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Train wreck at FCC

The road to hell is paved with good intentions, and that is abundantly evident in the FCC rules process guiding the DTV transition.

The road to hell is paved with good intentions, and nowhere is that more evident than the rule-making process that faces the Federal Communications Commission as it attempts to guide broadcasters, cable operators, and consumer electronics manufacturers through the transition from an analog to a digital-only world of communication technologies.

In fact, among the myriad places the convergence of computers and television could get waylaid, a likely bottleneck is not the labs of Silicon Valley but rather the boardrooms of Washington. That's the setting for a fight that could erupt into an all-out legal battle over rules the FCC is attempting to set for digital television.

Affiliates of the four major networks--ABC, NBC, CBS, and Fox--in the ten largest markets are slated to begin digital broadcasts no later than May 1999 and in the top 30 markets by November 1999. By 2006, the FCC has mandated that no more analog television signals be broadcast.

Already, a handful of TV stations are broadcasting limited amounts of high-definition digital television. Services now marketed as "digital TV" by cable companies such as Tele-Communications Incorporated are basically more channels on analog television. True digital TV, on the other hand, promises the ability to display programming with greater picture quality than now possible and even content from the Internet.

But to some, the future of digital TV looks less than promising, because numerous questions remain about whether or not there will be a large enough audience to make the expensive leap into the digital era worthwhile.

"It's a train wreck," Jim Burger, a partner with Dow, Lohnes & Albertson, said about digital TV's morass of regulatory issues. Burger's firm represents technology companies such as Intel and Oracle on telecommunications policy issues, as well as cable operators such as Comcast and broadcasters.

"We can't expect there to be a successful transition until there are enough eyeballs watching digital TV," said Bob Rini, managing partner with Rini, Coran & Lancellotta.

Even those at the FCC are worried about the transition to digital technology, which is shaping up to be an immensely complicated task.

"There's a considerable fear of making the wrong move. There's always the possibility we could latch on to something and go the wrong way. We don't want to be stuck with picking that," said Bill Johnson, deputy chief of the cable services bureau of the FCC.

On the other hand, "There's also got to be considerable concern about getting digital broadcasting going," he said.

Among the many issues facing the FCC--and the cause of such A likely bottleneck is not the labs of Silicon Valley but rather the
boardrooms of Washington. consternation--are the so-called must-carry rules, which broadcasters say require cable operators to transmit high-definition television signals in addition to equivalent analog signals.

Cable operators say "must-carry" is a problem because it eats into allotted bandwidth set aside for regular broadcasting. If the operators are forced to carry both analog and digital broadcasts, they will have to drop many cable-only channels to make room for the multitude of signals, with the eventual result being a large loss of advertising and subscriber revenues.

Rini, who represents a group of broadcast station owners in their proceedings with the FCC, thinks the cable industry should be required to carry digital TV signals but says they are advocating a moderate approach. As cable companies upgrade their systems to accommodate greater channel capacity, only then should they be required to carry digital TV signals in whatever format is being broadcast.

It is not clear yet how the "must-carry" rules would apply to digital programming because of the variety of signals that will be transmitted, each occupying varying degrees of the cable company's overall channel capacity.

Broadcasters don't expect to have much more than a few hours of HDTV programming per day because of the added cost of producing such material. The rest of the day, an HDTV channel could filled with several lower-quality channels in its stead. More promising is the possibility of combining television programming with data broadcasting.

"The commission would very much like the change-over to the digital world to take place," noted the FCC's Johnson. "If [the FCC] just ordered cable operators to carry HD signals, some part of the change-over takes place, but also nobody knows what this changeover is to. We don't know if it is to six standard definition digital TV signals or one HD signal."

Some observers are hoping that the rules are flexible enough to allow for experimentation.

"Bits is bucks," Burger said. "Why spend all of your bit diet on a pretty picture when it's just one small part of an audience you can get? It's an awful waste of bandwidth."

A variety of different digital formats is being used, with some taking up less than half the space required of the highest-quality format while offering comparable picture quality, he claims.

"The extra bandwidth could be used for interesting applications such as data services which the local broadcaster might be able to We can't expect there to be a successful transition until there are enough eyeballs watching digital TV. make money on," Burger said. Those services can be used to finance the expensive system upgrades and new antenna towers that can cost anywhere between $2 million and $5 million for each local affiliate of the big four broadcasters. The cost goes up to between $8 million and $10 million if the local station wants to produce its own programming such as a newscast in HDTV.

The possibility of combining TV programming and computer graphics had companies such as Microsoft, Intel, and Compaq Computer excited enough that they haughtily declared in 1996 that they would do so. Why were they so excited? Because PCs already process data as bits, they can easily be turned into digital TV receivers, as long as video information was being sent in a format known as "progressive scan."

With the broadcast format issue largely decided in terms of technology, at least, high-tech companies are working hard to make sure there is technology that allows DTV content to be easily displayed on a PC screen.

Other issues under the control of the FCC relate directly to how digital set-top boxes will look and even where consumers will be able to get them.

TV makers and cable companies have yet to agree on a way to get signals from the cable box to new, expensive digital TV sets. As it stands, consumers will have to rely on antennas hooked up to their television sets to get DTV signals in their pristine, high-resolution state. The FCC is attempting to get the parties to agree on their own as to what technology should be used, but no industry-wide agreements have been made.

So what is the FCC's approach to guiding the various industries into the digital era? The agency's role, Johnson thinks, is to be a kind of cheerleader in the process of migrating to digital TV.

"If that doesn't work, there will be some stronger influence felt," he cautioned.  

Go to: Wintel: End of road?