NW ADDE Designs New Collaborative Model

A Pro-Active Approach Merges Best of the Industry Technologies to Prototype a New Operational and Distribution Service Model for Public Television Stations

Executive Summary:
An innovative collaboration of eight public broadcasting entities representing 11 licensees that operate 18 analog stations and a growing number of DTV stations created a partnership that integrates new technologies has resulted in the establishment of the Northwest Advanced Digital Distribution Entity (ADDE). Pioneering a unique and efficient way to carry out broadcast operations centrally, the ADDE will provide participating stations state of the art services at a reduced cost while adding many enhanced capabilities associated with the conversion to digital television. The initial ADDE services include centralcasting functions, digital asset management, shared production capability, monitoring of transmitters, access to university content, multi-platform delivery, regional program distribution and a robust intranet for development and deployment of other collaborative activities. The partners believe this advanced network will permit their stations to focus subsequent investments on content, thereby improving their competitiveness in an increasingly competitive market.

The ADDE project has been in development for over three years. The concept was developed in 1997 and launched in 1999. A preliminary feasibility study was conducted by Andersen Consulting (now Accenture), which provided the impetus for the further refinement of the concept. The core NW ADDE project partners began working on solutions for centralizing facilities and operations in late 1999 with financial support from the Corporation for Public Broadcasting's Future Fund.

After reviewing many consolidation models from inside and outside the public broadcasting industry, the core partners eventually focused on "centralcasting" or consolidated master control and content distribution for initial deployment. During the process, the original three core partners plus an additional five participating stations had expanded to 15 by late 2001. Collectively, they studied, analyzed and concluded that building a collaborative network with advanced capabilities, incorporating regional content storage, and a centralized master control for distribution of video programming, interstitials and multicast data services, to be one of the most efficient and viable methods for public television stations, of any size, to economically deliver broadcast media.

It was found that the ADDE model will not only consolidate the participating stations initial capital investment but also, provide significantly reduced operational expenses of roughly $3,000,000 per year.

Furthermore, the ADDE will provide:

• Best practices service on all of the covered functions,
• Added flexibility in content distribution and
• Improved positioning for the development of many future collaborative intranet applications.

After careful and detailed analysis, eight of the fifteen stations decided to move forward to form an independent entity to operate the ADDE to provide services. KWSU - Washington State University, KCTS Television in Seattle and Oregon Public Broadcasting in Portland, are the core partners leading the efforts. KVPT in Fresno, CA, KEET in Eureka, CA, KSPS in Spokane, WA, KBTC in Tacoma, WA, and Alaska Public Television are the other primary participants.

Project History and Status:
During the concept maturation phase a number of technical and operational models were developed and studied which demonstrated various options available to the participating stations. The working groups studied several "centralcasting" models in the commercial broadcasting sector including Ackerly, AT&T, USA Broadcasting, HBO, and The New York Times. In addition, they looked at similar operations in public broadcasting including the Pennsylvania Public Television Network and those in their own group who program for multiple markets. The models that were developed represent the key ideas and practices of all the observed station groups as they pertain to the needs of the member stations.

As the study moved forward, the focus narrowed to those services that can be centralized to maximize operational and capital efficiencies with regard to program storage and delivery. In order to gain the maximum benefit for each station, three working groups were created which met on a regular basis to develop and discuss the various models, and explore issues in their particular areas of expertise.

The engineering group compared engineering practices and procedures at each station to determine common expectations for technical quality and signal handling. They analyzed the digital conversion plans for each partner station to determine where common timelines existed and created consensus on delivery methods and technologies. During the process they contacted and coordinated with the PBS Technology & Distribution Committee. They lead the investigative technical, operational and ensuing evaluation of the industry leaders in consolidation.

The finance group studied individual station operating and capital budgets and determined the cash flow capabilities and timelines of each station.

The programming/traffic group studied the operational intricacies and distinct programming habits of each station to determine similarities and analyze the differences.

Transformations Consulting was engaged to facilitate meetings of the three working groups and analyze financial efficiencies and redundancies related to the present station plans and the conceptual plans for the NW ADDE. All of the information was carefully analyzed and validated to determine the most effective methodology for the developing ADDE. Paramount to the process was careful attention to station individuality focusing on their financial capabilities and individual programming needs.

