Time Warner subscriber. The Live Well HD channel (OTA KABC-TV 7.2) is reported also to be a p60 (rather than p30). The Author is surprised by the good HD presentation quality at 5 Mbps OTA (but remember that the programming is not fast-moving sports), quite acceptable for home viewers as a secondary HD program feed.

Incidentally, Netflix’s top HD streaming 720p30 delivery bitrate is 4.8 Mbps, but, Netflix states that very few if any can attain such a delivery bitrate from start to finish of a movie. The Author’s ISP is Time Warner, and Netflix rates TW at 2.5 Mbps average for Netflix streaming delivery. But Netflix uses H.264 (MPEG-4) compression, which is now about 1.5x as efficient as the new MPEG-2 ATSC encoders, and Netflix uses half the frame rate (p30). Thus Live Well Network OTA at 5 Mbps will have less in-home HD presentation quality than a Netflix movie over Author’s TW broadband internet service. (But still acceptable to the vast majority of home viewers from a video quality perspective.)

Live Well SD looks relatively soft, making the Author speculate that KABC’s statistical multiplexing system favors (naturally) the primary HD, then the HD sub-channel, and whatever bits are left over are assigned to the SD sub-channel. But, all in all, a seemingly well-performing well-balanced implementation of a 3-channel (dual HD) OTA multicasting operation, and one which may be duplicated by others in the future. Kudos to ABC.

It is interesting to note that ABC TV Station Group seemingly does not yet believe in Mobile DTV (ATSC M/H Mobile Television), as we have not seen any public effort to discuss their Mobile DTV strategy indicating that the sub-channel spectrum is worth more to ABC through its Live Well Network “monetization” than what Mobile DTV could possibly do. And we all know that there is no significant audience currently for Mobile DTV because receiver/monitors have not yet been purchased by the public in any mass quantity. On the other hand, ABC could very easily convert the Live Well SD sub-channel to a Mobile DTV sub-channel, if and when Mobile DTV becomes a profitable business opportunity.

NBC’s impressive 1080i HD with 2 sub-channels + Mobile DTV

The NBC Station Group is completing a multicasting infrastructure for its NBC (English language) O&Os offering a total of four (4) program streams over each station’s DTV channel. Initially obtained technical information indicates the following approximate sharing of the available 19 Mbps (and the Author reporting viewing experience with the KNBC O&O in Los Angeles):

This adds up to nearly 19 Mbps. The main 1080i60 HD program must get priority over the sub-channels through the statistical multiplex bitrate manager, if and when it needs additional bits due to highly detailed, fast moving images.

Kudos to NBC as well. KNBC’s OTA 1080i60 quality at only 11.5 Mbps is impressive, after the Author visually compared the local HD studio newscasts between KCBS and KNBC OTA direct on the Author’s 52-inch 1080p60 HDTV at normal home viewing distance. KCBS is reportedly running their OTA 1080i60 at around 17 Mbps, as KCBS has no sub- or mobile channel addition (as of September 22, 2011). The Author cannot visually detect any material difference in HD picture quality, both looking very good, with KNBC’s main HD bitrate believed to be around 5 Mbps lower than the KCBS HD bitrate.

Recall that the only video compression permitted within the Mobile DTV (ATSC M/H) is AVC (MPEG-4), and not the ATSC MPEG-2, at first glance significantly reducing the Mobile DTV bitrate share required within the pipe. However, the bad news is that the very robust forward error correction overhead required for mobile reception reliability consumes from 2x to as much as 5x the net program bitrate. Thus KNBC’s specified 1.8 Mbps embedded Mobile DTV stream can support a net Mobile DTV program data rate of maximum 629 Kbps (34% of 1.8 Mbps, maximum available efficiency) down to a minimum of 312 Kbps (17% of 1.8 Mbps, minimum available efficiency). KNBC engineering management has obviously chosen an efficiency level (robustness) believed to be optimum for KNBC purposes for the Los Angeles area topography. The Author may guess that a middle of the road 26% may be reasonable, yielding a net maximum payload of 484 Kbps (out of the total Mobile DTV 1.8 Mbps).

