THE ORIGINS AND FUTURE PROSPECTS OF DIGITAL TELEVISION
Digital television is not simply a superior television format featuring better pictures and sound, greater efficiency in its use of spectrum, and versatility in its range of applications. Digital television, or DTV, also represents a new technological infrastructure for broadcast television, and thus a new economic and competitive paradigm for the industry.(1) The new transmission technology invites a broad reassessment of established programming practices, business strategies and regulatory requirements, including the public interest obligations that have long been considered fundamental to broadcast television.
In order to understand the new framework of legal and technical standards that will guide the development of digital television -- and thus the likely business models and most appropriate public interest standards -- it is important to understand how digital television has evolved over the past eleven years. This section recounts that history. It also explains the statutory and regulatory standards that will govern DTV, the possible barriers to implementing the new technology, and the unresolved policy issues that will require action by the Federal Communications Commission.
I. WHAT IS DIGITAL TELEVISION?
Digital television is a new, more sophisticated technology for transmitting and receiving broadcast television signals. Using an additional 6 megahertz (MHz) of broadcast spectrum temporarily granted by Congress, broadcasters will be able to develop a diverse range of new digital television programming and services while continuing to transmit conventional analog TV programming on their existing allotments of spectrum, as required by the Telecommunications Act of 1996.
A digital standard is superior to analog because of its greater accuracy, versatility, efficiency and interoperability with other electronic media. Digital signals also have the advantage of generating no noise or "ghosting," and being more resistant to signal interference. Within the range of the signal, this results in a perfect signal.
The chief rationale for the nation's transition to digital television is high-definition television, or HDTV. This transmission standard contains as much as six times more data as conventional TV signals and at least twice the picture resolution. HDTV images have a 16-to-9 aspect ratio (the ratio of width to height), providing a wider image than the 4-to-3 ratio that has characterized television since 1941. Because of its higher resolution and different aspect ratio, HDTV images are remarkably more vivid and engaging than the existing television format, an effect that is enhanced by five discrete channels of CD-quality audio.
But DTV is not just about HDTV. As a digital (and not analog) signal, DTV enables broadcasters to offer a variety of innovations. Instead of sending an HDTV signal of 19.4 megabits per second, for example, a broadcast station may decide to send as many as five digital "standard-definition television" (SDTV) signals, each of which might consist of four to five megabits per second. SDTV images are not as sharp as HDTV, but still superior to existing TV images. This new capacity, known as "multicasting" or "multiplexing," is expected to allow broadcasters to compete with other multichannel media such as cable and direct broadcast satellite systems. As new advances in compression technology are made in the years ahead, broadcast stations may be able to fit even more SDTV signals into the same spectrum allotment.
Another DTV capability is the ability to provide new kinds of video and data services, such as subscription TV programming, computer software distribution, data transmissions, teletext, interactive services and audio signals, among others. These broadcast services are known, under the Telecommunications Act of 1996, as "ancillary and supplementary services." They include such potentially revenue-producing innovations as the providing of stock prices, sports scores, classified advertising, paging services, "zoned" news reports, advertising targeted to specific TV sets, "time-shifted" video programming, closed-circuit television services, and more.
None of these choices -- HDTV, multicasting and innovative video/information services -- are mutually exclusive. Within a single programming day, a broadcaster will have the flexibility to shift back and forth between different DTV modes in different day parts. During the day, for example, a station might show four SDTV channels, and then show a single HDTV program (perhaps a movie or wide-screen sporting event) during prime time. Since different gradations of HDTV and SDTV picture resolution are possible -- there are 18 different transmission formats -- a station can mix and match video programming with data services, so long as the various signals fit within the 6 MHz bandwidth.
As all this suggests, DTV over the next ten to fifteen years will usher in a sweeping transformation of broadcast television -- its programming and services, its revenue sources, its corporate partnerships and ownership structures. While many existing programming genres and styles will surely continue, many innovative types of video programming and information services will arise, fueled in no small part by the anticipated convergence of personal computer and television technologies. Through DTV, furthermore, broadcast television may develop new services in alliance with other telecommunications media, such as wireless telephony, a scenario made possible by digital code, increasingly the common language for all electronic media.
