The FCC Drinks Its Kool-Aid

The sweltering summer heat finally got to the FCC. Michael Powell, the Republican chairman who claimed not to believe in intrusive government, got very intrusive. With the great tuner mandate came Act III of the DTV Demolition Derby with spectators gathering for the predicted climax: a BIG train wreck.

Oops, perhaps I shouldn't use a metaphor about trains. It would be wrong to confuse the plight of Amtrak, another struggling bureaucracy, with the FCC. At least we know that a sizable number of people actually want national train service. The same can't be said about "the DTV transition," a growing fiasco that might eventually rival WorldCom and AOL for the most costly technology boondoggle of the 20th Century.

All it took, however, was for three FCC members to drink the Kool-Aid and begin a slippery last-ditch attempt to save political face and stave off a huge looming budget deficit when all that broadcast spectrum Congress counted on selling in 2006 turns up missing.

In a highly controversial ruling, the FCC ordered that all new television receivers (plus digital VCRs, recordable DVD devices and many personal computers) be equipped with tuners capable of receiving over-the-air digital television signals. It simply didn't matter that about 90 percent of American television households have voluntarily chosen to receive their video entertainment from pay television services - not over-the-air television stations.

"We can wring our hands all day about how we got here. Bottom line is: we are here," Powell said. "The idea of talk of going back in any way is absolutely ridiculous and frivolous."


I would strongly suggest that the above quote be clipped and filed away for use in any future political campaign that Powell, the young Republican "rising star," might run. It represents remarkable arrogance - the attitude that whether people want it or not, or whether the kluged DTV technical standard even works reliably, doesn't matter. The federal government, gosh darn, has ordered that DTV happen and by golly it will happen.

Of course - legal niceties aside - one wonders if the FCC actually has the power to order electronics manufacturers to integrate unwanted tuners into all new video display devices. It's pretty heavy-handed to think that a few government regulators can force a nation's consumers to purchase a costly option they don't want or need on a product; especially since it was the public's resources - valuable spectrum - that was squandered in the DTV deal in the first place. So much for "free markets." Welcome to saving political face, no matter what it costs.

Hopefully, some expected legal actions will help smoke out the truth. The Consumer Electronics Association (CEA), led by Gary Shapiro - a man whose teeth might even be sharper than Michael Powell's - has promised a lawsuit to block the tuner mandate. It wouldn't be surprising to see other consumer organizations join the action.

Though the CEA would like for you to think they represent the interests of consumers, they, in fact, are the tough-as-nails lobbyists for the electronics manufacturers, the group that will have to pay hard dollars to build the tuners into all the new receivers. A court battle over dollars might be a good thing. Money can be an excellent detective, the kind of tool that might finally pry open the DTV fog and let in some sunshine.

One can only salivate at the thought of a federal courtroom setting in which all the usual DTV suspects are placed under oath and sworn to tell the truth and nothing but the truth. A stern judge, reminding them that this is not a press conference, demands honest answers under the threat of a "DTV perp walk." The bloviators squirm as they try to reconcile their mountain of previous spin against the cold reality of a courtroom.


Oh well, it's just a fantasy. But what's not was a recent op-ed article published in the Wall Street Journal by Thomas W. Hazlett, a former FCC chief economist. In the hard-hitting, "We Don't Want Our DTV," Hazlett called the DTV transition a "bait and switch" that began as a promise by broadcasters to deliver HDTV in exchange for holding on to spectrum but ended up being a basic technology shift from analog to digital transmission.

Though DTV tuners have been readily available in optional outboard devices, Hazlett notes that almost no one is buying them because tuners are not needed in today's multichannel pay TV universe.

Referring to over-the-air digital broadcasting as a "policy corpse," Hazlett said the transition is in "shambles" because it doesn't make economic sense. "The great news is that this public policy balance sheet is easy to analyze - the costs are XXXL while the benefits are Barbie-sized," he said wrote.

"At year-end 2001, there were 105.44 million TV households, of which 94.81 million subscribed to a 'multi-channel video provider.' In other words, just ten percent of households are now without subscription TV. For the 90 percent tuned to cable or satellite, digital TV is here today."

The FCC's recent get tough actions on DTV, Hazlett contends, will "merely bolt gridlock in place." The superior strategy, he writes, is to allow TV stations to abandon digital television broadcasts and offer wireless services that consumers actually want.

"Unoccupied TV channels should be awarded at auction to speed the spectrum into production use," he said. "Broadband networks would lift off to challenge cable modems and digital subscriber lines. Soon, high-speed Internet access could become ubiquitous, achieving critical mass and delivering substantial social benefits.

"Able to purchase spectrum access rights, companies could deliver a robust new generation of TV, including streaming technologies, video-on-demand, and - most ironically - a reincarnation of broadcast DTV as a spectrum-friendly information service."

The DTV soap opera continues. Stay tuned.

Frank Beacham is an independent writer based in New York.