INDUSTRY WEIGHS IN ON WHAT TO DO ABOUT DTV'S 15% PROBLEM

NAB and MSTV in a joint filing said that, to meet the DTV deadline, digital-to-analog converter boxes should be made widely available at a reasonable price, with some govt. subsidies. Digital converter boxes should be designed for ease of use and consumers should be better educated about DTVs, they said; a near-term measure would have the Commission require warning labels on analog-only sets, alerting consumers to their limited useful life. Receiver manufacturers could speed the DTV tuner schedule to reduce sales of sets without tuners. About 280.5 million analog sets are in use, according NAB and MSTV, and about 18.3 million multichannel video programming distributor (MVPD) homes have analog TVs that will become useless without a digital-to-analog converter.

Of the roughly 13% of households that don’t subscribe to cable or satellite, most rely on over-the-air TV reception for reasons “other than economic constraints,” the CEA said. CEA findings, from polls it conducted -- that the impact wouldn’t be borne disproportionately by low-income consumers -- stood in sharp contrast to data from others, including Disney/ABC.

Disney/ABC was among broadcasters urging the Commission to take an “extremely cautious” tack on any action that would “disenfranchise” over-the-air customers who “represent a significant portion of our potential viewing audience.” It said ABC commissioned phone surveys of L.A. and N.Y. viewers who rely on over-the-air broadcast TV. Of the 9.1% of respondents in N.Y. and 15.3% in L.A. who rely entirely on over-the-air reception, cost and personal choice were the main reasons cited for not subscribing to cable or satellite, Disney said. Moreover, an additional 20% in N.Y. and 22% in L.A. were found to subscribe to cable or satellite but nonetheless keep TV sets unconnected, also for personal choice, it said. Of nonsubscribers, most (58.5% in N.Y., 55.6% in L.A.) had incomes below $50,000 and were nonwhite adults (60.6% in N.Y., 71.5% in L.A.), Disney said.

To help identify where the 15% might be, Sinclair Bcst. conducted a telephone survey of about 2,000 households across about 39 markets in which it operates. It found 13% didn’t subscribe to MVPDs, 33% had at least one TV set that relies upon analog over-air reception and 20% relied exclusively on analog over-air reception, mostly in minority and lower- income households.

But Paxson said identifying the 15% was “entirely irrelevant” and the Commission should use its regulatory tools to increase DTV penetration “by fostering the growth of a DTV service that compels viewers to tune in.” The key is full, digital multicast must-carry, Paxson said. NAB and MSTV agreed cable systems failure to carry all DTV signals was a disincentive to consumers to buy DTV.

Several broadcasters suggested revenue from auctions of spectrum that will be reallocated from broadcasting could contribute to the cost of new reception equipment for consumers. The 700 MHz Advancement Coalition said it supported that suggestion, but “strongly opposes” any attempt to require prior auction winners to pay for the conversion of analog-only equipment as part of a mandatory band-clearing mechanism. “Any such effort would be unconstitutional and contrary to the Commission’s precedent,” the Coalition said. Paxson agreed: “Forced band-clearing would be unfair to both 700 MHz broadcasters and their viewers.”

CEA took no position on receiver subsidies, just repeating its argument that broadcasters should do more to promote the DTV transition. “More efforts to educate consumers about the transition, especially by broadcasters, will minimize the potential that some viewers may have difficulty” continuing to receive over-the-air signals after the DTV conversion, CEA said.

Community Bcstrs. Assn. (CBA) said a forced premature termination of analog service would be “fatal” to Class A and low-power TV stations (LPTV). CBA said most Class A and LPTV station viewers don’t rely on cable or DBS, so digital reception penetration must be based on broadcast reception by digital receivers or analog receivers with digital converters obtained other than through cable or DBS service providers.

Capitol Bcstg. said it doesn’t support abandoning any analog sets: “As the Commission focuses on homeland security issues, it must remember the role of broadcast television in informing the public, including the continued importance of over-the-air broadcasting.” Capitol noted that in disaster prone states, such as N.C., battery-powered analog TVs aren’t just used at Carolina Hurricanes and Panthers games: “They are used for safety information during real hurricanes.”

The key to minimizing the effect on consumers whose TV sets wouldn’t work after the DTV transition lies in achieving economies of scale that would assure “a very low-cost converter box” is available, LG said. It estimated the retail cost of a set-top converter box will be less than $100 by late 2005 and drop as low as $50 by 2008, “assuming industry-wide demand of tens of millions of units by then.” Moreover, compliance with the FCC’s ATSC tuner mandate will drive down the costs of ATSC chipsets “exponentially” to the point that “a digital tuner 3 years from now should cost about the same as analog circuitry today,” LG said.

The IT industry said the sooner a hard switchoff of the analog service occurred, the better, because of the benefits of the accompanying freeing of spectrum. The IT Industry (ITI) Council touted setting Jan. 1, 2009 for the hard switchoff of the analog service as “an essential aspect” of any comprehensive national DTV transition strategy. In light of all the expected benefits a hard deadline would afford, the ITI Council said it even would support “modifying the plan to provide for an even earlier deadline” for return to the govt. of the analog channels. It said there would be “minimal” disruption to the consumer and said it believes putting the spectrum “to its best use, at the earliest feasible date, should be one of the primary goals” of the DTV transition.

The Council said 84 MHz of the spectrum to be returned would likely be used by advanced wireless providers for “innovative services” like WiMAX. It praised WiMAX as “a potentially affordable answer to consumers who are unable to receive broadband service from cable or DSL providers either because they live in rural areas or are in developing markets where service providers have yet to deploy wired infrastructure.” Intel, in separate comments, agreed, telling the Commission that WiMAX “is expected to improve bandwidth and service while radically reducing radio costs.” As a result, Intel said, WiMAX “should dramatically spur wireless broadband deployment as a 3rd broadband pipe augmenting DSL and cable.”