1                          MEETING OF THE
 8                     Friday, January 16, 1998
21                         Mt. Vernon Salon
22                           Madison Hotel
23                     15th and M Streets, N.W.
24                         Washington, D.C.

 1    PERSENT:
 2    LESLIE MOONVES, Co-Chair      
 3    NORMAN J. ORNSTEIN, Co-Chair
13    GIGI B. SOHN

 1                          C O N T E N T S
 2    ITEM                                            PAGE
 3    Technology of Digital Broadcasting and   
 4      The Implications for New Programming Service    7
 5    Closed Captioning and Video Description
 6      of Broadcast Programming                      104
 7    Natural Disaster Information Systems            135
 8                    (Afternoon Session p. 150)
 9    Educational Programming in the Digital Era      154
10    Statement of Gordon Ambach, Executive
11      Director, Council of Chief State School
12      Officers                                      158
13    Statement of Janet Poley, President,
14      American Distance Education Consortium        166
15    Statement of Marilyn Gell Mason, Director,
16      Cleveland Public Library                      174
17    Statement of Fred Esplin, General Manager,
18      KUED-TV, Salt Lake City, Utah                 181
19    Statement of Gary Poon, Executive Director,
20      Digital Television Strategic Planning
21      Office, PBS                                   187
22    Committee Discussion of Future Agenda           228
23    Public Comments, Questions and Answers          243
24    Closing Comments                                246

 1                       P R O C E E D I N G S
 2                                                   (8:53 a.m.)
 3              MR. MOONVES:  Could we get started, please?
 4              Good morning.  Welcome to our third meeting of
 5    the Advisory Committee on Public Interest Obligations of
 6    Digital Television Broadcasters.  I think we have an
 7    exceptionally packed day today, with four different panels
 8    coming in.
 9              The first one, Technology of Digital
10    Broadcasting and The Implications for New Programming
11    Service.  The next will be a briefing on Closed Captioning
12    and Video Description of Broadcast Programming.  Then
13    there will be a briefing on Natural Disaster Information
14    Systems.  There will be a lunch break and then Peggy
15    Charren will head a group on Educational Programming in
16    the Digital Era.
17              So there is a lot to do today.  I urge everybody
18    to participate.  The following members will not be here
19    today -- Barry Diller, Jim Goodman, Richard Masur, Newton
20    Minnow, Jose Luis Ruiz, and James Yee.  Cass Sunstein will
21    be here late.  However, most of them will be hooked up by
22    the Internet.
23              A little bit of housekeeping before I turn it
24    over to my partner and colleague, Norm Ornstein.  The
25    following three meetings will be -- the next meeting will

 1    be in Los Angeles, California, because I'm tired of
 2    traveling across the country so I need one near me, and
 3    Frank agrees.  The University of Southern California
 4    Annenberg School for Communication has offered to be our
 5    host, and actually for one of the reasons that we wanted
 6    to go outside of Washington.  They would like to
 7    participate.  They feel they want to open it up and bring
 8    their students in, and I think it will be terrific.
 9              So the Dean, Jeffrey Cowen, has graciously
10    offered to be our host, and he sent me a letter which I'll
11    get you a copy of.  I will be happy through my office to
12    find some hotel accommodations that are near there and we
13    will organize that.
14              The following meeting will be in Washington, D.
15    C. once again, and then the meeting after that will be in
16    Minneapolis, and Mr. Crump will be hosting us.  Do we have
17    those dates, Karen, of the new few meetings set up?
18              MR. DUHAMEL:  Les, the meeting on Tuesday, the
19    14th of April, is the Tuesday after Easter, and one of the
20    reasons we tried to set these meetings up on a Friday or
21    Monday was because of travel to stay over Saturday night. 
22    Well, I think it's an imposition to be gone from home on
23    Easter and to be here for that meeting I'd have to travel
24    on Saturday and be in Washington on Easter, and I really
25    prefer to be with my family.

 1              MR. MOONVES:  I totally understand that.  That
 2    sounds valid.  Let's relook at the dates.  I think that's
 3    a very valid point, Bill.
 4              The next meeting will be Monday, March 2.  As
 5    Bill just said, we are scheduled for Tuesday, April 14. 
 6    We will take another look at that.  And the Minneapolis
 7    meeting is scheduled right now for Monday, June 8.
 8              As we mentioned at our last meeting, a letter
 9    will be going out shortly from Norm and myself to the
10    White House requesting an extension.  By the next meeting
11    we should know exactly how long that extension will be so
12    we can sort of plan when we plan on doing the report and
13    going from there.
14              After lunch we will begin to talk about what our
15    agenda will be for the next meeting.  So I think that is
16    basically it.  Norm, why don't I turn it over to you, sir?
17              MR. ORNSTEIN:  Thanks very much, Les.  
18              A couple of announcements.  We are being
19    broadcast live on C-SPAN.  For our viewers at home, if
20    things are a little bit fuzzy it's because it's in analog.
21              (Laughter.)
22              MR. ORNSTEIN:  We also have NHK, the Japanese
23    public broadcasting with us.  And I'm proud to announce
24    that the proceedings of this meeting, as I hope our future
25    meetings, can be heard on audio over the Internet, thanks

 1    to Rob Glaser of RealNetworks.  And for people who want to
 2    follow us in this fashion they can go to one of two sites
 3    --, and there is a link right there to
 4    the Advisory Committee, or you can turn to the
 5    RealNetworks page, because it's the RealNetworks company
 6    that's arranged this, and that is, and go
 7    directly there by doing,
 8    and follow us if you don't want to watch on television or
 9    are unable to do so.
10              So we aer making technology work in some fashion
11    for us at least this morning.
12              I want to thank Robert Decherd for generously
13    providing lunch for us today and also note that this
14    afternoon we will have to have some discussion, as we've
15    already done, of the site for the meetings of the agenda
16    we want to follow.  We really need to asses, without
17    knowing exactly how much time we have left, nevertheless
18    where we go.  And we probably want to very seriously think
19    about moving in a more expeditious way towards considering
20    solutions, and after some extended time today, a
21    particularly rich day, getting information, gathering
22    information and viewpoints.
23              But we will start now by looking at a little bit
24    more of the technology of digital broadcasting and the
25    implications for new programming services.  This panel has

 1    been put together for us, doing lots of different duties,
 2    by Rob Glaser, and I will turn things over to Rob.
 5              MR. GLASER:  Thanks, Norm, and thanks, Les, and
 6    welcome to everyone on the committee.  We have a very good
 7    panel this morning for you to discuss the question of
 8    technology as it relates to digital television.  We took a
 9    rather broad view of the technology area to cover in order
10    to give committee members a full understanding of the
11    technology environment in which digital television will be
12    playing out.
13              We wanted to really address fundamentally what
14    would happen with digital television, and that's the main
15    focus of our first two presentations, really, but we also
16    wanted to put it in the context of the other developments. 
17    There are a number of developments happening with
18    satellite, with cable, and Internet delivery.  So our
19    panel is designed to cover all of those issues in the time
20    we have available.  Obviously there are tradeoffs between
21    comprehensiveness and breadth and we tried to strike a
22    good balance.
23              I am very pleased with the panelists that are
24    joining us today.  They represent a very, very strong well
25    of expertise and knowledge, and I'm sure you will find

 1    their insights very valuable.
 2              Our first speaker is Bruce Allan, the Vice
 3    President and General Manager of Harris Corporation's
 4    Broadcast Division.  Mr. Allan is a pioneer in the
 5    development of digital television.  Today he heads
 6    Harris's worldwide broadcast operations and leads the
 7    company's digital TV business.  Prior to joining Harris,
 8    Mr. Allan was Vice President of Thomson Video Products
 9    Division, and then Vice President of Technology and
10    Business Development for Thomson Multimedia.  In that role
11    he represented Thomson on all of its activities for the
12    Grand Alliance consortium, which developed the technology
13    upon DTV is based.  
14              And Mr. Allan's efforts to get a DTV standard
15    adopted resulted in an Emmy Award from the Academy of
16    Television Arts and Sciences.  
17              Harris Corporation itself is a very broadbased
18    provider of broadcast and radio equipment and leader in
19    the develop of DTV.  Six of the seven experimental DTV
20    operations of the first ones in the United States were
21    based on Harris's technology.  Harris's educational
22    initiatives include publishing the Complete Guide to
23    Digital TV, airing the first live high definition
24    broadcast of a major league sporting event, and fielding
25    the Harris/PBS-sponsored DTV Express, a 40-city tour and

 1    road show consisting of seminars, a mobile DTV station,
 2    and demonstrations in futuristic living room and classroom
 3    settings in order for people to get a perspective on what
 4    is happening with DTV.
 5              Without further ago, I'd like to introduce Mr.
 6    Allan to present his thoughts on what's going to happen
 7    with DTV.
 8              MR. ALLAN:  Thank you very much, Rob.  It's a
 9    pleasure to be here this morning and be able to share with
10    you some information that we have which at Harris we view
11    as measurable progress toward the implementation of
12    digital television in the marketplace.
13              (Slide.)
14              MR. ALLAN:  What I would like to do this morning
15    is go through the implementation mandate, the first cities
16    that will be there, which basically sets a reference
17    point, share with you the results of a broadcaster survey
18    that we recently conducted that will give you some
19    insights into broadcasters' plans, attitudes, and current
20    status regarding the implementation of digital television,
21    review some of the key implementation issues, be they real
22    or perceived, that have been talked about over the last
23    six months, and then give you a quick overview on receiver
24    availability and what was shown at the Consumer
25    Electronics Show last week.

 1              In doing that I think we end up setting the
 2    stage for many of the new programming services and many of
 3    the new capabilities that my colleagues will report on
 4    later.
 5              (Slide.)
 6              MR. ALLAN:  If you look at the mandate, which I
 7    think many of you are familiar with, obviously the first
 8    26 stations are to be, on a voluntary basis, up and
 9    operating in November of 1998, which now we're really
10    talking only ten months from now.  So digital television
11    is definitely becoming a reality.
12              That is shortly followed by the network
13    affiliates in the top 10 markets by May of '99, which says
14    there will be at least a minimum of 40 stations up and
15    operating in May of 1999, the top 30 markets by November
16    of '99, which says a minimum of roughly 120 stations, and
17    then all the commercial stations by mandate must be up and
18    operating, at least passing a digital signal, by the year
19    2002, and then the PBS stations must be up and operating
20    by 2003.
21              (Slide.)
22              MR. ALLAN:  The next chart simply gives you a
23    quick look at the locations of those first 30 markets, and
24    what it really says is that 30 percent of the households
25    will have access to a digital television signal by May,

 1    1999, an additional 20 percent, or a total of 50 percent
 2    of the households will have access to approximately three
 3    digital signals by the end of 1999.
 4              So by the time we get to the end of 1999 a very
 5    large percent of the U.S. population has access to digital
 6    television signals.
 7              (Slide.)
 8              MR. ALLAN:  If we now go to the actual survey,
 9    Harris had originally conducted a survey regarding
10    broadcaster attitudes and plans in October of 1996.  This
11    December we repeated a similar study so that we would have
12    the ability to track shifts in DTV plans and attitudes and
13    identify any emerging trends that were resulting from
14    broadcasters' plans as they were moving toward market
15    implementation.
16              The survey consisted of 401 TV executives that
17    were surveyed during a telephone interview.  That
18    represents roughly 480 stations, because of multiple
19    ownership.  And the people interviewed were definitely
20    qualified as people that aer directly responsible for
21    making the decisions on implementation of digital
22    television.  So we made very certain that we were talking
23    to the people that have to actually implement this
24    program.
25              (Slide.)

 1              MR. ALLAN:  If we look at the overall findings
 2    in summary, it becomes very interesting from our
 3    perspective, and I think from your perspective. 
 4    Broadcasters are moving even faster than the FCC requires,
 5    and some of the data that you'll see in a minute will
 6    support that.
 7              They are addressing issues intelligently,
 8    logically, realistically.  They're getting very involved
 9    in equipment -- what they have, what they need, how they
10    can roll it out, how they can go ahead and make the
11    transition from analog to digital.  And some of the other
12    results when we looked at some programming questions, it's
13    becoming more obvious that they're planning to use the
14    full potential of DTV to better serve communities and to
15    offer a wider selection of programming than they do today.
16              (Slide.)
17              MR. ALLAN:  If we look at the first question, or
18    how likely are stations to adopt DTV in the next five
19    years, we find that 66 percent of those stations indicated
20    they are very likely to be up and operating within a 5-
21    year time frame.  Another 27 percent said somewhat likely. 
22    And we believe the "somewhat likely" response is most
23    likely due to questions regarding tower implementation,
24    equipment availability, things that the broadcaster
25    himself does not necessarily control that could impact his

 1    ability to be in the marketplace on a timely basis.
 2              So 93 percent of the broadcasters have said they
 3    expect to be up and operating prior to the year 2002. 
 4    That includes many PBS stations, which says the
 5    broadcasters are really running, from an overall average,
 6    ahead of the plan that was originally laid out by the FCC,
 7    which should be encouraging to all of us.
 8              The 7 percent of the stations that said they
 9    were not likely to do it at all tended to be in markets
10    that were smaller than the top 100 markets, and with
11    financial implications that's most likely not a surprise
12    at this point in time.
13              (Slide.)
14              MR. ALLAN:  If we go to the next one, which is
15    another encouraging slot, which talks about can
16    broadcasters afford the cost of conversion, in 1996 only
17    42 percent of the broadcasters claimed they could afford
18    the cost of conversion to digital television.  A year
19    later, 66 percent of the broadcasters are indicating that
20    they can afford that transition, which means an increase
21    of roughly 157 percent versus the previous study.
22              Obviously a lot of that is a result that
23    equipment is not at the $10 million to $12 million that
24    people had talked about originally.  Now that equipment is
25    going into production, costs are becoming more realistic. 

 1    The broadcasters indicated that they felt on average the
 2    conversion cost would be in the vicinity of $5.7 million -
 3    - still a lot of money, but a significantly different
 4    number than they were looking at 12 to 24 months ago when
 5    many of these issues were discussed.
 6              (Slide.)
 7              MR. ALLAN:  So we basically said they're going
 8    on an accelerated schedule.  They're finding it more
 9    affordable than they initially thought, and getting
10    confidence that they could do it.  Now we're looking at
11    the channel utilization potential.  And, as most of you
12    know, the system has a tremendous degree of flexibility.
13              You can do one high definition program with
14    theater quality sound, video and 6-channel surround sound. 
15    You can do multichannel broadcasting.  Here we've said
16    five standard definition programs -- it could be six,
17    seven, or eight, depending on the broadcaster's definition
18    of quality on programming and picture quality.  It can do
19    data.
20              And the thing that gets lost most times is that
21    the system is capable of doing a combination of these
22    services at the same time.  You can do high definition and
23    you can still do data.  You can do five channels of
24    multicasting and still do data.  You could most likely do
25    two movies in high definition and have some opportunistic

 1    abilities to do some other services.
 2              So the flexibility often gets lost, but it says
 3    that the things that are up there are not mutually
 4    exclusive.  You can do many of them at the same time,
 5    depending on the way you actually handle the bit stream. 
 6    And that's obviously the decision of the broadcaster on
 7    how he programs the channel.
 8              (Slide.)
 9              MR. ALLAN:  One of the interesting things, while
10    there's still a great deal of uncertainty with
11    broadcasters about how they will actually utilize and
12    finally program those digital channels, is that when we
13    looked at it we had about 44 percent of the broadcasters
14    who said they weren't sure exactly what they would do with
15    programming at this time, and 33 percent said they
16    definitely wanted to do multicasting, 23 percent said that
17    they definitely would do high definition.
18              But when you cut through all the data -- and the
19    next two charts I think are the most indicative -- it said
20    that the majority of broadcasters are leaning toward doing
21    high definition programming during the prime time hours,
22    which is very encouraging, because that says the American
23    public will get exposure to high definition television,
24    and the flexibility built into the system and the
25    utilization by the FCC can be used experimentally to find

 1    out what the marketplace wants and let the marketplace
 2    have a vote in programming.
 3              (Slide.)
 4              MR. ALLAN:  If we look at the next slide, what
 5    you'll see is that, just the reverse, the broadcasters in
 6    this survey are saying that they will do standard
 7    definition -- which I'm interpreting as multicasting --
 8    during daytime hours to try and expand the programming
 9    capabilities and do numerous things.  So we're getting
10    confirmation of many of the things we guessed at as a
11    result of the survey that we've seen.
12              (Slide.)
13              MR. ALLAN:  The next one is one that is
14    interesting and this supports the fact that the
15    broadcasters are reacting to providing more public service
16    and to trying to serve their constituent base even better
17    than they are today.  If you look at the program, you'll
18    see that as far as how they will use the multicasting
19    programs, there's a much higher degree of response here
20    that they'll use it for news, additional information
21    services, and local affairs content.
22              So it is becoming something with a lot more
23    local content, a lot more directed at trying to serve the
24    local audience in ways that have not been possible in the
25    past.

 1              (Slide.)
 2              MR. ALLAN:  When we look at the broadcasters'
 3    reaction to digital receivers, obviously they're looking
 4    at it from the standpoint of how can they make the market
 5    grow the fastest.  And their biggest concern is, without
 6    question, how can they have consumer electronics
 7    manufacturers keep the costs of digital receivers as low
 8    as possible.
 9              The other elements of promotion obviously pale
10    by comparison relative to the concern there.  And when I
11    talk about sets, we can address that one a little bit.
12              The question is how quickly can the consumer
13    electronics manufacturers drive down the cost of sets?
14              (Slide.)
15              MR. ALLAN:  The final chart really that deals
16    with the broadcaster survey is a simple one that we asked
17    do you hope that digital TV will become a reality.  And in
18    1996 only 72 percent of the broadcasters indicated that
19    they hoped it did.  Now that we're a little farther along,
20    we get 83 percent.  So we are again getting a more
21    positive reinforcement out of the broadcasters.
22              So we find the survey very encouraging.  Things
23    are moving along.  We think things are tracking the way
24    they should be at this point in time.
25              (Slide.)

 1              MR. ALLAN:  The next chart really talks about
 2    implementation issues, and there's no question that the
 3    transition to digital television will face many problems,
 4    will have hurdles to overcome.  If we had looked at this
 5    chart six months ago, we would have most likely had a very
 6    different reaction to whether these are problems, and
 7    that's why I've labeled it Perceived DTV Implementation
 8    Issues, because what's happening, the closer we get to
 9    market implementation, the more and more problems and more
10    and more hurdles that people will be finding technical
11    solutions to.
12              If we look at channel allotments, which is the
13    biggest hurdle right now, Commissioner Ness at the CES
14    meeting indicated that the FCC expects to have channel
15    allotments finalized and done by the end of this month. 
16    That really turns on the marketplace and lets my company
17    start selling transmitters to broadcasters, because then
18    they know that the channel allocations are real, they are
19    firm, and they will start placing orders for transmitters,
20    which are obviously the key to starting the launch of
21    digital television.
22              One of the issues that broadcasters have had
23    over the last 24 months is the availability of digital
24    equipment, because much of it was being invented, created
25    and developed while we were creating the standard.  It

 1    didn't exist as product per se. 
 2              And I put up three references.  As far as
 3    encoders, which was a big question six months ago, there
 4    are 14 different manufacturers who have indicated they
 5    will have encoders available for sale at NAB.  In the case
 6    of distribution equipment -- switchers, routers, et cetera
 7    -- so signals can be transported through the studio, there
 8    are 5 suppliers we know of today that will have equipment
 9    available at NAB.  And as far as storage medium, 5 to 7
10    suppliers.
11              So equipment is becoming less of a problem. 
12    Prices are becoming more realistic as they become true
13    production products.
14              Another issue that came up as recently as the
15    consumer electronics show was how will people handle
16    program guides and channel numbers.  Doing a little bit of
17    homework, I found out that the ATSC standard for channel
18    numbering and program guides has been officially adopted
19    and is now being balloted with the Society of Cable
20    Television Engineers, which says both the broadcast
21    industry and the cable industry will have agreed to
22    channel numbering for virtual channels with multicasting. 
23    So that's one more problem that's solved.
24              Studio interfaces, a combination of ATSC work
25    and SMPTE work, is pretty well defined and set as industry

 1    standards at this point in time.  
 2              Tower construction, still an issue for selected
 3    broadcasters that has to be addressed.  There's no
 4    question about that one.
 5              Must-carry, a big issue that the FCC has to take
 6    action and determine what the proper policy will be
 7    regarding must-carry.
 8              When you get into interactivity and conditional
 9    access, the standards are being worked on, and the ATSC
10    believes they will have them completed or at least
11    optimistically completed by the end of the year.
12              I think the key message on this chart is the
13    fact that many of the issues that were there have been
14    solved.  There aren't really many technical issues that
15    are now in the way of launching digital television. 
16    They're getting solved one at a time.  They're getting
17    moved out of the way.  And there's nothing that precludes
18    the introduction of digital television later this year.
19              (Slide.)
20              MR. ALLAN:  If we look at digital receivers and
21    take a quick look at what the consumer electronics
22    manufacturers showed last week at CES, 14 different
23    manufacturers demonstrated high definition receivers at
24    the Consumer Electronics Show.  The majority of these are
25    very large-screen rear-projection sets, because that's the

 1    quickest way to get to market with the highest quality
 2    picture.  And the consumer electronics manufacturers
 3    believe that in '98, with 26 markets up, the most
 4    important thing is to create consumer awareness and pull
 5    people into retail stores so for the first time they can
 6    see live demonstrations of high definition television,
 7    digital television, and its true capabilities.
 8              They all plan to expand their product lines in
 9    1999, adding smaller direct view sets.  33- to 38-inch
10    screen sizes have been talked about.  And the fact that
11    they will have set-top converters available in '99 for
12    anyone that wishes to purchase those and convert the
13    signal down to an NTSC signal or a component video signal
14    to show on current product.
15              One of the encouraging things that will help
16    drive the implementation of digital and high definition
17    television was the announcement by Thomson and Hughes
18    Direct TV that they would provide a high definition signal
19    on a nationwide basis with at least two to three channels
20    starting in the fall of this year.  So instead of being in
21    10 markets this fall there will be national coverage,
22    which, one, provides more exposure to consumers, two,
23    provides a broader base for consumer electronics
24    manufacturers to sell product in and start to help prime
25    the pump for digital television.

 1              The other announcement at CES was the fact that
 2    Intel and Zenith are collaborating and working on a
 3    digital TV decoder card for PCs so they can bring in again
 4    another segment of the market into digital television.
 5              The other thing that was there and it was talked
 6    about is something that we put into effect last year and
 7    has now come to fruition, the fact that the Consumer
 8    Electronic Manufacturers Association has created a
 9    certification program that ensures -- and all the
10    manufacturers who were on the floor said they were
11    subscribing to it -- that all 18 of the ATSC formats will
12    be decoded and displayed, which says there's never a
13    chance that the set will go dark because someone has
14    decided not to include one of those original formats.
15              So I think what we're seeing is some very
16    encouraging signs that the broadcasters are supporting
17    digital television.  Broadcasters are to be congratulated. 
18    They aer doing excellent planning and working forward and
19    moving to implement on a time schedule that's even quicker
20    than was originally required, and the set manufacturers
21    have made major investments to have sets available by the
22    fall of 1998.
23              So at this point in time we're very encouraged
24    that things are going right, that they're going on
25    schedule, and that all of us can look forward to

 1    exploiting the potential of digital television starting in
 2    1998.
 3              Thank you very much.
 4              MR. GLASER:  Thank you, Bruce.  That was
 5    fantastic.
 6              Our second presentation is from Josh Bernoff,
 7    who is a principal analyst with Forrester Research. 
 8    Forrester is an independent market research firm based in
 9    Cambridge, Massachusetts.  Josh is the principal author of
10    a survey in the new digital TV area that Forrester put
11    together in the middle of 1997.
12              Josh's focus is TV technology and consumer
13    behavior.  He comes from a background of about 15 years in
14    technology in interactive media.  Without further ado,
15    Josh.
16              MR. BERNOFF:  Thank you, Rob.  I'm glad to have
17    a chance to be able to address you folks on what we found
18    out.
19              When I began to study digital television last
20    year and talked to people in all aspects of the television
21    industry -- from the consumer electronics manufacturers to
22    cable to broadcasters -- everyone told me it was
23    impossible to predict what the future of digital
24    television will be.  I, of course, took that as a
25    challenge, and you're going to see the results of that.

 1              The second challenge was when Rob told me I had
 2    to present the results of that in ten minutes here.  And I
 3    think that's a challenge I may or may not be able to
 4    grapple with.
 5              (Slide.)
 6              MR. BERNOFF:  Let me begin with who Forrester
 7    Research is, for those of you who may not be familiar with
 8    us.  We are an independent research company.  We have no
 9    axe to grind here.  Our only objective is to create the
10    most accurate predictions possible, because of what
11    Forrester is in business to do, which is to help our
12    client companies thrive on technology change.  And that,
13    of course, depends on having unbiased, accurate
14    predictions.
15              For about 15 years we've been looking at
16    technology futures, including futures of technologies like
17    the Internet, and now especially high definition
18    television, as that starts to creep onto the public stage.
19              (Slide.)
20              MR. BERNOFF:  What I'm going to be talking to
21    you about is the results of a survey that we completed in
22    July of 1997.  This is qualitative research.  I haven't
23    got 400 broadcasters that we've interviewed.  We talked to
24    25 broadcasters at that time, but we also talked to senior
25    executives at broadcast networks, at the consumer

 1    electronics manufacturers, people in the cable industry,
 2    people producing television content, and folks in the
 3    technology industry in an attempt to try and figure out
 4    how this market was likely to develop.
 5              So let me begin by telling you that everyone we
 6    spoke to was at the same time grappling with the issue of
 7    the costs and risks associated with this, as well as, to a
 8    certain extent, hoping that there'd be some benefit for
 9    them.
10              (Slide.)
11              MR. BERNOFF:  At least in July of last year what
12    we heard in general was that people weren't quite clear on
13    exactly what the most wonderful aspects of digital
14    television were going to be for them.  This is just an
15    example that reinforces what you heard from Mr. Allan,
16    that about half of the stations we talked to said that
17    they were going to be spending at least $3 million on this
18    investment, and there's more research of this kind in the
19    study.
20              (Slide.)
21              MR. BERNOFF:  So let me begin now to talk about
22    what I think is the real result -- the prediction of the
23    future of digital television and what's going to happen
24    over the next ten years, which starts with, like any good
25    drama, a slow start, some pretty interesting plot twists

 1    in the middle, and what to me at least was a surprising
 2    ending for the broadcast industry.
 3              (Slide.)
 4              MR. BERNOFF:  Let's start with this year, with
 5    1998.  I think I don't quite share the optimism Mr. Allan
 6    has about what you're going to see this year -- a pretty
 7    inauspicious debut.
 8              To begin with, I'm not as hopeful about all of
 9    the 26 stations meeting their deadlines.  Again, we talked
10    to a relatively smaller number of people but did some in-
11    depth interviews.  The folks that I talked to at the
12    television stations were dealing with multiple business
13    issues, with technical issues, with issues like getting
14    towers built and getting FAA approval, delivery times on
15    transmitters and antennas.  And I think that you're likely
16    to see the FCC get some requests for extensions on some of
17    those deadlines as this year dawns, but that's a matter of
18    months.  
19              That's not nearly as important as the fact that
20    the receivers that you're going to see are going to be
21    priced at a relatively high level.  The first people to be
22    hit by this good news/bad news situation for digital
23    television are, of course, the consumer electronics
24    manufacturers.  People like Zenith are already seeing the
25    big-screen sales are slowing down at this point while

 1    people hold back and wait for digital.
 2              But the digital receivers that we talked to
 3    people about were rolling out at prices around $4,000.  So
 4    you're going to see relatively slow sales of all big-
 5    screen sets, including digital sets, in 1998.
 6              A lot of people have held out the computer as a
 7    potential receiver for digital television, and we decided
 8    to take a look at that and see whether PCs would
 9    potentially be where an early audience would develop.  And
10    it is indeed less expensive to create a card to deliver
11    digital television on a PC than it is to build an entire
12    television set to do it.
13              The problem is -- and when Nielson begins
14    measuring this I think it'll be clear -- that television
15    viewing on a computer is not the same as television
16    viewing on a TV set.  You're going to have an occasional
17    and distracted audience that's of less interest to
18    advertisers.  And for that reason I don't think that the
19    PC audience is going to be a significant factor in what's
20    being programmed on digital television for any time in the
21    near future.
22              (Slide.)
23              MR. BERNOFF:  Things get a little better over
24    the next three years as more stations begin to come on
25    line, there's more content, as the prices of the sets come

 1    down.  And I'm going to fast-forward to 2001 and give you
 2    an idea of what I think that will look like.  But before I
 3    do that I want to talk about a little bit of a problem
 4    that the broadcast networks and the broadcasters face.
 5              And that problem is that when they are producing
 6    both analog and digital programming they're going to have
 7    to decide where to put their dollars and which kind of
 8    programming to produce.  Let me just give you an example
 9    here.
10              Suppose that you are producing, say, a
11    basketball game.  Right now, in an analog television
12    world, the right thing to do as Michael Jordan runs down
13    the court, leaps in the air, and dunks the ball in the
14    basket is to point the camera at him and follow him as he
15    runs down the court, have a close-in shot.
16              Now, if you take that same camera work and
17    deliver it in digital format, you're going to lose some
18    things.  One thing is that that rapid panning may induce
19    vertigo in the viewer.  In fact, if you decided that you
20    were going to deliver the most appropriate version of that
21    picture for the digital television viewer, one thing you
22    might want to do is take a little bit wider shot -- have
23    him start all the way at the lefthand side of the screen,
24    run down the court, and leap up and dunk the ball on the
25    righthand side of the screen.

