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Abernathy Advocates Free Market Solutions

TV Technology: What more can the FCC do to facilitate the transition to digital television?

Abernathy: If you look at digital TV as a pie, we as an agency have jurisdiction over only a piece of that pie. That means that we can ensure that our rules aren't standing in the way of the transition, and we can work with the parties about how best to structure regulations that create incentives for the parties to move to this great new digital world.

But we can't put the television sets in the marketplace. We can't really fix the copyright issues. And then you also have the programming piece. And all those factors play together to create the economic incentive, and these are all companies that are out there that are publicly traded and they have every right to look at the economics of it.

So what we're trying to do and what we did in our recent order is make changes to our rules, changes that we believe will create an incentive to move to digital sooner rather than later. We're changing some rules that years ago we thought made sense, and the more we learn about this issue and what the parties are expecting and what some of the barriers are, then we've got to be willing to say, well, we were wrong on this issue, a better approach is X, and move to that.

So the commitment's definitely here, and what the chairman has done is created a DTV task force. The goal of that task force is to help us coordinate and work with all those other pieces of the pie, recognizing that even though we don't have the jurisdiction, the more we understand the driving forces behind creation of programming, behind the deployment of HDTV-compatible TV sets, then the more likely we are to come up with regulations that fit in to the puzzle and move the whole process.

TV Technology: One of the things the broadcasters keep saying is, "To push us through this tough time, there are a few other things that can help." What's wrong with, for example, temporary, interim dual must-carry on cable?

Abernathy: First, there's the First Amendment, to which, as a country, we need to pay attention. Second, must-carry rights are statutory. We, as an agency, need to look at the language and see what Congress meant. The law says the cable operator shall carry in its entirety the primary video of these stations, and to the extent feasible the program-related material in the vertical blanking integral. The commission before I was here concluded, basically, if you're broadcasting more than one single stream of video at a time, only one could be considered primary. We are continuing to look at two issues: What does this mean to be "program-related?" And the second is the dual carriage issue. Would broadcasters be entitled to carriage of both the analog and the digital signal? And, would they be entitled to carriage of the entire digital stream? There are also clear concerns around capacity and, as previously stated, the First Amendment.

What's the obligation Congress intended? The language given to us by Congress wasn't written for a digital world. And you have a whole new commission here and we're going to have to grapple with this, and pretty soon. If you can get both signals carried all the time, sure that creates a great economic situation for the broadcasters – probably not optimal for the cable providers. So it's a balance, and it's a statutory interpretation.

One thing to keep in mind, and sometimes I have to say this on the wireless side too, is, in a perfect world: if there were no laws in place, what would we do? But in fact that's not how we operate. We don't pass any of the laws. We don't vote on any of the laws. The statute's given to us by Congress and everything we do, even if the statute is outdated, has to be consistent with that statute. Remember, we're not elected, we're appointed. So the difficulty that we have is we're in an industry that is technology-driven and moving very, very quickly on the technology side, and we have a statute that is probably not up to speed with where the technology is.

TV Technology: On the proposed EchoStar-DirecTV merger, everyone talks about the Justice Department approval. What do you see as the FCC's role?

Abernathy: The first hurdle of course is the DOJ and antitrust. But then there's still the FCC because you have a license transfer. And in a license transfer, the FCC has an obligation to determine whether or not the transfer is in the public interest. So that is why we have put together a team, led by cable services Bureau Chief Ken Ferree, to take a look at the transaction. Assuming it gets blessed by DOJ, then there's our piece, which is broader and goes beyond a mere antitrust analysis, and we ask, is the merger consistent with our rules and regulations, and is it consistent with the overall public interest?

TV Technology: Obviously there's a big interest in allowing people to move off channels 60 to 69 earlier than planned. Do you have to balance that public interest against the viewer losing services? After all, we're giving up spectrum, so there are going to be fewer services out there.

Abernathy: Absolutely, there's a balancing here. And Congress pretty much already made that value judgment: There is a higher use than retaining it for use by existing traditional broadcast. And they said that higher use should be determined by an auction. So that judgment call was made for us.

At the same time, Congress adopted no deadline regarding when the stations must relocate, other than 85 percent market penetration of digital sets, which could be a long, long time in the future. Given that part of the 60 through 69 spectrum would be used for public safety – and this decision was made well before 9/11 – there are limited options available to the agency to speed the availability of this spectrum. Congress defined when and how the parties would relocate.

All the FCC has said is, to the extent that the parties who purchase the spectrum at auction believe it is in their economic self-interest to encourage an early relocation to their new digital location, they can pay broadcasters to do that. We won't stand in the way. What this does is provide some additional money to the parties who have to convert to digital anyway.

And some concern was expressed because we will allow payments to the broadcasters. But our point was, if we do nothing, it could be a long, long time before this spectrum is usable, and we aren't forcing anyone to move early. But to the extent that both parties make an independent value judgment that they want to engage in this voluntary band clearing, we will not prohibit it.

We're lucky to have such a healthy broadcast community. I was just in a call a minute ago where folks were asking why we have so much less spectrum available for wireless than other countries. Well, it's because we have a very strong thriving broadcast industry in the U.S. And that means that we end up doing some balancing of these various interests in ways where not everybody is always satisfied. But we're fortunate that we're so far ahead with the technology that we have so many new uses for our spectrum.