'Very Clear' FCC to Adopt ATSC 3.0, With Order Expected by Fall, Says One Media

The wording of the FCC’s draft NPRM on ATSC 3.0 makes it “very clear” the FCC will adopt the new standard, and an order is expected this fall, said Jerald Fritz, One Media executive vice president-strategic and legal affairs, in an FCBA CLE on the new television standard Tuesday.

The permutations of channel sharing during the ATSC 3.0 transition, selling the standard to “conservative” broadcasters, and capacity concerns raised by multichannel video programming distributors were topics Tuesday. “It’s a very small problem,” Fritz said of the capacity issue. “These are questions that should be worked on,” said Wiltshire Grannis cable attorney Michael Nilsson, who represented the American Television Alliance in filings on ATSC 3.0. “The broadcaster position is just to kick it down the road.” The NPRM is set for a vote at the FCC Commissioners' meeting Thursday.

The ATSC 3.0 transition proposal seems simple on its face, but the closer it’s examined the more complicated it appears for MVPDs, said Nilsson. Under the new standard, broadcasters will be able to move around bandwidth and alter signal quality on the fly, which makes it unclear how current carriage rules would function, Nilsson said. If 3.0 signals take more bandwidth than 1.0 signals, what will MVPDs and broadcasters do about it? Nilsson asked. MVPDs are happy the FCC NPRM will ask many questions about the new standard, he said. Such issues would be better worked out in retransmission consent negotiations, said Cooley broadcast attorney Jason Rademacher. Retrans agreements already contain provisions about bandwidth and carriage, so the same issues can be worked out with ATSC 3.0, Rademacher said. It’s “good government” for the FCC to be asking such questions about the new standard, Nilsson said. He also questioned whether requiring an MVPD to carry ATSC 3.0 through retrans negotiations is truly voluntary. “If you think carriage of the Tennis Channel is voluntary, you probably think carriage of ATSC 3.0 is voluntary,” Nilsson said. The new standard “should be a boon” to MVPDs, said Pillsbury Winthrop Communications Attorney John Hane.

The channel sharing rules that already have been worked out for the aftermath of the incentive auction will be a model for channel sharing during the transition to the new standard, said Wiley Rein broadcast attorney Jessica Rosenthal. The petition behind the ATSC 3.0 proceeding contemplates broadcasters assisting each other with the transition to 3.0 by channel sharing. Broadcasters would host the ATSC 1.0 signal of other broadcasters in their market while they transition to and broadcast an ATSC 3.0 signal, Fritz said. It may be easier to work out sharing agreements during the transition than the auction version because they aren’t permanent, though they could last several years, Rosenthal said. Fritz said ATSC 3.0 sharing agreements may be much larger than auction sharing agreements, with all of the large broadcasters in a designated market area entering into multiparty sharing agreements with each other. That could lead to smaller broadcasters and low powers without a “dance partner,” said Fletcher Heald broadcast attorney Peter Tannenwald.

Such channel sharing arrangements may have to take care to avoid being regarded as anti-competitive arrangements between stations in the same market, said Arnold & Porter antitrust attorney Wilson Mudge. Though broadcasters can argue that sharing facilities is necessary for the transition to ATSC 3.0 and not anti-competitive, other joint ventures that arise out of those arrangements could be seen as collusion among competitors, he said. “Agreements should contain protections against sharing competitively useful information,” Mudge said. It’s also possible that stations in the same market that were left out of such arrangements could make an antitrust argument against the sharing stations, Mudge said. If the station wasn’t included for legitimate business reasons, such as not having enough revenue or enough power, the sharing stations would have a good counter argument, Mudge said.

The sharing plan for the transition could run into issues with noncommercial educational stations, Fritz said. Since NCE stations are prevented by law from using their facilities for profit, it could be argued that the law prevents them from sharing with a commercial station, he said. The FCC approved sharing in connection with the incentive auction between commercial and NCE stations, so it shouldn’t become an issue for ATSC 3.0, said Pillsbury communications attorney John Hane.

Broadcasters are “typically a conservative group,” and for ATSC 3.0 to take off, many will have to buy into the plan, Rademacher said. It will be a tough case to make since converting to the new standard likely will cost broadcasters hundreds of thousands of dollars, he said. The large networks haven’t yet signed on to “the business case” for the new standard, said Fox Television Stations Senior Vice President-Legal and FCC Compliance Joe Di Scipio. Networks want their affiliates to carry their programming and wouldn’t support anything getting in the way of that, Di Scipio said. Networks won’t “get in the way” of the new standard “as long as the signal is provided,” he said. The post-incentive auction repacking could be a venue to accelerate the adoption of the new standard, but that will depend on how aggressive broadcasters are in buying ATSC 3.0 compatible equipment for their new stations, Rademacher said. Such equipment is likely to be more expensive than the old equipment and may not be fully reimbursed by the FCC, he said. As the repacking stretches on, that could change, since broadcasters will be repacked in phases over three years.