Rabbit Ears on a Set-Top? Probably Not

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Cable operators and broadcasters are at each others throats over the issue of retransmission fees. In the most recent dust-up, Cablevision subscribers this past Sunday lost WABC for the better part of the day, with the parties coming to terms just as the Academy Awards telecast started (see WABC-TV Returns To Cablevision).

The FCC is now looking into whether the retransmission-consent system needs to be “fixed,” after an appeal to the agency and Congress by Cablevision, Time Warner Cable, Dish Network, DirecTV, the ACA and others (see FCC: Retrans Framework Under Review and Cable, Satellite Ops Seek Congressional Review Of Retrans).

But why can’t the cable operators just connect an antenna to a cable set-top — thereby letting a subscriber access free, over-the-air broadcasts alongside the cable lineup? After all, this is what startup Sezmi is doing with its hybrid broadcast-plus-Internet TV service (see Sezmi, Best Buy Ink Hybrid TV Pact for L.A.).

Voila! No retrans payments needed, right?

While the idea may seem like an instant technical workaround to retrans standoffs, in practice such an approach would be costly, logistically challenging and probably politically untenable.

Let’s rewind to 2007, when CableLabs initiated a project to “develop cable interface specifications for receipt of off-air digital broadcast signals.” Motorola, at the Cable Show in Las Vegas that year, actually demonstrated two set-top configurations with over-the-air receivers (see Motorola to Demo Set-Tops with Antennas and Trying to Beat Broadcast Over the Ears).

At the time, American Cable Association president and CEO Matt Polka said the project was “vitally important piece of technology development,” citing the leverage it would give cable operators in retrans negotiations.

But it’s not clear whether the cable industry is exploring this option as a realistic solution today.

CableLabs says the spec is currently in draft status and is available to members but otherwise had no specific update. The National Cable & Telecommunications Association declined to comment on the project; Polka was unavailable for an interview.

A rabbit-eared set-top would be impractical for a number of reasons. For one thing, it could be interpreted by regulators as a bad-faith effort on the part of an MSO to circumvent retrans negotiations with a broadcaster or constitute illegal retransmission, according John Hane, a lawyer in the communications practice of Pillsbury Winthrop Shaw Pittman LLP in Washington, D.C., whose clients include broadcasters and satellite operators.

Moreover, a cable operator would likely incur significant operational costs with such a solution. An MSO would need to develop and distribute set-tops or adapters-and then help customers install and troubleshoot them. On top of all that, many customers may be simply unable to receive a given station’s DTV signals, a problem that was cable’s original raison d’être.

Note, too, that DirecTV once proposed this type of solution to the FCC to provide “local into local” service in the smallest markets, through a set-top with an OTA tuner and the signals seamlessly integrated with its program guide. The FCC pushed back on this idea; DirecTV now provides subs instructions for hooking up their own antennas instead.

Further, under the FCC’s rules, if a cable operator provided a set-top with an OTA receiver and provided an antenna, the operator could not charge for local signals. And of course, under the current regime any station can elect must-carry, and the cable system would still be obliged to carry that station.

All in all, the idea of connecting an antenna to a set-top “is a combination of wishful thinking and bluster,” Hane said. “It’s a nonstarter and it will never be a real issue, as opposed to a bluff, in a retrans negotiation.”

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