IP: NAB - the Super Nova is imploding

[David Farber <dave () farber net>]

> To: OpenDTV Mail List <openDTV () topica com>
> From: Craig Birkmaier <craig () pcube com>
>
> Sender: <openDTV () topica com>
>
> NAB 2001 - The laws of physics still apply
>
> Throughout history we have seen examples of the role that technology can 
> play in facilitating major shifts in power...those radical shifts that 
> dislodge well entrenched interests allowing new "eras" of history to 
> begin. One oft cited example is the invention of the printing press, which 
> made it possible to break the stranglehold that the institutions of that 
> time (principally the Catholic Church) held on the dissemination of 
> information to the masses. Before the printing press, books were produced 
> by hand, mostly by Monks - those who were privileged enough to own a book 
> were among societies elite, but more important, they controlled knowledge 
> and made certain that it conformed to the prevailing beliefs of the day... 
> like the notion that the Earth was the center of the universe.
>
> In modern times we have witnessed major changes due to shift from an 
> agricultural to manufacturing based economy; From horse drawn 
> transportation to vehicles with "horsepower" to spare. And now we are 
> seeing yet another sea change due to the ease with which we all can 
> create, distribute and share information in the emerging digital world.
>
> Earlier this year at "Morning After" session at the ITS Technology 
> Retreat, John Sprung created a mental picture of the current mess we are 
> in with the transition to digital television broadcasting. John repainted 
> the image we have all seen many times of Wiley E. Cayote, having run off 
> the cliff, hanging in space, in suspended reality, just before the big 
> fall. Sprung indicated that this is exactly where we "stand" today with 
> the DTV transition.
>
> Well that was in February. As hard as it may be to believe, things have 
> changed dramatically in just two months. The broadcasts business is no 
> longer hanging in suspended animation...the bottom just fell out and Wiley 
> and his ATSC standard have come crashing to earth.
>
> The irony of this is that it has absolutely NOTHING to do with technology. 
> The bottom has fallen out of legacy broadcast business models worldwide. 
> It matters not whether we are talking about ATSC or DVB-T, 8VSB, E-VSB, 
> COFDM or ISDB-T. The fundamentals of the business are finally giving way 
> to a new reality...
>
> TV Anywhere
> TV Anytime
>
> What You Want Is What You See
>
> The days of herding the masses round the TV set to drink the "kool-aid" 
> from the government supported propaganda machines is finally coming to an 
> end; in truth it has existed in suspended animation for nearly a decade.
>
> In the U.S. the broadcast establishment is fracturing from within. In 
> Great Britain the grand experiment with DVB-T has hit the wall. The ITV/On 
> Digital crowd has finally awakened to the reality that they are not 
> competing with one another, but with the Death Star controlled by Rupert 
> "Darth Vader" Murdoch and Newscorp.
>
> Everywhere one looks the reality is the same.
>
> Any business model based on trying to force people to sit down at a 
> specific time to watch a program is withering. Meanwhile, business models 
> based on accumulating targeted audiences over time are gaining momentum. 
> In an era where we are constantly bombarded with messages that we don't 
> want, people are willing to pay a premium for the content - AND THE ADS - 
> that they do want.
>
> While I did not have time to attend the NAB keynote in person, I found the 
> remarks of Eddie Fritts (which follow) to be quite revealing. Seems Mr. 
> Fritts and company have finally discovered that broadcasting cannot defy 
> the laws of the Universe forever, even with the help of their friends in 
> Congress who have given them every possible competitive advantage.
>
> The "product life cycle" of NTSC has defied all logic. Somehow it has been 
> possible to milk this business for more profits, even in the face of 
> decline...a negative slope to the end of the product life cycle curve. But 
> this time the bottom really has fallen out. Broadcasting has taken that 
> final step off the digital cliff.
>
> The spin machine is busy trying to tell us that everything is OK now that 
> that nasty modulation issue has been put behind us. But U.S. broadcasters 
> know otherwise.
>
> There's a new atmosphere in Washington. It's deregulatory. We gave you 
> what you asked for, and now we are going to watch as you feed upon one another.
