A new standard in over-the-air TV broadcasting could arrive as early as this year in more than 40 U.S. cities, bringing better reception and more TV channels and features to those willing to buy a new television or converter box to watch.

ATSC 3.0 comes just a decade after full power television stations in the United States ceased analog broadcasting. The ‘upgrade’ is a significant improvement over ATSC 1.0, the digital over-the-air television standard now in use in the U.S.

At the National Association of Broadcasters convention in Las Vegas, Sinclair, Fox Television Stations, Nexstar, and NBCUniversal (and a consortium group of stations owned by SpectrumCo and Pearl TV) this week announced 40 U.S. television markets would see ATSC 3.0 stations launched by the end of 2020, starting in these cities:

• Dallas-Ft. Worth, TX
• Houston, TX
• San Francisco-Oakland-San Jose, CA
• Phoenix, AZ*
• Seattle-Tacoma, WA
• Detroit, MI
• Orlando-Daytona Beach-Melbourne, FL
• Portland, OR
• Pittsburgh, PA
• Raleigh-Durham, NC*
• Baltimore, MD
• Nashville, TN
• Salt Lake City, UT
• San Antonio, TX
• Kansas City, KS-MO
• Columbus, OH
• West Palm Beach-Ft. Pierce, FL
• Las Vegas, NV
• Austin, TX

To help the transition, ATSC 3.0 stations in these cities will switch off their ATSC 1.0 channels and relocate programming to one or more other local stations’ digital subchannels, allowing viewers with older sets to continue watching until a 5-year transition period ends.

The second, and likely larger wave of stations to switch on ATSC 3.0 will come in these cities:

• New York, NY
• Los Angeles, CA
• Chicago, IL
• Philadelphia, PA
• Washington, DC
• Boston, MA
• Atlanta, GA
• Tampa-St.Petersburg-Sarasota, FL
• Minneapolis – St. Paul, MN
• Miami – Ft. Lauderdale, FL
• Denver, CO
• Cleveland-Akron, OH*
• Sacramento-Stockton-Modesto, CA
• St. Louis, MO
• Charlotte, NC
• Indianapolis, IN
• San Diego, CA
• Hartford-New Haven, CT
• Cincinnati, OH
• Milwaukee, WI
• Greenville-Spartanburg, SC – Asheville, NC

The third wave of stations, still expected to complete a transition to ATSC 3.0 by the end of next year, are located in:

• Norfolk-Portsmouth-Newport News, VA
• Oklahoma City, OK
• Albuquerque – Santa Fe, NM
• Grand Rapids – Kalamazoo, MI
• Memphis, TN
• Buffalo, NY
• Providence – New Bedford, RI
• Little Rock – Pine Bluff, AR
• Mobile, AL – Pensacola, FL
• Albany-Schenectady – Troy, NY
• Flint-Saginaw – Bay City, MI
• Omaha, NE
• Charleston – Huntington, WV
• Springfield, MO
• Rochester, NY
• Syracuse, NY
• Chattanooga, TN
• Charleston, SC
• Burlington, VT – Plattsburgh, NY
• Davenport, IA – Moline, IL
• Santa Barbara – Santa Maria – San Luis Obispo, CA

*ATSC 3.0 is already running on one or more stations in these markets.

A faster transition to ATSC 3.0 may be possible in cities where station owners like Sinclair own more than one full power local station. It will make it easier for programming on one station to be temporarily shared on another, without complicated carriage contract negotiations. There is no forced transition to ATSC 3.0, so consumers can make their own choices about whether they want to invest in new televisions or converters. Broadcasters understand that, and many are planning to launch a host of new channels and networks that could benefit cord-cutters and convince them to upgrade.

Over the air viewers will need to get in the habit of remembering how to “rescan” their local channel lineup as stations occasionally disappear as they move to different channels as a result of an unrelated ongoing channel repack or from shifting around to accommodate ATSC 3.0. Some secondary networks like Retro TV, MeTV, Comet, and others may temporarily disappear in some markets if that channel space is temporarily needed for channel-sharing arrangements.

