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Final ThoughtTime Marches Backward!

In 1981, HDTV was to be at least a billion-dollar business by 1990. But by the time the FCC began its inquiry into the subject in 1987, 1990 was no longer such a likely date. When the inquiry ended in 1997, HDTV was no longer even a requirement of what became known as digital television.

In 1997, Congress and the FCC ordained the shutdown of NTSC in nine years. Two-thirds of the way there, the end-of-transition date appears to be farther than ever into the future. Congress said the post-transition spectrum had to be auctioned by September 30, 2002—the law was changed just in time.

In 1998, an FCC rulemaking was to make TV sets compatible with digital cable through the use of point-of-deployment (POD) pay-TV security modules that were to be available as of mid-2000. At the end of 2002, when the major players in the cable and consumer electronics industries agreed on digital TV/cable compatibility based on PODs, a Scientific-Atlanta spokesperson reported not a single sale of a POD in the intervening two-and-a-half years. Of course, the new agreement depends on FCC actions not yet taken; it’s not clear they ever will be.

The digital TV/cable agreement seemed so important because in the annual FCC video competition reports the percentage of U.S. TV households subscribing to some multichannel video programming distributor (MVPD), such as cable or DBS, was growing every year. At the end of 1996, it was said to be 74.6%. By mid-1997, it was 75.9%. By mid-1998, it was 78.2%. By mid-1999, it was 81.4%. By mid-2000, it was 83.8%. By mid-2001, it was 86.4%.

At that rate of growth, who cared about over-the-air broadcast digital television? As long as cable and satellite would carry the signals, eventually almost everyone would be served. And then came the mid-2002 figures, released by the FCC at the end of last year: 85.3%, a drop from the previous year.

Why? One can point the finger of blame at reductions in “wireless cable” (MMDS) and backyard (non-DBS) dishes. Cable, still the dominant MVPD medium (76.5% of subscribers), had virtually no growth at all, while overall television households had strong growth. But why? And, if subscribers merely jumped ship from backyard dishes or cable to DBS, why did the overall MVPD percentage drop?

One possible scenario is that cable subscribers who tried DBS used antennas to bring in local stations. Having found local reception adequate, they may have later dropped DBS as an economic measure. If so, when flush times return, so might MVPD subscribers. If not?

If not, over-the-air broadcast reception will become more important than ever. Accordingly, the 2002 FCC MVPD competition report has a section on broadcast television. And, given the 1997 rulemaking, that section covers digital television broadcasting.

Paragraph 87 notes that the Consumer Electronics Association (CEA) said “DTV unit sales for the year 2002 through September totaled near 1.6 million,” a respectable proportion of overall television sales. CEA did say that, but those were sales to U.S. dealers, not to consumers. More importantly, the vast majority of those 1.6 million units had no capability of receiving over-the-air digital television transmissions.

Last year, the FCC ordered receiver manufacturers to include that reception capability in all TVs of 13-inch size or larger, as well as VCRs, on a phased-in schedule. How much will that add to their costs? The estimates vary widely. One camp notes that digital electronics become less expensive with time; they do. Another notes that there are hefty intellectual property payments that don’t drop in price at the same rate; there are.

VCRs are routinely advertised at under $50; some 13-inch TVs have been advertised at under $70. Some large grocery stores sold 20-inch TV sets for under $100 last year.

Once upon a time, grocery stores sold only groceries. TV sets were sold at appliance dealers or department stores.

They’re still being sold in department stores. Foley’s, Lord & Taylor, and Macy’s all advertised TV sets last year. They cost as little as $20—including built-in radios. At that price, of course, they were black and white.

Mark Schubin is an engineering consultant with a diverse range of clients, from the Metropolitan Opera to Sesame Workshop.