Powell Floats a Rigid DTV Switchover

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Federal regulators are thinking anew when it comes to the digital-television transition.

The Federal Communications Commission — feeling heat from Congress, which is under pressure from the spectrum-hungry wireless phone industry — is trying to map a plan that would set a firm date for the return of broadcasters’ analog spectrum.

The FCC’s Baedeker appears to be the city of Berlin. Last summer, the German capital became the globe’s first major city to shut down off-air analog TV in a flash-cut to all-digital broadcasting that came off without any documented displays of civil unrest.

'GONE SMOOTHLY’

“It’s gone very smoothly,” said Thomas Hazlett, an economist at the Manhattan Institute, who supports a Berlin approach for the U.S.

According to government and industry sources, FCC chairman Michael Powell and Media Bureau chief Kenneth Ferree, learning from the Berlin example, are mulling a few options and bouncing them off congressional staff on Capitol Hill for a read on their political viability.

Powell and Ferree are considering new ideas because the digital transition in the United States contains legal loopholes, by design, making it virtually impossible to determine when exactly the FCC can expect to recover broadcasters’ analog spectrum said to be worth many billions of dollars.

Initially, Congress set the analog giveback date at Dec. 31, 2006, but the deadline was negated by subsequent legislation that tied the spectrum return in a market to 85% penetration of digital-TV reception equipment in the home.

Ferree, in an interview last week, acknowledged that fresh ideas are being considered but he declined to provide details, saying it would be premature because words had not been put to paper.

“It may be a dead end, and if it is, I don’t want to stir up a lot stuff on something that may be going nowhere,” Ferree said. “Probably in the next week or so, I’ll have a sense of whether there is even a chance that this thing will even have legs.”

Broadcasters that have caught wind of the Powell-Ferree plan are not elated by the details, but called it too early in the process to stage a rebellion.

“There are 1,000 questions this begs,” said Lowell W. (Bud) Paxson, chairman of TV broadcaster aid Paxson Communications Corp.

NEW 85% LITMUS

At the core of the Powell-Ferree plan is a new methodology for calculating when 85% of households in a market would be considered capable of receiving digital broadcast signals.

No market today is even remotely close to hitting 85%. As the 85% test is interpreted today, a household is not considered digital-ready unless it has the means to decode digital signals, which usually means possession of a cable or DBS set-top or a DTV set with an off-air tuner.

In a change, Powell and Ferree are floating the idea of requiring cable companies to carry digital TV signals in downconverted analog format.

In theory, every cable home served in such a manner — and every DBS home that purchased a local TV signal package from DirecTV Inc. or EchoStar Communications Corp.’s Dish Network — would magically qualify as digital-ready homes for purposes of the 85% test.

Powell and Ferree are confident that the vast majority of the top 100 markets — which happen to include 85% of U.S. households — would either meet, or come very close to meeting, the 85% threshold. Thus they would be instantly eligible to make the switch to digital in a flash, just like Berlin.

The Powell-Ferree plan would confer some obvious benefits:

  • The wireless industry, which yearns for spectrum to roll out broadband, would rejoice in knowing that at some specific time, prime spectrum would become available, probably at auction.
  • The cable industry could rest assured that it was no longer threatened by dual must-carry mandates from the FCC, since there would be no more analog TV stations. Broadcasters would no longer have to burn cash running two TV stations funded by a single advertising revenue stream.
  • And the U.S. Treasury would pocket billions of dollars from the analog spectrum auction, pleasing deficit hawks on Capitol Hill.

Hazlett, who wants to see the U.S. reclaim the analog spectrum quickly, applauded the Powell-Ferree plan despite not having all the details.

“It’s certainly going to eliminate a lot of unproductive use of airwaves,” he said. “If this is the way they have to do it politically, this is better than nothing.”

KNOCK-DOWN QUALM

But some saw a downside to the Powell-Ferree plan.

Broadcasters interviewed said they were upset by the idea that cable could take their digital signal and knock it down to analog.

Furthermore, it was not clear at what point the Powell-Ferree plan would require cable to restore the signal to digital.

Paxson said Congress would have to change the law to accept the idea that downconverted digital signals contributed to meeting the 85% test.

Paxson said he had problems with the Powell-Ferree plan because his company invested large sums in analog equipment on the assumption that the current 85% test would remain the law.

“I get what [Powell] is trying to do, but it requires congressional action,” Paxson said.

Public broadcasters have already signaled support for a Powell-Ferree-type plan.

Last November, the Association of Public Television Stations agreed to a firm date to give back analog spectrum if the FCC ordered cable to carry multiple programming streams of public stations.

It was not clear whether the Powell-Ferree plan would require cable systems to carry in analog multiple digital programming streams of a TV station.

Cable is vigorously opposing multicast must-carry obligations at the FCC.

A spokesman for the National Cable & Telecommunications Association declined comment on the Powell-Ferree plan.

JUNE 2000 REMARKS

But the NCTA, in a June 2000 letter, told the FCC that “it may not be objectionable” for cable to carry DTV signals in analog “provided that the television station presents an analog feed of its television signal to the cable operator at the headend.” NCTA was referring to carriage of a single programming channel.

The Powell-Ferree plan has some loose ends.

If broadcasters went all-digital in a sudden shift, every analog TV set not connected to cable or satellite would be useless.

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