Cable, telco-TV, streaming and satellite customers should not notice a thing because any changes will be managed by your television provider. But those watching over-the-air will need to prepare for the transition either with a forthcoming TV converter or preparing to buy new television sets with ATSC 3.0 tuners. Details on both are sketchy, but free TV viewers may want to start saving money now for new equipment spending starting either late this year or more likely early next.

ATSC 3.0 promises better, more robust reception, with error correction and the capability of downgrading video quality in marginal reception areas to preserve a stable viewing experience. It also supports 4K Ultra-HD and better sound, mobile viewing on smartphones and other devices, and local features including hyper-local weather warnings, targeted advertising and some data applications.

Despite the growing impact of cord-cutting, Comcast is following companies like Charter Spectrum by cutting back customer retention discounts that savvy subscribers negotiate to keep their cable bill reasonable. Despite losing more than 344,000 cable television customers in 2018, almost twice as many as it lost in 2017, Comcast has lost interest in cutting prices to keep customers.

Traditionally, customers using the word “cancel” with a customer service representative would quickly be offered deeply discounted service if they agreed to stay. Customers willing to stand their ground in tough negotiations with the cable company could win promotional pricing indefinitely, often saving several hundred dollars a year without losing channels or services. In 2016, after Charter Communications completed its merger with Time Warner Cable and Bright House Networks, Charter CEO Thomas Rutledge vowed to impose “pricing discipline” on Time Warner Cable’s “Turkish bazaar of promotional deals” after Charter took control of the company.

Rutledge called out the ‘madness’ of offering customers fire sale prices on internet and television service at a MoffettNathanson Media & Communications Summit in May 2017.

“Time Warner wanted to make a video number, and there were data packages that cost less if you took video than if you didn’t,” Rutledge said. “And a lot of those were churning out. And a lot of them were basic-only. So on the margin, at the end – in the last year, I think they were selling 40% of their connects as basic-only. [TWC had] 90,000 different promotional offers, many of them deeply discounted and piled on top of each other.”

Rutledge said Time Warner Cable represented the worst of an industry practice that gave unprecedented power to customers to get what they wanted, at least for awhile.

“You’d call in, bargain … And so there’s a lot of that out there. And they’re also exploding packages. Meaning, at the end of the term, they go back to full price,” Rutledge complained.

Rutledge called an end to negotiations by offering customers the opportunity of keeping their current package, but gradually raising it to a price that was often higher than Spectrum’s own non-negotiable packages and pricing. Regardless of what package a customer chose, it was a win for Charter because regular pricing ensured the company was making money either way.

Comcast has apparently been won over by Rutledge’s message to the industry and is now gradually moving in a similar direction.

Strauss

Matt Strauss, executive vice president of XFINITY Services, told Business Insider Comcast will now attempt to keep and win back its cord-cutting customers not by discounting prices, but by creating much smaller cable TV packages with fewer channels — a practice known as slimming down packages into “skinny bundles.” Comcast also plans to stop pushing customers into its “best value” triple-play packages of television, phone, and internet services, understanding many customers have no interest in some of those services.

“Our strategy is very focused on segmentation and getting more sophisticated in putting together the right video offering for the right customer at the right time in their life,” Strauss said, not by offering deep discounts on bloated packages (including a landline or hundreds of unwanted TV channels) that would reduce profitability.

Charter is already offering an ultra-slim, a-la-carte local TV package combining Music Choice with the customer’s pick of 10 national cable channels for $21.99 a month. The package is targeted to those with internet-only service and is accessed through a Roku set-top box. DVR service is available, if a customer was willing to pay a steep DVR service and box rental fee.

Comcast’s new strategy will market internet packages that include the added-cost option of a super-slim TV package of local channels and a handful of cable networks.

Strauss disagrees with some industry pundits who have suggested cable companies are planning to abandon selling cable television altogether in favor of internet-only service.

“We continue to be very bullish on video, but you’re just going to see us be more focused on how we go to market with video,” Strauss said.

European broadcasters are frightened at the prospect of seeing viewers and crucial mandatory TV license fees erode away as an invasion of American on-demand streaming from Netflix and Amazon takes its toll on traditional television.

