Technology

Three out of 10 rural Americans do not have access to high-speed internet: FCC

NEW DELHI: Cable is down, DBS and telcoTV is up, and more than 80 per cent of American broadcast TV signals are now high-definition, says the latest Federal Communications Commission‘s annual Video Competition Report. 

"As of the end of 2011, 1,501-82.2 per cent-of full-power stations were broadcasting in HD, up from 1,036 stations in 2010," the report said.

Household adoption of HDTV sets also rose. As of 2012, 85.3 million (74.4 per cent) of US TV households had sets capable of displaying HD signals, up from 75.5 million (65.1 per cent) in 2011. DVR adoption rose as well, from 46.3 million households (40.4 per cent), to 50.3 million households (43.8 per cent).

However, Acting FCC chairwoman Mignon Clyburn said she was concerned because "Not all of our citizens are realising the promise of these competitive benefits. Nearly three out of 10 rural Americans do not have access to high-speed internet, sufficient to receive online video distributors‘ services, and I sincerely hope that these consumers are not forgotten."

Reliance on over-the-air TV has remained steady at around 11.1 million households, according to the report. This figure is in agreement with one proffered by Nielsen in January, but far short of another published last month in GfK‘s Home Technology Monitor, an annual survey that found 19.3 per cent of U.S. TV households rely exclusively on over-the-air reception. 

Broadcast TV station revenue followed the political cycle-$22.22 billion in 2010; $21.31 billion in 2011; and a projected $24.7 billion for 2012, a rise in part attributed to retransmission consent fees. However, TV stations were said to make about 88 per cent of their revenues through advertising, "A slight decline from the last report."

Prime-time ad rates for a 30-second spot in the top 100 TV markets, based on composite figures, rose from $26.76 CPM (cost per thousand households) in 2010, to $28 in 2011, and $32.08 in 2012.

Local news is said to account for 35 to 40 per cent of advertising revenues. In 2011, the average TV station aired 5.5 hours of local news per weekday, up from 5.3 hours in 2010.


Network compensation, once paid to TV station affiliates by the networks, has "All but disappeared," the report said. Network compensation dipped from $48.2 million in 2010 to $25.1 million in 2011, according to SNL Kagan numbers cited in the report. The 2012 figure is projected at $287,000. Networks have reversed the compensation model by taking a percentage of retransmission fees from stations.

Retrans fees comprised 8.1 per cent of TV station revenues in 2011, or $1.76 billion; and 9.4 per cent or $2.36 billion in 2012.

Ancillary DTV revenues were nearly negligible. Broadcasters can use a portion of their spectrum for revenue-generating activities such as subscription video or data transfer, but they must pay the FCC five per cent of those revenues. In 2012, 81 licensees made total ancillary DTV revenue of $499,970. The peak year was 2010, when 99 licensees brought in more than $7.1 million in ancillary revenues.

Clyburn said she was "Encouraged by the pro-consumer trends it reveals," adding "Options for accessing video programming are swelling," she said. "Nearly all consumers now have a choice among three. MVPDs, and today, more than one-third of all households can choose from four or more providers. I note that broadcast TV remains one of the most affordable sources of entertainment and news," she continued. "As the report shows, 11 million American [households] still rely on free, over-the-air broadcast signals as their exclusive source for TV viewing."

While the commission has been bullish on reducing the spectrum available for TV broadcasting, it did give stations props for public service: "Since the last report, full-power television stations have continued to take advantage of digital broadcasting technology to offer improved service to the public. In addition to high-definition content, broadcasters are using multicasting to bring more programming to consumers by expanding the availability of established networks and adding new startup digital networks-including networks targeting minorities and programming targeting niche audiences-and Spanish language offerings."

Multicast diginets include Bounce TV, which now has 154 affiliates, This TV, with 133, and Retro TV with 44 affiliates. Established networks have also benefited from multicasting. The CW is on 115 multicast channels; MyNetworkTV, on 92.

Total day audience share for the network affiliates held steady between 2011 and 2012 at 28, per cent with the total broadcast share at 33 per cent, compared to 52 per cent for ad-supported cable networks. In prime time, network affiliates held 33 per cent of the audience; all broadcast, 38 per cent; and ad-supported cable, 51 per cent.

The availability of mobile DTV grew between reports, from 60 stations in 2010 to 105 stations at the end of 2011. 

The National Association of Broadcasters said the total now stands at 130 stations in 30 states delivering 150 channels.

Despite ongoing reports of cord-cutting, the FCC found that pay TV subscriptions rose slightly between the end of 2010 to June 2012, from 100.8 million to 101 million households. Cable‘s share fell however, from 59.3 per cent to 55.7 per cent as of June 2012. Direct broadcast satellite TV providers picked up 600,000 subscribers in the time period to end June 2012 with 34 million, or 33.6 per cent of all pay U.S. pay TV subscribers.

TelcoTV grew by 1.7 million subscribers during the period, to 8.6 million, according to the report. However, it noted that the total comprised "AT&T‘s Uverse and Verizon‘s FiOS services," but not other small telcoTV providers around the country.

Technologically, cable systems are catching up with telcoTV, which delivers only the channels being watched at a given time versus the entire package a la traditional cable. At the end of last year, more than half of the footprint of the top eight cable providers was all-digital, with 43 per cent of that portion using switched digital video delivering only those channels watched.

The average price of a basic cable subscription increased by 6.2 per cent to $20.55 between 2011 and 2012, with expanded basic up 4.8 per cent to $61.63. The basic price-per-channel was up 1.5 per cent to 63 cents, while expanded price-per-channel fell one-tenth of a penny in the 50 cent range.

The Video Competition Report divides TV distributors in to three types-broadcast, multichannel video programming distributors (cable, satellite and telco pay TV), and online video providers, or OVD. The commission cited SNL Kagan numbers indicating that the number of internet-connected TV households grew from around 26.6 million (22.8 per cent) at the end of 2011, to an estimated 41.6 million (35.4 per cent) by the end of 2012.

The commission said OVD accounted for a growing portion of internet traffic during peak hours, and noted that most major cable operators imposed bandwidth caps or metered pricing during the first half of 2012. Phone companies are said to be following suit.

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