Television: An Obit
The death has been foretold, but has it finally arrived?
Commercially available television first arrived in America in the 1930s and was available to the masses by the mid-1950s.
It began as a local black-and-white service, and -- after a few syndicated shows aired in color -- the NBC network began broadcasting Bonanza, the first full-color western, in 1959 at 9 p.m. every Sunday night. By then, America had become a TV nation.
It would take another 50 years before the power of television would begin to shift from a few large media companies to empowered individuals throughout the world. Now that transition has begun. It will surely be marked with fits and starts, as old media companies fight to hold onto the past while a new generation takes control of the future.
From its earliest days, television was broadcast to homes via an antenna from a local TV station. Later, microwaves supplied national programming to the stations, turning them into distribution hubs for centralized national programming. From the 1940s to the early '70s, the three major networks -- NBC, CBS and ABC -- supplied the bulk of nationally produced programming to America's living rooms.
In exchange for free spectrum granted by the U.S. government, television broadcasters entered into a quid pro quo. They would carry government-approved "public service programming" -- including news and public affairs -- in exchange for the free spectrum to broadcast their entertainment fare. If the TV stations kept their content clean and noncontroversial, the deal was a license for broadcasters to print vast amounts of money.
But what technology giveth, it takes away. Looming on the horizon was cable. It began innocently enough. For those homes with poor reception, cable television was developed in 1948 to aid viewers in receiving stations with difficult reception problems.
At the time, cable was called Community Antenna Television (CATV) and was used for sharing television programming with the entire community. Then in 1972, with deregulation, cable television got to carry its own original programming. The first basic cable network, launched via satellite in 1976, was Ted Turner's Atlanta superstation, WTBS, subsequently known simply as the Superstation.
By 1975, HBO (Home Box Office) was the first cable network to become "premium" and delivered nationwide to homes. Later joined by direct-to-home satellite operators, pay television operators began to challenge the single-program feed aired by local broadcasters.
As a multichannel service, cable had some huge advantages over broadcast. It didn't use valuable government-owned spectrum and wasn't subject to the content restrictions of traditional broadcasters. Cable programming became more provocative, allowing nudity and profanity into the American living room. The audience loved it. Over time, most American households would become cable subscribers.
The future for over-the-air broadcasters looked bleak. Then, in 1997, by a 5-4 decision of the U.S. Supreme Court, traditional broadcasters got a temporary stay of execution. The court ordered cable systems to carry the signal of broadcast stations. This razor-thin life raft was called "must-carry."
Though "must-carry" came in the nick of time, it was already too late. A new technology was evolving that would eventually transform not only the broadcasters, cable and pay satellite operators, but most of the entertainment industry itself. It was called the Internet. By the 1990s, it became apparent that any and every type of communications would eventually run on the Internet. It began with documents, images, music and voice telephony. Later, as the bandwidth increased and the speeds accelerated, huge files like high-definition video and audio could move around the planet in seconds.
Entrenched media companies, rather than change, at first tried to stop its effects with encryption technology. The music industry fell first. Now, the movie industry, publishing and, yes, the television industry is trying the same thing. None of it has even made a dent. A new generation of broadband mobile devices have empowered consumers to demand their media unlocked from the television set, movie screen or printed page. The new consumer mantra is all media any time, any place and on any device.
Early on, many old media companies made another huge mistake. They "tested" the Internet by giving away some or all of their product for free on the Web. The public liked this and quickly began sampling the media offerings. The cat, as they old saying goes, was out of the bag. Attempts to go back and charge a fair price to these Internet users for content has largely failed.
Television is survived by VOD, streaming video and video-sharing services.
The election of Barack Obama to the presidency in 2008 also shifted the focus from old media to new technology. A candidate who used the Internet more than anyone before him, Obama was always a staunch Internet advocate. He is now using stimulus money to expand broadband access to poor and rural areas. Obama's administration has also released the nation's first National Broadband Plan. For the past six months, his Federal Communications Commission (FCC) has been attempting to reclaim much-needed spectrum for a vast expansion of wireless broadband services.
One of the administration's key places for finding wasted spectrum, not surprisingly, was broadcast. On the table now is a plan that will allow television broadcasters to "voluntarily" put all or part of their government-owned spectrum on sale in an auction in which they would keep part of the proceeds. Essentially, the government -- in order to free up spectrum -- is allowing the broadcasters to be rewarded for spectrum they don't own.
