Shapiro's Blind Spot: Broadcast TV Innovation

As every one of the 126,000 who attended the International CES undoubtedly knows, Gary Shapiro, the president of the Consumer Electronics Association, has written a book. At a convention that is easily awash in hype, the book more than held its own in that department.

The Comeback: How Innovation Will Restore the American Dream (Beaufort Books) is a right-of-center policy guide for saving America by spurring technological innovation. It’s worth a read — concise, clear, thoughtful, and provocative. If you are a thinking person, you will agree with some of the prescriptions, scoff at others.

Shapiro says the book was inspired by a run-in a couple years ago with a Chinese official at a banquet who was upset about the impact the sub-prime mortgage meltdown was having on the Chinese economy. The official pointed his thumb up. “China going up,” he said in English. Then he turned his thumb toward the floor. “U.S. going down.”

At first the incident made him angry, Shapiro says. But he eventually accepted it as true and that set him to thinking about how to get things in American moving in the right direction again. Hence, the book.

Now, you would think that a guy who just wrote a book on innovation, would at least know it when he sees it. But he has a big blind spot.

Right there in the middle of the Central Hall of the Las Vegas Convention Center, broadcasters’ Open Mobile Video Coalition showcased mobile DTV, a service that will let viewers tune into the best TV now has to offer on tablets, smart phones, netbooks and other portable devices when they are roaming around outside the house.

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If all goes according to plan, the service will comprise many channels, simulcasts of regular local broadcasts for free along with cable networks and VOD for pay.

To provide the service, broadcasters have coalesced into two consortia. Just before the CES opened, one of the consortia, the Mobile Content Venture, led by NBC and Fox, said it had awarded contracts for the conditional access and user interfaces, keeping it on pace to inaugurate a service by the end of this year. The other consortium, the Mobile500 Alliance, said at the show that its station-members could now deliver mobile DTV to 92% of the population.

The broadcasters are going to launch the new service while maintaining their regular HD over-the-air service, which insures that every TV set in every home can enjoy the best of TV and has access to local news and weather.

It all sounds rather innovative to me. But Shapiro doesn’t see (or chooses not to).

In the book, Shapiro argues for taking away half of the broadcasters’ spectrum by 2015 so that it can be sold at auction to the likes of AT&T and Verizon and put to use in wireless broadband applications. Such a move would starve mobile DTV of spectrum and kill it. But that’s OK by Shapiro.

“We cannot let an old business model hog government property any more than we would have granted horse-and-buggy makers exclusive use of the public roads after the invention of the car,” he says.

Shapiro calls broadcasting an “incredibly inefficient” use of valuable spectrum, noting that its over-the-air audience has shrunk to less than 10% of TV homes.

I believe that Shapiro is lowballing the percentage of OTA homes. It’s higher than that and I believe it’s growing as more consumers recognize what a bargain OTA is and cut the cord of cable and satellite.

But what gets me is that Shapiro is ignoring broadcasters’ mobile DTV initiative, which, by any definition, is innovative and, given the quality of the programming, more important than many of wireless gimcracks and geegaws shown at CES.

Well, I guess if a fact doesn’t support your argument, the thing to do is leave it out and hope nobody notices. Such a lapse makes me wonder what else he is leaving out of his book when he makes his case for reforms in free trade, education and immigration.

Shapiro sounded the same theme during his opening speech at the CES last Thursday morning. Broadcasters “are squatting now on our broadband future,” he said. Perhaps Shapiro believes that broadcasters are engaged in a giant sham, pretending that they will put their excess digital spectrum to work in mobile so they can warehouse it for some bigger payday somewhere down the road.

If he does, he should say so, although labeling broadcasters as liars is no better than disparaging them as hogs and squatters.

In the book, Shapiro laments the “coercive hand of government” that skews free markets. Yet, in his calls for broadcast spectrum reallocation, Shapiro is aligning himself with the FCC in its attempt to direct private business.

As you should know, FCC Chairman Julius Genachowski has made shifting a big block of spectrum from broadcast to broadband a centerpiece of his agenda. In fact, he gave a speech at CES in which he once again made the case for it.