Netflix’s almost limitless budget for original local/in-country productions is threatening to outspend traditional European broadcasters and giving viewers a new reason to stop paying compulsory TV license fees, which do not apply to foreign-owned streaming services.

Unlike in the United States, where non-commercial public broadcaster PBS receives most of its financial support from corporate underwriting and voluntary contributions from viewers and listeners, many European countries finance their national, over-the-air public broadcasting services with a mandatory annual license fee.

In the United Kingdom, for example, a household must pay $200 a year if their home has color TV sets or $68 a year for black and white-only TV sets if they watch the BBC. These fees cover the costs of the BBC’s extensive commercial-free radio and TV service and keep it independent of the British government. That fee is a bargain compared to Denmark, Norway, and Austria where TV license fees exceed $300 US annually.

Enforcement officers using TV detector vans drive through neighborhoods looking for unlicensed TV homes by detecting signals emitting from a switched-on television. Warning letters and a visit from an enforcement officer quickly follow. But as streaming services take hold, it is becoming more difficult for licensing officers to determine if a resident is using their television to watch the BBC, which requires a license, or on-demand content from a streaming service like Netflix, which does not require a license.

It’s a growing issue in the United Kingdom, where TV license cancellations are now rising for the first time in five years, particularly as younger viewers move away from traditional linear-live TV programming. According to the Financial Times, by 2022 Netflix, Amazon, Facebook and Apple could outspend traditional UK networks by a factor of four. Independent of the BBC, Britain’s commercial ITV network is also reporting increasing viewer defections, especially among younger audiences. Traditional pay television, usually delivered by Sky satellite or Virgin’s cable system, is also experiencing dish/cord-cutting as viewers start to abandon traditional TV packages.

(Image courtesy: Financial Times)

UK networks are planning to respond to the threat by building on their current streaming successes, particularly BritBox, a joint venture of BBC Studios and ITV targeting North American audiences with on-demand British television series and original productions. BritBox has attracted a loyal following in the U.S. and Canada willing to pay around $7 a month, effortlessly raising almost half of the amount of a traditional UK TV license from North Americans without the expenses of traditional broadcasting, staffing, and collections. In the UK, a TV license grants viewers automatic access to iPlayer from the BBC, which offers live streams and short-term access to on-demand programming. Both UK broadcasters believe a service like BritBox, offering a more extensive library of older programming and full seasons of TV shows may interest UK audiences more — perhaps enough to pay another $7 a month for access, in addition to their TV license fee.

Other European broadcasters are dabbling in streaming ventures, but currently see less threat from the English-language dominant catalog of content from services like Netflix. In fact, many of those European broadcasters, particularly in Scandinavia, Germany, France, Switzerland, the Netherlands, and Belgium are earning extra revenue by licensing their native language content, subtitled for English language audiences, to streaming services like Netflix, MHz Choice, Hulu, and Amazon Prime.

AT&T shareholders are frustrated. They are not getting the dividend payouts and shareholder value they expected after AT&T put itself $170 billion in debt last year — the highest debt load of any non-financial American corporation.

As AT&T has bet big in recent years on video-related acquisitions, including DirecTV and Time Warner (Entertainment), investors are skeptical AT&T can properly monetize its video business. Many have sold shares after criticizing company executives over the company’s strategy and high debt, driving AT&T’s market capitalization down to around $225 billion, comparable with considerably smaller Verizon Communications.

But no worries, AT&T CEO Randall Stephenson, has reassured. AT&T expects those investments to yield results this year, helped by forthcoming broad price hikes for AT&T’s consumer services.

“2019 candidly is the money year,” Stephenson said in an interview with the Wall Street Journal. “This is a year when we get everything rationalized.”

According to AT&T, customers are irrationally paying too little for AT&T’s video-related services, which include DirecTV (~19 million customers) and DirecTV Now — the two-year old streaming service that has attracted nearly two million subscribers.

