BROADCASTERS SAY TUNERS, COMPATIBILITY ARE BECOMING KEY DTV ISSUES

Requiring DTV tuner in all new TV sets and pressing for DTV-cable compatibility are emerging as key broadcaster issues in DTV transition, although DTV must-carry remains important, speakers said. Broadcasters always believed FCC had authority to require dual tuners, said Gary Chapman of LIN TV, chmn. of MSTV board, but if it didn’t, it “without doubt is past time for the Congress to act.” If govt. wants DTV transition to conclude, it “must take action now” on issues such as dual tuner, Donovan said. He cited recent Arthur D. Little study indicating additional cost of putting DTV tuner in all analog TV sets would be about $15 each, after mass production settled in later this decade.

Price estimate for dual tuner is “clearly not realistic,” said Brian Smith, Philips vp-technology policy. He said best estimate was that current additional cost would be “hundreds of dollars,” although figure would decline with mass production. He said it was conceivable dual tuner cost could drop to $15-$20 by 2010. FCC “recognizes broadcaster concerns” that dual tuners are necessary to speed DTV penetration, said Alan Stillwell, assoc. chief of FCC Office of Engineering & Technology. But he said Commission also was “very concerned” about effect on CE market and consumers: “This would make sets a lot more expensive, especially small sets.” He said FCC had seen few surprises in industry comments on dual receiver issue, including possibility of phased-in dual tuner requirement. FCC is awaiting CE comments on Little study of tuner costs, Stillwell said, but there’s no timetable for decision: “Stay tuned.”

Issue of DTV-cable compatibility remains difficult, speakers said. Jonathan Levy of FCC Office of Plans & Policy said NCTA and CableLabs announced only month ago that they had agreement on interoperability software, and standard still was out for review. Standard won’t solve whole problem, he said, because manufacturers are claiming retailers won’t sell interoperable set-top boxes without monthly revenue stream.

Speakers said industries also hadn’t agreed on nearly intractable issue of copy protection, or on DTV must-carry, which speakers said was business, rather than technical, issue. Cable consolidation means there’s big “prospect for mischief” by cable MSOs over carriage issues, Hearst-Argyle TV CEO David Barrett said, with “the gatekeepers favoring their own programming.” However, Michael McCarthy of Belo said broadcasters must provide high-quality programming because “if the viewers want to see our programming, cable is very responsive to its subscribers.”

Demand for DTV programming will be driven by network programming rather than by local broadcasters without resources to produce sustained highest-quality HDTV programming, McCarthy said. Barrett agreed that local stations must “hold the networks accountable for providing HDTV programming.”

Another big carriage-interoperability issue is data in DTV signals that’s not directly linked to programming, broadcasters said. Cable wants to strip much of that data out in order to conserve cable bandwidth, but speakers said that would make functions such as noncable electronic program guides (EPGs) nonfunctional. “We shouldn’t cede to cable EPGs,” said McCarthy. However, Richard Chessen, chmn. of FCC’s DTV Task Force, said Commission might not have authority over all issues raised.

“Your job is not to get an agreement among all the parties,” obviously frustrated James Goodmon, CEO of Capitol Bcstg., told FCC officials, speaking from audience. “Your job is to set the rules. Without rules, the transition won’t happen.” Goodmon said broadcasters also should accept some rules, possibly including requirement that they carry full- quality HDTV.

“This is the natural take-off point” for DTV set sales, said Panasonic Vp-Technology Policy Peter Fannon. He cited factors such reaching one million sales plateau, declining set prices: “The good news is that… the obvious product and buzz at the CES this year was HDTV.”

Broadcasters should focus on core video business, rather than multicasting or datacasting, Goodmon said. He and others said broadcasters might find some new revenue streams from DTV, but indicated they shouldn’t count on them. Chapman said LIN TV changes its business plan for ancillary DTV services “every day about noon.” Clear Channel’s Leon Brown, however, said company rolled out prototype service in Cincinnati Dec. 18 that provides 256 kbps downloads of data carried in DTV signal in response to conventional online uplinks. He said system had been “very robust” to date, and generated high consumer satisfaction.

In keynote, House Telecom Subcommittee Chmn. Upton (R- Mich.) said speeding up DTV transition “is my number one priority. It is a tremendously complex issue… ‘06 [when stations must vacate analog channels or start paying fee] is creeping up on us.” But, he said, public isn’t buying digital sets, “so it’s the old chicken-and-egg” debate. He said local TV stations “already have spent millions of dollars” on transition and their investments must be protected.

Referring to 2 meetings congressional leaders had with industries involved in transition, he said 3rd session would be in early March, with public hearing by Telecom Subcommittee to follow. He expressed hope transition “can be put back on track and the consumers will win” as result. Upton called amendment to campaign finance reform bill -- being debated on House floor as he was speaking -- requiring stations to charge lowest unit rate to political candidates (CD Feb 13 p8) “particularly onerous” (see separate story, this issue). In his district alone, which is covered by Chicago TV stations, it would have cost broadcasters a great deal to provide such access in 2000 election when he had 4 opponents, Upton said. “I suspect it will be a pretty close vote” in House to delete amendment, he said, but predicted Senate would go along if House deleted provision from bill.

In afternoon panel on regulatory issues, House Commerce Committee Majority Counsel Will Nordwind said transition issues were hard to reconcile because industries were saying different things to Congress. He said 2 earlier meetings led to “very heated discussions,” but “there seems to be grounds for compromise.” Hope is, he said, “Congress won’t have to step in and legislate.” Rep. Markey (D-Mass.) aide Colin Crowell said “it’s very useful to get everybody together and talk” about DTV issues. As result, he said, progress has been made on some issues.

Susan Eid, mass media adviser to FCC Chmn. Powell, said agency’s formation of Digital Task Force demonstrated “it’s a very important issue,” but she said it was one complicated by fact so many industries were involved.

Asked if there was possibility Congress could pass bill requiring TV sets to include digital tuners, Nordwind responded: “Everything is on the table.” Crowell said Markey offered such legislation in 1997 and “he still thinks it’s a good idea… The transition is in sort of a morass right now” and it may take “discrete legislation to speed it along.” On spectrum auctions, Crowell said that was part of “budget politics” and not telecom issue as such.