Crooked Path Ahead for Digital TV

[Gregg Lengling]

By Elisa Batista
Story location: http://www.wired.com/news/business/0,1367,56244,00.html

02:00 AM Nov. 08, 2002 PT

The future of digital television remains fuzzy.

Even with one political party -- in this case, the Republicans -- set to control both Congress and the White House, the only foreseeable change in the arduous transition to digital TV is a new Senate committee chairman.

In January, Sen. John McCain (R-Ariz.) will take over the reins of the Senate commerce, science and transportation committee, which oversees legislation related to DTV, from Sen. Ernest Hollings (D-S.C.).

"The goals will be similar," said Andy Davis, spokesman for Sen. Hollings. "The details will be different."

In 1998, Congress mandated that TV broadcasters switch from analog to digital programming, which promises viewers crystal clear pictures and a windfall of interactive capabilities on their TV sets, by 2006. Congress wants to sell the broadcasters' analog airwaves licenses to wireless service providers and stick the proceeds in the government's coffers.

Hollywood, however, is reluctant to produce digital programs unless there is a provision to keep TV viewers from unlawfully copying movies and shows. The broadcast networks also want cable TV providers, which are in 68 percent of households, to carry their local digital broadcasts.

Consumers, for their part, want the right to record movies in their homes. They also don't want their current TV sets and VCRs to become obsolete in this transition to a digital world. (A digital set-top box, built-in tuner, or a whole new television set is required to tap into digital programming.)

To the chagrin of legislators, there is always one group that tries to shoot down the DTV bill and proposals intended to speed up the transition to DTV.

The consumer electronics industry wants no government regulation at all.

"It is more fruitful for us to present something to policy makers than" have them draft legislation, said Jenny Miller, spokeswoman for the Consumer Electronics Association.

Politicians want the money that would come from an auction of the analog airwaves. They also want to appease the broadcasters -- a lobbying powerhouse to reckon with in Washington. However, they certainly don't want constituents' TVs to cease working by 2006.

"If you wake up one morning and your TV set goes black," said Gerry Kaufhold, an analyst with market research firm In-Stat MDR, "that is not politically acceptable to anybody."

He added, "I don't think we will ever see analog channels completely turned off.... There will be a substantial amount of people who own a 100 percent analog TV set and can't flat out afford to buy a new one."

The new Senate committee chairman – John McCain – appears to hold Kaufhold's view.

While McCain is in the middle of "developing our agenda and our priorities," he is skeptical that the analog broadcasters are going to give the spectrum over to the government as they agreed to do in 1998, said his spokeswoman Pia Pialorsi.

In other words, he doesn't see digital TV becoming ubiquitous any time soon.

"He's been very critical of the broadcasters for this analog spectrum and how slowly the transition (to DTV) has been going," Pialorsi said. "He doesn't think there's a snowball's chance that Arizona broadcasters will give the spectrum back."

Believing that McCain's handling of the DTV transition will not differ that greatly from Hollings, Pialorsi added, "We work in bipartisanship in this committee. We've had a good working relationship with Sen. Hollings and Sen. McCain fully intends to work on that."

Hollings spokesman, Davis, also expects McCain to address some of the same issues as Hollings, which includes copyright protection for the industry and a speedier timeline to bring DTV to consumers.

When more consumers will view DTV programming is still up in the air.

At least 60 percent of Americans live in markets with channels that offer five or more shows in digital formats, according to National Association of Broadcasters spokesman Dennis Wharton.

However, most people don't have DTVs to view these programs.

While DTV sales continue to grow, their numbers remain small, mainly because of their hefty price tags. The most affordable DTVs cost $1,500, said In-Stat MDR's Kaufhold.

By the end of this year, TV manufacturers will sell 2.1 million DTVs, according to CEA forecasts. That number will increase by 20 percent to 10.5 million sets by 2006.

The life cycle of a TV set is, generally, eight years, Kaufhold said. Only recently did the FCC mandate TV manufacturers to insert digital tuners into all their products by 2004. Despite the pending transition to digital, TV manufacturers continue to sell analog sets.