Stephenson

Although DirecTV has recently been extremely aggressive about offering deep discounts to convince satellite customers to stay, AT&T plans to pull back on those discounts as two million DirecTV customers see their two-year contracts end this year. Instead of granting renewed discounts for signing another contract, AT&T plans to deliver significant rate increases.

“As those customers come due, we’ll get closer to market pricing,” AT&T’s John Donovan told investors at a November investor conference. “We’ll be respectful of our customers, but [prices] will move up.”

That may prove a difficult sell for DirecTV satellite customers, who have recently been abandoning the satellite platform in favor of cheaper streaming TV alternatives. Even with package discounts, DirecTV is the pay television industry’s most expensive provider, collecting an average of $120.36 a month for its TV packages. In contrast, Dish Networks gets an average of $103.99, Charter Spectrum earns $91.14 and Comcast, $84.50.

DirecTV defections, largely over price, have been growing at an accelerated rate, with 1.4 million customers turning their back on the satellite provider over the last two years. Analysts expect AT&T will report 300,000 more lost subscribers in the last three months alone. At that rate, AT&T will lose at least $1 billion in operating profits in 2019 from its declining satellite TV unit alone.

(Image courtesy: WSJ)

DirecTV Now customers, who already absorbed a $5 rate hike last summer, and will face even more rate increases and channel reductions in 2019. Stephenson expects DirecTV Now’s price point to be in the $50-60 range, which means many customers will likely face an average of $10 in rate hikes this year. For AT&T, that would deliver “the right price” and gets the service “to where it is profitable,” according to Stephenson.

But customers are likely to balk if AT&T reduces channel lineups at the same time it raises prices. AT&T has already faced substantial DirecTV Now customer defections after last summer’s rate increase, and the company has also reduced new customer sign-ups by cutting back on new subscriber promotions, which often included a free set-top streaming device. Waiting to pick up exiled streaming and satellite customers are AT&T’s competitors, especially Google. YouTube TV has proved to be a DirecTV Now killer, now charging $40 a month for 60+ channels. It also comes with an unlimited cloud DVR feature and a complete lineup of local channels across most of the country. YouTube TV is reportedly still growing, attracting more than one million customers so far. AT&T executives claim the service is popular only because Google is suspected of subsidizing what they believe to be an unprofitable venture by around $9 a month.

Investors are also unhappy about customers slimming down their TV packages, because average revenue per customer is cut in the process, sometimes dramatically. Wall Street was accustomed to video packages bringing in at least $100 a month. In many cases, that revenue is cut in half after a customer switches to a streaming provider. AT&T hopes investor pressure on those new ventures and ongoing wholesale programming rate increases will both conspire to bring back familiar annual rate hikes for streaming services as well. Programming cost inflation almost feeds itself. As programmers set new wholesale rate records for their networks, other programmers believe there is now room to raise their wholesale rates as well.

Programming costs are not just important for consumers, either. Wholesale programming rate inflation was one of the reasons AT&T spent $49 billion to acquire DirecTV. Volume discounts for DirecTV meant the satellite provider was paying an estimated $20 a month less on programming than AT&T’s own U-verse unit, which had a much smaller customer base. AT&T’s purchase of Time Warner, which owns several popular cable networks, was also a hedge against programming rate increases because AT&T would effectively pay any increases to itself.

(Image courtesy: WSJ)

The Journal reports AT&T executives were unprepared for the speed cord-cutting has taken hold. Most most under-30 have abandoned the concept of paying for live, linear cable television at any price, preferring a combination of on-demand streaming from Netflix, Hulu, and other video streaming services with an over the air antenna to watch local stations for free. Older Americans are gradually following suit.

According to the Journal, AT&T’s latest tactic to slow down customer departures is to make cancellation as difficult as possible:

“There’s no way that we could make the numbers we were told to make,” said Altrina Grant, former manager of a Chicago-area AT&T call center. She said some agents would promise to call back a customer about a request to drop service rather than immediately disconnecting, which would count against their compensation. Irate customers would later call another employee to ask why their request wasn’t honored, she said.

“These reps were getting thousands of dollars because they knew how to manipulate the system,” Ms. Grant said.