However, if the broadcasters decide not to give up their spectrum for auction voluntarily, there are now bills before Congress that will allow the FCC to determine a value for that spectrum and tax the broadcasters for its use. The days of free government-provided spectrum for broadcasters appear to be coming to an end.
Suspicion is that many broadcasters who own stations will take the deal, figuring the game is up for their business. They would walk away with a bundle of cash and say goodbye to a lucrative business that brought them huge profits for years.
The must-carry ruling for broadcasters prevailed by only a single vote at the U.S. Supreme Court and could easily be reversed, leaving the station owners with no cable carriage. A buy-out deal may be very appealing to those facing an increasingly dire future. Until that day comes, the posturing by broadcast lobbyists against a government takeover of spectrum continues unabated. Broadcast, say the lobbyists, is of "vital importance to tens of millions of Americans who rely on local TV stations for high-quality entertainment, niche programming and lifeline emergency news and information."
And cable providers find themselves between a rock and a hard place. To counter Internet viewership trends, some carriers are now experimenting with subscription systems that allow their subscribers to watch cable channels online. It works only for paying cable subscribers, who must enter a serial number for access. Time Warner, for example, is promoting HBO Go, a new password service that allows HBO subscribers to watch about 800 titles each month online.
But monthly cable fees are increasing 6 to 7 percent a year - twice the rate of inflation. In some regions, the price of basic cable is now $80 a month. And there are other options. With the economy as bad as ever for many cable subscribers, something has to give. Increasingly, Americans are cutting the cord -- in favor of less costly television services. For example, the new Hulu Plus pay-television service debuted on the Internet recently for $9.95 a month. Hulu insists it is not competing with cable. But few believe that. Competition for eyeballs is fierce. At an annual media conference in Sun Valley, Idaho this summer, cable providers and entertainment companies talked of selling cheaper cable bundles in order to try to keep customers and compete with the likes of Netflix, Apple, Google and Hulu Plus.
"It would be a good thing if we could all figure out a way to have one or more smaller packages that would be attractive to people who can't afford bigger ones, especially if we could do it in a way that the entertainment companies are still able to finance the product," Glenn Britt, chief executive at Time Warner Cable, told Reuters. Yet, Britt added, though talks are happening on some level, efforts so far are not that serious. Expect that to change soon - very soon. Even Wall Street is worried about the future prospects of cable, with repeated warnings that prices are too high and must come down. Comcast, like most pay-TV companies, continues to lose video customers. In the second quarter, Comcast lost 265,000 video subscribers to end the quarter with 23.2 million. On the other hand, Comcast's high-speed Internet customers climbed by 118,000, compared with the growth of 65,000 in the same period last year.
As a backdrop to all of this, the federal government just allocated $7.2 billion in stimulus spending for extending broadband Internet access to poor or rural parts of the nation. Many of these areas still have dial-up Internet service. In some places, the nearest high-speed connection is a 10-mile drive to the local library. So far, more than 200 small projects have been awarded about $3 billion in grants and loans from the U.S. Agriculture and Commerce departments. The stimulus law requires that all the money in the program be allocated by Sept. 30.
The new spending will trigger a burst of online activity that will give millions of Americans new options for accessing television. It also will increase the economic pressure on all commercial television operators - from stations to networks to pay operators - who continue to struggle as the Web closes in on their business.
The time is rapidly coming when television producers will sell their programs directly to individual viewers online. With the middlemen diminished, the consumer wins: The price for programming will drop dramatically. Viewers will pay for only the shows they choose to watch. Pay providers will finally lose their immense power as bundlers and aggregators of programming.
In an equally dramatic shift, ordinary people and businesses will make their own video for use on the Internet. Of course, it's already happening to some extent. However, higher-quality video made by individuals will arrive as the skill sets are acquired to do professional productions.
Already, YouTube and streaming media sites offer a free distribution system for video. This video interconnects with blogs and Web sites. All that's holding most enterprises back today is the lack of skill and expertise in producing and distributing professional-quality video.
It's been about 35 years since the portable video revolution began. The first camcorders in the mid-1970s cost about $40,000. Today, prices are so low that just about any individual can afford to own a high-definition video camera.
With the roadblocks mostly gone and the democratization of video nearly complete, the future rests with the skill and talent of empowered individuals and small groups to make compelling programming. As always, most of this video from the masses will be pure drek. Unfortunately, that's a price we pay for ending the era of tight corporate control.