DTV Confusion Pervasive Among Lawmakers Who Decry Consumer Confusion

Sununu’s warning did little to keep witnesses from saying a hard date for the analog cutoff would cause catastrophe unless managed properly. For example, John Lawson, pres. of the Assn. of Public TV Stations, told the committee an analog cutoff could be “a train wreck” if some viewers’ sets go dark. Moreover, Lawson testified, organizing a “payout” to convert 21 million households that rely on over-the-air reception would require “Y2K- level” planning to assure a smooth transition.

But confusion on DTV also was pervasive among Committee members themselves -- most notably its chairman, Sen. Stevens (R-Alaska). At one point late in the hearing, Stevens asked CEA Pres. Gary Shapiro whether a DTV set-top could be designed to up-convert an analog TV for digital. “You really need a digital TV set to appreciate” digital quality, Shapiro responded. “An analog set will only be as good as an analog set can be. A system is only as strong as its weakest component, and today the weakest component would be the analog picture.”

Mike Kennedy, senior Motorola govt. relations executive, chimed in that all a DTV converter box can do is convert an over-the-air digital signal to analog for display on a conventional analog TV set. “I'm not aware of how, in a sense, you would do that in the other direction.” Still, Stevens asked why that isn’t possible. “You could never get color on a black & white set because the system doesn’t allow it,” Shapiro said. You have to buy a DTV-capable set to display a digital picture, just as “you have to buy the color TV set to get the color,” Shapiro said.

Stevens then asked about the feasibility of a “drop dead” date as early as Nov. 15, 2005, for all analog sets to have DTV tuning built in. Shapiro said economies of scale haven’t been achieved on integrated DTV tuners and such a rule would raise the price of a TV $100-$200. Sen. Burns (R-Mont.) then suggested building a $50 digital-to- analog converter box into every TV, noting that’s the estimate of what a set-top would cost by 2009 to keep households from going dark.

Meanwhile, tuner subsidies -- and whether they would be subject to a means test or offered to all over-the-air households -- remains the issue that could stall DTV legislation this year. “The number of consumers that could be left in the dark by the digital transition is substantial,” testified Consumers Union Policy Dir. Gene Kimmelman. “If Congress gets this wrong, the transition will not merely inconvenience consumers, which is nuisance enough, it will impose on them direct costs of $3.5 billion or more.” CEA counts far fewer potentially disenfranchised households, and says the proportion is dropping every year.

Michael Calabrese, dir. of the Wireless Future program at the New America Foundation, told the Committee a “credible” hard date that includes a comprehensive “compensation” package “can spin straw into gold.” He called for a “broad-based” DTV converter “rebate that ensures all households still relying on analog over-the- air are held harmless.” Calabrese said: “By earmarking a relatively small share of the expected auction revenue for a consumer compensation fund, Congress can both protect vulnerable consumers and ensure potential wireless business plans will not be disrupted via voter backlash.” According to Calabrese, giving a $50 box or rebate to 16 million households -- the minimum he projected would depend on over the air reception -- would cost about $800 million. Giving a rebate to 44 million households that report relying on over-the-air for local channels would cost $2.2 billion, he said. Either way, that’s a small part of the $18-$30 billion that would be raised in a spectrum auction, Calabrese said.

A “means-tested” subsidy program for low-income consumers would cost less than one for all disenfranchised households, Calabrese said, but “we believe it’s neither administratively practical nor fair.” If a broader program were adopted, he said, “we believe that on balance, it would be most cost-efficient to reimburse qualified retailers” for requiring them to offer FCC- certified converters, keeping consumers’ share of the cost “to a small co-pay, and to provide a degree of technical support.”

Any cash rebate or subsidy should give consumers the option of applying it to purchase of a new DTV set, a DBS receiver or cable set-top, Calabrese said. The Consumer Electronics Retailers Coalition (CERC) wasn’t asked to testify at the Senate hearing. But at a House Telecom Subcommittee hearing in May CERC urged panel members not to saddle retailers with the burden of administering a subsidy program, although the group took no position on subsidies themselves. CERC couldn’t be reached for comment on the Calabrese proposal.