Last month, Media Life Magazine published a story titled, “FCC Spectrum Auction: Winners and Losers.” Bill Bromwell, the story’s author, broke down what our media landscape is going to look like after the unprecedented auction wraps up this summer.
And at the top of the “losers” section of his post? Cord cutters.
Because public and private TV stations across the country have an opportunity this March to sell their spectrum and go off the airwaves in exchange for millions of dollars, there is a concern — and a likely chance — that the number of over-the-air television stations is going to be reduced. Industry experts have told me as many as 500 stations could get out of the broadcasting business.
“With fewer over-the-air stations available, cord-cutters will be faced with the choice of either signing up for cable or largely forgoing TV entirely for over-the-top services,” Bromwell writes.
Maybe. Or Maybe not.
Staying on the air?
Stations in bigger markets (think New York, Chicago, L.A.), especially your CBS’s, NBC’s and ABC’s, aren’t going anywhere. The opportunity to cash in on potentially hundreds of millions of dollars doesn’t even come close to what those stations can pull in and have pulled in over the long run.
Remember, this is a reverse-auction format, meaning the FCC is trying to find broadcasters who are willing to get out of the business and go off the air for the lowest price possible. Those stations have probably been trying to do this for sometime, but now they have a vehicle to do so.
Many publicly owned stations — those PBS stations that are often owned and operated by public universities — also aren’t going anywhere. In Michigan, for instance, two PBS stations on opposite sides of the state have already publicly said their stations are too valuable to the public and communities they serve. WKAR, in Lansing, actually doubled down and struck a partnership with the Detroit PBS station to launch a 24/7 children’s programming channel. So, your PBS station is safe.
And smaller, independent stations that currently operate on the VHF — very high frequency — channel don’t have to necessarily worry about the auction, as much as they do the repacking of stations following the auction. VHF stations aren’t invited to participate in the auction because the FCC is after spectrum in the UHF — ultra high frequency — band.
But what about the big four affiliates in smaller markets that might be run by smaller broadcasting companies, or perhaps by family-owned companies? They, too, have other options instead of going off the air.
Sure, they could sell, rake in millions and turn off the lights at the station. But they could also opt to move to the VHF band. Or they could strike a deal with another station in the market and share a channel. Remember, following the digital conversion of 2009, TV stations can actually broadcast more than one station using their spectrum. Many broadcast their main signal in HD and then have two or three additional subchannels (also called diginets or dot channels) in standard definition. So, your local NBC station could become the landlord and your local ABC station, and both could broadcast in HD.
So, while hundreds of TV stations could potentially go off the air, the stations that are likely most watched by cord cutters who are using an antenna, in addition to their over-the-top options, probably aren’t going anywhere.
And furthermore, if this auction were to put a crimp in cord cutting and maybe entice some people to sign back up for cable, those monthly subscription rates from the Comcasts and AT&T’s of the industry would likely increase because of demand.
All of that being said, there are concerns in the broadcasting industry over what a station’s coverage is going to look like post-auction. Congress has said the auction will be done in a way that doesn’t impact the over-the-air reach of a TV station, but these are also the same guys who have put our country trillions of dollars in debt. It’s all still to be seen.
Following the auction, the FCC is going to repack the spectrum. One of the concerns is that there isn’t going to be enough money or enough time given to those individual stations to move channels. Between 800 and 1,200 are expected to make a channel move after the auction.
If signal strength ends up being a problem, there could be some bad public backlash, but again, that’s to be seen. The auction kicks off March 29 and is expected to last through the summer.
Making auction-related decisions even more difficult is the creation of a new broadcast standard that’s currently being developed. ATSC 3.0 is expected to create new revenue streams for broadcasters and include several technical advancements, including 4K broadcasts. If you go off the air, you don’t even get a chance to see if ATSC 3.0 is the renaissance over-the-air TV has been waiting for.
Now, what about the mobile industry? After all, the spectrum auction is designed to give more spectrum to companies like AT&T and Verizon as the public relies on handheld devices instead of old-fashioned, over-the-air TV waves.
Many reports point to T-Mobile being the big winner in the auction, which again, is good news for cord cutters. For those worried about data caps, T-Mobile Binge On allows unlimited streaming of a number of services, including the very popular Sling TV service.
T-Mobile wants to boost its rural and urban coverage area. According to a report from FierceWireless, the wireless provider is hoping to scoop up as much of the 600 MHz spectrum as it can. If T-Mobile increases its reach, expect more cord-cutters to jump on board to take advantage of their unlimited streaming deals.
Bad news for cord cutters?
Death and taxes are the only guarantees in life, but I don’t see this auction being bad for cord cutters for several reasons.
One, the cord cutting trend is too far down the road at this point. Sling TV finally gave us that affordable, mini-cable bundle that, most importantly, included ESPN streaming. HBO realized it could be successful by offering a streaming subscription-model. Showtime followed suit. And while Apple is reportedly “frustrated” by its ongoing discussions with TV executives, it’s hard to bet against the company, which singlehandedly changed the music industry. Be patient, cord cutters.
If anything, the spectrum auction is going to shed more light on cord cutting because it’s going to shed more light on the magic of broadcasting. Believe it or not, there are people out there who don’t realize you can receive a crystal-clear high-definition signal on football Sunday for the one-time cost of an antenna. Broadcasting may seem out of date to some, but it’s still the best and most reliable way of reaching the masses.
Industry experts are saying the auction is going to change the entire landscape of the broadcasting industry.
I think cord cutters have already done that.