DTV Lesson From 'Rosty’

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Broadcasters are airing a new battle cry: Remember Rosty.

In 1989, Rep. Dan Rostenkowski (D-Ill.) was smacked with umbrellas and had his car mobbed by dozens of seniors, furious that their Medicare premiums would rise to pay for catastrophic health-care insurance — a new Medicare entitlement that Congress thought would be a winner with the gray panthers.

Rostenkowski, the gruff and imposing chairman of the Ways and Means Committee, sped away from the mob in a humbling getaway seen by millions of TV viewers.

PREMIUM PUNCH

“It was going to be the be-all, end-all solution to health insurance in this country — until the seniors found out what the premiums were going to be,” Martin Franks, executive vice president of CBS Television, recalled last week at an industry conference here sponsored by the Association for Maximum Service Television. “The seniors were standing around pounding on the car and a week later, catastrophic health insurance got repealed.”

Franks offered the famous Rosty episode as a friendly reminder to the Federal Communications Commission, which is just weeks away from likely adoption of a digital-TV transition plan that could render 73 million analog sets useless within four years.

The FCC plan could lead to another Rostenkowski rebellion, Franks predicted.

“If something like that passes to disrupt the momentum of the transition, we’re going to have a whole lot more people banging on cars of politicians,” Franks said.

The FCC plan is the brainchild of Media Bureau chief Kenneth Ferree, who is concerned that TV stations will sit on $70 billion of analog spectrum for many years to come without a push from government, which wants to give some TV airwaves to public safety groups and sell even more to the bandwidth-hungry wireless phone industry.

85%: A LONG WAY OFF

Under current law, TV stations can keep the spectrum until 85% of TV households have digital reception capabilities. Today, about 40% of TV households have at least one digital-cable or direct-broadcast satellite set-top box.

“If that is the standard, we are not going to transition anytime in my lifetime, probably not until 2050 or 2070 or something like that,” Ferree said last week.

Instead, Ferree and his staff developed a plan that would end analog broadcasting on Dec. 31, 2008.

The plan assumes market forces will guarantee cable and satellite subscribers will continue to be able to view their local TV stations. DBS is already digital and cable companies can downconvert the digital signal to analog.

“We expect that we would have essentially a nationwide 85% trigger point met at that point,” Ferree said.

Consumers that rely solely on over-the-air TV would need new DTV sets with over-the-air tuners. Only 2 million such sets have been sold.

Consumers can buy digital-to-analog converters to keep their old analog sets running. Converters go for about $300 today, but Ferree expects the price to plunge to $50 with mass production.

The Ferree plan assumes that Congress will subsidize boxes for low-income consumers, at a cost of $1 billion.

With all these pieces of the puzzle in place, the entire U.S. will make a flash cut over to digital broadcasting on Jan. 1, 2009.

“The vast majority of viewers will not even know that the transition occurred. They’ll wake up Jan. 2, pour their cup of coffee, turn on their TV set and they’ll get exactly the same thing they got the day before.” Ferree said.

Broadcasters think that millions of consumers will see snow, creating a political blizzard on Capitol Hill reminiscent of the one that led to the about-face on Medicare after Rosty’s run-in with the seniors.

National Association of Broadcasters CEO Edward Fritts last week reminded everybody at the MSTV forum of what Rep. Eliot Engel (D-N.Y.) said at a House hearing a few years ago about a poorly planned DTV transition.

QUOTE FROM ENGEL

“If we impose a strict, hard return of spectrum of Dec. 31, 2006, one can be sure that we will all be impeached on Jan. 1, 2007,” Fritts said, quoting Engel. [Some in Congress, including House Energy and Commerce Committee chairman Rep. Joe Barton (R-Texas) actually favor 2006 over 2009 for completing the transition.]

At bottom, broadcasters don’t want the FCC to even begin thinking about an analog cutoff until 85% of TV households have at least one DTV set with a digital off-air tuner. That puts off the transition indefinitely, because consumer electronics companies don’t have to equip nearly all new TV sets with an off-air DTV tuner until July 2007. Broadcasters are also concerned for the fate of DTV households that own second and third sets that are analog.

“The fact is you just can’t turn off and displace this many television viewers without having enormous political consequences,” Fritts said.

The NAB has supplied the FCC with figures designed to slow the momentum behind the Ferree plan.

According to the NAB, the U.S. has 280 million analog TV sets, with 45 million of them in 20.5 million TV households that do not subscribe to cable.

If the government fails to look out for these consumers, their TVs will go dark on Jan. 1, 2009.

Cable and satellite homes have 28 million analog sets that are not wired to the pay TV service, the NAB also claims. Those sets also become just boxes with wires if left stranded by the Ferree plan.

The NAB has another beef: downconversion. Allowing cable companies to take a digital signal and convert it to analog, NAB says, would sap consumer interest in the purchase of DTV sets.

“The Ferree plan is, quite frankly, a surrender on digital,” Fritts said.

Speaking at the same MSTV forum, National Cable & Telecommunication Association president Robert Sachs endorsed downconversion as a temporary measure that would cease at a point when a substantial majority of cable subscribers had DTV sets or set-top boxes.

NAB is preparing a counter proposal to the Ferree plan, but Fritts did not provide any details. In the past, NAB has insisted on an iron-clad set-top subsidy program for off-air viewers, funded with proceeds from the analog TV spectrum auctions.

SACHS VS. MANDATE

It’s probable that the NAB will call for a ban on downconversion and require cable to pass through the digital signals, with operators responsible for providing consumers with as many digital set-tops as they need.

The latter proposal was a nonstarter with Sachs.

“We think that’s too high a price to impose,” he said, adding that NCTA also opposed mandatory cable carriage of more than one DTV service provided by local stations. Ferree has endorsed a multicast carriage mandate on cable.

Does the Ferree plan have the votes to gain adoption at the FCC? Chairman Michael Powell is the only member who has seen a copy of the Ferree plan.

“We have obviously nothing before us as commissioners,” said Johanna Shelton, media adviser to FCC member Michael Copps. “If NBC can figure out how to transition Jay Leno by 2009, I’m sure all of us … can figure out the digital television transition.”

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