At this point, it is difficult to predict which business models broadcasters will choose to develop as they commence DTV transmission. The Telecommunications Act of 1996, which authorized the FCC to give an additional 6 MHz channel to existing broadcasters for digital transmissions, is deliberately flexible. Much will depend upon the competitive opportunities that broadcasters identify as promising, as well as on emerging market conditions and the regulatory ground rules for conducting business.
II. A BRIEF HISTORY OF DIGITAL TV TECHNOLOGY
For nearly sixty years television broadcasters have transmitted signals based upon the "NTSC standard." This technical format, developed and recommended by the National Television System Committee, has remained largely unchanged since its adoption by the FCC in 1941. The most significant modifications have been the introduction of color TV in 1953, "ghost cancelling" provisions to enhance picture clarity; the use of a previously unused portion of the transmission signal called the "vertical blanking interval" to send closed captioning; and stereophonic sound.
While television engineers had long envisioned ways to upgrade the existing NTSC standard, there had been little enthusiasm in the broadcast industry, Congress or the FCC to undertake such a large, complex challenge. This changed in the mid-1980s as Japanese consumer electronics firms forged ahead with the development of HDTV technology. In particular, the Muse analog format proposed by NHK, a Japanese company, was seen as a pacesetter that threatened to eclipse U.S. electronics companies. During this same period, the FCC was contemplating the reassignment of some vacant portions of the broadcast spectrum to so-called Land Mobile users -- police departments, emergency services, delivery companies, and others. At that point, broadcasters showed an interest in developing this portion of the spectrum.(2)
To explore the issues posed by HDTV, the FCC in July 1987 issued its First Notice of Inquiry on Advanced Television Service.(3) A few months later, the FCC appointed a 25-member advisory panel, the Advisory Committee on Advanced Television Service (ACATS). Chaired by former FCC Chairman Richard E. Wiley, the panel was charged with reviewing the technical issues and recommending an ATV system to the FCC.
The first congressional hearing on HDTV was held in October 1987, an event that helped galvanize the ACATS to announce an open competition for development of the best advanced television standard. Among more than twenty-three different technical concepts, the Japanese Muse standard, based on an analog system, was the leader until June 1990, when an American company, General Instrument, demonstrated the feasibility of a digital TV signal. This was a breakthrough achievement, significant enough to persuade the FCC to delay its imminent decision on an ATV standard and require a digital-based standard.
Once it became clear that a digital standard was feasible, the FCC in March 1990 made a number of critical decisions. The Commission declared, first, that the new ATV standard must be more than an enhanced analog signal, but be able to provide a genuine HDTV signal with at least twice the resolution of existing television images. It also decided that the new ATV standard must be capable of being "simulcast" on different channels. This would assure that people who did not want to buy new digital TV sets could continue to receive conventional television broadcasts.
The new ATV standard also allowed the new DTV signal to be based on entirely new design principles. While incompatible with the existing NTSC standard, the new DTV standard would, as a result, be able to incorporate many improvements. These include:
Progressive scanning, as explained below, is a more demanding technical format than the current "interlaced scanning" that will allow for a smoother sequencing of video picture frames and interactivity between computers and television sets.
Square pixels, or the most basic element of video image data, facilitate the interoperability of the new video standard with other imaging and information systems, including computers. With 1,920 pixels per line displayed on 1,080 lines per frame, the resolution of HDTV images is much sharper than the current NTSC format.
Increased frame rates allow a smoother simulation of motion in TV signals; the more frames per second, the more realistic the portrayal of motion. The ACATS proposal allowed three different frame rates 24, 30 and 60 frames per second.
Additional lines per frame allow video images to be sharper in resolution. The current NTSC format provides for 525 horizontal lines of picture data, while the two HDTV standards provide for either 720 or 1080 horizontal lines.
Different aspect ratios give viewers a wider field of view, so that the viewing experience is more encompassing in the manner of a film. In the existing NTSC format, the aspect ratio, or relation between the width to height of the screen, is 4-to-3. In HDTV, the aspect ratio is a wider, more rectangular 16-by-9 aspect ratio, which is the same dimensions as 35 millimeter film.
Sound is more vivid in digital television, too, because there are five discrete channels of CD-quality audio, along with a sub-woofer channel for deeper sounds. Over time DTV programming is likely to exploit these new capabilities.