What video resolution can 484 Kbps payload support? This is compressed video and audio. Let’s assume that the video-only share of the bitrate is 400 Kbps.

In this case of KNBC, the Mobile DTV program is a simulcast of SD sub-channel 4.2 California Non-stop, which sub-channel we can assume is in 480i60 (as NBC is an “i60 network”) although a good case can be made for converting the program to progressive 480p30 prior to MPEG-2 compression (for the sub-channel), as progressive encoding is more efficient than interlaced. Such is also supported by the fact that the three (3) Mobile DTV format standards are progressive (interlaced is not permitted). Although the M/H standard permits frame rates down to 12 fps, the simulcast of California Non-stop sub-channel must presumably be at least 30 fps. So, AVC compressed, can this 400 Kbps video-only bitrate support the enhanced Mobile DTV format of 624x360p30 with the minimum image quality necessary for “enjoyable” viewing on tablets and netbooks, or just the basic 416x240p30 for smartphones and smaller displays? On a 10-inch iPad, such less-than-SD-quality at 400 Kbps may not be sufficient, in the Author’s opinion. The Author’s 7-inch DTV/Mobile DTV portable receiver/display does display the current KNBC Mobile DTV signal (416x240p30) with reasonable quality for its intended “moving around” use. The iPad is for stationary use while on-the-go, like sitting at the Admirals Club at LAX waiting for your flight, requiring a higher level of program resolution to be satisfying. In the Author’s opinion, Mobile DTV really needs to be minimum 624x360p30, for “mass mobility appeal”, if not the maximum of 832x480p30 (wide SD).

Multicasting in Los Angeles (DMA 2):
Would you believe about 100 TV Channels Over-the-Air!

The Author resides in Los Angeles, where there are 26 licensed full power TV stations on the air, and these 26 full power stations are transmitting around 70 sub-channels as well as 5 Mobile DTV channels, delivering a total of around 100 TV channels OTA.

The listing below covers the 22 licensed full power TV stations transmitting from the Mt. Wilson area, which collectively also broadcast a total of 58 sub-channels exclusive of the 5 Mobile DTV channels. The listing was assembled by the Author on September 20, 2011 by actually receiving these TV stations off the air on a newer 1080p flat screen HDTV set at the Author’s home with a directional antenna pointed with line of sight to Mt. Wilson. The Mobile DTV reception was achieved on a 7-inch DTV-Mobile DTV portable receiver/monitor.

The following is a breakdown of the 80 TV channels (excluding the 5 Mobile DTV channels):

14 HD Main DTV Channels
8 SD Main DTV Channels
Of which

• 14 Main Channels are English language (10 are HD)
• 8 Main Channels are Spanish language (4 are HD)
• 7 Main Channels deliver local news in English (all in HD)
• 4 Main Channels deliver local news in Spanish (all in HD)

58 Sub-channels
Of which

• >20 Sub-channels are English language
• >20 Sub-channels are Spanish language
• >10 Sub-channels are Asian/other languages
• >10 Sub-channels are fair-to-good quality SD
• >30 Sub-channels are lower quality SD
• 1 Sub-channel is fair quality HD

Recognizing that the Hispanic population in the U.S. is a substantial portion of the total audience, TV stations are generally catering to either the English speaking or the Spanish speaking population, not to both on the same major channel. In this article, we are concentrating on the English speaking audience. Many of the LA sub-channels are addressing ethnic audiences, including Hispanic, Chinese, Japanese, Korean, Vietnamese and Armenian, while other sub-channels are religious. At any given time, there are infomercial programs on several of the sub-channels. The “major main-stream” English language commercial sub-channels in the Los Angeles DMA which may enjoy some ongoing audience support are:

• 4.2 California Non-stop (KNBC)
• 4.4 NBC Universal Sports (KNBC)
• 5.2 Antenna TV (KTLA-Tribune)
• 5.3 This TV (KTLA-Tribune)
• 7.2/3 Live Well HD/SD (KABC)
• 30.2 Qubo (KPXN-ION)
• 30.3 ION Life (KPXN-ION)
• 56.3 MeTV (KDOC-Ellis)

In addition to the above eight (8) “major main-stream” English language sub-channel TV program sources, there are eleven (11) main-stream English language primary TV channels, for a total of nineteen (19) TV program sources OTA for the main-stream English speaking audience, which includes the main DTV channel of ex-PBS KCET and new-PBS KOCE (but not their sub-channels). But, look, only three (3) full service news stations are on the list: KNBC, KTLA and KABC, and local news may not be a major part of their sub-channel programming activity, as of yet.

