Telecom Reform Takes Shape - TvTechnology

Telecom Reform Takes Shape

Pesky consumers remain the greatest unknown
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McCain Remains Force in Broadcast RegulationWASHINGTON

Sen. John McCain (R-Ariz.) has long been the bane of broadcasters on Capitol Hill, once accusing them of "one of the great rip-offs in American history." Frustrated that many broadcasters missed their initial digital deadlines, McCain growled that loaned spectrum for digital signals was a "$70 billion giveaway."

It is little wonder then that the Arizona senator got $1,000 from the NAB during the last election cycle, while Congressman Joe Barton (R-Texas) got $8,000. (See "TV Contributors.") However, it was McCain who favored a kinder, gentler transition deadline of 2009, while Barton won't back off of Dec. 31, 2006.

Last fall's power shift left McCain without a committee chairmanship, but he continues to hammer away at broadcast issues. In February, the senator introduced the Localism in Broadcasting Reform Act of 2005, which would require broadcasters to renew their licenses every three years, instead of the current eight-year cycle. McCain's bill was motivated by a study from the Norman Lear Center at the University of Southern California Annenberg School for Communications that criticized broadcast coverage of local elections.

McCain would also like to force programming distributors to make financial disclosures related to boxing matches. He introduced a bill last fall to make broadcasters as well as DBS and cable operators reveal payments from or to fight promoters and other related income to a federal boxing commission. McCain's boxing bill was KO'd in the first round, but he vowed to bring it back into the ring.

-- Deborah D. McAdamsPesky consumers remain the greatest unknown

WASHINGTON

Time is running out for lawmakers to pass a 2006 analog deadline bill and not leave millions of Americans without television reception.

Consumer electronics manufacturers need up to 18 months to build and distribute enough digital-to-analog converter boxes to assure that millions of households will not lose television signals. That leaves about three months for lawmakers to write, markup and pass a bill to end analog transmissions by Dec. 31, 2006.

"I think I've got enough votes in the House," said Rep. Joe Barton, (R-Texas). "We've got to have some help in the Senate."

It was in the Senate where the last hard-date bill flamed out. That bill, introduced by Sen. John McCain (R-Ariz.), gave most broadcasters until Jan. 1, 2009 to power down their analog transmitters. (Stations in the 700 MHz public safety spectrum had until the end of 2007.) McCain's hard-date bill was eventually reduced to a Sense of Congress statement that there ought to be a deadline.

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Barton, head of the House Commerce Committee, has since taken the lead on establishing a deadline, but many details remain amorphous. The prickliest problem is what to do with folks who get television exclusively over-the-air. Debate continues on whether or not the government should subsidize D-to-A converters for OTA-only households. The current cost estimate--just for the boxes--is around $1 billion, provided those devices are $50 apiece. Consumer electronics makers have testified before Congress that they can make $50 boxes, but not before the target Dec. 31, 2006 deadline.

Carl McGrath was chief technology officer of Motorola last July when he told lawmakers that his company could do a $67 box by 2007, with "sufficient demand." McGrath also said that DTV transition legislation would have to be passed by mid-2005 "to meet the 2007 goal without disruption."

Dr. Jong Kim of LG Electronics more recently told a Congressional subcommittee not to anticipate a $50 box until some time in 2008, "assuming industrywide demand of tens of millions of units by then."

Box makers have said they are already gearing up to build the simple converter boxes, but an estimate of how many will be needed has yet to materialize. According to the Government Accounting Office, about 21 million U.S. households rely exclusively on OTA television--not exactly what the average layperson would consider "tens of millions." Moreover, if a subsidy were limited to poor households (with incomes at twice poverty level, for example), about 9.3 million would qualify, according to GAO estimates.

That doesn't mean that nonqualifying households wouldn't buy converters, but it also doesn't mean they wouldn't buy TVs with built-in tuners--if they can find them.

Adding to the ambiguity of potential demand, the CEA is angling to get the second phase of the digital tuner mandate dumped. Instead of having to put tuners into all TVs 36 inches and larger and half of 25-to-35-inch TVs by July 1, the CEA wants a consolidated deadline of March 1, 2006.

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Once lawmakers figure out who qualifies for converter subsidies, they'll have to have some idea where these people live. According to the FCC report on OTA households, the market demographics vary widely. OTA reliance is about 30 percent in the Dallas, Minneapolis and Salt Lake City markets, while Palm Springs, Calif., and Parkersburg, W.V., have the lowest proportion of OTA households in the country at 6 percent.

The FCC report suggested two options for shutting off analog signals. The first is the sudden and simultaneous end to analog transmissions preferred by lawmakers. The second, "fade to black," would phase out analog transmissions market by market and allow OTA households to continue receiving emergency information and local programming.

"Given the importance of an accurate assessment, funding of a formal study would be helpful to establish the precise number of OTA households on a market-by-market basis, and to forecast how those numbers are expected to change over the next several years," the report said.

The House Commerce Chairman has a much simpler formula in mind.

"I believe that a hard date will make analog TVs go away," Barton said at a gathering of broadcasters in Washington, D.C.

He did not indicate what he would do with his own analog TVs, including one that he bought over the holidays with a $300 gift certificate.