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CEA Is Optimistic About Regulatory Progress During 2002

1/08/2002 02:00:00 AM Eastern

The Consumer Electronics Association (CEA) had another busy year on the legislative and regulatory front in the nation's capital and around the country. There are many daunting issues on the table for the consumer electronics industry, but there is much reason for optimism for the coming year based on positive signs and results from the association's efforts in 2001.

"We've benefited from having a very knowledgeable FCC chairman in Michael Powell who has a well developed and astute sense of how our industry works," notes Michael Petricone, government affairs VP for CEA. "The chairman is maintaining a regulatory environment to let digital television continue to grow and to move the ball forward on some cable issues."

Cable has been, of course, one of the biggest obstacles to the full realization of digital television. With some 70 percent of the nation receiving TV signals through cable, the industry's slow pick-up of local broadcasters' digital channels has been a concern, especially now that several hundred stations are broadcasting digital and TV makers are offering hundreds of digital sets.

But there are hopeful signs, including Comcast's announcement that it will begin carrying digital broadcast channels in eastern Pennsylvania. "The technical cable compatibility issues are mostly completed," Petricone said, "now we need to complete the standard and have cable operators commit to the standard so we can have a national market for digital cable products at retail. Then consumers can buy equipment in Maine and move to California and it will still work, just like other consumer electronic products."

One potentially explosive issue for the consumer electronics industry surrounds the new energy legislation passed in the U.S. House of Representatives last year — the Securing America's Future Energy Act, H.R. 4 — and awaiting action by the Senate. In it there are provisions that would require a huge expansion of governmental power over thousands of diverse products from stereos to security systems, from home computers to home medical equipment, from baby monitors to home aquariums.

These provisions would create a one-watt standby consumption standard for all "household appliances" defined as any device that uses household electric current and operates in a standby mode. The legislation would require all electronics to comply with a one-watt standard for a standby mode during the next two to seven years. It would establish an extremely cumbersome administrative process whereby a manufacturer or importer must apply to the Secretary of Energy for an exemption to the standard for a specific product. These would be mandatory minimum energy efficiency requirements, not voluntary Energy Star type specifications.

"We don't like to see mandates on products that limit consumer choice," Petricone said, 'but we're encouraged by the willingness of some members of Congress, including Chairman Tom Davis (R-Va.), Chairman Billy Tauzin (R-La.) and Chairman David Drier (R-Calif.), to work together in Conference to remove inflexible, mandatory standards contained in H.R. 4 that could harm the technology engines of our economy, and compromise our competitiveness worldwide."

Petricone reiterated the comments CEA president Gary Shapiro and EIA president Dave McCurdy made at the time the House passed the bill. "The one-watt standby and non-covered product provisions in H.R. 4 inhibit innovation, increase government bureaucracy and impair the ability of our industry to provide the features and functionality demanded by consumers," the executives said. "As written, they in essence create expensive and intrusive government mandates on products accounting for a mere 3 percent of total energy use.

"We continue to support a comprehensive energy plan. In fact, our industry leads by example in the goal to promote energy efficiency. Our industry's products become smaller, cheaper, faster, better and more energy efficient year after year." The pointed out also that the high technology industry contributed to 50 percent of the acceleration in U.S. productivity growth in the second half of the 1990's and represents 10.6 percent of the U.S. manufacturing workforce.

CEA's representatives also continued to promote sales tax holidays nationally and at the state level as a method for boosting consumer spending at a relatively small cost in tax revenues. CEA, which has been instrumental in sales tax holidays for computers and other electronic products also supported the congressional attempts for a national sales tax holiday following the September 11th attacks.

CEA estimates that each dollar of sales tax relief on the purchase of a computer would generate about $30 in new spending. Additionally, CEA maintains that purchases of DVD players and mobile phones generate future sales of software, accessories, movies and service contracts which further boost consumer spending and expand the impact of a tax holiday." The CEA-supported tax holidays in Pennsylvania and South Carolina in 2000 and 2001 led to dramatic increases in computer sales in those states, CEA said, demonstrating that consumers are highly motivated to purchase computers when given targeted tax relief.

Of course priorities and issues have changed in the nation's capital as a result of the attacks of Sept. 11th and other interruptions, but business continues. "The Congressional agenda was diverted," Petricone noted, "but there's a strong sense that even as the conflict continues, the business of America has to be done." The issues we're dealing with are important and current events have pointed up the importance of consumer electronic products in Americans' lives."

CEA will have much to concentrate on in 2002. "We'd like to see the resolution of a couple of issues" Petricone said, including copy protection, cable compatibility and DTV carriage, and increased broadband penetration. "We'd like to see broadband elevated to a top administration priority," he said. "It could be the technology equivalent of the interstate highway program in the '50s and '60s with a tremendously positive ripple effect."

Finding effective copy protection schemes that also protect consumer's recording rights continue to be one of the key elements to success for the new generation of digital products. CEA was in the forefront of the battles to secure home recording rights a generation ago in the analog age, the early days of the VCR. CEA is working to assure those rights in the digital era, to maintain the variety of consumer choice the electronics industry has come to be known for.

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