WBAL-TV makes sense:
Adds an hour of local news at 7AM …
On the sub-channel !

Yes, on the sub-channel, concurrent with their NBC network “Today” morning show on the main HD channel. A Hearst Television flagship station, WBAL Baltimore (DMA 27) boldly just announced that their morning local news, weather and traffic would add an hour from 7AM to 8AM but on their sub-channel 11.2 (WBAL Plus). This makes a lot of sense as many commuters get ready to leave their homes for work during the time period 7AM to 8AM, and would rather get ready while watching local news, weather and traffic than the more entertainment oriented network morning shows where local weather and traffic appear only briefly, every half hour.

Local Sub-channel News is not really new
In January 2009, nearly three years ago, in the middle of the recession, local Chambers Communications owned market leader Ch.9 KEZI, ABC affiliate in Eugene, Oregon (DMA 121), launched a 24/7 local non-stop news channel on sub-channel 9.2 which is still going strong as KEZI 9+ Nonstop News.

Monetizing the Sub-channel asset is the key
Referred to as Diginets, the “Sub-channel National Network” activity is heating up. The latest major venture seems to be Bounce TV soon to launch with an initial 30%+ national audience coverage by affiliates, addressing the African American audience. There are now over 20 Diginets, of which 16 are English language, vying for attractive sub-channel placement in many DMAs. The basic deal seems to be that the Diginet gives up significant ad inventory to the local affiliate to sell. Is any Diginet making money yet? The experts say not yet. And what about the Big 4 affiliates owned by the station groups “renting out” their sub-channels? Are they able to sell the local sub-channel spots on old movies and reruns for real money or are they “bonus packaged” with main channel ad contracts? Monetizing the sub-channel requires significant audience support. Will they come?

And what kind of sub-channel programming will improve the TV station’s bottom line the most in the longer term: Old movies and reruns, or local news and content, or perhaps a combination of old entertainment and fresh news?

Expanding & Time Shifting Local News
vs. Perry Mason & The Maltese Falcon?

The first priority for any TV station already producing or just airing local news should be for its sub-channel to carry local content and local news, weather and traffic, and only after establishing the optimum times for the local content coverage should Diginet programming be allowed to fill the open slots. Choose local control, flexibility and preserve future options.

However, the easy approach may be to join a Diginet. They deliver the feed to the TV station, and, except for adding some hardware and providing master control, the Diginet sub-channel is more or less on autopilot. Except, there are two additional very important required activities: (i) selling the spots and (ii) promoting the sub-channel on the main HD channel and on the website, to assure some audience following.

But … Promoting the sub-channel seems difficult
Your Diginet sub-channel attempts to compete with all TV programs available to the local audience at home, including your main HD program. And, presumably, you don’t want to tell your main HD program audience (while they are watching your main HD program) to switch to your sub-channel. It’s like a local McDonalds opening a different flavor fast food joint (i.e. McGees) across the street, and have promotional signage at the McDonalds encouraging their customers to go across the street to McGees to eat. You get the drift. You want to take audience away from your local competitors, to add viewers to both your main HD and your sub-channel programs resulting from your sub-channel activity. The Diginet Network really needs to contribute significantly to the local start-up promotions of their new sub-channel affiliate, at the minimum.

Remember, local audiences are all potential viewers of local content, news, weather and traffic, while they are NOT necessarily all potential viewers of the original Perry Mason or The Maltese Falcon! From a favorable audience point of view, the highly desirable 18 to 49 age demographics may indeed refuse to watch any B/W program, getting your TV station stuck with the less valuable 60+ demographics, all fans of Raymond Burr and Humphrey Bogart. Many advertisers may not be impressed.