While these technical improvements would help make television programming more appealing, the overarching goal of the ATV standard, the FCC later stated, is to:
promote the success of a free, local television service using digital technology. Broadcast television's universal availability, appeal and the programs it provides -- for example, entertainment, sports, local and national news, election results, weather advisories, access for candidates and public interest programming such as educational television for children -- have made broadcast television a vital service.(4)
By deciding to adopt a uniform technical standard rather than leaving the outcome to marketplace competition, the Commission wanted to assure stability and continuity in the broadcast market. TV set manufacturers in particular wanted assurance that any digital TV set would work and thus could be sold in all regions of the country.
The Advisory Committee on Advanced Television Service, or ACATS, which was hosting the competition for the best digital standard, decided to collaborate with the Advanced Television Systems Committee (ATSC), an industry group, to recommend a series of technical specifications. By early 1993, this subgroup affirmed the superiority of digital over analog after a rigorous technical review of four digital HDTV standards and one analog proposal. But the ATSC subgroup also found that each of the four digital proposals was deficient in one respect or another.
This prompted the remaining seven ATV competitors to form a coalition called the Grand Alliance to pool their expertise.(5) Working with ACATS, the former competitors agreed in May 1993 to jointly develop a new, multi-faceted standard that would incorporate the best of each system. By November 1995, after extensive testing at three laboratories, the ACATS formally recommended a set of prototype DTV protocols -- the Grand Alliance standards -- to the FCC. Key technical criteria in selecting the final standards were video/audio quality, interoperability with other video delivery media, spectrum efficiency issues, and cost.
In May 1996 the FCC formally proposed adopting the Grand Alliance standards for terrestrial broadcasting.(6) In December 1996 the FCC adopted the DTV standards proposed by ACATS with some modifications.(7) Neither cable nor direct broadcast satellite transmissions would be directly affected. The standards covered five major technical subsystems: scanning, video compression, audio compression, packetized data transport, and radio-frequency transmission. The standards included eighteen distinct transmission formats, a compromise that satisfied the sometimes-conflicting interests of various industries (broadcasting, TV set manufacturers, film studios, computer and software makers) while assuring great flexibility in how digital television could be used.
The final standard adopted by the FCC did not require a single standard for scanning formats, aspect ratios or lines of resolution; instead, a number of options were specified. This outcome resulted from a dispute between the broadcast and computer industries over which of two scanning processes -- interlaced or progressive -- is superior. "Interlaced scanning," which is used in televisions worldwide, scans even-numbered lines first, then odd-numbered ones. Progressive scanning, which is the format used in computers, scans video lines in sequences, from top to bottom.
The computer industry argued that progressive scanning is superior because it does not "flicker" in the manner of interlaced scanning. It also argued that progressive scanning enables easier connections with the Internet, and is more cheaply converted to interlaced formats than vice versa. The film industry also supported progressive scanning because it offers a more efficient means of converting filmed programming into digital formats. Broadcasters, for their part, argued that progressive scanning cannot transmit high-definition signal formats, which require 1,080 lines per picture and 60 frames per second. Broadcasters also favored interlaced scanning because it is more spectrum-efficient, and because they have a vast archive of interlaced programming that would not be readily compatible with a progressive format.
In the end, the FCC acknowledged but did not adopt any of the eighteen recommended formats; broadcasters can choose the scanning format that suits them best. Of the eighteen formats, six are HDTV formats. Three are based on progressive scanning, and three on interlaced scanning. Of the remaining formats, eight are SDTV (four wide-screen formats with 16x9 aspect ratios, and four conventional 4x3 aspect ratios), and four are VGA (formats that are of lower quality than the current analog NTSC standard; VGA stands for "Video Graphics Array Adaptor). A key rationale for adopting so many formats was to allow broadcasters to explore what works best for them in the marketplace. "We anticipate that stations may take a variety of paths," the FCC said in its April 1997 Fifth Report and Order on ATV:
Some may transmit all or mostly high resolution television programming, others a smaller amount of high resolution television, and yet others may present no HDTV, only SDTV, or SDTV and other services. We do not know what consumers may demand and support. Since broadcasters have incentives to discover the preferences of consumers and adapt their service offerings accordingly, we believe it is prudent to leave the choice up to broadcasters so that they may respond to the demands of the marketplace. A requirement now could stifle innovation as it would rest on a priori assumptions as to what services viewers would prefer.(8)
In its Fifth Report and Order, the Commission also established a tentative eight-year transition schedule for moving from the current NTSC standard to DTV.
