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Ferree Plan No Picnic for Cable, Either

4/25/2004 8:00 PM Eastern

It’s possible there’s no such thing as a Ferree lunch for the cable industry in the FCC’s plan to wrap up the digital-TV transition within five years.

At least one Federal Communications Commission official suspects the cable industry is just as troubled as broadcasters about the plan crafted by Media Bureau chief Kenneth Ferree and his aides. Under the plan, TV stations may demand mandatory cable carriage of their digital signals, effective Jan. 1, 2009.

Some stations would elect for digital carriage, knowing that the cable operator would voluntarily carry the signal in analog to keep analog equipment-only viewers happy.

DUAL BY DEFAULT

That’s called dual must-carry, abetted but not ordained by a change in government policy.

“If you choose digital carriage and you have a [The] WB [station] or something, the cable system will find it very tough to drop your analog,” said Rick Chessen, the FCC official working with Ferree.

National Cable & Telecommunications Association president Robert Sachs has praised the Ferree plan for tackling a tough subject, but he has refused to provide a specific critique.

In remarks to the National Association of Broadcasters convention here last Monday, Chessen provided a possible explanation for the NCTA’s reticence.

“Cable has very mixed feelings about this type of plan, where broadcasters get to choose whether they want digital, because they recognize that the marketplace in many, many instances is going to force them to carry both,” Chessen said.

For years, cable has fought government-imposed dual must-carry. Cable operators could avoid the dual-carriage scenario suggested by Chessen if they were to convert to all-digital transmission before 2009.

RECLAMATION SEEN

Comcast Corp. has indicated it might make the switch soon, but the MSO can’t make the move before it has a plan that ensures its customers have set-tops or converters for their analog TV sets.

But the move to all-digital is an attractive proposition for cable because it allows for the reclamation of valuable bandwidth that can be used for new services.

Chessen’s notion that cable would engage in voluntary dual must-carry was met with some skepticism.

Tom Van Wazer, a broadcast attorney with Sidley, Austin, Brown & Wood, suggested that cable would find other uses for the analog bandwidth.

“I am not at all clear that the cable industry is going to jump to put your analog [signal] back on,” Van Wazer said.

The Ferree plan, which has not been released by the FCC as a formal proposal, has been controversial from the start, especially with broadcasters when they heard about it for the first time in early March.

PLAN POINTS

In 2009, TV stations that elect must carry may do so for just their digital signals.

Stations may require cable operators to downconvert the signal to analog at the headend to ensure cable subscribers with analog TV sets do not lose service.

At that point, all cable subscribers and direct broadcast satellite subscribers that receive local TV signals from their DBS provider would count toward the test that determines when TV stations must surrender their analog spectrum.

The trigger point is when 85% of TV households in a market have the equipment to view local DTV stations. Under the Ferree plan, the cable headend that downconverts a digital signal, in effect, would be converter boxes for homes with analog TV sets.

The FCC suspects that on Jan. 1, 2009, the vast majority of the country’s 210 TV markets will meet the 85% test as defined by Ferree plan.

From the agency’s perspective, the Ferree plan would confer a few obvious benefits. It would give consumers a specific date regarding when their analog sets would not work anymore without some sort of digital interface, and it would provide a clear road map to public safety — and for broadband wireless companies that want to take control of an important swath of the airwaves.

Without a firm date, some FCC officials fear the transition would linger for decades until the last analog TV sets was hauled to the landfill.

DOWN ON CONVERSIONS

Broadcasters have told the FCC that downconversion at the headend is illegal at the headend. Downconversion, NAB claims, is a decision for the consumer.

FCC members who spoke here last week expressed concerns about the plan.

Republican FCC commissioner Kevin Martin said the agency’s first job was to decide broadcasters’ digital carriage rights on cable. Cable is opposed to a Martin-supported FCC rule that would mandate cable carriage of a DTV station’s multicast services.

“It’s hard to evaluate [the Ferree plan] in the abstract if we don’t know what the cable carriage rights are. I think it’s putting the cart before the horse,” Martin said.

BERLIN BACKSTOPS

Last August, Berlin, Germany, finished the transition, using subsidies and other mechanisms to ensure that off-air only consumers did not lose local TV service.

The Ferree plan does not have a solution for the roughly 15% of U.S. households that are broadcast-only, mainly because the agency does not have authority to address that issue directly.

But the Ferree plan anticipates that by 2009, the number of off-air only households is likely to shrink because by that time some will have signed up for pay-TV and others will have purchased a DTV set with an off-air tuner.

“This plan, nor any other plan I’ve seen, really gets to the problem of the 15% of the people who are going to be left stranded. I think we have a long way to go,” said Democratic FCC member Michael Copps.

Rachel Welch, a top legal adviser to Sen. Ernest Hollings (D-S.C.), said Congress would obviously be concerned about off-air only consumers and their ability to obtain affordable converter boxes.

“When are we going to get those at a price range that’s reasonable for the grandmother at the of the road to purchase?” Welch said. “That’s political reality we all have to deal with.”

POWELL: PATH NEEDED

FCC chairman Michael Powell has remained in the background, having little to say about the Ferree plan.

Last Tuesday, Powell emphasized to NAB convention attendees that the FCC had an obligation to chart the path leading to the end of the transition.

He warned broadcasters that they would be wise to work with the FCC because Congress might dictate an end to the transition on terms not to broadcasters’ liking.

Powell applauded the Ferree plan as a proposal that his agency needed to consider. But Powell said he had yet to endorse it.

“I have not made a decision that I think it is dead on and that we ought to do it,” Powell told reporters. “It’s certainly not the final word. I haven’t even stated that, knowing what I know about it, that I fully endorse it. But I fully endorse the dialogue.”

Nevertheless, Powell said the FCC had to consider a firm date to end the transition because current law was “extremely muddy,” allowing the transition to drag on indefinitely.

“We are talking 30, 40, or 50 years from now, and that’s the truth and that’s a generally unacceptable development,” Powell said.

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