The Morning “Stickiness Factor”
The objective is to attract maximum audience in the early morning and have them stick to your channel for the longest possible time. In addition, you want to attract new audiences, as a result of adding sub-channel and Mobile DTV programs. As your TV station is already a local news leader (or contender), you recognize that the average age of a TV viewer is now over 50, and that the 18 – 29 demographics don’t watch a lot of traditional weekday morning news. So, your most desirable age group is likely to be the 30 – 59 demo, which are generally out of the home from before 9AM to after 5PM. Attract them to tune in your TV station early in the morning, and make them stick until they walk out their front door. And, if they happened to carry a Mobile DTV receiver/display, make them tune in to your Mobile DTV program in the car, on the bus or on the train. That’s a tall order, but it is your goal.

Local News OR Raymond Burr?
It seems obvious to the Author that few if any (in the 30 – 59 age group) will elect to watch Perry Mason at 7AM over a live local newscast giving necessary weather and traffic information for the day and the commute.

No Duplication between Main HD and Sub-channel
The sub-channel should not concurrently duplicate the main HD channel, unless there is a good reason to provide a separate SD feed of the main HD. Thus in the illustration above, sub-channel X.2 may (for example) deliver live morning news of financial markets by syndicated live feed, switching to the live (continuing) local morning newscast at 7AM when the main HD program is the live Big 3 Network morning show.

Big 3 Network Morning Show OR Local News?
And OTA vs. MVPD program competition
Across the U.S., 12 million TV households (about 10% of all TV households) rely exclusively on OTA television. These are the households which may benefit the most from the sub-channel programming, and which may positively seek to find OTA program offerings to their liking. But this is only 10% of your local audience.

The balance of 90% are subscribing to MVPD service, whether cable, satellite or telco TV. Cable and telco TV systems generally have channel capacity to add “major main-stream” sub-channels, while satellite TV may not have capacity. So the 35% of MVPD TV households served by satellite may only have access to the local sub-channels if they also receive OTA. Only a small percentage does. And then, once available on the local cable or telco TV systems, the competition is fierce for the Diginet(s) on your sub-channel(s) as there are dozens of cable channels offering old sitcoms, reruns and old movies at any given time.

The local OTA news competition may also be tough, but the direct competitors are limited to the other local news stations, and you know the local news competition well. The choice seems obvious. The sub-channel priority should be on local content, news, weather and traffic in order to build value for your TV station in the longer term. And the viewers wanting local news, weather and traffic past 7AM, electing NOT to watch your main HD with a Big 3 Network morning show, should be able to switch to your sub-channel for satisfaction rather than to the local competition.

And, as to program schedule, your TV station is already being largely controlled by a Big 4 Network, so would it not make sense that the sub-channel control should largely remain with the TV station? The bottom line is that a local-news-prioritized sub-channel is certain to have a significantly better ratings opportunity than a Diginet-only sub-channel.

END

By 2015, TV Everywhere, OTT TV and Smart TVs will be all over, in connected homes and on-the-road through wireless broadband. But local audiences still need local HD newscasts, delivered by streaming simulcasts in addition to traditional OTA and MVPDs.

A Smart TV is a flat screen HDTV set, generally of a larger size suitable for home viewing, connected to a broadband internet service directly, with built-in “PC capabilities” enabling advanced internet searching and the running of media-related applications to find, receive and display a wide selection of television programs and video being streamed over the internet. The Smart TV also provides connectivity to cable/satellite/telco TV STBs through HDMI and includes the FCC-mandated DTV over-the-air (OTA) built-in ATSC tuner, and attempts to integrate all TV program sources into one program guide for viewer convenience and flexibility, making lesser known TV programs more competitive as to audience reach.

An existing HDTV set may be upgraded to a Smart TV by acquiring an external Smart TV box (such as the Logitech Google TV box or the LG Smart TV upgrade box). See the illustration above. A potential drawback with any external upgrade box is that the upgrade box may not provide ATSC OTA input, thus requiring the OTA antenna to connect directly to the “old, not-so-smart” HDTV set, and thus not be fully integrated in the “smart” program guide/search.

