American TV broadcasters used to tout their reach with comments like "more American homes have TVs than have indoor plumbing.," and that broadcast signals reached 98% of homes. Then came cable, satellite TV, the digital transition, and now IPTV and mobile TV, all providing alternative delivery systems for TV programming.. The Big Three broadcast networks that used to count on 90% of prime-time viewing now struggle to reach 35%. Then came reports of the declining percentage of homes who get their TV directly over the air, rather than through some multichannel programming service (cable, satellite, etc.), culminating in a Consumer Electronics Association report released at the end of May that said only 8% of U.S. television households rely solely on over-the-air TV reception from local stations.
Coming at a time when the FCC is moving towards reshuffling channel allocations to free up 120MHz of broadcast spectrum (to create room for wireless broadband service), such reports complicate broadcaster's arguments about the need to preserve traditional television broadcasting. The 120 MHz the FCC wants to reclaim is roughly equivalent to 20 TV channels - almost half of the remaining spectrum allocated to local television in the U.S. While the FCC claims that almost all existing stations can be reallocated within the shrunken spectrum allocation, the move would leave little room for any future expansion of stations or service. Thus, it's clear that over-the-air (OTA) broadcasters are looking for anything that would support the value of, and need for, continued OTA broadcast service.
The broadcast industry hopes that research from Knowledge Networks' "The 2011 Ownership Survey and Report" will boost their arguments. That report concludes that the number of people who rely exclusively on OTA broadcasting has risen slightly in the last year, from 42 to 46 million (or 15% of US households). The report also shows that 4% of US households dropped pay-TV service at some point to rely on OTA broadcasting. Moreover, the report suggests that minorities are more likely to rely on OTA signals (17% of African-American households, 23% of Hispanic (27% in homes where Spanish is language of choice), and 25% of Asian). OTA-only is also higher in younger households, and in poorer households.
How strong a case do these results make for maintaining OTA services and spectrum? Well, probably not as strong as they hope. Many factors could contribute to a rise in OTA-only numbers, particularly when using people rather than households. U.S. population is growing about 1% a year; accounting for a portion of the increase. Perhaps more significantly, two technology-related factors could account for much of the growth in OTA-only households in recent years. First, when local stations finally turned off their analog transmissions, many households switched to cable and satellite systems to provide signals for their analog sets. As more households acquire digital sets, and as local stations use the flexibility of the DTV standards to provide additional programming, some households are returning to OTA-only, finding that it satisfies their needs. Further, the growth of IPTV options is enticing users as a much cheaper alternative to cable and satellite services, leading to what's been termed "cord-cutting." From the press report, it's unclear whether their measure of OTA-only households includes those who only use OTA for traditional TV, but supplement it with accessing video programming through the Internet. If so, a sizable proportion of that increase could be attributed to the continued growth of "cord-cutting."
On the other hand, the exact percentages of OTA-only households aren't that important an argument from a policy perspective. Local broadcasting maintains certain key, critical, services - providing a local focus and programming; providing access to households not being served by multichannel providers (and here the arguments of disproportionate reliance on OTA by minorities further strengthens the case); and providing a channel in emergency situations that remains accessible by smaller, battery-powered, sets. All these are strong arguments for maintaining an over-the-air local broadcasting system.
Whether we need one with as many channels and stations as exists today is a second argument - one where broad looks at penetration won't really help.
Source: "46 million Americans still watch TV exclusively over the air, says report". Broadcast Engineering
Edit - forgot to add source originally, so added.