BCasters Move Ahead With HDTV

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Washington -- Broadcasters suggested last week that Federal
Communications Commission chairman William Kennard could use some legal tutoring regarding
mandatory cable carriage of digital-TV signals.

This week, cable operators and broadcasters are set to file
their initial set of comments with Kennard's agency, which is conducting a
far-reaching rulemaking on digital must-carry.

"We hope at that time to educate the chairman as to
the law of 1992 and how we feel that entitles broadcasters to must-carry," said Chuck
Sherman, executive vice president of television for the National Association of
Broadcasters, to reporters. "It's specifically written into the [Communications]
Act."

Sherman was reacting to comments that Kennard made a few
weeks ago indicating that digital must-carry was not a legal entitlement. Instead, Kennard
said, the TV industry had to make a showing that government intervention was preferable to
the dictates of a marketplace that includes cable-created local-news channels that compete
head-to-head with local-TV stations.

In a seven-paragraph statement -- released in response to
the NAB's news last week that 42 TV stations will begin beaming digital pictures in
November -- nowhere did Kennard mention the FCC's digital must-carry rulemaking, or
even vaguely hint that must-carry was an appropriate step by the FCC to hasten the
transition from analog to digital.

"I have said many times that digital is the future of
over-the-air television, and that the pace and direction of the transition to digital TV
will be set by the private sector, by the marketplace and by competition,"
Kennard's statement said.

The cable industry is opposed to digital must-carry rules
that would require carriage of analog and digital signals, saying that dual carriage is
contrary to law and a burden on cable-system channel capacity.

Sherman said that despite the cable industry's First
Amendment challenge, "the Supreme Court has held that must-carry is the law of the
land."

Kennard's view that the private sector can manage the
transition was borne out to some extent by comments that an executive with MediaOne Group
made to reporters here last week.

Susan Eid, the No. 3 MSO's vice president of federal
relations, said between 60 and 80 of the company's 176 existing
retransmission-consent agreements include digital-TV-carriage agreements.

She said about one-third of the agreements require carriage
when 5 percent of the households in a market have the equipment to receive a digital
signal; one-third require "good-faith" negotiations when the TV station begins
digital service; and one-third require immediate carriage.

"Some of the agreements date back to '93,"
Eid added.

However, Terry Shockley, president of Shockley
Communications Corp., said that when his ABC affiliate in Madison, Wis., goes on the air
with its digital signal in November, in the country 84th-largest market, he is hoping that
talks with Tele-Communications Inc. will lead to digital carriage.

"We've asked them to take that to Denver, if
that's required, and to see if we can get approval of that," Shockley said.
"Hopefully, [TCI chairman and CEO] John Malone will smile pleasantly on that."

Meanwhile, NAB president Edward Fritts sent National Cable
Television Association president Decker Anstrom a letter Oct. 6, urging the cable industry
to carry digital-TV signals to ensure that the $16 billion transition is "seamless
and successful."

Anstrom, in a reply issued the same day, pledged
cooperation, but he balked at the notion that cable operators and programmers should
subordinate their First Amendment rights to competitors like TV stations.

The cable industry has argued that digital must-carry will
sacrifice widely viewed cable networks for digital-TV signals that can only be seen in
high-definition by the few people who have bought $6,000 HDTV sets.

"Given your keen interest in the First
Amendment," Anstrom continued, "we're also sure that you agree with us that
cable-network programming like C-SPAN deserves the same constitutional protection as
broadcast programming."

In his last zing at the NAB, Anstrom repeated published
comments by CBS head Mel Karmazin, who said, "It's 'hypocrisy' for
broadcasters to push for deregulation in most areas while seeking digital
must-carry."

Fritts, in an Oct. 6 letter to the Consumer Electronics
Manufacturers Association, asked that set-makers build affordable receivers that
"reliably receive digital signals" and that "work with cable systems and
set-top boxes" -- the latter a reference to the so-called fire-wire issue, which
involves not only compatibility of the connection between a digital-cable box and a
digital TV, but also copyright protection of Hollywood movies.

CEMA spokeswoman Cynthia Upson predicted that the fire-wire
issue would be resolved in November.

"That is very, very close to being finalized,"
she said.

Meanwhile, the first HDTV-compatible televisions are
already drawing crowds at retail and other public-demonstration sites across the country.
It's not clear yet whether most consumers who see these demonstrations understand
issues such as digital must-carry or fire-wire compatibility.

But those involved with the digital-television rollout
agreed that consumers need to be educated before they take their $5,000-plus televisions
home and find out that they won't get their local digital-broadcast channels via
cable.

At a press conference cosponsored by CBS and Panasonic
Consumer Electronics last week to celebrate the first public HDTV-broadcast signal in New
York, Panasonic executives explained that the company's first-generation digital-TV
sets may be able to receive future cable-delivered local HDTV feeds, as long as
they're passed through via component-video inputs. Digital televisions in the field
today do not yet incorporate digital fire-wire connections.

Panasonic executives said they will encourage their retail
salespeople to be upfront with customers about cable and satellite compatibility.
"The last thing that we want to do is to push product out the door and have people be
disappointed," said Bill Mannion, general manager of Panasonic's television and
network-systems division.

To that end, Panasonic posts a "Frequently Asked
Questions" section devoted to digital television on its Web site (www.panasonic.com).
And starting Thursday (Oct. 15), Panasonic will add a public bulletin board, where users
can post questions and reviews on HDTV products.

The FCC also plans to release a public bulletin soon,
designed to alert consumers about issues such as cable compatibility.

Mannion projected that the U.S. industry would sell 1
million digital televisions by early 2001.

Some Best Buy stores across the country have already
started taking orders for new digital televisions, according to a spokeswoman for the
consumer-electronics chain.

Best Buy will promote HDTV when it opens its newest store,
in Boston, this week. The chain will display HDTV only in top markets that will launch
digital-broadcast services this fall, but it will take orders at stores outside of those
markets.

Retailers will get a boost for their in-store HDTV
demonstrations this fall, thanks to plans by CBS and DirecTv Inc. to broadcast several
National Football League games in high-definition this season.

The timing of the last HDTV game coincides with the
Consumer Electronics Show in Las Vegas in January, where DirecTv plans to draw a crowd of
retail attendees with a big-screen, high-definition football-playoff game.

The first digital-television sets from Thomson Consumer
Electronics capable of receiving DirecTv's high-definition feeds will be delivered
only to retail this fall. Consumer sets are not expected until early next year.

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