News

Wireless Operator Faces Costly Transition

2/20/2007 7:10 AM Eastern

For the past 25 years, hundreds of office buildings housing government agencies, trade groups, law firms and news bureaus have paid to receive C-SPAN and a few 24-hour cable news channels over a wireless service provided by Capitol Connection, a nonprofit group affiliated with GeorgeMasonUniversity in Fairfax, Va.

All full-power TV stations need to shut off their analog-TV signals Feb. 17, 2009, and rely exclusively on digital transmission. But Capitol Connection can’t wait that long.

It plans to spend up to $2 million, or $1,123 per subscriber, to get the job done within a matter of weeks, mainly by forcing all but its largest customers to buy digital set-top boxes that cost more than $200 each.

Capitol Connection operates a four-channel, low-capacity wireless-cable system under Federal Communications Commission license. Viewers receive programming on their TVs over coaxial wires that stretch from inside the building to a rooftop antenna. Transmitters beam channels from two line-of-sight locations that overlook commercial zones. The roof antenna also collects local TV signals directly from station towers.

Dr. Michael Kelley, Capitol Connection’s executive director and founder, was a GMU professor specializing in Chaucer and medieval drama when he borrowed $14,000 to get the video service licensed and running before any company had a cable franchise in D.C. Today, he teaches a graduate class in telecommunications at GMU's School of Public Policy. "I reinvented myself around 1981," Kelley said, recalling his shift to telecommunications.

With 1,780 subscribers located in 550 buildings, Capitol Connection is a small operation. Because it hasn't charged for additional outlets, it estimates that it is connected to about 5,000 TV sets. Its basic-programming package -- which costs $595 per year -- includes C-SPAN, C-SPAN2, CNN, CNBC and the free local TV signals. Fox News Channel and MSNBC are available to some customers now. For access to televised coverage of the FCC's monthly public meeting, the price jumps to $795.

The massive digitization of media is requiring Kelley to perform a second reinvention by using the next 10 weeks to convert his facilities from all-analog to all-digital transmission almost two years before the turnoff of analog-TV signals.

It isn’t voluntary on Capitol Connection’s part. The switch to digital now is because Sprint Nextel has rights to its spectrum under an FCC policy designed to expedite the rollout of WiMAX wireless-broadband-access service. Sprint Nextel is helping to finance Capitol Connection’s move to new radio frequencies.

"We are not doing the national transfer like everybody else is by the congressional law. We're doing this because of the FCC and Sprint," Kelley said.

The 70-day plan has two parts: building consumer awareness and changing equipment at a rapid clip. Regular on-screen messages have been warning subscribers that a big -- and potentially expensive -- change is about to occur. They are encouraged to call in with questions.

Each requesting subscriber will receive one free digital set-top box. Each additional box will cost $235, plus tax. It must be purchased, not leased.

"This way, it's your box and we don't have to worry about the [billing] hassles of leasing boxes," Kelley said.

Capitol Connection’s total cost to convert could reach $2 million, with one-half of the amount attributable to the acquisition of 5,000 digital set-tops.

"A lot of this is being borne by the customers," Kelley said. "If we don't sell the [other] boxes, we're going to go broke."

About 130 large customers are expected to avoid box costs by allowing Capitol Connection to install rooftop-based electronics to convert digital signals to analog.

“It’s cheaper for them to get a headend in the top of the building and translate it to analog all through the building,” Kelley said.

March