Transition Trauma

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When the policy and business elite gather to swap ideas about the digital television transition, the picture that emerges is a lot less clear than the one they are promising anyone who buys a DTV set.

How long the transition should last — a simple question in the abstract — is a good example of how hard it is to reach a consensus.

A key player in DTV politics, House Commerce Committee Chairman Billy Tauzin (R-La.), strongly supports the termination of analog broadcasting on Dec. 31, 2006.

"Chairman Tauzin is very much wedded to a certain date, and 2006 is in his mind right now," said Tauzin aide Jessica Wallace. She expects Tauzin to introduce legislation next year that includes the 2006 deadline.

Tauzin, she said, wants the government to recover the analog spectrum for public-safety officials and other users — most likely the cellular phone industry — and is pressing Congress to act on their behalf.

The 2006 deadline would replace current law, which allows television stations to keep analog service going until 85 percent of local households have DTV sets or converters.

Focus at forum

For some in the broadcast industry, the 2006 shutoff has the potential of becoming an explosive political issue for one obvious reason: With the flip of a switch, millions of analog TV sets (81 million, according to a 2001 study) that aren't connected to cable or satellite would become useless.

"The notion that we are going to simply turn off the analog when there are still millions of analog sets out there is just mind-boggling," said CBS Television Network executive vice president Martin Franks.

The 2006 deadline was one of many ideas kicked around last week at an all-day forum here. The event, hosted by the Association for Maximum Service Television (MSTV), brought together regulators, congressional staff, Wall Street advisers and broadcast and cable executives.

Consumers who don't want to buy digital TVs due to cost concerns could squeeze more life out of their analog sets by obtaining digital-to-analog converters. But Franks, a former congressional aide, dismissed the converter idea as an implausible political response to angry consumers who refuse to dip into their wallets.

"I keep hearing about cheap converters," Franks said. "Well, the cheapest converter I know about at the moment is on eBay for about 300 bucks. A $50 or $100 converter box is still going to cause a political firestorm in this country."

Thus, the basic question of when to quit analog broadcasting is one not easily answered. The best answer anyone can provide for now is a circular one: The DTV transition ends when it ends.

But an answer must be found, because stations are straining from having to run both analog and digital TV stations with no additional source of revenue in a market that just now appears to be ending an horrendous slide.

"We've stranded $60 million to $70 million in capital in our company so far," said Cox Television president Andrew Fisher. "I am not sure what's considered to be really stupid, but we're getting pretty close."

Powell sees progress

FCC chairman Michael Powell, who is trying to advance DTV policies and goals he inherited from the agency's prior regime, introduced a voluntary plan in April that called on all industries to shoulder some burdens of bringing high-definition television to the public.

Cable operators, for example, were asked to provide up to five "high-value" digital services, which FCC sources said meant HDTV.

In August, the FCC leaned on the consumer-electronics industry by requiring the phased-in inclusion of off-air digital tuners in all TV sets 13 inches or larger by July 2007.

In his MSTV remarks, Powell declared that the transition is moving forward.

"We are not there yet, but the pieces of the puzzle are starting to come together," he said.

Powell's missing pieces? The protection of broadcast content from digital piracy, which the FCC might resolve by rule; and compatibility between DTV sets and digital cable systems, an issue that the FCC is pressing the cable and CE industries to quickly solve on their own.

In his MSTV speech, National Cable & Telecommunications Association president Robert Sachs referred to DTV compatibility as a "non-issue," in that cable operators would not knowingly carry high-definition signals that subscribers with HDTV sets could not view.

"Cable consumers are currently receiving HDTV signals over upgraded cable systems using HD set-top decoders," said Sachs. "Cable consumers are enjoying HD programs today. Compatibility is not an issue."

Must-carry desires

Broadcasters have a few more pieces to add to the puzzle. One is mandatory cable carriage of analog and digital signals until analog broadcasting ends, and the other is mandatory carriage of multiple digital signals generated by a single DTV station.

A dual-carriage mandate has gained no ground at the FCC and is unlikely to find a home in legislation that Tauzin controls.

"[Tauzin] thinks it's an undue burden on cable operators, in that they have spent billions of dollars upgrading their systems without any government assistance," said Wallace. "He thinks the same programming … is redundant and he doesn't see the benefit that much of that."

But both Tauzin and some at the FCC have shown increasing interest in multicasting. In theory, multicasting means a TV station that had yielded its analog signal could expect cable carriage of multiple programming streams when it's not broadcasting a single program in HDTV.

"What should be carried on cable systems are all free, over-the-air bits — whether those are video, audio or data bits. The PSIP [program and system-information protocol] that accompanies the digital channel should be passed through as if it comes from out of the broadcast transmission system," said Marilyn Mohrman-Gillis, vice president and general counsel for the Association of Public Television Stations.

The law requires cable systems to carry a station's "primary video." The fight is over whether or not primary means one signal or many. In January 2001, the FCC said primary meant one.

The NCTA views a multicasting mandate to be the regulatory twin of a dual must-carry requirement. That's because a DTV station that multicasts will still need to reach analog cable subscribers with its primary signal and digital subscribers with the remaining services, which combine to occupy a much greater slice of spectrum than today's 6-megahertz analog signal.

Multicasting deadlock

"Multicasting would have the same practical impact on bandwidth as dual must-carry," said NCTA spokesman Mark Osgoode Smith. "If one considers dual must-carry constitutionally suspect, then multicasting could not be much different."

The four-member FCC has been deadlocked over multicasting for months. Republican Kevin Martin and Democrat Michael Copps are ready to overturn the January 2001 ruling and declare that primary does not mean just one programming service.

Republican member Kathleen Abernathy said the FCC must be sure that whatever it decides is in accordance with the Supreme Court's decision upholding analog must-carry requirements in 1997.

She would prefer that the FCC seek additional comment on whether a multicasting mandate would violate the First Amendment rights of cable operators.

"My position is that I think the language is ambiguous enough that primary video can mean multiple bits of data, because video is multiple bits of data," Abernathy said. "Then you have to ask yourself, 'What are the legal and constitutional issues that arise from that to ensure that you are in compliance with the [Supreme Court] case, as far as the burdens on the parties that have the must-carry obligations?' "

Powell supported the 2001 ruling which held that primary video meant one programming service. Last week, he didn't seem ready to cede any ground.

"I said what I said once with regard to what I believe [is] a fair interpretation of the statute," Powell said. "I think it will be difficult to convince at least me that it was in error."

Broadcasters claim the only way over-the-air viewers will receive multicast services is if they're simultaneously available to the much larger base of cable subscribers.

Development of multicasting services is essential because TV stations can't expect eye-popping HDTV pictures to command higher advertising rates, according to Bear Stearns & Co. media analyst Victor Miller.

"The rulebook says you can develop multi-models, and that's exactly what you should do," Miller said. "Wall Street is absolutely mystified that we can spend $5 billion with no hope of generating any revenue."

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