A few thoughts and observations on the original question and some of the comments . . .
I think that you’re confusing television broadcast networks with local “over-the-air” television stations. They are two different animals, although often under common ownership.
Local over-the-air stations may be owned by the network that they are affiliated with, by a different network (although rarely) or independently (as a single station or as part of a group). And yes, they are still necessary (IMHO). They are free to be received by the viewer (or at least the primary channel must be now that multiple program streams can be transmitted by the same station as per the FCC Rules). As a general rule local programming (news, public affairs, etc.) is created and originated at this level.
Television networks source a program stream (or these days multiple streams) to be carried by their affiliated “over-the-air” stations, by cable service providers, by satellite distribution services and a few other venues such as the internet. The programming is distributed these days mainly by satellite and fiber optic cable but in the past specialized telephone circuits, re-broadcasting of the nearest receivable affiliate of the same network and even “bicycling” (shipping pre-recorded shows via the mail or courier service) was used.
Local over-the-air stations that are affiliated with one of the television networks (there are now four of the “biggie” commercial networks and numerous smaller and specialized networks) used to be paid lucrative compensation to carry the network programming. “Back in the day” the two networks had extensive programming that was sent out to their affiliates for broadcast (over equalized telephone circuits, no less!). Entire shows were usually sold to one advertiser (think Texaco Star Theater) so local commercial insert times usually weren’t available. In order to insure that enough stations carried the programming the networks had to share the profits with those affiliates, hence the “Comp”.
Enter the third “upstart” network. They tried that route too but there wasn’t enough advertising revenue to go around and they faced bankruptcy. So they decided to sell individual commercials just like radio. That started to open the door for a variety of sponsors in any one show and for “local avails”. The other two were forced to follow suite shortly thereafter.
Then a fourth network rose out of the ether and they decided that they didn’t need to pay any comp at all to their affiliates. After all, programming was the most expensive thing that TV stations had to buy and if they could provide it for free with some of their own spots and some local avails then everyone would win (and they could operate much more cheaply).
These days some stations still receive “comp” from the networks, some are paid nothing for carrying network programming and a small number may actually have to pay for network programming (usually through a system of barter). Depends on the network and on the individual Affiliate Agreement.
Program creation has varied. Some is/was produced by the networks themselves, particularly news and sports programming. Most entertainment shows though are produced by independent companies “on spec” or as ordered by the network; some actually utilize network facilities for the production. And some were actually produced by the sponsor (a couple of soap operas come to mind there.) Most all are very expensive to produce.
As to the “over-the-air” stations . . . they are licensed to operate in one of three “bands” of the frequency spectrum: low-band VHF (channels 2 to 6, or 54-mHz to 88-mHz, with a couple of holes for other services), high-band VHF (channels 7 to 13, or 174-mHz to 216-mHz) and UHF (currently channels 14 to 51, or 470-mHz to 698-mHz; but keep watching this space as they say, the UHF part of the spectrum has been reduced several times already with more to come . . .).
In the US the FCC did mandate a switch from the old analog system (which was actually two separate signals for each station, an amplitude-modulated carrier (AM) for the video and a frequency modulated carrier (FM) for the audio, to the current single AM (with eight vestigial sidebands instead of the single vestigial sideband for the old analog video carrier) that carries the digital information. Each channel occupied 6-mHz of bandwidth under the old analog NTSC (National Television Standards Committee) system and continues to occupy that same bandwidth under the current ATSC (Advanced Television Standards Committee) system. (There are still a few analog stations on the air but they are low-power broadcasters covered by the FCC Rules Part 74 and they have to convert to digital by the October this year or next, don’t remember and too lazy to look it up right now.)
But making that change caused a whole Aramada (as opposed to boatload) of confusion!
In the beginning of the conversion process stations were assigned a second channel to run their new “digital” signal on. When analog “sunset” (for the commercial stations) many, but not all, could choose to stay on their digital channel or switch back to their old analog channel with the new digital signal. Consequently the channel number that your new digital TV displays has no real meaning other than to identify the “image” of the station broadcasting it. It’s based on data that the station transmits as part of the P-SIP information. Your receiver sorts all that out when you do a channel scan. To know what part of the spectrum the station is actually broadcasting in you need to look it up. (Go to www.fccinfo.com if you’re really interested.)
Most stations have elected to remain in the UHF band (or begged to go back to it) for a number of reasons. One being that the FCC"s predictions for coverage in the high-VHF band were wildly optimistic. Another is that well-meaning (well, they were meaning to make a big profit) receive antenna manufacturers pushed “special” digital TV receive antennas. There is no such thing as a “digital” antenna. Antennas can’t tell what kind of signal that they’re receiving; it’s the receiver’s job to do that. The same “over-the-air” antenna that worked fine for your analog receiver should work just fine for your new digital receiver. But most (if not all) of these new antennas were designed for optimum performance in the UHF band, much to the detriment of their performance in the VHF band (both high and low-band). That further hampered reception of the stations that decided to go back to the VHF band. (And the low-band VHF spectrum is plagued with impulse noise and other forms of interference that the analog system tended to tolerate, but not so much the new digital system.) Add to that mobile applications for the transmitted data (that’s what it really is now; it can be video, audio or anything else that can be sent as data) UHF transmission makes for much smaller receive antennas (built into the device instead of requiring an outboarded “rubber duckie” antenna.
And someone mentioned the cliff effect. With the old analog system when the received signal strength started to drop below the receiver’s sensitivity threshold the picture would start to get “snowy”; the “snowflakes” being noise instead of received signal. At a certain point the picture would go away completely (generally speaking audio was never a problem because the aural signal usually carried farther than the visual signal). The new digital system doesn’t work quite that way. When the signal to a digital receiver starts to drop off to the equivalent point that analog receivers would start to display a snowy picture the correction circuity in the digital box just “fills in the blanks” so you still have a good, solid picture and sound. When the received signal drops to a point where the receiver can’t fill in all the missing pieces it “goes over the cliff” and you loose the picture completely (yes, there’s a pont at that edge where you get “blocking” or some other undesirable artifacts before complete loss, but you get the picture, or not!). The new, digital signal is, in theory, supposed to duplicate the coverage area of the old, analog signal but with changes in frequency and antenna height (or even locations for some stations) it’s not a perfect overlay so some places that had a good signal have nothing now, and some places that had nothing before now have a good signal.
Sorry for being long-winded here but I hope that answers more questions that it opens.