Shapiro, who portrays himself as a free marketeer, sees no irony or inconsistency in his hooking up with a bunch of federal officials and deciding which industry or service is more worthy of precious spectrum.

Look, if broadcasters were doing nothing with their spare digital spectrum, I’d agree they should give it up. They should accept Genachowski’s offer, let the FCC sell it to wireless operators and take what they can get.

But that’s clearly not the case. They are investing ample money and energy into adding an innovative and potentially revolutionary dimension to broadcasting.

And they deserve this shot. They’ve earned it from having invented television and having provided 60 years of magnificent service. Not incidentally, they’ve sold a few TV sets for the consumer electronics industry in that time.

Mobile DTV could lead a broadcast TV renaissance. Next January, I fully expect that if I need to make a run to the supermarket during the football playoffs, I will be able to take the game with me.

Like it or not, Gary, broadcasting going up.

Harry A. Jessell is editor of TVNewsCheck. He can be contacted at 973-701-1067 and hajessell@newscheckmedia.com. You can read his other columns here.

Comments (30)

tom denman says:

January 11, 2011 at 9:02 am

Shapiro’s comment are powered by the major cell phone and mobile device manufacturers, I mean he is with CES isn’t he? Unfortunately for TV broadcasters, this mobile TV thing will be a non-starter. Not only is the reception very limited to a finite area withing a DTV coverage area, the assumption is somehow that domestic consumers will embrace carrying around a TV set as they have for years in Asia. Asia is a much more mobile society than in the US. People get their media fix while on the subway or train, many not having a TV at home. In the US, the consumption of media is quite the opposite. Video viewing on mobile devices in the US will be most popular, as with music, by downloading and viewing content when the consumer wants it, not live. Look at the expansion of DVRs over the past ten years.

Matthew Castonguay says:

January 11, 2011 at 9:08 am

It’s not “live” OR “on demand”. It’s BOTH. The idea that Shapiro is pushing this agenda at the clear direction of his membership is not clear either – the big boys are heavily involved in mobile DTV, and in any event, from a consumer p.o.v. at the end of the day either vision requires devices that essentially will do the same thing ie; deliver all media they want….live or on demand…when/where they want it. I don’t see how the non-mobile DTV approach necessarily results in greater opportunities for CE devices. Can you explain that?

Doug Smith says:

January 11, 2011 at 9:29 am

HowardM makes the right points , short form, downloads,SMS type alerts for news,weather are the future of mobile. They were selling huge 3-D HD sets at CES for $2,000 and people are going to watch Dancing with Stars on a mobile phone?? Besides any service must be a free or cost effective like music downloads. Speaking of innovation let’s look at what’s unique for mobile rather than simple putting on WXXX’s feed that already over the air or on cable.

Todd Barkes says:

January 11, 2011 at 5:36 pm

Mobile DTV is about much more than just ‘little TV’. If broadcasting is to survive, Mobile DTV will be all about connecting viewers with what they want on an interactive basis. Getting this right is about making sure that Next Generation Broadcasting does it better/faster/more often (and believe you me there will be a Next Generation Broadcast Technology that puts today’s digital on steroids!). It is about bringing multiple platforms together in a meaningful way, and still being the face of TV that everyone knows…’the guy/gal next door’ that brings relevance to the programming and makes us feel at home.

January 11, 2011 at 9:04 am

The real issue is not “who’s more innovative?”. The point broadcasters should hone in on is that mobile DTV is a better way to realize the broadband vision the FCC ostensibly is seeking. A combination of point-multipoint and point-to-point delivery of data (mainly video). They are right about exploding demand for broadband (mainly going to be video). Any spectrum they can reclaim from broadcasters will solve that problem for about 6 months. There has to be a better way, there is a better way, and mobile DTV is the key. If broadcasters would only clearly articulate this point and hammer it home, CEA, FCC and others would either have to debunk it, or we could start to smoke out what their real agenda is.

You’re doing a good job Harry, but let’s keep going. Dig deeper.

