243 1 2 3 4 5 UNITED STATES DEPARTMENT OF COMMERCE 6 NATIONAL TELECOMMUNICATIONS 7 AND INFORMATION ADMINISTRATION 8 9 10 11 MEETING OF THE ADVISORY COMMITTEE 12 ON PUBLIC INTEREST OBLIGATIONS 13 OF DIGITAL TELEVISION BROADCASTERS 14 15 16 17 Commerce Auditorium 18 14th Street & Constitution Avenue 19 Washington, D.C. 20 Thursday, October 23, 1997 21 22 244 1 COMMITTEE MEMBERS PRESENT: 2 LESLIE MOONVES, Co-Chair President, CBS Television 3 NORMAN J. ORNSTEIN, Co-Chair 4 Resident Scholar, American Enterprise Institute 5 CHARLES BENTON 6 Chairman and CEO, Benton Foundation and Public Media, Inc. 7 FRANK M. BLYTHE 8 Executive Director, Native American Public Telecommunications, Inc. 9 PEGGY CHARREN 10 Visiting Scholar, Harvard University Graduate School of Education 11 Founder, Action for Children's Television 12 HAROLD C. CRUMP Vice President, Hubbard Broadcasting, Inc. 13 FRANK M. CRUZ 14 Board Member, Corporation for Public Broadcasting 15 President, Cruz & Associates, Inc. 16 ROBERT W. DECHERD Chairman, President and Chief Executive 17 Officer (CEO), A.H. Belo Corporation 18 WILLIAM F. DUHAMEL, Ph.D. 19 President and General Manager, Duhamel Broadcasting Enterprises 20 ROBERT D. GLASER 21 Founder and CEO, RealNetworks 22 245 1 COMMITTEE MEMBERS PRESENT (CONT'D.): 2 JAMES FLETCHER GOODMON President and CEO, Capitol Broadcasting 3 Company, Inc. 4 PAUL A. LA CAMERA Vice President and General Manager, WCVB-TV 5 NEWTON N. MINOW 6 Professor, Communications Policy and Law, Northwestern University 7 Counsel, Sidley & Austin 8 SHELBY SCOTT President, American Federation of 9 Television and Radio Artists 10 GIGI B. SOHN Executive Director, Media Access Project 11 KAREN PELTZ STRAUSS 12 Supervising Attorney, National Association of the Deaf 13 CASS SUNSTEIN 14 Professor, University of Chicago Law School 15 JAMES YEE Executive Director, Independent Television 16 Service 17 ALSO PRESENT: 18 KAREN EDWARDS Designated Federal Officer, National 19 Telecommunications and Information Administration 20 21 * * * * * 22 246 1 C O N T E N T S 2 PAGE 3 Opening Remarks 247 4 Briefing III: What Makes 249 Digital Different? 5 Questions and Comments 269 6 High-Definition Television 323 7 Demonstration 8 Public Comment, Questions 345 and Answers 9 10 * * * * * 11 12 13 14 15 16 17 18 19 20 21 22 247 1 P R O C E E D I N G S 2 (9:20 A.M.) 3 DR. ORNSTEIN: Ladies and gentlemen, 4 if we can get started. Good morning and 5 welcome to day two of our first meeting. We 6 are going to focus this morning on the nature 7 of digital television and take a look at some 8 of the larger questions that we have to deal 9 with. 10 I want to make just one brief comment 11 before we begin. There were some press 12 reports, both in the trade press and elsewhere, 13 this morning that left, I think, an impression, 14 in some cases more explicitly than others--, 15 that is, an inaccurate one. I notice here in 16 Communications Daily the headline is "Ornstein 17 Warns Against Stalemate by Commission," an 18 impression that was also left in The New York 19 Times this morning, which suggests that a 20 stalemate is coming. 21 I think that is an absolutely 22 unwarranted interpretation of what was said. 248 1 None of us wants a stalemate. Indeed, I think 2 our deliberations yesterday and our 3 conversations in between sessions would suggest 4 quite the opposite. We have a very strong and 5 real opportunity for a broad consensus here, 6 and I think that is a viewpoint shared by 7 everybody. 8 If somebody wants to issue a 9 dissenting viewpoint to that, please go ahead. 10 We seem to have an impression in some places 11 out there in the community that would take 12 great delight in a stalemate, perhaps, or that 13 is setting up a framework suggesting that this 14 is the direction in which we are heading. I 15 don't think any of us believes we have 16 necessarily a collision course here at all, so 17 I wanted to set that record straight as best we 18 can. 19 With that, anything further? 20 MR. MOONVES: Nothing further. 21 DR. ORNSTEIN: We are going to begin 22 with a presentation by Dick Wiley, Richard E. 249 1 Wiley, who is now a senior partner at the law 2 firm which begins with his name, Wiley Rein & 3 Fielding, which is a very prominent 4 communications law firm in Washington, the 5 largest communications practice in the United 6 States, served as a former chairman, 7 commissioner, and general counsel of the 8 Federal Communications Commission and was a 9 driving force behind the digital television 10 standard as it emerged, is rightly a member of 11 broadcast and cable's hall of fame. 12 You have his biography in front of 13 you, so I will not go into any of the enormous 14 detail that we could to talk about his 15 accomplishments. Dick will do a little 16 demonstration, and then we will have some 17 discussion. 18 BRIEFING III: WHAT MAKES 19 DIGITAL DIFFERENT? 20 MR. WILEY: Someone is going to turn 21 the overheads on, I think. 22 Norm, Les, ladies and gentlemen, 250 1 thank you very much for having me here. I see 2 a lot of friendly and familiar faces around. I 3 am just going to take you through a little bit 4 here of the history of digital television. We 5 will get the first overhead in just a second. 6 (Slide) 7 MR. WILEY: Well, I think you have 8 got that one, so we will go to the next one. 9 (Slide) 10 MR. MOONVES: Welcome to the billion- 11 dollar digital television age. 12 MR. WILEY: This is a high-tech field 13 we are dealing with, and I have got a low-tech 14 presentation. 15 Back in 1987, the United States 16 really was not a factor in the development of 17 advanced television service, and especially so 18 compared to Japan and Western Europe, where 19 research on this exciting technology had been 20 ongoing for over a decade. But what a 21 difference a decade can make because here in 22 1997, with the FCC having issued the digital 251 1 television standard, we have really got an 2 enviable position of world superiority, 3 technologically. 4 The Grand Alliance System, which is 5 the basis of the standard, represents world- 6 leading technology and probably the greatest 7 advance in the history of television. Now, you 8 have got in 1997 the Digital Television Service 9 Rules that have been issued by the FCC. 10 Broadcasters have been given the loan of a 11 second broadcast channel, and a deployment 12 schedule has been established. 13 The next question is what happens 14 next for broadcasters, for cable companies, for 15 direct broadcast satellite, for computer 16 companies, and most importantly the American 17 consumer? I am sure that is what you are going 18 to be talking about. 19 Let us go to the next chart. 20 Let us look at the timetable here. 21 The FCC has decreed a rapid build-out for 22 digital television, but they have also tried to 252 1 temper it by saying there would be reasonably 2 applied waivers in the event of unforeseen, 3 unexpected consequences and availability of 4 necessary equipment, for example, new towers 5 and what have you. 6 Specifically, the network affiliates 7 associated with the top four networks have to 8 construct digital facilities and get a signal 9 on the air by May 1, 1999, that is, 24 months; 10 affiliates in the next markets, the next 20 11 markets, 11 through 30, by November 1, 1999; 12 all other commercial stations, five years; 13 noncommercial, six years. 14 In addition, a number of large 15 stations and large markets have made voluntary 16 commitments to the Commission to do it all in 17 18 months. Mr. Belo, Mr. Decherd at A.H. Belo, 18 for example, has done that in some markets. 19 The FCC has indicated that they intend to hold 20 them to those commitments. 21 The next chart, please. 22 Now, cable television, which, of 253 1 course, passes 97 percent of American 2 households and is subscribed to by over 3 two-thirds, has indicated that it also intends 4 a digital rollout, digital modems, digital 5 set-top boxes, and what have you. I think it 6 is fair to say that progress to date has been 7 slow, and some critics are skeptical about the 8 industry's commitment. 9 My own view is that cable will and 10 must get the job done. After all, they are a 11 major multichannel competitor with a direct 12 broadcast satellite already in place, digital 13 transmission. Certainly, if the telephone 14 industry ultimately enters the video field in a 15 major way, it will be digital. The computer 16 industry is digital. 17 The technological die seems cast in 18 this country. The video landscape is going to 19 be digital and soon. As history has claimed, 20 the 20th century will soon -- I think it is 21 also going to do so for analog television. 22 From a transmission quality 254 1 standpoint, I think we have seen recent 2 announcements of major cable programmers, HBO, 3 Discovery, that they plan to do high-resolution 4 television. If broadcasters do high-resolution 5 television, I think the public is also going to 6 expect and demand that it not be degraded via 7 cable transmission. 8 Let's go to the next one. This is 9 analog channel return. An early buildout by 10 broadcasters that I have just shown you also 11 may imply an early give-back of the so-called 12 "analog channel frequencies," that is, the 13 current frequencies on which we watch 14 television today; at least, that is what a lot 15 of government officials believe is part of the 16 two-channel bargain. 17 The original plan was that there 18 would be an auction in 2002, and a give-back 19 would come in 2006. The difference would be, 20 of course, to get the revenues involved in the 21 balanced budget plan. But recent budget 22 legislation said that 85 percent of a station's 255 1 viewers must receive a digital signal before 2 the analog frequencies have to be given up, 3 that is, a signal either off air, through 4 cable, or through a satellite. That may delay 5 the give-back of the analog frequencies for 6 some years, depending how quickly the whole 7 transition to digital occurs. 8 My own betting is that the DTV, 9 digital television, implementation may be more 10 rapid than was the change over to color 11 television, but that may depend on the 12 availability of low-cost set-top box 13 converters, that is devices that would convert 14 the digital signal so they can be received on 15 the nation's existing universe of analog 16 television sets. It would not be an ideal 17 picture, but at least you could see the digital 18 programming service. 19 All right. Next chart, please. 20 What digital services are going to be 21 available? A key question. The Grand Alliance 22 System that I talked about has an amazingly 256 1 supple framework, and it is capable of 2 providing a dazzling, high-definition 3 television picture together with a CD-like 4 sound that will give a whole new viewing 5 experience for the American people, a so-called 6 "theater of the home." All of the bits, 20 7 megabits per second, would have to be used 8 essentially, or most all of them, for this 9 single picture. 10 On the other hand, those bits could 11 be broken up and used for multiple so-called 12 standard-definition television, SDTV, which 13 would be the digital equivalent of today's 14 television as we know it as far as quality is 15 concerned. 16 Some of the bits could be used for 17 data, data associated with the programming or 18 not associated with the program. Some of them 19 could be used for online or interactive 20 services and also for subscription television, 21 which the Congress has said, if broadcasters 22 use them for subscription they would have to 257 1 pay some kind of fee in that regard. 2 Now, the important question here to 3 remember is that this is not an either/or 4 choice. You can shift dynamically back and 5 forth between these services in different day 6 parts. For example, a broadcaster could show 7 the football game, let's say, on widescreen 8 high-definition television and then perhaps 9 during daytime periods shift to four channels, 10 perhaps, of standard definition. 11 I know Public Television has 12 indicated they plan to do SDTV during the 13 daytime and HDTV at night. I think a lot of 14 broadcasters haven't made their decision at 15 this point. One thing that is to be said for 16 high-definition television, American 17 broadcasters have a big advantage here because 18 we have a whole universe of high-resolution 19 programming equivalency right off the shelf, 20 that is, all of the great Hollywood films and 21 most of primetime are shot in 35-millimeter 22 cinematography, which is the equivalent to 258 1 high-definition television and can be easily 2 converted to HDTV. 3 Some broadcasters, therefore, say 4 they want to do high-definition television. 5 They have a single channel, they want to have 6 the highest quality possible; others suggested 7 perhaps they ought to try SDTV. My own guess 8 is that the marketplace is going to tell us 9 what will work here best and what the American 10 people want. 11 My own view, however, is that the 12 public ought to get a choice, if we are going 13 to find out what the marketplace really wants, 14 and if there is no high-definition television 15 at all, I think some people, some people on 16 this panel, perhaps, would question why 17 broadcasters should have gotten a 6-megahertz 18 channel. 