Manufacturers promise a fight; broadcasters hail phase-in
It could be the big break that the DTV transition needs. Or, it could clog the television market with expensive DTV tuners that no one wants, for DTV signals few can receive.
In its August meeting, the Federal Communications Commission responded to bipartisan Congressional pressure and told television makers to include digital tuners in nearly all sets by 2007, and in half of all sets larger than 36 inches by July 1, 2004.
"Now is logjam-breaking time," said Commissioner Michael Copps.
But no sooner did the meeting end when the Consumer Electronics Association said it would fight the mandate, in court if necessary.
"We think it's a bad policy," CEA President Gary Shapiro told reporters after the meeting. "We don't think the FCC has the authority, in fact, to rule in this area."
The FCC is relying on the All-Channel Receiver Act of 1962, the law that mandated UHF tuners in televisions, as its authority in the action. The CEA says the law, written before DTV existed, gives no such authority.
In the meantime, the rule is a major victory for broadcasters, who have complained that they've invested millions in government-mandated DTV transmission while other industries wait on the sidelines.
"Today's FCC decisions represent the most important action on digital television since adoption of the DTV standard in 1996," said NAB President Eddie Fritts.
Commissioner Kevin Martin dissented from the order.
In another potential boost to the DTV transition, the FCC also began a process for making rules on the so-called "broadcast flag," a key to many likely digital copyright-protection arrangements. Commissioners noted that industry players have reached consensus on some, but not all, copy-protection issues. The action begins the administrative process of receiving public input for possible rules.
Assuming the rule is upheld by the courts - a process that could extend well into the July 2004 implementation of the mandate - both sides disagree about what the consumer will face. NAB and some manufacturers, such as Zenith, which holds a key tuner patent and stands to profit from the mandate, say the price of tuners will follow DVDs, VCRs and microchips in dropping faster than a high-tech stock.
"We're seeing improvement in the technology very quickly and this mandate will just speed that even more," said Mark Richer, executive director of the Advanced Television Systems Committee, which sets DTV standards but whose members are on both sides of the issue. "You're going to have tens of millions of receivers coming out with ATSC-receiving capability, so the technology will continue to evolve. The price will certainly come down and the performance will continue to accrue."
He also said other countries, still undecided between ATSC and the European DVB standards, would benefit from the economies of scale that the flood of ATSC receivers would provide.
CEA fingered Zenith, which owns key intellectual property related to the tuners, poised to reap a royalty windfall.
"For Zenith, having a tuner mandate contributes to the bottom line," said CEA spokesman Jeff Joseph. "They're running around the world pushing the U.S. standard."
Zenith (a CEA member) is only one of several entities holding some patent rights to the many technologies involved with DTV.
"Will Zenith and others benefit from royalty payments? Sure," said Zenith spokesman John Taylor, noting that the company's massive investments might now be recouped. "Is this the reason Zenith supports [the mandate]? No."
Taylor noted that an integrated Zenith HDTV set is available today for less than $1,500, tuner and all.
"We're backing up our claim about tuners under $200, day after day in the marketplace," he said.
Shapiro said the decision had nothing to do with the digital transition. "It has to do with a well-intentioned but misguided effort to return broadcasters to the glory years, when there were only three networks and everyone had this big ugly antenna.
"Americans are not accepting of antennas," he said. "They want cable. They want satellite. They want pre-recording."
He said the issue hit home the other night when he rode an elevator with an office-cleaning worker.
"She's going to want to buy a TV set in five or six years," he said. "She may want to go to Wal-Mart. She's working her second job. She's an immigrant. Will she be able to afford that 19-inch set if you have to have a digital tuner?"
Consumer groups shared Shapiro's anger.
"To force the expansion of DTV through the creation of false demand for digital products, instead of requiring digital programming from broadcasters, is stunningly ill-advised, one-sided and thoroughly unacceptable," wrote Consumer Action, a Washington-based group. The Consumer Federation of America called the deal "an outrage."
The mandate has a phase-in plan. Half of all units 36-inches (diagonally) and larger need the tuners by July 2004, with the tuner in all new units a year later. Since these TVs are already expensive, and many now have the tuners, the CEA is less concerned with these than with the smaller, more popular models.
The mid-sized screens - 25 to 35 inches - come next, with half requiring tuners by July 2005, and all with the advanced capability by July 2006.
All TVs 13 inches diagonally or larger, as well as VCRs, DVD recorders or any other receiving devices must have the tuners by July 2007 - less than five years away.
But the rule has a few potential loopholes.
For example, the rule does not apply to monitors that have no over-the-air tuner at all. With so many consumers buying TVs for cable or satellite reception, and with a VCR providing over-the-air analog reception in a pinch, some may not care about a built-in tuner and will happily choose cheaper, tuner-free sets.
Also, the FCC did not, for now, mandate any minimum performance standards. That raises the specter of manufacturers using the cheapest equipment possible, knowing that most viewers will never even use the product. Add the current low-power state of most digital broadcasts, and even the FCC rule might not bring a clear picture.
The CEA has been clamoring that other pieces of the DTV puzzle should be fitted. In particular, they want universal plug-and-play standards for cable TV and universally portable set-top boxes.
And they might get their wish. In its order, the commission hinted that it's getting around to that question. A decision on mandatory cable carriage of broadcasters' digital signals could also come soon, although the commission would have to dance around the cable industry's First Amendment concerns.
Nevertheless, Powell, in a letter Aug. 9 to Rep. Edward J. Markey (D-Mass.), promised action on the dual carriage issue, on the carriage of multiple digital broadcasts and on the plug-and-play issue. He did not reveal, however, what those decisions might be.
The possibility of a tough plug-and-play mandate is real enough for the cable industry to lobby the commissioners and the Media Bureau recently, advising that accelerating the drive to plug-and-play would unfairly burden consumers.
If national open standards existed for cable compatibility, Joseph speculated, set-top boxes might evolve into more powerful gateways, with PVRs, broadband modems and other features.
"But these are things that come with competition," he said.