CEA to ‘Unequivocally Endorse’ 2008 DTV Hard Date at Hill Hearing Today

At the same time, Shapiro will urge that the DTV tuner mandate deadline on 13” and larger sets is working and should be “left as is,” not accelerated by a year to July 1, 2006, as the draft would do. CEA is concerned “such a requirement would severely reduce the retail market for these sets,” Shapiro will say. An accelerated deadline could force some manufacturers “to move to tuner- less sets or to stop manufacturing altogether the TV models which cannot be fitted with digital tuners,” his testimony says. Many CE makers are reluctant to do that and it “would defeat the purpose of the tuner mandate itself,” Shapiro will say.

According to the testimony, even if manufacturers were able to meet such a “severely foreshortened production schedule,” a July 2006 date could result in cost increases “that the marketplace cannot sustain.” Advancing the tuner deadline by a year “would double the development costs for manufacturers, as well as double the price of a typical 13-inch television to consumers,” it says. The unfortunate result of accelerating the tuner mandate deadlines would be to decrease the number of DTV tuners in the marketplace, which clearly doesn’t serve the transition, Shapiro’s testimony says: “By contrast, the current and anticipated July 2007 date allows time for economies of scale to fully develop. This will lessen the ’sticker shock’ for consumers, allowing these products a chance to compete against less expensive, tuner-less alternatives.”

In his testimony, Shapiro and CEA take no position for or against tuner subsidies, which have been at the core of a debate within the committee, and thus were absent from the DTV bill draft. Instead, he will repeat CEA’s past policy statements that it “respects and understands” those who support subsidies, but will maintain that the proportion of households that would be disenfranchised by an analog cutoff is less than 13% at present and falling rapidly.

As for other terms of the draft, CEA supports rules on product labeling and retail signage warning consumers of the impending cutoff, Shapiro will say. But CE makers will need at least 120 days “to include the labels or label text on the outside of the product packaging and on or near the television itself,” the testimony says. The draft called for such labeling to be in place only 45 days after the bill’s enactment. Other Shapiro arguments: (1) CEA supports the proposed deadline of Dec. 31, 2006, for the FCC’s issuing of final channel allotments, but urges that the reconsideration period not be extended beyond the 7 months provided for in the draft so as not to endanger the analog cutoff slipping to 2010. (2) The number of broadcaster disclosure ads warning of the analog shutoff should be increased from the present 2 per day, and separate requirements should be imposed on networks as well as local broadcasters. (3) Cable operators that carry broadcast signals digitally must not be allowed to reduce the audio or picture quality.

Meanwhile, cable has concerns with the bill’s effective dual must-carry provision. Under the bill, cable operators may convert a digital must-carry signal to analog anywhere between the head-end and the subscriber’s premises so the signal can be viewed on analog TVs. But if cable operators elect to do a conversion for one must- carry broadcaster within a market, they must do the conversion for all other must-carry broadcasters within that market, according to the bill.

The problem with this provision is that some must- carry stations don’t have compelling programming and it uses space that cable could fill with more quality shows, according to industry sources. Out of a nationwide body of 1,200 commercial broadcasters, about 100 elect for retransmission consent, rather than must-carry, because the content is so desirable that cable is willing to cut deals with the broadcasters -- either to carry other programming streams or get favorable channel placement.

The Barton bill could require cable to convert to analog hundreds of must-carry stations. “We're still in an analog world,” said one industry source, anticipating that there could potentially be a number of stations that would need to be converted to analog. Cable executives presented the House Commerce Committee with a proposal for solving the problem, which would require giving cable the ability to downconvert the signal at the headend, but the proposal was rejected, sources said.

Meanwhile, Consumers Union is expected to tell the Committee that the discussion draft doesn’t do enough to help consumers, nor does it provide a way to ensure that freed-up spectrum licenses could be auctioned to businesses that could stimulate greater competition in the market. “We are not opposed to a hard deadline for the transition, but if we have a deadline, it should come with tangible benefits for consumers,” said Susanna Montezemolo, policy analyst with Consumers Union. Consumers Union Senior Dir. Public Policy Gene Kimmelman is expected to testify at the hearing, along with NCTA Pres. Kyle McSlarrow and James Yager, CEO of Barrington Bcstg, for NAB.