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High Hurdles in Digital-TV Race

With deadline ahead, television industry assesses nagging issues 3/17/2006 07:00:00 PM Eastern

Consumer-electronics manufacturers, broadcasters and legislators descended on Washington last week for the Consumer Electronics Association's Entertainment Technology Policy Summit. The mood was upbeat, as set-makers spoke of the growing adoption of high-definition TVs and programmers touted their increased HD output.

But the tone at the show (co-sponsored by B&C) was at times sober, as attendees spoke of the obstacles they must overcome before analog TV gets turned off.

CEA chief Gary Shapiro said that, for the first time, set-makers will sell more HDTV sets than analog TVs in 2006. The association predicts 12.2 million sets with integrated digital tuners will ship this year and 27.1 million DTV sets in 2009, when analog signals are scheduled to cease.

Shapiro added that the DTV budget bill signed last month by President Bush, which set the “hard date” of Feb. 17, 2009, for the turnoff of analog signals, was a significant milepost in the industry's long march to HDTV: “We, in essence, set the finish line.”

But reaching that finish line remains an issue, given the potential roadblocks.

In his keynote address, FCC Commissioner Jonathan Adelstein said most Americans don't realize that analog TV signals will cease in 2009. He called for a national campaign to educate consumers about the turnoff and their options for receiving DTV service, which include purchasing subsidized set-top boxes that will receive digital signals and convert them to analog for viewing on older sets.

“If we don't get this right,” Adelstein warned, “we could face a tsunami of public outrage.”

He added that one of the major problems facing the transition is that “consumers are buying up analog TVs at bargain-basement prices” and creating a bigger universe of potentially obsolete sets, despite set-makers' efforts to gradually integrate DTV tuners into their products per federal mandate. He would like to see the FCC work with the National Telecommunications & Information Administration, which is overseeing the digital-to-analog converter-box program, to create a “federal DTV task force” to improve consumer awareness. He also called for more help from consumer-electronics companies, the entertainment community and broadcasters.

Even if “late adopters” get the message about the turnoff and apply for their $40 subsidy for a converter box, there are concerns about the boxes themselves. Electronics manufacturers say ATSC (Advanced Television Systems Committee)-compliant receiver chips are in their fifth generation of development and can reliably receive DTV signals on small indoor antennas, but there is no guarantee that the latest chips will be in low-cost DTV set-tops. That may mean that people who buy the boxes will need to replace their “rabbit-ear” antennas with specialized indoor antennas or even install a rooftop antenna.

“You have no way of knowing what generation of chip you're buying,” notes Ira Goldstone, chief technology officer for Tribune Broadcasting. “If you're buying an HD set today, it doesn't say 'second-generation ATSC tuner' on it.”

CBS VP of Advanced Technology Bob Seidel says his network has seen a broad range of performance in DTV tuners it has tested over the years, and he believes differences in quality will get wider as companies from China and Taiwan enter the digital-to-analog converter-box market. “Some manufacturers will be looking to enter the market with the lowest possible cost,” says Seidel. “So instead of the $5 tuner, they might go with the $1.25 model.”

The suggested $40 rebate and projected $50 total cost of the boxes is unrealistic, he adds, noting that CBS research indicates that the price of the parts and the technology licenses for such set-tops will add up to $40 per box before the retail markup.

Circuit City Chairman Alan McCollough, for one, doesn't like the idea of a converter box in the first place, because DTV set-tops are already a high-return item at the retail chain. Instead, he would like to see broadcasters offer all their programming, both analog and digital, in the widescreen format to spur consumers to upgrade to DTV sets. “I'm suggesting all wide, all the time,” he says.

Several attendees indicated a lack of confidence in policy-makers. Brandon Burgess, CEO of Ion Media Networks (formerly Paxson), says the government is at fault for failing to enact rules on pressing issues like converter-box requirements, digital must-carry and the broadcast flag. “Putting off rules is a way to delay the hard date,” he says. “If it becomes apparent around election time in 2008 that this thing isn't working, you are going to see a delay in the hard date.”

Most agree there's a load of work to do before the hard date arrives. Rick Chessen, former associate chief of the FCC media bureau and now a lawyer with Washington firm Sheppard, Mullin, Richter and Hampton, notes that 200 stations are not yet offering a digital signal, 50% of DTV stations are still operating at low power, and some 500 stations will be moving their DTV channel assignments as part of the transition.

He says, “There is a very complicated dance that needs to happen over the next two years.”

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