Friday, September 30, 2011

Why I keep going on about rabbit ears

I'm starting a string of posts on this so I thought I'd take a few moments and explain why I think over-the-air TV is worth discussing.

1. I genuinely like the product

I get my television through an antenna on the top of my set and I can't think of a purchase I've been happier with. The picture is DVD quality and I get over a hundred channels, some of them very good, all for free.

2. It provides an excellent service for people who could use something nice

It has always sucked to be poor but in recent years we seemed determined to make it suck worse. Over the air digital television bucks that trend. Anyone with an old TV, a second hand converter box and a set of dollar store rabbit ears can have a source of entertainment, news and education (I get ten PBS channels). That may not seem like much to you but to a lot of people in this country, it can be a major improvement in quality of life.

3. There are other people trying to take that service away

Some would like to sell off the part of the spectrum used for television. Economist Richard Thaler even wrote a New York Times op-ed on the subject, explaining how the sale could solve virtually all of society's ill. Think I'm exaggerating?
Here's a list of national domestic priorities, in no particular order: Stimulate the economy, improve health care, offer fast Internet connections to all of our schools, foster development of advanced technology. Oh, and let’s not forget, we’d better do something about the budget deficit.

Now, suppose that there were a way to deal effectively with all of those things at once, without hurting anyone... I know that this sounds like the second coming of voodoo economics, but bear with me. This proposal involves no magical thinking, just good common sense: By simply reallocating the way we use the radio spectrum now devoted to over-the-air television broadcasting, we can create a bonanza for the government, stimulate the economy and advance all of the other goals listed above. Really.
(I'm tempted to go off on multiple tangents here about how these sales of public land of have a way of going badly for the government and the tax payer, or how the VHF part of the spectrum isn't actually that useful for mobile applications, or how oblivious men like Thaler are to what life is like in the bottom decile, but Rajiv Sethi has already written the definitive rebuttal so I'll just leave it with a link and a recommendation to follow it.)

At the risk of sounding paranoid, I very much doubt that this idea simply popped into Thaler's head. We live in an age subsidized discourse. Whenever you read a news story or opinion piece that seems to come from a lobbyist's desk, you can generally assume that it originally did. I'm not saying that Thaler was paid to hold these opinions -- I'm sure he wasn't -- but I'll bet good money that the experts he relied on were, either directly on indirectly.

There is a huge imbalance of money in this conflict. A number of big and deep-pocketed corporations are gunning for OTA broadcasters. Some would like to carve up the spectrum. Other would just like to get rid of the competition.

4. Competition is good

And over-the-air television plays a vital role in maintaining competition in the world of live TV. If access is limited to cable/phone lines and satellite, the business will always be dominated by a handful of very big and powerful companies and since these companies fall in the middle of the supply chain, we have to worry about both monopolistic and monopsonistic effects.

The industry currently runs on the up-sell model: get people in the door with a twenty or thirty dollar a month plan (sometimes helped along with some opaque pricing), then make the package crappy enough to get people to move up to a more expensive tier. OTA television presents a potentially deadly threat to that model because, in most markets, OTA is actually better than cable's basic package. It has more channels, better content and less compression (this may be less applicable to satellite). Cable has been able to ignore this threat up until now because most consumers are unaware of what they can get for free, but if word gets out cable companies will have to start giving customers considerably more value for their money.

5. There's a story here

And it has been woefully under-reported. New technology. New markets. Small but smart players like Weigel Broadcasting coming up with innovative business models and easily lapping major media companies. For me that's way more interesting than reading about Facebook throwing money at some business problem.

(also posted at MippyvilleTV)


  1. "Cable has been able to ignore this threat up until now because most consumers are unaware of what they can get for free..."

    Do you have more to say about why most consumers are unaware of this great treasure trove of material? I guess maybe it could be as simple as "no one has the profit motive or funding to make them aware of this resource"?

    But without a theory of 'why', I'd be tempted to think that there's some reason the people you're talking about ("bottom decile") can't or won't get this value out of broadcast.

  2. David,

    You jumped groups there -- "most consumers" refers to, well, MOST consumers, more than fifty percent, not the bottom decile. Right now poor people are the ones who ARE aware of what they can get for free and who getting value from broadcast TV. I'm saying that the bottom decile has discovered a bargain.

    As for why people who currently pay for cable (particularly basic cable) aren't making the "rational" decision, I put it down to asymmetry of information. Orphan technologies are usually underutilized for this reason -- think Ubuntu -- and this one also has a branding problem (most people formed their opinion of OTA before it went digital).

    Add to that the huge imbalance in promotion and lobbying, the heavy reliance on contracts and consumer inertia. Cable and satellite providers recognize this inertia and pour a tremendous amount of money into marketing to counter it.

    Finally, there's the piss poor job consumer and business reporters have done with this story. This is where the bottom decile comes back into the picture. I would argue these journalists have little awareness and even less interest in an industry they see as old, non-trendy, and generally frequented by poor people.

    As for the 'trove,' Sethi also points out that basic cable generally has lower picture and TV Guide confirms that in most markets (at least the half dozen or so I've checked) OTA offers money channels than basic cable. That just leaves quality of content and that's a topic for another day.

  3. "You jumped groups there."

    True! Oops.

    "I'm saying that the bottom decile has discovered a bargain."

    Your reasons that most consumers haven't discovered the bargain make sense. Thanks. It does seem like a valuable thing many more people should make use of. I see why you keep going on about it!

    (For me, I don't think cable or broadcast make much sense. It's all internet. I suspect maybe it's the same for a lot of your audience.)