This article deals with how the local TV stations can possibly increase total local audience share in the future difficult environment where more and more TV and video content is available “streaming on-line” over the internet. One thing is certain in the opinion of the Author: by 2015, a local TV station without local HD news and local HD content has a much lesser basis for profitable existence.

Breaking News:
CNN first with live 24/7 simulcast “IPTV Channel”

Time Warner Inc. (not Time Warner Cable) just announced (July 18, 2011) that its primary CNN and HLN channels are now available “free” over the internet 24/7 at home and on mobile devices as live simulcasts under the TV Everywhere service with viewer sign-up on the CNN website proving that they indeed are pay-TV subscribers to Comcast, DISH, Verizon FIOS, AT&T U-verse, COX or SuddenLink (initial limitation). Other MVPDs’ subscribers will gain access in the near future, no doubt. Only two days later, CNN announced that more than 10 million CNN apps had already been downloaded by users of iPhones, iPads, Android and Nokia devices.

This is a very significant development when this major 24/7 news channel recognizes the future necessity of distributing their program live simulcast 24/7 over the internet, for viewing within the connected home and when on the road.

The major sports leagues have each originated their own MVPD channel (NFL, NBA, NHL, MLB) the first being NBA TV starting in 1999. The MLB Network is probably the largest one in viewer reach, over cable/satellite/telco TV and by simulcasts over the internet in 720HD (subject to subscribers’ broadband bitrate) for an annual subscription of $80. ESPN initiated live simulcast streaming of sporting events over the internet at the end of 2010. ESPN offers a very impressive service available “free” to MVPD subscribers under the TV Everywhere umbrella, where the validated user may often select among several live sporting events at any one time.

Other news cable channels (i.e. Fox News and others) are available live over the internet and through wireless broadband providers (Verizon, T-Mobile etc) in their live/on-demand video subscription packages, but up to now, U.S.-wide (continuous near 24/7) MVPD/internet simulcasts have not been available from any major national network. One may certainly look at the retransmission of local over-the-air (OTA) TV channel newscasts over cable systems to be a simulcasts, but we call it retransmission. The term simulcast is recently understood to be
the simultaneous availability of the same TV program at the same time through two or more delivery paths or vehicles, i.e.:

• A Cable/Satellite/Telco Channel also streaming over the Internet

• A TV OTA Channel (main DTV or sub) also streaming over the Internet

Also, a TV Channel’s main DTV program (or sub) concurrently streaming over the Mobile DTV (ATSC M/H) subcarrier is a simulcast although the delivery is on the same OTA TV broadcast DTV carrier.

A single IPTV Channel’s live streaming over the Internet may need to be more than one stream, with service through wired broadband (i.e. HD resolution stream for Smart TVs) as well as through wireless broadband to out-of-home mobile devices (i.e. SD resolution stream), although HD capable laptops and tablets may indeed be able to display the HD stream subject to wireless download speed being capable of the HD stream’s bitrate.

Obviously, looking at the Big 4 TV Networks, they have a time zone problem with their national morning and evening news, making it very difficult to simulcast live over the internet across the entire U.S. without upsetting their own and the local affiliate stations’ business “timing” model. CNN does not have that specific problem because most of their transmissions go out live at the same time all across the U.S. There seems to be little or no time zone day/prime time scheduling. The evening Piers Morgan Tonight talk interview is 9 – 10PM in the east and simultaneously 6 – 7PM in the west. The Situation Room with Wolf Blitzer is 5 – 7PM east coast and simultaneously 2 – 4PM local west coast time. CNN seems to be the ideal cable channel for live cross country streaming, with perhaps the insertion of local commercials being the complicated part.

The “full service HD news” TV Stations may soon embrace 24/7 Internet streaming of local newscasts with local content in a separate “IPTV Channel”

Why not? A separate one way “IPTV Channel” which can be accessed by the viewer by a simple single click or keystroke, independent from and in addition to the TV station’s website, although with a website quick-link to the “IPTV Channel”.

