Ensuring DTV Is Free TV

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Senate Commerce Committee Chairman John McCain (R-Ariz) said last Wednesday that a federal plan to end the digital-TV transition should not abandon consumers that don’t subscribe to cable or satellite.

A Federal Communications Commission staff plan would likely end the transition on Jan. 1, 2009, but the plan does not propose a solution for millions of analog TV sets that would become useless at that time.

“We must not leave these consumers out in the digital cold,” McCain said.

APTV AGREES

John Lawson, president of the Association of Public Television Stations, agreed in testimony before McCain’s panel.

“We can’t just turn off these people’s analog sets,” Lawson said. “We must give the consumer a simple and inexpensive pathway to go digital. Some subsidies may be necessary.”

The FCC plan, crafted by Media Bureau chief Kenneth Ferree and key aides, would leave it to Congress to decide how to accommodate consumers that had not purchased digital TV receivers or analog-to-digital set-tops.

In his testimony, Ferree indicated market forces might be sufficient to address the problem. “All of the industries have a vested interest in making sure that all those TVs continue to work — not just the broadcasters, but the cable operators and the satellite operators want those TVs to work, the advertisers want those TVs to work. Nobody wants to see those go dark,” Ferree said.

About 18 million U.S. households are totally dependent on free, over-the-air broadcasting. Millions of cable and DBS homes have second and third TV sets that are not connected to their pay TV providers.

Pressure is building to end the transition, because it would allow the FCC to reclaim 108 Megahertz of broadcast spectrum that experts consider beachfront property for the expansion of wireless high-speed data services.

The FCC rules and federal law would give some spectrum to fire and rescue groups and auction a big block to companies that want to accelerate the rollout of wireless broadband services to compete with cable modems and digital subscriber line service.

Under current law, the transition is supposed end Dec. 31, 2006, but TV stations may seek extensions if less than 85% of households in their markets have DTV sets or converters. Many consider the 85% test a loophole that would drag out the transition for decades.

Ferree’s plan is structured in such a way so that cable carriage of digital TV signals — whether in digital or downconverted analog format — would count toward the 85% test.

Ferree expects his plan, which would also count satellite subscribers with a local-TV station package toward the 85% test, would require the return of analog TV spectrum in nearly every market in the country, ending the transition on Jan. 1, 2009.

The National Association of Broadcasters is opposed to the Ferree plan, and has said it would stall consumer interest in HDTV and needlessly put spectrum reclamation ahead of consumer interests.

Thomas Hazlett, a Manhattan Institute economist, told McCain’s panel that some TV stations want to prolong the transition because that would improve the chances of receiving a “payoff” from wireless companies that want the analog spectrum.

The idea that a firm deadline was possible gained currency last August when Berlin, Germany, became the first major city to shut off analog broadcasting under a two-year plan that included set-top box subsidies for low-income residents.

“The Berlin switch took 18 months,” said Michael Calabrese, vice president and director of the Spectrum Policy Program at the New America Foundation.

A VOTE FOR 2008

Calabrese told McCain’s panel that he supports ending the transition a year earlier than Ferree, and subsidizing digital-to-analog converters. He said the price tag in the form of tax credits would range between $600 million and $4.7 billion, depending on how broad Congress wanted to make the handout.

But Ferree indicated the transition should run a little longer to give consumers time to digest the details. He noted that U.S. residents are still buying more than 20 million analog TV sets, even though those sets will be useless without a converter in a few years. “The sooner we do this, the bumpier the ride, so to speak, for consumers,” Ferree said. “I do not have any philosophical problem with moving it up.”

Ferree said he plans to forward his DTV transition plan to the five FCC commissioners later this year.

The plan won’t take final form, he added, until the agency reviews public comments on issues related to the needs of consumers that rely solely on over-the-air broadcasting.

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