III. HOW DIGITAL TELEVISION WILL EVOLVE: THE PLAN
While ACATS was wrestling with technical challenges and inter-industry disagreements, Congress in 1994 and 1995 was debating legislation that, on February 8, 1996, became the Telecommunications Act of 1996. The law was enacted to spur competition in the telephone and cable industries, and to foster the development of new electronic media.
Section 201 of the 1996 Act specifies the basic terms under which digital television would move forward. Existing broadcasters are assigned a new DTV license and an additional 6 MHz channel to facilitate the transition from analog to digital television. Broadcasters retain their original 6 MHz channel for analog broadcasts until the expected completion of the transition in 2006, at which point the channels are returned to the FCC.(9)
DTV licensees are granted great flexibility in how they can use their new spectrum, provided that its uses do not interfere with the provision of over-the-air television programming. DTV licensees are still bound by the public interest standards that apply to broadcast television. Finally, DTV licensees are to pay the federal government an as-yet-to-be determined set of fees of the market for ancillary and supplementary (subscription) DTV services.
In moving to a digital format, the FCC, broadcasters, public-interest organizations and others agreed that it is important to keep free, over-the-air TV universally available to the American people. The grant of free additional spectrum to broadcasters for DTV was seen as a way to assure that over-the-air television would continue to be universally available in the future, and that broadcast television as an industry would continue to remain competitive.
By giving broadcasters use of the airwaves until 2006, rather than auctioning the spectrum or charging a fee, the federal government hoped to ease the transition to digital TV: broadcasters would have time to make considerable investments in new digital equipment and make strategic and operational changes in their businesses; TV set manufacturers would have time to develop new products, improve them and lower prices, and consumers would have time to buy new sets.
To help the industry meet the transition deadline of December 31, 2006, the FCC established an accelerated schedule for the introduction of DTV so that all Americans could have access to it by the year 2002.(10) Affiliates of the top four networks (ABC, CBS, NBC and Fox) in the top ten markets must have a digital signal on the air by May 1, 1999. The same network affiliates in markets 11 through 30 must be on the air by November 1, 1999. And all other commercial stations must be on the air by May 1, 2002.
By the end of November 1998, forty-one stations began DTV broadcasting, according to FCC Chairman Kennard, which will make digital TV signals available to more than one-third of television households in the U.S. by year's end. The National Association of Broadcasters expects this coverage to rise to 50 percent of the nation's TV households by the end of 1999. Total DTV coverage for commercial stations is intended to be available by 2002.
When Congress passed the Balanced Budget Act of 1997, it adopted two provisions that will allow broadcasters to keep their analog TV service beyond 2006 if 1) one or more of the largest TV stations in a market do not begin DTV transmission by the 2006 deadline through no fault of their own; or 2) if fewer than 85 percent of the TV households in a market are able to receive digital TV signals (either off the air or through a cable-type service that includes DTV stations).(11)
IV. CHALLENGES THAT REMAIN
The advent of digital television will bring some remarkable, exciting changes to broadcasting. Consumers will gain a much wider set of choices from broadcast television, from sharp high-definition TV programming and multicasting of niche-audience channels to new information services and computer-interactivity. Broadcasters will have new opportunities to develop innovative programming and services, along with new revenue streams and market franchises. DTV will help the broadcasting industry evolve and compete in the new media environment, while assuring that public interest needs are still met through over-the-air broadcasting.
Resolving all of these issues will take time. This section reviews some of the more significant issues that need to be addressed.
What kinds of DTV programming and services to offer? Because of the inherent versatility of digital transmissions and the still-evolving terms of market competition, it is unclear how broadcasters will in fact use their digital signals. One of the first-threshold choices that broadcasters must make is whether to transmit HDTV programming, to multicast, or to choose some combination of the two.
