Congress Sorts Through Set-top Scenarios

Three certainties emerged from Thursday's congressional subcommittee hearing on "The Role of Technology in Achieving a Hard Deadline for the DTV Transition:" 1) There is not consensus on a Dec. 31, 2006 deadline. 2) Several lawmakers are technologically challenged. 3) Twenty years in Congress hasn't hurt Joe Barton on

Three certainties emerged from Thursday's congressional subcommittee hearing on "The Role of Technology in Achieving a Hard Deadline for the DTV Transition:"

1) There is not consensus on a Dec. 31, 2006 deadline.
2) Several lawmakers are technologically challenged.
3) Twenty years in Congress hasn't hurt Joe Barton one bit.

Barton, the Texas Congressman who is head of the House Energy and Commerce Committee, sat on the sidelines during much of the telecom subcommittee hearing, which was held by his colleague, Chairman Fred Upton (R-Mich.) Much of the hearing focused on the potential impact of an analog shut-off and the cost of subsidizing set-top digital-to-analog converters. Barton briefly weighed in with a promise to introduce a standalone bill to end analog broadcasting, and a short time later, a narrative on his personal viewing arrangements.

Barton said he had three homes and three offices, containing a total of 15 television sets, including "three in reserve," one of which is a Zenith cabinet model. His wife, apparently considering him TV deficient, gave him a $300 voucher for Christmas--for a television set. Barton proceeded to the electronics store, where he asked for "the best TV I can get for $300," and the salesman started showing him analog sets.

Barton asked about digital sets, to which the response was, "you said you wanted the best set you could get for $300."

"But what about Congress setting a deadline?" Barton said he asked the salesman, who replied, "ahh, they'll never do that," and thus, the congressman bent on setting an analog deadline bought a $300 analog television set.

Barton considers the current 85-percent threshold legislation inadequate, for reasons that he did not quite make clear at the hearing, (but ostensibly for the spectrum auction cash). Under current law, at least 85 percent of a designated market area must be able to receive over-the-air DTV signals before analog transmission can be discontinued.

"If we don't do a hard-date bill, what it per region? I don't know what a region is," Barton said. "...a DMA? Is it a DMA? If you're in that region and it has 85 percent, you're out of luck."

Whereas a Dec. 31, 2006 deadline would spread the absence of luck more evenly--and primarily to poor nonwhite households.

Mark Goldstein, testifying for the Government Accounting Office, said his office found that approximately 19 percent, or 21 million American households, rely exclusively on OTA television. Of those, 48 percent had incomes less than $30,000. Also, more than 23 percent of nonwhite households are OTA-only compared to less than 16 percent of white households; as are about 28 percent of Hispanic households compared to 17 percent non-Hispanic.

Goldstein also testified to the potential cost of a program to subsidize set-top digital-to-analog converters. If all OTA-only households were each supplied with a $50 to $100 converter, the cost for the boxes would run from $1 billion to $2 billion. If a means test of twice poverty-level were applied, the cost would be approximately $463 million to $925 million. (Poverty level for a family of four is just under $19,000.)

"If a means test is any TV in the home, I'm going to make a gold mine," Barton said, making a succinct case for a means test.

If cable and DBS providers are enjoined from headend D-to-A conversion, the cost of subsidizing set-tops increases dramatically--up to possibly $10 billion for every households with a stranded analog set.

Broadcasters are averse to headend conversion. Jim Yager, CEO of Barrington Broadcasting, testified that headend conversion would degrade HD broadcast signals for every cable subscriber, including those with hi-def sets.

"Down-conversion at the headend would mean that consumers who invest in HDTV sets would find themselves receiving an identical picture as their neighbors' analog-only TVs," he said.

Mike Willner, president and CEO of Insight Communications and a regular figure at Hill DTV hearings, testified to the contrary. He said cable operators are currently able to convert digital signals for their analog customers while retaining HD resolution for their hi-def subscribers. He also said that Insight was signing up new HD subs at a rate of about 1,000 per week.

Rather than clear up the contradiction of Yager's and Willner's testimony, Upton seemed primarily concerned about how many set-tops he'd need when he and his colleagues pulled the plug on analog.

"Now I have a digital set and an HD set in my home," he said. "Both are plugged into set-top boxes. I also have two analog sets. What happens?"

"The digital sets become analog," Yager said.

"Do the analog sets become digital?" Upton said, amusing himself. "Will I need boxes for my analog sets?"

Willner reiterated that with headend conversion, there would be no need for additional set-tops for Upton's analog TV sets. However, he said, if broadcasters win their bid for conversion in the home, "even cable-ready sets will need a set-top box." (The cable lobby is currently fighting aspects of the FCC order that launched cable-ready sets.)

The question of whether analog TV sets ought to be labeled was put to the witnesses by Rep. Bobby Rush, (D-Ill.), to which Yager replied in the affirmative. (Yager previously mentioned that "every year, another 30 million analog-only sets are sold to unsuspecting consumers.") Willner noted that analog sets would not become obsolete with cable.

Rep. Lee Terry, (R-Neb.) chimed in about the futility of labeling TVs in the absence of a hard analog shut-off date, and then proceeded to demonstrate his grasp of the scope of subsidizing set-tops and of television technology as a whole.

"I have an HDTV set with cable, and I need a set-top box to operate it. I'm not sure how difficult this transition will be," he said. "It will be difficult on a 'certain class' of individuals who can't afford a $50 converter box."

Yager testified that one Omaha station with which he was affiliated spent $1.5 million to get a digital signal on the air, so it would be nice for people to be able to receive the signal.

Terry countered that the Omaha CBS affiliate was withholding its HD signal from Cox.

"And the only way you can get it is with a $300 antenna," Terry said.

The $300-antenna myth persisted until Dr. Jong Kim of Korea's LG Electronics testified that there is no difference between an analog antenna and a digital antenna.

"It's the same thing. You can use a $5 bow-tie," he said.

Congress having initiated the digital TV transition to save America's flagging consumer electronics industry, Dr. Kim's presence as a witness was testimony to how well that strategy worked.

Dr. Kim testified that LG could turn out a $60 to $70 D-to-A converter, if, and only if, orders came in on the scale of "10s of millions." He also said the CE industry would need 12 to 16 months lead time for production on such a scale. Taking into account the logistics of distribution and the administrative of a subsidy program, Congress will have to act within the next few months in order to achieve a Dec. 31, 2006 analog shut-off without stranding millions of TV households.

Several lawmakers indicated unwillingness to do so, including Rep. Elliot Engel, (D-N.Y.), and Heather Wilson, (R-N.M.), who said a "date certain would not be particularly popular for New Mexico. Two billion dollars for boxes on top of TVs is a lot of money. That's $2 billion we're not using to immunize kids, or educate them or buy body armor."