 1              The problem is, if you take that same digital
 2    feed and convert it to analog and now look at it on a 4x3
 3    aspect ratio analog set, what do you see?  Well, you begin
 4    by seeing nothing.  Then Michael Jordan runs into the
 5    screen, and just as he's about to leap into the air he
 6    disappears off the other side of the screen.
 7              (Laughter.)
 8              MR. BERNOFF:  Now, to solve this problem the
 9    people who are producing television have two choices. 
10    They can create a separate analog feed and a separate
11    digital feed, perhaps using the same cameras but with a
12    separate director and a separate control room.  You can
13    imagine the expense associated with that.
14              Or, they can shoot the game as if it were going
15    to be produced in analog, and in that situation the
16    digital receivers are not seeing anything that is
17    startlingly different from what they see now.  It's
18    sharper, it's clearer, it's wider, but there's not a whole
19    lot of interesting stuff happening on the edges of the
20    screen.
21              That's what informs, I think, what you're going
22    to see when the set prices finally get down to the point
23    where people will be able to afford them.
24              (Slide.)
25              MR. BERNOFF:  In 2001 our expectation is that

 1    there will be readily available digital TV sets at a cost
 2    of around $500.  And at this point we think about 3
 3    percent of the households in the United States are likely
 4    to have a digital TV set in that household.
 5              But the interesting thing is when you look at
 6    who is likely to buy those sets.  This is not your average
 7    consumer.  This is a consumer who is interested in
 8    television, who is willing to make the investment and pay
 9    the premium to have a digital television set.  And what
10    are these entertainment-focused people like?
11              Well, these are people who are much more likely
12    to have a satellite dish.  They're much more likely to
13    have a surround sound system.  These are people who are
14    into the television experience.  And when they point that
15    expensive new television set at the broadcast channels,
16    what they're going to see is Seinfeld with a potted plant
17    in the corner.
18              The number of movies, for example, is one of the
19    things that are better in this widescreen, high resolution
20    format, will be limited to those movies that are on the
21    broadcast channels.  And in fact what we think will happen
22    is that these people buying these TV sets in the early
23    years are going to want more, and they're going to be
24    willing to pay for it.
25              They're going to say give me a premium channel

 1    and I'll pay for it if it's got really good programming
 2    for high definition television.
 3              Where will that programming come from?  Well,
 4    most likely we think it's going to come, in the early
 5    years, from satellite.  You heard that Direct TV is
 6    beginning to put in high definition channels.  The
 7    satellite operators have the most channel space to be able
 8    to have choices, so you'll begin to see premium high
 9    definition channels appearing on satellite.  And my bet
10    for the first channels that you will see are HBO, ESPN,
11    MTV because of the sound capabilities and, of course,
12    Playboy -- all the things that are going to be most
13    compelling and that people are willing to pay for in a
14    high definition, high resolution format.
15              (Slide.)
16              MR. BERNOFF:  All right.  Now what happens when
17    we get beyond this niche market?  If we go out to about
18    2004, the price differential in sets between analog and
19    digital is going to be relatively small, and you're also
20    going to have the situation where you go into the
21    electronic showroom and the salesperson says you don't
22    really want to buy an analog set, do you?  Come on,
23    they're scheduled to turn off all the analog signals in
24    two years.  Why don't you just buy a digital set?  I'll
25    see you in here next year for digital if you don't buy one

 1    now.
 2              And the result is that we'll begin to start
 3    seeing a rampup of these purchases in about 2004, and our
 4    expectation that the adoptions will reach about 23 percent
 5    of households at that point.
 6              Now, what happens after these sets get bought? 
 7    One possible scenario, which I don't personally believe
 8    in, is that people take the sets home, they set up their
 9    rabbit ears, and they say, wait a minute, this is a clear-
10    screen picture.  I have all these choices from the
11    broadcasters multicasting high definition.  Why don't I
12    stop paying my cable bill and I can just get everything
13    from broadcast?
14              But at this point the cable industry is not
15    likely to sit still as their subscriber base leaves.  The
16    digital transition that's already under way in the cable
17    industry and is proceeding relatively slowly is likely to
18    accelerate and you'll see a lot more digital choices from
19    cable television at this point.
20              The activity that you've seen in a last few
21    weeks around digital cable boxes running Windows CE and
22    the WebTV chip and Personal Java we'll finally begin to
23    see that start rolling out in the households over the next
24    five to ten years, and this is when things will
25    accelerate, when there's a risk of losing those cable

 1    subscribers to broadcast.
 2              What will those cable people be able to see? 
 3    Well, given the additional compression that's possible
 4    with delivering cable digitally, you'll see dozens of high
 5    definition channels and hundreds of standard definition
 6    channels on those cable systems.
 7              (Slide.)
 8              MR. BERNOFF:  The next slide is our projections
 9    for how fast we think digital television is likely to
10    penetrate.  Just to sort of fast-forward to ten years from
11    now, in 2007 we're looking at approximately 42 million
12    households with either a digital television converter for
13    broadcast or an actual digital television set in the
14    household.
15              If you wonder about the speed of this and wonder
16    whether people might be picking up this capability
17    quicker, I'll just draw your attention to the fact that
18    two of the most popular consumer electronics innovations
19    in the last 20 years -- audio CD and VCRs -- took eight
20    years to go from 1 percent penetration of America to 50
21    percent penetration of American households.  And anybody
22    who believes that digital television is going to catch on
23    faster than something as popular as a VCR is, I think,
24    extraordinarily optimistic.
25              This has interesting implications for turning

 1    off the analog signal in 2006, as scheduled, because not
 2    only do we see more than half of American households
 3    without a digital television receiver, but even in the
 4    households that do have a receiver there are going to be
 5    plenty of leftover old analog sets that they don't wish to
 6    become obsolete at that moment.
 7              (Slide.)
 8              MR. BERNOFF:  Now I'm not going to go into
 9    detail about the next two slides because of the
10    limitations on time.  I'll be happy to answer questions on
11    them.  But we went so far as to predict what this means
12    for the distribution pie and what this means for ratings.
13              We expect cable to continue to increase its
14    market share.  There's going to be a little bit of a dip
15    when digital comes on line in a big way with cheaper sets
16    around 2002, but we expect that to go up to about 70
17    percent penetration, with direct broadcast satellite going
18    up to eventually to about 15 percent of households.
19              (Slide.)
20              MR. BERNOFF:  And as far as ratings, the story
21    here is continued decline in network ratings in the face
22    of more choices from cable.
23              In the aggregate we expect free cable channel
24    ratings to go up.  The real losers here and the people who
25    aer going to end up the worst off are the people with

 1    independent channels, many of the UHF affiliates, that are
 2    right now showing reruns and other more daytime type
 3    programming.  They are going to see a continual erosion of
 4    their market share in favor of these free channels.
 5              That's what I've got for you today.  I think
 6    it's a pretty interesting story, given that we're talking
 7    about the broadcast industry investing billions of dollars
 8    and ending up in a slightly worse situation than they're
 9    in right now.
10              Thank you.
11              MR. GLASER:  Thanks a lot, Josh.
12              For the third presentation, we're going to talk
13    about the relationship of the Internet to digital
14    television, which is really more of a survey of what's
15    going on on the Internet with regard to transmission of
16    digital video.
17              (Slide.)
18              MR. GLASER:  Indeed, the Internet is today, by
19    probably any measure, probably the most broad-based method
20    of transmission of digital video, if one defines digital
21    video in the very literal sense of video that's digital. 
22    The quality, the image size, the frame rate, is well below
23    broadcast standards.  Nonetheless, it's a very broad-
24    based phenomenon.  It's really been going on for about
25    three years, and, given that the quality is inferior to

 1    any broadcast method today, it's really interesting to ask
 2    why has the Internet become such a broad-based vehicle for
 3    the delivery of video in such a short period of time.
 4              There really aer a set of reasons for that.  One
 5    is that the Internet is a global delivery system, so that
 6    any signal can be transmitted, as for instance is the case
 7    with the audio of today's hearing, can be received
 8    basically simultaneously anywhere in the world.
 9              Secondly, anybody can be a programmer.  There's
10    no need to go to the FCC or a national sovereign
11    organization to get a broadcast license.  There's no
12    limitation of spectrum.  It's a switched delivery system,
13    so anybody can transmit to anybody.  As a result, there
14    can be, just like there aer hundreds of thousands of Web
15    sites, there could be hundreds of thousands of, if you
16    will, channels.
17              Broadcasts can reach out to the overall Internet
18    or can reach out within organizations over intranets. 
19    Programs can be personalized, since the receivers, if you
20    will, are all personal computers that have memory and
21    local storage in computers, were already early on in the
22    process of experimenting with how all these different
23    program services can be mixed and matched, and in fact the
24    programs themselves can either be broadcast live or made
25    available on demand, can be linear broadcast or can be

 1    interactive, and can be integrated with the worldwide web.
 2              (Slide.)
 3              MR. GLASER:  To give you a sense of how much
 4    activity is out there and how rapidly it's growing, this
 5    is a survey that was done just through looking at the
 6    various search engines out there for how many Web sites,
 7    how many Web pages have in this case audio or video on
 8    them.
 9              The green in the diagram represents audio and
10    the light blue represents video.  In the period of the end
11    of September to the end of November, which is to say a
12    two-month period, the number of Web pages with video or
13    audio grew by 70 percent.
14              The video piece of that actually grew by about
15    85 percent, and the audio piece grew by 60 percent. 
16    Audio, as you see in this chart, still is substantially
17    greater than video because of bandwidth considerations,
18    which I'll talk about in a second. 
19              But, nonetheless, the overall amount of video
20    and audio that's out there, as well as the number of
21    people that experience this -- estimates are that there
22    are on the order of 20 million people globally that
23    experience video and audio on the Internet, and that's
24    grown very dramatically, probably doubled in 1997 over
25    1996.

 1              So this is a broad-based sort of, if you will,
 2    almost bottoms-up, perhaps one might even say ad hoc
 3    underground type of phenomenon.
 4              (Slide.)
 5              MR. GLASER:  The driver of this has been
 6    primarily people with dial-up access to the Internet. 
 7    Some people get access to the Internet, of course,
 8    directly in corporations or in campuses or government, but
 9    the majority of Internet access for experiencing video and
10    audio is through dial-up.
11              This chart shows that from 1995 to 1997, again
12    just the last two years, the number of PC households grew
13    in a healthy fashion probably by about 40 percent.  But
14    the number of people with dial-up access to the Internet
15    grew about five-fold during that same period.  There is
16    this real explosion of Internet access.
17              It has been almost purely borne on the back of
18    dial-up standard POTS -- plain old telephone service --
19    modems.  There is a little bit of ISDN and cable modems,
20    but, as you see in the chart, a very small percentage. 
21    Cable modems really sort of made their first way in 1997. 
22    We probably exited 1997 with 100,000 households on a
23    domestic basis with cable modems installed, and estimates
24    are that there may be 300,000 to 400,000 or 500,000 in
25    1998, so very rapidly growing.  But compared to a base of

 1    over 30 million dial-up households still a very, very
 2    small number.
 3              (Slide.)
 4              MR. GLASER:  The interaction between the methods
 5    of access and the bandwidth and hence video quality is a
 6    very important fundamental point.  This chart shows the
 7    type of alternatives that we have available, and what
 8    we're going to do is show a few examples of what people
 9    are doing today on the Internet as well as what's possible
10    tomorrow.
11              By way of contrast, DTV, in terms of the overall
12    bandwidth, is nearly 20 megabits or 20,000 kilobits of
13    bandwidth that's available per 6MHz channel.  All of the
14    methods of transmitting video on the Internet today use
15    just a fraction of that.  In terms of what people do over
16    standard phone lines, just about 1/400th of the amount of
17    bandwidth that the full highest definition DTV signal can
18    use.
19              So we're talking about here very, very
20    fractional uses of bandwidth relative to full DTV.  The
21    experience that one gets with that shows, but it is very
22    interesting that even though the quality of the experience
23    is much lower that all of these other benefits associated
24    with the transmission of video and audio on the Internet
25    are so powerful that there's still a lot of activity going

 1    on in this area.
 2              Before we look at these various tradeoffs,
 3    that's the vast majority at the below 56K POT, standard
 4    phone line connection.  Also I'm going to want to show
 5    what's possible in the 100 to 500K range, where the video
 6    quality is less than VHS but getting to a point where it
 7    is competitive with that.  As a third reference point, I
 8    put the MPEG standard, which is sort of the initial video
 9    standard, MPEG-1, which gets about 1/10th or 1/15th of the
10    DTV standard.  I didn't choose to do any demonstrations
11    there, but just wanted to show you that as another
12    reference point that many people may have.
13              (Slide.)
14              MR. GLASER:  Now I'd like to show two examples
15    of what this video looks like that is being put up today,
16    in fact every day, by two major broadcast companies.  And
17    I want to thank the folks at ABC and at Fox News for
18    allowing this demonstration.  These are literally what you
19    would have seen if yesterday or the day before you had
20    gone to their Web pages.  
21              (Slide.)
22              MR. GLASER:  This is, and they put
23    up video on a regular basis associated with very many of
24    their stories.  This is their home page.  When one clicks
25    on the mouse, this is the article on the deep weather

 1    freeze, and this is the video that is up there.  Again,
 2    this is the video that's designed for 56K modems, which is
 3    the fastest popular commonly-available modem speed.
 4              And, as you'll see, the video quality here is
 5    well below broadcast.  We called it talking head video on
 6    that last slide.  And, as you'll see, it gets the point
 7    across but it certainly isn't anywhere near broadcast
 8    quality.
 9              (A video was played.)
10              MR. GLASER:  Okay.  
11              (Slide.)
12              MR. GLASER:  What I will now show you is a
13    similar clip from Fox News.  And that gives you a sense. 
14    This is also just a video page that Fox has, and every day
15    on their Web site they're putting up lots and lots of
16    clips like that, and this is an example again for that
17    same bandwidth, that same 56K, what you can expect to see.
18              (A video was played.)
19              MR. GLASER:  Now again that was what can be done
20    today, and that's the majority of video on the Internet is
21    at that level.
22              (Slide.)
23              MR. GLASER:  I want to show examples of the next
24    level up, because I think it is actually striking to see
25    that if you put 3, 4, or 5 times the amount of bandwidth

 1    on the problem, still a very small percentage in this
 2    case, something like 1/200th or 1/100th of a full DTV
 3    signal, still the video can get, for certain kinds of
 4    applications, into the sort of near VHS range.
 5              I first want to show an example from C-SPAN. 
 6    This may be the first time a clip from C-SPAN has been
 7    shown on C-SPAN.  I didn't know this at the time we were
 8    setting up.  And then I want to show a movie trailer to
 9    show you for a different kind of content.
10              This clip is at about 300K, to give you an
11    example of the range of expectation.
12              (A video was shown.)
13              MR. GLASER:  Okay.  Now I want to show you a
14    second clip, which is a motion picture trailer.  This has
15    a lot more action and I think this clip is at about 400 or
16    500K, but, as you'll see, it's also not quite VHS quality,
17    but it starts to get in that realm, get into that range of
18    usability.
19              (A video was shown.)
20              MR. GLASER:  So, by way of summary, and then
21    after this we certainly want to turn everything over to
22    the committee for questions, within the range of what can
23    be done today -- and again none of these formats, just to
24    be clear, are any of the approved DTV formats -- all of
25    this stuff would go under the broad rubric of what DTV

 1    calls data transmission, where the only obligation that
 2    DTV has is to send this as a data stream and assume that
 3    there's a processor on the receiving end -- for instance,
 4    a PC or the kind of microprocessor that's found in a WebTV
 5    -- that knows how to interpret this data.
 6              But the implications are very powerful in that I
 7    think you can see a scenario where DTV bandwidth can be
 8    used not only for single channel very high definition or
 9    even 10-channel SD, as has been discussed, where there
10    will be better than broadcast quality experience, but, as
11    you've seen here, 50, 100, 200, 300, perhaps as many as
12    400 discrete, if you will, channels of video information
13    that has all kinds of very interesting implications in the
14    months and years ahead as microprocessors become
15    pervasive.
16              And all of this is just running off of a
17    standard Pentium personal computer, to give you an example
18    of sort of how the futures might be coming together.
19              So, with that, let me turn things back over to
20    Norm and Les and anyone else on the committee that has
21    questions for our panel this morning.
22              MR. ORNSTEIN:  Thank you all.  That was
23    provocative and enlightening in a host of ways.
24              Let me start with just a question or two.  First
25    for Mr. Allan, talk a little bit, if you will, about the

 1    nature of the compression technology now and where it
 2    seems to be heading.  You said at the start that we might
 3    be talking about five or six or seven or eight channels
 4    that could be multiplexed simultaneously.
 5              Is that where we're going to be when these first
 6    digital signals go out in the top 10 markets, and if we
 7    can look ahead at where we may be, how many channels
 8    realistically, given what's happening with compression,
 9    could actually go out at any given time, looking down the
10    road?
11              MR. ALLAN:  Well, I think a lot of the response
12    to that question is a function of what the broadcaster
13    believes is acceptable video quality.  We all have
14    differences of opinion when we see different bit rates. 
15    In the system, it's basically totally variable, which says
16    that you can go now to 1.5 megabits a second, obviously in
17    the 19 that gives you 10 channels or more.  That's cartoon
18    quality video.
19              Movies right now are done reasonably well at 3
20    megabits a second, sports are at 6 to 8 depending on which
21    system you're dealing with today.
22              So it becomes a quality issue of the broadcaster
23    on what's acceptable to him and how he wants to use the
24    compression that's there based on how he wishes to use the
25    bit rate.

 1              One of the things that will happen going
 2    forward, as we all get better in designing the algorithms
 3    in the encoders that are used for compression, we'll find
 4    ways to do better quality pictures at lower bit rates, so
 5    there's still going to be headroom within the encoders to
 6    provide even more flexibility in the system going forward.
 7              Exactly what those bit rates aer at this point
 8    in time is really a function of the creativity of the
 9    engineers that are working with the design of encoders.
10              MR. ORNSTEIN:  And, as I understand it, if
11    you're talking about a live signal, like a sports program,
12    that takes a lot more than if you're talking about even
13    something like a movie, which may have a lot of action in
14    it but which isn't going out live.
15              MR. ALLAN:  If you were doing a sports event
16    today in high definition, you're going to use the majority
17    of the 19 megabits per second.  If you're willing to do
18    standard definition the way DSS would do it today in a
19    digital format, you can do a basketball game, which is
20    most likely the hardest task because of the action, in
21    somewhere approximating 7 megabits per second.
22              That, when DSS started, was closer to 9, so even
23    in there some of the improvements have freed up bits for
24    other uses and other programming means.
25              MR. ORNSTEIN:  And if you wanted to do a couple

 1    of movies.
 2              MR. ALLAN:  If you want to do a couple of
 3    movies, high definition with surround sound, you can most
 4    likely run them in the vicinity of 10 megabits apiece, and
 5    most likely do two movies, high definition, on that
 6    channel, with something that is highly acceptable to the
 7    consumer.
 8              Right now that's stretching the system about as
 9    far as it can go in that capability.  And then you start
10    getting into things that some people might believe is high
11    definition, some other people would say it's not, and it
12    starts to become a subjective attitude.
13              MR. ORNSTEIN:  One other question about the
14    screen technology.  Certainly if we think about what the
15    futuristic projections have been, it's not just that we'll
16    get reasonably priced large-screen Tvs, but we're going to
17    have these plasma screens that you can hang on a wall. 
18    Those are available but extraordinarily expensive now.
19              Is that technology and production cost changing
20    to a point where maybe if we look to when Josh says 8 or
21    10 years down the road we actually have some real
22    penetration here, that consumers are going to be able to
23    buy wall-size screens like pictures they can hang at a
24    relatively small costs?
25              MR. ALLAN:  I'm always afraid to forecast when

 1    flatscreen will be available, but I've been in the
 2    consumer electronics industry for almost 30 years, and
 3    every year we say it's 10 years out, and we haven't been
 4    right for 30 years.
 5              However, there's no question those are coming
 6    down.  They're digital displays.  People are working on
 7    them very diligently.  
 8              What's happened with NTSC, people worked on
 9    electronics but the picture tube was pretty much a known
10    display, and there wasn't a whole lot of cost reduction
11    work done.  I think that Jim Meyer from Thomson Consumer
12    Electronics at the Consumer Electronics Show commented the
13    other day that there's no question the electronics costs
14    on digital television will drop very quickly.
15              You can already see merchant chip manufacturers
16    introducing .35 micron chip sets, which is the first
17    attempt at major cost reduction of the electronics.  But
18    his second part was, people will start paying attention to
19    display technology again and working on cost reduction on
20    display technology, be it tube projection or flatscreen to
21    also cost-reduce that, because they recognize that their
22    business, which sells 25 million television sets a year in
23    the United States today, that that volume and loading
24    those factories is a function of a price/cost
25    relationship, performance relationship with the consumer. 

 1    So they're going to be addressing those very diligently,
 2    because they want the costs down.
 3              I think one of the things you should recognize
 4    is that consumers today, there are 18 million households
 5    that have television sets that cost them over $2,000 at
 6    this point in time, and the consumer electronics industry
 7    is selling roughly 1 million sets a year at the $3,000
 8    price range and above, so there are plenty of people out
 9    there that are video adopters and innovators to at least
10    prime the pump to get things started with reasonable
11    volumes so the consumer electronics manufacturers can do
12    what they do very well, which is take a very complex
13    product, make it as simple as possible, and cost reduce
14    it.
15              And I think the history of television, in '54 a
16    color television set, 13-inch, cost the same as a
17    Chevrolet.  Today that same television set's about $129. 
18    VCRs started at $1,000.  Today you can buy them for $89. 
19    That was in '76; now we're in '97.
20              So their track record is, because of the
21    electronics and the type of products, to cost-reduce very
22    diligently because they are in a mass market business and
23    their businesses are all volume-leveraged.
24              MR. ORNSTEIN:  Les?
25              MR. MOONVES:  Once again let me reiterate thank

 1    you, all three of you, for a very good presentation.
 2              I want to deal with the money for a little bit. 
 3    Show me the money.  You both spoke about what it's going
 4    to cost for the broadcaster to put in the equipment,
 5    anywhere from $1.5 million to north of $6 million or
 6    whatever it will cost for each broadcaster.
 7              By the same token, Josh, by your statistic, in
 8    the year 2004 we'll have approximately 23 percent
 9    penetration.  One of the things this commission has to
10    determine is how much has the broadcaster been given, per
11    se.  Now, with penetration being only 23 percent in the
12    year 2004 and the cost of this equipment being
13    considerable, what do you view as the future in terms of
14    the finances for the broadcaster?  Either one of you can
15    answer, because I think you may have differing opinions.
16              MR. BERNOFF:  Well, the question is how you make
17    use of that resource.  One of the things that I am
18    projecting that's most likely to happen with independent
19    broadcasters first as opposed to affiliates of the major
20    networks is to be able to use the bandwidth for other
21    means.
22              As I understand it, the data, for example, that
23    can be transmitted in this signal doesn't have to be
24    associated with a television program, and it's possible
25    for the broadcasters to take that bandwidth and allocate

 1    it to other profit-making activities, from, say, carrying
 2    a pay channel like HBO, on a sideband to using it for a
 3    paging network.
 4              So I think that what you're going to see in the
 5    first five years is everybody in the broadcast business
 6    experimenting with picture formats, with data broadcasts. 
 7    During this time, the number of people watching will be
 8    low enough that you'll be able to recover from any of
 9    these experiments if they don't work out.  It's definitely
10    not going to be a time where large amounts of profit are
11    going to be derived from this.
12              In the long term, the broadcaster's ability to
13    leverage not only people receiving the signals over the
14    air but also, assuming that must-carry continues to take
15    place, the receipt through cable is where the money is. 
16    It's in advertising and the ability to sell advertising on
17    five different channels during the day, to rent out space
18    to additional channels, to carry data, and to have
19    potentially those channels all carried on cable and
20    satellite is where the money is.
21              But I think certainly this is a case of
22    investment in the short term paying off over the period
23    from five to ten years from now, when the audience finally
24    starts to show up for this.
25              MR. GLASER:  I think, linking together a few

 1    things that Josh said and that came out in Bruce's
 2    presentation, Bruce's presentation illustrated that 47
 3    percent of the broadcasters in the most recent survey said
 4    that they planned to deliver information services using
 5    this additional bandwidth.  It was very high in the
 6    survey.
 7              A very interesting question that Bruce also
 8    raised, which Josh just touched on, relates to must-carry. 
 9    If must-carry includes data services, then I believe there
10    is a tremendous economic opportunity for broadcasters in
11    what one might call the data information services,
12    Internet access space.
13              Internet dialtone, with consumer spending an
14    average of $20 a month for 56 kilobits of access,
15    represents a tremendous opportunity in various forms,
16    where that is a market that has on the order of 20 percent
17    consumer penetration today and probably, as per Josh's
18    point, very high correlation with the early adopters of
19    DTV technology.
20              So if broadcasters are given must-carry standing
21    for the data feeds that they're sending as well, or if,
22    failing that, they are able to get direct digital antennas
23    into people's homes, which is an alternate scenario, then
24    I believe that there's a tremendous short to mid-term
25    economic opportunity.

 1              Clearly there's an upfront capital cost
 2    associated with any of these deployments that's onerous,
 3    and so from a pure capital outlay standpoint the earlier
 4    years of DTV will be a very substantial investment period,
 5    but I would view that the mid-term opportunity for those
 6    kinds of ancillary services, whether and intended public
 7    policy consequence or not, is a very, very promising
 8    scenario that sits under the hood here as one of the
 9    reasons why I thought it was valuable to demonstrate the
10    various ways that the bandwidth can be used for non-
11    traditional -- if DTV's old enough to have traditions --
12    ways of looking at DTV.
13              MR. BERNOFF:  I just want to point out one other
14    thing.  The real question here is what's the value of
15    what's been given to the broadcasters, and one way of
16    thinking about this is imagine over the next three years
17    you have either a multichannel operator, somebody who owns
18    20, 30, 50 stations, or a second-tier network like UPN or
19    the WB having to make major investments in all of these
20    upgrades.
21              It wouldn't surprise me if someone who has a
22    vested interest in delivering data, somebody like AOL or
23    Microsoft, sees these television stations, collections of
24    television stations, as a distribution method for their
25    data, and to see a proposed acquisition or a major

 1    distribution deal of that kind.  Especially when there's
 2    this bandwidth that is available, it is likely.
 3              The question is what happens ten years out if
 4    everyone's got digital receivers and there's a lot of high
 5    definition broadcasting going on and there is suddenly not
 6    a whole lot of room left to squeeze the data into the
 7    signals.
 8              MR. MOONVES:  In effect what you're suggesting
 9    is that the definition of a broadcaster, particularly in
10    terms of ownership, which has already been changing, is
11    likely to change pretty substantially.  I mean, we're
12    likely to have a complete confusion where at least now
13    there's some distinction between the Microsofts of the
14    world and the broadcasters of the world.
15              MR. GLASER:  The word we used was "convergence,"
16    not "confusion."
17              MR. BERNOFF:  Right now broadcasters like the
18    PBS stations are selling their vertical blanking interval
19    space for use in data delivery, and nobody sees that as
20    particularly scary.  Of course, the reason is it is public
21    television stations, they need the money, and the fact
22    that Starsight electronic program guides are being
23    delivered there doesn't really scare anybody.
24              But there's a big difference between the 9600
25    baud that you can get in a vertical blanking interval and

 1    suddenly 19 megabits per second worth of bandwidth
 2    available in a digital television channel.
 3              MR. ORNSTEIN:  Let me ask you a different
 4    question, Josh, and then we'll open it up.  It's partly
 5    related to what Les has said, but also because we are
 6    considering the question of political communication as
 7    well, and political communication by candidates and
 8    parties at least has a lot of parallel with commercial
 9    communication and advertising.
10              I guess what I want to ask you to explore a
11    little bit is, if we look down the road and think about
12    all the options that will be available to consumers and
13    how consumers will be looking at their television sets,
14    it's got to change dramatically the nature of advertising
15    -- the way in which advertisers communicate.  The
16    technology has got to be changing in a way where you can
17    simply program out the commercial spaces, if you want. 
18    It's certainly going to be a whole lot easier.
19              As you've done your surveys and project ahead,
20    do you see advertisers, first of all, either through the
21    agencies or the advertisers themselves, thinking a lot
22    about and projecting ahead themselves as to how they will
23    respond to this digital high definition era, including all
24    of the data streams coming through, and do you see the
25    communication changing in a fundamental way?

 1              If we move from one minute to 30 second to 15
 2    second, toward 8-second spots, are we going to continue
 3    that trend or move in some different fashion?
 4              MR. BERNOFF:  I actually talked to a fair number
 5    of television advertisers, both during and after this
 6    study was created.  They are fascinated by this, as they
 7    are by any new medium.  
 8              So let me point out two implications.  One has
 9    to do with reach.  What we're talking about here is a
10    fragmenting of media.  You're talking about many more
11    channels, many more choices, and, with things like video
12    on the Internet, the possibility for a limitless number of
13    streams.
14              And in a world like that there is some value in
15    having the only shows that a significant percentage of the
16    world watches.  And that's why when I go to network
17    executives and show them that three or four percent
18    decline in market share they say, oh, that doesn't look
19    too bad, because they're still going to be the only people
20    who are in possession of the Super Bowl and Seinfeld and
21    other high-reach activities.
22              The second thing which I think is interesting
23    has to do with targeting, because right now you can make a
24    highly-targeted buy on something like the Discovery
25    Channel or Home and Garden Television and expect to reach

 1    a very specific set of people.  Not only will you be able
 2    to target further, but you'll be able to let people act on
 3    this.  
 4              Right now, using a WebTV-Plus, you can in
 5    certain programs, say, be watching a music video, push a
 6    button and actually purchase the video that you're
 7    watching on screen, get the CD delivered to your house. 
 8    And I think that advertisers are going to be especially
 9    interested in, you know, show them the spot.  You know,
10    show me the commercial for the automobile, and if you're
11    interested push the button on your remote and we'll send
12    you a brochure or we'll send you into the Web site for the
13    dealer in your area to find more information.
14              So the commercial doesn't become so much about
15    here's a product we want you to know about.  Here's an
16    image we want you to have.  All right, we're done.  But if
17    you want to invest more, you will be able to go deeper
18    into that commercial and interact with it.
19              For things like home shopping we could end up
20    with an experience that's more like Nieman-Marcus than it
21    is like Walmart when you have this kind of interactivity
22    available.
23              MR. ALLAN:  Just to add to Josh's comments,
24    right now what we're seeing is that the advertisers are
25    very much in the same boat as the broadcasters.  They have

 1    a new capability and they're trying to figure out how can
 2    they really utilize it.
 3              We've just recently been approached by one of
 4    the largest advertisers in the United States, Proctor and
 5    Gamble, asking us to loan them equipment for the next 90
 6    days so in their headquarters they can experiment with
 7    high definition, they can experiment with multicasting,
 8    they can have their advertising people working with it to
 9    try and understand how they think they can use it to
10    improve their overall advertising message and obviously
11    hit a directed audience.
12              So I think there's going to be a lot there, and
13    I don't think anybody can get a clear answer today other
14    than that it's a new tool and a lot of people are going to
15    be experimenting just to see how it works for their
16    business and how it can improve their overall business
17    operations.
18              MR. ORNSTEIN:  It's not a subject for us, but
19    retailing is going to go through a revolution like they
20    have never seen before, clearly.
21              Rob, let me ask you just one question.  You
22    talked about video on the Internet.  Talk a little bit
23    about the Internet on video, because I would assume that
24    we're also moving into an era where people as they watch
25    their television sets are going to be able to

 1    instantaneously call up any Web site or Web page, and that
 2    the Web pages are going to change to accommodate the video
 3    viewers, not just the computer viewers.  Is that an
 4    accurate assumption?
 5              MR. GLASER:  Yeah.  I think there are two issues
 6    here.  There's what's technically possible and what will
 7    consumers want to do.
 8              From a technical standpoint, if one were a
 9    purist, the most rational thing to do would be to have a
10    general purpose microprocessor in every DTV device so you
11    could just do whatever you wanted with the data, and
12    somebody could download a new job application, if somebody
13    had a new idea for a way to tell a story interactively or
14    a way to have a quiz after a children's program, or a
15    whole set of scenarios that are very interesting.
16              The challenge and the issue is that the scenario
17    for how people watch television and the scenario for how
18    people use computers are totally different.  Typically
19    when someone's using a computer it's a one-on-one
20    experience, the screen is 12 to 18 inches away, there's a
21    keyboard.  It's a high level of interactivity engagement.
22              When people use televisions, there may be
23    multiple people.  The viewing distance for standard NTSC
24    is six to ten feet away, and for HD with big screens you
25    want to actually even be further away to have the best

 1    possible experience.  The level of interactivity is
 2    usually just a channel-up or channel-down button.  
 3              So there aer such different paradigms of usage
 4    that one of the things that we've see is that there is
 5    sort of a no-man's-land in the middle and we're all
 6    struggling with is there a program guide that's easier to
 7    use than up and down where you don't have to have a
 8    keyboard in order to use it.  And then when you get to the
 9    level of how the TV programs work with ancillary data and
10    ancillary information how that works.
11              So I think there is no doubt that that 19.3
12    megabits of bandwidth that broadcasters have can be used
13    as a very, very powerful asset for data broadcasting,
14    including pure Internet access, as it is today on a
15    computer, where people might plug their DTV feed into
16    their computer, much as people are plugging cable modems
17    into computers.
18              But the question of what the hybrid applications
19    are, where you're actually using your TV for Internet
20    access, where it's sending e-mail, where it's the
21    interactive conferencing and chatting, going to lots of
22    Web sites, that's more of a social issues and a usage
23    pattern issue than it is a technological issue.  And on
24    that one nobody yet has found the hybrid that works.
25              Things like WebTV certainly are very interesting

 1    experiments, and they have a couple hundred thousand
 2    users.  And I'm actually optimistic that we're going to
 3    get to an interesting hybrid there.  But there's not a
 4    paradigm that you can point to that's as pure as either
 5    today's Internet or today's TV experience.
 6              MR. BERNOFF:  I'd like to take the chance to
 7    answer that very directly.  I spent a lot of time talking
 8    to people in the television production business about
 9    adding interactivity.  And they're very confused right now
10    about what they need to do.
11              Let me just cite three problems.  Number one, if
12    you want to add interactivity to a television signal right
13    now, you have Intercast that runs on PCs, Wink that runs
14    on cable boxes, WebTV, NetChannel, and Worldgate, which is
15    Internet access that runs on cable boxes.  And they all
16    have different standards for linking television signals to
17    interactive information.  So the person producing is like,
18    well, which standard do I support.
19              The other problem is there's nobody there
20    watching, so you put in all this effort and there's no
21    result right now.
22              And the third problem is that adding
23    interactivity to television programs is expensive.  It's
24    expensive to figure out.  I mean, producing television
25    programs is expensive, but we already know how that

 1    results in a payoff in terms of audiences watching.  But
 2    the production cost of doing this right now doesn't
 3    justify anything other than experiments.
 4              Now digital television has the potential to
 5    resolve all three of these problems.  There will be more
 6    people watching.  There is the likelihood to be one
 7    standard for adding interactivity to television signals,
 8    and if you think three or four years out, maybe people
 9    will have finally figured out the appropriate economic
10    model to do that.
11              But nobody's figured out right now what the
12    appropriate thing is to do, and they're all scratching
13    their heads and asking me what they ought to do over the
14    next couple years.
15              MR. DUHAMEL:  Bruce, the question that I had is
16    do you expect the economies that you've seen on the
17    consumer electronics, as the prices of the receivers come
18    down, to be translated into economies on the broadcast
19    equipment over the next four to five years?
20              MR. ALLAN:  Well, there's no question that as
21    you move into the production mode you get some economies
22    in the broadcast business.  What you have to recognize is
23    we're dealing with a universe of 1,684 customers, not 100
24    million.  So you'll never see the kind of economies in
25    broadcast equipment that you see in consumer equipment.