Most TV stations are already on the internet with impressive looking websites, but often offering a confusing array of choices of news stories and video clips, and including the opportunity to view live simulcasts (and replays) of the local newscasts. But many potential viewers outside (and inside) the home do not have the time to navigate a fully featured website, preferring a 24/7-type CNN model adapted for the local and greater metro audiences, where all live newscasts (OTA/MVPD) are simulcast over the internet on the TV station’s own streaming “IPTV Channel”, possibly including live Big 4 network newscasts when such is on the air, if permitted, and then interleaved with local, regional, state-wide, national and world clips as time permits and as the “IPTV Channel” business model evolves. Excellence in local news delivery to all major TV viewing platforms is what will differentiate future DMA leadership, much more than in the past. And if the affiliate agreement with a Big 4 TV network currently excludes local simulcasts, the Big 4 will soon come around to see the advantages to permit such live simulcasts in the new world of “TV Everywhere”. Perhaps CNN will entertain supplying national and international news to local IPTV 24/7 news channels run by local TV stations?

And the TV station’s IPTV Channel may be the ideal feed for the Mobile DTV simulcast service.

The Four (4) Primary Delivery Paths:
Which path will decline? Which will grow?

Let’s look at the U.S. audience numbers. There are 120 million households in the U.S. of which 116 million are TV households, in turn about 12 million (10%) of those rely exclusively on OTA TV. That means that 104 million TV households (90%) subscribe to cable/satellite/telco TV, as the number of TV households receiving TV programs exclusively over the internet is rather small in 2011. Excluding the very young children (up to 10) and the older population (80+), we conclude that there are potentially 275 million people in the U.S. with the ability to independently select and turn on a TV program.

Let’s analyze the four (4) primary choices for TV station’s channel delivery to the local TV households.

ATSC Over-the-air – DTV and Mobile DTV

An estimated 12 million TV households rely exclusively on DTV OTA. In addition, millions of pay-TV subscribers may have a second or third TV set relying on DTV OTA. Also, millions of the OTA-only households do indeed subscribe to internet service, of which substantially all home internet connections in the future will be broadband wired to home modem/router with WiFi wireless within the home.

DTV OTA audience decline?
Yes, decline, because of the continuing increase in choice of TV programs available over the internet coupled with the newfound ease of program availability and selection through emergence of Smart TVs. The most decline will be in the OTA viewing of non-news/non-Big 4-affiliated TV stations, with the least decline in OTA viewing of full service news stations. And we can add the negative results of the FCC recommended “Spectrum Grab and Auction”.

Mobile DTV (ATSC M/H) audience growth?
Yes, growth, but will it ever be embraced by the “on-the-go” video watching audience in large enough numbers to make a real business model enhancement for the local TV stations? And how will the “FCC Spectrum Grab and Auction” affect the Mobile DTV build-out and progress? There are substantial potential upsides, with some serious reservations. (Another reason why the “IPTV Channel” simulcast may make a lot of business sense. See below.)

MVPD – Cable/Satellite/Telco TV
(MVPD – Multichannel Video Program Distributors)
Decline, as to a local TV station’s audience share through the local MVPD operators. Although total number of MVPD subscribers by 2015 may not decline much, the share and penetration will as the total number of U.S. TV households increase from 116 million in 2011 to over 120 million by 2015, by population increases. By comparison, in 2007, there were about 111 million TV households. Highly regarded cable oriented research firm SNL Kagan just released their findings that 4.5 million TV households will have “cut the MVPD cord” by end 2011 in favor of OTT, increasing to over 12 million by end 2015. The Author believes that the 12 million “cord cutting” number is conservative, and that there will be a more substantial exodus from MVPDs in favor of broadband internet delivered TV programs by 2015, concluding that a local TV station’s fortunes can no longer rely on MVPDs as their only primary audience reach vehicle.

