DIGITAL STRATEGIESTracking The Transition: How Many Are On-Air?

Since HD appeared on the horizon, there have always been more questions than answers. This situation is reminiscent of a poster I once saw depicting an orangutan with a glum look on its face, sitting on a boulder in a pose resembling Rodin's "The Thinker" sculpture. Under the orangutan was written, "Just when I learned all the answers, they changed all the questions!" Even in 2002, that poster still sums up the state of the DTV transition. But it turns out that the one answer the industry really needs can only come from the Federal Communications Commission (FCC).

For all its posturing through specific and nebulous mandates, the commission is still reluctant to bear its teeth while it's growling. SpecificallyÑwhat happens to stations that don't meet the deadlines? Something? Nothing? Anything? And will the FCC draw a line in the sand and say "turn it on or turn it off"?

Fact is, the longer the commission drags out the transition, the more brave some stations become. And those brave stations believe they can stall off the inevitable.

Undeniably, purchasing a DTV transmitter is a burden for any station, let alone those marginally profitable ones in the bottom 100 markets. But the FCC must now be aware that instead of chunking out about $750,000 for a two-IOT transmitter, a station can spend roughly $200,000 on an upgradeable transmission package and pass the on-air litmus test.

Meanwhile, for those stations who've been opting to protect their future by installing full power rigs, their capital expenditure budgets have been spent. And this means that when a station going the high power route puts down those dollars, there's not much left for acquisition, distribution, and production equipmentÑin other wordsÑall the equipment needed to make its DTV facility a reality.

Had the FCC anticipated the stifling impact these transmission investments would have on the overall health of the industry and the progress of the DTV transition, it would have allowed the transmission upgrade package from the outset. But it didn't.

FCC Adds It Up

The FCC recently issued an update on the status of the DTV transition:
*Some 1,462 television stations (87 percent) have been granted a DTV construction permit or license.
*There are a total of 272 stations on the air with ongoing DTV operations.
*Of that total, 190 are on the air with licensed facilities and 82 are on the air with special or experimental DTV authority.

The major concern in the FCC figures is the number of stations requesting extensions. Of the 1,462 stations with a DTV construction permit or license, 572 stations have requested an extension of the May 1 deadline to complete the construction of their DTV facilities.

Of course, in order to have these extensions granted, stations must follow the FCC's November mandate revisions, in which the commission said it would not take market conditions into consideration. And it required the stations to show proof of progress, such as orders for transmitters, etc.

With that in mind, all RF manufacturers are finally seeing that the golden pot at the end of the rainbow is within reach. On the other hand, the quickest way to meet the deadline or secure an extension is to step up to the plate with low- or medium-power transmission packages.

The FCC also reported that all remaining DTV applications have been processed and are awaiting additional information, such as Mexican, Canadian or other clearances, or are mutually exclusive. According to the FCC's transition tracking paperwork, of the top 10 markets' 40 network affiliates, 36 have constructed their licensed DTV facilities. However, 38 are on the air when you count two stations with Special Temporary Authority (STA).

WNBC-DT and WABC-DT, both in New York City, were licensed and on the air prior to September 11, but they're off now because of the destruction of the World Trade Center.

In the 11 to 30 top markets, there are 79 network affiliates. Of these, 68 have built out their licensed DTV facilities. Some 75 are on the air (68 with licensed facilities and 7 with STA).

However, at the the 180th market, you'll find PBS station WVPT-DT (which covers the Shenandoah Valley and Charlottesville, VA markets) on the air serving 99,102 households.

Still, the burning question is that with 272 stations with DTV facilities completed, and another 572 stations applying for extensions, what's the status of the other 700-plus stations?

DTV Set Sales Climbing

Here's how the Consumer Electronics Association (CEA) sees the DTV transition. A report from January 17, 2002 claims that factory-to-dealer digital TV product sales in 2001 hit 1,459,731 units.

The CEA also calculates that sales for the year had already surpassed initial 2001 forecasts of $1.1 billion units in November and that brisk sales continued throughout December.

The CEA's sales summary includes integrated sets and monitors capable of displaying at least 480p active vertical scanning lines. And, in the case of integrated sets, this includes units capable of receiving and decoding ATSC terrestrial transmissions.

Of the 1.45 million units sold in 2001, 97,157 units were integrated sets, which the CEA says represents a 1,455 percent increase in integrated set sales over the year 2000. What's more, the industry sold 196,564 standalone set-top decoder boxes last year, an increase of 434 percent over 2000.

With the final 2001 sales figures now on the record, the CEA reports that the total number of DTV products sold since the introduction of the DTV category in 1998 equals 2,498,347, and that includes 361,828 integrated sets and set-top decoders.

As of January 2002, the CEA was projecting that 2.1 million DTV products will be sold in 2002. By 2006, it anticipates DTV unit sales to reach 10.5 million.

If its projections are in the reality ballpark, the cumulative total for DTV units sales will reach 32,000,000 in 2006.

And The Beat Goes On

When you hear people talk about the size of the industry, most will be saying that there are 1,400 or 1,500 stations. Sound familiar?

Actually, the FCC has authorized 1,688 TV stations, and of that number, 1,663 are on the air as of late 2001.

The question some pundits are asking is, is this more stations than the market can bear? That, of course, can't be answered just yet, but one must think that 1,663 must be close to saturation. If future growth takes place in the smaller markets, the situation for marginally profitable stations would be compounded, so we'll get the answer soon enough.

If the FCC rules that there really is a drop date, we can expect that some small market stations will disappear. The number? Most likely not many, but that would tell us more about saturation than sheer on-air totals.