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RF EXPRESSSunny Side Up?

Now's the time of year when forecasters are busy predicting what they think the weather patterns will look like in 2003. This is also when manufacturing sales managers, working on a calendar-year budget basis, are asked to forecast sales for the coming year. Both the sales and weather predictions are based on educated guesses.

For the broadcast industry in general, the outlook probably sounds a lot like the national weather forecast: heavy winter snows in the Rockies and the Northeast, a late spring thaw, heavy rains in the Ohio River Valley and the Midwest, etc. Now's the time of year when you can expect lots of partly cloudy to cloudy days. And that's the way transmitter manufacturers see 2003. They say there are some sunny days ahead, but only one month will be sunny for sure: All are zeroing in on May, when PBS mandates that its members' DTV transitions be mostly complete. The broadcaster is estimating that between 70 to 80% of its stations will meet this deadline.

Meanwhile, there are other bright days ahead. In addition to date changes and waivers, the November 2002 FCC ruling, which encouraged broadcasters to move ahead by turning on low power transmitters, has given stations more flexibility. Since the budget won't be swallowed up by a new high power RF plant investment, stations have been able to rethink their capital expenditures allocations.

Curiously, the November 2001 ruling has also spurred sales of high power NTSC transmitters well beyond what transmitter manufacturers had forecast for 2002. Of course, these transmitters can be easily and economically converted to DTV.

Prospects For High Efficiency

As the industry crept toward the 2002 deadline, there were other promising signs coming from the major IOT suppliers. New tubes from E2V, L3 Communications, Thales, and CPI promised to break new ground in UHF efficiency. These devices could save stations thousands of dollars every year in power bills.

Trouble is, they surfaced at a time when stations were either stalling their DTV conversions or looking for the most economical way to satisfy the FCC transition mandates. Except in the major markets, stations just weren't in the mood to make the jump to high power DTV operations. They understood that turning on those high power DTV transmitters (with few eyeballs looking at their signals) meant that their operating expenses would escalate and profits would diminish.

Undaunted by those prospects, the transmitter manufacturers have been aggressively testing the new tubes. There is some concern among their numbers about how recent name changes reflecting new ownership, such as Marconi becoming E2V Technologies and Northrup Grumman becoming L3 Communications, may affect the future availability of products.

Further clouding the possibility of bringing these high efficiency tubes to the market in transmitters designed to accommodate their specifications, transmitter manufacturers are estimating that these new transmitters could cost 15 to 20% more than the traditional IOT-equipped transmitters of recent vintage.

Sounds like a gloomy forecast, but keep in mind that transmitter manufacturers are estimating that stations could recover that 15 to 20% in about two years. After that, the true cost of ownership would improve dramatically.

Other Important Factors

Manufacturers are sensing that the FCC's waiver and waiver extension process appears to have the effect of spreading out the transition. If the low power ruling hadn't been instituted, the high power sales would have been running at breakneck speed. It's still not clear whether or not the transmitter manufacturers would have been able to produce the volume needed to satisfy the original mandates, and if they could have, certainly many stations couldn't have afforded it.

Manufacturers' dream of a great sales spike was quashed by the low power ruling. However, this gave them a rain in the morning, sunny afternoon forecast. All those low power transmitter sales are keeping money flowing now and eventually, broadcasters will need to convert over to high power. It's become a "pay me now" and "pay me later" scenario.

A 2003 Forecast

Manufacturers were reluctant to spell out their 2003 sales forecasts, but they did agree on some important factors: nÊFirst on the scale of importance will be for the FCC and Congress to finally settle the score on must-carry. A few stations are working on deals whereby, when they turn off their NTSC transmitters, their DTV signals will be immediately picked up on the local cable system.

Consolidation and cross ownership will get the twice-over in 2003, and the result could be of great importance because, among other significant changes, it would promote DTV program delivery, centralcasting, central monitoring, and automation applications that step up all station operations.

Manufacturers are also anticipating that competition within the markets will become a factor favoring increased full power sales, probably in the second half of the year. That will become important as more eyeballs start watching those DTV programs. And don't be surprised if your corner sports bar adds to the "thrill of victory and the agony of defeat" through DTV, as some have with DirecTV's HDNet.

It's also important to note that in Canada, broadcasters are beginning to implement DTV. Rather than pushing its adoption through mandates, the Canadian government is allowing the transition to be driven by the market. Stations along the U.S. side of the border will no doubt second that motion.

Being cautiously optimistic, manufacturers see low power sales continuing, although 2003 will see increased numbers of full power transmitters leaving the dock in the third and fourth quarters.

For a while, PBS will add momentum to the transition, because of the PBS mandate and because it's anxious to offer the new services made possible by DTV.

If you reference only the number of stations currently DTV-ready, the FCC's November 2002 ruling has speeded up the transition. But it has dramatically slowed the full power transition. That should change as 2003 unfolds.

Unless we suffer through another major terrorist attack, the forecast for 2003 looks good, but unsettled. At least the prospects for more sunny days in the industry are definitely on the horizon.

Editor's Note: Thanks are due to those who spent hours with me on the phone offering their thoughts about what's ahead for the industry in 2003. Special thanks to Mark Polovick of Ai, Rich Schwartz of Axcera, Dale Mowry and Dave Glidden of Harris Broadcast, Jim Adamson of LARCAN and LARCAN USA, and Dick Fiore of Thales Broadcast & Multimedia.