19 I expect to see a lot of 20 experimentation over the next few years to see 21 what the public really wants and to see what 22 kind of services would be profitable. My 259 1 advice to broadcasters has been to leave all 2 the options open and, in particular, 3 high-definition television. 4 Some people say the American public 5 is not clamoring for high-definition 6 television. I would respond they haven't seen 7 it yet, and when they do I am personally 8 convinced it is going to be one of the major 9 driving forces in this area. 10 Let's go to the next chart. 11 This leads to a rather arcane but, I 12 think, important question of scanning formats. 13 I am going to take you into a little technology 14 here, but I will try to simplify it if I can. 15 The television picture is delivered via 16 horizontal scanning lines. 17 There are about 525 of those lines in 18 the current NTSC picture, which is the current 19 standard for our television, and it has been 20 around since 1941. If you stand close to the 21 television set, you will see those horizontal 22 scanning lines. Do not try to count them, just 260 1 take my word for it, it is about 525. Some are 2 above the line, and you will not see them all. 3 The Grand Alliance System 4 incorporates at minimal cost penalty both what 5 is called "interlaced scanning," which is used 6 in television worldwide, and "progressive 7 scanning," which is used in computers. This 8 was a compromise that we had in order to 9 accommodate a variety of industries that worked 10 within the advisory committee that I chaired 11 that recommended the Grand Alliance System to 12 the FCC as the basis for the standard. It was 13 also a compromise needed to accommodate the 14 various members of the Grand Alliance System. 15 We had two progressively scanned 16 systems and two interlaced scanned systems, and 17 we had to find a way to accommodate them both. 18 But everybody agreed that the ultimate goal 19 here is over 1,000 lines compared to 525, and 20 probably progressive scanning ultimately with 21 what are called "square pixels" or picture 22 elements. Why? Because it will facilitate 261 1 interoperability between the new video standard 2 and other imaging and information systems, 3 including computers, so that you can have in 4 the future interactivity on your television set 5 with computers. Also, over 1,000 lines would 6 make high-definition television possible. 7 Now, we can squeeze 1,000 interlaced 8 lines into a 6-megahertz television channel 9 today, but we do not know how to do it 10 technologically yet with the more demanding 11 progressive scanning. We can only get about 12 700 or 720 lines. I think that is going to 13 change in the future, maybe in the next five 14 years or so. In the meantime, what is to be 15 done? 16 Well, the Grand Alliance System, 17 again, our recommendation is to include 18 interlaced and progressive scanning. The 19 broadcasters prefer interlaced scanning because 20 it is more spectrum-efficient, and they have an 21 archival universe of interlaced programming. 22 Computer people believe that they can 262 1 add video capacity to PCs for about $100, and, 2 if that is true, they are likely to be a force 3 to be reckoned with, I think, ultimately in the 4 receiver marketplace. We do have something of 5 a "religious war" over progressive and 6 interlaced scanning. 7 Most people would not think of that 8 as being a big issue, but, believe me, it is. 9 If I were to be honest with you, sometimes I 10 believe it is less about technology and more 11 about who is going to control the box in the 12 American home, but that is just a private view. 13 In any case, it is interesting to 14 note that Europe and Asia, all of Asia now, are 15 following the United States' lead on a common 16 imaging format of 1,080 lines and 1,920 pixels, 17 or those picture elements, per line. I think 18 it would be ironic, indeed, if, given that 19 achievement, if the United States eschewed any 20 high-resolution programming altogether. 21 Let's go to the next chart. 22 Now, if digital television is to be a 263 1 reality in this country, I think it is fair to 2 say that sets have to be priced within the 3 reach of the average American pocketbook. 4 Without any question, the initial 5 high-definition television sets are going to be 6 expensive. But, as the experience of our 7 consumer electronics marketplace has shown -- 8 VCRs, CDs, and other equipment -- that price is 9 likely to fall and fall quickly within a 10 vibrantly competitive marketplace. 11 If it does not, I would suggest that 12 the standard set manufacturers that we know 13 today, the names that are familiar to all of 14 us, are likely to be severely tested by the 15 millions of so-called "PC TVs" that will be 16 coming onto the market as I earlier suggested. 17 Interestingly enough, it appears that 18 at the Consumer Electronics Show in Las Vegas 19 next January we are going to see the first of 20 the wide screen, that is, 16 by 9 will be the 21 aspect ratio, that is, the dimensions, compared 22 to the more boxy 4 by 3 television sets that we 264 1 are all familiar with. 2 You are going to see those 3 high-definition sets, digital sets, in January, 4 and I think we will see market sales beginning 5 in the fall, leading up to the big Christmas 6 sales in 1998. From what I understand, most of 7 the set manufacturers plan to decode all of the 8 Grand Alliance formats, that is, both 9 interlaced and progressive scanning. They are 10 hedging their bets to see how the marketplace 11 is going to work. 12 All right, next chart. One 13 interesting question is "must carry." The FCC 14 for many years had ruled that cable companies 15 have to carry local broadcast signals in order 16 to ensure that we have diversity around the 17 country in local broadcasting. That has been a 18 point of contention for many years. A number 19 of FCC decisions have been overruled in lower 20 courts. 21 Ultimately, after two tries, the 22 Supreme Court finally in 1997 settled this 265 1 issue and found that the constitutionality or 2 the legality of "must carry" has been 3 established. Subject to certain channel 4 limitations and availability, cable must carry 5 all broadcast signals. 6 Now, there is a question: That is 7 true in the analog world. What about in the 8 digital world that you are concerned with? I 9 think cable would say, "Yes, we are certainly 10 going to carry one high-definition television 11 signal. We do not want to carry four or five 12 standard-definition signals." No way. 13 On the other hand, broadcasters, I 14 think, would say the compression technology 15 that allowed digital television in 1,000 lines 16 to be broadcast is going to be even more 17 favorable to cable, and, therefore, they ought 18 to carry all channels if we do 19 standard-definition. 20 I think this is an issue that is 21 going to have to be decided by the FCC. I 22 would expect to see that consideration coming 266 1 sometime next year. We do have four new 2 commissioners coming onto a five-member body. 3 It is going to take them some time to get up to 4 speed. They have got many issues they have got 5 to decide under Congressional deadlines, but 6 eventually this issue will be decided by the 7 FCC. It might be appealed to the courts 8 thereafter, so sometime we will know what the 9 rule is in this area. 10 Next chart, please. 11 Now, this gets into your area. I 12 have just put this chart up just to tie it into 13 what you are doing. Various transmission 14 industries are regulated under different models 15 at the FCC. For example, broadcasters are 16 regulated under what is called a "public 17 trustee" model. Those who have the privilege 18 of getting a broadcast license, and it is a 19 scarce commodity, must operate for the entire 20 community, serve as fiduciaries for the entire 21 community, and what have you. 22 That gets into your public interest 267 1 responsibilities. Telephone companies, on the 2 other hand, are regulated under a so-called 3 "common carrier" model; that is, they have to 4 provide service to all comers. Cable is 5 perhaps somewhere in between, and the computer 6 industry is not regulated at all. 7 Yet, one could argue that someday 8 they are all going to be competing, perhaps, in 9 a digital video world; if so, the FCC may have 10 to consider someday some kind of regulatory 11 parity. In the meantime, you are going to 12 consider whether there should be some new 13 obligations for broadcasters in the digital 14 television area. 15 I think this is a decision for you 16 and not for me. I will say only what I have 17 said on other public occasions. I would 18 suggest that you might want to move with some 19 caution and care here because, of course, we do 20 not know where this technology is headed at 21 this point. We do not know whether we are 22 going to see high-definition predominant or 268 1 whether it is going to be standard-definition, 2 what is going to be the use of this new 3 technology. But, again, that is a decision 4 certainly for you. 5 Let's turn to the next and last 6 chart. 7 I think it is fair to say that the 8 U.S. video market, we are all beneficiaries of 9 this, is increasingly robust, diverse, and it 10 is definitely going digital, I think. I see it 11 not only as a bright future for the United 12 States but, indeed, around the globe, as I have 13 suggested. It is fair to say, though, and I 14 have only touched on it here, that there are 15 numerous market and regulatory issues that 16 remain to be resolved. How they will be 17 resolved will affect different industries in 18 different ways. I can only say at this point 19 stay tuned. 20 Thank you very much. 21 DR. ORNSTEIN: Questions or comments? 22 QUESTIONS AND COMMENTS 269 1 MS. SOHN: Dick, as usual, I have had 2 the pleasure of being in the audience at many 3 of these kinds of presentations that Dick does, 4 and I just think he is fantastic. 5 Dick, you have a career in academia. 6 MR. WILEY: Gigi, thank you. You are 7 kind. 8 MR. MOONVES: Oh, boy. Do you have a 9 question? 10 MS. SOHN: Yes, I actually have 11 several questions, but I will just ask one and 12 let other people ask as well. Could you talk a 13 little bit about the change over to color? You 14 said you anticipate this will be shorter. I 15 sure hope so because my understanding is that 16 the transition to color took quite some time. 17 MR. WILEY: Well, one interesting 18 thing is when we brought color in we overlaid 19 it over the existing black-and-white system 20 because we only had a one-channel system. One 21 could argue that perhaps we did not pick the 22 ideal system; we picked the system the most 270 1 compatible with the black-and-white television. 2 When we set up the advisory 3 committee, one thing we decided was we were 4 going to get the best system that technology 5 could offer; therefore, we were going to work 6 with virgin spectrum. That was the whole 7 concept of giving or loaning broadcasters a 8 second channel, so that we could transition the 9 country over a period of time from existing 10 analog television, television we are all 11 familiar with, over to the new digital service. 12 I think, once people see the digital 13 and if there is a reason to go out and buy a 14 new set -- that is, there might be a new 15 service, a new wider screen, a much clearer 16 picture, perhaps other services associated with 17 interactive services -- I think it is a richer 18 universe of service options here and may impel 19 the public to buy sets. I think we will see, 20 but I personally am betting on faster than 21 color. The color change over was pretty slow. 22 MS. SOHN: Can you say specifically? 271 1 Is it going to take, like, 25 years or 2 something for 30 percent of the people? That 3 cannot be right but -- 4 MR. WILEY: Oh, no, it was a little 5 faster than that, but I do not have those 6 statistics at hand. I have seen a lot of 7 betting as to how quickly this is going to 8 occur. As I say, a lot of us have multiple 9 television sets in our house, and, if there is 10 a set-top box converter that will allow us to 11 use the kitchen receiver, let's say, or the den 12 receiver while maybe buying one new digital 13 set, that may facilitate a change over to the 14 digital. 15 Some people say it may slow it down, 16 too. I think it depends on how you look at it. 17 I think only the marketplace is going to tell 18 us. Again, it is going to be a question of 19 whether those set prices will fall within the 20 reach of all of our pocketbooks. 21 I think, again, until the public sees 22 this -- and the public generally has not seen 272 1 digital television. Some people have DBS, the 2 direct home satellite service. They do get 3 digital transmission, but they are watching it 4 on an analog receiver, so they are not seeing 5 it as good as it can be. It is not 6 high-definition television; it is only a form 7 of digital. 8 I just happen to be a believer, 9 having seen a lot of it, that the public is 10 going to be captured by it once they see this, 11 and particularly when broadcasters get out 12 there and get this service available, as the 13 FCC's schedule would suggest. 