According to a survey conducted by the Harris Corporation, a provider of broadcast and radio equipment, 44 percent of broadcasters in December 1997 were not sure exactly what they would do with DTV programming.(12) Some 33 percent said they definitely plan to do multicasting; another 23 percent said they definitely would do high-definition TV. For those broadcasters who will use high-definition television, most plan to do so during prime-time and not other day parts.(13)
For those broadcasters who plan to multicast, 50 percent predicted they would offer news and regular network programming; 47 percent said they planned to transmit information services and 26 percent planned to air local news and public affairs. One of the more significant findings of the Harris survey was that broadcasters will move to DTV local program origination faster than generally anticipated, and that they expect to offer more locally produced news with DTV.
Some industry observers caution that that the ways in which DTV will interact with media markets will be highly unpredictable for years. While it is likely that multicasting will be economically feasible for some types of programs and dayparts, there are no clear business models for how to attract viewers and keep them tuning in regularly in a multicasting environment. Nor is it clear how interactive services will be treated under must-carry rules.
There are questions as well about how much revenue the new channels whether HDTV, SDTV or data can generate. Will broadcasters cannibalize their primary signals as they pursue new DTV opportunities, or will they expand their business?(14) Anticipating the nature of DTV programming and services is also made complex by the new competition among different media, especially cable, direct broadcast satellite and the Internet. Digital television offerings could also be affected by new ownership patterns for TV broadcasting, which in turn might blur the boundaries between once-distinct media. Some industry observers speculate that information providers may see television stations as distribution vehicles for their data, which may encourage new corporate owners to acquire broadcast stations.(15)
Technical issues. Only a few technical problems stand in the way of a full rollout of digital television. The broadcast and cable industries have agreed to channel numbering for virtual channels with multicasting. A consensus standard for ensuring that DTV is technically compatible with cable television systems, through which 65 percent of Americans receive TV programming, is still being sought.(16)
Investment costs. The Harris Corporation's survey of broadcasters in December 1997 suggested that the average cost to broadcasters of converting to digital would be in the vicinity of $5.7 million. This sum is "soft" in the sense that TV stations serving larger, urban markets will likely bear greater expenses than smaller TV stations. The timing of purchase of DTV equipment will make a significant difference as well. Also, the kinds and amount of equipment that stations choose to buy for local origination of DTV programming can vary immensely. For all these reasons, previous estimates of DTV conversion costs of $6 to $10 million per station are expected to decline rapidly, probably even faster than the 20 percent annual price decrease that now prevails.(17)
Consumer demand for DTV. Another uncertain variable is how quickly consumers will see value in DTV programming and services, and choose to buy DTV sets. Perhaps the most significant factor here will be the cost of DTV sets. Original projections by TV manufacturers indicate that new sets would cost $1,000 to $1,500 more than conventional high-end projection sets, or about $4,000 to $5,000.
But the first high-definition television sets offered for sale in September 1998 were $8,000; about 100,000 are expected to be manufactured in 1998 (out of a universe of one million conventional sets sold each year).(18) A Samsung Electronics Company official estimates that HDTV sets will sell for $3,000 by the year 2002, considerably higher than the $500 or less that most Americans now pay for new TV sets.(19) But as new digital programming and services become more plentiful, it is expected that consumer demand for DTV sets will rise and set prices will decline.
Must-carry regulations. In order for digital television to become fully operational, several regulatory issues must be resolved. One of the most important is clarifying how the must-carry provisions of the Telecommunications Act will apply to digital television.(20) Historically, cable televisions systems have had to carry the signal of local broadcasters, as mandated by the 1992 Cable Act and affirmed in the 1997 Supreme Court ruling of Turner Broadcasting System, Inc. v. FCC ("Turner II").(21) The arrival of digital television transmission raises questions about how must-carry precedents should apply in the new TV environment. Should cable systems be obliged to carry DTV signals at all, or only one TV signal, as they have under the existing must-carry rules? Or should cable systems be obliged to carry the same amount of bandwidth as they currently do, even though that same spectrum may now be carrying several programming channels and perhaps subscriber-based services? Do analog and digital broadcasts constitute separate "broadcasting stations" for the purposes of retransmission consent and digital broadcast signal carriage?
