FCC'S PEPPER SAYS QUICK DTV TRANSITION IS CRITICAL TO BROADCASTER SURVIVAL

Pepper said broadcasters must ask themselves whether they can afford not to convert: “If you don’t, consumers will go elsewhere.” Pepper emphasized that “a couple of things have changed over the past 15 years,” such as 75% cable penetration and rising satellite penetration. He said that currently “people are buying digital TV sets for movies. They're not buying them for over-the-air broadcast programming.”

Mark Cooper, research dir., Consumer Federation of America, said that while efforts of Baby Bells to control digital arena thus far had been resisted successfully, broadcasters, who were given billions of dollars worth of digital spectrum, “have left the most fertile fields lie fallow.” He said nation needed “content revolution, not a capacity fix… we need content that stimulates [DTV] demand.” He suggested taking spectrum back from broadcasters and selling it to highest bidder: “Public stewardship is in the public interest, not corporate welfare.”

Progress & Freedom Foundation Pres. Jeff Eisenach said next stage in Internet economy would be delivery of “interactive digital content into the home. This is the area where the government cannot shrug its shoulders and walk away, as Mark [Cooper] would like it to do.”

Pax TV Pres. Dean Goodman said “we are in the stretch run as far as DTV is concerned… a few issues that need to be addressed can be addressed expediently,” such as imposing must-carry obligations on cable industry: “What we need is an all-channel DTV bill” that would mandate date-certain digital-receiver transition for all TV sets: “We did it with AM-FM and it works.”

Mitsubishi Digital Electronics America Vp-Mktg. Robert Perry said harmonious DTV equipment standard was paramount concern. He said he supported govt.-mandated transition timetable: “In our business, we survive only when we deliver the products that consumers want,” something that can’t be accomplished when cable devices work in one area and not another. “Imagine what our country would be like if we 18 different telephone standards… It is appropriate and correct for the timetables” to be set, he said. Many broadcasters haven’t set up financial models to make transition, and it’s not govt. responsibility to ensure that they have changed those financial models, he said: “You may not survive the transition. That’s a reality… If you want to pay for spectrum, fine, if you want that spectrum for free,” then comply with the transition requirements.

Sen. Burns (R-Mon.) said that no matter what govt. said or did, marketplace set pace of transition on conversion: “The marketplace probably will have more to do with that… than any other factor.” He said May 2003 on-air deadline was unrealistic: “Next year we're really going to have to take a good look at that deadline.” Burns said conversion to digital from analog depended on broadcasters’ turning over analog spectrum: “The top end of the television market will convert and will be okay. But I tell you what, from the middle on down, its going to take a long time.”

Burns said “broadband is a national goal… Speed is everything now, and of course that takes bandwidth.” He said “wireless is going to play a role in the overall communications area, not just in one-way [communications], but in two-way.” “The military, some would say, has too much [spectrum],” he said. However, he said “we'll see progress” in getting some of that military spectrum into hands of private sector, particularly with expected support from Sens. Stevens (R-Alaska) and Inouye (D- Hawaii). Stevens is ranking Republican on Appropriations Committee, while Inouye is chmn. of Appropriations Defense Subcommittee. Burns said there now were 112 million subs and would nearly double that in not-too-distant future in U.S. “What does that tell me [about spectrum allocation]? Something has got to happen in spectrum management,” he said. Burns said General Accounting Office would finish comprehensive study on spectrum in Nov.

“Obviously there’s a great thirst for spectrum, and the military has a great deal of it,” CEA Pres. Gary Shapiro said. “There a deal in the works, as I understand it… Spectrum is tied to military purse strings.”

MPAA Exec. Vp Fritz Attaway said in panel discussion on “cable imperative” that “DTV broadcasting is not going to mature and the DTV transition is not going to take place until there is compelling content on DTV stations.” However, he said content owners were not going to release content in unsecured environment: “Security is a must for TV to develop and provide the kind of programming.” Broadband and DTV won’t develop, and “unless the IT community can find a secure distribution system, [content providers] will seek another type of system such as satellite or cable.”

Attaway said MPAA was concerned that “consumers will distribute content to 100 million over the Internet” and wasn’t concerned with “fair use” copies made at home: “That’s a real problem for content owners, and it needs to be solved.” He also said encryption and open access were not separate issues, but he saw difficulty in regulatory or congressional resolution of those issues: “Politically, it would be difficult to get the FCC to require DTV stations to encrypt their signal and require the consumer electronics industry to provide trusted television sets that could decrypt the signal.” He said that requiring watermarks on content also would require legislation, but saw equal difficulty in that measure: “Both of these alternatives are technically possible, but create public policy issues that aren’t easily resolved.”