Aides: DTV Scheme Scary to Congress

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Broadcasters have had their say. Now it’s Capitol Hill’s turn to raise concerns about a new Federal Communications Commission plan designed to expedite the transition to digital television.

The unofficial plan would require TV stations to surrender their analog license years earlier than anticipated and would require millions of analog TV sets not served by cable or satellite to connect to some sort of off-air digital-to-analog converter, cost unknown.

FCC staff under Media Bureau chief Kenneth Ferree began to look seriously at speeding up the transition last August when Berlin, Germany became the first major city in the world to complete the transition.

'HUGE ISSUE’

Lawmakers on Capitol Hill and their aides fear the repercussions from a situation in which analog TV service were terminated prematurely, and consumers who rely solely on broadcasting did not have the necessary equipment to view DTV signals.

“I can just envision the pitchforks and the torches,” Will Nordwind, top media and telecommunications adviser to Rep. Fred Upton (R-Mich.), chairman of the Subcommittee on Telecommunications and the Internet, said last Monday.

Added Rachel Welch, a telecom adviser to Sen. Fritz Hollings (D-S.C.), “I think that would be a huge political issue.”

Nordwind and Welch were speakers at a luncheon last Monday held by the Media Institute, an industry-funded group that studies First Amendment issues.

KEY CABLE FEATURE

A key feature of the FCC plan is a requirement that cable operators downconvert digital broadcast signals to analog at the headend, thus ensuring no cable customer loses access to local-TV signals.

Under current law, when 85% of TV households in a market can view local DTV signals, TV stations in that market must return their analog licenses starting Jan. 1, 2007.

Importantly, the FCC plan would count cable subscribers who take downconverted digital signals toward the 85% threshold.

Eloise Gore, an FCC official in the Media Bureau, said cable penetration today exceeds 85% in six markets. The number of markets that qualified would rise significantly if satellite subscribers taking a local-TV station package were included.

“Roughly 30 or so more markets would reach 85% if added in the cable and the satellite,” Gore said.

Broadcasters are objecting that the FCC’s plan would bring the 85% trigger into play much sooner than anyone expected and would deter consumer acquisition of DTV sets, because cable subscribers would receive broadcast programming in analog format.

The industry is also troubled that the FCC plan failed to explain how off-air only consumers would be accommodated.

TV-TAX FEAR

Berlin, which has high pay-TV penetration, subsidized boxes for low-income and poor residents. Berliners who paid $174 for a converter were rewarded, because broadcasters there used their digital spectrum to provide additional free services, known in the U.S. as multicasting.

Broadcasters also are concerned Congress might tax TV stations to recover the revenue dedicated to funding converter boxes for off-air only viewers who could not shoulder the cost themselves.

According to Welch, the Hollings aide, box costs in Berlin may not offer a guide for the U.S. market. For one thing, she noted, Berlin stations don’t offer HDTV, just standard-definition telecasts.

“How much does a converter box cost when you have to HD downconversion versus standard-definition downconversion?” Welch asked. “It may be too early to speculate on whether Congress would actually subsidize converter boxes or not.”

ENGEL WARNING

Lawmakers are beginning to digest the FCC plan.

Rep. Elliot Engel (D-N.Y.), who serves on Upton’s panel, became the first lawmaker to go public with his doubts.

In a March 18 lettter, Engel told FCC chairman Michael Powell that he has “grave concerns” that current set-top costs were prohibitive and burdensome, especially for low-income and elderly consumers.

“People who cannot afford cable or satellite TV services are certainly not in a position to spend $1,000 on a new TV or $300 to $500 on the set-top box that is required to receive digital signals and covert them to analog,” Engel said. “I hope that before pursuing this policy any further, you and your staff will consider the ramifications for all segments of America and pursue policies that do not cause economic harm [to] people who can ill afford it.”

<p>Where Cable Drills Deepest</p><p>Markets with 85%-plus cable penetration:</p>

Hartford/New Haven, Conn.

91%

Honolulu

91%

Palm Springs, Calif.

87%

Springfield-Holyoke, Mass.

86%

West Palm Beach-Fort Pierce, Fla.

86%

San Diego

85%

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