Website (with HD News?)
Somewhat less important in the future, in the current forms. The Website is an absolute necessity for any TV station, as it is for any business today and in the future, but most full service news TV stations’ websites are very busy looking and sometimes confusing to navigate. Another problem is the very limited opportunity to stream in HD or even at high quality SD, as each visit to the website by the local audience is a “separate IP connection” each requiring a dedicated video stream for (on-demand) replays, necessitating streaming each of hundreds of streams concurrently at low quality video for server bandwidth reasons. Viewing such websites and low quality video on the emerging (larger screen) Smart TVs is likely to turn off the audience causing them to look for other higher quality presentations of local HD news (offered by competing TV stations). The Author’s conclusion is that the Website is somewhat less important in the future in the new world of OTT and Smart TVs to convey video clips unless streaming at a much higher quality (which may be difficult in an on-demand environment). The TV stations substantial investments in HD studio and live HD ENG equipment, personnel and facilities are not utilized on the website, as the fabulous HD images (even down-converted prime quality SD images) is not reaching the website visitors.

The TV Station’s own IPTV “News” Channel
Growth opportunity. The simplest form of “IPTV Channel” transmission is one-way from TV station server to the broadband internet users with just one IP multicast stream, with no viewer interactivity (feedback) capability, similar to the one-way broadcast OTA DTV transmissions. The IPTV Channel server streams in IP multicast mode over the public internet to unknown destinations (no prior knowledge of how many and where the IPTV receivers are), which stream is “tuned in” by interested viewers enabled by their broadband connected PCs, tablets, smart-phones and Smart TVs. However, as many as three simultaneous streams of the same program is required to match the various display resolution and the downlink bitrate capabilities of different delivery paths:

Consideration #1: IPTV Channel in HD to display on Smart TVs in homes
Suggested HD encoding is 720p30/60 at a bitrate range of 5 to 8 Mbps. This will also cover HD presentation on PC/laptop/tablet displays at home and on-the-go.

Consideration #2: IPTV Channel in SD to display on tablets and (hi-res) smart-phones on-the-go. Suggested SD encoding is wide 854x480p30 at a bitrate of about 2 Mbps. This will also cover high quality SD presentations on PC/laptop/tablet displays. In addition, this format may be the feed for the Mobile DTV (ATSC M/H) transmission.

Consideration #3: IPTV Channel in CIF (wide) to display on very small screen devices
Suggested low res encoding is wide 416x240p30 at a bitrate of about 400 Kbps. This will also cover simulcast streaming of the IPTV Channel through the TV station’s website.

IP Multicast over the Public Internet?
When we say “IPTV Channel”, we mean multicast IP streaming over the public internet, NOT an IPTV Channel delivered by private IP networks such as through AT&T U-verse (IPTV multicast) services, which are highly controlled (private) networks. Note that Cable TV and Telco TV, when delivering both TV channels and broadband internet services over a single “cable”, the two services are electronically fully separated with the broadband internet being the public part.

Any household connected with wired broadband to the public internet should be able to receive any multicast IP streaming it wants to “tune in”, but, up to now, the public internet infrastructure has not been fully “multicast enabled” to provide reliable and relatively high quality IPTV Channel reception in HD. However, new multicast transmission technologies are now being marketed promising to accomplish reliable live single stream IPTV Channel in multicast mode over the public internet.

TV Broadcasters’ simulcast “IPTV Channel”:
Assuring maximum Audience Reach

By 2015, Smart TVs and OTT will be a rapidly growing TV delivery system, likely to cause serious deterioration to today’s MVPD (cable/satellite/telco TV) business model and to cause decline in OTA home audience. The MVPD operators will surely modify their business models as they have already implemented through the TV Everywhere initiative. What have the TV broadcasters done so far? Not much . . . outside of spending efforts on mobile television (Mobile DTV) and offering comprehensive (sometimes confusing) websites. The IPTV Channel can be initiated now, as it appears that there is no government regulation impeding such implementation.

