Three important revelations came out of Wednesday's House subcommittee hearing on the DTV transition: estimating spectrum auction proceeds is a waste of time, the United States of America is not Berlin, and grandmas have clout on Capitol Hill.
Just how much money the remaining chunk of Channels 52-69 will generate is anyone's guess, but empirical calculations and wild estimations put it somewhere between $680 million and $50 billion. The low end comes from the sale of licenses in Channels 54, 55 and 59, auctioned off in mid-2002 for $145,467,590. At those prices, the remaining analog TV spectrum in 52-69 would bring in around $680 million. While such a straight-forward calculation doesn't account for certain geographic, economic and political factors, (like a hard date for the eviction of broadcasters), the government's own estimate has fluctuated from $27 billion to $70 billion and recently settled at around $50 billion.
Hence, the $49.32 billion discrepancy, which gave pause to at least one Congressman on the issue of using auction proceeds to provide a government subsidy for analog-to-digital converter boxes for every over-the-air TV set in the nation.
"Every time we try to estimate proceeds of an auction, we are usually wrong... dramatically wrong," said Rep. Rick Boucher (D-Va.) during the hearing.
The notion of supplying converter boxes arose in part from a study conducted by the Government Accounting Office--at the subcommittee's request--of the DTV transition in Berlin, where about five percent of TV households relied solely on over-the-air television. Berlin was able to shut down analog signals 10 months after digital transmissions began by supplying converters to needy households. The FCC's Media Bureau has also suggested a converter-box subsidy as a way to achieve analog shutdown by Jan. 1, 2009.
Subcommittee Chairman Fred Upton, (R.-Mich.), favors the Media Bureau plan, while full Commerce Committee Chairman Joe Barton (R.-Texas) isn't budging from the 2006 deadline imposed seven years ago by legislators who have yet to become adept at post-transition plans of any kind. The remaining handful of lawmakers who attended the hearing generally agreed that a hard analog shut-off date was a pretty good idea. Subsidizing converter boxes was something else altogether.
In all of Germany, television is primarily a public entity funded by a mandatory monthly fee, which is waived for welfare recipients and low-income households. Consequently, the logistics of providing converter-box subsidies in Berlin was built into the socioeconomic structure.
In the United States, the estimates of households entirely dependent on over-the-air television range from 12 million to 15 million, and just who these pay-TV holdouts are is a mystery. The FCC has issued an inquiry on over-the-air households (MB Docket No. 04-210) with comments due Aug. 11, and replies due Sept. 7. There's a prevailing assumption that many such viewers are lower income elderly females, for whom filing comments with the FCC and hooking up converter boxes is not a competitive sport.
"My mother is not going to be able to figure out how to use this box, no matter how simple it is," said Greg Schmidt, vice president and general counsel for LIN Television.
Currently, the cheapest box on the market is around $300. That's because A), demand is paltry, and B), they're full of silicon. Carl McGrath of Motorola, who testified at the hearing, said manufacturers could get boxes down to $67 by 2007, if a hard analog shut-off date is imposed, and if there is sufficient demand for the boxes.
So what, Schmidt said.
"Even to have a $50 box on a $70 TV is not a very consumer-friendly prospect," he said.
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