FCC Presses for Digital-TV Standards

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Washington -- Federal Communications Commission officials
pressed industry groups last week to reach agreement on standards and copyright protection
so consumers can purchase digital-television sets knowing the units will be compatible
with cable television.

FCC chairman William Kennard, who organized a roundtable
discussion among key industry players, asked for a timetable for resolving differences by
July 1, claiming he didn't want the FCC to settle a business fight.

"I think there has to be a sense of urgency about
getting this done," Kennard said.

FCC commissioner Susan Ness echoed that view by saying,
"You do not want the FCC to be forced to intervene."

Local TV stations -- which are planning to spend $10
billion over the next seven years to convert to digital -- fear that the transition will
be hampered if consumers are uncertain whether the expensive sets they will need can
display pictures when hooked to cable."That's the black eye, the stigma we have
now -- they don't work with cable," said Lynn Claudy, senior vice president of
science and technology for the National Association of Broadcasters.

The cable and consumer-electronics industries have agreed
on a standard -- called either IEEE 1394 or fire wire -- for the wire connecting advanced
cable set-tops to digital TVs.

"We have ordered 1394 sets from our vendors,"
Time Warner Cable chief technology officer Jim Chiddix said.

Tom McMahon, director of advanced-television technology for
Microsoft Corp., said the software giant supports 1394, but interoperability for the use
of e-mail, for example, would not be assured until Internet-protocol technology was based
in the TV set.

A major hurdle yet to be cleared is the standard for
protecting digital content -- especially movies -- from piracy. In the digital
environment, pirated copies can be made repeatedly without the kind of degradation that
occurs with analog content.

"If copy protection is the key to this, then get on
with it," Claudy said.

Five companies -- Hitachi Ltd., Intel Corp., Matsushita
Consumer Electronics, Sony Corp. and Toshiba America Consumer Products -- have agreed on a
copy-protection scheme called "5C," but Thomson Consumer Electronics and Zenith
Electronics Corp. are supporting another standard called "XCA."

Chris Cookson, executive vice president of technical
operations for Warner Bros., raised concerns about XCA, saying his company may not be able
to protect itself fully under a new federal law against those who circumvent the XCA
standard to steal copyrighted content.

Laurie Schwartz Priddy, AT&T Broadband & Internet
Services' senior vice president of technology, said the cable industry supported 5C
because it seemed to meet with the approval of the Hollywood studios.

She said quick resolution of the 5C-XCA debate was
important in order for cable to meet the FCC's July 2000 deadline requiring it to
begin offering separate signal-security modules to promote the retail sale of set-tops.

Some of the discussion focused on the need for
digital-cable-ready TVs to minimize consumer confusion.

Schwartz Priddy cautioned that cable-ready TV sets would
have to coexist with digital set-tops because set-tops allow cable operators to introduce
new services.

Alan McCullough, president and CEO of Circuit City Stores
Inc. -- a retailer hoping to break into the cable set-top-box market -- stressed the need
to make the purchase of digital-TV equipment as simple as possible.

"What the customer wants is simplicity," he said.

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