When it comes to digital TV, broadcasters shouldn't bank on the law that permits them to offer datacasting and other additional services. At least, that seems to be the message from top GOP lawmakers.
Sure, the 1997 law giving TV stations a second channel to launch DTV allows them to earn extra revenue from ancillary services such as datacasting, in addition to high-definition and other digital programming. But key lawmakers last week appeared shocked to find the industry actually moving ahead with these new ventures.
"What is not part of the deal will be for broadcasters to lease or sell off part of that spectrum," House Telecommunications Subcommittee Chairman Billy Tauzin warned broadcasters at a hearing on DTV's problems.
With the DTV rollout plagued by questions about indoor reception, lack of programming and cable interoperability, Congress will be in no mood to sit by if the industry neglects its core over-the-air business, added Commerce Committee Chairman Thomas Bliley (R-Va.).
"You asked that Congress provide you with an opportunity to offer HDTV," Bliley said in a written statement. "We did that. Now some of you are getting cold feet." He suggested that broadcasters be required to buy their non-HDTV spectrum at prices comparable to what they could earn at auction.
It would be unfair for broadcasters to use part of the digital spectrum they obtained for free to compete with wireless communications that paid billions for theirs, he said.
In the wake of the broadcaster bashing, the lawmakers also ignored several factors that TV stations say contribute to the dearth of digital programming, namely the lack of interoperability with cable TV-which prevents the 70% of Americans who get their TV via the local cable system from watching the 130 DTV stations now on the air. Another factor is the lack of copy-protection standards, without which Hollywood is unwilling to provide movies.
Although Tauzin and Bliley seemed to be ignoring key elements of the DTV statute, their aides say the lawmakers' real motivation is not to strip TV owners of enticing new business but to ensure that broadcasters don't lose sight of the DTV law's initial purpose: bringing HDTV to the U.S.
Particularly troubling, they say, are suspicions that broadcasters are more concerned about launching datacasting services than delivering HDTV and other digital programming, a fear fanned by ABC's decision to drop HDTV from Monday Night Football.
Congress approved 6 MHz for each station with the understanding that that's what would be needed to deliver HDTV, Tauzin said, and "it would be a very big mistake if broadcasters kept it from the American public."
Without widespread HDTV, Tauzin said, Congress will reconsider its 1997 decision to give every TV station a digital channel at no charge.
Despite the harsh words, broadcast groups now gearing up to pool their excess spectrum for datacasting say they will avoid congressional ire by both offering substantial amounts of HDTV and letting stations retain control of spectrum devoted to datacasting.
"The broadcasters in our groups are not giving up control of the spectrum or leasing it to anybody," said Michael Lambert, head of iBlast, a partnership of Tribune, Gannett, Cox and other large station groups. "What we're doing is providing a network service to our stations in the same way that NBC provides a network service to its affiliates."
In fact, broadcasters and FCC officials said they were surprised by the lawmakers' angry tone, given that iBlast and rival group Broadcasters' Digital Cooperative have met with Tauzin to discuss their plans and thought him receptive.
What's more, Congress explicitly gave broadcasters authority to offer ancillary services.
Finally, broadcasters are already obligated to pay for that right. The FCC in 1998 ordered stations to turn over 5% of any revenue earned from pay services such as datacasting.
A spokesman for Tauzin acknowledged that iBlast is probably on safe ground with Capitol Hill, but said congressional leaders don't want TV owners to be lured from free over-the-air television. "I don't think anyone in the broadcast world knows how much spectrum it will take to do HDTV."
Most broadcasters say they have a pretty good idea that a substantial amount of spectrum will remain, even if stations offer top-quality 1080i. A standard 6 MHz channel allows a data flow of 19.39 Mb/s, but high-end HDTV needs only 12 to 14 Mb/s (except live sports). That means 5 to 7 Mb/s is available for datacasting.
But the lawmakers' bashing of broadcasters didn't stop with datacasting. Bliley also blasted many of the stations now operating on analog ch. 60-69, whose spectrum is scheduled to be auctioned in September to mobile-communications companies.
Many likely bidders-telco powerhouses like Nextel, Qwest, Verizon and SBC-have complained they have no way of telling how much the spectrum is worth, because broadcasters are trying to negotiate high-priced buyouts to vacate the channels by the 2006 deadline. "This is pure nonsense," Bliley said. "The wireless industry should not be held at the mercy of a broadcaster unwilling to exit the band."
But Congress gave stations the right to keep their current analog channels until the DTV transition is complete, which will be well past the 2006 deadline.
Realizing this, the FCC has encouraged private buyout deals. Potential bidders have complained of the prices allegedly being demanded and have asked for a delay in the auction until the FCC issues spectrum-clearing rules this fall. Tauzin and Rep. Cliff Stearns (R-Fla.) have echoed those calls. FCC officials say their main goal is to get spectrum located on the 700 MHz band into new hands as soon as possible, regardless of how much broadcasters earn or how little the government gets.-Glen Dickson contributed to this story