IPTV Channel Core: Local News, Weather, Traffic
Full service news TV stations (east & west coast) generally start local live weekday coverage at 5AM going to 7AM, with national network “good morning/news” shows from 7AM to 9AM. Late morning live local news may go from 11AM to Noon, with the live evening news starting with local news from 4PM to 6:30PM, with national evening news til 7PM. Then local late evening news live at 11PM for 30+ minutes. That’s 6 hours of live local news, weather, traffic. The affiliated national network covers an additional 2.5 hours of “good morning/evening news”, which may be available (sooner or later) for live simulcast on the IPTV Channel by affiliate agreement. A total of 8.5 hours of live daily news-related programs. If network and syndicated daytime and prime time programs on the DTV OTA channel are not released for the IPTV Channel, then replays of the news-related programs may be scheduled throughout the day and evening as a starting point for the IPTV Channel. The networks and the syndicators will come around, sooner or later.

Mobile DTV simulcast of live IPTV Channel?
The Author believes that the IPTV Channel is significantly more important for audience reach than the Mobile DTV OTA. There seems to be wishful thinking in certain TV broadcasting quarters that the Mobile DTV service will be widely received by Mobile DTV capable devices within the home. With broadband wired to the home and Wi-Fi within the TV household, why would Mobile DTV reception within the home be widespread? It is not a likely scenario. Mobile DTV, if substantially embraced by the consumers at large, will be received on-the-road while travelling in vehicles and in fixed locations such as airports and public establishments. An initial approach for Mobile DTV would be to simulcast the IPTV Channel, as the IPTV Channel may be launched in the shorter term with a relatively large viewer potential far ahead of any immediate viewer potential for Mobile DTV, because very few consumers will have Mobile DTV capable receivers/displays in 2011 or even in 2012.

HD News & HD ENG make you highly competitive

The TV station with full service weekday HD newscasts is no doubt a local ratings leader, already producing 5 or 6 hours of live news, weather and traffic each day, and obviously competing with one or two other TV stations for the number one position in the DMA. The local news events are the same for all TV stations, thus the basic news storyline is potentially the same for all full service news TV stations in the same DMA. The differentiation is in the talent, in the quality and promptness of the news clips aired, and in the delivery vehicles used.

JVC Broadcast has over the past several years become the leading supplier of professional HD news acquisition products in North America. The ProHD label offers cost effective HD camcorders and HD studio cameras purpose-designed for broadcast quality on-air performance and ease of operation. Group Station Owners all over North America have adopted ProHD and successfully transitioned to HD news and live HD ENG.

Working directly with JVC, broadcasters have access to products tailored especially for their needs. The GY-HM700LL, GY-HM750LL and GY-HM790LL, the three most popular cameras, have JVC’s exclusive LoLux feature, enabling them to capture pictures in extremely low light environments. LoLux was developed to assist television journalists when it is not possible to use external lighting. LoLux goes beyond the normal gain boost to produce broadcast acceptable imagery under the most challenging situations.

The TV Station and IPTV Channel “Duopoly” . . .
A single click away

The real challenge in the emerging world of Smart TVs is to make it easy for the interested and committed viewers to access your TV station’s live program whether DTV OTA, MVPD retransmission or the simulcast IPTV Channel, first and foremost at home. This is likely to involve the availability of a simple app download which icon will appear on the Smart TVs’ “Home Page”. Clicking on the icon will rapidly retrieve the IPTV Channel or perhaps present a simple selection window on the Smart TV screen where OTA, MVPD or IPTV can be selected. An alternate way of quickly retrieving your IPTV Channel may be by saving as favorite channel. You get the drift: As the number of TV/video programs available to the broadband wired home audience increases “exponentially” over the next several years, and as many of these OTT programs may be as easy to access through Smart TVs as clicking on a channel number on a TV/STB remote today, your TV station has no other option but to initiate a simulcast IPTV Channel with “a single click access”.

A number of issues need to be resolved over time, such as possible geographical limits on the streaming of prime time network programs, for the mutual protection of networks and TV stations. No one wants an uncontrolled breakdown of time zone issues, where California OTT viewers may “tune in” the IPTV Channel of a New York TV station and watch a first run prime time episode live 3 hours early, Start with local HD news, weather and traffic, and local content, and possible syndicated shows without time-of-day or geographical limitations. Your IPTV Channel is essential for your future existence, in the opinion of the Author, just as leadership in local HD news is “future existence insurance”.

END