How long will broadcast remain an over-the-air TV biz?

A major issue facing television today is whether broadcasting will continue to be the stalwart enterprise it has always been or be forced by the ever-changing whims of an evolving industry to morph into a different business altogether.

First, the easy part: not having a back channel, broadcasting is at a disadvantage when compared to cable.

The development of digital TV will bring about a number of changes both for viewers and broadcasters. There will be different methods of TV consumption (TiVo is one example), different ways of financing TV production and new ways of generating revenue. Digital TV will make more channels available to the public, causing more audience fragmentation and increased competition. As a result, broadcasters must look for new ways to monetize their digital signals differently from their analog revenue streams. So far, broadcasting has wisely taken advantage of the strict regulations that govern it, while the Internet remains largely unregulated due to vastly divergent views as to what sort of regulations the still relatively new medium requires.

Second, who can guarantee that broadcasters will still be over-the-air operators a decade from now? No one can, really. Former U.S. Federal Communications Commission (FCC) chairman Reed Hundt advocated clearing the UHF bandwidth for wireless Internet and other data services as soon as possible. Current FCC chairman Michael Powell stated that "the viability of over-the-air TV -- and the FCC'S role in protecting it -- are uncertain.

Analyzing the wireless industry's growing need for a larger slice of the electromagnetic spectrum, one could expect that:

1) it will be more profitable for broadcasters to lease their frequencies out than to use them to program their own channels, and

2) the wireless industry will most likely pressure lawmakers into forcing broadcasters to abandon their terrestrial frequencies (since the frequencies will no longer be necessary for broadcasting).

Consider the numbers: more than 70 percent of U.S. homes already get their TV via cable. Add to that the 13 percent who own direct-broadcast satellite dishes, the half million homes that have DSL and the 10,000 or so homes with fixed wireless, and one begins to wonder why there are any TV transmitters at all today. (In Europe, 38 percent of homes receive programs by cable or via satellite.)

In the U.S., parts of the 700 MHz band (channels 60 to 69) have already been taken away from broadcasters. In the past, broadcasters were removed from the band for channels 70 to 83, which currently accommodate commercial wireless services, and the FCC now wants to auction off channels 52 to 59, further limiting broadcasters' reach. In addition to that cruel blow, broadcasters are also losing 32 MHz in the ENG (Electronic News Gathering, i.e., portable TV equipment) bandwidth to Mobile Satellite Services. Similarly, in Japan, one quarter of the frequencies now used for analog TV transmissions will soon be allocated to wireless services.

As FCC chairman Powell said, "If 100 percent of Americans don't get free, over-the-air TV, [then] what is it we are protecting?"

Meanwhile, companies such as the Spectrum Exchange Group were set up for the sole purpose of selling the analog TV frequencies that broadcasters are required to vacate before the 2006 deadline. To the non-compliant -- those broadcasters who just can't seem to part with their frequencies -- the FCC was expected to impose steep fines averaging $160,000 per year per station.

In the U.S., TV stations are also losing their "local" uniqueness, since major TV station groups are increasingly managing all their stations from a single, central location. Centralized broadcasting, or "centralcasting," makes use of digital technology in an effort to save on costs and better manage commercial inventory.