NAB President and CEO Gordon Smith delivered the annual NAB State of the Industry address during the 2014 NAB Show. Below is a transcript of his remarks as prepared for delivery.
Thank you and welcome to the NAB Show. Though change abounds in the media industry, your attendance at the show to celebrate technology, content and connectivity is a constant we appreciate. We especially welcome those of you who have travelled many miles to be here.
This is an exciting time to be in the media business. Just take a look at what’s happening at the show: NHK is demonstrating over-the-air transmission of 8K content, NextRadio is presenting a highly interactive experience for radio listeners on smartphones, and multi-screen services like ATSC 2. 0 are showing how today’s broadcast TV can be enhanced with synchronized content delivered via the Internet.
Throughout the marketplace, we are beginning to see the incredible power of the convergence between broadcasting and broadband. A future that includes both is bright. Broadband, much like broadcast radio and television, is a game-changer.
It has enhanced the ways we communicate, creating new platforms for consumers to deliver and receive content. But the broadband and broadcast industries differ in our sources of motivation. Broadcasters strive each day to serve their local communities.
Broadcasting is broadcasters – men and women uniquely tied to the people they serve – men and women who are committed not only to innovation but to serving the public interest. The pioneers of broadcasting believed that radio and television could be used for the greater good… to inform, entertain and help people understand what happens beyond the boundaries of their own lives. Throughout all the great moments in history – both tragic and joyful – local broadcasters have been there to capture them.
We turn to local TV and radio stations to follow the inspiring events that have shaped our nation…… and to mourn together when tragedy befalls our communities, governments and leaders. We are here to be the public’s eyes and ears… to lead them out of darkness during times of crisis… to share profound moments… and to connect to our family, friends and neighbors. We are here to be the voices against oppression… and we are here to be the megaphones for freedom and democracy.
We are always here for our communities… anywhere they are, and always available for free. That is the public good we provide… that is our mission… and at the heart of what we do every day. There is no substitute for broadcasters’ dedication to localism… there is no other medium dedicated to serving the local communities throughout this great nation.
And there is no denying broadcasting’s economic impact. The local broadcast radio and television industry contributes nearly $1. 3 trillion of Gross Domestic Product and 3 million jobs to the American economy annually.
Couple this with broadcast radio and television’s efficient one-to-many architecture, it’s no wonder other industries challenge us on all fronts. It’s hard to compete with free and local. The wireless industry covets our spectrum, because they chew through their massive allocation of spectrum, attempting to deliver the video we deliver far more efficiently.
And they continue to milk, bilk and bill by the bit. Our content, our connection to local communities and our spectral efficiency make us the envy of others. We are a competitive threat.
I am not sure Washington views us this way, however. On one hand, government can treat us as if we are dinosaurs and does what it can to encourage TV stations to go out of business. On the other hand, the FCC says we are so important and powerful that two TV stations can’t share advertising in the same market, while it’s okay for multiple cable, satellite and telecommunications operators to do so.
Which is it? Too powerful or irrelevant? It can’t be both.
One possible explanation is that, over the past five years, there has been an increasingly singular focus by the federal government on broadband. The government invested many millions of dollars and a year of the FCC’s time and effort to produce a National Broadband Plan – a roadmap for investment and innovation for the cable and wireless industries. The FCC has also opened separate inquiries on how to foster investment in broadband.
All the while, the FCC has continued to regulate broadcasters as if the world is stuck in the 1970s. So I ask, why doesn’t the FCC have a National Broadcast Plan? Why is there no focus to foster innovation and investment in broadcasting to ensure our business continues to be a world leader alongside our broadband industries?
Where is the FCC’s gusto and determination to embrace broadcasting’s values and public service responsibilities? A national broadcast plan would take a holistic view of our industry… something we have sought for years. (CLICK NEXT FOR MORE OF THE SPEECH)<! –nextpage>Rather than addressing one small piece of radio and television ownership rules, why not conduct a meaningful and thorough review of all of these decades-old regulations?
Instead of individually looking at the UHF discount, the sports broadcast rule or the use of sharing agreements, why not step back and assess whether, and if so, to what extent, those rules achieve our broadcast goals? A national broadcast plan could look at any number of areas, and figure out how broadcasting can continue to be a competitive force in this country and continue to serve the public interest.
For example, from a public safety perspective, what enhanced role can broadcasters play? Because of the strength of our architecture, and the power of our airwaves, local stations are often the only available communications medium during disaster situations…As former FCC Chairman Mark Fowler noted in an op-ed in The Wall Street Journal, “Broadcasting kept more than eight million people safe and informed during Hurricane Sandy. Broadband can’t do that.
”So why not, for example, think seriously about removing the competitive and other barriers to including FM chips in mobile phones? Why not inquire about the role mobile TV and the mobile emergency alert system can play in keeping the American people safe? Time and time again, we have witnessed how broadcasters deliver lifesaving information during emergencies – often placing their own lives in jeopardy.