14 MR. MOONVES: In a few minutes, we 15 are going to see a demonstration from Jim 16 Goodmon of the HDTV. That will happen a little 17 bit later. 18 MR. WILEY: Jim is a believer in 19 this, as I am, in this service and has really 20 done as much as anyone to really promote it 21 with Capitol Broadcasting. 22 MR. MOONVES: Yes. 273 1 MR. CRUZ: Dick, amplify a little bit 2 from the standpoint that you mentioned earlier, 3 that perhaps the acceleration of the 4 marketplace helping decide it and push it 5 along, will be this competitive thing that, if 6 the broadcasters don't come out quickly with it 7 or fast enough, that it will be PC-TV driven. 8 Amplify on that. 9 MR. WILEY: Well, I really think that 10 PC-TV will be a struggle between the existing 11 set manufacturers and the computer companies. 12 I mean, I think that is more of a box 13 competition. I think broadcasters are going to 14 be important to this because they reach 100 15 percent of the audience and they are heavily 16 watched, so I think they are going to be the 17 first line here, if you will. The FCC has 18 basically decreed that by this rapid buildout. 19 I think the shame of it would be if 20 broadcasters do get out there and do provide 21 HDTV, as Jim's company and Robert's company are 22 planning to do and if somehow we cannot receive 274 1 it via cable; therefore, I think the cable 2 industry has got to be impelled also to make 3 sure that their set-top box converters and 4 their equipment or modems will pass through a 5 high-quality signal. 6 There is no doubt that the future 7 digital box will be an intelligent device 8 powered by computer chips, and, therefore, it 9 has the capability of providing the kinds of 10 services that we see on the computer. 11 Will it all merge into a single 12 device? I doubt it for now. I think a lot of 13 people will want big, wide-screen television 14 for entertainment and information with some 15 interactivity, and a lot will want their 16 workstations, smaller sets, that they can sit 17 up closer to. There will be continued 18 convergence because a lot of the guts of both 19 devices will become more of the same, I think, 20 in the future. 21 MR. CRUZ: Early on in your 22 presentation, you alluded to public 275 1 broadcasting. Were you referring to the 2 noncommercial public broadcasting? 3 MR. WILEY: Yes, PBS. 4 MR. CRUZ: Can you amplify that a 5 little bit? What is the line of thinking that 6 you have heard on that? 7 MR. WILEY: Well, what PBS has said 8 to date publicly, they have said it throughout 9 our advisory committee, that they were planning 10 to experiment with standard-definition during 11 the daytime hours and have a public 12 broadcasting PBS/HDTV agenda at nighttime while 13 the local stations could pass through the 14 network signal for a relatively lower cost. 15 Similarly, if the major commercial networks do 16 a digital programming agenda, local stations 17 could pass that through for a relatively lower 18 price. 19 What will cost more, of course, is 20 for local origination. It has been estimated 21 $1 million to $2 million, perhaps, for some 22 stations to do it locally, depending on whether 276 1 they have the have a new tower and things like 2 that, but $5 million to $10 million, perhaps, 3 to do the whole thing. It is an expensive 4 operation. 5 One thing I would suggest to you is 6 that this is going to be an expensive 7 transition for all the companies, not only 8 broadcasting but cable and others, because we 9 are going to be asking our industries to 10 operate and undergo the expensive operation of 11 two different stations for a rather lengthy 12 period of time, both, that is, to operate an 13 analog and digital channel and to buy a lot of 14 new equipment, and the question is, of course, 15 will they get more advertising dollars? That 16 is a question mark. Will they get more 17 viewers? I think that is very much a question 18 mark. That is a challenge, I think. You 19 certainly will want to, I think, take that into 20 consideration. 21 MR. DECHERD: Dick, I want to stay 22 with those points. I think they are important 277 1 for our context for these discussions. Let me 2 ask questions by way of making a couple of 3 observations, and then perhaps you can comment 4 on them. First of all, I think it would be 5 very useful if you could delineate between the 6 shorthand descriptions that have developed in 7 the press and in the industry for analog versus 8 a digital channel because there are no such 9 things. We are talking about spectrum. The 10 fact is that Paul or Jim or Bill or I could 11 build the plant and convert our towers or build 12 new towers and at 12:01 a.m. switch our current 13 license spectrum to HDTV. The problem is we 14 would disenfranchise anyone who does not have 15 an HDTV receiver or a converter. I think it 16 would be very helpful if you could make that 17 important distinction and talk about why you 18 think the 85-percent penetration rule came into 19 the budget discussion. Let us keep in mind the 20 licensing idea. Your public trusteeship has a 21 lot to do with every citizen in this country 22 being able to receive a free, over-the-air 278 1 signal, so the numbers you are talking about 2 become central to our consideration. 3 MR. WILEY: Well, the advisory 4 committee that I chaired was a group of 5 industry people that the FCC appointed. We 6 worked very closely for eight or nine years 7 with the FCC. One thing the FCC always advised 8 us and something we agreed with was that we 9 could do nothing to undermine current 10 television as we know it. It is a great public 11 service that we all enjoy and get information 12 and entertainment from. 13 We have to make sure that the 14 existing service, the analog service, would 15 stay as we know it; therefore, we were working 16 with a completely different channel on here. 17 Now, you are quite correct in saying you are 18 only talking about spectrum. 19 Technically, there is no difference 20 between the spectrum, it is the application 21 that is applied to it. What we are bringing 22 into digital is really a whole new transmission 279 1 technology that will be applied to that virgin 2 spectrum and a much more flexible and, I think, 3 ultimately more valuable service because of the 4 different kinds of offerings that will be 5 permitted. 6 Did you want me to say more on that? 7 MR. DECHERD: What is penetration 8 issue, this 85 percent? 9 MR. WILEY: Yes, I think the reason 10 there is because it is hard to pick a date. 11 Congress wanted to pick the date, 12 understandably, for budget reasons and also to 13 get the spectrum back as quickly as they could 14 so it could be auctioned and given for other 15 purposes, other public purposes. 16 I do not think there is any plan to 17 give broadcasters long time both channels. But 18 you pick a date, maybe the marketplace is 19 moving much slower than I am predicting. We 20 just do not know how quickly the public will 21 become attuned to this, so I think Congress in 22 its wisdom decided to give more flexibility 280 1 here and pick a figure like how quickly the 2 penetration levels came, and that is why the 85 3 percent was selected. 4 It could have been, I suppose, 75 5 percent or whatever, but somehow 85 percent was 6 picked. Again, I want to say it is whether the 7 public gets it off air or through cable or 8 perhaps someday through a satellite service. 9 Right now, the local signals, of course, do not 10 come via satellite, but that may change in the 11 future. That may be better than a static date. 12 That was the thinking that Congress had more 13 recently. 14 The down side to it is, of course, it 15 may slow down when you return to the analog 16 frequencies, the auctioning of them, the use of 17 them for other purposes, perhaps some sort of 18 mobile communications, and using those dollars 19 to balance the budget. Those are the 20 tradeoffs, I think. 21 Yes, Peggy? 22 MS. CHARREN: In the list of dates 281 1 for various networks and affiliates, where does 2 public broadcasting fit in that list? 3 MR. WILEY: They were given six 4 years. 5 MR. MOONVES: Noncommercial. 6 MR. WILEY: Noncommercial. 7 MS. CHARREN: Six years. 8 MR. WILEY: They got the most time 9 because of the budgetary concerns that they 10 faced. 11 MS. CHARREN: That $750 million that 12 people say it will take to convert is -- 13 MR. WILEY: It is daunting. 14 MS. CHARREN: It is going to have to 15 get raised someplace? 16 MR. WILEY: Yes, and I think 17 commercial broadcasters face a problem here, 18 and cable faces a problem. It is an expensive 19 changeover. It is one of the many issues that 20 you will have to take into consideration in 21 your deliberations, I am certain, because we 22 are talking about really the first major change 282 1 for television in 50 years. 2 Yes, we had color, no doubt about it, 3 but in terms of the underlying infrastructure 4 this is a major change, and that is why we had 5 to get it right. I commend the FCC. They 6 worked very hard on this and tried to get the 7 best input they could from industry, our group, 8 and from other sources and went through many 9 public proceedings, perhaps as many as six 10 different rulemakings, to finally pick a 11 standard which, as I say, I think is the best 12 in the world. I think it is now being adopted. 13 We are much slower off the dime here. 14 One of the things about coming in late, we came 15 in stronger because we said we are going 16 digital. Europe and Japan had a different 17 image, that is, to go analog digital, go 18 partial, and then move to full digital. But 19 that would have caused a requirement of selling 20 the American people two generations of 21 television sets, and we did not want that. The 22 FCC did not want that, and so the decision was 283 1 made to go for the best. 2 Fortunately, our engineers were able 3 to pull it off. The one thing about this 4 standard that we always have to keep in mind is 5 this is a bottom-up type standard. It was 6 developed by the best technologists, the cream 7 of our engineering technology, and adopted by 8 the policymakers rather than the government 9 coming in and saying, as they do in some other 10 countries this is going to be the standard. 11 You will do it this way. It was not adopted, 12 it was not developed in that way. So, we have 13 the best. 14 MS. CHARREN: Okay. Thank you. 15 MR. CRUZ: Dick, we have a daunting 16 task. Give us a little bit of your wisdom and 17 a little bit of insight in the form of 18 recommendations. If this is a new era and it 19 had been easy to set public interest 20 obligations for analog, and, as you indicated 21 in your presentation with your overheads that 22 computer, cable, broadcast, and phone might all 284 1 end up as part of the package, should we 2 consider in our public interest obligation 3 recommendations to the president and to the 4 vice president public interest obligations 5 along the lines of some of those entities, 6 phones, cable, computer, and others? 7 MR. WILEY: Well, broadcasting is the 8 only technology, the only service alternative 9 that has had a specific public interest 10 requirement, although more recently DBS has had 11 a requirement to devote a certain percentage of 12 their time to some public purposes. The theory 13 has been because of the scarcity of 14 frequencies. 15 I think broadcasters have struggled 16 with the public interest obligation over the 17 years, but I think good broadcasters have 18 recognized that it is the thing that 19 distinguishes them. That tie to the local 20 market, that service into the local market, I 21 think, is their hallmark, if you will. We 22 could all argue as to how it should be defined, 285 1 and, by the way, it has not been clear in the 2 analog world. It has been a struggle for the 3 FCC through the years, and I faced it when I 4 was chairman of the FCC, of trying to say too 5 much or too little. The courts have talked 6 about a tightrope in this regard. We have had 7 a number of decisions. 8 I think the question is how different 9 will digital be from analog television? 10 Broadcasters focus on one channel, primarily, 11 high-definition television. How different is 12 that than from analog? And, how different 13 should the public interest responsibilities be? 14 One of the geniuses of the FCC 15 system, it seems to me, is that it has given 16 broadcasters a lot of flexibility in how they 17 meet their public interest requirements. Why? 18 Because broadcast stations differ, the 19 communities they serve are different, and the 20 audiences they serve are different. 21 This is a big country. We have New 22 York, and we have Peoria, where I was from 286 1 originally, and they differ. And the public 2 interest services may differ in that regard. I 3 think broadcasting is a service infused with 4 the public interest. I think it will continue 5 to be. 6 Some day maybe we will have 500 7 channels brought to us via satellite or fiber 8 optics. Maybe that will change and we will 9 have regulatory parity, as I suggest, but we 10 are not there yet, so we do have a public 11 interest requirement. 