Update on ATSC 3.0

A few months ago the FCC authorized the implementation of equipment using the ATSC 3.0 standard. The industry has known this has been coming for several years, which has given TV manufacturers the ability to start designing the standard into antenna and TV sets.

ATSC 3.0 is the first major upgrade to broadcast TV since the transition to digital signals (DTV) in 2009. This is a breakthrough upgrade to TV since it introduces broadband into the TV transmission signal. The standard calls for transforming the whole over-the-air transmission to IP which means that broadcasters will be able to mix in IP-based services with normal TV transmissions. This opens up a whole world of possibilities such as providing reliable 4K video through the air, allowing for video-on demand, providing immersive high-quality audio and greatly improving the broadcast emergency alert system. This also can bring the whole array of digital features that we are used to from streaming services like program guides, actor bios and any other kind of added information a station wants to send to customers.

From an economic standpoint this provides a powerful tool to local TV stations to provide an improved and more competitive product. It does complicate the life of any station that elects to sell advanced services because it puts them into the business of selling products directly to the public. Because the signal is IP, stations can sell advanced packages to customers that can only be accessed through a password, like with online TV services. However, this puts local stations into the retail business where they must be able to take order, collect payments and take calls from customers – something they don’t do today.

It creates an interesting financial dynamic for the TV industry. Today local network stations charge a lot of money for retransmission fees to cable companies for carrying their content. But most of that money passes through the local stations and gets passed up to the major networks like ABC or NBC. ATSC 3.0 is going to allow stations to directly market advanced TV service to customers, and it’s likely that many of these customers will be cord cutters that are lured away from traditional cable due to the advanced ATSC 3.0 services they can buy from their local networks. This puts the local network affiliates directly into competition with their parent networks, and it will be interesting to watch that tug of war.

This also opens up yet one more TV option for customers. FCC rules will still require that anybody with an antenna can receive TV for free over the air. But customers will have an additional option to buy an advanced TV package from the local station. If local stations follow the current industry model they are likely to charge $3 to $5 per month for access to their advanced features, and the jury is still out on how many people are willing to buy numerous channels at that price.

There are other interesting aspects to the new protocol. It allows for more efficient use of the TV spectrum, meaning that TV signals should be stronger and should also penetrate better into buildings. The TV signals also will be available to smartphones equipped with the ATSC 3.0 receiver in its chipset. This could enable a generation of young viewers who only watch local content on their phones. Station owners also have other options. They could license and allow other content to ride along with their signal. We might see local stations that bundle Netflix in with their local content.

We probably aren’t going to see many ATSC 3.0 devices in the market until next year as TV and other device makers build ATSC 3.0 tuners into their hardware. Like anything this new it’s probably going to take four or five years for this to go mainstream.

It’s going to an interesting transition to watch because it gives power back to local stations to compete against cable companies. And it provides yet one more reason why people might choose to cut the cord.

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