Budget Considerations Drove 2008 Transition Date in DTV Bill

Budget issues also are fueling a debate among committee members on how aggressive govt. should be in offering tuner subsidies for low-income families that would otherwise be left out in an analog cutoff. Intent on maximizing the windfall generated by an analog spectrum auction, committee members are wrangling over how to structure subsidies. That debate is unresolved, which is why the draft doesn’t address tuner subsidies.

A CBO estimate of income from a 2008 auction will come within weeks -- a critical determinant of a DTV bill’s success, sources said. If the auction looks lucrative enough, the CBO guidance will make it easier for Democrats and Republicans to agree on a subsidy program for tuner boxes. A smaller figure would sharpen those negotiations.

“It’s now time to take the next step and legislate,” said House Commerce Committee Chmn. Barton (R-Tex.). “It is far wiser to plan for the coming change than to sit back and wait for television sets to go dark,” he said: “This spectrum will also raise billions of dollars at auction, helping us further reduce the federal deficit.”

“The benefits of adopting a date certain are numerous and significant,” Barton said. “For years, our first responders have had to make do with antiquated radio equipment while waiting for the airwaves they were promised. This bill will make it easier for these public servants to catch criminals, fight fires and save lives.”

Telecom Subcommittee Chmn. Upton (R-Mich.) said: “I am confident that at the end of the day, we will have a DTV bill that will deliver something of real value to American consumers as we approach the digital age. For nearly two months we have negotiated in absolute good faith with our Democrat counterparts and our hearing this week on the draft bill ensures that the process continues to move forward.”

Some insiders voiced skepticism about the bill passing as written. “I don’t see it passing without a subsidy provision,” said one Washington lawyer who represents a diversity of interests. He also said the date is “way too late.”

Others were more optimistic. “Putting this spectrum to work will mean an increase in American jobs and a positive ripple effect throughout the U.S. economy,” said Janice Obuchowski, exec. dir. of the High Tech DTV Coalition.

“The most important thing about this draft is that it starts the clock ticking for broadcasters to free up spectrum for better uses,” said Rhett Dawson, pres.- Information Technology Industry Council: “Having a date certain gets us closer to the point where that spectrum can be used for public safety, enhanced wireless broadband, and new, more efficient uses.”

CEA said little after releasing a statement late Fri. generally praising Barton’s role in pushing for a hard deadline. If CEA had any misgivings about the draft’s aggressive new timetable on implementing a DTV tuner mandate, it wasn’t saying so publicly. Michael Petricone, CEA vp-technology policy, told us Mon. his group’s overriding priority is a hard date for analog cutoff. As to how CEA greeted the draft language accelerating the tuner mandate by a year to July 1, 2006, Petricone declined to comment, saying CEA hadn’t yet polled members.

Barton earlier signaled his intent to ask the FCC to expedite the DTV tuner mandate on 13” and larger sets (CED April 13 p1), although he originally backed a final deadline this year based on a hard analog cutoff date of Dec. 31, 2006. Still, in accelerating the timetable by which all new sets must have ATSC tuning to July 1, 2006 - - a year earlier than currently scheduled -- the draft is more aggressive than even CEA’s opponents had hoped for when they also urged rejection of a CE industry petition to revise the deadlines on 25-36” sets.

For example, Pappas Telecasting urged moving the deadline to Dec. 1, 2006, for all remaining TV sets and interface devices. The accelerated schedule would “more closely conform” with the DTV construction schedule imposed on broadcasters and was “especially important” if a hard analog cutoff date of Dec. 31, 2006, were established, Pappas said. Motorola recommended a Nov. 1, 2006, deadline for all remaining sets, which the company said would speed the drop of DTV equipment prices “by taking advantage of the large sales volumes that occur during holiday season.” CEA replied that Motorola’s proposal “severely truncates what is feasible from a manufacturing perspective” and was based on “a self- serving interest to sell more set-top boxes and wireless devices once the analog spectrum is returned for non- broadcast use.”

Nevertheless, CEA Pres. Gary Shapiro stated no specific objections to the accelerated timetable when he released a statement late Fri. hailing Barton for taking “a critical and necessary step” by releasing the draft. “While we look forward to studying all aspects of the bill in full detail, we have long supported a hard cutoff date for analog broadcasts to provide certainty to manufacturers, retailers, consumers and all others with a stake in the transition,” Shapiro said. “A hard date will foster innovation and strengthen America’s security, while completing the DTV transition in a timely and understandable manner.” He pledged CEA’s “full support.”

An 85%-penetration “test” as a trigger for analog shutoff under existing DTV law is delaying the transition and return of the analog spectrum, according to the draft. Deciding if the penetration test has been met in a market “will also be extremely cumbersome” for the FCC to do, the legislation says. Moreover, the difficulty in predicting when a particular market will reach the 85% threshold makes it “extraordinarily hard” for consumers, industry and govt. to plan for the analog cutoff, the draft says. “This will be especially burdensome for the approximately 15% of remaining consumers in a market who would not have access to digital broadcast channels,” as they will need to know when to buy DTV sets or converter boxes or subscribe to cable or DBS to continue receiving programming, the draft says. Eliminating the 85% test and setting a hard cutoff date “will bring consumers and the economy the benefits of digital television faster, and enable all affected parties to plan,” it says.

Besides expediting the tuner mandate schedule and setting stringent product labeling and store signage requirements for CE makers and retailers (CED May 23 p1), the bill would direct the FCC to hold an analog spectrum auction beginning April 1, 2008 -- some 9 months before the cutoff -- and deposit proceeds within 60 days, the draft says. The Commission would have until Dec. 31, 2006, to issue a final order on DTV channel assignments for full-power stations and complete any reconsideration of that order by July 31, 2007, the draft says. Beginning Feb. 1, 2006, and ending when international coordination of DTV channel assignments with Canada and Mexico is complete, the FCC would file status reports every 6 months with the House and Senate Commerce Committees, the draft says. The FCC would be free to “take any actions necessary” to terminate full-power analog station licenses to assure all analog transmissions stop Jan. 1, 2009, it said.