12 But I am saying -- this is just me, 13 Les, and Norm -- that I do not know where this 14 technology is headed. I am not sure anyone 15 does yet. I would, therefore, suggest that you 16 move with some caution and care until we see 17 clearly how far it is going to go and not to 18 editorialize here. 19 DR. ORNSTEIN: Charles? 20 MR. BENTON: I really enjoyed your 21 presentation. 22 MR. WILEY: Thank you. 287 1 MR. BENTON: You obviously have a 2 great deal to bring to our group. The 3 implications of the merger from a programming 4 perspective of television and computers is 5 mindboggling, totally, and all of us look at 6 this from our own experience. None of us has 7 the experience of combining the motivational 8 powers of television and the information 9 in-depth availability through computers. 10 Thinking about this in both programming and 11 advertising terms and the linking between the 12 systems here is absolutely mindboggling. 13 We are going to be meeting and 14 struggling with this over the next year. I 15 would be very interested in your suggestions as 16 to what processes this Committee should follow, 17 what expertise should we tap, how can we get 18 out of the box in our thinking in combinations 19 where the whole is larger than the sum of the 20 parts, and really bring some innovation to this 21 challenge before us and not just make the same 22 old speeches of the public interest versus the 288 1 broadcasters which we have all heard ad nauseam 2 and we do not need more of. 3 If you could reverse roles and put 4 yourself in the roles of the two co-chairs that 5 are leading us here, what would be your advice 6 as to what processes or how we could move 7 forward with the charge, the very important 8 charge, of this body to make the best 9 recommendations and the most progress possible? 10 MR. WILEY: Well, that is a very 11 daunting question, I would say. I am very 12 excited about the diversity of the potential of 13 digital television. Yes, we are having 14 inter-industry disagreements about scanning 15 formats and other things like that, but I think 16 all of us see that there is more potential for 17 television in the future as a video service in 18 this country in terms of interactivity and what 19 have you. 20 I do not think we should deceive 21 ourselves that there are not going to be 22 millions of Americans that still want 289 1 television as we traditionally know it, that 2 want to have it as a viewing experience, a 3 relaxing experience, an educational experience. 4 I think it is going to be different 5 strokes for different folks in this thing, and 6 you are probably going to want to hear from a 7 lot of different people, I think, from across 8 the firmament of the video age. Make no 9 mistake about it, digital television is going 10 to, I think, benefit this country in diverse 11 ways. 12 I think just the ability to have a 13 digital box into the American home is one of 14 the things that I have tried to say to some of 15 the industries that perhaps would have 16 disagreed with some portion of what we were 17 doing. 18 To get a high-resolution box into the 19 American home, it is an intelligent device. 20 Once it is in there and once a lot of people 21 have it, it is going to be used in diverse 22 ways, in ways that perhaps none of us can even 290 1 predict today. 2 I would say, first, do no harm. 3 Remember that this is a service, just as we 4 have ÄÄÄÄ, and you do not want to undermine the 5 great entertainment and informational service 6 that the public is receiving today. I think it 7 is the best in the world, by the way. Often 8 criticized, but I think, if you compare it with 9 any other service anywhere around the world, 10 that we have got the best. I think you have 11 got to remember that. 12 I believe in localism, and I believe 13 in network service. But I think that the 14 strength, again, is serving those local 15 communities. That is what broadcasting's 16 hallmark is. It's got to continue in that way; 17 therefore, yes, you are about the public 18 interest, and I think that is important. 19 All I am saying, once again, is will 20 digital television as we know it really differ 21 in the first five or ten years so much from 22 analog television and its basic service? I am 291 1 not so sure about that. 2 DR. ORNSTEIN: Dick, let me ask you 3 to put your semi-technical hat back on as we 4 just try to explore ahead. 5 MR. WILEY: I am a lawyer now, 6 remember that. 7 DR. ORNSTEIN: Oh, I understand. 8 Will we see in Las Vegas next January some 9 advances in the screen technology? We have 10 been hearing for years about these large, 11 flat-screen TVs that will basically be able to 12 hang like a picture on a wall and will cover 13 much of the wall. I ask that because, clearly, 14 the lure of high-definition television is much, 15 much greater if you can watch it on the 16 equivalent of a movie screen in your own home. 17 MR. WILEY: I think that is the 18 ultimate solution. I have been to Tokyo, and I 19 have seen a 40-inch flat panel display and had 20 some artifacts, but it is going to get there. 21 The idea of being able to have it up there like 22 a mirror or a picture during the daytime and 292 1 then switch onto it when you want to watch it 2 is the ultimate answer here. 3 A lot of people do not want to bring 4 large, bulky screens into their home. They do 5 not have the room for it, and, if they can put 6 it on the wall, that is going to be great. I 7 do not think we are going to see flat-panel 8 displays, large ones, in January. I think it 9 is an evolutionary process. But I think it is 10 coming, and I think it will be terrific. 11 There are problems to be solved in 12 terms of blowing it up over a large 50-inch 13 screen. I think we can solve it with the 14 plasma or what-have-you technology when you are 15 in a smaller screen, but I do not think you can 16 see them. By the way, a lot of people say on 17 HDTV, "I can't see the difference." Well, on a 18 20-inch screen you cannot see it. On a 50-inch 19 screen or a 35-inch screen, you can see the 20 difference. 21 MR. MOONVES: Wait until later, you 22 will be able to see it on that screen. 293 1 MR. WILEY: You will be able to see 2 it. 3 DR. ORNSTEIN: There is more to 4 explore. 5 MR. WILEY: Yes, I cannot tell you 6 how soon, but people are working on it hot and 7 heavy. 8 DR. ORNSTEIN: Let me just explore 9 one other area with you. Gateway and other 10 computer companies now are moving in the 11 direction of family computers. Basically, you 12 now have the ability -- it is bulky and it is 13 expensive, but that is already moving down in 14 cost and moving up in quality -- of having a 15 large monitor in your living room with a 16 wireless mouse, in effect. You can have a 17 family sitting on the couch on the Internet. 18 It seems to me that, as that 19 technology moves forward separately in some 20 ways rapidly and the monitor technology, which 21 is a very high-quality screen, and they are 22 already getting larger there and those costs 294 1 are coming down, that it is on a curve where it 2 is going to interact with high-definition 3 television. 4 What we are going to have is at least 5 the opportunity for people to sit in their 6 living rooms with a monitor where you can go 7 back and forth between the Internet and 8 broadcasting. It will become an 9 interchangeable kind of process. In effect, 10 broadcasting will be an alternative on the same 11 vehicle to the worldwide web and other 12 alternatives. Do you see that as a likely 13 future? It obviously has great implications 14 for us as well. 15 MR. WILEY: Oh, well, I think further 16 interaction between the television set as we 17 have known it and computers, that is really 18 what the advisory committee sought from the 19 outset, to have that interoperability. There 20 will be those kinds of sets. I think there 21 will still be, though, people who will want 22 each; they want different devices for different 295 1 purposes. 2 They will want to work at their 3 workstation, they will want to relax before 4 their screen, they will want large screens for 5 television, and they will want small screens 6 and closer viewing for computers, and there 7 will be others that will want the kind of 8 combination that you talked about. I think we 9 are going to go through some years of 10 experimentation, but I do not think it is all 11 going to change as rapidly as some predict. 12 DR. ORNSTEIN: What do you see, 13 finally, as implications of all this for the 14 classroom and education? Does this create 15 great opportunities for altering the nature of 16 education, or is it just the same sorts of 17 things over a higher-quality screen or picture? 18 MR. WILEY: Well, no, I think, 19 certainly, the higher-quality screen is going 20 to aid everybody's appreciation and enjoyment 21 of it, and I think brings more people to the 22 screen, but I think also digital has inherent 296 1 interactivity qualities that will promote 2 education and information, and I think the FCC 3 has seen that, and I think that is good. 4 DR. ORNSTEIN: Obviously, that is a 5 part of our responsibility as well, to explore 6 those standards. 7 MR. LA CAMERA: I apologize for 8 transforming you into an engineer, but it is 9 again somewhat of a technical question. When 10 Preston Patton at ABC dropped the proverbial 11 bombshell suggesting that ABC might be more 12 directed to multicasting rather than HDTV, I 13 think his premise was that you can deliver an 14 SDTV signal which would not be necessarily 15 discernible from HDTV for the average viewer. 16 Do you put any weight at all on that premise? 17 MR. WILEY: I do not agree with it 18 for a larger screen. I have looked at it, I 19 have seen it, and it is not my vision. But I 20 think there is nothing wrong with standard 21 definition. I think some broadcasters will 22 want to do it, the technology allows it. On a 297 1 20-inch screen, I think that would be right, 2 but I think on a larger screen there is a 3 difference. You have got to see it to believe 4 it. I think when you see it I think this may 5 be a reverse Gresham's law, the good will drive 6 out the bad. 7 MR. LA CAMERA: Not pursuing HDTV 8 would be a missed opportunity? 9 MR. WILEY: I think it would be a 10 missed opportunity. I think this is the one 11 chance we have to bring a whole new viewing 12 experience to the public. I am not saying that 13 broadcasters should be tied to it if they do 14 not wish to be. I am simply saying it should 15 be part of the panoply of services that are out 16 there, and to pass it up would cause you to 17 wonder if we were only going to do 18 standard-definition, we could have developed a 19 system in 1.5 or 2 megahertz, perhaps. There 20 is a lot of valuable spectrum that was given 21 because we thought there was the possibility of 22 high-definition. 298 1 MR. LA CAMERA: You would sacrifice 2 the multicasting capacity? 3 MR. WILEY: That is true. I think we 4 could have done some of it in lower amounts of 5 spectrum. 6 MR. MOONVES: Dick, as we head into 7 the future and we are obviously looking at HDTV 8 versus multicasting or some combination 9 thereof, which is probably most likely, what 10 are the set manufacturers doing right now in 11 terms of that? 12 MR. WILEY: In terms of multicasting? 13 MR. MOONVES: In terms of the various 14 possibilities for the future. 15 MR. WILEY: From what I know, and I 16 am not an expert in this area, Les, but from 17 what I have heard from those who are working 18 with them is that they are hedging their bets. 19 As I said, they are planning to decode a 20 variety of formats we had. 21 Some people criticized the fact that 22 there were multiple formats in the Grand 299 1 Alliance System. The idea was to have an 2 inclusive rather than exclusive system so that 3 you could have various uses of this and people 4 could decide on standard-definition, if that is 5 what they wanted, primarily, or high-definition 6 television or what have you. 7 I think the set manufacturers would 8 be making a mistake, as I think they are doing 9 in Europe, to foreclose not decoding HDTV. The 10 European viewer will be the last one to see 11 high-definition television. If that is the way 12 it works out, then I think they are going to be 13 behind us in that regard and they will rue that 14 someday. 15 MR. MOONVES: Gigi? 16 MS. SOHN: Before I ask my questions, 17 Dick, I just wanted to make two suggestions to 18 the chairs. First, we are hearing a lot of 19 numbers thrown around, and I really think we 20 need to have a neutral briefing on exactly what 21 this is going to cost and what new technologies 22 may produce. That is my suggestion to the 300 1 chairs. 2 MR. WILEY: Absolutely. I am giving 3 you the figures that the advisory committee was 4 given and others here who are actually in the 5 industry. Jim and Robert here can give much 6 better figures. Bill, you can do the same and 7 others as well. 8 MS. SOHN: My second suggestion is 9 that to the extent that it is feasible, one of 10 the most helpful things I saw when I testified 11 at the FCC's en banc hearings in 1995, which 12 will tell you at least how long I have been 13 doing this, on public interest obligations they 14 had different size screens, and they also 15 showed what a 4-megabit picture looked like, 16 what a 6-megabit picture looked like. To the 17 extent that we could do that, that would be, I 18 think, extremely helpful, so just another 19 suggestion. 