Policy

DTV Bills Coming Soon

10/07/2005 8:00 PM Eastern

Washington— The fall drama most important to broadcasters won’t air in primetime. Instead, the venue will be the hideaway offices on Capitol Hill where deals are struck at crazy times of the night.

Starting next week, the House and Senate will begin moving legislation designed to end TV stations’ prolonged transition to digital-only transmission. The Senate Commerce Committee is scheduled to cast votes on Oct. 19. The House Commerce Committee is expected to act the same week, though an exact date has not been selected.

But the hard bargaining in Congress won’t happen for a few more months, and it won’t happen anywhere near press cameras and tape recorders.

“It’s going to be a very interesting period between now and Christmas, and I think we will be here until Christmas,” Senate Commerce Committee chairman Ted Stevens (R-Alaska) predicted in a speech here last Wednesday to the Association for Maximum Service Television.

$10B REVENUE ESTIMATES

At the end of the transition, which began in 1997, the Federal Communications Commission is planning to auction much of the analog spectrum that TV stations must surrender, with revenue estimates running as high as $10 billion.

The first hurdle that Congress needs to clear is picking a “hard date” for actually ending the transition.

Companies promoting wireless broadband services, including Dell Computer Corp., IBM Corp., Cisco Systems Inc., Intel Corp., Microsoft Corp. and Qualcomm Inc., want access to the analog spectrum as earlier as January 2007.

Sen. John McCain (R-Ariz.) has introduced a bill (S. 1237) that would establish Dec. 31, 2008, as the hard date. McCain’s chief concern is seeing that some of the returned analog-TV spectrum go to police and emergency squads clamoring for a clean swath of the airwaves.

House Energy and Commerce Committee chairman Rep. Joe Barton (R-Texas) is backing Dec. 31, 2008, after first favoring Dec. 31, 2006. In his MSTV speech, Stevens reaffirmed his support for a 2009 deadline.

Stevens supports 2009 because he believes earlier dates won’t generate as much auction revenue and won’t give consumers enough time to buy DTV sets or converter boxes to keep their analog TVs working.

“The later the hard date is, the more digital televisions people will have bought on their own … and fewer set-top boxes, obviously, would be needed,” Stevens said.

TWO MORE ISSUES

After selecting a hard date, Congress would need to address at least two more issues that have frustrated policy makers for many years.

First, what to do with the $10 billion? Second, what about multicast must-carry?

The National Association of Broadcasters is pressuring Congress to subsidize at least one digital-to-analog converter each for the roughly 20 million homes that rely exclusively on free, over-the-air broadcasting.

If the NAB’s fondest hopes were realized, Congress would agree to provide a free box for all 73 million analog TV sets not connected to cable or satellite.

The cost of the set-top subsidy could range from several hundred million dollars to about $7 billion, but that range should narrow once box cost estimates are tightened and the scope of the subsidy in dollar terms is known.

After his speech, Stevens told reporters that although he supports set-top subsidies, he would not back a free lunch, meaning subsidy recipients had to help defray box costs.

“I don’t how much it will be — $25, $20, $5, whatever it is — but we want a small copayment, not to raise the money but to make sure people understand that this is a process that is very expensive, and everyone must pay part of the cost,” Stevens said.

With the flexibility afforded by digital technology, TV stations can fit four or five programming services within the same 6 megahertz of bandwidth used by one analog TV signal. Today, cable operators are required to carry just one programming service per station.

NAB is seeking “multicast must-carry,” a requirement that cable carry all DTV services provided free to over-the-air viewers; the National Cable & Telecommunications Association is advocating the status quo.

Should the House Energy and Commerce Committee adopt multicast must-carry, it would have to happen over the objections of chairman Barton, a must-carry foe from the days of the 1992 Cable Act.

“I can’t predict what the disposition of 57 members of the committee will be. I wouldn’t be surprised if there is a multicast must-carry amendment. There will not be one in the base bill,” said Howard Waltzman, Barton’s top telecommunications policy adviser.

Earlier in the year, Stevens voiced support for multicast must-carry to the extent the channels had a public service orientation, including local news, weather and community affairs.

Stevens skirted the issue last week in his MSTV speech.

“I didn’t mention it, did I? It’s still being decided,” Stevens told reporters.

The NCTA has complained that, among other things, giving TV stations many more cable channels by default would not provide stations the incentive to invest in quality programming.

“How do you ensure that this isn’t going to be used for just more infomercials,” said James Assey, a top telecommunications policy adviser to Sen. Daniel Inouye (D-Hawaii), co-chairman of the Senate Commerce Committee.

The DTV legislation is being folded into an annual budget process called reconciliation. Under Senate rules, Stevens’s panel can’t include budget and telecommunications provisions in the same bill.

DIVIDED INTO TWO BILLS

The plan, then, is to advance two bills, one dealing with the DTV hard date because of its association with revenue-raising spectrum auctions. A second bill would need to address multicast must-carry.

“Multicasting has nothing to do with raising money, so it has to be in the other bill,” Stevens said. “But passage of both bills is necessary to accomplish our goals.”

Speaking after Stevens, Martin Franks, CBS Television executive vice president, told the MSTV forum that he feared Congress would pass a hard date but postpone action on the “messy details” of set-tops and multicasting,

“If there are 21 million that are going to get turned off, I think we’re going to see a bit of train wreck hit,” Franks said. “At the moment, I think it’s very likely that they will put in the hard date and that’s the only thing that’s going to get done.”

September