Digital TV: Where’s the Transition?

by on July 12, 2005

We’re in the midst of a transition from analog to digital transmissions of broadcast TV – sort of (as I said in a C:\Spin article). Today the Senate Commerce Committee held a hearing on legislation concerning digital television (DTV), focusing on how and when to transition away from analog. It is hoped that the hearings will induce Congress to give this lagging transition a defined mission with a “hard” deadline.

Congress must create a “hard” deadline for a complete digital transition. The sooner the date becomes a certainty, the better it will be for: a) consumers, who will be able to make more informed purchases; b) manufacturers, who can label analog sets in a way that will inform consumers of the transition date; c) broadcasters, who can publicize the transition in a way that can help attract increased viewership.

Congress recognized the value of this spectrum for alternative purposes. The Telecommunications Act of 1996 gave broadcasters a six megahertz (6 MHz) channel of spectrum for free. The expectation was that broadcasters would begin broadcasting in both digital and analog, eventually transitioning entirely to digital broadcasts. On December 31, 2006, the broadcasters would give back the 700 MHz band (the analog portion) of the spectrum. However, the Balanced Budget Act of 1997 created a loophole, mandating that 2006 deadline would be enforced only if at least 85 percent of households in a local market can view digital broadcasts. And most markets fall well below this threshold, as many consumers remain content with their analog sets.

So we have the proverbial chicken and egg problem-which comes first, the broadcast transition or consumer demand?

Inherent in any transition is an event that results in a transformation. When an industrial sector is mostly regulated by market forces, the transformation can occur gradually and almost imperceptibly through the proverbial “invisible hand.” But market forces are constrained as an impetus for change when government heavily regulates an area, as it does with spectrum allocation. Incentive structures are often skewed, and companies turn their attention away from competing and toward politicking. Thus, Congress must be the agent that creates the catalyst–a hard and fast deadline-by which DTV transition must occur.

All Consumers Lose from a Delayed DTV Transition

A fixed date DTV transition would help stimulate future advanced wireless services that benefit all Americans. Innovators, armed with certainty for access to spectrum, would have incentive to develop services that would create new competition for existing wireless services and offer new services to rural and underserved populations.

The possible uses of this spectrum that provide potential benefits to all include the following:

Wireless Broadband – the 700 MHz band is valuable to portable and last-mile wireless services due to favorable penetration and propagation characteristics.

Public Safety – Public safety agencies would receive 24 MHz of spectrum in the 700 MHz band, which would allow police, firefighters and federal Homeland Security personnel to coordinate their actions more effectively.

What about Homes that Rely on Analog Over the Air Signals?

Despite the significant public interest benefits to a DTV transition, some existing consumers will experience a cost. The figures vary, but only about 13 – 15 percent of American households still use televisions that receive their broadcast signal over the air. Regardless of the actual percentage, the number of over the air households shrinks every year, and will continue to do so as phone companies enter the market with video over DSL.

But what to do about the households that rely exclusively on over the air signals? Some proposals rely on setting up a government program for reimbursing these consumers. Either through rebates or tax credits, consumers would receive compensation for purchasing the equipment required to upgrade their TVs for receiving digital signals.

While many free market advocates are against government subsidies, a DTV compensation program could be viewed less as a subsidy and more as a onetime payoff. And it must be emphasized that the digital transition is not just about the ability to watch (insert goofy show name here) in pristine high definition digital form. It’s about reducing-or at least making more efficient-the amount of spectrum owned by media companies in the “public trust.” Making the 700 MHz band available to the rest of the communications market–where smart entrepreneurs armed with innovative technologies can utilize it–is the key public interest concern.

The Problem with Top-Down Spectrum Regulation

The digital TV transition is a stellar example of the problem with having too much government control of spectrum. Broadcasters received their spectrum at no charge in return for serving the “public interest” and have not had the same incentive to better utilize its spectrum holdings.

There are good reasons for going digital, especially because digital broadcasts use spectrum much more efficiently than analog. The cellular phone companies made this switch long ago, mainly because they paid for their spectrum and have incentive to use it efficiently.

The media marketplace is in rapid flux. New media services offer a bottom-up creative process that shifts the flow of information. The one-way broadcast or publishing model is rapidly becoming obsolete as both as a venue for entertainment and as a news source. Internet services allow consumers to be “citizen journalists” and tag and share media with friends and family. If the spectrum market were not overly regulated by government, traditional media companies would be forced to better respond to these new developments.

A prolonged DTV transition denies consumers and public safety too much. Let’s begin the transition mission.

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