20 MR. WILEY: Yes, the side by sides 21 are awfully good. I have seen them side by 22 side. When you see it and compare it, you can 301 1 make your own decision. 2 MS. SOHN: It makes a huge 3 difference. But let me ask a question. First 4 of all, I just want to clarify that you can do 5 high-definition and other things. I was 6 wondering if maybe you could give an example. 7 It is a 19-megabit bit stream, correct, that 8 fits it? 9 MR. WILEY: It is 19.4, I believe. 10 MS. SOHN: My understanding is 11 high-definition takes up about 18, right? 12 MR. WILEY: The bulk of it, yes. 13 MS. SOHN: What could you do with 14 that extra megabit and a half? 15 MR. WILEY: Probably with data. For 16 example, the suggestion is you are watching a 17 ball game or something like that and you want 18 more information on the ad you just saw or you 19 want more data on the team or the players or 20 something, and this is just one example, but 21 data would be available. I know advertisers 22 are quite excited about being able to provide 302 1 additional information on that. 2 "Bits are bits" as people say and can 3 be used for a variety of purposes. That is why 4 you do get into the Preston Patton exchange 5 like that because I think he was simply 6 suggesting that there are other uses, and I do 7 not find anything to criticize except it 8 forecloses one. 9 MS. SOHN: Right. Could you talk a 10 little bit about compression technology, to the 11 extent that we do not get too technical, 12 exactly what that is and how it is changing? 13 Could we reach a time, maybe, in five years 14 where you could do high-definition television 15 on half the capacity that you are doing now? 16 MR. WILEY: It is possible. As we 17 squeeze more -- basically, what you are taking 18 is a 50-megahertz picture and you are squeezing 19 it down into a 6-megahertz channel. The 20 Japanese system was 8-megahertz for example, 21 and they wanted us to use the system. In the 22 advisory committee, they were very anxious for 303 1 us to adopt that here in the United States, but 2 that would have changed everything. 3 We have a 6-megahertz, that is the 4 size of a channel, and we wanted to make that 5 the same for digital as in analog so you could 6 have that evolution, that transition, that we 7 had. The first thing I had to tell the 8 Japanese, and this is related in a book that 9 Joel Brinkley has written called Defining 10 Vision on the whole history of this is that it 11 was not because President Bush had ordered me 12 to turn them down. It was because we had 6- 13 megahertz and they had 8. 14 I think compression technology will 15 continue to advance, and we will see greater 16 potential than we can expect today. What we 17 try to do, I think, is develop a system that 18 has what the engineers like to call "head 19 room," a potential for expansion further up the 20 line. 21 One great thing about selecting a 22 standard is it does give the marketplace some 304 1 assurance that we are not going to buy a beta 2 max. When we go out to buy 200 million sets, 3 let's say, as we have in the analog world, that 4 we can rely that the government has now said 5 this is going to be the standard. The other 6 downside to setting the standard is you can 7 freeze advancing technology. We have tried to 8 not do that, to permit some continued changes. 9 By the way, NTSC television adopted 10 in 1941 has improved through the years: We 11 have got color, ghost canceling, the vertical 12 blanking interval, stereophonic sound. Many 13 advances have come, and I would like to say 14 this is going to happen again in the future, 15 but we just do not know how fast that is going 16 to come. That is the type of thing you are 17 going to need to take into consideration. 18 Yes, ma'am? 19 MS. PELTZ-STRAUSS: Before, Norman 20 painted a picture of a family monitor where we 21 would switch back and forth between digital 22 broadcasting and the Internet, but in your 305 1 presentation you talked about online services 2 themselves being provided by digital 3 broadcasters or within these signals. How 4 likely do you think that is possible, at what 5 time in the future, and do you think it should 6 be a subject of our deliberations in 7 determining public-interest obligations in this 8 Committee? 9 MR. WILEY: Well, I do not know. You 10 will have to decide the latter. I think you 11 just should be aware that that is possible, 12 again, that bits are bits. Yes, it is possible 13 and it can be done, and we tried to make sure 14 that that was possible. 15 Norm has painted one scenario. 16 Another scenario that I have painted, and I do 17 not think that either one is wrong, they are 18 just alternatives, is that people will want 19 their computer room and their workstation and 20 they will do their work, and then they will 21 want to go and relax and watch television, 22 perhaps on a wide-screen, large monitor. 306 1 For the Wiley household, that is the 2 vision I have. I like the computer and I like 3 the use of it and want it, but I also want to 4 relax and have entertainment and information on 5 an increasingly large screen. I am going to be 6 one of the first that enjoys HDTV if it, 7 indeed, is offered as I expect it to be. 8 DR. ORNSTEIN: Although increasingly, 9 Dick, the computer is a tool for relaxation. 10 So much of what is happening on the web now is 11 not work-related, necessarily. 12 MR. WILEY: That is true. 13 DR. ORNSTEIN: We are going to find, 14 I suspect, competition for the entertainment 15 viewer. 16 MR. WILEY: Absolutely. I think that 17 is a very good point, too. I do not want to in 18 any way appear to demean that because I think 19 it is great. One thing I think the Committee 20 from the outset, although we did not have as 21 many computer representatives as we wanted, I 22 think the computer industry began to see the 307 1 vision of video television a little later in 2 the game and now they do see it. I think we 3 always wanted to have that harmony, 4 harmonization, of a video standard in the 5 computers. 6 DR. ORNSTEIN: Yes, Bill? 7 MR. WILEY: Nice to see you again. 8 MR. DUHAMEL: Thank you. The 9 question I have is semi-technical. I suspect 10 that you know the answer, but I do not. Right 11 now, we have a 525 lines, and then HDTV is 12 either 1,050 or 1,125, I believe. 13 MR. WILEY: It is going to be 1,080. 14 MR. DUHAMEL: Ten eighty? 15 MR. WILEY: The reason we picked 16 1,080 and now the Japanese have moved away from 17 1,125 and are going to 1,080, as I have 18 suggested, and the Europeans as well, is 19 because, as I understand it, it does in fact 20 help this harmonization because you can have, 21 the way the multiples work out, the algebra 22 works out, if you will, the mathematics, is 308 1 that you will have square pixels, again, square 2 picture elements, which facilitate the 3 interactivity that I have talked about. And 4 1,080, again, gives you the possibility of 5 high-definition. 6 MR. DUHAMEL: In between, is there a 7 continuum? In other words, there might be some 8 programs that might have 750 or something? 9 MR. WILEY: Oh, yes, because, 10 remember, standard definition is not going to 11 be 1,080 lines. For example, progressively 12 scanned, you have 700 lines. And there are 13 other formats for film products and what have 14 you, so there are some differences. Ten-eighty 15 is the high side; it is the full, 16 high-definition television in interlaced 17 format. 18 MR. DUHAMEL: But where they are 19 talking about the multiple, as I understand 20 like, say, if they are doing a soap opera or 21 something that is fairly static, you do not 22 need as many lines as you would, say, for a 309 1 soccer game where you have got a lot of 2 movement and in and out. Isn't that true? 3 What I am wondering about is is it possible in 4 this intermix that you would have something, 5 say, during the daytime that you would have, 6 rather than just one or two, five or six. 7 MR. WILEY: You can shift, as I say, 8 in different day parts from high-definition 9 television, all the bits essentially being used 10 for a single picture to four or five. By the 11 way, it doesn't have to be four or five, you 12 could have more, but, the more channels you 13 get, the lesser the quality. I do not think we 14 want to degrade it below at least current 15 television. I think four or five, perhaps, 16 channels under today's compression technology 17 has been, I think, probably what we have been 18 thinking about. 19 So, yes, a broadcaster, assuming he 20 could learn to program those extra channels and 21 assuming he could learn to sell those channels, 22 advertising on them, so he can make a profit or 310 1 a noncommercial broadcaster can find an 2 audience for it, if you will, and get the 3 financial support for it, you can shift to four 4 or five channels. 5 DR. ORNSTEIN: It is conceivable you 6 could shift every half hour? 7 MR. WILEY: You could, it is 8 conceivable. I think some of the question, and 9 Robert has talked about this, is as to whether 10 or not shifting channels is going to undermine 11 the basic channel that you do have. I think, 12 whether you are cannibalizing your own signal, 13 that is a question I cannot answer. I am not 14 in the industry that way, but it is at least a 15 question mark. I think for you, you have 16 thought more about a single high-definition 17 signal. I heard your testimony on Capitol 18 Hill. 19 MR. DECHERD: If I could pick up on 20 that and would ask Dick to speculate about if 21 that in fact is going forward. Our view, at 22 least, is that a single, high-definition 311 1 channel, properly promoted and sold in the 2 local marketplace by local licensees, is the 3 only certain business strategy in this very 4 complex world that Dick has described. 5 The more you go to multiplexing or 6 anything that degrades your signal or, as you 7 said, cannibalizes it enables all of these 8 competitors, whether it is cable, MSOs from 9 multiple networks packaged together, most of 10 them networks of their own, not the traditional 11 television networks -- are what we believe is 12 now a very aggressive view on the part of the 13 computer industry about this very competition 14 for who is going to control the set box. 15 What for a traditional licensee is, 16 in our judgment, the best defense and the 17 strongest offense competitively is to have the 18 best picture quality with the best oral quality 19 for the most number of hours in a broadcast 20 day. That is where we need our network 21 partners to give us guidance about how much 22 HDTV programming they are going to downstream 312 1 and will pass through to our local viewers. 2 Now, that leads to my question, which 3 I realize requires a good deal of speculation 4 on your part, Dick, and this is all 5 prospective, not what has gone on before. As 6 the computer industry becomes more ambitious 7 about the set box or who is going to control 8 the television signal, you have described a 9 very diverse environment going forward that I 10 believe, based on the technological questions 11 just discussed, will become more so, 12 potentially more so, so here is a three-parter. 13 Number one, going forward, do you 14 think there will be scarcity, as traditionally 15 defined, of sources of programming from 16 over-the-air, cable, DBS, computers, number 17 one? 18 MR. WILEY: I will say to that no. I 19 think we are going to see a profusion of 20 diverse programming sources, and I think we are 21 seeing that now. Again, some people say there 22 is more sameness, perhaps, but I think there is 313 1 more diversity. 2 MS. EDWARDS: Before you continue, 3 can I ask everyone to speak into the mike? I 4 think we are having a bit of a problem hearing. 5 MR. DECHERD: Okay. Sorry. 6 Secondly, in a comparative sense, and I realize 7 this is highly speculative, do you think the 8 so-called concentration in the computer 9 industry versus television licensees today and 10 prospectively is the same or different, and 11 could you envision a situation where the 12 federal government would think it is proper to 13 impose public interest standards on the 14 computer industry, which is totally unregulated 15 and I believe is going right after the 16 broadcast industry's jugular? 17 MR. WILEY: Well, I have suggested in 18 my chart that some day the Commission will have 19 to look at, if the scenario you are suggesting 20 eventuates, that is, you have competition from 21 a variety of different transmission 22 alternatives and they all can reach the 314 1 American public and they have some similarity, 2 there may have to be some similarity of the 3 regulatory treatment. 4 I do not think the FCC believes we 5 have reached that point at this point in the 6 analog world, so you may decide we have not 7 reached that point in the digital world. What 8 I am suggesting is that you have got to take 9 that into consideration in your deliberations. 