NextGen TV: What About Diginets?

Now to one of the harder issues NextGen TV presents broadcasters: space, or perhaps more accurately stated, the lack of space.

Those old enough to remember the days of nearly square (4:3 aspect ratio) TV sets and rabbit ears or rooftop antennas may also recall the television industry transitioned its over-the-air service from an analog standard (called NTSC, for the National Television Systems Committee responsible for defining it) to DTV.

It was a long, slow transition that began in the mid-1990s and didn’t wrap up until the Obama Administration. In fact, one of the first things President Obama did after taking office was to extend the deadline for the transition to give Americans more time to buy a digital television (DTV) or take advantage of a government-subsidized coupon for a discount on a set-top box that would convert DTV signals to their analog equivalents so mom and pop wouldn’t have to discard their old set and start fresh.

A defining characteristic about this analog-to-digital transition that helped to make it a success was a government decision to grant TV broadcasters on a temporary basis a second channel to simulcast their programming as a digital signal while maintaining their analog channel. The significance of this decision is hard to overstate.

By allowing broadcasters to simulcast an analog and digital channel, the government gave the public a way to make their own transition to DTV more naturally. In other words, households were not forced to make a major purchase. Rather, millions of U.S. TV households more organically converted of their own volition when it was time to replace their aging sets, not because they woke up one day, turned on their old sets and there was nothing but snow where they once expected to see “Good Morning America.”

Further, Americans turned out to be wild about rectangles and skinniness. They were attracted to flat panel LCD and plasma TVs like moths to a flame and by the millions discarded their old sets for these replacements, which happened to be equipped with DTV tuners and the ability to display HDTV.

The NextGen TV Transition
Fast forward to today. Once again broadcasters are transitioning to a new television standard, but they are doing so without the benefit of being awarded a second temporary channel to transmit their ATSC 3.0 signal to NextGen TV set owners while maintaining their ATSC 1.0 DTV service on their existing channels.

Rather, the way the Federal Communications Commission rules are written, the transition to ATSC 3.0 is “voluntary.” As such, no temporary simulcast channel has been awarded. In fact, this NextGen TV transition came right as broadcasters were being required to relinquish spectrum that ultimately was auctioned by the government to wireless companies for cell service.

To enable the transition, the FCC changed its rules to allow competing broadcasters in a market to share a channel and play some fancy musical chairs, ganging up their DTV channels on the same existing 6MHz channel assignment (more likely multiple 6MHz channel assignments in a market) to free up one channel to be shared by the same broadcasters for their ATSC 3.0 transmissions. 

(As discussed in the previous blog, ATSC 3.0 uses a different, more spectrally efficient type of modulation and more efficient compression, which make it easier for so many broadcasters to share a single 6MHz assignment to deliver their over-the-air [OTA] NextGen TV channels.)

Like the DTV transition, the idea is that over time consumers will replace their existing DTV sets with NextGen TV sets, and the long march has begun. Numbers from the Consumer Technology Association (CTA) reveal that overall 2021 sales of NextGen TVs more than tripled the 2020 forecast with shipment of 3 million units. This year, CTA predicts sales of 4.5 million units, and based on sales projections the association expects nearly one-third of U.S. homes to own a NextGen TV by 2024.

The plan is that at some point during consumer adoption of NextGen TVs, local TV stations will shut off their ATSC 1.0 OTA service, return from their shared 3.0 stick (or sticks) and begin transmitting ATSC 3.0 on their own assigned channels.

In theory, the approach sounds workable. But there’s a rub: the growth of Diginets.

Enter Diginets
Most local TV broadcasters don’t simply transmit one main channel. Compression technology—even MPEG-2 compression technology—as well as another technology known as statistical multiplexing, or stat muxing, efficiently combines multiple digital sub-channel or “dot 2” channels along with a broadcaster’s main channel in a single 6MHz TV channel. While most of the available 19.4 Mbps available in one physical channel are allotted to carrying the main channel in 720p or 1080i HDTV, the rest are devoted to carrying a variety of secondary channels—most often as a standard definition (SD) service.

Public broadcasters, for instance, might transmit non-commercial digital subchannels devoted to children, education, cooking and travel. Many commercial broadcasters, on the other hand, generate revenue from ads sold into programming on any of a variety of Diginet offerings with names like MeTV, Comet TV and Grit from broadcast companies like Weigel Broadcasting, Sinclair Broadcast Group and Katz/E.W. Scripps Broadcasting, respectively. 

Through affiliate relationships and a broadcast group’s own stations, these types of networks have broad national reach. For instance, MeTV reaches 90% of U.S. TV markets. Together, these Diginets account for under $1 billion in ad revenue, according to a 2021 Forbes article. Granted, small compared to the $68.5 billion U.S. broadcast ad spend projection for 2022, but large non-the-less. 

What this means in the context of ATSC 3.0 is that broadcasters, following the government proscribed procedure for a voluntary transition to NextGen TV, are somewhat hamstrung in how they advance beyond one or two 3.0 sticks in their market because they do not wish to sacrifice their slice of the Diginet pie.

At the moment, the transition hasn’t threatened the presence of 1.0 Diginets in markets. In other words, those running the transition have been able to shoehorn everyone in. However, that will get harder to do as more sticks light up with 3.0 in markets because fewer ATSC 1.0 sticks will be left to accommodate all of the main and Diginet channels.

However, the fact that ATSC 3.0 is IP-based and has an over-the-top component unaffected by the scarcity of channels in any given TV market may play a role in helping the transition along. It’s not a role without its own challenges, but there may be business and technology solutions that will make it possible to overcome them. That’s what we’ll explore in our next blog.