Cyrus Evans, a former call-center manager in Waco, Texas, said employees’ pay could swing between $50,000 and $80,000 a year depending on their performance, which was often influenced by how many disconnection requests they could deflect. Mr. Evans said employees often got angry calls from customers who had been promised their service would end, only to receive a bill the next month. He said the incentive structure rewarded bad behavior.

Former AT&T workers said the company launched a new audit team in 2017 to crack down on support staffers making promises they couldn’t keep. Ms. Grant said this initiative led the company to fire some workers but several customer-care executives are still in their jobs.

AT&T disputes these allegations, claiming false promises to customers violate AT&T’s Code of Business Conduct and are “extremely rare.”

In the era of cord-cutting, getting a new, independently owned cable network on cable lineups can be an exercise in futility.

With most new channel additions coming as part of renewal agreements with major cable network owners or sports teams, launching a new 24-hour cable network and getting it on the lineup has never been so difficult. That isn’t stopping a relaunch of Court TV — a well-known former cable network that literally burned its logo into some television sets that were reliably tuned to coverage of the murder trial of O.J. Simpson, which ran from January-October, 1995.

“Court TV was a top-20 cable network and at the height of its popularity when the network was taken off the air in 2008,” said Jonathan Katz, CEO of Katz Networks. “Today, while consumer interest in the real-life drama of true-crime programming is at an all-time high, there is no dedicated daily court coverage on television. We expect the new Court TV to fill that void on cable, satellite, over-the-air and over-the-top.”

A promotional video for Court TV, returning in May, 2019 (0:44)

Katz Networks, a division of E.W. Scripps Co., has acquired the rights to the Court TV name and other intellectual property from its old owner, Time Warner (Entertainment). That includes over 100,000 hours of pre-recorded programming and trial coverage in the Court TV archives. The new venture has hired Vinnie Politan, a former Court TV presenter, as its lead anchor. The new Court TV has also hired back some of its old employees who either left the network or transitioned to its replacement – Tru TV.

The new Court TV will run 24 hours a day, everyday, and is expected to concentrate on live coverage of high-profile trials.

The thought of bringing back Court TV has not been enough to attract much attention from the cable industry. When the network launches in May 2019, it is expected to achieve coverage in 25% of cable homes at best. Most viewers will be able to watch Court TV as a digital subchannel offered by a local over-the-air station. Katz already specializes in running digital sub-networks, including Bounce (African-American targeted channel) and Laff (comedy).

Multichannel News reports several station owner groups will carry Court TV, giving it coverage of about half the country at launch:

Dan Abrams hosting a show on the Law & Crime Trial Network

Tribune Broadcasting will carry Court TV in 22 markets, including New York; Los Angeles; Chicago; Philadelphia; Dallas-Fort Worth; Houston; Miami-Fort Lauderdale; Denver; St. Louis; Seattle-Tacoma, Washington; and Sacramento, Calif.

Eight Scripps markets will carry Court TV, including Tampa, Fla.; Detroit; Cleveland; Cincinnati; Las Vegas; Tulsa, Okla.; Green Bay, Wis. and Tucson, Ariz.

Entravision Communications’ 10 Court TV markets include Boston; Orlando, Fla. and Wichita, Kan.

Univision Communications will carry the network in San Antonio; Albuquerque, N.M. and Bakersfield, Calif.

Citadel Communications will air Court TV in Providence, R.I.

Court TV already has at least one minor competitor. Dan Abrams, a former well-known Court TV personality who now hosts the popular A&E show Live PD, also runs the Law & Crime Trial Network, which relies primarily on live video streaming online to attract viewers. While the network has garnered little attention since it began streaming multiple feeds of live trial coverage over its website, YouTube, and Facebook Live, it did attract A+E Networks, which announced its involvement in the project in March, 2018.

Like Court TV, Abrams’ Law & Crime depends on live trial coverage during the day and analysis and documentary-style programming at night. So far, it is free to watch. Its future may be overshadowed by the higher profile return of Court TV, however, unless A+E bundles it into its suite of networks offered to cable and satellite providers.

Dan Abrams pitches his Law & Crime Trial Network to potential partners. (1:29)