Eliminate Free HDTV-CEA Responds… and so do we

June 7th, 2011 · 7 Comments · Cable TV, News

The Consumer Electronics Association responded today to our article “CEA Wants to Eliminate Free HDTV.” It is posted in its entirety after the jump, with our comments in bold.

Gentlemen,

You raise the alarm in your editorial that CEA seeks to “eliminate free television reception.” This is not true. CEA supports a bipartisan proposal, enacted by a unanimous FCC and endorsed by the Democratic President and the Republican Congress, which would solve our nation’s wireless spectrum crisis by providing a financial windfall to broadcasters.

I hope you find time to actually read CEA’s policy proposal on this subject, but in order to provide the “facts” you demand, I thought a brief summary might be helpful. Let’s first address some of your more colorful rhetorical flourishes.

HDGuru.com: We agree this proposal should be studied in detail, hence our alarm.

First, you claim that CEA’s survey finding 8% of households reliant on over-the-air broadcasting “wasn’t elaborately explained.” But then you proceed to repeat our full explanation of the survey methodology and don’t point to a single factual deficiency in the survey.

It isn’t elaborately explained. The only information released was that it was a telephone survey of 1,256 adults weighted to “reflect the known demographics.” Weighted how? Known by whom? “Weights were applied to cases based on gender, age, race and geographic region.” This seems explanatory, but when a survey is an outlier as this one appears to be, goes against trends others have found, and speaks handily towards your agenda, we would like to see more data before we take it as fact. Indeed it could be the most accurate survey taken on this subject, and if so, we will gladly retract our complaint of this aspect.

Arguing as you do that our survey is questionable because “CEA’s agenda is biased towards their members” is not a fact-based argument – it is rhetorical and unfairly pejorative given CEA’s unchallenged record of more than 80 years of high quality market research.

We didn’t intend that to be a pejorative, only the acknowledgement that any association will act in the best interests of its members. Our issue is when any group’s interests are against those of our readers.

Second, you state that “it’s clear that CEA’s assumption is that because OTA reception is trending downwards, that eventually it will reach zero.” Although it is obviously helpful to your prose to set up and knock down your own straw man, the fact is that nowhere in the study does CEA make such a statement. Rather, we simply asked respondents whether they rely on over-the-air TV for broadcast reception, and 8% of them (9 million households) said yes.

Our opinion is that CEA, CTIA and others would like to auction off sections of the public airwaves so it can be used by private companies. Is this not true? Even given these auctions are voluntary, you cannot deny this would result in a radical shift from our current over the air broadcast as we know it. To imply, as this study and press release did, that it doesn’t matter because only a small percentage of the public use it, we feel, is disingenuous.

Third, you endorse as more accurate a study by Knowledge Networks that found 14% of households reliant on over-the-air broadcast. Notably, you offer no information on that study’s methodology and appear to assume that it is correct, an assumption you would not extend to CEA (and although you use “demographics” and “methodology” interchangeably, they are not the same thing [They aren't. I wasn't.]). You also fail to note that the Knowledge “study” is based on data more than a year old. But even if we were, like you, to accept Knowledge’s numbers, we would conclude that 16 million households (14% of 119 million U.S. households) rely on over-the-air broadcasting. Meaning that 86% or 113 million American households don’t.

We do not claim it is more accurate, merely that it presents a significantly different number than the CEA study. Without more information on both, I wouldn’t presume either are accurate. As for the age of the data, Knowledge Networks released a new study on Monday that finds OTA use increasing. When other studies on the same topic show a different trend and different totals than CEA’s, who are we not to raise the flag of question?

What if you ask consumers if they feel OTA should change or disappear? Turns out, a lot of people feel pretty strongly that this is a bad idea.

Finally, you open a new branch of the vast right-wing conspiracy by suggesting that CEA’s policy position is part of its “pro—Republican tilt” as evidenced by CEA’s public comments on the recently released Republican tech policy platform. Again, colorful prose and a helpful straw man for you, but not based on fact. The reason CEA has not commented on the new Democratic tech policy plan is because the Democrats haven’t yet issued their tech policy plan. When they do so, and to the extent it embraces policy proposals that are in line with the tech industry’s innovation-driven policy priorities, we will issue a statement in support as well.

We look forward to a Democrat proposing something useful on this topic. We’re not holding our breath.

Having dealt with some of the rhetoric, let’s look (briefly) at the facts. A fuller recitation of the facts is contained in the joint CEA/CTIA submission to the FCC dated February 15, 2011. It is available online here: http://bit.ly/kRbRT5. It is a useful read for anyone seeking to understand the incentive spectrum auction proposal and make an informed decision about whether to support it.

Yes, everyone should read this.

Our nation’s spectrum is quickly approaching exhaust. Demand for wireless broadband services is exploding – more than 33 percent of Americans have a smart mobile device, and according to Cisco, data traffic from wireless devices will exceed data traffic from wired devices by 2015. Consumers will own 15 billion wireless devices by 2015 – twice the world’s population. And total Internet traffic will quadruple to 966 exabytes a year.

The bipartisan National Broadband Plan calls for using incentive auctions to repurpose underused spectrum for wireless broadband. We can’t make more spectrum, but we can ensure that it is allocated efficiently in a way that meets consumer demands. For more than 75 years, the nation’s TV broadcasters have been allocated enough wireless spectrum to serve 100% of consumers over the air – a historical anachronism based on the fact that, in the early days of broadcasting, over-the-air was the only transmission method to homes. But with most Americans – more than 90% — getting TV service from cable, satellite or other multichannel video providers, broadcasters are sitting on vast swaths of unused spectrum.