> Regards
> Craig Birkmaier
> Pcube Labs
>
>
> Edward. O. Fritts
> National Association of Broadcasters
>
>
> NAB2001 All Industry Opening
> State of the Industry Address
>
> April 23, 2001
>
> Good morning and welcome to NAB 2001.
>
> Let me tell you about three totally unrelated things that I've heard on 
> the news recently, and then let me tell you what I think they mean to the NAB.
>
> Number one ... astronomers have made a discovery regarding supernovas. 
> This discovery apparently could alter our very conception of the universe.
>
> Two Š the president of Russia has changed the lyrics to that country's 
> national anthem. In place of the old Soviet lyrics about Lenin and 
> communism's triumph, the new lyrics instead celebrate a "holy country ... 
> protected by God." Quite a change.
>
> Three ...in February, E-toys announced that it was seeking bankruptcy 
> protection. Its stock, which had once been as high as $86 a share, was 
> down to nine cents a share when trading was stopped.
>
> Now, here's my point Š if scientists can alter something so basic as their 
> conception of the universe, if Russians now sing of God rather than Lenin, 
> if Internet high fliers can so quickly rise and crash to earth ... should 
> we expect radio and TV broadcasting to be immune from such wrenching 
> change? The answer, of course, is no.
>
> Broadcasting's universe IS changing. The real question is how we meet 
> these challenges.
>
> On top of the technological, financial and political challenges 
> broadcasters face, we now face the added challenge of division within our 
> own ranks. Rather than focusing 100 percent on meeting the challenges from 
> without, all of a sudden we are challenging ourselves from within.
>
> What I'm talking about, of course is the split between the affiliates and 
> the networks. Never in our industry's history have tensions been so high.
>
> In the old Soviet national anthem that I just mentioned, they used to sing 
> about, quote, "an unbreakable union of republics." The Russians removed 
> that phrase in the new anthem.
>
> Some would suggest the concepts of union and unity have been removed from 
> the NAB anthem.
>
> This is an unsettling time in any number of ways. There are those who 
> worry about the future of our association and our industry. Well, I can 
> tell you that I have total confidence in the future of the NAB. We will 
> continue to be a vibrant, aggressive advocate for free broadcasting. We 
> will remain strong, committed and effective ... with membership in all 50 
> states and in every congressional district in this nation!
>
> Over the last decade, we have an enviable record of public policy success. 
> We've had victories in the Congress, the FCC, the courts and even in the 
> Supreme Court. These victories don't count the scores of other actions 
> harmful to free broadcasting that we've stopped, sidetracked or finessed.
>
> We haven't succeeded, however, just because OF OUR political expertise. We 
> have been successful because free, local broadcasting is a public service 
> and a public good. Neither this mission nor our credibility is about to 
> disappear. Our members, who are integral parts of their communities, are 
> not about to abandon their commitment to localism.
>
> What we're experiencing right now is nothing new. I don't want to minimize 
> the hurdles before us, but we've had discord in our ranks before. There 
> was a time, for instance, when radio was deeply divided, but they came 
> back together for the common good. The NAB is still here doing what we 
> need to do ... and we will continue to do so.
>
> And it's a darn good thing we ARE here ... Because our industry DOES 
> confront some big challenges. Since we met a year ago we have a new 
> President, a new Congress and a new FCC. While we generally expect to 
> benefit from a lighter regulatory touch, some issues will be more difficult.
>
> Additionally, our economic playing field has been reversed in the last few 
> months. For example, this industry is in the most difficult advertising 
> market since the late '80s, early '90s. Added to that economic reality, we 
> are up against more competitors than ever before -- satellite, cable, 
> broadband, the Internet. All this is occurring at a time when we're faced 
> with the very expensive transition to digital. The very future of 
> broadcasting rests on the successful completion of this transition.
>
> Tennessee Williams said, "There is a time for departure even when there is 
> no place to go." Now ... we all know where we must go -- to digital. The 
> hard part is the logistics of bringing it about.
>
> This country faces a choice between two timelines. Either marketplace or 
> governmental ... We can follow the marketplace timeline ... in which case 
> the transition to digital will be elongated over many, many years. Or, we 
> can follow a government deadline that forces consumers to replace nearly 
> 300-million analog TV sets in just five years. I submit that if we follow 
> the government timeline, there needs to be minimal government intervention 
> to facilitate the needs of consumers.
