The Revolution That Wasn't

WASHINGTON: Billy Tauzin wants his DTV, by cracky. And if he doesn't get it soon, the Committee on Energy and Commerce's Republican chairman from Louisiana and his buds are going to make it happen: "Due to the exigency in removing remaining obstacles to the DTV transition, we believe it is now time for the Government to assert its jurisdiction in these matters," Tauzin wrote in a recent missive to FCC Chairman Michael Powell.

Tauzin is miffed because a timely DTV transition was necessary for holding scheduled spectrum auctions, which were imperative to achieving a balanced budget bill that he signed. Never mind that he also offered legislation that would allow those auctions to be canceled should the transition stall.

Welcome to the latest episode of "DTV, The Really Long Saga."

By now, digital television was expected to be the biggest revolution in the medium since color. New TVs were going to be flying off shelves like trailer houses in a twister. U.S. electronics makers would once again reign over the (gasp!) Japanese. DTV would enable broadcasters to compete with cable. It would bring us high definition programming, balance the budget, clear up acne, and give us all six-pack abs. It would be the single greatest thing that ever happened in the history of the planet, and it was ours. All ours!!! Bwahahaha...ahem.

Can you say, "irrational exuberance?"
More than 1,000 out of nearly 1,300 commercial broadcasters missed their May 1 deadline for getting a digital signal on the air, prompting a cascade of blame and back-biting, but not a huge amount of surprise.

"I don't think anyone in broadcasting thought that the transition could be accomplished in less than 15 years, even if everything went right," said one veteran broadcast engineer, who cares more about keeping his job than seeing his name in print. (The deadlines for the transition were adopted by the FCC in April 1997, five years and a month before the date that all commercial stations were supposed to have a digital signal on the air.) So, just who is responsible for the unfulfilled promise of DTV?

Playing The Blame Game
"This [the DTV transition] always lacked a coherent business plan at its core," said Blair Levin, an analyst with Legg Mason who was Reed Hundt's former chief of staff at the FCC. As a government industrial policy, it's "not like the railroad or the Internet, with lots of collateral benefits to the economy...For broadcasters, it's not clear how to make money with this. Broadcasters want free spectrum, cable carriage, and to make manufacturers make equipment cheaper. But broadcasters don't make more money with prettier pictures... Manufacturers want cable to pay, and to make broadcasters do more programming...And what do the cable guys get out of this? Nothing."

Mark Aitken, director of Advanced Technology for Sinclair Broadcast Group, said, "There are so many issues. When does Hollywood step in and take its fair share of the Îblame game?' The 85 percent rule, how will that end up being interpreted? Is it anything that is tied to a source that provides TV content? The CEA...they want maximum dollar margins, so they go for HD. Forget about supporting the 300 million analog sets out there. Broadcasters are afraid to buck the establishment and would rather lull themselves into not thinking they may need to take their future into their own hands."

Enter Chairman Powell, whose prime directive is to auction spectrum, because congressmen can't pad their districts with press releases alone. Faced with delaying those auctions and losing billions in the Lowell-Bud loophole (the one where certain parties would be allowed to sell off their DTV set-aside spectrum to the highest bidder and pocket the cash instead of turning it back over to We The People), Powell proposed "voluntary actions" for all parties in the DTV sandbox.

Powell's plan could have ended up being little more than "velvet jawboning," as one observer noted, except for the cable cadre knowing a good opportunity when it saw one.

"We're going to embrace the chairman's plan and provide five channels of enhanced TV," NCTA Board Chairman and Insight President and CEO Mike Willner, said. "That doesn't mean it's going to be all broadcast. It could be high definition. That's a perfect example of something additive for consumers...PBS came to the cable industry and showed us their plan÷a mix of high def and standard def hours, [and] multistreaming...they showed us what they want to do, and Time Warner, Insight, and Comcast are signing on, station by station."

Broadcasters and satellite operators also offered alms to Powell, but manufacturers held out. Responding to the chairman's directive that manufacturers include over-the-air (OTA) digital tuners in all TVs by 2006, Consumer Electronics Association CEO Gary Shapiro said no problem. We'd be glad to do just that, a year-and-a-half after cable adopts an open plug-and-play standard.

Shapiro's comments so incensed Powell that he replied, "The CE industry's response on DTV tuners is so limited, and loaded down with so many conditions, that I believe it amounts to no commitment at all."

Excuse us, CEA members balked, but it's not fair to build TVs with a substantial retail add-on that has no discernible function in most of the country.

When verbal excoriation didn't budge the set-makers, Powell proceeded to put mandatory tuner integration on the FCC's August 8 docket, which passed 3-1. The NAB openly supports forced integration, but broadcast engineers covertly blast it across various electronic discussion boards. A) It's a TV tax, B) which will tick off consumers, most of whom C) would benefit far more from an analog-compatible broadcast set-top box. The FCC DTV Tuner Act is not the gospel. Various petitions for reconsideration and court appeals are anticipated.

