Policy

Devil's In Digital Details

1/12/2007 7:00 PM Eastern

Las Vegas — Television-industry leaders last week predicted the cutoff of analog over-the-air TV in February 2009 would occur as planned.

But, aware the issue is as politically sensitive as a lost Social Security check, they suggested that just about anything could easily cloud their forecast.

“I've been in Washington long enough where you never know what's going to happen until it's just about ready to happen,” said David Donovan, president of the Association of Maximum Service Television (MSTV), a broadcast-funded technical advisory group in the capital.

“We think it will stick. We certainly hope it will stick. Anything can happen in Washington, of course,” said John Taylor, vice president of public affairs at LG Electronics, one maker of the flat-panel HDTV sets that millions of consumers are rushing to buy.

PACKED HOUSE

Donovan and Taylor, joined by National Cable & Telecommunications Association president Kyle McSlarrow, discussed the so-called DTV transition last Tuesday here at the International Consumer Electronics Show. While many panel discussions drew a dozen or so people, the one on digital TV attracted at least 200 show attendees.

In reality, the termination of analog TV is more complicated than the flip of a switch on Feb. 17, 2009.

Postponing the deadline would delay the return of 84 MHz of TV spectrum to the federal government, including 24 MHz earmarked for police, fire and emergency crews for mobile broadband interoperability. The other 60 MHz of spectrum has been designated for auction to commercial wireless broadband providers.

Proceeds from the sale, which by law must start next January, are expected to top $10 billion.

If Congress is going to change the 2009 cutoff, it has to act sooner rather than later, presumably because auction bidders need to know whether they will take control of their Federal Communications Commission licenses immediately after the DTV transition.

“To the extent something is going happen to alter that, it's really has to happen in the next year, not two years,” McSlarrow said.

“There are lot of things built on it,” Donovan agreed. “If they decide to move that date, there are a lot of other issues that start getting implicated.”

The switch to digital will render useless millions of analog TVs not connected to cable or satellite. The National Association of Broadcasters estimates there are 45 million broadcast-only analog sets in homes without pay TV and another 28 million such sets in homes that do have cable or satellite service.

Congress approved spending $1.5 billion (funded by auction revenue) to pay for digital-to-analog converter boxes in a subsidy program supervised by the Commerce Department's National Telecommunication and Information Administration. By law, each recipient household is entitled to up to two coupons worth $40 each. Boxes are expected to cost between $50 and $75 apiece.

To focus the subsidy on broadcast-only homes, the NTIA tentatively proposed excluding pay TV households from the program.

“I understand why they did it because they have a budgetary constraint,” McSlarrow said.

The NAB, MSTV and the Consumer Electronics Association informed the NTIA that the law permits every TV household to apply for coupons. The NCTA has not asked NTIA to include cable homes.

“A converter-box coupon program should be available for anyone with an over-the-air set in the home,” Donovan said.

The $1.5 billion would be sufficient to fund about 37.5 million coupons — far short of the 73 million analog TV sets that could go dark in a flash.

If Capitol Hill lawmakers won't alter the deadline, they might increase converter box funding to ensure continuity of TV service.

“We may need more money to support the coupon program,” said LG's Taylor, adding that 50 million digital TV sets have been sold.

DAVIS ON BOX FUNDS

A day earlier, Rep. Tom Davis (R-Va.) told a different CES audience that the new Democratic Congress might “double or triple” converter box funding.

Cable operators plan steps that could take funding pressure off the coupon program. MSOs, McSlarrow said, would supply set-top boxes and offer analog service tiers to ensure that the 130 million analog TV sets in cable homes continue to function.

“We put a digital signal down the pipe for digital TV receivers and an analog signal with the exact same programming,” McSlarrow said. “We have to take care of our analog customers, even though we're trying to drive them onto the digital age as fast we can.”