>
> Today, for instance, if a consumer purchases a new digital TV set, takes 
> it home, and plugs into cable, and turns it on, they will learn it doesn't 
> pick up free, local broadcast channels. How does that benefit consumers? 
> What's wrong with this picture?
>
> We contend there are three obstacles standing in the consumer's path to 
> digital broadcasting. One, the cable gatekeepers must carry the local 
> broadcast channels offering digital and HDTV programming. Two, TV 
> manufacturers must put DTV tuners in every new set that is made. Consumers 
> want and deserve sets that will receive both analog and digital. Three, 
> the issue of DTV/ Cable interoperability must be resolved. It is not 
> simple, but none of these issues are.
>
> Congressman John Dingell has said that the barriers to DTV transition may 
> be "too great to overcome without additional government intervention." He 
> is absolutely right. The transition to digital in this country has been 
> handled about as effectively as California handled the deregulation of energy.
>
> WE are working to resolve these issues with the consumer electronics 
> association. A sign of our partnership can be found at the DTV Store in 
> the lobby of the Las Vegas Convention Center. On display there is a wide 
> variety of DTV receivers available to consumers today. Most importantly, 
> that display sends another important signal -- that broadcasters are 
> committed to the DTV transition.
>
> On the other side of the aisle, Radio faces its own digital challenges but 
> the signs look good for the iBiquity system providing in-band, on channel 
> digital radio. We're excited about recent announcements from iBiquity 
> denoting steady progress toward adoption of IBOC digital radio.
>
> Without a doubt, our biggest victory last year was in scaling back the 
> FCC's Low-Power FM plan. This was a true victory for spectrum integrity. 
> It was a tough fight. It took the entire year, but the NAB, the 50 State 
> Associations and hundreds of local broadcasters protected the airwaves 
> from increased interference.
>
> Battles such as this are why we exist as an organization. Unfortunately, 
> all victories in Washington are temporary ... and nothing demonstrates 
> that more clearly than the latest moves to reverse the LPFM legislation. 
> Senator John McCain recently introduced a bill that would roll back the 
> LPFM legislation of last year. So here we go again.
>
> Another challenge emanating from Washington is the so-called "campaign 
> finance reform legislation. The truth is that it benefits the politicians 
> but does nothing for the voting public. McCain Feingold is a clever means 
> for politicians to buy even more air time for their negative ads. What's 
> happening here is that the politicians have voted to give themselves the 
> cheapest rates during the most valuable time slots. As Senator Don Nickles 
> has said, "This is better than free time." They have granted themselves 
> special privileges unavailable to the fast food restaurant or the auto 
> dealership in the local marketplace. In the words of Chairman Billy 
> Tauzin, "Why should a politician pay a lower rate than a Ford dealer?"
>
> The issues we face are indeed daunting. I call on broadcasters all across 
> the country to redouble their efforts to meet these challenges. What we 
> provide is a free, local service to the community. Broadcasters also 
> provide over $8-billion a year in public service announcements and funds 
> raised for local charities and disaster relief. What we provide is a 
> public good, and that deserves defending.
>
> At the end of the day, our internal issues will be resolved, one way or 
> another. Then what? Will the NAB remain an umbrella organization? You bet 
> we will. Some say that this umbrella approach -- radio and TV, large and 
> small, network and affiliate -- is our weakness. I believe it is our 
> strength, a strength that has given us many victories over the years.
>
> And I publicly want to thank ABC for remaining with us. We value your 
> standing side by side with us, in spite of your disagreement on the issue 
> of the 35% ownership cap. We want to acknowledge your independence, your 
> larger vision, your commitment to the long-term good of the broadcasting 
> industry.
>
> Ladies and gentlemen, everything is still in place to continue our record 
> of success. We never like to lose a member, large or small, but we are 
> neither diminished nor demoralized. I can say with absolute confidence 
> that we have the means and the members to continue the fight. We know who 
> we are and we know where we're going.
>
> We are going onward.
>
> We are going upward.
>
> And we are going forward.
>
> Thank you very much.
>
>
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