Washingtons big week

Hill wants answers on DTV rollout; FCC to get an earful on AOL-TW merger
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Washington policymakers will meet on two of the TV industry's hottest issues this week. At a Capitol Hill hearing on Tuesday (July 25), House lawmakers will try to get a handle on what's plaguing broadcasters' transition to digital TV. Two days later, the FCC's five commissioners will hold a hearing on the pending and increasingly controversial merger of America Online and Time Warner.

Both hearings are likely to generate a great deal of media attention and, more than likely, an excess of vitriol.

To find out why there hasn't been more progress in implementing DTV, the House Telecommunications Subcommittee wants to hear from DTV equipment makers, broadcasters, cable companies and movie industry officials-all of whom blame each other for the digital transition's sluggish pace.

Likely flash points: the lack of interconnection standards between equipment makers and cable companies, uncertainty over DTV reception quality, the scarcity of high-definition programming and continuing disagreements over copy-protection technology. Broadcasters' plan to pool unused digital spectrum and lease it to nonbroadcasters is also a top concern, said a spokesman for Telecommunications Subcommittee Chairman Billy Tauzin (R-La.).

"If broadcasters did not need all 6 MHz [of spectrum] Congress gave them for delivering digital TV signals, why did we give it to them?" he asked.

Also count on Tauzin and his colleagues to grill broadcasters over plans to vacate spectrum now being used for channels 60-69. The spectrum, located on the 700 MHz band, is slated for auction to wireless companies Sept. 6. The FCC wants spectrum winners to negotiate deals that would compensate TV stations for leaving the spectrum well before a 2006 deadline.

Tauzin and other committee members are expected this week to ask the FCC to delay the auction, at least until spectrum-clearing rules are issued this fall.

Subcommittee staffers were still trying to set the witness list Friday, but asked to testify are Matt Miller, chairman of DTV chip maker NxtWave; Zenith technology chief Richard Lewis; LIN Television Chief Executive Gary Chapman; and data broadcasters.

More intra-industry disputes will make the newscasts when the FCC holds a hearing Thursday on the merger of AOL and Time Warner. AOL's Steve Case and Time Warner's Gerald Levin will counter assertions by Disney and others that the companies should be forbidden to merge or at least should be split into two new businesses: one for cable and Internet distribution and the other for producing programming and Web content. Last week, Levin told a CNNfn interviewer that Disney's demands were "absurd."

Besides Case and Levin, the witnesses will include Disney's Washington head Preston Padden, and Consumer Federation of America Research Director Mark Cooper.

In reality, Levin and Case have little reason to fear a split of their programming and distribution operations. The FCC did away with the financial-interest and syndication rules that prevented broadcast networks both producing and syndicating their own shows in 1993, and few industry officials say there's a chance the commission will bring back such heavy-handed restrictions in the deregulatory Internet age.

A more plausible scenario, industry sources say, is the imposition of conditions that would prevent the future AOL-Time Warner from boosting consumer access to its own content by transmitting at higher data rates than rival offerings or denying unaffiliated producers access to AOL-Time Warner's "first screen."

To obviate the demand for such conditions, America Online officials last week tried to back up their pledge to be fair players. For example, they promised that TV programmers that create interactive services for AOLTV would not be required to have exclusive relationships with the online provider. AOL said broadcasters also could offer their own interactive content but that it would block interactive services provided by third parties.

Consumer advocates last week said AOL's pledges don't go far enough in preventing content discrimination. "They've given an inch, and we've got a mile to go," said Mark Cooper, research director for the Consumer Federation of America.

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