 1              There's no question, though, that the
 2    electronics in an encoder, as new chip sets are developed
 3    and as things happen, there will be economies that will
 4    come along.
 5              That number has dropped.  When the initial
 6    estimate was done four years ago at $10 million to $12
 7    million a station, it was based on the known technology
 8    and the known capabilities and estimates at that point in
 9    time.  It's down significantly from that now because it's
10    in production mode, and it most likely will go somewhat
11    lower.  But you're starting to get in the realm of a 20 to
12    30 percent premium over analog equipment, so there isn't a
13    whole lot more room to take cost out of that going
14    forward.
15              MR. DUHAMEL:  You mentioned you were figuring an
16    average of $5.7 million.
17              MR. ALLAN:  That's what a broadcaster told us. 
18    That's not my number.
19              MR. DUHAMEL:  Because I've seen broadcasters
20    that are spending close to $20 million for a single
21    station.
22              MR. ALLAN:  It depends what they're doing at a
23    station, how they're equipping it.  What we got in the
24    $5.7 million was the feedback from broadcasters on what
25    they intended to do on average, and it was a structured

 1    sample that had large broadcasters, medium broadcasters,
 2    and small, so it was indicative of the population of the
 3    United States and not an individual broadcaster.
 4              MR. DUHAMEL:  Because the numbers I've seen,
 5    this wasn't a top 10 station, but that they had placed an
 6    order and I think the total order was about $20 million.
 7              MR. ALLAN:  The biggest issue depends on how
 8    they're equipping their station for local origination. 
 9    And that's where the big variable comes into it, depending
10    on how they see doing that -- number of cameras, number of
11    encoders, redundancy.  There are a lot of things,
12    depending on how a station wishes to operate and run his
13    station that determine how big that bill really is.
14              I mean, a lot of people will run redundant
15    transmitters simply to make sure that if one goes down and
16    they can't afford to go off the air they've got full power
17    and they're still broadcasting.  A lot of people will do
18    redundant encoders, and the question is when do they get
19    to the redundant encoders to make sure they don't have
20    some of the experiences we've had when we've done
21    demonstrations with one and we try and make it work for
22    four hours.
23              So there's just a lot of variables there.  And
24    what broadcasters have told us from a budgeting standpoint
25    is that 25 percent of them expect to have their budget for

 1    funding to be up and actually operating and the basic
 2    funding approved from a budget standpoint by 1998, and 50
 3    percent have said they expect to have approved funding by
 4    1999.
 5              So the funding and the budget and the growth,
 6    and the fact that all of this investment does not have to
 7    happen in one year, it gets spread over time, you have to
 8    be very careful in the way you look at the numbers.  And
 9    it will vary by station.
10              MS. SOHN:  Bruce, I want to get back to the
11    question of what is HDTV because I think that's really
12    important when you're talking about how much capacity a
13    broadcaster's going to be using at any particular time.
14              At the Consumer Electronics Show my
15    understanding is that the Consumers Electronics
16    Manufacturers Association approved two types of HDTV. 
17    That's 1080I and 720P.  Would you tell me the difference
18    in terms of how much capacity they use?  And then I've got
19    a follow-up question.
20              MR. ALLAN:  Basically 720P and 1080I have
21    roughly the same requirement for data.  They are different
22    approaches both to get high definition.  In my belief, the
23    reason CEMA chose it is high definition is when we
24    originally did the standard, and we're talking only high
25    definition.  Those were the two formats that were selected

 1    for high definition.
 2              But, as I say, the bit rate is roughly the same. 
 3    The question then becomes how do you handle those formats
 4    and what bit rate do you want to run with that determines
 5    the actual utilization of the capacity.  But they utilize
 6    almost the same amount of data to get a comparable
 7    picture.
 8              MS. SOHN:  Now you had on one of your charts
 9    here that the broadcasters say that during prime time 99
10    percent of them during prime time are going to do HD.  But
11    is it going to be the type of HD that uses the 7 or 8
12    megabits, like a movie, or do you think it'll be more of
13    the kind that will use most of the bit stream, so 18 or
14    so?
15              MR. ALLAN:  Well, I think initially a lot of it
16    is going to be in the 18 range so people can put out the
17    best possible picture, create the most dramatic effect at
18    retail and expose it to the consumer.  I think as the
19    broadcaster has experience and time in utilizing the
20    system and he starts and his engineering and production
21    people understand the tradeoffs that they'll work that to
22    get maximum capacity and maximum utilization out of that
23    channel.
24              We've seen it in other digital systems, and I
25    don't believe it would be any different with broadcasters. 

 1    But it's a case of understanding the applications,
 2    understanding what the quality levels are, and you can see
 3    in DSS today one of the broadcasters will run movies at 3
 4    megabits a second, and he determines that's acceptable. 
 5    The other runs at 3.5 megabits and for pay per view he
 6    goes to 4.5 megabits to make the picture look better.
 7              And I think that the broadcasters will determine
 8    where the mean is and how they can get maximum utilization
 9    out of that channel for not only that but so they have
10    data capacity and other services that they can use on an
11    opportunistic basis.
12              MR. GLASER:  My sense is, and this is sort of a
13    view of how technology interacts with markets, that it's
14    clear that there will be times of day and types of
15    programs where it will only be economically rational to
16    have multichannel presentations because the extra
17    bandwidth won't get you bigger audiences in terms of
18    larger pictures.  And the tricky question is how you build
19    viewer habituation, how you built usage patterns when some
20    days you may be broadcasting, if you will, two channels,
21    sometimes you might be broadcasting five channels.
22              So are channels 3, 4, and 5 channels that can
23    really build loyal audiences if they're not 27 by 7
24    channels?  It's a tricky question.
25              If these devices in a common scenario get hooked

 1    up for interactive services, either into PCs or this
 2    hybrid PC/TV thing develops, then you have a third way to
 3    make money, which is through those businesses.  So I think
 4    the wild card in my opinion is there are a whole set of
 5    factors.  Does must-carry include all data?  Do standards
 6    coalesce around interactive services, be it essentially
 7    treating DTV as an equivalent of a cable modem for PC
 8    access or doing something on a hybrid TV attach device?
 9              If that happens, then there's a big economic
10    opportunity.  My perception is there is no coalescence
11    there.  There's a lot of sniffing around.  But it's a
12    tremendous opportunity, and so my sense is that there will
13    be people that experiment and find successful hybrids
14    there, because in the short to middle term there is a
15    substantial economic opportunity.
16              MR. BENTON:  I found, Bruce, three of your
17    charts especially interesting and it kind of confirmed my
18    guess.  The chart on what time of day will you broadcast
19    HDTV and what time of day will you broadcast standard
20    definition.  HDTV clearly, prime time is the target. 
21    That's makes most sense because you're spending more to
22    reach the largest audience.
23              Now, going to the multiple channel, this chart
24    of yours, if multiple channel, what will you have on those
25    channels, that to me was, from a programming point of

 1    view, the single most interesting chart of all the
 2    presentations.  I wish you'd talk more about this chart,
 3    of what will you have on these channels, because I notice
 4    instructional/education is 20 percent.  I think if there
 5    are five channels that you could have a full-time channel
 6    just for instructional/education, which I'm sure we'll be
 7    talking about this afternoon.
 8              Local news and public events, 26 percent.  You
 9    could have a full-time channel, multiplying by six.  So
10    I'd like to have your thoughts to go into a little more
11    depth with us about the meaning of this chart of if
12    multiple channel, what will you have on those channels?
13              MR. ALLAN:  I think a lot of what's happening
14    there, when you look at it, and we've said it on other
15    things, broadcasters have a new delivery system, they have
16    a new tool, they have new capabilities.  They're all
17    working their business models right now to understand how
18    those work for them, what the business might mean, what
19    rules of the business change, so they can understand what
20    economically makes sense for them.
21              There's no question that PBS and others have
22    said they want to multicast during the day because they
23    want to take advantage of the educational capabilities and
24    do things that they would like to do to reach broader
25    audiences on an educational and public service basis and

 1    expand their programming to schools, hospitals, and a lot
 2    of places that they can't reach with one channel today.
 3              I think the interesting thing here is that the
 4    broadcasters started looking at news, public information,
 5    and public services more so than they did pay per view and
 6    other things that could equally be used for the channel.
 7              Now the survey doesn't go into that in enough
 8    depth to let us interpret that totally, but I found this
 9    as an interesting finding also, because it may have been a
10    little bit different than I would have guessed it would
11    have been.  But again I think the key is that all of these
12    people are trying to understand what is the business model
13    for a broadcaster now that he has these new capabilities. 
14    What does it mean from an advertising standpoint?  How
15    should he program it to maximize his audience share?
16              And they're working these diligently, and I know
17    that most of the people we've talked to don't believe they
18    have all the answers, and part of the answers are going to
19    be developed in the marketplace, as some of the other
20    panel members have said, as they experiment with the new
21    services and find out what the consuming public tells them
22    they really want.
23              MS. CHARREN:  In the interviews that were
24    conducted on that very same question, do you feel that any
25    of that is the broadcaster making it sound good in the

 1    beginning, the same way they had Kulka, Fran and Ollie, as
 2    that delicious program on television began, and then as
 3    the money capabilities showed up certain kinds of
 4    programming disappeared in favor of making money, which is
 5    understandable but changes the way these answers might
 6    feel in the future.
 7              MR. ALLAN:  Well, it's impossible to give you a
 8    total answer to that, but if I look at the study in
 9    context, if I were trying to respond to a study to slant
10    the answers to say it's difficult, it's a problem, I don't
11    know how to handle the programming, some of the answers
12    that came out -- we're going to spend the money, we're
13    going to do it now -- would have been different.
14              So I think what you're seeing is people are
15    groping with what they're really going to do with this. 
16    We're getting a fairly honest response on what they're
17    thinking.
18              That's not saying it doesn't change tomorrow
19    when they've had another 24 hours to think it through and
20    somebody gets a bright idea on how it may work for them,
21    but I think it's an accurate indication of where they are
22    today.
23              MR. BERNOFF:  I actually think there's a
24    relatively simple way to look at this, which is the
25    network affiliates will pass through what the network

 1    produces in prime time.  And to the extent that networks
 2    have announced that they're going to do high definition I
 3    think that they will all be forced to go to that level to
 4    be competitive.
 5              It's not going to be up to the local network
 6    affiliates to say yes or no.  They're like to be required
 7    by their affiliate agreements to pass that through at that
 8    high level of definition.
 9              And as far as what happens during the day when
10    there's additional channel space available, forgive my
11    cynicism, but it's my perspective that broadcasters will
12    do those things that are likely to generate the most
13    income while maintaining their public interest
14    obligations.
15              MR. ALLAN:  I think one of the things that we
16    don't show in the charts but it's something that is
17    changing, or at least we believe is changing, is initially
18    the model that people had talked about was that the
19    networks would encode programming, ship compressed
20    programming to the affiliates, and the affiliates then
21    would pass that programming through and that would be the
22    way they would start high definition.
23              In our discussions with broadcasters, we're
24    seeing that model changing.  We're hearing networks
25    telling us they're going to broadcast high definition via

 1    satellite, uncompressed, and there will be encoders
 2    available at the local broadcaster to do ad insertion, to
 3    do various things.  He will then encode it and broadcast
 4    that signal.
 5              With this study result, what that does, it gives
 6    the local broadcaster local origination capability that
 7    the original model he wouldn't have had until sometime
 8    farther down the road.
 9              So I think some of this you're seeing a little
10    of the local affiliate response, obviously, in the numbers
11    we're talking about.  You're seeing a difference and
12    change in the last six months on what the model for
13    broadcasting may be as far as the distribution of
14    programming.
15              So the local content and the ability to have
16    local content may be larger up front than a lot of us
17    anticipated initially.
18              MR. CRUMP:  I'd like to remind us all that when
19    we talk about what the possibilities are we are talking
20    about just that -- possibilities.  And when we think of
21    how we're trying to take an expenditure of money which is
22    from purchase of equipment and change that into a revenue
23    stream we have to remember that everything that's going to
24    occur, everything that we have heard talked about here
25    today, is experimentation.

 1              And experimentation in programming is the most
 2    expensive booger you can get your hands on, because you
 3    don't know what's going to work and not work.  You're
 4    going to have huge expenditures of money possibly in the
 5    larger markets on things that do not generate any audience
 6    at all, though it was the best idea that they had at that
 7    time.
 8              And to back this up I would point out,
 9    particularly -- Les, knows this, sitting here -- we have a
10    number of networks now who literally spend hundreds of
11    millions of dollars every year on brand-new programming
12    that's going to be gangbusters and work every single time,
13    and that money goes right down the drain most of the time.
14              It's very seldom we have the huge hit.  So I
15    think we need to --
16              MR. ORNSTEIN:  My cab driver, Tony Danza, was
17    saying that to me.
18              (Laughter.)
19              MR. CRUMP:  So we need to keep in the back of
20    our minds where we're talking about this huge revenue
21    potential it may be there, but the money that's got to go
22    into finding out what works and what does not work is gong
23    to be gigantic as well, and that's the risk that the
24    commercial broadcaster has been willing to assume because
25    it's a gamble but it's been a good gamble.

 1              But we don't know that this is going to work.
 2              MS. CHARREN:  Harold, is there some reason why
 3    you kept looking at me during that?
 4              (Laughter.)
 5              MR. CRUMP:  Peggy, I look at you because you're
 6    goodlooking.
 7              MR. BLYTHE:  Josh, I am pleased that you
 8    mentioned the phrase public interest obligations for the
 9    first time this morning.
10              In your surveys or even in Bruce's surveys, was
11    that subject any part of the questioning of what
12    broadcasters feel?  Did any broadcasters bring up the
13    phase that some of the services that they provide do fit
14    into that area of public interest obligations, and were
15    they cognizant of the fact that this is one of the issues
16    at hand right now, particularly for this panel, in trying
17    to determine what those obligations may be or continue to
18    be, or what new ones might be part of our final report?
19              Did you run across any of those examples, or do
20    you have suggestions of where broadcasters would use some
21    of these channels to meet some of those public interest
22    obligations?
23              MR. BERNOFF:  Well, I didn't ask specifically
24    about that, but at the risk of caricaturing people and
25    generalizing, the local stations seemed most worried about

 1    meeting the obligation to deliver digital television. 
 2    That public interest obligation is secondary; they've just
 3    got to make sure that a signal is going out and that they
 4    can get that functional.
 5              And the broadcast networks and the television
 6    production companies that I spoke to were most interested
 7    in figuring out what were they going to do now that they
 8    had this set up.
 9              To take it a little bit away from the mercenary,
10    the question is, you know, we've given you this capability
11    to deliver the most compelling possible television.  How
12    will you use that, especially given that at the same time
13    you have to satisfy the starting out 100 percent and
14    eventually 95 percent, 85 percent, and 75 percent of your
15    viewers that are still viewing analog.
16              If you ask about my suggestions for public
17    interest, it's sort of interesting, because I worry more
18    about what's likely to be than what should be usually, in
19    this business, but in thinking about this I think that if
20    you imagine a high definition, extremely realistic
21    television picture which has the capability for you to
22    interact with it, there's an enormous capability to create
23    a very compelling medium here, and there's an enormous
24    capability for exploitation.
25              And if I were worried about public interest

 1    obligations, one of the things that would be at the top of
 2    my mind is to say how can we make sure that children in
 3    this situation don't become television junkies, that
 4    children in this situation are not sort of sucked into
 5    this more realistic picture and this interactivity and
 6    into this virtual world in ways that we may not consider
 7    to be healthful or hopeful.
 8              As far as using bandwidth for things like
 9    politics or public interest, that seems secondary in my
10    mind to the potential that this medium has to change the
11    way that Americans live their lives and view their
12    television sets.
13              MR. LaCAMERA:  Josh, earlier you mentioned the
14    issue of fragmentation, and I just want to go back to
15    that.
16              I'm cynical enough to think that, as exciting as
17    all this is -- and I think high definition is going to
18    redefine our business and hopefully reengage the viewer
19    and reexcite the viewer -- I don't think it's going to be
20    the commercial goldmine that many people suggest.
21              If you look at alternative or multicast signals,
22    the first one that comes to mind would be a local or
23    regional news service.  We already have several examples
24    of those around the country, as you know, basically
25    partnerships between cable and, in some cases, local

 1    broadcasters.
 2              Of those, there might be one or two now that
 3    after several years have turned profitable and, if so,
 4    minimally or marginally.  
 5              So in your talking to broadcasters was there any
 6    expression or just gut reaction and concern about the
 7    further cannibalization of their primary signal, their
 8    primary service, which in some ways in the end, rather
 9    than furthering the interests of public service
10    initiatives, could actually undermine them?
11              MR. BERNOFF:  Well, the answer depends on who
12    you talk to.  If you're talking about affiliates of major
13    networks, then it's not so much an issue, because of the
14    fact that although there's continuing erosion of market
15    share they think that there's still only going to be one
16    place on television where everyone on Thursday night will
17    be watching the same thing, or one of two or three things.
18              For the independent affiliates, you know, it
19    costs the same amount to put up a new transmitter whether
20    you are an independent affiliate in Augusta, Maine or you
21    are a network affiliate in Atlanta, Georgia.  But they
22    recognize that after they begin broadcasting digitally the
23    quality of their programming is not going to suddenly
24    generate a new audience.
25              And that's really where the concern is.  It's

 1    interesting.  If you look at the fragmentation, it's
 2    possible to imagine a world in which there's all of this
 3    wonderful programming, but if you look at the
 4    fragmentation that's happened so far with things like
 5    cable, a lot of what's available is reruns of prime time
 6    fare, whether you're talking about USA Network or you're
 7    talking about your local independent affiliate.
 8              And maybe we'll have the ability to see Three's
 9    Company at seven different times during the day, but I'm
10    not sure that there's the capability to produce all of
11    this original programming, given that the audience for the
12    lepidoptery channel is not likely to be all that large.
13              MR. LaCAMERA:  I think that's the point.  You
14    know, if you look at the three traditional historic
15    networks, it's proved repeatedly how we're suggesting that
16    you can't successfully program 22 hours of prime time a
17    week, extend that beyond entertainment to any form of
18    programming and expect broadcasters to successfully and
19    commercially broadcast channels, I think is the issue at
20    hand and one that we shouldn't assume is going to be done
21    successfully or with any commercial return.
22              MR. BERNOFF:  Well, it's not popular, but I
23    definitely take away from what I've seen the message that
24    this is not some gold mine.  It's not as if you suddenly
25    put these digital stations and bandwidth up and the money

 1    starts flowing in.
 2              MR. MOONVES:  I'd like to comment to Peggy.  The
 3    role of the broadcaster and the public service are not
 4    necessarily mutually exclusive, and I'll explain why.
 5              If you're dealing with a universe of five or six
 6    new channels, by necessity you will have to do some local
 7    programming.  Even though in your cynical attitude you may
 8    say the broadcaster may want to make as much money as he
 9    can on all five or six channels that he may have, I think
10    it will be necessary to do local programming that serves
11    the community that is relatively cheap.
12              So I think the two ends can be the same.
13              MS. CHARREN:  I certainly appreciate the
14    education, Les, but let me point out to you that if I were
15    a cynic I would have stopped what I'm doing about 25 years
16    ago.
17              (Laughter.)
18              MR. ORNSTEIN:  Robert?
19              MR. DECHERD:  Norm, thank you.  I'd like to
20    reiterate a number of points that had been made in our
21    previous panels and it builds on the theme of each of the
22    last three or four comments.  Some of this is observation
23    but I hope it will also engender some responses or
24    extension from our panelists.
25              One thing that was said a minute ago I think is

 1    worth noting, and that is that interactivity and a virtual
 2    world are indeed coming.  They are coming rapidly.  They
 3    may be pervasive.  But those are things that are, for the
 4    most part, being driven by third parties to the
 5    traditional broadcast industry.
 6              Those are coming from people who are not
 7    represented at this table per se, other than Rob, and who
 8    have no public interest obligations.  I think it's
 9    important for us to distinguish between our work, our
10    charge, and the real capabilities and influence of
11    traditional broadcasters, who really are the object of our
12    discourse more than anything else.
13              In that sense, I believe that we can choose the
14    non-cynical view here, if we want to, and that is that the
15    broadcasters on this panel are not necessarily exceptions
16    to the rule, which is the theme we've heard in our recent
17    meetings, and that there is indeed a natural gravitation
18    by responsible broadcasters to public interest, to news,
19    to local news and information, and that on our current
20    channels or on multicasted versions of the new spectrum
21    we're going to be loaned -- and I want to underscore
22    "loaned" -- that we may well decide on our own to do
23    things, to take initiatives in public affairs, public
24    interest areas which don't need to be mandated, that are
25    the extension of our current relationship with viewers.

 1              Our relationship with viewers is built on a
 2    number of things.  It's built on our entertainment
 3    programming -- whether we're network or non-network.  It's
 4    built on our local news, our local identity.  It's built
 5    on the kinds of public interest and public affairs
 6    relationships we've established over long periods of time.
 7              And if we want to continue to be successful we
 8    have to extend those into whatever delivery system
 9    evolves.  So first let's take the optimistic view that we
10    aren't the only four good guys in the industry and that
11    there may be others who do this as a matter of course.
12              Now, how do we look at this?  We look at it as a
13    challenge.  We look it, in Josh's research terms, as a
14    prospect wherein eight years from now, having spent, I
15    think you said, billions of dollars as an industry, we
16    will be in the same or somewhat worse competitive position
17    than we are today.
18              So as we as a panel talk about what our public
19    interest obligations are and the cost of maintaining
20    those, much less expanding those, I think we need to
21    recognize, as Norm said earlier, that there are going to
22    be a lot of changes in the ownership landscape, a lot of
23    changes in who the participants are, the people who
24    influence these outcomes.
25              It's not just the traditional commercial over-

 1    the-air broadcasters.  And indeed, when we get into issues
 2    like must-carry, there are some fundamental questions here
 3    as to whether these channels which will be available to us
 4    through multicasting will have any chance whatsoever of
 5    having direct access to the audiences.
 6              If the cable industry were represented on this
 7    panel, I assure you we would have a very vigorous
 8    conversation about whether they must carry only our
 9    current over-the-air single channel or one or all of these
10    additional channels. 
11              Also keep in mind that these are loaned pieces
12    of spectrum, 6MHz that we have to use until 2006.  At our
13    more recent meetings we've heard a lot of skepticism about
14    whether "those megahertz will ever be returned to the
15    Federal government."
16              What we've heard this morning is that this
17    transition is happening at a faster pace than anyone has
18    anticipated.  Logic suggests that we then get to an end
19    point where that loan can be repaid.  And the fact is, all
20    of these 6MHz returned to the U.S. government can be
21    auctioned off for all the purposes we're talking about
22    here to whatever the marketplace then defines as the
23    universe of bidders.
24              It may be commercial broadcasters.  It may be
25    Internet providers.  It probably will be parties we can't

 1    even identify today because technology is moving that
 2    rapidly.
 3              So where I come out is flexibility, as we talked
 4    at our last meeting, is really the byword.  It's the
 5    byword within our business.  It's the byword within the
 6    public interest obligation.  And I think it is very
 7    treacherous to make assumptions about who's going to do
 8    what, when, how profitably.  In fact, I would submit that
 9    most of this multicasting will be a loss leader for the
10    next ten years.
11              And keep in mind that under the Telecom Act if a
12    commercial broadcaster takes any of the spectrum and
13    obtains any sort of payment for it, that broadcaster has
14    to pay a fee to the U.S. Government.
15              So this is not the great giveaway, and it is, in
16    my judgment, a transition to where the delivery systems to
17    the home, to the television set for the typical American
18    television viewer is moving from an over-the-air format,
19    where we began in 1945, for which the license is issued -
20    - that's the only license issue here, the only regulatory
21    issue -- to one where, as Josh's research suggests, 75
22    percent of Americans will access our signal via cable,
23    another 10 or so percent by satellite, and the only people
24    still using an antenna to get an over-the-air signal, in
25    my judgment, will be those consumers least able to afford

 1    all these pyrotechnics or those who just don't care -- and
 2    the truth is there aren't many -- and the political issue
 3    is going to be how do you make sure they can down-convert
 4    the signal.
 5              But in real terms the business is going to be
 6    delivered some way other than over the air via the license
 7    we obtain from the U.S. Government.
 8              So this is a very complex equation, and I think
 9    it's important not to get too enthusiastic about Star Wars
10    here when we're still trying to fly fighter jets off of an
11    aircraft carrier deck.
12              MR. ORNSTEIN:  We're just trying to make sure
13    that the Force prevails over the Dark Side.
14              MR. DECHERD:  Hear, hear.  
15              MR. GLASER:  Bob, I think you made some very
16    important points in, as always, an extremely articulate
17    way.
18              The points that I would make -- and I'm sure
19    Josh and Bruce have additional points they would like to
20    add -- is one of the reasons that I in today's session and
21    also in previous sessions introduce the Internet and cable
22    is based on a view that there is a history of why
23    broadcasters are subject to public interest obligations
24    that has gotten us into a somewhat anomalous state.
25              I think there were historically two reasons why,

 1    as I've read the literature, there were a category of
 2    public interest obligations or sets of public interest
 3    obligations for broadcasters.
 4              One was spectrum scarcity.  The other was the
 5    belief that these media are powerful social forces,
 6    fundamentally.  And I think that one of the things that as
 7    a group we are not narrowly chartered to do but I imagine
 8    we will want to engage in discussion, whether it's part of
 9    our broad charter, is to say that in a world that has as
10    much confusion or convergence, if you will, that a
11    thoughtful, consistent public policy recognizes that
12    duality of motivation and separates out the public
13    interest obligations associated with the spectrum usage
14    from the public interest obligations associated with the
15    potency and pervasiveness and importance of this medium.
16              And the latter may not be something that has a
17    well-understood or certainly not a consistent public
18    policy tradition associated with it, but I think it's
19    valuable to say, hey, for any of these media that have
20    this level of power or pervasiveness how do we think about
21    creating the society we collectively want, whether or not
22    the media sits literally on top of the back of licensed
23    spectrum or whether the media sits on top of
24    infrastructure that's purely commercial where there's no
25    theoretical limit to how much infrastructure there is,

 1    where it's a fixed infrastructure where there's no limit
 2    to access.
 3              And that's tricky, of course, but I think that's
 4    among the discussions that we should have in order to end
 5    out the end of the chute not only with a great DTV policy,
 6    narrowly defined, but with an approach that recognizes the
 7    reality of convergence and the intermingling of
 8    convergence.
 9              So I may have additional comments, but you
10    touched on many thoughtful points, and that was one in
11    particular I wanted to just hit headon.
12              MR. BERNOFF:  I wanted to address a couple of
13    those issues.  First of all, I think Rob has put things in
14    exactly the right perspective as far as public interest
15    obligations.
16              Right now, as a consumer you know who ABC is,
17    you know who Channel 4 is.  You may not know that your
18    station is owned by A.H. Belo or someone like that.  So
19    you have a perception of the local station and the
20    national network.
21              And that will continue.  There will be national
22    networks.  There will be local stations.  But the
23    broadcasters, the local broadcasters will be more in the
24    position that A.H. Belo is right now, that they will have
25    their stream of local broadcasting, including passing

 1    through the network feed.
 2              And then they will have additional bandwidth. 
 3    And you should, in my opinion, consider how do we regulate
 4    that stream of broadcasting and, second, how do we
 5    regulate the use of the additional bandwidth.  And those
 6    two are not directly related to each other.
 7              The second thing has to do with the loan.  Based
 8    on my projections, this is a loan, but it's a loan that's
 9    likely to be over 15 or 20 years, because that's when it's
10    going to become politically viable to shut down the analog
11    spectrum.
12              And if you want to assess the value of that
13    asset, that's really what it is, is a loan that's not
14    likely to be able politically to be shut down in 2006
15    because of the vast numbers of analog TV sets that will
16    still be in use at that time.
17              MR. ORNSTEIN:  Let me throw in a couple of
18    comments here myself.  I don't know how far we can get in
19    assessing the value here, because part of the value here
20    is what would happen if there had never been this loan and
21    where would broadcasters be if they simply had an analog
22    broadcast.
23              If we look out ten years there, the revenue
24    stream is not going to be -- oh, it may be roughly the
25    same or we don't know what it will be -- it will be zero. 

 1    So the ability to get this loaned spectrum without any
 2    bidding is worth something in and of itself.  I'm not sure
 3    we're going to get very far if we try and put a dollar
 4    value on it.  We may have to put that issue aside.  
 5              There are a couple of very large questions here
 6    that we will have to in some fashion grapple with.  If we
 7    know now who the local broadcaster is but not everybody's
 8    going to know that it's A.H. Belo, we can at least have
 9    some comfort if it is A.H. Belo because of the record of
10    A.H. Belo.
11              But if we look down the road and it's Microsoft,
12    having bought UPN and/or Warner Brothers and a whole bunch
13    of other stations, and in fact the world of broadcasters
14    is a confused one -- that it's Microsoft in partnership
15    with TCI, probably with a satellite and having a whole lot
16    of broadcast stations -- that changes the whole notion of
17    localism and of commitment to public interest.
18              But it also confuses us in terms of whether we
19    should be making this really firm distinction saddling
20    broadcasters, just because of license, with heavy public
21    interest obligations and let others get off scott free in
22    this case or in some other way.
23              So while our mandate is digital television
24    broadcasters, I don't see how we can avoid addressing in
25    some fashion the much larger question of how the public

 1    interest is served by all of these different entities and
 2    try to make sure that there is a better balance struck. 
 3    We ought to be recommending, I believe, things along those
 4    lines.
 5              MS. WHITE:  Josh, could you talk with me just
 6    for a little while?  I was interested in your comment
 7    about our public interest obligations, certainly as it
 8    pertains to children, and your comments about children not
 9    becoming TV junkies.
10              If you've thought about this, then you must have
11    some counter solutions for that, such as more children's
12    programming.  I mean, I don't want to put things in your
13    mouth, but just talk to me.
14              MR. BERNOFF:  Well, I think something along the
15    lines of the restrictions that are on commercials that
16    take place during children's viewing hours right now are
17    in order.
18              I also think that you have the potential to
19    allow parents to block things.  You know, there will be
20    the potential to have extremely graphic programming here,
21    and it ought to be possible to block that out.  The
22    graphic potential is a heck of a lot more powerful in this
23    medium than I think it has been with existing television. 
24    If you start looking at an HDTV signal, you begin to say
25    wait a minute, this is something completely different.

 1              I'm not sure that it's necessary to obligate
 2    people to create children's programming, because from what
 3    I've seen the level of quality that results from those
 4    obligations is highly variable.  You know, you will
 5    produce a really good, wholesome program for children is
 6    not a way to get a broadcaster to create something that
 7    people will actually watch, unless your kids are into Wall
 8    Street Week kind of programming, I guess.
 9              So I guess what I come down to is again to the
10    extent that broadcasters are making money off of the
11    bandwidth you should assess the ways in which that revenue
12    takes place and how that ought to be regulated.  
13              And to the extent that broadcasters are
14    delivering programming of a more or less compelling nature
15    and advertising of a more or less compelling nature, you
16    need to put safeguards in to make sure that the audience
17    that presumably doesn't have its own free choice, the
18    children's audience, is not exposed to those things that
19    are going to have a potential negative impact.
20              MS. WHITE:  Thank you.
21              MR. SUNSTEIN:  Is it right to say that some of
22    the empirical projections that you've made cast in doubt
23    both the scarcity rationale and the unusually powerful
24    forces rationale that Rob referred to?
25              This is linked, obviously, to Norm's suggestion

 1    that it might be anachronistic to be focusing on one view
 2    of what the empirical projections are, to be focusing on
 3    broadcasters alone.  Or is that not right?
 4              MR. BERNOFF:  Well, in terms of the scarcity
 5    rationale, I think our telephone companies are regulated
 6    because they've been given an opportunity to sell services
 7    to consumers that's not available to everybody in their
 8    markets.
 9              You're in the same situation here.  But you have
10    to balance this against all of the other potential media. 
11    So I think that yes, you've got to remember that only 40
12    percent of consumers right now have a computer.  And even
13    if prices drop, our projections show that that's likely in
14    the next four years to go up to perhaps 60 percent.
15              So the idea that everyone is going to be sucking
16    this stuff down off of the Internet isn't valid, because
17    there are plenty of people who are not going to have
18    access to that.
19              MR. SUNSTEIN:  What I'm thinking is, Robert
20    Decherd suggests that 85 percent of consumers will be
21    either on cable or on some sort of satellite, and that
22    suggests that 85 percent of consumers won't be dependent
23    on four networks.  If 85 percent of consumers aren't, and
24    if 60 percent, relatively soon, have computers, then
25    doesn't -- this is just a question -- but then the

 1    dependence on broadcasters as uniquely the source seems,
 2    just on the numbers -- or is something being missed by
 3    that?
 4              MR. BERNOFF:  There is something being missed,
 5    which is that even in cable households there are often
 6    television sets that are not hooked up to the cable.  But
 7    the assessment that this represents a chunk of the viewing
 8    hours and that that's what you're putting obligations on,
 9    that's the right way to look at it.
10              You're not in a position here where any
11    obligations that you put on the broadcasters are
12    necessarily going to affect the majority of viewers
13    because there are so many that are hooked up to cable and
14    satellite.
15              MR. GLASER:  There's also just a category of
16    interaction here that I think we're not focusing on, which
17    is in Josh's talk he differentiated between what people
18    watch and what wire comes through.  In other words, prime
19    time may be at 50 percent even though the majority of the
20    time people are watching prime time coming from a
21    broadcast system to a cable head-in, through the cable
22    head-in into the cable system.
23              I don't think we have empirical data -- and I
24    think it might be useful to have a more thorough set of
25    information on this -- on what the user experience will be

 1    in taking DTV signals that have gone through traditional
 2    train branch cable systems.  
 3              I mean, you've got a lot of repeaters out there
 4    that generate noise in the signal, and I think most of the
 5    DTV tests that I'm aware of are based on point-to-point
 6    DTV, and I think when you actually take that signal
 7    through and you take it through a cable head-in, you take
 8    it through, there are going to be very interesting
 9    interactions.
10              So there's a whole set of issues about technical
11    meaning, if you will, of must-carry.  If you carry the DTV
12    signal but you degrade it down to a near-NTSC signal, you
13    know, that's going to have interesting implications.
14              So I think that the power dynamics between cable
15    and broadcast could be affected by must-carry rulings,
16    could be affected by the rate at which the cable plant
17    upgrades happen, and could be based on this interaction of
18    what the experience is going to be.
19              Because there's all this forward investment of
20    capital by broadcasting, that's going to put a heck of a
21    lot of pressure on cable to have an infrastructure that
22    can carry that 19 megabit signal in a high quality way.
23              Bruce, I'm interested in your perspective on
24    whether there's a tripwire there or not and what you think
25    will happen.