Meanwhile, consumer adoption of DTV, that crucial piece of the transition that everyone took for granted, has not exactly reached revolutionary levels. Of the roughly 70 million TV sets sold to consumers since digital products were introduced in January of 1999, fewer than 200,000 are capable of picking up digital signals over the air, according to figures provided by Tom Edwards, senior analyst at NPDTechworld, a data tracking firm in Port Washington, NY (see tables). The majority of the 2.7 million in-home digital "TVs" are high definition monitors, purchased for DVDs and gaming, meaning broadcasters are conceivably getting closed out of a window of opportunity to compete against cable with free OTA high definition and multicast services.

When the pendulum of blame isn't swinging toward cable or manufacturers, it inevitably goes back to greedy broadcasters trying to hang onto free spectrum. So what if their sole business model was predicated on free spectrum for five decades? Along came cell phones and all heck broke loose. Suddenly, free spectrum is worth billions, so broadcasters come up with HDTV, and Congress says, OK...put your money where your mouth is. But Congress is not a patient animal. Congress is Jabba the Hutt on steroids.

What Congress member could vote against a bipartisan Balanced Budget Act that presupposed spectrum auctions would raise $26.3 billion within five to six years? Certainly not Senator John McCain (R-AZ), who stopped just short of calling broadcasters welfare cheats when they missed the deadline, yet admitted openly in a May 1 speech on the Senate floor that he never expected them to meet it in the first place: "I say again, when we gave away $70 billion to the broadcasters, I knew at the time they would never meet this time schedule."

Translated: Congress endorsed deadlines that it never expected broadcasters to meet in the first place because it had to have something to back up the Balanced Budget Act. It looked very good to its constituents, and now that broadcasters have missed their impossible deadlines, Congress has to rattle sabers on the off-chance that a few constituents are paying attention. Where $26.3 billion became $70 billion is a matter of magical math. Meanwhile, more than 68 percent of the stations that requested extensions quietly got them. More are pending. So if a majority of stations missed the deadline and a majority of them are forgiven, what does that say about the deadline?

So, What's The Deal?

Without a doubt, stations in a variety of markets made the deadline. Around 38 percent of the FCC's 483 listed DTV stations are either Top 30 market network affiliates or PBS stations. The rest are across the board, indicating that in general terms, getting a DTV signal up is not impossible. From a paperwork standpoint, if KAME, an independently-owned UPN affiliate in Reno, NV, can broadcast digital, what's up with the likes of KFBD in Honolulu, HI, or KTEN in Ada, OK, two of at least 69 stations that received letters of "admonishment" from the FCC, (i.e., you have until December 1 to come up with a better reason for being late or you're really in trouble this time, buster.)?

In real-world terms, assuming KAME, KFBD, and KTEN are all on the same playing field is a stretch. Even though the FCC's methods may seem perfectly reasonable within the confines of the agency's resources, it's a good bet it hasn't sent investigators out to personally examine the circumstances of the delinquent stations, and the obstacles to digital television are much more complex than paperwork and arbitrary deadlines allow.

Take towers, for example. New York stations banked their digital sticks on the World Trade Center. Their hope of building a replacement tower on Governors Island now appears to rest with getting Metropolitan Television Alliance President Ed Grebow into the mayor's mansion. Elsewhere in the country, new towers are about as welcome as nuclear waste.

"They [towers] are the biggest issue in the transition," said John Turner, principal of Turner Engineering. "Regulators are ready to slap these guys with a fine, even though they've got seven farmers from the local zoning board gathered around their tower not letting them modify it." Even tower manufacturers admit there was no way they could have surveyed and built the number of towers at the rate necessary to meet the deadlines.

Less widely discussed is the talent issue. Some of the finest transmission engineers in the business died on 9/11. It was no small loss to a close-knit community.

"A lot of transmitter engineers classically started out as ham radio kids," Turner said. "It was a natural evolution if you were a radio nut in the 20s, 30s, 40s, 50s, get a license and work for a TV station with a really big transmitter. With the proliferation of computers...the influx of these kids into the business is almost at a halt. If you go to an engineering transmission meeting, all you see is white hair.

It's not real sexy to get a job and work at the top of the Empire State Building. It's a problem, getting young blood into the RF business. When I went to school, I studied vacuum tubes. They're asking a lot of guys my age to forget everything we know about TV and get into bit streams."

And so DTV remains an unfulfilled promise, but not one without huge potential for those willing to take risks. If people will nail a $200 dish to the side of their house for $10-a-month multichannel video, just imagine what they'll do to get it for free.

Ahh, competition. Ya gotta love it.

Deborah D. McAdams is a contributing editor.