DTV Bill: Cable Can't Downconvert

[Gregg Lengling]

Cable operators lost the right to deliver some digital-TV signals in analog -- a policy defeat that might force millions of subscribers to lease set-top boxes in order to maintain their ability to watch local broadcast stations via cable.

Just before Christmas, the House and Senate agreed to sweeping legislation that called for ending local broadcasters' transition to digital transmission Feb. 17, 2009.

The House bill had included language designed to avoid the mass deployment of set-tops, providing relief to large and small MSOs in different ways.

But House Energy and Commerce Committee chairman Joe Barton (R-Texas) agreed to remove it after Senate Budget Committee chairman Judd Gregg (R-N.H.) -- with the encouragement of the National Association of Broadcasters -- raised procedural objections.

Under the House bill, high-capacity cable systems would have been required to carry "must-carry" TV stations in analog and digital for five years after the transition, with cable having the right to degrade HDTV signals to standard definition.

Small cable operators, again for the first five years, gained permission to transmit must-carry digital-TV signals in analog -- a concession to their technical constraints in transmitting local TV signals in both analog and digital.

NAB spokesman Dennis Wharton hailed the outcome on Capitol Hill, which is expected to be finalized by one last House vote in late January or February.

After the transition in 2009, millions of cable homes will still have analog-TV sets. Must-carry digital-TV stations will lose access to those cable homes until those homes have digital-TV sets or set-tops.

Wharton would not address whether must-carry stations were prepared to lose so much of their audience.

National Cable & Telecommunications Association president Kyle McSlarrow told Congress cable wanted the right to downconvert digital-TV must-carry stations at the headend in order to avoid the cost and inconvenience of deploying millions of set-top boxes.

But the NAB's position throughout had been that degradation of digital-TV signals should be done by the consumer, not the cable company.

By the end of 2006, Comcast Corp. and Time Warner Cable plan to offer all customers a digital simulcast of their analog channels, allowing analog consumers to transition to digital-TV sets and set-tops at their own pace.

Under the digital-TV legislation, in 2009, Comcast and Time Warner could not offer digital-TV must-carry stations in analog.

The two major direct-broadcast satellite carriers -- DirecTV Inc. and EchoStar Communications Corp.'s Dish Network -- also had digital-TV signal-carriage flexibility removed from the bill.

In another provision, Congress agreed to create a $1.5 billion federal program to subsidize digital-to-analog converter boxes in an effort to extend the life of millions of analog TVs in homes that do not subscribe to cable and satellite.

The U.S. has about 20 million homes that rely exclusively on free, over-the-air broadcasting. Collectively, those homes own an estimated 45 million analog-TV sets.

The subsidy program allows each U.S. household to receive two $40 coupons to acquire two converter boxes. Congress, however, is anticipating that cable and satellite homes are unlikely to apply for coupons and that broadcast-only homes are likely to represent the bulk of the demand.