 1              MR. ALLAN:  Well, I think the basic thing, when
 2    you're talking about can a cable -- yes, in designing the
 3    standard there was quite a bit of testing done on what
 4    happens with a signal when it's carried by cable.  The
 5    question is, how will cable carry it.
 6              One of the ways is simply to pass the signal
 7    through and the DTV set will have the decoder and it can
 8    pick off the signal and decode it.
 9              The other question is, does the cable head-in
10    decide to remodulate it in QAM, which is their format, so
11    they increase the capacity, and once they're remodulating
12    the question is how have they handled the signal.  Do they
13    pass data?  There aer a lot of issues.
14              I think some of the points that have been
15    brought up here is the fact that many of the people that
16    the networks compete on aren't regulated now.  One of the
17    reasons we could get a direct TV system up in air and
18    operating is that it isn't regulated the way the
19    broadcasters are regulated, and you could put a digital
20    system in the air and run it.  
21              And it's been run very well, but there are no
22    basic obligations once that was done.  But in cable there
23    aer just a lot of issues on how the signal's going to be
24    in the cable.  I mean, people talk about 75 and 85 percent
25    penetration.  I guess one of the questions is, but how

 1    much of the actual prime viewing time is network
 2    programming that's been passed through the cable and how
 3    well is it passed has a big impact on where that
 4    programming goes.
 5              And you get into issues of when networks own
 6    multiple programming services, will they be distributing
 7    programs themselves over the air.  So it's a very complex
 8    issue.  There's no question about that.  That's obvious by
 9    the discussions here.
10              And, you know, I'm glad that I only had to work
11    with the standard and that this group has to sit there and
12    come up with the answers for this one, because it is not
13    simple at all and there are just an awful lot of
14    conflicting interests.
15              MR. MOONVES:  Just a quick comment.  As this
16    panel thinks towards our future, coming up with a
17    document, we have to decide how far-reaching we can be. 
18    And, Rob, you know, I'd like to hear your comments.  Are
19    we dealing with networks?  Are we dealing with cable?  Are
20    we dealing with local stations, be they independent?  Are
21    we dealing with America On Line?
22              When we make suggestions and recommendations
23    about what the public interest obligation is, how far do
24    we go?  I think that addresses a little bit, Norm, of what
25    you were referring to.  You know, we've looking at a brave

 1    new world here.  How far does our reach extend?
 2              MR. GLASER:  I think the answer to that turns on
 3    a few things.  One is just literally what our charter is. 
 4    If our charter is just DTV and shut up about everything
 5    else, then we'd better put anything else in the appendix.
 6              The second issue is to what extent we come up
 7    with almost a consensus on a legal view of the degree to
 8    which the public interest obligations of digital
 9    broadcasters emanate narrowly from scarcity or other
10    things that are uniquely intrinsic to this transmission
11    method as opposed to other transmission methods.
12              And if we develop the point of view that there
13    are a set of public interest obligations that come from
14    sources not entirely confined to things that are specific
15    to DTV, then it's logical to say, hey, these other forces
16    ought to apply to these other transmission methods.
17              And then if you sort of pass those two hurdles,
18    you get into the interesting question of, hey, given that
19    there is no or certainly not as thorough a regime
20    associated with public interest obligations for these
21    other methods of transmission, how do we integrate one in
22    that might not be as comprehensive as the one that's in
23    place for broadcasting today or that might not be one
24    that's as comprehensive as the DTV one, because there is
25    indeed a spectrum loan that has been applied without an

 1    auction, without an open bidding process -- and that has
 2    some intrinsic value, even if we can debate what it is and
 3    whether all the people that got it would be bidding on it
 4    if there were a bid, et cetera.
 5              But I would love to see us actually try to say,
 6    okay, there are a set of things -- I think kid's content
 7    we can probably get to a strong consensus on -- that there
 8    ought to be a set of guidelines for video programming that
 9    apply, I would think, pretty universally, if you have
10    advertising content versus programming content that there
11    be the kind of differentiated barriers that people like
12    Peggy have fought hard for and ought to apply to all video
13    media, regardless of the transmission method.
14              So I think there are some like that that we can
15    get pretty comfortable with.  There may be others in the
16    area of political speech and campaign finance issues that
17    are much harder because these media are so different in
18    terms of how you program for them.
19              But I would like to see us try, and if we pick
20    two or three things and do a good job of those, then I
21    think we start a paradigm of getting people to think of
22    public policy in a convergence world.  Maybe that's a
23    little idealistic, but, like Peggy, I must be an idealist
24    because I'm here.
25              (Laughter.)

 1              MS. STRAUSS:  I think it's also important that
 2    in considering the fact that there are all of these other
 3    various transmission methods that we not cause that to any
 4    way lessen the public interest obligations of the
 5    broadcasters, and I would urge that we do in fact at least
 6    include an appendix, even if we don't feel that our
 7    mandate is broad enough, because I think it is problematic
 8    that only broadcasters are regulated.
 9              There are these other transmission methods.
10              MR. GLASER:  I think the cable folks would tell
11    you they think they're regulated too, just not on public
12    interest issues.
13              MS. STRAUSS:  They have certain requirements,
14    but they should also have the public interest obligations. 
15    At least that would be my view.
16              And I think that we should do whatever we can
17    and stretch our mandate to whatever extent we can that's
18    permissible to help define those as well and make
19    recommendations on those as well.
20              MR. BERNOFF:  If I can add a comment here,
21    convergence is baloney.  More specifically, people have a
22    way of interacting with their television set which is very
23    unique, and they will evolve that interaction now that the
24    television set is going to have digital capability and
25    interactivity.

 1              And they have a way of interacting with their
 2    computer which is pretty much different.  So when I think
 3    about your mission I think you need to think about
 4    everything that happens on that television set and your
 5    involvement with it.
 6              What do you want to do about the content on
 7    there?  I think it would be a mistake to say that you're
 8    only worried about over-the-air content, because of the
 9    diversity of distribution media.  And I also think you
10    need to think about you're now in a position of having
11    helped people to have bandwidth and how are you going to
12    regulate the use of that bandwidth to generate profit.
13              So that's sort of an organizing principle in my
14    mind.
15              MR. ORNSTEIN:  Of course, we can think of
16    convergence in a variety of ways.  We have convergence of
17    ownership.  I think that's almost a given at this point.
18              Convergence in terms of the technologies coming
19    together or a confusion of missions, let's explore that a
20    little bit more.  At least in previous sessions we've had
21    this vision emerge -- it's certainly not the only one --
22    of a family sitting in a room, a living room or a family
23    room, with a big screen in front of them and some little
24    device that somebody has where they're basically going
25    back and forth between a broadcast channel, a cable

 1    channel, a satellite channel, a Web page, maybe an
 2    interactive video game, very possibly a video newspaper
 3    with all the bells and whistles, far more imaginative than
 4    what we saw that Rob put up there.
 5              That would be certainly what one would call
 6    convergence.  That's probably what Gateway had in mind a
 7    little bit when they started to move towards this
 8    destination, which certainly does seem to be going out
 9    very quickly.
10              MR. BERNOFF:  You mean the destination no one
11    went to?
12              MR. ORNSTEIN:  But that was obviously based on a
13    vision of something like this emerging down the road.  
14              You think that that sort of notion of people
15    sitting there in front of their set able to do all of
16    those things is baloney?
17              MR. BERNOFF:  No.  Let me be more specific.
18              Convergence in my mind is the vision that the
19    devices in our homes will somehow all become very similar
20    to each other and that the content stream that's delivered
21    on them will be very similar to each other.  So that
22    whether you're on your telephone, your television, or your
23    computer you're going to be consuming the same thing on
24    the same screen.
25              And in fact when we've studied this, what we've

 1    seen is that if you look, for example, at what's happening
 2    with WebTV that Internet on your television is of interest
 3    to very few people.  But if you take the Internet
 4    capability and use it to create a television experience,
 5    that changes things and you have things like E, the
 6    Entertainment Network, changing their Web page around so
 7    that it's best delivered on a TV set with lower resolution
 8    but with video included in it.
 9              So, sort of to elaborate on convergence is
10    baloney, what I'm saying is there is something right now
11    called television, and in the future there will be
12    something called television.  It won't be some convergence
13    experience.  It will be a television experience.
14              It will have interactivity in it.  It will have
15    some Internet transmission going back and forth.  And
16    while the infrastructure may be converging and the
17    ownership to a certain extent is converging, there will
18    still be a television experience to think about, and that
19    that in my mind is what the mission of folks like you is,
20    is to figure out what that television experience might be
21    and to what extent you want to make sure that it goes in a
22    direction we all consider desirable.
23              MR. ORNSTEIN:  Is there anybody else who hasn't
24    addressed these issues?  Then we will make this the last,
25    because we're still on time.

 1              MS. SOHN:  Let's do a little roleplay, okay? 
 2    I'm a cable operator and you're broadcasters, and I
 3    already carry your analog signal.  The FCC's going to be
 4    starting a proceeding next month to see whether I should
 5    carry maybe five multiplex channels, maybe one high def,
 6    one high def and data -- all these different things. 
 7    Okay?  You're asking the FCC to make me, the cable
 8    operator, forego some of my First Amendment rights to
 9    carry you.
10              Why should I?  What's your rationale?
11              MR. GLASER:  Well, I think there's an
12    interesting question that I think must-carry is sort of
13    split down the middle on, on whether the cable operator
14    has a First Amendment right to choose what to include or
15    not include or has a common carriage relationship of some
16    form or some fashion.
17              I'm not a lawyer and don't play one on TV, so I
18    may be using the terms inartfully.  But almost a common
19    carriage obligation to pass through without blocking or
20    censoring, and the Court's ruling was in essence that the
21    must-carry rule was legal because there was enough of that
22    kind of dimension of common carriage associated with the
23    role that a unique, basically, in some legislated, in some
24    cases monopoly, coaxial cable pipe had in terms of its
25    role as a pathway.

 1              Because of that ambivalence about which of those
 2    the cable operator is -- in other words, an editorialist
 3    or a common carriage pipe -- we're likely to see the
 4    rubber hit the road in these other issues where certainly
 5    it would seem to me if the interpretation of the FCC was
 6    that any linear channel broadcast was an elaboration of
 7    current must-carry, I'm sure it would be contentious, but
 8    that's doesn't sound like that's breaking a principle.
 9              If all of these data interactive transmissions
10    were viewed to be subject to must-carry, then you would
11    just basically be saying to the cable carrier you are just
12    pure conduit and any business can flow through your pipe
13    and we're going to mandate that you have to carry that in
14    as general a way as possible.
15              And I personally don't know what the outcome is. 
16    That's not roleplaying as much as prognosticating that
17    that's going to be a tricky determination.  One would have
18    to know a lot more about the internal dynamics of the FCC
19    decisionmaking than I certainly do to have a predictive
20    sense of how that is going to play out.
21              MR. ORNSTEIN:  Bruce, to follow up on that, just
22    technically, looking down the road for that cable
23    operator, how much of a burden will it be to carry all of
24    what the broadcasters want to put on?  Where will that
25    hurt them or cut into their --

 1              MR. ALLAN:  If you look at it in the most
 2    simplistic fashion, we talk about bandwidth.  A channel
 3    out of a network or a local broadcaster is 6MHz today. 
 4    With the digital channel, regardless of the programming on
 5    it, it's still the same 6MHz bandwidth, so it only takes
 6    one channel on the cable station.
 7              If the cable should convert it to QAM and go to
 8    256QAM, they have doubled the capacity that they would
 9    have had before, or quadrupled the capacity, so they can
10    carry those programs and still have additional capacity
11    left over.
12              So if you look at it from a purely technical
13    standpoint on actual bandwidth, the cable system would be
14    asked to carry no more than they are carrying today and
15    utilizing no more of their system than they are today.
16              MR. GLASER:  What about the real world, where
17    you've got, in some path, several dozen repeaters along
18    the way that introduce noise and that might not actually
19    send a clean signal through in the same way that a pure
20    broadcast transmission would?
21              MR. ALLAN:  Well, I think the question there,
22    you're getting into what is the capability of the system
23    and how valid is the system and the investment.
24              There are new systems that are going to have no
25    problems passing the cable and passing the signal well. 

 1    There aer other signals right now that have a problem
 2    passing just an NTSC signal.
 3              MR. GLASER:  Right.  And this will be far harder
 4    than an NTSC in terms of --
 5              MR. ALLAN:  It's still 6MHz.  It's not going to
 6    be any harder than an NTSC signal.
 7              MR. GLASER:  Except a little bit of line noise
 8    doesn't mean that you can't seen that Jerry Seinfeld's
 9    telling a joke.
10              MR. ALLAN:  I've got the ability to do forward
11    error correction and a lot of things to correct and make
12    sure I've really received the signal in the digital world.
13              You can come up with a situation where you've
14    got a problem, but I think the question is just what
15    format do they want to carry it in and how do they want to
16    deliver it.  And the issue's going to be who controls the
17    settop box at the end of that cable.
18              MR. ORNSTEIN:  Okay.  That's a good point, I
19    think, at which to take a break.  We will come back in
20    precisely 15 minutes.  Thank you both very much.  You've
21    been very, very helpful to us.  And, Rob, thanks a million
22    for putting this together.
23              (Recess.)
24              MR. ORNSTEIN:  If everybody could take their
25    seats, please, we're going to get under way here.

 1              MR. MOONVES:  We're going to start now.  We are
 2    under a time constraint, but I'd just like to make one
 3    announcement because it was mentioned three times in the
 4    last panel.  Jerry Seinfeld is off the air, and we are
 5    very happy about that.  So I just wanted to editorialize
 6    for a moment.
 7              MR. ORNSTEIN:  But there will be six channels of
 8    Seinfeld reruns going simultaneously.
 9              MR. MOONVES:  For the rest of your life.
10              (Laughter.)
11              MR. MOONVES:  We have a very interesting panel
12    right now on closed captioning and video description of
13    broadcast programming.  Fortunately, a member of our
14    committee is Karen Peltz Strauss, who was the lead
15    advocate of the Television Communications Act to expand
16    closed captioning and drafted that section of the
17    Television Communications Act.
18              Karen is legal counsel for the National
19    Association of the Deaf, and she will moderate this panel. 
20    Karen.
22                     OF BROADCAST PROGRAMMING
23              MS. STRAUSS:  Thank you.  I do promise to keep
24    us within our one-half hour time limit so we will be
25    talking very quickly, probably to the dismay of the sign

 1    language interpreter.  But I'm from New York, and so I can
 2    speak pretty fast.
 3              (Pause -- power outage.)
 4              MR. MOONVES:  Power's on.  Back to you, Karen.
 5              MS. STRAUSS:  What I'm going to do is give a
 6    very brief overview of closed captioning and basically
 7    familiarize you with the legislative history of closed
 8    captioning.  Then I'm going to pass it quick on to my
 9    other members.
10              We've got a really exciting show.  Now that
11    we've got your interest, I'm going to proceed for the
12    third time, if we're ready.  
13              You all aer very familiar with the benefits of
14    closed captioning for 28 million Americans who are deaf
15    and hard of hearing.  It can hardly be disputed.  In
16    addition, captioning also helps people who are illiterate,
17    people who are learning English as a second language, and
18    children who aer learning to read.
19              For adults, access to television provides not
20    only a source of entertainment but a critical link to news
21    and information that is really vital to full participation
22    in all aspects of our society.
23              On several occasions, Congress has recognized
24    the benefits of captioning.  For example, in discussing
25    the benefits of captioning television, the Senate has

 1    explained that, "The development of captioned television
 2    has made it possible for deaf and heard of hearing persons
 3    to understand what television has to say and in effect to
 4    join the mainstream of American society in an era of
 5    increased output of and reliance on information."
 6              I think that statement this morning was proven
 7    to be quite true.  As the digital age comes, there will be
 8    more opportunity for interaction with our television sets
 9    and with the information put forth through those TV sets,
10    and captioning of those programs will become even more
11    important.
12              Until now the FCC has reserved line 21 of the
13    vertical blanking interval of the broadcast and other
14    analog television signals for the transmission of closed
15    captioning.  This has occurred since 1976.  Line 21 is the
16    last line in the VBI before the actual television picture
17    begins.
18              The captions are then decoded and generated into
19    visual characters which are displayed on the television
20    screen.  Captioning services began in 1980 with a
21    cooperative agreement among ABC, NBC, PBS, the National
22    Captioning Institute, and Sears, Roebuck and Company.  And
23    I should mention that WGBH actually had the first
24    captioning program with Julia Childs and then with ABC
25    Late Night News.

 1              Under the original agreement, NBC and ABC and
 2    PBS each captioned 16 hours of programming per week, and
 3    Sears manufactured and distributed caption decoders. 
 4    You'll be happy to know, Les, that in 1984 CBS also joined
 5    and began to transmit captions on its programs.
 6              By 1989, the entire prime time schedule on CBS,
 7    NBC and ABC was captioned.  Although this growth was
 8    significant, still the vast majority of cable programming,
 9    local news programming, and daytime programming remained
10    without captioning as late as 1990.
11              Many attributed the resistance to increasing
12    captioned hours to the fact that people had to purchase
13    expensive caption decoders that were separated from the
14    TV, and the hookup of these caption decoders was quite
15    difficult.  A lot of people got confused about how to hook
16    them up, and, as I indicated, they were expensive.
17              (Pause -- power outage.)
18              MR. MOONVES:  We're back.  We apologize again,
19    Karen, on behalf of the Madison Hotel.
20              MS. STRAUSS:  That's okay.
21              As I just mentioned, one of the reasons that
22    there was not an increase in captions is that people had
23    to purchase their own caption decoders.  So in 1990
24    Congress passed the Television Decoder Circuitry Act,
25    which required that as of July 1993 all televisions with

 1    screens over 13 inches must have built into those
 2    televisions the decoder chip, and the decoder chip enables
 3    anybody to decode closed captioning.
 4              That has been enormously successful.  The costs
 5    have been minimal, and now millions of people across
 6    America have access to captioning.
 7              What we were hoping was that with this chip
 8    there would be enough economic incentive for stations to
 9    increase their captioning.  However, what happened is that
10    between 1990 or 1993 and 1996, in fact there was only a
11    marginal increase in the percentage of shows that were
12    being captioned, especially on cable television.
13              So, in 1996, in the Telecommunications Act, we
14    pushed for and were successful in getting legislation that
15    would significantly expand the availability of closed
16    captions.  In August of 1997 the FCC issued its rules
17    implementing that Act, and in those rules requires that 95
18    percent of all new television programming be accessible
19    within eight years, and for former programming, older
20    programming, 10 years is the time schedule for
21    implementing captioning.
22              There are significant exemptions to those
23    requirements, for example exemptions for short
24    advertisements, for overnight programming, for
25    interstitials, and for some local programming, et cetera. 

 1    But it will significantly expand the availability of
 2    captioning.
 3              What I'd like to do now is to present the two
 4    next panelists.  To my left is James Tucker.  He is the
 5    superintendent of the Maryland School for the Deaf, and he
 6    will speak as a citizen, as a parent, as a deaf person,
 7    and as an educator to talk just very briefly about the
 8    benefits of captioning for, most notably, school children
 9    and deaf individuals.
10              To his left is Larry Goldberg, and Larry
11    Goldberg is the director of media access at the WGBH
12    Educational Foundation, as well as the director of the
13    Corporation for Public Broadcasting/WGBH National Center
14    for Accessible Media, which he founded in 1993 as a
15    department within WGBH, which is Boston's public
16    television station.
17              The media access departments at WGBH consists of
18    the caption center, descriptive video service, and NCAM. 
19    And Larry will speak on both captioning and video
20    description and will also provide some video
21    demonstrations of these technologies in the digital era.
22              I will now pass the room over to James Tucker.
23              MR. TUCKER:  Members of the Gore Commission,
24    thank you for the opportunity to come this morning.  I
25    would like to give you a crash course in sign language.

 1              If you would follow me, put your hands in the
 2    okay gesture, touch the fingers together and move them
 3    back and forth.  Guess what that means?  Captioning.  Now
 4    you know the sign for captioning.  That is the beloved
 5    sign amongst our community.
 6              Before I provide my three minutes worth of words
 7    of experience, let me just mention that captioning is not
 8    a deaf thing.  It's definitely not.  I can bet you that
 9    most people who are watching captioning are in fact
10    hearing people.  We call them people with hearing --
11    hearing people.
12              People watch TV in bars and are unable to hear
13    the sound, and so they often will ask the bartender to
14    turn on the captioning.  Or at airports again I'm seeing
15    people turning on captioning in those kinds of places.
16              I would like to share very briefly with you the
17    four roles that I play and represent here today.  First,
18    as a citizen, I vote, as the rest of you do, but I was
19    never really informed until just recently.  My favorite
20    programs when I was growing up were sports and the Three
21    Stooges, and Julia Childs.
22              (Laughter.)
23              MR. TUCKER:  That third one only because Julia
24    Childs, as Karen has already mentioned, was captioned.  
25              Today I am very informed.  I can learn from the

 1    television about community events, about cultural events,
 2    government affairs, world affairs, Washington events.  I
 3    vote as much more informed now.
 4              My second role that I represent today is as a
 5    consumer.  I have money to burn.  I'm looking at the
 6    products I see on the television.  I'm making decisions as
 7    to which of those products I want to buy.  I'm looking
 8    forward to the Super Bowl game.
 9              In the deaf community here in America we keep
10    two scores.  First, the football game score.  Secondly,
11    how many of the commercials are captioned.  And the
12    results are printed in the national deaf newspapers.
13              Thirdly, the third role I play is that of an
14    educator.  Captioning has brought so much to our
15    classrooms.  As you know, deaf children are visual
16    learners.  Deaf people like myself depend on our eyes for
17    visual input, to learn.  So there aer books, magazines,
18    newspapers, and now captioning.
19              It's also used in classrooms where English is a
20    second language.  And now we're seeing regular classrooms
21    utilizing captioning technology as well.
22              Finally, and perhaps my most important role, is
23    that I am a father.  I have two children.  I have a boy
24    who is 7-1/2, who is hearing.  And my second child is
25    deaf, a girl, and she's 4.

 1              My first child, without my having done anything
 2    special, is having a normal life with us at home, is
 3    already reading quite well for his age.  And when you
 4    consider what the reason is, I think we can relate it to
 5    captioning, because often I myself forget to turn on the
 6    volume at home on our television set, but he's able to
 7    enjoy the programs anyway by reading the captions.
 8              Maybe we should force all hearing children to
 9    get in the habit of reading TV.
10              (Laughter.)
11              MR. TUCKER:  I also wanted to add that
12    captioning technology is something that's growing. 
13    Amongst the deaf community, we would appreciate access to
14    that kind of technological opportunities.  We would like
15    to be able to control the captioning features -- for
16    example, change the font size, the shape, the color, or
17    the location of the captions as they appear on the screen. 
18    Sometimes I don't know the score of the game, because the
19    captions cover up the characters.
20              When you finalize your recommendations, I would
21    ask you to please consider the deaf community and the rest
22    of the country in that we want full access to captioning
23    technology in this new digital age.  
24              Thank you.
25              MR. GOLDBERG:  As most of you know, captioning

 1    has become a routine post-production process for much of
 2    today's television industry.  With decades of help from
 3    the U.S. Department of Education and the Corporation for
 4    Public Broadcasting and most networks and producers, along
 5    with a few Congressional nudges, captioning is both
 6    accepted by the television industry and expected by most
 7    consumers, as you've heard.
 8              With the coming of the digital era, however, the
 9    pressure is now on to make the transition smoothly.  We
10    need to make continual service for both analog and digital
11    programming.  A standard for captioning has been crafted
12    in the digital domain, and it incorporates the new
13    features and services and takes advantage of added
14    bandwidth and advanced technology so that the captioning
15    of the future can match the enhanced picture and audio
16    quality and myriad new services we are all about to
17    receive.
18              Unfortunately, this standard, developed by a
19    subcommittee of the Electronic Industries Association,
20    with participation by manufacturers and caption service
21    providers, has suffered from a severe lack of attention by
22    the television industry.
23              It's barely been tested in even its first
24    prototype stage.  Virtually no hardware or software exists
25    for creating, encoding and decoding captioned data, and

 1    tests have yet to take place of live captioning or
 2    simultaneous captioning for analog and digital.
 3              The staff and budgets of the caption agencies
 4    are being stretched to the limit to complete these tasks. 
 5    Maybe this lagging development is no different than what
 6    the rest of the TV industry is going through to get ready
 7    for the launch of digital broadcasting, but with so few
 8    resources being committed to developing the required
 9    technologies there's a danger that the first receivers
10    sold to consumers and the first digital stations that go
11    on the air will have at best a rudimentary captioning
12    capability and, at worst, none at all.
13              Today's TV system has a very robust and fully
14    featured closed captioning capability.  With recently-
15    granted FCC permission, we can now provide, on any
16    program, up to four streams of captioning, four text
17    channels, and something called extended data services, or
18    XDS, which can set your VCR clock, tell you what program
19    or network you are turned to, and act as the content
20    advisory or V-chip locking service.
21              While the look of today's captions is still a
22    bit coarse, digital TV will give us the opportunity to
23    upgrade the entire look and feel of captions.  
24              Before I show you a tape of what captions can
25    look like in the next few years, I want to sound a

 1    cautionary note.  Those extended data services I mentioned
 2    are not related to captions in any way.  They just happen
 3    to share some available protected bandwidth.
 4              The implementation of ancillary data services in
 5    digital TV, such as extended data services or Worldwide
 6    Web data, or conditional access, should not impinge upon
 7    the 9600 baud bandwidth that has been set aside for
 8    captioning.  No one has directly addressed this question
 9    yet.  But there is a concern that the limited set-aside of
10    bandwidth for captioning may be desired for services not
11    specifically created for deaf and hard of hearing viewers,
12    as mandated by Congress and the FCC.
13              Now for the tape.  Hopefully our technology's
14    going to be working.  This would be the first ATVCC dub
15    tape.  You'll see simulations of captions that use the
16    proposed features from the ATVCC standard.  Just hold it
17    for a second.
18              What you'll see first is the caption volume
19    control which James mentioned, actually.  This would give
20    user control over the size of the caption, so we call it
21    caption volume.  What you won't see but have been written
22    into the standard are 15 streams of captions per program,
23    user or provider selection of fonts, and highly flexible
24    screen placement and a variety of options to improve
25    legibility of on-screen text and backgrounds.

 1              (A videotape was shown.)
 2              MR. GOLDBERG:  This is a simulation, and
 3    actually you could probably take out the audio, whoever is
 4    in charge of audio here.  If you've seen closed captions
 5    on TV today, you know that they don't look this nice. 
 6    We've got nice, well-formed fonts and the background is as
 7    goodlooking at digital TV can look like in the future.
 8              If you just fast-forward a little bit there and
 9    let it play there, now we have captions for people whose
10    vision might be going a little bit.  It's larger.  And
11    this is what we call the caption volume control.  It's
12    written into the standard, and it's just a question of
13    what would actually be available in TV sets.
14              If you go ahead and fast-forward again and play
15    this clip here, we found out from research, it's kind of
16    interesting.  Younger people prefer these smaller
17    captions; older folks prefer the larger captions -- not a
18    surprise.
19              (Laughter.)
20              MR. GOLDBERG:  Why don't you go ahead and eject
21    that tape and we'll play a short clip from the next one?
22              (A videotape was shown.)
23              MR. GOLDBERG:  Captioning in digital TV is far
24    from brain surgery compared to all the other technological
25    feats that are going to be performed, so this is easy. 

 1    When I mentioned 9600 baud bandwidth set-aside, look at
 2    how tiny that is compared to the full 19MHz that are
 3    available.
 4              Now here's captioning with a much nicer look
 5    too.  There's a slight gray mist behind.  It's got a drop
 6    shadow.  You can see through them.  All of this is
 7    actually possible and written into what we call the ATVCC
 8    standard.  It might be the kind of captions everyone would
 9    want to look at at the same time.
10              You can stop that tape now.
11              As I said, not all these features will be in all
12    TV sets because what is required to built in versus what
13    is optional has yet to be determined, and actually there's
14    not even a process for making a decision on how to make a
15    decision.  But there's a lot to be done, and we're hoping
16    for a much wider and extensive effort to get us there.
17              Now let me switch gears a little bit and talk
18    about television access for blind and visually impaired
19    people.  Video description was developed by public
20    television in the late 1980s and officially launched in
21    1990 on American Playhouse.
22              Once again, the U.S. Department of Education and
23    the Corporation for Public Broadcasting made it possible
24    to develop, launch, and sustain the service.  Today you
25    can find described programming on PBS, the Turner Classic

 1    Movie Channel, and hundreds of home videos, and even a few
 2    DVDs.
 3              To hear the video description on cable or
 4    broadcast programs you need only a stereo TV or VCR with
 5    secondary audio program or SAP capability.  This feature
 6    is available in most consumer video equipment sold today. 
 7    Video description is, like captioning, free to consumers.
 8              But rather than talk any more about DVS, let me
 9    play an example of a program, first without and then with
10    descriptions, and for the full experience you might want
11    to close your eyes.  You will need audio for this.
12              (A videotape was played.)
13              MR. GOLDBERG:  That really helps you understand
14    Shakespeare too, doesn't it?
15              (Laughter.)
16              MR. GOLDBERG:  Now I'd like to introduce Nolan
17    Crabb, editor of the Braille Forum, a monthly publication
18    of the American Council of the Blind, to give you the
19    consumer's perspective on video description.  Nolan.
20              MR. CRABB:  Thank you.  I do promise to stay
21    within my time constraints.  I'm sure someone will get the
22    word to me.  My friend here on the floor invariably sleeps
23    through my presentations, without apology, so getting the
24    word to him and then getting it to me won't be reliable.
25              Before you can understand the importance of

 1    video description, ladies and gentlemen, you have to
 2    recognize that blind and visually impaired Americans are
 3    in fact avid television viewers.  Some of you hear me say
 4    that and you think that's about as likely as a ski resort
 5    on the equator perhaps, or whatever.  
 6              But the reality is that blind and partially-
 7    sighted people do in fact watch as much television as do
 8    their sighted counterparts, based on a study that I've
 9    seen from the U.S. Department of Education and carried out
10    by the American Foundation for the Blind.
11              The numbers are almost identical.  99 percent,
12    according to the study, of blind and low vision people own
13    television sets.  83 percent of those people own VCRs and
14    use VCRs, compared with about 84 percent or so of the
15    sighted group.
16              That's a staggering number when you stop to
17    realize that VCR makers generally don't even make the
18    equipment accessible in a way that a blind person can use
19    it easily.  And yet they are interested enough in the
20    programming and in the industry that they own the
21    equipment and do the best they can to make the material
22    work.
23              Those of us who are blind parents -- and I'm the
24    father of four daughters -- must watch TV if we're to ever
25    have any meaningful part in the lives of our children. 

 1    It's just that obvious.  Video description is important
 2    for a variety of reasons, but that's one of them.
 3              I recall an incident, if you'll allow me a
 4    little bit of personal indulgence, a time where I was home
 5    alone with my little girl, who was then two -- this has
 6    been several years ago.  There was a children's program on
 7    PBS geared toward her age bracket, of course, and there
 8    was a moment of silence in the programming and I could
 9    tell that she was watching with rapt attention.
10              And then suddenly she said, "That ball pretty. 
11    Is red?"  She was just beginning to be aware of her colors
12    a little bit, and, of course, coming in age in terms of
13    speech.  I had no idea how to help her.  I didn't even
14    know the character had a ball in his hand, let alone the
15    color of the ball, and was unable really to provide much
16    to her in the form of information.
17              Had we had video description at the time on that
18    particular program, I probably would have been able to be
19    of more value to her and more interactive with her and the
20    program.
21              Now we all have to look at the bottom line, and
22    lest you think that video description is good only to help
23    a blind father with his child in terms of learning her
24    colors, we need to think again.  It has far greater
25    importance than that.

