NEW YORK--The Federal Communications Commission chairman is blasting the broadcast networks for dawdling over digital television as they sit atop spanking new spectra valued at more than $70 billion.
As a result, the usually soft-spoken William Kennard outlined Tuesday several digital TV proposals guaranteed to sock networks and TV manufacturers in the pocketbook.
He clearly regrets that broadcasters were given extra spectra for free back in 1996 to speed them toward digital
television. The Telecommunications Act that year allowed the networks to keep analog spectra as well, until either 2006 or the time when digital TV would reach 85 percent penetration, whichever came later. The trouble is that color televisions took 20 years to hit 85 percent, and VCRs 16 years to reach that penetration.
"It's like Congress donated to each broadcaster two rent-controlled apartments on the Upper West Side, and the broadcaster proceeded to leave one of them empty," Kennard said.
Eddie Fritts, head of TV industry lobby group National Association of Broadcasters, fired back. He claims that
Kennard has "failed the test of leadership" by "trying to shift the blame for a faltering" transition to digital TV. Fritts also insisted that broadcasters are well ahead of schedule in the transformation to digital.
In a statement, Fritts pointed out that 158 TV stations across the country now send digital signals to almost 65 percent of all U.S. households.
Jeff Smulyan, CEO of station group Emmis Broadcasting, bridled at Kennard's constant reference to "free" spectra.
"We've spent millions of dollars gearing up for digital," he said.
Kennard wants Congress to direct the FCC to require that by a certain date, say Jan. 1, 2003, all new TV sets include the capability to receive digital signals. As of Jan. 1, 2006, he wants broadcasters to start paying for use of analog channels. This "spectrum squatters" fee, he said, would escalate yearly until broadcasters complete their transition to digital.
He also wants Congress to revisit the 85 percent loophole so it doesn't become a "25 year justification" for the broadcasters' double dipping.
Kennard plans to present his proposals in January when Congress reconvenes.
Broadcasters point a finger at cable TV, asserting that the industry must promise to carry the additional digital channels once the broadcasters offer them.
"About 75 percent of TV households in the U.S. are wired for cable," one broadcast executive said. "These people
aren't going to go to the trouble of installing an antenna just to pick up digital signals if their cable system refuses to transmit them."
Broadcasters point out that cable is dramatically expanding channel capacity on its systems through digital technology. Cable operators, however, are lobbying hard to head off any digital must-carry provisions. They say no one has enough space to accommodate that kind of rule, which could force them to air as many as 23 separate digital TV signals in big markets such as New York and Los Angeles.
And broadcasters admit that they're not sure how they'll use the digital spectra. High-definition is one obvious choice, but execs say that's looking less and less likely.
"High definition looks fantastic on a six-foot screen, but most people watch television on a 21-inch screen," one said.
And high-definition doesn't generate much extra revenue for broadcasters. Station owners are, instead, looking to
harvest additional profits from selling movies on demand or selling data that could be stored in a hard drive on a digital set-top box and called up through a descrambler for a fee.
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