Battle Over Freebies

Digital-conversion set-top plan rankles broadcast group

The federal government wants to make sure a wide swath of TV viewers
aren't left without reception when the plug is pulled on analog transmission
in February 2009. But broadcasters are concerned the government's plan could
potentially disenfranchise some viewers and delay the transition to

The National Telecommunications & Information Administration (NTIA)
will distribute $1.5 billion to consumers in the form of $40 coupons—up to
two per household—while supplies last. Viewers can use the money to buy a
digital converter for their analog sets.

But what bothers some broadcasters is that, two weeks ago, the NTIA
proposed that it provide the coupons only to households that don't subscribe
to cable or satellite services. That's a small handful: The National
Association of Broadcasters says only 19.6 million out of 110.2 million TV
households get their TV reception over-the-air; that's about 18%.

Most viewers would get the digital signal downloaded to their primary
set from the set-top box provided by their cable or DBS suppliers. But, without
the government's coupon, that spare TV set in a bedroom or workshop would
become an unwatchable antique.

NTIA says there are 74 million analog sets out there and it can give
only enough coupons to convert about 20 million sets before exhausting the

But that will leave a lot of TV sets dormant, says David Donovan,
president of the Association of Maximum Service Television (MSTV), who charges
that the NTIA has “changed the nature of the program. We don't believe the
statute was ever intended to be so limited.” The cable industry hasn't
reached consensus about how to respond to the NTIA because it would like
approval to convert digital signals to analog at its headend, which would
eliminate the problem for the cable industry altogether.

Donovan, whose group essentially is the broadcast industry's spectrum
watchdog, says the giveaway plan is to make sure that viewers don't suddenly
lose TV service. “It said the boxes would be supplied to TVs not connected to
cable or satellite,” he argues, “but did not differentiate between whether
they were in cable or satellite households or not.”

Also, NTIA says it plans to make the coupons available on a first-come,
first-served basis to viewers who certify that they are in analog-only
households. Viewers will get only one coupon per set and will have to swear
they actually have another analog set to get the second coupon. NTIA is trying
to discourage a black market in fraudulently obtained coupons.

Actually, the agency may not be doing the heavy lifting at all. Last
week, it suggested that it might outsource the program, asking for information
from the private sector from companies with the experience and qualifications
to administer it.

Flying into Trouble

MSTV has other concerns about the government's role in the DTV

Donovan says his organization is “very worried” about a Federal
Aviation Administration (FAA) proposal that would require broadcasters to make
almost any TV-license application subject to FAA clearance. The FAA essentially
wants more say-so over tower construction and potential interference to
navigation from radio and TV signals. But it is flexing its muscle just as
1,600 TV stations are in the midst of making various modifications in the
switch to digital.

Michael Marcus, director of consulting firm Marcus Spectrum Solutions
and former FCC technology expert, says the FAA's bid to expand its authority
over spectrum issues stems in part from a historical rift between the two
agencies. “FAA spectrum staffers see the FCC as a handmaiden of its
industries with little interest in safety,” he says.

“This is clearly an exaggeration,” he adds, “but sometimes,
insensitive FCC staffers have acted in ways that reinforce this bias.”

Beyond the turf fight, Marcus is concerned about a process that gives
the FAA broad and not clearly defined review power over tower construction and
interference issues. MSTV plans to fight the proposal.

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