 1              Video description actually is a great tool in
 2    terms of education.  It's a great tool in terms even of
 3    helping blind and low vision people stay employed.  Now
 4    that seems a little strange.  Let me help you think about
 5    that a minute.
 6              We generally think of people with whom we work,
 7    and the ones that we work best with are those with whom we
 8    have the most interaction socially on many occasions. 
 9    That's a given.  That's pretty much documentable.
10              A blind or low vision person is able to
11    contribute to the conversation around the water cooler
12    about last night's movie, if video description has been
13    part of that presentation.  If not, the blind or
14    partially-sighted individual is usually condemned to
15    either silence or to a sort of wondering awe in which he
16    says something like, "Oh, so that's what happened.  It
17    didn't make sense to me last night."
18              And then you perhaps will ask a question about
19    the presentation.  But what happened when such and such,
20    or when this person did such and such?
21              The reality is that video description does in
22    fact enhance the social factors as well as the educational
23    factors for blind adults and children, as we see in
24    America more and more sighted kids are dissecting digital
25    frogs using CD-ROMs and computers, and I'm sure digital

 1    television will also blossom in the classroom as well. 
 2    The absence of video description in that kind of an arena
 3    will be a sad thing indeed, as blind children become left
 4    out of that process.
 5              We would hope that we would see additional
 6    amounts of video description.  A wide array of this
 7    service is really the only way we will know whether it's
 8    useful in other arenas other than for blind and low vision
 9    people.  I think we'll find that it is. 
10              My sighted wife has often commented that had she
11    not seen the program described, she would have missed a
12    certain element about it that was there.
13              The scope of my testimony really can't go into
14    the technology.  I heard this morning some talk about the
15    importance of passing the complete digital signal through
16    cable and so on.  And we heard that that's an easy thing
17    to do.  And yet cable companies throughout the country are
18    stripping the SAP channel away from the analog signal
19    already in almost epidemic proportions.
20              We would hope that digital television could in
21    fact be constructed in such a way that the entire signal,
22    including video description, could be passed through the
23    system.  
24              I'm an extra class Ham operator who understands
25    a little bit about packet radio, and I know there's a big

 1    difference between packet radio and data packets sent via
 2    digital television, but certainly we would want and hope
 3    that the signal would be complete and that video
 4    description could go unencumbered in that regard.
 5              The other thing that we would plead with you to
 6    think about -- and I realize that it's a little beyond the
 7    purview of this commission to deal with the receivers
 8    themselves perhaps -- but we would hope that you would
 9    consider the idea that without an accessible way of
10    turning on and off the description a blind person would
11    find it almost unusable, if he couldn't have a way to
12    independently turn it on and off.
13              We are entering into an era of highly graphical
14    point and shoot kind of interfaces, and if you've ever
15    shut your eyes and tried to work with the on-screen menu
16    on your television set you know that that's a very
17    difficult thing indeed.  So we are hopeful that we can
18    talk to manufacturers as well as to you about the
19    importance of an accessible way of turning this service on
20    and off.
21              The reality is simply this, ladies and
22    gentlemen, that video description is an important and
23    vital process that ought to be mandated.  If we fail to do
24    something about it in the digital TV world, as we stand at
25    this historic crossroad, blind and low vision people will

 1    be excluded unnecessarily.
 2              And whether it means a greater ability to teach
 3    a little girl her colors by her father, or greater
 4    acceptance at the workplace or whatever, video description
 5    really is a vital and ought to be a mandated part of the
 6    digital TV spectrum.
 7              Thank you very much.
 8              MR. GOLDBERG:  Thank you, Nolan.
 9              Let me just quickly catch a few technical points
10    here.  As you heard, description is not mandated by the
11    FCC, like captioning is.  But they have studied the
12    question in a recent report just released this week on the
13    status of competition in markets for the delivery of video
14    programming.
15              The FCC did recommend that any requirement for
16    video description begin with a gradual rollout of the
17    service on limited types and amounts of programming in the
18    largest markets and by the largest providers.  Who would
19    impose such a requirement was left unstated.
20              The ATSC digital TV standard incorporates the
21    flexibility to carve out a portion of the data signal for
22    additional audio tracks, and that's for video description,
23    or for other languages or for director's comments. 
24    However, even though the technical standard allows for
25    ancillary audio services, nothing is required of

 1    manufacturers of the new sets to ensure that consumers
 2    will be able to receive any or all of these additional
 3    audio services.
 4              It's vital to the future of video description
 5    service that all manufacturers include this feature in all
 6    DTV sets and not just certain models.
 7              Let me skip ahead to, of course, reinforcing Mr.
 8    Crabb's comment about the difficulty of navigating through
 9    on-screen menus.  That's a problem for sighted people, so
10    obviously you can realize how much of a problem it is for
11    blind folks as well.
12              The greatest concern at this point for
13    description is the universal availability of ancillary
14    audio channel decoding capability in all DTV sets.  We're
15    also concerned about the lack of any bandwidth guarantees
16    for this or any other audio service, and, as I said, it
17    sure would be nice if the user interface were more
18    friendly.
19              Let me just finish by saying that when looking
20    at public interest obligations it seems like serving deaf
21    and blind people should be a very easy win-win situation. 
22    This is a population of people ready, willing, and able to
23    pay as much as anyone else for the full gamut of digital
24    services coming.  These folks are not looking for
25    subsidies or freebies.  They are a real market with credit

 1    cards in hand.
 2              With a little bit of attention to the
 3    technological developments and a relatively tiny post-
 4    production cost, all deaf and hard of hearing and blind
 5    and visually impaired consumers can be equal partners in
 6    the digital world.  And if you think deaf or blind
 7    consumers is too small a market niche to deal with, try
 8    inviting all 34 million of them to dinner sometime.
 9              Or, better yet, imagine a $50 per month digital
10    broadband income stream from 34 million customers hungry
11    for accessible media in all of its forms.  Or imagine that
12    same monthly $1.7 billion market drifting away to other
13    media because a few forward-thinking steps weren't taken
14    or because a fraction of a percentage of production and
15    transmission development funds weren't committed.
16              Many of us would like to grow to ripe old age,
17    and at that time unfortunately many of our own personal
18    analogs human systems will begin to fail.  When your sight
19    or hearing begins to go, won't you still want your MTV?
20              Thank you.
21              MR. MOONVES:  Thank you.  Thank you everybody on
22    the panel.  I think they were very eloquent comments.
23              Peggy?
24              MS. CHARREN:  It's not a question.  It's a sort
25    of conditional comment.  I watched at WGBH description

 1    video services happening, and I'd like to add one other
 2    benefit.  It's an extraordinary place for unemployed
 3    English majors.
 4              (Laughter.)
 5              MS. CHARREN:  These wonderful people sit there
 6    and add those delicious words to the story.
 7              MR. GOLDBERG:  We'd love to hire many, many
 8    more.
 9              MR. ORNSTEIN:  I have a couple of questions.  I
10    guess they are practical questions.  Some of the areas
11    that you're talking about obviously are beyond our
12    mandate.  We don't deal with the manufacturers.  I think
13    we may very well want to address it in a side way or even
14    address a suggestion that the cable operators deal with
15    this.
16              Presumably what you're talking about for us it
17    simply making sure that what seems to be a very small part
18    of the bandwidth that is already reserved be kept
19    reserved.  What I'd like to know is, if that is the case,
20    what it involves and also what are the costs here?  
21              There clearly is a cost to somebody for putting
22    the video description on.  I assume it's a cost to the
23    programmers, generally, but how does that work out? And
24    what would the cost be to broadcasters here for any of the
25    sorts of things that you would like done?

 1              MR. GOLDBERG:  I guess those are technical
 2    questions so they're mine.
 3              The reason I brought up the issue of the
 4    manufacturing side of things is that every technical
 5    committee I've ever sat on at the EIA or SMPTE always has
 6    broadcasters involved.  In the development of digital TV
 7    it's been a very cooperative effort.  So clearly we all
 8    need to work together so that the content side is also
 9    feeding the receipt side.
10              The protecting of bandwidth for captioning is
11    pretty well set, especially because it's part of the TV
12    Decoder Circuitry Act.  But it's the development that's
13    needed to get us there.  
14              As broadcasters, the "setaside for video
15    description" is problematic, because, as you've heard
16    today, this giant pipeline can be cut up in several
17    different ways.  And if you're going with a high
18    definition signal you're using most of the bandwidth.
19              If you're going with four, five or six standard
20    definition TV services, then you're really using an awful
21    lot of your bandwidth for other services, including
22    perhaps these personal pagers and cellulars and so forth.
23              So the question is that as you begin feeding
24    extra audio services, if it's not done in a consistent way
25    across the board, then it won't be a reliable service for

 1    folks like Mr. Crabb to be able to get on a regular basis. 
 2    If there's always an audio channel to be tuned into and
 3    always available on the sets, it's sort of a chicken and
 4    egg situation.  The manufacturers won't build it into
 5    their set if the broadcasters aren't using it, and vice
 6    versa.
 7              The way we saw that in today's SAP channel,
 8    which was added to the sets when stereo TV was invented,
 9    was that the manufacturers said this might be of interest
10    for second language programming, start adding a Spanish
11    track to TV shows.  
12              And the manufacturers said, oh, well then we'll
13    build in the capability.  But for many years no one was
14    really using that capability, so the manufacturers began
15    to offer it as a more expensive option, until DVS came
16    along and we saw a channel to exploit, and then finally
17    the manufacturers said, well, as long as it's being
18    utilized we'll build it into our sets.
19              As for the cost of DVS, today it's round about
20    $5,000 per hour of programming, give or take, because
21    programs are different, the turnaround requirements and so
22    forth.  The broadcaster today needs to have stereo
23    broadcasting capability and what's called a SAP exciter. 
24    Generally the SAP part of it is only $5,000, but if you're
25    not already stereo then you've got to upgrade to stereo.

 1              In digital TV we don't anticipate there will be
 2    any additional cost for the infrastructure to transmit
 3    extra audio.  That's the flexibility of digital TV.  We'll
 4    be able to encode or reconfigure the use of that bandwidth
 5    for 5.1 channels of audio or just stereo plus ancillary
 6    audio.
 7              So it's the flexibility of these digital
 8    encoders and decoders that will enable the cost for the
 9    infrastructure description to be pretty low.
10              MR. ORNSTEIN:  So what should we do?  What would
11    you want us to do?
12              MR. GOLDBERG:  Well, I think involvement in the
13    standards creation process -- most broadcasters have seats
14    on the ATSC, SMPTE, CEMA, EIA -- to be aware that there's
15    this audio question, and a lot of other technical issues I
16    didn't even attempt to bring up today, in addition to the
17    fact that, as we've heard many, many times today, analog
18    TV is here with us a long, long time.
19              You're building a body of programming today that
20    will be used in digital television.  So the time is now to
21    begin describing programming that will be utilized in the
22    future, to begin experimenting with the whole broadcast
23    transmission of digital TV with DVS, and then to utilize
24    that with the settop boxes and with the digital sets.
25              MS. SOHN:  Could I just get a point of

 1    clarification?  Are you saying that the broadcaster
 2    station owner should be the one that pays for the
 3    description?
 4              MR. GOLDBERG:  Oh, that was another part of the
 5    question.  At this point, captioning is paid for by either
 6    the producer or the distributor -- that is, the network or
 7    cable provider.  Because of the new Telecom Act, the costs
 8    are likely to be shifted much more to the producer of the
 9    programming, the holder of the copyright.
10              Today in description it's being paid almost
11    exclusively by government funds, by Department of
12    Education grants.  But those are limited and will only
13    give a limited rollout.
14              It seems also likely that the burden of paying
15    for description will fall mostly on the producer or the
16    licenser of that program, that is, the distributor.  That
17    seems to be the natural way to split the costs.  Since
18    you're licensing it for a limited period of time, right
19    now the distributors -- CBS, ABC, NBC -- pay for a portion
20    of those costs.  And the same would be likely for
21    description in the future as well.
22              MR. SUNSTEIN:  There's an obvious puzzle in this
23    area, which is if there are 34 million viewers and it's
24    $5,000 per hour to make viewing available, why doesn't the
25    market provide that?  In other words, if those are the

 1    numbers, there shouldn't be any need for regulation.
 2              MR. GOLDBERG:  I was thinking that that question
 3    was going to be asked today too.  I think that in the
 4    world of relying on the marketplace to trigger services
 5    like this it's a question of what other markets does a
 6    broadcaster have the ability to go after and how easy are
 7    they.  How understandable are they?
 8              In the world of Internet services or data
 9    broadcasting or television, there's the low-hanging fruit. 
10    There's the market niches that a broadcaster understands. 
11    I don't think there's a large enough awareness of the
12    disabilities community for broadcasters, cablecasters to
13    really understand the power of that market.
14              It hasn't been felt yet, but it is absolutely
15    there.
16              MS. STRAUSS:  If I could just add to that, in
17    fact captioning is a good example of how the market, at
18    least the broadcasters did respond to the market. 
19    Initially there was very little captioning, and as the
20    broadcasters recognized how widely it was received it
21    really picked up, although, as I said, we needed a little
22    bit of help with the Telecommunications Act.
23              Video description is much newer, and so the goal
24    here is to at least preserve whatever bandwidth is
25    necessary to ensure that when it does catch on there is

 1    going to be the technology available to send it through. 
 2    I mean, that's really the purpose.  
 3              That's how I see my purpose on this committee,
 4    to make sure that whatever needs to be in place is in
 5    place, so that in the future, when it does pick up,
 6    however it picks up, whether through legislation or
 7    through economic market incentives, there's not a
 8    technological barrier to that.
 9              MR. MOONVES:  Karen, has there been any research
10    done about what in fact the closed captioning has done for
11    the broadcaster and the advertiser?  In other words, is
12    there an economic basis on which, yes, this worked there. 
13    If you do it in video description it will also work.
14              MS. STRAUSS:  There was some research done with
15    respect to television manufacturers.  In 1990, when we
16    were going to Congress to get the decoder chip act passed,
17    there was evidence that we were able to show, by Zenith
18    and some other television manufacturers, about the
19    economic incentives and the economic benefits to making
20    closed captioning available.
21              And it proved very viable.  In fact, Zenith
22    began installing the decoder chip before they were
23    mandated to do so because they found it so attractive in a
24    business environment.
25              MR. MOONVES:  Yes, Harold.

 1              MR. CRUMP:  May I, just as an aside.  I was
 2    struck by my own reaction to this as I sat here with my
 3    eyes closed listening to it.  And I immediately thought of
 4    the fact that we have had in the past many times
 5    television stations doing simulcasts with radio stations
 6    on public service programs, football games, et cetera.
 7              And what I was listening to, to me, seemed to be
 8    radio.  So perhaps there's another opportunity here, as we
 9    talk about commercialism, where we might do simulcasting,
10    and it literally would come down to radio and television
11    together.  Oversimplification, but there you are.
12              MR. GOLDBERG:  In today's distribution of
13    description video there are a number of radio stations
14    that actually do provide that.  It's a question of getting
15    that air time on a radio station as well.  But that's
16    certainly a possibility.
17              There's even possibilities of simulcasting
18    through Mr. Glaser's RealNetworks the audio portion of a
19    TV program, and once everyone's more capable of turning
20    their PC on we could synchronize that as well.
21              If I could just go back to one question about
22    the marketplace and description video, how many people
23    here heard description for the first time today?
24              (A show of hands.)
25              MR. GOLDBERG:  We don't have a lot of funds for

 1    PR to make sure that people really do understand that. 
 2    But, as you can hear from Mr. Crabb and his very large
 3    organizations that he works for, there's a lot of folks
 4    out there.  But it's still an awareness issue for many,
 5    many people.
 6              MR. MOONVES:  I'd like to thank all of you.  We
 7    will skip the break that is on our schedule and go right
 8    into the national disaster information systems.  Thank
 9    you, Karen.
10              MR. ORNSTEIN:  We're going to now hear from Dr.
11    Peter Ward, who is with the U.S. Geological Survey, who
12    communicated with us early on as the chairman of the
13    working group, a cross-agency group, on natural disaster
14    information services, on basically how the digital
15    technology offers opportunities for dealing with early
16    warnings and accurate information about disasters.
17              Thanks for joining us, Dr. Ward.
19              DR. WARD:  Thank you for the invitation.
20              The working group on natural disaster
21    information systems has a goal of evaluating and fostering
22    ways to integrate public and private resources and
23    infrastructure to ensure that the most accurate, timely,
24    and technical information is available to those that can
25    use it -- to save lives, reduce losses, speed response and

 1    recovery.
 2              It's a committee of Federal employees, all of
 3    which are integrally related to either the sources of this
 4    information or ways of getting the information out, or
 5    ways that regulate the ways the information gets out. 
 6    What we wanted to do was make you aware of our effort. 
 7    It's under way, and it has some implications.
 8              What I want to do is put a small blip on your
 9    radar screen, small because the bandwidth we're talking
10    about is essentially trivial.  But it's a very large blip
11    in terms of the potential benefits for the American people
12    and the public relations benefit I think for the
13    broadcasting industry.
14              The problem we're facing is that natural
15    disasters in this country are becoming very expensive.  In
16    the last five years, the average cost has been $1 billion
17    a week, actually $52.4 billion a year.  Single future
18    disasters -- the Northridge earthquake in 1994 was $42
19    billion, but an anticipated earthquake in the eastern part
20    of San Francisco Bay region we anticipate losses of about
21    $150 billion in about 25 seconds.  And this will be
22    similar to the Kobe, Japan, earthquake a couple of years
23    ago.
24              The problem is that more and more people are
25    moving into urban areas at risk and our infrastructure is

 1    becoming much more complex and much more expensive.
 2              We find that being able to provide information
 3    rapidly before an event or even during an event or
 4    immediately after an event does lead to significant cost
 5    savings and potential savings of life.  Obviously an early
 6    warning of the tornado is down the street and headed in
 7    your direction is clear.  In the case of an earthquake, we
 8    can now, or we will within a short time be able within
 9    tens of seconds to say the earthquake has occurred.
10              And if you're far enough away, like 20, 30, 40,
11    50 miles away, you we can actually tell you the waves are
12    going to arrive in five, 10, 15 seconds, which is enough
13    time for schoolchildren to get under their desks or for
14    preplanning programs to shut down factories or close up
15    critical pipelines or whatever to begin.
16              So there's a potential now of getting
17    information very, very quickly, and the problem is
18    delivering it to those that need it.
19              Now, there is a system in place that many of you
20    may be aware of, probably are, the emergency alert system. 
21    It replaces the emergency broadcast system.  There has
22    been a revamp this year.  It's mandated by the FCC.  The
23    new form of the EAS includes a digital packet of
24    information that goes out, and up to about a two-minute
25    verbal information, which on television is often changed

 1    to a scroll at the bottom of the screen.
 2              And this is mandated for Federal information,
 3    not necessarily for state information.  For example a
 4    chemical spill that would occur in a town, the local
 5    channels have a choice as to whether to put it out, and,
 6    depending upon the priority of the message, they have a
 7    choice as to how long they could delay before the message
 8    actually goes out.
 9              One of the problems we're finding in dealing
10    with disaster warning would seem rather clear when you
11    stop and think about it.  It is that if you're woken out
12    of your sleep being told that there's a flash flood
13    warning, but that flood is actually ten miles away and
14    isn't going to affect you at all, and if this happens
15    several times you're going to figure out how to disconnect
16    that device that's giving you that information.
17              And even if you're not woken out of your sleep,
18    if you just keep hearing these warnings about catastrophes
19    and they don't actually affect you, it's only natural that
20    when you hear them in the future you say, ah, I've heard
21    that before.  That's not an issue.
22              Well, what's exciting about the digital future
23    is we see the potential of having smart receivers.  For
24    example, the television set, the pager, whatever the
25    receiver is, can have a small computer that can say,

 1    tornado touchdown five miles southwest, headed in your
 2    direction; go to the basement.  Earthquake waves arrive in
 3    10 seconds.  
 4              The idea is that you can personalize the message
 5    to the particular person, to where they are location-
 6    wise, and to what their interests are.  You might be able
 7    to put a profile in, and the individual person says, well,
 8    I really don't care about tornados; don't tell me about
 9    those.  Or, even to go further, it might be possible in
10    the future to say I want to know about tornados where
11    Grandmother lives.
12              And this information that's in the airwaves,
13    just small amounts of digital information that's going
14    out, it's the user and the user's receiver that can decide
15    what they get and whether it interrupts them, whether it
16    wakes them up at night, and what the details are in terms
17    of distance to the event, the size of the event, what it's
18    going to mean to them.
19              We're looking at the application of this on many
20    different technologies.  We are working with the AM
21    digital standards and looking at it in terms of cellular
22    phones and many of the other kinds of receivers.  But the
23    idea is that we see a way of getting the information
24    centralized and to various distribution channels.
25              So the message I wanted to leave you with was

 1    the concept that a few years, five or 10 years at the
 2    most, in the future we stand the possibility of being able
 3    to take fairly simple, short digital messages that
 4    broadcast widely and having hardware that's sold in the
 5    stores that allows people to utilize this information in
 6    whatever way is best for them.
 7              The public relations value of this in terms of
 8    what the distribution channel is is tremendous.  There is
 9    an individual in Missouri who is working on using cellular
10    phone technology to say where a tornado is.  You can light
11    up all the phones within a given cell.
12              What the manufacturers have found, or those that
13    are trying to put the equipment out there, is that when
14    they go before the local zoning boards and ask to put a
15    tower in the town, when they say we have this piece here
16    for public value, all of a sudden the zoning board's more
17    interested.  And in fact the headway he's made
18    unofficially has really been from that standpoint, that
19    the providers have found is a real value.
20              So again what are we talking about.  A very
21    small amount of digital information, really hundreds of
22    bits at most, a very small bandwidth, maybe 1200 baud or
23    less, but a stream of information that has official
24    information about anything from earthquakes, volcanos,
25    tornados, floods, chemical spills, major traffic

 1    accidents, whatever.
 2              And that could be available on any variety of
 3    receivers.  It might even turn the receivers on, set the
 4    volume, and give the message.
 5              Thank you.
 6              MR. ORNSTEIN:  So basically what we should do is
 7    think about making sure that this small bandwidth is
 8    reserved for this purpose.  At this point it's not
 9    mandated?
10              DR. WARD:  At this point it's not mandated. 
11    It's not clear whether a mandate's going to be necessary. 
12    But the reason I was talking to you is, yes, to think
13    about whether a small bandwidth for disaster information,
14    for warning information, would be appropriate.
15              This ties in also with intelligent
16    transportation systems and the communication needs they
17    have.  And that's another area we're working on.  So there
18    are many different applications there, but I think the key
19    issue is that small bandwidth.
20              I also put a single line on here suggesting that
21    there is a need for more educational information about
22    disasters -- how you can prepare, how you can deal with
23    them.  And that's a slightly different issue.  I just
24    wanted to leave that in there as a point.
25              MS. STRAUSS:  Apropos of the earlier panel, I'm

 1    curious to know whether you've given any consideration or
 2    whether there's been any efforts to ensure that the
 3    information that's passed through is accessible to people
 4    with disabilities, so that if it's passed through in text
 5    form or when it would be audio and vice versa that there
 6    would be a redundancy of the transmission.
 7              DR. WARD:  Yes.  That's obviously a concern.  I
 8    can say that even in the paging area now there are a
 9    number of manufacturers that are working with different
10    communities with disabilities to make sure that a vibrator
11    under the pillow goes off, or there are many technologies. 
12    And that's very important.
13              Part of our concern as a Federal committee is to
14    try to make sure that the standards that private industry
15    needs in order to invest the money to do these kinds of
16    things are there.  You know, we can say we will have the
17    information available on certain channels.  These
18    distribution channels -- for example, digital TV -- agrees
19    to carry the information.  And so therefore it's
20    worthwhile for you to develop the products.
21              MR. LaCAMERA:  Doctor, in this future world of
22    tailoring messages to units or regions or whatever, the
23    sourcing, is it FEMA and do they have the regional/local
24    resources to tailor messages that way, to focus messages
25    to particular regions within their coverage area? 

 1              DR. WARD:  The primary input at the moment of
 2    signals comes from the National Weather Service and from
 3    FEMA and from the local county emergency managers.   The
 4    EAS system allows them to specify a county level and one-
 5    ninth county level.  But that is in the broadcast mode.
 6              What we're talking about now is adding latitude
 7    and longitude either as a point or as a polygon to that
 8    digital stream that goes out so that a receiver that can
 9    know where its latitude and longitude are can do the
10    resolution for space.  So what we're talking about is
11    moving brains into the receiver rather than transmitting
12    something over a much broader region.
13              MR. ORNSTEIN:  The notion of being able to
14    actually turn your set on and transmit, that would come
15    through a chip inside the receiver, or would it take any
16    more bandwidth to be able to make that happen?
17              DR. WARD:  No.  The way we would visualize it is
18    that this channel of information is being monitored
19    continuously, even when the set's turned off, although
20    somebody would probably have the option to turn this
21    monitor off also.  And that monitor would simply, when
22    something was seen of importance to that individual, turn
23    the set on, if it's not already being used, or interrupt
24    the program.
25              One of the problems with the emergency alert

 1    system at the moment is it does interrupt the programming. 
 2    Even if the digital blip is all that's sent out, that is a
 3    sound on the program.  So clearly from the broadcasters
 4    point of view it has some interference.
 5              The nice thing about putting the brains in the
 6    receiver is that it will only interrupt the programming of
 7    people that are immediately affected.
 8              MR. MOONVES:  Dr. Ward, let me ask a question. 
 9    In terms of the larger things that have happened over the
10    last few years, have people missed them?  In other words,
11    haven't the broadcasters done a fairly good job already? 
12    You know, I live in Southern California, so rain is a big
13    story.
14              But I think right now it seems like there is
15    quite an alert system that's already in operation on 75
16    channels. 
17              DR. WARD:  The current emergency alert system is
18    just moving to cable, but it's very active on television
19    and radio and has been working very well.  While it's FCC-
20    mandated, the broadcasters play a major role and it's
21    really in many ways more cooperative than simply a
22    mandate.  I think they have done an outstanding job.
23              MR. MOONVES:  But have they missed anything?  In
24    other words, has there been a disaster area where, in
25    other words, if this system was implemented there would

 1    have been a much better result than would currently exist?
 2              DR. WARD:  Well, if you look at the reported use
 3    of the emergency alert system around the country, you find
 4    certain channels, certain stations have provided many,
 5    many, many warnings and other places don't provide any. 
 6    It definitely gets back to choice of how much, on the one
 7    hand, the Weather Service is putting out, and then how
 8    much the local station is interested in participating,
 9    because they do have a choice at certain levels.
10              But what we're not looking at here is a problem
11    with the way things have been done from, say, the
12    broadcasters point of view.  We're looking at the
13    opportunities of what the broadcasters can do.  And in the
14    future there's a whole new opportunity here that digital
15    technology provides us and a way to get to just the people
16    we need.
17              As I mentioned earlier, we have this problem
18    that if you keep warning people then it doesn't apply to
19    them.  And almost any radio station or television station
20    reaches a lot more people than are usually at risk for the
21    particular event.
22              MR. ORNSTEIN:  The Chicken Little phenomenon.
23              MR. CRUZ:  One question of interest.  There are
24    other major stories in California that are of interest
25    besides rain and earthquakes.  Having been through several

 1    of them in California and having lived through one in
 2    Mexico City that hit 7.1 on the Richter scale, I have a
 3    great appreciation for earthquakes.
 4              What is it that you can do now?  What is the
 5    latest status of technology that enables detection?  I
 6    thought that was still something that wasn't close enough
 7    yet.
 8              DR. WARD:  There's been great advances in the
 9    earthquake area, and that is my personal specialty.  I was
10    in charge of the earthquake prediction program in the
11    '70s.  And we're working now on what we call rapid
12    notification.
13              Rapid notification is right at the moment,
14    within 30 seconds after an earthquake in northern
15    California, you can see the location of that earthquake on
16    the Worldwide Web.  Within a few minutes we hope to be
17    able to have a map of anticipated damage, or at least
18    anticipated ground-shaking.  That's rapid notification.
19              A more research area is what we call early
20    alert, where we try to detect the earthquake right where
21    it occurs and send out at the speed of light information
22    that the earthquake has occurred and it's about to arrive
23    at your location.
24              Rapid notification turned out to be very
25    important.  For example, when a major earthquake occurs,

 1    transportation systems usually shut down -- for example a
 2    train.  The standard policy is to shut the train down.  By
 3    notifying within tens of seconds what's going on, where
 4    the earthquake is, dispatchers can decide that's not
 5    likely to affect our track; we'll start the train up
 6    again.  And in fact we have cases of this with CalTrain in
 7    the San Francisco area.
 8              It also allows people to prevent secondary
 9    damage.  We have cases in southern California where the
10    electric utility was able to switch a transformer offline
11    before the surge followed the earthquake and saved many
12    millions of dollars.  
13              There are many, many cases like that where the
14    rapid notification that we're doing now can really pay
15    off, and when you start leveraging that across the whole
16    community at risk it's turning out to be very important.
17              But part of our problem is the delivery of that
18    information.  Standard paging units take 8 to 10, 15
19    seconds to get it out, because there's a priority list and
20    that's just the way they're managed.  So our critical
21    users at the moment, we have either leased lines or some
22    direct way of communicating with.
23              But as this becomes more developed and there are
24    more users, potential users, it's going to be important we
25    find instant channels, ways of getting it out immediately. 

 1    And, of course, the issue with EAS at the moment is,
 2    because it interrupts programming the broadcasters would
 3    like to have some control over whether it occurs during a
 4    commercial or where in the program.
 5              So it's important in that case that it can get
 6    delayed.
 7              MR. CRUZ:  Earthquakes don't give you that
 8    luxury, though.  They blast everything down.
 9              MS. STRAUSS:  How much information are you
10    anticipating would be sent, transmitted over this.  The
11    reason I ask is that currently EBS and EAS oftentimes will
12    transmit only the fact that there is an emergency.  But
13    then they will not use those systems to transmit
14    information about where to get help in the emergency.
15              I know this because captioning is required for
16    EAS and EVS, but then it's not necessarily required for
17    all of the local news, so that, for example, deaf people
18    lose out on that.
19              Are you anticipating this being used just for
20    the very fact of the emergency or for additional
21    information on how to obtain help?
22              DR. WARD:  Well, I think where we're headed with
23    Internet and Internet-like facilities is going to open a
24    whole new world there.  One of the very interesting
25    systems to me that you should be aware of is called EMWIN,

 1    the Emergency Managers Weather Information Network.  It's
 2    actually a transmission by satellite, by NOAA, by the
 3    National Weather Service, that it had been operating at
 4    1200 baud.  You could receive it with a small board added
 5    to your PC directly from the satellite.
 6              And the software is such that you log onto your
 7    PC and search through that information, just as you would
 8    on the Web, except it's all located on your computer.  
 9              In addition, it's rebroadcast.  In areas such as
10    this it's rebroadcast in VHF, and for a $5 or $10 module
11    that you plug into your parallel port you can get that
12    same stream of information.  This is very important in
13    emergencies when lines can be down and so on, and we see
14    it as a real value of getting that information out there.
15              Now on digital television, with that kind of a
16    baud rate, there's a possibility that that could be added.
17    It's a whole other dimension that we would want to bring
18    in here.  EMWIN has recently gone to 9600 baud, but it can
19    be in those kind of rates, and the idea is that the
20    information is being transmitted regularly, but then you
21    go search out what you want within what's there.
22              Now EMWIN is also found on Internet, the same
23    information.  And what is being transmitted, by the way,
24    is weather information all over the country, and any alert
25    that's active, be it for all hazards.

 1              MR. ORNSTEIN:  Okay.  Thank you very much, Dr.
 2    Ward.  That was very useful and helpful for us.  We'll
 3    break now for lunch and we will come back precisely at
 4    1:30 so that we can have our very robust afternoon.
 5              (Whereupon, at 12:38 p.m., the meeting recessed,
 6    to reconvene at 1:30 p. m. the same day.)

 1                         AFTERNOON SESSION
 2                                    (1:40 p.m.)
 3              MR. MOONVES:  Ladies and gentlemen, can we
 4    gather.  Can we reconvene, please.
 5              First, Norm Ornstein for a couple of brief
 6    messages.
 7              MR. ORNSTEIN:  I just wanted to suggest to the
 8    members, we will be discussing this at the conclusion of
 9    this panel or towards the end and not everybody will be
10    here.  Since we are meeting in Los Angeles next, our early
11    plan, which was to focus next on the larger questions of
12    the political process, it doesn't make a whole lot of
13    sense to do that out in California.
14              So we should think a little bit more and come to
15    a conclusion about our agenda for the next session in Los
16    Angeles.  We have some ideas that we'll put on the table
17    later on this afternoon.
18                     PANEL:  EDUCATIONAL PROG
20              MR. MOONVES:  Good.  Thank you, Norm.
21              We are graced with a wonderful panel of five
22    experts in the area of education programming.  Our panel
23    member Peggy Charren has put this together.  Peggy, as you
24    all know, has been the bane of every network's existence
25    for many years and is fondly known as the godmother of

 1    children's television.
 2              So Peggy, I would love to turn the panel over to
 3    you. 
 4              MS. CHARREN:  Thanks.
 5              I'll sit over here since we have so many members
 6    of this panel.
 7              First I want to thank the committee staff and
 8    some members of this committee, too, for --
 9              MR. MOONVES:  Peggy, put the microphone closer
10    to your mouth, please.  Thank you. 
11              MS. CHARREN:  First I want to thank the
12    committee staff and the members of this committee for
13    helping to put this panel together, and it was very
14    significant help.
15              This afternoon's panel focuses on education. 
16    There's no question that television educates.  It's
17    because violent, stereotyped, overcommercialized program
18    educates that so many people worry about it.  But when we
19    talk of TV's power to educate we usually mean the ability
20    to give us what we need to know to grow up healthy and
21    prosper in a democratic society.
22              Every U.S. broadcast license includes a legal
23    mandate to serve the public interest.  Over the past 50
24    years Congress and the FCC have developed policies
25    designed to reinforce that obligation.  For example, the

 1    Children's Television Act of 1990 presently requires three
 2    hours a week of educational programming for children on
 3    each station.  Yet even this minimal guideline is too much
 4    for some TV executives to accept.
 5              In "Any" magazine this month Mark Lieber, who's
 6    the Senior Vice President of Children's Programming at
 7    Polygon Television, wrote:  "No matter how cleverly we
 8    disguise education, most children over the age of four are
 9    inclined to turn the channel.  Instead of mandating a
10    specific number of hours per broadcaster, it would be more
11    effective to devise a collaboratively funded one-hour
12    family special to air each month."
13              He suggests that all the networks and cable
14    companies air that show simultaneously.  That's one hour a
15    month.  Well, so much for diversity.
16              Without discussion and decisions about how many
17    new programming opportunities are inherent in digital uses
18    of the spectrum that can be used to serve the American
19    public, we think that maybe vested interests will win out
20    over the public interest. 
21              James Day, who is the past President of WNET and
22    a big person who helped to organize public broadcasting,
23    put it very nicely in a book he recently wrote.  He said: 
24    "In the communications shakeout that's coming there will
25    be winners and losers.  Some will survive and others will

 1    slip into limbo, victims of the inexorable economic forces
 2    that shape the fate of the mass media."
 3         "Economic forces," he said, "however, are not the
 4    only arbiter of social needs.  This Nation, dependent as
 5    it is upon an informed electorate, must not permit its
 6    organs of enlightenment to be shaped by the same forces
 7    that determine its leading brands of beer, headache
 8    remedy, and dog food."
 9              Now, you may ask what all this has to do with
10    our deliberations here today.  I'm sure that today's panel
11    will have some answers.  First we're going to hear from
12    Gordon Ambach, who's the Executive Director of the Council
13    of Chief State School Officers.  He holds a B.A. in
14    American studies from Yale, a master's in teaching
15    history, and he served as the New York State Commissioner
16    of Education and President of the University of the State
17    of New York. 
18              He developed and implemented the Nation's most
19    comprehensive school reform act, the Regents' Action Plan,
20    establishing rigorous diploma standards.  He served on the
21    National Committee on Libraries and Information Services.
22              And I was particularly pleased to note in his
23    resume that he's a graduate of Hope High School in
24    Providence, because that's where my husband went.
25              Anyway, we're delighted to welcome Gordon

 1    Ambach.
 4              MR. AMBACH:  Thank you very kindly, Peggy.
 5              Co-Chairs and members of this distinguished
 6    committee:  It is a great privilege for me to be with you
 7    this afternoon and to address the subject of public
 8    interest obligation with respect to elementary and
 9    secondary student achievement.
10              I have provided a copy of my brief remarks.  It
11    should be at your places.  I really would like to make
12    five points.  I have five minutes and that divides rather
13    evenly, although a couple of the points have much more
14    weight than do others.
15              I'm going to speak not only on behalf of public
16    elementary and secondary, but nonpublic elementary and
17    secondary interests, and about learning both inside and
18    outside of schools.
19              The public interest obligation for the use of
20    digital television to improve student achievement has
21    extraordinarily high stakes for our Nation.  The
22    acquisition and use of knowledge is the major resource for
23    our society in the coming century.  Information
24    technologies are keyed to access and use of knowledge,
25    which is pivotal for our quality of life, our economic

 1    development, and indeed our security.
 2              The Nation's success depends upon how
 3    effectively all members of our society are prepared to use
 4    information technologies, which in turn means that the
 5    proficiency of our citizens depends upon the quality of
 6    our elementary and secondary education offerings and
 7    student capacity to use the information technologies.
 8              The advice of this committee in my judgment on
 9    the public interest obligations with respect to elementary
10    and secondary education must be exceptionally bold and
11    commensurate with the high stakes of our Nation for our
12    information IQ, if you will, in an internationally
13    competitive environment. 
14              Now, at pivotal points in the history of this
15    country over these past two decades -- two centuries,
16    excuse me -- the Federal Government has in fact from time
17    to time made very significant decisions to commit the
18    Nation's resources to address our educational challenges. 
19    In the eighteenth century we made land grants for
20    establishing local school districts.  In the nineteenth
21    century we made land grants to establish the most
22    extraordinary system of colleges and universities that the
23    world knows, the land grant acts in the latter part of
24    that century.
25              In the twentieth century we had things like the

 1    GI Bill post-World War Two, which created probably the
 2    greatest access to the development of advanced capacity
 3    that any society has ever put forward at one particular
 4    time.  In the sixties we've had major Federal
 5    interventions for children who happen to be economically
 6    disadvantaged or have disabilities, which have changed
 7    substantially opportunities.  I know you saw the
 8    demonstration this morning with respect to persons who
 9    happen to have disabilities.  The Federal Government and
10    its initiatives here have been absolutely extraordinary. 
11    And of course, most recently we've had the universal
12    services discounts for schools and libraries with respect
13    to telecommunications services.
14              Now, I cite these because at various times there
15    have been extraordinarily bold decisions made and I
16    believe we're at the same point with respect to the use of
17    the digital capacity, digital television broadcasting. 
18              Now, in order to justify a public interest
19    obligation and elementary and secondary education, rather
20    than starting with this perspective of what's the
21    technology and how we might use it, it seems to me that we
22    must start with what are the needs in elementary and
23    secondary education and in fact can any of them or should
24    any of them be addressed by the applications of digital
25    television.