Selection of the System Integration Vendor:
Upon completion of the conceptual model, the stations were ready to move forward with an RFP to determine project costs. A comprehensive RFP was released in October 2001 and responses were presented to the ADDE evaluation team in December 2001. The responses were then systematically scored and three finalists were selected to submit "best and final" scaled proposals based upon the number of stations that agreed to initially go forward.

Of the three finalists, Harris Corporation was unanimously selected as the ADDE systems integration partner. Harris will begin work with participating station ADDE engineers at the 2002 NAB convention to demonstrate their proposed equipment capabilities and to cement their dedication and relationship to the project.

Project Summary and Next Steps:
As described above, the ADDE project has made substantial visible and verifiable progress during the development phase. With financial assistance from CPB and facilitation and financial analysis from Transformations Consulting Group, the partner stations feel confident they have developed a deployable concept and operational model. With this first crucial phase of the work completed and with demonstrated partner station commitment to continued design and planning efforts, the project can now be said to have reached the implementation stage.

The partners are therefore ready to move into the detailed design phase. This work will include:

• Final technical design with line drawings and equipment lists for the operating plant
• Detailed and specific cost of equipment and installation and operation
• Determination and suitability review of candidate facilities
• Facility provisioning and cost
• Determination of Network Provider
• Network design and operational cost
• Station specific equipment determination
• Business details and structure establishment
• Operating agreements establishment
• Resolution of legal issues

The projected timeline for the full development and deployment of the ADDE is as follows:

• Funding commitments from the Digital Distribution Fund secured by July 1, 2002
• Station funding and participation commitments secured by September 1, 2002
• Network provider commitment by September 15, 2002
• Facility commitment by September 15, 2002
• Detailed design work completed by October 1, 2002
• Network design complete by October 15, 2002
• Equipment orders placed by November 30, 2002
• Facility build out complete by December 31, 2002
• Construction begins January 1, 2003
• Interconnection completed by June 1, 2003
• Construction completed by August 1, 2003
• ADDE fully operational by September 1, 2003

The public television system, as a whole, benefits from the ADDE research, design, and prototype development. It has been determined that if the ADDE concept were adopted widely, the cost savings to the entire public broadcasting system would approach $100,000,000 annually. The work done for the original fifteen stations in the beginning phase of development for the ADDE project clearly indicates there may be many public broadcasting stations unable to make the conversion financially. The assumption continues that with limited digital conversion funds available for public television, the progress of this project could be pivotal to achieving overall system success.

Transformations Consulting continues discussions with other station groups showing interest in starting ADDE's in other regions. The ADDE concept offers stations of all sizes and types the ability to convert their broadcast operations to digital and attain enhanced state of the art operations while achieving substantial cost savings.

Linkage to PBS Interconnection Study:
Development, design and construction of a working prototype prior to interconnection commitments being made at the national level are of significant importance. The PBS Technology & Distribution Committee is currently studying the options available for its next generation of distribution methods. Transformations Consulting and many industry leaders believe this project will serve as a national model for public television program distribution and collaboration. As the 2006 date for conversion to a new distribution system draws near, the development of this project becomes even more relevant and urgent. NW ADDE partner stations are committed to working with PBS to ensure this project is compatible with the needs and goals of the national interconnection system. That said, regardless of the initial path of the PBS Technology & Distribution committee, the ADDE concept if properly deployed, will provide enhanced cost saving services and value to the participants.

Financial Impact:
Attached to this document is a brief financial summary of the impact the project will have on the participating stations.

The financial summary shows these savings rather dramatically. Selecting two representative years from the detailed financial analysis, it is projected that the participating entities will enjoy an operational savings of around $3,000,000 per year.

One primary benefit from the way this project is structured is in its ability to offer public television stations two options to cover their capital contribution to digital. They can elect to invest the capital funds they raised at the beginning of the project, or alternatively, they can choose to fund their capital investments with the use of revenue bond financing. If the stations elected to use the revenue bond financing path, the operational savings would more then cover the annual finance charges as shown at the bottom of the chart.

In Conclusion:
The primary benefit from the ADDE project is the overall operational savings generated by participation. In our analysis, each participating station established a "go it alone" timetable and cost structure detailing all the costs associated with building their own digital broadcast operations without the ADDE. By comparison, we were able to show that each station could realize a far greater return on their investment over time with participation in ADDE. Although the digital conversion timelines for some stations are market driven, the desire of public television stations to provide a high-quality digital signal with additional, value-added services is the driving factor. ADDE provides a compelling mechanism for all stations to accelerate their timelines and provide enhanced yet cost effective services to their viewers.