CEA-Broadcaster Accord on Converter Boxes—Will It Last?

The groups “weren’t that far apart on the big policy issues” when they convened for talks to draft the filing after an Aug. overture by CEA Pres. Gary Shapiro, said MSTV Pres. David Donovan. Unity on the filing was the “culmination” of the year-long MSTV-NAB converter box program, he said: “We entered into that project to prove you could build a high-quality, low-cost DTV converter box.” It made “eminent sense” to take this to “the next level” of cooperation between CE and broadcasters, Donovan said.

Hailing the joint filing as “extraordinary,” Shapiro called it an “important thing to do” in light of CE’s past rancor with broadcasters and policy disagreements that may evolve. The coupon subsidy program was “a one-time deal, and we felt there would issues getting it out to the public,” Shapiro told us: NTIA has been handed “a very difficult task, and I felt it would be in everyone’s interest if we could go to the NTIA together and say, ‘This is what we think is important.'” At first, he said, his idea met with scorn even within CEA. But “the fact that we filed together, I think, was a good thing, and it’s part of our strategy going forward,” he said: “Our desire is to work as closely as possible with the broadcasters and the cable industry to promote the DTV transition.”

Today’s “phenomenally healthy” HDTV market exists because “TV set makers got behind it as a policy early on,” Shapiro said: “It’s something we're very proud of. But we had to lock horns with the broadcasters quite often.” Sharp rhetoric on both sides marked the split. In the heat of battle NAC called CEA a shill for offshore TV makers, and CEA was equally sharp in some statements.

A possible deal-killer -- a dispute over how many household sets will go black in Feb. 2009 -- was disposed of quickly, we're told. “No viewer should be left behind,” Donovan said: “At the end of the day, whether it’s 19.5 million being disenfranchised or 15 million, that’s a large number. And we needed to get beyond that debate, and I think we did.”

Ensuring no households are disenfranchised was “the overriding issue” in getting talks rolling, said NAB Exec. Vp Dennis Wharton. Talks occurred in a “spirit of congeniality,” he said: “Ultimately this is all about consumers.” Shapiro said: “The first thing I said is, ‘Let’s ignore all the numbers because they're really not relevant.’ If you'll notice, there’s really no numbers in the filing.”

Compromise runs through the 33-page filing. Earlier, CEA mocked the MSTV-NAB DTV converter box program as a “publicity stunt.” That program’s findings -- that a cost- effective set-top can be developed incorporating the latest receiver improvements -- figure prominently in Appendix A of the filing, on minimum technical requirements NTIA should adopt for coupon-eligible converter boxes. That CEA members Thomson and LG signed on with the MSTV-NAB to develop prototypes “gave me the comfort for us to sign on with the filing,” Shapiro said: “The logic was, if they could do it, so could we.” CEA calls the MSTV-NAB program an “appropriate” basis for helping define technical “thresholds” required in a coupon-eligible box, he said. But it’s a “one- time-only event,” he said. “There has to be a threshold to define what this is. Otherwise, how do you do a rebate program?”

CEA has long fought govt. requirements for TV receiver performance, Shapiro said, and will keep up the fight. “The difference I see here is no manufacturer is compelled to market this type of box” under NTIA’s voluntary program, Shapiro said. “If manufacturers voluntarily want to make a box, these are the standards we're asking NTIA to put into place. And that’s all it is. We are still going to be ready to fight mandates that force us to build all our products a certain way.”

The minimum standards incorporated in Appendix A were a bone of contention between CE and broadcasters in discussions before the filing, we're told. “Clearly, we didn’t want a gold-plated box because consumers then couldn’t afford it,” Shapiro said. But NTIA proposed adopting ATSC A/74 receiver guidelines for the boxes, and in the 2 years since A/74 appeared, “there have been improvements in receiver design and quality,” Donovan said. The MSTV-NAB program was “exceeding” A/74 performance, and doing so cost-effectively, he said: “The thought was, let’s try to capture those improvements.” CEA went along, but its wariness shows in a footnoted disclaimer in the document: “The recommended minimum performance requirements in Appendix A take into account measured performance levels achieved in the NAB/MSTV digital converter box program, and reflect the consensus of the broadcast and consumer electronics industries for the specific purpose of the NTIA program.”

Certifying boxes was a point of debate. Broadcasters wanted FCC oversight; CE makers resisted, said all those we interviewed. Ultimately, they agreed on a “verification plus” proposal to NTIA that’s spelled out in the filing. Box makers would be responsible for their own compliance testing, under the “self-certification” methods that NTIA proposed.

But the FCC “should have the ability to be involved in the approval process before the devices are released to market,” the filing said. Manufacturers would have to submit their test results and a sample. “The FCC should then review test results to ensure conformity between the converter boxes and the NTIA’s performance standards, which themselves are based on standards endorsed by or known to the FCC,” it said: “If the FCC does not alert NTIA and the manufacturer of any problem within 15 days of when the data were submitted, the device should automatically qualify for the program. If the FCC does issue notification of a problem, however, it should expedite its own testing and rapidly notify NTIA and the manufacturer of any noncompliance. In this circumstance, the manufacturer would not be allowed to distribute its devices until they are cleared by the FCC. This process is, of course, extraordinary, but it is justified by the special nature of the converter box program.”

CEA, MSTV and NAB agree that whatever process is used “should be speedy,” Donovan said. Another footnote in the filing, also apparently indicating CEA concerns: “Because of the unique and time-limited nature of the converter box program, the commenters believe a ‘verification plus’ process would best ensure the quality of consumer devices included within the program. These comments don’t address the viability of such a process in any other context.”

Will the CE-broadcaster detente hold as long as necessary to promote the Feb. 2009 analog cutoff date? “I'm not smart enough to anticipate” disagreements with broadcasters, Shapiro said: “I do know that no matter how well we jointly promote this cutoff date, there will be a certain number of people -- this ‘X’ number -- who will not prepared for it and may not be pleased with it.”

Despite agreement to table debate over disenfranchised households, NAB’s Wharton said there’s a GAO study “that’s never been refuted,” putting the tally at 73 million. “Whether it’s 73 million or 63 million, there are still tens of millions of homes and consumers who are threatened by this deadline that’s sort of staring us in the face,” he said: “The obvious goal of CEA is to sell more TV sets, and that’s our goal, too, with the understanding that we protect… the 73 million folks who could wake up one day and be staring at a blank signal. That’s something that wouldn’t benefit anybody.”

Working with CE makers on the joint filing to NTIA was “the first step in a lengthy process,” Wharton said: “But there’s got to be a recognition among policymakers that the $1.5 billion probably is not going to be enough to do the trick. We all understand -- particularly NAB understands -- that there’s a massive educational effort that needs to be done between now and the deadline. We're prepared to undertake that. We're going to be using our own airwaves to educate people on what’s at stake here. It’s one of the top priorities of the NAB board and the NAB staff, and we're going to be moving aggressively on this in the next few months and the next year.”

Wharton declined to “comment specifically” on our question whether NAB would seek more money for coupon subsidies and education. But as funded the program “doesn’t get you even to 50 million TV sets,” he said: “We have an educational opportunity here, involving not only the public but also policymakers and interest groups… This is going to involve a lot of moving parts and different pieces that would need to be put together, so stay tuned.” Asked if Congress’s setting a hard deadline means parties won’t return to the Hill for more subsidy funding, Wharton said: “I don’t think it does, but I think it’s a little early to lay out a game plan. All of this will be resolved at the appropriate time.”