 1              I've suggested for you several very specific
 2    items where there is a great need within the elementary
 3    and secondary schools that can be addressed at least in
 4    part through applications of digital television.  A, point
 5    4:  Access to the use of information technologies so that
 6    students can learn the skills and proficiencies to help in
 7    their learning.  This is an extraordinary equity issue
 8    right now across our country.  Perhaps the most important
 9    equity issue in elementary and secondary education right
10    now is the have's and have-not's issue with respect to
11    access to information technologies.
12              The second is in access to timely, inexpensive
13    databases.  This is the issue of how extensively is the
14    Internet or its successor nets going to be available to
15    children in our schools and outside.
16              The third is the opportunity for interactive
17    distant direct teaching and learning in subjects which are
18    typically unavailable:  AP courses, for example, in some
19    schools; or calculus or advanced mathematics; or master
20    classes with performers or artists, such as Izaak Perlman
21    with respect to teaching in very, very special
22    circumstances by distance learning.
23              I happen to have seen Perlman, incidentally,
24    conduct a master violin class with four students in remote
25    locations -- one of the most extraordinary things I have

 1    ever seen.  And he would tell you, just as a parentheses,
 2    he can teach more effectively that way in many cases than
 3    he can teach in person.  There's an interesting dynamic,
 4    that the student loses the anxiety of being at the
 5    master's side and focuses on what are the techniques.  The
 6    sound isn't as great as if you were next door, but the
 7    potential, I use just as an illustration, is incredible.
 8              Next and in a way a derivative from the issue of
 9    those subjects not ordinarily available, but one which is
10    so important for our country, is the use of our digital
11    capacity to help with the learning of languages other than
12    English, both with respect to our populations who are non-
13    English speaking and who need to learn both English and
14    maintain their own language for our overall capacity and
15    for our English speaking population that needs to learn to
16    communicate with the majority of the world which of course
17    speaks languages other than English.
18              The next is using technologies to learn to
19    conduct scientific experiments or operate complex
20    machinery by simulation, what any major industry does at
21    this point with respect to its own employees and something
22    that is extraordinarily important for learning for
23    occupations in our secondary levels, to be able to learn
24    at distance by simulation.
25              The next:  cost effective, round the clock

 1    channels of communications for students, parents, and
 2    teachers to reinforce learning through understanding
 3    expectations for student performance, for access to
 4    curriculum materials at home, for informing about
 5    progress, for homework assignments, for monitoring
 6    students.
 7              The next is recording and displaying student
 8    performance through portfolios or other examples related
 9    to their standards and for informing the public on school
10    results.
11              Finally, the preparation of teachers through
12    observation of good practices in the United States and
13    other nations, exchanges on teaching technique, coaching
14    of candidates and practitioners from offsite locations.
15              I might also offer you a brief parenthetical
16    note there.  There has just been done a major study
17    comparing mathematics and science education in this
18    country and in 40 other countries.  I happened to
19    represent the United States in conducting that study.  The
20    most fascinating aspect of it is comparative videotapes of
21    teaching in different countries, and it is stunning what
22    effect that has been by way of having our teachers now be
23    able to watch Japanese teachers of mathematics or German
24    teachers of mathematics and actually see how they handle
25    the subject.

 1              Now, the potential there, both within this
 2    country and across countries, is just extraordinary. 
 3    Remember, we are dealing with the heart of the educational
 4    system, the teaching and learning of that system.
 5              Incidentally, you'll notice every single example
 6    I have just given you is on teaching and learning.  Every
 7    one of them has to do with student achievement.  We're not
 8    talking here about management information systems, we're
 9    not talking here about other aspects.  We're talking about
10    the core of the function of education. 
11              So let me conclude then by way of saying that
12    the capacity of digital television and that which can make
13    a contribution on each of these needs, surely on other
14    needs, is fantastic.  To use it effectively will require,
15    in my judgment, new and very imaginative decisions on the
16    dedications of entire channels or sub-channels or major
17    parts of them in order to expand the number of pipes or
18    the size of the overall pipeline for information flow and
19    communication. 
20              In addition, the Nation must make a substantial
21    commitment of a part of the revenues from the growth of
22    using digital television for dedication to creating the
23    content for the learning that goes through these
24    pipelines.  There is precedent for Federal action to
25    establish revenue streams for education that use allocated

 1    resources, and they go back two centuries:  the land
 2    grants and then allocation of how they were used; timber
 3    rights, mining rights; and indeed, brought up to date, in
 4    a way the universal services provision is such a kind of
 5    commitment.
 6              Now, I said to you that I was going to propose
 7    some bold solutions.  Maybe these are beyond the scope of
 8    this particular advisory committee.  I hope they're not,
 9    because in my judgment what you do by way of your
10    recommendations and what is done by way of the use of this
11    incredible capacity in technology, an asset which is
12    genuinely that of our Nation as a whole, will have or can
13    have an extraordinary impact on achievement of elementary
14    and secondary students in the future.
15              Thank you very much.
16              MS. CHARREN:  Thank you, Gordon.  You validate
17    what I made my approach to this panel when I started
18    thinking about it.  It's, after all, "Programming in the
19    Digital Era" and, instead of focusing on particular kinds
20    of programming, I thought it was appropriate to focus on
21    where we learned.  First is K, pre-K through 12, and next
22    it's higher education, and it's also libraries and public
23    broadcasting as a place on the screen and as a thread for
24    all these institutional possibilities.
25              Anyway, next we have higher education, and to

 1    discuss it we have Janet Poley, who is President of
 2    American Distance Learning Consortium -- ADEC.  Is that
 3    right, ADEC?  Right.
 4              In March she was named one of the hundred
 5    outstanding technology leaders in government, business,
 6    and academia by Federal Computer Week.  She's been
 7    Director-Deputy Administrator for Communication,
 8    Information, and Technology of the Extension Service of
 9    the U.S. Department of Agriculture.  She served as
10    Coordinator of the Development Management Center, Chief of
11    Party for the Training for Rural Development Projects for
12    six years in Tanzania, and for that she was given an
13    Excalibur Award from Congress in 1983.  
14              She's been involved in technology, technical
15    assistance, and all kinds of evaluation in more than 20
16    countries from Asia, Africa, and Europe, and was a member
17    of the first USDA Extension team sent to Poland to explore
18    establishing an Extension Service there.
19              I imagine it's easier to do what you have to do
20    this afternoon.  Anyway, Janet.
23              MS. POLEY:  Thank you very much.
24              Good afternoon.  I'm very pleased to have an
25    opportunity to speak with you on behalf of ADEC, the

 1    Distance Education Consortium that includes about 50 of
 2    the major state universities and land grant institutions
 3    in the United States.  We're also affiliated with many
 4    nonprofits and professional associations, and what I hope
 5    to do is to share with you some of our vision and ideas
 6    that may be helpful as you think about this very important
 7    public and educational interest. 
 8              I wanted you to know that as a group of higher
 9    education institutions we have about 39 uplink sites
10    across the United States, about 2,000 downlink sites that
11    go into almost all of the counties of the United States. 
12    We partner with many groups, and I would applaud what
13    Gordon has said in terms of the K-12 sector.  I think we
14    have a seamless kind of operation and some of the needs
15    that he mentioned will not be met without a collaboration
16    between higher education, a number of you, and the K-12
17    community.
18              One of the things that I wanted to mention up
19    front:  I come from the land grant institutions and ADEC
20    was founded on that land grant base, and I think this is a
21    very important dimension of who we are and where we come
22    from.  Today we are active participants in the Next
23    Generation Internet and Internet 2.  We're experimenting
24    with interactive technology integration that's appropriate
25    for learning applications.  We have historically black

 1    colleges and universities that are members of our
 2    organization as well as tribal colleges.
 3              We stretch from coast to coast and around the
 4    world.  We have foreign educational institutions involved
 5    in Australia, Mexico, Latin America, and Africa.
 6              As a distributed virtual organization, we work
 7    with a variety of professional associations and nonprofits
 8    in nutrition, health, children's welfare, youth
 9    development, food technology, and the physical and
10    biological sciences.  If you want to know more about ADEC,
11    you can find us on the World Wide Web,, and
12    you'll find some very interesting programming there that I
13    hope will be more broadly used in the public interest and
14    educational sector.
15              My member institutions want you to know how
16    important we think it is to ensure that this transition to
17    the digital television age takes into account building a
18    vibrant public and educational broadcasting sector.  We
19    think that the digital revolution must be developed to
20    serve educational goals critical to the future of our
21    Nation.  I think Gordon did an eloquent job of saying how
22    important education is to this Nation's future.  We talk
23    here about knowledge economy.  It's absolutely essential.
24              Today I want to talk briefly about the five
25    areas that we think are highly important to expand

 1    programming to meet the growing demands of our clients
 2    around the country.  We are currently using all available
 3    technology to program to community leaders and learners in
 4    parenting, nutrition, health, environmental science, food
 5    production, food safety, community development, consumer
 6    affairs, workforce skills, and volunteer development. 
 7              Research tells us of the importance of active
 8    learning and we're entering an era where multidirectional
 9    digital communication can restore our ability to treat
10    each other as intelligent and engaged partners.  But we
11    must think about this as an evolution, and I think that's
12    what many of you were saying this morning.  It isn't going
13    to happen overnight.
14              In the short term, we can work together to
15    provide existing educational offerings to our citizens. 
16    In the longer term, we can develop new integrated digital
17    systems matched to learning styles and the needs of those
18    we serve.  I want to just briefly hit on those five areas
19    that we are hearing from across the country as being
20    important, and my paper testimony will give some very good
21    examples of the institutions doing that kind of
22    programming:
23              First of all, parenting and other programs
24    focused on improving the lives of children and youth;
25              Secondly, the area of health;

 1              Third, lifelong learning, and with a special
 2    emphasis on the aging population.  I notice I'm not the
 3    only one here who's taking on and putting off glasses.
 4              (Laughter.)
 5              So there are some special needs that we all have
 6    as we age.
 7              Workforce technology; and virtual certificates
 8    and degrees.
 9              We're hearing a great deal, I think, these days
10    about those five areas and there are a tremendous number
11    of activities and efforts going on in state universities
12    and land grant colleges.  The governors are even involved
13    in something called Western Governors University, the
14    private sector in Phoenix University.  So it's a whole new
15    evolving, developing kind of marketplace as far as
16    education and learning.
17              The digital television revolution gives us, I
18    think, a wonderful opportunity to move from a mindset of
19    scarcity to a mindset of abundance, of multiple channels
20    and services.  We can now have the long overdue national
21    conversation about what this television appliance does and
22    does not bring into our homes.  We can talk about quality
23    and content and finally bring the television medium to a
24    place front and center in strengthening our local and
25    national economies.

 1              We've already alluded to the fact that 98
 2    percent of American homes have at least one television and
 3    67 percent have two.  We know this is the most ubiquitous
 4    media that we have that goes into our homes.
 5              In the short term, our task may simply be
 6    organizing broader access to more program choices.  In the
 7    longer term, we have a wonderful opportunity to develop
 8    this public and educational sector so as to engage
 9    learners actively in an environment where data, voice, and
10    video are integrated interactively, as talked about this
11    morning.
12              Today, for all practical purposes the
13    institutions that I work with, the land grant
14    institutions, are frozen out of the prospect of creating
15    affordable access to the medium people watch, or have on,
16    more than six hours a day.  The evolution to digital
17    television will give us an opportunity to become more
18    socially responsible.
19              Surely we can encourage broad participation in
20    this new television and Internet integration.  Surely we
21    can carve out some organized time and space among the
22    hundreds of digital channels and services to assure that
23    educational programs are easily found -- and I'll repeat
24    that -- easily found among the offerings.  Surely we can
25    allow universities and nonprofits to have some control

 1    over deciding what they will offer and when.  And we need
 2    to do this in partnership.
 3              We need many groups to be involved in organizing
 4    this new and dynamic digital public interest and education
 5    sector.  We need real collaborations and partnerships.  We
 6    need to look at this so channels can be dedicated to
 7    various audience segments and types of programs.  We need
 8    to plan so that a rich diversity of programs are aired for
 9    the rich diversity of the people we call Americans. 
10    Beyond all else, we need to develop this public interest
11    sector so that it spans and encompasses the Nation.  The
12    quality of our future depends upon everyone becoming
13    lifelong learners.
14              In the 1800's colleges and universities were
15    granted land to develop an organizational system that
16    would take knowledge to the people.  Higher education
17    based on a practical curriculum, learning applicable to
18    real life and open to anyone, not just elites, was a
19    radical idea.  The Land Grant Act of 1862 changed our
20    world forever.
21              You on this committee hold the future of America
22    and the globe in your hand.  I know you will think long
23    and hard about this digital grant to broadcasters and how
24    it can be used in the public interest.  It's clear to my
25    constituents in every state and county in this Nation that

 1    broadcasters, in return for their exclusive use of a
 2    public good, should be required to carry an increased
 3    amount of educational and public interest programming,
 4    located so it can be easily found and widely offered on an
 5    affordable basis.
 6              The digital revolution, after all, is about
 7    restoring the rights of all Americans to participate in
 8    the dialogue which shapes their Nation.  The development
 9    of a broadcasting environment that encourages the
10    development of a real public and education sector is
11    essential for the sustainable security of our Nation.
12              I wish you well and know that Americans in every
13    community in the Nation will be following your actions
14    closely.  They must.  Their vital interests are at stake.
15              Thank you very 
16              MS. CHARREN:  Thank you very much, Janet.
17              Next we have Marilyn Gell Mason, who is Director
18    of the Cleveland Public Library.  She served as Director
19    of the White House Conference on Library and Information
20    Services and as a member of the Board of Trustees of the
21    Online Computer Library Corporation.  She is a member of
22    the Visiting Committee School of Information Studies at
23    Syracuse University.
24              And I'm going to cut short the bios, which are
25    in your packets, so that we can get to the question

 1    period.
 3                     CLEVELAND PUBLIC LIBRARY
 4              MS. MASON:  You forgot the "walk on water, talk
 5    to God," all that. 
 6              When Peggy invited me to meet with you today she
 7    warned me.  She said:  Now, Marilyn, this isn't like
 8    testifying before a Congressional committee; these people
 9    really want to hear what you have to say.
10              (Laughter.)
11              But I can't help thinking that many of you may
12    be wondering what libraries have to do with broadcasting. 
13    I hope in the five minutes I have allotted to me I can
14    convince you that libraries and digital broadcasters have
15    interests that intersect in some very important points.
16              Public libraries are our most democratic
17    institutions.  Their job is to provide every man, woman,
18    and child, regardless of age, race, level of education,
19    economic condition, physical ability or disability, with
20    the knowledge and information that is needed, in the time,
21    place, and in the format they need it.  Thus we are
22    democratic not only in the people, or audience, that we
23    serve, but also in the services, or the programming, that
24    we provide.
25              Because libraries are modestly funded, you may

 1    be unaware of the range of our reach.  A poll that was
 2    completed just this week in Cleveland revealed that 77
 3    percent of the residents of the city have been in the
 4    library in the last year.  I hope you're surprised.  I
 5    was, and I'm used to working with all of those people.
 6              All of these people are inner city residents. 
 7    Cleveland is an intensely inner city city, with almost no
 8    suburban reach to it.  30 percent are below the poverty
 9    level.  Almost half of the children are in below poverty
10    level homes.  The population includes young children,
11    senior citizens, owners of small businesses, students,
12    people struggling to get a job, learning to read, getting
13    information about public assistance, or simply reading the
14    newspaper or perhaps a good book.
15              They find what they want in printed material, on
16    audio or video tape, and more and more frequently on the
17    Internet.  Beginning in 1991, the Cleveland Public Library
18    was the first large library in the country to provide
19    Internet access to the public.  We were, however, far from
20    the last.  Today 60 percent of the public libraries in the
21    country provide Internet access to the public. 
22              Now, I know you're wondering why I'm talking
23    about the Internet because we're talking about digital
24    broadcasting today.  Technologies continue to change, and
25    what was once the exclusive domain of print, then shared

 1    by broadcast technologies, now by Internet, will in the
 2    future be shared by digital broadcasting.
 3              Although many of us continue to think of
 4    television as a distribution mechanism for entertainment
 5    and perhaps advertising, it has always had a larger public
 6    responsibility, as demonstrated by broadcasts of the
 7    Persian Gulf War, confirmation hearings of Clarence
 8    Thomas, children's educational programming, and a recent
 9    tradition of televised presidential debates.  Even the
10    controversial broadcast of the O.J. Simpson trial last
11    year provoked stimulating conversations about race
12    relations in the United States, a topic that has smoldered
13    underground for far too long.
14              With the advent of digital television, the
15    public responsibilities of broadcasters will expand in
16    direct proportion to expanded technical capabilities.  I
17    think that's an important point.  As television moves
18    beyond entertainment in a definitive way to transmit data
19    and even provide an interactive capability now available
20    through wired computer transmission, digital broadcasters
21    must be part of our long-standing national commitment to
22    public access to knowledge and information, a commitment
23    that gave rise to public schools, public libraries, and,
24    most, recently public access to the Internet.
25              As technologies continue to change at an ever

 1    increasing rate, the public has come to rely on the
 2    library to ensure that information does not become the
 3    sole prerogative of the rich.  Some of you may have heard
 4    the discussions of signs of death of the public library,
 5    the fact that libraries have become obsolete.  In the same
 6    poll that was on my desk on Wednesday, we asked the public
 7    how important they thought libraries were in this
 8    information age.  Some of you might want to pause a minute
 9    and think about the answer to that question.
10              The question was:  "Because of the increased use
11    of computers and information technology, libraries are
12    more important than they used to be.  Yes, no, or not
13    sure."  Just form in your own mind, how many people think
14    libraries are more important?  The answer was 81 percent. 
15    Far from becoming obsolete, libraries are becoming
16    essential to the lives of the vast majority of individuals
17    in the community.
18              Digital television is the next big leap in the
19    development of information technology, and you just
20    thought it was for broadcasting.  Discussing the future of
21    digital technology today is like the discussion of
22    computers in the 1970's, when I opined that they had no
23    future, especially in libraries, because they didn't have
24    the storage capacity, they were too slow, and they were
25    too expensive.  That was true in the 1970's.  It is, of

 1    course, no longer true.
 2              While it is true that the digital spectrum is
 3    limited, it is not yet clear what that limitation may mean
 4    in the future, as signal compression technology continues
 5    to improve.  My best guess -- and I listened with great
 6    interest to the panel this morning -- my best guess is
 7    that, whatever any of us may anticipate, it will be wrong
 8    and will probably fall short of what we imagine it will
 9    be. 
10              Still, even today many are suggesting that
11    digital broadcasting will be the vehicle that brings the
12    vast holdings of the Internet to the masses.  If that is
13    the case, all of us have a stake in ensuring free public
14    access to the information people need to live every aspect
15    of their lives.
16              Whether future delivery systems are wired,
17    wireless, or some combination of the two, there is a rich
18    opportunity for public libraries to work with broadcasters
19    to ensure public access to information.  A dedicated
20    interactive library channel, for instance, would enable
21    anyone without a computer or an Internet connection to
22    access to full range of electronic library offerings using
23    his or her television set.
24              These offerings already include today:  the
25    library's catalogue, numerous electronic databases, access

 1    to other libraries, access to other Internet resources,
 2    materials that the library has already digitized,
 3    materials that other libraries, including the Library of
 4    Congress, have digitized, and educational programs,
 5    including computerized literacy programs.
 6              At a time when only one household in seven has
 7    access to the Internet, this scenario is appealing for
 8    public as well as commercial ventures.  I can imagine, for
 9    instance, a child doing some research on Martin Luther
10    King, Junior, a popular topic this time of year, who
11    cannot get to his or her local branch library, as much as
12    we try to make them close and convenient, who could turn
13    on the television, search the electronic Encyclopedia
14    Britannica, and actually see Martin Luther King, Junior,
15    delivering the "I Have a Dream" speech.  This could be
16    done today.
17              Commercial and public interests are not always
18    at war.  Often they exist side by side in a symbiotic,
19    mutually productive relationship.  One example of this is
20    the now almost ancient relationship between libraries and
21    bookstores.  Study after study has demonstrated that
22    people who use libraries also buy books.  They don't use
23    libraries instead of buying books.  It is not a zero sum
24    game.  The existence of each encourages the use of both.
25              The United States has a long-term commitment to

 1    educating and informing its citizenry, and for good
 2    reason.  Educated and informed people not only contribute
 3    to the community as a whole, but educated and informed
 4    people are also more likely to buy other goods and
 5    services.  They are employable and interested in a broader
 6    spectrum of activities.
 7              Today there are many routes to the same truth. 
 8    Libraries and educational institutions must be part of the
 9    broader picture.  Use of the latest technology to further
10    educate and inform citizens will be of benefit to our
11    entire country socially, politically, and even
12    economically.
13              MS. CHARREN:  Thank you so much, Marilyn.
14              Next we have Fred Esplin, who is the General
15    Manager of KUED Channel 7 in Salt Lake City.  In 1989 he
16    assumed the additional responsibilities of Associate
17    Director of the Utah Education Network and of the
18    University of Utah's Department of Media Services.
19              He began there in 1979 as Director of Marketing. 
20    His broadcast background includes development and
21    promotion work for PBS in D.C., WITF-TV and FM, the
22    Pennsylvania Public Television Network in Hershey,
23    Pennsylvania.
24              He's a native Utahn, which is the first time I
25    ever saw that word in print.  His education included an

 1    internship with columnist Jack Anderson, graduate study at
 2    American University, and a White House internship.
 3              We're delighted to have you with us.
 5                   KUED-TV, SALT LAKE CITY, UTAH
 6              MR. ESPLIN:  Thank you very much, Peggy.
 7              It's good to be with you, and I appreciate the
 8    opportunity to share one public broadcaster's perspective
 9    on how public television might better serve the public
10    interest in the digital age.  I should say from the outset
11    that I applaud the creation of this group and I applaud
12    your taking up the challenge in the important work of this
13    committee to ensure that the public interest is protected
14    and advanced as we broadcasters are entrusted with this
15    finite and significant public resource.
16              As you well know, public broadcasters are
17    committed to harness the most current technology in the
18    service of education and public interest, and it's a
19    commitment we've had from the beginning.  We have it today
20    and will carry it with us into the digital age.
21              Our commitment to education is manifest in four
22    areas that I'd like to speak to briefly.  One is early
23    childhood services.  Another is digital -- excuse me --
24    technology integration in K through 12 education.  The
25    third is workforce technology and education; and the

 1    fourth is digital service accessibility.  I'd like to
 2    share my view on what we're doing in each of these four
 3    areas, briefly touching on the national, but talking about
 4    our experience in Utah as well.
 5              First, public broadcasters are committed to
 6    providing programming which helps with early childhood
 7    development and school readiness.  Right now over 120
 8    public TV licensees covering most of the country provide a
 9    service called "Ready to Learn."  It's a comprehensive
10    programming and outreach service that's designed to assure
11    the school readiness, that kids are ready for school and
12    ready to succeed when they get to school.
13              While many public TV stations -- despite this
14    fact, a lot of public TV stations can't carry the "Ready
15    to Learn" service today because of commitments to the
16    daytime instructional schedule.  In a multiplexed DTV
17    world, this important service could be made available to
18    every child and parent and caregiver in America.
19              The second area:  As you know, public TV has a
20    strong track record in using the latest technologies to
21    provide K-12 educational programming.  As we speak, some
22    30 million students in 70,000 schools are currently served
23    by public television, and we're in the process nationally
24    of developing a comprehensive plan for delivering news
25    services in a digital environment.

 1              In Utah, for example, we already partner with
 2    the 40 school districts in the State and with the State
 3    library system, to connect them to the Internet, to
 4    provide online services, to develop CD-ROM's and
 5    videocassettes and study guides, all to supplement
 6    instructional services.
 7              Let me just give you briefly one example of
 8    that.  We are in the third year of a project called Utah
 9    Collections, where we take the best of some of our video,
10    audio, historic photographs, text, digitize it, put it on
11    CD-ROM, put it online, and ultimately we anticipate
12    putting it on air with digital TV, to supplement the
13    instruction that is made available in the public schools. 
14    We anticipate building on this collaboration by offering a
15    dedicated SDTV service for the public schools with an
16    integrated online and broadcast data instructional support
17    materials to back it up.
18              That's what we're doing in Utah, and we're not
19    alone in that.  A lot of my colleagues throughout the
20    country are making similar plans.
21              Third, public television has a proven track
22    record in both adult literacy and workforce education, and
23    we plan to leverage the features of digital technology to
24    meet critical workforce needs.  Already, public TV around
25    the country provides over 70 college credit TV courses to

 1    more than 400,000 students each academic year, not to
 2    mention a broad array of professional development courses
 3    and teleconferences to organizations nationwide.
 4              In Utah, which is really where the idea of the
 5    Western Governors University began to develop, through our
 6    Governor Levitt, we're very active in this as well.  We're
 7    working with the nine colleges and universities in our
 8    State in the creation and delivery of telecourses and in-
 9    service technology, and are planning for a dedicated SDTV
10    service to make these kinds of services available to even
11    more students and working professionals.
12              Finally, public television is and always will be
13    committed to serve the unserved and underserved
14    populations in our country, those who because of economic,
15    geographic, physical, cultural, or language barriers have
16    been left behind in the commercial marketplace.  Public
17    television, as I expect you know, pioneered in the
18    development of open and closed captioning for the deaf,
19    descriptive video services, and radio reading services for
20    the blind or visually impaired.
21              Digital technology I believe will give us the
22    flexibility and capacity to expand that commitment to
23    those populations and to ensure that the educational
24    services are available to all Americans.
25              I want to cite one other Utah example here as

 1    well.  Mr. Ambach talked about the need for access to
 2    people who might not otherwise get the services, and I
 3    cite this as illustrative.  Part of Navajo Nation is in
 4    Utah, in the southeast corner of the State, Monument
 5    Valley.  You remember the old John Ford movies; a lot of
 6    them were shot down there.  There are several high schools
 7    in the Navajo Nation and they don't have access to a lot
 8    of the curriculum that you do in the urban schools.  There
 9    aren't qualified teachers in a lot of the areas.
10              Working with the school districts in that area,
11    we have been developing, not only for broadcast but for
12    closed circuit, interactive, and now Internet services,
13    which have allowed them to share programming in the Navajo
14    language to preserve that language, which is being lost to
15    a lot of those Native peoples, to deliver Russian,
16    Japanese, and other foreign language classes, to deliver
17    AP courses, and so forth.
18              It's an integrated approach that involves today
19    four or five different means of delivery.  In a digital
20    environment, the ability to do that and other things like
21    that I think will be enhanced.
22              In closing, I would note that in Utah we
23    recognize that it will take a coordinated active
24    partnership among public broadcasters, schools, colleges,
25    and libraries to realize the full potential that I've

 1    described here.  In Utah we've already banded together to
 2    create what we call the Utah Education Network.  Working
 3    together, we are providing distribution through broadcast,
 4    two-way interactive audio and video, Internet access, and
 5    wide area computer networking.  And we're developing
 6    instructional content for each of these means of delivery,
 7    to make certain that Utah students are not road kill on
 8    the information superhighway.
 9              Along with my public broadcasting colleagues
10    throughout the country, we are looking forward to
11    harnessing the potential of digital television to work
12    with and to advance the goals of our partners in public
13    and higher education and the public libraries. 
14              Thank you. 
15              MS. CHARREN:  Thank you.
16              Lastly, I want to introduce Gary Poon.  It
17    occurred to me that because he's here, here in Washington
18    that is -- he's the Executive Director of the Digital
19    Television Strategic Planning Office at PBS -- and because
20    he's very knowledgeable in the issues that we're talking
21    about, I thought first that I'd have him here as a
22    resource in case there were questions that the rest of us
23    couldn't answer.  But I thought, while you're here and you
24    have a microphone, why don't you do a few minutes to tell
25    us what you would tell us if I let you talk.

 1              (Laughter.)
 4              MR. POON:  Sure.  Thank you, Peggy.  I've very
 5    deeply honored to be asked to speak before this very
 6    distinguished committee.
 7              Let me sort of step back and give you my
 8    perspective from a membership organization -- PBS, as you
 9    know, is a membership organization that provides
10    noncommercial educational services and programs to our
11    membership stations and provides interconnection.  Part of
12    my job is to help strategically position ourselves for the
13    digital future and to help our member stations make that
14    transition.  
15              I have three very brief points.  That is:
16    Number one, we feel that digital television is tailor-
17    made for public broadcasting; second, that we can turn
18    lifelong learning into customized services for the
19    learners; and third, that this is a tremendous opportunity
20    for us to fulfil the original vision of our founding
21    fathers and really take it to a higher realm.
22              As for the first point, the tailor-made, why 
23    DTV is tailor-made for public broadcasting, you heard a
24    lot this morning about the uncertainties and the
25    challenges that are facing us as a system, and we want to

 1    turn those challenges into opportunities to further our
 2    mission.  We think that HDTV is perfect for prime time
 3    broadcasting.  You heard this morning that that's where
 4    the audience is.  But also our programming, our prime time
 5    programming, is tailor-made for that type of technology. 
 6    The crystal-clear pictures and the CD-quality sound will
 7    enhance our science and nature, our music and performing
 8    arts, our drama and theater type programming.
 9              Fred talked a little about the types of services
10    that we could provide.  During the day we can multicast,
11    we can experiment with multicasting.  We don't have as
12    much of a worry about fragmentation of audiences as
13    perhaps our commercial colleagues might because our
14    programming is targeted to niche audiences.  In fact, this
15    allows us to really expand our types of services.
16              One point that we want to emphasize is that the
17    data capacity can be then broadcast throughout the day,
18    both in terms of HDTV and multicasting.  
19              This kind of leads me to my second point, which
20    is the flexibility of this technology allows us to
21    customize the types of services to the learner.  If we
22    have time we can show a video of how one vision of how
23    that could be done.
24              But as you know, one of the challenges of
25    education is how we provide materials that learners can

 1    then tailor to their uses.  The ability to deliver a rich
 2    mix of video, audio, text and data allows us to do that
 3    and allows the teacher, as well as the student, to
 4    customize the types of materials for their own needs.
 5              Finally, why I feel this is a golden opportunity
 6    to fulfil the mission and the vision of our founding
 7    fathers, they recognized way back 30 years ago -- and we
 8    just celebrated our thirtieth anniversary of the passage
 9    of the Public Broadcasting Act -- they realized 30 years
10    ago that television is a great technology, but it also is
11    a great technology to serve great purposes.
12              In order to do so, they recognized that we need
13    to be adequately funded.  You heard this morning that the
14    transition will be very expensive.  Bruce Allan testified
15    here that it costs about $5.7 million per station.  You
16    multiply that out by 350 stations and you get over $1.7
17    billion. 
18              We have asked the Federal Government for only a
19    portion of that and our stations have the responsibility
20    of raising the rest through traditional means.  I think
21    this committee has an opportunity to make a recommendation
22    to the administration to ensure that public broadcasting
23    will be adequately funded for the digital future.
24              So thank you very much.
25              MS. CHARREN:  I think you can cue up the video.

