CEA WEIGHING STILL LEGAL OPTIONS ON DTV TUNER MANDATE

As for possible court option, such as seeking injunction through appeal in U.S. Appeals Court, D.C., Shapiro said CEA was still conferring with its attorneys before deciding next move. He said CEA or other parties would have 60 days to seek such action after FCC notice of proposed rulemaking is published in Federal Register. Citing mixed retail reaction to FCC from within CE community itself, Shapiro said DTV tuner mandates emerged quickly in recent weeks, but acknowledged CE industry must do better job educating rank and file about complicated issues.

Suppliers we canvassed about FCC’s surprise inclusion in order of VCRs, DVD recorders and PVRs said they were analyzing text of mandates and implications for future products and pricing. Typifying others, Thomson spokesman said “obviously this unanticipated wrinkle in the FCC order will have unintended consequences.” However, he said given that requirement on such devices won’t take effect for 5 years, “by that time the additional cost [of DTV tuners] should be in line with the additional costs to add ATSC to TV sets, or roughly about $100.” He quipped: “So much for $89 VCRs.”

Retailers continued to offer mixed take on FCC action. Franklin Karp, pres. of N.Y. metro area chain Harvey Electronics, told us: “I have a problem forcing my clients to buy technology that they may never be able to use in the realm of broadcast HD versus satellite and cable.” He indicated many of his customers get their TV via cable or satellite -- as is case with much of country. But because of high incomes of many Harvey customers and types of high-end TVs they typically purchase from chain, he said, “it’s not going to impact my customers.” Karp said there was possibility FCC ruling could lead to more high-definition broadcasting: “If the networks are using the excuse on the [content] side that there aren’t enough people to receive it for it to be economically feasible for [them] -- if that’s the excuse… then, yeah, [this could lead to more HD content]. If this forces their hand, great, because, lord knows, there’s not enough [HD content now].”

Stuart Schuster, pres. of single-store Marvin Electronics in Ft. Worth, said: “I think it’s good. I think we need to go on to HD… I think that [forcing manufacturers to put the tuners in is] fine. We only sell high-end product and in our area we have 6 stations broadcasting terrestrial [HD]. So we think it’s great.”

Sears Home Electronics/Home Office Vp-Gen. Mgr. Ray Brown said: “Personally, I think [the FCC] probably needed to do something to spur the transition along and I think personally that this is probably an appropriate action. I personally don’t buy off on the belief that at the end of the day it’s going to cost consumers $200 [or more] incrementally. Some of this is coming from the same folks in the industry who were pricing DVD [players] at $800 five years ago -- and today they're $49. So, I don’t buy that [argument]. I think that’s something akin to yelling fire in a crowded movie theater -- trying to create panic where panic isn’t required. I think [the FCC’s vote was] probably an appropriate next step.”

David Workman, pres. of Denver-based Ultimate Electronics, said argument by Shapiro and others “in a pure sense is a very valid argument in that obviously people now get their signals from a variety of sources including cable and satellite and their argument is ‘why should we force the consumers to buy 2 tuners?'” But he quickly added: “When you think about the advent of color television and all the other advances that have been made, TVs have always had a tuner built into them and that’s what consumers are used to and, in fact, [they] have been buying 2nd tuners for some time… And if you don’t increase the content then we obviously don’t get anywhere.”

However, Canton, Mass.-based Tweeter Home Electronics offered mixed reaction to FCC ruling. Brand Communications Dir. Anne-Marie Boucher told us: “Overall, from our point of view it seems like a great milestone in the history of turning things from analog to digital. However, it’s kind of a nonevent in the sense that in 5 years from now most manufacturers don’t need a mandate to tell them to make digital TVs because they're already well on their way.” As for issue of TVs with screens 36” and up having to include digital tuners by 2004, she said: “From Tweeter’s point of view, most of the TVs that we sell right now already comply with that standard.”

Meanwhile, FCC set Oct. 30 comment deadline for its DTV copyright rulemaking (MM 02-230), with replies due Dec. 13. Brief notice released Fri. seeks comment on whether a regulatory copy protection regime is needed, and whether FCC has jurisdiction to impose it on broadcasters and CE manufacturers. Among other questions are: (1) Whether high- quality programming would continue to be withheld from distribution if copy protection, including broadcast flag, were imposed. (2) Whether broadcast flag developed for ATSC is best technology, whether there are alternatives, whether it could be upgraded and improved over time, and whether it would be better to wait for better alternative. (3) Whether broadcasters and content providers should be required to embed flag in content, and whether CE equipment other than DTV receivers themselves should be required to carry out flag’s instructions. It also asks how CE device can be certified as flag-compatible. (4) Whether and how flag should be carried on cable and DBS. (5) Whether copy protection raises privacy or First Amendment concerns. (6) Impact of flag on CE costs, as well as future technology development.