10 We are moving toward more entities coming into 11 this video marketplace than we have seen in the 12 past. 13 MR. DECHERD: What would be the 14 regulatory rationale to impose any kind of 15 government regulation? 16 MS. EDWARDS: Your mike is off. 17 MR. DECHERD: I think it is dead. 18 There we go. Speak louder? Okay. 19 MR. WILEY: This is probably a 20 philosophical question. Rather than placing 21 new public interest responsibilities on other 22 entities if there is competition, I think we 315 1 can let the marketplace and have less public 2 interest responsibilities on anybody, hoping 3 that competition will drive that. I am not 4 suggesting that is where we are today. 5 I think I would rather go towards a 6 less-regulated marketplace because I think it 7 would be more diverse, particularly when you 8 are dealing with the content issues. The 9 reason why we have content regulation in 10 broadcasting today to the extent we have it is 11 because of the scarcity issue. 12 MR. BENTON: Dick, we are being asked 13 to see, understand, and act on the future, and 14 the technology base you bring here is pretty 15 important. Regulation is one approach; model 16 building is another. Project Kick Start, these 17 brochures are in our staging room, if you will. 18 This reports on the support through the NTIA of 19 connecting America's communities to the 20 information superhighway, supporting nonprofit 21 innovators at the community level to try and 22 get the most out of the evolving national 316 1 information infrastructure on the so-called 2 information superhighway. 3 Now, in like manner, have you thought 4 about or how could our Committee think about 5 some serious model building to try to 6 demonstrate the potentials of this convergence 7 that we have been talking about between 8 television and computers? 9 It is all theory at this point. We 10 do not have any practice. We have got a public 11 broadcasting system, so-called, because it 12 really is not a system, but a public 13 broadcasting arena, that could lead the way 14 through experimentation with some support. The 15 system is very poor, and yet it could, as it 16 brought tennis to television, because it was 17 successful, was then picked up by commercial 18 television. There are, obviously, lots of new 19 models to be built here, so how can we think 20 about model building as a way of not simply 21 talking about the public interest obligations 22 but the public interest opportunities for 317 1 television broadcasters? Perhaps you could 2 give us your opinions? 3 MR. WILEY: Charlie, this probably 4 goes beyond my area of expertise to respond to 5 that, and you may want to talk to somebody like 6 Irvin Duggan, who served at the FCC and knows 7 this technology, somebody like that. I think 8 the kind of vision you are striking here, 9 though, has a potential here. 10 I think the educational 11 opportunities, as Norm has suggested, are 12 there. I think they are exciting. I think 13 this is part of television as well, and the FCC 14 has said so. You know, it is not just 15 entertainment; it is informational and 16 educational as well. 17 MR. BENTON: Educational and cultural 18 programming, exactly, which there could be a 19 lot more of. 20 DR. ORNSTEIN: One last question, 21 Dick. When the analog channels go back, you 22 speculated they could be used for things like 318 1 mobile communications. Is there any broadcast 2 potential for those analog spaces? What really 3 could they be used for? 4 MR. WILEY: That is spectrum, Norm. 5 As Robert has pointed out, there is no such 6 thing as an analog spectrum or a digital 7 spectrum. Those are just side names we give 8 them, something shorthand, if you will, to 9 express what we are talking about here; it is 10 the use put to them. 11 The spectrum is a very valuable 12 resource; if you will. It is a finite resource 13 on which there is infinite demands today. I 14 would think that, if the spectrum was out 15 there, people would find uses for it. What we 16 have seen is sometimes the auctions at the FCC 17 have been very successful when they have been 18 well-thought out and well-scheduled. I am sure 19 that Congress, looking ahead with a lot of 20 years here to think about it, and the FCC will 21 find good uses, probably uses that we are not 22 thinking about today. 319 1 DR. ORNSTEIN: If that compression 2 technology works or progresses as we have been 3 talking about, then that presumably would make 4 this part of the spectrum more valuable than it 5 is today and perhaps usable for what might even 6 be a kind of high-definition television down 7 the road, maybe not? Could you elaborate? 8 MR. WILEY: Well, it is possible you 9 could have two high-definition signals, let's 10 say, within a 6-megahertz or something like 11 that. That might be where the compression 12 advances would go or, as I say, it might make 13 possible a more demanding, progressive scanning 14 at 1,000 lines and more in a 6-megahertz, which 15 would solve this dispute that we have had 16 between broadcasters and computer companies. I 17 would very much like to see that happen. 18 Gigi, you and I have been down that 19 road a few times. 20 MR. CRUMP: Is it not true, also, 21 then, that because of the compression the 22 remainder of the spectrum will then be larger 320 1 than it is today, and we will have more for the 2 public to deal with outside of the broadcast 3 domain? 4 MR. WILEY: Yes. That is the 5 argument, for example, that we talked about 6 with the cable folks, that maybe compression 7 technology are going to bless wire services 8 even more than over-the-air services. 9 Everybody gets advanced by having more spectrum 10 available or more capacity available, if you 11 will. 12 You are absolutely right, Harold. I 13 think that is a good point. We do not know how 14 soon that is going to happen. We have solved 15 the wonder of the world here. Sometimes I am 16 frustrated by the fact that, no matter how good 17 the system we get, somebody always says, well, 18 it is not quite good enough. I think we should 19 step back a little bit and say we have created 20 a marvel here. 21 I did not do it, so I can say this 22 objectively, I think. The engineers who 321 1 created this would solve a multitude of 2 problems that we will never know to get to 3 where we are that we can do this thing over the 4 air, 50 miles away, absolutely crystal clear, 5 and it works. 6 MR. GOODMON: Sixty-five. 7 MR. WILEY: Sixty-five. See, there 8 is always going to be somebody wanting 9 something better. 10 DR. ORNSTEIN: But you are right, to 11 be able to see that picture come in, as I did a 12 few years ago, from way out 65 miles away and 13 coming into a studio here and then eventually 14 into the homes crystal clear when we were 15 worried about you could never get a digital 16 signal over the air. 17 When I started out, by the way, the 18 one thing I was told on this in 1987, it would 19 not be digital. It would not be digital, and 20 it was going to be analog and we were going to 21 try to have advanced analog, if you will. Then 22 somebody came along and solved the digital 322 1 problem, General Instrument Corporation in 2 California in 1990. The rest of the 3 broadcasters, in this country at least, saw the 4 vision, and the rest of the Grand Alliance 5 proponents went digital, and, therefore, we 6 have this wonderful technology. 7 Yes, we still have problems between 8 broadcasters and computers and set 9 manufacturers, and, yes, we have these 10 continuing concerns as to whether cable will 11 pass this through and all the rest of it. 12 These are transitory problems, ephemeral. They 13 will be solved, and you also have some issues 14 to be resolved. We have got our own problems. 15 MR. WILEY: I do thank you so much 16 for having me here today. Thank you so much. 17 DR. ORNSTEIN: Thank you, Dick. You 18 have helped us out a lot. 19 MR. MOONVES: Let's take a 10-minute 20 break, shall we. Jim, you want to set up your 21 stuff in 10 minutes? We will take 10. 22 (Recess) 323 1 MR. MOONVES: All right. Ladies and 2 gentlemen, we are back. Briefly, I want to 3 introduce the gentleman to my right, Jim 4 Goodmon, who is head of Capitol Broadcasting, 5 which has been one of the people who have been 6 most out front on HDTV. They have, among other 7 stations, WRAL, which is the CBS affiliate in 8 Raleigh, North Carolina. 9 Thank you. Thank you for CBS. 10 As I said, WRAL has been far out in 11 front in terms of HDTV. They are already 12 showing certain shows on the air with it. 13 Jim, why don't I turn it over to you? 14 HIGH-DEFINITION TELEVISION DEMONSTRATION 15 MR. GOODMON: Thank you. I would 16 like to spend just a few minutes talking about 17 our experimental station, and then we have some 18 tapes that we want to show you. 19 A little background about what HDTV 20 is, just so we are all on the same page. There 21 are three things about HDTV that we need to 22 remember, three things going on with HDTV. The 324 1 first is we are changing the screen size. You 2 notice the monitors that we have in front here, 3 both of those monitors are 13 inches high. 4 The HD monitor on top you see is 5 wider. There is a different aspect ratio. The 6 16-to-9 aspect ratio in high-definition and 7 4-to-3 ratio in NTSC, and I think it is good to 8 see the difference in a 13-inch high NTSC set 9 and the 13-inch high HDTV set to give you an 10 idea of the change in the aspect ratio. 11 Remember, that just going to the 16-by-9 aspect 12 ratio gives us a wider field of view. 13 Thirty-five millimeter film is at that aspect 14 ratio, so there would be an easy conversion 15 from 35-millimeter film to this format. 16 The second thing we are doing is 17 increasing the number of scanning lines from 18 our 525 system to our 1,080 system. Actually, 19 one way to say this is that we are transmitting 20 six times as much picture information with the 21 HD signal as we are with the NTSC signal. That 22 is more definition, more colors. You are going 325 1 to see colors you have never seen before and 2 very high resolution. 3 The third thing, and this is a real 4 interesting part that nobody really talks 5 about, is that the HD signal has five discrete 6 channels of CD-quality audio. Now, this is not 7 the right plus the left minus, these are 8 discrete channels, five discrete channels, of 9 CD-quality audio. Actually, there are six. 10 There is a subwoofer channel, a 30-hertz 11 channel, 5, so it was 5.2 channels of 12 CD-quality audio. It has just crossed my mind 13 that in the future sound is going to be a whole 14 lot more important to television than it has 15 been in terms of what we are about. 16 The reason that we applied for the 17 experimental license and put a station on the 18 air last July was specifically related to our 19 interest in the coverage of the digital signal, 20 the propagation of the signal, how much power 21 do we need, how far will the signal go. 22 Our market in Raleigh-Durham is 326 1 interesting in that less than half of our 2 viewers live in the metropolitan area. We 3 cover 23 counties. The second largest county 4 in our market is 60 to 65 miles away, so the 5 propagation characteristics of the signal are 6 very important to us, and that is the main 7 reason we applied for the experimental license. 8 We want to get the station on the air to start 9 testing the coverage. 10 Now, remember, a couple of other 11 things about this digital signal that are 12 really important are no noise, no ghosting, a 13 perfect signal, whereas, now, as you get 14 farther and farther away from the station, you 15 start getting snow and the picture fades. With 16 digital you either have a perfect picture or no 17 picture. It is called the "cliff effect." We 18 have a threshold, and, if your signal is above 19 a threshold, it is perfect or you do not have 20 any. 21 MS. SCOTT: What about neighborhood 22 interference like a ham radio station next door 327 1 which affects the standards? I know it does on 2 my set. 3 MR. BEAUCHAMP: Do you want me to 4 handle that one? 5 MR. GOODMON: Yes. 6 MR. BEAUCHAMP: We have not 7 experienced any kind of interference, that kind 8 of ham interference, in our testing. Any kind 9 of overload on channel -- in other words, the 10 signal right on that channel that you are 11 receiving -- will kill the receiver. But the 12 interference that ham radio or CB or any other 13 kind of other two-way radio type of stuff is 14 probably not on channel and is probably a 15 harmonic, that kind of thing. 16 MR. GOODMON: I need to introduce Tom 17 Beauchamp, our chief engineer. Tom is going to 18 talk about our testing program and what we 19 found out in terms of testing of the signal. 20 So, different aspect ratio, more 21 scanning lines, and five channels of CD-quality 22 audio. What we are going to show you, I am 328 1 going to ask Tom to talk about our testing, 2 what we found out about this signal as we have 3 tested it out away from the tower, and then 4 what I would really like to do is have 5 everybody go down in front of the monitors. 