 1              MR. POON:  Yes.  This is a video that was put
 2    together by our educational task force.  It's about four
 3    minutes long.
 4              MS. CHARREN:  That's good.
 5              MR. POON:  And it gives an example of one vision
 6    of how the integration of data could be made.
 7              (Videotape, with sound track inaudible.)
 8              MS. CHARREN:  Louder.
 9              MR. POON:  Volume, please.
10              (A videotape was shown, whose sound track is as
11    follows:)
12              VOICE:  -- inside the White House, the West, and
13    the Great War in his classroom.  With the introduction of
14    The Learning Port of PBS online, these programs have grown
15    much more curriculum-connected, making them easy to access
16    and use.  Through The Learning Port, Jim can now look at
17    teaching units organized by content area and grade levels,
18    covering virtually every major historical event in his
19    classes' required textbooks.
20              The teaching units contain lessons plans with
21    short video segments, classroom activities, and home
22    activities.  He can also preview and order programs
23    through The Learning Port and see which ones have been
24    rated highest by other teachers.
25              To help his classes better understand the

 1    Declaration of Independence, Jim ordered "Thomas
 2    Jefferson" for his classroom after watching the broadcast
 3    version on his local public television station.  When
 4    placing his order he requested that the program be
 5    transmitted in digital format by one of his local
 6    stations' DTV media channels so it could be recorded on
 7    his media center's Internet server.
 8              The curriculum index transmitted with the
 9    Jefferson program enabled Jim to have on-demand access to
10    the exact video segments that address the concepts and
11    skills he was teaching.  When the class was studying the
12    events leading up to the selection of Jefferson to write
13    the Declaration of Independence, he was able to call up
14    the exact segment to portray what happened.
15              MODERATOR:  On June 7, 1776, Richard Henry Lee
16    of Virginia introduced a resolution that declared that
17    'These united colonies are and of right ought to be free
18    and independent states.'  Congress scheduled a vote on
19    Lee's resolution for early July, hoping it would convince
20    France to join the struggle against England, the mightiest
21    power on Earth.
22              They established a committee to draft a
23    Declaration of Independence to which all 13 colonies could
24    subscribe.  Benjamin Franklin was asked to write the first
25    draft and refused.  He made it a policy, he said, not to

 1    write documents subject to editing by others.
 2              Jefferson and Adams were assigned the task.
 3              VOICE:  Both Jefferson and Adams were committed
 4    to a republic, but they had very different styles. 
 5    Jefferson was bland and careful and aphoristic and high-
 6    flown.  His rhetoric always soared toward aspiration and
 7    human dignity.  Adams was earthy and anecdotal and
 8    pugnacious.
 9              Jefferson says, I think you ought to do it, and
10    Adams says:  "No.  Three reasons you must do it:  First,
11    you are a Virginian and a Virginian must be at the head of
12    this business; second, I John Adams am disliked and
13    obnoxious and if I write it it will lack credibility; and
14    third, you are ten times better a writer than I am."
15              VOICE:  Classroom activities for the Jefferson
16    lessons focused on students knowing and understanding the
17    five basic freedoms in Jefferson's writings.  Text data
18    was transmitted with the video, providing Jim suggested
19    lessons plans, program transcripts, still pictures, and
20    graphics and other materials.
21              He printed the specific materials he wanted to
22    use in class and sent home to parents suggested homework
23    assignments, encouraged parents and children to watch the
24    program together if possible and answer the questions in
25    the Jefferson student study sheets provided online.

 1              Jim Overbie now uses public television more than
 2    ever because of the convenient access he now has to these
 3    effective teaching tools.
 4              (End of videotape.)
 5              MR. POON:  Thank you.  Stop the video now.
 6              We have actually two other scenes that we
 7    developed.  Again, these are hypotheticals of one vision
 8    of how the digital television can combine video, audio,
 9    text and data to make a much more enriched learning
10    experience over the air and provide it to schools and to
11    the homes.
12              MS. CHARREN:  That was just what I wanted us to
13    be able to look at.  I'm so pleased.
14              Before we close the panel let me point out that
15    the fact that we're meeting here and talking about issues
16    like this is causing other organizations and institutions
17    to focus on how it should work, on how to make it work
18    better.
19              I was asked to announce that the American Center
20    for Children's Television, based in Chicago, is going to
21    be having -- they haven't put the dates on it and
22    everything, but you can stay in touch with them.  They're
23    putting together sort of a seminar, a one-day conference
24    which will be a briefing and brainstorming for people who
25    are in the business of making children's television, about

 1    how this new technology can apply to new formats and
 2    enhance program content and that kind of thing.
 3              I expect that to be happening across all kinds
 4    of constituencies once this is talked about in a
 5    meaningful way.
 6              Thanks very much.
 7              MR. MOONVES:  Thank you, Peggy and the panel.
 8              I'd like to open it up to any questions,
 9    comments.  Yes, Cass?
10              MR. SUNSTEIN:  This was a very wonderful set of
11    presentations about the needs and opportunities with
12    respect to children's programming.  I'd like to put it a
13    bit in the framework of our particular mission, which is
14    the public service obligations of digital television
15    broadcasters.  There are really four simple possible ideas
16    that I think would come out of what you've said.
17              One idea, maybe an inadvertent idea, is that
18    you've given, the last two speakers especially, a very
19    strong plea for deregulation.  Here the idea would be in a
20    digital era, the idea of public interest obligations,
21    that's really a dinosaur, because PBS can provide a
22    tremendous amount of material with digital technology. 
23    There the notion would be that now that Nickelodeon, PBS,
24    Disney, and the Internet Plus are available, well, no more
25    public interest obligations on broadcasters.  That would

 1    be one idea.
 2              A second idea would be the status quo, what
 3    Peggy describes as the minimal three-hour requirement,
 4    basically makes best sense, that, as Marilyn Mason
 5    suggests, things are changing very rapidly, and we don't
 6    really have enough knowledge to do anything other than
 7    just stick with what we've been doing.  That would be a
 8    second possible approach.
 9              A third approach, which I think is consistent
10    with some of the spirit of the things you said, a third
11    possible approach would be to say status quo plus, that we
12    need more obligations in a digital era.  What would that
13    mean exactly?  Well, it might mean six hours rather than
14    three, or it might mean broaden the requirements beyond
15    broadcasters to other providers.  That would be to suggest
16    this is so important that we need more.
17              A fourth idea would be really I think what was
18    suggested by Gary Poon's remarks, would be to rely not on
19    the kind of rigidity of the status quo or the greater
20    rigidity of status quo plus, but to have more in the way
21    of market incentives and trading, such as for example a
22    situation in which each broadcaster would have to provide
23    three hours, but they could sell it to anyone who'd be
24    willing to buy it so long as that person were another
25    broadcaster; or a situation even more flexible:  they'd

 1    have a three-hour obligation, but they could provide money
 2    to PBS instead as a way of fulfilling their obligation.
 3              So these are basically four frameworks that your
 4    remarks all went in the direction of:  deregulation,
 5    status quo, status quo plus, or incentives and trading. 
 6    And insofar as our mission is to talk about really
 7    regulatory obligations and not about the value of
 8    educational programming -- everybody agrees on that --
 9    we're thinking about governmentally imposed obligations. 
10    Those are really, I think, four families of reforms.
11              Now, my question really is mostly for the last
12    two speakers, though for all of you, is first:  Why not
13    deregulate entirely, given what you've said about PBS? 
14    And the second question is, if you've got an answer to
15    that one, why not incentives and trading rather than three
16    hours or three hours plus?  Those are not meant as
17    rhetorical questions.
18              MR. ESPLIN:  Let me take off my public TV
19    manager hat and put on my father hat here for a minute. 
20    I've raised four kids.  They're now into college, so I
21    guess they're close to being raised.  And I look at how
22    they consumed television as youngsters and growing up.  I
23    was real happy when they were little and listened to what
24    dad said to get them to watch Sesame Street, Mr. Rogers,
25    and Reading Rainbow and what-not.

 1              But that control became less and less as they
 2    got older, which leads me to the point, I guess to answer
 3    your question directly:  Speaking as a citizen, not as a
 4    public broadcaster advocating this, from that hat it seems
 5    to me would be a terrible misfortune if this opportunity
 6    were missed to have at least some portion of what the
 7    commercial broadcasters are doing to be for public service
 8    and education. 
 9              The bulk of the time spent watching television,
10    for better or for worse -- and much of it is good and some
11    of it perhaps isn't -- is spent with commercial
12    television, not with public broadcasting.  The opportunity
13    for service on the part of commercial broadcasters is
14    enormous.  The opportunity to do good as a modest payback
15    for the opportunity to use this finite public resource is
16    minimal, it seems to me.
17              So I'm in favor of having the obligation and,
18    while I would welcome maybe, putting on my public
19    broadcaster's hat, to have someone pay me to do something
20    we're going to do anyway, it doesn't seem to me that's
21    really in the public interest here.
22              MR. POON:  Well, I guess I would add that I'm
23    holding actually in my hand the personal copy of the
24    Public Television Program for Action that was owned by Mr.
25    Bob Soddick, who passed away earlier last year.  He was on

 1    the original commission and he gave it to me before he
 2    passed away, and I refer to it often.
 3              The Carnegie Commission thought that they needed
 4    to create a system of public television stations in order
 5    to meet an obligation that was unfortunately not fulfilled
 6    by the commercial stations.  That being the case, we've
 7    created a tremendous system of stations that are
 8    absolutely committed to the public service and the public
 9    interest obligations, and we feel that we've been doing a
10    fine job in that respect.
11              So my remarks I guess could be, I guess,
12    construed as favoring deregulation in some respects, but
13    in others it still does -- it could be interpreted as
14    favoring regulation to ensure that those types of services
15    are provided if the marketplace doesn't otherwise step up
16    to the plate.
17              As for sort of the second comment, about trading
18    and perhaps selling the obligation and maybe perhaps
19    having PBS or its member stations fulfil some of those
20    obligations in return, certainly we are open to creative
21    means that would allow for a steady stream of funding that
22    would come to public broadcasting so that those
23    obligations indeed are fulfilled for the marketplace.
24              MR. MOONVES:  Yes, Marilyn.
25              MS. MASON:  I want to say -- did I say that?  I

 1    didn't think I said that. 
 2              I am reminded of something Arthur Clarke used to
 3    talk about, which is in looking into the future people can
 4    have either a failure or nerve or a failure of
 5    imagination.  A failure of nerve is when you have all of
 6    the factual elements you need and just fail to project far
 7    enough ahead.  For instance, in the seventies when I
 8    thought computers had no future because they were too slow
 9    and all the rest of that, I failed to project, to see
10    faster, cheaper, and so on.  A failure of imagination is
11    where you fail to see that computer chips are going to be
12    invented at all, for instance.
13              In this instance it seems to me that, while we
14    say and even the survey that was reported on earlier today
15    noted that 47 percent of those interviewed or polled or
16    surveyed said that they expected to provide information
17    services which is significantly different than what
18    broadcasters do now, we continue to think of television in
19    the same old way, programming as the same kind of
20    programming that is provided today.
21              My guess is that that is really going to be only
22    part of the future, and we're talking about not only
23    conventional television programming, whether it's for
24    educational purposes or sports or the Simpsons -- I'm
25    sorry -- but it will be data services.  And if information

 1    services are provided only for a fee and if this becomes a
 2    dominant technology, wireless over wired -- and we don't
 3    know the future of that -- then you will be closing out a
 4    vast number of people from getting information because
 5    they cannot pay for it.
 6              Now, there are lots and lots of assumptions
 7    built into all of that and I could argue either side of
 8    any of those assumptions myself.  But the important point
 9    for you to keep in mind is that if we completely
10    deregulate we can be almost sure that public purposes will
11    be ignored, and if we wait until we know what's going to
12    happen it will be too late.
13              So it is important to keep the door open, to
14    keep almost a place-saver there, so that we have a
15    capability of having the public purpose served as the
16    technology develops further.
17              MR. MOONVES:  Janet.
18              MS. POLEY:  Just a quick add to that.  I think
19    in my testimony I emphasized that we need a more vibrant
20    public interest and educational sector.  I think what you
21    said about the status quo plus, that's really the position
22    I'm coming from, that we need a sector, not simply one set
23    of things going on.
24              I think that's a real opportunity for commercial
25    broadcasters.  If you look at the local level, where my

 1    organization does a lot of work, there are opportunities
 2    to have an educational laboratory, if you will, at the
 3    margins, to work with local communities and universities
 4    in this sector, that might produce some interesting
 5    opportunities with larger markets.
 6              I think that as you look at the past one of the
 7    things in the numbers game that we've been playing in the
 8    marketplace, you're less apt to have the innovation kinds
 9    of things occurring in terms of -- I mean, I think we all
10    understand the tough marketplace stuff we're trying to
11    deal with here.
12              But I guess I'm concerned about what we won't
13    get to, not necessarily because you aren't, those of you
14    in broadcasting, aren't doing good things in the public
15    interest in terms of public affairs and news and emergency
16    kinds of things -- there's a lot of public service
17    announcements that come on at 2:00 o'clock in the morning
18    -- but I think there's some opportunities if we can look
19    at some ways to do some new partnerships.
20              So my sense is that that status quo plus has
21    opportunities if we look at how to do it.
22              MR. MOONVES:  Gordon, go ahead.
23              MR. AMBACH:  I just wanted to take one bite at
24    the apple if I could on this one.  First of all, I want to
25    commend the perceptive question.  I think it's a

 1    fascinating way that you've structured it to sort of go
 2    right through.
 3              The premise, of course, is that the more there
 4    is the commodity available, the less you need to regulate. 
 5    I mean, if it's the air, we don't control how much each of
 6    us takes in; or the water, not much control.  And if it's
 7    going to be digital and it's got almost unlimited
 8    capacity, then you don't have to bother regulating because
 9    some way or other there's going to be room for education. 
10              I'm not sure that I would agree with the
11    premise.  I would come to the conclusion that probably
12    some requirement for regulation is necessary, some
13    allocation.  But I'm kind of intrigued by the trade or
14    incentive issue, because the more there is availability of
15    the pipeline then the less is the requirement for specific
16    hours of this or that.  It could be done by various ways
17              Now, the biggest problem here is that we really
18    don't know what kind of potential there is out there for
19    using this asset.  The technical capacities are moving so
20    rapidly that it's very hard to just say, okay, we've got a
21    fixed asset here and we can pretty much judge what we
22    ought to carve out for education and let the rest go. 
23    None of us is going to be willing to say that because if
24    it turns out there's an incredible expansion of the
25    capacity and you can do all sorts of things in education,

 1    they don't want to give it away at this point, and neither
 2    would any commercial broadcaster want to give it away.
 3              But, having said that, it strikes me as though
 4    you have to have some kind of regulation.  I tried to put
 5    an emphasis in my remarks on the fact you start with what
 6    it is that you really need.  I mean, it's our obligation,
 7    I think, in the elementary and secondary domain, and I
 8    think it is in the other domains, to be able to clearly
 9    state, this is what we need in the area of delivery of
10    information technologies, and then figure out how much do
11    you have to sort of earmark in terms of that regulation as
12    to what portion is required to provide it.
13              If you can do that, if you can come up with some
14    kind of a sensible quantification of the proportion of the
15    capacity that you earmark for education, I have no problem
16    personally with a kind of a trade arrangement or a buyout
17    arrangement, that if a commercial company says we don't
18    want to put this stuff on, but we'll put money in the pool
19    for somebody else to do good programming, I'm all for it.
20              I think that makes sense, and I think it gets at
21    this issue I was trying to push earlier.  We not only have
22    the issue of pipelining here, we have the issue of what's
23    the quality of content that goes down the pipe, and that's
24    not going to just happen.
25              Thank you. 

 1              MR. MOONVES:  Frank.
 2              MR. CRUZ:  I just wanted to in a sense expand on
 3    that question and on the comments you made.  If the five
 4    of you stop to consider what it is that each one of you is
 5    asking for, you're very, very clear.  You're K through 12,
 6    university, at the public library level, at a particular
 7    station, and at a particular branch of public broadcasting
 8    in America.
 9              I think what Cass is basically saying, is there
10    not a creative way, if we want to look at bold moves and
11    if the times call for unique bold, brave moves now, rather
12    than waiting for someone to do something at your
13    particular level or at your requests, maybe the time is
14    right now where you possibly could achieve some of those
15    particular goals through some of these creative market
16    incentives that could take place, to finally achieve.
17              Now, this is not my idea.  There are many
18    politicians at the national level who have said that and
19    are really thinking, let's deregulate the commercial side
20    completely, but let's make sure there is funding so that -
21    - I've heard it at that angle, but I haven't heard it
22    applied to your three areas -- that could be done at this
23    particular time.
24              That might be a particular feature of something,
25    Mr. Co-Chairs, that we could possibly think of as

 1    alternate solutions or recommendations.
 2              MR. MOONVES:  Frank, let me go on the record. 
 3    Let me take off my Co-Chair hat and let me put on my CBS
 4    hat for a second to explain a very practical situation
 5    which, Gordon, I think supports what you're saying.
 6              CBS is not watched by children.  We have the
 7    oldest demographic.  Very few children watch it.  We have
 8    no means of promoting to children during the week. 
 9    Therefore, on Saturday morning our children's programming
10    comes in about twelfth.  No exaggeration, we get killed by
11    cable networks.
12              We were watched this year, this season from
13    September until now, on the average by about 500,000 kids,
14    which means the TV was probably turned on, they weren't
15    watching.  You know, it had been left on the night before
16    by their parents.
17              We lost many, many millions of dollars.  Now,
18    I'm not asking for a benefit for CBS.  However, there are
19    -- and by the way, our programming was good.  It wasn't
20    bad programming.  This money would have been so much
21    better spent going to a place where they were watching it,
22    and we would have supported that, going to PBS and saying: 
23    Here, here's X millions of dollars; use it for children
24    who are really watching.  That will be a lot more
25    effective than that.  It's a real practical example of

 1    that. 
 2              Fred, I also -- one second, Peggy.  I want to
 3    comment on something that you said which is ironic and as
 4    a parent I agree with you.  The government issues in terms
 5    of broadcast television sometimes go back and forth.  On
 6    one hand, the three hours of children's, or educationally
 7    sound programming that the government demands is exactly
 8    that, so that we as parents who are not always there will
 9    make sure that our children are getting better things on
10    the air.
11              By the same token, a recent code was instituted
12    with letters and numbers -- V, S, and L-14 -- specifically
13    so the parents would regulate what is going on in their
14    home, which by the way we also support.  We think it is
15    our job as broadcasters to give the parents as much
16    information as possible.  But it is an odd combination
17    between the broadcaster, the child, and the parent, and
18    it's a triangle that we are struggling with. 
19              Anyway, Peggy, to you.
20              MS. CHARREN:  Well, before I deal with what I
21    was going to say before you took off your hat --
22              MR. MOONVES:  I just put it back on.
23              MS. CHARREN:  Right.
24              -- I'd like to deal with that first and then
25    talk to something that the panel brought up.  Since Les

 1    put out in front of us the CBS children's programming
 2    problem -- I have been very careful to try not to bring
 3    these things up.  Having talked about them so much for 30
 4    years, I thought everybody knew where I stood, so I
 5    wouldn't have to say anything.
 6              But I'd like to point out that CBS' Saturday
 7    morning has a two-hour news block in the middle of it, and
 8    it's a bloody miracle that any child in America watches
 9    any of CBS' news on Saturday morning -- I mean,
10    programming on Saturday morning, which is quite good as a
11    matter of fact.  It's a question, that audience flow is so
12    inimical to raising an audience that I couldn't understand
13    it when I first heard it and I'm not surprised that it's
14    not working very well.
15              ABC seems to be very happy with its ratings and
16    it has that nifty program Science Court, for example.
17              MR. MOONVES:  ABC's ratings were three times
18    ours before the news block went in.
19              MS. CHARREN:  Yes, but ABC is doing it.
20              MR. MOONVES:  Wouldn't $5 million of our money -
21    -
22              MS. CHARREN:  Look, you brought this up and I'm
23    answering you, right?
24              MR. MOONVES:  Wouldn't $5 million of our money
25    be better given to PBS?

 1              MS. CHARREN:  I'm saying that -- and that
 2    relates to the second point I was going to make, which is
 3    that, as much as I love public television, and I do love
 4    public television -- I mean, I'm very supportive of the
 5    system, which personally I watch a lot of -- I do not
 6    think the idea of one publisher for information and
 7    education is a terrific idea, and PBS is one institution.
 8              Now, as much as I think that what we have here
 9    today is extraordinary -- I mean, I helped plan it --
10    there are other --
11              MR. MOONVES:  Sorry, Gary.  I was going to give
12    you $5 million and now Peggy has killed it.
13              (Laughter.)
14              MS. CHARREN:  The fact, the fact is that Les' $5
15    million won't buy hats, I mean for everybody else to put
16    on when he takes his off.  The amount of money that the
17    broadcasters were talking about to fulfil this need -- and
18    this idea has come up many times before -- is just not
19    enough.
20              I mean, if they really want to fund the system I
21    can give them some numbers that might make that a
22    reasonable idea.  It has nothing to do with what they keep
23    talking about.
24              But the point is that there's a nonprofit sector
25    out there.  We could have had another representative from

 1    the whole nonprofit sector that wants the ability to
 2    control its own speech and to set its own program
 3    requirements for getting certain kinds of messages out. 
 4    There are a lot of places that you need to separate out
 5    the vested interests from the public interest.  This is
 6    one set of them.  There are other sets, and I do not
 7    believe that public broadcasting can necessarily serve
 8    them all.  There's an opportunity here to set other kinds
 9    of structures, that may be smaller than the structures you
10    represent, but that certainly aren't going to show up and
11    get funded with the idea that we should just ignore this
12    and let the marketplace take care of, she says gently.
13              MR. MOONVES:  Before we go any, I want to shift
14    our conversation just for one moment to say that Rob
15    Glaser, who has to catch a plane, that it's his birthday
16    today.
17              (Applause.)
18              MR. ORNSTEIN:  As a present we're going to give
19    you the $5 million.
20              (Laughter.)
21              MR. MOONVES:  He doesn't need the $5 million. 
22              MR. GLASER:  Thank you. 
23              MR. ORNSTEIN:  Thanks for everything you did
24    today, Rob.
25              MR. ORNSTEIN:  Thanks a lot.  See you in L.A.

 1              MR. MOONVES:  Peggy, are you finished?
 2              MS. CHARREN:  Yes, I'm through.
 3              MR. MOONVES:  Robert?
 4              MR. DECHERD:  I think this is a fairly
 5    intriguing discussion if you look at it in today's
 6    environment forward.  The point was made by Janet and
 7    Marilyn both and it seems to me the real point of
 8    contention comes down to one simple idea, and that is
 9    audience size.  Now, in a perfect world a large part of
10    our population is going to be drawn to the programming you
11    would like to put on the air and all the public interest
12    groups, which have for years argued very persuasively that
13    commercial broadcasters have an obligation, that they
14    would like to have on the air.
15              But we also have to deal with the reality, just
16    as we have in children programming and in the V-chip and
17    in ratings, that people make choices.  So all we're really
18    talking about is what kind of choices are going to be
19    presented to them in the future and who is best able to
20    present those choices to them.
21              Now, it seems to me this breaks down first of
22    all as we begin by defining what we need.  Let's just say
23    for purposes of this hypothet that we need all of the
24    things you've described and we need all of the things
25    you've described this morning from some public interest

 1    representatives and our prior meetings, and that there's
 2    this panoply of others who have equally valid needs.
 3              If we could further hypothesize that there is a
 4    way for all of them to have ready access to a programming
 5    mechanism to convert their needs into quality programming.
 6              Then I think we go to three fundamental issues: 
 7    spectrum, funding, and audiences.  For purposes again of
 8    this example, let's say that the Congress decided to leave
 9    with public broadcasters all 12 megahertz that you will
10    have as of this year, that there's no giveback.  And let's
11    say you then multiplex all of those channels six to one.
12              We now have, instead of where we are in 1997 or
13    were, one channel per market, we have 12 which have all
14    these capabilities we're talking about, plus all of the
15    imagination of the future that Marilyn has very properly
16    caused us to think about.
17              So as a mutual friend of ours Ralph Rogers would
18    have said -- he loved to provoke discussions like this --
19     he said:  Now, who's best able to do that?  The people
20    who are genuinely interested in it or people who are being
21    compelled to do it?
22              So my question is, if you could for the moment
23    imagine that audiences could somehow be made aware through
24    Gemstar's programming guides and the Internet and a
25    zillion other ways that we're going to provide choices for

 1    viewing in the future -- it's not going to be on-air
 2    promotion pulling people from our newscasts into Wheel of
 3    Fortune and CBS prime time, where by the way none of this
 4    is ever going to get on the air anyway -- I mean, let's
 5    not kid ourselves.
 6              If these funding mechanisms that have been
 7    talked about, whether it's Chairman Tauzin's plan, whether
 8    it's the kind of trading we're talking about here, whether
 9    it's any number of things, could provide adequate funding
10    for experts to deal with 12 pipes, back to the pipes idea
11    -- there will probably be 24 some day, and may be
12    available through all these different mechanisms -- and if
13    the availability of those pipes, further, gave you the
14    opportunity to get all of your inventory onto the air,
15    which presently doesn't have any visibility and therefore
16    you can't market to people like the state board of
17    education in the State of Texas, which is going PC if the
18    Governor has his way, why doesn't it make more sense for
19    that to happen properly funded and for we then to have the
20    ultimate litmus test, a point I've been making in every
21    meeting, which is broadcasters, commercial broadcasters,
22    will inevitably be drawn to public interest because it
23    builds audiences?
24              Why isn't that a triple win?
25              MS. CHARREN:  What was the last sentence?

 1              MR. DECHERD:  The last sentence is that
 2    broadcasters, commercial broadcasters like the people
 3    represented here, are always going to be drawn to public
 4    interest programming such as news, information, public
 5    debate.  We had a half-hour debate last night in Dallas
 6    leading out of our late news over an arena that's going to
 7    be voted on Saturday.  We had huge numbers, huge numbers. 
 8    We're going to do that anyway.
 9              But if I've written Leslie's check and everybody
10    else here, it's not just CBS' $5 million.  It's the entire
11    industry, and Chairman Tauzin's idea, and maybe the states
12    wake up and fund some of this, and maybe the Federal
13    Government says, you know, $1.5 billion for this is not a
14    lot.  Why isn't that a good hypothet?
15              MR. MOONVES:  Yes, Janet?
16              MS. POLEY:  Let me comment on that and bring an
17    example in from another area I've been doing some work in,
18    the digital broadcast satellite area, where we've been
19    talking about some kind of consortial mechanism where we
20    can bring to the table various providers to do sort of
21    what I think you're talking about in terms of trying to
22    program some channels that would create a public interest
23    and educational sector.
24              That's not a real easy thing to do, but I think
25    that's something that has, looking ahead, has a whole lot

 1    more viability to it as something to talk about as a
 2    possible solution. 
 3              One of the things that I think is terribly
 4    important to keep in mind is that on the one hand
 5    commercial broadcasters are trying to build big audiences
 6    and on the other hand a lot of us in education are not
 7    necessarily trying to build huge audiences, but we want
 8    the right community of interest and that we don't want to
 9    be fragmented all over the place.
10              So for example, if I am trying to do
11    environmental programming, for example, including programs
12    from all over the United States, I want to be able to pull
13    that together, to market it, to package it, and that has a
14    whole lot more value added than throwing one thing here
15    and one thing there. 
16              So my sense is that that organizational
17    structure, those mechanisms, if we can figure out a way to
18    do that I think that would be very exciting.
19              MR. ORNSTEIN:  Let me throw in a couple of
20    comments here, related comments.  I'm not sure that we
21    have an either-or here, first of all, that it has to be
22    something that's totally market-driven, where it's either
23    we leave everything over to PBS because everybody else
24    just wants to pay, or none of that at all.  You can have a
25    hybrid model and you can have a flexible model, and indeed

 1    we can have one where CBS, which simply doesn't have the
 2    reasons to do this or the interest to do it, could pay,
 3    but others would find that it's perfectly appropriate for
 4    them and we can serve more interests.
 5              MR. DUHAMEL:  Disney, Disney would be the
 6    example.
 7              MR. ORNSTEIN:  Sure.  But I think if we move in
 8    this direction as a group our task is going to be, to use
 9    Bob Wright's watchword from our last meeting, flexibility
10    to try and make sure that we can serve a lot of different
11    interests here in the same way.
12              I would also suggest to you that we can't have a
13    status quo or even a status quo plus, that we can't
14    define, I believe, in a digital world where broadcasters
15    are going to have probably at some time of the day a high
16    definition signal with one stream going out, at other
17    times of the day six or eight streams going out, maybe two
18    at others, and say, all right, you're going to do three
19    hours of children's programming a week, because we're
20    going to get into an unbelievable morass trying to define
21    what three hours is on which of those streams.
22              One of the ways in which we may want to at least
23    think about this is, if indeed we move to a situation
24    where, in non-prime time, where you've got the opportunity
25    to do 6 or 8 or maybe 12, maybe we can have some

 1    flexibility on the commercial channels that would meet
 2    Janet's needs, where one of those channels is in fact set
 3    aside for some of these larger purposes and we pick times
 4    that would fit.
 5              Then you could do a narrowcast in a sense that
 6    would cover a broader area.  That may be one possible way
 7    or one little piece of what we're dealing with here that I
 8    would just throw out.
 9              MR. MOONVES:  Gigi?
10              MS. SOHN:  I actually would like -- is this
11    working?
12              MR. MOONVES:  Yes.
13              MS. SOHN:  I'd actually like Janet to expand a
14    little bit about her discussions with the DBS providers. 
15    In the interest of full disclosure, Janet is my client at
16    the FCC where we're trying to get them to implement the
17    public interest obligations of direct broadcast satellite
18    providers, one of them being that they have to reserve
19    between 4 to 7 percent of their capacity, of their channel
20    capacity, for educational and informational programming.
21              There's a lot of talk today about how digital
22    may or may not eliminate scarcity, but I would argue that
23    if you've got five multiplex signals and one person
24    controlling it you've still got scarcity.  The problem is
25    not scarcity, Cass; it's access.

 1              I'd like Janet to talk a little bit about how
 2    she has approached DBS providers -- these public interest
 3    obligations have not been implemented yet -- how she's
 4    approached DBS providers, some of whom control 150 and 200
 5    channels.  And I'd like her to talk about her success in
 6    getting on those systems.  It's going to be a very short
 7    answer.
 8              MS. POLEY:  Well, we have had no success in
 9    terms of getting access.  We've had a lot of conversations
10    at this stage.  And I guess I would back that up with how
11    we even started moving that direction is that we have a
12    system of satellite uplinks and downlinks all over the
13    country -- I'm sorry for my voice; I'm very froggy today -
14    - and once satellite time went up in terms of going from
15    putting in place an infrastructure for educational
16    purposes in higher ed where satellite time was about $100
17    an hour roughly, to bumping up to $800 to $1,000 an hours,
18    it caused my community of higher ed institutions and
19    nonprofits to start immediately to look around for other
20    options and hybrid systems.  And thank goodness the
21    Internet was there, and you can mail a lot of videotapes
22    for what that transponder time was costing.
23              But one of the things that we thought was very
24    important, we have a lot of clients in rural areas and
25    when you talk about distance ed you're really in many

 1    cases dealing with place-bound people who can't get
 2    somewhere for college classes easily without driving a
 3    couple of hours, et cetera.
 4              So we thought that DBS, which was heavily
 5    marketing to rural areas, would be a natural in terms of
 6    trying to work together on access as far as distance
 7    education was concerned.  We have met with the DBS
 8    providers.  To date, I won't run you through all the
 9    conversations, but I've spent a lot of time on planes
10    between Lincoln, Nebraska, and here and back and forth and
11    out to Denver, and to date we have not succeeded in
12    getting access through that channel.
13              These are things that we know we have markets
14    for.  It's not as though -- but they're not huge markets. 
15              MR. MOONVES:  Yes, Gordon.
16              MR. AMBACH:  May I come back to Robert's
17    proposal, if you will, or at least kind of thesis that was
18    advanced.  And I'm struck -- I'm not a broadcaster, I'm
19    not a programmer.  I'm involved in running major
20    educational systems.  We've got 50 million clients out
21    there.  This conversation if it stays mostly on what is
22    sort of real-time broadcasting is missing the point with
23    respect to what is going to be the availability of work-
24    through digital and the provision of convergent services
25    in the schools and in the homes.

