The first round of discussions by the House Telecommunications Subcommittee for establishing national digital television policy pitted broadcasters against a handful of other interested parties in a battle to establish a firm analog television cutoff date.
The almost day-long session covered a staff discussion draft of the Digital Television Transition Act of 2005, which includes, among other things, a proposal to have analog television broadcast spectrum returned to the government by Dec. 31, 2008.
The government would then have the ability to reallocate portions of the 700MHz spectrum to emergency services needs, before putting the bulk out to auction for various wireless communications services.
Proceeds from the auction would be applied to the federal deficit. For that reason, Rep. Joseph Barton (R-Texas), House Energy and Commerce Committee chairman, has proposed linking passage of the act to this year’s budget approval process, a controversial procedure which some committee members feel is unwisely rushing through critical DTV policy issues.
Most of the committee members attending the session seemed to support the call for establishing a hard cutoff date, although several suggested the date should be pushed up to the original Jan. 1, 2007, deadline. Many committee members from both sides of the aisle also called for inclusion of subsidy programs to compensate consumers who rely on over-the-air analog broadcasting for the cost of digital to analog converter equipment.
Most members calling for the subsidy provision would have it cover low-income households determined by a means test, although several members, including Rep. Rick Boucher (D-Va.), said the subsidy should be allocated to every home that would be affected by the loss of analog signals, regardless of income.
Others argued that there was no need for a subsidy of any kind if consumers were given enough advance warning to prepare.
In oral testimony, Jim Yager, Barrington Broadcasting’s CEO, said broadcasters are ready for the digital TV transition.
“Let me be very clear. All broadcasters — large and small — want to see the DTV transition brought to a successful close,” he said.
But Yager added that the current draft language would place a hardship on the 21 million viewers who continue to receive over-the-air TV, according to his data. Many of those homes have low incomes, he said.
“Under the draft’s hard date, viewers will either lose their television service or have to pay for converter boxes, or, even worse, subscribe to pay TV, all just to keep something they currently get for free,” he said.
Gary Shapiro, CEA’s president/CEO, said his association “unequivocally endorses the staff draft’s establishment of Dec. 31, 2008, for the recovery of the analog spectrum. The setting of a date certain will benefit consumers as spectrum is reallocated for purposes ranging from public safety communications to exciting new services such as wireless networking and Internet access.”
Shapiro said the analog cutoff “will have little practical impact on the viewing habits of the vast majority of Americans.”
Shapiro said the CEA does not support a provision in the draft that would accelerate the Federal Communications Commission’s (FCC’s) digital television tuner mandate for 13-inch to 24-inch televisions, from July 1, 2007, to July 1, 2006.
“We are concerned that, if implemented, such a requirement would severely reduce the retail market for these sets,” Shapiro said in written testimony presented to the subcommittee. “Manufacturers need a minimum of 18 to 24 months to plan, develop and deploy new equipment.”
He added that imposing a July 1, 2006, deadline could force some manufacturers to remove all tuners from the affected sets or drop the screen sizes from their model offerings.
Other consequences could be forced cost increases that the marketplace cannot sustain, resulting in a decrease in the number of DTV tuners in the marketplace.
“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,” Shapiro said.
Alan McCullough, Circuit City’s CEO, echoed Shapiro’s statements.
“I believe setting a transition date will result in a very substantial, though possibly short-lived market for converter boxes that receive a digital signal from an antenna and deliver a standard analog broadcast type signal to good old Channel 3 or 4,” McCullough said. “Setting a hard date will strand some customers who are on analog broadcasting now, and we have no objection in principle to the government subsidizing the purchase of products that receive digital broadcasts or even simply giving away converter boxes. All we ask is that you avoid solutions that seem to look good on paper but don’t get the real-world test.”
McCullough pointed to the FCC’s current digital tuner mandate with phase-in requirements as “more of a paper solution than a real one.”
“When you try to mandate supply and demand in this way, you always get unintended, typically bad consequences,” said McCullough.