Tuner Mandate Loses Steam in the Real World

November 12, 2004
In yet another splendid example of how government policy reflects actual human behavior, the FCC's tuner mandate is causing tuner-integrated sets to not sell like hotcakes. Consequently, the consumer electronics lobbies asked the FCC if it could please make the phase-in part of the mandate go away.

In a cleverly worded statement that makes it appear as if they want a faster digital transition, the Consumer Electronics Association and the Consumer Electronics Retailers Coalition asked the FCC to ditch the half-way point for phasing digital tuners into mid-sized TV sets.

"CEA and CERC requested that the 100-percent deadline for DTV tuners in television screen sizes 25 to 36 inches be accelerated to March 1, 2006, thereby speeding the consumer migration to DTV," stated a release from the two groups.

The current deadline is July 1, 2006, but the half-way point--when 50 percent of sets that size have to have DTV tuners--is a year earlier. Less than five months into the 50-percent phase-in for big-screen TVs, the CEA is having nightmares about what the same process will do to the category of sets that comprise the bulk of all TV sales.

As of last July 1, half of all 36-inch and larger TV sets with over-the-air analog reception and/or CableCARD slots also had to have over-the-air digital reception, aka ATSC capability. The CableCARD/ATSC combo added $300 premium to the price of those sets, so guess what the big retailers ordered by the truckload for the holidays?

Retailers appear to favor the cheaper non-ATSC sets by about three-to-one over those mandated by the DTV tuner phase-in, based on highly scientific numbers derived from Mark's Monday Memo. The Memo, compiled by New York-based television expert Mark Schubin, tracks ads for TV sales across the country. Since July, about 24 percent of the so-sized sets in stores have included ATSC reception. (The average number of ads for 36-inch and larger sets was 86; an average of 21 of them had ATSC reception.)

Part of the problem is that the FCC is not the boss of Circuit City or Wal-Mart. It can only strong-arm manufacturers into turning out ATSC-capable sets; it can't force anyone to buy them. And retailers buy what consumers buy, and consumers unfailingly buy the A) biggest thing, at B) the lowest price.

It's one thing to stack up a 50-inch Hitachi widescreen LCD projection set at $3299.97 against the very same set, only sans an ATSC tuner, for $2999.97. It's another thing to tack $300 onto sets that retail in the $500 neighborhood.

"CERC believes the proposed modification will eliminate the unintended consequences of the Commission's 50 percent requirements that became apparent only recently, but threaten to impede the DTV transition," said CERC Executive Director Marc Pearl. "In practice, the 50-percent requirement has proven to be unduly disruptive. It creates an artificial scarcity of products without tuners, providing an incentive for retailers to assure their supplies of these non-tuner products. This is the opposite result from the one sought by the commission, and by retailers, as a matter of public policy. Accelerating the100 percent obligation would eliminate that situation."

Translation: getting rid of the 50-percent obligation would help retailers and manufacturers unload their current inventory somewhere besides eBay.

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