 1              I hope that you really give that very, very
 2    close attention because the capacity to be able to
 3    deliver, as I very briefly suggested before, the content
 4    of what it is that we expect our children to be learning,
 5    reports on how they're learning, interactions between
 6    parents, teachers, and students about that, and the
 7    availability of the pipes to be able to handle that is in
 8    my judgment probably the most significant thing down
 9    track.
10              It isn't going to be real-time broadcasting. 
11    It's going to be what's the availability of getting into
12    the huge storage of information, whether it's in video or
13    data or voice form, whatever it is, and use it when you
14    want it, so that it's on time for the particular learning
15    that's at stake.
16              Now, just two observations about your proposal,
17    because again I think it's a very intriguing one.  You
18    have two premises which you have to get agreement on.  One
19    is that it would be possible to get some kind of
20    aggregation of need if we went across the different
21    desires, if you will.  You probably could get an
22    approximation there.  The proposition is based that you
23    could do that.  
24              And you put in a sort of a statement at the end
25    which, if properly funded, and that's the part of it

 1    which, frankly, I'm most concerned about.  If we are going
 2    to be involved in deregulation which doesn't require
 3    everybody to put on three hours, trades, other kinds of
 4    arrangements for the financing of essentially what's the
 5    content, then we've got to talk very, very specifically
 6    about how do you finance that, and whether, as I suggested
 7    earlier, there are legitimate ways to think in terms of
 8    how the digital asset, if you will, grows in the
 9    commercial environment.
10              Do you tap in for a part of that and in the
11    public interest allocate that back over to the educational
12    forces?  That's the theory behind the universal services
13    discounting which is going on right now.  That may be a
14    way to do it.  I recognize that may be beyond the scope
15    here of the advisory committee or it may be not a very
16    popular idea among many.
17              But if properly funded, it forces us then to
18    have to ask the question, well, what do we mean?  What
19    would the obligation be on the commercial stations for
20    purposes, or the commercial broadcasters for purposes of
21    doing it?
22              But if we could get at those two questions,
23    you've got something. 
24              MR. DECHERD:  May I just interrupt for a moment?
25              MR. MOONVES:  Yes.

 1              MR. DECHERD:  These are not ideas that are
 2    developed at all in my mind, but I go back in my mind, for
 3    example, to Chairman Tauzin's suggestion of a couple
 4    months ago, actually this summer, of a trust fund, which
 5    would be an opt-out for many of these obligations into a
 6    literal discrete corpus from which income is derived.  But
 7    I think that's only part of it.
 8              Several people on this panel have said either in
 9    these discussions or offline that there's a very
10    interesting question about what will happen to the fees
11    that are incurred by broadcasters who use any part of the
12    spectrum for non-broadcast purposes.  For example, those
13    fees which are supposedly now going into the Treasury
14    might be dedicated to this purpose.
15              Moreover, the thing that struck me when I
16    listened to all of you is -- and really I'm taking
17    Marilyn's admonition to heart -- I don't think any of us
18    has stepped back and thought, you know, we're talking
19    about an available resource which has not even been a
20    discussion point with state legislatures, but let's say
21    educators, what I meant to say first, but it's really
22    both.
23              When you look at the educational crisis in K
24    through 12 in this country and you look at the strain on
25    two-parent working families trying to obtain higher

 1    degrees, it's a lot of difference to say, you know, we
 2    have this one PBS channel over here and in the mornings
 3    and on Saturdays and Sunday at 2:00 a.m. we can do this,
 4    that, and the other kind of programming or, for that
 5    matter, public interest programming generally, which is
 6    outside of your purview except for Gary and Fred, but now
 7    to say there's this vast, available, right now, here today
 8    set of pipes.
 9              If you go to the California legislature, they
10    can say what they want about affirmative action and a lot
11    of very complex educational questions, who gets access to
12    universities and not.  This is direct access to a huge
13    resource.
14              Now, who along the political spectrum wouldn't
15    be attracted to at least trying this?  This is not the, if
16    you will, the paradigm which has hounded the funding for
17    public broadcasting.  It's a completely different decision
18    set.
19              MS. POLEY:  It's completely different. 
20              MR. ORNSTEIN:  But it's also -- let me
21    reiterate, Chairman Tauzin basically wanted to channel all
22    of this into PBS, public broadcasting, in effect use PBS
23    as the ground for all of it.  That isn't necessarily the
24    only way to go.  You could have a funding mechanism or a
25    mechanism which you could then channel in a whole range of

 1    other directions.
 2              Gary, apropos this, let me ask you one other
 3    question.  I know that in terms of the streams of data
 4    coming through the pipe that if in prime time you're
 5    putting on a high definition program you're going to use
 6    up almost all of that stream.  But say at 3:00 o'clock in
 7    the morning, you can send through an enormous amount of
 8    data.  Is it the case that you could, for example, send
 9    through a lot of data in the middle of the night when not
10    many people are watching and have it go to the schools or
11    to the libraries and they could then store it in some
12    fashion and then call it up at any time?
13              MR. POON:  Yes, indeed, that is one use of the
14    spectrum when it's not being broadcast either in high
15    definition or standard definition.  There is that big pipe
16    of data capacity, 19.4 megabits, in the wee hours of the
17    night where that could be done to the schools.  Indeed, we
18    within public broadcasting are thinking of ways in which
19    that could be used to further the educational mission.
20              MR. ORNSTEIN:  So getting at what Gordon and
21    Janet in fact were both talking about, it's not real-
22    time, but just having access to those things, presumably
23    we have an enormous opportunity here.  And that's another
24    one where commercial broadcasters in the middle of the
25    night, when they're not looking for the same kinds of

 1    audiences, we might be able to have ways of saying, at
 2    very low cost you can open up to data streams for
 3    libraries, educational institutions and the like, where we
 4    may be able to have a sharing.
 5              MR. MOONVES:  Yes, Janet.
 6              MS. POLEY:  In fact, some of the work that we've
 7    done to date has been that kind of thing over the
 8    satellite system, where you send something, then you use
 9    the Internet to do your interactive aspect of the program. 
10    So there are a lot of ways.
11              Right now it's real clunky because you do the
12    sending, either sending out the videotape or put it over
13    satellite, and then you use the Internet or audio
14    conferencing or whatever.  It's just not integrated.  But
15    I think that's an excellent idea.
16              MR. AMBACH:  Incidentally, if I can take you
17    back to the New York experience, 20 years ago through the
18    public television network we ran the system all night long
19    sending out videos to the schools on order.  It's not a
20    new practice.  It's been going on for a long time.  So the
21    question of expanding it is not really very complicated.
22              MR. MOONVES:  Frank?
23              MR. CRUZ:  I was just going to add that in the
24    public broadcasting realm I know what Fred Esplin has done
25    in Utah, in the State of Utah, but there are other very

 1    good examples of how the full spectrum of linking up the
 2    political forces, the educative forces, the broadcasting
 3    forces in the State have all come together for quite some
 4    time and they all bought off and they do long distance
 5    learning at various levels, not only for K through 12 but
 6    also for nurses and teachers and policemen, et cetera, et
 7    cetera.
 8              In the State of South Carolina they have a very,
 9    very well developed system where they do that.  I think I
10    really believe that we are at a right particular time here
11    in this digital technology revolution where we can, I
12    think, can come up with a variety of different
13    recommendations and solutions regarding public interest
14    obligations and different ways for them to be met by
15    different entities, commercial side and public
16    broadcasting side.
17              MR. MOONVES:  Yes, Fred?
18              MR. ESPLIN:  It's our view in Utah -- and I am
19    not alone, either -- within public broadcasting that data
20    delivery will become increasingly important as our service
21    to education and libraries and so forth, for the very
22    reasons that have been described.  We see it the same way
23    that my colleagues here on the panel have described it as
24    far as making information available at the time the
25    researcher, the student, wants to use it, whether it's a

 1    course or access to data.
 2              Even with digital compression and even with the
 3    possibility of multiplexing, it's a finite pipe, and I'm
 4    very, very intrigued with the thought that Robert
 5    suggested.  If there were a way to hang onto the spectrum
 6    we have now and the spectrum, the DTV spectrum assignment,
 7    the possibility of doing multiplexing of the instructional
 8    programming during the day and the night both and
 9    providing HDTV, but also providing significant data
10    streams, that's very, very interesting, and I would hope
11    this group looks at it very carefully.
12              MR. MOONVES:  Anybody else?
13              (No response.)
14              Well, thank you to the panel.  You were all very
15    helpful.
16              Yes, Charles?
17              MR. BENTON:  Picking up on Gordon's point, to be
18    needs-driven here, it's been a wonderful panel and it's
19    gotten me to thinking about something that I've given a
20    lot of thought to, which is the whole area of literacy. 
21    We have 40 million functional adult -- adult functioning
22    illiterate people in this country, and there's a crying
23    need for the people in the schools not only to learn how
24    to read and write, but also to learn how to use computers,
25    media literacy.

 1              So here's a tremendous need.  Now, isn't there
 2    some way in which both public and commercial broadcasters
 3    could work with schools, libraries, and colleges to take
 4    the three arenas represented here to attack nationally the
 5    problem of literacy?  We need campaign thinking about
 6    solving national problems, but doing it in a local way. 
 7    It's not a mandate by the Federal Government -- we all
 8    know that's not very popular these days -- but to focus on
 9    a big problem, like literacy, where we know there is a
10    huge problem, and to incentivize everyone working together
11    on this problem so there is a structure like the National
12    Defense Education Act which, Gordon, I'm surprised you
13    didn't mention in your review of national acts.
14              MR. AMBACH:  I only had five minutes.
15              MR. BENTON:  The secret of the National Defense
16    Education Act, which was our response to the Russians
17    putting up Sputnik, the Federal Government putting up
18    money for math, science, and foreign languages, literally
19    the first major Federal legislation since the Land Grant
20    College Act in Lincoln's Administration -- so I mean that
21    was 100 years later.
22              But the secret of the National Defense Education
23    Act was the idea of a matching grant.  The government puts
24    up half the money, but the other half's got to come out
25    locally.  So that smoked out all the innovators that were

 1    interested in getting on board with new ways of teaching
 2    math, science, and foreign languages, teaching and
 3    learning.
 4              It was a brilliant idea.  I think we need this
 5    kind of thinking that would really address some big
 6    national problems that we all know are national problems
 7    and they're not being addressed adequately now, given the
 8    infrastructures that are trying to piecemeal look at them. 
 9    I just couldn't resist throwing that out before we
10    adjourned.
11              MR. MOONVES:  Once again, thank you to the
12    panel.  Thank you, Peggy.  It was a very good afternoon. 
13    Thanks very much.
14              Let's take a 15-minute break.
15              (Recess.)
17              MR. MOONVES:  All right, we'll begin discussion. 
18    We have reversed the order on our agenda.  We're going to
19    talk about our future agenda first and then we'll do the
20    public comment questions and answers.
21              So our next meeting is going to be in L.A. and
22    we have to decide on an agenda.  Norm, you want to jump in
23    on some of the thoughts you were sharing with us at
24    lunchtime?
25              MR. ORNSTEIN:  Sure.  Let me say, too, Les, that

 1    we should at least have a few minutes, some of the members
 2    have suggested, about those future dates and have some
 3    discussion about what we can possibly work out there. 
 4              MR. MOONVES:  Sure.
 5              MR. ORNSTEIN:  When we discussed the agenda last
 6    time we talked about continuing basically our deliberative
 7    and factfinding process, where we would focus the next
 8    meeting on the political process.  Having now decided for
 9    a whole host of reasons that we would go to Los Angeles
10    for the next meeting, it doesn't seem to make a great deal
11    of substantive sense to discuss the political process out
12    there. 
13              At the same time, as our discussion of the last
14    15 or 20 minutes of this panel indicates to me at least,
15    we are now among ourselves starting to float a lot of
16    interesting and innovative ideas about where we go, and it
17    is not necessary in any way, intellectually or otherwise,
18    for us to defer discussion of ideas for solution until we
19    have finished gathering facts and having discussions of
20    some of these substantive areas.
21              So I would suggest that we take at least the
22    afternoon of our day in Los Angeles to have, without a
23    panel of outside people, for discussion among ourselves,
24    where we begin to talk about and go back and forth on some
25    of the ideas that we have raised indirectly or directly or

 1    others that emerge, and begin to move at least on a
 2    parallel track towards some framework for the public
 3    interest obligations in the digital era and see where we
 4    go.
 5              I suggest this in part as well, frankly, because
 6    whatever time frame we have, with whatever extension we're
 7    able to get, we're clearly not going to be able to sit
 8    down in one meeting and hammer out those ideas, and we
 9    clearly want to start thinking about our report long
10    before the report is written, and we're going to have to
11    share drafts among ourselves as well.
12              Now, the next question is whether we want to do
13    that for the whole day or take advantage of our location
14    in Los Angeles or simply for other reasons and have in the
15    morning continuing deliberation or discussion of one of
16    the areas we've talked about.  There was some suggestion
17    earlier that -- the National Association of Broadcasters
18    is in the midst of doing a survey of its members on what
19    in fact all of the stations now do for the public
20    interest.  We thought about perhaps having some
21    presentation and discussion there, but it turns out that
22    the timing will not work for Los Angeles.
23              So we're going to have to -- let's open up for
24    some discussion of whether there's another idea, whether
25    there's something that would be particularly suited for a

 1    West Coast location -- it doesn't have to be -- or what
 2    else we might do with that day that we have out there. 
 3    Why don't we see if there are ideas.
 4              MR. CRUZ:  Norm, can I ask a question?  Is it
 5    possible -- let me ask it this way and backtrack.  In
 6    terms of the political process of the thing that we want
 7    to discuss in the political arena, the campaign funding
 8    and so forth, is it possible to do some of it out there on
 9    the West Coast?  Would the panels be sufficient enough to
10    do some out there and some out here?
11              MR. ORNSTEIN:  I think that we could probably
12    have some discussion of the political process out there,
13    and we might very well not only draw on some resources
14    that are already out on the West Coast, but very likely
15    some of the people we might want to have involved who are
16    not on the West Coast would be willing to make the
17    terrible sacrifice of coming to Los Angeles in March. 
18    That's certainly one possibility.
19              MR. MOONVES:  Yes.
20              MR. DUHAMEL:  I was going to say one of the
21    things might be what the broadcasters political
22    obligations are right now, because every time I look it
23    seems to be getting worse.
24              MR. ORNSTEIN:  But that's what I think the
25    National Association of Broadcasters study -- 

 1              MR. DUHAMEL:  No, that's public interest.  I'm
 2    talking about in political, just the political area.
 3              MR. CRUMP:  That's part of that study, too.
 4              MR. DUHAMEL:  Oh, is it?
 5              MR. LA CAMERA:  So they will be prepared to
 6    deliver that to us?
 7              MR. MOONVES:  They will do that the following
 8    meeting, here in Washington.
 9              MR. ORNSTEIN:  Not in April.
10              VOICE:  The question Mr. Duhamel raised on what
11    the political rules are now is not part of the public
12    interest survey.  It's an interesting question, but the
13    public interest survey asks for things like debates and
14    not what the Commission's rules are.
15              MR. ORNSTEIN:  No, no, I think that's what Bill
16    is saying.  This is what people are doing now.
17              MR. DUHAMEL:  No, no.  I was saying what their
18    obligations are under the present rules, because they get
19    confused.  I get confused with them every --
20              MS. SOHN:  Didn't we get that already in our
21    papers in the first meeting?
22              MR. ORNSTEIN:  Yes, we did that in our first
23    meeting.  We did the inventory of what those obligations
24    are.
25              MS. SOHN:  We went over all that already.

 1              MR. ORNSTEIN:  You actually have a paper that I
 2    think outlines all of those from our first meeting.
 3              MR. DUHAMEL:  Oh, from what's his name.
 4              MS. SOHN:  Kraznik.
 5              MS. CHARREN:  Maybe we could do what you
 6    suggested for the afternoon, which is a continuation of
 7    where we started today, do that in the morning, and use
 8    the afternoon as a real outreach thing to hear from people
 9    who live out there.  People are complaining that they
10    can't get here.  There's a lot of people who might want to
11    say something to us and we could use part of the afternoon
12    to let them say it.
13              MR. MOONVES:  They always have that opportunity,
14    but I think we --
15              MS. CHARREN:  But they don't come.
16              MR. ORNSTEIN:  Well, we certainly want to make
17    sure we have a significant period for public comment and
18    to have it stretched a little bit more is a possibility
19    out there because it's an opportunity away from
20    Washington.
21              MS. CHARREN:  Could we have the programmers, the
22    people?  There's a lot of people out there who are the
23    creative community.
24              MS. SOHN:  Jim Yee might -- I think we should
25    talk to Jim about whether there are some programmers.

 1              MS. CHARREN:  Right.
 2              MS. SOHN:  One of the points that I brought up
 3    in the last panel is the lack of access even in an "age of
 4    abundance."  I guess I'd like to hear some programmers
 5    talk about getting on, their possibilities for getting
 6    their product out.
 7              I'd actually like to hear from Les, since he's
 8    the Hollywood guy, how he thinks being out there could
 9    benefit us.
10              MR. MOONVES:  Where are my sunglasses?
11              MS. SOHN:  Suntan.
12              (Laughter.)
13              MS. CHARREN:  Take advantage of who's out there.
14              MS. SOHN:  I think Peggy's right.  I think
15    hearing from the programming community would be a terrific
16    idea.
17              MR. MOONVES:  About what?  I'm not quite sure. 
18    I'm not being facetious.  What do you mean about from the
19    programmers?  What would you like to hear from them?
20              MS. SOHN:  What I'd like to hear from them is
21    whether they believe that they can get their programming
22    on broadcasting now and what they see the possibilities
23    for digital television are.  If we're talking about
24    diversity and abundance, is there really an opportunity
25    for alternative voices to get on now and will there be an

 1    opportunity in a digital era?  That's what I'd like to
 2    hear.
 3              MS. CHARREN:  And are they thinking about how
 4    the digital opportunity can change their ability to be
 5    creative?
 6              MR. MOONVES:  Who are "they"?  Who are you
 7    talking about, mainstream programmers?
 8              MS. SOHN:  Independent programmers, like Jim
 9    Yee.
10              MS. CHARREN:  It's just an idea.
11              MS. SOHN:  It's just an idea.
12              MR. MOONVES:  That's fine, that's fine, yes.
13              MR. ORNSTEIN:  Well, it would make sense if --
14              MS. SOHN:  It could be anybody.
15              MR. ORNSTEIN:  -- whether we do this for a
16    lengthy period or even take an hour, it certainly makes
17    sense.
18              MS. CHARREN:  Just take five minutes.
19              MR. ORNSTEIN:  Actually, you know, what might
20    make sense is to have somebody who represents one of the
21    larger studios, somebody who represents an alternative or
22    independent, just talk about whether they're thinking
23    about the digital age or what differences may be there. 
24    It wouldn't be bad to do that for an hour or so.
25              Let me just suggest this, that if it's all right

 1    with the rest of you, if you have other ideas let us know. 
 2    And then, if you're willing, let Les and I with our staff
 3    talk about what is logistically feasible and come up with
 4    an agenda.
 5              MR. MOONVES:  Because I think Norm's right, I
 6    think we should plan on having an agenda in the morning
 7    and in the afternoon let's start getting into some
 8    preliminary deliberations and bring up some of the issues.
 9              MS. SOHN:  Yes, we need to start getting down to
10    brass tacks and start talking about specifics. 
11              MR. MOONVES:  That's correct.  That's what the
12    afternoon will be about.  I think to do it the whole day
13    probably -- I think that's right, Norm.  Let's hear from
14    all of you.  Why doesn't everybody think about it for a
15    few days and send us faxes about ideas, suggestions. 
16    Getting programmers is not a difficult thing to do if we
17    feel it's relevant and valid.  That's fine, that's fine. 
18    Okay.
19              So we'll be hearing from you.
20              MR. ORNSTEIN:  Yes, so just let us know what you
21    think.
22              We need to -- there are at least a few people
23    that -- it's always difficult to set schedules -- who are
24    quite concerned that, having set our schedule, we not
25    change our schedule.  But we need to hash that one out. 

 1    Obviously we do not want to cause great discomfort for
 2    people.
 3              The Tuesday meeting -- certainly we tried to set
 4    meetings so that they would cover over a Saturday night
 5    stay, but --
 6              MS. EDWARDS:  And garner the largest group of
 7    members as well.
 8              MR. MOONVES:  Obviously we missed this time.
 9              MR. ORNSTEIN:  And believe me, when we looked at
10    all of the calendars it becomes a very difficult task to
11    find a date where the bulk of people were available to
12    come.
13              Now, we can do this in a couple of ways.  We can
14    -- maybe the easiest thing is for us to go back to those
15    calendars, which I hope have not changed materially since
16    then, and see if there is another acceptable date around
17    that time frame, and then get in touch with you to see if
18    that still works.  We can try and find one that is better.
19              MS. CHARREN:  Could you ask now if at least the
20    bunch sitting here look like they're free on the 17th?
21              MR. MOONVES:  Two months ago we each sent in
22    calendars and that's why we set it out and compared all
23    the schedules.
24              MS. CHARREN:  Yes, I know.  I did, too.
25              MR. CRUZ:  Yes, I want to make reference to

 1    that, because I think Karen Edwards and the other young
 2    lady, whose name escapes me -- Anne -- I know they went
 3    out of their way.  We sent these calendars in and we were
 4    pretty explicit on dates back and forth, and I think it
 5    would be unfair to a lot of us to have to remodify that
 6    now if it went in that way.  And I say that in all due
 7    respect to religious holidays.
 8              MR. DUHAMEL:  See, the thing is, in two months
 9    your calendars may have changed.  If Karen could just
10    repoll us.
11              MR. ORNSTEIN:  Yes.  Well, we can --
12              MR. MOONVES:  We can re-look at calendars.
13              MR. ORNSTEIN:  I guess what we could do is, the
14    one thing we could do that might work here -- it's going
15    to be extremely difficult, I think, to find another date. 
16    The 17th, for example, doesn't work for me because I'm out
17    on the West Coast.
18              MS. CHARREN:  Well, try and get Easter moved.
19              MR. ORNSTEIN:  Yes.
20              MR. MOONVES:  Good idea, Peggy.
21              MS. SOHN:  Appeal to a higher source.
22              (Laughter.)
23              MR. ORNSTEIN:  Why don't we have Easter moved
24    through one of those channels late at night and then we
25    can just have it any time you want.

 1              MR. LA CAMERA:  With public broadcasting. 
 2              MR. ORNSTEIN:  Perhaps what we could do is have
 3    our staff canvas everybody for the dates that are
 4    available in April and see if we can find a date that
 5    still fits the other objectives that we have of making
 6    sure it's sensitive to the Saturday night stay.  And if we
 7    can't find another date we're just going to have to live
 8    with what we've got.
 9              At every one of these meetings we have some
10    people who can't make it, for one reason or another, and
11    it may be that the inability to get away for Easter is
12    just one of those reasons that we have to accommodate.  I
13    hope we can find a date that doesn't discomfort people,
14    but we'll try.
15              MS. EDWARDS:  Are we agreeing, then, that all
16    the members will send in to me and Anne the list of dates
17    when you are available in the month of April?
18              MR. ORNSTEIN:  Yes, let's do that. 
19              MR. SUNSTEIN:  Well, then you'll have to fax us,
20    I'm sorry to say, one of those calendars again.
21              MS. PELTZ STRAUSS:  We could also write it out
22    before we leave and give it to you.  It sounds old-
23    fashioned, but --
24              MS. EDWARDS:  We can certainly provide the
25    calendars again.  That's not a problem. 

 1              MS. CHARREN:  Cass, there are 30 days in April.
 2              MR. SUNSTEIN:  Are you sure?
 3              MS. CHARREN:  Positive.
 4              MR. SUNSTEIN:  It changes every year.
 5              MR. MOONVES:  Can we move on?  Have we got any
 6    other housekeeping?  Go ahead.
 7              MS. EDWARDS:  I have one other housekeeping
 8    thought.  Anne and I have a proposal and I don't know sort
 9    of what your thinking about it would be, but we've
10    discussed with Les and Norm the possibility of creating a
11    LISTSERV for the members, a LISTSERV, in other words, so
12    you can communicate with each other via E-mail and
13    everybody would get the same messages.  It's one bite at
14    the apple and everyone's in on the conversation.
15              I wanted to get a sense from you of whether
16    that's worthwhile.  Here are the two complications:  One,
17    everyone is not on E-mail, although that's not very hard
18    to fix, I guess, if everybody thought it was worthwhile. 
19    Two, some of the E-mail addresses we have don't work.
20              So I wanted to raise the question and find out
21    whether or not it's something you wanted to pursue as you
22    get more into the sort of discussion, debate.
23              MS. CHARREN:  And the report, too.
24              MR. ORNSTEIN:  As we move, it's clear as we move
25    closer to the process where we're going to be discussing

 1    among ourselves solutions, this would be a very convenient
 2    way to have a larger discussion.  So you ought to at least
 3    see what your E-mail situation is.
 4              I just wanted to make one comment before we move
 5    on to the next phase of the program and maybe before Karen
 6    leaves, to reiterate for the record what a wonderful job
 7    the staff has done.  They were here late last night. 
 8    Putting all this together logistically is very difficult,
 9    and for Karen, Anne, Cheree, Jonathan, and others -- we
10    have others as well.  This is a very small staff for what
11    is a very big operation.
12              MS. CHARREN:  And Anne.  I talked to Anne every
13    day for the last four weeks.
14              MR. MOONVES:  He said Anne.
15              (Applause.)
16              MR. MOONVES:  Charles, did you have something
17    else?
18              MR. BENTON:  Yes.  I noticed the letter you
19    passed out.  I may have missed this, but on the October
20    1st deadline, I know that some of us felt that it would be
21    better to have a deadline for getting the report in after
22    the election as opposed to before.  Was this considered
23    and are we really fixed on this October 1st deadline, or
24    can we go to December 31st?
25              MR. ORNSTEIN:  The original plan that was

 1    created in the executive order was a year, and there was a
 2    pretty strong suggestion from the White House that this
 3    was not to take longer than a year.  So we're actually
 4    talking about somewhere in the range of a year here.  So I
 5    think there is little likelihood --
 6              MR. BENTON:  So there's no wiggle room on this?
 7              MR. ORNSTEIN:  No.
 8              MR. MOONVES:  Yes.  I don't think the election
 9    should be a problem. 
10              Yes, Karen?
11              MS. PELTZ STRAUSS:  I had a question about
12    whether or not you have any idea of what the agenda is
13    going to be at the June meeting as well.  The reason I ask
14    is that we have a very limited budget and I'm not sure I
15    can make two out of town meetings in the spring and I may
16    have to choose between the two.  So has any thought been
17    given to that far in advance?
18              MR. CRUMP:  St. Paul is a lot more fun than L.A.
19              MR. MOONVES:  I beg your pardon.  You haven't
20    gone to the right places.
21              MR. CRUMP:  I'll go with you.
22              (Laughter.)
23              MR. MOONVES:  We haven't gotten that far.  My
24    guess is we will get heavier into our discussions in June. 
25    Hard to say.

 1              MS. PELTZ STRAUSS:  Okay.
 2              MR. ORNSTEIN:  My guess is that as we move -- it
 3    is very hard to say.  Clearly, as we move along we are
 4    going to be probably emphasizing more tapping into
 5    expertise of people who have ideas that we're raising for
 6    solutions.  Where we get by June is going to depend on
 7    where we are in March and April.  So you'll have to make a
 8    gaming judgment here, conditional probability.
 9              MR. MOONVES:  Any other housekeeping?
10              MR. BENTON:  This will be the last meeting,
11    then, and the rest will be on our report?
12              MR. MOONVES:  No.
13              MR. ORNSTEIN:  No.  I think we just didn't want
14    to plan -- I would think that what we want to do probably
15    in Los Angeles is then begin to think about, the end of
16    that day we want to begin to think about where we are,
17    make an assessment, especially after we have some
18    discussion of possible ideas and what future meetings we
19    want to schedule.
21              MR. MOONVES:  Public comments, questions,
22    answers.  The microphone is now open.
23              MS. PUHAR:  Hi.  My name is Annamarie Puhar. 
24    I'm Executive Director of The Television Project, which is
25    a nonprofit that promotes healthy television viewing

 1    habits for families.
 2              Mr. Benton gave me my segue, because I came down
 3    here to ask you to really consider media literacy as an
 4    important obligation that we have to our children.  We
 5    need media literacy and we need it nationally, and it
 6    needs to be funded for research and curriculum development
 7    and implementation, and so we start a campaign.
 8              Thank you. 
 9              MR. MOONVES:  Thank you. 
10              MR. DINGMAN:  Hi.
11              MR. MOONVES:  Hi.
12              MR. DINGMAN:  My name is Jim Dingman.  I was
13    here last meeting, and I wanted to just give you a follow-
14    up on that paper that we gave you on a public interest
15    obligation to show missing children.  
16              I urge members of the commission to call the
17    National Center for Missing and Exploited Children at 1-
18    800-THE-LOSS, because they cannot come here today --
19    they're an agency under the Department of Justice -- but
20    we had long discussions about how a system like this could
21    operate, and a lot of thought is now being put to it
22    around the country by the different missing children's
23    clearinghouses in the different states.  And by your March
24    meeting, we hope to give you a more developed paper on how
25    a system like this would look.  

 1              But the people over there asked me to ask you to
 2    call them up.  Nancy Hammer is one of the legal counsels
 3    there and she wants to help.  And I can certainly feed and
 4    give you names of other folks.  Dianne Vigars, who is the
 5    Manager of the clearinghouse in the State of New York --
 6    again the problem is these are employees of state
 7    governments and in the case of Nancy Hammer she's under
 8    the Department of Justice, so they cannot necessarily
 9    advocate and lobby these things.
10              But they want to talk to you about these things
11    because they're very excited with the possibility of some
12    system being set up.  One idea that they suggested was in
13    terms of stranger abductions, that shows with high Nielsen
14    ratings, that there be sort of an emergency system
15    implemented where a child who's a victim of a stranger
16    abduction, alongside perhaps a daily show or a daily
17    airing of kids in the different categories that we talked
18    about -- stranger abductions, runaways, parental kidnaps,
19    et cetera -- that those shows which have the largest
20    blanket appeal to people, where they are seen by Nielsen's
21    ratings of 20 and 18, et cetera, that those shows be
22    prioritized to be vehicles for children who are seriously
23    in danger of being killed.
24              That we can certainly see as a public interest
25    obligation, and this is something we're going to petition

 1    the FCC for a rule change on.  But those are the kind of
 2    considerations we wanted to bring to you.
 3              Again, just as a sidebar, I think that community
 4    broadcasters -- and I'm talking now about all the
 5    different FM and AM radio stations and TV stations -- they
 6    don't have a clue about the impact of this technology on
 7    them.  I think it would be interesting to ask some of them
 8    to come in and give commentary on it, because they've not
 9    thought carefully about this or have they thought about
10    their public interest obligations in response to this
11    digital technology, and they really are as ignorant as
12    most of us are in trying to comprehend it.
13              Thank you. 
14              MR. MOONVES:  Thank you. 
15              Anybody else?
16              (No response.)
17                         CLOSING COMMENTS
18              MR. MOONVES:  Norm.
19              MR. ORNSTEIN:  I would point out to our members
20    simply that we have gotten other public feedback through
21    the web site and through letters.  You have copies of
22    those things and some of them are quite interesting.  We
23    should read them.
24              MS. CHARREN:  I would like to just call the
25    attention of the committee to two pages in the Electronic

 1    Media, the issue of January 12th, which has two pages of
 2    web sites.  I don't think we're on it.  You might want to
 3    write a letter to the editor of Electronic Media just to
 4    add ours to this list.  
 5              But there are two pages of web sites on digital
 6    television that would be interesting for us to pull down
 7    and see what they're saying.  Some of them are public,
 8    some are government, and some are industry.  But it was 25
 9    web sites.
10              MS. SOHN:  Can I ask a question?  Actually, it's
11    for Les.
12              MR. MOONVES:  Yes.
13              MS. SOHN:  Have the folks at Annenberg given you
14    any indication of how they might publicize this? 
15              MR. MOONVES:  They really haven't.  Jeff Cowan,
16    who is an acquaintance, who is the dean of the school,
17    called me up and I said, write me a letter.  And then it
18    happened that I got the letter the day I came back from
19    the last meeting or soon after, and he by the letter said: 
20    "The issue the committee is examining is of intense
21    interest to students, faculty, and graduates of USC."
22              So I think they'll get the word out.  They'll
23    get the word out among the L.A. community, as well as we
24    can certainly send out a press release that goes into the
25    trade papers there, Electronic Media and those things. 

 1    And we'll see if we can get some of those people from the
 2    community.
 3              Once again, anybody -- and I'm open to ideas --
 4     that you guys would like to hear from from that
 5    community, I certainly can get them there. 
 6              MS. EDWARDS:  I would just add to that, I spoke
 7    with Jeff Cowan yesterday, Gigi, and I think that he is
 8    still casting about to figure out what the publicity of
 9    this would be like and looking to us for a bit of
10    guidance.  So if you have some ideas about what they might
11    do, you could definitely funnel them through me because I
12    will be talking with him a fair amount next week.
13              MR. ORNSTEIN:  And once we get an agenda set,
14    that'll have some impact on that. 
15              I would just throw in one more small thing. 
16    Judd French, who is a very, very strong technical person
17    from Harris, did a little exploration.  I had asked him
18    about the emergency notification business, and what I
19    asked him was:  If we're talking about this 9600 baud,
20    which is basically I think the equivalent of the width of
21    a human hair across an eight-lane highway in terms of the
22    space that it takes up, what does that really mean? 
23              He just made a couple calls and gave us some
24    interesting notes.  Where it becomes a question is if you
25    have a 24-hour service, including the problems that may

 1    exist for stations that aren't on 24-hours, where you'd
 2    have to be talking about turning it on; and also simply
 3    the power needs for television sets, where you have to use
 4    at least a reduced power if you're even going to have --
 5    if it's off, to be able to turn it back on; that there are
 6    some questions raised here in terms of energy usage and
 7    otherwise, not so much for any of the purposes that are
 8    directly related to us, because actually mandating this is
 9    nothing in terms of the actual usage.  But there are other
10    questions.
11              We'll maybe type this up and send it out to you,
12    but it's just one of those -- this is one of those little
13    areas that we really need to think about.  But it raises
14    questions and Judd did some very nice stuff for us, for
15    which I thank him.
16              MR. MOONVES:  Thank you all.  See you next month
17    or the month after.
18              (Whereupon, at 4:13 p.m., the meeting was
19    adjourned.)