Getting Run Over on the Spectrum Superhighway

Media groups may soon become casualties in the ‘platform wars’ or run over on the spectrum superhighways unless they are careful.  That’s the gist of a series of reports from research firms, industry analysts AND the governments of the United States and the United Kingdom.   

The ‘platform wars’ phrase comes from a report by the Forrester research group which says – get this – Microsoft is “winning the battle” for TV supremacy.  The ‘spectrum superhighways’ phrase comes from the President’s Council of Advisers on Science and Technology.  A similar report from Britain’s House of Lords (seriously, the House of Lords) Select Committee on Communications goes even farther.  It calls for television to be delivered completely on the Internet.  “This may be a more sensible arrangement as spectrum is perfectly suited to mobile applications,” the report says.  Interestingly, or oddly, depending on your point of view, this is even though the report acknowledges that one out of every six adults in the UK have never been online.  The numbers are similar in the US.

Humorously, or oddly, again depending on your point of view, the US report says that while, yes, it’s true that the federal government uses lots of spectrum, “clearing just one 95MHz band… would take 10 years, cost some $18 Billion and cause significant disruption.”  Surprise.  Surprise. 

So, to reach the goal set by the President of freeing up 500 MHz of spectrum for commercial use in ten years, the report says the best option is to “share” the spectrum paths.  This is where the ‘superhighways’ analogy comes in.  The report likens the situation to that facing the country in 1939 when FDR was president and another commission recommended the building of Interstate highways.  This report argues that, just like the Interstates, spectrum can be set up with “the wireless equivalents of signals, sensors and stop lights to avoid collision.”

Regardless what either government does, or thinks it will do, the fact is that the system of delivering content — the ‘platforms’ — is going to change the media landscape significantly in the next ten years.  The amount of global mobile data has doubled every year for the last four years.  The number of mobile devices today is put at 5 Billion today but is expected to reach as much as 50 Billion by 2020.  Remember – there are ‘only’ 7 Billion people in the whole world, and I suspect that many of those in third world countries are not on the Internet.

An eMarketer report said the “Big Four” on-line are Amazon, Google, Facebook and YouTube.  Of course, the “Big Four” on-air are ABC, CBS, NBC and Fox.  Which one of them will make it to the “Final Four.” 

Well, add another twist to that.  A report by Forrester Research says the ‘spoiler’ in all this is Microsoft.  Its Xbox 360 is the most-watched net-connected TV device in the U S, and “soon the world.”  Holy Mackerel!  It says there are 32 Million consumer households watching online video on a TV in the US, with 18.4 Million using a game console.  Of those, most are using the Xbox 360 which the report calls a “disruptive onslaught.”  Here’s the critical line in the report that I suggest you all think about:  “Each combatant has a consumer device strategy, to be sure, but it’s their platform strategies that will determine the TV winner in the long term.”

Which brings me back to the so-called “Smart TVs.”  Technically, they are called IPTVs – Internet Protocol Television.  There are twice as many of them this year than last.  According to Nielsen, of the TVs in use, one out of 20 (4.7%) last year were IPTVs. As of February of this year, that percentage had more than doubled to 10.4%.  BUT only 5% of that10.4% actually used the Internet capability.  Now, my high school algebra teacher always gave me a hard time about my math skills, so I may be wrong — but the way I calculate this, that means only five out of every thousand television viewers are watching online video on their TVs.  The figures are pretty much the same in the U.K. study as well.

But don’t write them off yet.  A survey by consulting firm McKinsey of IPTV use in the UK and France says there are serious questions about their use and appeal.  It echoes the US numbers with about a tenth buying Smart TV’s and only three percent actually using the function.  They call the response in those countries as “lukewarm” at best.  BUT (you will notice it’s in capital letters again), it projects IPTV sales to grow by 70% a year, and that they have the ‘potential’ to be ‘breakthrough.’

Now, if you’re a traditional broadcaster, you “know” you don’t need to worry.  After all, as a story on the RapidTVNews site so aptly put it, being a couch potato is almost a full-time job.  Why?  Because another Nielsen study says Americans spend 35 hours a week just watching television.  No Internet TV.  Just TV.  Local News-Two and a Half Men-Network News-American Idol-TV.  After all, a study by a group called the Coalition for Innovative Media Measurement (CIMM) and comScore says 90% of consumers watch TV on a traditional set.

Oh, well, yes, it’s true that the report also shows that nearly two-thirds (60%) of “media companies’ viewers” were doing something online at the same time they watched TV.   Another group, Futuresource Consulting, found similar figures but they also found that four out of five (85%) of 16 to 18 year olds used an “interactive device” while watching TV.  And, well, yes, there are reports from firms like IMS Research that show a third (30%) of consumers want to buy a TV with Internet connection. And, well, yes, it’s true that a Harris Interactive poll found that streaming video apps are the most popular apps for the owners of web-connected TVs and non-web-connected places.  And, well yes, it’s true that sites Huffington Post are starting their own online video news services.  But you professional broadcasters don’t have to worry… do you?

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