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Evidence
Would adding the low power tv to U.S. must carry create an unreasonable burden to cablecos?
3,000 Class A TV stations do not have guaranteed carriage on cable, the primary way 60% of the U.S. watches television. Most are religious or community based, and very few have large audiences. After the digital transition, viewers with cable will need to maintain an antenna to watch these stations. That would further reduce the audience. It would be nearly impossible for any of these stations to grow ttheir audience, because almost no one will be able to sample their programming.
Quick answer - Yes, to some very small ones. Yes, to some large ones without 3-5 years to adapt. No, to most large ones in the near future, who have switched digital in place.
Approach: Determine actual costs of carrying a few more stations
Results: Generally, the cost of adding 8 SD or 3HD stations will be $5,000 or less, because most cable systems have or will soon install switched digital for other purposes. If you have switched digital in place, you can add a QAM with that capacity, the price of which to large carriers is $1,000 or so. You also need to acquire the stations (over the air or directly), and send a technician to do the installs. There is an ongoing cost - inevitably, a small proportion of the QAMs will fail and need repair, there will be an inch more of paper required in the printed program guide,etc. These are probably very small costs.
To counterbalance that in many cases, the cablecos will win some customers who want to watch those stations. Since the cost of carriage is small, even a few additional subscribers - less than a dozen - will bring in enough to cover the costs. I am still investigating alternatives, with a tentative conclusion that those cablecos without SDV have significantly higher costs.
Reliability: Weak at this first writing, because while the source of the cost estimate is knowledge, I have not confirmed it with several experts. A newspaper will often accept the opinion of a single expert, but I believe policymakers should check further. The consequences of a mistake are substantial. I have minimal backup for my conclusion that most carriers, including just about all of the larger carriers, have or soon will have SDV. I am not referencing any practical experience from the field directly comparable, although carriers have similarly added many stations to prove out the technology in general.
(I expect to improve that.)
Results from other similar systems: A don't know any direct comparisons from other countries, which generally have far fewer stations and different issues. There is strong evidence that there is additional revenue available for new stations with relatively modest numbers of viewers and low operating costs. Video over the Internet has exploded with literally thousands of "channels." Many are struggling, but at least a few dozen are already profitable, including from advertising dollars. That implies (some) opportunities for the stations to be commercially viable.
Possible sources of error: (At first writing) There may be problems acquiring some stations. For example, their signal may not reach the cableco's local network station. There are few primary information sources to confirm the conclusions. Adding stations creates additional complexity in operations which I cannot put a figure on. This analysis implies that extra cost of complexity is modest.
Contrary opinions: The cablecos policy people assert that the costs will be too high. (I'm reaching out to them for specific data.)
Cable carraige would dramatically raise the value and selling price of these stations, possibly in the $billions. That is a large windfall, especially to anyone who bought one of these stations after the announcement of the digital switchover. They paid a price based on the assumption they would not be carried.
Policy implications: The burden of adding these stations is modest. Since they will induce some people to choose cable, there is additional revenue that in many cases will offset the costs. A dozen subscribers at $500/year adds $6,000 to revenue, so a $5,000 investment will be quickly repaid in many cases.
Requiring a rapid pickup of these stations would impose high costs on those carriers not equipped with SDV. 2009 is the digital transition and the beginning of heavy DOCSIS 3.0 deployment, when imposing additional requirements will be particularly burdensome. Small carriers may have higher costs, because the they don't have the necessary equipment in place.
Possible policy choices: The must-carry requirement could be imposed with an optional delay to 2010-2011 for large carriers and later for small ones.
Because the cost to the cablecos is low, even a small fee would cover much of it and might be welcomed by the stations. $1,000 a year would cover much of the carriage costs, but would be a bargain for the stations whose audience and value would increase.
Current arguments from the principals: Kevin Martin, Chairman of the FCC, wants this citing the number of additional voices that will be available for viewers. A second FCC commissioner tells me directly "It's the right thing to do." Two of the FCC commissioners (Copps, Adelstein) have spoken often and eloquently on the need for more voices on the air, including the difficulty of any new stations getting cable carriage. If they could reach agreement with Martin, they could have thousands of additional stations available soon to most in the U.S., a goal shared by many others.
The cable companies assert the costs would be too high. (get specifics.) In particular, a small cable company with only a thousand or so subscribers cannot share the
Unspoken policy issues: Most cablecos make a large share of their revenue from selling premium channels like HBO, and every additional choice available reduces those sales. In addition, many of the cable companies have substantial ownership in existing channels which could lose advertising revenue. CableVision owns Sundance and five other channels, Comcast has major parts of half a dozen, and Warner was a movie and TV company before the split, not as cableco. Also, Comcast and others are still hopeful about charging networks for carriage. They beat back an FCC requirement that have moderate channel-leasing terms, presumably hoping to extract much more in the duoploy.
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