Sadly, you still need to cover 100% of the people for the 8% to get signal.

The FCC’s voluntary incentive auctions would allow broadcasters to return underused spectrum for re-auction and share in the proceeds of that auction. As the total proceeds of such an auction are estimated at more than $36 billion, and as broadcasters did not pay a dime for their spectrum, the windfall in which they will share is quite generous.

From your own paper, it is clear that in many markets, stations will need to share frequencies or possibly stop broadcasting for enough bandwidth to be freed up.

Saying these auctions would be “voluntary” seems to us like giving a dog the choice between bacon, or no bacon. The choice is yours! The pro-bacon agenda is clearly good for the dog, but is it good for the rest of us? Sure, the government gets $36 billion, but this is a one time fee for something they (and the public) will never be able to get back. This is a BIG ISSUE, and one that is not being discussed.

And again, it is voluntary – if broadcasters don’t want to participate, they don’t have to participate [See above]. The FCC’s assumption – and ours – is that many broadcasters will continue over-the-air. Indeed, CEA makes clear in its FCC submission that under our model “outside the Top-30 markets, no stations will need to exit their over-the-air channels.” While that doesn’t square with your rhetorical statement that “CEA wants to eliminate free HDTV,” it does meet the needs of consumers and broadcasters.

That last part is the key to our debate. We feel it doesn’t meet the needs of consumers, and clearly many feel the same way as we do (note the admittedly unscientific CNET Poll linked above).

A core component of our plan – one which would provide another $565 million in benefits to broadcasters – would be to relocate broadcast channels for free for those broadcasters who choose to continue broadcasting on their own spectrum or to share frequencies with other broadcasters while cashing in some of their spectrum. Why would that component of the plan be necessary if CEA seeks to “eliminate free television reception”? The answer, of course, is that it wouldn’t be, because elimination of TV broadcasting is not CEA’s goal.

“Cashing in some of their spectrum.” So does this reduce picture quality, reduce channel options, or both? That is the part we feel isn’t in the consumer’s best interest.

We welcome discussion on this important issue, and let’s all make sure it’s based on the facts.

Jason Oxman
Senior Vice President – Industry Affairs
Consumer Electronics Association

Thank you Jason for your extensive response, and the links for those interested to find out more data. We feel that the more consumers learn about this proposal, the fewer will like it. But for that we shall see.

We agree with you, this is a very important topic, and while we may have resorted to a touch of hyperbole in places, it is clear to us that this represents a significant shift in the way over the air broadcasts are handled. The airwaves are for the public, and we feel this isn’t in the public’s best interest.

 

 

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7 Comments so far ↓

  • Jay

    Why doesn’t the government lease spectrum in stead of outright “sale”.

    This way there is an incentive to actually provide service on spectrum they continue to pay for. Dish and others are sitting on bought spectrum waiting for it to rise in value so they can sell it later.

  • Mike

    Am I wrong? Or is the math wrong on their study. According to their study there are 119 million households with tv’s and 14% have OTA which results in 16 million, thus 119 minus 16 is 103, not 113 million

  • Brian

    He continues to belabor the point that these auctions would be voluntary…what broadcaster wouldn’t jump on these auctions? The people receiving over the air are giving the broadcaster no money, so the broadcasters aren’t going to care if they can’t tune in, not if there are $10s of millions of dollars to be had.

    This is just a desperate money ploy for broadcasters losing money to those forgoing tradition TV subscriptions in return for OTA and online options. The harder they try to keep grasping at 20th century solutions the more money they will continue to lose (just look at the recording industry for an example).

  • cbono

    If we truly had a democracy by, of and for the people, then broadcasters would have to abide by a “use it or lose it” policy. And, by “use it”, a set of public interests would be honored among them making time available for non-sponsored news, citizen opinion and public and political debate. Instead, what belongs to all of us – the airwaves – become the operating domain of huge multi-dimensional corporations who end up charging us for access to that which we gave them.

  • HiFiFun

    Investors will demand return payment for paying off the OTA broadcasters. Plus profit.

    Consumers don’t need a subscription to watch OTA TV. Its paid for by advertisers.

    But with this new system, consumers will once again be forced to pay subscriptions to watch commercials, with every remote button press being transmitted instantly to advertisers.
    So Google and Apple are inserting themselves again as middlemen. Obviously they have hired the high-priced lobbyists, now they need the Republicans to win in 2012.

    All this does is erode our standard of living and undermine our constitutional right to privacy and unreasonable search.

  • HiFiFun

    Its like taking public roads and converting them to toll roads.
    Wall St and venture capitalist will enjoy luxurious sports cars and mansions ay out expense.
    This type of greed is a thirst which can never be quenched.
    Isn’t our country already super-saturated with advertising?
    Why should consumers pay to watch advertising?
    Greed replaces common sense (which is why our debt is so high). Dah!

  • David

    Since broadcasters didn’t pay for the channels they use, why should they get any auction proceeds?
    And if they didn’t get any of the $36 billion, how many would want to turn over their frequency?
    $36 billion sounds like a nice bribe to me.

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