Resolution of the must carry and retransmission consent requirements will affect the kind of access that cable households will have to digital TV signals, what stations and channels are available over cable systems, and the rates that subscribers will have to pay. There is also concern about how must-carry rules in the new DTV environment might affect noncommercial video outlets such as the Public Television System, and public affairs and public access cable channels. To help it address the must carry/retransmission consent issue, the FCC released a Notice of Proposed Rulemaking on July 10, 1998, which proposes seven different alternatives for implementing the must-carry provisions of the Telecommunications Act.
Fees for ancillary and supplementary services. Another regulatory issue that the FCC must decide is how to structure the fee system for ancillary and supplementary services, pursuant to the Telecommunications Act of 1996. In requiring fees for these envisioned services, Congress sought to assure that broadcasters would pay approximately what they might have paid had the spectrum been auctioned, for any subscription services (as opposed to free over-the-air programming).(22) This way, the public would receive some portion of the value of the spectrum assigned to broadcasters. To help it in establishing a new fee system for any pay services on DTV, the FCC initiated a Notice of Proposed Rulemaking in December 1997.(23)
Siting and construction of DTV towers. Another pending Notice of Proposed Rulemaking invites comment on whether federal law should allow the preemption of local zoning rules in order to facilitate the siting and construction of digital broadcast towers. This proceeding was initiated in August 1997 in response to a petition by the National Association of Broadcasters, which expressed concern that the local approval process for new towers could take too long, delaying the introduction of DTV.
Public interest obligations. Finally, one of the largest unresolved issues is what public interest obligations should govern digital broadcasters in the new media marketplace. Congress specified in the Telecommunications Act of 1996 that broadcasters would continue to serve as trustees of the public's airwaves and that public interest obligations should extend into the digital TV environment:
Nothing is this section shall be construed as relieving a television broadcasting station from its obligation to serve the public interest, convenience and necessity. In the Commission's review of any application for renewal of a broadcast license for a television station that provides ancillary or supplementary services, the television licensee shall establish that all of its program services on the existing or advanced television spectrum are in the public interest.(24)
While Congress' general intent is clear, the substantive meaning of public interest obligations in the new television environment is likely to change. To determine the precise contours of a DTV licensee's public interest obligations, the FCC plans to initiate a rulemaking in the near future. This process will be enhanced by understanding the historical development of the public interest standard in broadcasting: the focus of Section II. This is followed in Section III by the Advisory Committee's formal recommendations.
For all the challenges that remain, the opportunities to build a new, more robust broadcasting system have never been greater. The sheer technological capabilities of DTV offer sweeping possibilities for program creativity as well as for the increased competitiveness of broadcasting and public interest service. The most important task at hand is to devise the most appropriate structures to facilitate all these goals.
1 DTV is often referred to as "advanced television," or ATV. Because ATV embraces any enhancements to the existing TV format (known as the NTSC standard, for National Television Systems Committee), ATV is a more inclusive term than "digital television" or "high-definition television." Once digital technology was shown to be feasible and the most desirable technical standard for advanced television, however, DTV became virtually synonymous with ATV.
2 In the Matter of Further Sharing of the UHF Television Band by Private Land Mobile Radio services, General Docket No. 85-172; RM-3975 RM-4829, 101, 852. Adopted May 31, 1985; Released June 10, 1985. See also Joel Brinkley, Defining Vision: The Battle for the Future of Television (Harcourt Brace and Co., 1997).
3 In the Matter of Advanced Television Systems and Their Impact on the Existing Television Broadcast Service, MM Docket No. 87-268 RM-5811, 2 FCC Rcd 5125, Adopted July 16, 1987; Released August 20, 1987.
4 FCC, Fifth Report and Order, MM Docket No. 87-268, April 3, 1997, p. 13.
5 The seven members of the Grand Alliance were AT&T (now Lucent Technologies), David Sarnoff Research Center, General Instrument Corporation, Massachusetts Institute of Technology, Philips Electronics North American Corporation, Thomson Consumer Electronics and Zenith Electronics Corporation.
6 FCC, Fifth Further Notice of Proposed Rulemaking on Advanced Television Systems, MM Docket No. 87-268. Released May 20, 1996.
7 FCC, Fourth Report and Order, DC 96-117, MM Docket 87-268. Released December 27, 1996.
8. 8 FCC, Fourth Report and Order, MM Docket No. 87-268, 11 FCC Red 17771 (1996), p. 19.