I would ask the FCC, is this not a highest and best use of spectrum? What is the worth of a human soul? A national broadcast plan would capitalize on broadcasting’s one-to-many network architecture that transmits one signal to many receivers – its service area spanning hundreds of square miles.
This inquiry is critical, because wireless broadband chugs along, buffers and crawls when it comes to video. If consumers want access to large, live events, broadcasting must be part of the solution. And if the Commission is really serious about competition, it will study how broadcasting can be a competitive check on the cable and wireless industries.
In its National Broadcast Plan, the FCC should also refocus itself on some of the primary goals of the Communications Act. Without broadcasting, who will carry out the public interest mandates of diversity and localism, to say nothing of children’s programming, political events and observing decency standards of local communities. Cable companies?
Wireless companies? Not a chance. Held to these standards, the Internet would collapse.
We also cannot afford to risk disenfranchising those in society who rely most on broadcast TV and radio as their primary source of local news, emergency updates, sports and entertainment. Our government leaders have placed a high priority on giving a voice to those whose voices often go unheard – those who live in rural communities and low-income areas, minorities and seniors. Ironically, the very people who would be harmed the most by a spectrum incentive auction that is not carried out judiciously.
It seems the FCC is at odds with the very constituencies the White House values the most. Now, NAB has worked tirelessly for the past year and a half to help the FCC deliver on Congress’s direction to hold a voluntary broadcast spectrum incentive auction. For every concern we have raised, we have offered a meaningful solution.
Let’s face it, the incentive auction will affect the TV broadcast industry far more than any other industry. Ours is the only industry the auction can actually harm. While we understand the goal of freeing up spectrum and believe in smart spectrum policy, an equal aim should be to ensure that broadcasters and their viewers are not harmed in the process.
But at the moment, it is, at best, an open question whether the FCC has balanced those aims. Recently, the FCC ruled against sharing arrangements between two stations in the same market, deeming them in violation of ownership rules – many years after blessing them in the public interest. But at the same time, the FCC is pushing stations to channel share in efforts to reclaim more spectrum to auction off.
So, let’s get this straight: Sharing was good until the FCC deemed it wasn’t, and now sharing is good again. But when will they say it isn’t? In light of the FCC’s recent action, it’s not surprising that broadcasters are finding it hard to trust that the FCC will follow through on its commitments during the incentive auction.
How can we trust that the carpet won’t be pulled from underneath us again, even after following the rules? The truth is, we don’t know. And that’s a problem for the incentive auction.
To close this trust gap, the FCC must work collaboratively with broadcasters. It must demonstrate through its actions – not just words – that it is committed to ensuring broadcasting is a competitive force with a thriving future. It must also commit to ensuring viewers can still access the same channels after the auction.
We must also ensure the continuation of the current free market retransmission consent process. The government should continue to encourage fair and market-based negotiations that result in the most compelling and popular programming for viewers. Government intervention would only tip the scales in favor of pay-TV providers, whose end game is to drive free-TV out of business and capitalize on new advertising dollars.
Through aggressive advocacy in Washington, NAB will remain committed to ensuring broadcasters’ long legacy of serving the American public. Whether it’s attempts by the big record labels to impose a tax on local radio stations for simply playing music, or pay-TV companies’ attempts to get out of fairly compensating broadcasters for the highly-valued content they resell, you can be sure we won’t let down our guard. The enduring value of broadcasting remains – it is the ultimate survivor.
Even with competing media platforms, broadcast radio and television is still the preferred technology for news and entertainment. From hybrid FM radio, mobile TV and ultra HD, we are experiencing exciting developments in broadcasting. And in order to continue adapting and responding to consumers’ demands, I believe that television broadcasting should seriously consider the challenges and opportunities of moving to a new standard.
This would allow stations the flexibility and efficiency they need to innovate, to better serve their viewers, to compete in a mobile world and to find new revenue streams. The world as we know it is volatile – we face a very divided Congress that cannot seem to find meaningful, honorable compromises. Amidst all this, and despite the strength of those in and out of government seeking to weaken broadcasting, the strength of your broadcast industry remains strong, and our task to defend the enduring values of broadcasting and to always be there for our listeners and viewers when they need us most remains as important and as winnable as ever.
Broadcasting is America’s indispensable, irreplaceable industry. Andrew Jackson once said, “As long as our government is administered for the good of the people, and is regulated by their will; as long as it secures to us the rights of persons and of property, liberty of conscience and of the press, it will be worth defending. ”We have a crucial mission that goes beyond ensuring the viability of the broadcast business.
Broadcasting is more than just another moneyed interest. Broadcasting goes to the heart of making sure that the beautiful Lady of Liberty, who stands with arms outstretched at the entrance to New York Harbor, will still be standing hundreds of years from now. Broadcasting will always be the voice of our freedom and democracy.
That is something precious. That is something worth defending. That is something worth winning.