6 We have produced a college football 7 game. It was Duke/State, I wish it could have 8 been a Duke basketball game, a Duke/State 9 football game. We have done a baseball game, 10 we did an outdoor symphony concert, we produced 11 a children's program. We took the unit by 12 Public Television and did the Wood Right shop 13 and another Public TV show to get them 14 experienced with the different aspect ratio and 15 the high-definition. 16 So, after Tom tells you about the 17 propagation characteristics, if we can all walk 18 down in front of the monitors and take a look 19 at these tapes, I think you will enjoy seeing 20 what HD really is. 21 MR. BEAUCHAMP: The testing program 22 of the DTV transmission system in Raleigh, we 329 1 were assigned experimental Channel 32. That 2 testing began in May. We followed the industry 3 plan or the model station RF Committees so that 4 there is a standard testing program to verify 5 that this system does work. It works, and it 6 works very well. 7 We were transmitting on 100 kW, which 8 is a tenth of the power assigned to our channel 9 in Raleigh. We transmitted from a side-mounted 10 antenna, which is not an optimum antenna for 11 broadcast. We transmitted at 1,736 feet, and 12 we transmitted successfully to 90 percent of 13 the locations out 65 miles around Raleigh. 14 The radial horizon, which is referred 15 to by engineering as the line of sight, is 16 about 61 miles. We went beyond the radial 17 horizon. We stopped at 65 miles because we 18 were getting out of North Carolina in certain 19 areas. 20 We had known troublesome areas and 21 some of that success rate would probably be 22 higher had we not been in the middle of the 330 1 military army base and they were doing 2 something, and they had bigger guns than we 3 did, so we left. 4 We also were within 9 miles and 4 5 miles of a Channel 31 analog station, which was 6 introduced into the Lumberton area. We were on 7 Channel 32 to test the relationship between the 8 adjacent channels. Channel 31 overloaded the 9 DTV receiver, the test receiver, and we were 10 unsuccessful in two sites. The military 11 incident knocked another site out of that 165 12 different sites that we went to. 13 We did radials, which is the 14 traditional way of measuring this, which is 15 circles drawn around, and you pick up every 35 16 to 40 degrees, laid out going through major 17 metropolitan areas, and you go out and you 18 measure the incidents in urban cities in a 19 different terrain, a farm. We had all the 20 radials around Raleigh. 21 We also had clusters and grids. 22 These were determined by the industry to see 331 1 what exactly happened to the DTV signal at a 2 very close proximity in a small town, in an 3 urban area as Raleigh. In total, there were 4 165 measurements made, measurement sites made. 5 The success rate increased to 95 6 percent at 60 miles, and the success rate again 7 increased to about 97 percent at 55 miles from 8 Raleigh. The receiving antenna was just a 9 truck, and we had one of the blue box Zenith 10 receivers and our Mitsubitshi decoder in it. 11 We actually received pictures. 12 We made all of the test measurements 13 according to the plan that the engineers got 14 together and said this would solve every one of 15 the questions that we did. Over 1,400 pages of 16 data were submitted to the FCC. We were asked 17 a number of questions by the FCC having to do 18 with both the mythology to make sure that we 19 did everything correctly and supplied them with 20 all that information. 21 It was a very robust test. It went 22 through various weather, rain and a lot of 332 1 heat. The signal does get out there, and it 2 works very well. We are presently undergoing 3 an indoor test. We have reconfigured our 4 antenna to transmit horizontal, to transmit a 5 vertical, and then to transmit an elliptical 6 pattern to see what happens to set-tops, rabbit 7 ears, to loop antennas, and to bowties. 8 We are finding that that is a very 9 important question, to determine the 10 reliability of the signal without any kind of 11 outside antenna in the areas of multiple 12 housing developments and areas of condos. That 13 testing is going along. It is very positive. 14 We have found that the DTV signal provides a 15 picture-perfect, studio-quality signal when a 16 comparison NTSC signal is unwatchable. 17 Every place you go in that market, 18 wherever you have the objectionable features of 19 the NTSC, the ghosting, the multipath and the 20 noise, comparing it right to the next receiver 21 with the digital signal on it, it is studio 22 quality, the same as you will see on these 333 1 monitors. 2 We are hoping to get about 60 3 measurements, 60 to 65 sites. We are making 4 nine measurements per site, and we hope to have 5 that test completed within the next couple of 6 weeks. We will then submit that as additional 7 industry information. 8 Yes, ma'am? 9 MS. CHARREN: Besides the two 10 problems that you found, what do you think the 11 most negative finding was? 12 MR. BEAUCHAMP: I cannot say that 13 there was a negative finding in that 14 perspective as being a trouble. We knew this 15 characteristic, and we just proved that that 16 was exactly what we thought it was. 17 The negative? I do not think there 18 was any negative. We had people stop on the 19 side of the road and ask us what we were doing. 20 It is a disconcerting thing to a lot of people 21 to see a test truck sit on the side of the road 22 and swing antennas around and aim stuff. 334 1 We had a number of people. We 2 explained to them what was going on. We had 3 pictures, monitors in the truck, and we would 4 show them. We would show them the thing, and 5 they were just amazed. They would say, "It is 6 like you are there. It is like it is real. It 7 is like 3-D." These are the comments. 8 The negative? I really do not think 9 there is a negative impression to the testing. 10 We looked at trying to find out how that signal 11 would work in not the optimum situation. In 12 side mounting an antenna to a tower, you have a 13 lot of steel, and we have a very, very heavy 14 steel tower. That is probably the only thing 15 that I would say would be negative to the side 16 mounting of the thing, that we were able to 17 calculate that we have an effect. The tower 18 does have an effect on the antenna, but, 19 through the brilliant engineers that developed 20 this system, they allowed the receiver to help 21 out, and the receiver has smarts to correct and 22 present a picture-perfect, studio-quality. 335 1 DR. ORNSTEIN: These phenomena, 2 ghosting, noise, and the like, is that a 3 digital phenomenon so that if you multiplexed 4 you would also find no noise, no ghosting, and 5 all of that? So it is not just the HDTV? 6 MR. BEAUCHAMP: Right, it is not just 7 the HDTV. This standard, the ATSC standard, 8 that we have and all the parts, the corrective 9 things, that are part of that allow the 10 transmission of the signal to be corrected at 11 the receiver. There are circuits in the 12 receiver schematics that allow those 13 corrections to go on. 14 DR. ORNSTEIN: What about the audio 15 channels? Would those five discrete audio 16 channels be there for each of the multiplex 17 signals, or is that just for HD? 18 MR. BEAUCHAMP: The discrete channels 19 will probably get into a production standard. 20 What we have now is we have a transmission 21 standard, and the transmission standard is what 22 the FCC gave us. The production, the studio 336 1 side, is a work in progress. This system is 2 not plug-and-play. 3 You talk about 5.1 channels of audio. 4 The tape machine that I have here only has four 5 channels of audio, so there is a production 6 standard committee working on how we are going 7 to get these other channels of audio onto the 8 tape machines to start at the studio. 9 MR. GOODMON: That is a good 10 question. I do not know the answer to that. 11 MR. BEAUCHAMP: We don't know where 12 these things -- 13 DR. ORNSTEIN: Obviously, I am asking 14 whether, if you went to a multiplex, are you 15 going to get a better quality for each of those 16 with better sound and better picture, than we 17 now have for each existing analog, even if it 18 is the same video? 19 MR. GOODMON: It will be better 20 quality, and it is digital, yes. 21 MR. MOONVES: Let's take a look at 22 the tape because I think afterwards we may have 337 1 more questions. Let's go to the videotape. 2 MR. GOODMON: Let's go to the tape. 3 This is the Warthogs, the Duke 4 football game. The top monitors are 5 high-definition monitors. The program was shot 6 at 1,035 because of the availability of the 7 camera and present production equipment, and it 8 is not available to shoot 1,080. The lower one 9 is the regular analog-style. 10 MR. BEAUCHAMP: This (indicating) is 11 what you would get the regular old way. 12 MS. SCOTT: Let me ask you, Are you 13 going to be able to get to use your analog set 14 by using analog? 15 MR. BEAUCHAMP: This is comparable to 16 what you would get. This (indicating) is a 17 26-inch diagonal screen, and this is a 20-inch 18 diagonal PC monitor. 19 MR. DECHERD: That is an important 20 question, though, isn't it, because, the bigger 21 the screen becomes, the more dramatic, the more 22 differentiation. 338 1 MR. BEAUCHAMP: There is a length and 2 height relationship. It was shot at night. 3 MR. CRUZ: Why is that bluer? 4 MR. BEAUCHAMP: At the angle, you 5 have a view that is square and there a few that 6 are going this way. 7 MR. CRUZ: The bigger screens make it 8 clearer. 9 MR. BEAUCHAMP: The lighting in this, 10 there was some additional lighting. The 11 cameras were basically wide open, so there are 12 some production things that we are learning 13 about as we do these. The equipment is part 14 digital. The actual pickup on the cameras are 15 the analog pickups. I mean, you have to take 16 the light and convert it into digital. 17 MR. DECHERD: That is a very good 18 point. 19 MR. BEAUCHAMP: There is going to be 20 some degradation as we go through this 21 transition. Everything inside the stations 22 with the antenna has to evolve. 339 1 Basically, we have found that there 2 are no production standards that can give us -- 3 Dolby is working, we are trying to do a 4 four-channel audio. 5 MR. GOODMON: The one thing you can 6 see is she has freckles on her arm and neck. 7 MS. CHARREN: Where are the freckles? 8 MS. SOHN: What symphony is this? I 9 didn't think they allowed that down there. 10 MR. BEAUCHAMP: This is a concert on 11 the 31st of August. You are also going to see 12 the new sets are going to have to change. 13 MR. CRUZ: While you are making the 14 transition, the bottom picture is the one that 15 you will receive? With a converter box, that 16 is what they are going to see? 17 MR. BEAUCHAMP: With a converter box, 18 this is what they are going to see at the 19 bottom. At the top, this is what you will have 20 with one of the new ones coming out next year. 21 The digital transmission system will add a lot 22 to the NTSC signal that we have now because it 340 1 is a much cleaner presentation and it is a much 2 cleaner way of getting from point A to point B. 3 Here is an example of the different two 4 pictures and the amount of detail and the 5 amount of resolution color and the highlights. 6 MS. CHARREN: The best thing is the 7 lighting. 8 MR. BEAUCHAMP: There is a lot of 9 improvement to this. 10 MS. CHARREN: What is this? 11 MR. BEAUCHAMP: The announcer is 12 introducing the next entertainer. 13 MS. CHARREN: Where is this? 14 MR. BEAUCHAMP: It is in a park at 15 Meredith College. 16 MS. CHARREN: Can we see the next 17 one? 18 MR. BEAUCHAMP: The next one? 19 MS. CHARREN: (Nodding) 20 MR. BEAUCHAMP: This is a baseball 21 game at Chapel Hill at Raleigh. 22 MS. CHARREN: This looks like the 341 1 ball comes right out of your set into the 2 living room. 3 MR. GOODMON: This is the Warthogs 4 playing. 5 MR. BEAUCHAMP: You cannot fix NTSC; 6 you cannot correct that. 7 MS. CHARREN: What is that? 8 MR. BEAUCHAMP: This is a children's 9 program produced in our studio. There is a 10 picture of a snake that is coming in here, and 11 that is a boa constrictor. We will show you 12 where the detail is. You will actually see the 13 membrane covering the snake's eye. 14 MR. CRUZ: I am not quite sure I want 15 to see that. 16 MR. BEAUCHAMP: There are some 17 expressions on the kid's faces. Richard Wiley 18 said there are some things that are in NTSC 19 that are in NTSC. There are certain 20 characteristics that are just accepted. Also, 21 if you look at the two monitors, the monitors 22 may have a little difference. I tried to tune 342 1 them up as best I could yesterday. There is a 2 little difference in the monitor. 3 (Pause) 4 MR. MOONVES: We will wrap this up. 5 I will throw it out to the public, and then we 6 will go around and see if anybody has anything 7 further to say. 8 DR. ORNSTEIN: Exactly. How come you 9 didn't bring "Touched by an Angel"? 10 MR. MOONVES: We have that, we have 11 some of our shows on HD. Yes, how come you 12 didn't bring that, some of our shows? 13 DR. ORNSTEIN: You can see the wings. 14 MR. MOONVES: That's right. Does 15 anybody have any further questions for Jim or 16 Tom? 17 Thank you. That was very impressive. 