Update on ATSC 3.0

The third generation of the Advanced Television System Committee’s (ATSC) over-the-air (OTA) standard, ATSC 3.0, continued rollout across the U.S., with Atlanta, Georgia becoming the most recent city to start broadcasts. This brings the running total (as of August 25, 2021) to 43 cities (and 161 channels), reaching 35% of US households. A further six cities are planned to launch ATSC 3.0 services before the end of summer 2021 and another 47 US cities listed as “coming soon”. The initial goal (or first step) for ATSC 3.0 named 62 initial markets that would bring coverage to more than 75% of US viewers, meaning its well on its way to hitting this goal. As was the case with ATSC 1.0, South Korea also launched ATSC 3.0 broadcasts (adopted standard in 2016 and launched 4K broadcasts in May 2017) and coverage has already passed 70% of the potential viewing population.

The ATSC also held in-person meetings in August (after a year+ break due to the pandemic) where other market updates were discussed. Both LG and Sony were on-hand to provide support for ATSC 3.0 hardware (TVs in this case) and its future, at least in terms TV rollouts. Note that consumer facing side of ATSC 3.0 is branded as NEXTGEN TV. This means TVs and STBs that include an ATSC 3.0 tuner at retail and broadcast services all carry the NEXTGEN TV logo. In common parlance ATSC 3.0 and NEXTGEN TV are often used interchangeably, although ATSC 3.0 is best used when discussing the broadcast technology (and tuners/receivers) and NEXTGEN TV for services and retail devices (as is the case for this insight).

LG’s NEXTGEN TV units are still focused on the higher end of their TV product lineup, while Sony has already added NEXTGEN TV support across its new 2021 TV products— in total there are currently 70 NEXTGEN TV models across LG, Samsung, and Sony. With the spread in TV models with NEXTGEN TV support, 2022 was pegged as an inflection point for adoption and growth in the installed base. With regards to chip availability, despite ongoing chip shortages, MediaTek suggested availability of ATSC 3.0 receivers should not be a problem.

Datacasting with ATSC 1.0 and 3.0, which refers to the broadcasting of data (not part of content broadcast) using radio waves, has also seen early traction, at least in education and among first responders. In addition to those two use cases, datacasting over ATSC has been trialed/demoed for the automotive industry (i.e., firmware and software updates), supplemental information for broadcasts (i.e., local weather), and smart city/IoT applications. Company SpectraRep currently offers two datacasting solutions, one for first responders (IncidentOne) and the other targeting education (EduCast)—SpectraRep is using both ATSC 1.0 and 3.0 for datacasting. On the education front, the global pandemic created a need for educators to reach those household with limited to no broadband access and datacasting has served as an economical alternative to reach these households. EduCast is currently available in 12 states and is deployed in at least 10 of those markets (Indiana and Washington D.C. were highlighted examples). While lesson plans and assignments can be distributed using OTA signals, the return channel (i.e., to send homework back to the instructor) is ideally satisfied through the parents’ cellphones with data plans.    

On the tuner front, strong support from LG, Samsung, and Sony will expand the installed base of NEXTGENT TVs in both the U.S. and South Korea markets at a healthy pace, but this growth rate will largely follow TV replacement and upgrade cycles since there is no government tuner mandate/upgrade pathway for ATSC 3.0 (as was the case with ATSC 1.0). The mandates required all TVs to include an ATSC 1.0 tuner and the U.S. government subsidized ATSC 1.0 converter STBs for those consumers who did not have a TV that supported ATSC signals. Without the government mandate and subsidy program, NEXTGEN TV STBs are currently priced prohibitively high for most households, with NEXTGEN TV Set Top Boxes (STBs) at retail priced at US$200 leaving most growth in the installed base of NEXTGEN TV devices to come from the TVs with embedded ATSC 3.0 tuners.

On the service front, Edge Networks launched Evoca, an NEXTGEN TV service in 2020 into the Boise Idaho market—it has since expanded to select markets in Arizona (i.e., Phoenix). Edge Networks recently announced its plan to use CommScope’s VIP7802 hybrid Android TV STB (includes ATSC 3.0 and 1.0 tuners) early in 2022 for its customers and partner broadcasters nationwide (STB will be called Pilot by Evoca) to offer a more comprehensive converged broadcast and streaming platform over its current “Scout by Evoca” STBs.

While this package seems like an ideal solution for cord cutters, the service is priced at US$49/month (after an initial US$9.50/month promotional period), in addition to US$12/month to lease the receiver/STB. While NEXTGEN TV broadcasts can reduce a household’s broadband consumption (i.e., they don’t have to stream as many live channels or programming) this is not typically a pain point for most U.S. broadband households. The cost of the total service/package is not significantly lower than preexisting vMVPDs (virtual multiple video programming distributor). Evoca also has an education play through its Evoca Learn product which broadcasts educational content (i.e., virtual field trips) in partnership with local institutions and organizations.

To date, the video content side of NEXTGEN TV has offered relatively little compelling evidence it will push consumers to actively seek out NEXTGEN TV hardware (outside of those directly looking to add OTA broadcasts to their TV viewing) and for those who do will likely scoff at the high prices of peripheral STBs if they want to upgrade an existing TV. Commercial applications for datacasting, like education, are intriguing but market activity elsewhere should give some pause or at minimum help set expectations. Some of the potential datacasting use cases for example pointed to applications like automotive and smart city as a distribution channel to offload some data traffic from 5G networks, but as ABI Research has openly questioned in another insight, IN-6236, this aspect of the market (e.g., interest from enterprises) has not yet accelerated as many had anticipated and this could negatively impact interest in ATSC 3.0 datacasting.     

Ultimately the best recommendation to the industry parallels a comment John Taylor from LG Electronics made at ATSC’s annual meeting:

“The opportunity at hand is for all of us in the ecosystem—manufacturers, broadcasters, and retailers—to jointly promote the capabilities of NEXTGEN TV without overpromising; we’re all sensitive to that.”

Consumer education and setting appropriate expectations is critical, even if this leaves out some of the most innovative features which are not yet ready for deployment. Speakers at the ATSC event also highlighted the need to focus on ATSC 3.0 as part of “future-proofing” one’s TV tech and highlighting improvements to video and audio quality.      

Outside of those households with limited to no broadband access, the datacasting services will likely offer little in the way of differentiating its content/services from apps and services available on typical CTV (connected TV) platforms. In fact, if the experience is at all disjointed (i.e., navigating between the broadcast content versus broadband return channel) then it will be viewed as inferior to a standard web or CTV based app. Improvements to content quality (video and audio) could also prove to be a difficult sell to many households who have already moved away from premium formats (i.e., physical media)—the value for “high-end” content  carries far less weight compared to when ATSC 1.0 and HD were launched.

The best option for TV manufacturers is to play the future proofing card, to encourage consumers to look for NEXTGEN TV branding to ensure they have the most up to date technology, regardless of if consumers know if they need or want it. For the TV market, with such wide support expected across TV lineups this shouldn’t come at a cost penalty and could for a time serve as a differentiator between TV brands.

On the datacasting side, outside of specific target markets like education and automotive software updates, expectations need to be tempered until more enterprise opportunities open up on the 5G front. When this occurs, a stronger case can be made for ATSC 3.0 datacasting to help alleviate some of the data demands flowing through 5G networks, but until these use cases gain momentum 5G will still focus on data rates for consumers. All of this doesn’t mean ATSC 3.0 is dead on arrival, but the industry has a much higher hurdle to clear in terms of educating consumers and presenting a compelling value proposition than past deployments and market trends like DTC, which offered a clear value statement by making it easier for consumers to access and only pay for the content they wanted.