T Kuhn says:

January 11, 2011 at 10:09 am

The FCC has been made very aware of the necessity of multicast as a part of the solution to growing demand for broadband services. Broadcasters can and already do, to some extent, play in vital role in this area. Certainly, someone as well informed as Mr. Shapiro should know this. What is necessary to promote true innovation in the existing broadcast spectrum space, is the ability to evolve the technologies that broadcasters use to facilitate their services. Broadcasters in the USA, like other spectrum based businesses should be able to choose from the best technologies available on the world stage and reception devices should be compatible with any network . . . This is how the wireless industry has been able to evolve their technologies and services so quickly! The chairman likes to use the word “unleash” in his various speeches. How about unleashing the broadcast industry as well, certainly before he implements his “incentive auction” plan to gut the broadcast industry and destroy the public service, diversity of voices and ownership, which are unique to broadcasting in America. As for Mr. Shapiro’s apparent interest in serving as an errand boy for the wireless industry, perhaps he should remember that many of his largest CEA members also build mobile TV receivers.

Grace PARK says:

January 11, 2011 at 10:20 am

Harry, good piece. I’m always amused when people like this open their mouths, for they almost always look stupid in so doing. If Mr. Shapiro truly represented the technological community, he would be lobbying for unlicensed spectrum and not to hand it over to another private business community, the Telcos. In 1985, the FCC released spectrum in the 2.4 GHz ISM band, which led to the birth of WiFi ( IEEE 802.11). In the same space is Bluetooth and a host of other technological breakthroughs that we all take for granted today. If we can do all that as a nation with a tiny, tiny slice of bandwidth, imagine the innovations that could/would spring forth from something even bigger. You won’t hear any of that from Shapiro, though, even though his industry has been at the forefront of such development. Why? Because he’s in the back pocket of the Telcos. Just my 2-cents.

Peter Tannenwald says:

January 11, 2011 at 10:29 am

Snap! Well, Gary?

Candis Terry says:

January 11, 2011 at 10:51 am

The fact is that all the gadgets in the world are useless without compelling content. Broadcasters provide it. That’s not just my opinion — take a look at this excellent article in Advertising Age: http://adage.com/ces/article?article_id=148092. My stroll around the CES floor, as interesting as it was, made this conclusion inescapable for me. Gary’s constituents had better be careful about killing the golden goose.

Robert Crookham says:

January 11, 2011 at 12:09 pm

Of course, when Shapiro makes his comment about OTA reaching only 10 percent of homes, he completely ignores the fact that many cable and satellite distributors receive their local signals OVER THE AIR! There aren’t wires running from every station to every headend. That increases the OTA reach quite significantly. Take away the OTA delivery to headends, and broadcast signals disappear from cable and satellite. Of course, that wouldn’t both Shapiro’s puppet masters…

January 11, 2011 at 12:10 pm

That should read, “wouldn’t *bother* Shapiro’s puppet masters”…

mike tomasino says:

January 11, 2011 at 12:13 pm

Trip Ericson of rabbitears.info did an analysis that estimated that broadcasters are currently using 75-86% of their spectrum and that the “empty box car” anology has no basis in reality. Also, the less than 10% statistic is skewed by large markets where tall buildings block and reflect broadcast signals (and the fact that cable companies over report subscriptions to boost ad sales). There are some markets where OTA only accounts for 30% of households. Why should those markets suffer due to urban reception problems and inaccuracies in cable reporting?

January 11, 2011 at 12:24 pm

re; “OTA is only 10%”. Snap you are correct. Moreover, there is an incorrect assumption built into these statements…that anyone who subscribes to cable or satellite therefore does not use OTA TV. There are many homes that do have one or two TVs hooked up, and then several others that aren’t and use OTA for those. I don’t know if anyone really knows what the “use any OTA service” % is, but it’s definitely way higher than 10%.

john bailie says:

January 11, 2011 at 2:06 pm

Since when is spectrum “government property?” It’s that kind of thinking that empowers misguided public officials like Genachowski.

