An Antenna-Connected Cable Set-Top Still Won't Fly
Over-the-air TV is free. So why should cable, satellite or telco operators pay anything to offer broadcast TV stations to their customers? Just give ‘em an antenna, right?
Reality, unfortunately, is more complicated.
Boxee has run a version of this idea up the antenna pole again. The Internet-video startup is selling a $49 USB stick with a TV tuner and antenna, which plugs into a Boxee-based set-top. Presto: instant live TV, mixed in with a bunch of Web video. (Boxee is promoting the over-the-air dongle with the tagline: “Still Spending Too Much on Cable TV?” Never mind that regular digital TV antennas are available for less.)
Now Boxee claims it has landed deals with some small cable operators, which intend to get out of the TV business altogether and simply offer over-the-air TV and Internet video, according to FierceCable.
It’s an interesting idea, but most cable companies aren’t going to chuck their video services out the window.
Meanwhile, there would be a number of issues if MSOs attached an antenna to their set-tops and told broadcasters to pound sand — an idea the industry has already considered.
In 2007, CableLabs initiated a project to develop cable interface specifications “for receipt of off-air digital broadcast signals” (see Trying to Beat Broadcast Over the Ears). Motorola, at the 2007 Cable Show in Las Vegas, even demonstrated two set-tops with over-the-air receivers — one with a plug-in USB antenna that looked a lot like the Boxee dongle, in fact (see Motorola Demos Set-Tops).
But an antenna-connected set-top doesn’t make sense for cable operators.
First is the practical matter of supporting existing customers: Millions of people rely on their pay-TV provider to deliver the local TV networks. It would be extremely disruptive (and expensive) to equip everyone in a market with OTA antennas. Boxee doesn’t have this problem, since it has never offered traditional TV.
Next, there are many areas where you can’t get a good digital TV signal. “Your DTV reception can be affected by terrain, trees, buildings, the weather, damaged equipment, as well as antenna type, location and orientation,” according to the FCC. This, by the way, was the very reason the cable TV industry started: to haul signals to people who couldn’t get them over the air.
Finally, broadcasters would not allow the pay-TV operators to offer their signals as part of a subscription bundle without payment: They would sue. So a cable operator wouldn’t be able to include the OTA channels in a guide or let subscribers record them with a DVR, for example: a pretty bad customer experience.
Long story short: There’s no feasible rabbit-eared technology end-run around those nasty retrans fights.
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Peter commented:
Todd, This is certainly a timely topic. One thing you missed is a little known start up called Sezmi (Recently acquired by Kit Digital) that sucessfully (from a technology viewpoint anyway) deployed roughly 1500 STB's in Los Angeles using attached multiphasic "smart" indoor antenna systems and a well thought out reception prediction system. For UHF reception this worked into the high 90 percent range. The big issue here was VHF which given the antenna size was a problem in many cases for indoor reception. Outdoor was great in all cases. This system used an integrated EPG system (not PSIP) and was functionally easy to use and install. It can be made to work in many markets but is not a universal solution.
Steve Effros commented:
As John noted, this is not an issue of "getting around" retrans negotiations. It's and issue of negotiating leverage. Sure, both cable and satellite will continue to have retrans fees, but the satellite customer already has the option not to take the broadcast signals. I want the cable customer to have that right too. Then local reception can easily become less expensive, for both the operator and the customer, than the fees now being demanded. It's a marketplace solution, and the technology works. To be sure, some folks will always have to pay for retrans, and cable operators will offer it. But it will be far from the current mandated 100%!
John commented:
Worth keeping an eye on Bamboom (believe they now have a different name) - combination of a Bamboom like solution for reception, with rollout of IP enabled STBs from MSOs, could lead to the gradual erosion of retrans revenue/leverage. The financial incentive to reduce retrans fees is simply too great for some variation of this not to happen.
Todd Spangler commented:
Steve, even the DBS guys see the antenna option as second resortfor customers -- not as a way to get around retrans negotiations.
Steve Effros commented:
Todd; The DBS folks already deliver broadcast signals as an option, and have used the antenna work-around, legally, for many years so the broadcaster copyright/retrans claim now would not be persuasuve. That's all cable wants; let the consumer have the option. If the "retranstenna" as I call it, works, then why should they have to pay for "retransmission consent" fees which are now in some cases more than $2.00 per sub per month for one channel! Do the math. If cable operators could do a slow migration away from extrotionate signal carriage fees for those who can get the signals over the air, why wouldn't they? All we need is for the FCC rules to allow consumers to make their own choice instead of the government requring retrans for everyone.
Quigley Spargus commented:
People, listen to the insanity! A work around for a failed act of legislation. A means to stop the extoration of a failed business strategy. Double taxation of the tax payer whom generously donated the public airwave to serve the public. This will not get fixed until the public lights up the switchboard and email servers of Congress. In the mean time - Thank you mother may I have another!
Todd Spangler commented:
Also: Even if you find a legal/regulatory workaround, you still have major issues on signal reception & activating the installed base of STBs.
Todd Spangler commented:
Steve - Broadcasters (and their lawyers) will insist that such a setup constitutes retransmission. Will cable be able to defend itself on that front?
Steve Effros commented:
Sorry, think you missed the logic of this one. True, it won't work for everyone, but with minor legal tweaks at the FCC, those who DO get good digital broadcast signals could receive them without a "retransmission" from the cable operator (yes, you could have a guide that showed them, and a remote that worked the internal A/B switch in the set, and a consumer has every right to record the programming on a DVR)thus, the operator could chip away at the excessive retransmission consent fees now being demanded. The technology is already here, the rules have to be updated, and then we can start a migration that the broadcasters will have to pay attention to.
Economist commented:
As the broadcasters demand more dollars for free OTA channels the economics of what Boxee is proposing becomes more feasible. In addition the problems that have been identified with Boxee's solution are solvable with enough investment, again something that is more likely as more money is paid to broadcasters. With operators now paying $2 to $5 per month per subscriber for free OTA channels, Boxee's solution becomes very compelling.
Todd Spangler commented:
News Hound - I wager that broadcasters would agree to binding arbitration on retrans before then. Or, we'll see federal legislation mandating something along those lines.
Todd Spangler commented:
Old Newspaper Man - I don't mean that TV stations will block IPG info. I mean that they'll refuse to allow their channel to be carried by a pay-TV provider; having over-the-air channels in a separate silo would be unsatisfactory to most subscribers.
Old Newspaper Man commented:
Yes, it'll be a problem when cable systems can't predict from one house to the next whether their OTA hookups will work. Just try explaining that to subscribers!
But I dunno about broadcasters blocking the guide info. Windows Media Center, for example, shows guide info for all OTA channels for free.
News Hound commented:
Todd -- Your last sentence may be true for now. But you'd better believe somebody is going to figure it out within the next three years. The broadcasters' extortion has now reached a level where we in the cable business MUST and WILL find a way to tell them to go pound sand. Local stations, please enjoy that meal of golden goose for the next three years, and never forget that you're the ones who killed it.