The Government Accountability Office estimates that it would cost as much as $10 billion in equipment to subsidize the DTV transition if cable and satellite are required to pass through broadcaster's digital and high-definition signals to their subscribers.
By contrast, if cable and satellite are allowed to convert the signals for their customers, the bill would top out at $2 billion.
That's according to a report to members of the House Telecommunications Subcommittee Thursday, who were holding a hearing on what it would take to limit the costs and political damage of setting a hard date for the cut-off of analog signals. "If we drop a hammer on consumers," said Greg Walden (R-Ore.), "they will rightly drop a sledgehammer on us," a warning echoed by several in the room.
The costs would primarily be for subsidizing converter boxes for the around-20 million analog-only households, most of which are lower income, Hispanic and other minority viewers. For each GAO scenario, the costs would only be for covering a single set in a household (there are 73 million analog-only sets) and would cover only equipment costs, not implementation.
The GAO said it was preparing a report for July that would get into the costs and logistical issues of determining who should receive the subsidized converter boxes.
Rep. Ed Markey (D-Mass.) suggested that if GAO couldn't even produce a study until July on the costs of implementation, that did not argue for a hard date being achievable any time soon, particularly given that the universe of 20 million analog-only homes would be like subsidizing all of France.
The committee is considering legislating a hard date for the giveback of analog spectrum. Currently, the date is Dec. 31, 2006, or when 85% of houses in a market are equipped to receive a digital signal, whichever is later.
The FCC has recommended allowing cable and satellite to convert digital signals to analog and count those homes as digital-ready so that that 85% trigger could be reached sooner. Otherwise, it argues, the conversion could take decades. Broadcasters are concerned that downconverting to analog would deny viewers the super-fine pictures that are the value-added of DTV and for which they have spent big bucks to deliver.
Insight President Michael Wilner backed a hard date, saying cable would accept any date Congress wants to determine. "Set the date, we will be there," he said.
Former NAB Joint-board Chairman James Yager of Barrington Broadcasting said broadcasters were also eager to stop paying double for redundant analog and recognize the value in completing the transition. But he expressed concerns over downconverting at the cable head-end, suggesting it would be like consumers buying a color set and only being able to receive a black-and-white picture.
When asked whether broadcasters should have to help pay for the converter boxes, Yager said broadcasters had already paid millions to convert and that boxes weren't part of the deal. Wilner responded to the same question by saying that cable had already spent $100 billion to convert to digital without asking for any government assistance, and that now to ask it to spend more to help broadcasters was "above and beyond."
Wilner brought up the National Cable & Telecommunications Association's DTV recent carriage deal with noncommercial stations as an example of market forces helping advance the transition, while Yager called it smart public relations, suggesting cable has been unwilling to strike a similar deal with commercial broadcasters.
Wilner countered that the noncom deal was about content. "If we give [commercial broadcasters] a free ride," Wilner said, "the content will be less good than if they have to prove to the consumer this is something they want." The FCC last week officially denied broadcasters mandatory cable carriage of their digital spin-off channels.
Committee members almost universally shared concerns over a hard-date's effect on analog-only homes and the need to make sure they are not suddenly denied service, but several, including Commerce Committee Chairman Joe Barton and Cliff Stearns (R-Fla.), said they thought a hard date was necessary to advance the transition and reclaim the spectrum for new wireless services.
Barton pledged Thursday to "in the near future" introduce his bill establishing a hard date, which he would prefer to be the current soft date of Dec. 31, 2006.
Charles Gonzalez (D-Tex.) had one idea for speeding the transition: "Require that campaign commercials be carried in digital," he said, "then we'll see some movement."
Markey asked each of the four hearing witnesses whether a Dec. 31, 2006, hard deadline was even possible.
The GAO representative said yes, as did an executive of Korean equipment manufacturer LG Electronics, who said they could make the equipment "available and affordable." Yager's was a definite no, leaving it to Wilner.
"The yeses have it three to one," he said. Looking at the outvoted Yager, Markey replied: "I'm a Democrat, so I can sympathize with you.