Drucilla Neeley says:

January 11, 2011 at 2:11 pm

I GUESS 308 MILLION PEOPLE WANT THERE OWN TV CHANNEL GOOD LUCK

January 11, 2011 at 2:13 pm

THE GOVERNMENT DOES NOT OWN THE BROADCAST FREQUNCIES WE THE PEOPLE DO IN TRUST. NOT FOR SALE

jeff lee says:

January 11, 2011 at 7:44 pm

If Shapiro and CEA (See Ya!) could produce an electronic device that utilizes rainwater, it’ll never rain again.

Kim Sterton says:

January 12, 2011 at 12:03 pm

Thanks Harry for focusing on these issues – you are a great journalist and advocate for broadcasters. A few responses:

First, it is a fact that fewer than ten percent of American homes may rely on over the air broadcast as they don’t have cable, sattelite or fiber entertainment.

The argument that because cable has lost some subscribers Americans, broadcast is equally gaining ignores the fact that an increasing number of Americans are simply using broadband (wired or wireless) to fill their information and entertainment needs.

“The Comeback” does describe how broadcasters helped positively with the DTV transition, but anyone who lived it can recall the numerous roadblocks broadcasters raised (insisting on 480P as the best format, delaying, wanting 4 x3 ratio, etc.). The result was good but the process was a challenge.

Broadcasters as a group through the NAB have tradtionally been reluctant to embrace new technology and have been good at blocking innovation through politics (think of micro radio, RDS, the proposal to mandate FM on every phone). But we have worked together for some good things (stereo television, ghost cancelling, DTV and mobile TV).

I represent over 2000 technology companies, and not one yet has told me to stop seeking more spectrum for both licensed and unlicensed – more spectrum, is a CEA priority and incentivized auctions are a pretty good deal for broadcasters.

January 13, 2011 at 9:38 am

Mr. Shaprio, thank you for commenting in this forum. We appreciate the opportunity to engage with you. I do have some questions:

1/Why do you keep just ignoring any facts that don’t fit your narrative? Every home that subscribes to cable, satellite or fiber is not necessarily a “non-broadcast home”. Many of these homes have sets that utilize one of these services, AND also have sets that rely on broadcast. The net result is that far more than 10% of homes utilize OTA broadcast. That’s a fact.

Two, you refer to mobile TV as a “good thing” coming from broadcasters. Do you understand that spectrum re-allocation (ie; re-packing TV in the VHF band) will KILL mobile TV?

Three: Will you please once and for all address the issue of scalability of a point-to-point infrastructure for high-demand, live content? Is it your position that if 10,000,000 users want to watch the same live (say, breaking news) event on a mobile device, that the best way to do that is by delivering 10,000,000 individual streams?

Ellen Samrock says:

January 12, 2011 at 2:34 pm

The incentive auction is NOT a ‘good deal to broadcasters’ when you consider what is at stake, namely Mobile DTV and multichannel broadcasting. The income potential from these technologies is unlimited. Whereas a full power station will get, what, 5-10 million at best from the auction? And as far as we know, low power stations will get zip. Come on, get real here! Like the man said, we gave at the office already. Look for spectrum elsewhere. In fact, you can start by looking at all that warehoused spectrum wireless providers are already sitting on.

January 12, 2011 at 3:16 pm

Gary, Daniel Brown is competely right. Broadcast television has every right to keep every MHz of its spectrum and you need to get over yourself and get off the greed train. I can see that broadcasting has the tendency that all media types seem to have to resist change, which isn’t good, but broadcast has just been handed the chance to come back and dominate, and you folks need to allow it the chance to do that. If one antenna company can sell half a million antennas in one year with November and December being the best months, there is something going on in OTA land. You can get on the wagon or get run over by it!

January 12, 2011 at 3:20 pm

And, I need to add that there is a big difference between getting more spectrum for broadband and taking it from broadcasting. Maybe the feds need to cough up a bit, and maybe the spectrum that’s already out there needs to be built out. But, using the FCC to kill off your competition is just wrong!!!

January 12, 2011 at 3:45 pm

Snap, you’re absolutely right. This spectrum grab also presupposes that wireless technology will never change; that it will never make more efficient use of existing spectrum then it is making now. But when you look at the evolution of the technology we know that that isn’t true. Future wireless devices will be doing more with less.

