FCC Vote Sends Broadcasters Into Data-Collection Era

WASHINGTON (CN) – Regulatory approval of technology that lets broadcasters tailor advertising for each viewer sparked warnings Thursday from privacy groups.

Modeled after data-driven advertisements that dominate internet platforms like  Facebook and Google, Next Gen TV has been touted by the National Association for Broadcasters as a standard that will deliver improved reception and clearer picture, as well as television’s first brush with viewer-personalized advertising.

The Federal Communications Commission was divided 3-2 Thursday in approving just the technical standard known formally as ATSC 3.0, paving the way for one-way transmissions between broadcasters and viewers.

It will be left to the Federal Trade Commission to determine how broadcasters receive data about viewers. Television stations must also still adopt the technology. Critics of the standard note that once they do so, viewers will then have to buy new TVs or a compatibility gadget — imposing an effective tax on the 12 million consumers who watch TV via over-the-air reception.

FCC rules stipulate that no more than three commissioners may be members of the same political party, and only Republicans voted Thursday to approve Next Gen TV.  The commission’s two Democrats, Mignon Clyburn and Jessica Rosenworcel, each dissented, focusing on the lack of attention about the cost consumers will bear overhauling their televisions.

Rosenworcel said the FCC should have ensured that the transition will leave “no viewer worse off,” and questioned why there was no talk of subsidies being provided as they were in 2005 when television broadcasts were upgraded to digital transmission, or DTV.

Ernesto Falcon, legislative counsel for digital-privacy watchdog Electronic Frontier Foundation in Washington, said in an interview he shares Rosenworcel’s concerns and believes some viewers will certainly be worse off once the standard launches. Not every household can afford digital television and according to the FCC, millions of homes will rely on increasingly outmoded over-the-air broadcast. The technology’s threat to consumer privacy, he said, could impact certain consumers disproportionately.

“Compounding the problem is the disproportionately high reliance on free over-the-air television by senior citizens who are more vulnerable as a population to the harms from losing privacy. They should have a regulator that protects their sensitive information on their behalf rather than declare open season on what they do in their living rooms,” Falcon said.

Clyburn’s dissent meanwhile expresses considerable unease over the launch.

“Next Gen supporters tell us not to worry, viewers can continue to receive [their existing signals] and for five years after this order appears in our Federal Register, that signal will be ‘substantially similar,’” she wrote. “Five years after this order appears in our Federal Register, that requirement sunsets. Translation: that mandate goes away. They no longer have to send you that signal. Now late yesterday, the Chairman’s Office revised the Order to include an exception to this requirement. Without a requirement to make programming substantially similar, broadcasters are free to create two different tiers of television. Why is that problematic? Why am I uneasy? This could actually create an unacceptable, unjustified and unwanted digital television divide for those with limited financial means.”

Commissioner Brendan Carr who joined the FCC over the summer on nomination by President Donald Trump said the pushback from critics was about “stoking fears at the last minute.”

Worries over the costs of buying new TVs or higher cable bills are the stuff of “bogeymen,” Carr added.

“We adopt numerous measures that protect consumers and other stakeholders and we ensure that this voluntary transition will be driven by market forces and consumer demand, not an FCC mandate,” Carr said.

Broadcasters will likely see ad revenue soar with the technology’s rise since it eliminates much of the demographic guesswork. Typically, television stations sell commercials based on data that can be rather broad, i.e. men, ages 18 to 50, who watch a certain kind of programming.

David Smith, executive chairman for broadcasting giant Sinclair, cheered the technology during a conference last week.

Next Gen TV means Sinclair “will have perfect data all the time,” Smith told investors at the Wells Fargo Technology, Media and Telecom Conference in New York.

“We’ll know where you are, who you are and what you’re doing – just like you do now, just like everybody does now, the internet does, or Google, or Facebook,” he said.

Ads will also consider the viewing habits of consumers on their phones, tablets and or other smart devices.

Aside from approval of Next Gen TV, Sinclair is also awaiting regulatory action on its bid to acquire Tribune Media for $3.9 billion.

If the deal clears antitrust hurdles, the Maryland-based company will gain access to more than 70 percent of all U.S. households. The acquisition would also give Sinclair ownership over 233 stations. This is in addition to the company’s current partnership with Nexstar Media Group Inc., which shares airwaves with Sinclair on 170 stations. Univision Holdings Inc., the Spanish-language broadcaster won’t miss out either – the company has joined Nexstar and Sinclair as well.

Aside from the impact to broadcasters, regulators reviewing the deal must consider how Sinclair’s acquisition impacts television manufacturers and other cable providers too. Those groups will likely have to pay Sinclair royalties once the new standard is underway.

In a separate 3-2 vote on Thursday, the FCC also approved new consolidation rules for broadcasters, giving them permission to combine with newspapers in the same market, meaning soon, some broadcasters could be allowed to own two of the top four stations in a given city.

Commissioner Michael O’Rielly called it likely that Thursday’s vote will spur a court challenge since it marks one of the more significant changes to ownership regulation in decades.

FCC Chairman Pai said “ownership regulations should match the media marketplace of 2017,” and promised that the FCC would “[drag] the broadcast rules into the digital age.”

Commissioner Rosenworcel and Clyburn voted against the consolidation measure as well.

“Instead of engaging in thoughtful reform, which we should do, the agency sets its most basic values on fire,” Rosenworcel said in a statement. “They are gone.”

Commissioner Clyburn likewise dismissed the move as “deeply flawed.”

“This is really about helping large media companies grow even larger,” she said.

In addition to common ownership of a newspaper and broadcast station in a single market, stations will also no longer be forced to show that there are at least eight other independently owned outlets in a coverage area.

Joint sales for media companies will also be given more breathing room. Stations that already agree to sell off more than 15 percent of their advertising time to another outlet in the same market will no longer have to  account for those agreements when determining if they are within the limits for national television ownership. This could hurt smaller markets who have often relied on such agreements in order to compete.

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