House DTV Draft: Subsidy, No Must-Carry

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The House Energy & Commerce Committee has circulated a draft of its DTV transition bill that sets a hard date of Dec. 31, 2008, only three months and one week sooner that that passed Thursday by the Senate Commerce Committee (April 7, 2009).

It also contains a converter-box subsidy that was not in the draft issued earlier in the year and requires broadcasters to air many more PSAs about the transition.

As expected, it does not require cable to carry broadcaster's multiple digital signals.

House Commerce Committee Chairman Joe Barton (R-Tex.) does not support multicast must-carry.

The House bill allows cable operators to convert broadcaster's signals from digital to analog, at the headend or the set, so long as it does not "materially degrade" the signal, though it also lays out a bunch of conversion scenarious and says, by definition, they don't qualify as degrading the signal.

Specifically, it requires cable systems (with capacity of more than  550 MHz) to transmit both a standard definition version of a must-carry broadcast signal (so no HDTV pass-though requirement) and an analog version for the first five years, after which they must deliver a digital version of a station's signal.

"Our industry will accept the dual carriage obligation of limited duration in the bill," said Kyle McSlarrow, President of the National Cable & Telecommunications Association.  "We are willing to make this significant concession expressly to facilitate Congressional action returning broadcasters' analog spectrum for important uses like public safety and to facilitate the consumer transition."   
The bill also requires broadcasters to air two, 60-second spots per day, one in prime time, throughout all of 2008 informing viewers that their analog-only sets won't work after Dec. 31, 2008, without a converter. Cable and satellite providers, and other multichannel video distributors, would have to include bill-stuffer announcements.
Barton has told the story more than once of buying a TV set in Texas and being told by the retailer that he had no worry about it no longer working after the digital transition because Congress wasn't doing anything about it anytime soon.
The bill would provide only $830 million (after administrative costs) for subsidies for DTV-to-analog converter boxes for every household (post office boxes excluded), with the rest going to the general treasury fund.

Like the Senate bill, the House version allows that sum to be borrowed so that the program can be implemented before the auction proceeds are actually collected. Those auctions begin in January 2008, as they do in the Senate version.

The subsidy would be in the form of a redeemable coupon worth $40. That would suggest the boxes will cost at least that, and more like $50 or $60. The Senate bill also sets the value of its subsidy at $40 per set-top converter, but does not spell out how the program would be administered.

The House bill requires viewers to obtain a coupon request form from goverment buildings, and likely online, then actively apply for the subsidy.

In essence the subsidy is meant to target those who really need it by creating a three-step process: get the application; get the coupon, then get the box at a retailer. It is also not open-ended, lasting about one year.
But that could arguably disadvantage the people that need it most, the poorer and immigrant populations that are distrustful of goverment forms or may be put off by the multi-step process.
Households would get up to two coupons, meaning two sets in each house would be subsidized. That would mean only about 10.3 million households could receive the boxes.

It is also essentially a first-come, first serve program. When the $830 million runs out, after those 10.3 million households, that's it. That could leave some analog-only households to pay full freight if some of the subsidies go to second or third analog-only sets in cable and satellite households.

The bill also calls for a braodcast/cable/equipment manufacturer/retailer consumer education campaign and labeling of  TV sets, but no money for emergency communications, as there is in the Senate bill.

While the Senate bill is short--five pages--by virtue of Senate rules that stripped it of all but money-related matters ($10 billion in proceeds from analog spectrum auctions and what that would be spent on), the house bill spans 33 pages and gos into great detail on the subsidy program and information campaign.

There is also a difference in the language. The Senate bill begins with "strike" this clause and "insert" that one, the House bill reads like a an indictment of broadcasters for still sitting on analog spectrum, or at least of Congress for giving them that opportunity.

"A loophole in current law is stalling the digital television (DTV) transition," the bill begins, "preventing the return of spectrum for critical public safety and wireless broadband use."

The committee is expected to mark-up the bill Oct. 26.

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