18 A wonderful, wonderful demonstration. 19 We will in a moment throw it open to 20 the public and then the Committee. 21 Yes? 22 MR. LA CAMERA: I felt possibly I 343 1 would like to give Gigi some more information 2 about the question she asked earlier because 3 maybe it is appropriate here when we think 4 about how much time it is going to take us to 5 change from analog to digital. 6 It took 12 to 15 years to go from 7 black and white to color, but we had an unusual 8 circumstance. We had the FCC having to make a 9 decision as to which system would be used, and 10 we had three or four different systems that 11 were being pushed, but the two mains ones that 12 were pushed were by the two larger networks, 13 NBC and CBS. NBC was owned by RCA, and in the 14 final analysis they won. They got their 15 system. Whoever had the system that won was 16 going to make huge money, big profits. 17 What occurred was CBS then 18 immediately got its nose way over here 19 (indicating). It was way out of joint. As a 20 result, there was a decision made by CBS and 21 the others who were mad that by golly, we are 22 not going to help move the public towards 344 1 color. 2 Therefore, there was only one network 3 that was using color programming, and they were 4 not going whole hog yet because there were not 5 enough sets out there, but they wanted to sell 6 the RCA color sets. They had things locked up. 7 That is why I believe it took so long for the 8 transition to occur, because it was actually 9 being opposed by the other two networks, CBS 10 and ABC. 11 This started in the early 1950s, and 12 the transition actually took place in the 1960s 13 and early 1970s. Television local stations did 14 not begin to convert their local programming, 15 newscast et cetera, to color until the very 16 late 1960s, like, 1968, 1969, and the 1970s. 17 The early 1970s years is when that began to 18 work. So that is why there was the slowdown. 19 MS. CHARREN: Besides, Gigi, 20 everything was green in the early days. 21 MR. BEAUCHAMP: That is what CBS 22 said. 345 1 MR. MOONVES: I beg your pardon. 2 PUBLIC COMMENT, QUESTIONS AND ANSWERS 3 MR. MOONVES: Anyway, we will throw 4 it open to the public, and, if anybody has any 5 closing remarks, we will open up the mikes for 6 everybody here. 7 Is there anybody out there who would 8 like to make any comments? Questions? 9 Answers? 10 Thank you. Anybody on the Committee? 11 Yes, Paul? 12 MR. LA CAMERA: If I could add 13 something? 14 MR. MOONVES: Please. 15 MR. LA CAMERA: It goes back to the 16 initial charge in the address yesterday morning 17 by the vice president, and that is our agenda. 18 I think he partially defined it, and I am sure 19 there are additions that we would be interested 20 in. 21 Does our agenda logically, and I am 22 asking this to the two co-chair people, fall 346 1 into four arenas, the first being children's 2 and family issues, and that is everything from 3 children's programming to educational 4 programming to ratings of television programs. 5 The second is, obviously, is the political 6 advertising. 7 The third is the historic public 8 interest activities of broadcasters that falls 9 under localism, and that is everything from 10 public affairs programming to PSAs to closed 11 captioning. 12 The fourth is something that Charles 13 mentioned this morning, and that is whatever 14 the creativity or innovation of the future is 15 going to be in applying public service, public 16 interest standards to the future world of 17 digital television that we are spending so much 18 time learning about and appropriately so over 19 these last two days. 20 If it logically falls, then, into 21 those four arenas, should we be devoting a half 22 a day or a day in the future to each of these 347 1 so we can specifically focus our future 2 direction? Should there be subcommittees? 3 What are your thoughts on that and beyond? 4 MR. MOONVES: The logical breaks that 5 you have set up certainly do make sense. I 6 think the fourth probably falls into a little 7 bit of all of the three that preceded it. I 8 frankly think the political discussion probably 9 will take longer than the others. There 10 certainly should be a designated period of 11 time, and I think that is the plan for the 12 future for each one of those things. 13 DR. ORNSTEIN: That makes sense. 14 That is a substantive agenda. We are not yet 15 done with our examination of the technology, 16 where it might be going, that elusive target, 17 and how it will mesh with all of these other 18 entities out there, cable, computers and the 19 like. 20 We have to have as full an 21 understanding, I think, of what the future may 22 look like but also what this technology means 348 1 in terms of the delivery to people before we 2 can gauge what standards we want to set. 3 If it is basically just a wonderful 4 picture, but it is in effect the same sort of 5 system we have here now. It is just a much 6 better picture on a bigger screen. That leads 7 us in one set of directions. If it is going to 8 be with all of these data streams a lot of 9 different kinds of information coming in in 10 different ways, we have to think through 11 another way, so we have that. 12 And we also have to consider more 13 broadly an element we raised only briefly 14 yesterday but which may be in the end if we are 15 fortunate our greatest contribution, and that 16 is thinking about different ways of 17 establishing public interest standards more 18 generally. 19 Now we establish publish interest 20 standards in discrete ways, "X" amount of hours 21 doing something, this kind of ratings system. 22 It may be that we can come up with a very 349 1 different approach for a new era. We will have 2 to devote some time to those things as well. 3 MR. LA CAMERA: Well, that was the 4 fourth item. 5 DR. ORNSTEIN: Peggy? 6 MR. MOONVES: Right. Peggy? 7 MS. CHARREN: There was something 8 that came up yesterday in response to a 9 question that I think we might want to talk 10 about whether we should do it and how we should 11 do it. It seems to me that part of our agenda 12 has to be to educate the public not so much 13 only about what we are doing, which is the 14 website, but about what the issues are that we 15 are dealing with. 16 Having looked at four newspapers this 17 morning and seen this short story in one of 18 them, I have a feeling that the issue even with 19 us sitting here is going to get about as much 20 coverage as it got in the past, where the only 21 place you see it is in the trade press. 22 If we want input and we want people 350 1 to be interested in what we are going to come 2 up with in the end, otherwise, nobody will pay 3 any attention to it, it would be appropriate to 4 set up some kind of little subcommittee to 5 decide how to do that. 6 MR. MOONVES: If I respectfully may 7 slightly disagree with my co-chair on one of 8 the points, I fear from a technology point of 9 view we are not going to know a whole lot more 10 a year from now than we know today. In other 11 words, there is not going to be anything more 12 firm about HDTV versus multiplexing, the 13 computer age, et cetera, et cetera. I do not 14 want the Committee over the course of the year 15 to get bogged down with too much of that 16 because I do not think we are going to get a 17 whole lot more than we have now. That is not 18 to say we should avoid it. 19 Peggy, on your point, I think 20 absolutely there needs to be some way of 21 dealing with outside information in the press. 22 It is something that is important. 351 1 Yes, Charles? 2 MR. BENTON: One thing that I know 3 you both probably want to get clear is whether 4 we have to stick with the original time limit 5 and get our report in in June or whether we can 6 do this toward the end of the year, hopefully 7 after the election, as we talked about, because 8 by doing it after the election it would take 9 this really out of politics, which is where it 10 should be. Is there any pressure from the 11 administration to get this in in June, or could 12 we get it in just as well in December? 13 DR. ORNSTEIN: The original timetable 14 was set up, as we know, back in February. 15 There has not been pressure in any fashion. 16 Clearly, we had a sense of the Committee 17 yesterday that we would need more time, and we 18 now have to back to the president and the vice 19 president and tell them what we think and get 20 their judgment on whether they are willing to 21 extend our timetable. They may have other 22 reasons for not wanting to because there are 352 1 other things going on even as we are operating. 2 We are not operating in a vacuum here, but I 3 would guess we would be able to get additional 4 time. 5 MR. BENTON: So I understand, then, 6 you are going to do this prior to our next 7 meeting in December? 8 DR. ORNSTEIN: Yes, what I think we 9 will do is we will communicate with the 10 administration immediately. 11 MR. MOONVES: We are going to make 12 that request. 13 DR. ORNSTEIN: Yes. 14 MR. MOONVES: Before our next 15 meeting. Hopefully, we will have a timetable 16 then, and we can plot out the rest of the year 17 on the basis of that, that date. 18 MR. BENTON: Wonderful. Great. 19 MR. MOONVES: Yes? 20 MR. YEE: When do you propose to set 21 the agenda of the December meeting, then, 22 between now and September? 353 1 DR. ORNSTEIN: Well, we pretty much 2 did that yesterday. In the December meeting, 3 we are going to have a panel with some 4 discussion that will focus around broadcasters 5 that Robert is going to put together. We will 6 have a panel that will look from a variety of 7 public interest perspectives that Gigi will put 8 together, and we will have a session on 9 technology that Rob Glaser will put together 10 with input from the rest of us. 11 MS. CHARREN: The broadcast panel 12 will maybe include public broadcasting as a 13 separate part of broadcasting? 14 DR. ORNSTEIN: Yes. 15 MR. MOONVES: Yes. Robert is looking 16 into that as we speak, and it most certainly 17 will do that as well, incorporate that. 18 James, if we feel that there is a 19 need to expand on that, we may discuss it. 20 MR. YEE: Now that this Committee is 21 official, I suspect that we will all be getting 22 interesting mail and feedback in the interim 354 1 time, and perhaps that will have a filtering 2 process or an added impact on our decisions. 3 MR. MOONVES: Absolutely. Over the 4 course of the times that we are not meeting, 5 obviously, through E-mail and correspondence we 6 should all be in touch with ideas about what we 7 all want to see at future meetings. 8 MS. SOHN: Can I ask Karen a 9 question? If people do send us letters or call 10 us, which happens especially to me quite a bit, 11 people want to chat about digital television. 12 What are our obligations to make that part of 13 the public record? 14 MS. EDWARDS: Well, in terms of 15 letters or comments that you get directly, the 16 first thing I would want you to do is send it 17 to me because the Department of Commerce is the 18 repository for all of the documents that we 19 get. Telephone calls are a little bit more 20 difficult. If you make some sort of record of 21 that phone call, again I would want you to send 22 it to me, and the public can get it from the 355 1 Department of Commerce. 2 In terms of conversations that you 3 have among and between each other, keep in mind 4 the limitations that we talked about yesterday, 5 trying to keep all of the discussion and 6 decision making in the public eye. E-mail 7 conversations, include me, cc me if you can. 8 Again, that is part of the public record. I 9 hope that helps, Gigi, in answering. 10 MS. SOHN: It did, thanks. 11 MR. MOONVES: Anyone else? Comments? 12 Questions? 13 MS. CHARREN: I have enjoyed this 14 meeting, the last two days. It's nice that it 15 did not feel like the "McLaughlin Report." 16 DR. ORNSTEIN: Well, I would only 17 say, Peggy, apropos of your earlier comment, 18 what I fear is our general press coverage is 19 going to be there only if there is a perception 20 of great conflict and nuclear warfare, as you 21 suggested. 22 MS. CHARREN: I agree with that. 356 1 DR. ORNSTEIN: Yes. 2 MS. CHARREN: That is why I prefaced 3 it by saying I am not talking about the 4 coverage of this panel, which really will not 5 get covered, I do not think, until we come up 6 with our report, but coverage of digital 7 television as an issue for the public to look 8 at is something we may find is important in 9 terms of our getting the message out so people 10 can interface with us. It is not even a 11 question of knowing what we are doing. It is 12 why should they take advantage of this 13 opportunity if they do not even know what the 14 issues are. I would think that is part of our 15 outreach obligation. 16 MR. MOONVES: Anybody else? Well, 17 Peggy, like you, I have enjoyed this very much. 18 I think it is a terrific group of people. I 19 think it has been a good start, and I look 20 forward to seeing everybody again in December. 21 (Whereupon, at 11:45 a.m., the 22 MEETING was adjourned.) 357 1 * * * * * 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22