January 12, 2011 at 6:01 pm

Since for most carriers “4G” is really only “3G+” we haven’t even realized the potential of 4G. Plus, what about 5G, 6G, and 7G. I’ve had 3 cell phones in 7 years. Meanwhile my parents are still using the 25 inch color consol that my grandparent bought in 1980.

January 12, 2011 at 7:25 pm

This whole issue may be moot anyway. Today (1/12) at a Brookings Institute panel Genachowski actually expressed doubt that Congress would pass the incentive auctions. We can only hope.

http://thehill.com/blogs/hillicon-valley/technology/137443-genachowski-no-bets-on-congress-oking-an-fcc-priority

January 13, 2011 at 12:02 am

Yeah, but Upton just reported that the spectrum bill will “likely” include incentive auctions. That of course doesn’t mean it will pass, or that it will pass in its original form. I just hope that no one gets forced to give up their channel and that no one volunteers. But, I don’t trust any politicians, bureaucrats, or presidents of the CEA to tell the truth ever. You know Mr. Shapiro, that absolutely worthless AntennaWeb web site is proof positive that you wanted the digital television transition to fail. The only thing it was good for was discouraging people from even trying to use free DTV.

January 13, 2011 at 9:38 pm

Thanks for all the feedback. Some one should explain to me why this spectrum owned by the US public has now become broadcaster property – and yet no broadcaster funds went to the US Treasury. It is not owned by broadcasters – it is a temporary license!!!

Responses: we are looking for spectrum from broadcasters and elsewhere. Government recently said it is making a nice swath of non-broadcast spectrum available.

Antennae website was a CEA financed site which for years we begged broadcasters to help fund – they did not. So CEA was the one promoting free over the air broadcasting – not NAB. Finally, recently with new NAB leadership – they took it over..

FCC Chairman has given a consistent answer on incentive spectrums. He is not a prognasticator. I think he is being quite generous to broadcasters.

Good point about under ten percent number – it only counts homes with no cable or satellite or fiber. (but not those who may rely exclusively on wi fi) – It’s a lot less than the 100 percent who used to rely on OTA and with digital you have to raise the question of the spectrum being used efficiently.

January 14, 2011 at 10:29 am

Mr. Shapiro, Thank you for the feedback. Thank you for the added information. I have to agree that if broadcasters lose their spectrum it will be their own fault. They could have promoted their OTA digital signal at any time, but they refused to do so because they came to believe that retransmission fees were going to save them. But, the less than 10% number is a bit misleading. It is .2% in Boston, 3.3% in New York, but 29.2% in Boise, 28.2% in El Paso and 22.6% in Milwaukee. That doen’t count people who may have cable or satellite who get locals over the air. Either for cost savings, better picture quality, more local channels, or simply for additional televisions. And, I really doubt that the Neilsen numbers are all that accurate since a large percentage of my friends and family members are OTA only, and I haven’t heard a peep from Neilsen since the early 80s. I really think that cable companies pad their numbers for ad revenue. Add to that, that antenna sales are rapidly rising. Give it five years without a spectrum grab, and then we can start talking about whether broadcast spectrum is being used efficiently. Trip Ericson of rabbitears.info shows broadcasting spectrum use at 75-86% with new services like mobile just rolling out.

January 17, 2011 at 1:06 pm

How wide did you have to open your mouth to stick your foot in it on C-SPAN the other day? Business gets a bad wrap for being greedy because of a “few bad apples” like you!

January 17, 2011 at 6:40 pm

Let’s just cut to the chase here. The spectrum crisis is a hoax. And despite the fear mongering on the part of Genachowski (“The US is losing its competitive edge because we’re running out of spectrum–and broadcasters are to blame! Arrgh!”) and Shapiro (“The NAB is bullying Congress and broadcasters are to blame! Arrgh!”) cooler heads are beginning to prevail. DSL Reports.com is asking for accountability from the telcos on how they plan to use the 150 MHz they’re already hoarding and Sen. Olympia Snowe recently asked the FCC for a spectrum inventory–something they promised to provide over a year ago. Let’s hope more people, and especially members of Congress, start asking similar questions.