9 The law directs the FCC to auction the so-called analog spectrum in 2002, and return it to the FCC in 2006. The FCC will then assign it to the auction winners.
10 FCC, Fifth Report and Order, MM Docket No. 87-268, Paragraph 76. Adopted April 3, 1997; Released April 21, 1997.
11. 11 Some industry observers question whether the full transition to DTV and the return of analog spectrum will be consummated by 2006, as intended by the Telecommunications Act of 1996. This stems from doubts about consumer enthusiasm for DTV if sets are too expensive and, in turn, a likely triggering of the two contingency clauses adopted by Congress in 1997.
Based on existing projections of the market penetration of DTV over the next eight years, many analysts believe it is unlikely that 85 percent of TV households will be equipped to receive DTV by 2006. Josh Bernoff, a principal analyst with Forrester Research, an independent market research firm based in Cambridge, Massachusetts, estimates that only 23 percent of U.S. households (nearly 20 million) will have DTV sets by 2004 and only 48 percent (42 million) by the year 2007.
12 Presentation by Bruce Allen, vice president and general manager of the Harris Corporation's broadcasting division, to the Advisory Committee on the Public Interest Obligations of Broadcasters, January 16, 1998.
13 Bruce Allen presentation to the Advisory Committee on the Public Interest Obligations of Digital Broadcasters, January 16, 1998, p. 16. The survey interviewed 401 TV executives who represent approximately 480 stations.
14 Josh Bernoff of Forrester Research speculated in his presentation to the Advisory Committee (January 16, 1998, p. 79): "If you look at the fragmentation [of the existing TV marketplace], it's possible to imagine a world in which there's all of this wonderful programming. But if you look at the fragmentation that's happened so far with things like cable, a lot of what is available is reruns of prime time fare....Maybe we'll have the ability to see Three's Company at seven different times during the day, but I'm not sure that there's the capability to produce all of this original programming, given that the audience for the lepidoptery channel is not likely to be that large."
15. 15 Statements by Josh Bernoff, Forrester Research, and Robert W. Decherd, Chairman of A.H. Belo Corporation, to Advisory Committee on the Public Interest Obligations of Digital Broadcasters, January 16, 1998, p. 53 and 82. If new permutations of ownership and blurring of media technologies do occur, some observers envision a rivalry between the personal computer and television, or perhaps a novel blending of the two media. Already, Intel and Zenith are collaborating on a digital TV decoder card for PCs, an innovation that could open up the PC market to digital television. On the other hand, there are reasons to believe that PCs and TV will remain distinct media. The experience of interacting with a PC from a distance of twelve to eighteen inches is quite different from relaxing in front of a TV screen, which is best viewed from six to ten feet away (and even further for big-screen HDTV). And adding interactive features to TV programming would entail great expense, competition among several different technical protocols, and the absence of an established audience.
16 Letter by Chairman Kennard to the National Cable Television Association, August 13, 1998, at http://www.fcc.gov/Speeches/Kennard/Statements/stwek862.html, or Joel Brinkley, "FCC Wants HDTV Glitch Solved Soon," The New York Times, August 24, 1998, p. C4.
17 Gary Arlen of Arlen Communications, in "Making the Transition: A New Kind of Television: A White Paper," April 1998, p. 19. Arlen predicts that new digital equipment may cost barely 20 percent more than today's comparable analog facilities, which suggests that the most cost-efficient way to proceed is scaled purchases of DTV equipment that parallel development of the market.
18 Joel Brinkley, "HDTV: High in Definition, High in Price," The New York Times, August 20, 1998, p. E1.
20 47 U.S.C. 534(b)(4)(B).
21 Turner Broadcasting System, Inc. v. FCC, 117 U.S. 1174 (1997).
22 47 U.S.C. Section 336(e)(2)(B).
23 FCC, Fees for Ancillary or Supplementary Use of Digital Television Spectrum Pursuant to Section 336(e)(1) of the Telecommunications Act of 1996, Notice of Proposed Rulemaking, MM Docket 97-247. Adopted December 18, 1997; Released December 19, 1997.
24 47 U.S.C. Section 336(d).